The Issue The issues to be resolved in this proceeding concern whether the Respondent properly maintained and supplied required records to support and document prescription claims, which it billed to Medicaid and for which it received payment from the Medicaid program during the audit period of April 1, 2000 through December 31, 2001. If that is not the case, it must be determined whether the Agency is entitled to recoup from the Respondent the sum it seeks of $108,478.77, as the purported amount overpaid to the Respondent by the Agency. It must also be determined whether the applicable laws and regulations referenced herein were complied with by the Respondent, in terms of its accepting and filling prescriptions, dispensing relevant drugs, and recording and documenting such activities in its pharmacy records. Finally, it must be determined whether the statistical methodologies employed by the Agency, through its audit and investigation of the Respondent, were sufficiently representative and accurate so as to support the calculation of estimated overpayments.
Findings Of Fact The Petitioner is an Agency of the State of Florida charged by the statutes and rules referenced herein with ensuring that proper reimbursement is effected to providers, including pharmacies, by the Medicaid system. Because of its duty to enforce and regulate the Medicaid system, the Petitioner Agency has an audit and oversight function, as well as an enforcement function, to ensure that Medicaid payments and the general operations of the Medicaid system are carried out correctly. It is through this duty imposed by the cited Florida Statutes and rules, as well as the federal regulations it is charged with enforcing, that the Petitioner carried out an audit of the Respondent, Brown Pharmacy, concerning the audit period of April 1, 2000 through December 31, 2001. The Petitioner conducts audits of providers such as Brown in order to ensure compliance with the Medicaid provisions and Medicaid provider agreements. These are called "integrity audits" and are routinely performed by auditors contracted from private firms such as Heritage. Brown Pharmacy (Brown) is licensed in the State of Florida as a pharmacy (license Number PH562). Brown maintained a business location at 312 West 8th Street, Jacksonville, Florida 32206, at times pertinent to this case. During the audit period Brown was an enrolled Medicaid provider authorized to provide Medicaid prescriptions pursuant to a provider agreement with the Agency. The terms of the provider agreement governed the contractual relationship between Brown and the Agency. Pursuant to that provider agreement, Brown was to maintain the Medicaid-related records and documentation for at least five years. Any Medicaid provider, such as Brown, not in compliance with the Medicaid documentation and record retention policies may be subject to the recoupment of Medicaid payments. During the audit period, Brown dispensed prescription drugs to Medicaid recipients. Medicaid claims were filed and paid electronically as "point of sale" transactions during the audit period. Each claim reviewed and at issue in this case was a paid Medicaid claim subject to the provider agreement and pertinent regulations. As a condition of participating in the Medicaid program, a Medicaid provider must comply with all provisions of a provider agreement, which is a voluntarily agreement between the Agency and the provider. Those provisions include the provider's agreement to comply with all relevant local, state and federal laws, rules, regulations, licensure laws, bulletins, manuals, and handbooks, etc. The provider must agree to keep and maintain, in a systematic and orderly manner, all Medicaid- related records as may be required by the Agency and make them available for state and federal agencies and review. It must maintain complete and accurate medical, business, and fiscal records that will justify and disclose the extent of goods and services rendered to customers or patients and rendered as billings to the Medicaid system. Florida Administrative Code Rule 59G-4.250 promulgates, as part of the rule, the above-referenced handbook (handbook) which sets out Medicaid polices and rules. The polices and rules govern the rights and responsibilities of drug providers, such as Brown, including coverage and payment methodologies for services and goods rendered to Medicaid recipients and billed to the Medicaid program. The types of records that must be maintained are as follows: Medicaid claim forms, professional records such as patient treatment plans, prior and post authorization information, prescription records, business records, including accounting ledgers, financial statements, purchase and acquisition records etc., tax records, patient counseling information and provider enrollment documentation. Providers who are not in compliance with the Medicaid documentation and record retention policies described in the handbook are subject to administrative sanctions and/or recoupment of Medicaid payments. Medicaid payments for services that lack required documentation and/or appropriate signatures will be recouped. Chapter five of the handbook, in defining overpayment provides that any amount not authorized to be paid by the Medicaid program, whether paid as a result of inaccurate or improper cost reporting, improper claims, unacceptable practices, fraud, abuse or mistake, constitutes overpayment. Incomplete records are records that lack documentation that all requirements or conditions for the providing of services have been met. Medicaid may recoup payments for services or goods when the provider has incomplete records or cannot locate the records. The Agency contracted with Heritage to conduct an on- site audit at Brown. The audit was conducted March 18th through March 20, 2002. Heritage isolated a sample of 205 prescription claims, known as the "judgmental sample" out of a total universe of paid pharmacy claims from Brown totaling 16,727 for the audit period. Heritage also selected 250 random prescription claims out of the remaining total universe of paid pharmacy claims of 16,522, which remained after the 205 judgmental sample claims had been removed or isolated from the remainder of the total claims. With the acquiescence of the Agency, Heritage chose the 205 claims by weighing it in favor of the "high dollar" or more expensive drug prescriptions. Those prescriptions are primarily for HIV and Aids therapy drugs and psychotherapeutic drugs for various mental conditions, including schizophrenia. Weighing of the judgmental sample strongly in favor of the high dollar prescription claims would seem to render the judgmental sample fundamentally unfair against Brown if the judgmental sample had then been extrapolated to the entire universe of claims ($16,727). This was not done, however. The judgmental sample was audited and compiled by doing an actual count and totaling of claim amounts in dollars represented by all the discrepant prescriptions, including all those the Agency and Heritage maintained resulted in "overpayments" to Brown. Therefore, the judgmental sample is an actual number rather than an extrapolated calculation so that weighing the sample in favor of the high dollar prescriptions does not result in an unfair or biased sample, as to the judgmental sample. Because the judgmental sample was drawn from the total pool of audited claims and removed from that claim pool prior to the identification and drawing of the random sample, the two are mutually exclusive and the amounts calculated do not represent a duplication or overlap. Thus the findings from the judgmental sample and then the random sample may be properly added together. The randomly selected claims (random sample) were taken of the remaining 16,522 claims in the audit claim pool after the judgmental sample of 205 claims had been removed. According to the report rendered by Heritage, the 250 randomly selected claims totaled $10,632.59 in paid Medicaid dollars. The Heritage auditors determined that there were 56 discrepant claims out of these which totaled, according to their calculation, $2,450.13 in apparent overpayments. This resulted in an average overcharge per claim of $9.80 (determined by dividing the documented "sanction amount" by the total number of claims in the random sample (250), multiplied by the universe of claims from which the random sample was taken (16,522) which yielded an extrapolated overcharge of $161,924.19. Applying the statistically appropriate 95 percent "one-sided" lower confidence limit of this extrapolation resulted in a purported overpayment extrapolated from the randomly selected claims of $102,700.85. This means that the overpayment amount calculated by Heritage represents an amount statistically 95 percent certain to be the lowest amount overpayment based on the extrapolation of the overpayment represented in the 250 randomly selected claims. The non-extrapolated judgmental findings showed, according to Heritage, that there were 72 discrepant claims. Heritage then determined that, of these, there were $29,381.09 in apparent actual overcharges. The discrepancies determined by Heritage involved the failure to produce documentation of refill authorizations for 80 prescription claims; 31 prescription claims containing an incorrect Medicaid provider number; the failure to produce 12 "hard copy" prescriptions representing 25 claims; four claims that did not have the prescriber's DEA number on the prescription for controlled substances; three claims for prescriptions that did not contain the original date of service; two claims that were billed for quantities greater than that authorized by the physician; one claim that was billed for an incorrect day's supply; one claim that was billed in excess of the maximum allowable quantity of prescription of the drug, set by Medicaid policy; and one prescription claim that was billed for an incorrect prescriber's Medicaid provider number (although this should not be a discrepancy because the correct prescriber was documented in the pharmacy's computer, which the regulations allowed). Additionally, there was one claim billed for a drug different than that prescribed by the physician, according to Heritage in its report. Heritage also conducted an invoice review using utilization reports provided by the Respondent. This was apparently a review of 25 different drugs that purportedly showed that the prorated purchases of those drugs were insufficient to cover the number of units billed to Medicaid for all 25 drugs reviewed, and thus yielded a purported shortage of $87,942.13, representing the amount billed to Medicaid above the amount the records of purchases from suppliers proved that Brown had purchased of those drugs. Based upon the Heritage audit as well as documentation findings and overpayments calculations (see Exhibit 8), the Agency issued a PAAR dated September 27, 2002, determining that Brown had been overpaid $150,036.71 for Medicaid claims during the audit period. That report advised Brown that it was a provisional report only and encouraged Brown to submit any additional information or documentation which might serve to change the overpayment. The report listed examples of documentation that the Agency would consider for a possible reduction in the overpayment amount initially claimed. Thereafter, the Agency agreed to an extension of time for Brown to submit additional documentation and sent a letter to Brown dated October 31, 2003, advising that the audit had been placed in abeyance pending the outcome in a related case, but that the Agency expected to resume the audit and that therefore all Medicaid-related records and documentation regarding paid claims should be maintained and preserved until the audit was finalized. The FAAR was addressed in the testimony of Ms. Stewart for the Agency. Through her testimony it was revealed that certain corrections should be made to the FAAR updating it from the findings in the Heritage initial audit report. The Agency corrected the information in the FAAR for this reason and for the reason that it secured some additional information from the Respondent. Thus, for the audit period it was established that there were 16,727 total claims for prescriptions dispensed by Brown, for which it was paid $795,564.59 during the 21-month audit period, of those claims, 205 were pulled out from the total universe of claims as the judgmental sample. There were some 72 allegedly "discrepant claims" totaling $36,393.51 in dollars paid to Brown. The Agency's position is that $29,381.09 of those are so called "documented overcharges." The random sample of 250 claims was extrapolated to the remaining universe of 16,522 prescription claims. The Agency now takes the position that it found 49 "discrepant claims" in the random sample which totaled $2,154.40 in dollars paid to Brown's pharmacy and of that it maintains that $1,927.55 are "documented overcharges" for the 250 randomly selected claims (for which Brown had been paid $10,632.59). Thus the Agency found an average overcharge for the 250 randomly sampled claims of $7.71 per claim. The $7.71 average per claim overcharge was then multiplied by the remaining universe of 16,522 claims, yielding an extrapolated purported overcharge of $127,387.92. The Agency then applied the 95 percent "one-sided lower confidence limit" to this extrapolation, that is, that it or its statistician, Dr. Johnson, felt that there was a 95 percent chance that the lower confidence limit number it calculated was accurate. That number is $79,097.68. When that number is combined with the Agency's position as to overcharges from the judgmental sample results in a total postulated overcharge of $108,478.77. This is the final amount the Agency claims as an overpayment that must be recouped for Medicaid. The FAAR summarized the discrepant claims for the judgmental sample as follows: 61 claims involve refills which exceeded the authorized number of refills without documentation of reauthorization; 10 claims showed an incorrect prescriber license number but the correct prescriber license number was documented in the pharmacy's computer; and For two claims the hard copy description did not have an original date of service depicted on it and did not reference a DEA number. The discrepant claims shown in the FAAR as to the random sample were as follows: There were 19 claims for refills without documentation of refill authorization (refills had been previously authorized, but for the 19 claims at least one refill had been issued beyond the authorization limit); Fifteen claims showed an incorrect prescriber license number on the claim and the license number was not documented in the Respondent's computer; Seven claims showed an incorrect prescriber license number, but the correct license number was documented in the pharmacy's computer; There were seven claims for which the original hard copy prescriptions could not be found on file during the audit period; For one claim the hard copy prescription did not have an original date of service or DEA number; For one claim the quantity paid exceeded the quantity authorized by the prescriber or dispensed to the recipient; and For one claim the number of days supply submitted by the pharmacy was not consistent with the quantity and directions of the prescriber and the quantity exceeded the limit set by the plan. The most common discrepancies with regard to the judgmental sample and the random sample occurred when the Respondent billed refills in excess of the number authorized by the prescriber, without any written authorization for such being provided in the audit process or later. Concerning the random sample, the second most common discrepancy occurred when the claim depicted an incorrect precriber number on the claim and the license number of the prescriber was not documented in the computer. In the judgmental sample the second most common discrepancy occurred when the claim showed an incorrect prescriber number, but the correct prescriber number was documented in the pharmacy's computer. The discrepancies in the FAAR with the indication "UR", references "unauthorized refills." The records of the pharmacy showed that Brown issued refills of prescriptions to Medicaid recipients in excess of the presriber's limit depicted on the prescriptions but showed no written record of a telephonic or written authorization by the prescriber allowing the additional refill or refills. It is also true that as to some or even many of these the Respondent may have obtained verbal authorization, but failed to document that re- authorization. Medicaid policy, the statutory authority cited herein, and the PDSCLR Handbook provide that all verbal orders authorized by the prescriber of a prescription must be recorded either as a "hard copy" or noted in the pharmacy's computer in order to comply with the relevant law cited herein, for record- keeping and auditing purposes under Medicaid policy. The Agency's Statistical Methodology Mark E. Johnson, Ph.D., testified on behalf of the Petitioner. He was qualified as an expert witness in the area of statistical formulas, statistical methodology, and random sampling, including the random sample statistical methodology employed by the Agency in determining the overpayment amount. He is a professor of statistics at the University of Central Florida. Dr. Johnson reviewed the statistical methodology, numbers and calculations arrived at by the Agency and its extrapolation method of arriving at the overpayment amount. He also used his own independent analysis based upon a software package he commonly uses in the practice of his discipline in testing the methodology employed by the Agency and the random sample employed by the Agency and Heritage. The statistical formula employed by Dr. Johnson and the Agency is a standard one routinely used in Dr. Johnson's profession and statistical sampling. He established through his own testing of the methodology that the random sample was appropriate for Medicaid program integrity audits and determinations as employed in this case. The random sampling, according to Dr. Johnson, was employed because it would be time and cost prohibitive to examine individually each of 16,522 claims regarding overpayment issues. The random sampling methodology using 250 randomly chosen samples is a time and cost saving device and yet still presents a "plausible estimate" as established by Dr. Johnson. He established that for the universe of 16,522 claims which were subjected to the random sample and extrapolation statistical analysis and calculation, that such is a reasonable sample for purposes of this audit and that the 250 random samples employed by the Agency are indeed statistically appropriate random samples. His calculation of overpayment was at variance with the Agency's by 55 cents. He established that is not a significant difference since the 95 percent certainty limit of $79,097.68 for the random sample extrapolation analysis is so much lower than the estimate established at $108,478.22. Dr. Johnson established that the Agency had employed appropriate and valid statistical methods in its determination of the above-referenced overpayment amount based upon the random sample of paid claims. The expert testimony of Dr. Johnson, together with his written report in evidence, is credible and persuasive as to the validity of the random sampling of the claims during the audit period and as to the random sample portion of the analysis employed in arriving at the final overpayment calculation and numbers depicted in the FAAR. Dr. Johnson established the appropriateness of the statistical formula, including extrapolation, used to calculate the overpayment amount, the appropriateness of the sample size relative to the universe of claims, and the improbability that the overpayment amount is attributable to chance causes alone. Thus Dr. Johnson's testimony is accepted as credible and persuasive in establishing the validity of the Agency's method of overpayment calculation, and the overpayment calculation in conjunction with the statistical evidence in this record, except as modified by the findings below.1/ The Respondent's Position Gary Steinberg testified on behalf of the Respondent, Brown Pharmacy. He was accepted as an expert witness in the areas of Medicaid policy, audits and pharmacy practice, including Florida pharmacy practice. Mr. Steinberg acknowledged that Brown had not properly documented all claims that had been paid by the Medicaid program nor maintained all required records. He emphasized in his testimony, however, that Brown had not fraudulently billed the Medicaid program with claims for prescription medications that it had not actually dispensed to the patients or recipients. Rather, all medications involved in the subject prescription claims had actually been dispensed. There is no evidence or claim on the part of the Agency that Brown charged and collected more than the appropriate approved price for the prescriptions at issue. Through the explanation given in his testimony, Mr. Steinberg opined that although Brown was guilty of technical errors in record keeping and documentation as to the prescriptions involved in the subject claims, Brown had made substantial compliance with the Medicaid program requirements of the Medicaid provider agreement and the statutes and rules at issue and policies embodied in the subject handbook. He explained in his testimony that in the pharmacy practice setting in which Brown has operated, whereby it serves a large indigent population in an inner city environment, it is difficult to contact a prescriber at the time when a patient needs a critical prescription refilled in order to get a refill authorization. The prescriptions at issue mostly involve critical medications for HIV/Aids and psychotropic medications for severe mental conditions such as schizophrenia. The patients who need these critical medications (and there are very few patients, since most of the procedures involve filling and refilling for a small number of such recipients) are patients of clinics operated at the nearby university hospital (Shands). In these circumstances, where the patient literally needs the HIV/Aids medication refilled on an immediate basis, possibly even to prevent death, and the mental health patient critically needs a refill in order to prevent harm to the patient or harm to the members of the public if the patient goes without medication and "decompensates," the ethical thing for a pharmacist to do is to refill the prescription and seek authorization later. Mr. Steinberg established that it is often difficult to obtain authorization from the original prescriber since the medication were prescribed by residents practicing in the various clinics at the Shands Hospital and that the residents can not always be identified or contacted easily since they do not maintain a fixed medical practice in the area. Consequently, some of the prescriptions were not documented as to authorization, although in some cases the pharmacy actually obtained authorization and entered it in its computer. In some cases, being unable to obtain re-authorization from the resident who originally prescribed the medication the pharmacy used the DEA license or prescribing number of the hospital itself. He explained that although under the law a pharmacy can refill a prescription on an emergency basis for up to a 72-hour supply, that this is generally impracticable and unsafe for patients in this plight because such indigent, mental health and HIV/Aids patients tend to be non-compliant with their medication regimes quite often anyway, and it is often unreasonable to expect them to return to the pharmacy for another refill within two or three days. He thus opined that the ethical and safe thing for the pharmacist to do was to refill and re-dispense the medical approved medication for up to a 30 or 34-day supply (the normal refill supply duration). He further explained that the Shands Hospital license number was used in some of these circumstances because the resident doctor who originally issued the prescription could not be identified on the Shands Hospital prescription forms and because the resident doctors at the Shands clinics only have and can use Shands Hospital prescription forms in any event. Mr. Steinberg thus established that 35 percent of those prescription claims classified as "WMP," that is the prescription claims contained an incorrect prscriber license number were for these reasons and the pharmacist could only use the Shands Hospital license number because the resident could not be identified from the Shands Hospital prescription forms. He thus opined that 35 percent of the random sample extrapolation amount, the 95 percent statistical confidence limit amount of $79,097.00, should be deleted from that amount in determining the correct amount of overpayment predicated on the random sample. Likewise, with regard to the judgmental sample concerning the HIV/Aids and mental health patient prescriptions and related claims, he opined that, in effect, $19,500.00 of the total $29,381.09 overpayment amount claimed by the Agency pursuant to the judgmental sample portion of the claims, should be deleted from that portion of the overpayment claim by the Agency; this is a result of his explanation regarding "substantial compliance" in the critical refill situation he described concerning the HIV/Aids and mental health patients and their prescription drugs. The preponderant, persuasive evidence does establish (and indeed the Agency acknowledged in its Proposed Recommended Order) with regard to the judgmental sample, that 10 of the claims at issue listed an incorrect prescriber license number, but that the correct prescriber license number was actually documented in the pharmacy's computer record with the name of the prescriber. This circumstances comports with the law referenced below and in the Petitioner's Proposed Recommended Order. This results in a reduction in the overpayment claim with regard to the judgmental sample of 13.88 percent of the judgmental sample claims or a reduction of $4,078.09. Likewise, with regard to the random sample extrapolation calculation of overpaid claims, the preponderant, persuasive evidence, also as acknowledged by the Agency in its Proposed Recommended Order, disclosed that seven claims listed an incorrect prescriber license number on the claims, but had been correctly documented in the pharmacy's computer system and therefore were in compliance with the relevant statutes, rules, and the subject handbook. Thus the discrepant claims and the overpayment amount related to the random sample portion of the audit claims should be reduced by 14.28 percent of the total amount of $79,097.00 for a $11,295.05 reduction of that $79,097.00 random sample overpayment amount. Mr. Steinberg demonstrated that Brown was not overcharging on the drugs prescribed and dispensed and was charging the Medicaid-authorized amount for the drugs involved in the prescription claims at issue. The Agency is not claiming that there was any fraudulent practice or illegal overcharging for the prescriptions involved. In fact, Brown was earning only a very small profit on the drugs dispensed that are the subject of the prescription claims at issue. Mr. Steinberg thus opined that since Brown did indeed dispense all the drugs at issue and was only paid the legal authorized amounts for the drugs and prescriptions at issue that recoupment of the amounts sought by the Agency or, in effect, established in these findings of fact, would be fundamentally unfair. He and the Respondent contend, rather, that since Brown performed substantial compliance, but was guilty of technical non-compliance with the relevant rules, agreement, and Medicaid policy, that the Agency should impose a lesser fine instead of seeking recoupment. In summary, in view of the preponderant persuasive evidence establishing the above facts, it has been shown that the documentation and record-keeping, dispensing errors, and omissions in the manner found above, with regard to the prescription claims and types of claims addressed in the above findings of fact, occurred. If those deficiencies amount to violations of the authority cited and discussed below which justify recoupment, then the amount of overpayment established by the above findings of fact is $93,104.95.
Recommendation Having considered the foregoing findings of fact, conclusions of law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Agency for Health Care Administration providing for recoupment of $93,104.95, and that the Respondent, Brown Pharmacy, must re-pay that amount to the Petitioner Agency, through a reasonable re- payment plan established between the parties. DONE AND ENTERED this 3rd day of November, 2006, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 Clerk of the Division of Administrative Hearings this 3rd day of November, 2006.
The Issue The issues joined in this litigation concern an administrative complaint brought by the State of Florida, Department of Professional Regulation (Petitioner) against David D. Turner, M.D. (Respondent), charging him with the violation of Section 458.331(1)(c), Florida Statutes, related to an alleged conviction in the United States District Court for the Northern District of Georgia, for the offense of conspiracy (adulterated and misbranded drugs) in violation of Title 21, U.S. Code, Sections 331(b) and 333(a), all in violation of Title 18, U.S. Code, Section 371.
Findings Of Fact Part A. Facts which are alleged in the Administrative Complaint, admitted by Respondent: Petitioner is the state agency charged with regulating the practice of medicine pursuant to Section 20.30, Florida Statutes, Chapter 455, Florida Statutes, and Chapter 458, Florida Statutes. Respondent is, and has been at all times material hereto, a licensed physician in the State of Florida, having been issued license number ME 0010840. Respondent's last known address is Post Office Box 267, Orange Park, Florida 32073. On September 27, 1985, Respondent was convicted in the United States District Court for the Northern District of Georgia in Atlanta, Georgia, of the offense of conspiracy (adulterated and misbranded drugs) in violation of Title 21, U.S. Code, Sections 331(b) and 333(a), all in violation of Title 18, U.S. Code, Section 371. Part B. Facts found based upon an examination of the record established at hearing: An explanation of his involvement in the federal case was given by the Respondent in the course of the present hearing, and it is found at pages 225 through 235 of the transcript which was provided at the conclusion of the administrative hearing. Dr. Turner concedes that he pled to the misdemeanor charges as alluded to in paragraph 3 of these fact findings and made a knowing plea. The pharmaceuticals that were being provided to the contact person, who had identified himself to the Respondent as Mark Taylor, actually Tom Hall, are not controlled substances. They were items provided to Respondent by pharmaceutical representatives, generally described as hypertensive, birth control pills and antihistamines. Respondent indicated, in the course of the hearing, that the person who identified himself as Taylor said he was representing a wholesale pharmaceutical distributor from Georgia which was controlled by a Dr. Wallace (mastermind in this fraudulent scheme), a licensed physician in the state of Georgia. Initial contact between Dr. Turner and Hall aka Taylor took place in late 1982 or early 1983. The arrangement that was arrived at had Respondent give sample pharmaceuticals to Taylor by allowing Taylor to pick up discarded drugs once or twice a month. Respondent received what is referred to as an "administrative charge," a cash remuneration of $100, for handing over the pharmaceuticals. Taylor/Hall stated that he had an interest in acquiring surplus pharmaceuticals from various physicians and hospitals for redistribution into the wholesale market. Taylor also represented that the primary distribution would occur to needy people. As indicated to Respondent, the distributor contemplated eventually having physicians buy stock in the distributorship and in the interest of goodwill, in the interim, Respondent and other physicians were expected to contribute generic pharmaceuticals. At Taylor/Hall's suggestion, Respondent contacted Dr. Wallace to confirm Taylor's explanation of the arrangement for providing Taylor the pharmaceuticals. Dr. Wallace confirmed Taylor's representations and gave the names of four or five other doctors in Florida whom the Respondent could contact about the enterprise. These pharmaceuticals were not items intended for resale. Respondent, as the federal prosecutor's memorandum for sentence indicated and as he testified to in the administrative hearing, did not realize that the pharmaceuticals were being resold on the market upon the false representation that they were drugs that could be disposed of in this fashion, as opposed to those not for resale. He believed that they were going to Dr. Wallace for purposes other than resale. The legal problem with Dr. Turner's arrangement with Mr. Taylor was that the sample drugs that comprised Dr. Turner's surplus are marked "not for resale." Although Dr. Turner was not aware of it, Mr. Taylor was taking the pharmaceuticals obtained from Dr. Turner back to Atlanta and repackaging them for distribution at a profit. Petitioner's Exhibit 9 admitted into evidence is the prosecution's sentencing memorandum which was made available to the court in the disposition of the criminal proceedings against the Respondent as previously described. This document sets forth the factual underpinnings for the receipt of the Respondent's plea of guilty in federal court and is accepted as fact in the administrative hearing in determining the basis for the conviction described in paragraph 3 of these factual findings. Of significance in the present case are the following remarks found within this sentencing memorandum related to the criminal defendants, among them the Respondent: * * * The defendants realize that such packaging and labeling would have had to be removed by someone before ultimate sale to consumers with prescriptions, since consumers normally would not pay for drugs marked as free samples. The defendants were not aware of what methods co-conspirators would employ to effect this removal. Nor were the defendants aware of how the now adulterated and misbranded drugs would be stored, handled, resold, and dispensed. * * * AGAIN, THESE DEFENDANTS HAD NO KNOWLEDGE OF THE METHODS EMPLOYED BY CO-CONSPIRATORS WHICH RESULTED IN ADULTERATION AND MISBRANDING. Further, these defendants received very little payment for their sample in comparison to the amount realized from their ultimate resale after the adulteration and misbranding. During the same time period that each doctor was involved in selling his samples, he also signed a number of letters requesting stock bottles of prescription medication free of charge for his personal use from many different drug manufacturers. Upon receipt, these stock bottles would be included with the sample drug picked up by Tom Hall or Robert Morrill and resold through the same parties. The stock bottles did not have to be removed from their original packaging and labeling since they bore no restrictive use markings. * * * All doctors except Cooper were confronted by the FBI in January 1985. They all gave false exculpatory statements, either denying the letter-writing scheme altogether or denying receipt of any proceeds from the stock bottles and sample drugs. * * * However, soon after retaining legal counsel all of the doctors involved in the sample and letter writing schemes contacted the government and offered their full cooperation. They returned to Atlanta at their own expense where they were fully debriefed. They told the complete truth and remain ready to testify before the Grand Jury and at subsequent trials when called upon to do so, including the case of Robert Morrill who is already under indictment for controlled substances and tax violations. * * * The current defendants have done everything in their power to make amends for their past illegal activities, many of which were undertaken without full knowledge or consideration of their ramifications. Without assistance from three defendants the government would not have been able to make such a national impact on drug "diversion" and the distribution of adulterated and misbranded drugs, both of which seriously jeopardize the health of the drug consuming public, as well as increase the cost of prescription medication. * * * David L. Turner - May 1983 through December 1984. Dr. Turner, unlike the other Florida doctors, dealt with Hall rather than Morrill. His sale of samples and stock bottles obtained for personal use continued longer than anyone, but McAlister and Contreras. He also ordered a few extra pharmaceuticals at low purchase prices for clinic use which he resold to Hall. However, this activity was miniscule compared to the other "diversions" uncovered in this investigation. Dr. Turner was fully cooperative. His background and lack of other criminal activity is a positive factor in his favor. Petitioner's Exhibit 8 sets forth the adjudication of the subject case involving the federal prosecution against the Respondent, to include the correction of the court's order upon motion of counsel for the Respondent. The highlights of the disposition of the case included a ten-day jail term as a condition of probation, a period of probation of 36 months, the possibility of the service of imprisonment for a period of one year and the necessity of performing three days per week for a period of one year related to community service. Respondent also had to pay a fine of $1,000 and a special assessment of $25. Petitioner's Exhibit 10 admitted into evidence is a statement from the Respondent's probationary officer in the federal criminal prosecution in which the affiant Fred Fortenberry, federal probation officer, attests to the Respondent's carrying out of his obligation for community service dealing with the care and treatment of indigent persons in the Pureal Medical Center in Orange Park, Florida, where Respondent is employed. That obligation for community service had not been concluded, but has been faithfully executed up to the point of the affidavit which was given on September 29, 1986. The affiant Fortenberry also indicated that the Respondent was complying with other terms and conditions of probation.
Findings Of Fact The Parties The Petitioner is the state agency that administers the Florida Medicaid program, which includes pharmacies that participate in the program. The Petitioner's Office of Program Integrity is responsible for insuring that the goods and services billed to the Medicaid program are those that are actually provided to Medicaid recipients. Medicaid is a joint program, funded by the federal government and by the State of Florida, and is administered pursuant to both state and federal statutes and rules. All services or goods billed to the program must be necessary, Medicaid compensable, and must also have actually been provided to eligible recipients by providers prior to submitting claims. Any payment made by the Medicaid program for goods or services not actually provided to an eligible recipient is subject to recoupment by the Petitioner, and the provider is also subject to the imposition of administrative fines and exclusion from the program for a specified period of time. The Respondent is a community pharmacy located in a hispanic section of Miami, Florida, which has been owned and operated for the past six years by Frances Larin, a licensed pharmacist, who makes all drug purchases and does all Medicaid billings at the pharmacy herself. Most of Respondent's customers have limited financial resources and are Medicaid recipients. The Respondent has participated in the Medicaid program for approximately eight years, and has not previously been charged with overbilling the Medicaid program. The Respondent has cooperated fully with the Petitioner throughout these proceedings. Prior Review From February to April 1988, the Petitioner's Office of Program Integrity had a review performed of the Respondent's billings to Medicaid from March 1, 1987 to December 31, 1987. This review was conducted for the Petitioner by the Foundation for Health Care, Inc. (Foundation), contract auditors, and resulted in the determination that the Respondent had overbilled the Medicaid program for prescription drugs dispensed to program recipients during the review period. In performing this review, the Foundation used an across-the-board Medicaid percentage of 54% in determining the available units of the various drugs on hand for dispensing to Medicaid recipients. Based upon the Foundation's review, the Petitioner sought recoupment for overpayments in the amount of $28,649.99 by letter to the Respondent dated July 20, 1988, as well as an administrative fine of $7,162.49, and a three month suspension from the program. The Respondent timely sought a formal administrative hearing in which it disputed the results of the Foundation review. However, after the matter was referred to the Division of Administrative Hearings, the Petitioner withdrew its notice of overpayment and imposition of administrative sanctions, and thus, without a determination on the merits, the Division of Administrative Hearings file was closed and jurisdiction was relinquished to the Petitioner. Subsequently, the Petitioner entered a Final Order which provided that the Respondent would be re-audited. The Respondent timely sought judicial review of this Final Order in which it challenged that Petitioner's right to conduct a further review of the period March 1, 1987 to December 31, 1987. However, the District Court of Appeal of Florida, Third District, dismissed the Respondent's appeal, and the Petitioner proceeded with a further review. The KPMG Review (a) For purposes of its further review, the Petitioner employed the public accounting and management consulting firm of KPMG Peat Marwick which designed a statistically valid sampling methodology to determine the Respondent's Medicaid percentage for each drug, and also to perform a management review of the Respondent. It was established by competent substantial evidence in the record, and in particular by the expert testimony in statistics from Dr. Robert Ladner and Robert Peirce, that the KPMG methodology was statistically valid. The KPMG review was conducted during the latter half of 1989, and included developing a Medicaid percentage for individual drugs based upon an analysis of prescriptions for all drugs in question to determine the portion of each drug's total sales that went to Medicaid recipients, calculating the total units claimed for each drug for which the Respondent sought reimbursement during the audit period, and calculating the total units purchased by the Respondent for each drug claimed for reimbursement during the audit period. The Medicaid percentage of each drug was then applied to total purchases for each specific drug to determine the amount of each drug that was on hand at the Respondent's pharmacy for dispensing to Medicaid recipients. This number of available units was then compared with the total units claimed for reimbursement. Where the units claimed exceeded the units available for dispensing, a positive variance was noted, and this number of excess units claimed was then multiplied by the per unit reimbursement amount for that particular drug in order to obtain the amount of the apparent overbilling for that particular drug. Where the total units available for dispensing exceeded the total units claimed for a particular drug, a negative variance was noted. It was stipulated by the parties that negative variances did not indicate underpayments, and the evidence, including specifically the testimony and report of Dr. Victor Pestien, an expert in statistics, does not establish that such negative variances should be offset against the positive variances or that they in any way reduce the positive variances. This is the first instance in which this methodology has been utilized by the Petitioner in seeking a recoupment of an alleged Medicaid overpayment from a pharmacy, and this methodology was not set forth in any rule or regulation of the Petitioner that had been adopted at any time material hereto. Previous audits used an overall Medicaid percentage to calculate the portion of a pharmacy's business that was comprised of Medicaid recipients, and the quantity of drugs that were available to them. Using a drug specific Medicaid percentage, however, is a more accurate and conservative approach to determining overpayments than using a fixed percentage. Based upon the consideration of all evidence in the record, it is specifically found that the greater weight of evidence establishes that the methodology used by KPMG in this review for calculating Medicaid percentages was sound and reasonable, and in no way precluded the Respondent from presenting additional competent substantial evidence to the Petitioner, or at hearing, which would have established different Medicaid percentages for particular drugs. (a) The type of review conducted by KPMG is known as an aggregate analysis, a generally accepted type of statistical analysis, in which drugs that have been billed to and paid for by the Medicaid program are reviewed to determine whether the pharmacy under review purchased or otherwise acquired a sufficient quantity of drugs to justify its billings to Medicaid. Interchangeable brand-name drugs and generic equivalents were grouped together so that in conducting this review, whole equivalent groups of drugs were considered as one type of drug, regardless of differences in individual product names. To obtain a statistically random sample, prescriptions were put in numerical order and every fourth prescription for the review period was examined, and since prescriptions may be refilled for up to a year after they are originally filled, reviewers also examined every prescription for the year prior to the review period. Competent substantial evidence establishes that KPMG performed an appropriate and valid statistical analysis, and that they used an acceptable sampling methodology which produced a truly random result. The underlying assumption of this analysis is that before a drug can be claimed to have been dispensed and billed to Medicaid, the pharmacy under review must have that drug in its possession. (b) The approach taken by KPMG and the Petitioner was to be as conservative as possible in resolving all uncertainties and questions which arose during the course of this review in favor of the Respondent. KPMG did not conduct a financial audit of the Respondent, but did prepare a management report based upon its review of Respondent's operations during the audit period. Data used by KPMG in its methodology in calculating the amount paid by Medicaid to the Respondent, the unit price of drugs dispensed, and the quantity claimed by Respondent for payment by Medicaid, was derived from computer based information provided by the Petitioner's fiscal agent. During the period of time being reviewed in this case, Electronic Data Systems (EDS) was the Petitioner's fiscal agent, while Consultec was the Petitioner's fiscal agent during the period when the KPMG review was actually being performed. When Consultec was selected as the Petitioner's fiscal agent and replaced EDS on January 1, 1989, EDS turned over its computer records to the new agent by copying all of its magnetic, computer files, along with supporting microfiche documentation, which it then provided to Consultec under the supervision of the Petitioner. Upon receipt of these magnetic tapes, Consultec placed them in a controlled environment vault, and then later converted the information on these tapes to a new format used by Consultec. It was established by competent substantial evidence that in this process, no data was added, deleted or changed in any manner. The "units claimed" data was subsequently provided by computer download from the Consultec claims data base directly to the Petitioner's Office of Program Integrity. It was established by competent substantial evidence that data regarding claims which originated with EDS passed through Consultec to the Petitioner's Office of Program Integrity unchanged. Specific information regarding Respondent, including the claimed quantity of drugs dispensed and amounts paid, was accessed by staff in the Office of Program Integrity, randomly verified, and then made available to KPMG. Both Consultec and EDS are nationally recognized data processing and management companies. Competent substantial evidence established that the claims processing function utilized by the Petitioner in the Medicaid program during the period at issue was subject to several quality control checks to insure that claims were properly processed and appropriate payments were made. On occasion claim adjustments were made, but these were reasonable and for good cause, such as a substantiated underpayment. The computer hardware utilized in this process was reliable and properly maintained. In order to verify the data used by KPMG concerning the dollar amount of claims paid and the quantity of units of medication claimed, an "audit trail" was performed using 140 randomly selected sample claims by tracing each claim from its claim reference number to its associated remittance voucher and cancelled checks, where available. This audit trail verified that the data used as the basis for quantity claimed and total dollars paid was valid and reliable. The KPMG review was not limited to the top 100 drugs, by volume claimed, during the audit period, but included each drug dispensed by the Respondent to Medicaid recipients during the audit period. In its report dated November 20, 1989, KPMG calculated a total Medicaid overpayment to Respondent of $30,452.59, and based thereon, the Petitioner notified the Respondent that it was seeking recoupment of this amount, as well as an administrative fine of $2,000 and termination from the Medicaid program for at least two years. Subsequently, however, the Petitioner and KPMG reviewed and considered additional invoices documenting additional purchases of drugs in question by the Respondent during the audit period, and prepared a revised report dated August 30, 1990. Based upon this revised report, the Petitioner sought recoupment of a revised, reduced overpayment calculated to be $21,939.93, as well as a $2,000 administrative fine and a minimum two year termination from the program, and it was on this basis that this matter proceeded to final hearing. The Top 100 Drugs Subsequent to the final hearing, the Petitioner issued an amended recoupment letter dated October 17, 1990, which limited the recoupment it is seeking in this matter to the top 100 drugs, by dollar volume of claims, plus their generic equivalents. This resulted in the elimination of many individual drugs with relatively small overpayments from the list of overpayments, and left only five instances among these top 100 drugs where the difference between the quantity available, adjusted for standard error, and the quantity claimed is less than 100 units. In many instances the difference is well in excess of 1,000 units. The sanctions being sought in this amended recoupment letter further reduced the recoupment being sought to $12,643.11, reduced the administrative fine to $1,400, and reduced the period of exclusion from the program that is being sought to 16 months. However, due to an error in calculating the top 100 drugs and equivalents, the Petitioner issued a second amended recoupment letter dated October 26, 1990, further reducing the administrative fine sought to $1,200 and reducing the period of exclusion to 14 months. Inventory Analysis In performing its review, KPMG obtained information concerning the quantities of drugs purchased during the review period by the Respondent directly from the pharmacy's wholesalers and from a review of invoices retained by the Respondent for a period that included one month prior to the review period through one month after the review period (February 1, 1987, to January 31, 1988). The effect of seasonal variations in pharmacy sales and ordering patterns was also taken into account, and balanced, by extending this period to a full twelve months. All documentation concerning drug acquisitions was requested from Respondent, and the information received and considered by KPMG and the Petitioner was checked for reasonableness by a consultant pharmacist and cross validated by two reviewers. It was stipulated by the parties that the Respondent's main wholesaler, Gulf Distribution, Inc., had and maintained accurate information and records regarding its sales to the Respondent, and that it properly transferred that information to computer disks which were provided to KPMG. Subsequent thereto, additional invoices were discovered and were also made available to KPMG. The Petitioner stipulated that these additional invoices from Gulf did not reduce the number of drug units purchased by, and invoiced to, Respondent. Pharmacies in Florida which choose to participate in the Medicaid program are required to maintain complete and accurate patient and fiscal records which fully substantiate the extent of services rendered and billings made for a period of five years from the date of billing or service, and are also required to retain all invoices from wholesalers, or from the transfer or receipt of drugs through barter or exchange, for a period of five years. (a) Actual beginning and ending inventories of the top 100 drugs reviewed by KPMG for which the Petitioner now seeks recoupment in the amount of $12,643.11 were not determined. Rather, an estimate of inventory on hand was derived by counting invoices of all drug acquisitions through purchase, transfer or exchange made by the Respondent during the review period, as well as invoices of acquisitions made one month prior to and one month after the review period. Additionally, all documentation provided by the Respondent of bulk, or large, acquisitions made during or prior to the review period was also considered and included in the Petitioner's estimate of inventory. It was established by competent substantial evidence that pharmacies generally keep a drug inventory consisting of a two to two-and-a-half week supply on hand, and acquire drugs in anticipation of future sales rather than as a replacement of inventory depletion from past sales. Therefore, a basic assumption of the KPMG methodology, relied upon and accepted by the Petitioner, that Respondent had only those drugs available for dispensing which were obtained by invoiced purchase from wholesalers, or through transfer or exchange, between February 1, 1987 and January 31, 1988, as well as documented invoiced bulk purchases prior to this time period, is reasonable. At hearing, the Respondent established that a significant quantity of nine specific drugs were purchased during the review period from suppliers other than Gulf that were not considered by KPMG. These drugs include Xanax (.5 mg.), Inderal (10 mg.), Tagamet (300 mg.), Nitrostat (.4 mg.), Trental (400 mg.), Motrin (400 mg.), Motrin (600 mg.), Quinamm (260 mg.), and Quinidine Sulfate (200 mg.). It is, therefore, found that the overpayment of $2,902.19 calculated by KPMG and relied upon by the Petitioner for these particular drugs has not been supported by competent substantial evidence. Frances Larin, Respondent's owner and operator, testified that she did not follow the generally accepted practice of retaining only a two to two-and-a- half week supply of drugs on hand. Rather, she testified that for a significant number of the top 100 drugs at issue in this proceeding, she would purchase large quantites in bulk, and was thus able to draw down on these inventories without making additional purchases of particular drugs for over a year. The Respondent sought to establish that due to very large beginning inventories of particular drugs at issue, it was able to legitimately dispense more units during the review period than it purchased during the same time. However, the Respondent did not produce evidence in support of its position, such as invoices for bulk purchases which KPMG or the Petitioner did not consider, or complete records of bartering or transfers which had not been considered, and which would have supported its claim of a significantly larger beginning inventory for these particular drugs than would be the generally accepted practice. To the contrary, competent substantial evidence in the record, as well as the demeanor of Larin while testifying, establishes that Respondent's claim is unreasonable and lacks credibility. The deposition testimony of JoAnn Padell is outweighed by the testimony of Deborah Launer, Susan McCleod, and Robert Peirce. A review of the Respondent's purchasing patterns clearly shows that Respondent generally and routinely kept low inventories of drugs on hand, placing daily orders with Gulf to obtain drugs on an as-needed basis. Recoupment Based upon the foregoing, it is found that competent substantial evidence establishes that the Respondent overbilled the Medicaid program during the review period at issue in this case in the amount of $9,740.92 ($12,643.11 claimed in the second amended recoupment letter minus the $2,902.19 claim associated with the nine specific drugs for which significant purchases were omitted from the KPMG review, as found above at Finding 13). Petitioner is authorized to recoup the established overpayment of $9,740.92 from the Respondent. Sanctions (a) In determining the sanctions stated in the second amended recoupment letter which Petitioner seeks to impose upon the Respondent, the Petitioner considered the provisions of Section 409.266(13), Florida Statutes, as well as the impact which sanctioning this Medicaid provider would have upon Medicaid recipients. Competent substantial evidence establishes that there are eight pharmacies which accept Medicaid within a one mile radius from the Respondent's location, and twenty-six such pharmacies within a two mile radius. Medicaid recipients are issued new cards each month and may transfer pharmacies at the beginning of each month. Therefore, it is found that Medicaid recipients would not be substantially affected by the imposition of sanctions upon the Respondent. The parties stipulated that the sanction matrix set forth in Rule10C- 7.063, Florida Administrative Code, was not applied by the Petitioner against the Respondent in this case because it was not in effect at the time of this review. The sanctions which the Petitioner seeks to impose against the Respondent, therefore, are based upon non-rule policy which must be explicated in this proceeding. In seeking to explicate its non-rule policy upon which the sanctions set forth in the second amended recoupment letter are based, the Petitioner established that it was concerned that sanctions imposed in prior cases, as well as in the original recoupment letter which had been sent to the Respondent in this case, had been too lenient in view of the seriousness of Medicaid violations. The Petitioner developed its non-rule sanctions policy after the KPMG review had been completed, and based its proposal upon the maximum sanctions set forth in state and federal statutes and rules. Specifically, Section 409.266(12), Florida Statutes, provides for a maximum fine of $10,000; the maximum exclusion period applied in previous cases by the Office of Program Integrity is ten years, and the minimum exclusionary period imposed by the federal government has been five years for the failure to supply payment information. At hearing, the Petitioner explained that it first determined the percent of Respondent's total Medicaid payments that the overpayment represented, and then applied that percentage to these maximum sanctions allowed under law and existing policy. The overpayment of $12,643.11 claimed by the Petitioner in its second amended letter of recoupment is 12% of the total payment of $100,397.88 made by the Petitioner to Respondent for the review period, and 12% of the maximum fine and exclusion period is $1,200 and 14 months, respectively. While the Petitioner explained the manner by which this exclusionary period and fine were calculated, it did not explicate its non-rule policy by establishing a reasonable, rational basis for applying the percentage of Medicaid overbillings to the maximum fine and exclusionary period. Certainly, the arithmetic calculation used to arrive at these proposed sanctions is clear, but there was no explication through competent substantial evidence which would establish that there is a basis in fact or logic for this calculation. Therefore, it is found that the Petitioner's non-rule policy used to propose these sanctions is arbitrary and capricious. Due to the lack of any evidentiary basis in the record which would support the imposition of the sanctions of an administrative fine or a period of exclusion from the Medicaid program, the Petitioner is not authorized to impose sanctions on the Respondent.
Recommendation Based upon the foregoing, it is recommended that Petitioner enter a Final Order which requires that Respondent to repay the Petitioner for Medicaid overbillings in the amount of $9,704.92, but which does not impose sanctions consisting of either an administrative fine or period of exclusion. DONE AND ENTERED this 18th day of January, 1991 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 18th day of January, 1991. APPENDIX TO RECOMMENDED ORDER Rulings on the Petitioner's Proposed Findings of Fact: Adopted in Finding 1. Adopted in Finding 2. Adopted in Finding 3. Adopted in Finding 1. Adopted in Finding 4. Adopted in Findings 4 and 5. 7-10. Adopted in Findings 6 and 7, but otherwise Rejected as unnecessary. 11-17. Rejected as unnecessary. 18-20. Adopted in Findings 6 and 7. 21-24. Adopted in Finding 12. 25. Adopted in Finding 2. 26-28. This is a conclusion of law and not a proposed finding. 29-30. Adopted in Finding 8. 31-32. Adopted in Findings 7 and 10. Adopted in Finding 6. Rejected as unnecessary. 35-39. Adopted in Finding 7. 40-47. Adopted in Finding 7, but otherwise Rejected as unnecessary. 48. Rejected as unnecessary and immaterial 49-51. Adopted in Finding 7, but otherwise Rejected as unnecessary. 52-53. Rejected as unnecessary. 54-63. Adopted in Finding 12, but otherwise Rejected as unnecessary. Adopted in Finding 8. Adopted in Finding 9. 66-67. Adopted in Finding 8, but otherwise Rejected as unnecessary. 68-69. Adopted in Finding 9. 70-78. Adopted in Finding 8, but otherwise Rejected as unnecessary. 79-82. Adopted in Finding 8. 83-85. Rejected as unnecessary. 86-93. Adopted in Finding 13, but otherwise Rejected as unnecessary. 94-97. Adopted in Finding 14, but otherwise Rejected as unnecessary. 98-103. Adopted in Finding 14. 104-105 Rejected as unnecessary and immaterial. 106-107 Adopted in Finding 12. 108. Adopted in Findings 12 and 13. 109-112 Rejected as unnecessary and immaterial. 113-115 Adopted in Finding 13, but otherwise Rejected as immaterial. This is a conclusion of law and not a proposed finding. Adopted in Finding 11. 118-119 Rejected as unnecessary and immaterial 120-122 Adopted in Finding 11. Rejected as unnecessary. Adopted in Finding 6. 125-128 Rejected as unnecessary. 129. Adopted in Finding 6. 130-132 Adopted in Finding 9. Adopted in Finding 11. This is a conclusion of law and not a proposed finding. 135-147 Adopted in Finding 16, but otherwise Rejected as unnecessary and immaterial. 148. Adopted in Finding 11. 149-150 Adopted in Finding 16, but otherwise Rejected as unnecessary. 151-152 Rejected as unnecessary. 153. Rejected as unnecessary and cumulative. Rulings on the Respondent's Proposed Findings of Fact: 1. Adopted in Finding 4. 2-3. Adopted in Finding 5, but otherwise Rejected as unnecessary and not based on competent substantial evidence. 4-5. Adopted in Findings 3, 6 and 7. 6-7. Adopted in Finding 10, but otherwise Rejected as unnecessary. 8-9. Adopted in Finding 11. 10-11. Adopted in Finding 3, but otherwise Rejected as unnecessary. Adopted in Finding 6. Rejected as immaterial and unnecessary. 14-15. Rejected as argument on the evidence rather than a proposed finding, and otherwise as not based on competent substantial evidence. Adopted in Finding 7, but otherwise Rejected as argument on the evidence rather than a proposed finding. Rejected as repetitive and otherwise as immaterial. Adopted in Finding 13, but Rejected in Finding 14 and otherwise as argument on the evidence rather than a proposed finding and as not based on competent substantial evidence. Rejected in Finding 14, as immaterial, speculative, and as not based on competent substantial evidence. 20-21. Rejected in Finding 6, as immaterial, and as not based on competent substantial evidence. 22-23. Rejected in Findings 13 and 14, and otherwise as immaterial and not based on competent substantial evidence. Rejected as repetitive and otherwise as argument on the evidence rather than a proposed finding. Rejected in Findings 13 and 14. 26-30. Rejected as a statement of the Respondent's position and not a proposed finding, as speculative and contrary to competent substantial evidence, and as totally without citation to authority in the record as required by Rule 22I-6.031(3), Florida Administrative Code. 31-35. Rejected in Finding 6, and as not based on competent substantial evidence and as unnecessary. 36-38. Adopted in Findings 12 and 13. 39-41. Adopted in Finding 8. 42. Rejected as immaterial. 43-44. Rejected in Finding 9. 45. Rejected as simply a summation of testimony and not a proposed finding. 46-48. Rejected in Finding 9, and otherwise as immaterial and not based on competent substantial evidence. 49-50. Rejected as unnecessary and immaterial. 51. Adopted in Finding 16, but otherwise Rejected as immaterial. 52-53. Rejected as unnecessary and immaterial. Rejected as not based on competent substantial evidence. Adopted and Rejected in part in Finding 16. 56-57. Adopted in Finding 16. 58-61. Rejected as immaterial and irrelevant. 62. Adopted and Rejected in part in Finding 15. COPIES FURNISHED: David G. Pius, Esquire Building Six, Room 233 1317 Winewood Boulevard Tallahassee, FL 32399-0700 James J. Breen, Esquire Michael P. Scian, Esquire 900 Sun Bank Building 777 Brickell Avenue Miami, FL 33131 R. S. Power, Agency Clerk 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Linda Harris, Acting General Counsel 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Robert B. Williams, Acting Secretary 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether Petitioner, Agency for Health Care Administration (“AHCA”), is entitled to recoup from Respondent, JRM Pharmacy, Inc., d/b/a Super Drugs Pharmacy (“JRM”), $156,657.05 as Medicaid overpayments; and whether investigative, legal, expert witness costs, and fines should be imposed against JRM.
Findings Of Fact AHCA is the designated state agency responsible for administering the Medicaid Program in Florida. At all times material to this case, JRM has been a licensed pharmacy and authorized Medicaid provider pursuant to a Medicaid Provider Agreement with AHCA. The Medicaid Provider Agreement is a voluntary contract between AHCA and JRM. JRM’s Medicaid provider number is 102451500. As an enrolled Medicaid provider, JRM is subject to the duly-enacted federal and state statutes, regulations, rules, policy guidelines, Medicaid provider publications, and the Medicaid Provider Agreement between it and AHCA. At all times during the audit period, JRM was required to follow the Florida Medicaid Prescribed Drugs, Services, Coverage, Limitations, and Reimbursement Handbook (“Prescribed Drugs Services Handbook”). This case involves a Medicaid audit by AHCA of JRM as to dates of service from January 1, 2010, through December 31, 2010 (“audit period”). AHCA’s Bureau of Medicaid Program Integrity (“MPI”), pursuant to its statutory authority, conducted an audit of JRM of paid Medicaid claims for medical goods and services to Medicaid recipients which occurred during the period from January 1, 2010, through December 31, 2010. The audit included a comparison of the amount of prescription medications billed to Medicaid by JRM during the audit period with the units of the corresponding medications JRM purchased from licensed wholesalers. The audit concluded that JRM was overpaid a total of $156,657.05 for various prescription medications it billed to AHCA and received payment from AHCA. The claims which make up the overpayment alleged by AHCA of $156,657.05 were filed and paid by AHCA prior to the institution of this matter. JRM does not dispute that it was overpaid $43,890.02 for various prescription medications, and JRM concedes that AHCA is entitled to recover this amount as an overpayment. However, JRM disputes the remaining balance of AHCA’s alleged overpayment of $112,767.03, which AHCA attributes to an overpayment to JRM for the brand named prescription drug Prevacid 30 mg Capsule DR (“Prevacid”). The audit involved a review of JRM’s purchases of Prevacid from McKesson, and Lansoprazole from Bellco, the authorized wholesalers, during the audit period. The audit established that JRM billed to AHCA and received payment from AHCA for more Prevacid than JRM had available during the audit period to dispense to Medicaid recipients. Specifically, the persuasive evidence adduced at hearing demonstrates JRM was overpaid $112,767.03 for Prevacid. When a Medicaid pharmacy provider submits a claim to Medicaid for payment, Medicaid identifies the prescription drug on the claim by the National Drug Code (“NDC”). The generic form of Prevacid is Lansoprazole. Prevacid and Lansoprazole have different NDC numbers. JRM was required to submit the entire 11-digit NDC number for the actual product dispensed on the claim. During the audit period, JRM billed to Medicaid and was paid by Medicaid for “NDC: 00300304613 PREVACID 30 MG CAPSULE DR, NDC: 00300304619 PREVACID 30 MG CAPSULE DR, AND NDC: 64664004613 PREVACID DR 30 MG CAPSULE.” The persuasive evidence adduced at hearing demonstrates that JRM billed Medicaid and was paid by Medicaid for 31,650 Prevacid capsules. However, JRM only purchased 10,907 units of Prevacid, leaving a shortage of 20,744 capsules of Prevacid and an overpayment of $112,767.03. Thus, JRM received payment from Medicaid for $112,767.03 for Prevacid that JRM did not purchase and did not dispense to Medicaid recipients. There is a significant cost difference between the brand name Prevacid and generic Lansoprazole, with the brand name Prevacid being billed at a much higher rate than the generic Lansoprazole. JRM purchased a large amount of Lansoprazole from Bellco during the audit period, but billed and received payment from Medicaid for Prevacid. Only prescription drugs that are on the Florida Medicaid Preferred Drug List are allowed to be paid for by Medicaid. During the audit period, generic Lansoprazole was not on AHCA’s preferred drug list. However, Prevacid was on AHCA’s preferred drug list. JRM often dispensed Lansoprazole and billed and received payment from Medicaid for dispensing Prevacid.
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 of recoupment of a Medicaid overpayment from JRM in the amount of $156,657.05; impose a fine of $5,000.00; and remand this matter to the undersigned for a determination of the amount of investigative, legal, and expert witness costs, should a final order be entered by AHCA indicating that AHCA ultimately prevailed, and if there is any dispute as to the amount of such costs following the issuance of the final order by AHCA. DONE AND ENTERED this 13th day of January, 2015, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of January, 2015.
The Issue In addition to the issue of whether the Respondent committed the acts alleged, the administrative complaint alleges on its face that the Respondent was not licensed to practice medicine in the State of Florida until July 13, 1982. Most of the administrative complaint relates to alleged violations by the Respondent prior to the date of his licensure. A primary issue is the Petitioner's jurisdiction over the Respondent to prosecute for acts committed prior to his licensure. A major factual issue in this case are the dates upon which the doctor's conduct allegedly took place.
Findings Of Fact The Respondent was licensed as a medical doctor on July 13, 1982, in the State of Florida. Prior to that date the Respondent was not licensed to practice medicine in this or any other state. Prior to his licensure he was participating in a medical internship program in Pensacola, Florida. He was permitted to practice and prescribe medicine as an intern in and within the limits of this program. (Re: Count I through Count IV) The Respondent presented prescriptions for Eskatrol and Dexedrine on two different occasions to two different pharmacies. These prescriptions listed the Respondent as the person for whom the prescriptions were filled and signed by the Respondent. Neither prescription was accepted by the pharmacists and neither prescription was introduced into evidence. Eskatrol and Dexedrine are amphetamine compounds and are Schedule II controlled substances. The Respondent's ex-wife placed the Respondent's use of amphetamines in February of 1981. See Transcript page 95 line 19 through page 96 line 1. One of the pharmacists to whom the prescription was presented by the Respondent was Ann Cole Wilson, the Respondent's former sister-in-law and sister of his ex-wife. Wilson's testimony concerning the date of the alleged occurrence testifies as follows: Q. Can you tell me what occurred on that occasion, and tell me approximately when this occurred? A. Like I say, it's hard to remember. It was sometime during the summer months. Q. The summer of what year? A. Oh, gosh. Right now it's been, let's see, `82 or `83. Q. The summer of `82? A. I would say `82 yeah. The other pharmacist who testified regarding the Respondent's presentation of prescriptions for amphetamines was Elizabeth S. Grimsley. Grimsley testified regarding the alleged events as follows: Q. How did you come to meet him? A. He brought in a prescription one night for, two prescriptions, rather, written for him by himself for Eskatrol and Dexedrine, amphetamine prescriptions. Q. These prescriptions were written for the use of Dr. Taylor and they were written by Dr. Taylor? A. Yes, sir. Q. Do you remember approximately when this occurred? A. No, sir; roughly a year and a half or two years ago, I suppose. The latter witness is very vague about the date, and the former witness has an interest in these proceedings by virtue of her relationship with the Respondent's former wife. The relationship by Respondent and his former wife is characterized by hostility and continuing litigation arising out of their divorce and concerning child custody. It is concluded that the Petitioner failed to prove the acts occurred after the date of the Respondent's licensure. (Counts V, VI) The Respondent ordered legend and other drugs from pharmaceutical companies using the name of Michael Archer, M.D. and Archer's DEA registration number. Archer did not approve the order or give the Respondent permission to use his DEA registration in order to obtain these drugs. Respondent's actions took place in 1981 and 1982 prior to the date of the Respondent's licensure by the Florida Board. See the depositions of Farrell, Schied & Perez. (Count VII) Between the dates of March 3, 1982, and June 30, 1982, the Respondent submitted drug orders for and received thirty Crescormon No. 4 iu- vials from Pharmacia Corporated, 800 Centennial Avenue, Piscataway, New Jersey 08854. These events occurred prior to the Respondent's licensure by the Petitioner. See deposition of Schied, Exhibit 3. Respondent ordered amino acids from Varitex Corporation, a Michigan company. These materials which are not legend drugs were ordered and received by the Respondent prior to the date of his licensure by the Petitioner. See deposition of Myers, Exhibit 4. Respondent ordered various drugs from Generix Drug Corp., 1900 W. Commercial Blvd., Ft. Lauderdale, Florida, in the same manner. All these transactions occurred before the Respondent was licensed. See the deposition of Perez, Exhibit 5. (Count VIII) The Respondent sold or provided Darrell R. Black substances represented by the Respondent and thought to be by Black a drug with the trade name Dianabol. Dianabol is a steroid and a legend drug. This transaction was not a part of Dr. Taylor's practice under the Pensacola Education Program, the internship in which Dr. Taylor was participating. This transaction occurred in 1981, prior to Dr. Taylor's licensure by the Board. See Transcript page 38. The Respondent sold or provided to Shaun Francis Farrell drugs represented by the Respondent and thought to be by Farrell testosterone and Deca-Durabolin. This transaction was not part of the Respondent's internship in the Pensacola Educational Program. These transactions occurred in 1981, prior to Respondent's licensure by the Board. See Transcript page 46. (Count IX) The Respondent presented prescriptions for and received various metabolic steroids during 1981. However, all of these were presented prior to the date of the Respondent's licensure by the Board. See Transcript, pages 15, 16, 20, 21, 22, 31, 32, 33. One prescription for Trisorlan was presented by the Respondent for himself on October 20, 1982. Trisorlan is a legend drug, however it is not a controlled substance. Trisorlan is a drug affecting the pigmentation of skin. Transcript page 24. No evidence was received concerning the propriety of Dr. Taylor prescribing this medication for himself. (Count XI) No evidence was received that the Respondent held himself out as being licensed to practice medicine. Black and Ferrell did not see Respondent as a doctor. Respondent saw Cayton at the hospital and was authorized to treat patients within the scope of his internship. Most of the witnesses stated that they knew that the Respondent was a doctor, that he was "practicing" at Sacred Heart Hospital. The Respondent holds a degree as an M.D. and was practicing at Sacred Heart as an intern. Further to the extent that the Respondent may have held himself out as a physician contrary to Section 458.327, he did so prior to the date of his licensure and acquisition of jurisdiction by the Board.
Recommendation Having found no evidence to support the jurisdiction of the Board over the Respondent on the allegations of Count X, the Hearing Officer recommends that the Board take no action against the Respondent and the administrative complaint against the Respondent be dismissed. DONE and ORDERED this 4th day of February, 1985, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 4th day of February, 1985. COPIES FURNISHED: Joseph W. Lawrence, II, Esquire Dorothy Faircloth, Executive Department of Professional Director Regulation Department of Professional 130 North Monroe Street Regulation Tallahassee, Florida 32301 Board of Medical Examiners 130 North Monroe Street William Taylor, M.D. Tallahassee, Florida 32301 5271 Myrtlewood Sarasota, Florida 33580 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore Carpino, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue Whether or not on or about May 24, 1978, the Respondent was arrested by officers of the Jacksonville Sheriff's Office, in Jacksonville, Duval County, Florida, and found to be in illegal possession of the controlled substance, to- wit, Pentothal (Sodium Thiopental), injectable, and, therefore, in violation of Subsections 464.21(1)(b) and (d), Florida Statutes. Whether or not on or about May 24, 1978, the Respondent was found to be in possession of several prescription drugs without having obtained a prescription for those drugs, in violation of Subsection 464.21(1)(b), Florida Statutes.
Recommendation It is recommended that the license of the Respondent, Gloria Nesmith Moore Callender, R.N., No. 48527-2, be REVOKED. DONE and ENTERED this 28th day of November, 1978, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Julius Finegold, Esquire Geraldine B. Johnson, R.N. 1005 Blackstone Building Department of Professional and Jacksonville, Florida 32202 Occupational Regulation Board of Nursing Ms. Gloria N. M. Callender 6501 Arlington Expressway, 8030 Almar Place Bldg. "B" Jacksonville, Florida 32208 Jacksonville, Florida 32211
