The Issue The issues in this case are whether Respondent, Edgar Zamora, M.D., committed a violation of Chapter 458, Florida Statutes (2005), as alleged in an Amended Administrative Complaint issued by Petitioner, the Department of Health and, if so, what disciplinary action should be taken against his license to practice medicine in the State of Florida.
Findings Of Fact The Parties. Petitioner, the Department of Health (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for the investigation and prosecution of complaints involving physicians licensed to practice medicine in Florida. § 20.43 and Chs. 456 and 458, Fla. Stat. (2006). Respondent, Edgar Zamora, M.D., is, and was at all times material to this matter, a physician licensed to practice medicine in Florida pursuant to Chapter 458, Florida Statutes, having been issued license number ME 68598. The Indictment and Conviction. On or about January 27, 2004, Dr. Zamora was indicted in the United States District Court, Southern District of Florida, Case No. 06-20059CR-JORDAN, United States of America v. Heldy Artiles, et al., on one count of Conspiracy to commit offenses against the United States, in violation of Section 18 U.S.C. § 731 (Count 1), and one count of Health Care Fraud, in violation of Section 18 U.S.C. § 1367 (Count 7)(hereinafter referred to as the "Indictment"). The Indictment provides the following identification of Dr. Zamora: Defendant EDGAR ZAMORA was a medical doctor licensed to practice medicine in the State of Florida. He was employed by Miami Health as the clinic's doctor from in or around March 2000 through in or around June 2000. In Count 1 of Indictment, it is alleged that Dr. Zamora and the other named defendants committed Health Care Fraud Conspiracy against "Medicare and Private Insurance Companies, in connection with the delivery of and payment for health care benefits, items, and services” in order to "enrich themselves" in the following manner: submitting false and fraudulent claims to health care benefit programs; (b) paying kickbacks and bribes to Medicare beneficiaries and PIP-insured individuals so that they would serve as fictitious patients, thereby furthering the billing fraud scheme; (c) concealing the submission of fraudulent claims to health care benefit programs, the receipt and transfer of fraud proceeds, and the payment of kickbacks; and (d) diverting fraud proceeds for the defendants' personal use and benefit. Page 11 of the Indictment. The Indictment alleges the following facts concerning the Medicare Program: The Medicare Program ("Medicare") was a federal program that provided free or below-cost health care benefits to certain individuals, primarily the elderly, blind and disabled. The benefits available under Medicare are prescribed by statute and by federal regulations under auspices of the United States Department of Health and Human Services, through its agency, the Centers for Medicare and Medicaid Services ("CMS"). Individuals who receive benefits are referred to as beneficiaries. Medicare was a "health care benefit program," as defined by Title 18, United States Code, Section 24(b). Part B of the Medicare Program was a medical insurance program that covered, among other things, certain physician services, medical testing, medications, and durable medical equipment. Durable medical equipment, or "DME," is equipment that is designed for repeated use and for a medical purpose, such as a knee or back brace, nebulizer, or oxygen concentrator. The Medicare Part B Program was administered in the State of Florida by two entities, Palmetto Government Benefits Administrators ("PGBA") and Blue Cross/Blue Shield of Florida ("BC/BS"), both of which were private health insurance carriers that contracted with HCFA to receive, adjudicate, and pay Medicare Part B claims. PGBA processed and paid claims for DME and related supplies, including the associated medications. BC/BS processed and paid claims for physician and medical clinic services and diagnostic tests. Pages 5 and 6 of the Indictment. In part, the Indictment describes the following Medicare billing procedures: Qualified DME or pharmaceutical companies who supplied medical equipment or medications in connection with the Medicare program applied for and were given a "supplier number." The supplier number allowed DME suppliers and pharmaceutical companies to seek reimbursement for medical equipment and medications that they had supplied to Medicare beneficiaries. Medical clinics or doctors who provided services in connection with the Medicare program applied for and were given a "provider number," which allowed them to seek reimbursement for medical services that they had provided to Medicare beneficiaries. In order to receive payment from Medicare, a participating DME or pharmaceutical supplier was required to submit a health insurance claim form, known as a Form HCFA-1500 ("HCFA 1500"), and/or an Electronic Media Claim ("EMC"), which set forth, among other things, the beneficiary's name and unique Medicare identification number, the name and identification number of the doctor who ordered the item or medication, the item or medication that was supplied, the date of service, and the charge for the item or medication. Likewise, in order for participating medical clinics and doctors to receive payment form Medicare, the providers were required to submit a HCFA 1500, and/or EMC, which set forth, among other things, the beneficiary's name and unique Medicare identification number, the date of service, a description of the medical procedures and services provided to the patient, the physician who performed or ordered the procedures or services, and the amount charged for each procedure and service. Medicare, through BC/BS and PGBA, would generally pay 80% of the allowed cost for medical services, DME, and medications that were medically; necessary and ordered by licensed doctors or other qualified health care providers. Payments under the Medicare program were often made directly to the doctor or other provider or supplier of the medical goods or services rather than to the patient/beneficiary. For this to occur, the beneficiary was required to assign the right of payment to the provider or supplier. Thereafter, the provider or supplier assumed responsibility for submitting its bill directly to Medicare and obtaining payment. From January 1997 through March 2000, Miami Health Billed Medicare electronically by EMC under its assigned Medicare provider number, 40779. In or around March 2000, Miami Health was suspended by the Medicare Program, after which Miami Health billed Medicare by EMC using the Medicare provider number assigned to the doctor that was working at the clinic at the time. From in or around March 2000 through in or around June 2000, Miami Health billed Medicare under the provider number assigned to EDGAR ZAMORA, 27247. . . . . . . . . Pages 6 through 8 of the Indictment. With regard to Dr. Zamora, the Indictment alleges the "manner and means of the conspiracy" consisted of the following: 12. GUILLERMO GARCIA, EDGAR ZAMORA, and JOSE GARRIDO signed the altered, typed doctor notes and prescriptions, knowing that the notes and prescriptions had been changed and called for medically unnecessary tests, therapy, medications, and DME, and, in some cases, knowing that the altered notes reflected office visits that had not occurred. Page 13 of the Indictment. Finally, as to Count 1, Dr. Zamora is alleged to have committed the following "overt acts" with regard to "Car Accident Patient N.R.": 27. On or about June 19, 2000, EDGAR ZAMORA signed a typed final examination medical report concerning staged accident patient N.R., knowing that the typed note included false patient diagnoses and also a disability rating of 4% that had been fabricated by HELDY ARTILES. Page 18 of the Indictment. As to Count 7 of the Indictment, it was charged that Dr. Zamora and the other named defendants "in connection with the delivery of and payment for health care benefits, items, and services," committed Health Care Fraud against Medicare by: submitting or causing to submit false and fraudulent claims to Medicare and the Private Insurance Companies for the costs of medical tests, medical equipment, therapy, and medications; (b) paying kickbacks to Medicare beneficiaries and PIP-insured patients so that they would serve as patients, thereby furthering the fraudulent billing scheme; (c) concealing the submission of false and fraudulent claims to Medicare and the Private Insurance Companies; and (d) diverting fraud proceeds for the defendants' personal use and benefit. Page 25 of the Indictment. In particular, Dr. Zamora was alleged to have committed Health Care Fraud against Medicare by using his Medicare health care provider number when he submitted claims related to Car Accident Patient N.R. for an "[o]ffice visit, x- rays, tests, and physical therapy . . . ." Page 26 of the Indictment. On March 26, 2005, Dr. Zamora was found guilty by jury verdict of both counts against him of the Indictment. On December 5, 2005, United States District Judge Adalberto Jordan adjudicated Dr. Zamora guilty of the criminal offense charged against him in the Indictment. Judge Jordan sentenced Dr. Zamora to 27 months’ incarceration on both counts, to run concurrently; two years of supervised release; and restitution of $221,726.96. The Relationship of Dr. Zamora's Conviction to the Practice of Medicine. In light of the jury conviction on both counts of the Indictment relating to him, it is concluded that Dr. Zamora engaged in the activities alleged in the Indictment. All of those activities related to the practice of medicine. But for Dr. Zamora's license to practice medicine in Florida, Dr. Zamora would not have been able to commit the crimes for which he was convicted. It was his license to practice medicine that facilitated his ability to work at Miami Health, to obtain a Medicare provider number, and to fully participate in the Medicare program. All of the activities he engaged in, such as signing necessary Medicare documents and medical records backup, were carried out in his capacity as a licensed Florida physician. The crimes for which Dr. Zamora were convicted were crimes "which directly relates to the practice of medicine." Prior Disciplinary Action. Dr. Zamora has not previously been disciplined by the Board of Medicine.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the a final order be entered by the Board of Medicine finding that Edgar Zamora, M.D., has violated Section 458.331(1)(c), Florida Statutes (2005), as described in this Recommended Order; requiring that he pay an administrative fine of $5,000.00; and revoking his license to practice medicine in the State of Florida. DONE AND ENTERED this 20th day of July, 2007, in Tallahassee, Leon County, Florida. S LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of July, 2007. COPIES FURNISHED: Diane K. Kiesling Assistant General Counsel Office of the General Counsel Prosecution Services Unit Department of Health 4052 Bald Cypress Way, Bin C-65 Tallahassee, Florida 32399-3265 Benedict P. Kuehne, Esquire Sale & Kuehne, P.A. BankAmerica Tower, Suite 3550 100 Southeast Second Street Miami, Florida 33331-2156 Larry McPherson, Executive Director Board of Medicine Department of Health 4052 Bald Cypress Way Tallahassee, Florida 32399-3265 Dr. Ana M. Viamonte Ros, Secretary Department of Health 4052 Bald Cypress Way, Bin A00 Tallahassee, Florida 32399-1701 Josefina M. Tamayo, General Counsel Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701 R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701
The Issue Whether the permit held by the Respondents to operate a pharmacy in the State of Florida should be revoked.
Findings Of Fact A Complaint and Notice to Show Cause was filed against the Respondents, Ponce de Leon, Inc., doing business as Capel Drugstore, and Milagros Ferreras, Evina Valera and Julio C. Pascual, on December 27, 1978, alleging that the Respondents failed to maintain on a current basis a complete and accurate record of controlled substances controlled by Chapter 893, Florida Statutes, and that Respondents while holding a permit to operate a pharmacy in the State of Florida permitted the unlawful practice of pharmacy at Ponce de Leon, Inc., doing business as Capel Drugstore, located at 6661 SW 8th Street, Miami, Florida, by permitting a person not licensed or registered as a pharmacist or pharmacy intern in this state, to wit Milagros Ferreras, to fill and dispense a controlled substance with prescriptions and without prescriptions to various people on various dates. A hearing was requested by the Respondents on January 5, 1979. Notice of Hearing was sent to the parties on February 5, 1979. The first witness called on behalf of the Petitioner was V. K. Bell, Agent for the Florida Board of Pharmacy and a licensed pharmacist. Agent Bell testified that while at a local wholesaler in the Miami area he noticed that Ponce de Leon, Inc., doing business as Capel Drugstore, had been buying a large volume of Quaalude tablets, which is a Schedule II controlled substance that has been the subject of high abuse in the Dade County area. Thereupon, he proceeded to Capel Drugstore in order to review their records. He said that he found the prescription records did not account for proper disposition through lawful dispensing of a large volume of the Quaalude tablets that were purchased and documented by the invoices. He testified that he talked with the pharmacist, Francisco DeQueuedo, and Respondent, Milagros Ferreras, one of the owners of Ponce de Leon, Inc., doing business as Capel Drugstore, and the President of the corporation. Mr. Bell advised Ms. Ferreras and Mr. DeQueuedo of their right to remain silent and not answer questions, that anything they said could be used against them, and that they had the right to have an attorney present if they desired. He then questioned the Respondent, Ms. Ferreras, and Mr. DeQueuedo. Ms. Ferreras stated that she had bought a bad business and found that she was having financial difficulties with the business, and she started to sell Quaalude tablets for 50 cents each to some 15 or 20 different people without prescriptions. Mr. Bell testified that Ms. Ferreras then stated that she had made sales of the controlled substance without prescriptions. Agent Bell testified that the pharmacist, Mr. DeQueuedo, admitted to him that he knew that Respondent Ferreras was making these sales, and that she would from time to time bring him prescriptions which he would sign, indicating on the prescriptions that he did in fact fill them, although he had not, and then put them on file at the pharmacy in an attempt to cover up some of the shortages due to the unlawful sales of the Quaalude tablets. After this conversation Mr. Bell testified that he proceeded to do a drug accountability audit. Mr. Bell said that even with giving the pharmacy credit for those prescriptions which were signed by the pharmacist, he could not account for 27,440 Quaalude tablets. The drug accountability report was identified by Mr. Bell and was introduced into evidence as Petitioner's Exhibit number 1. Agent Bell identified a series of documents which constituted various invoices and prescriptions utilized in the drug accountability audit as well as a perpetual inventory, which the pharmacist had run. These documents were marked as Petitioner's Composite Exhibit number 2 and were introduced into evidence. Thereafter, Mr. Bell identified a document which he noted was a copy of a receipt which he gave to the pharmacist noting the various invoices contained in Composite Exhibit number 2, which were removed from the pharmacy. This receipt was marked as Petitioner's Exhibit number 3 and was introduced into evidence. Mr. Bell verified a document which was the receipt that he gave to the pharmacist, Mr. DeQueuedo, when he removed the original prescriptions from the pharmacy file, which prescriptions were also part of the Composite Exhibit number 2. This receipt was marked as Petitioner's Exhibit number 4 and was introduced into evidence. Mr. Bell then identified another document, which was marked for identification as Petitioner's Exhibit number 5, and Agent Bell testified that this was a statement made to him in his conversations with the Respondent, Ms. Ferreras, and the pharmacist, Mr. DeQueuedo, which he reduced to writing and which both the pharmacist and Respondent Ferreras signed. Exhibit number 5 substantiates the testimony which was given by Mr. Bell in respect to the unlawful dispensing of controlled substances by Ms. Ferreras, falsification of the prescription records by Mr. DeQueuedo, and the shortages found in the drug accountability audit. Robert S. Pacitti, a police officer with the Dade County Public Safety Department, was called as a witness for Petitioner. Officer Pacitti stated that he had received a telephone call from Agent Bell with reference to Ms. Ferreras and Mr. DeQueuedo. Officer Pacitti testified that he went to the Capel Drugstore and advised both the Respondent Ferreras and Mr. DeQueuedo, the pharmacist, of their Miranda rights. Officer Pacitti obtained a verbal statement from Mr. DeQueuedo that he was aware of the fact that Ms. Ferreras was dispensing Quaalude tablets. Officer Pacitti then took Respondent Ferreras down to the Dade County Public Safety Department, where she made a statement taken by a stenographer in Officer Pacitti's presence confirming the testimony of Agent Bell and Officer Pacitti. Respondent Ferreras stated that the individuals to whom she had sold Quaalude tablets promised to bring her prescriptions for them at a later date but did not do so. Officer Pacitti identified a document marked as Petitioner's Exhibit number 6 as a copy of the statement of Respondent Milagros Ferreras, and thereafter this statement was introduced into evidence as Petitioner's Exhibit number 6. Officer Pacitti testified that even though the large quantity of Quaalude tablets was being sold for 50 cents each, the street value of these tablets was between $3.00 and $5.00 per tablet. The secretary of Jack R. Blumenfeld, the attorney of record for Respondent Milagros Ferreras, presented photocopies of letters from two physicians indicating that Ms. Ferreras had been in the hospital and then had been advised to restrict her physical activity and avoid emotional strain. These letters were marked and filed by the Hearing Officer. After listening to the testimony of Agent Bell and Officer Pacitti, and after examining the exhibits introduced into evidence, it is the finding of this Hearing Officer that the Respondent, Milagros Ferreras, did permit the improper keeping of records at Ponce de Leon, Inc., doing business as Capel Drugstore, and that complete and accurate records of controlled substances were not maintained on a current basis. It is the further finding of this Hearing Officer that the Respondent, Milagros Ferreras, allowed the pharmacist, Francisco DeQueuedo, to file false information in the files of Ponce de Leon, Inc., doing business as Capel Drugstore, by placing prescriptions in the files which were not actually dispensed by the pharmacist to the individuals named thereon. The Hearing Officer finds that the Respondent, Milagros Ferreras, President of the corporation doing business as Capel Drugstore, improperly dispensed and sold Quaalude tablets to individuals with prescriptions and to individuals without prescriptions.
Recommendation Revoke the permit to operate a pharmacy in the State of Florida issued to Ponce de Leon, Inc., doing business as Capel Drugstore, and Milagros Ferreras, Evina Valera and Julio C. Pascual. DONE and ORDERED this 15th day of March, 1979, in Tallahassee, Leon County, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Jack R. Blumenfeld, Esquire 619 NW 12th Avenue Miami, Florida 33136 Michael Schwartz, Esquire Suite 201, Ellis Building 1311 Executive Center Drive Tallahassee, Florida 32301 H. F. Bevis Executive Secretary Florida Board of Pharmacy Post Office Box 3355 Tallahassee, Florida 32302
The Issue Whether the Petitioner was overpaid for Medicaid prescriptions. The Agency for Health Care Administration (AHCA, Agency or Respondent) asserts the Petitioner, Compscript, Inc., d/b/a Compscript (Petitioner or Compscript) failed to maintain proper records to support and document the Medicaid prescription claims paid by the Agency for the audit period. According to the Agency, the audit findings must be extrapolated to the universe of all claims for the audit period. If so, the Agency maintains the Petitioner should reimburse AHCA for a Medicaid overpayment in the amount of $216,974.07 (this is the “recoupment” amount). The Petitioner denies it was overpaid any amount, asserts it kept records in accordance with applicable laws and regulations governing pharmacy records, and maintains that the Agency may not apply the extrapolation accounting procedure in this case.
Findings Of Fact At all times material to the allegations of this case, the Petitioner was a licensed pharmacy authorized to do business in the State of Florida; its pharmacy license number is PH0016271. At all times material to the allegations of this case, the Petitioner was authorized to provide Medicaid prescriptions pursuant to a provider agreement with the Respondent. The Petitioner’s Medicaid provider number is 106629300. The terms of the provider agreement govern the contractual relationship between this provider and the Agency. The parties do not dispute that the provider agreement together with the pertinent laws or regulations controls the relationship between the provider and the Agency. The provider agreement pertinent to this case is a voluntary agreement between AHCA and the Petitioner. Pursuant to the provider agreement, the Petitioner was to “keep, maintain, and make available in a systematic and orderly manner all medical and Medicaid-related records as AHCA requires for a period of at least five (5) years.” In addition to the foregoing, a Medicaid provider must maintain a patient record for each recipient for whom new or refill prescriptions are dispensed. Any Medicaid providers not in compliance with the Medicaid documentation and record retention policies may be subject to the recoupment of Medicaid payments. A Medicaid provider must retain all medical, fiscal, professional, and business records on all services provided to a Medicaid recipient. The records may be kept on paper, magnetic material, film, or other media. However, in order to qualify for reimbursement, the records must be signed and dated at the time of service, or otherwise attested to as appropriate to the media. Rubber stamp signatures must be initialed. The records must be accessible, legible and comprehensive. Specific to the issues of this case, a Medicaid provider must also retain prescription records for five years. The Respondent is the state agency charged with the responsibility and authority to administer the Medicaid program in Florida. Pursuant to this authority AHCA conducts audits to assure compliance with the Medicaid provisions and provider agreements. These “integrity” audits are routinely performed and Medicaid providers are aware that they may be audited. At all times material to the allegations of this case, the Medicaid program in Florida was governed by a “pay and chase” procedure. Under this procedure, the Agency paid Medicaid claims submitted by Medicaid providers and then, after-the-fact, audited such providers for accuracy and quality control. These “integrity” audits are to assure that the provider maintains records to support the paid claims. In this case, the audit period is May 28, 1999 through July 18, 2000. The pertinent audit has been designated AHCA audit no. 01-0514-000-3/H/KNH and was initiated on October 23, 2000. The Petitioner does not dispute the Agency’s authority to perform audits such as the one at issue. The Petitioner maintains its records are sufficient to support the paid claims and that the Agency has unreasonably imposed its interpretation of the requirements. The Medicaid provider agreement that governs this case required that the Petitioner comply with all Medicaid handbooks in effect during the audit period. Essentially, this standard dictates the records that must be kept for quality control so that the after-the-fact audit can verify the integrity of the Medicaid claims that were paid by the Agency. During the audit period the Petitioner sold or dispensed drugs to Medicaid recipients. Equally undisputed is the fact that Medicaid claims were paid by the Agency during the audit period. Each claim reviewed and at issue in this cause was a paid Medicaid claim subject to the Petitioner’s provider agreement and the pertinent regulations. The Agency required that each and every claim submitted by the Petitioner during the audit period under the Medicaid program be filed electronically. Each claim submitted was filed electronically. Nevertheless, the Agency also required the Petitioner to retain records supporting the claim. Additionally, the Petitioner was to make such supporting records available to the Agency upon request. The Agency asked the Petitioner to present its records to support the claims for the audit period. The disclosure of the records proved difficult for this Medicaid provider because it does not operate in a conventional pharmacy setting. More specifically, it operates solely to serve a nursing home population. All of the patients whose prescriptions were filled were nursing home residents. Compscript maintains its manner of doing business is slightly different from the conventional pharmacy. Rather than the walk-in patient who presents a written prescription to be filled, this Petitioner receives its pharmacy orders by telephone or facsimile transmission from nursing homes. Typically, the staff at Compscript takes the call, writes down the pertinent information, enters the data into the pharmacy’s computer system, and the item is dispensed and routed to the nursing home via the delivery driver. All drugs are dispensed in sealed containers and are delivered with a manifest listing all the medications by name and patient. Given the volume of prescriptions being prepared and delivered, for the audit period at issue in this case, the Petitioner made 2-3 trips to the nursing home per day. Once the information for the prescription was entered into the Petitioner’s computer system, Compscript had little interest in maintaining the written telephone message or the facsimile sheet that generated the request. In some instances the Compscript employee did not make a written record of the prescription request. In those instances the employee entered the request directly into the Petitioner’s computer system and bypassed the written step altogether. The Compscript computer system tracks the initials of the pharmacist who entered the prescription information and cannot be altered without such alteration being tracked and noted. Since the pharmacy fills “over the counter” items, as well as controlled and non-controlled pharmacy products, the computer record denotes that information along with the patient information. When the Respondent’s audit agents went into the Compscript facility to audit the Medicaid claims, the Petitioner could not readily produce the written documentation to support the dispensed drugs. In fact, many of the records that verified the prescriptions dispensed were found on the nursing home records. The nursing home patient’s physician order sheet specified the item or items requested for the patient. This “physician order sheet” (POS) should theoretically always support the dispensing of the product from the Petitioner. In this case there were instances when the POS did not corroborate the claim. When the auditors from the Agency presented at Compscript, the Petitioner did not have the POS records to produce. Obviously, those records were maintained within the nursing home. Additionally, Compscript did not have the telephone notes or the facsimile transmission sheets to support items dispensed during the audit period. When the hearing in this cause proceeded it was also discovered that records that were generated daily by the Petitioner’s computer system that would have corroborated the claims (and which were allegedly maintained in storage) were not produced or available to support Medicaid claims submitted during the audit period. During the audit the Agency’s auditors requested records from a random sample of the claims submitted during the audit period. The results from that sample where then applied to the universe of claims for the audit period. When this mathematical calculation was performed the audit produced a Medicaid overpayment in the amount of $1,341,466.27. Afterwards, when the Petitioner was able to locate additional records to correspond to and support the prescriptions dispensed, the amount of overpayment was reduced to $217,715.28 (the amount set forth in the parties’ Pre-hearing Stipulation). At hearing, the Agency maintained that the amount of overpayment was $216,974.07 for which the Petitioner could produce no adequate documentation. At hearing, the Petitioner continued to dispute the procedure of applying the audit sample overpayment to the population of claims to mathematically compute the overpayment for the audit period. This “extrapolation” process was admitted into evidence and has been fully considered in the findings reached in this case. The Petitioner was required to maintain Medicaid- related records for a period of 5 years. Thus, for the audit period in this case, any record supporting the claims should have been maintained and made available for the Agency. Such records would have been within the five-year period. The Agency designates Medicaid compliance to its office of Medicaid Program Integrity. In turn, that office contracted with Heritage Information Systems, Inc. (Heritage) to perform and report pharmacy audits of the numerous pharmacy providers within the state. Auditors from Heritage were assigned the Compscript audit. At the time of the audit the Heritage auditors were not privy to any of the POS documents later produced in the case. Ken Yon is the Agency’s administrator who was responsible for managing the instant case and who worked with the Heritage auditors to assure the policies and practices of the Agency were met. In this case, the Heritage auditors presented at Compscript unannounced on October 23, 2000, and sought 250 randomly selected claims for review. By limiting the number of claims, the auditors were not required to sift through the records of 46,000+ claims (the approximate number of claims that the Petitioner submitted during the audit period). For the universe of 46,000+ claims, 250 randomly selected claims is a reasonable sample to audit. The adequacy of the sample number as well as the manner in which it was generated is supported by the weight of credible evidence presented in this matter. Also, the results of a sample of 250 from the universe of 46,000+ would be statistically valid if randomly chosen as they were in this case. In this regard the testimony of Dr. Mark Johnson, an expert in statistical sampling and analysis, has been deemed credible and persuasive as to the issues of the appropriateness of the sample (as to size and how it was generated), the use of the sample overpayment to calculate an overall payment, and the statistical trustworthiness of the amounts claimed in this cause. If anything, as Dr. Johnson asserted, the actual overpayment would be greater than the recoupment amount sought by the Agency. The Agency has used a statistical extrapolation method to compute overpayments for years. The statistical concept and process of applying a sample to a universe to mathematically compute an overpayment is not novel to this case. After the auditors completed their review of the records at the Compscript pharmacy, Kathryn Holland, a licensed pharmacist (who is also a consulting pharmacist) prepared the Respondent’s Final Agency Audit Report. Prior to completing the report, Ms. Holland received and reviewed the information provided by the Petitioner through the auditors. As a result of the review, a number of “can’t find” conclusions were reached. By “can’t find” the auditors and Ms. Holland meant that the original prescription or refill documentation could not be located for the paid Medicaid claim. These “can’t find” claims were reported to the Petitioner, who was given additional time to locate and produce documents to support the claims. In fact, the Agency continued to accept documentation for claims up through the time of hearing. Consequently, the amount sought for overpayment has been substantially reduced. Whether the Agency had the authority to accept documents outside the prescription records maintained by the pharmacy is not an issue. In fact, the Agency did reduce the overpayment amount when subsequent supporting documents were located. A second error in the documentation for the Petitioner’s prescriptions was noted as “no doctor’s address on the prescription.” That expression meant that pursuant to state and federal law the physician’s address is required for a controlled substance and when it was not provided the auditor deemed the documentation incomplete. Although the Petitioner maintained doctor addresses in its computer system, the records did not correspond to the specific prescriptions that were filled for the audited claims. In order to stand as a sufficient prescription form, a writing must be created contemporaneous to the order (phone requests that are transcribed are acceptable), must contain specific information (type of drug, strength, dose, patient, doctor, DEA number, refill, etc.), and it must be kept for the requisite time. It would be acceptable for the prescription to be computer generated so long as it was written contemporaneous to the order and preserved as required by law. In this case, at the conclusion of the audit, the Agency identified 194 discrepant claims within the random sample of 250. The vast majority of those discrepancies were noted as “can’t find.” Had the Agency not accepted other documentation to support the dispensing of the drugs, the calculated overpayment would have been $1,575,707.44. Applying a lower confidence limit of 95 percent to that amount generated the calculated overpayment of $1,341,466.27. The audit findings set forth in the Agency’s Final Agency Audit Report (dated April 6, 2001) is supported by the weight of credible evidence in this case. Nevertheless, the Agency did allow the provider here to supplement the documentation disclosed during the audit. And, to that end, the calculated overpayment was reduced to $216,974.07 (this amount is 95% of the calculated overpayment). In reality, the amount owed by this Petitioner for failure to maintain proper documentation for this audit would be greater than the recoupment amount sought by the Agency. Had the Agency held the Petitioner to a standard of “no prescription, no payment” standard arguably 194 of the 250 audited claims could have been disallowed. That is not the standard applied by the Agency. A “patient record” may include information regarding the patient’s prescription history. The terms “patient record” and “prescription” are not synonymous. For example, while a prescription would contain information such as patient's name, doctor, DEA number, doctor's address, dosage, drug, and whether it may be refilled, it would be expected that the “patient record” would contain additional information not typically found on a prescription. For instance, a “patient record” might contain a historical track of past medications or known patient allergies. In this case, the computer records or “patient records” maintained by the Petitioner did not retain the prescriptions in the format dictated by rule. An electronic imaging recording system may be used when the system captures, stores, and can reproduce the exact image of the prescription, including the reverse side of the prescription if necessary. The Petitioner’s system did not do that. An electronic system must be able to produce a daily hard-copy printout of all original prescriptions dispensed and refilled. If the Petitioner’s system could do that, it did not. An acceptable electronic system must generate the prescription contemporaneous to the dispensing order. The Petitioner’s system did not do that. The Agency has not alleged, and there is no evidence to suggest, fraud in the Petitioner’s failure to maintain its records. The Agency’s interpretation of the requirement that a prescription be reduced to writing is consistent with the rules and regulations in effect at the time of this audit. The last category of discrepant items was “UR” which stood for “unauthorized refills.” These were claims for refills on drugs for which the original prescription could not be located or documentation from the nursing home could not be found. Again, the Petitioner the maintained that within the nursing home setting a physician’s reorder for medications for the patient could be found on the POS. These refill requests were handled orally among the physician, the nursing home staff, and the pharmacy. Nevertheless, because they were not documented in writing the Agency disallowed this claims and included them among the discrepant list. If the Petitioner was able to produce a physician order to support the UR claims, it was removed from the recoupment list. In most instances, the Petitioner did not have the requisite paperwork to support the refill. Instead, the Petitioner relied on its computer records (again not kept in accordance with the applicable standards) to support the UR claims. The Agency has not claimed that the refills were not dispensed, merely that the paperwork to support the claim cannot be produced.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order that accepts an amended Final Agency Action Report to support an overpayment and recoupment against the Petitioner in the amount of $216,974.07. S DONE AND ENTERED this 6th day of October, 2005, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of October, 2005. COPIES FURNISHED: Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 L. William Porter, II, Esquire Agency for Health Care Administration Fort Knox Executive Center III 2727 Mahan Drive, Building 3, Mail Stop 3 Tallahassee, Florida 32308-5403 Kenneth W. Sukhia, Esquire Fowler, White, Boggs, Banker, P.A. 101 North Monroe Street, Suite 1090 Post Office Box 11240 Tallahassee, Florida 32302 Ralph E. Breitfeller, Esquire McGrath & Breitfeller, LLP 140 East Town Street, Suite 1070 Columbus, Ohio 43215
The Issue Whether Petitioner is entitled to additional compensation under the Agreement with Respondent?
Findings Of Fact On August 1, 1986, Respondent issued ,Invitation to Bid Number 87-2, which was titled, "Invitation to Bid for Providing Financial Services Related to the Payment of State Employees' Group Health Self Insurance Claims: (Invitation to Bid). Under the terms of the Invitation to Bid, the winning bidder would agree to provide banking services for two interest bearing accounts. One account (Prescription Drug Account), was to be used to transfer funds from the Respondent to Paid Prescriptions, Inc., the administrator of the prescription drug component of the State Employee's Group Health Self Insurance Plan (Plan). The other account (Health Claims Account) was to be used to pay drafts issued by Blue Cross and Blue Shield of Florida, Inc., to participants and providers for payment of all health claims, except prescription drugs. Blue Cross and Blue Shield of Florida, Inc., was the administrator of the Plan, except for Prescription drugs. For both accounts, the Invitation to Bid required that all fees and charges of the winning bidder must be offset by "the required minimum daily balance." The required minimum daily balance was an amount of money which Respondent would have to maintain deposited in the account with Petitioner. Interest earned by the winning bidder on the required minimum daily balance amount would compensate the winning bidder for providing the services required by Respondent. In addition, funds deposited in the accounts in excess of the required minimum daily balance would earn interest credited to the account each month. Responses to the Invitation to Bid were to be evaluated based on the amount of required minimum daily balances and the amount of interest Respondent would earn on funds on deposit in excess of the required minimum daily balance. Appendix 1 to the Invitation to Bid, was titled "Prescription Drug Account Activity" and contained the following information: Estimated number of deposits per month 2 Estimated number of wire transfers per month 2 Average amount per transfer from February 1986 through May 1986 $480,000 Appendix 2 to the Invitation to Bid was Titled "Heath Claims Account Activity" and contained the following information: The following data was collected from the Period May 1, 1985 through April 30, 1986. Average number of drafts paid per month $40,568 Average daily amount of drafts paid $395,398 Average number of deposits per month 8 Average number of stop Payments per month 19 In preparing its response to the Invitation to Bid, Petitioner based its calculations on the number of transactions set forth in the Appendix. Petitioner determined that, to cover its costs plus a 20 percent profit margin, it would need to receive 13.7 cents per draft handled on the Health Claims Account. By using the 13.7 cents per draft, the average number of drafts per month listed in Appendix 2, and by assuming that it could earn 6.3 percent interest on the required minimum daily balance, Petitioner determined that it needed to ask for a required minimum daily balance of $1,059,000, if the funds were to be maintained in a Demand Deposit Account. Before petitioner submitted its response, Mr. Dale Thompson, an employee of Petitioner's, contacted Mr. Andrew Lewis, Respondent's contact for the invitation to bid, to ask a few questions, and make sure Petitioner understood what it was doing. During this conversation, Mr. Thompson asked Mr. Lewis if he had any reason to expect that the average number of drafts listed in Appendix 2 would increase. Mr. Lewis responded that the number reflected what it had been over the last period and that he had no expectation that it would increase. Petitioner submitted a response which asked for a required minimum daily balance of $0.00 for the Prescription Drug Account, contingent upon having the Health Claims Account of $961,216, if funds were to be maintained in a zero interest Certificate of Deposit, $1,059,522, if funds were to be maintained in a Demand Deposit Account. Also, the amounts on deposit in excess of the required minimum daily balance would earn interest based on the current month's auction average of the ninety-day U. S. Treasury Bill Discount Rate, but not less than 4 Percent. Based on Respondent's analysis of the bids submitted by five firms, Petitioner was selected as having submitted the best bid. Thereupon, Petitioner and Respondent entered into and Agreement whereby Petitioner agreed to provide the services set forth in the Invitation to Bid and pay the interest set forth in Finding of Fact 13, supra, in exchange for Respondent's maintaining a required minimum daily balance of $1,059,522 in a Demand Deposit account with Petitioner. Nowhere in the Agreement is there mention of the average number of drafts listed on Appendix 2. Page 6 of the Agreement contains the following language: SECTION VI - ADDITIONAL DOCUMENTS Invitation to Bid Number 87-2, mailed August 1, 1986 and Capital City's Response to Invitation to Bid Number 87-2 are incorporated herein by reference, except where there is a conflict between this Agreement and the Invitation to Bid shall take precedence over Capital City's Response to the Invitation to Bid. Petitioner began performing services under the Agreement on November 8, 1986, and continued to do so until December 31, 1987, when the agreement expired. Immediately after beginning to perform services, the number of drafts being processed in the Health Claims Account exceeded the number Petitioner had anticipated. This continued for the entire period of the Agreement, during which Petitioner processed the following number of drafts: Nov. 8 - Nov. 30, 1986 38,291 December 55,313 January, 1987 59,887 February 73,309 March 74,468 April 68,654 May 67,911 June 81,065 July 86,838 August 74,337 September 82,846 October 85,624 November 74,474 December 76,374 Monthly Average 72,217 On April 21, 1987, Petitioner, requested that Respondent pay additional compensation to Petitioner based on 13.7 cents per draft for the number of drafts which were being processed in excess of the number reflected on Appendix 2 of the Invitation to Bid. By letter dated May 25, 1987, Respondent denied Petitioner's request, stating that the "unpredictable fluctuations in the volume of drafts was a business risk agreement." Petitioner's Exhibit 4.. After further oral communications between the parties, Petitioner requested an administrative hearing regarding its request for additional compensation. The number of drafts paid from Respondent's, account during May, 1985 through April 1986, which formed the basis for the average number of drafts listed on Appendix 2 were: May 1985 32,783 June 28,045 July 32,697 August 32,822 September 34,923 October 41,430 November 41,491 December 39,136 January 1986 53,103 February 51,390 March 50,775 April 48,176 Total $486,811 Additionally, the number of drafts paid in May, June and July, 1986 were 44,020; 45,123; and 53,095; respectively. At the time Mr. Lewis was working on the Invitation to Bid and had the conversation with Mr. Thompson described in Finding of Fact 12, supra, he was not aware that the number of drafts paid per month had been increasing over the prior three months. In preparing the Invitation to Bid, Mr. Lewis had asked someone in his office to give him an average for the past 12 months and the number he received is the number reflected in Appendix 2.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED, that Respondent issue a final order denying Petitioner's request for additional compensation. Done and ENTERED this 17th day of May, 1988, in Tallahassee, Florida. JOSE A. DIEZ-ARGUELLES Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 17th day of May, 1988. APPENDIX The parties submitted proposed findings of fact which are addressed below. Paragraph numbers in the Recommended Order are referred to as "RO ." Petitioner's Proposed Findings of Fact Proposed Finding Ruling and Paragraph Number in of Fact Number Recommended Order Accepted. RO1, 2. Accepted, generally. RO3, 4 Accepted, generally. RO5 Accepted. RO9 Irrelevant Accepted. RO12 Accepted. RO11, 13 First sentence, accepted. RO14, 15. Second sentence, generally accepted, except to the extent it indicates that the number of items was limited by the Agreement. RO16, 17 and last paragraph of Conclusions of Law. Generally supported by the evidence, but irrelevant. The fact that Respondent had this information in its records does not mean that it had a duty to inform bidders when, at the time, it did not know its significance. Accepted. RO19 Accepted, except for parenthetical on incorporation by reference. RO19 Supported by competent evidence but not necessary for the decision reached 13-15. Rejected as argument Respondent's Proposed Finding's of Fact Proposed Finding Ruling and Paragraph Number in of Fact Number Recommended Order 1-3. Irrelevant 4,5. Accepted RO3, 4, 5, 13, 15 6. Accepted 7. Accepted generally. RO12 8. Accepted generally. RO12 9. Accepted 10. Accepted. RO5 11-13. Accepted. RO20 14. Supported by the evidence, but unnecessary to the decision. COPIES FURNISHED: James D. Beasley, Esquire Ausley, McMullen, McGehee, Carothers & Proctor 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Augustus D. Aikens, Jr., Esquire General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Adis Vila, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue The issues to be determined here concern disciplinary action to be taken against Respondent for those administrative offenses pertaining to the controlled substances Talwin, Dilaudid and Paregoric dispensed by Scottie Drug Store in Duval County, Florida, during the period April 2, 1981, to March 23, 1982, in violation of various provisions of Chapter 465, Florida Statutes. These contentions made by the State of Florida, Department of Professional Regulation, are more particularly described in the Administrative Complaint, DPR Case No. 0022147.
Findings Of Fact Howard E. Staats is a pharmacist who has been issued a license by the State of Florida, Department of Professional Regulation, Board of Pharmacy. The license number is 0007704. At times relevant to this proceeding, Staats practiced pharmacy in Jacksonville, Florida. At all times pertinent to the Administrative Complaint, which is the focus of this action, Staats was the managing pharmacist at American Apothecaries, Inc., which does business as Scottie Drug Store at 41 Arlington Road South, Jacksonville, Florida. A copy of Respondent's most recent license may be found as Petitioner's Exhibit No. 1, admitted into evidence. Petitioner's Exhibit No. 2, admitted into evidence, is a copy of the permit for American Apothecaries. Sometime within the period March 23, 1982, through March 29, 1982, an audit was conducted at the Scottie Drug Store. The audit revealed that in the period April 2, 1981, through March 23, 1982, the drug store had purchased 66,900 tablets of Talwin, 50 mg., had sold 29,373 tablets of that drug, had lost by robbery or theft, 1,000 tablets of the drug, leaving 36,527 tablets of Talwin unaccounted for. During that same audit period, the pharmacy purchased 4,000 tablets of Dilaudid, 4 mg., selling 3,025 tablets of that drug, losing by robbery or theft, 200 tablets of the drug and failing to account for 775 tablets of the drug. Finally, during the audit period, 2,064 ounces of Paregoric had been purchased and 699 ounces sold, with the remaining amount of 1,285 ounces being unaccounted for. See Petitioner's Exhibit No. 4. Talwin is a Schedule IV controlled substance within the meaning of Chapter 893, Florida Statutes. Dilaudid is a Schedule II controlled substance within the meaning of Chapter 893, Florida Statutes. Paregoric is a Schedule III controlled substance within the meaning of Chapter 893, Florida Statutes. The audit which was conducted at the Scottie Drug Store revealed numerous prescriptions for the controlled substance Talwin, 50 mg., written on prescription blanks of Drs. W. W. Shell, Jr., and L. T. McCarthy, Jr., which had allegedly been signed by those physicians, when in fact the patients for whom the prescriptions were written were unknown to the physicians and the signatures of the physicians were forgeries. Those prescriptions are depicted in Petitioner's Exhibit No. 5, admitted into evidence. During the period covered by the audit, it was shown that Staats filled a number of prescriptions for various patients for the controlled substance Talwin, which had been written on prescription pads of Methodist Hospital and Baptist Medical Center in Jacksonville, Florida, and signed by individuals who are not physicians having hospital privileges at those medical centers nor practicing as physicians in the Duval County area. Copies of those prescriptions may be found as Petitioner's Exhibit No. 6, admitted into evidence. In the course of the time sequence related to the audit review process, it was discovered that Staats had refilled numerous prescriptions for controlled substances on more occasions than had been authorized by physicians, namely prescription No. 51632 was refilled twice although the physician indicated there were to be no refills; prescription No. 51579 was refilled once although the prescription indicated there should be no refills; prescription No. 51639 was refilled twice although the prescription indicated there should be no refills; prescription No. 51217 was refilled once although the prescription indicated there should be no refills; prescription No. 51238 was refilled once although the prescription indicated that there should be no refills; prescription No. 53010 was refilled once although the prescription indicated that there should be no refills; prescription No. 53597 was refilled four (4) times although the prescription indicated that it should only be refilled once; prescription No. 53537 was refilled once although the prescription indicated that it should not be refilled; and prescription No. 53592 was refilled twice although the prescription indicated that there should be no refills. Petitioner's Exhibit No. 7, admitted into evidence, is copies of prescriptions spoken to in this paragraph. Respondent Staats had operated the Scottie store under a lease arrangement during 1979 and 1980, and in January of 1981, took a position as an active pharmacist in that store. After becoming the principal operating pharmacist in the Scottie store, Staats began to receive prescriptions from doctors Shell and McCarthy for the substance Talwin and when a prescription purportedly written by those physicians was in question, Staats would call the office of the physicians for confirmation, which at times would be given over the phone and at other times an indication was made that a call back from the physician's office to Staats would be necessary. Some of the indications of physicians' prescription authority of the substances in question would be placed on a separate log and not on the back of the prescription and on other occasions, the note of the prescription information would be placed on the back of the prescription form and not in the log. Normally, this information would be reflected both in the log and on the back of the prescription. There were occasional circumstances in which the authority was not stated in either place. At approximately the same time as was covered by the audit, Staats began to ask for identification from customers who were seeking prescriptions for Talwin and noted that the demand for that substance declined with the advent of the request for identification. Staats posted a notice in the window of the pharmacy to the effect that state law imposed a fine of $5,000.00 or might cause incarceration for five (5) years for presenting forged prescriptions or conspiring or agreeing with another to have a forged prescription filled. On two (2) occasions Staats called law enforcement officials on a circumstance involving suspect prescriptions and those persons were apprehended. (Poor record keeping and mistakes in estimating the amount of losses due to a robbery and a larceny which occurred in the period covered by the audit contributed to the unaccounted for controlled substances, but those matters of record keeping and theft reports would cause only a slight differential in the disparity, as opposed to explaining the whereabouts of a substantial portion of the missing controlled substances.) Beginning on March 25, 1982, Staats began to keep a daily inventory log on the substance Talwin and a number of other controlled substances. A copy of that log may be found as Respondent's Exhibit No. 9, admitted into evidence. In addition, certain out-of-date and otherwise undesirable controlled substances, Schedules II, III and IV, have been removed from inventory and turned over to appropriate authorities for destruction.
The Issue The issue for consideration in this hearing is whether Respondent's license as a chiropractor in Florida should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Board of Chiropractors, was the state agency responsible for the licensing of chiropractic physicians and the regulation of the chiropractic profession in Florida. Respondent was a licensed chiropractic physician holding license number CH-0004760, issued on January 2, 1985. Shortly after beginning his licensed practice, Respondent requested a provider number under both the Medicare and the Blue Cross/Blue Shield insurance programs, and was assigned provider number 70616. Application for a Blue Cross/Blue Shield provider number does not automatically result in the issuance of a Medicare provider number. That requires a separate request. However, Blue Cross/Blue Shield is the contract manager for the Medicare Part B program in Florida and is responsible for issuing provider numbers to physicians submitting claims to either or both programs, and the number for both may be the same, modified with a PIN number for one of them. On or about September 26, 1985, Respondent entered into an agreement with Medicare Part B to be a participating physician or supplier, as well as with Blue Cross/Blue Shield. A participating physician is a provider of medical services who agrees by contract to file claims directly with the carrier for the Medicare Part B program and agrees to accept no more than the Medicare approved charge for service of treatment rendered to a patient within the program. The participation agreement is automatically renewed on an annual basis until the provider requests, in writing, to be disenrolled. Respondent did not submit such a request, and, therefore, from January 1, 1986 through such time in 1995 as his status was terminated, he was a participating physician under the Medicare Part B program. In mid-September, 1992, S.M., a 70 year old woman, needed chiropractic treatment. Since she had just moved into the Winter Haven area, she contacted a referral service from which she obtained Respondent's name, among others. Because she knew where his office was, she called him to make an appointment, After asking her over the phone if she had Medicare and supplemental insurance coverage, (she did not ask him if he took Medicare patients), he made an appointment with her for an examination. S.M. contends that prior to providing any treatment, Respondent had her fill out a case history form which bears some notations which she did not put there. The Confidential Patient Case History form filled out by the patient on July 18, 1992, in the section entitled "Insurance Information", specifically asks for the name of the patient's insurance carrier and if the patient is covered by Medicare, to each of which questions the patient answered affirmatively and gave the pertinent coverage information. She also gave Respondent's staff her insurance cards for copying in support of the information noted on the form. The same form also has a provision in it which states in part, just above the patient's signature line: .... I understand that this Chiropractic Office will prepare any necessary reports and forms to assist me in making collection from the insurance company and that any amount authorized to be paid directly to this Chiropractic office will be credited to my account on receipt. However, I clearly understand and agree that all services rendered me are charged directly to me and that I am personally responsible for payment. Respondent took two x-rays of the patient's back and then treated her. She visited Respondent's office for treatment on at least two occasions and he wanted her to come back for further visits. However, because she felt better she did not do so. Respondent's records reflect that S.M. was treated by the Respondent with spinal adjustment or manipulation on both September 21 and September 28, 1992, and according to the Board's expert, Dr. Lucido, he also performed spinal acupressure trigger therapy on her. Spinal adjustment is covered by Medicare. Spinal acupressure trigger therapy is not. After each visit, S.M. was requested to pay in full in cash for all services provided and was given a receipt for the payments made. S.M. paid Respondent $170.00 for the first visit and paid $30.00 for each succeeding visit. According to Dr. Lucido, if Respondent performed services covered by private insurance, the filling out of the form for the patient would be a courtesy. If, however, the patient were covered by Medicare for the service rendered, it would be mandatory. If a chiropractor is going to perform a therapy which, as here, is not covered by Medicare, he is required to notify the patient of this in advance. Since in this case Respondent was performing a service not covered by Medicare, he was obliged to so advise the patient prior to doing the treatment, and this advice should have been reduced to writing and acknowledged by the patient. If a non-covered service was to be the exclusive service provided, Respondent would not have been required to file for Medicare coverage for the patient unless it were necessary in order to get a denial of coverage by Medicare prior to payment by private insurance. This is the standard in the community, according to Dr. Lucido. Respondent claims to recall vividly the treatment he rendered to S.M. and asserts he did only non-covered therapy which did not require him to fill out a Medicare claim form. He also claims that at the time in issue he was no longer a Medicare provider, asserting that one of the memoranda in the Blue Cross/Blue Shield personnel files relative to his status bears a signature thereon that is not his. Nonetheless, this testimony must be considered in light of Respondent's admission that he was once convicted of a crime involving dishonesty or the making of a false statement. Respondent admits signing up with Medicare early on and there is no evidence that he ever initiated his disenrollment from the program in a manner consistent with the procedure outlined by Ms. Esposito, the agency's enrollment official. The testimony of Respondent's office assistant, Ms. Miller, suggests that the receipts in this case are inaccurate and based on the medical records and her mistaken supposition of what happened in the treatment room. Respondent agrees and claims that when he discovered what had happened and how S.M. had been billed, he tried to retract the incorrect receipts which Ms. Miller had mistakenly issued. Notwithstanding all the above, in Dr. Lucido's opinion, S.M. was given both covered and non-covered treatment, and in this case, he contends, Respondent was obliged to file the Medicare claims form for S.M. After an evaluation of the testimony given by both Respondent and his assistant, it is found that Dr. Lucido's analysis of the situation is more credible and is adopted here. Ordinarily, S.M. would wait for the Medicare Explanation of Benefits form which she would then use to seek reimbursement from her supplemental carrier. The physician providing Medicare covered treatment is required to submit the Medicare claims form, and some physicians, as a courtesy, will prepare and submit the supplemental insurance claim form as well. After the last visit with Respondent, S.M. requested that he submit her insurance claim form to Medicare on her behalf so that she could be reimbursed for the money paid by her to him. Respondent told her he didn't go to school for five years to learn to fill out forms, but if she would get the forms, he would help her fill them out. When she went to the Social Security office to get the forms, at first she could not get them. S.M. was told it was up to the doctor to obtain and fill them out. However, she finally prevailed and got the forms which she filled out as best she could, except for the diagnosis. She then took them to Respondent. He not only refused to file the claim form with Medicare for S.M., he also refused to complete the diagnosis portion of the form. As a result, S.M. was required to submit the claims forms to Medicare herself, but payment for the services rendered her was denied by Medicare because the claims forms were not filed by Respondent directly with the carrier. When S.M. called Respondent's office to report that, he was not in and she left word for him to call back. He has never done so. Respondent's assistant, Ms. Miller, claims that on none of the three visits did S.M. indicate she was on Medicare nor did she ever present a Medicare card. Her testimony is not considered reliable, however, and S.M.'s account of the relationship is more credible. Federal law, at 42 U.S.C. 1395 provides that for services rendered after September 1, 1990, and within one year after the date on which the service is rendered for which payment is sought, a physician or provider: ... shall complete and submit a claim for such service on a standard claim form specified by the Secretary to the carrier on behalf of a beneficiary, and ...may not impose any charge relating to completing and submitting such a form.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Board of Chiropractic enter a Final Order in this case placing Respondent, Jerald M. Jervis', license to practice chiropracty in Florida on probation for six months, assessing an administrative fine of $500.00, and issuing a reprimand. RECOMMENDED this 7th day of September, 1995, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of September, 1995. COPIES FURNISHED: Jon M. Pellett, Esquire Agency for Health Care Administration Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Jerald M. Jervis, D.C. 1100 East Lake Silver Drive, N.E. Winter Haven, Florida 33881-4155 Sam Power Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Jerome W. Hoffman General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32309 Diane Orcutt Executive Director Board of Chiropractors 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether Petitioner is liable to Respondent for Medicaid overpayments, fines, interests, and costs, pursuant to the Agency’s Final Agency Audit Letter of May 2, 2001 (hereinafter FAAL), in the amount of $194,526.97.
Findings Of Fact The Parties Petitioner Petitioner, Lifeline Pharmacy, is a retail pharmacy formed in early 2000. Martin Calano is the owner and president of Lifeline. It is co-owned by his wife, Barbara Calano, who serves as the treasurer; Frank Hernandez, who oversees the pharmacy operations; and Imada Hernandez. None of the pharmacy's owners has an educational background in pharmacy or Medicaid regulations. Dr. William Bebell is the sole pharmacist employed by Lifeline Pharmacy. He is responsible for managing the prescriptions and has been involved with the practice of pharmacy for 25 years. Respondent Respondent, Agency for Health Care Administration (AHCA), is the state agency charged with administration of the Medicaid program in Florida under Section 409.907, Florida Statutes. As one of its duties, Respondent must recover overpayments paid to providers by the Medicaid program. The term "overpayment" is statutorily defined to mean "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." See Section 409.913(1)(d), Florida Statutes. Petitioner participated in the Medicaid program, under contract with Respondent, from December 17, 1999 through April 21, 2000, and was issued provider number 021780800. In 1999, Respondent hired Heritage Information Systems ("Heritage") to perform audits of various Medicaid providers. Louis Elie, an auditor employed with Heritage since 1999, is responsible for auditing retail home infusion pharmacies. He is a pharmacist with a degree from Howard University, registered in the State of Virginia, and has practiced for over ten years. He has worked in a retail pharmacy for five years coordinating home infusion therapies, and has worked at Medical College of Virginia, a teaching institution that has a community pharmacy embedded in a home infusion pharmacy that services the community. William Thomas is an investigator for Heritage and serves as the project manager for the Florida Medicaid audits. He has a B.A. in economics, a B.S. in pharmacy, and is a licensed pharmacist in Florida. Kelly Rubin is employed by AHCA within the Medicaid Program Integrity (MPI) office as a pharmacy investigator. The MPI office audits health care providers who participate in the Medicaid program and reviews the provider's compliance with applicable statutes, rules, and policies regarding billing Medicaid for services rendered. Ms. Rubin has been a licensed Florida pharmacist for approximately nine years, and was a pharmacy tech for approximately eight years. She has experience in hospital and retail pharmacy, and has served as the director of a home infusion pharmacy. As an investigator employed by Respondent, Ms. Rubin reviewed Petitioner's pharmacy records as well as the audit performed by Heritage. Upon review of the records and the Heritage audit, Ms. Rubin and the MPI office calculated the amount of Petitioner's overpayment and issued the FAAL with supporting documentation. The Audit During the four-month time period reviewed in the audit, Petitioner submitted 744 prescription claims to Medicaid totaling $445,713.19 and received payment for each of them. Respondent, acting as the state's enforcement arm of the Medicaid program, chose to audit 329 of Petitioner's 744 claims. Specifically, Respondent selected 128 of the 744 claims to be audited through a judgmental sample analysis and 201 claims from the remaining 616 claims to be audited through a random sample analysis. On May 15, 2000, Respondent, and its contract auditor Heritage, arrived unannounced at Petitioner's place of business to conduct the in-depth audit. The audit team was met by Petitioner's sole pharmacist, Dr. Bebell, who was responsible for managing the prescription records. Upon their arrival, Dr. Bebell was provided a list of 329 provider claim prescription numbers selected by Respondent for review. Although the audit team did not specify the precise records it needed, the auditors instructed Dr. Bebell to provide "all" records pertaining to the selected prescriptions, purportedly filled by the pharmacy during the December 17, 1999 through April 21, 2000, audit period. In response, Dr. Bebell provided the auditors with the prescription records, invoice records, and financial records of the specific prescriptions requested. It is apparent, however, that at some point during the first day of the audit, Petitioner retrieved some records back from the audit team prior to review. During the audit, the team reviewed each record provided by Dr. Bebell and occasionally requested Dr. Bebell to produce additional prescription records for a given claim. Any additional records provided by the pharmacist were considered by the auditors. Although the communication between the parties appeared to be strained, the auditors remained at Petitioner's place of business for four days and interacted with Dr. Bebell on a regular basis. At the conclusion of the audit on the fourth day, the auditors departed the pharmacy. A formal exit conference, involving Petitioner's counsel, was not held. Audit findings Judgmental sample As indicated, the auditors selected 128 of the 744 claims for review through a judgmental sample analysis. Using this technique, the auditors reviewed each claim and identified discrepancies with the rules, laws, and policies governing both the Medicaid Program and the practice of pharmacy, and assessed a monetary sanction for each discrepancy. In the judgmental sample, the auditors cited 81 alleged discrepancies that were predominately attributed to unauthorized refills ("UR"), original hard-copy prescriptions that could not be found ("CF"), and oral prescriptions that were not properly documented ("MISC"). The monetary sanctions totaled $172,410.84. Random sample The audit team also utilized a mutually exclusive random sample to review claims. The random sample consisted of 201 claims selected at random from the remaining population of 616 Medicaid provider claims. In the random sample, the auditors again looked at each claim and identified discrepancies with the rules, laws, and policies governing both the Medicaid Program and the practice of pharmacy. However, in this review, the auditors also calculated a claim discrepancy average and multiplied it by the remaining population of 616 claims. During the random sample review, Respondent discovered 58 discrepancies that averaged $51.546661 per claim. Thereafter, the random sample average was extended to the remaining population of claims in the judgmental sample and totaled $31,752.71. For added confidence in the extrapolated findings and to mitigate any "over penalizing," Respondent calculated the 95 percent one-sided lower confidence limit of the extrapolated random sample and reduced the applied discrepancy amount to $22,116.13. The random sample and judgmental sample discrepancy amount were aggregated and a monetary sanction in the amount of $194,526.97 was assessed against Petitioner for the overpayment. Respondent's case At the administrative hearing, during Respondent's case-in-chief, counsel for Respondent introduced an exhaustive list of 35 exhibits relating to the audit, presented the testimony of Mr. Thomas, Mr. Elie, and Ms. Rubin, and explained each discrepancy documented during the audit. Respondent presented evidence identifying the 152 discrepancies identified in the audit report. Specifically, the auditors cited: 23 "CF" discrepancies where the original hard-copy prescription could not be found on file during the audit; 50 "UR" discrepancies where the number of refills billed and paid to the pharmacy exceeded the number authorized by the prescribing physician; 4 "OBQ" discrepancies where the quantity paid exceeded the quantity authorized by the prescribing physician; 1 "EQL" discrepancy where the quantity paid exceeds the limit set by the Medicaid Plan; 6 "DS" discrepancies where the day's supply value submitted by the pharmacy was not consistent with the quantity and directions prescribed; 1 "WDB" discrepancy where the pharmacy submitted a claim for medication that was different from the medication dispensed; 1 "NDEA" discrepancy where the hard-copy prescription did not contain a DEA number as required; and 64 "MISC" discrepancies where the telephone prescription orders were not reduced to writing. Petitioner's Case Following Respondent's case-in-chief, counsel for Petitioner introduced seven exhibits; presented the testimony of four witnesses including Mr. and Mrs. Calano, Mr. Hernandez and Dr. Bebell; and strenuously attacked the actions, motivations and findings of Respondent. Specifically, Petitioner alleged that the 23 documented "CF" discrepancies, relating to missing prescriptions, actually existed and were available at the time of the audit. Petitioner argued that the missing prescriptions were subsequently "found," introduced into evidence at hearing, available to Respondent, and entitled them to relief. Petitioner's assertions and the newly found prescriptions are highly suspect and summarily rejected. Respondent proved the 23 "CF" discrepancies by a preponderance of the evidence. Petitioner also argued that the 50 "UR" discrepancies, representing unauthorized refills, identified in the audit report, were in fact authorized. Specifically, Petitioner claimed that the abbreviation "IV," written in Rx numbers 50619, 50622, 50623, 50631, 50638, and 50641, and cited for 20 discrepancies, stood for "4" refills and not the term "intravenous." Dr. Bebell testified under oath that he utilized the abbreviation in each of the 20 discrepancies to reflect the numeral "4" and not the term "intravenous." Petitioner's assertion regarding these 20 cited "UR" discrepancies are not accepted for several reasons. First, Respondent demonstrated that the excessive number of refills would have been inappropriate therapy. Second, Petitioner's position does not comport with standard pharmacy practice. Third, Petitioner's assertion and Dr. Bebell's testimony are directly inconsistent with Dr. Bebell's routine use of standard numerals within his written prescriptions. In fact, there appear to be no Roman numerals within any of his prescriptions. And finally, accepting the argument that "IV" actually meant "4" creates unreasonable inconsistencies and ambiguities within Dr. Bebell's written prescriptions. For these reasons, Petitioner's assertion is without credit. Respondent proved the 20 cited "UR" discrepancies by a preponderance of the evidence. With respect to the 30 remaining "UR" discrepancies relating to Rx numbers 50624, 50631, 50632, 50633, 50634, 50635, 50723, 50280, and 50330, Petitioner demonstrated that the prescriptions were valid, often included both the prescribing doctor and pharmacist's signature, occasionally were not billed for refill, and in fact were authorized. Respondent failed to prove the 30 above-cited "UR" discrepancies by a preponderance of the evidence. Petitioner also contested three of the four "OBQ" discrepancies relating to the quantity paid exceeding the quantity authorized, and specifically conceded to Rx number 50505. Petitioner presented credible evidence that Petitioner properly received Medicaid payment for the precise medicine prescribed by Dr. Contreras in Rx numbers 50331 and 50463, as well as the precise medication (30 tablets plus one refill) prescribed by Dr. Folkerth in Rx number 50548. Respondent proved, by a preponderance of the evidence, the single "OBQ" discrepancy conceded by Petitioner in Rx 50505. Petitioner argued that Rx number 50678, cited as a discrepancy due to the quantity paid exceeded the Medicaid Plan, was proper. Respondent proved the single "EQL" discrepancy by a preponderance of the evidence. Petitioner contested the six "DS" discrepancies identified in the audit report relating to Rx numbers 50505, 50331, 50451, 50463, 50548, and 50678, and argued that the day's supply value submitted by the pharmacy was consistent with the quantity and directions provided by the physician. Respondent failed to prove the discrepancies related to Rx numbers 50331, 50463, and 50548, and applied no penalty to Rx number 50451. Respondent proved the two "DS" discrepancies relating to Rx numbers 50505 and 50678 by a preponderance of the evidence. Respondent proved, by a preponderance of the evidence, the single "WDB" discrepancy relating to Rx number 50308. Respondent proved, by a preponderance of the evidence, the single "NDEA" discrepancy relating to Rx number 50740. And finally, counsel for Petitioner strongly contested the 64 "MISC" discrepancies identified in the audit report that allege Dr. Bebell failed to properly reduce telephone prescriptions to writing. Petitioner suggested that, at best, the "MISC" discrepancies were "technical" and should not be assessed. While the evidence proves that Petitioner often received its prescriptions via physician telephone orders, it is clear that these records were not received, recorded, managed and maintained in the method provided by law. In fact, at the time of the audit, Petitioner indicated that they were in the initial stages of setting up the pharmacy and had problems with paperwork. Dr. Bebell admitted that he was unfamiliar with the computer system, kept prescription records in patient charts rather than in the computer, and did not understand many of the regulations governing prescription records including telephone orders. He testified that "according to regulation either myself or one of my staff members reduce the verbal order . . . to writing immediately," notwithstanding the fact that Dr. Bebell is the only registered pharmacist on staff and the only individual legally permitted to accept and sign the prescription. While Petitioner further argues that the telephone orders relating to the 64 "MISC" discrepancies were properly reduced to writing and later signed by the pharmacist shortly after taking the order, the evidence demonstrates otherwise. Scanned images of Petitioner's prescription records, taken at the time of the audit, clearly demonstrate that telephone prescription orders were improperly received, signed and recorded. Furthermore, Dr. Bebell admitted that he occasionally did not sign each telephone order prescription as required by law. Petitioner further asserts that the scanned images were only draft documents and the newly provided, signed prescription documents are the actual prescriptions. Petitioner's new evidence relating to the 64 "MISC" discrepancies is suspect and not accepted. The 64 "MISC" discrepancies identified verbal orders allegedly taken by a registered pharmacist and not signed by that pharmacist. Standard pharmacy practice, as well as state and federal law, require pharmacists to reduce telephone prescription orders to writing immediately upon receipt. Respondent proved, by a preponderance of the evidence, all of the 64 "MISC" discrepancies including Rx numbers 563, 565, 602, 639, 723, 821, 829, 131, 133, 271, 275, 276, 278, 279, 280, 281, 282, 283, 284, 286, 287, 296, 306, 311, 330, 341, 344, 365, 389, 390, 411, 412, 475, 477, 478, 479, 529, 537, 538, 539, 552, 556, 557, 558, 564, 676, 704, 705, 706, 708, 709, 713, 714, 716, 740, 779, and 885. A total recovery for each of those claims to Medicaid is appropriate.
Recommendation Based upon the foregoing Findings of Facts and Conclusions of Law, it is recommended that: Respondent shall recalculate the monetary sanctions, excluding the 30 "UR," three "OBQ," and four "DS" discrepancies identified in the Findings of Fact, utilizing the same statistical formula. Petitioner shall repay Respondent the recalculated monetary sanction, plus interest derived from April 6, 2001 through December 1, 2002, at the statutory rate, within a reasonable period of time agreed to by both parties. Petitioner shall not be obligated to pay any other costs or fees related to this matter. DONE AND ENTERED this 8th day of March, 2002, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 2002. COPIES FURNISHED: Kelly A. Bennett, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5403 Craig A. Brand, Esquire Brand & Fernandez, P.A. 2 Northeast 40th Street Suite 403 Miami, Florida 33137 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Diane Grubbs, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
The Issue Whether an administrative fine should be imposed on the respondent for the violations alleged in Final Agency Audit Report number 94-0367-000-G, and, if so, the appropriate amount of the fine.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Agency for Health Care Administration is the state agency responsible for administering the Medicaid program in Florida. Ch. 93-129, 58, Laws of Fla. (1993). The Agency oversees the activities of Medicaid providers and is authorized in section 409.913(9), Florida Statutes, to impose sanctions for violations of the Medicaid rules and regulations. The division of the Agency responsible for monitoring payments to Medicaid providers is referred to as Medicaid Program Integrity, which is part of the Agency's Office of the Inspector General. Medicaid payments are monitored to ensure that such payments are made in accordance with federal and state rules and regulations. At all times relevant to this proceeding, the respondent was licensed to practice medicine in Florida and was an approved Medicaid treating provider assigned Treating Provider number 065767102. The respondent entered into a Noninstitutional Professional and Technical Medicaid Provider Agreement on October 14, 1981, in which he agreed to "abide by the provisions of the Florida Administrative Rules, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations," as provided in paragraph 7 of the agreement. The Medicaid Physician Provider Handbook provides in the introduction to section 11.1 that "[t]he services in this program must be performed for medical necessity for diagnosis and treatment of an illness for an eligible Medicaid recipient." The provider agreement also requires in paragraph 2 that the provider "keep such records as are necessary to fully disclose the extent of services provided to individuals receiving assistance under the State Plan." The Agency audited a random sample of medical records of Medicaid recipients for whom payments were made to Dade Health Services for medical services provided from August 3, 1992 through October 31, 1993. The respondent's name appeared frequently in these records as a treating provider. As a result, the Agency extended its investigation to the respondent. The respondent provided medical services at Dade Health Services from the beginning of the audit period until February 9, 1993, when he terminated his association with the clinic. The medical records of seven Medicaid recipients treated by the respondent were among the Dade Health Services's medical records audited by the Agency. In order to ensure that the Agency had all the medical records relevant to these patients, a letter was sent to the respondent requesting any additional medical records he might have in his possession. The respondent notified the Agency through his attorney that he did not have any medical records relating to the seven patients. The medical records of the seven Medicaid recipients treated by the respondent were reviewed by Dr. John Sullenberger, Chief Medical Consultant for the State of Florida Medicaid Group, to determine if the services provided and billed to Medicaid were medically necessary. Dr. Sullenberger evaluated the medical records in accordance with generally-accepted practices and using generally-accepted tools such as the Current Physician Terminology Handbook. He concluded that certain of the tests and treatments ordered by the respondent were not medically necessary Patient Q.M. was seen by the respondent in an office visit on September 16, 1992. The patient's main complaint was shortness of breath. The respondent ordered spirometry, a test which measures lung function. Shortness of breath can have many causes, among them heart problems. There is no indication in the medical records that a chest x-ray was taken, and nothing in the records supports the medical necessity for a test measuring lung function for shortness of breath alone. Patient J.U. was seen by the respondent in an office visit on January 30, 1993. The patient complained of a dry cough and shortness of breath. The respondent noted that the patient wheezed when he blew air out of his lungs, and he ordered spirometry. Spirometry is contraindicated for wheezing, and there is nothing in the records to support the medical necessity for the test for shortness of breath alone. Patient M.V. was treated on November 11, 13, 16, 18, 20, 23, 25, 27, and 29, 1992, and on December 2 and 7, 1992, with aerosol treatments ordered by the respondent. An aerosol treatment consists of the patient's breathing in a vaporized mist to moisten the nose and the bronchial tubes, and it provides relief for approximately three hours. Aerosol treatments are properly administered every four to six hours, usually to patients who are hospitalized. There is nothing in M.V.'s medical records to support the medical necessity for aerosol treatments, and there is no medical justification for administering these tests every two to three days. Patient D.S. was seen by the respondent in an office visit on January 23, 1993. The medical record of this visit is largely illegible, but it appears that the patient's main complaint was a cough. The respondent ordered spirometry, an electrocardiogram, and radiologic testing. There is nothing in the medical records to support the medical necessity for spirometry, especially since the respondent noted in the records that an examination of the lungs showed that they were within normal limits. There was no legible entry in the medical records to support the medical necessity for an electrocardiogram, which measures, among other things, the rhythm of the heart beat, the rate of the beat, and any blockage of blood passing through the heart. The radiologic testing consisted of a chest x-ray, but there is nothing in the medical records to support the medical necessity for this test. Patient E.R. was seen by the respondent in an office visit on November 2, 1992. The entry in the medical records of this visit for the patient's chief complaint is illegible. The respondent ordered two non-invasive tests, one to measure the blood flow through the arteries of the patient's legs and one to measure the blood flow through the veins of the legs. The respondent also ordered echography to test the patient's peripheral vascular system. Echography uses sound waves to construct a picture or photographic plate of the area being tested. There is no indication in the medical records that the respondent observed any abnormality of the patient's legs or feet or that he took the pulse in the feet to determine if the tests were necessary. The two non- invasive tests and the echography were not justified as medically necessary by the information contained in the medical record of E.R.'s November 2 office visit. Patient E.R. was also seen by the respondent in an office visit on December 19, 1992. The respondent ordered a duplex scan, which is a sonogram of the arteries in the neck that go to the brain. It is unusual to perform such a test on a 45-year-old woman, and there is nothing in the medical records to support the medical necessity for this test. Based on his examination of patient E.R. on December 19, the respondent also ordered aerosol treatments, which were administered on December 21, 23, 26, 28, and 30, 1992, and on January 4, 1993. There is nothing in the medical records to support the medical necessity for aerosol treatments, and there is no medical justification for administering the treatments every two to five days. Patient W.L. was seen by the respondent in an office visit on November 23, 1992. The patient's chief complaint was pain in the legs. There is nothing in the medical records indicating that the respondent examined the patient's legs or took the pulses in the feet, behind the knees, or in the groin. Nevertheless, the respondent diagnosed the patient as having peripheral vascular disease and ordered two non-invasive tests and echography of the peripheral vascular system. There is nothing in the medical record to support a diagnosis of peripheral vascular disease or the medical necessity for the three tests. Patient A.A. was seen by the respondent in an office visit on October 19, 1992. The patient's chief complaint was hemorrhoids, and the respondent noted in the medical records that the patient's lungs were clear. Nevertheless, he ordered aerosol treatments, which were administered October 19, 21, 22, 23, 26, 28, and 30, 1992, and November 2, 4, 6, and 9, 1992. There is nothing in the medical records to support the medical necessity for these treatments, and there is no medical justification for administering the treatments on the prescribed schedule. The evidence is clear and convincing that the respondent administered or ordered administered forty-seven tests and treatments for these seven Medicaid recipients, that Medicaid claims were submitted for these tests and treatments, and that no medical necessity was shown in their respective medical records for these tests and treatments.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order finding that, from August 3, 1992, until February 9, 1993, Jaime Vergel, M.D., committed forty-seven violations of Medicaid rules and regulations and imposing an administrative fine in the amount of $25,000. DONE AND ENTERED at Tallahassee, Leon County, Florida, this 14th day of November 1995. PATRICIA HART MALONO, 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 14th day of November 1995.
The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $1,140,763.88 that Petitioner received from the Medicaid Program in compensation for the provision of prescription drugs between late-August and November of 1998. Respondent contends that Petitioner is not entitled to retain the payments in question because Petitioner allegedly has failed to demonstrate that it had available during the pertinent period a sufficient quantity of the prescription drugs in question.
Findings Of Fact The parties' Joint Stipulation of Facts and the evidence presented at final hearing established the facts that follow. The Parties The Agency for Health Care Administration (the “Agency”) is responsible for administering the Florida Medicaid Program. As one of its duties, the Agency must recover "overpayments . . . as appropriate," the term "overpayment" being statutorily defined to mean "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." See Section 409.913(1)(d), Florida Statutes. Palm Beach Pharmacy, Inc. (“PBPI”), d/b/a Eddie’s Drug (“Eddie’s”) was, at all times material hereto, a duly contracted Medicaid provider, having entered into a Medicaid Provider Agreement with the Agency and been assigned a Medicaid Provider Number: 106343000. Eddie’s is a Florida licensed pharmacy.1 As an enrolled Medicaid provider, Eddie’s is authorized to dispense drugs and supplies to Medicaid recipients. In return, Eddie’s has agreed to comply with all governing statutes, rules, and policies, including those policies set forth in the Florida Medicaid Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (the “Handbook”). The Agency, which prepared the Handbook and furnishes it to Medicaid providers, has incorporated the Handbook by reference into Rule 59G-4.250(2), Florida Administrative Code. PBPI, which owned and operated a number of pharmacies (including Eddie’s), maintained its corporate headquarters in West Palm Beach, Florida. Eddie’s was located in Miami, Florida. On July 1, 1998, PBPI acquired a drug store known as Jay’s Drugs (“Jay’s”). Jay’s was located in Miami, Florida, across the street from Eddie’s. Thus, before both stores came under common ownership, they had been competitors. This case arises out of the Agency's attempt to recover alleged overpayments on Medicaid claims for which Eddie’s was paid several years ago. The "audit period" that is the subject of the Agency's recoupment effort is April 1, 1998 to July 31, 1999, although the actual period in controversy is much shorter. From July 1, 1998, until the end of the audit period, PBPI owned and operated both Eddie’s and Jay’s. The Underlying Facts The transactions at the heart of this case occurred between late-August and November of 1998, during which period (the “Focal Period”) Medicaid reimbursed Eddie’s more than $1 million for prescription drugs including Neupogen and Epogen/Procrit (collectively, the “Drugs”). The Drugs are used to treat AIDS patients and persons infected with HIV. Prior to the Focal Period, Eddie’s had not dispensed $1 million worth of the Drugs——or any figure approaching that amount——in three or four months’ time. The reason for the dramatic spike in Eddie’s business is that Eddie’s was dispensing the Drugs to customers of Jay’s pursuant to an arrangement designed to manipulate PBPI’s contractual obligations to the former owner of Jay’s under the purchase and sale agreement by which PBPI had acquired Jay’s. Essentially, the arrangement was this. Jay’s was dispensing the Drugs to a large number (approximately 150) of Medicaid beneficiaries who were receiving treatment at a nearby clinic. Because the Drugs were administered to the patients via intravenous infusion, the clinic typically obtained the Drugs from Jay’s in bulk. To fill these prescriptions, Jay’s ordered the Drugs from a wholesale supplier, which usually delivered the Drugs to Jay’s the next day. At some point before the Focal Period, arrangements were made to have the clinic present its prescriptions for the Drugs to Eddie’s rather than Jay’s.2 The evidence does not show, exactly, how this was accomplished, but whatever the means, the clinic abruptly began bringing prescriptions for the Drugs to Eddie’s.3 This diversion of Jay’s’ business to Eddie’s was intended to deprive Jay’s of Medicaid reimbursements to which Jay’s’ former owner had access as a source of funds for paying down a note that PBPI had given for the purchase of Jay’s. By having Eddie’s dispense the Drugs and submit the Medicaid claims, Medicaid money flowed into Eddie’s’ bank account (rather than Jay’s’ bank account) and hence was not immediately available to the former owner of Jay’s to reduce PBPI’s debt. During the Focal Period, Eddie’s did not purchase the Drugs from a wholesaler but instead acquired them from Jay’s. The process by which this was accomplished involved a pharmacy technician named Wright, who was employed at Eddie’s, and a pharmacist named Shafor, who worked at Jay’s. Wright (at Eddie’s) accepted the prescriptions for the Drugs as the clinic brought them in Then, she called Shafor (at Jay’s) and told him the quantities needed to fill the prescriptions. Shafor ordered the Drugs from a wholesaler, which delivered them in bulk to Jay’s, usually the next day. Upon receiving the Drugs, Shafor personally delivered them to Wright, who, recall, was across the street at Eddie’s. Wright labeled and dispensed the Drugs. Eddie’s submitted a claim for the Drugs to Medicaid, and Medicaid paid Eddie’s. PBPI maintained separate accounting ledgers for Eddie’s and Jay’s, respectively. The company’s accountants recorded the subject transactions in these ledgers so that Jay’s——not Eddie’s——would “recognize” the sales of the Drugs. In a nutshell, this was done through “inter-company” transfers whereby all of the money that Eddie’s received from Medicaid for the Drugs was moved, on the books, into an account of Jay’s. In this way, any profit from the sales of the Drugs (the difference between the wholesale cost of the Drugs and the Medicaid reimbursement therefor, less overhead) was realized on Jay’s’ books.4 The Medicaid payments to Eddie’s that the Agency seeks to recoup were included in four remittance vouchers dated September 2, 1998; September 30, 1998; October 28, 1998; and November 25, 1998, respectively. The September 2 payment to Eddie’s totaled $287,205.52. Of this amount, $276,033.23 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of September 30, 1998, the sum of $276,033.23 had been transferred from an account of Eddie’s to an account of Jay’s. The September 30 payment to Eddie’s totaled $439,175.77, of which $432,700.36 was paid in consideration of the Drugs. The October 28 Medicaid payment was $431,753.82, of which total the Drugs accounted for $424,202.76. Eddie’s’ accounting ledger reflects that, as of October 31, 1998, the sum of $870,929.59 (439,175.77 + 431,753.82) had been transferred from an account of Eddie’s to an account of Jay’s. The November 25 payment to Eddie’s totaled $407,088.00. Of this amount, $393,063.00 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of November 30, 1998, the sum of $407,088.00 had been transferred from an account of Eddie’s to an account of Jay’s. The Agency’s Allegations On October 31, 2000, the Agency issued its Final Agency Audit Report (“Audit”) in which Eddie’s was alleged to have received $1,143,612.68 in overpayments relating to the Drugs. In the Audit, the Agency spelled out its theory of the case; indeed, the Audit is the only document in the record that does so. The Agency cited several statutory provisions. First, Section 409.913(7)(e), Florida Statutes, was referenced. This section states: When presenting a claim for payment under the Medicaid program, a provider has an affirmative duty to supervise the provision of, and be responsible for, goods and services claimed to have been provided, to supervise and be responsible for preparation and submission of the claim, and to present a claim that is true and accurate and that is for goods and services that: * * * (e) Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law. Section 409.913(7)(e), Florida Statutes. The Agency did not allege (or prove), however, that Eddie’s had violated Section 409.913(7)(e), Florida Statutes.5 Put another way, the Agency did not plead or prove lack of supervision, submission of a false claim, or that the Drugs were not provided in accordance with applicable law. Next, the Agency cited Section 409.913(8), Florida Statutes, which provides: A Medicaid provider shall retain medical, professional, financial, and business records pertaining to services and goods furnished to a Medicaid recipient and billed to Medicaid for a period of 5 years after the date of furnishing such services or goods. The agency may investigate, review, or analyze such records, which must be made available during normal business hours. However, 24-hour notice must be provided if patient treatment would be disrupted. The provider is responsible for furnishing to the agency, and keeping the agency informed of the location of, the provider's Medicaid- related records. The authority of the agency to obtain Medicaid-related records from a provider is neither curtailed nor limited during a period of litigation between the agency and the provider. The Agency further alleged, as fact, that Eddie’s had failed, upon request, “to submit invoices from [its] suppliers to substantiate the availability of drugs that [were] billed to Medicaid” and thus had not “fully substantiated such availability.” The Agency, however, did not invoke any of the available remedial provisions as authority to impose a sanction for this alleged failure to turn over Medicaid-related records. See, e.g., Sections 409.913(14)(b), (c), and (d), Florida Statutes. The Agency cited Section 409.913(10), Florida Statutes, which authorizes the Agency to “require repayment for inappropriate, medically unnecessary, or excessive goods or services from the person furnishing them, the person under whose supervision they were furnished, or the person causing them to be furnished.” There was no allegation (or proof), however, that the Drugs which Eddie’s had purported to dispense (i.e. the Drugs for which it had submitted Medicaid claims) were “inappropriate, medically unnecessary, or excessive.” Thus, Eddie’s was not alleged (or shown) to have violated Section 409.913(10), Florida Statutes. Finally, the Agency relied upon Section 409.913(14)(n), Florida Statutes, which is the basis of the Agency’s legal theory. This section provides: The agency may seek any remedy provided by law, including, but not limited to, the remedies provided in subsections (12) and (15) and s. 812.035, if: * * * (n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program[.] The Agency contended, additionally, that “[b]illing Medicaid for drugs that have not been demonstrated as available for dispensing is a violation of the Medicaid laws and regulations and has resulted in the finding that [Eddie’s] ha[s] been overpaid by the Medicaid program.” (Emphasis added). The Agency explained, “Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid.” Thus, the Agency’s theory of recovery is that Eddie’s must forfeit “overpayments” arising from its failure to demonstrate the availability, in inventory, of a sufficient quantity of the Drugs for which claims were submitted, as required by Section 409.913(14)(n), Florida Statutes. After the Audit was issued, the Agency accepted a handwritten note regarding the transfer of a small quantity of Drugs from Jay’s to Eddie’s as sufficient to demonstrate the availability of such amount. This resulted in a slight reduction of the amount of the alleged overpayment, to $1,140,763.88. The Separate Audit of Jay’s The Agency conducted a separate audit of Jay’s, concerning which some evidence was introduced at hearing. Without getting into unnecessary detail, the audit of Jay’s revealed that Jay’s had purchased, during and around the Focal Period, a quantity of the Drugs that exceeded the number of units that Jay’s had billed to Medicaid. It was Eddie’s theory that this “excess inventory” of Jay’s matched, more or less, the alleged inventory shortfall at Eddie’s, thereby corroborating the testimony concerning the transfer of these Drugs from Jay’s to Eddie’s for dispensation. At hearing, the parties sharply disputed whether, in fact, Jay’s had transferred the Drugs to Eddie’s. The Agency, of course, maintained that such transfers were not properly documented; Eddie’s argued that the documents and other evidence, including testimony about the transactions in question, adequately demonstrated that the transfers had, in fact, occurred. There was no dispute, however, that if it were found that such transfers had occurred, and if, further, the documents (and other evidence) pertaining to the inventory of Jay’s were accepted as proof of the quantities of Drugs so transferred, then all but $176,078.30 worth of the Drugs could be accounted for. Thus, as counsel for Eddie’s conceded at hearing, the Agency is entitled to recoup some sum of money. The question is whether that sum is $1,140,763.88 or $176,078.30. Ultimate Factual Determination Based on all of the evidence in the record, including the deposition testimony received through the parties’ joint stipulation, it is determined that, more likely than not, Eddie’s had available during the Focal Period a sufficient quantity of the Drugs to support all but $176,078.30 worth of the claims in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Eddie’s to repay the Agency the principal amount of $176,078.30. DONE AND ENTERED this 12th day of March, 2002, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of March, 2002.
