The Issue The issue is whether Respondent properly reclassified Petitioner's position as a Senior Management Analyst Supervisor from career service status to selected exempt status pursuant to Sections 110.205(2)(x) and 447.203(4), Florida Statutes (2001).
Findings Of Fact Petitioner worked for Respondent for approximately 30 years. He was a Board Certified Behavior Analyst and had training as a Risk Manager. During his state employment, Respondent became known as Respondent's expert for the Baker Act, Chapter 394, Part I, Florida Statutes (Baker Act). The Baker Act sets the standard in Florida for determining whether people can be involuntarily examined and treated within public and private mental health facilities. Petitioner's work as Respondent's Baker Act expert involved very independent work. He performed extensive research related to the laws of other states in the mental health area. He analyzed and made recommendations on subjects such as misuse of seclusion and restraints, the absence of documentation or doctor's orders, and the availability of medication upon release from a mental health facility. Petitioner's research and review of national accreditation standards led to the development of standards for state-wide Baker Act procedures and associated clinical care in state-run mental health receiving and treatment facilities. Ensuring compliance with these procedures and/or standards impacted state employees administering state facilities. Petitioner reviewed professional journals to learn federal block grant requirements. Petitioner's research and recommendations often resulted in proposed amendments to state law and associated Florida Administrative Code rules. Petitioner's assignments included answering constituent requests about the Baker Act from stakeholders on behalf of legislators and the Governor's Office. He conducted public hearings on the subject and gathered comments from a variety of sources, including but not limited to, the Florida Psychiatric Society, the Florida Psychological Society, the National Alliance on Mental Illness, the Advocacy Center for Persons with Disabilities, the Florida Council for Community Mental Health, and the Florida Alcohol and Drug Abuse Association. In other words, Respondent relied on Petitioner to answer inquiries about the Baker Act from the following: (a) families with members who have mental illness; (b) Respondent's district staff members; (c) the staff members of private provider agencies; (d) labor unions; (d) trade associations; (e) the judiciary; (f) law enforcement; and (g) legislative staff. To say the least, Petitioner's duties regarding the Baker Act were not of a routine clerical or administrative nature. Sometime after 1997, Respondent reorganized its adult mental health unit into two sections. The state mental health treatment facilities constituted one section consisting of six or seven state-operated or state-contracted facilities for people needing long-term care. The other section consisted of community mental health facilities that provided mental health services to people in communities, including people in crisis or with forensic involvement. After the reorganization, Petitioner worked primarily in the adult community mental health section with private providers. Petitioner worked with Ron Kizirian, his counterpart in the state mental health treatment facilities section. Petitioner used his Baker Act expertise, working as a team with Mr. Kizirian, to coordinate and address all issues state-wide regarding the Baker Act. Respondent's staff generally considered the adult community mental health services to be more progressive in attempting to provide patients with appropriate services. The state institution services were typically characterized as reactive, custodial, and generally, not positive. Petitioner's duties after the reorganization included explaining the things he did in the community side so that the institutional side would understand the concepts and issues. At the time of the reorganization, there were approximately 550 to 600 private, not-for-profit community mental health providers with state contracts. The adult community mental health section managed these contracts. Petitioner's duties included engaging in preliminary contract discussions with private providers, clarifying issues, and generally participating in the development of the contracts and their associated budgets and grants. He also was involved in recommending amendments to the contracts. As a contract manager, Petitioner monitored the activities of private providers. He initiated corrective action procedures. Petitioner's duties included the following: (a) making sure private contractors stayed within their budgets; (b) ensuring that private contractors agreed to performance standards; (c) pre-auditing the vouchers of vendors; and (d) submitting vouchers for payment. Petitioner's job included investigating high profile events on Respondent's behalf. For instance, Petitioner was sent to investigate alleged abuses in crisis stabilization units in Orlando, Florida. Petitioner would then draft a report for his superiors. Petitioner would often represent his superiors in meetings. Petitioner also performed as acting supervisor in the absence of his immediate supervisor. On or about October 1, 2000, Petitioner was a career service employee, serving as an Operations and Management Consultant. On March 6, 2001, Respondent changed the title of Petitioner's position to Senior Management Analyst II and then back to Operations and Management Consultant on the same day. On March 16, 2001, Petitioner's position changed again to Senior Management Analyst II. On June 27, 2001, and effective July 1, 2001, Petitioner's position title was reclassified to Senior Management Analyst Supervisor, a selected exempt service position. Petitioner was serving in that capacity when Respondent terminated his employment on December 3, 2002. Petitioner never supervised any other employees except to the extent that he served as acting supervisor in his immediate supervisor's absence. He signed a performance evaluation on March 27, 2002, indicating that critical elements involving directing leadership, staffing, performance appraisal/feedback and discipline administration did not apply to his performance for the rating period from October 30, 2001, to March 6, 2002. Petitioner performed the same duties and functions before and after reclassification from career service to selected exempt services. At the time of reclassification, Petitioner inquired of his immediate supervisor why Respondent changed his position from career service to selected exempt service. The immediate supervisor referred Petitioner's inquiry to next higher level supervisor who advised Petitioner not to challenge the determination but to "just keep his job." During the discovery phase of this proceeding, Respondent contended that Petitioner's position was reclassified for the following reason: Petitioner's position was reclassified to Select Exempt Service because his position was managerial with [sic] the meaning of Section 447.203(4), Florida Statutes. Petitioner's duties and responsibilities as Senior Management Analyst Supervisor was not of a routine, clerical or ministerial nature and required the exercise of independent judgment and the position also required the Plaintiff [sic] to develop performance guideline for the state mental health facilities, supervise adult mental health staff and facilitate resolution of complex programmatic, management, administrative or regulatory issues affecting state mental health facilities and districts. During the discovery phase of this proceeding, Respondent produced a generic selected exempt service position description for a Senior Management Analyst Supervisor. The position description contains the duties and responsibilities for senior staff in Respondent's state mental health facilities section and Respondent's adult community mental health facilities section. The position description sets forth some of Petitioner's duties relative to the Baker Act for state-wide public and private mental health institutions and/or facilities and relative to other mental health issues in adult community mental health facilities as follows: (a) provides consultation to the state mental health treatment facilities and districts on operational and programmatic mental health system issues; (b) facilitates resolution of complex programmatic, management, administrative or regulatory issues affecting state mental health treatment facilities and districts; (c) develops/coordinates development of performance guidelines for state mental health treatment facilities; (d) reviews/analyzes data and develops written reports as needed; (e) coordinates or participates as a member of various workgroups and project teams to address issues affecting provision of mental health services within the state; (f) assists with negotiating or developing contracts with private providers as needed; (g) prepares various reports and correspondence; (h) assists with the development of budget and rate amendments for mental health entities; (i) develops and utilizes consultant expertise as need in various projects; (j) researches information regarding mental health programs/systems; and (k) provides on-site visits to districts and state facilities to provide technical assistance regarding administrative and/or programmatic issues.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent enter a final order finding that Petitioner's position of Senior Management Analyst Supervisor was that of a select exempt employee. DONE AND ENTERED this 3rd day of March, 2008, in Tallahassee, Leon Country, Florida. S SUZANNE F. HOOD 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 3rd day of March, 2008. COPIES FURNISHED: Jerry F. Traynham, Esquire Patterson & Traynham 315 Beard Street Tallahassee, Florida 32315-4289 Juan Collins, Esquire Department of Children and Family Services Building 2, Room 204 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory Venz, Agency Clerk Department of Children and Family Services Building 2, Room 204B 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Robert A. Butterworth, Secretary Department of Children and Family Services Building 1, Room 202 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 John J. Copelan, General Counsel Department of Children and Family Services Building 2, Room 204 1317 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue This consolidated proceeding involves protests by Prison Health Services, Inc. (“PHS”), Physician Healthcare Plans, Inc. (“PHP”), and Wexford Health Sources, Inc. (“Wexford”), contesting notices of intended decisions to award contracts posted by the Florida Department of Corrections ("Department") following review and evaluation of proposals submitted pursuant to the Department's Request for Proposals No. 00-DC-7342, “Comprehensive Healthcare at Twelve Institutions in Region IV” (“RFP”). Pursuant to Section 120.57(3)(f), Florida Statutes (2000), the Administrative Law Judge is to conduct a de novo proceeding to determine whether the agency’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the proposal specifications.
Findings Of Fact Stipulated facts In their Prehearing Stipulation filed on March 13, 2001, the parties stipulated that the following facts were admitted to by all parties and were to be taken as true without the need for further proof: The Department issued request for proposals 00-DC-7342 for Comprehensive Healthcare Services at Twelve Correctional Institutions in Region IV (the “RFP”) on or about September 1, 2000. The RFP divided Region IV into an East Cluster and a West Cluster and permitted the Department to award separate contracts to separate vendors for each cluster or both clusters to a single vendor. CMS, PHP, PHS, and Wexford each submitted a timely proposal to the RFP. The proposals submitted by CMS, PHP, PHS, and Wexford are submitted as Joint Exhibits 5-12. The Department concluded that each proposal was responsive to the RFP. Each proposal was scored by the Department’s technical evaluation committee. The RFP specified separate price and technical proposal scores. The technical evaluation scores were determined by an evaluation team and a certified public accountant retained by the Department to evaluate financial documentation submitted by the proposers (See Joint Exhibit 27 for identity of members of evaluation team). The Department’s evaluation team scored the proposals (except for financial components) and awarded points, for both East and West Clusters, in the areas of Corporate Qualifications, Project Staff, and Service Delivery Approach. A certified public accountant evaluated and scored the financial information submitted by each proposer. The price scores were awarded pursuant to a numerical formula. The RFP specified 1000 points as the highest possible score. The RFP specified 550 possible Cost Proposal Points and 450 possible Project Proposal Points. The Department evaluators used information set forth on the scoring sheets and the Proposal Evaluation Manual which are Joint Exhibits 4 and 13-19 during their evaluation of the proposals. The Department evaluators assigned scores to each of the questions found on the scoring sheets. The Department then determined the numeric average of the scores assigned by the evaluators. Those average scores for each question were multiplied by weights assigned to each question by the Department to derive a final score for each question. Those scores were summed and then added to scores assigned by Mr. Law [the CPA retained by the Department] based upon his review of Financial Documentation required by Section 5.3.1 of the RFP. The RFP required the vendors to specify a per inmate per diem cost price. For the West Cluster, the Final Project Scores are as follows: Cost Proposal Points Wexford: 550.00 PHP: 539.65 PHS: 463.09 CMS: 457.29 Project Proposal Points Wexford: 407.97 CMS: 405.29 PHS: 445.1 PHP: 360.84 Vendor Total Calculations Wexford: 957.97 PHS: 908.19 PHP: 900.50 CMS: 862.58 For the East Cluster, the Final Project Scores are as follows: Cost Proposal Points Wexford: 529.57 PHP: 550.00 CMS: 521.89 PHS: 483.19 Project Proposal Points Wexford: 407.97 CMS: 405.29 PHS: 445.1 PHP: 360.84 Vendor Total Calculations Wexford: 937.54 PHS: 928.29 CMS: 927.18 PHP: 910.85 On or about December 11, 2000, the Department posted a notice of intent to award the West Cluster to Wexford. On the same day, with regard to the East Cluster, the Department posted a notice of intended decision to negotiate with each proposer, in descending rank order, based on each vendor's combined price and technical evaluation scores. The descending order for the East Cluster vendor negotiations was Wexford, PHS, CMS, and PHP. On January 2, 2001, at 3:15 p.m., the Department posted its notice of intended decision in the East Cluster; the notice provides that CMS is the intended recipient of the East Cluster. On or about January 23, 2001, the Secretary of the Department executed a document entitled “Agency Statement Supporting Continuation of Bid Solicitation Process or Contract Award Process” (“Agency Statement”). The geographic service area approved by the Agency for Health Care Administration for PHP does not include Desoto, Hardee, Hendry, Indian River, Martin, or Okeechobee Counties. From the time PHP submitted its proposal to the present, Bruce L. Carpenter has never been licensed by the Florida Department of Insurance as a health insurance agent. PHP has not made any filings with the Florida Department of Insurance pursuant to Section 641.31, Florida Statutes, seeking approval of its rates or rating methodologies for the proposed contract with the Department of Corrections. PHP is the only proposer which holds a valid Certificate of Authority issued by the Florida Department of Insurance for the operation of an HMO. Facts proved at hearing The RFP was issued at the express direction of the Florida Legislature to privatize health care services in Region IV. (See Chapter 00-166, Laws of Fla. (2000), proviso language accompanying specific appropriations 737 through 750.) The Legislature required the Department to retain a contractor to provide such services at a cost savings when compared to the Department's fiscal year 1999-2000 expenditures for providing those services in-house. The RFP bears out this Legislative instruction in Section 2.2 of the RFP: Proposals are to be submitted by qualified vendors who will be required to provide services at a cost saving when compared to the Department’s actual FY 1999-2000 healthcare expenditures as shown in Composite Attachment 9. The referenced Composite Attachment 9 revealed that the Department’s cost of providing health care averaged $8.00 per inmate per day in the West Cluster, and $13.24 per inmate per day in the East Cluster. The RFP established the qualification of vendors to submit a response based on prior experience. That requirement was that the vendor must have provided comprehensive health services to at least 9500 “clients” for at least three of the last five years. The RFP did not require that any of such services had to have been performed in the State of Florida. The RFP does not contain any language that would reasonably put a vendor on notice that competition was limited to licensed HMOs. The RFP does not contain the phrase “Health Maintenance Organization” or the abbreviation “HMO”. The RFP contains the following statement: Florida law mandates that all Medicaid recipients, with certain exceptions, be enrolled in a managed care plan. While it is recognized that inmates are not Medicaid recipients, the Department does expect the Contractor(s) to apply the principles of managed care in the treatment of inmates in Region IV. Currently, many aspects of managed care are being utilized in the correctional healthcare delivery system throughout the state including, but not limited to, pre-hospital admission certification, continued stay review, retrospective admissions review, ambulatory surgery and discount contracting for specialty medicine and diagnostic care. However, the Department is looking to the private sector with its flexibility, purchasing power, business acumen and innovation to apply these principles of managed care in Region IV at a cost saving to the State of Florida while maintaining a minimal constitutionally adequate level of care for the inmates. (Emphasis added.) No other provision of the RFP addresses managed care. The RFP also contains the following language: Applicable provisions of all Federal, State, county and local laws, and of all ordinances, rules, and regulations shall govern development, submittal and evaluation of all proposals received in response hereto and shall govern any and all claims and disputes which may arise between person(s) submitting a proposal response hereto and the State of Florida, by and through its officers, employees and authorized representatives, or any person, natural or otherwise; lack of knowledge by any proposer shall not constitute a cognizable defense against the legal effect thereof. * * * The Contractor and the Department shall work cooperatively to assure a high standard of service delivery and compliance with all Federal, State of Florida and Department laws, statutes, rules, policies and procedures. Each of the proposers was afforded the opportunity to submit questions to the Department concerning the RFP requirements prior to submitting a proposal. In that process, CMS posed the following question and received the following response from the Department: Question: Are there any licensures or certificates that will need to be secured or maintained in order for us to deliver the services during the contract? Answer: Whatever is required by the State of Florida for health care providers. If any others are required it is the vendor’s responsibility to meet all such requirements. Pursuant to the RFP, the contractor providing these comprehensive health care services will be paid a fixed monthly sum, and nothing more, regardless of the actual cost incurred by the contractor to render any necessary services for the applicable prison inmate population. In other words, the contractor will be “at risk” with regard to whether or not it achieves financial profits or losses under the contract. As stated in the RFP: The Contractor in each cluster will be completely and totally responsible for the cost of all healthcare delivered to inmates in their respective cluster institutions. There will be no stop/loss provision for hospitalization or any other care. The RFP at Section 7.4.2 provides: “[t]he contractor agrees to request compensation on a monthly basis through submission to the Department of a properly completed invoice within fifteen (15) days following the end of the month for which payment is being requested. . . .” Payment under the contracts contemplated by the RFP is based on the average daily population (“ADP”) of inmates at an institution for the preceding month times the per diem rate in the contract. In all instances the contractor will be paid for services provided during a specific month at some time after the services have been performed. Under the prison health services contracts that will result from the RFP, the contractor will not be “prepaid” for the services it performs for the Department. The Department knew that its current contractors for similar health care services were not licensed as HMOs. The Department has never previously contracted with an HMO for inmate health services. The Department had no intention to eliminate its current contractors from competition for the subject contracts. The services contemplated under the RFP, health care services for Department inmates, do not include certain benefits and protection afforded “enrollees” under the State’s Health Maintenance Organization laws. The "Comprehensive Health Care Services" sought by the instant RFP are described in the RFP as follows: “Provision of medically necessary and appropriate health care to meet the minimal adequate constitutional level established by federal law. This includes physical, dental and mental health care both on site and off site.” The scope and nature of the health care services described in the RFP is a lesser level of care than that mandated by the Florida HMO Act. As noted in the Department of Insurance Consumers Guide, HMOs must provide a broad range of coverages and HMO subscribers have numerous rights inconsistent with the rights of inmates to receive health care in a prison setting, such as: (1) the right to receive a contract, certificate or member handbook clearly stating services and limitation of membership; (2) the right to convert from a group to an individual contract if the group contract is canceled; (3) the right to fair rates—HMOs are prohibited from charging rates that DOI deems excessive, inadequate or discriminatory; (4) the right to receive a list of all hospitals and primary care physicians employed by or under contract with the HMO; (5) the right to a second medical opinion; (6) the right to a 45-day notification before a contract is canceled or non-renewed; the right to appeal to the Statewide Provider and Subscriber Assistance Program Panel; and (8) the right to receive a converted contract if coverage has been continuous for at least three months. These "rights" exceed the minimum constitutionally required standard of care to which prison inmates are entitled, and are not rights otherwise available to prison inmates. Section 6 of the RFP states, in part: “Selection of the successful proposer will be based on the proposal that is determined to be in the best interest of the Department, taking into consideration the criteria set forth in the RFP.” (Emphasis added.) Section 6 continues: “The Department reserves the right to make an award with or without further negotiations with the highest scoring proposer.” Section 4.3.11 of the RFP, as revised by Addendum 1, specifically prohibits proposers from communicating with the Department regarding cost at any time prior to the posting of a notice of intended award. “Any discussion by the proposer with any employee or authorized representative of the Department involving cost information, occurring prior to the posting of the recommended award will result in rejection of said proposer’s proposal.” And paragraphs 6.4, 6.5, and 6.6 of the RFP add the following provisions regarding the selection of the successful proposer: Final Proposal Scores/Total Points Scored The points awarded for the Business/Corporate Qualifications, Project Staff and Service Delivery Approach categories will be totaled and added to the points awarded for the Cost Proposal to determine the final scores of all proposals. Identical Tie Proposals In the event of an identical tie in the evaluation scores of proposals from this RFP, preference will be given to businesses with drug free workplace programs. Attachment 6 describes such programs and how proposers may obtain this advantage. Final Determination In the event that the Department receives identical evaluation scores from two or more responsive proposers with drug-free workplace programs, the final determination of the award shall be decided through the toss of a coin in a public meeting. The RFP described the evaluation process for the proposals. The evaluation criteria for the proposals included two categories for which no points would be awarded to proposers: Mandatory Responsiveness Requirements, and Transmittal Letter and Executive Summary. The other four review categories would be scored, resulting in scores being assigned up to a maximum possible score of 1,000 points, as follows: Category 1 Business/Corporate Qualification 100 points Category 2 Project Staff 100 points Category 3 Service Delivery Approach 250 points Category 4 Cost 550 points The RFP explained that an Evaluation Committee would be established to score the proposals on Categories 1, 2, and 3 above. The scoring system for these three categories was a curved system designed such that the vendor receiving the highest number of points in a given category would be awarded the maximum score (100 or 250) for that category, and the other, lower scoring vendors would receive proportionally fewer points. Section 5.11.1 of the RFP requires the submission of a sealed cost proposal. That section of the RFP goes on to provide that the cost proposals "should be submitted with the most favorable terms the proposer can offer." The cost proposals were to be separately scored by Department staff, separate and apart from the scoring of the project proposals. The lowest per diem rate offered by any vendor in each of the two clusters would be awarded 550 points, with the other vendors’ higher per diem rates assigned proportionally fewer points based on a formula contained in the RFP. Section 6 of the RFP further informs the proposers that the “factors to be considered” by the evaluators in scoring the “Business/Corporate Qualifications, Project Staff and Service Delivery Approach sections” of each proposal “are listed in Attachment 8” to the RFP. Attachment 8 to the RFP is titled: “Evaluation Criteria for Project Proposal.” When the RFP was initially issued on September 1, 2000, Attachment 8 listed evaluation criteria for each of the proposal areas (Corporate Qualifications, Project Staff, and Service Delivery Approach) to be evaluated. Section 4.3.8.2 of the RFP notified each proposer of its responsibility to assure that the RFP requirements were clearly stated and to request changes if they were not. RFP Section 4.3.8.2 (“The proposer shall examine this RFP to determine if the Department's requirements are clearly stated.”) Unless a proposer requested changes, it was deemed to have accepted the specifications. Submission and Evaluation of Proposals In response to the RFP, four vendors – Wexford, CMS, PHP, and PHS – submitted proposals. The Department assembled a team of seven Department employees to evaluate and score the project proposals in the areas of Business/Corporate Qualifications (except as to financial statements submitted by the vendors), Project Staff, and Service Delivery Approach. The evaluators received instructions from the Department’s Bureau of General Services staff on how to evaluate the proposals and assign scores. The evaluators were given a Proposal Evaluation Manual designed specifically for this solicitation. The Evaluation Manual identified six criteria for each evaluator to assign a score for each vendor’s Business/Corporation Qualifications; eighteen criteria for each evaluator to score for Project Staff; and thirty-four criteria for each evaluator to score for Service Delivery Approach. A portion of the scoring of the "Business/Corporate Qualifications" section of the proposals was performed by Richard Law, a certified public accountant in private practice retained by the Department to assist with several competitive solicitations that the Department was pursuing. Before the September issuance of the RFP, Mr. Law drafted what he considered fairly "generic" requirements for financial documents to be submitted by vendors with their proposals. The financial statement evaluation accounted for 40 of the 100 points available for Business/Corporate Qualifications. Mr. Law allocated the 40 points among six review criteria devised by him. A possible 28 of the 40 points were assigned to Mr. Law's review of the auditor’s report on financial statements for an opinion without qualification or adverse comment (8 points); review of the auditor’s letter to management for no material weaknesses in internal controls (10 points); and review of the audited financial statements for no indication of a "going concern" problem (10 points). Mr. Law also allocated up to four points each to three "ratios" calculated from information in the vendor’s balance sheet; a current ratio, an acid-test ratio, and a debt-to-equity ratio. Mr. Law was provided with a copy of each vendor’s entire proposal for scoring. Employing the six criteria devised by Mr. Law, an accountant in Mr. Law’s firm calculated scores for those criteria for the four vendors, which Mr. Law reviewed and adjusted slightly to the following: PHP, 39; CMS, 38; PHS, 37; and Wexford, 32. Mr. Law filled out a single evaluation sheet for each vendor covering all six of his review criteria, and returned them to the Department. At that point, Mr. Law believed his involvement in this RFP was done. Scores Assigned Mr. Law’s scores were added to the criteria weighted scores assigned by the Department Evaluation Committee members in the area of Business/Corporate Qualifications. This resulted in a total weighted score for each of the vendors in the area of Business/Corporate Qualifications. Pursuant to Section 6.3.1 of the RFP, the vendor with the highest total weighted score in the Business/Corporate Qualifications received a score of 100, and the other vendors received a proportionally lower score, as follows: CMS, 100.00; PHS, 98.85; Wexford, 92.27; and PHP, 85.94. Scores were assigned to the vendors for the eighteen criteria for Project Staff in much the same way, except without scores from non-Department employees such as Mr. Law. After determining total weighted scores for each vendor in this area, and assigning 100 points to the highest scoring vendor, the final Project Staff scores were: PHP, 100.00; PHS, 96.25; Wexford, 88.75; and CMS, 85.95. Similarly, scores were assigned to vendors for the thirty-four criteria for Service Delivery Approach, again without scores from non-Department employees. The total weighted scores for the four vendors in this area were adjusted to give the highest scoring vendor 250 points, with the other vendors receiving proportionately fewer points, as follows: PHS, 250.00; Wexford, 226.95; CMS, 219.34; and PHP, 174.90. Adding the adjusted scores for each of these first three criteria together for each vendor produced a final "project proposal" score, out of a maximum possible 450 points, as follows: PHS, 445.1; Wexford, 407.97; CMS, 405.29; and PHP, 360.84. The scoring of the vendors’ cost proposals was accomplished as follows: Within each cluster, the vendor offering the lowest per diem rate received the full 550 points, and the vendors offering higher per diem rates received proportionally lower scores, as described in Section 6.3.4 of the RFP. In the West Cluster, Wexford offered $7.30; PHP, $7.44; PHS, $8.67; and CMS, $8.78. These rates translated into adjusted cost proposal scores for the West Cluster as follows: Wexford, 550.00; PHP, 539.65; PHS, 463.09; and CMS, 457.29. For the East Cluster, the per diem rates proposed were PHP, $12.44; Wexford, $12.92; CMS, $13.11; and PHS, $14.16. [Jt. Exhs. 6, 8, 10, 12] These rates translated into adjusted cost proposal scores for the East Cluster as: PHP, 550.00; Wexford, 529.57; CMS, 521.89; and PHS 483.19. A total score was arrived at for each vendor in each cluster by adding the vendor’s "project proposal" adjusted score to its "cost proposal" adjusted score for that cluster. The total scores for the West Cluster were: Wexford, 957.97; PHP, 900.50; PHS, 908.19, and CMS, 862.58. For the East Cluster, the final totals were: Wexford, 937.54; PHS, 928.29; CMS, 927.18; and PHP, 910.85. Notwithstanding the prohibition in Section 4.3.11 of the RFP, PHS faxed a three-page letter to the Secretary of the Department, Michael Moore, six days before the posting of the recommended awards for the East and West Clusters on December 11, 2000, but after the proposals had been opened. PHS did not give notice of this communication to any other proposer. The essence of the information in the PHS letter was that PHS had erred in calculating its cost proposal, that PHS had erred by including costs that the RFP did not require, and that PHS wanted an opportunity to lower its price. The obvious purpose of the letter was an effort to affect the Department's decision- making process and to give PHS an advantage not enjoyed by other bidders. Mr. Law’s Second Review According to the date Mr. Law signed his scoring sheets, his scoring of the financial statements from the proposals was completed November 22, 2000. The RFP, as revised by the Department’s addendum had established an anticipated date for the "Posting of Recommended Award/Notification to Proposers" of Monday, December 11, 2000. Shortly before the anticipated posting date, however, Richard Prudom, the Department’s Deputy Director of Administration, called Mr. Law and asked him to perform additional analysis regarding the financial capability of the vendors. This was reduced to writing in a letter faxed to Mr. Law on Wednesday, December 6, 2000. Omitting the formal parts, the letter read as follows: Thank you for your financial evaluation of the bids submitted in response to the Requests for Proposals for the delivery of comprehensive healthcare to inmates in Region IV. The evaluations were an integral part of the corporate qualifications section of the project proposal scoring process. With the evaluation process now complete the Department is ready to award contracts for the delivery of services of which the anticipated value is approximately $17 million for the West cluster of Region IV and $41 million for the East cluster. Since the Department has an obligation to award contracts that are in the best interests of the State of Florida, what further commentary/analysis could you provide regarding the ability of each proposer to fulfill the obligations of contracts at those anticipated values? Your assistance in this matter is appreciated. In response to the request for additional comments and analysis, Mr. Law reviewed the financial materials submitted by each of the proposers in light of the anticipated dollar values of the contracts for each cluster. He then made calculations comparing the 1999 health care revenue for each of the proposers to the anticipated dollar values of the contracts for each cluster. On December 8, 2000, Mr. Law sent a letter by fax to the Department containing a table demonstrating the comparisons he had calculated, as well as some additional comments. The additional comments in Mr. Law's letter of December 8, 2000, included the following: In my judgment, a proposer in the healthcare industry is more likely to fulfill all of the terms and conditions of the proposed contract if the dollar value of the contract is within a reasonable range of its existing level of operations. * * * The burden of fulfilling the terms and conditions of the contract will obviously be much greater for Wexford than the other three vendors because of the relative impact of adding 24.6% (for $17 million) or 59.4% (for $41 million) more in services than they provided in 1999. * * * Wexford does not currently perform any services in Florida, whereas the other three providers already provide a substantial amount of services in Florida. Since they have no management or staff in place in Florida, and considering the impact of fulfilling a $17 million or $41 million contract relative to their existing revenue base, the risk of failure is high. The comments and analysis set forth in Mr. Law's letter of December 8, 2000, do not address any of the criteria in the RFP on which Mr. Law relied when he performed his original scoring of the financial documents of each proposer. Rather, his comments and analysis in the December 8, 2000, letter are predicated on two criteria that do not appear in the RFP. In this regard, it it significant to note that in response to the Department's request for additional comments and analysis, Mr. Law did not suggest that any changes should be made to his earlier assignment of scores to each of the proposers. This is no doubt due to the fact that the criteria upon which Mr. Law based his December 8, 2000, comments are criteria that do not appear in the RFP, and the December 8 comments, even if correct, would have no bearing on the scores assigned to the proposers pursuant to the criteria that are included in the RFP. Based upon the letter written by Richard Law, the Department decided by December 11, 2000, that Wexford would not be awarded the East Cluster contract. Notably, December 11 was the day on which the Department posted its notice of intent to negotiate for the East Cluster contract, identifying Wexford as the first vendor with whom it would negotiate. In effect, based on Richard Law’s letter of December 8, 2000, Wexford was disqualified from being eligible to propose on the East Cluster. This occurred even though pursuant to the terms of the RFP Wexford was clearly a qualified and responsible bidder for that contract under the terms of the RFP. Mr. Law acknowledges that he has no understanding of the correctional health care industry, or of what it would take for a vendor to perform a contract for health services in a correctional setting. Rendering an opinion on the impact of a new contract on a company would require an understanding of how the business works, not just the amount of revenue the contract would generate. An analysis of a vendor’s ability to perform this contract which is based on existing and anticipated revenues is not a meaningful or relevant analysis. A more useful analysis would compare the number of inmates and number of institutions covered by the contract to the vendor’s existing level of service. Such a comparison in Wexford’s case shows that Wexford is already performing contracts in other states that cover a comparable or greater number of inmates and a comparable or greater number of prisons. Posting of Awards and Decisions On December 11, 2000, the Department posted a Notice of Intended Award for the West Cluster contract, indicating its intent to award that contract to Wexford. The Department also posted on that date a "Notice of Intended Decision" for the East Cluster, stating its intent to negotiate. The East Cluster Notice identified an order of negotiation that tracked the final scores in the East Cluster: Wexford, then PHS, then CMS, then PHP. The only written information the Department provided to the vendors concerning the negotiations was contained in its Notice of Intent to Negotiate. The East Cluster notice contained the following description of the negotiation process: Pursuant to the provisions of the State Purchasing Rule 60A-1.002, F.A.C., the Department of Corrections announces its intention to negotiate a contract for the East Cluster service area. The Department intends to negotiate with the highest- ranking proposer. If no contract is successfully negotiated with this proposer, the Department will proceed to the next highest-ranking proposer. If no contract is successfully negotiated with this proposer, negotiation will continue with the third- highest and then fourth-highest ranking proposer, as necessary. In other words, the negotiations were to be sequential rather than concurrent, and would be exclusively with the highest- ranked vendor until it was determined that a contractual agreement could not be reached. The Department issued no further written information concerning the negotiation until it issued its notice of intent to award the East Cluster contract to CMS on January 2, 2000. Prior to commencing the negotiations, the Department instructed one of its employees to contact each of the four proposers and tell them the following. That negotiations had to be concluded on December 15: That each vendor had not more than 2 hours to conclude negotiations; That if negotiations concluded with a vendor without an agreement, such vendor would not be given another chance to negotiate with the Department for the East Cluster. The greater weight of the evidence is to the effect that the Department's employees failed to advise any of the four proposers of the negotiation rules described immediately above at any time prior to the negotiations. During the negotiations none of the proposers were advised of the negotiation rules. The Department never provided written notice of the negotiation rules to any of the proposers. The "negotiations" referenced in the December 11 East Cluster notice were scheduled for Friday, December 15, by telephone. The Department scheduled conference calls with three of the four vendors for December 15, commencing with Wexford at 9:30 a.m. The Department apparently intended to conclude the negotiations in a single day, although this intent was not communicated to the proposers. Wexford attempted to obtain information from the Department in the days leading up to the December 15 conference call as to an agenda for the call or subjects to be discussed or negotiated, in order to be better situated to promptly respond. The Department provided no information other than the identity of its "negotiation team": Mr. Prudom, Ms. Bassett, and Deputy Secretary Michael Wolfe. Following introductory comments, the Department’s call to Wexford began with the Department's notifying Wexford that Wexford would not be awarded the East Cluster contract, despite the December 11 East Cluster notice that ranked Wexford first. When pressed for an explanation, the Department responded that a CPA retained by the Department to review the proposals had expressed concern over Wexford’s financial capabilities. This was apparently a reference to the December 8, 2000, letter from Mr. Law to Mr. Prudom. The Department refused Wexford’s request to submit documentation to respond to those concerns. At some point during the conference call with Wexford, Deputy Secretary Mike Wolfe requested that Wexford’s representative, Mr. Matonte, engage in a one-on-one telephone conversation with him. Mr. Matonte did so, at which time Mr. Wolfe made it clear that Wexford was not going to receive the East Cluster contract, and that Wexford needed to stop contesting the Department's position if it wanted to receive the West Cluster contract. This conversation took place at about 10:00 a.m. on Friday, December 15, and Mr. Wolfe gave Wexford until noon to give him a response. If Wexford did not respond, then Wolfe indicated Wexford would end up with nothing. Following the conference call with Wexford, the Department had conference call sessions with PHS and then with CMS. In both of those sessions, the Department invited those vendors to lower their per diem rates offered for the East Cluster. The negotiations effectively ended on the afternoon of December 15, when Mr. Wolfe, Ms. Bassett, and Mr. Prudom made the decision to award the East Cluster to CMS, but Mr. Wolfe continued to negotiate with PHS for most of the week following December 15, 2000. These negotiations culminated in PHS’s written “best and final offer” on December 21, 2000, at which time PHS offered a price of $13.17. By then, the Department had already decided to award the East Cluster contract to CMS. Most of the negotiations between PHS and Mr. Wolfe occurred after the Department commenced negotiations with the third-ranked vendor, CMS, and after the Department had already decided to award the East Cluster contract to CMS. This course of conduct by the Department was inconsistent with the negotiation rules the Department purports to have applied to the negotiation process. A notice of intent to protest had been filed by PHP, the fourth ranked bidder in the East Cluster, on December 12, 2000. The Department made the determination that the bid procurement should continue and ultimately set forth facts and circumstances in writing to support that determination in an Agency Statement signed by the Secretary. On January 2, 2001, the Department posted notice of its intent to award the contract for the East Cluster to CMS. On January 8, 2001, PHP amended its Initial Protest to contest the Department's continuation of the procurement process subsequent to PHP’s initial petition. Wexford History and Experience Wexford was founded in 1992 as a service company providing health care in correctional settings. Wexford is one of the three largest companies nationally performing correctional health care, along with CMS and PHS. Wexford’s officers and key employees have extensive experience in health care in Florida and in correctional health care in Florida and throughout the nation. Wexford’s CEO, Kevin Halloran, has been with Wexford since its inception, and prior to Wexford’s founding had health care experience in the U.S. Army Medical Corps and, beginning in 1971, the nursing home business in Florida and the hospital rehabilitation business in Florida and nationally, for a total of 36 years in health care. Wexford’s Vice President of Business Development, Bob Matonte, has over 25 years' experience in health care management and delivery, both clinically and administratively, including 3 years overseeing health care delivery in the Broward County jail immediately before joining Wexford in 1992. Wexford’s Regional Manager for this project, Kathy Harkis, has 30 years' experience in health care, including 19 years (since 1982) in correctional health care, the last 5 of which have been in Florida. Wexford’s Medical Director for this contract, Gary Schecodnic, M.D., served as medical director for state prisons and county jails in Florida for over 12 years, from 1987 to 1999. Wexford’s first contract for correctional health care was for prisons in the state of Illinois, with a population of about 7,500 inmates. Wexford grew rapidly after the Illinois contract, picking up contracts for 8 prisons and 13,000 inmates in Pennsylvania, and 17 prisons and 19,000 inmates in New York state. Wexford currently serves over 70,000 inmates in over 68 facilities in 11 different states; including a contract for about 500 inmates in the Martin County, Florida, jail since October 2000. Wexford’s current contract revenues projected forward for 12 months, are about $95 million, and Wexford expects to break the $100 million barrier soon. The "staffing up" process in the private correctional health care industry typically involves the vendor interviewing and often hiring the doctors, nurses, and other staff who are already in place at a particular prison providing the health care. This occurs regardless of whether the health care was being provided in-house by the prison system’s own employees, or under contract with a vendor. Wexford’s standard practice is to hire every single person already providing health care in a facility on a 90-day probationary period. Thus, the RFP’s requirement at Section 3.2.3.1, that the contractor interview the Department's existing employees, is consistent with Wexford’s standard practice. Wexford has not experienced problems in performing contracts where it had no presence prior to the contract award. The RFP requirement for interviewing current employees, as well as Wexford’s standard staffing practice and the staffing practice standard to the industry, demonstrate that Mr. Law’s statement concerning the "lack of presence in Florida" is not a significant basis for concern. Wexford anticipated "start-up costs" for the two clusters at between $3 million and $5 million. The single largest element of start-up costs is the employee salaries that Wexford will have to pay before it starts receiving payment from the Department. Wexford assumed 45 to 60 days of incurring salary costs before payments would be received from the Department. Under the terms of this RFP, vendors must submit an invoice for payment by no later than 15 days after the end of the month for which payment is sought. The invoice amount is calculated by multiplying the contract per diem rate by the ADP in the cluster prisons for that month. Obviously, it is in the contractor’s best interest to submit the invoice as soon after the end of a month as the ADP figure is available. It is the Department’s practice to pay invoices as quickly as it can. The other costs which a vendor will incur during both start-up and the entire period of the contract are primarily medical in nature. These include payment for inmate care at hospitals and doctor’s offices. Such services would not be paid for at the time of delivery, but would typically be paid 45 to 60 days after the contractor received an invoice. Thus, any such costs incurred by Wexford during the start-up period would not be paid by Wexford during the start-up period, but might be paid months later. As reflected in the notes to the audited financial statements contained in Wexford’s proposal, Wexford maintains a $10 million line of credit with a financial institution that it can expand if necessary. A line of credit is a borrowing line established with a financial institution on which a company can draw and repay as needed to finance its daily operations. As of the end of 1999, the amount drawn on this line of credit was $94,223, showing that it had been significantly paid down since the end of 1998. As noted by Wexford’s Chief Financial Officer at the time of final hearing, there were no funds drawn on the line of credit as of the week of final hearing. Wexford’s $10 million line of credit provides an ample resource for Wexford to financially perform this contract even during the start-up period before revenue begins to flow.
Recommendation On the basis of all of the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department issue a Final Order in this case awarding to Wexford contracts for both the West Cluster and the East Cluster, and denying all relief sought by all other proposers. DONE AND ENTERED this 4th day of May, 2001, in Tallahassee, Leon County, Florida. MICHAEL M. 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 4th day of May, 2001.
Findings Of Fact Edward Amsbury, Petitioner, is a Career Service employee with permanent status. The Petitioner timely filed an appeal of the Respondent's actions as set forth above. According to Petitioner, he applied for several jobs under the reorganization of the Department of Health and Rehabilitative Services (HRS) prior to July of 1976. At that time he was advised that inasmuch as he was not an adversely affected employee, he would only be considered after all adversely affected employees were placed in other positions. On July 9, 1976, a letter was sent by George Van Staden, ASO, by Larry Overton to the District Administrator advising that Petitioner was originally to have been adversely affected and he (Van Staden) asked for justification as to why Petitioner's position was continued in the District III personnel structure. Thereafter, on approximately July 22, 1976, according to Petitioner, Richard Dillard, Sub- district III-A Administrator, orally advised him that his position would be abolished prior to January 1, 1977, due to HRS' reorganization. A few days later, Petitioner was advised by Mr. Dillard that his position as Mental Health Representative was being reclassified to that of the Community Resources Development Unit Supervisor as of October 1, 1976, and that the pay grade would be 18 rather than his then existing pay grade, 19. Petitioner was asked to write a new job description for the Community Resources Development Supervisor, at which time he was offered that position. Petitioner was then at the top of Pay Grade 18; however, he was advised by Mr. Dillard that his salary would not be reduced since he, in effect, was adversely affected due to reorganization. In view of the lateness with which the Petitioner was advised that his position was adversely affected, there were then only two positions available within the district, i.e., Community Resources Development Unit Supervisor or Clinical Social Worker II at the North Florida Evaluation and Treatment Center. Petitioner chose the position more closely related to his field of Mental Health, i.e., the Community Resources Development Unit Supervisor, and was told by Mr. Dillard that he would retain his present salary regardless of which position he accepted. All the Petitioner's performance evaluations were satisfactory or above. Based on the record, it appears that the Petitioner was forced to accept a position with a lower pay grade due to HRS' reorganization. By letter dated July 1, 1977, the Petitioner was advised by William H. McClure, Jr., District Administrator, that the Department of Administration had disapproved the District Administrator's request that he (Petitioner) maintain his current salary above the maximum for the class of Clinical Social Worker II, to which he was demoted on September 17, 1976. Correspondence from Conley Kennison, State Personnel Director, reveals that determination was based on the following reasons: Petitioner's voluntary demotion was not directly attributable to reorganization since the position of Mental Health Representative continued in existence until July 1, 1977; He retained his bi-weekly salary of $584.76 upon demotion without approval of the State Personnel Director; and Petitioner was not informed in writing the Mental Health Representative position would be adversely affected, by reorganization. As a result thereof, the Department of Administration contended that it overpaid the Petitioner the amount of $11.16 per bi-weekly pay period and that in accordance with provisions of Chapter 22K-10.04(2) of the Personnel Rules and Regulations, such amount must be recovered and to effect such, said amount would be deducted from each salary warrant for a period of twenty-one pay periods to cover the overpayment from September 17, 1976, through July 7, 1977. Additionally, effective July 8, 1977, Petitioner's salary was reduced to the maximum for Pay Grade 18, i.e., $573.60 bi-weekly. The letter of July 1, 1977, further advised the Petitioner that although he was originally designated adversely affected along with all the other Mental Health Representative positions, positions which were to be abolished on July 1, 1976, the District Administrator was later told that Petitioner's position would not be abolished until January of 1977. Petitioner, as stated in said letter, took his demotion in good faith, feeling that his position of Mental Health Representative would be abolished. On November 17, 1976, the District Administrator forwarded a request to the Department of Administration requesting that Petitioner's salary be maintained; however, no action was taken because no administrative disposition bad been taken with respect to the abolishment of that position. A further request was sent to the Department of Administration in April, and during June of 1977 the request was denied and efforts to recover the overpayment were implemented. Evidence contained in the case files revealed that several employees who were voluntarily demoted pursuant to reorganization were granted permission to maintain their current salaries which amounted to payments above the maximum for the class to which they were demoted. The Respondent offered no evidence to refute or otherwise contradict the statements and contentions of the Petitioner that he was advised by district representatives and personnel that his salary would be maintained even though he was being demoted due to reorganization. It further appears that the Respondent, in relying on statements by the District Administrator (Dillard), was hampered in his efforts to obtain favorable consideration for other positions which were up for bid during the reorganization process. Noteworthy is the uncontradicted statement that the Petitioner was told that inasmuch as he would not be adversely affected by reorganization, he would not be considered for positions until all adversely affected employees had been placed in positions which were open for bid during reorganization. A memorandum from Art Adams of the HRS Personnel Office to John Campbell, Personnel Officer for District IV, dated August 9, 1976, advised that all employees who were asked to take a demotion due to reorganization would retain their salaries over the maximum. For all of the above reasons, including the indefensible position advanced by the Respondent, I shall recommend that the Respondent's action in reducing the Petitioner's pay and seeking to recover amounts allegedly overpaid be reversed.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED: The Petitioner's salary be reinstated to the level to which he was receiving as of the date of demotion on or about September 17, 1976. That the Respondent make whole any loss of pay the Petitioner suffered as a result of the reduction in his salary and the bi-weekly deductions of $11.16. That the Petitioner be paid interest at the rate of 6 percent per annum based on the amounts withdrawn from his salary warrants through the deductions and the recovery of amounts allegedly overpaid him when his salary was reduced. RECOMMENDED this 27th day of July, 1978, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 1978. COPIES FURNISHED: Mr. Edward Amsbury 5620 Northwest 25th Terrace Gainesville, Florida 32601 Mrs. Dorothy B. Roberts Career Service Commission 443 Carlton Building Tallahassee, Florida 32304 Joseph E. Hodges, Esquire 2002 Northwest 13th Street 3rd Floor, Oak Park Executive Square Gainesville, Florida 32601 Thomas K. McKee, Jr., Esquire Post Office Box NFETC Gainesville, Florida 32602 =================================================================
