Findings Of Fact The Parties. The Petitioner in case number 91-4632, Brighton Hall Co. (hereinafter referred to as "Brighton"), is a general partnership. Prior to March 6, 1990, Brighton owned and operated West Bay Nursing Center (hereinafter referred to as "West Bay"), a 120-bed nursing home in Oldsmar, Florida. The Petitioner in case number 91-4634, Shive Nursing Centers, Inc. (hereinafter referred to as "Shive Nursing"), is a corporation. Prior to March 6, 1990, Shive Nursing owned and operated Sunset Point Nursing Center (hereinafter referred to as "Sunset Point"), a 120-bed nursing home located in Clearwater, Florida. The Petitioner in case numbers 91-4635 and 91-4636, GHF, Inc. (hereinafter referred to as "GHF"), is a corporation. Prior to March 6, 1990, GHF owned and operated Oakhurst Manor Nursing Center (hereinafter referred to as "Oakhurst") and Orchard Ridge Nursing Center (hereinafter referred to as "Orchard Ridge"), two 120-bed nursing homes located in Ocala and New Port Richey, Florida, respectively. The Petitioner in case number 4637, Springwood Nursing Center, Ltd. (hereinafter referred to as "Springwood"), is a Florida limited partnership. Prior to March 6, 1990, Springwood owned and operated Springwood Nursing Center, a 120-bed nursing home located in Sarasota, Florida. All of the Petitioners owned and operated nursing homes which participated in the Florida Medicaid program, provided services to Medicaid patients and received reimbursement for Medicaid services from the Respondent. The Respondent in these cases, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department"), is the state agency charged with administering the Florida Medicaid program. The Florida Medicaid Program. The Florida Medicaid program is a program for the reimbursement of the costs of providing medical care to certain patients in Florida. The State of Florida enters into contracts with nursing homes for the treatment of Medicaid patients. Nursing homes agree to provide medical care and the State of Florida agrees to reimburse the nursing homes on a per diem basis for those services. One of the components of costs which are considered in determining the Medicaid per diem rate is the property cost component. Included within the property cost component is a reimbursement for depreciation expense. Generally, depreciation is the allocation of the cost of certain assets over the useful life of those assets. For example, if an asset cost $100,000.00 and it will be useful for 10 years, it is reasonable to assume that 10% of its cost, or $10,000.00, will be attributable to each year of the asset's useful life. Only assets considered to have a limited useful life are considered depreciable. For Medicaid purposes, those assets generally include tangible assets, such as buildings, equipment and furnishings. Land is not a depreciable asset. Medicaid recognizes that assets with a limited useful life which are used in providing medical services constitute part of the costs which should be reimbursed to providers of Medicaid services. Therefore, depreciation expense is included as part of the property component of the Medicaid per diem reimbursement rate. Sale of the Nursing Home Facilities. When a change of ownership of a nursing home facility which has participated in the Florida Medicaid program takes place, the nursing home terminates its participation in the Medicaid program. Any amounts which were paid for depreciation to the former owner of a nursing home may be recovered (hereinafter referred to as "depreciation recapture"). Depreciation recapture may occur to the extent that there is a gain realized by the former owner of the nursing home facility on the sale of the facility's depreciable assets. There is a gain realized on the sale of depreciable assets when the amount received for a depreciable asset exceeds the net book value (cost less accumulated depreciation) of the asset. To the extent that a gain is realized on the sale of a depreciable asset, the owner may be receiving a reimbursement for amounts the Medicaid program has already paid the owner for depreciation. On or about November 29, 1989, Brighton, Shive Nursing and GHF entered into an Asset Purchase Agreement with Krupp I, Inc., a Massachusetts corporation, for the sale of West Bay, Sunset Point, Oakhurst and Orchard Ridge. On or about November 29, 1989, Springwood entered into an Asset Purchase Agreement with Krupp Yield Plus Limited Partnership, a Massachusetts limited partnership, for the sale of Springwood Nursing Center. The sale of the five nursing home facilities was part of the sale of nine facilities by the principal owner of the facilities. The November 29, 1989, Asset Purchase Agreements referenced in findings of fact 22 and 23 (hereinafter referred to as the "Asset Purchase Agreements"), included as an attachment a schedule titled the "Purchase Price Allocation" allocating the purchase price to the assets of each nursing home facility sold. The total purchase price of $42,239,650.00 was allocated on the Purchase Price Allocation among the nine nursing homes and the corporate offices which were the subject of the sale. The purchase price allocated to each nursing home facility was further allocated on the Purchase Price Allocation to the various assets of each facility, including land (a non-depreciable asset), buildings and improvements, furniture, fixtures and equipment, computer software, supplies and inventory, certificate of need, patient lists, covenant not to compete, assembled work force, favorable lease and enterprise/going concern. The closing of the Asset Purchase Agreements took place on March 6, 1990. The Department's Treatment of the Sale of the Nursing Home Facilities. When the Department was informed of the sale of the five nursing home facilities at issue in this proceeding, the Department made a determination of whether depreciation recapture was due on the sale. The Department, in determining the amount of gain on the sale, utilized the amounts allocated to the various depreciable assets of each nursing home facility on the Purchase Price Allocation as the amount realized for those assets. The amount realized for depreciable assets reported by the Petitioners less the net book value for the depreciable assets was determined to be the gain realized on the sale of the Petitioners' nursing homes facilities. This gain, which was less than the depreciation of the depreciable assets, was determined to be the amount subject to depreciation recapture. After calculating the amount of depreciation recapture for each facility, the Department notified each Petitioner by letter that depreciation recapture was due in the following amounts: Date of Letter Petitioner Recapture June 25, 1991 Brighton $175,627.00 June 5, 1991 Shive Nursing 94,631.00 June 15, 1991 GHF (Oakhurst) 278,169.00 June 14, 1991 GHF (Orchard) 115,492.00 June 7, 1991 Springwood 231,320.00 On July 5, 1991, the Petitioners challenged the Department's proposed action. Following discussions with Department officials by a representative of the Petitioners, the Department amended the amount of depreciation recapture on October 10, 1991, by reducing the amount of recapture for the following Petitioners: Petitioner Recapture Reduction Brighton $3,485.00 Shive Nursing 69,370.00 GHF (Orchard) 36.00 The parties stipulated that these proceedings would take into account these amended amounts and a Motion for Leave to Amend Letter Requesting Depreciation Recapture was granted by Order entered October 23, 1991. The Manner in Which the Department Determined the Amount of Depreciation Recapture. Rule 10C-7.0482, Florida Administrative Code, provides the framework for the operation of the Medicaid program in Florida. This Rule specifically incorporates Florida Title XIX Long-Term Care Reimbursement Plan, Version IV, as a part of the Rule. The manner in which depreciation recapture is determined by the Department is governed by Section III.H.1. of Florida Title XIX Long-Term Care Reimbursement Plan, Version IV (hereinafter referred to as "Title XIX"), which provides, in pertinent part: Recapture of depreciation resulting from sale of assets. The sale of depreciable assets, or substantial portion thereof, at a price in excess of the cost of the property as reduced by accumulated depreciation, resulting in a gain on sale, and calculated in accordance with Medicare (Title XVIII) Principles of Reimbursement, indicates the fact that depreciation used for the purpose of computing allowable costs was greater than the actual economic depreciation. . . . The gross recapture amount shall be the lesser of the actual gain on the sale allocated to the periods during which depreciation was paid or the accumulated depreciation after the effective date of January 1, 1972 and prior to the implementation of payments based on FRVS to the facility. . . . [Emphasis added]. The terms "Medicare (Title XVIII) Principles of Reimbursement", are defined in Section IX of Title XIX as "Health Insurance for the Aged, Blind or Disabled (Medicare), as provided in the Social Security Act (42 U.S.C. 1395- 1395pp)." Medicare (Title XVIII) Principles of Reimbursement, do not contain specific provisions governing how gain on a sale of depreciable assets is to be calculated. The federal regulations to implement Medicare (Title XVIII), however, including the following: (iv) If a provider sells more than one asset for a lump sum sales price, the gain or loss on the sale of each depreciable asset must be determined by allocating the lump sum sales price among all the assets sold, in accordance with the fair market value of each asset as it was used by the provider at the time of sale. If the buyer and seller cannot agree on an allocation of the sales price, or if they do agree but there is insufficient documentation of the current fair market value of each asset, the intermediary for the selling provider will require an expert to establish the fair market value of each asset and will make an allocation of the sales price in accordance with the appraisal. 42 C.F.R. 413.134(f)(2)(iv). The Department of Health and Human Services, the agency responsible for administering the federal Medicaid program, has also promulgated a Provider Reimbursement Manual for guidance in the federal Medicare reimbursement program. Of pertinence to this proceeding is Chapter One, Section 104.14.B, which contains language similar to the provisions of 42 C.F.R. 413.134(f)(2)(iv), quoted in finding of fact 38. The terms "fair market value" are defined in Medicare (Title XVIII), as follows: Fair market value is the price that the asset would bring by bona fide bargaining between well-informed buyers and sellers at the date of acquisition. Usually the fair market value is the price that bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquisition. 42 U.S.C. 413.134(b)(2). The federal regulations implementing Medicare (Title XVIII), and the Provider Reimbursement Manual are not specifically incorporated by reference in the Department's rules or in Title XIX. As a matter of policy, the Department relies upon the federal regulations and the Provider Reimbursement Manual in determining the amount of gain on the sale of depreciable assets. To the extent that an issue involving depreciation recapture is not resolved by the foregoing rules and policies, the Department relies on Generally Accepted Accounting Principles. These policies are reasonable. The Department, in applying 42 C.F.R. 413.134(f)(2)(iv), treats a written allocation of the sales price between a buyer and a seller included in a sales and purchase agreement as sufficient documentation of the fair market value of each asset sold. Absent other evidence which would cause some question about the reasonableness of relying upon such an allocation, this policy is reasonable. Absent such contrary evidence, there is no reason why the Department should not assume that the parties to a sales and purchase agreement have reached an arms length agreement as to the fair market value of the assets being sold and that a schedule or other document setting out the agreement of the parties is sufficient documentation of that agreement. In this case, the Department has utilized a written allocation of the sales price (the Purchase Price Allocation) to determine gain on the sales at issue despite other documentation indicating that the allocated amounts may not constitute fair market value and raising a question as to whether the Purchase Price Allocation is sufficient documentation. It may be reasonable for the Department to conclude that a sale of assets does not involve "insufficient documentation" if the only evidence of the allocation of the sales price to the assets being sold is a written allocation of the sales price included as part of the sales and purchase agreement. But where other documentation of the fair market value of the assets is provided to the Department which is inconsistent with the written allocation included in the sales and purchase agreement, it is unreasonable for the Department to ignore that additional evidence. Absent a specific rule to the contrary, if other documentation is provided to the Department that calls into question the accuracy of a written allocation of the sales price, the Department should review and consider that documentation in determining whether the written allocation alone constitutes "insufficient documentation". In this case, the Department reasonably relied upon the Purchase Price Allocation originally provided to it to determine the amount of depreciation recapture. It was not reasonable, however, for the Department to ignore appraisals of the depreciable assets at issue performed on behalf of the Petitioners or to ignore other information concerning industry averages for new nursing home equipment in Florida on a per bed basis once this information was provided to the Department. Information Provided by the Petitioners. The Petitioners do not dispute that the Department is entitled to depreciation recapture on the sale of the facilities at issue in this proceeding. They dispute the amount of depreciation recapture, however. During the hearing of these cases, evidence was presented concerning industry averages for new nursing home equipment in Florida: generally, a Florida nursing home facility can be equipped with new equipment for $1,500.00 to $3,500.00 per bed. The cost of equipping the nursing home facilities at issue in these cases with used equipment based upon the allocation of values included in the Purchase Price Allocation is between $8,000.00 and $10,000.00. During 1988 and early 1989, prior to the time that the Asset Purchase Agreements were entered into, Craig Smith, appraised twelve nursing home facilities, including the nursing home facilities at issue in this proceeding. Mr. Smith holds a M.A.I. (Member Appraisal Institute) designation. The appraisals conducted by Mr. Smith were provided to the Department's Office of Licensure and Certification as required by Rule 10D- 29.103, Florida Administrative Code. The appraisals were provided by the purchasers of the nursing home facilities as part of the process of obtaining a license from the Department to operate the nursing homes facilities. The Department did not, however, rely upon or take into account the appraisals in determining the amount of depreciation recapture even though they were provided to the office responsible for making that determination. The Department, for purposes of determining the amount of recapture relied only on the Asset Purchase Agreement. The disparity between the amounts allocated to the depreciable assets of the nursing home facilities in the Purchase Price Allocation and the appraised values is significant. Based upon the weight of the evidence, the appraisals conducted by Mr. Smith and his determination of the fair market value of the depreciable assets of the nursing home facilities at issue in this proceeding are more reflective of the fair market value of those assets. The Petitioners presented evidence as to the amount of depreciation recapture which should be paid to the Department based upon the appraised value of the assets at issue in this proceeding. These amounts were not refuted by the Department. The amount of depreciation recapture the Department may reasonably receive from the Petitioners, based upon appraised fair market value, is as follows: Petitioner Recapture Brighton $ 95,915.00 Shive Nursing 27,502.00 GHF (Oakhurst) 229,222.00 GHF (Orchard) 78,141.00 Springwood 161,762.00 The Treatment of the Purchaser of Nursing Home Facilities. Prior to the change of ownership of a nursing home facility in Florida which intends to continue participating in the Medicaid program, the new owner must file an application with the Department's Office of Licensure and Certification for approval of the change and issuance of a license to operate the facility. Among the things to be reported by the new owner, is a fair market value appraisal of the nursing homes assets conducted by an appraisal expert. This requirement is specified, however, by the specific provisions of Rule 10D- 29.103(7)(i)9.b., Florida Administrative Code. This Rule does not specifically apply to the determination of depreciation recapture. The amount (known as "basis") which may be used by the new owner in the determination of the amount of depreciation expense entering into the new owner's per diem reimbursement rate is determined by a comparison of the fair market value appraisal required by Rule 10D-29.103(7)(i)9.b., Florida Administrative Code, the sales contract price and the cost of the facility for the owner of the facility on July 18, 1984. The manner utilized by the Department in its determination of depreciation recapture on the sale of a nursing home facility and the determination of the basis for the assets of the same facility for the new owner pursuant to Rule 10D-29.103, Florida Administrative Code, can result in the use of different amounts as the amount paid for those assets. In light of the conclusion concerning the invalidity of the Department's policy in these cases, it is not necessary to determine whether the Department's difference in treatment of the Petitioners and the buyers of the Petitioners' nursing homes was improper.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department requiring the Petitioners to pay to the Department the amounts set our in finding of fact 55 as depreciation recapture owed as a result of the sale of depreciable assets utilized by the Petitioners in the Florida Medicaid program. DONE and ENTERED this 20th day of February, 1992, in Tallahassee, Florida. LARRY J. SARTIN 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 20th day of February, 1992. APPENDIX Case Number 91-4632 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1-2, 9 and hereby accepted. 2 3-4, 9 and hereby accepted. 3 5-6, 9 and hereby accepted. 4 7-9 and hereby accepted. 5 10 and hereby accepted. 6 11-12 and hereby accepted. 7 See 13-14. 8-11 Not relevant. 12 35. 13 15-16. 14 13-14 and 16. 15 18-19. 16 56 and hereby accepted. 17 57. 18 58. 19 19. 20 20-21. 21 36. 22 Hereby accepted. 23 Not relevant. 24 See 36-41. 25 See 38-39. 26 41. 27 42. 28 22-25. 29 50 and hereby accepted. 30 25. 31 26-28. 32 Not relevant. 33 Not supported by the weight of the evidence. 34-35 Not relevant. 36-37 51. 38 32. 39 34 and hereby accepted. 40 34. 41 33. 42 42-44. 43 38-39. 44 40. 45 42-43. The last sentence is not relevant to this proceeding. 46 43. 47 52 48-51 Not relevant to this proceeding. 52-54 See 42-47. 55 49 and 51. 56 Not supported by the weight of the evidence. 57 49 and 52. 58 See 42-47. 59 Hereby accepted. 60 42-47 and 54-55. 61 Not supported by the weight of the evidence. 62 See 42-47 and 54-55. 63 Not relevant to this proceeding. 64-65 54-55. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1-2, 5-8, 14-16 Summary of some of the rulings during the final hearing. Facts which primarily relate to credibility or weight of the evidence. 3 9. 4 48. 9 30-31 and 43-44. 10-13 See 43 and 45-47. 17-19 See 30-31 and 43-44. 20 32. 21 30-32. 22 42. 23 38. 24 Hereby accepted. 25-26 See 43 and 45-52. 27 30-31. 28 43. 29 Not relevant to this proceeding. COPIES FURNISHED: William B. Wiley, Esquire Darrell White, Esquire 600 First Florida Bank Building Tallahassee, Florida 32301 Gordon B. Scott, Esquire Department of Health and Rehabilitative Services 1317 Winewood Boulevard Building 6, Room 230 Tallahassee, Florida 32399-0700 Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The issues are (1) whether certain medical expenses incurred by petitioners' daughter should be covered under the state group health insurance program, and (2) whether the state is estopped from denying the claim based upon erroneous misrepresentations made by its agent.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioner, Etta Aldridge, is a full-time employee of Sunland Training Center in Marianna, Florida and is a participant in the state group health insurance program (the plan). James Aldridge, her husband and also a petitioner in this cause, and Jerrilyn Aldridge, her daughter, are covered by the plan. On November 3, 1987, Jerrilyn, then around seventeen years of age, was severely injured in an automobile accident near her home in Greenwood, Florida. Among other things, she suffered a skull fracture, abrasions, crushed pelvis and hip, and punctured lungs and stomach. She was initially taken to a Marianna hospital for emergency treatment and then transferred to a Tallahassee hospital for longer-term care. While at the Tallahassee hospital, Jerrilyn was diagnosed by her neurologist as having a closed, diffuse brain injury and brain stem contusions. After Jerrilyn was treated in Tallahassee for two and one-half months, which included one month in the hospital and forty-five days at the hospital's extended care facility, her parents were advised that, due to her poor prognosis, they had a choice of putting her in a nursing facility or taking her to their home. Although Jerrilyn was still in a coma, petitioners decided to take her home and care for her in a bedroom which had been converted into a hospital room setting. After six or seven weeks at home, and contrary to earlier medical expectations, Jerrilyn opened her eyes, made noises and manifested some slight arm movement. Based upon these encouraging signs, petitioners sought further medical advice and were told that, given the foregoing signs of improvement, treatment in a facility that specialized in brain injury rehabilitation would improve their daughter's condition. Petitioners contacted the National Head Injury Foundation and were given a list of health care facilities in the state that provided rehabilitative services for brain injured patients. This list included Manatee Springs Nursing Center, Inc. d/b/a Mediplex Rehab-Bradenton (MRB), a facility licensed by the state as a skilled nursing facility but which specialized in rehabilitating brain injured patients. MRB is the largest brain injury rehabilitation facility in the southeastern united States. Since the Aldridges did not have the financial resources to pay for any additional treatment for Jerrilyn, it was essential that they selected a facility that would be covered by the plan. After James Aldridge spoke with and received information from most of the facilities on the list, and conferred with Jerrilyn's neurologist, he eventually narrowed his choice to several facilities, including MRB, which impressed him because of its good reputation and specialty in head injury rehabilitation. To confirm whether coverage would be provided for further treatment, James Aldridge telephoned the customer service unit of Blue Cross and Blue Shield of Florida, Inc. (BCBS), the plan's administrator. He also contacted MRB and authorized it to make an inquiry with BCBS on his behalf. On March 28, 1989 Aldridge received favorable advice from a BCBS service representative concerning coverage and benefits for Jerrilyn at MRB. This advice was independently confirmed by MBR on the same date, and Jerrilyn was accepted as a patient at the facility effective March 31, 1988. Some three months later, and after some of the bills had been paid, BCBS advised MBR and petitioners that a "computer" error had been made and that the requested benefits applied only when rendered in a licensed hospital and not a skilled nursing facility. BCBS accordingly declined to pay the bills. That prompted petitioners to initiate this proceeding. The bills in question total over $225,000. The Insurance Plan The State has elected to provide a self-insured group health insurance program for its employees and their dependents. The legislature has designated respondent, Department of Administration, Division of Employees' Insurance (Division), as the responsible agency for the administration of the plan. To this end, the Division has entered into an agreement with BCBS to administer the plan. Among other things, BCBS provides verification of coverage and benefits, claims payment services, actuarial and printing services, and medical underwriting of late enrollee applications. Including dependents and retirees, there are almost 300,000 persons who are covered by the plan. Upon enrolling in the plan, all employees, including Etta Aldridge, were routinely given an insurance card with BCBS's telephone number and a brochure entitled "State of Florida Employees Group Health Self Insurance Plan Brochure" (brochure) containing a general description of the plan. The brochure warns the insured that the brochure is not a contract since it does not include all the provisions, definitions, benefits exclusions and limitations of the plan. It also contains advice that if the brochure does not answer an employee's question, he should telephone the Division's customer service section in Tallahassee. In actual practice, however, if an employee contacts the Division number, he is told to telephone BCBS's customer service unit in Jacksonville regarding any questions as to coverage and benefits, claims or other problems concerning the plan. The Division generally becomes involved only when an employee is unable to resolve a claims problem with BCBS. BCBS has established a service unit that deals exclusively with inquiries regarding coverage and benefits under the state group health plan. There are approximately twenty- eight service representatives in that unit. Each representative receives four weeks of training before being certified as a customer service representative. After being certified, a representative's primary responsibility is to respond to inquiries from state employees, health providers and physicians regarding verification of benefits and coverage under the state group policy. It should be noted that a distinction exists between verification of benefits and coverage. To verify coverage means to verify that a person has an active policy at the time services are rendered. To verify benefits means to confirm that a specific service is covered under the policy. In this case, there was an inquiry by the insured and provider regarding both benefits and coverage. In the event a representative is unsure as to the licensing status of a facility or provider, the representative has access to BCBS's master registry department which maintains the provider number and licensure status of every facility in the state. That registry identified MRB as a skilled nursing home. BCBS representatives have the authority to make decisions regarding benefits and coverage. It is only when an inquiry falls within a "grey area" that the final decision is referred from the unit to either the Legal or Medical Division of BCBS. The Division, with the assistance of BCBS, has prepared a seventy-five page benefit document (document) which governs all claims arising under the plan. However, the document is for BCBS in-house use only and is not given to state employees or providers. The document first became effective on May 1, 1978 and has been subsequently amended from time to time. When Jerrilyn was admitted to MRB, the document effective October 1, 1987 was controlling. The document was further amended effective July 1, 1988, which was three months after her admission to MRB. As is pertinent here, the July 1, 1988 amendments increased the deductibles and narrowed the definition of a "hospital". According to the state benefits administrator, the document is "the final word" on any dispute regarding coverage or claims. The BCBS service unit uses this document to verify coverage and benefits. Included in the document are numerous definitions that are used to resolve disputed claims. Relevant to this controversy is the definition of a hospital at the time Jerrilyn was admitted to MRB: "Hospital" means a licensed institution engaged in providing medical care and treatment to a patient as a result of illness or accident on an inpatient/outpatient basis at the patient's expense and which fully meets all the tests set forth in 1., 2., and below: It is a hospital accredited by the Joint Commission on the Accreditation of Hospitals, or the American Osteopathic Association or the Commission on the Accreditation of Rehabilitative Facilities; It maintains diagnostic and therapeutic facilities for surgical or medical diagnosis and treatment of patients under the supervision of a staff of fully licensed physicians; It continuously provides twenty-four (24) hour a day nursing service by or under the supervision of registered graduate nurses. It is undisputed that, while MRB may have provided many services comparable to those rendered by a licensed hospital and is considered to be an atypical nursing home, MRB is still licensed by the state as a skilled nursing facility. Thus, MRB cannot qualify as a hospital under the benefit document. Payment for services in a skilled nursing facility, such as MRB, are much more limited and restrictive than for a hospital. To qualify for payment of benefits in a skilled nursing facility, the insured must have been hospital confined for at least three consecutive days prior to the day of hospital discharge before being transferred, upon a physician's advice, to a skilled nursing facility. Once admitted to such a facility, the insured's room and board reimbursement is limited to a maximum of $76 per day. Further, payment of services and facilities is limited to sixty days of confinement per calendar year. In contrast, benefits for hospital care include, for example, unlimited days of coverage per calendar year and much higher reimbursement rates for room, board and other services. In this case, besides having been admitted to MRB directly from her home, and not a hospital, Jerrilyn had already used up forty- five of the sixty days of annual benefits at the extended care unit of a Tallahassee hospital. BCBS also has a fee schedule that is used in paying all covered claims. However, the schedule was not introduced into evidence. Estoppel Before he made a final decision as to where to send his daughter, James Aldridge spoke by telephone with several BCBS representatives, including Michelle Sahdala and Rhonda Hall, the unit supervisor and considered its most experienced representative. 1/ Aldridge made these telephone calls because he wanted to positively confirm which facilities would be covered by the plan. During one conversation, Sahdala advised Aldridge that the proposed treatment would not be covered in several facilities named by the National Head Injury Foundation, including New Medico Rehabilitation Center of Florida in Wauchula, Florida and Capital Rehabilitation Hospital in Tallahassee. Aldridge advised BCBS that he might want to place his daughter in MRB, but only if such treatment was covered under his wife's insurance plan. He heard nothing further from BCBS until a week later. Aldridge contacted MRB on March 21, 1988 and advised an MRB representative that he wished to place his daughter in the facility if his wife's insurance covered the treatment at MRB. He also gave MRB the BCBS unit supervisor's name (Rhonda Hall) and telephone number. To verify coverage and benefits, MRB's admission coordinator, Patricia Dear, telephoned Hall on March 22, 1988. Such an inquiry is routinely made by the provider on behalf of the insured and before the patient is admitted to the facility. This is to ascertain if the prospective patient is insured, and if so, to verify the amount of benefits. Dear identified herself and advised Hall that she was requesting benefits information on Jerrilyn Aldridge, an insured. She told Hall that MRB was a skilled nursing facility and not a hospital, the nature of services that would be provided to Jerrilyn and her need to determine whether such services would be covered under the plan before Jerrilyn was accepted as a patient. When asked if she would need further information in hand concerning MRB before determining the amount of benefits, Hall responded affirmatively. Accordingly, Dear sent Hall by overnight mail a letter and brochure describing the facility's services. They were received by BCBS the next morning, or March 23. The letter included information concerning MRB, the fact that it was a skilled nursing facility and not a hospital, the type of services that MRB provided, a summary of the expected charges for treating Jerrilyn (from $600 to $850 per day), the average length of stay of a patient (3 to 9 months), and an offer to answer any additional questions that BCBS might have. When Dear heard nothing further from Hall within the next few days, she made a follow-up telephone call to Hall on March 28 to see if Hall had any questions and to verify benefits coverage. Hall acknowledged receiving the letter of March 22 with attachment. After Dear discussed each of the disciplines and types of services to be provided and their expected cost, including physician services, physical therapy, neuropsychology, central supply, pharmacy, laboratory services and a room and board charge of $351 per day, Hall advised Dear that the only policy exclusions on coverage would be occupational and speech/language therapy. She added that all charges would be subject to medical necessity, and ambulance costs to transport Jerrilyn to the facility would be covered. The two also discussed the fact that there were no time limitations under the policy and that almost $475,000 in lifetime coverage still remained. Hall represented that after the Aldridges satisfied their $1500 deductible on which BCBS paid only 80% of the bills, BCBS would thereafter pay 100% of all medically necessary charges. In making that representation, Hall did not disclose the fact that BCBS has a fee schedule and that all payments were subject to the limitations specified in that schedule. After verifying that Hall had cited all policy limitations, and consistent with her longtime experience in verifying benefits with other insurance carriers, Dear properly assumed that if the policy contained a provision which limited payment to something less than 100% of covered services, Hall would have said so. Dear asked Hall if there was any reason not to admit Jerrilyn and Hall replied "no." Dear also asked Hall if she (Hall) was in a position to verify benefits and Hall represented that she was. Dear then told Hall that Jerrilyn would be presented to the admissions committee the next day and, if clinically appropriate, she would be admitted. Dear ended the conversation by advising Hall that a letter confirming their understanding would be sent after Jerrilyn was admitted. After speaking with Hall, Dear had a clear understanding that coverage and benefits had been approved and, except for occupational and speech/language therapy, BCBS would pay 80% of all medically necessary charges until the Aldridge's $1,500 deductible was met, and then to pay 100% of all remaining medically necessary charges. 2/ After receiving the favorable advice, Dear telephoned Aldridge the same day and told him the results of her conversation with Hall. Within a few moments after speaking with Dear, Aldridge received a telephone call from an unidentified female BCBS representative who informed him that BCBS would pay for his daughter's treatment at MRB. Jerrilyn was accepted as a patient by MRB's admissions committee on March 28, 1988. Both the provider and the insured relied upon Hall's representations in admitting Jerrilyn to the facility. Had Jerrilyn not been covered by the plan, the committee would not have approved her admission. Also, if the Aldridges had known that the treatment at MRB was not covered, they would have sent their daughter to another facility covered by the plan. On April 4, 1988, and pursuant to her last telephone conversation with Hall, Dear sent Hall by overnight mail the following letter: This is to confirm the admission of Jerrilyn Aldridge on March 31, 1988, to the specialized head trauma rehabilitation program at Mediplex Rehab-Bradenton, Florida. The following benefits information has been verified by you and Patricia Dear, R. N., Admissions Coordinator on March 28, 1988. Effective date: 10/1/79 Benefits: After $1,500 - out of pocket/yr- 100% coverage Days available: Unlimited days Monies available: $474,533.79 Exclusions: Occupational Therapy, Speech- Language Therapy Limitations: Treatment subject to "Medical Necessity" If I do not hear from you, I will consider you to be in agreement with the above information. Please place this in the client's file. Thank you for your prompt attention to this matter. (Emphasis supplied) Although BCBS's records reflect that Dear's letter was received, Hall did not advise Dear that there were any problems concerning Jerrilyn's coverage and benefits under the plan or that Dear's understanding of the benefits to be paid was inaccurate or in error. Of some note is the fact that Hall is considered one of the most knowledgeable BCBS representatives on state health plan benefits and recognizes that her statements concerning benefits are relied upon by providers. Even though Hall was specifically advised both orally and in writing that MRB was licensed as a nursing home, and she had access to BCBS's master registry to confirm MRB's licensure status, she failed to discern that a nursing home was not a covered facility for the requested services within the meaning of the plan. Indeed, she later acknowledged by deposition that she knew that "the state does not pay for nursing homes" and that she had made a mistake by failing to properly "investigate" the matter more thoroughly. By failing to convey accurate advice to James Aldridge and MRB and to note that the proposed treatment would not be covered if rendered by a nursing home, Hall failed to use reasonable care and competence in responding to the inquiry. Three months after Jerrilyn's admission, James Aldridge received notice that BCBS had changed its position and now asserted it was not going to pay for Jerrilyn's rehabilitation and treatment at MRB. Proposed agency action confirming this decision was later issued by the Division on October 21, 1988. Miscellaneous All medical services received by Jerrilyn were medically necessary within the meaning of the benefit document. The necessity of Jerrilyn's placement in a rehabilitation facility was established by Dr. James D. Geissinger, her Tallahassee neurologist, who based it upon Jerrilyn's improvement after leaving the Tallahassee hospital and made her a candidate for brain rehabilitation. Doctor Geissinger also noted that, as a result of receiving treatment at MRB, Jerrilyn had made "remarkable" improvement and was able to partially regain her language function, use her left arm and hand, and improve her "activities of daily living." There are expectations that she will be able to walk again within a year. Further, based upon the testimony of an MRB staff physician, the services and treatment received by Jerrilyn at MRB were medically necessary to facilitate her neurologic and functional recovery. Given the nature of her injury and MRB's nursing staffing ratios, the required intensive medical rehabilitation and monitoring of Jerrilyn's medical and neurological condition was comparable to care in a hospital intensive care unit. These matters were not contradicted. On April 1, 1988, the Aldridges executed a standard financial agreement with MRB whereby they agreed to indemnify MRB for all charges which were not paid by BCBS. As is normally done, they also authorized MRB to directly bill BCBS for all charges incurred by Jerrilyn while being treated at the facility. Finally, the Aldridges authorized MRB to make inquiries on their behalf with BCBS to verify insurance coverage and benefits for Jerrilyn. MRB submitted to BCBS all bills for services and treatment given to Jerrilyn during her five or six month stay at the facility. A summary of the dates of service, charges, payments made by BCBS and balance due is contained in petitioners' exhibit 17. In all, there are thirty-eight outstanding bills totaling $227,139.27. The parties have stipulated that the bills in exhibit 17 represent services that were actually performed and supplies that were actually received by the patient. As noted in finding of fact 21, all such supplies and services were medically necessary. For the reasons given in the conclusions of law portion of this recommended order, the doctrine of equitable estoppel applies, and petitioners are entitled to be reimbursed for all unpaid bills filed with BCBS in accordance with the representations of agent Hall. These include room and board charges (at the intensive care room rate), physician services, neuropsychology, physical therapy, central supply, pharmacy and laboratory charges as more fully described in petitioners' exhibit 17. Such reimbursement should be not be subject to the limitations prescribed in the fee schedule.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the amended petition of Etta and James Aldridge be GRANTED, and the Division order Blue Cross and Blue Shield of Florida, Inc. to reimburse petitioners $227,139.27 as reflected in petitioners' exhibit 17. DONE and RECOMMENDED this 7th day of August 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of August, 1989.
Findings Of Fact Petitioners are licensed Florida nursing home facilities and at all times material hereto, were certified to and were participating in the Florida Medicaid Program. Said participation is subject to all State and Federal laws, regulations, standards and guidelines relating to Medicaid. For nursing homes, the pertinent guidelines relating to Medicaid reimbursement are found in The Florida Title XIX Long Term Care Reimbursement Plan (Gainesville Plan) which has been incorporated by reference as a rule. See Rule 10C-7.48(4)(a)5.a., Florida Administrative Code. To arrive at a nursing home provider's reimbursement rate for the upcoming year, Respondent reviews the past years's cost report submitted by the provider and sets a prospective per diem rate. This prospective rate, based upon historical costs, is projected forward with the addition of an inflation factor. The provider is expected to stay within the budget of this prospective rate for the entire year. Should a provider experience unforeseen costs related to patient care during the year, the provider may apply for an interim rate (usually an increase over the current prospective rate) prior to the filing of its next coat report. Interim rates are only allowed in certain circumstances as set forth in the Gainesville Plan. During 1984, Petitioners experienced difficulty keeping employees due to competition from other facilities and unionization which had raised salaries at other facilities above those paid by Petitioners. In order to compete, Petitioners raised salaries for their employees and subsequently filed requests for interim rates with Respondent to cover the increased costs incurred. The requests were mailed by Petitioners on August 30, 1984 but were not received by Respondent until September 4, 1984. Respondent by correspondence dated October 8, 1984, denied Petitioners requests for interim rates stating: "The Florida Title XIX Long-Term Care Reimbursement Plan, Section IV, Subsection K (2) states: `Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes will be considered only if such changes were made to comply with existing State or Federal rules, laws, or standards, and if the change in cost to the provider is at least 5,O00 and would cause a change of 1.0 percent or more in the provider's current total per diem rate.' The interim rate request as submitted does not document that the increased costs were incurred for complying with existing State or Federal rules, laws, or standards." The Petitioners were also notified of their right to a hearing and, pursuant to Section 120.57,(1), Florida Statutes, this hearing was requested. On April 1, 1983, a Florida Title XIX Long-Term Care Reimbursement Plan (Gainesville Plan) was implemented and was revised effective September 1, 1984. Beginning in October 1, 1984, all aides hired by nursing home facilities had to be certified which required certain education and training. Those aides hired prior to October 1, 1984 had until October 1, 1986 to become certified. This was a requirement placed on the aides and not on the nursing home facilities. Both the April 1, 1983 Gainesville Plan and the September 1, 1984 revised Gainesville plan provide for the use of postmark in submitting cost reports but neither plan provides for use of postmark in submitting an interim rate request. The policy of the Respondent was to consider the interim rate requests under the plan in effect on the date the request was received.
Recommendation Based upon the findings of facts and conclusions of law recited herein it is RECOMMENDED that the Respondent enter a Final Order denying the Petitioner interim rate increase. Respectfully submitted and entered this 5th day of August, 1985, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings 5th day of August, 1985. COPIES FURNISHED: Department of Health and Rehabilitation Services 1323 Winewood Boulevard Tallahassee, Florida 32301 John P. McCoy Esquire Post Office Box 191 150 Magnolia Avenue Daytona Beach, Florida 32015 David Pingree Secretary 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, the stipulations of the parties and the entire record complied herein, I hereby make the following findings of fact: THE STIPULATIONS OF THE PARTIES The parties stipulated to the following facts: Forum timely filed its letter of intent and application with DHRS and the District IX Local Health Council for the July 1986 batching cycle. DHRS ultimately deemed the application complete and, following review, published its notice of intent to deny the application. Forum timely filed a petition requesting a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes. The sole issue is whether there is a need for Forum's proposed services; additionally, it is DHRS's position that a lack of need for the project results in the project not being financially feasible in the short or long term. All other statutory and rule criteria were satisfied, at least minimally, except proof of need pursuant to Rule 10-5.011(1)(k) [formerly 10-5.11(21)(b)], Florida Administrative Code, and financial feasibility as it relates to need. FORUM'S PROPOSAL Forum is a publicly held health services company which owns, develops and operates retirement living centers and nursing homes on a national basis. Forum proposes to develop a retirement living center in Palm Beach County that would consist of 120 to 150 apartment units for independent living, a separate personal care unit (known in Florida as an adult congregate living facility), and a 60-bed nursing home component certified for skilled and intermediate care. Palm Beach County is in HRS Service District IX, Subdistrict 4. All three components of Forum's retirement living center would be physically connected and share some operational functions, such as dietary facilities and the heating plant. Such a design provides for an efficient operation as well as an economic distribution of costs facility wide. No specific site has been selected , although Forum has narrowed its focus to the eastern half of Palm Beach County. It is not economically feasible to acquire property or pay for an option on property until after receiving CON approval. The projected total cost of Forum's proposed 60-bed nursing home is $2,329,800. Forum has the necessary resources for project accomplishment and operation. Forum proposes to seek Medicare certification and will provide up to 25 of its beds for Medicaid patients. FINANCIAL FEASIBILITY Forum is a national company, with substantial experience in developing and operating nursing homes and retirement living centers. If need for the facility is shown, Forum would be able to capture a sufficient share of the nursing home market to render its proposed nursing home financially feasible while at the same time having no material negative impact on existing providers in the district. NUMERIC NEED Need for new or additional community nursing home beds in Florida is determined, preliminarily, by use of the methodology found in Rule 10- 5.011(1)(k), Florida Administrative Code. Additional beds normally are not approved if there is no need for beds as calculated under the rule. Pursuant to the rule, need for a defined nursing home subdivision is projected to a three- year planning horizon, in this case July 1989. The need methodology prescribed in the rule is as follows: A (POPA x BA) + (POPB x BB) or: The District's age-adjusted number of community nursing home beds for the review cycle for which a projection is being made [A] (The population age 65-74 years in the relevant departmental districts projected three years into the future [POPA] x the estimated current bed rate for the population age 65-74 years in the relevant district [BA]) + (The population age 75 years and older in the relevant departmental district projected three years into the future [POPB] x the estimated current bed rate for the population age 75 years and over in the relevant district [BB].) BA LB/(POPC) + (6 x POPD) or: The estimated current bed rate for the population age 65-74 years in the relevant district [BA] (The number of licensed community nursing home beds in the relevant district [LB]/the current population age 65-74 years [POPC] + (6 x the current population age 75 years and over [POPD]) BB 6 x BA or: The estimated current bed rate for the population age 75 years and over in the relevant district [BB] 6 x the estimated current bed rate for the population age 65-74 years in the relevant district [BA]. SA A x (LBD/LB) x (OR/.90) or: The preliminary subdivision allocation of community nursing home beds [SA] The district's age-adjusted number of community nursing home bids for the review cycle for which a projection is being made [A] x (The number of licensed community nursing home beds in the relevant subdistrict [LBD]/the number of licensed community nursing home beds in the relevant district [LB]) x (The average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district [OR]/.90) Rule 10-5.011(1)(k)(2)(i), Florida Administrative Code, provides that: The new bed allocation for a subdistrict, which is the number of beds available for CON approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs a. through i., unless the subdistrict's average estimated occupancy rate for the most recent six months is less than 80 percent, in which case the net bed allocation is zero. The appropriate planning horizon for the instant case is July 1989, corresponding to the review cycle which began July 15, 1986, and the subdistrict is Palm Beach County. THE NUMBER OF LICENSED COMMUNITY NURSING HOME BEDS IN THE RELEVANT DISTRICT (LB)/THE NUMBER OF LICENSED COMMUNITY NURSING HOME BEDS IN THE RELEVANT SUBDISTRICT (LBD) Rule 10-5.011(1)(k) requires that "review of applications submitted for the July batching cycle shall be based upon the number of licensed beds (LB and LBD) as of June 1 preceding this cycle..." On June 1, 1986, there were 5,459 licensed community nursing home beds in District XI (LB) and 4,084 licensed community nursing home beds in subdistrict 4 (Palm Beach County LBD). These figures include 220 licensed beds that were previously categorized as sheltered. In the instant case, the appropriate figure for LB is 5,459, and the appropriate figure for LBD is 4,084. APPROVED BEDS WITHIN THE RELEVANT DEPARTMENTAL SUBDISTRICT DHRS's interpretation of the rule is to include in the count of approved beds, those approved up to the date of the supervisor's signature on the State Agency Action Report (SAAR). In this case, there were 640 approved beds in Palm Beach County at that time. As of June 1, 1986, the same date as the licensed bed cutoff, there were 640 approved beds in the subdistrict. In Dr. Warner's opinion, approved beds should be determined as of the same time period as licensed beds in order to have consistency and avoid anomalies in the formula. This opinion is reasonable and appropriate. In the instant case, the figure to be applied in the formula for approved beds in the subdistrict is 640 approved beds. THE POPULATION AGE 65-79 YEARS IN THE RELEVANT DEPARTMENTAL DISTRICT PROJECTED THREE YEARS INTO THE FUTURE (POPA). THE POPULATION AGE 75 YEARS AND OVER IN THE RELEVANT DEPARTMENTAL DISTRICT PROJECTED THREE YEARS INTO THE FUTURE (POPB). The rule provides that the three year projections of population shall be based upon the official estimates and projections adopted by the Office of the Governor. For the purposes of calculating need, DHRS utilizes at the final hearing the figures for estimated population obtained from data available at the time of initial application and review. The set of population projections which were available when Petitioner's application was filed and reviewed were those published on July 1, 1986. Based on this data, which is reasonable to use, POPA 170,639; and, POPB 122,577. THE CURRENT POPULATION AGE 65-74 YEARS (POPC)/THE CURRENT POPULATION AGE 75 YEARS AND OVER (POPD). In calculating POPC and POPD, DHRS also utilizes at final hearing the most current data available at the time of initial application and review, in this case the July 1, 1986, release. Based on that data, POPC 153,005 and POPD 112,894. In the opinion of Dr. Warner, Forum's expert, the base for POPC and POPD should correspond to the period for which the average occupancy rate (OR) is calculated. For the July batching cycle, OR is based upon the occupancy rates of licensed facilities for the months of October through March preceding that cycle. According to Warner, January 1, 1986, as the midpoint of this time period, is the appropriate date to derive POPC and POPD in this case. The formula mandated by the rule methodology for calculating the estimated current bed rate requires that the "current population" for the two age groups be utilized. It is reasonable and appropriate for the base for POPC and POPD to correspond to the period for which the average occupancy rate is calculated. Supportive of Dr. Warner's opinion are the past practices of DHRS. Between December 1984 and December 1986, DHRS routinely used a three and one half year spread between the base population period and the horizon date in determining "current population" in its semiannual nursing home census report and bed need allocation. In the January 1987 batching cycle, which cycle immediately followed the cycle at issue in this case, DHRS utilized a three and one half year spread between the base population period and the horizon data for "current population" when it awarded beds. DHRS offered In this case, it proposed to use a three year spread between the base population period and the horizon dated for "current population" in calculating POPC and POPD. Using the July 1986 population release, POPC for January 1986 is 149,821 and POPD for January 1986 is 98,933. THE AVERAGE OCCUPANCY RATE FOR ALL LICENSED COMMUNITY NURSING HOMES WITHIN THE SUBDIVISION OF THE RELEVANT DISTRICT (OR). The rule requires the use of occupancy data from the HRS Office of Health Planning and Development for the months of the previous October through March when calculating a July batch of nursing home applicants. However, the rule is not instructive as to how one calculates this number. In this case, DHRS computed average occupancy rates based on the existing occupancy rates at applicable facilities on the first day of each month. Based on this occupancy data, which includes the data for the 220 previously sheltered beds in the subdistrict, occupancy rates for the July 1986 batch of Palm Beach County nursing home applicants is 83.75 percent. Forum's witness, Dr. Warner, determined that the correct occupancy rate was 85.46 percent for Palm Beach County for the period October 1985 to March 1986. Dr. Warner arrived at this figure by including paid reservation days. A paid reservation day is a day which is paid for by the patient or the patient's intermediary during which the patient is not physically in the bed. Typically, the patient will either be in the hospital, visiting relatives or otherwise away from the facility and will continue to pay for the nursing home bed, so that they will be able to return and not have someone occupy the bed. One of the goals and objectives of the District IX Local Health Plan is that paid reservation days be considered when bed need calculations are made. Calculating prepaid reservation days is consistent with the Rule because such beds are no longer available to the public and are therefore in use. Dr. Warner determined that during the applicable period, 1.25 percent of the licensed beds in the subdistrict were paid reservation days. Although taking paid reservation days into account would not be inconsistent with the rule, Forum failed to demonstrate that the 1.25 percent figure arrived at is valid for the applicable period, i.e., October 1985 to March 1986. Dr. Warner merely calculated a two-year average number of paid reservation days, broke this figure down to a six-month average and applied this average to the six-month period specified in the Rule. Gene Nelson, an expert called on behalf of Forum, calculated the occupancy rate as 88.72 percent in Palm Beach County for the appropriate period called for in the Rule. Nelson used the average monthly occupancy data obtained from medicaid cost reports for some facilities rather than first-day of the month data as used by DHRS. In addition, Nelson did not factor in the occupancy date of licensed beds in the extreme western portion of the County based on his belief that the District IX Local Health Plan mandates that the western area not be considered in any way with the eastern coast section of Palm Beach County for purposes of determining competitiveness. While the use of average full-month occupancy data is generally more reliable than using first-day of the month data, it is best, from a health planning prospective, to be able to use either all full-month data or all first- day of the month data. In making his calculations, Mr. Nelson mixed the two types of data, using full-month data when available and in other cases using first-day of the month data when full-month data was not available. It is inappropriate to fail to consider licensed beds in the extreme western portion of the County based solely on the local health plan. Among other reasons, the rule does not provide for exclusions for any of the subdistricts licensed facilities from the methodology. The appropriate and most reasonable occupancy rate (OR) in the instant case for the applicable time period is 83.75 percent. NET NEED Applying the above-referenced variables to the Rule formula produces the following results. July, 1986. District Allocation BA LB (POPC + (6 x POPD) - 5459 [149,821 + (6 x 98,833)] - .007349 BB - 6 x BA .044094 (.007349) July, 1989 Allocation (POPA x BA) + (POPB x BB) - (170,639 x .007349) + (122,577 x .044094) - 6659 Subdivision Allocation and Need SA A x (LBD / LB) x (OR 1.9) - 6659 x (4084 / 5459) x (.8375/.9) - 6659 x .74812236673 x .93055555555 4636 Subdistrict Allocation for Palm Beach County 4084 (Licensed Beds) 576 (90 percent of 640 Approved Beds) -24 (Bed Surplus)
Recommendation Based on the foregoing Findings of Fact, and Conclusions of Law, it is, RECOMMENDED that the application for certificate of need filed by Forum be Denied. DONE AND ORDERED, this 4th day of April, 1988, in Tallahassee, Florida. W. MATTHEW STEVENSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0704 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in substance in Finding of Fact 2. Adopted in substance in Finding of Fact 3. Adopted in substance in Finding of Fact 4. Adopted in substance in Finding of Fact 5. Adopted in substance in Finding of Fact 5. Adopted in substance in Finding of Fact 6. Adopted in substance in Finding of Fact 6. Adopted in substance in Finding of Fact 7. Adopted in substance in Finding of Fact 9. Sentence 1 is rejected as contrary to the weight of the evidence. Rejected as subordinate and/or unnecessary. 11. Adopted in substance in Finding of Fact 9. 12. Adopted in substance in Finding of Fact 9. 13. Adopted in substance in Finding of Fact 10. 14. Adopted in substance in Finding of Fact 12. 15. Adopted in substance in Finding of Fact 1. 16. Adopted in substance in Finding of Fact 14. 17. Adopted in substance in Finding of Fact 21. 18. Adopted in substance in Finding of Fact 20. 19. Adopted in substance in Finding of Fact 22. 20. Adopted in substance in Finding of Fact 22. 21. Adopted in substance in Finding of Fact 18. Adopted in substance in Finding of Fact 15. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 23. Rejected as a recitation of testimony and/or unnecessary. Rejected as subordinate and/or unnecessary. Adopted in substance in Finding of Fact 24. Rejected as a recitation of testimony and/or unnecessary. Adopted in substance in Finding of Fact 25. Rejected as a recitation of testimony and/or subordinate. Adopted in substance in Finding of Fact 25. Adopted in substance in Finding of Fact 21. Rejected as contrary to the weight of the evidence. Rejected as not supported by the weight of the evidence and/or unnecessary. Rejected as subordinate and/or unnecessary. Rejected as subordinate and/or unnecessary. Adopted in substance in Finding of Fact 27. Adopted in substance in Finding of Fact 28. Adopted in substance in Finding of Fact 27. Adopted in substance in Finding of Fact 28. Rejected as a recitation of testimony and/or subordinate. Rejected as misleading and/or subordinate. Rejected as subordinate and/or unnecessary. Rejected as contrary to the weight of the evidence. Rejected as contrary to the weight of the evidence. Rulings on Proposed Findings of Fact Submitted by the Respondent Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 9. Adopted in substance in Finding of Fact 3. Rejected as contrary to the weight of evidence. Adopted in substance in Finding of Fact 13. Adopted in substance in Finding of Fact 18 and 19. Adopted in substance in Finding of Fact 16. Adopted in substance in Finding of Fact 23. Addressed in Conclusions of Law. Addressed in Conclusions of Law. Rejected as subordinate and/or unnecessary. COPIES FURNISHED: Thomas W. Stahl, Esquire 102 South Monroe Street Tallahassee, Florida 32301 R. Terry Rigsby, Esquire 325 John Knox Road Building C, Suite 135 Tallahassee, Florida 32303 Richard Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 John Miller, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power HRS Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 =================================================================
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner be reimbursed for fiscal year 1979 and 1980 in accordance with the foregoing adjustments. DONE and ENTERED this 17th day of December, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 1982.
The Issue Whether Respondent, an insurance agent licensed in Florida, violated specified Florida Statutes and agency rules in the sale of an annuity to two senior citizens, as charged in the Administrative Complaint, and, if so, the penalty that should be imposed against Respondent's license.
Findings Of Fact The Parties At all times relevant, Respondent was licensed by Petitioner as an annuity, health, and life insurance agent in Florida. Petitioner is the state agency charged with licensing and regulating insurance agents and taking disciplinary action for violations of the laws and rules it administers. Background Annuities This case arises from Respondent's sale of an Allianz Life Insurance of North America equity indexed annuity ("Allianz annuity") to Robert and Frances Wexler in June 2004. An annuity is a contractual arrangement under which an insurance company, in exchange for a premium, agrees to pay the owner a specified income for a period of time. Annuities generally are classified as "fixed" or "variable." Under a fixed annuity, the benefit is paid according to a predetermined interest rate. Under a variable annuity, the premium is invested on the owner's behalf, and the amount of the benefit, when paid, reflects the performance of that investment. Fixed annuities can be either "immediate" or "deferred." Under an immediate fixed annuity, the insurer begins paying the benefit upon purchase of the annuity. Under a deferred annuity, the premium is allowed to grow over time until the contract "matures" or is "annuitized" and the insurer begins paying the benefit. The Allianz annuity that Respondent sold to the Wexlers is a fixed deferred annuity. The Allianz annuity at issue also is an equity index annuity. This means that the insurer pays a benefit to the insured based on a premium that earns interest at a rate determined by the performance of a designated market index. The premium is not invested in the market for the owner's account; rather, the interest rate rises or falls in relation to the index's performance, within predetermined limits. Equity index annuities typically are long-term investments. Owners of equity index annuities have limited access to the funds invested and accumulating in their accounts, although some equity index annuities, such as the Allianz annuity at issue in this case, permit yearly penalty-free withdrawals at set percentages. The accrued interest generally is not taxed until the funds are withdrawn or the benefit is paid under annuity. The purchaser may incur substantial surrender charges for canceling the contract and withdrawing his or her funds before a specified date. Some equity index annuities identify a date——often many years in the future——on which the insurer will "annuitize" the contract if the purchaser has not already opted to do so. This date is sometimes called the "maturity date." The benefit payable under the annuity is determined based on the account's value as of the maturity date, and the payments to the owner of the annuity begin at that time. The Wexlers Robert Wexler was born in 1930. He was 73 years old in 2004, when Respondent sold him the Allianz annuity at issue in this case. His wife, Frances Wexler, was born in 1932, and she was 71 years old at the time. Both Wexlers finished high school and took some college courses. They married after Mr. Wexler joined the Air Force. While in the Air Force, Mr. Wexler studied electronics, which ultimately led to his career in that field in the private sector. He worked for IBM, Univac, and General Electric before retiring in 1994. Mrs. Wexler worked for a small family-owned printing firm for over 26 years, and retired in 1997. The Wexlers raised three children, and they lived in the same home in Pennsylvania for 40 years. While living in Pennsylvania, the Wexlers saved money by using Mrs. Wexler's salary to pay their living expenses and saving most of Mr. Wexler's earnings in a retirement account. They never bought annuities, but did trade stocks, which resulted in financial loss. For many years, the Wexlers visited Florida as "snowbirds" and eventually purchased a condominium in a gated community in Deerfield Beach, Florida. In 1998, the Wexlers sold their home in Pennsylvania, liquidated the stocks they owned, and bought a larger condominium in the same gated community. They moved permanently to Florida in 1998, with approximately $500,000 in liquid assets. The 2002 Aviva Annuity Respondent met the Wexlers in 2002, when he worked for the Cornerstone Financial Group ("Cornerstone"). Cornerstone had mailed out cards to persons 65 years old and older and the Wexlers sent in a reply card with boxes checked indicating interest in learning about Cornerstone's products. Based on that contact, Respondent arranged an in-home appointment with the Wexlers. At that time, the Wexlers informed Respondent that they had three financial investment goals: safety of their invested principal; long-term growth of their investment; and at some point years in the future, having a fixed income stream for the rest of their lives. The Wexlers consider themselves "conservative" financial investors, and they live off of their monthly social security and retirement pension checks. Being able to take money out of an annuity to cover routine living expenses was not a high priority for the Wexlers. They were more interested in leaving their investment alone and allowing it to grow, and they communicated this information to Respondent. Based on this information, Respondent sold the Wexlers an Aviva3/ equity index annuity. The Wexlers paid a $60,000.00 premium. The annuity was issued on June 11, 2002, and had a maturity date of June 11, 2031. The policy allowed partial withdrawal beginning immediately, without charge, of up to ten percent of the value of the account on the prior certificate anniversary date. If the insured withdrew more than that amount, a withdrawal charge was assessed, with the amount4/ of the withdrawal charge decreasing over a ten-year period, so that starting in year 11, there was no withdrawal charge. Pursuant to this withdrawal charge schedule, if the Wexlers withdrew all of their money from the policy——in effect, "surrendering" the policy——before the ten-year withdrawal charge period had expired, they would be assessed charges according to the withdrawal charge schedule. Under such circumstances, withdrawal charges are referred to as "surrender charges." The Aviva policy allocated the premium to three investment strategies. Specifically, 50% was allocated to the Annual Equity Index Strategy ("AEIS"), which is the Standard & Poors (S&P) 500 index excluding dividend income. The AES investment strategy had a minimum guaranteed interest rate of zero percent. The remaining 50% of the premium was invested equally in the Investment Grade Bond Index Strategy (IGBIS") and the Guaranteed One-Year Strategy ("GOS"). The IGBIS strategy was tied to the Lehman Brothers Aggregate Index, and, at the time, had a minimum guaranteed interest rate of two percent per year. The GOS investment strategy had a four percent per year current interest rate and a two percent minimum guaranteed interest rate per year. No evidence was presented about how the Aviva policy would have performed to date had the Wexlers not surrendered the policy. The 2004 Allianz Annuity In June 2004, Respondent paid the Wexlers another visit. At that time, Respondent was with Global Financial Group and was marketing different products. Respondent met with the Wexlers to discuss an Allianz annuity that, in his view, had "better" features than the Aviva annuity he sold them two years earlier. The evidence establishes that Respondent spent at least an hour or more reviewing the Allianz annuity with the Wexlers. In Mr. Wexler's own words, Respondent spent time "explain[ing] it, patiently talking about it." Mr. Wexler nonetheless claimed5/ at hearing that Respondent did not provide a comparison of the Alliance and Aviva policies. Respondent testified that he did provide such a comparison, and the undersigned finds his testimony more persuasive. Mr. Wexler testified that Respondent told them that surrendering their Aviva annuity and moving their funds into the Allianz annuity would cause them to incur a substantial surrender charge,6/ but that they would recoup the charge through a bonus provided by the Allianz annuity. Respondent credibly testified that he told the Wexlers that the bonus would be available if they annuitized the policy. Mr. Wexler did not recall Respondent discussing the specifics of annuitizing the Allianz policy with him, and Respondent confirmed that he did not extensively discuss annuitization with the Wexlers. This was because Mr. Wexler told Respondent that they had liquid assets and were not interested in immediately generating an income stream from the annuity, but instead were interested in leaving their investment alone to grow over time. Using information provided by Mr. Wexler, Respondent filled out paperwork, consisting of the Application for Annuity and Authorization to Transfer Funds, required for the Wexlers to surrender their Aviva annuity and purchase the Allianz annuity. According to Mr. Wexler, Respondent selected the type of product (here, the 10% Bonus PowerDex Elite Annuity) on the Application for Annuity form, and also selected the percentage of funds to be allocated into specific investment strategies on a Supplemental Application form. Respondent testified that he always fills out the forms for his clients, and he credibly testified that he reviewed the selected strategies with the Wexlers. Mr. Wexler executed the "Agreements and Signatures" section of the Application for Annuity.7/ This section states in pertinent part: It is agreed that: (1) All statements and answers given above are true and complete to the best of my knowledge; . . . (5) I understand that I may return my policy within the free look period (shown of the first page of my policy) if I am dissatisfied for any reason; and (6) I believe this annuity is suitable for my financial goals. Respondent provided the Wexlers with a copy of a Statement of Understanding regarding the Allianz annuity. This document explained the key aspects of the annuity in substantial detail. Mr. Wexler executed the Statement of Understanding, confirming that he received a copy of that document, and that he reviewed and understood key aspects of the annuity. The document states in pertinent part: I received a copy of this Statement of Understanding. The agent has answered my questions. I have also reviewed the 10% Bonus PowerDex Elite Annuity consumer brochure. I understand that any values shown, other than the Guaranteed Minimum Values, are not guarantees, promises, or warranties. I understand that I may return my policy within the free look period (shown on the first page of the policy) if I am dissatisfied for any reason. The Wexlers paid a premium of $58,125.01 for the Allianz annuity, and invested an additional $8000.00, for a total investment of $66,125.01. As a result of surrendering the Aviva policy to purchase the Allianz annuity, they incurred a surrender charge of $5,726.89. The Allianz annuity, Policy No. 70097189, was issued on July 16, 2004. Once the Allianz annuity was issued, Respondent delivered it to the Wexlers and reviewed it with them. Respondent again informed the Wexlers of the 20-day free look period during which they could return the annuity and obtain a full refund of the premium. Mr. Wexler did not read the annuity and "stashed it away." The Allianz annuity had been approved by Petitioner for sale to investors, including senior investors, when Respondent sold the annuity to the Wexlers in 2004. Respondent credibly testified that Mr. Wexler did not tell him that he had purchased annuities from other agents, and Mr. Wexler could not clearly recall8/ whether he had provided Respondent information regarding his other annuities purchases. Respondent earned a commission of $6,281.92 on the sale of the Allianz annuity to the Wexlers. Comparison of the Aviva and Allianz Annuities The parties agree that annuities are intended to be long-term investments. Beyond that, there is substantial disagreement regarding whether the Allianz annuity was, in reality, a "better" investment than the Aviva annuity for the Wexlers. Respondent maintained that the Allianz policy had several advantages over the Aviva policy. Petitioner asserts that the Allianz annuity either had some substantial disadvantages, or, at best, did not offer any significant advantages over the Aviva policy. Respondent testified that a key reason for introducing the Allianz policy to the Wexlers was that it had a higher index-tied earnings cap than the Aviva policy, so it could earn more than the Aviva policy. Petitioner asserts, and a review of the policies confirms, that the Aviva policy had a higher cap rate——specifically, 15% for the first year with a 10% minimum guaranteed index cap rate thereafter for the Aviva policy, as compared to 12% for the first year, with a guaranteed five percent minimum thereafter for the Allianz policy. Thus, the Aviva policy provides greater potential for index-tied earnings than the Allianz policy. The evidence shows that Respondent provided the Wexlers inaccurate information on this policy term. Respondent maintained that the Allianz annuity had a 100% participation rate, as compared to only a 60% participation rate for the Aviva policy, so that under the Allianz policy, the Wexlers would keep 100% of any gains due to increases in the S&P Index, whereas under the Aviva policy, they would keep only 60% of those gains. Petitioner disputes that the Aviva policy contained a limit on participation rate. A review of the policies shows that they both state a 100% participation rate in the selected investment indices; however, under the Aviva policy, there is a "certificate charge" that is deducted when calculating the owner's index earnings. Whether this deduction is expressed as a "lower participation rate" or considered a "fee," the fact remains that under the Aviva policy, the owner got to keep less money from his or her index investment. Accordingly, it is determined that Respondent accurately informed the Wexlers on this point. Respondent claimed, and apparently communicated to the Wexlers, that there was no risk in the Allianz investment, because gains resulting from the investment allocation indices were locked in so the Wexlers would never lose their invested principal or any gains they realized on the investment indices. Petitioner, on the other hand, asserted that the Allianz policy embodied substantial risk because negative index adjustments were deducted from the policy's current value. Although Petitioner is correct regarding the policy's current value, Respondent is correct regarding the effect of negative index performance on the annuity's high water value. The policy's annuitization value is the greater of these two values, so the high water value is likely more important for investors like the Wexlers, who wish to leave their investment alone rather than annuitize in the short term. Although the Wexlers' investment value under the Allianz annuity may have declined in years 2008 and 2009 due to poor S&P Index performance (which also would have affected the value of the Aviva policy, had the Wexlers still owned it), the annuitization value of the policy was not negatively affected by the poor performance of that index. In light of Respondent's understanding of the Wexlers' investment goals, his representations on this point were reasonable and not materially inaccurate. The Allianz policy provided a ten percent bonus for money invested for the first five years, and the bonus was accessible if either the policyholder annuitized the policy or as a death benefit to the policy's beneficiary. By contrast, the Aviva policy offered no bonuses after the first year. Petitioner characterizes the Allianz bonus as an "ephemeral" feature because of the limits on its availability. However, the credible evidence establishes that Respondent informed the Wexlers about these limitations, and that they were aware of them when they purchased the annuity. Under the Aviva policy, the Wexlers could annuitize at any time before the policy's maturity date. Under the Allianz policy they could only annuitize after five years, could not withdraw more than 5% of the account value of the annuity on an annual basis, and could not withdraw more than 25% of the account value over the life of the annuity. Notwithstanding, the credible evidence establishes that Respondent told the Wexlers about the annuitization limits of the Allianz policy, and they were aware of these limitations when they purchased the policy. Both policies imposed surrender charges for withdrawal of funds before the maturity date. Under the Aviva policy, withdrawal charges applied during the first ten years; under the Allianz policy, surrender charges could be incurred for the lifetime of the policy pursuant to a formula and terms established in the policy. This information is clearly stated in the policy's contract summary, and Respondent credibly testified that he fully reviewed the annuity with the Wexlers before he sold it to them, and again when he delivered it to them after issuance. Both annuities had death benefit features. The Allianz annuity provided that if the owner died, the accumulation value9/ would be paid to the beneficiary over a five-year period. The Aviva annuity provided that if the annuitant was less than 75 years old on the contract date, the death benefit would be the greater of the account value or the guaranteed account value.10/ On balance, the policies' death benefits features were similar, and there is no persuasive evidence that Respondent touted the Allianz annuity as having a superior death benefit to induce the Wexlers to purchase the annuity. The Allianz annuity featured a nursing home benefit that allowed withdrawal of the policy's full annuitization value over a five-year period if the insured was admitted to a nursing home for 30 or more days. However, the Wexlers already had insurance coverage providing assisted living benefits. Respondent acknowledged that the Allianz policy nursing home benefit was of relatively little value to the Wexlers. The evidence is insufficient to prove that Respondent represented this feature as a substantial advantage in inducing the Wexlers to purchase the Allianz annuity. Ultimate Findings of Fact Regarding Alleged Statutory and Rule Violations For the reasons explained in detail below, the undersigned determines, as a matter of ultimate fact, that Petitioner did not show, by clear and convincing evidence, that Respondent violated section 626.611(5), (7), (9), or (13); 626.9541(1)(a)1, (1)(e)1, or (1)(l); or 626.621(6); or rules 69B-215.210 or 69B-215.230.11 Alleged Violations of Section 627.611 Section 626.611 sets forth violations for which suspension or revocation of an insurance agent's license is mandatory. Petitioner has charged Respondent with violating sections 626.611(5), (7), (9), and (13). These offenses require a finding that the licensee had intent to commit the act constituting the offense. See Beckett v. Dep't of Fin. Servs., 982 So. 2d 94, 99 (Fla. 1st DCA 2008); see also Bowling v. Dep't of Ins., 394 So. 2d 165 (Fla. 1st DCA 1981). Here, the evidence does not clearly and convincingly show intent on Respondent's part with respect to any of the alleged violations of section 627.611. Although Respondent provided inaccurate information to the Wexlers on a material term——the comparative index earnings caps, which affect how much the Wexlers could earn through the policies' investment strategies——the evidence does not establish that Respondent intentionally misinformed the Wexlers on this policy term. To that point, Respondent accurately represented all other material terms of the Allianz policy to the Wexlers. The undersigned finds this probative in determining that Respondent's misstatement was made unintentionally, rather than willfully or knowingly. See Munch v. Dep't of Bus. and Prof'l Reg., 592 So. 2d 1136, 1143-44 (Fla. 1st DCA 2008)(to find an offense of "misrepresentation," an intentional act must be proven). Section 626.611(5) makes the willful misrepresentation of any insurance policy or annuity contract or the willful deception with regard to any such policy or contract a ground for suspending or revoking an agent's license. Petitioner did not prove that Respondent willfully misrepresented any aspect of the Allianz or Aviva policies to the Wexlers or willfully deceived them regarding the policies. Respondent credibly testified that he reviewed the key terms of the Allianz policy with the Wexlers, and there is no persuasive evidence in the record to the contrary. Although Respondent did inaccurately represent the Allianz policy as having greater index-tied earnings potential than the Aviva policy, the evidence does not clearly and convincingly establish that Respondent willfully misrepresented this information to the Wexlers, or willfully deceived them, to induce them to purchase the policy. Accordingly, Petitioner did not prove, by clear and convincing evidence, that Respondent violated section 626.611(5). Section 626.611(7) makes the demonstrated lack of fitness or trustworthiness to engage in the business of insurance a ground for suspending or revoking an agent's license. Again, a finding of intent on the licensee's part is required to find a violation of this subsection. The evidence does not clearly and convincingly establish that Respondent intended to provide incorrect, misleading, deceptive, or fraudulent information to the Wexlers to induce them to purchase the Allianz policy. As such, Petitioner failed to prove, by clear and convincing evidence, a demonstrated lack of fitness or untrustworthiness on Respondent's part to engage in the business of insurance, in violation of section 626.611(7). Section 626.611(9) makes fraudulent or dishonest practices in conducting business under an insurance agent license grounds for suspension or revocation of the license. As previously discussed, although Respondent provided incorrect information to the Wexlers regarding the comparative investment strategy caps for the Allianz and Aviva annuities, the evidence does not clearly and convincingly establish that Respondent intended to do so. Accordingly, Petitioner failed to prove, by clear and convincing evidence, that Respondent violated section 626.611(9) by engaging in fraudulent or dishonest practices in the sale of the Allianz policy to the Wexlers. Section 626.611(13) provides that willful failure to comply with, or willful violation of, Petitioner's orders or rules, or any willful violation of any provision of the Florida Insurance Code constitutes a basis for suspending or revoking an insurance agent license. Again, Petitioner failed to prove, by clear and convincing evidence, that Respondent willfully violated its rules or orders, or willfully violated the Florida Insurance Code, in connection with the sale of the Allianz annuity to the Wexlers. Although Respondent did provide incorrect information on a key term——the comparative investment strategy caps, which affected the annuities' comparative earnings potential——the persuasive evidence in the record does not support a finding that Respondent willfully did so. Thus, Petitioner failed to prove, by clear and convincing evidence, that Respondent violated section 626.611(13). Alleged Violations of Section 626.9541 Section 626.9541 is entitled "unfair methods of competition and unfair or deceptive acts or practices defined." This statute defines the types of acts that constitute unfair methods of competition and unfair or deceptive acts or practices in the insurance industry, but it does not independently authorize disciplinary action. Werner v. Dep't of Ins., 689 So. 1211, 1214 (Fla. 1st DCA 1997). Petitioner has charged Respondent with engaging in acts set forth in section 626.9541(1)(a)1., specifically, that he knowingly made, issued, circulated, or caused to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which misrepresents provides that making any estimate, statement, sales presentation, omission, or comparison which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. As discussed above, the evidence does not clearly and convincingly establish that Respondent knowingly engaged in any of these acts. Thus, Petitioner did not prove, by clear and convincing evidence, that Respondent engaged in unfair methods of competition or unfair or deceptive acts as provided in section 626.9541(1)(a)1. Petitioner also charged Respondent with engaging in acts defined in section 626.9541(1)(e)1. This section requires, as a predicate for the imposition of discipline, a finding that the licensee knowingly made false material statements through a variety of actions described in that provision. Again, the evidence does not establish that Respondent knowingly engaged in any of these acts. Accordingly, Petitioner did not prove, by clear and convincing evidence, that Respondent engaged in unfair methods of competition or unfair or deceptive acts as provided in section 626.9541(1)(e)1. Petitioner has charged Respondent with "twisting," which is defined in section 626.9541(1)(l) as knowingly making any misleading representation or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies for the purposes of inducing, or tending to induce, any person to surrender, terminate, or convert any insurance policy or to take out a policy of insurance in another insurer. Again, there is no persuasive evidence that Respondent knowingly committed any of the acts described in this statute. Thus, Petitioner did not prove, by clear and convincing evidence, that Respondent engaged in twisting under section 626.9541(1)(1), Florida Statutes. Alleged Violation of Section 626.621 Section 626.621 sets forth violations for which suspension or revocation of an insurance agent's license is discretionary.12/ Petitioner has charged Respondent with violating section 626.621(6) by engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited by part IX of chapter 626, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest. For the reasons previously discussed, the evidence does not clearly and convincingly establish that Respondent engaged in any actions that could be considered unfair methods of competition or deceptive acts or practices under chapter 626, part IX. Accordingly, Petitioner has not shown, by clear and convincing evidence, that Respondent engaged in acts under section 626.621(6) that justify the suspension or revocation of his insurance agent's license. Alleged Violations of Agency Rules Petitioner charged Respondent with violating rule 69B- 215.210. This rule provides that the business of life insurance13/ is a public trust in which all agents of all companies have an obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws governing life insurance by letter and in spirit by presenting accurately and completely every fact essential to a client's decision, and by being fair in all relations with colleagues and competitors and always placing the policyholder's interests first. The rule implements section 626.797, entitled "code of ethics," which directs Petitioner to adopt a code of ethics to "govern the conduct of life agents in their relations with the public, other agents, and the insurers," and to establish standards of conduct to avoid the commission of acts that would constitute grounds for suspension or revocation under sections 626.611, 626.621, and unfair trade practices and unfair methods of competition under chapter 626, part IX. The rule must be interpreted and applied consistent with the law it is implementing. As previously discussed, the violations of sections 626.611, 626.621, and 626.9541 with which Respondent was charged all require that he have intent to commit the act constituting the violation. The persuasive evidence does not establish that Respondent had the requisite intent necessary to find a violation of rule 69B-215.210.14/ Petitioner also charged Respondent with violating rule 69B-215.230. Rule 69B-215.230(1) makes unethical the misrepresentation of the terms of any policy issued or to be issued or the benefits or advantages promised by that policy. This rule implements sections 626.797 and 626.9541(1)(a) and (b), violations of which require a showing or willful or knowing misrepresentation. Further, "misrepresentation" requires that an intentional act be proven for a violation to be found. See Walker v. Dep't. of Bus. and Prof'l Reg., 705 So. 2d 652, 654 (Fla. 5th DCA 1998). As previously discussed, the evidence does not clearly and convincingly establish that Respondent knowingly or willfully provided incorrect information or misstatements to the Wexlers regarding the Allianz policy. Accordingly, Petitioner has not shown, by clear and convincing evidence, that Respondent violated Rule 69B-230.210(1).15/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services dismiss the Administrative Complaint against Respondent. DONE AND ENTERED this 15th day of June, 2012, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS 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 15th day of June, 2012.
