The Issue Whether the School Board of Broward County's decision to award the contract in response to Request for Proposals, No. 210139V, for Group Medical Benefits, to Humana, Inc., Humana Medical Plan, Inc., and Humana Health Insurance Company of Florida, Inc. (collectively called "Humana") is contrary to the agency's governing statutes, the agency's rules or policies, or the request for proposal specifications.
Findings Of Fact The Procurement The procurement at issue is for group employee medical insurance benefits for SBBC employees and their dependents. As one of its employee benefits, the SBBC provides health care insurance to approximately 26,000 employees. Generally, an employee must pay five percent of the premium if he or she is enrolled in a plan, other than a health maintenance organization plan, whose premium cost exceeds $212 per month. The employees can also purchase coverage for their eligible dependents. On July 10, 2000, the SBBC issued RFP No. 21-139V entitled "Group Medical Benefits for School Board Employees" (the "RFP"). On July 31, 2000, the SBBC released Addendum Number One to the RFP that consisted of written responses to proposers' questions and minor changes to the RFP. Proposers were permitted to offer any or all of three healthcare delivery models or any combination of the three: a health maintenance organization ("HMO") model; a point of services ("POS") model; and a preferred provider organization ("PPO") model. SBBC reserved the right to contract for one or more models independently or contract for multiple models from the same proposer. SBBC received proposals from seven companies, including Humana, AvMed, HIP Health Plan of Florida, Inc. ("HIP"), and United Healthcare of Florida ("United"), on August 18, 2000, as scheduled by the RFP. The School Board evaluated the proposals through the Superintendent's Insurance Advisory Committee (the "Insurance Committee"), who then made a recommendation to the Superintendent, who in turn made a recommendation to the School Board. Prior to the issuance of this RFP, during the year 2000, health care coverage was provided to employees of SBBC through contracts with HIP and with Foundation Health, a Florida Health Plan ("Foundation"). Those contracts, at guaranteed premium rates, were to remain in effect through December 31, 2001. Due to enduring problems with HIP and Foundation, the School Board became concerned that both companies may be unable to continue to perform under their contract. In the course of communication with SBBC during 2000, Foundation requested to be released from further obligations as of December 31, 2000, under its existing contract awarded June 15, 1999, under the previously issued RFP No. 99-100E. The open enrollment period for 2001 health plan election by SBBC employees was scheduled for October 30, 2000. While HIP participated in the open enrollment process whereby SBBC employees could select their health care plans, Foundation did not participate. SBBC filed a lawsuit against Foundation on October 23, 2000, for relief including breach of contract. In June 2000, HIP was declared "impaired" by the Florida Department of Insurance ("DOI") and ceased the enrollment of new members as required for impaired insurers. DOI placed HIP under "administrative supervision" pending a sale or liquidation of the company. In a letter dated September 6, 2000, DOI notified SBBC that HIP’s enrollment of new members was suspended pending an acquisition or cash infusion to cure the financial deficit. Shortly thereafter, in a letter dated October 18, 2000, DOI notified SBBC that HIP had been acquired by a new owner, was free of the restrictions noted in the September 6, 2000, letter, and permitted to enroll new members. HIP participated in the employee enrollment for the 2001 calendar year. Issuance of RFP No. 21-139V In light of the circumstances surrounding its incumbent vendors for group medical benefits, SBBC decided to issue a new RFP for new contracts providing group medical benefits for SBBC employees and dependents. On July 10, 2000, SBBC released RFP No. 21-139V entitled "Group Medical Benefits for School Board Employees." RFP Content Article 1, entitled "Required Response Form," requested general information about each proposer seeking to bid. Article 2.0 of the RFP entitled "Introduction" authorized proposers to quote any or all of three delivery models (HMO, POS, and PPO) for the employees and retiree groups and reserved the right for SBBC to award additional points to proposers who quoted all three delivery models. It also authorized SBBC to "contract for one or more models independently or to contract for multiple models from the same vendor." Article 2.0 of the RFP further stated that "Proposers must bid on the Current Plan Designs" and referred proposers to the then existing HIP certificates of coverage contained in Attachment G of the RFP. Proposers were invited to include one alternate plan for each delivery model quoted and referred proposers to a skeletal framework for such models contained in Attachment N of the RFP. Article 3, entitled "General Conditions," provided the RFP's deadlines and conditions. Section 3.7 indicated that "In a competitive procurement process no submissions made after the proposal opening, amending or supplementing the proposal shall be considered." However, Section 3.8 specifically authorized the Evaluation Committee and/or SBBC to "waive irregularities or technicalities in proposals received." Article 4 and Article 5 did not appear in the RFP at issue. Article 6, entitled "Interpretations," referred proposers who had questions to the SBBC purchasing department. Article 7 of the RFP was clearly marked as "Minimum Eligibility Criteria." In past RFP's, SBBC included extensive minimum eligibility criteria for proposers seeking to bid. In the RFP at issue, SBBC minimized the criteria to encourage competing proposals and to afford flexibility to SBBC in solving its immediate employee health care needs. Accordingly, Article 7 set forth only one minimum eligibility criterion. It stated: In order to be considered eligible for this assignment, proposer shall meet or exceed the following criteria: The proposer shall be licensed in good standing in the State of Florida to conduct health insurance business, and/or be a non- profit health care corporation licensed to transact business in Florida. All proposals which complied with Article 7 were considered by the agency. Any deviations in the proposals were contemplated by the Insurance Committee and considered in scoring the proposals. Article 8 of the RFP, entitled "Information to be included in the submitted proposal," requested applicants to organize their proposals in the specified manner. Subsections of Article 8 requested a Title Page (8.1), Table of Contents (8.2), Letter of Transmittal (8.3), Response Form (8.4), Notice Provision (8.5), and an Addenda Letter (8.6). Additional subsections in Article 8 of the RFP requested applicants to provide validation of their minimum eligibility (8.7), responses to the Attachment E questionnaire for each proposed plan (8.8), records of their experience and qualifications (8.9), a detailed plan for providing SBBC's requested scope of services (8.10), and a cost proposal for each plan (8.11). Noteworthy, Subsection 8.10.9 of Section 8.10 provided the applicant with proposed "assumptions/requirements" that "should be considered" when preparing a response to the RFP. For each proposed assumption listed in Subsection 8.10.9, three separate response columns were provided bearing the headings "Yes, Can Comply"; "Yes, Can comply but with deviations"; and "No, Cannot comply." For example, included within Subsection 8.10.9’s list of proposed assumptions to be considered by the applicant was the following: Variations in actual enrollment shall have no effect on your rate quotation. Your proposal shall be valid regardless of the actual enrollment mix, number of proposers, number of plan designs or outcome. By providing three separate response columns in the RFP, SBBC clearly invited a range of responses from proposers that would permit a proposal to differ from the proposed "assumptions/requirements." Although Section 8.11 of the RFP stated, in part, that "[n]o conditions or qualifications (e.g. participation requirement) to the quoted rates are acceptable," only Section 8.7 specifically addressed the disqualification of a proposal. Section 8.7, entitled "Minimum Eligibility" clearly restated that the "Proposer shall validate each criteria stated in Section 7 as required in said Section. Failure to comply with the requirements of Section 7 will disqualify the proposal from further consideration." Disqualification arose not for non- compliance with an Article 8 component, but rather for a failure to satisfy the minimum eligibility criteria contained in Article 7. Section 8.10 of the RFP entitled "Scope of Services Provided," requested an explanation of the proposed plan. Specifically, it stated: The following services are requested by SBBC in the provision of group medical coverage to its employees and retirees (including KID’s programs). Clearly describe how the proposer can accomplish each of the following Scope of Services provided below. . . . Moreover, Article 9 of the RFP, entitled "Evaluation of Proposals," clearly reserved to the Insurance Committee "the right to short list the proposers, interview them, and negotiate any term, condition, specification or price with the selected proposer(s)." The wide latitude of discretion plainly conferred upon the Insurance Committee by this provision is consistent with the minimum eligibility criteria contained in Article 7 and with the reservation of the right in Article 2 to contract for one or more models independently or contract for multiple models from the same vendor(s). Article 10 of the RFP, entitled "Special Conditions" detailed general conditions of the RFP. Specifically, Section 10.37 of the RFP, entitled "Acceptance and Rejection of Proposals," provided that a proposal "may be rejected if it does not conform to the rules or requirements contained in this RFP." This section listed permissive grounds for possible RFP rejection including conditional proposals and instances in which the "proposer adds provisions reserving the right to accept or reject an award or to enter into a contract pursuant to an award or adds provisions contrary to those in the RFP." Finally, Article 11 of the RFP, entitled "Requirements of Agreement," clearly and separately identified a list of "provisions that are not subject to negotiation." There is no evidence in the record that any proposer included provisions in its proposal which conflicted with Article 11. Issuance of Addendum Number One Shortly after SBBC released the RFP, at least two proposers sought clarification of Subsection 10.37.6. On July 31, 2000, SBBC released Addendum Number One to the RFP which responded to proposers’ questions and made minor changes to the RFP. In the Addendum, SBBC addressed the following question: "Is SBBC stating in this section that ANY deviations from the Proposer, in response to RFP 21-139V, will result in the Proposer’s automatic rejection from this bid process? Please clarify." In response, the SBBC stated: There are provisions in this RFP which provide proposers the opportunity to submit an additional plan design for each delivery model quoted. See Section 2.0. However, a proposer who adds provisions to its proposals reserving the right to accept or reject an award, reserving the right to enter into a contract pursuant to an award, or add[s] provisions in its proposal which are contrary to the wording in the RFP, as amended, would have its proposal rejected. The Proposals On August 18, 2000, proposals were submitted to SBBC’s Purchasing Department. SBBC received proposals from the following seven (7) proposers: AvMed; Beacon Health Plans, Inc. ("Beacon"); HIP; Humana; The Maxon Company ("Maxon"), UniPsych Corp. (UniPsych"); and United Healthcare of Florida ("United"). The Humana Proposal In its proposal, Humana responded "Please see comments on rate pages (Attachment D)" under the "No, Cannot comply" column in response to the proposed "assumption/requirement" in Subsection 8.10.9 of the RFP that "variations in actual enrollment shall have no effect on your rate quotation. Your proposal shall be valid regardless of the final enrollment mix, number of proposers, number of plan designs or outcome." Humana’s response to this portion of the RFP was identified to the Insurance Committee as a deviation from the RFP and was considered when scoring the proposals. The Financial Response Forms contained in Attachment D of Humana’s proposal for HMO, POS, PPO and modified PPO health products that were referenced in its response to Subsection 8.10.9 stated as follows: The following contingencies apply: Rates and benefits are contingent upon a minimum of 10,000 employees enrolled in Humana plans. Proposed rates and benefits assume a maximum of two carriers. The competing carrier must have similar benefits, covered services, and plan types. SBBC’s incentive strategy must be such that the amount the employee is required to contribute to the Humana plan shall be equal to or less than the employee’s contribution toward the competitor’s plan. These provisions were actuarial assumptions reasonably used by Humana to price the benefits proposed to SBBC. Humana’s response to this portion of the RFP was identified to the Insurance Committee as a deviation from the RFP and considered when scoring the proposals. In response to Subsection 8.10.9 of the RFP, Humana also responded to the proposed "assumptions/requirements" that "[a]ctively-at-work provisions shall be waived for all participants" and that "[t]here shall be no exclusion provisions for pre-existing conditions, except for late entrants" by stating under the heading, "Yes, Can comply but with deviations" that it will waive those terms "if Humana is offered as full replacement." Humana’s response to these portions of the RFP was identified to the Insurance Committee as deviations from the RFP and considered when scoring the proposals. In its formal written protest, AvMed, in part, contests the portion of Humana’s proposal that states "[p]erformance guarantees will apply only if a minimum of 10,000 employees enroll in Humana plans." This response is consistent with the compliance matrix in Subsection 8.10.9 and with Section 10.42 of the RFP which stated that "SBBC may negotiate performance standards and performance guarantees with the selected proposer(s)." In addition, the performance standards guarantees, contained in Attachment K of the RFP, invited proposers to "[p]lease review the outlined proposed performance standards and liquidated damages." Although Humana labeled each plan design it proposed as an "alternate plan," it clearly sought to closely match them with the current HIP certificates of coverage contained in Attachment G of the RFP. While structured differently, Humana’s HMO (Alternative Plan 1) generally matched the benefits contained in the current HIP HMO certificate of coverage with minor variances in certain benefits. Humana offered slightly modified benefits by eliminating a $300 hearing aid benefit, requiring a co-payment of $10 for maternity office visits, providing a three-tier structure for retail and mail order prescriptions, slightly increasing the out-of-pocket maximums, and eliminating a benefit for mildly ill child care services. Humana however, offered enhanced benefits by including coverage for non-formulary retail and mail order prescriptions, and abolishing the limit on days/visits for physical, speech and occupational therapies, as well as home health care visits, and infertility treatment. The proposed modifications were considered by the Insurance Committee. Similarly, Humana’s proposed POS (Alternative Plan 1) generally matched the benefits contained in the current HIP POS certificate of coverage with minor differences. Humana offered modified benefits by omitting a $300 hearing aid benefit, using a three-tier structure for retail and mail order prescriptions, reducing visits for in-network mental health outpatient services, increasing the co-payment for in-network inpatient substance abuse, omitting coverage for in-network infertility treatment, increasing the co-payment for non-surgical spine and back treatment and limiting visits per year for the same, placing a maximum on benefits for in-network and out-of-network hospice care, and placing a $5 million limit on lifetime benefits. On the other hand, Humana offered enhanced benefits by eliminating limitations for in-network or out-of-network rehabilitation visits, providing coverage of out-of-network ambulance care, increasing covered days for skilled nursing facilities, increasing visits for home health care and omitting co-payments for in-network care and increasing covered visits and omitting benefit limits for out-of-network care, and increasing the out-of-network lifetime benefits limit. Humana’s HMO and POS proposals also offered networks of acute care hospitals, primary care physicians, and specialty physicians, that were far superior to other proposals. Humana's proposals were thoroughly considered by the Insurance Committee during the evaluation process. Moreover, due to past problems with the SBBC incumbent providers, a financial rating report of the proposers was given to the Insurance Committee. Humana was reported to have an AM Best rating of "A- (excellent)." Ratings of B+ and above represent those companies that are considered secure in their ability to meet their ongoing obligations to members. The AvMed Proposal The AvMed proposal also contained health care delivery products corresponding to the Current Plan Designs contained in Attachment N of the RFP. However, their proposal failed to closely match the current HIP certificates of coverage contained in Attachment G of the RFP. The HMO product offered to SBBC by AvMed differed from the HIP model of coverage, at minimum, in the following respects: Current Benefit Description Certificate AvMed Proposal Maternity outpatient visits No co-payment Per visit $10 co-payment per visit Family Planning – sterilization $10 co-payment (office visit) $50 co-payment (hospital) $100 co-payment Physical, Speech and Occupational Therapy No co-payment 60 days from 1st day of treatment for acute $10 co-payment 24 days per condition Skilled Nursing Facility No co-payment 30 days/ $25 co-payment per day, up to calendar year; 100 days/ lifetime 20 days/ contract year Second Medical Opinion from No co-payment $10 co-payment a participating provider per visit Testing for Learning $200 co-payment No Benefits Disabilities for children 5 years and older Second Medical Opinion from 40% of No Benefits a Non-participating charges provider within the service area Durable Medical Equipment No co-payment $50 co-payment $5,000 annual $500 annual limit limit Mildly Ill Child Care $10 co-payment No Benefits Services (a qualified Limited to 3 participating provider days per arranged by carrier to calendar year per care for a sick child family coverage (up to age 12) during subscriber normal business hours Infertility Treatment No co-payment No Benefits (ncludes testing, counseling, $6,000 max per artificial insemination, lifetime in-vitro fertilization and injectable drugs) Prescription Drugs – $3 = 90 day $9 = 90 day Mail Order supply supply AvMed's proposed differences in benefits were identified and evaluated by the Insurance Committee during the evaluation of proposals. Moreover, the POS product proposed by AvMed as corresponding to the Current Plan Design differed in the following respects: Benefit Description Current Certificate AvMed Proposal Family Planning – Sterilization (in network) $10 co-payment (office) $200 co-payment (hospital) $10 co-payment per visit Family Planning – sterilization (out-of-network) $10 co-payment (office) $200 co-payment No Benefits (hospital) Physical, Speech and Occupational Therapy visits (in-network) No co-payment 20 visits per condition 80 visits per year $10 co-payment 24 (in-network) condition Skilled Nursing Facility (in-network) No co-payment up to 30 days calendar year $25 co-payment per day, up to 20 days/ contract year Second Medical Opinion from a participating provider No co-payment $10 co-payment Second Medical Opinion from non-participating provider within Service area a No co-payment No Benefits Testing for Learning Disabilities for children 5 years and older No co-payment No Benefits Durable Medical Equipment (in-network) No co-payment $5,000 annual Limit $50 co-payment $500 annual limit Durable Medical Equipment 65% of URC After Deductible $5,000 annual $50 co-payment $500 annual limit limit Mildly Ill Child Care Services (a qualified $10 co-payment limited to 3 No Benefits participating provider days per calendar arranged by carrier to care year per family for a sick child (up to coverage subscriber age 12) during normal business hours Infertility treatment No co-payment No Benefits (includes testing, counseling, $6,000 max per artificial insemination, lifetime in-vitro fertilization and injectable drugs)(in-network) Hospice Care (out-of-network) No co-payment No Benefits 210 days lifetime limit Prescription Drugs – Retail $7 (formulary) No Benefits (out-of-network) $21 (non-formulary) Prescription Drugs – mail $7 (formulary) $21 (formulary) order (in-network) $21 (non- $63 formulary) (non-formulary) Similarly, AvMed's proposed differences in benefits were thoroughly considered by the Insurance Committee during the evaluation process. AvMed submitted additional deviations in its proposal. Subsection 8.10.1 of the RFP listed a scope of services and requested each proposer to describe how their proposal could accomplish each item. One service listed was "Customer service lines for employees in Area Code 954, as well as a toll-free line for employees residing outside the 954 Area Code." The provision of customer service lines within the 954 area code is important for serving SBBC’s employees as many telephones within the school system will not dial an outside call in excess of 7 digits. In responding to Subsection 8.10.1 of its proposal, AvMed stated that it "offers toll free customer service lines for all members" which is "accessible from all locations inside and outside of the 954 area code." Due to the inability to access 800 service on several school properties, this response was identified to the Insurance Committee as a deviation from the provisions of the RFP and considered when scoring the proposals. Subsection 8.10.2 of the RFP requested proposers to describe how they can "participate and share in the cost of an independent employee satisfaction survey." In its proposal, AvMed stated its willingness to participate in the survey but was silent as to sharing in the survey cost. AvMed’s response was identified to the Insurance Committee as a deviation from the RFP and considered when scoring the proposals. Although Attachment E of the RFP instructed each proposer to "[p]rovide your organization’s most recent financial ratings (e.g., Moody’s, S&P, AM Best)," AvMed failed to provide it. As a result, an independent report was prepared and submitted to the Insurance Committee during the evaluation process reflecting the AM Best rating of AvMed’s financial status as "Bq (Fair)." The rating indicated that AvMed had not solicited the Best’s rating but was derived from publicly available financial data as well as other reliable information. Ratings of B and below are considered vulnerable with respect to their ability to meet their ongoing obligations to members. Specifically, a "B" rating denotes an ability to meet current obligations to members, but financial strength is vulnerable to adverse changes in underwriting and economic conditions. The HIP Proposal In its proposal, HIP also responded to the portion of Subsection 8.10.9 concerning "variations in actual enrollment" under the response column marked "Yes, can Comply but with deviations." HIP’s response stated, "At the request of the School Board of Broward County, HIP is willing to work with the School Board to reduce PPO rates." Its response comported with Subsection 8.10.9, was submitted to the Insurance Committee as a deviation from the RFP, and was considered when scoring the proposals. Section 10.42 of the RFP stated that SBBC may negotiate performance standards and guarantees with the selected proposer(s). In its Proposal, HIP agreed to this provision and responded that it had reviewed and understood its obligations under Section 10.8 of the RFP which concerned, in part, damages upon provision of non-conforming services. Similarly, HIP indicated a willingness to negotiate performance guarantees in its response to Attachment K of the RFP. The United Healthcare Proposal In its formal written protest, AvMed argued that portions of the United proposal were non-responsive requiring rejection of the proposal. In its proposal, United described certain rating assumptions utilized by its actuaries to prepare the rate quoted to SBBC. The assumptions generally concerned circumstances and the status quo existing under SBBC’s current providers and included an assumption that 50 percent of the eligible employees would participate in the coverage. The assumptions were identified to the Insurance Committee as deviations from the RFP and were considered when scoring the proposals. United also reserved the right to revise its quotation if the benefits or service requirements were changed. United Healthcare's reservation did not render conditional the rates offered for the benefits specified in the proposal and is consistent with Article 2 of the RFP which notified proposers that benefit levels may be subject to change due to changes in SBBC’s collective bargaining agreements. Subsection 10.37.2 of the RFP provides that a proposer will not be excused from "full compliance with the RFP specifications and other contract requirements if the proposer is awarded the contract." United agreed to Subsection 10.37.2 in its proposal and, consistent with Section 9.4, acknowledged that a formal agreement was to be negotiated and executed. United also stated that its proposal relied upon information provided by SBBC. In the event that such information proved false, United reserved the right to adjust its proposal. Section 10.16 of the RFP set forth the priority of documents in the event of a conflict of terms. While United suggested the parties conduct a conference to discuss any disputes, it concurred that the process described in Section 10.16 should be used as the primary method for resolution. Section 10.19 of the RFP included a hold harmless agreement. The provision included a statement that the proposer would be liable for damages or loss to SBBC arising from the proposer’s negligence. United expressly agreed to Section 10.19, but stated that it would not indemnify clients for the acts of network providers. The statement does not conflict with the provisions for indemnifying SBBC and clarifies any mistaken inference that United was assuming responsibility for the acts of third persons over whom United lacked control. Similarly, Subsection 10.31.2 of the RFP set forth a proposer’s obligations to indemnify SBBC and Subsection 10.31.1 set forth SBBC’s obligation to indemnify a proposer. United’s response to the subsectioins did not refute its obligations to indemnify SBBC, but simply reiterated its prior statement regarding an inability to indemnify enrollees for the acts of network providers over whom United lacked control. Subsection 10.41(a) of the RFP provided that no rate increase could occur until the end of any applicable rate guarantee period. Consistent with Section 9.4 which provided that any term or condition may be negotiated by the Insurance Committee with the selected proposer(s), United responded in its proposal that these requirements will be discussed if United is considered a finalist. As discussed earlier, Section 10.42 of the RFP provided that "SBBC may negotiate performance standards and performance guarantees with selected proposer(s)." Attachment K of the RFP invited each proposer to review certain "proposed" performance standards and liquidated damages. United properly responded to Attachment K, stating that the performance guarantees had been endorsed by its executive leadership and acknowledged that the allocation of fees at risk would be mutually agreed upon if United were selected as a finalist. Section 10.8 of the RFP addressed liquidated damages for non-conforming services and the filing of actions in Broward County courts. Consistent with Section 10.42’s provision for the negotiation of performance standards and guarantees, United agreed to negotiate the issue of damages. In addition, United suggested use of alternative dispute resolution by the parties. Evaluation and Scoring of Proposals The ultimate decision to issue the RFP and award contracts was made by SBBC. SBBC’s Superintendent maintains a standing committee known as the Insurance Committee which provides advice and input to the Superintendent regarding insurance issues, including the development of an RFP as well as the review and scoring of the proposals which are submitted in response to the RFP. The Insurance Committee makes recommendations to the Superintendent who, in turn, makes recommendations to SBBC. Section 9.1 of the RFP at issue was entitled "Evaluation of Proposals" and set forth the following process and criteria for the scoring of the proposals: The Superintendent’s Insurance Advisory Committee (hereinafter referred to as "Committee") shall evaluate all proposals received, which meet Section 7.0 Minimum Eligibility Requirements, according to the following criteria: CATEGORY MAXIMUM POINTS Experience and Qualifications 30 Scope of Services Provided 30 Minority/Women Business 10 Participation Cost of Services Provided 30 TOTAL 100 Additional points were awarded to proposers who quoted all three delivery models pursuant to Article 2. SBBC retained an independent consulting firm ("Consultant") to assist in the development of the RFP and the review and evaluation of the proposals. In addition to the Consultant, staff including SBBC’s Director of Benefits, Director of Risk Management, Director of Purchasing, M/WBE Compliance Director and legal counsel served as technical resources for the Insurance Committee at each meeting. The Insurance Committee met at least eight times and in excess of 39 hours to analyze, evaluate, score, and recommend an awardee from the proposals. All meetings were recorded and transcribed by a court reporter and entered into this record. Copies of the RFP, Addendum No. 1 and of the various proposals were provided and available at each Insurance Committee meeting. The Consultant prepared a voluminous document entitled "Analysis of Proposals" which was divided into sections corresponding to each of the health care delivery products submitted in the proposals. Each section provided a side-by-side comparison of each proposal submitted. Each section was further divided into subsections corresponding to experience and qualifications, scope of service and M/WBE that comprised the evaluation criteria categories other than cost. The Analysis of Proposals was provided and explained in detail to the Insurance Committee. The Consultant presented a document entitled "Listing of Proposal Deviations," which addressed the minimum eligibility criteria, scope of services, and other portions of the RFP. It provided a side-by-side comparison of each proposal and was thoroughly explained to the Insurance Committee. The Consultant also prepared a document entitled "Benefit Comparison," which provided a side-by-side analysis of the health care benefits submitted by each of the proposers and was thoroughly explained to the Insurance Committee. The Consultant prepared and presented an additional document entitled "Comparison of Existing Contract Costs and Proposed Costs by Plan Type" ("Cost Comparisons") which provided a side-by-side comparison by plan type along with cost and enrollment data for SBBC’s current benefits programs. Again, the Consultant hired an outside analyst to prepare a report regarding the financial stability of each proposer. It was presented and explained to the Insurance Committee on two occasions. Upon review of the proposals, the Insurance Committee immediately recommended rejection of the proposal submitted by UniPsych on the following grounds: Reject proposal from Unipsych Benefits of Florida. Proposer did not meet the Minimum Eligibility Criteria specified in Section 7.0. Additionally, proposer was deemed non- responsive to the requirements of this RFP for submitting a proposal for behavioral health care services only. On October 30, 2000, the Insurance Committee met and scored the proposals submitted by the proposers. The score sheets were structured to correspond to the evaluation criteria contained in the RFP. Three of the 11 members of the Insurance Committee testified at the formal hearing. Each stated that in scoring the proposals, he/she applied the evaluation criteria contained in the RFP to the materials submitted to him/her as a Committee Member for analysis of the proposals as well as the presentations made by the Consultant, technical staff, and proposers. The proposals of AvMed, Beacon, HIP, Humana, Maxon, and United were determined by the Insurance Committee to meet the RFP’s minimum eligibility requirements and each of these proposals was scored in accordance with the RFP. The scoring tabulation for the top four plans under each health care delivery model were as follows: HMO: Humana (Alternate Plan 1) 81.73 points; HIP (Match Current Plan) 79.82 points; AvMed (Match Current Plan) 75.63 points; United (Self-Insured Plan) 69.91 points; POS: Humana (Alternate Plan 1) 78.27 points; AvMed (Match Current Plan) 75.55 points, HIP (Alternative Plan 1) 75.27 points; HIP (Match Current Plan) 75.23 points; Modified PPO: United (Self-Insured Plan) 77.09 points; HIP (Match Current Plan) 76.56 points; Humana (Alternative Plan 1) 73.19 points; Maxon 60.45 points; PPO: Humana (Alternative Plan 1) 77.37 points; HIP (Match Current Plan) 77.00 points; United (Self-Insured Plan) 74.63 points; HIP (Alternative Plan 1) 73.83 points. Upon review of the scores for the 11 Insurance Committee Members, eight members scored Humana’s HMO (Alternative Plan 1) higher than AvMed’s HMO (Match Current Plan), nine members scored Humana’s HMO (Alternative Plan 1) higher than AvMed’s HMO (Alternate Plan 1), seven members scored Humana’s POS (Alternative Plan 1) higher than AvMed’s POS (Match Current Plan), and seven members scored Humana’s POS (Alternative Plan 1) higher than AvMed’s POS (Alternative Plan 1). Short-Listing , Negotiations and Recommendation After the proposals were scored pursuant to Section 9.1, the Insurance Committee was authorized to recommend award to the top-ranked proposer, to recommend award to more than one top- ranked proposer, to short-list the top-ranked proposers for further consideration or to reject all proposals received. After scoring the proposals, the Insurance Committee chose the top four proposed plans for each health care delivery product. After scoring the proposals, the Insurance Committee received a copy of a letter sent to the Superintendent by the chief executive officer of HIP. In this letter, HIP described three scenarios for the provision of medical benefits to SBBC employees in 2001 involving the continued provision of medical benefits by HIP under its existing contract with SBBC. The Insurance Committee determined it was impractical for each proposer’s representative to participate in post-scoring interviews and return for post-scoring negotiations. As such, the Insurance Committee voted to consolidate interviews and negotiations and provided each short-listed proposer, including AvMed, the opportunity to participate in interviews/negotiations with the Insurance Committee. Thereafter, each short-listed proposer was invited to attend a meeting of the Insurance Committee to negotiate and bind the proposer to contract terms. Humana negotiated a number of its terms with the Insurance Committee. AvMed was willing to negotiate the provision of a telephone service line within the local area code. Upon completion of the interviews/negotiations, the Insurance Committee voted to withhold the options of POS and modified PPO plans to employees due to minimal past enrollment interest. The Insurance Committee carefully considered at least four combinations of plans submitted in the proposals as well as eight combinations of plans submitted in the proposals with plans provided under HIP’s current contract. The Insurance Committee briefly considered combining AvMed’s HMO (Match Current Plan) with Humana’s Modified PPO (Alternative Plan 1); however, the terms of Humana’s proposal eliminated it from consideration in the proposed configuration. Another combination of plans discussed coupled AvMed’s HMO (Match Current Plan) with Humana’s HMO (Alternative Plan 1) and Humana’s PPO (Alternative Plan 1). The terms of Humana’s proposal eliminated it from consideration in the proposed configuration. The Insurance Committee also considered the combination of AvMed’s HMO with United’s PPO and the combination of Humana’s proposed HMO (Alternative Plan 1) and PPO (Alternative Plan 1) with the HMO and PPO plans provided by HIP under its current contract with SBBC. The individual Insurance Committee Members each ranked their top five combinations of plans. Their rankings were totaled and sent to the Superintendent of Schools as the Committee’s recommendation. Of the five combinations forwarded to the Superintendent, the Insurance Committee’s top-ranked combination of plans coupled Humana’s proposed HMO (Alternative Plan 1) and PPO (Alternative Plan 1) with the HMO and PPO plans provided by HIP under its current contract with SBBC. The fifth-ranked combination coupled AvMed’s proposed HMO (Match Current Plan) with United’s PPO product. Upon receipt and review of the recommendation, the Superintendent determined that SBBC’s collective bargaining agreements required that it continue to provide POS and Modified PPO plans to employees and directed the Insurance Committee to modify its recommendation to include them. The Insurance Committee reconvened and voted to add the POS and Modified PPO plans submitted by Humana to the combination previously recommended. Humana had the highest scored POS plan in the evaluation process and its Modified PPO was short-listed for consideration. AvMed did not propose a Modified PPO product under the RFP. The revised recommendation which included the POS and Modified PPO products was forwarded to and accepted by the Superintendent. He posted the recommendations/tabulations dated November 6, 2000, and recommended to SBBC that it award a contract to Humana for its HMO (Alternative Plan 1), POS (Alternative Plan 1), Modified PPO (Alternative Plan 1) and PPO (Alternative Plan 1) plans to be offered to SBBC employees along with the existing HMO, POS, Modified PPO and PPO plans under HIP’s current contract with SBBC. AvMed timely filed a Notice of Protest on November 9, 2000. The School Board awarded a contract to Humana under the RFP on November 9, 2000, declaring an immediate and serious danger to the public health, safety, or welfare pursuant to Section 120.57(3)(c), Florida Statutes, and on November 20, 2000, AvMed timely filed its Formal Written Protest.
Recommendation Based upon the foregoing Findings of fact and Conclusions of Law, it is RECOMMENDED that the School Board of Broward County, Florida enter a Final Order dismissing the Formal Written Protest filed by AvMed, Inc. d/b/a AvMed Health Plan. DONE AND ENTERED this 9th day of May, 2001, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of May, 2001. COPIES FURNISHED: Andrew S. Berman, Esquire Young, Berman, Karpf & Gonzalez, P.A. 17071 West Dixie Highway North Miami Beach, Florida 33160 Joseph M. Goldstein, Esquire Shutts & Bowen, L.L.P. First Union Center 200 East Broward Boulevard, Suite 2000 Fort Lauderdale, Florida 33301 Edward J. Marko, Esquire Robert Paul Vignola, Esquire School Board of Broward County 600 Southeast Third Avenue, 11th Floor Fort Lauderdale, Florida 33301 Dr. Frank L. Till, Jr., Superintendent School Board of Broward County 600 Southeast Third Avenue, 11th Floor Fort Lauderdale, Florida 33301
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Prior to the institution of this proceeding, Petitioner had undergone surgical sterilization through a procedure known as a vasectomy. Subsequent to the Petitioner having the vasectomy, Petitioner made a decision to have the procedure surgically reversed. At all times material to this proceeding, Petitioner was a member of the State of Florida Employees Group Health Self Insurance Plan (Plan). At some time prior to having the vasectomy surgically reversed the Petitioner obtained and reviewed the Brochure from the Plan (Petitioner's Exhibit 1). Page 1 of the Brochure advises the members of the Plan (members) that the Brochure is "not a contract since it does not include all of the provisions, definitions, benefits, exclusions, and limitations" of the Plan and that its purpose is to furnish members a summary of the benefits available under the Plan and provides a regular telephone number and a SunCom telephone number for the Office of State Employees Insurance (OSEI) in Tallahassee, Florida for the members to call if there are any questions. Page 4 of the Brochure contains a paragraph entitled "Benefit Inquiries" and provides a regular telephone number and a SunCom telephone number for members to call the OSEI on questions concerning benefits. Page 12 of the Brochure contains a paragraph entitled "Claims Inquiries" and provides a TOLL FREE WATS LINE number for the Jacksonville Office of Blue Cross and Blue Shield for members to use when calling that office on questions concerning claims or claims problems. OSEI interprets "Claims Inquiries" to mean inquiries concerning payment, nonpayment or timeliness of claims as distinguished from whether certain services are covered under the Plan which would be "Benefit Inquiry". Page 9 of the Brochure contains a paragraph entitled "Limitations and Exclusions" wherein surgery to reverse surgical sterilization is listed as one of those procedures that the Plan finds necessary to limit or exclude payment. Immediately above the paragraph entitled "Limitations and Exclusions" on page 9 the Brochure advises the member that exclusions and limitations are contained in the Benefit Document on file in the individual's personnel office and the OSEI in Tallahassee, Florida. The Benefit Document is defined on page 2 of the Brochure as the document containing "the provisions, benefits, definitions, exclusions and limitations of the" Plan. Section VII, EXCLUSIONS, subparagraph P. of the State Employees Group Health Insurance Benefit Document (Document) (Respondent's Exhibit 3) specifically excludes surgery to reverse surgical sterilization procedures from coverage under the Plan. The Department of Administration has been designated by the Florida Legislature as the State agency responsible for the administration of the Plan and to make the final determination as what benefits are covered under the Plan in accordance with the Document. There was no evidence presented to show that this responsibility had been delegated to Blue Cross and Blue Shield of Florida, Inc. (Administrator) who was selected by the competitive bid process to provide claims payment services, actuarial and printing services, and medical underwriting of late enrollee applications. Before having surgery to reverse surgical sterilization, the Petitioner contacted the Jacksonville Office of the Administrator and was advised by an unidentified person in that office that the Plan would cover the hospital costs for reverse surgical sterilization but would not cover the doctor's fee. The Petitioner did not at any time material to this proceeding contact the OSEI in Tallahassee or the local personnel office concerning the Plan's coverage of surgery to reverse surgical sterilization. Petitioner acted on the advice of the unidentified person in the Jacksonville Office of Blue Cross and Blue Shield, plus his reading of the Brochure, to come to the conclusion that there was a limitation on the benefits available under the Plan for surgery to reverse surgical sterilization rather than an exclusion of benefits for that procedure; the limitation being that the Plan would pay for hospital costs but not the doctor's fees. Prior to entering the hospital, the Petitioner's admission, being elective, was certified under the Plan's Preadmission Certification Program. However, the Petitioner was advised that the admission being certified did not mean that the services requested were covered under the Plan and that the services rendered would be subject to the limitations and exclusions listed in the Plan. On or about July 30, 1986, Petitioner was admitted to Fish Memorial Hospital where Dr. Youngman performed surgery to reverse surgical sterilization and was discharged on July 31, 1986. After surgery was performed, claims were made under the Plan and, the State of Florida, through the Administrator, made the following payments in connection with the surgery: (a) Fish Memorial Hospital - $935.10; (b) Southeast Volusia Radiology Associates - $19.10; (c) Clifford Chu, M.D. - $742.00 and; (d) Robert Charles Youngman, M.D. - 742.00 Although claims made by the different health care providers (providers) for the services rendered to the Petitioner indicated a diagnosis of Azoospermia which is defined as the absence of live spermatozoa in the semen, there was insufficient evidence to show that this diagnosis was the primary reason for payments being made in error to the providers by the Administra- tor for the services rendered in connection with Petitioner's surgery to reverse surgical sterilization. Subsequent to the health care providers being paid by the Administrator for services rendered to Petitioner under the Plan, the OSEI made a determination that none of the services rendered to the Petitioner to reverse surgical sterilization were covered under the Plan, and demanded reimbursement from the providers. All of the providers, with the exception of Dr. Youngman, reimbursed the Plan but, since the Petitioner had paid Dr. Youngman prior to the claim being made, the Petitioner had received Dr. Youngman's claim and subsequently reimbursed the Plan. Petitioner made a demand on the State to pay the providers since he had been informed by the Administrator that the services, at least the hospital costs, were covered under the Plan. Respondent, at Petitioner's request, reviewed its denial of coverage and determined that costs incurred for surgery to reverse surgical sterilization was not covered under the Plan. By letter dated September 25, 1987, received by Petitioner on October 1, 1987, Respondent advised Petitioner of that decision and of his right to a hearing should he desire one. Petitioner was also advised that he had twenty-one (21) days to file a petition and failure to timely comply would result in the action contemplated in the letter becoming final. A Petition For Formal Proceedings and Notice of Appearance was received by the Respondent on October 26, 1987 bearing a certificate of service dated October 23, 1987. The petition was mailed by Petitioner and received by the Respondent more than 21 days after receipt of the letter by the Petitioner on October 1, 1987. Respondent's ore tenus Motion For Remand Or, In The Alternative, To Dismiss The Petition citing Petitioner's failure to timely file his petition was filed at the hearing on May 12, 1988 some five and half (5 1/2) months after Respondent's receipt of the petition. Upon the Respondent determining that the Petitioner's surgery to reverse surgical sterilization was not covered under the Plan, Petitioner became responsible for all costs incurred for the surgery rather than just Dr. Youngman's fee which resulted in Petitioner being responsible for $3,057.70, in addition to Dr. Youngman's fee. Had the surgery been covered under the Plan, the Petitioner would have only been responsible for $91.90, plus Dr. Youngman's fee.
Recommendation HAVING considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that the Department of Administration enter a Final Order DENYING Petitioner payment for the costs incurred for the surgery to reverse surgical sterilization requested in his Petition for Formal Proceedings. RESPECTFULLY SUBMITTED and ENTERED this 20th day of July, 1988, 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 this 20th day of July, 1988. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-1452 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Petitioner's Proposed Findings of Fact were submitted in unnumbered paragraphs but, for clarity, I have numbered them 1 through 18. The first two sentences of paragraph one are rejected as not being supported by substantial competent evidence in the record. Although an employee of the Administrator represented to Petitioner that the procedure was covered, there was no approval in that the Administrator did not have that authority. The last two sentences of paragraph one are adopted in Findings of Fact 15, 16, and 17. The first two sentences of paragraph 2 are adopted in Finding of Fact 19 but clarified. The last two sentences in paragraph two are adopted in Finding of Fact 20. Adopted in Finding of Fact 20 but clarified. (4-7) Rejected as immaterial to irrelevant except the last sentence of paragraph 7 which is adopted in Finding of Fact 11 but clarified to show the 800 number being provided under "Claims Inquiries". Adopted in Finding of Fact 11. Adopted in Finding of Fact 11 but clarified. Adopted in Findings of Fact 11 and 14 but clarified. Adopted in Finding of Fact 16. Rejected as immaterial or irrelevant. Adopted in Finding of Fact 18. Adopted in Finding of Fact 24 but clarified. Rejected as not supported by substantial competent evidence in the record. Adopted in Findings of Fact 9 and 13 but clarified. The first sentence of paragraph 17 is adopted in Finding of Fact 8 and although there is a difference in the meaning of "limitations" and "exclusions", there was no substantial competent evidence in the record that the Brochure and Document were inconsistent in this regard, therefore the last sentence is rejected. Rejected as a restatement of a witness' testimony and not a finding of fact but additionally, rejected as not being supported by substantial competent evidence in the record. Specific Rulings on Proposed Findings of Fact Submitted by Respondent (1-6) Adopted in Findings of Fact 1 through 6, respectively. (7-8) Adopted in Finding of Fact 8. (9-10) Adopted in Finding of Fact 7. (11-14) Adopted in Findings of Fact 15, 12, 11 and 13, respectively. (15-16) Adopted in Finding of Fact 17. (17) Rejected as not supported by substantial competent evidence in the record. See Finding of Fact 17. (18-19) Adopted in Findings of Fact 18 and 19, respectively. (20) Rejected as a restatement of a witness' testimony and not a Finding of Fact. Also, it would be rejected as not being supported by substantial competent evidence in the record. (21-22) Adopted in Finding of Fact 20. (23) Adopted in Finding of Fact 21. (24-25) Adopted in Finding of Fact 22. (26-28) Adopted in Finding of Fact 10. Adopted in Finding of Fact 9. Rejected as a conclusion of law. COPIES FURNISHED: William A. Frieder, Esquire Department of Administration 440 Carlton Building Tallahassee, Florida 32399-1550 Lester A. Lewis, Esquire P. O. Drawer 9670 Daytona Beach, Florida 32020 Adis Vila, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue The issue in this case is whether the Department of Insurance should discipline the Respondent on charges contained in the Administrative Complaint filed June 1, 1994. The Administrative Complaint charges that the Respondent failed to accurately disclose certain aspects of the true physical condition of two applicants for health insurance and failed to disclose to the applicants the existence of certain deductibles and a six-month waiting period for preexisting conditions.
Findings Of Fact The Respondent, Blair John Reuther, is eligible for licensure and is licensed in Florida as an insurance agent. At the times referred to in this case, the Respondent was licensed to solicit health insurance on behalf of National States Insurance Company (National States). Some time prior to April, 1993, National States solicited health insurance from Earl and Jessie Lane, an elderly couple who lived in Ft. Pierce, Florida, and invited them to return a postcard in order to express their interest in more information about health insurance policies National States had to offer. They sent in the postcard, and their names were referred to the Respondent. Without an additional contact with the Lanes, the Respondent went to their home during the week preceding April 3, 1993, and asked to be permitted to talk with them about National States health insurance policies in which they had expressed an interest. The Lanes invited him in, and the Respondent discussed their existing coverage. At the time, the Lanes had a Level A Medicare Supplement policy, which carried the standard deductibles for such a policy. After some additional discussion, the Respondent promised to return with his proposals and with applications. On Saturday, April 3, 1993, the Respondent returned to the Lane home and proposed to sell each of them a National States Level A Medicare Supplement policy and a limited benefit medical expense policy. It is found, contrary to the Lanes' testimony, that the Respondent did not tell the Lanes that the National States policies would "cover everything," that the Respondent told the Lanes that the National States Medicare Supplement policies had deductibles (just like their previous Level A Medicare Supplement policies), and that there was a six-month waiting period for preexisting conditions under the National States limited benefit medical expense policies. (There was no waiting period for preexisting conditions under any of the Medicare Supplement policies.) After discussing the proposal, the Lanes decided to apply for the National States policies being proposed by the Respondent. It is found that the Respondent went over the applications for the National States policies with the Lanes and filled out the applications in accordance with the information given to him by the Lanes. As to the medical questions on the applications, it is found that the Respondent read the questions aloud and recorded the answers given to him by the Lanes. Specifically, question 5 on the Medicare Supplement applications asked, in pertinent part: Does the Applicant have or had within the past 5 years any of the following: (Underline condition) Tumor, cancer, malignancy or growth of any kind? * * * c. High or low blood pressure, varicose veins or disorder of the heart or circulatory system? * * * Amputation, because of sickness, paraplegia, disease of the back or spine? Disease of the rectum or intestine, stomach, kidney, prostate, urinary bladder, liver, gall bladder? Question 6.b. asked, "Has the Applicant been confined in a hospital in the last five years? The Lanes answered, "no," to all of the questions set out in the preceding paragraph. They also signed the applications, which state in part: "I agree that all answers above are true and complete to the best of my knowledge." Effective April 14, 1993, National States issued the limited benefit medical expense policies for which the Lanes had applied; the Medicare Supplement policies were issued with effective dates of April 18, 1993. All four policies were delivered on April 22, 1993. The Respondent returned to the Lane home on April 30, 1993, to go over the policies with the Lanes and answer any questions they had. During the review of the policies after delivery, the Lanes never expressed to the Respondent any dissatisfaction with any of the policies. To the contrary, they both signed a statement that they had reviewed their policies with the Respondent, who had explained them in full. Jessie Lane contends that she told the Respondent that she "had had a heart problem, a small heart problem." She testified that, at the time of her deposition, she had a pace maker but that, at the time of the application, she "wasn't that bad . . . I was just having--missing heart beats." She also testified that she has: "a light case of arthritis. . . . Not bad." She also testified that she had been hospitalized during the five years preceding the applications: "That's when I had my heart problem too." Earl Lane contends that he told the Respondent that he had a back injury that required hospitalization several times, but he did not testify that he told the Respondent that he was hospitalized, or that he continued to have back problems, within the five years preceding the application. He testified that he had a swollen prostate that required surgery, but he did not testify that the surgery was within the five years preceding the application. He testified that he had skin cancer "at one time," but that it "was successfully treated" and "didn't amount to nothing." He did not testify that the cancer or the treatment was within the five years preceding the application. He contended for the first time in his deposition testimony that he had a "rupture," but not that he had it within the five years preceding the application. He testified during his deposition: "I've been in the hospital in the last five years." Later during his deposition, he was asked: "How many times have you been in the hospital in the last five years?" He answered: "Just once, I guess, before he was here." He did not clearly testify that he had been hospitalized within the five years preceding the application. Earl Lane also contended for the first time in his deposition testimony that he told the Respondent that he had varicose veins, but he did not testify that they were not surgically removed or that he still had them within the five years preceding the application. The Lanes also filed a complaint listing other alleged violations by the Respondent: (1) that the Respondent misrepresented that the National States policies covered dental and eyeglasses; (2) that these coverages duplicated policies the Lanes already had; (3) that the National States policies were more expensive than policies the Lanes already had; (4) that the National States policies did not pay skilled nursing; and (5) that the Respondent tricked the Lanes into signing a bank draft agreement. The Department chose not to charge those alleged violations, presumably either because there was insufficient evidence that they were true or because they were not violations. It appears that someone helped the Lanes draft their requests for refunds from National States and their initial list of complaints against the Respondent. Although the evidence was not clear who helped, it may well have been the insurance agent whose Medicare Supplement policies were replaced by National States and who was trying to recover the business. In response to the Lanes' request, dated May 7, 1993, to cancel the policies, National States cancelled the Medicare Supplement policies as if the request had been made within the 30 day cancellation period and refunded all but 5 percent of the premium, which was retained as a processing fee. In their cancellation request, the Lanes' alleged: "Our health conditions were not accurately written on the applications by agent Blair Reuther and we will not take any chances on not being paid on future medical bills for misrepresentations by this agent." Nonetheless, National States refused to cancel the limited benefit medical expense policies. They remained in full force and effect until they lapsed a year later for failure to pay the premium when next due. There is no evidence that National States investigated the Lanes' true health status. During the year that the National States limited benefit medical expense policies were in effect, National States paid out more in claims under the policies than the Lanes paid in premiums.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance and Treasurer enter a final order dismissing the Administrative Complaint in this case. RECOMMENDED this 1st day of February, 1995, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of February, 1995. APPENDIX TO RECOMMENDED ORDER To comply with the requirements of Section 120.59(2), Fla. Stat. (1993), the following rulings are made on the Department's proposed findings of fact (the Respondent not having filed any): 1.-2. Accepted and incorporated. Accepted and incorporated; however, the Respondent was responding to a "lead" given to him by his employer after the Lanes returned a postcard expressing interest. Accepted and incorporated. Rejected as not proven. (It was not clear from the evidence what the Respondent was told.) Accepted and incorporated; however, it is not clear from the evidence whether the Respondent should have answered the medical history questions on the application differently based on the information given to him by the applicants. First sentence, rejected as not proven. Second sentence, accepted but subordinate and unnecessary. First sentence, accepted and incorporated. Second sentence, rejected as not proven that there were health conditions that should have been disclosed; otherwise, accepted and incorporated. Last sentence, accepted and incorporated. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance 412 Larson Building Tallahassee, Florida 32399-0300 Blair John Reuther 8535 Blind Pass Drive, #202 Treasure Island, Florida 33706 Honorable Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Esquire Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact Findings regarding general matters The Respondent, Elnor Darlene Johnson, is currently licensed in the State of Florida as a life insurance agent and as a health insurance agent. At all times pertinent to the issues in this case, the Respondent was licensed in the State of Florida as a health insurance agent and was employed by National States Insurance Company and Transport Life. In order to become a licensed Florida Insurance agent, the Respondent was required to become familiar with the provisions of the Florida Insurance Code and pass an examination given by the Department of Insurance. Respondent is familiar with the provisions of the Florida Insurance Code applicable to health and life insurance agents. Findings regarding Count I (Anna Hajek) The Respondent visited Anna Hajek for the first time on December 6, 1988. Mrs. Hajek had sent in an advertising card to the Respondent's insurance agency requesting information on several health insurance programs. When the Respondent arrived at Mrs. Hajek's home, she asked Mrs. Hajek what other insurance coverage she had in addition to her Medicare coverage. Mrs. Hajek told the Respondent that she did not have any other existing health insurance coverage at that time. During the visit on December 6, 1988, Mrs. Hajek appeared to understand what she and the Respondent were talking about. They discussed the meals Mrs. Hajek was having, Mrs. Hajek's son, and some of Mrs. Hajek's activities. The Respondent was under the impression that Mrs. Hajek was handling her own affairs and that Mrs. Hajek's son was not involved in the management of her affairs. The Respondent and Mrs. Hajek discussed Mrs. Hajek's son and the fact that she wanted to protect her assets (money invested in certificates of deposit) for her son and that she did not want to spend it all on a nursing home. Mrs. Hajek invited the Respondent to return for another visit to have lunch. During the course of the December 6, 1988, visit, the Respondent sold Mrs. Hajek a Medicare Supplement insurance policy. Respondent explained the various benefits and coverages under the policy. Mrs. Hajek appeared to understand the policy. The Respondent did not fill out any "replacement forms" because Mrs. Hajek had told her that she did not have any existing Medicare Supplement insurance. Mrs. Hajek appeared to understand the Respondent's questions regarding whether Mrs. Hajek had any existing coverage. When she left Mrs. Hajek's house, the Respondent left identification, including her telephone number. The insurance policy sold too Mrs. Hajek on December 6, 1988, was a Medicare Supplement insurance policy to be issued by National States Insurance Company, with an intensive care benefit rider, a dental, vision, and hearing care expense rider, an extended care facility confinement rider, and a rider to increase benefits to Supplement Medicare Part B. The initial annual premium was $1,264.00. Mrs. Hajek paid the initial annual premium by delivering a check to the Respondent. National States Insurance Company issued the policy on December 28, 1988. On December 8, 1988, the Respondent made a second visit to Mrs. Hajek's home. At that time Mrs. Hajek told the Respondent she thought she needed nursing home coverage because she did not believe she could rely on her son to help her. The Respondent sold Mrs. Hajek three insurance policies during the course of the December 8, 1988, visit. The first of these policies was an Extended Care Confinement policy with an initial premium in the amount of $121.00 The second was a Limited Medical-Surgical Expense policy with an initial premium in the amount of $668.00. The third was a Nursing Home Policy with a home nurse benefit rider with an initial premium in the amount of $1,496.00. On December 8, 1988, Mrs. Hajek paid the initial premiums on all three policies by delivering a check to the Respondent. National States Insurance Company issued the three policies on December 28, 1988. The Respondent explained all of the coverages and benefits provided under the various policies prior to selling them to Mrs. Hajek, and Mrs. Hajek appeared to understand the policies she was purchasing. During the December 8, 1988, visit with Mrs. Hajek, the Respondent also discussed policies that would provide long-term custodial-type care, which is a different type of coverage than skilled nursing coverage. On December 20, 1988, the Respondent made a third visit to Mrs. Hajek's home. During the course of that visit, the Respondent sold Mrs. Hajek a Long- Term Care policy with an inflation rider to be issued by Transport Life Insurance Company. The initial premium for that policy was $2,380.88. On December 20, 1988, Mrs. Hajek delivered a check in the amount of $2,404.80 in payment of the initial premium and the application fee for the Long-Term Care policy. Transport Life Insurance Company issued a Long-Term Care policy to Mrs. Hajek with an effective date of December 20, 1988. Mrs. Hajek was enrolled in and covered under Humana Gold Plus HMO from at least June 1, 1987, until December 31, 1988. On December 16, 1988, a disenrollment form dated December 6, 1988, and apparently signed by Mrs. Hajek, was received at the offices of the Humana Gold Plus HMO. The disenrollment form was processed and Mrs. Hajek was disenrolled from the HMO effective December 31, 1988, or January 1, 1989. The annual premiums of all of the policies sold to Mrs. Hajek by the Respondent during December of 1988 total $5,869.88. At that time Anna Hajek had an annual income of approximately $7,500.00. 1/ During the time period when the Respondent sold the several insurance policies to Mrs. Hajek, Mrs. Hajek appeared to be mentally competent and in charge of her own affairs. At that time, Mrs. Hajek had her own checking account, was handling her own financial affairs, and was living on her own in a condominium. As of that time, Mrs. Hajek had never been diagnosed as suffering from dementia or any other type of mental disorder that would prevent her from handling her own affairs. 2/ When Mrs. Hajek's son, Frank Hajek, discovered that his mother had purchased several insurance policies, he attempted to contact the Respondent, but she did not return his calls. Ultimately, Frank Hajek wrote to the issuing insurance companies requesting that the policies be cancel led and that the premiums be refunded to his mother. In due course all the policies were cancelled and all of the premiums were refunded. The coverage provided by the policies the Respondent sold to Mrs. Hajek overlaps in several respects. However, all of the coverage appears to be cumulative in the sense that where a specific circumstance is covered by two policies, both policies will pay. 3/ Findings regarding Count II (Sadie & Joseph Grossman) No evidence was received regarding the allegations contained in Count II of the Second Amended Administrative Complaint. 4/ Findings regarding Count III (Paul and Mary Kline) The Respondent visited Paul and Mary Kline at their home in response to a "lead card" the Klines had sent requesting information on long-term nursing home insurance. The Respondent reviewed the Klines' existing coverage and left them information outlining the various benefits and coverages that were available from the companies the Respondent represented. The Klines indicated they were interested in long-term nursing coverage, but did not buy any insurance during the first visit. Mr. Kline later telephoned the Respondent and told her that he and his wife were interested in purchasing the nursing home insurance they had discussed during the first visit. In the meantime, National States had introduced a new policy, the LTC, and the Respondent returned to the Klines' home on January 26, 1989, and showed them the coverages provided by the new policy. The LTC policy provided for skilled, intermediate, and custodial care, and also provided money back to the policyholder if the coverage was not used. During the visit on January 26, 1989, the Respondent solicited, and Paul and Mary Kline signed, applications for long-term nursing care policies to be issued by National States Insurance Company. The premium due on the two policies totaled $2,596.00. On January 26, 1989, Mrs. Kline wrote a premium payment check in the amount of $2,357.60 payable to the order of National States Insurance Company and gave the check to the Respondent. At the time of receiving the check, the Respondent did not notice that the amount on the check was less than the total amount of the premium due on the two policies. On January 26, 1989, the Respondent left receipts and outlines of coverage with the Klines. The receipts were for the full amount of the premium, an amount $238.40 greater than the check received by the Respondent on January 26, 1989. The discrepancy between the receipts and the check were noticed when the Respondent submitted the applications to her agency. Thereupon, the Respondent called Mr. Kline and explained what had happened. The Respondent told Mr. Kline that the company would process the applications, but that the $238.40 shortage would be charged against her account and she hoped he would pay the shortage. Mr. Kline told the Respondent he would pay the difference. The Respondent then wrote a personal check to the insurance company and submitted the Klines' insurance applications for processing. Shortly thereafter Mrs. Kline signed a check payable to the Respondent in the amount of $238.40 and delivered it to the Respondent. At some time subsequent to the purchase of the policies, but before the policies were actually issued, the Klines saw a television show that caused them to believe they had purchased the wrong type of insurance. The Klines tried unsuccessfully to contact the Respondent by telephone. Towards the end of February, the Klines wrote a letter to National States Insurance Company requesting that the policies be cancel led and that their premiums be refunded. Mr. Kline also contacted the Department of Insurance service office about his inability to contact the Respondent. Shortly after that contact, the Respondent called Mr. Kline. The policies were canceled and the Klines received a full refund of the $2,596.00 they had paid in premiums. At the time of the purchase of the policies, the Respondent fully explained the policies to the Klines and the Klines voluntarily purchased same. Mr. Kline was satisfied with the policies on the day he purchased them. Mr. Kline's main complaint was that the Respondent failed to return his telephone calls. Mr. Kline did not believe that the Respondent had lied to him or misrepresented any of the coverages provided by the policies. Findings regarding Count IV (Charles Retty) In November of 1988, Charles Retty contacted the St. Petersburg offices of National States Insurance Company and Diversified Health Services with questions regarding the effect of changes in the Medicare program, and how those changes might affect the need for insurance coverage. At that time, Mr. Retty and his wife were insured under two nursing home policies he had purchased from National States Insurance Company. The Respondent had not sold him either of those policies. As a result of that contact, someone in the management of the insurance company asked the Respondent to call on Mr. Retty. Shortly thereafter, the Respondent visited Mr. Retty, discussed his concerns with him, told him she did not know the answers to all of his questions, and told him she would get back in touch with him with further information. Following the initial meeting between Mr. Retty and the Respondent, Mr. Retty made several unsuccessful efforts to get in touch with the Respondent. Mr. Retty then complained to the Department of Insurance service office regarding his concerns and the failure of the Respondent to get back in touch with him. Shortly after his complaint to the Department of Insurance, the Respondent again visited Mr. Retty, at which time they did not get along very well. Each thought the other somewhat rude and antagonistic. The Respondent was never Mr. Retty's insurance agent. She had never sold him any insurance prior to the visit in November of 1988 and she did not attempt to sell him any insurance during any of her communications with him. The Respondent did not attempt to have Mr. Retty cancel any of his existing insurance or allow any such insurance to lapse. Mr. Retty never gave the Respondent any money. Findings regarding Count V (Minnie Holden) The Respondent has been Minnie Holden's insurance agent since about 1976 or 1977, when the Respondent enrolled Mrs. Holden and her husband in a Medicare Supplement program. When Mr. Holden passed away, the Respondent continued to service Mrs. Holden's policies. In 1986, the Respondent sold Mrs. Holden a Medicare Supplement policy issued by United American. In February of 1987, the Respondent converted that policy to an updated United American Medicare Supplement policy. Mrs. Holden also had a long-term nursing home policy issued by Transport Life. On February 18, 1988, United American Insurance Company received a $990.00 renewal premium for the renewal of Mrs. Holden's Medicare Supplement insurance policy. United American Insurance Company renewed the policy for another year, and it remained in force, paid in full, until its lapse date of February 26, 1989. The Respondent was listed as the agent of record for the renewal of that policy. United American Insurance Company credited the Respondent's debit balance account with a commission in the amount of $138.60 for the February 1988 renewal of Mrs. Holden's Medicare Supplement insurance policy. United American Insurance Company also sent the Respondent a statement of account covering the month of February 1988. The statement of account included the information that Mrs. Holden had renewed her Medicare Supplement insurance policy and that the Respondent's account had been credited with a commission for that renewal. The statement of account also contained information about many other policy holders and contained information about many things other than commissions. 5/ The Respondent visited Mrs. Holden on August 25, 1988, at which time Mrs. Holden told the Respondent that she (Holden) had cancelled her Medicare Supplement policy because she could no longer afford it. Mrs. Holden told the Respondent that she (Holden) had kept her long-term nursing home policy in effect because her daughter was thinking of placing Mrs. Holden in a nursing home. 6/ Respondent advised Mrs. Holden that she really should have Medicare Supplement coverage, and during the August 25, 1988, visit the Respondent solicited and obtained from Mrs. Holden an application for a Medicare Supplement insurance policy to be issued by National States Insurance Company. In filling out the application for the policy, the Respondent answered "No" to Question 4, which inquired, "Is the insurance being applied for intended to replace any accident or sickness insurance, health service or health maintenance contract? " She also answered "No" to Question 5, indicating that no other existing policies were in force. The Respondent believed that her answers to Questions 4 and 5 on the application form were correct on the basis of what Mrs. Holden had said about the cancellation of the prior policy. On August 25, 1988, Mrs. Holden paid for only six months of coverage because she said that was all she could afford. The Respondent told Mrs. Holden that the National State policy was less expensive than the prior United American policy because it provided slightly less coverage. The Respondent did not fill out a "replacement form" when she filled out the application on August 25, 1988, because she thought the United American policy had expired and was no longer in effect. On September 8, 1988, National States Insurance Company issued a Medicare Supplement policy to Mrs. Holden. Mrs. Holden had two Medicare Supplement insurance policies in effect from September 8, 1988, until February 26, 1989. Findings regarding Count VI (Louella Riley) The Petitioner did not offer any evidence regarding the allegations contained in Count VI of the Second Amended Administrative Complaint. Findings regarding Count VII (Violation of probation) In 1986, the Florida Department of Insurance conducted an investigation Into the activities of the Respondent as an insurance agent in this state. As a result of that investigation, the Department filed Investigation Report No. 86- 158-IA-TP, alleging violation of the replacement laws relating to the solicitation and sale of Medicare Supplement insurance. On August 28, 1987, the Respondent entered into a Settlement Stipulation For Consent Order with the Department, Case No. 87-L-321DF, whereby she was placed on departmental probation for a period of one year, effective upon the date of signing of the Consent Order in that case. A condition of that probation was that the Respondent strictly adhere to all provisions of the Florida Insurance Code and of the rules of the Department of Insurance. The settlement stipulation also provided that the Department of Insurance would initiate proceedings to revoke all licensure and eligibility for licensure of the Respondent if she violated provisions of the Florida Insurance Code or rules of the Department of Insurance during her probationary period. On September 9, 1987, a Consent Order was issued by the Department of Insurance in Case No. 87-L-321DF, which incorporated all terms and conditions of the Settlement Stipulation For Consent Order. Accordingly, the Respondent was on departmental probation from September 9, 1987, through September 8, 1988.
Recommendation For all of the foregoing reasons, it is recommended that the Department of Insurance issue a Final Order in this case dismissing all charges against the Respondent in this case. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 5th day of November 1990. MICHAEL M. PARRISH 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 5th day of November 1990.
The Issue The basic issue in this case concerns the scope of the coverage provided by the State of Florida Employees Group Health Self Insurance Plan ("State Plan"). The Petitioner incurred extensive expenses for medical treatment, some of which have been paid by the State Plan. The Petitioner contends that under the State Plan, specifically under the "extended coverage" portion of the State Plan, she is entitled to more than has already been paid. The Respondent contends that the correct amount has already been paid.
Findings Of Fact The State of Florida makes available to its officers and employees several group insurance programs. With regard to group health insurance, the available programs include the State of Florida Employees Group Health Self Insurance Plan ("State Plan") and a number of different HMO's, depending upon the county in which an employee resides. Upon commencement of employment, State employees may elect to participate in the State Plan, may elect to join one of the HMO's in their geographical region, or may elect not to participate in any of the voluntary group insurance programs offered by the State. Employees who choose to participate in the State Plan are charged a premium which is normally deducted from their paychecks. The State also contributes regular amounts to pay a portion of the premium for each participating employee. Roberta Rubin has been an employee of the State of Florida for twelve years. She is currently employed as a judicial assistant to Circuit Court Judge George Orr. Roberta Rubin is an insured under the State of Florida Employees Group Health Self Insurance Plan ("State Plan"). The basic terms and conditions of the State Plan are set forth in a document titled State of Florida Employees Group Health Self Insurance Plan Benefit Document ("Benefit Document"). The version of the Benefit Document applicable to this case is the version amended effective July 1, 1988. The Department of Administration, Division of State Employees' Insurance, distributes a brochure titled Group Health Self Insurance Plan Benefits which describes the benefits under the State Plan and is intended to assist State employees in deciding which health insurance plan to select. The Department of Administration, Division of State Employees' Insurance, also distributes a brochure titled Group Health Self Insurance Plan Brochure ("Plan Brochure") to individuals enrolled for coverage under the State Plan. At page 1, the Plan Brochure describes the State Plan as follows: "This is a self-insured group health insurance program belonging to those State officers, employees, retirees, and their eligible dependents who elect to participate in the Plan." At the first unnumbered page inside the front cover of the Plan Brochure is a statement of the brochure's purpose, which includes the following: This brochure is not a contract since it does not include all of the provisions, definitions, benefits, exclusions and limitations of the State Self Insured Health Plan's Benefit Document, a copy of which is on file in your agency's personnel office. The purpose of this brochure is to furnish State officers and employees with a summary of the benefits available under the State Self Insured Health Plan. It is hoped that this brochure will answer any questions that might arise about the Plan. The State of Florida Employees Group Health Self Insurance Plan is administered by Blue Cross Blue Shield of Florida, Inc. In December of 1990, the Petitioner, Roberta Rubin, was diagnosed as having cervical cancer. The prognosis and recommended treatment provided by her treating physicians in Miami were not acceptable to Petitioner and she sought another opinion. Petitioner was referred to and ultimately treated by Dr. Neil Rosenshein, a gynecological oncologist at Johns Hopkins Hospital in Baltimore, Maryland. Dr. Rosenshein and Johns Hopkins Hospital are both "non-preferred patient care providers" within the meaning of the definitions in the Benefit Document. Dr. Rosenshein performed the following surgical procedures: radical abdominal hysterectomy; radical pelvic node dissection; bilateral commoniliac node dissection; and periaortic node dissection. The Physician's Procedural Terminology published by the American Medical Association ("PPT Code Book") assigns procedure codes to various surgical procedures that are utilized by billing physicians and various insurers. The PPT Code Book does not contain procedure codes that accurately reflect the latest technology or the complexity, intricacy, or radical nature of the procedures being performed in gynecological cancer surgery. Since no single or multiple procedure codes accurately characterized the surgical procedures performed by Dr. Rosenshein, his bill was submitted to Blue Cross Blue Shield of Florida, Inc., reflecting only one procedure code, 58210, with amodifier, "-22." The modifier "-22" is described in the 1986 version of the Approved Fee Schedule, of the State Plan, as follows: -22 UNUSUAL SERVICES: WHEN THE SERVICES PROVIDED ARE GREATER THAN THOSE USUALLY REQUIRED FOR THE LISTED PROCEDURE, IDENTIFY BY ADDING THIS MODIFIER -22 TO THE USUAL PROCEDURE NUMBER. LIST MODIFIED VALUE. REPORT MAY BE REQUIRED. However, the Benefit Document, as amended effective July 1, 1988, does not provide for or allow the use of the modifier "-22" in determining the amount of payment due on a claim even when the services provided are greater than those usually required for the listed procedure. The modifier "-22" is used by Blue Cross Blue Shield in the administration of other group health insurance plans. The claim form submitted by Dr. Rosenshein went through a level three review by Blue Cross Blue Shield of Florida, Inc., and in response to a request for additional information, Dr. Rosenshein submitted a letter explaining the nature of the procedures performed and a copy of the operative report. Following its review, Blue Cross Blue Shield of Florida, Inc., allowed payment only for the approved fee schedule amount for a single procedure code 58210, or $3,726.00. Dr. Rosenshein's uncontradicted testimony established that the most accurate representation of the procedures he performed would require the following three procedure codes: Code # Description 58210 limited periaortic lymphadenectomy 49201 extensive excision or destruction by any method of intra-abdominal retroperitoneal tumors or cysts or endometriomas 38780 retroperitoneal transabdominal lymphade- nectomy, extensive, including pelvic, aortic and renal nodes. The approved fee schedule for these procedure codes allows the following amounts: Code # Amounts 58210 $3,726.00 49201 2,683.00 38780 2,764.00 Petitioner has incurred the following bills in 1991 which are in excess of the applicable deductible and $1,500.00 out-of-pocket amount provided for under the Extended Coverage provisions of the benefit Document: Provider Amount JHU Department of Radiology $ 159.30 JHU Pain Management Anesthesia 698.10 JHU Anesthesiology 507.70 John Hopkins Hospital Outpatient 50.00 JHU Department of Oncology 503.50 JHU Cardiology 90.00 JHU Pathology 230.00 Dr. Neil Rosenshein 9,904.50 Total $12,143.10 The amounts reflected above are exclusive of benefits already paid by Blue Cross Blue Shield of Florida, Inc., and other insurers and do not include any charges for room and board services or ambulance services. Section I of the Benefit Document contains definitions of numerous terms, including the following: D. "AFS" means the "Approved Fee Schedule," as approved or amended by the Department of Administration. "Covered provider" shall mean a person, institution, or facility as defined herein and who furnishes a covered service or supply. "Covered service or supply" shall mean a medically necessary service or supply furnished by a covered provider and which is covered by the Plan. Q. "Deductible" shall mean the dollar amount of covered services and supplies which each insured is required to pay before benefits are payable by the Plan. BA. "Preferred Patient Care Fee Schedule" or "PPC Fee Schedule" means a list of allowances for each service which has been set and agreed to by the preferred patient care providers. BB. "Preferred Patient Care Provider" or "PPC Provider" means a physician or hospital which has an agreement with the Administrator to provide health care services at set fees to individuals insured under the Plan. A non-preferred patient care provider does not have such an agreement. BJ. "Reasonable Charge" shall mean the following: an average of the amounts charged by the non-preferred patient care hospital, skilled nursing facility, hospice facility or birth center facility for services to individuals using such hospital or facility, as determined by the Administrator; or the charge set forth in the AFS for covered medical-surgical services. BS. "Usual, Customary and Reasonable" or "UCR" means a schedule of fees for covered services in a geographical area which is determined by the Administrator based upon the normal amount charged by the provider in his/her practice, (b) the range of fees for most providers in an area for the same service, and (c) any unusual circumstances or complications requiring additional time, skills and experience by the provider which can be documented. Section II of the Benefit Document contains the provisions regarding coverage for hospital and other facility services. That section reads as follows, in pertinent part: The following services shall be covered when ordered by a physician a nd are medically necessary for the treatment of an insured as a result of a covered accident or illness. Non-Preferred Patient Care Hospital Inpatient Room and Board Services: 1. When confined to a semi-private or private room or ward, 80% of the hospital's average semi-private room rate shall be paid but not to exceed an actual payment of one- hundred and fifty-two ($152.00) per day. Other Covered Non-Preferred Patient Care Inpatient Services: 80% of the actual charge for the following services will be paid by the Plan: Use of operating room, labor room, delivery room and recovery room; All drugs and medicines used by the patient while confined in the hospital, provided such drugs and medicines are listed in "New and Non-Official Remedies" or the "United States Pharmacopoeia"; Solutions (including glucose); Dressings; Anesthesia and related supplies; Oxygen therapy; Transfusion supplies and services including blood, blood plasma and serum albumin, if not replaced; Laboratory services; Electrocardiograms; Basal metabolism examinations; X-ray, including therapy; Electroencephalograms; Diathermy and physical therapy. Covered Outpatient Hospital, Ambulatory Surgical Center or Outpatient Health Care Facility Services: Ninety percent (90%) of the reasonable charge shall be paid for covered outpatient services provided by a Non-PPC provider. When such services are provided by a PPC provider, the plan shall pay ninety percent (90%) of the charge subject to the PPC fee schedule limits. Covered Clinical Laboratory Services: Ninety percent (90%) of the charge for covered clinical laboratory services shall be paid by the Plan not to exceed the maximum amount permitted under the AFS. Section III of the Benefit Document contains the provisions regarding coverage for medical-surgical services. That section reads as follows, in pertinent part: A. Ninety percent (90%) of the charge for medically necessary inpatient/outpatient services provided to an insured by a non- preferred patient care physician, physical therapist or nurse anesthetist for the treatment of the insured as a result of a covered accident or illness shall be paid by the Plan, subject to the provisions of Section VI and Section XXIII; however, such payment shall not exceed the maximum amount permitted under the AFS. C. If a covered procedure does not have a specified fee listed in the AFS, pricing will be performed by the Administrator in accordance with its normal procedures. Section V of the Benefit Document, titled "Extended Coverage," contains the provisions regarding what is commonly known as the "stop loss" feature of the plan. That section reads as follows, in pertinent part: If under individual or family coverage, the out-of-pocket expenses of an insured for covered services under Section II., Section III., Section IV and Section XXV amount to one thousand five hundred dollars ($1500.00) during a calendar year, all further covered charges for such services incurred by the insured during the remainder of the calendar year shall be paid by the Plan at one hundred percent (100%), subject to the lifetime maximum and the maximum payments listed in paragraph C. below. If under family coverage, the out-of- pocket expenses of two or more insureds for covered services under Section II., Section III., Section IV. and Section XXV. amount to three thousand dollars ($3000.00) during a calendar year, all further covered charges for such services incurred by any insured during the remainder of the calendar year shall be paid at one hundred percent (100%), subject to the lifetime maximum and the maximum payments listed in paragraph C. below. Maximum payments subject to Subsections A. and B. above shall apply only to room and board services under Subsection II A., Subsection II E., Subsection II G., and ambulance services under Section IV, as follows: One hundred and ninety dollars ($190.00) per day for hospital room and board; Ninety-five dollars ($95.00) per day for room and board in a skilled nursing facility; Three hundred and eighty dollars ($380.00) per day for an intensive care unit; Two hundred and eighty-five dollars ($285.00) per day for a progressive care unit; One hundred and twenty-five dollars ($125.00) per use for ambulance service; One thousand dollars ($1000.00) for ambulance transportation of a newborn child; One hundred and ninety dollars ($190) per day for room and board in a specialty institution or residential facility. Charges for covered services and supplies applicable to the deductible(s) under the Plan shall not be considered an out-of-pocket expense under the provisions of Section V. The brochure titled Group Health Self Insurance Plan Brochure contains the following language at page seven regarding the stop loss feature of the plan: Maximum Out-Of-Pocket Expense If, during a calendar year, the out-of-pocket expenses for one person insured under individual or family coverage amount to $1,500, or $3,000 for two or more persons insured under family coverage, all further charges will be paid at 100%, subject to the lifetime maximum, any allowance limits for room and board while confined to Non-PPC facilities, and ambulance transportation allowance limits for newborn children. This provision applies to all covered services except Hospice services; however, charges applicable to the deductible shall not be considered an out-of-pocket expense. The language of Section V of the Benefit Document regarding "Extended Coverage" is ambiguous with regard to the scope of the coverage provided by that section of the benefit document. The language of Section V of the Benefit Document regarding "Extended Coverage" also conflicts with the language at page seven of the Plan Brochure regarding "Maximum Out-Of-Pocket Expense. /1
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Department of Administration issue a Final Order to the following effect: (a) concluding that the "Extended Coverage" language of Section V of the Benefit Document is ambiguous; (b) concluding that the "Extended Coverage" language of Section V of the Benefit Document is in conflict with the language at page 7 of the Plan Brochure under the caption "Maximum Out-Of-Pocket Expense;" (c) concluding that after the Petitioner's out-of- pocket expenses for covered services reached $1,500, she was entitled to have "all further charges" for covered services paid at 100% of the amount of the charges except as specifically limited in paragraph C. of Section V of the Benefit Document; and (d) providing for payment in the total amount of $12,143.10 to the Petitioner or to the providers listed in paragraph 15 of the Findings of Fact. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22 of May 1992. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SC 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 22 day of May 1992.
The Issue Whether Petitioner is entitled to receive a refund of insurance premiums paid to Respondent.
Findings Of Fact The Division administers health plans, including COBRA, for the benefit of employees of the State of Florida. Petitioner was an employee of the State of Florida from 1991 until February 11, 2000, which was his last day on the payroll of the Office of the Attorney General. On May 27, 1998, Petitioner was placed on the Temporary Disability Retired List by the U. S. Air Force. He was presented an identification card reflecting his rank as colonel. His identification card reflects that he was eligible for medical insurance. As a retired military person Petitioner was eligible for treatment at a military medical facility or through TRICARE. TRICARE is a comprehensive health insurance program for military personnel. TRICARE may be a primary provider or a secondary provider of health benefits. During his active employment with the state, however, the TRICARE coverage was secondary. This means that the state paid any claims to the extent of its policy limits and the remaining amount of any claim would be processed and paid in accordance with TRICARE coverage. Petitioner was aware that placement on the Temporary Disability Retired List was, as the name implied, a temporary situation. It was his expectation that subsequent to being placed on the list, the U. S. Air Force would determine either that he was disabled to the extent that he would receive disability retirement, and thus continue to be eligible for TRICARE, or that he would be denied disability retirement and would have to arrange for other medical insurance, or do without. During Petitioner's employment with the Florida Department of Legal Affairs, he was covered by the State Group Health Self Insurance Plan. On February 11, 2000, when Petitioner terminated his employment with the Florida Department of Legal Affairs, he was seeking to have the State of Florida declare him disabled. Pursuant to law, Petitioner's entitlement to the benefits of the State Group Health Self Insurance Plan continued until March 31, 2001. Without taking action to secure health insurance, Petitioner would have only TRICARE as an insurer. However, if the state determined him to have become disabled while employed by the state, he would be covered by the State Group Health Self Insurance Plan, retroactively. On May 11, 2000, the Florida Division of Retirement denied Petitioner's application for in-line-of-duty disability retirement benefits. The effect of this determination was to terminate the possibility of coverage under the State Group Health Self Insurance Plan with the reduced premiums available to a person on disability retirement. The Florida Department of Legal Affairs failed to immediately notify the Division that Petitioner had terminated his employment. As a result, the Division did not send Petitioner a Notice of Continuation Coverage Eligibility until immediately after to May 11, 2000. The notice informed Petitioner of his right to have family continuation coverage in return for a premium of $517.96. It further informed him that he had until July 11, 2000, to elect coverage which would be retroactive to April 1, 2000. A second Notice of Continuation Coverage Eligibility, dated May 22, 2000, was sent to Petitioner. This notice similarly informed Petitioner of his right to have family continuation coverage in return for a premium of $517.96 but informed him that he had until July 22, 2000, to elect coverage which would be retroactive to April 1, 2000. The second page of the Notice of Continuation Coverage Eligibility informed Petitioner, inter alia, that coverage would be available for 18 months for voluntary or involuntary termination, 29 months for certain disabled qualified beneficiaries, and 36 months for all other qualifying events. The second page also informed Petitioner that coverage might end on the occurrence of several events. The event asserted to be pertinent to this case is the date the insured becomes covered by another group health plan which does not contain any limitation or exclusion with respect to a pre- existing condition. Petitioner filed a "Continuation of Coverage Enrollment" form dated July 21, 2000. This form noted that the date of the event that precipitated eligibility for coverage was February 11, 2000. Petitioner wrote on the form in his own hand, "I am permanently and totally disabled; I and my dependents am covered under TRICARE at present." At the bottom of the "Continuation of Coverage Enrollment" form, the Division authorized coverage dating back to April 1, 2000. Petitioner sent the Division a check in the amount of $517.96 to cover the initial premium. The date on the check was July 21, 2000. Sometime prior to August 24, 2000, he sent the Division another premium payment in the amount of $517.96. At the time Petitioner filed the "Continuation of Coverage Enrollment" form and submitted the premiums, he was covered by the regular military medical system, because he was considered to be retired by the U.S. Air Force. However, since the question of his disability with the U.S. Air Force had not been decided, he was aware of the possibility that his military health coverage could end at any time. By maintaining a COBRA policy, he was insuring that he would not find himself in a posture where he had neither COBRA nor TRICARE. On August 16, 2000, the U.S. Air Force determined that Petitioner was disabled and was entitled to the medical care provided by law for retired service persons, which includes TRICARE, presumably, for life. It was at this point Petitioner demanded the return of the premium he paid. Petitioner's theory for the refund is that he was, under the law, ineligible for COBRA coverage during the two months that he paid a premium with respect to it. On September 29, 2000, in a letter signed by Ria Brown, Benefits Administrator, the Division reiterated its refusal to refund the premiums and noted that Petitioner was covered under COBRA for the period April 1, 2000, through May 31, 2000. The letter informed Petitioner that, "Based on the information in your letter, you are eligible and entitled for TRICARE Standard coverage, but you did not indicate that you are actually enrolled." Ms. Brown also advised the following: Coverage at time of COBRA event: Section 4980(f)(2)(B)(iv) provides that a qualified beneficiary's right to COBRA continuation coverage may be terminated when the qualified beneficiary "first becomes," after the date of the COBRA election, covered under another group health plan (subject to certain additional conditions) or entitled to Medicare benefits. The final regulations provide that an employer may cut off the right to COBRA continuation coverage based upon other group health plan coverage or entitlement to Medicare benefits only if the qualified beneficiary first becomes covered under the other group health plan coverage or entitled to the Medicare benefits after the date of the COBRA election. Petitioner asserted in a reply, also dated September 29, 2000, that contrary to Ms. Brown's assertion, he was actually enrolled in TRICARE Standard during the operative period. In a letter dated October 3, 2000, Merrill Moody, the Division Director, informed Petitioner that his claim for refund was being denied because he had a contractual relationship with the Division and that he got the product for which he paid-- health insurance coverage for April and May, 2000. Mr. Moody also pointed out that the Division was required under law to allow active employees and their covered dependents, to participate in COBRA, notwithstanding their participation in other programs.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Division of State Group Insurance enter a final order denying Petitioner's request for a refund of $1035.92. DONE AND ENTERED this 19th day of March, 2001, in Tallahassee, Leon County, Florida. HARRY L. HOOPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 2001. COPIES FURNISHED: Julia Forrester, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Morris Shelkofsky 3721 Crawfordville Road, No. 17 Tallahassee, Florida 32310-7074 Cynthia Henderson, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Bruce Hoffmann, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: The Department is the state agency responsible for the licensure and discipline of persons holding or those eligible to hold various insurance licenses. At all times material to this case, Respondent was licensed and eligible for licensure in this state as a health insurance agent. For all policies described below, Respondent was eligible to receive a sales commission and a bonus package which provided Respondent incentive to complete sales of insurance policies. At all times material to this case, Respondent acted as a sales agent for the following insurance companies: Diversified Health Services, National States Insurance Company, Penn Treaty, and Transport Life. Respondent sold health insurance policies, Medicare supplements, home nursing-care policies, nursing home policies, and booster plans to supplement additional coverage under Part B of Medicare. On or about April 20, 1988, Respondent went to the home of Martha and Sam Klingensmith in Port St. Lucie, Florida. Respondent's visit was in response to an information lead card that Mrs. Klingensmith had mailed to an insurance company. Mr. Klingensmith had had surgery in January, 1988, on a malignant brain tumor. Mrs. Klingensmith was anxious for her husband to receive the best care possible and hoped to obtain insurance benefits to help with the costs associated with that care. Mrs. Klingensmith told Respondent about her husband, who was too sick to be interviewed by Respondent (he was bedridden in another room). At that time Mrs. Klingensmith advised Respondent that she and her husband had Medicare supplement policies through a group policy from AARP. Respondent did not review that policy. On or about April 20, 1988, Respondent completed insurance applications for Mr. and Mrs. Klingensmith for nursing home insurance policies. The application form provided, in part, the following questions: Is the insurance being applied for intended to replace any accident or sickness insurance, health service or health maintenance contract? * * * Complete the following for each person named above who now has insurance in force or pending: * * * Does any person above have or ever had any of the following: (Underline condition) A. Tumor, cancer, malignancy or growth of any kind? * * * g. Disease of the rectum or intestine, stomach, kidney, prostate, urinary bladder, liver, gall bladder? * * * 7.a. Has any person named above consulted or been treated by any physician or practitioner in the last five years? b. Has any person named above been confined in a hospital in the last five years? * * * 9.a. List conditions for which medication has been taken or doctor consulted within the past six months: * * * 10. If any part of questions 6 or 7 was answered YES give details--otherwise--answer question by stating "NONE" On the application form for Mr. Klingensmith, Respondent wrote the following responses: as to question 4, "No" was entered; as to question 5, "NONE" was entered; as to 6.a. "Yes" was checked; as to questions 7a. and 7b., "Yes" was checked; as to question 9, only medications not conditions were listed; and under question 10, the remaining effects were indicated as "Good Health." The answers given by Respondent to questions 5, 9, and 10 were incorrect and contrary to the information Mrs. Klingensmith had given Respondent. Mrs. Klingensmith signed the application for her husband. On Mrs. Klingensmith's application form completed by Respondent on April 20, 1988, the answer to question 5 was incorrect and contrary to the information Mrs. Klingensmith had given Respondent. On or about May 17, 1988, Respondent returned to the Klingensmith home and completed an application for Mr. Klingensmith for an extended care insurance policy. The application for that policy was identical to the one described above. Respondent completed the form and gave the same responses that are indicated above. Respondent knew that Mr. Klingensmith had the National States policy from April, 1988, and he failed to include that information on the application. Further, since Mr. Klingensmith remained bedridden, the response of "good health" to question 10 continued to be false and contrary to the information supplied by Mrs. Klingensmith. On August 17, 1988, Respondent went to the Klingensmith home and completed two applications for Mr. 5 Klingensmith: one for a Medicare supplement insurance policy and one for a hospital confinement indemnity insurance policy; both to be issued by National States. On September 14, 1988, Respondent went to the Klingensmith home and completed an application for Mr. Klingensmith to receive a medical/surgical insurance policy from National States. That application did not disclose any of the prior policies sold by Respondent, was again signed by Mrs. Klingensmith (her husband continued to be gravely ill), and falsely stated that Mr. Klingensmith was in good health. At all times material to the sales of the five policies described above for Mr. Klingensmith, Respondent knew or should have known that Mr. Klingensmith was terminally ill. Respondent either did not report the information given by Mrs. Klingensmith or chose not to inquire further based upon the answers she gave him. Mr. Klingensmith died, at home, in October, 1988. In connection with the Klingensmith policies Respondent was required to complete a certification form pursuant to Rule 4-46.004, Florida Administrative Code. That form is to be signed by the insurance applicant. Without Mrs. Klingensmith's prior consent or knowledge, Respondent executed certification forms on behalf of the Klingensmiths. In August, 1988, Mrs. Klingensmith asked Respondent to examine a cancer insurance policy issued by Bankers Fidelity Life Insurance Company covering the Klingensmiths. Respondent failed to disclose that policy on the applications completed in August and September, 1988. Further, Respondent failed to accurately disclose the benefits of that policy to Mrs. Klingensmith. The cancer policy would provide additional benefits which the Respondent should have known could be helpful since Mr. Klingensmith had been diagnosed with a malignant tumor. In September, 1988, Respondent sold a medical/surgical policy to Charles Areni. Subsequently, in April, 1989, Mr. Areni asked Respondent to assist him in the completion of claims forms. Respondent went to Mr. Areni's home, helped him complete the claims forms, and sold him a National States Medicare supplement insurance policy. At that time, Respondent knew Mr. Areni had been hospitalized since a cancerous prostate problem had reoccurred, and that Mr. Areni was taking medication for pain associated with his most recent surgery. The application completed by Respondent for Mr. Areni was the same form described in paragraph 6 above. Respondent submitted the following false responses to the questions posed by that questionnaire: in response to question 5, "None" was entered; to question 6a. Respondent checked "No" when he knew or should have known (based upon Mr. Areni's answers) that the prostate condition was cancerous; and "None" to question 9. Further, Respondent provided that Mr. Areni was in good health in response to question 10. At that time Mr. Areni was not in good health, and, while his prognosis was uncertain, it was apparent that he was in poor health. On or about January 19, 1989, Respondent went to the home of Ruth Stone in Fort Pierce, Florida. That visit was 7 in response to Mrs. Stone's mailed in lead card. At that time, Mrs. Stone was insured by American Life Assurance Corporation with whom she had a Medicare supplement policy. Mrs. Stone told Respondent about her policy but did not show it to him. Without reviewing the existing policy, Respondent advised Mrs. Stone that a policy he could offer her through National States would be a better buy. Based upon Respondent's representations, Mrs. Stone elected to apply for a policy through Respondent. To that end, Respondent completed the application described in paragraph 6 for Mrs. Stone. Respondent answered question 5 incorrectly since he knew that Mrs. Stone had a current policy. Later, after speaking with her other agent, Mrs. Stone cancelled the National States policy by stopping payment on her check. She later gave a sworn statement to the Department. After Respondent found out about Mrs. Stone's complaint to the Department, he asked her to change her statement since he might lose his job. On or about February 17, 1988, Respondent went to the home of Edward and Julia Whitham in Fort Pierce, Florida. Respondent sold the Whithams Medicare supplement policies to be issued by National States. The policies sold to the Whithams did not cover dental or optical services. At the time they purchased the policies, the Whithams were under the impression that optical and dental services were covered. Respondent signed the certifications required by Rule 4-46.004, Florida Administrative Code, for the Whithams without their prior consent or approval.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department of Insurance, Office of the Treasurer enter a final order revoking the Respondent's health care insurance license. DONE and ENTERED this 7th day of August, 1990, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH 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, 1990. COPIES FURNISHED: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Nancy S. Isenberg and Dennis Silverman Department of Insurance Division of Legal Services Room 412, Larson Building Tallahassee, Florida 32399-0300 Kelli Hanley Crabb Battaglia, Ross, Hastings & Dicus, P.A. 980 Tyrone Boulevard St. Petersburg, Florida 3371014 APPENDIX TO CASE NO. 89-4986 RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT: Paragraphs 1 through 35 are accepted. Paragraph 36 is rejected as irrelevant. Paragraph 37 is rejected as contrary to the weight of the evidence. Paragraph 38 is accepted. Paragraphs 39 through 48 are accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT: Paragraph 1 is accepted. Paragraph 2 is accepted. Paragraph 3 is accepted. Paragraph 4 is rejected as contrary to the weight of credible evidence. Paragraph 5 is rejected as contrary to the weight of the evidence. Paragraph 6 is accepted as to the fact that the Whithams purchased policies from Respondent; otherwise, rejected as irrelevant. Paragraph 7 is rejected as unsupported by the record. Paragraph 8 is accepted. With regard to paragraph 9, it is accepted that the Whithams asked that their policies be reinstated; otherwise rejected as unsupported by the record or irrelevant. Paragraph 10 is rejected as unsupported by the record. The first sentence of paragraph 11 is accepted. The remainder of the paragraph is rejected as contrary to the weight of the evidence. Paragraph 12 is accepted but is irrelevant. Paragraph 13 is accepted but is irrelevant. Paragraph 14 is accepted as to their complaint against the company but is irrelevant. The first sentence of paragraph 15 is accepted. The remainder of the paragraph is accepted with the notation that Mrs. Stone did advise Respondent that she had a policy in effect. She was shopping for a cheaper policy that offered as good or better benefits. Respondent made no effort to review Mrs. Stone's policy. Paragraph 16 is rejected as irrelevant. With regard to paragraph 17, it is accepted that based upon Respondent's representations, Mrs. Stone purchased a national States policy; otherwise rejected as irrelevant. Paragraph 18 is rejected as contrary to the weight of the evidence. With regard to paragraph 19, it is accepted that Mrs. Stone spoke with her agent and decided to stop payment on the check to National States; otherwise rejected as irrelevant. Paragraph 20 is not supported by the record and is, therefore, rejected. Paragraph 21 is rejected as-irrelevant. Paragraph 22 is accepted. With regard to paragraph 23, it is accepted that the application disclosed a prostate condition; otherwise rejected as not supported by the record. Paragraph 24 is accepted. Paragraph 25 is accepted. Paragraph 26 is accepted with the notation that Respondent did not complete the application with all of the pertinent information that Mr. Areni gave him; consequently, Respondent was attempting to have the policy issued when he knew or should have known that Mr. Areni's cancer would preclude him from being eligible. Paragraph 27 is rejected as contrary to the weight of the evidence; see the notation to paragraph 26 above. Paragraph 28 is rejected as irrelevant. Paragraphs 29 through 31 are accepted. The first sentence of paragraph 32 is accepted. With regard to the second sentence, it is accepted that Respondent was not supposed to write insurance for cancer patients, however, the overwhelming evidence in this case established that Respondent did just that. The first sentence of paragraph 33 is accepted. It is further accepted that Mrs. Klingensmith executed the applications on behalf of herself and her husband; otherwise the paragraph is rejected as either unsupported by the record or contrary to the weight of the evidence. The first sentence of paragraph 34 is accepted. The remainder is rejected as contrary to the weight of the evidence since the comment was only made in relation to Mr. Klingensmith's day-to-day behavior. He undoubtedly had some good days relative to his more severe days. It is further concluded that Mr. Klingensmith was never seen by any visiting insurance person other than as a bedridden person. Mr. Bessimer's comment that Mr. Klingensmith could have been napping was not credible in light of the total circumstances known to Respondent. Paragraph 35 is accepted but is irrelevant. The second sentence of paragraph 36 is accepted. With regard to the first sentence of that paragraph, it is rejected as contrary to the weight of the evidence. Mrs. Klingensmith's account of the conversation has been deemed more credible than the Respondent's. Paragraphs 37, 38, and the first sentence of paragraph 39 are accepted. With regard to the remainder of paragraph 39, it is rejected as contrary to the weight of the credible evidence. Paragraph 40 is accepted but is irrelevant.
Findings Of Fact Respondent, Mark Alan Gable, is currently eligible for licensure and is licensed in Florida as a life and health insurance agent and was so licensed at all times relevant to these proceedings. Respondent at all times relevant to these proceedings was licensed in this state to solicit health insurance on behalf of National States Insurance Company (herein National). On or about September 28, 1988, Respondent visited the home of Mabel Bowmaster of Sarasota, Florida, for the purpose of soliciting health insurance. At the time, Ms. Bowmaster was insured under the provisions of a protective life medicare supplement insurance policy. Ms. Bowmaster was interested in purchasing a policy that offered custodial nursing care benefits as her protective life policy did not offer such coverage. Respondent was not a stranger to Ms. Bowmaster as he had sold her a medicare supplement policy in 1987 and had processed claims for Ms. Bowmaster during 1987, although she did not remember him. Although Ms. Bowmaster was interested in purchasing custodial care, when Respondent explained to her the cost of the coverage versus the benefits that she could receive, she was convinced that the premiums for a custodial care policy was too expensive and she declined to purchase the coverage. In fact, Respondent tendered a certification to Ms. Bowmaster which acknowledged that she had been explained the benefits, that she understood them and there is, in that medicare supplement policy, a specific exclusion of custodial care. (Respondent's Exhibit 18 and 3.) During August 1989, Ms. Bowmaster was visited by another insurance agent, a Chris Morrison, who was also soliciting insurance. At agent Morrison's urging, Ms. Bowmaster cancelled the medicare supplement policy that Respondent had sold her after he showed her a copy of a St. Petersburg Times article which was critical of Respondent and after Morrison suggested that Respondent was in trouble with the Petitioner. When Ms. Bowmaster cancelled her insurance policy that she purchased from Respondent, she wrote a letter to National States Insurance Company asking them not to honor the bank draft authorization that she had signed for the year 1989. Notwithstanding the letter Ms. Bowmaster sent to National, the bank draft was honored. As a result, Ms. Bowmaster filed an insurance consumer service complaint with Petitioner stating the reason for cancelling the policy was that she had duplicative coverage as a result of her purchase of the same coverage from Mr. Morrison and she therefore requested a refund of the National policy in light of her request that the bank draft be terminated. In none of Bowmaster's correspondence to National during August and November 1989, was there any reference of any misrepresentation of coverage by Respondent for custodial care coverage. On or about February 11, 1988, Respondent visited the home of Alice V. Bowling of Bradenton for the purpose of soliciting health insurance. Ms. Bowling is an 82 year-old widow whose primary source of income is social security. At the time, Ms. Bowling was insured under the provisions of a Prudential Insurance AARP (American's Association of Retired Persons) medicare supplement insurance policy and an Old Southern medicare supplement insurance policy. Respondent discussed with Ms. Bowling her existing insurance coverages. Ms. Bowling was interested in obtaining an insurance policy that would pay benefits for hearing aids, eyeglasses and dental care. Neither of her existing policies offered such benefits. Respondent's purpose in visiting Ms. Bowling during February of 1988 was to follow-up on a lapse of a National States Medical/Surgical policy. During the interview with Ms. Bowling, she informed Respondent that she had in effect a policy with AARP and the National policy that was soon to lapse. She did not tell him that she had a policy with Old Southern. While Ms. Bowling testified that she showed Respondent a copy of the Old Southern policy, the evidence adduced at hearing indicates otherwise. It was noted that when Respondent purchased the National States policy during 1987, she did not tell that agent about the existence of the Old Southern policy. (Respondent's Exhibit 7.) Additionally, when Ms. Bowling signed the notice to applicant regarding replacement of accident and sickness insurance form, she indicated that she was replacing a Prudential policy. The application for insurance also indicates her replacement for the Prudential policy. After Respondent reviewed with Ms. Bowling her AARP policy and the National States policy, he advised her that he could process some claims for her under the lapsed National States policy. As a result, Respondent submitted claims for Ms. Bowling and she was reimbursed for medical bills for which she had not previously sought payment. (Respondent's Composite Exhibit 8.) Respondent and Ms. Bowling discussed eyeglass and hearing aid coverage to determine if she should purchase it. However, based on Ms. Bowling's desire to hold the cost of insurance down, and after Respondent explained to her that under the eyeglass-hearing aid rider, it would cost her approximately $340 in premiums to get $500 in coverage, she declined such coverage. By way of example, Respondent explained that the premium for the rider was $125, deductible of $75 pays 80% with a maximum coverage of $500; so on a $700 bill, it would pay $500, indicating that the insurance payment of $340 was for $500 worth of benefits. Evidence of Ms. Bowling's rejection was noted in the outline of coverage which specifically excludes eye glasses and hearing aids. (Respondent's Exhibit 10.) Ms. Bowling acknowledged that the benefits of the policy was clearly explained to her. After Respondent's initial visit, Ms. Bowling decided to cancel the policy. Upon receiving notice of cancellation, Respondent called upon Ms. Bowling to determine her reason for cancelling the policy. Respondent again explained the coverage to Ms. Bowling in the presence of her son. Ms. Bowling acknowledges that Respondent explained to her at the second visit that eye glasses, dentures and hearing aids were not covered by the policy, that the rider would be required to provide that coverage; and she then again elected not to purchase the rider coverage but kept the policy in force. Evidence of this continuation of coverage is in Ms. Bowling's handwriting which reflects "After talking to my agent Mark Gable, I have decided to keep the UMS 1060437 in force." Thereafter, Ms. Bowling again decided to cancel the policy and in correspondence with National States, she related that after reviewing the policy with others, she concluded that she could not afford the coverage. Ms. Bowling, at the time, made no complaint about Respondent having misrepresented the existence of eyeglass or similar coverage, but simply requested a refund. After the company failed to forward a refund to Ms. Bowling, she filed a complaint with Petitioner asserting that she was entitled to a refund, but she made no reference to any claim of misrepresentation of coverage. At hearing, Ms. Bowling acknowledged that she cancelled the policy because the coverage was too expensive. Ms. Bowling made no mention of any misrepresentation by Respondent for coverage for eye glasses, dentures or hearing aids until the interviews by Petitioner's investigators. On or about July 19, 1990, Respondent visited the home of Fred V. Lively of Englewood for the purpose of discussing health insurance. At the time, Mr. Lively had recently purchased an American Traveler's Long-Term care insurance policy effective as of July 13, 1990, and offered custodial nursing care insurance benefits. It is alleged that Respondent sold a nursing home policy to Mr. Lively representing that the policy provided coverage for custodial care and he failed to advise Mr. Lively that the policy called for a three (3) day confinement in a hospital as a condition precedent to the payment of benefits. The policy that Respondent sold to Mr. Lively did not require such a waiting period as it included a rider eliminating the waiting period. This fact was confirmed by William J. O'Connor, the manager of policy services for National States. During July of 1990, Mr. Lively was running a lapse notice on the National States policy previously sold to him by Steve Daggett, a former employee of National States. Initially, Respondent showed the Livelys a Penn States policy and a Transport Life policy for nursing home care, both of which included custodial care. The premiums on both policies approached $5,000 a year and the Livelys determined that they were too expensive. As a result, they were rejected. Thereafter, Respondent explained the National States nursing care policy which provided skilled and intermediate care and the Livelys elected to purchase the nursing care policy. Prior to the Livelys purchase, Respondent reviewed the coverage provided and an outline of coverage was left with the Livelys as well as an outline prepared by Respondent. In addition, based on the pendency of administrative charges in this matter, Respondent had the Livelys acknowledge, in their own handwriting, that "all of the benefits of this outline has been explained to me in full and a signed copy of this outline has been left with me, by my agent, Agent is Mark Gable," followed by the signature of Fred Lively. (Respondent's Exhibits 15 and 16.) Additionally, the Livelys signed two further certifications and a customer survey report prepared by Respondent. This was done in an attempt by Respondent to avert claims generated by other agents by having new clients under certification to indicate that the coverage was explained. Shortly after the Respondent sold the insurance to the Livelys, Steve Daggett, the agent who had sold the Livelys their American Traveler's policy, arrived at the Livelys' home and convinced Mr. Lively that his policy was to have included custodial care; cited that Respondent had failed to reveal that and he (Daggett) related that Respondent had failed to reveal that he (Lively) suffered from diabetes for the purpose of suggesting that Respondent had "clean sheeted" the application which would thereafter result in a denial of coverage if a claim was made. A review of Respondent's application filed with the Lively deposition showed that Respondent revealed the existence of Mr. Lively's diabetes. Sometimes after August 21, 1990, Respondent again visited the Livelys and requested that they reconsider their decision to cancel the policy. Following Respondent's review of the policy and the coverages, Mr. Lively signed a letter which was submitted to National States requesting that the policy be kept in force. National States received the letter and the cancellation of the Lively policies was rescinded. On or about October 6, 1988, Respondent visited the home of Martha Roche for the purpose of soliciting health insurance. As a result of their discussion, Ms. Roche purchased two National States insurance policies. Although Ms. Roche testified that Respondent represented himself as an insurance adjuster for the purposes of gaining entry into her home, the testimony does not comport with the documentary evidence or her practice with respect to letting insurance agents into her home. At times, Ms. Roche has had as many as three insurance agents in her home at one time. Respondent was following up on a lapse notice with respect to prior National States policies which Ms. Roche had purchased from Respondent. At her front door, Respondent showed Ms. Roche his insurance license and she granted him entrance. On November 3, 1988, or less than thirty (30) days after the policy was originally written by Respondent, Respondent returned to Ms. Roche's home after receiving a notice of cancellation with respect to the policy in question. After discussing the matter with her, she decided to save the policy and wrote a handwritten note asking that the coverage be continued. During the November 3, 1988 meeting with Ms. Roche, which was well after the bank draft authorization had been submitted to National States, Ms. Roche indicated that she did not wish to stay on the draft plan in the following year. Respondent explained to Ms. Roche that she should write a letter to National States and to the bank to terminate the bank plan. In addition to this advice, Respondent was aware that National States would advise Ms. Roche of her right to terminate the bank plan and the procedure for termination as the bank plan is a contract between the insured and the bank. Respondent was without authority to terminate the bank plan that Ms. Roche authorized. Ms. Roche requested cancellation of the bank draft as Respondent instructed her, although the bank continued payment until she filed a complaint with Petitioner, complaining that National States insurance had failed to cancel her bank draft plan. Ms. Roche fails to allege in her complaint to Petitioner or otherwise suggest that Respondent used any false pretense to gain entry to her home. Ms. Roche's complaint was that National States did not refund her money after she wrote requesting a refund. Subsequently, a refund was given to Ms. Roche.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner enter a Final Order dismissing the Second Amended Administrative Complaint filed herein in its entirety. DONE and ENTERED this 28th day of February, 1991, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of February, 1991. COPIES FURNISHED: James A. Bossart, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Martin Errol Rice, Esquire 696 First Avenue North Post Office Box 205 St. Petersburg, Florida 33731 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether the surgery to correct complications from non- covered cosmetic surgery are covered under the State of Florida self-insured health plan?
Findings Of Fact Sharon Lett, Petitioner, was initially hired by the State of Florida on October 1, 1986, and began participating in the State's self-insured health plan known as the State Employees' Preferred Provider Organization Plan, or State PPO Plan. Pre-existing conditions were covered after 365 days. In June 1985, Lett had bilateral silicone breast implants placed under the pectoral muscles. This occurred before she was covered under any of the state-sponsored health insurance plans. The implant surgery was performed for purely cosmetic reasons. Lett continued to work for the State until her retirement and was covered under the State's health insurance plan. Upon her retirement she continued her coverage under the State PPO Plan. In 1997, while covered by the plan, Lett sought medical intervention for problems related to the implants. She had concerns about the implants leaking and there were indications in the form of "lumps" and x-ray images which indicated the implants were leaking. There are some clinical studies which indicate that leaking implants are a potential health problem. The "lumps" and leakage decrease the ability to properly diagnose breast cancer. For patients who have a higher risk for breast cancer, these difficulties in diagnosis place the implanted patients at greater risk. Lett is diagnosed as being at greater risk for breast cancer. Both of her implants have leaked. Lett sought removal of the implants beginning in 1997. The State's PPO Plan has denied approval of the surgical procedure to remove the implants because the implant surgery was originally for cosmetic purposes. The latest denial was by letter dated September 27, 2002. The Division of State Group Insurance (DSGI) is responsible for the management of the State's group insurance programs, to include the PPO Plan. The State's PPO Plan is administered under contract by Florida Blue Cross and Blue Shield. In support of her latest request for payment for the surgery to remove the implants, Lett provided DSGI the following: Medical Report of Marguerite Barnett, M.D., (Respondent's Exhibit 4), dated May 23, 2002. Clinical Record Progress Notes by Frank B. Vasey, M.D., for visit on April 15, 2002. Lett also provided a diagnostic report by Mary E. Swain, M.D., dated June 1, 2000. The DSGI agrees that the reports of Drs. Barnett and Vasey accurately describe Petitioner's medical condition and accurately identify the etiology of the condition that necessitates the surgery Petitioner seeks. At the time Lett initially enrolled in the State PPO Plan, the benefits document in effect was State of Florida Employees Group Health Self Insurance Plan Benefit Document, as Amended on October 1, 1986. Section VII, Exclusions, of the 1986 Benefits Document provides: Services for cosmetic surgery or treatment unless the result of a covered accident as provided in Subsection VIII.A. However, cosmetic surgery is a covered service if it is: in connection with the correction of a congenital anomaly for an eligible dependent born while family coverage is in force and performed while the Plan is in force, a medically necessary procedure in the correction of an abnormal bodily function, or for reconstruction to an area of the body which has been altered by the treatment of a disease, provided such alteration occurred while the insured was covered under the Plan. Section VIII, Limitations, of the 1986 Benefits Document provides: The following limitations shall apply under the Plan: A. Cosmetic surgery or treatment necessary for the repair or alleviation of damage to an insured is covered by the Plan if such surgery or treatment is the result of an accident sustained while the insured is covered under the Plan and actually performed while the Plan is in force, except as provided under Section XIII and XIV of this Benefit Document. Section XIII deals with termination of an insured's coverage and is not applicable here. Section XIV deals with termination of the program and is not applicable here. At the time Lett requested approval for the surgery to remove the implants, the benefits document in effect was State Employees' PPO Plan Group Health Insurance Plan Booklet and Benefit Document effective January 1, 2000 (hereafter, 2000 Benefits Document). The 2000 Benefits Document states regarding services not covered by the plan that cosmetic surgery is not covered unless it is: A result of a covered accident if the accident happens and the surgery or treatment is performed while the person is covered by this health insurance plan, For correction of a congenital anomaly for an eligible dependent born while the employee has family coverage and performed while the dependent is covered by this health insurance plan, A medically necessary procedure to correct an abnormal bodily function, For reconstruction to an area of the body that has been altered by the treatment of a disease, provided the alteration occurred while the person was covered by this health insurance plan, For breast reconstructive surgery and the prosthetic devices related to a mastectomy. "Mastectomy" means the removal of all or part of the breast for medically necessary reasons as determined by a licensed physician, and "breast reconstructive surgery" means surgery to reestablish symmetry between the two breast, . . . Complications resulting from non-covered services, except complications of pregnancy defined on pages 49-50, are excluded from coverage generally. See 2000 Benefit Document, page 31, paragraph 53. It is noted that the 1986 Benefit Document does not have a provision similar to that cited in paragraph 21, above. Under the 1986 Benefit Document, cosmetic surgery would not have been covered, but surgery necessary to address complications from non-covered services was not limited or excluded. The problems suffered by Lett did not arise until after the time limit excluding pre-existing conditions had expired or run.
Recommendation Based upon the foregoing findings of fact and conclusions of law it is RECOMMENDED: That Petitioner's Petition be dismissed. DONE AND ENTERED this 27th day of February, 2004, in Tallahassee, Leon County, Florida. S STEPHEN F. DEAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of February, 2004. COPIES FURNISHED: Sharon Lett 240 Starmount Drive Tallahassee, Florida 32303 Sonja P. Mathews, Esquire Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 William Simon, Secretary Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Alberto Dominguez, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
