The Issue Should Respondent's license as an insurance agent in the State of Florida be disciplined for the alleged violation of certain provisions of Chapter 626, Florida Statutes, as set forth in the Administrative Complaint and, if so, what penalty should be imposed?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: The Department is the agency of the State of Florida vested with the statutory authority to administer the disciplinary provisions of Chapter 626, Florida Statutes. Respondent, at all times relevant to this proceeding, was licensed as an insurance agent in the State of Florida. Respondent is also currently licensed in the State of Florida as a life and life and health insurance agent. Sometime around May 30, 2000, Patricia I. Coburn and her husband, Kevin L. Coburn received a postcard from Guarantee Reserve Life Insurance Company (Reserve Life) indicating that the Coburns may want to consider life insurance since Social Security only paid $250.00 in death benefits. Kevin Coburn was no longer employed, and the life insurance coverage with his former employer was no longer in force. Therefore, the Coburns, in response to the postcard, made contact with Respondent by telephone. Patricia Coburn testified that Respondent came to the Coburn's home on May 30, 2000, in response to the telephone call. However, Respondent was in the Coburns' home on only one occasion and that was when the application was completed and signed, which was May 31, 2000. The Coburns were looking for an insurance policy that would cover "final" expenses. The Coburns settled on a joint whole life policy with Reserve Life, which carried death benefits of $18,000.00, with an $18,000.00 accidental death coverage and a $5,000.00 child rider. At all times relevant to this proceeding, Kevin Coburn suffered from impaired vision (due to diabetic retinopathy), heart problems (by-pass surgery and congestive heart failure), and kidney problems (in renal failure and currently receiving dialysis three times a week). However, Kevin Coburn's health condition was not readily apparent to Respondent at the time he was in the Coburns' home around May 31, 2000. The application for the insurance policy required that Respondent ask both Kevin Coburn and Patricia Coburn a series of health questions, which required a yes or no answer. The application also required Respondent to mark each of the Coburn's responses in the appropriate place on the application. Respondent asked both Kevin Coburn and Patricia Coburn the required health questions. Other than question number 7 and question number 12, which did not require an answer due to the Coburns' age, each answered the questions with a "no" answer, notwithstanding Patricia Coburn's testimony to the contrary, which lacks credibility in this regard. Based on the Coburns' responses, Respondent marked "no" to the appropriate questions on application. Questions 3(A) and (F), 6.(3), and 9. of the Application provide in pertinent part as follows: Have your ever been diagnosed or treated by a member of the medical profession as having, or have you ever taken medication for: (1) Chronic Kidney Disease; or (2) any kidney disorder for which you are currently receiving dialysis? * * * F. Congestive Heart Failure? * * * 6. During the last 1 year, have you had a . . .(3) heart or by-pass surgery . . .? * * * 9. During the last 5 years, have you had Heart-By-Pass surgery? Respondent marked the answer "no" to these questions for both Kevin Coburn and Patricia Coburn. The application inquired as to whether either of the applicants was disabled. The Coburns responded that they were not disabled but employed, and Respondent so marked the application. After Respondent completed the application, he handed the application to the Coburns for them to review and sign. While it may be questionable as to whether Kevin Coburn reviewed the application, including the answers to the health questions, due to his failing eyesight, Patricia Coburn certainly had the opportunity to review the application, including the answers to the health questions. Neither Patricia Coburn nor Kevin Coburn discussed or revealed Kevin Coburn's current medical condition with Respondent prior to, or during the time, Respondent was filling out the application, including the responses to the health questions, notwithstanding Patricia Coburn's testimony to the contrary, which lacks credibility in this regard. Had Respondent been made aware of Kevin Coburn's medical problems, he could have placed the Coburns' insurance with another insurance company (Cotton State Life Insurance Company or Americo Financial Life and Annuity Insurance Company), notwithstanding Kevin Coburn's medical problems. Admittedly, the policies would not have been at the standard issue rates and there would have been graded death benefits or limited death benefits. Furthermore, Respondent's commission on this type policy would be higher than on a regular death policy. Reserve Life acted favorably on the Coburns' application and in June 2000, issued Policy No. OJ11976 to the Coburns with the Basic Death Coverage as set out in the Application. Kevin Coburn died on September 19, 2000, from a staph infection as a result of his leg being amputated in August 2000, due to the diabetes. Shortly thereafter, Patricia Coburn filed a death claim with Reserve Life. Because Kevin Coburn died within two years of the issuance of the insurance policy, Reserve life, in accordance with company policy, requested Kevin Coburn's medical records so that it could review his health history in order to determine if the health questions had been answered correctly. Upon review of Kevin Coburn's health records, Reserve Life discovered that Kevin Coburn, at the time of the application, was diabetic, underwent dialysis, had undergone heart by-pass surgery, had other health problems, and was disabled. Because of his health problems and disability, Kevin Coburn was not eligible to purchase this particular insurance policy, and had Reserve Life been made aware of Kevin Coburn's health problems and disability, Reserve Life would not have issued this particular policy. In response to Reserve Life's inquiry concerning Kevin Coburn's health history, Patricia Coburn wrote a letter to Reserve Life asserting that she and Kevin Coburn had advised Respondent of Kevin Coburn's health problems, and that Respondent had apparently marked the "no" block instead of the "yes" block concerning the health questions without their knowledge. Without giving Respondent an opportunity to refute Patricia Coburn's allegations, Reserve Life offered Patricia Coburn $9,000.00 as a settlement, which she accepted. The reason for the offer of settlement by Reserve Life was that it would be Patricia Coburn's "word" against Respondent's "word." There is insufficient evidence to show that Respondent knew, or should have known, of Kevin Coburn's medical condition at the time the Coburn's applied for the insurance with Reserve Life.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order finding Respondent, Jerry Lee Surratt not guilty of violating Subsections 626.611(4),(5),(7),(8),(9), and (13), Subsections 626.621(2),(3), and (6), and Subsections 626.9541(1)(a)1., and (e)1., Florida Statutes, and dismissing the Administrative Complaint filed against Jerry Lee Surratt. DONE AND ENTERED this 15th of March, 2002, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 2002. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street, Room 612 Tallahassee, Florida 32399-0333 Jerry Lee Surratt 926 Lake Deeson Pointe Lakeland, Florida 33805 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
The Issue The issue to be determined in this case is the amount to be paid to Respondent, Agency for Health Care Administration (“Respondent” or “AHCA”), to reimburse Medicaid for medical expenses paid on behalf of Petitioner from proceeds of a personal injury settlement received by Petitioner.
Findings Of Fact The following findings of fact are based on exhibits admitted into evidence, testimony offered by witnesses, and admitted facts set forth in the prehearing stipulation. Petitioner, William O’Malley, is the recipient of Medicaid for injuries he sustained in an automobile accident. Respondent is the state agency charged with administering the Florida Medicaid program, pursuant to chapter 409. On September 9, 2009, Petitioner, William O’Malley, lost control of his vehicle when it hydroplaned across three lanes of traffic. Mr. O’Malley’s vehicle left the roadway and struck a tree. While he was restrained with a seat belt, Mr. O’Malley suffered a severe brain injury, fractured skull, injury to his neck at the C6-C7 level, numerous fractured ribs, shattered spleen, lacerated liver, abdominal bleeding, a fractured ankle and other serious injuries. He remained in a coma for a number of weeks undergoing extensive surgical procedures to save his life. As a result of his severe and permanent injuries, Mr. O’Malley now suffers from cognitive deficits, is disfigured, and is unable to work. He receives disability payments due to his injuries. A portion of Mr. O’Malley’s past medical expenses related to his injuries was paid by Medicaid, in the amount of $196,125.72. Mr. O’Malley initiated a personal injury civil action to recover all his damages associated with his injuries against the construction companies who allegedly designed and constructed the roadway in a defective manner (“Defendants”). During the pendency of Mr. O’Malley’s personal injury action, AHCA was notified of the action, and asserted a $196,125.72 Medicaid lien against any damages received by Mr. O’Malley. AHCA was not otherwise involved in the personal injury action or settlement. In October 2016, Mr. O’Malley’s personal injury action settled for the gross amount of $1,750,000. The General Release memorializing the settlement agreement provides as follows: Although it is acknowledged that this settlement does not fully compensate William O’Malley for all of the damages he has allegedly suffered, this settlement shall operate as a full and complete Release as to Releasees without regard to this settlement only compensating William O’Malley for a fraction of the total monetary value of his alleged damages. The parties agree that William O’Malley’s alleged damages have a value in excess of $20,000,000.00, of which $379,874.27 represents William O’Malley’s claim for past medical expenses. Given the facts, circumstances, and nature of William O’Malley’s injuries and this settlement, the parties have agreed to allocate $33,239.00 of this settlement to William O’Malley’s claim for past medical expenses and allocate the remainder of the settlement toward the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all William O’Malley’s damages. Further, the parties acknowledge that William O’Malley may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses William O’Malley will incur in the future. However, the parties acknowledge that William O’Malley, or others on his behalf, have not made payments in the past or in advance for the First Party’s future medical care and William O’Malley has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for future medical expenses. By letter of October 13, 2016, Mr. O’Malley’s attorney notified AHCA of the settlement and provided AHCA with a copy of the executed Release and itemization of $123,699.86 in litigation costs. This letter explained that Mr. O’Malley’s damages had a value in excess of $20 million and the settlement represented only 8.75 percent of the recovery of Mr. O’Malley’s $379,874.27 claim for past medical expenses. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $196,125.72 Medicaid lien. AHCA responded to Mr. O’Malley’s attorney’s letter and demanded full payment of the entire $196,125.72 Medicaid lien from the settlement. AHCA, through the Medicaid program, spent $196,125.72 on behalf of Mr. O’Malley, all of which represents expenditures paid for Mr. O’Malley’s past medical expenses. No portion of the $196,125.72 paid by AHCA represented expenditures for future medical expenses. Application of the formula at section 409.910(11)(f) to Mr. O’Malley’s settlement requires payment to AHCA of $196,125.72, the actual amount of the medical expenses paid by Medicaid. Petitioner disputes that $196,125.72 is the amount of recovered medical expenses payable to Respondent, and instead asserts that $33,239.00 in medical expenses are payable to Respondent. Notwithstanding Petitioner’s dispute, Petitioner has deposited the full Medicaid lien amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). In support of his position, Mr. O’Malley presented the testimony of two experts, Steven Browning, Esquire, and Vinson Barrett, Esquire. Mr. Browning represented Mr. O’Malley in the personal injury action. He testified as an expert regarding the valuation of Mr. O’Malley’s personal injury claim. Mr. Browning has practiced law for 31 years, primarily representing plaintiffs. He is a partner of his law firm and handles serious personal injury, wrongful death, and catastrophic injury cases. Mr. Browning handles cases that result in jury trials and, thus, he routinely researches jury verdicts to determine potential value of cases. In the litigation of civil actions, he also prepares mediation statements regarding the value of cases. He reviews life care plans, economic reports, and past jury verdicts to determine the value of a case. Mr. Browning opined that $20 million constituted a very conservative valuation of damages suffered by Mr. O’Malley. He based this opinion on having represented Mr. O’Malley in the underlying personal injury action and on his knowledge of jury verdicts and settlements in recent Florida cases involving awards of damages to individuals with similar injuries as Mr. O’Malley. He emphasized that his valuation was far more conservative than many comparable cases that resulted in substantially higher verdicts or settlements. Mr. Browning concluded that the $1,750,000 settlement amount represented 8.75 percent of the damages suffered by Mr. O’Malley. He also opined that only 8.75 percent of the $196,125.72, the past medical expenses paid by Respondent, was recovered. Mr. Browning was accepted as an expert in this matter and his testimony was found to be persuasive. Mr. O’Malley also presented the testimony of Mr. Barrett regarding the valuation of Petitioner’s claim. Mr. Barrett has practiced law for approximately 35 years. He primarily practices in the areas of medical malpractice, pharmaceutical liability, and catastrophic injuries resulting from automobile accidents. Mr. Barrett routinely handles jury trials. Thus, he routinely monitors jury verdicts and determines the value of damages suffered in personal injury actions. He reviewed recent jury verdicts and the life care plan for Mr. O’Malley to formulate his opinion regarding the valuation of Mr. O’Malley’s claim. Mr. Barrett testified that $20 million to $25 million was the estimated value of Mr. O’Malley’s claim. He testified that the amount was a very conservative estimate of damages suffered by Mr. O’Malley. Similar to Mr. Browning, Mr. Barrett opined that allocating 8.75 percent to past medical expenses in the amount of $196,125.72 was a reasonable allocation of past medical expenses and reflected the amount recovered by Mr. O’Malley for past medical expenses. Respondent also presented an expert regarding the valuation of Mr. O’ Malley’s claim, Steven Carter. Mr. Carter has been licensed to practice law for 23 years. He is the managing shareholder of his law firm. He has handled catastrophic injury cases in which he determined the value of the claim. He has conducted 35 to 40 jury or bench trials. Mr. Carter was accepted as an expert regarding valuation of Mr. O’Malley’s claim. Mr. Carter testified that the value of Mr. O’Malley’s damages was the actual settlement amount of $1,757,000. Ultimate Finding of Fact The undersigned finds that the testimony of Mr. Browning and Mr. Barrett was more persuasive regarding valuation of Mr. O’Malley’s claim than the testimony of Respondent’s expert witness. Mr. Browning and Mr. Barrett’s number of years of experience with handling catastrophic personal injury cases, and the fact that they had the benefit of the life care plan when evaluating the case, make their testimony more persuasive regarding the valuation of damages suffered by Mr. O’Malley in this case.
Findings Of Fact At all times pertinent to the allegations contained herein, Respondents Richard Elliott Templin, Jr., was qualified for licensure as a general lines agent and as a life and health insurance agent in Florida and represented the Okeechobee Insurance Agency, (OIA), located at 1874 Okeechobee Boulevard, West Palm Beach, Florida. Respondent is currently eligible for licensure as a general lines agent and as a health and life insurance agent in Florida. RAVEN MILLER In March, 1984, Raven Miller applied for and was issued automobile insurance by OIA. She contacted that agency among others and found that it quoted her the cheapest price for the coverage she wanted, coverage sufficient to protect her and the finance company from loss. During the application process, she signed several forms provided to her by the agent who briefly discussed her coverage with her but did not advise her it would include life insurance or accidental death insurance. When she initially went into the office to renew the policy, she asked for coverage on the vehicle but did not desire anything else. The employee with whom she talked indicated understanding of her desires and filled out the required paperwork for her without asking any other questions of her. When the paperwork was completed, Ms. Miller was told that the premium cost would be $347.00 for which she gave a check and received a receipt, plus $110.00 for a term life insurance policy. She was not told that that this latter coverage was separate from the automobile coverage. Ms. Miller filled out nothing during the application process. All the documents were filled out by the clerk. The application form was completely filled out except for her signature when she signed it. It reflected that uninsured motorist coverage was rejected but Ms. Miller was not asked by anyone at the agency if she desired that coverage. When she inquired about deductibles, she was advised there was a mandatory $250.00 deductible and though she is reflected to have rejected bodily injury coverage, this was not discussed with her, either. The only form that Ms. Miller filled out personally was the pink application to Fortune Insurance Company, (Fortune), on which she identified her "beneficiary." This form was not explained to her, however, nor was there any discussion with her of life insurance coverage. Ms. Miller, who works with the Post Office, has $140,000 in life insurance coverage through her job and had she known she was being offered additional life insurance coverage, would have rejected it. When Ms. Miller signed the summary of coverage form, it was completely filled out. The lady with whom she was dealing briefly went over the various items on it but did not discuss them with her or explained anything to her. The confirmation form which she signed was filled out prior to being given to her for signature. The explanation regarding it was brief and she was not advised that life insurance coverage was optional. The life insurance premium was not forwarded by OIA to the company. She did not receive a policy from either Fortune Life or ATA. At no time during her dealings with OIA did she meet or deal with Respondent and she does not know him nor would she recognize him. When she sold her car in March, 1985, Ms. Miller cancelled the policy in person at the agency at which time she was advised that her refund would come in the mail. Even after numerous contacts with the agency to inquire where the refund was, it was not given to her. At no time during her dealings with OIA was she aware of the fact that she was applying for an accidental death policy. All she asked for, all she wanted, and all she thought she was getting was auto insurance sufficient to cover her, her bank, and others with whom she might have an accident in the event of loss. Notwithstanding the fact that Ms. Miller signed an acknowledgment of explanation both at the time of the original policy and and the time of renewal, the explanation in both cases was extremely brief. She asked no questions to speak of and no information was volunteered. In short, at the time of renewal the agency merely renewed the prior coverage. They did not show her what they were comparing with. She assumes that the figures were the same as for the original policy and she assumed that whatever she got was a standard coverage and charge to every applicant. Ms. Miller was satisfied with the coverage she received and the package she purchased. Her complaint to the Department of Insurance related to the failure to receive her refund not to the sale of the insurance to her. In fact, at the time she filed her complaint, she did not even know that she had a life insurance policy. DENNIS AND ALETA NELSON Dennis Nelson, who has worked for the Post Office for approximately 10 years, on or about March 21, 1985 went to the OIA because, having spoken with Respondent over the phone, and having gotten a quote for "full coverage" on his automobiles from him, he liked the price. Mr. Nelson dealt with Respondent who took down the particulars on the cars to be covered, then went to his rate books, and quoted a price to Mr. Nelson which was satisfactory. In doing so, he laid out the explanation of coverage form and indicated what coverage the Nelsons would have. In the course of the application process, there was no discussion of the limits of liability insurance, uninsured motorist Coverage, deductibles, or life insurance. When the paperwork was completed, Mr. Nelson signed the applications for insurance given to him and a premium finance agreement. Respondent explained to Mr. Nelson the application for life insurance and gave him the impression that it was mandatory. It was made mandatory by the company that a customer buy the whole package, but it was not mandatory under the state requirements. The failure to make this distinction is misleading and deceptive. Mr. Nelson never received any policies from any of the companies from whom he was supposed to have received coverage, though he made his premium payments. By the same token, the company did not receive Nelson's premiums from the agency and, therefore, did not issue a policy. Approximately three months after the coverage went into effect, OIA notified the Nelsons that the cost of coverage on their Blazer would be raised by more than $200 for the year. Mr. Nelson made the initial inquiry call to the company writing this coverage but he was poorly treated by company representatives and got no information. Thereafter, Mrs. Nelson went to OIA's Okeechobee Boulevard office and spoke with Respondent who indicated he could not understand it either. Nonetheless, she paid a part of the increase, ($110.00), at the time in cash. The Nelsons checked with other companies and were quoted lower prices. Because OIA could not explain the raise, they went to the Petitioner's local office where they were told that the life insurance coverage they had purchased was not mandatory. As a result, they decided to cancel their coverage with OIA which Mrs. Nelson did in person. When she attempted to fill out the cancellation form, she was told by an agency employee that she could not cancel the life insurance portion only her husband could do that. Mr. Nelson thereafter attempted to reach the Respondent to discuss this situation with him but could never seem to get in touch with him. Mr. Nelson felt he got repeated run arounds from the employees at OIA and was repeatedly referred to the Lake Worth office. When they ultimately received the refund from OIA, it was dishonored and thereafter, the Nelsons were reimbursed for it in cash. ROBERT M. ANDERSON Mr. Anderson, an employee of Pratt and Whitney Aircraft Corporation in West Palm Beach, purchased automobile insurance from OIA in July, 1985. He selected that agency because they offered him the best price for the coverage which he had told them he wanted, which was "the minimum necessary to satisfy state and bank requirements." During the course of his negotiations with the agency, he dealt with an individual known to him as "Rich" but though Respondent looks familiar to him, he cannot identify Respondent as that individual. He advised the individual with whom he dealt what kind of car he had, (a Porche 911), his age, and that he wanted the best deal he could get. In response, the individual gave him a quotation for a 12 month policy which was too high for his budget. He asked for a quote on the rate for 6 months which was quoted to him as $1,816.00, for which he wrote a check. Mr. Anderson thereafter filled out an application package for coverage. The summary of coverage form was not discussed with him in detail. For example, the $2,000 deductible of PIP coverage was not discussed nor were any details or deductibles on other coverages. Accidental death coverage was not discussed with him nor did he request it. He recognizes his signature on certain documents and does not dispute having signed them. However, he does not recall any discussion about them nor does he recall signing a power of attorney form or even discussing the need to have one signed. There was no discussion with Mr. Anderson regarding life insurance coverage and in fact, he would have declined it had it been discussed because he was fully covered through his company's group policy. Mr. Anderson was not prevented from asking questions but did not do so because he did not know what questions to ask. He was given the opportunity to read the forms but did not review them in detail because he did not understand them then and does not understand them now. He did not, however, indicate that he did not understand. Because he had 9 points on his driver's record, he did not ask many questions. He was grateful to get any coverage and did not feel it was appropriate to take the time, as busy as Respondent appeared to be, to ask questions. It was his understanding that everything he got was a part of the "total package" that he requested. Mr. Anderson had no complaint about the coverage that he received. His complaint to the Petitioner was based on his failure to secure a prompt refund from the agency at the time he desired to cancel the coverage, and it was at this time, in discussing the matter with the Commissioner's office, that he first learned he had life and other undesired coverages as a part of his auto insurance package. He has, however, subsequently received the refund requested. All of the individuals referenced above received and paid for as a part of their insurance coverage, membership in an automobile motor club. On policies of this nature, the selling agency retains 90 percent of the premium and remits only 10 percent to the insurer. The motor club membership included a life insurance policy issued by Fortune Life. None of the persons involved with Respondent here knew they were buying either life insurance, accidental death insurance, or motor club membership. All had asked for "total" coverage, desiring thereby only that coverage necessary to operator a motor vehicle legally in this state. Neither life insurance, accidental death insurance, nor motor club coverage is a requirement of the state for the operation of a motor vehicle. It is not unlawful for an insurance agency to make those coverages a necessary part of a package and condition the issuance of liability, property damage, and PIP coverage upon the purchase of a total package including the other. What is improper, however, is a failure on the part of the agency to disclose that the life, accidental death, and motor club coverages are not a part of the insurance requirements of the state and the failure to disclose this is the nexus of the offense alleged.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is, therefore: RECOMMENDED that the Respondent's licenses and eligibility for licensure be placed on probation for a period of two years and that he be ordered to pay an administrative fine of $2,500.00. RECOMMENDED this 27th day of July, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0093 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. For Petitioner 1-4 Accepted and incorporated herein. 5-7 Accepted and incorporated herein. 8 Accepted and incorporated herein. 9 Accepted and incorporated herein. 10-16 Accepted and incorporated herein. 17-18 Accepted and incorporated herein. 19 Accepted and incorporated herein. 20 Accepted but irrelevant. 21 Accepted and incorporated herein. 22 Accepted. 23-26 Accepted and incorporated herein. 27 Accepted and incorporated herein. 28 Accepted and incorporated herein. 29 Accepted but irrelevant. 30 Accepted and incorporated herein. 31&32 Accepted and incorporated herein. 33 Accepted and incorporated herein. 34 Rejected as unproven. Witness never identified Respondent as the individual with whom he dealt. In the remaining paragraph rulings, it is assumed only that Respondent was involved. 35&36 Accepted and incorporated herein. 37-39 Accepted and incorporated herein. 40&41 Accepted and incorporated herein. 42&43 Accepted. For Respondent Accepted and incorporated herein. Accepted not as a Finding of Fact but as a recitation of the evidence, Accepted in substance. Paragraph is long and involved. See 3 above. See 3 above. COPIES FURNISHED: William Gunter, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 William W. Tharpe, Jr., Esquire Office of Legal Services Larson Bldg. Tallahassee, Florida 32399-0300 David W. Spicer, Esquire Tammy J. Kissell, Esquire NCNB Tower, Suite 910 1555 Palm Beach Lakes Boulevard West Palm Beach, Florida 33401-2363 =================================================================
Findings Of Fact Ian Ocasio was born on April 20, 2010, at Winnie Palmer Hospital for Women and Children in Orlando, Florida. Ian weighed 2,749 grams at birth. Donald Willis, M.D. (Dr. Willis), was requested by NICA to review the medical records for Ian. In a medical report dated September 20, 2013, Dr. Willis opined: In summary, the baby was delivered by Cesarean section due to preterm labor and a recent genital herpes outbreak. Herpes cultures from the baby were negative. There was no fetal distress during labor. The baby was not depressed at birth and did not require any resuscitation. Umbilical cord blood gas was not done. Apgar scores were normal. There was no apparent obstetrical event that resulted in loss of oxygen or mechanical trauma to the baby’s brain during labor, delivery or the immediate post delivery period. A review of the file does not show any contrary opinions, and Petitioners have no objection to the issuance of a summary final order finding that the injury is not compensable under the Plan. The opinion of Dr. Willis that Ian did not suffer a neurological injury due to oxygen deprivation or mechanical injury during labor, delivery, or the immediate post- delivery period is credited.
The Issue Whether Christopher Noel Rios, a minor, qualifies for coverage under the Florida Birth-Related Neurological Injury Compensation Plan (Plan).
Findings Of Fact Petitioners Yolanda Rios and Rene Rios are Chris’ (Christopher Noel Rios’) natural parents. At all times material, Yolanda Rios was an obstetrical patient of Intervenor Raul Montenegro, M.D. Raul Montenegro, M.D., the delivering obstetrician, was a "participating physician" in the Florida Birth-Related Neurological Injury Compensation Plan, as defined by Section 766.302(7), Florida Statutes, who delivered obstetrical services in the course of labor, delivery and resuscitation in the immediate postdelivery period related to Chris. Although the parties stipulated to the foregoing language, the evidence as a whole shows that no need to "resuscitate" Chris ever arose. (See Findings of Fact 12 and 14.) Chris was born on January 11, 2005. At birth, Chris weighed in excess of 2,500 grams. Chris was born at Bayfront Medical Center. Bayfront Medical Center is a licensed Florida hospital located in St. Petersburg, Florida. Coverage is afforded by the Plan for infants who suffer a "birth-related neurological injury," defined as an "injury to the brain . . . caused by oxygen deprivation or mechanical injury occurring in the course of labor, delivery, or resuscitation in the immediate postdelivery period in a hospital, which renders the infant permanently and substantially mentally and physically impaired." § 766.302(2), Fla. Stat. See also §§ 766.309 and 766.31, Fla. Stat. Herein, there is no dispute that Chris suffers from some neurologic or brain impairment(s), but Petitioners claimed that his problem resulted from a birth-related neurological injury, and NICA was of the view that the record failed to support the conclusion that Chris’ brain was injured by "oxygen deprivation or mechanical injury occurring in the course of labor, delivery or resuscitation in the immediate postdelivery period" as required by the statute for a finding of compensability. Intervenors expressed no position on the issue of compensability. On January 11, 2005, Mrs. Rios was admitted to Bayfront Medical Center. Her fetus was estimated to be at 38-1/2 weeks’ gestational age with intrauterine growth restrictions. The baby’s head had been smaller than expected, but within normal limits, as of her last previous ultrasound. Mrs. Rios was noted to have a non-reactive, non-stress test with spontaneous decelerations and a biophysical profile 4/8 with oligohydramnios. A fetal cardiac abnormality was also reported. As a result of suspected fetal distress, Mrs. Rios underwent a primary low transverse caesarian section at 5:03 a.m., on January 11, 2005. Following delivery, Chris had Apgar scores of 8 and 9 at one and five minutes respectively.6 Mrs. Rios claimed that, based on recorded times on various medical/hospital records, it is questionable whether cord blood gas testing was done. Indeed, it is unclear whether such testing was done. However, a letter dated September 17, 2008, from Maria Watts, Bayfront Medical Center Director of Health Information Management, to Mrs. Rios states, in pertinent part, "Although Dr. Boren’s operative note pertaining to the c- section delivery of your son Christopher states that Cord gas and PH were sent, there are no laboratory results in either his or your medical record." The stipulated medical and hospital records reveal, among other notations, that Chris was administered "blow by" oxygen for approximately four minutes ("whiffs" of oxygen as opposed to bag oxygen), shortly after birth. However, he never had to be intubated. Because he was noted to be microcephalic and had a heart murmur, Chris was transferred, shortly after birth on January 11, 2005, to All Children’s Hospital in St. Petersburg, Florida, for further evaluation of suspected congenital heart disease and microcephaly. The records further show that on January 12, 2005, Dr. Joseph Cassadonte, a pediatric neurologist, was consulted due to a CT scan of Chris’ brain that showed ventriculomegaly with periventricular calcification and an abnormal scan pattern. Dr. Cassadonte recorded his impression that Chris had microcephaly with periventricular calcifications and suspected congenital infection, especially TORCH. Dr. Cassadonte wrote in his consult record that Chris’ brain had probably been affected by an intrauterine (in utero or "in the uterus") infection. Due to the microcephaly, a TORCH work-up was completed.7 Chris remained hospitalized until February 8, 2005. He was able to breathe room air without assistance of any kind throughout his 28-day hospitalization. With regard to infections within the TORCH spectrum and Chris’ central nervous system, the Neonatal Discharge Summary stated, in pertinent part: INFECTIONS: * * * Due to the microcephaly a TORCH workup was done. The IgMs were remarkable for positive Rubella and HSV2. The rest were all negative. * * * CENTRAL NERVOUS SYSTEM This infant was noted to be microcephalic on admission. A CT scan was obtained on day 1 of life, which documented periventricular calcifications. An MRI was obtained on day 2 of life, which also documented multifocal areas of brain destruction consistent with scattered calcifications, which were consistent with TORCH infection. An EEG was obtained on day 16 of life and was abnormal with bilateral amplitude attenuation over the hemisphere suggestive of bilateral cerebral dysfunction. This infant has been followed by Neurology. This infant was also evaluated by developmental pediatrics. He will be followed by Neurology and Developmental Pediatrics as an outpatient. * * * On February 8, 2005, Chris was discharged from All Children’s Hospital. The Neonatal Discharge Summary listed discharge diagnoses of: Term male. Periventricular Calcifications. Hyperbilirubinemia, both direct and indirect. Bilateral duplication of the collecting system. Bilateral Grade 3 vesicoureteral reflux. Coagulopathies. Anemia. Aspiration. Mild arytenoids laryngomalacia. Microcephaly. Clinical sepsis. Thrombocytopenia. Patent foramen ovale. Following discharge from All Children’s Hospital, Chris developed seizures at three months of age, and in December 2005, Dr. Cassadonte ordered an EEG which was interpreted as "markedly abnormal because of severe disorganization of the background as well as multifocal spike and sharp waves, maximum in the posterior regions." The EEG was consistent with a modified hypsarrhythmic pattern, and it was noted that during the study, Chris had multiple clinical events which appeared to be epileptic spasms unassociated with any electrographic changes during the events. Since that time, Chris has continued to experience multiple daily seizures and has made little motor developmental progress, being unable to roll over or sit up on his own. He also has cortical visual impairment. He receives physical, occupational and speech therapy. A G-tube was placed at 2-1/2 years of age and he is on a keogentic diet. Donald Willis, M.D., testified by deposition. Dr. Willis is a physician who is board-certified in obstetrics and gynecology and in maternal-fetal medicine. Based on his evaluation of the medical records, Dr. Willis opined that the medical records reflect that Mrs. Rios was not in labor when Chris was delivered by caesarian section and that Chris did not suffer oxygen deprivation or mechanical injury occurring during delivery or resuscitation in the immediate postdelivery period. More specifically, he testified: Q: Dr. Willis, let me ask you this: Did Christopher Rios suffer oxygen deprivation or mechanical injury occurring during delivery or resuscitation in the immediate postdelivery period? A: No. Q: And is that opinion within a reasonable degree of medical probability? A: Yes. Q: Would you explain to us – and I understand you may be repeating some of your opinions, but explain to us the basis for that opinion. A: Right. If the baby suffered oxygen deprivation during the time of delivery, then the baby would be depressed at birth and would have low Apgar scores, would require resuscitation, positive pressure ventilation, intubation with oxygen, would be acidotic and my [sic] require intervenous [sic] drip for bicarbonate to correct the acidosis, and would require, you know, care in the neonatal intensive care nursery for newborn depression. Now, also the babies often have seizures within the first 24 to 48 hours, renal failure. Many of the organ [sic] can be affected. Often feeding difficulties can occur. But primarily, you know, it have – the baby would have to be significantly depressed at birth. And this baby was really not depressed at birth. Dr. Willis stated that the absence of cord gas results did not change his ultimate opinion in the case. (See Finding of Fact 11.) He noted that many people would not have a cord blood gas test done when Apgar scores are normal and the baby does not require resuscitation, as was the situation with Chris. He noted that microcephaly as recognized at birth happens over a longer period of time as opposed to being the consequence of some intrapartum (during birth or delivery) event. Specifically with regard to the role a fetal infection may have played in Chris’ condition, Dr. Willis testified: Q: And I think you said that the early ultrasound suggestive of microscopically[8] [sic] suggests to you that the infection, perhaps, or whatever insult on the fetus that caused these problems occurred sometime much earlier in pregnancy; is that correct? A: That’s correct. Q: All right. And under those circumstances, would it be uncommon for the TORCH titers and the other cultures to be negative at birth if, in fact, the infection had happened long enough ago to have created or caused some microcephaly that was noted early on in the ultrasound? A: Well – that’s right. I mean, those titers can revert to negative over time. And if they occur early enough in pregnancy, they may be too early for the baby to have an IGG – IGM immune response, which is the one that – or an IGG response. So, you know, that could be, or it could be that there was some viral infection that was not included in the TORCH titers, it could be some other virus that’s less well-known. Q: All right. And so is it true, Doctor, we don’t know exactly what kind of intrauterine viral infection may have impacted Christopher, you are still of the impression or opinion that it was a viral infection of some sort that explains his current problems? A: Yes. I agree that the findings are most consistent with an in utero viral infection, but the exact virus – I don’t know the virus that caused this. Michael Duchowny, M.D., a medical physician board- certified in pediatrics and neurology, with special competence in child neurology and clinical neurophysiology, particularly the sub-specialty of pediatric epilepsy, also testified by deposition. He evaluated Chris on March 10, 2010. Based upon his evaluation of Chris, and his review of the medical records, Dr. Duchowny concluded that Chris did, in fact, evidence findings consistent with a substantial neurological impairment, involving both mental and motor functioning, that was in all likelihood permanent. He further opined that the evidence compellingly suggested that Chris’ permanent and substantial mental and physical neurological impairment(s) are the result of an infection acquired in utero, rather than being the result of intrapartum (during birth) oxygen deprivation or mechanical injury. More specifically, Dr. Duchowny testified: Q: And with regard to your opinion, Doctor, what do you look at to give support for it? A: I think the support for that comes from several sources. To begin with, Christopher’s post – his perinatal course was inconsistent with oxygen deprivation or mechanical delivery. Specifically, he was born with good Apgar scores. His condition, at birth, was sufficiently stable, so that his physicians chose not to order either umbilical cord or arterial blood gases. He did not have multi-organ failure, as would be expected in a baby who was hypoxic, and he did not have a need for prolonged intubation and medical ventilation. On the other hand, he did suffer from thrombocytopenia or low platelet count, which is more consistent with an infection. He had elevation of bilirubin, which I also think was consistent with a – some type of infectious process. Furthermore, his neuroimaging studies, both, the MRI and the CT Scan, suggest both, an intrauterine acquisition of the brain damage and an infectious basis, and this is based on the fact that his MRI Scan, obtained on the second day of life, was already evidencing multi-focal damage, which suggested that it had been acquired a long time prior to the MRI, in order to produce that picture, and the multi-focal damage was most consistent with some type of intrauterine infection. Consistent with this hypothesis, were the findings on the CT Scan which demonstrated calcified areas surrounding the ventricles or the cavities of the brain. This finding is typically seen in patients who have an intrauterine acquired viral infection with one of several agents. Lastly, Christopher’s examination revealed evidence of congenital anomalies of his face and head, and these findings, obviously, reflected abnormalities acquired in the intrauterine environment during the time when the – when these structures were being formed. So I think the weight of the evidence – and I would lastly say that Christopher was born with low birth weight, suggesting intrauterine growth retardation, and was congenitally microcephalic, with a head circumference of 30 centimeters. I think, putting all of this evidence together, it strongly suggests that Christopher’s neurologic impairment was acquired prenatally during intrauterine life, and resulted from an intrauterine viral infection. Mrs. Rios testified that she believed the hospital’s determination of viral infection had to be in error because infections always progress but Chris’ condition is not progressing and his CAT scans have remained consistent. However, no medical verification for this theory was presented. Additionally, Dr. Willis and Dr. Duchowny effectively refuted it, as both physicians testified that it is common to be unable to identify a specific viral infection and that the infection of concern would have affected Chris in the uterus, as opposed to after birth.9 Mrs. Rios testified that, in her opinion, she had experienced a normal pregnancy except for narrowing of the PDA, which was "followed" throughout her pregnancy. She had no explanation for what caused Chris’s neurologic problems, but testified from personal observation that he was dusky and blue with eyes swollen shut and facial bruising when he was first shown to her over the drape for the caesarian section. She inferred an oxygen deprivation or mechanical injury from these signs. Chris’ newborn photographs, the Newborn Assessment, and some nurses’ notes in evidence do show these conditions and some nurses’ notes assume them to be traumatic in origin, but Dr. Duchowny offered contrary, but reasonable, medical explanations. Dr. Duchowny stated, in response to questions by Mrs. Rios, at his deposition: Q: (Mrs. Rios) Okay. Because I don’t know if you read in the reports that, actually, he had extensive bruising in his – and his eye was swollen shut, and it states that on the report, and we also have photographs pertaining to that, that when Chris – after he was born, the nurse took a photograph, that she submitted to me, and there was extensive bruising on Christopher’s face, pertaining to – right a little bit above the eyebrow. It was in the area. It went from one end of the eyebrow to the other end, and his eyes were actually swollen shut. They were also bruised, and he had a hemorrhage in one of his eyes. Dr. Duchowny: Well, again. I would – and it’s not to take anything away from the difficulties associated with the delivery, but there was no evidence on either of the scans, either the CT or the MRI of a traumatic brain injury. So that although there were facial or cranial areas that were bruised, it does not appear that there was any traumatic injury to the brain. Dr. Duchowny also testified, concerning his 2010 examination of Chris, as follows: Q: And in Christopher’s case, what dysmorphic features or dysmorphisms did you observe? A: Well, the shape of his forehead, I thought, was abnormal. He had some abnormalities of the mid facial region, including his nasal bridge. There was – I thought that there was kind of what we call a mid facial compression. In other words, the distance from the eyes down to the mouth was less than it should be. The eyes had a slant to it. I also recall that the ears were slightly low set, as well. I’m not sure – Q: And what did those dysmorphic features suggest to you, as a pediatric neurologist, if anything? A: These types of abnormalities occur due to some problem that occurs during the time that they are forming. So this malformation suggests not that anything was destroyed or altered, after it was formed, but, rather, it did not form correctly. So it places the timing, you know, quite far back during intrauterine life, either the first or perhaps early second trimester, but I don’t think we can date it more than that. Dr. Duchowny also opined: . . . I can say that children – newborns oftentimes appear dusty, because they are peripherally vasoconstricted . It’s not uncommon for babies to appear blue or dusty in the delivery room, and to remain that way while they vasoconstrict, just to shunt blood to the core, including the vital organs and the brain. That actually does not mean that there is a neurologic impairment or that the baby is having any problems with oxygen. It’s just simply a physiologic adjustment that shunts blood centrally. It’s a reflex. It’s normal, and it doesn’t suggest that there’s any type of oxygen deprivation at that time. Dr. Duchowny also was asked hypothetically to assume cord blood gas testing had been done and to assume the PH thereof was at or below seven and whether this set of hypothetical facts would impact his opinions: Q: Dr. Duchowny, I would like you to assume that the cord blood gases in this particular case were done and were, hypothetically, reported as below – or with a PH at or below seven. Would that, in any way, impact your opinions you’ve expressed today regarding the etiology of Christopher’s neurological problems? A: It would not. Q: Why not? A: Again, I think the overwhelming evidence suggests that Christopher’s neurologic impairment was acquired remotely in intrauterine life, and if there is a cord PH that was low, it still wouldn’t make me believe that Christopher had a significant intrapartum event. Furthermore, his post- natal course was inconsistent with it, as well. So I recognize that you’re putting that out as a hypothetical situation, but even in that hypothetical situation, I could not understand how Christopher’s damage would be acquired during labor and delivery. Q: And how is his neonatal course or how was his neonatal course inconsistent with an abnormally low PH, if it was? A: Well, I discussed that previously, but the findings that one would expect to see were not there, including intubation, prolonged mechanical ventilation, multi- organ failure, cardiovascular instability, and, in fact, what did transpire, which was thrombocytopenia, is probably more consistent with some type of infection, rather than intrapartum hypoxia or mechanical injury. As previously noted, Mrs. Rios provided lay testimony questioning the expert medical opinions and assailing the veracity of certain medical records, most notably the failure to perform a cord blood test or the absence of a record of the cord blood test if such a test had been done. (See Finding of Fact 11.) Her testimony was, however, lay testimony without any other substantiating lay or expert medical evidence, and the expert medical opinions herein were not dependent on the presence or absence of cord blood testing. Where a medical condition is not readily observable, issues of causation are essentially medical questions, requiring expert medical evidence. See, e.g., Vero Beach Care Ctr. v. Ricks, 476 So. 2d 262, 264 (Fla. 1st DCA 1985)("[L]ay testimony is legally insufficient to support a finding of causation where the medical condition is not readily observable."); Ackley v. Gen. Parcel Serv., 646 So. 2d 242, 245 (Fla. 1st DCA 1991)("The determination of the cause of a non-observable medical condition, such as a psychiatric illness, is essentially a medical question."); Wausau Ins. Co. v. Tillman, 766 So. 2d 123, 124 (Fla. 1st DCA 2000)("Because the medical conditions which the claimant alleged resulted from the workplace incident were not readily observable, he was obligated to present expert medical evidence establishing that causal connection."). Herein, the opinions of Doctors Willis and Duchowny are clearly "expert." Moreover, they are logical, consistent with the record, not controverted by other competent medical opinion, and not shown to lack credibility. See Thomas v. Salvation Army, 562 So. 2d 746, 749 (Fla. 1st DCA 1990)("In evaluating medical evidence, a judge of compensation claims may not reject uncontroverted medical testimony without a reasonable explanation.") Accordingly, the weight of their expert evidence is more persuasive than Petitioners' lay testimony. Therefore, it is found that Chris’ physical and mental problems, substantial though they may be, most likely resulted from an intrauterine-acquired infection, as opposed to being caused by oxygen deprivation or mechanical injury occurring in the course of labor, delivery, or resuscitation in the immediate postdelivery period in a hospital.
The Issue The issue is whether the Dynamic Orthotic Cranioplasty band and related services to correct cranial asymmetry in a one-year- old child are covered benefits under the State of Florida State Employees' self-insured health plan.
Findings Of Fact At all material times, Petitioner Andres Gil has been a professor employed at Florida International University in Miami. At all material times, he has been a participant in the state group insurance programs, including the state group health insurance plan (Plan). The plan's benefits are described in the State Employees' PPO Plan Group Health Insurance Plan Booklet and Benefit Document (Benefit Document). At all material times, Petitioner's child, S. G., who was born on April 15, 2002, was a covered dependent under the Plan. At birth, S. G.'s skull appeared normal, but, at about two months of age, she began to exhibit a slight flattening of the head. The flattening became more pronounced by four months of age. The flattening was probably due to positioning of the infant at night so that she would sleep on her back and presumably be safer from sudden infant death syndrome. Petitioner and his wife took S. G. to a pediatrician, who diagnosed S. G. with severe bilateral deformational plagiocephaly. The pediatrician confirmed that S. G.'s condition was not congenital. After trying unsuccessfully conservative treatment, the pediatrician recommended the Dynamic Orthotic Cranioplasty band. This device is called a DOC Band?. The DOC Band? is among the type of devices that attempt to reshape the skull of infants through the application of focused pressure on the still-forming skull. The U.S. Food and Drug Administration has approved 38 such devices, and many of them have been used for many years. These devices include rigid helmets, which are initially fitted, but not later adjusted, and more-flexible bands, which are adjusted periodically during the period that the infants wear them. S. G. first wore the DOC Band? for four months, starting in May 2003. Although she received little benefit from the device, Petitioner, his wife, and the pediatrician decided to give the device another try, starting in September or October 2003. During the second application of the DOC Band?, which ended in February 2004, S. G.'s skull asymmetry reduced substantially. When the pediatrician first prescribed the DOC Band?, Petitioner submitted a claim to Blue Cross Blue Shield of Florida (BCBSF), which is the third-party administrator of the Plan. BCBSF denied the claim, and Petitioner appealed this decision to Respondent. By letter dated October 24, 2003, Respondent informed Petitioner that it was sustaining the determination of BCBSF. The letter states that the service or procedure was "experimental or investigational" or "not in accordance with generally accepted professional standards." On December 15, 2003, Petitioner filed a letter requesting a formal hearing. However, he never filed a claim for the second application of the DOC band. The Benefit Document lists under the "Summary of Plan Benefits" an "overview" of the "services and supplies" that are covered by the Plan. Benefit Document, p. 11. The "Summary of Plan Benefits" states that the Plan pays a percentage of the cost of "covered care and medical supplies," as long as the "care or supplies" are ordered by a covered physician and are "medically necessary" for treatment as a result of a covered accident, illness, condition, or mental or nervous disorder. Id. The Benefit Document generally covers "doctor's care" and "durable medical equipment." Benefit Document, p. 12. However, under "Limitations and Exclusions," the Benefit Document does not cover: "Services and procedures considered by BCBSF to be experimental or investigational, or services and procedures not in accordance with generally accepted professional medical standards, including complications resulting from these non-covered services." Benefit Document, p. 31. The Benefit Document defines "investigational or investigational services" as "any evaluation, treatment, therapy or device that:" cannot be lawfully marketed without approval of the US Food and Drug Administration or the Florida Department of Health if approval for marketing has not been given at the time the service is provided to the covered person is the subject of ongoing Phase I or II clinical investigation, or the experimental or research arm of a Phase III clinical investigation--or is under study to determine the maximum dosage, toxicity, safety or efficacy, or to determine the efficacy compared to standard treatment for the condition is generally regarded by experts as requiring more study to determine maximum dosage, toxicity, safety or efficacy, or to determine the efficacy compared to standard treatment for the condition has not been proven safe and effective for treatment of the condition based on the most recently published medical literature of the US, Canada or Great Britain using generally accepted scientific, medical or public health methodologies or statistical practices is not accepted in consensus by practicing doctors as safe and effective for the condition is not regularly used by practicing doctors to treat patients with the same or a similar condition BCBSF and [Respondent] determine whether a service or supply is experimental or investigational. The first two bullets of the above-cited definition of experimental or investigational services are not at issue in this case. The U.S. Food and Drug Administration has approved the DOC Band?, and it is not presently under clinical investigation or otherwise under study to determine its efficacy compared to other treatments. Nor is the safety of the DOC Band? at issue. Premature use, which is not applicable in this case, may present certain risks. Otherwise, the main risk is minor skin irritation, which obviously may be monitored. Thus, no substantial, unavoidable safety issues emerge in the use of the DOC Band? in this case. In addition to raising safety concerns, the third and fourth bullets of the above-cited definition of experimental or investigational services raise the issue of the efficacy of the DOC Band?. In 2003, the American Academy of Pediatrics released a position paper on the management of skull deformities in infants and reached no firm conclusions about the efficacy of cranial orthoses. However, a significant number of physicians find the DOC Band? to be effective in treating deformational plagiocephaly. The fifth and sixth bullets of the above-cited definition of experimental or investigational classify the DOC Band? as experimental or investigational if it is not accepted in "consensus" by practicing doctors as effective or if it is not "regularly used" by practicing doctors to treat deformational plagiocephaly. "Consensus" is defined as: "1.a. general agreement: UNANIMITY . . . [,] b. the judgment arrived at by most of those concerned[,] and 2. group solidarity in sentiment and belief." Merriam-Webster's Collegiate Dictionary (Tenth Edition 1999). Respondent has proved that DOC Band? has failed to reach these levels of acceptance and use. Although insureds may be absorbing the cost of DOC Bands? without filing claims, the fact that the Plan has received one claim for a DOC Band? in 2004 and one claim for a DOC Band? in 2003 militates against a finding of regular use, if not also widespread acceptance, of the device. Although significant numbers of physicians find the DOC Band? to be effective in treating deformational plagiocephaly, the record reveals disagreement in the acceptance of the DOC Band? and suggests that practitioners do not regularly use the device to treat deformational plagiocephaly. The research articles on which Petitioner relies assist in determining the efficacy of the DOC Band?, but do not assist in finding, at the practitioner level, the extent of acceptance and use of the device. The medical group endorsements suggest an invitation to the use of the DOC Band?, but assist little in finding the acceptance of the device by practitioners and do not assist at all in finding the extent of use of the device by practitioners. Against this evidence, the scant number of claims and the testimony of Respondent's expert witness to similar effect establish that the DOC Band? meets the fifth and sixth definitional bullets of experimental or investigational services.
Recommendation It is RECOMMENDED that Respondent enter a final order denying Petitioner's claim to the Plan for payment for the DOC Band? and related services. DONE AND ENTERED this 22nd day of November, 2004, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 22nd day of November, 2004. COPIES FURNISHED: William Simon, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Alberto Dominguez, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Andres G. Gil 206 Cameron Court Weston, Florida 33326 Sonja P. Mathews Assistant General Counsel Office of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950
Other Judicial Opinions A party who is adversely affected by this final order is entitled to judicial review pursuant to Sections 120.68 and 766.311, Florida Statutes. Review proceedings are governed by the Florida Rules Of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk Of The Division of Administrative Hearings and a_ second copy, accompanied by filing fees prescribed by law, with the appropriate District Court of Appeal. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. 11
The Issue The issues to be determined in this case are whether Respondent Lockhart Builders, Inc., violated state laws applicable to workers’ compensation insurance coverage by failing to secure coverage for three employees and failing to produce records requested by Petitioner Department of Financial Services, Division of Workers’ Compensation (Department) and, if so, what penalty should be assessed for the violations.
Findings Of Fact Petitioner is the state agency responsible for the enforcement of the workers’ compensation insurance coverage requirements established in Chapter 440, Florida Statutes (2007).1 Respondent is a Florida corporation with its office in Bradenton. William Lockhart is Respondent’s president. Respondent is licensed to engage in construction activity in Florida. Respondent was engaged to construct a two-story duplex at 2315 Gulf Drive in Bradenton. Respondent began work at the job site on or about February 21, 2007. On August 22, 2007, Lockhart received a proposal from Burak Yavalar, owner of BY Construction, to do the exterior stucco work on the duplex building for a flat fee of $10,750. The proposal was accepted by Respondent on August 23, 2007. Yavalar presented Lockhart with a certificate of liability insurance which indicated that he had obtained workers’ compensation coverage for his employees. The certificate was issued by Employee Leasing Solutions, Inc. (ELS), a professional leasing company in Bradenton. ELS provides mainly payroll services and workers’ compensation insurance coverage for its clients. Lockhart did not ask for, and Yavalar did not provide Lockhart with, a list of the names of the BY Construction employees who were covered by the insurance. Lockhart made a call to ELS to verify that BY Construction had workers’ compensation insurance coverage, but he did not ask for a list of BY Construction employees covered by its insurance policy. BY Construction began work at Respondent’s job site on or about September 10 or 11, 2007. On September 12, 2007, BY Construction had eight employees at the job site. One employee, Justin Ormes, had previously worked for BY Construction, had quit for a while, and had just returned. Two other employees, Carlos Lopez and Jaime Alcatar, had been working on a nearby job site and were asked by Yavalar to come to work at Respondent’s job site. Yavalar claims that on the morning of September 12, 2007, Ormes, Lopez, and Alcatar had not yet been employed or authorized to start work for BY Construction. On September 12, 2007, Petitioner’s investigators Germaine Green and Colleen Wharton performed a random compliance check at Respondent’s job site. Without being specific about what particular work was being performed at the site by Ormes, Lopez, and Alcatar, the investigators testified that when they arrived at the job site they observed all eight men performing stucco work. The investigators spoke to Yavalar, Lockhart and the workers at the job site to determine their identities and employment status. Yavalar told the investigators his eight employees had workers’ compensation insurance coverage through ELS. However, upon checking relevant records, the investigators determined that insurance coverage for Ormes, Lopez, and Alcatar had not been secured by either BY Construction or Respondent. Wharton issued a statewide stop-work order to BY Construction for its failure to obtain workers’ compensation coverage for the three employees. After the stop work order was issued, Yavalar left the job site with Lopez and Alcatar to complete their paperwork to obtain insurance coverage through ELS. Yavalar’s wife was able to re-activate Ormes’ insurance coverage with ELS over the telephone. By the end of the day on September 12, 2007, insurance coverage was secured by BY Construction for Ormes, Lopez, and Alcatar. The business records of BY Construction produced for the Department indicated that Ormes had been paid by BY Construction in the period from March to July 2007, and then on September 12, 2007; Lopez had been paid on August 24, 2007, and then on September 12, 2007; Alcatar had been paid on September 12, 2007. All three men were paid only $28 on September 12, 2007. This evidence supports the testimony of Yavalar that these three had arrived at Respondent’s job site for the first time on September 12, 2008. BY Construction was later served with an amended order of penalty for its failure to obtain workers’ compensation coverage for the three employees. It arranged with the Department to pay the penalty through installments and was conditionally released from the stop-work order. When the Department's investigators were at the job site on September 12, 2007, they informed Lockhart about the stop-work order being issued to BY Construction and gave Lockhart a Request for Production of Business Records for the purpose of determining whether Respondent had obtained proof of workers’ compensation insurance coverage from BY Construction before BY Construction commenced work at Respondent’s job site. Respondent produced the requested records. As discussed in the Conclusions of Law, Florida law charges a contractor with the duty to secure workers’ compensation insurance coverage for any uninsured employees of its subcontractors. On this basis, the Department served Respondent with a Stop-Work Order and an Order of Penalty Assessment on September 21, 2007, for failing to secure coverage for Ormes, Lopez, and Alcatar. On September 21, 2007, the Department served a Request for Production of Business Records for Penalty Assessment Calculation to Respondent. The Department’s request asked Respondent to produce records for the preceding three years, including payroll records, tax returns, and proof of insurance. Respondent produced some records in response to this second request, which the Department deemed insufficient to calculate a penalty. However, the evidence shows Respondent produced the only records that it possessed regarding its association with BY Construction. The Department’s proposed penalty does not include an assessment based solely on Respondent’s failure to produce requested records. When an employer fails to provide requested business records within 15 days of the request, the Department is authorized to assess a penalty by imputing the employer's payroll using "the statewide average weekly wage as defined in Section 440.12(2), multiplied by l.5." § 440.107(7)(e), Fla. Stat., and Fla. Admin. Code R. 69L-6.028. Imputing the gross payroll for Ormes, Lopez and Alcatar for the years 2004, 2005, 2006, and 2007, by using the average weekly wage for the type of work, the Department assessed Respondent with a penalty of $138,596.67 and issued an Order of Penalty Assessment to Respondent on October 31, 2007. Petitioner later amended the penalty to $70,272.51, based on the fact that BY Construction was not incorporated until January 1, 2006, and issued a Second Amended Order of Penalty Assessment on December 20, 2007.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is recommended that the Department enter a final order that amends its penalty assessment to reflect one day of non-compliance by Respondent. DONE AND ENTERED this 31st day of March, 2008, in Tallahassee, Leon County, Florida. BRAM D. E. CANTER 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 31st day of March, 2008.
The Issue The issue for determination is whether Petitioners’ Interim Rate Request (IRR) for an increase should be granted.
Findings Of Fact AHCA is the agency of state government responsible for the implementation and administration of the Medicaid Program in the State of Florida. AHCA is authorized to audit Medicaid Cost Reports submitted by Medicaid Providers participating in the Medicaid Program. Avante at Jacksonville and Avante at St. Cloud are licensed nursing homes in Florida that participate in the Medicaid Program as institutional Medicaid Providers. On May 23, 2007, Avante at Jacksonville entered into a settlement agreement with the representative of the estate of one of its former residents, D. P. The settlement agreement provided, among other things, that Avante at Jacksonville would pay $350,000.00 as settlement for all claims. Avante at Jacksonville paid the personal representative the sum of $350,000.00. By letter dated July 16, 2007, Avante at Jacksonville requested an IRR effective August 1, 2007, pursuant to the Plan Section IV J.2., for additional costs incurred from self-insured losses as a result of paying the $350,000.00 to settle the lawsuit. Avante at Jacksonville submitted supporting documentation, including a copy of the settlement agreement, and indicated, among other things, that the costs exceeded $5,000.00 and that the increase in cost was projected at $2.77/day, exceeding one percent of the current Medicaid per diem rate. At all times pertinent hereto, the policy held by Avante at Jacksonville was a commercial general and professional liability insurance policy. The policy had $10,000.00 per occurrence and $50,627.00 general aggregate liability limits. The policy was a typical insurance policy representative of what other facilities in the nursing home industry purchased in Florida. The policy limits were typical limits in the nursing home industry in Florida. By letter dated July 18, 2007, AHCA denied the IRR on the basis that the IRR failed to satisfy the requirements of Section IV J. of the Plan, necessary and proper for granting the request. Avante at Jacksonville contested the denial and timely requested a hearing. Subsequently, Avante at Jacksonville became concerned that, perhaps, the incorrect provision of the Plan had been cited in its IRR. As a result, a second IRR was submitted for the same costs. By letter dated October 22, 2007, Avante at Jacksonville made a second request for an IRR, this time pursuant to the Plan Section IV J.3., for the same additional costs incurred from the self-insured losses as a result of paying the $350,000.00 settlement. The same supporting documentation was included. Avante at Jacksonville was of the opinion that the Plan Section IV J.3. specifically dealt with the costs of general and professional liability insurance. By letter dated October 30, 2007, AHCA denied the second request for an IRR, indicating that the first request was denied based on “all sub-sections of Section IV J of the Plan”; that the second request failed to satisfy the requirements of the Plan Section IV J.3. and all sections and sub-sections of the Plan “necessary and proper for granting [the] request.” Avante at Jacksonville contested the denial and timely requested a hearing. On October 19, 2007, Avante at St. Cloud entered a settlement agreement with the personal representative of the estate of one of its former residents, G. M. The settlement agreement provided, among other things, that Avante at St. Cloud would pay $90,000.00 as settlement for all claims. Avante at St. Cloud paid the personal representative the sum of $90,000.00. By letter dated December 10, 2007, Avante at St. Cloud requested an IRR effective November 1, 2007, pursuant to the Plan Section IV J, for additional costs incurred as a result of paying the $90,000.00 to settle the lawsuit. Avante at St. Cloud submitted supporting documentation, including a copy of the settlement agreement, and indicated, among other things, that the increase in cost was projected at $2.02/day, exceeding one percent of the current Medicaid per diem rate. At all times pertinent hereto, the policy held by Avante at St. Cloud was a commercial general and professional liability insurance policy. The policy had $10,000.00 per occurrence and $50,000.00 general aggregate liability limits. The policy was a typical insurance policy representative of what other facilities in the nursing home industry purchased in Florida. The policy limits were typical limits in the nursing home industry in Florida. By letter dated December 12, 2007, AHCA denied the IRR on the basis that the IRR failed to satisfy the requirements of “Section IV J of the Plan necessary and proper for granting [the] request.” Avante at St. Cloud contested the denial and timely requested a hearing. Insurance Policies and the Nursing Home Industry in Florida Typically, nursing homes in Florida carry low limit general and professional liability insurance policies. The premiums of the policies exceed the policy limits. For example, the premium for a policy of Avante at Jacksonville to cover the $350,000.00 settlement would have been approximately $425,000.00 and for a policy of Avante at St. Cloud to cover the $90,000.00 settlement would have been approximately $200,000.00. Also, the policies have a funded reserve feature wherein, if the reserve is depleted through the payment of a claim, the nursing home is required to recapitalize the reserve or purchase a new policy. That is, if a policy paid a settlement up to the policy limits, the nursing home would have to recapitalize the policy for the amount of the claim paid under the policy and would have to fund the loss, which is the amount in excess of the policy limits, out-of-pocket. Florida’s Medicaid Reimbursement Plan for Nursing Homes The applicable version of the Plan is Version XXXI. AHCA has incorporated the Plan in Florida Administrative Code Rule 59G-6.010. AHCA uses the Plan in conjunction with the Provider Reimbursement Manual (CMS-PUB.15-1)3 to calculate reimbursement rates of nursing homes and long-term care facilities. The calculation of reimbursement rates uses a cost- based, prospective methodology, using the prior year’s costs to establish the current period per diem rates. Inflation factors, target ceilings, and limitations are applied to reach a per patient, per day per diem rate that is specific to each nursing home. Reimbursement rates for nursing homes and long-term care facilities are typically set semi-annually, effective on January 1 and July 1 of each year. The most recent Medicaid cost report is used to calculate a facility’s reimbursement rate and consists of various components, including operating costs, the direct patient care costs, the indirect patient care costs, and property costs. The Plan allows for the immediate inclusion of costs in the per diem rate to Medicaid Providers under very limited circumstances through the IRR process. The interim rate’s purpose is to compensate for the shortfalls of a prospective reimbursement system and to allow a Medicaid Provider to increase its rate for sudden, unforeseen, dramatic costs beyond the Provider’s control that are of an on-going nature. Importantly, the interim rate change adjusts the Medicaid Provider’s individual target rate ceiling to allow those costs to flow ultimately through to the per diem paid, which increases the amount of the Provider’s overall reimbursement. In order for a cost to qualify under an interim rate request, the cost must be an allowable cost and meet the criteria of Section IV J of the Plan. The Plan provides in pertinent part: IV. Standards * * * J. The following provisions apply to interim changes in component reimbursement rates, other than through the routine semi- annual rate setting process. * * * Interim rate changes reflecting increased costs occurring as a result of patient or operating changes shall be considered only if such changes were made to comply with existing State or Federal rules, laws, or standards, and if the change in cost to the provider is at least $5000 and would cause a change of 1 percent or more in the provider’s current total per diem rate. If new State or Federal laws, rules, regulations, licensure and certification requirements, or new interpretations of existing laws, rules, regulations, or licensure and certification requirements require providers to make changes that result in increased or decreased patient care, operating, or capital costs, requests for component interim rates shall be considered for each provider based on the budget submitted by the provider. All providers’ budgets submitted shall be reviewed by the Agency [AHCA] and shall be the basis for establishing reasonable cost parameters. In cases where new State or Federal requirements are imposed that affect all providers, appropriate adjustments shall be made to the class ceilings to account for changes in costs caused by the new requirements effective as of the date of the new requirements or implementation of the new requirements, whichever is later. Interim rate adjustments shall be granted to reflect increases in the cost of general or professional liability insurance for nursing homes if the change in cost to the provider is at least $5000 and would cause change of 1 percent or more in the provider’s current total per diem. CMS-PUB.15-1 provides in pertinent part: 2160. Losses Arising From Other Than Sale of Assets A. General.—A provider participating in the Medicare program is expected to follow sound and prudent management practices, including the maintenance of an adequate insurance program to protect itself against likely losses, particularly losses so great that the provider’s financial stability would be threatened. Where a provider chooses not to maintain adequate insurance protection against such losses, through the purchase of insurance, the maintenance of a self- insurance program described in §2161B, or other alternative programs described in §2162, it cannot expect the Medicare program to indemnify it for its failure to do so. Where a provider chooses not to file a claim for losses covered by insurance, the costs incurred by the provider as a result of such losses may not be included in allowable costs. * * * 2160.2 Liability Losses.—Liability damages paid by the provider, either imposed by law or assumed by contract, which should reasonably have been covered by liability insurance, are not allowable. Insurance against a provider’s liability for such payments to others would include, for example, automobile liability insurance; professional liability (malpractice, negligence, etc.); owners, landlord and tenants liability; and workers’ compensation. Any settlement negotiated by the provider or award resulting from a court or jury decision of damages paid by the provider in excess of the limits of the provider’s policy, as well as the reasonable cost of any legal assistance connected with the settlement or award are includable in allowable costs, provided the provider submits evidence to the satisfaction of the intermediary that the insurance coverage carried by the provider at the time of the loss reflected the decision of prudent management. Also, the reasonable cost of insurance protection, as well as any losses incurred because of the application of the customary deductible feature of the policy, are includable in allowable costs. As to whether a cost is allowable, the authority to which AHCA would look is first to the Plan, then to CMS-PUB.15- 1, and then to generally accepted accounting principles (GAAP). As to reimbursement issues, AHCA would look to the same sources in the same order for the answer. The insurance liability limit levels maintained by Avante at Jacksonville and Avante at St. Cloud reflect sound and prudent management practices. Claims that resulted in the settlements of Avante at Jacksonville and Avante at St. Cloud, i.e., wrongful death and/or negligence, are the type of claims covered under the general and professional liability policies carried by Avante at Jacksonville and Avante at St. Cloud. Avante at Jacksonville and Avante at St. Cloud both had a general and professional liability insurance policy in full force and effect at the time the wrongful death and/or negligence claims were made that resulted in the settlement agreements. Neither Avante at Jacksonville nor Avante at St. Cloud filed a claim with their insurance carrier, even though they could have, for the liability losses incurred as a result of the settlements. Avante at Jacksonville and Avante at St. Cloud both chose not to file a claim with their respective insurance carrier for the liability losses incurred as a result of the settlements. AHCA did not look beyond the Plan in making its determination that neither Avante at Jacksonville nor Avante at St. Cloud should be granted an IRR. Wesley Hagler, AHCA’s Regulatory Analyst Supervisor, testified as an expert in Medicaid cost reimbursement. He testified that settlement agreements are a one time cost and are not considered on-going operating costs for purposes of Section IV J.2. of the Plan. Mr. Hagler’s testimony is found to be credible. Mr. Hagler testified that settlement agreements and defense costs are not considered general and professional liability insurance for purposes of Section IV J.3. of the Plan. To the contrary, Stanley William Swindling, Jr., an expert in health care accounting and Medicare and Medicaid reimbursement, testified that general and professional liability insurance costs include premiums, settlements, losses, co-insurance, deductibles, and defense costs. Mr. Swindling’s testimony is found to be more credible than Mr. Hagler’s testimony, and, therefore, a finding of fact is made that general and professional liability insurance costs include premiums, settlements, losses, co-insurance, deductibles, and defense costs.4 Neither Avante at Jacksonville nor Avante at St. Cloud submitted any documentation with their IRRs to indicate a specific law, statute, or rule, either state or federal, with which they were required to comply, resulted in an increase in costs. Neither Avante at Jacksonville nor Avante at St. Cloud experienced an increase in the premiums for the general and professional liability insurance policies. Neither Avante at Jacksonville nor Avante at St. Cloud submitted documentation with its IRRs to indicate that the premiums of its general and professional liability insurance increased. Avante at Jacksonville and Avante at St. Cloud could only meet the $5,000.00 threshold and the one percent increase in total per diem under the Plan, Sections IV J.2. or J.3. by basing its calculations on the settlement costs. Looking to the Plan in conjunction with CMS-PUB.15-1 to determine reimbursement costs, CMS-PUB.15-1 at Section 2160A provides generally that, when a provider chooses not to file a claim for losses covered by insurance, the costs incurred by the provider, as a result of such losses, are not allowable costs; however, Section 2160.2 specifically includes settlement dollars in excess of the limits of the policy as allowable costs, provided the evidence submitted by the provider to the intermediary (AHCA) shows to the satisfaction of the intermediary that the insurance coverage at the time of the loss reflected the decision of prudent management. The policy coverage for Avante at Jacksonville and Avante at St. Cloud set the policy limits for each facility at $10,000.00 for each occurrence. Applying the specific section addressing settlement negotiations, the loss covered by insurance would have been $10,000.00 for each facility and the losses in excess of the policy limits--$340,000.00 for Avante at Jacksonville and $80,000.00 for Avante at St. Cloud—would have been allowable costs.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying the interim rate requests for an increase for Avante at Jacksonville and Avante at St. Cloud. DONE AND ENTERED this 18th day of September 2008, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 18th day of September, 2008. 1/ The corrected case-style.
Findings Of Fact Respondent is currently licensed as an Ordinary-Combination Life, including Disability Insurance Agent to represent Interstate Life and Accident Insurance Company and as a General Lines Agent Limited to Industrial Fire to represent Interstate Fire Insurance Company. (Exhibit 37) During the period June 1, 1974, until October 1, 1976, Respondent was an agent for Gulf Life Insurance Company. In his application for licensing by Petitioner on the application dated July 3, 1974, Respondent listed his date of birth as December 14, 1928 (Exhibit 36), on the application dated June 28, 1975, Respondent listed his date of birth as November 11, 1928 (Exhibit 35), and on his application dated October 5, 1976, Respondent listed his date of birth as November 14, 1926 (Exhibit 34). By affidavit dated January 4, 1978 (Exhibit 33), Respondent declared he was born November 14, 1926. On March 15, 1974, John L. Harris was issued life insurance field policy No. 745 676 678 (Exhibit 1) and weekly premiums were paid continuously on this policy. He was also issued whole life policy No. 715 090 733 on October 18, 1971 (Exhibit 2), and weekly premiums were paid continuously on this policy. Although Harris paid the premiums each week when due to the Respondent, at one period these premiums were not remitted to Gulf Life and the policies lapsed. Immediately thereafter, on May 1, 1975, an application for new policies (Exhibit 5), was submitted to Gulf Life by Respondent with the name of John Harris in the space for the signature of the proposed insured. This signature was not that of Harris and Respondent signed the application as a witness to Harris signature. Gulf Life issued a policy to Harris (Exhibit 4) based upon this application. Evidence was presented that similar procedures were followed by Respondent in Gulf Life policies issued to Frances Harris, Dorcas Cohen, James Cohen, Joe Bryant, Peggy Hanie Bryant, Wilma Hanie and Brenda Bryant, whereby policies serviced by Respondent were lapsed by Gulf Life who later issued new policies on forged applications submitted by Respondent.
