Findings Of Fact The Respondent. At all times relevant to this proceeding, the Respondent, George Costage, served as a member of the City Commission of the City of Safety Harbor (hereinafter referred to as the "City"). Mr. Costage was first elected to the City Commission in March of 1986. He was reelected to the City Commission in 1988 and 1990. His bid for reelection in 1992 was unsuccessful. Mr. Costage's service on the City Commission was his only experience holding public office. Mr. Costage had previously worked as a fireman in the City of Detroit until his retirement. Mr. Costage was paid a salary of approximately $400.00 a month for his service on the City Commission. The City of Safety Harbor's Travel Policy and Procedure. Members of the City Commission, including Mr. Costage, were required from time to time to travel on behalf of the City. For example, travel for the City in conjunction with the Florida League of Cities was expected of Commissioners, including Mr. Costage. Mr. Costage served on the Ethics Committee of the Florida League of Cities. Commissioners also incurred expenses dealing with the citizens of the City which they usually were not specifically reimbursed for. In lieu of reimbursing Commissioners for such expenses, all Commissioners were paid $150.00 a month by the City. The $150.00 monthly payment was intended as reimbursement for the otherwise unreimbursed expenses they incurred. Commissioners were paid $150.00 per month regardless of the amount of actual expenses they incurred. The City also paid Commissioners for expenses they incurred for travel out side of the City on City business. For example, travel by Commissioners to an annual Florida League of Cities' meeting in Crystal River, Florida, was paid for by the City. There were several methods by which the City paid for out-of-town travel expenses of Commissioners: The City made payments directly to the vendor on behalf of a Commissioner; A credit card was issued by the City for each Commissioner. Commissioners were allowed to use the credit card to charge expenses which the City then paid directly to the credit card company; Commissioners could obtain reimbursement from the City for expenses they had previously incurred and paid out of their own resources; and The City could advance funds to Commissioners to cover estimated travel expenses to be incurred. The City used a form titled a "Travel Expense Certificate" (hereinafter referred to as the "Travel Form") in conjunction with the payment of travel expenses of Commissioners. The Travel Form was to be used by Commissioners to obtain reimbursement of travel expenses a Commissioner incurred and paid for out of the Commissioner's own resources. See Advocate's exhibit 4A and 4B, a photocopy of Travel Forms used by Mr. Costage. On the back of the Travel Form were instructions concerning how to complete the form and "Travel Expenses Regulations." Among other things, the following was printed on the back of the Travel Form: Traveling expenses shall be limited to those expenses incurred in the performance of a public purpose authorized by law to be performed and must be within the limitations prescribed below. . . . . . . . Certificate: "I certify that the expenses shown herein were necessary and actually incurred during, authorized travel in performance of official duty and the claim made herewith is true and correct in every manner." The City had established policies governing reimbursement of travel incurred by Commissioners. Some of those polices were in writing, having been included on the back of the Travel Form. The evidence failed to prove that the City, however, always strictly enforced its policies. Because of alleged problems associated with travel expenses paid by the City, including the issues in this case, the City adopted more extensive written travel policies by Resolution adopted November 20, 1989. Travel Expenses of Family Members. Commissioners, at times, took family members, including spouses, with them while traveling on City business. The City also, at times, made travel arrangements for family members and made advance payments of travel expenses for family members. It was the policy of the City that travel expenses of family members of Commissioners were not "expenses necessarily incurred in the performance of a public purpose authorized by law to be performed . . . ." Therefore, the City expected reimbursement of travel expenses incurred by family members. Although the City's policy concerning the payment of travel expenses of family members set out in finding of fact 15 was not specifically stated in writing, the general policy contained on the back of the Travel Form is sufficient to put a reasonable person on notice that they should determine whether a family member's travel expenses are "necessarily incurred in the performance of a public purpose authorized by law to be performed " It was not the policy of the City that travel expenses of spouses or other family members of a Commissioner incurred while the Commissioner was traveling on City business were to be borne by the City. The City did not require reimbursement for certain travel expenses incurred by a Commissioner which also benefited a family member of the Commissioner. Those expenses were limited to expenses which would generally have been incurred by the Commissioner regardless of the presence of the family member on the trip, i.e., the cost of a rental vehicle. Travel Expenses Incurred by Mr. Costage's Spouse Paid by the City. At issue in this proceeding is the period of time between March, 1986 and November 20, 1989, when the City adopted a written policy clearing setting out more extensive travel policies of the City. During the period of time at issue in this case, and while Mr. Costage was a Commissioner, his wife of thirty-seven years accompanied him on trips he took on City business. The City paid Mrs. Costage's travel expenses directly to the vendor when making travel arrangements or it paid travel expenses attributable to Mrs. Costage charged on the credit card provided to Mr. Costage by the City for his use. On at least one occasion, the cost of a helicopter trip over the Grand Canyon incurred by Mr. and Mrs. Costage was paid for by the City. Mr. Costage took no immediate action to reimburse the City for travel expenses paid by the City for Mrs. Costage's travel. Not until well after Mr. Costage was questioned publicly about the expenses paid by the City for Mrs. Costage's travel did Mr. Costage reimburse the City for her travel expenses. Mr. Costage's Payment of Mrs. Costage's Travel Expenses to the City. During Mr. Costage's campaign for reelection to the City Commission in the Spring of 1990, the propriety of the payment of the City of travel expenses incurred by Mr. Costage's spouse was questioned. As a result of the issue being raised, Mr. Costage requested that the City Manager determine the amount of travel expenses which the City had paid for Mrs. Costage's travel. This request was made in approximately March, 1990. The City Manager then requested and received an accounting from the City finance department. Based upon the records of the City finance department, it was initially determined that a total of approximately $3,100.00 in travel expenses attributable to Mrs. Costage had been paid by the City and had not been repaid by Mr. Costage. Mr. Costage was apprised of the City finance department's determination in approximately March, 1990. Mr. Costage asserted that the correct amount was about half the $3,100.00 amount arrived at by the City finance department. No reimbursement was made in March, 1990. At about the same time that Mr. Costage was informed of the amount of travel expenses attributable to his spouse, the Pinellas County Sheriff's Office began an investigation into the City's payment of travel expenses on behalf of family members of Commissioners and others. This was a general investigation, not limited to any one Commissioner or individual. As a consequence of the investigation, Mr. Costage took no further action to reimburse the City for the expenses paid on behalf of his spouse. Subsequent to the completion of the Sheriff's Office investigation, Mr. Costage again discussed the amount of his spouse's travel expenses with the City and it was mutually agreed that the correct amount of unreimbursed travel expenses paid by the City for Mrs. Costage was $2,974.63. Mr. Costage reimbursed the City this amount in February, 1991. Mr. Costage's Knowledge of the City's Policy Concerning the Payment of Family Member Travel Expenses. Mr. Costage has suggested that he did not violate Section 112.313(6), Florida Statutes, because of his assertion that the City did not have a policy that required him to pay for his spouse's travel expenses--that the City practice was just the opposite. He also has asserted that, if the City had such a policy, he was never informed that he was required to repay his spouse's travel expenses and he was not otherwise aware of such a requirement. These assertions are not supported by the weight of the evidence. First, the assertion that no policy requiring reimbursement of family- member travel expenses existed is contrary to the weight of the evidence: The statements on the back of the Travel Form are sufficient to place a reasonable person on notice that such expenses should not be paid for by the City. The statements are, at the very least, sufficient that it would be unreasonable for Mr. Costage to simply assume that his spouse's travel was "incurred in the performance of a public purpose authorized by law"; Several other Commissioners who served during at least part of the period that Mr. Costage was a Commissioner were specifically told that travel expenses incurred by family members of Commissioners were required to be repaid to the City by the Commissioner. See the testimony of Commissioners Caldemeyer, Cincota and Baty, City Mayor Dettmer and City Mayor Levine. Mr. Costage's assertion that it was the practice, if not the policy, of the City that travel expenses of family members were to be paid by the City is also not supported by the weight of the evidence: Except for Mr. Costage and former Commissioner McLaughlin, all the City officials who served during the period of time at issue and who testified at the final hearing of this matter indicated that they were aware that they were ultimately responsible for travel expenses incurred by family members and that the City did not pay those expenses; The evidence failed to prove that travel expenses of family members other than those attributable to Mr. Costage's spouse and possibly Mr. McLaughlin's spouse were paid for by the City without reimbursement; If the City had a policy of paying for spouse travel expenses without requiring reimbursement, why then did Mr. Costage ultimately repay the City almost $3,000.00? He repaid the expenses because he knew City policy required reimbursement and because his use of public funds for his spouse's benefit had been exposed; At best, the evidence proved that the City did not strictly enforce the policy that travel expenses were only to be paid with public funds if they were incurred for a public purpose. As a consequence of the City's lack of strict enforcement, Mr. Costage was able to avoid paying for his spouse's travel expenses from March, 1986 until February, 1991. The lack of enforcement of the City's travel policies, however, does not prove that the City had an established policy of paying the travel expenses of Commissioner's spouses. It only proved that City employees failed to question members of the City's governing body about their actions. The weight of the evidence also proved that Mr. Costage, despite his assertions to the contrary, was told and/or was aware of the City's policy requiring reimbursement of travel expenses of spouses: First, it is concluded that Mr. Costage was aware of the instructions on the back of the Travel Form: Mr. Costage filed two Travel Forms for which he received reimbursement of expenses incurred in 1986 and 1987. Although Mr. Costage was not able to say absolutely that the signature on the Travel Forms (Advocate's exhibit 4A and 4B) was his signature, he was also not able to say that it was not his signature and he acknowledged that the signatures could be his. It is, therefore, concluded that the two Travel Forms were signed and submitted by Mr. Costage. This conclusion is further supported by the fact that one other Commissioner witnessed Mr. Costage filing a Travel Form; Although on infrequent occasions a copy of a Travel Form without the back of the form was used by City personnel, it was the prevailing practice, especially of individuals such as Commissioners who were located in City Hall, to file an original three part Travel Form which included the instructions. Secondly, it is inferred from the following that Mr. Costage received instructions from the City Manager shortly after he was elected concerning the City's travel policies, including the policy concerning travel expenses of spouses: It was the City Manager's common practice and procedure to discuss, or cause to be discussed, City policies and procedures, including those governing spouse travel expenses, with all new Commissioners; All of the Commissioners who served during the period of time at issue and who testified in the final hearing, except Mr. Costage, recalled meeting with the City Manager or, at the City Manager's direction, the City's finance director, and discussing travel procedures. All of these Commissioners, except Mr. McLaughlin, recall being told that family travel expenses were to be paid by the Commissioner. Even Mr. McLaughlin admitted that he had been told that travel expenses attributable to his children were to be reimbursed by him. Mr. McLaughlin's testimony that the City policy concerning the payment of spouse travel expenses was not credible, especially in light of the ongoing litigation between Mr. McLaughlin and the City over travel expenses of Mrs. McLaughlin paid for by the City. While on a break during a budget workshop in 1986 or 1987, Mrs. Costage remarked in the presence of Mr. Costage and others that she thought the City should pay for the travel expenses of spouses of Commissioners because of all that the spouses did on behalf of the City. Mr. Costage did not indicate, as he has asserted in this proceeding, that the City already had a policy of paying for spouse travel expenses. The statement is also contrary to Mr. Costage's assertion that he was unaware of the actual policy of the City requiring that Commissioners ultimately pay for their spouse's travel; In 1987, Arthur Levine ran against Alton Dettmer for the position of City Mayor. At some time before the election Mr. Costage advised Mr. Levine to look into Mr. Dettmer's travel expense reports, implying that there was something wrong with the manner in which Mr. Dettmer had been paid for travel expenses. This act by Mr. Costage supports a finding that Mr. Costage was aware that the City had at least some policies governing travel. Benefit of Spouses Travel Expenses to Mr. Costage. Based upon the conclusion that Mr. Costage was aware that the City's policy required that he pay for Mrs. Costage's travel expenses and the fact that Mr. Costage did not pay for almost $3,000.00 in expenses incurred during the period March, 1986 through November 20, 1989, until February, 1991, it is concluded that Mr. Costage was aware that his failure to pay Mrs. Costage's travel expenses would be a financial benefit to him.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission on Ethics enter a Final Order and Public Report finding that the Respondent, George Costage violated Section 112.313(6), Florida Statutes, as alleged in Complaint No. 91-37. It is further RECOMMENDED that Mr. Costage be publicly censured and reprimanded. It is further RECOMMENDED that Mr. Costage be required to pay a civil penalty of $3,000.00. DONE and ENTERED this 24th day of September, 1992, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1992. APPENDIX Case Number 92-1007EC The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Advocate's Proposed Findings of Fact A 1 2. 2 3. 3 5. 4 19. 5 12. B 1 4. 2-4 6. 5 7. 6 8. 7 14-15. 8 9. 9 Hereby accepted. 10 9. 11 33. 12 10. C 1 20-21. 2 22. 3 23. 4 24. 5 25. 6 Hereby accepted. 7 25. 8 26. 9 See 27. 10 27. 11 28. The last sentence is hearsay. 12 29. D 1-2 33(a) and hereby accepted. 3-5 33(b). 6 Hereby accepted. 7 31-32 and 33(b). 8 33(b). 9 Hereby accepted. 10 33(c). Not supported by the weight of the evidence. Hereby accepted. 13 33(d). 14 33. Mr. Costage's Proposed Findings of Fact Mr. Costage's proposed "Findings of Fact" consists primarily of a summary of the testimony of the witnesses and not the ultimate facts which the testimony may support. In large part, the summary of testimony is accurate. It has been noted below where testimony has been mischaracterized or where the testimony does not support the ultimate fact which the testimony may or may no support. Advocate's Witnesses: Constitutes a generally accurate summary of testimony. Constitutes a generally accurate summary of testimony. The second sentence is not, however, relevant. The suggestion in the next to the last sentence that "no reimbursement was sought" is not supported by the weight of the evidence. Constitutes a generally accurate summary of testimony. The last sentence is not relevant and/or is not supported by the weight of the evidence. Constitutes a generally accurate summary of testimony. Whether Mr. Caldemeyer's testimony was "repetitious" is not relevant. Constitutes a generally accurate summary of testimony. Constitutes a generally accurate summary of testimony. The last sentence is hearsay. Mr. Costage's Witnesses: Constitutes a generally accurate summary of testimony. Ms. Adkins testimony involved a period of time subsequent to the period of time at issue in this proceeding. Consequently, her testimony was not of much relevance. Nor was her testimony concerning what others did supported by the weight of the evidence. Not supported by the weight of the evidence. Constitutes a generally accurate summary of testimony. Mr. Costage's testimony was generally not supported by the weight of the evidence or was not relevant. The first three sentences are not supported by the weight of the evidence. The fourth sentence has been generally accepted in finding of fact 14. The fifth through seventh sentences are not relevant. With regard to the last sentence, see findings of fact 24- 29. Mr. Costage's proposed findings of fact end on page 7 of Mr. Costage's proposed recommended order. Beginning on page 7, Mr. Costage has provided argument and conclusions of law. COPIES FURNISHED: Virlindia Doss Assistant Attorney General Department of Legal Affairs The Capitol, Suite 101 Tallahassee, Florida 32399-1050 George A. Routh, Esquire George A. Routh, P.A. 1446 Court Street Clearwater, Florida 34616 Bonnie J. Williams, Executive Director Commission on Ethics The Capitol, Room 2105 P. O. Box 6 Tallahassee, Florida 32302-0006
Findings Of Fact Background Respondent, Department of Health and Rehabilitative Services (Department), is the designated state agency responsible for the administration of Medicaid funds under Title XIX of the Social Security Act. Rule 10C- 7.048(2)(a), Florida Administrative Code. Petitioner, Richmond Healthcare, Inc., d/b/a Sunrise Health Center, owns and operates a 240-bed nursing home in Broward County, Florida, and is a participant in the Florida Medicaid Program. As a participant, petitioner is required to submit annual cost reports to the Department. Based on these cost reports, the Department establishes a participant's reimbursement rate. Rules 10C-7.048(4)(a)5 and 10C-7.048, Florida Administrative Code. The annual cost reports are subject to audit at the discretion of the Department. If audited, a direct examination of the participant's books, records and accounts that support the amounts reported in the annual cost report is made to determine the correctness and propriety of the amounts claimed in the cost report. Rule 10C-7.0481, Florida Administrative Code. Pertinent to this case, the Department elected to audit petitioner's cost reports for the period of October 5, 1983, through December 31, 1984. Based on such audit, the Department issued an audit report that disallowed certain costs claimed by petitioner, and proposed to recoup the excess Medicaid payments made to petitioner as a consequence of such disallowance. Petitioner filed a timely protest to contest the Department's decision. The parties' joint stipulation At hearing, the parties stipulated as follows: The parties have recalculated the usual and customary charges at $65.72 per day. The Department of Health and Rehabilitative Services will reclassify costs of $8,282.00 from the capitalized minor equipment to the operating and patient care component. The Department of Health and Rehabilitative Services will reclassify construction period interest to start-up costs from the date of certificate of occupancy to the date of the admission of the first resident to the nursing home. Amortization of this amount for the 15 months ended December 31, 1984, cost reporting period totaled $27,677.00. The adjustment to indirect home office costs will remain as in the audit report. The parties agree that the property ceiling issue will be remanded to the Department of Health and Rehabilitative Services for an informal hearing. All arguments will be presented in writing to the informal hearing officer. Oral argument will be permitted at the request of either party. The parties further agree that the written arguments will be due on the same date that the Proposed Recommended Order is due in the companion rule challenge case. If the rule challenge is dismissed, the parties will file briefs and hold oral argument, if requested, within fifteen (15) days of its dismissal. The parties agree that the only remaining disputed issue in the Petition filed in this matter is the allowable expense for private airplane usage. The expenses for private airplane usage. In rendering its annual cost report, a participant, such as petitioner, is bound by the following provisions of law or contract: Rule 10C-7.48(4), Florida Administrative Code, which provides: (4) Provider Eligibility. (a) Nursing home providers participating in the Medicaid Nursing Home Program shall: * * * Have a Medicaid reimbursement rate established. The provider shall submit a cost report in compliance with the provisions of the Florida Title XIX Long Term Care Reimbursement Plan, as revised April 1, 1983, and subsequently amended January 1, 1984, adopted by reference. The cost report shall be analyzed and a reimbursement rate established in accordance with the Florida Title XIX Long Term Care Reimbursement Plan, as revised April 1, 1983, and subsequently amended effective January 1, 1984. The Florida Title XIX Long Term Care Reimbursement Plan, which provides: * * * Cost Finding and Cost Reporting All providers are required to detail all of their costs for their entire reporting period, making appropriate adjustments as required by this plan for determination of allowable costs. . . . The cost report must be prepared by the facility's independent Certified Public Account, on the forms prescribed by the Department, and on the accrual basis of accounting in accordance with generally accepted accounting principles as established by the American Institute of Certified Public Accountants (AICPA), the methods of reimbursement in accordance with Medicare (Title XVIII) Principles of Reimbursement, the Provider Reimbursement Manual (HIM-IS) except as modified by the Florida Title XIX Long Term Care Reimbursement Plan, and State of Florida Administrative Rules. * * * G. All providers are required to maintain financial and statistical records in accordance with 42 CFR 405.453(a), (b, (c), (e). The cost report is to be based on financial and statistical records maintained by the facility. Cost information must be current, accurate, and in sufficient detail to support costs set forth in the report. This includes all ledgers, books, records, original evidence of cost and other records in accordance with HIM-IS which pertain to the determination of reasonable costs, and must be capable of and available for auditing by State and Federal authorities. . . . (Emphasis added) * * * III. Allowable Costs * * * C. Implicit in any definition of allowable costs is that those costs should not exceed what a prudent and cost-conscious buyer pays for a given service or item. . . . HIM-IS, which provides: 2100. PRINCIPLE All payments to providers of services must be based on the "reasonable cost" of services covered . . . and related to the care of beneficiaries. . . . * * * 2102.1 Reasonable Costs... It is the intent of the program that providers will be reimbursed the actual cost of providing high quality care. Implicit in the intention that actual costs be paid to the extent they are reasonable is the expectation that the buyer seeks to minimize its costs and that its actual costs do not exceed what a prudent and cost-conscious buyer pays for a given item or service. . . . 2102.2 Costs Related to Patient Care.-- These include all necessary and proper costs which are appropriate and helpful in developing and maintaining the operation of patient care facilities and activities. Necessary and proper costs related to patient care are usually costs which are common and accepted occurrences in the field of the provider's activity. . . . * * * 2103. PRUDENT BUYER General.--The prudent and cost-conscious buyer not only refuses to pay more than the going price for an item or service, he also seeks to economize by minimizing cost. . . . * * * 2304. ADEQUACY OF COST INFORMATION Cost information as developed by the provider must be current, accurate, and in sufficient detail to support payments made for services rendered to beneficiaries. This includes all ledgers, books, records and original evidences of cost (purchase requisitions, purchase orders, vouchers, requisitions for materials, inventories, labor time cards, payrolls, bases for apportioning costs, etc.), which pertain to the determination of reasonable cost, capable of being audited. (Emphasis added) On audit, petitioner provided no books, records or accounts to support the amounts reported in its annual cost report for expenses associated with private airplane usage. Under the circumstances, the Department properly disallowed such costs since their propriety and correctness was not substantiated by petitioner. At hearing, petitioner offered no proof regarding the correctness or propriety of the subject costs, but relied upon the proof offered on behalf of intervenor, Thelma R. Allgood. Ms. Allgood was, at all times material hereto, an owner of 50% of petitioner's stock, and was, after its sale to third parties, contractually obligated to assist and cooperate with petitioner to document the subject claim. At hearing, the proof offered on behalf of intervenor demonstrated that during the period of October 5, 1983, through December 31, 1984, petitioner had contracted with Allgood Healthcare, Inc., which was located in Augusta, Georgia, to provide all of the customary and necessary management services for petitioner. During this period, Ms. Allgood, in addition to owning 50% of petitioner's stock, was, along with her husband, Thomas Allgood, the sole owner of Allgood Healthcare. In view of this community of interest, Allgood Healthcare was considered a home office of petitioner for cost reporting purposes. Between October 5, 1983, and December 31, 1984, Allgood Healthcare used its private plane on 42 occasions to fly Mr. and Mrs. Allgood, as well as other personnel of Allgood Healthcare, to or from petitioner's facility in Broward County, Florida, and the home office in Augusta, Georgia, as well as the cities of Savannah and Atlanta, Georgia. The expenses for these trips totaled $41,228.26, and included aircraft operation costs, pilot charges, pilot's expenses, and fuel. On average, the cost of each trip was approximately $940. 1/ During the same time-frame, the cost for a round trip economy fare ticket between Augusta and Fort Lauderdale by commercial airline was approximately $430. To demonstrate its entitlement to claim the expenses for private airplane usage on its costs report, it was incumbent upon petitioner to demonstrate that such costs were reasonable and related to patient care. Petitioner has failed to demonstrate either prerequisite. The only proof offered to demonstrate that the subject costs were related to patient care was through the testimony of Mr. Allgood. Mr. Allgood, admittedly a person with no knowledge of patient care or cost reporting, accompanied his wife on approximately one-half of the subject trips and opined that the purpose of those trips, as well as those on which he had no personal involvement, were related to patient care. Mr. Allgood was, however, unable to recall any specific trips he made; any dates he, his wife, or any other specific person were on the premises; or what precisely was done at any particular time that would demonstrate that the trip was related to patient care. Under the circumstances, Mr. Allgood's testimony is not persuasive, and his conclusion that the subject costs for private airplane usage were related to patient care is not credited. 2/ Regarding the reasonableness of the expenses incurred, the proof demonstrated that the cost per trip for use of the private plane was $940, while the cost for a round trip ticket by commercial airline was $430. To support the reasonableness of this expense, intervenor again offered the testimony of Mr. Allgood, who opined that where two passengers were on a trip, the cost was comparable to commercial travel. Mr. Allgood's testimony was, however, unpersuasive to demonstrate the reasonableness of the cost to patient care. Notably, Mr. Allgood, who admitted performing no services related to patient care, accompanied his wife on approximately one-half of the trips. Under such circumstances, his presence was unnecessary, and the costs for transporting Ms. Allgood by private plane, even assuming she performed services related to patient care, were unreasonable. With respect to the remaining trips, Mr. Allgood was shown to have no personal knowledge regarding those trips, and his testimony that at least two passengers were present on each of those trips is not credited. In fact, to the extent proof is available, it indicates that a number of trips were made with only one passenger, and that on several occasions the expense of a trip, ostensibly a round trip (Augusta-Fort Lauderdale- Augusta), were incurred to transport one or two passengers in one direction only.
Recommendation Based on the foregoing findings of fact and conclusions of law it is RECOMMENDED that: Petitioner's protest of the Department's disallowance of the expenses associated with private airplane usage as Medicaid resident costs be dismissed, and Upon review of the property ceiling issue which is hereby remanded to the Department, that it enter a final order consistent with its findings on that issue, the parties' stipulation, and the recommendation contained in this order. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 19th day of January, 1989. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1050 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of January, 1989.
The Issue Whether or not existing rule 59A-12.006(3)(d) F.A.C., the Health Maintenance Organization (HMO) rule, constitutes a valid agency exercise of delegated legislative authority.
Findings Of Fact Existing Rule 59A-12.006(3)(d) F.A.C. provides: 59A-12.006 Quality of Care. Each HMO or PHC shall: Ensure that the health care services it provides or arranges for are accessible to the subscriber with reasonable promptness. Such services shall include, at a minimum: (d) Average travel time from the HMO geographic services area boundary to the nearest primary care delivery site and to the nearest general hospital under arrangement with the HMO to provide health care services of no longer than 30 minutes under normal circumstances. Average travel time from the HMO geographic services area boundary to the nearest provider of specialty physician services, ancillary services, specialty inpatient hospital services and all other health services of no longer than 60 minutes under normal circumstances. The AHCA shall waive this requirement if the HMO provides sufficient justification as to why the average travel time requirement is not feasible or necessary in a particular geographic service area; The existing rule in final form, supra, was adopted in February 1992 following extensive "workshopping" and other public hearing procedures. There is no suggestion herein that there are any enacting defects with regard to this rule. Validity of the rule is challenged solely under Sections 120.52(8)(c), (d), and (e) F.S. [1992 Supp.]. The grounds of invalidity alleged are that: The rule enlarges, modifies, or contravenes the specific provisions of the law implemented, i.e., Section 641.49, Section 641.495(3) and Section 641.56, F.S.; The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or The rule is arbitrary and capricious. Petitioner, Healthplan Southeast, Inc., (Healthplan), is a Florida corporation based in Tallahassee, Florida, and is a health maintenance organization (HMO) which provides comprehensive health care services to its subscribers. Petitioner has requested a waiver under the challenged rule. The agency's denial of that request for a waiver is the subject of DOAH Case No. 93- 2606, and involves disputed issues of material fact. Respondent, Agency for Health Care Administration (AHCA), is the state agency charged with the responsibility of implementing, interpreting, and enforcing the rules adopted pursuant to the authority set forth in Section 641.56, F.S. The Department of Health and Rehabilitative Services, (HRS), adopted Rule 10D-100.006(2)(a), the predecessor to Rule 59A-12.006(3)(d) as an agency rule in 1988. At the time of adoption of Rule 10D-100 in 1988, Ralph Gray was Unit Manager of the Managed Care Unit at HRS and was responsible for promulgating and implementing the rule. At the time Mr. Gray inherited the responsibility of promulgating Rule 10D-100, some preliminary work had already been performed and a draft rule existed which already included a requirement that the average travel time to the nearest primary care delivery site or the nearest institutional service site be thirty minutes or less. Mr. Gray accepted the draft that he inherited and moved forward with the rule adoption process without doing any independent investigation to determine the origin or validity of the thirty minute average time requirement. The rule as it was originally adopted in 1988, provided that HMOs should ensure that health care provided for subscribers was accessible with reasonable promptness by ensuring that the average travel time from an HMO geographic service area boundary to the nearest primary care delivery site or to the nearest institutional service site would be no longer than thirty minutes under normal circumstances. The specific language of the rule, as it existed from 1988 until February 1992, simply required an HMO to ensure that a subscriber had access to either a primary care delivery site or an institutional service site within an average travel time of thirty minutes. The rule as it was applied by the agency from 1988 until February 1992 did not require that an HMO provide a subscriber access to both a primary care delivery site and an institutional service site within thirty minutes. Neither did the rule as applied from 1988 to 1992 require that the institutional service site be under contract with the HMO. Amendments to Rule 10D-100 were proposed in 1991 in response to amendments to Chapter 641, Part IV, F.S. enacted by the 1991 Legislature and to establish additional quality of care standards for HMOs and Prepaid Health Clinics (PHCs). In 1991-1992, Ralph Gray was again the person in charge of implementing amendments to Rule 10D-100 that were necessary in order to comply with the statutory changes in 1991. Mr. Gray assembled a team to assist him in the rule adoption process. In addition to Mr. Gray, the team consisted of Linda Enfinger, Registered Nurse Specialist with the agency's HMO Unit and Dr. James Conn, M.D., Consultant to the Agency Office of Licensure and Certification. The rule amendments at issue herein included a change from "or" to "and" in the language of the rule which resulted in the thirty minute average travel time requirement being applicable to both primary care delivery sites and general hospitals under arrangement with the HMO to provide health care services. This change was not specifically mandated by the changes to Chapter 641 F.S. adopted by the Legislature in 1991. The change from "or" to "and" came about because of concern informally expressed to team members about HMO subscribers in northern Dade County and in Broward County having to travel long distances over considerable periods of time in congested traffic situations to obtain hospital services, and focused upon the Miami--Ft. Lauderdale population concentration corridor which is complex in roadways and traffic patterns and in its number of people and motor vehicles. There were no formal written complaints espousing the foregoing concept of traffic congestion and excessive distance to HMO provider hospitals in Dade and Broward counties, and the agency neither conducted nor commissioned any specific formal review or study to verify the presence or absence of such a problem either in Dade--Broward or in any other geographic area of the state. However, Mr. Gray reviewed listings of their providers supplied to the agency by HMOs and determined for himself that there were accessibility problems in the Dade--Broward area. No issue or concern clearly in opposition to the thirty minute average travel time restriction was raised in any workshop or public hearing during the 1991-1992 rule amendment process. Petitioner did not appear at the December 19, 1991 public hearing. Letters from the public in response to that public hearing did not contain adverse comments regarding the thirty minute travel requirement. Letters from the public during this process generally supported the time requirement upon accessibility grounds. A concomitant thrust of the public comment letters was to the effect that the agency should encourage HMOs to sign- up licensed local general hospitals in rural areas such as Madison County because of the need for such services from the HMOs. Opinion testimony offered at formal hearing herein that the thirty minute average travel time requirement as included in the predecessor rule was probably originally based on federal regulation 42 CFR 5 was speculative and unpersuasive. However, it is clear that the time limit, at least, was carried over from the 1988 HRS rule. No witness knew with certainty that the 1983 version of 42 CFR 5, dealing with the federal criteria for designating geographic areas having shortages of primary medical care professionals, was taken into consideration at the time the state's 1988 HMO rule was drafted. The 1992 version of 42 CFR 5 apparently applies to correctional institution populations who must usually have care providers travel to them, and became effective in October 1992, eight months after the new rule amendments were finally promulgated. On the other hand, the use of the thirty minute average travel time figure in CFR from 1983 to date is indicative of a continuing industry standard. Mr. Gray and Dr. Conn each had the "sense" or "impression" that thirty minutes average travel time was an industry standard. Mr. Gray's opinion in this regard was based on an absence of any serious question or challenge to this provision at any of the public meetings during the 1991-1992 rule amendment process. Dr. Conn's opinion was partly based on the same factor. However, his opinion is more persuasive because it is based, in part, upon his personal experience in the private health industry sector as Medical Director of the Capital Health Plan HMO from 1981 through 1982. During the amendment process, the agency did not conduct any formal studies to determine whether the thirty minute average travel time requirement had any validity or in any way satisfied the statutory mandate to ensure access to health care services with reasonable promptness. However, at formal hearing, the consistent and unrefuted expert medical and nursing testimony was to the effect that excessive travel time can exacerbate bone fracture, shock, and hemorrhaging. Dr. Conn specifically testified that there are many medical conditions that need to be evaluated capably within thirty minutes of the onset of symptoms. Medical physician Conn and nurse administrator Enfinger, as experts in their fields, recited factual examples from their own professional experience of emergency room protocols and general hospital "on-call" physician rosters which require response time ranging from 15 minutes to 45 minutes of notification of the occurrence of trauma. Dr. Conn testified as an acknowledged expert in managed health care that the rule's thirty minutes average travel time provision is a good and adequate interpretation of the statutory mandate of the enabling legislation at Section 641.495(3) F.S., to ensure that HMOs provide health care services to their subscribers with reasonable promptness with respect to geographic location. According to Mr. Gray, the 1991-1992 rule amendment changing the words "institutional service site" to "general hospital under arrangement with the HMO" occurred because the term "general hospital" was thought by agency personnel to be synonymous with "institutional service site" and because "general hospital" was thought to be less confusing due to generally understood industry perceptions of the term. There is no evidence in this record to the contrary. The change of terms within the rule from "institutional service site" to "general hospital under arrangement with the HMO," did not draw comments or raise concern during the rule amendment process, and Dr. Conn testified convincingly at formal hearing that a primary care physician's office would probably not have the technical equipment or personnel capabilities of treating severe emergencies, capabilities that would be present at a general hospital. HMO subscribers are in the nature of a captive audience in that they are not free to select from any provider if they wish to continue to enjoy the reduced cost benefits of the HMO provider contract. Emergency-type treatment for a subscriber must be paid for by his HMO even if that treatment was rendered in a health care facility not signed up with the HMO. Roberta Agner, administrator of Madison County Memorial Hospital, testified that the rule as amended acts to protect those subscribers receiving HMO services and the HMO itself by insuring adequate health care through the HMO. Ms. Agner's foregoing opinion is colored by the fact that without the new rule in effect, the Petitioner's HMO subscribers in Madison County may come to Ms. Agner's hospital, which is currently not signed up with Petitioner's HMO, only for life and death situations if they are to remain assured of payment of their fees by their HMO. Nonetheless, Ms. Agner's testimony is credible that HMO subscribers sometimes perceive symptoms such as acute chest pain as an emergency situation and utilize a local non-HMO facility only to discover after diagnosis and treatment that the HMO does not acknowledge the situation as a compensable emergency (life or death situation) because upon medical hindsight, the precipitating symptom is not, in fact, a heart attack. She gave several similar medical conditions that routinely result in such disputes. The greater weight of all the evidence is that prudent patients and hospital emergency rooms must treat these symptoms initially as emergencies. From this, the undersigned reasonably infers that the absence of the thirty mile rule could have a life- threatening "chilling effect" on HMO subscribers promptly seeking truly necessary emergency health care for fear of making an expensive wrong self- diagnosis. Without the challenged rule provision, a subscriber to Petitioner's HMO living in Madison County, Florida could have to travel from as far away as the Suwannee River (the eastern boundary) to Tallahassee in Leon County to receive hospital services. Without the rule, such a subscriber would have to travel sixty minutes average travel time (distance divided by legal speed limit equals time) from downtown Madison, which is not at the eastern boundary, to either provider hospital in Tallahassee. This trip's average travel time in unusual circumstances could be more than sixty minutes. As found supra, many conditions routinely require medical attention in a general hospital within 15 to 45 minutes. The rule as currently written has demonstrable impact on subscribers living in rural areas receiving health care services from their HMO promptly. Petitioner presented no evidence specifically attacking the portion of the rule providing for the sixty minute average travel time for specialty physician services, specialty inpatient hospital services, and all other health services. Petitioner complained that the agency has no uniform interpretation or guidelines for interpreting the rule's terms, "average travel time" and "normal circumstances." Despite such assertion, the rule is clear on its face. Each witness who was asked to apply the rule used standard dictionary definitions and elementary school mathematical formulas. Each witness uniformly started with the premise that distance calculated by existing roadways, divided by legal speed limits, would equal "average travel time" under "normal circumstances." All witnesses were able to list numerous hypothetical factual situations, including but not limited to weather and traffic conditions, which might render a travel time "not normal," but which would have to be weighed and considered on a case by case basis. The rule provides that the agency shall waive the average travel time requirement if an HMO provides "sufficient justification" as to why the requirement is not "feasible" or "necessary" in a particular geographic service area. Thus, an HMO which cannot meet the average travel time requirement of the rule still has the opportunity to prove the requirement ought not to apply to it, bearing the burden to go forward and the burden of proof. This is clearly a flexible standard designed to accommodate a variety of "not normal" circumstances. Petitioner's assertion that the rule is invalid because it does not establish a uniform interpretation or guidelines to supplement or explain "feasible" or "necessary," is not persuasive since, as used in the rule, these terms are clearly susceptible of interpretation by dictionary and of being applied on a case by case factual basis. Some types of evidence which agency personnel or the HRS consultant, Dr. Conn, advanced as probably going to prove "sufficient justification" were improved medical techniques, modes of transportation such as rescue flights, and unavailability of any accredited or licensed general hospitals in a given geographic service area. In such situations, the rule's waiver provision provides balance to the rule's initial thirty minute travel requirement.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law recited herein, it is ORDERED that Existing Rule 59A-12.006(3)(d) F.A.C. constitutes a valid exercise of delegated legislative authority. DONE AND ORDERED this 19th day of November, 1993, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The De Soto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of November, 1993. APPENDIX TO FINAL ORDER 93-2721RX The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: 1-15 Accepted, but material unnecessary, subordinate or cumulative to the facts as found has not been adopted. 16 Rejected as not supported by the record and as unpersuasive legal argument 17-21 Accepted in part and rejected in part upon the record evidence as a whole and as covered in FOF 32-34. What is rejected is not dispositive or controlling for the reasons set out in the FOF and COL. 22 Accepted in FOF 20. Respondent's PFOF: 1-5 Accepted, but material unnecessary, subordinate or cumulative to the facts as found has not been adopted. More specifically, the excessive wordiness of the proposals as to who examined the witness or whether oral testimony was given upon direct or cross examination or upon redirect examination has been excluded as irrelevant. 6-18 These proposals amount to identification of various exhibits by a witness. The exhibits are in evidence and were considered. Immaterial matters have not been adopted. The material substance of those exhibits and the oral evidence and stipulations concerning them are covered in FOF 3, 18-21. 19-20 Rejected as stated because misleading as stated. However, official recognition was taken of 42 CFR 5 in both its forms. Its significance is covered in FOF 19- 21. Accepted, but material unnecessary, subordinate or cumulative to the facts as found has not been adopted. Rejected as stated because not comprehensive of all testimony as stated. Covered in FOF 5, 32, and 34 as supported by the record as a whole. 23-30 Accepted, but material unnecessary, subordinate or cumulative to the facts as found has not been adopted. More specifically, the excessive wordiness of the proposals as to who examined the witness or whether oral testimony was given upon direct or cross examination or upon redirect examination has been excluded as irrelevant. Additionally, proposals which amounted to no more than identification of exhibits were excluded as subordinate. The exhibits themselves together with relevant testimony have been considered and facts found accordingly. 31-32 Rejected as stated because misleading as stated. However, official recognition was taken of 42 CFR 5 in both its forms. Its significance is covered in FOF 19- 21. 33-35 Accepted, but material unnecessary, subordinate or cumulative to the facts as found has not been adopted. More specifically, the excessive wordiness of the proposals as to who examined the witness or whether oral testimony was given upon direct or cross examination or upon redirect examination has been excluded as irrelevant. COPIES FURNISHED: Michael O. Mathis, Esquire Agency for Health Care Administration 325 John Knox Road, Suite 301 The Atrium Building Tallahassee, Florida 32303 John C. Pelham, Esquire Pennington, Haben, Wilkinson, Culpepper, Dunlap, Dunbar, Richmond, and French, P.A. Post Office Box 13527 Tallahassee, Florida 32317-3527 Carroll Webb, Executive Director Administrative Procedures Committee Holland Building, Room 120 Tallahassee, Florida 32399-1300 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium Building, Suite 301 Tallahassee, Florida 32303
Findings Of Fact In 1975 the Florida Legislature passed the Medical Malpractice Reform Act, Chapter 75-9, Laws of Florida, now codified in Chapter 768, Florida Statutes. Part of this legislative package included the creation of the Fund. This legislation was passed in response to a medical malpractice insurance crisis which arose when the primary underwriter for the Florida Medical Association sought to stop issuing medical malpractice policies in Florida, thus making it difficult, if not impossible, for physicians or hospitals to obtain medical malpractice insurance coverage at reasonable rates. As a result of this problem, many physicians began to practice defensive medicine, curtail or abandon their practices or practice without coverage of any kind. The Fund is a private not-for-profit organization, participation in which is totally voluntary for its member-health care providers. Insofar as Petitioners are concerned, membership in the Fund is but one of several options available to provide legally required evidence of financial responsibility in order to obtain licensure as a hospital facility in Florida. Physicians, hospitals, health maintenance organizations and ambulatory surgical centers who become members of the Fund must maintain at least $100,000 in primary professional liability insurance. Membership in the Fund grants to each participant a limitation of liability above the $100,000 in primary coverage. To the extent that any settlement or judgment exceeds the primary coverage of the participant, it is paid by the Fund without limitation. The Fund is operated subject to the supervision and approval of a board of governors whose membership is required by law to consist of representatives of the insurance industry, the legal and medical professions, physicians' insurers, hospitals, hospitals' insurers and the general public. The Department is charged by statute with certain regulatory functions concerning the Fund. As the law existed in 1980 a base fee for Fund membership was set by statute at $500 for physicians, after an initial $1,000 enrollment fee for the first year of participation, and at $300 per bed for hospital members. The statute required the Department to set additional fees based upon the classifications of health care providers contained in the statute. In the event that base fees are insufficient to pay all claims asserted against the Fund for a given fund year, the Department is empowered, upon request of the Board of Governors of the Fund, to order assessments against Fund participants to meet any such deficiency. Under the original legislation, all classes of health care providers could be assessed unlimited amounts to make up any deficiencies. As a result of legislative amendments which became effective July 1, 1976, the amount which participants, other than hospitals, could be assessed was limited to the amount each Fund member had paid to join the Fund for that particular coverage year. 1976 legislative amendments also required that each fiscal year of the Fund, which runs from July 1 through June 30, be operated independently of preceding fiscal years, and further required that occurrences giving rise to claims in a particular fund year be paid only from fees or investment income on those fees collected for that particular year. Thus, it is entirely possible for the Fund to experience deficits in a given year, and yet hold surplus funds for other years. On March 14, 1983, the Department of Insurance issued a "Notice of Assessment for 1980-81 Fiscal Fund Year" (hereinafter called the "Notice of Assessment). (exh. 20) Notice of this Notice of Assessment was published in the Florida Administrative Weekly, March 25, 1983, Vol. 9, no. 12. The Notice of Assessment announced that the Insurance Commissioner intended to levy and authorize the Fund to collect an assessment in the amount of $23,684,511 from those health care providers that were members of the Fund in fund year 1980-81 (exh. 20). Each of the hospitals named as Petitioners in the Petition for Administrative Proceedings in Case Dos. 83-1067 and 83-1068 were members of the Florida Patient's Compensation Fund during the fund year 1980-1981. (exh. 40; P.H.S. V 1) The chart below contains the following information concerning fund year 1980-81: the amount of the total proposed assessment described in the Notice of Assessment (dated March 14, 1983); the amount of the losses experienced by doctors and hospitals, respectively; the amount of the fees originally paid by doctors and hospitals; and the amount of the proposed assessments for doctors and hospitals; 1980-1981 Fund Year - Total Assessment $23,684,511 DOCTORS HOSPITALS Losses $19,086,800 Losses $29,798,500 Fees Paid 4,299,117 Fees Paid 6,015,827 Assessments 4,322,233 Assessments 18,734,918 (P.H.S. V 9) The Department computed the portion of the assessment to be paid by the different classes of health care providers for the 1980-1981 fund year based upon an "indicated rate method." This method is represented by the following formula: The Department started with the actuarially indicated rate for each class of health care provider as described in the October, 1981 Actuarial Report prepared by Tillinghast, Nelson, et al. This is called the "indicated rate by class." The Department then applied the following formula for each class: Indicated Rate by Class x No. of Members in the Class = Total indicated fees by Class Total Indicated Fees by Class divided by total Indicated Fees for ALL Classes = Percentage of Indicated Fee by Class Percentage of Indicated Fee by Class x Total Expected Loss for ALL Classes = Expected Loss by Class (Expected loss is ALL losses for the fund year including claims previously paid, reserves established on claims asserted and IBNR [incurred but not reported].) (P.H.S. V 12) The "indicated rate method" for allocating assessments among the various classes of health care providers was selected by the Department as the method which most fairly reflected the classifications prescribed in Section 768.54(3)(c), Florida Statutes. The record in this proceeding establishes that this method is the most feasible mechanism for fairly reflecting classifications established by statute, and, at the same time, providing immediate funds necessary to meet all claims against the Fund. (P.H.S. V 13) The difference between the results derived by the "indicated rate method" and the amounts reflected in the Notice of Assessment is due to the application of the statutory cap on assessments against physician members, as applied by the Department of Insurance. (P.H.S. V 14) Exhibit #17 shows (a) the calculations utilized by the Department in spreading the assessments for the 1980-81 fund year, (b) the amount each class would have paid under the "indicated rate method" for the fund year 1980-81 and (c) the amount actually described in the 1980-81 Notice of Assessment of the Department of Insurance. The Notices of Assessment issued by the Department of Insurance for fund years 1980-1981 allocated the "excess assessments" (which could not be applied to physician members because the 768.54(3)(c)'s limitation on the amount physicians could be assessed) among the other classes of health care providers based upon their percentage of "expected losses." (P.H.S. V 16) The amounts of the assessments sought by the Fund, and described in the Notices of Assessment, were calculated by the Fund by using the following formula: Total fees paid during the Fund Year + Investment Income attributable to the Fund Year Expenses allocated to that Fund Year Amount paid on claims for that Fund Year Amount reserved for all known claims for that Fund Year. (P.H.S. V 17) The fees ordered by the Department of Insurance and collected by the Fund plus the interest income generated by such fees for fund year 1980-81 are inadequate to cover claims against the Fund for that year. (P.H.S. V 19) Petitioners, for purposes of this proceeding, do not contest: (a) the method by which the Fund establishes reserves; (b) the amount of the reserves established for any individual claim file; or (c) the amount of the total deficit described in the Notices of Assessment dated March 14, 1983 for fund year 1980-1981. Nonetheless, Petitioners do not concede that the Fund needs all of the money described in the Notice of Assessment dated March 14, 1983 at this time. (P.H.S. V 33,34) The record in this cause establishes that as of March 14, 1983, there existed a deficiency in the Fund's account for the 1980-1981 fund year of at least $23,684,511 for the payment of settlements, final judgments and reserves on existing and known claims. Approximately $19,405.00 of this deficit is directly attributable to one judgment - Von Stetina v. Florida Medical Center. This was a malpractice judgment against a hospital which has been affirmed on appeal by the First District Court. An appeal has been filed in the Florida Supreme Court. (exh. nos. 1, 2, 18, 19, 26, 27 and 38) In view of the statutory cap on the amounts that may be assessed against physician members of the Fund, the foregoing dollar amounts for assessments for the 1980-81 fund year, and the manner in which they are proposed to be allocated among the remaining classes of health care providers are appropriate. The original fees for the 1980-1981 fund year were set in June of 1980. The Fund by letter dated April 21, 1980 requested that the Department approve an increase in membership fees for physicians and surgeons in the amount of twenty-five (25) percent and a redefinition of rate classes that would move eighteen (18) percent of the physicians and surgeons from Class 3 to Class 2. The Department published notice in the Florida Administrative Weekly and notified interested parties on its mailing lists that a public hearing was to be held on June 2, 1980. This hearing was held pursuant to 627.351, 768.54, and Chapter 120, Florida Statutes. The purpose of the hearing was identified as "to afford the Fund an opportunity to present evidence and agreement in support of its filing and, further, to afford any affected person an opportunity to present evidence and argument relating to the filing." A hearing was in fact held on June 2, 1980. The Fund presented evidence and argument in support of its request for twenty-five (25) percent increase in fees. No parties argued or presented evidence contending that the fees should have been higher. Subsequent to the hearing, the Department notified the Fund by letter dated June 12, 1980 that its request was approved. Acting on the Department's approval, the Fund sent all prospective members of the Fund for the 1980-81 year membership forms. These forms notified each health care provider what the fees for membership for all health care providers would be. In order to join the Fund each health care provider was required to fill out and sign these forms, thereby agreeing to pay the membership fees and any future assessments which might be levied. Both Petitioners and Respondent have submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that those proposed findings of fact are not included in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues involved in this cause, or as not having been supported by evidence of record.
The Issue At issue in this proceeding is the amount of reasonable expenses, including reasonable attorney’s fees, that should be awarded as a consequence of the filing of a claim for benefits under the Florida Birth-Related Neurological Injury Compensation Plan.
Findings Of Fact Background 1. Heather Nicole Hosken (Heather) is the natural daughter of Cynthia and Brian Hosken, and was born September 4, 1993, at Cape Canaveral Hospital, Cocoa Beach, Brevard County, Florida. 2. Within a few days of Heather’s birth, NICA was advised by the office of the "participating physician", who provided obstetrical services during Heather’s delivery, that she might qualify for coverage under the Plan. Consequently, NICA, through its executive director Lynn Dickinson, spoke with the Hoskens by telephone and, by letter of September 27, 1993, advised them as follows: Per our telephone conversation of this date, enclosed please find two medical information release forms. One of these forms is for the mother’s medical records, the other form is for your daughter’s medical records. Please complete these forms and return them to us, so that we may obtain medical records to assist you in filing a NICA claim. For your review, I am enclosing a copy of Section 766.301-766.316, Florida Statutes, which is the law that governs the Florida Birth-Related Neurological Injury Compensa- tion Association. zit you have any questions, please contact me. 3. Thereafter, Ms. Dickinson spoke with the parents by telephone and made arrangements to meet with them in the area of their residence; however, Mr. Hosken subsequently cancelled the appointment stating that he would contact Ms. Dickinson again in the future. Notwithstanding such advice, neither Ms. Dickinson nor NICA received any further contact regarding this potential claim until in or about April 12, 1994, when Mr. Frederick Feins’ office, now counsel for the Hoskens, contacted NICA to inquire about, inter alia, the procedure for filing claims. Finally, on June 8, 1994, Mr. Feins’ office again contacted NICA by telephone regarding the information needed for the claim (petition) for benefits, and NICA provided, by letter of June 8, 1994, a draft petition for counsel’s benefit. To further assist counsel, the letter provided: Dear Mr. Fein: 4 Enclosed is a draft petition which may be used for your convenience. Please complete and forward to Ann Cole, Division of Administrative Hearings, 1230 Apalachee Park- way, Tallahassee, Florida 32399-1550 along with $15.00 (payable to Division of Administrative Hearings) for the filing fee. Please send us a courtesy copy along with completed medical authorization release forms for the mother and the infant. We have enclosed blank authorization forms for your convenience. Please send us a complete copy of the mother’s prenatal records, labor and delivery records and a copy of the baby’s nursery notes/records. Please do not delay filing your claim while waiting for records or bills. We can obtain them for you. We will also request all outstanding bills. If you have any questions or if I may assist you in any way to expedite this or any other claim, please contact me. 4. On June 27, 1994, Mr. Fein, on behalf of the claimants, filed a petition with the Division of Administrative Hearings ("DOAH") for compensation under the Florida Birth-Related Neurological Injury Compensation Plan (the "Plan"), and on or about July 12, 1994, DOAH served the Florida Birth-Related Neurological Injury Compensation Association ("NICA") with a copy of the claim. The petition that was filed substantially mirrored the draft petition NICA had provided petitioner’s counsel. 5. Respondent, NICA, following service of a copy of the petition, evaluated the claim and arranged for a _ medical examination to assess whether Heather was currently "permanently and substantially mentally and physically impaired" so as to qualify for benefits under the Plan. That examination was conducted by Michael Duchowny, M.D., a pediatric neurologist associated with Miami Children’s Hospital, on September 20, 1994, and he rendered his report to NICA on or about September 26, 1994, concluding that Heather’s "neurologic examination reveals evidence of a profound developmental delay affecting both motor and cognitive functioning. [Heather] has not progressed past the newborn and the prognosis for neurologic function is extremely guarded. I believe that her deficits are relatively fixed and that the long term prognosis is extremely poor." 6. Following its receipt of Dr. Duchowny’s report, NICA determined the claim to be compensable, and by letter of October 7, 1994, advised claimants’ counsel as follows: Dear Mr. Fein: As per Section 766.305(3), Florida Statutes, the Association agrees that Heather Hosken suffered a birth-related neurological injury as defined in Section 766.302(2), Florida Statutes. A copy of Dr. Duchowny’s medical evaluation is attached. We are prepared to provide medical benefits as provided by Section 766.31(1) (a) and are willing to offer the full $100,000.00 as provided in Section 766.31(1) (b). Please forward to this office, your detail of time and expense records for the above stated claim so that we may reach agreement on reasonable attorney’s fee and costs as per Section 766.31(1)(c), Florida Statutes. Also, please contact me so that we may discuss how the funds will be disbursed. Moreover, on November 4, 1994, NICA telefaxed a draft stipulation to claimants’ counsel so NICA’s agreement to accept the claim for compensation could, consistent with the provisions of Section 766.305(6), Florida Statutes, be approved by the Hearing Officer. 7. A stipulation, which substantially comported with the draft stipulation forwarded by NICA, was ultimately executed by the parties on December 29, 1994, and filed with DOAH on January 6, 1995. By final order of January 17, 1995, the stipulation was approved by the Hearing Officer, and all disputes between the parties were resolved with the exception of the amount of reasonable expenses, including attorney’s fees, that should be awarded. The claim for attorney’s fees and_expenses 8. Pertinent to the claim for attorney’s fees, the time records of the law firm of Thornton, Davis & Murray, P.A., counsel for petitioners, reflect that from March 18, 1994, to January 30, 1995, the following time had been logged, by the individual indicated, on petitioner’s file: NAME HOURS LOGGED Calvin F. David (attorney) 12.00 Frederick J. Fein (attorney) 127.75 Holly S. Harvey (attorney) 43.50 Jeffrey B. Shalek (attorney) 6.00 Jinny E. Anderson (paralegal) -50 Naomi G. Berjah (paralegal) 29.00 [Petitioner’s exhibit 1).? 9. At hearing, Mr. Fein acknowledged that some of the hours contained in the firm’s time records should not be considered as an expense of pursuing the claim, including the hours spent negotiating a fee agreement with the federal government to pursue a claim against NICA to recover benefits paid by the government, researching the entitlement to fees under the Federal Medical Recovery Act, conversations with referral counsel regarding the status of the claim, and any time expended in seeking recovery of attorney’s fees in this proceeding. 10. The actual entries or hours that Mr. Fein conceded were not germane to the claim were not identified at hearing but, post-hearing, Mr. Fein submitted a proposed "order awarding attorney’s fees and costs" which reflected a claim for 122.00 hours on behalf of Mr. Fein as opposed to the 127.75 hours reflected on the time records for the period of March 18, 1994, to January 30, 1995. No time was deducted for any other attorney or paralegal. The "order" did not, however, identify the entries to which the 5.75 hour reduction related, and the reduction made falls far short of the time identified by Mr. Fein’s expert as excludable or, on examination of the time records, is suspect and remains unexplained. li. Here, substantial time has been dedicated to reviewing the time records entry by entry, and line by line. Based on that review, it must be concluded that the time logged is grossly excessive for this NICA claim and includes a substantial amount of time that is inadequately explained or unrelated to the NICA claim. 12. In concluding that the time logged is excessive for this NICA claim, it is observed that the claim was straight- forward, lacked any novel aspects, and the earliest medical reports disclosed that Heather was profoundly impaired, mentally and physically. Moreover, NICA assisted the claimants in filing the claim, expeditiously processed the claim, promptly accepted the claim for compensation, and, but for the claim for attorney's fees, did not contest any matter regarding compensability or benefits. 13. The reliability of the time logged or, stated differently, the reliability of the records as an accurate indication of the time reasonably dedicated to the claim, is further rendered suspect based on the firm's practice of recording all time in quarter (.25) hour segments. This practice, particularly when coupled with the firm’s practice of lumping every task performed on a given day by a lawyer or paralegal into a single entry, leads to inflated hours and unreliable records.° 14. Among the time that is facially unrelated to the NICA claim is that time logged between August 4, 1994, and December 13, 1994, wherein the time records reflect numerous entries by Mr. Fein, Jeffrey P. Shalek, Holly S. Harvey, and J.E. Anderson, for work related to representing the federal government in pursuit of a claim against NICA and research related to the Federal Medical Recovery Act which, based on the context of those entries, each with the other, is clearly related to the federal representation and not to the NICA claim.* 45. First, with regard to the time recorded by Jeffrey P. Shalek on August 4, September 20, and September 28, 1994, totaling 6.00 hours, such time is patently related to the federal claim. Second, with regard to the time recorded for Holly Ss. Harvey between November 10 and November 22, 1994, in the amount of 43.50 hours, such time is all related to researching the Federal Medical Recovery Act and when read, particularly in conjunction with Mr. Fein’s time, is patently related to the federal claim.°? Third, with regard to the time recorded for g.E. Anderson of November 30 and December 13, 1994, totalling .50 hours, it is observed that the entry of December 13, 1994, for .25 hours again patently relates to the federal claim. The other entry for J.E. Anderson of November 30, 1994, of one-quarter (.25) hour for “update of pleading index" is rejected as de minimus, not shown to be related to the NICA claim, and not shown to have been necessary. 16. Next, with regard to the time recorded by Calvin F. David, totaling 12.00 hours, it is observed that the time recorded for April 6, August 4, August 9, August 30, and October 14, 1994, totaling 4 hours, did not reasonably relate to the NICA claim but, rather, related to the federal representation, revising the contingency contract with the client, and a review of the "charges printout." 17. Finally, as to the time recorded by Mr. Fein that did not reasonably relate to the NICA claim, are the time charges of March 23 (11.00 hours), August 4 (3.00 hours), August 10 (1.00 hour), August 30 (2.00 hours), September 19 (.50 hours), September 30 (.50 hours), October 5 (.50 hours), October 14 (2.00 hours), October 19 (2.50 hours), October 21 (1.00 hour), October 24 (1.00 hour), October 31 (1.50 hours), November 1 (2.00 hours), November 3 (.50 hours), November 7 (.50 hours), November 18 (1.00 hour), November 22, 1994 (1.00 hour), and January 24, 1995 (1.00 hour). As to the March 23, 1994, charge of 11.00 hours, it relates to "Travel to Melbourne. Attendance at meeting with Wolfman and plaintiffs. Travel back to office." Notably, the infant was born in Brevard County, petitioners reside in Brevard County, and there was no showing that competent or able counsel was not available in that area. Given that proper venue was Brevard County, Section 766.307(1), Florida Statutes, and there was no showing that counsel was unavailable in that area to 10 represent petitioners, travel time cannot be recovered. See, In re Florear, Inc., 16 B.R. 726 (S.D. Fla. 1982). Moreover, since there is no proof of record as to how long the conference took with the clients, that item cannot be separately addressed. As for the time recorded for January 24, 1995, that was a status conference with referring counsel and, considering it occurred after resolution of the claim, there was no proof that it was relevant to the filing of the claim. As to the remaining hours, they were facially incurred with respect to anticipated representation of the federal government on claims against NICA, or were so intertwined with those claims as not to be divisible. Accordingly, petitioners have failed to demonstrate that these 32.50 hours were reasonably expended in pursuit of the claim for compensation. ° 18. Reducing the hours claimed, as set forth in paragraph 8, by the foregoing hours that are clearly objectionable, leaves the following hours, by individual, that must still be addressed. NAME HOURS Calvin F. David (attorney) "8.00 Frederick J. Fein (attorney) 97.25 Naomi G. Berjah (paralegal) 29.00 19. With regard to the entries made for Ms. Berjah, as well as those for Mr. David and Mr. Fein that have not heretofore been rejected, the firm’s practice of lumping every task performed on a given day by the lawyer or paralegal into a single entry with only the gross hours noted for the day, renders it impossible to discern, absent further explanation, the time dedicated to any particular task. Moreover, such practice, when Mr. Fein’s 11 entries include tasks which are not related to the NICA claim, such as representing the federal government, conferring with the referring attorney regarding the status of the case, preparing contingency contracts, or exploring the possibility of opting out of NICA through the "bad faith" exception or otherwise, ’ renders it impossible, absent speculation, to derive an accurate picture of the hours dedicated to the NICA claim. 20. The unreliability of the firm’s time records, as a gauge of the number of hours reasonably expended in pursuit of the NICA claim, is, as heretofore noted, intensified by the firm’s practice of recording all time in quarter (.25) hour segments. This practice, by its very nature, leads to inflated hours and unreliable records. 21. In reaching the foregoing conclusions, the expert opinion of Michael Eidson, Esquire, has not been overlooked. His conclusion as to the relationship of the time claimed to the subject claim, as well as the necessity and reasonableness of the time expended, is not, however, persuasive. Indeed, Mr. Eidson assumed the number of hours recorded related to the claim for compensation and, essentially, accepted the integrity of the number of hours claimed; however, when made aware, he readily conceded that time recorded incident to, inter alia, representing the federal government was not relevant to the NICA claim. Accordingly, since the record demonstrates that much of the time expended was not relevant to the NICA claim and that the firm’s time records are otherwise not reliable, Mr. Eidson’s opinion that the hours claimed were reasonably and necessarily expended is rejected. 12 22. Given the proof, the testimony of John Kelner, Esquire, is credited, and his opinion that the reasonable number of hours necessarily required to pursue this simple claim for compensation benefits was between 20 and 40 hours is accepted. Giving petitioner’s counsel the full benefit of doubt, and considering his relative inexperience, 40 hours are found to be reasonable in this case. 23. The next consideration in establishing a reasonable fee is the determination of the market rate" or prevailing hourly rate, or range of hourly rates, charged in the community by lawyers of reasonably comparable skill, experience and reputation, for similar services. 24. In deriving the market rate, careful consideration has been accorded the hourly rates referenced in the affidavit of Mr. Fein for the lawyers and paralegals employed by his firm. {Petitioners’ exhibit 1] Those rates are, however, excessive, and bear no reasonable relationship to the prevailing rate in the community, when the fee basis is hourly billing for time worked. 25. With regard to Mr. Fein, the $210.00 hourly rate he seeks to ascribe to his services is patently not a real world rate but, rather, an in-house rate used in contingency fee cases where his contract with the client accords him the option of a contingency percentage or a court awarded reasonable fee, which even is higher, at his option. That rate is clearly illusory since it bears no reasonable relationship to the market rate in the community or to those cases Mr. Fein has handled on which the fee basis is hourly billing for time worked. In such cases, 13 which Mr. Fein describes as insurance defense, he has billed "as high as 185 an hour and ... as low as 155 an hour." Given that Mr. Fein was not admitted to the Florida Bar until 1989, has yet to be lead counsel on any case that has been tried, and bills in quarter hour segments, it is doubtful that he could even command that rate. 26. As for the rates ascribed to the other attorneys, with the exception of Calvin David, and paralegals who worked on this case, as set forth in Mr. Fein’s affidavit, they suffer the same disparities and bear no reasonable relationship to the market when the fee basis is hourly billing for time worked. 27. Given the record, the proof offered on behalf of petitioners is rejected as unpersuasive, and the opinion of John Kelner that the range of rates in the community for similar services, considering the experience of the personnel who worked on this claim, would be a blended or mixed fee of $100.00 to $150.00 per hour. Here, a mixed rate of $150.00 per hour is accepted as a reasonable rate in the community for the services rendered, 28. Finally, petitioners’ attorneys incurred certain expenses for which they seek recovery as reasonably incurred in connection with pursuing the claim for compensation. Such costs total $5,354.42. ([Petitioners’ exhibit 1] NICA does not object to the filing fee of $15.00, medical expert fee of $1,050.00, cost for obtaining the medical records of Dr. Pettit of $10.00, and copy service charge of $2,256.40 incurred between May 4, 1994, and September 27, 1994, for Heather’s medical records. 14 Accordingly, such expenses totaling $3,331.40 are awarded, without further discussion. 29. The expenses opposed by NICA are (1) courier service fees of $40.95, (2) mileage expense of $7.43, (3) copy service expense of February 14, 1995, of $266.50, (4) travel expenses of $281.64 for Mr. Fein’s trip to Orlando, (5) the cost of photocopies at the firm of $687.90, (6) phone charges of $395.06, (7) postage of $53.54, and (8) the cost of Westlaw research of $290.00. As to items (1), (2), (Ss), (6), (7), and (8), there was no independent proof as to what services these expenses were incurred for and, therefore, the reasonableness of the amount or the need to incur those expenses has not been established. Moreover, it is as likely that they were incurred incident to the firm’s efforts to represent the federal government as its representation of petitioners and, if mixed, which is likely, cannot be allocated. As to item (3), the copy services of February 14, 1995, it is observed that such expense was incurred subsequent to the resolution of petitioner’s claim. Accordingly, there being no other showing concerning that cost, its relevance to the claim or reasonableness has not been shown. As to item (4), the travel expenses of Mr. Fein’s trip to Orlando, such is presumed to refer to his meeting with his clients in Melbourne on March 23, 1994. Consistent with the conclusion that time spent traveling to meet with his clients is not recoverable, so also is the conclusion that the travel expense is not recoverable. In re Florcar, Inc., 16 B.R.- 726 (S§.D. Fla. 1982). Accordingly, none of the expenses to which NICA has objected are recoverable. 15 The "cap" or maximum award of attorney’s fees and expenses recoverable in this case 30. Pursuant to the provisions of Section 766.31(1) (c), Florida Statutes, petitioners are entitled to recover and NICA is obligated to pay reasonable expenses incurred in connection with the filing of the claim, including reasonable attorney’s fees. In establishing the award of attorney’s fees, the Hearing Officer is constrained to base such award on the six factors contained in subsection 766.31(1)(c), discussed infra. 31. Here, notwithstanding petitioners’ entitlement to an award of reasonable attorney’s fees and expenses as prescribed by statute, the proof demonstrates they entered into a contingency fee contract with Mr. Fein’s firm. Pursuant to that agreement, following resolution of their claim, they resolved their obligation for fees and expenses to the firm by payment of 33 1/3 percent of the $100,000 they received in compensation of the claim. According to Mr. Fein, his firm has recovered all attorney’s fees and expenses from petitioners to which the firm is entitled or petitioners are obligated to pay, and that whatever is awarded here is to be paid to petitioners as reimbursement. 32. Given such circumstances, the maximum award that could be made in this case is an award for expenses, including reasonable attorney’s fees, not to exceed a total award of $33,333.00, and not the fee award of $46,345.00 and expense award of $5,591.25 sought at hearing. (Petitioner's proposed order, page 3]. See, Lane v_ Head, 566 So.2d 508 (Fla 1990), Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145, 1151 (Fla. 16 1985), Government Employees Insurance Co. v. Robinson, 581 So.2da 230 (Fla. 3d DCA 1991), Erickson Enterprises, Inc. v- Louis Wahl & Sons, 422 So.2d 1085 (Pla. 3d DCA 1982), and Trustees of Cameron -. Brown Investment Group v. Tavormina, 385 So.2d 728 (Fla. 3d DCA 1980). Given the award made, such restraint is not, however, significant to these proceedings.
Conclusions For Petitioners: Frederick J. Fein, Esquire Thornton, Davis & Murray, P.A. World Trade Center, Suite 2900 80 Southwest Eighth Street Miami, Florida 33130 For Respondent: David W. Black, Esquire Atkinson, Diner, Stone, Black & Mankuta, P.A. Post Office Drawer 2088 1946 Tyler Street Hollywood, Florida 33022-2088
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. See, Section 120.68(2), Florida Statutes, and Florida Birth-Related Neurological Injury Compensation Association v. Carreras, 598 So.2d 299 (Fla. ist DCA 1992). The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. 23
Findings Of Fact Petitioner was born in 1936. While on active duty in the United States Navy in 1955, he suffered an injury which subsequently led to the amputation of his left foot. When discharged from the Navy, his disability was rated by the Veterans Administration (VA) at 40 percent. Subsequent problems with the stump of the left leg, arthritis, and a spinal fusion led to VA disability increases, which disability rating at time of hearing was 100 percent. Petitioner applied for work with Delta Air Lines, Respondent, in 1966 and was employed as a reservations agent in Chicago. At this time his VA disability rating was 70 percent. In 1967 Petitioner, at his own request, was transferred by Respondent to Tampa, Florida. At this time Petitioner was able to move around the bay in which he worked with and without his crutches. In September 1979 Petitioner was hospitalized for stump revision and remained in an off-duty status until June 1980 when he returned to his position with Delta. At this time Petitioner carried out his duties as a reservation agent in a wheelchair. Following his return to work in 1981 Petitioner's performance of duty was marginal. Petitioner takes prescribed medication for pain. On one occasion the medication adversely affected his ability to perform his duties satisfactorily and he was told by his supervisor not to take medication at work. The doctor changed this prescription from 1-100 mg. daily to 4-25 mg. daily and Petitioner continued his medication as prescribed without further problems. On October 28, 1981, Petitioner was examined by Dr. Frazier, one of the physicians used by Delta for its employees. The purpose of this examination was to evaluate Petitioner's physical condition for continued employment. Report of this examination is contained in Exhibit 5 wherein Dr. Frazier concluded that Petitioner "has several progressive disabilitating diseases, that combined with his psychological state make him unemployable for Delta Air Lines. I would recommend because of his depression, amputation, hypertension, osteo-arthritis and spinal fusion problems that he be retired on disability." Respondent does not have a retirement for physical disability status. In lieu thereof it has short-term disability benefits and long-term disability benefits. Long-term disability benefits are calculated as a percentage of the employee's basic monthly salary less social security benefits the employee receives. Petitioner was in a long-term benefit status while recovering from stump revision in 1979-1980. Following Delta's receipt of the report of Dr. Frazier, Petitioner was sent home in a short-term disability status while the report was evaluated. Respondent subsequently advised Petitioner that he was qualified for sedentary work and directed him to return to his position with Delta Air Lines. Petitioner returned to work around June 1982 as a reservations agent. Fifteen or twenty reservation agents work in a "bay" where each has access to a telephone and computer terminal. These agents handle all reservation requests via telephone with no visual contact with the customers. They work an eight-hour shift with two 10 minute breaks and one-half hour off for lunch. While operating from his wheelchair, Petitioner usually took a station near the entrance to the bay which provided easier access for the wheelchair than a station farther down into the bay. He made no complaints about access to his station to Delta supervisory personnel. Reservation agents' telephone communications are monitored by supervisors on an intermittent basis to ensure the agent is carrying out his duties in a satisfactory manner and is providing proper information to the customers. In June 1972 Petitioner was placed on three months' probation. In September 1972 this probationary period was extended an additional three months. In July 1974 Petitioner was again placed on probation and given a "final chance" letter. In October 1977 he was given a letter for poor performance. Petitioner acknowledged that several times before 1982 he had been disciplined by Respondent but not fired. In December 1982 Charles Cortright, a retired architect, called the Tampa office of Delta Air Lines to get information on a flight to and from the West Coast interrupted with cruises while on the West Coast. Specifically, Cortright wanted to fly to Seattle, take a ferry trip to Alaska, perhaps two more sea cruises from West Coast ports, take a train from Seattle to San Francisco, and fly back to Tampa from San Francisco. He was referred to Petitioner, who quoted him a price of $278.00 on the air portion of this trip, but, since Petitioner did not think the cruises could be arranged by Delta, referred Cortright to a travel agency. Petitioner testified that he referred Cortright to three travel agencies located in the vicinity of Cortright's residence and did not specify the agency at which Petitioner's wife worked. Although Cortright testified that he was not referred to any one by name and did not know that Petitioner's wife worked at Tri-Cities Travel Agency, he went to Tri-Cities and his reservations were made by Malinda, who, in fact, was Petitioner's wife. It is likely that Cortright did not know that Malinda was Petitioner's wife, but it is believed that Cortright was told by Petitioner to ask for Malinda and he did so. When the airline tickets arrived at the travel agency, Cortright was advised by the agency the price of the air fare was $302.00. Cortright then, on December 14, 1982, called Delta and asked to speak to Petitioner to inquire about the difference in the fares quoted by Petitioner and the cost of the tickets at the travel agency, and to get the fare guaranteed that was quoted by Petitioner. At the time this call was received by another agent, Jennings King, King was being monitored by his supervisor, Carolyn Corvette. In this phone conversation Cortright said he had spoken to Petitioner two times before, that he went to the agency to which he had been directed by Petitioner, that he spoke to Malinda as directed by Petitioner, and that he was charged a higher fare than was quoted by Petitioner. Corvette had the call transferred to the customer service desk and authorized guarantee of the lower fare quoted. She promptly prepared a memo of the incident to Arthur Arden, Chief Reservation Supervisor (Exhibit 7). Arden called Cortright, who confirmed that Petitioner had directed him to Tri-Cities Travel Agency. Arden extracted from Delta's computer the reservation made for Cortright which disclosed the reservation was made by Malinda at Tri-Cities (Exhibit 8). Knowing that Malinda was Petitioner's wife, Arden, on December 15, told Petitioner that he was suspended from work and would be recommended for dismissal. On December 15, 1982, Arden signed a memo to Harry Dean, Delta's Regional Manager at Tampa, recommending that Petitioner be terminated (Exhibit 6). Dean concurred, sent the memo to Delta's Atlanta office, and Petitioner was fired. All reservation agent trainees are told that they should make every effort to arrange all of the transportation needs of the customers through Delta Air Lines, including tours requiring other modes of transport than air; and that they should never refer a customer to a specific travel agency. If a travel agency's services are needed by the customer, the customer should be referred to the yellow pages of the phone book to select a travel agency. This same information is contained in the Standard Practices Manual, which is available to all reservation agents. The reason for this rule is to eliminate, insofar as possible, conflicts of interest and to refrain from alienating some travel agents by appearing to favor other travel agents. This could create a serious problem for the air lines and is taken very seriously by air line company management. Petitioner's testimony that he did not refer Cortright to Tri-Cities Travel Agency and that he never referred a customer to a specific travel agency was rebutted by Betty Maseda, a fellow reservations agent who frequently sat alongside Petitioner at work and on several occasions overheard Petitioner giving specific instructions to customers on exactly how to get to Tri-Cities Travel Agency and to ask for Malinda. Ms. Maseda considers herself a good friend of Petitioner and did not volunteer this information to Respondent until after Petitioner had been fired.
The Issue What amount should be awarded Petitioners as attorney's fees and costs in the underlying case in this matter, Savona et al. v. AHCA, Case No. 97-5909RU (DOAH Amended Final Order On Remand issued November 6, 1998).
Findings Of Fact Petitioners challenged a non-rule statement and policy of Respondent which limited physicians' Medicare cost-sharing reimbursement to the rate for Medicaid. Petitioners submitted an itemized statement of the requested hours, a summary of hours by stages of the case, and a summary of total hours, rates, and expenses requested. The hours and rates are supported by the testimony of Petitioners' counsel, David K. Miller, and corroborated by testimony of Attorney Samatha Boge and Attorney Nancy Linnan. An affidavit of Attorney Barry Richard in a related case adds further corroboration to hourly rates submitted by Petitioners' counsel. Respondent did not present independent evidence concerning proper number of hours, rates or expenses. Respondent did challenge some portions of the hours claimed by Petitioners' counsel and opposed the claim for fees and costs in its entirety. As established by testimony of David K. Miller, Samantha Boge, and Nancy Linnan, all attorneys licensed and practicing in Florida, the time spent by Petitioners’ attorneys in the initial proceeding and their hourly rates were reasonable. Further corroboration of testimony regarding hourly rates was presented by an affidavit from Barry Richard, an attorney in a related case. Petitioners have revised the number of hours properly allocated to this case and reduced same by 1.9 hours from hours allocated to M. Stephen Turner, one of the Petitioners’ attorneys. Respondent also challenges 3.9 hours charged by Petitioners' attorneys for monitoring of legislation, specifically senate bill 384, amending the law governing Petitioners rights to payment on crossover claims. The claim of counsel for Petitioners that this 3.9 hours (performed by Attorney Jody Chase) is relevant to proceedings in the underlying action, is not credited and these hours are also deducted from Petitioners’ claim for fees and costs. Petitioners request as adjusted is summarized as follows: M. Stephen Turner 73.7 hours@ $300/hr.= $22,110.00 David K. Miller 240.4 hours@ $225/hr.= 54,090.00 15.0 hours@ $225/hr.= 3,375.00 Other Partners .10 hours@ $225/hr.= 22.50 Associate .3 hours@ $175/hr.= 52.50 Paralegals 2.4 hours@ $ 75/hr.= $180.00 Fees $79,830.00 Expenses 2,280.00 Total $82,110.00 As modified above, the hours and rates requested are found to be reasonable in view of the novelty and complexity of issues, level of legal skills required, and the amount potentially at stake to Petitioners. Particularly, the amount awarded is justified in view of customary amounts charged or awarded for comparable services. The requested expense reimbursement is also reasonable. The expenses are of the kind typically billed to clients in addition to the hourly rate charged.
