The Issue The issue in this case is whether the Agency for Health Care Administration (AHCA) should recover from the Petitioner, Barbara Por Srur, M.D., alleged overpayment of Medicaid reimbursement for psychiatric services to Medicaid patients.
Findings Of Fact The Petitioner's Practice The Petitioner, Barbara Por Srur, M.D., provided psychiatric services to Medicaid patients during the time period from January 1, 1991, through December 31, 1993. Some of these patients were outpatients seen in the Petitioner's private office, but most were either inpatients at Manatee Memorial Hospital or participants in the hospital's Partial Hospitalization Program (PHP). Under the PHP, patients essentially used the hospital for outpatient services; they were required to report to the hospital periodically for evaluation and treatment as an alternative to inpatient services. From a combination of these patient sources, the Petitioner's caseload was heavy. Many of her patients were adolescents, and many were Medicaid patients. Both adolescent and Medicaid patients tend to make relatively heavy demands on the time of a psychiatrist. Both tend to be relatively complicated psychiatric cases. In addition, Medicaid patients are more likely to require medical interventions that have to be coordinated with the delivery of psychiatric care, and their cases are more likely to require the psychiatrist to deal with various social workers also providing services to the patient, in addition to dealing with family members. The Petitioner had an agreement with another psychiatrist, a Dr. Goldman, to cover for each other so that both could take days off. When Dr. Goldman saw the Petitioner's patients, he would sign his name in the patient charts. The Petitioner signed a Medicaid Provider Agreement on September 1, 1988. By doing so, she agreed "to keep for 5 years complete and accurate medical and fiscal records that fully justify and disclosed the extent of the services rendered and billings made under the Medicaid program" and agreed to furnish them to AHCA upon request. She also agreed to "abide by the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations." Manatee Memorial maintained the patient charts for inpatient and PHP psychiatric patients. Usually, the Petitioner would have Manatee Memorial furnish her office with copies of the admission and discharge summaries on her inpatients and PHP patients, but the Petitioner herself would not maintain any other medical records on those patients. Sometimes Manatee Memorial would neglect to send the Petitioner her copies of the admission and discharge summaries on her inpatients and PHP patients. The Petitioner stipulated that she never documented time intervals in the medical records she maintained on her patients. The Petitioner probably was not alone in this practice. However, the evidence was clear that some psychiatrists, including the Petitioner's own expert witness, document time spent in individual psychotherapy in order to ensure Medicaid reimbursement. When the large number and amount of Medicaid claims being submitted by the Petitioner for the period from January 1, 1991, through December 31, 1993, came to the attention of the AHCA's Medicaid Fraud Detection Section, the matter was referred to an auditor for investigation and possible audit. The auditor had AHCA's fiscal agent, Consultec, generate an FLQPLPSY report estimating the hours per day (Medicaid and non-Medicaid) billed by the Petitioner during this time period. Based on the FLQPLPSY report, AHCA decided to proceed with an audit of the Petitioner's Medicaid reimbursement claims for the period from January 1, 1991, through December 31, 1993. AHCA's Audit Strategy Rather than audit all paid claims submitted by the Petitioner during the audit period, AHCA chose to audit a sample of the total claims and use a statistical formula to extrapolate the results of the sample audit to the total number of claims. It clearly was acceptable and valid to proceed in this fashion. AHCA next decided to sample the Petitioner's claims using cluster sampling rather than random sampling or some other method. In cluster sampling, clusters are randomly sampled. In the context of the Petitioner's Medicaid reimbursement claims, the Petitioner's patients were treated as clusters of claims attributable to those patients. Cluster sampling was the most efficient sampling method for use in this context. Although the Petitioner's patients differed in several respects--including whether they were inpatients, outpatients, or PHP patients-- cluster sampling was acceptable and valid. To accomplish the cluster sample, AHCA asked its fiscal agent, Consultec, to generate an ad hoc report on the total number of Medicaid claims billed by the Petitioner (11,673), the total number of patients to whom the bills were attributed (524), and the total number of Medicaid patients dollars paid to the Petitioner ($383,486.50) on those claims during the audit period. Next, the auditor had an office automation specialist utilize a computer program formula developed by Robert Peirce, the Administrator of AHCA's Office of Medicaid Program Integrity and a qualified expert in statistics, to generate a choice of sample size alternatives as a function of error proportion and proportion of point estimate prospectively recovered. From the choices given, the auditor selected 34 clusters (i.e., patients) as the sample size. The evidence proved that the sample size chosen by the auditor was acceptable and valid. The auditor then asked Consultec to randomly select 34 of the 524 Medicaid patients to whom the Petitioner's paid Medicaid bills were attributable. Consultec used a sequential random sample method to select the 34 clusters (patients). It would appear from the evidence that Consultec essentially divided 524 by 34, got 22.28, and selected every 23rd patient. The resulting cluster sample yielded 741 claims to audit, approximately the same number of claims per patient as for the total number of claims and patients (524 and 11,673). This supports a finding that the sequential random sample method used was acceptable and valid. The statistical formula used by AHCA to extrapolate its audit findings from the 741 sample claims to the 11,673 total claims also was acceptable and valid. The formula used a "t" value from the Distribution of "t" Table of 1.6923602, which was appropriate for use when selecting 34 out of 524 clusters. The formula yielded not only a point estimate of total overpayment but also a lower total overpayment amount with a 95% confidence level. In using the formula, the AHCA seeks to recover only the lower total overpayment amount with a 95% confidence level. First KePro Consultant and the Final Audit Report AHCA's auditor next proceeded to audit the claims included in the sample. To do this, she obtained medical records from the Petitioner and from Manatee Memorial Hospital. The auditor then decided that she needed the assistance of a consulting psychiatrist to analyze the medical records to determine whether the Petitioner had billed for services using the most appropriate American Medical Association Physician's Current Procedural Terminology (CPT) codes. The billings and medical records were referred to an organization called KePro, which had a contract with the AHCA, for assignment to one of its consulting psychiatrists. After comparing the billings with the medical records, the KePro consultant reported to the AHCA auditor that many services were billed incorrectly. As will be seen, the report of this KePro consultant was not put in evidence, and the record is not clear as to all of the procedure code changes recommended by this consultant. However, the KePro consultant often reported to the AHCA auditor that the correct CPT codes provided for less reimbursement to the Petitioner. The AHCA auditor used the consultant's report to determine the overpayments associated with the 741 audited claims. She also rejected claims not supported by any medical records and claims for services rendered by a health care professional other than the Petitioner. The AHCA auditor then used the statistical formula to determine the point estimate of total overpayment and the total overpayment with a 95% confidence level. The AHCA auditor then prepared a Provisional Agency Audit Report, dated January 31, 1996, which provisionally determined that the point estimate total overpayment was $162,374.42 and that the total overpayment, with a 95% confidence level, was $142,680.44. In addition, AHCA assessed a $2,000 fine. Upon review of the Provisional Agency Audit Report, the Petitioner and her current billing clerk discovered that the AHCA had rejected many of the Petitioner's audited claims as not having the necessary supporting documentation because the AHCA had not obtained all of the medical records from Manatee Memorial. The Petitioner had her billing clerk go to Manatee Memorial to obtain the medical records for her inpatients and PHP patients and send them to the AHCA auditor. The Petitioner was able to supply the auditor with many of the missing records. But to the dismay of the Petitioner and her billing clerk, some records could not be found. Based on the receipt of the additional documentation from the Petitioner, AHCA issued a Final Agency Audit Report on September 4, 1996, which reduced the point estimate total overpayment to $125,669.85 and reduced the total overpayment with a 95% confidence level to $113,756.93. The fine remained the same. Second KePro Consultant When the Petitioner attempted to depose the KePro consultant during discovery in this proceeding, AHCA refused to identify the consultant. The Petitioner eventually obtained an Order Compelling Discovery, but instead of making the first KePro consultant available for deposition, AHCA chose to refer the case to a second KePro consultant. Subsequently, on April 30, 1997, AHCA filed Respondent's Motion to Amend Final Agency Audit Report. It requested leave to delete from the report claims for services rendered prior to September 4, 1991, which was five years prior to the Final Audit Report. This was done because the Petitioner was only required to keep supporting medical records for five years. In fact, rather than deleting claims, AHCA left the older claims in the sample claims being audited but did not look for overpayments among those claims. As a result, none of the claims of 7 of the 34 patients in the cluster sample were reviewed for overpayments; nor were some of the claims of the remaining 27 patients. The result was a finding of no overpayments among these older claims. Since the total number of clusters and claims audited were assumed to remain the same (34 and 741, respectively), AHCA used the same statistical formula to determine the point estimate of total overpayment and total overpayment with a 95% confidence level. As a result of the Respondent's Motion to Amend Final Agency Audit Report, the alleged point estimate of total overpayment was reduced to $85,160.91, and the total overpayment with a 95% confidence level was reduced to $59,859.72. The fine was reduced to $100. The Petitioner did not oppose AHCA's Motion to Amend Final Agency Audit Report, and it was granted. Nonetheless, AHCA proceeded with a second KePro review of the claims that for services rendered after September 4, 1991. The second KePro consultant disagreed with the first KePro consultant in several respects, and the review by the second KePro consultant would have resulted in an increase in the overpayment claim to $71,026.63. But the evidence was that, based on agency policy not to increase a claim for overpayment as a result of a second consultant review, AHCA continued to claim just $59,859.72, plus a fine of $100. Although AHCA never based a claim on the review by the second KePro consultant, the Petitioner deposed the second KePro consultant and retained her own consulting psychiatrist to review the work of the second KePro consultant. AHCA's deposition of the Petitioner's expert revealed his harsh criticism of the work of the second KePro reviewer for numerous alleged errors and inconsistencies. Careful comparison of the testimony of the Petitioner's expert to the other evidence in the case raises a question as to whom the Petitioner's expert was in fact criticizing. Pages 74 through 87 of Petitioner's Exhibit 5 (which is the testimony of the Petitioner's expert) reveal the difficulty in answering that question. As a specific example, lines 15-20 of page 76 assert that the second KePro consultant chose 99231 as the most appropriate CPT code for the services rendered to Patient 8 on May 14, 1993, whereas neither Respondent's Exhibits 13 nor 14 --both of which reflect the worksheet, or "tool," of the second KePro consultant--indicate that code 99231 was selected by the consultant. The Desk Audit After the depositions of both the second KePro reviewer and the Petitioner's expert, the AHCA auditor prepared a desk audit on the advice of AHCA's legal department. The desk audit did not take into account the independent review by either KePro consultant. Even so, AHCA assumed that the desk audit would be adequate, because the grounds for disallowance of charges were limited to one or more of the following three reasons: (1) no time interval was documented in the medical records; (2) no medical records were found; or (3) the Petitioner did not personally render the service. As will be explained, AHCA's assumption was only partially correct. When completed on July 21, 1997, AHCA called the desk audit an Adjustment to Amended Final Agency Audit Report. From among the claims for services rendered before September 4, 1991, a total of $5380 of claims was rejected. AHCA again used the same statistical formula to determine the point estimate of total overpayment and total overpayment with a 95% confidence level, since the total number of clusters and claims audited were assumed to remain the same (34 and 741, respectively). As a result of the Adjustment to Amended Final Agency Audit Report, AHCA reduced the alleged point estimate of total overpayment to $84,751.34 and reduced the alleged total overpayment with a 95% confidence level to $58,341.26. AHCA chose to proceed on the basis of the desk audit alone and, over objection, was permitted to do so. At final hearing, AHCA attempted to exclude from evidence any reference to either of the KePro reviews on the ground that they allegedly were irrelevant to the desk audit. But those objections were overruled; as will be seen, the first two audits were not irrelevant to the desk audit. But apparently because of the positions their legal strategies required them to take, the parties' evidentiary presentations and proposed recommended orders did not clearly and comprehensively address their positions as to each claim in the sample. As a result, a time- consuming and painstakingly careful review of all of the evidence was required in order to determine whether there were overpayments on the 741 individual claims included in the desk audit. No Records Found It was possible for the desk auditor to determine from her own review of the audited claims, without the assistance of a consultant, when there was a complete absence of medical records to support the Petitioner's billings. Claims for reimbursement could simply be disallowed in those instances. The desk audit rejected a total of $1,858.50 of claims due to missing records. Although the Petitioner's witnesses criticized the KePro reviewers for overlooking medical records, the Petitioner did not attack the desk audit on the same ground. Instead, the Petitioner's defense to this ground was that the missing records were inpatient and PHP patient records which she was relying on Manatee Memorial Hospital to maintain. The evidence suggested that the Petitioner is not alone in relying on hospitals to maintain medical charts for inpatients. However, the Petitioner did not prove that AHCA has a policy of excusing doctors from the requirement of documenting claims for Medicaid reimbursement when a hospital fails to maintain those records. In some cases, there were gaps of missing medical records on Manatee Memorial inpatient and PHP patients. The Petitioner's expert consultant opined that, in those cases, the Petitioner should be given "the benefit of the doubt" on the theory that the Petitioner must have seen her patients a minimum number of times during the time periods represented by the gaps in the records. Although the Petitioner's defense conceded the missing records alleged in the desk audit, careful review of the evidence revealed a few instances in which the desk auditor disallowed claims on the ground of missing records, when in fact records appeared to have been presented to AHCA for review. The desk auditor disallowed the following bills on this ground: Patient 5 (E.S.), 4/1/93, CPT Code 90853 for $28 Patient 6 (J.G.), 8/31/92, CPT Code 90843 for $35 Patient 10 (D.H.), 2/12/93, CPT Code 90853 for $28 Although not apparent from a review of the medical records included in Respondent's Exhibit 15, the second KePro consultant indicated that he reviewed medical records on all of those claims. As to the claim on Patient 6, the medical record for the 8/31/92 bill was dated 8/28/92. In many other instances, AHCA gave the Petitioner credit when there was such a minor discrepancy on the billing date, as the second KePro consultant proposed to do in this instance. The consultant stated that the record did not justify reimbursement under code 90843 but did justify $17.50 of reimbursement under code 90862. Deducting the $73.50 represented by the foregoing discrepancies from the total of $1,865.50 of claims rejected in the desk audit, the actual overpayment among the audited claims due to missing records was $1792. Services Not Rendered By Petitioner It also was possible for the desk auditor to determine from her own review, without the assistance of a consultant, when services were not performed by the Petitioner. In the desk audit, claims for reimbursement were disallowed when the medical chart was signed by Dr. Goldman, who was covering for the Petitioner. The desk audit rejected a total of $642 of claims for services not rendered by the Petitioner. The Medicaid Physician Provider Handbook consistently provided through the audit period that: "All aspects of [psychiatric] services must be rendered personally by the psychiatrist." (emphasis in bold in the original) The Petitioner's expert agreed that the Petitioner should not have been billing for services rendered by Dr. Goldman. The Petitioner's witnesses criticized the KePro reviewers for not giving the Petitioner credit when chart notations were in her handwriting, but she omitted to sign the chart. But it did not appear from a careful review of the evidence that the desk audit failed to give the Petitioner credit in any such case. On the other hand, careful review of the evidence did reveal two instances when claims disallowed by the desk auditor should have been allowed because service in fact was rendered by the Petitioner. The desk auditor rejected a claim for $32 for a code 90260 on Patient 30 (M.H.) on 12/14/91 because the service was rendered by Dr. Goldman. But the Petitioner's current billing clerk pointed out that, in rejecting the claim, the desk auditor overlooked a medical record signed by the Petitioner on 12/15/91 which supported the claim. The Petitioner did not bill separately for the service rendered on 12/15/91. As already indicated in Finding 36, in many other instances, AHCA gave the Petitioner credit when there was such a minor discrepancy on the billing date. It is found that this claim should not have been disallowed on this ground. The desk auditor also rejected a claim for $35 for a code 90843 on Patient 3 (J.J.) on 1/11/93 because it was not apparent from a review of the medical records included in Respondent's Exhibit 15 that any service was rendered by Dr. Goldman. However, the Petitioner's current billing clerk testified that there was a medications record omitted from Respondent's Exhibit 15 which supported a claim for $17.50 for a code 90862. It is found that AHCA did not prove that a claim for $17.50 for a code 90862 should not be allowed. Deducting the $49.50 represented by the foregoing discrepancies from the total of $642 of claims rejected in the desk audit, the actual overpayment among the audited claims due to billings for services not rendered by the Petitioner was $592.50. No Time Interval Documented Requirement to Document Time Section 10.9 of the June 1991 update to the Medicaid Physician Provider Handbook on record-keeping and medical records provided in pertinent part: "If time is a part of the procedure code description being billed, then duration of visit shown by begin and end time must be included in the record." Section 11.10 on Psychiatric Services also provided in pertinent part: "All procedures with time descriptions apply to the minimum time in rendering the service. Required documentation in the record to show time interval is necessary." According to the evidence, the August 1992 update to the Medicaid Physician Provider Handbook included an additional section entitled Time, which provided: The inclusion of time in the old visit codes has been implicit in prior editions of CPT. Beginning in 1992, the inclusion of time as an explicit factor is done to assist physicians in selecting the most appropriate codes to report their services. However, the times indicated in each specific E/M code are average amounts of time a physician may spend with a patient. Thus, the actual content of the service should be used in determining the most appropriate code except in cases where the counseling and/or coordination of care dominates the patient encounter (more than 50%). The extent of counseling and/or coordination of care should be documented in the patient's records. Similar to the 1991 Handbook, Section 11.10 of the 1992 version on Psychiatric Services provided in pertinent part: "All procedures with time descriptions apply to the minimum time in rendering the service and required documentation in the record to show time interval is necessary." But, according to the evidence, Section 10.9 from the 1991 Handbook was omitted from the 1992 version. According to the evidence, the section entitled Time from the 1992 Handbook was deleted from the 1993 version (updated in July, 1993), and Section 10.9 from the 1991 Handbook was added back. Section 11.10 from the 1992 Handbook was renumbered 11.12, but the language remained unchanged. Notwithstanding the unclear language in the 1992 version of the Handbook, it appears that the intent of the applicable Handbook during the entire audit period was to require documentation of the time interval to support a claim for reimbursement under CPT codes having time as part of the procedure's description. b. Codes 90844 and 90843. Under the applicable Medicaid fee schedules, code 90844 was reimbursed $35 from 1/1/91 to 9/30/91, $75 from 10/1/91 to 12/31/91, and $52.50 from 1/1/92 to 12/31/93; code 90843 was reimbursed $20 from 1/1/91 to 9/30/91, $50 from 10/1/91 to 12/31/91, and $35 from 1/1/92 to 12/31/93. According to the CPT, code 90843 specified approximately 20 to 30 minutes of individual psychotherapy, while code 90844 specified approximately 45 to 50 minutes of individual psychotherapy. The evidence proved that time was part of the description of the 90843 and 90844 procedures and that it was necessary to document a time interval in order to be reimbursed under those codes. There was no evidence that time was part of the description any other pertinent CPT code. As previously found, the Petitioner stipulated that none of her medical records documented a time interval. Notwithstanding this stipulation, it was noticed in careful review of the evidence that the Petitioner actually was given credit for having documented a code 90843 time interval on at least one occasion--Patient 6 (J.G.) on 2/12/92. The same careful review of the evidence confirmed that the Petitioner never documented time intervals on a claim for reimbursement under 90844 or 90843 which AHCA disallowed because no time interval was documented. The KePro Consultants Allowed Codes 90844 and 90843 As previously mentioned, AHCA did not disclose the identity of the first KePro consultant and opposed any evidence as to either KePro review on grounds of relevance. But the relevance objections were overruled, and the evidence was that both KePro consultants often allowed reimbursement under code 90843 notwithstanding the requirement that time intervals be documented. The evidence was clear that, despite the absence of documentation of time intervals, the second KePro consultant frequently approved 90843 codes billed by the Petitioner, sometimes downcoded from 90844 to 90843, and sometimes changed (usually lower-paying, but sometimes higher-paying) codes not requiring documentation of time intervals to 90843 codes. The Petitioner did not elicit testimony from the first KePro consultant and did not introduce the first KePro review into evidence, but the Petitioner's billing clerk testified on the results of the first KePro review. According to her testimony, the first KePro consultant sometimes upcoded from a lower-paying code 90260, which did not require documentation of a time interval, to a code 90843 notwithstanding the absence of the required documentation of time intervals. AHCA Audit Policies on Use of Consultants Prior to the desk audit, AHCA intended to defer to its consultants. The evidence was that it was AHCA's policy to defer to the judgments of consultants on whom it intended to rely in rejecting bills included in an audit. The evidence was that, in part, AHCA's deference to its consultants followed an unwritten AHCA policy of being lenient to providers by not further downcoding after a consultant already had downcoded once from a higher-paying code (usually code 90844) to a code 90843. There also was evidence that AHCA was adhering to a litigation strategy of supporting all of the judgments of consultants upon whom it intended to rely in rejecting bills, even if those judgments were not entirely correct. In this case, AHCA initially intended to rely on the first KePro consultant in rejecting bills included in an audit; AHCA did not initially plan on two KePro consultant reviews. When it initiated the second KePro review, AHCA intended to rely on it. But with the second KePro review came unanticipated problems. The first problem arose when the second KePro review resulted in a higher overpayment. Because of AHCA's decision not to increase the assessment as a result of the second review, it found itself in the position of trying to use the second KePro review to substantiate the results reached in the first review. The second problem arose when not only did both two consultants sometimes recommend payment of 90843 codes despite the absence of the required documentation of time intervals, the two KePro consultants did not always agree on the proper codes to use. Faced with these problems, AHCA decided not to rely on either KePro consultant in rejecting bills included in the audit. Instead, upon the advice of its legal department, AHCA chose to conduct a third audit--a limited desk audit that did not rely on any consultant. It is found that AHCA's normal policy of deferring to its consultants did not control the desk audit to the extent of requiring AHCA to continue to use impermissible 90844 and 90843 codes. In correcting those errors, AHCA was not changing its policies; rather, AHCA was adapting them to fit the peculiar position in which it found itself in this case. It is found that, under these circumstances, it was appropriate for AHCA to correct the erroneous use of the impermissible 90844 and 90843 codes by the KePro consultants. It also is found that AHCA still should have followed its policies of choosing the most appropriate CPT codes in downcoding from codes 90844 and 90843 and of utilizing consultants to determine the most appropriate codes. While the consultants had the expertise to make those determinations, the desk auditor admittedly did not. Desk Auditor's Inappropriate Downcoding In the desk audit, whenever the Petitioner billed a code 90843 or 90844, the desk auditor automatically changed the codes to either a code 90841 (if the service was rendered before December 1, 1991) or a code 90862 (if the service was rendered on or after December 1, 1991) and assessed the resulting overpayment. The desk auditor's use of code 90841 is not disputed. Code 90841 was another individual medical psychotherapy code, but it did not specify time. The desk auditor only used it in place of code 90843 during the short time code 90841 was in effect-- between October 1 and November 30, 1991. There was no evidence that code 90841 was inappropriate in of those instances. Besides, code 90841 was reimbursed $50 during the time it was in effect, the same reimbursement allowed for code 90843 during that time. To the contrary, the desk auditor's automatic use of code 90862 in all other cases was not appropriate because it ignored the judgments of the KePro consultants and was contrary to the evidence. Direct Evidence of Appropriate Downcoding It is found from the testimony of the Petitioner's current billing clerk that the first KePro consultant often chose code 99231 or code 99232 as the most appropriate alternative to a 90844 or 90843. Hospital code 99231 required two of the following three key components: a problem-focused interval history; a problem- focused examination; and a medical decision that was straightforward or of low complexity. According to the applicable CPT, code 99231 included counseling and/or coordination with other providers (such as nurses), usually where the patient was stable, recovering or improving. It paid $29 starting 10/1/91 through 12/31/93. Hospital code 99232 required two of the following three key components: an expanded problem-focused interval history; an expanded problem-focused examination; and a medical decision that was of moderate complexity. According to the applicable CPT, Code 99232 was reserved for cases where the patient was not responding to therapy adequately or had developed a minor complication. It paid $31 starting 10/1/91 through 12/31/93. The CPT advised that code 99231 typically required the psychiatrist to spend approximately 15 minutes on the floor and that code 99232 typically required the psychiatrist to spend approximately 25 minutes at bedside and on the floor. However, time is not considered to be part of the description of either code 99231 or 99232. According to the first KePro consultant, the following are the procedures that AHCA should have downcoded from 90844 to 99231 (instead of to 90862): Patient 33 (R.G.) 03/03/93 03/08/93 03/12/93 03/17/93 Each of those downcodes generate overpayment in the amount of $23.50 (the difference between the $52.50 claimed for code 90844 and the $29 allowed for code 99231), for a total of $94. According to the first KePro consultant, the following are the procedures that AHCA should have downcoded from 90843 to 99231 (instead of 90862): Patient 3 (J.J) 12/30/92 01/18/93 01/20/93 01/27/93 Patient 8 (E.B.) 05/17/93 05/19/93 05/31/93 06/02/93 06/04/93 07/05/93 08/13/93 08/20/93 Patient 15 (B.D.) 06/26/93 06/27/93 06/28/93 07/05/93 Patient 24 (J.D.) 03/10/92 Patient 28 (T.H.) 12/21/92 Patient 33 (R.G.) 03/23/93 03/25/93 03/27/93 Each of those downcodes generated overpayment in the amount of $6 (the difference between the $35 claimed for code 90843 and the $29 allowed for code 99231), for a total of $126. According to the first KePro consultant, the following are the procedures that AHCA should have downcoded from 90843 to 99232 (instead of to 90862): Patient 8 (E.B.) 08/09/93 06/16/93 06/23/93 06/30/93 12/20/93 Patient 13 (M.B.) 09/30/92 Patient 15 (B.D.) 06/29/93 07/06/93 Patient 29 (B.E.) 11/10/92 11/18/92 Patient 33 (R.G.) 03/11/93 03/18/93 Each of those downcodes generated overpayment in the amount of $4 (the difference between the $35 claimed for code 90843 and the $31 allowed for code 99232), for a total of $48. In most cases, it was impossible to tell from the testimony of the Petitioner's expert what code he would have assigned to particular services instead of 90844 or 90843. In most cases, he testified in terms of numbers of services for each code, not in terms of particular dates of service. For the same reasons, it cannot be found that he disagreed with the first KePro consultant as to the use of codes 99231 and 99232 instead of codes 90844 and 90843. The Petitioner's current billing clerk clearly agreed with the downcoding recommended by the first KePro consultant. As previously found, the second KePro consultant frequently approved 90843 codes and changed 90844 codes to 90843, and it cannot be ascertained from the evidence what alternative codes the second KePro consultant might have been inclined to choose. But in some cases, in particular in regard to Patient 3 (J.J.), the second KePro consultant agreed with 99231 codes assigned by the first KePro consultant. In addition, the second KePro consultant recommended downcoding from 90843 to 99231 (instead of 90862) on five occasions not mentioned in the testimony of the Petitioner's billing clerk on the recommendations of the first KePro consultant in regard to Patient 3--January 4, 13, 15, and 22 and February 1, 1993. Each of those downcodes would add another $6 of overpayment to the findings of the first KePro consultant, for a total of $30. It is noted that in Respondent's Exhibit 14, the second KePro consultant's report (or "tool"), conflicted with his deposition testimony in regard to Patient 3 (J.J.) on January 22, 1993. He testified that it should have been a code 90853, which is a group psychotherapy code that was reimbursed $28 in 1992 and 1993. But the deposition testimony, which would substantiate a $7 overpayment in that instance, is rejected in favor of $6 overpayment reflected in Respondent's Exhibit 14. In several cases, it appeared that the second KePro consultant disagreed with the first KePro consultant's recommendation to downcode from 90843 to 99232 (instead of to 90862). The second KePro consultant thought that no code was appropriate for the bills on the following patients because he did not see an indication of individual therapy with the patient in the medical records: Patient 8 (E.B.) on June 16, 23, and 30, 1993; Patient 15 (B.D.) on June 29, 1993; Patient 29 (B.E.) on November 10, 1992; and Patient 33 (R.G.) on March 11, 1993. In those cases, the coding suggested by the first KePro consultant is accepted as supported by the greater weight of the evidence. (It does not appear that absence of individual therapy precluded the use of code 99232). Indirect Evidence of Appropriate Downcoding Due to the manner in which this case was presented, the foregoing findings based on direct evidence do not account for many instances in which the AHCA desk auditor automatically downcoded from 90844 or 90843 to 90862. However, in many of those instances, the patient appears to have been hospitalized or in the PHP program, and it is possible that a higher-paying hospital code could have been proper. Without expert evidence to the contrary, AHCA did not prove that the Petitioner was not entitled to the highest-paying code available in those instances. In the following instances, $31 for a code 99232 was the most reimbursement to which the Petitioner could have been entitled instead of the $35 for the code 90843 she billed, for an overpayment of $4 each: Patient 3 (J.J.) -- 01/21/93 $4 Patient 8 (E.B.) -- 05/07/92 05/12/92 05/14/92 05/21/92 07/02/92 08/11/92 08/16/92 08/18/92 12/17/92 12/22/92 $40 Patient 13 (M.B.) -- 09/08/92 09/09/92 09/11/92 09/15/92 09/16/92 09/22/92 09/23/92 09/25/92 09/29/92 -$76 10/02/92 10/07/92 10/13/92 10/14/92 10/16/92 10/20/92 10/21/92 10/23/92 10/28/92 10/30/92 Patient 15 (B.D.) -- 06/30/93 07/01/93 07/02/93 07/03/93 07/04/93 -$20 Patient 28 (T.H.) -- 12/23/92 12/28/92 01/04/93 -$12 Patient 29 (B.E.) -- 11/06/92 11/11/92 11/25/92 12/09/92 12/16/92 -$20 Patient 31 (B.L.) -- 02/25/92 -$4 Patient 33 (R.G.) -- 03/01/93 03/02/93 03/04/93 03/05/93 03/07/93 03/09/93 03/13/93 -$28 The total of these overpayments is $204. It was noticed that the second KePro consultant did not think any code was appropriate for Patient 3 (J.J.) for January 21, 1993, because the medical records did not indicate individual therapy with the patient. But it did not appear from the evidence that the absence of individual therapy precluded the use of code 99232. In the following instances, $31 for a code 99232 was the most reimbursement to which the Petitioner could have been entitled instead of the $50 for the code 90844 she billed, for an overpayment of $21.50 each: Patient 33 (R.G.) -- 03/10/93 03/15/93 03/19/93 03/22/93 03/24/93 03/26/93 03/29/93 -$150.50 The total of these overpayments is $150.50. Based on the evidence, the highest-paying hospital code available to the Petitioner before hospital codes 99231 and 99232 went into effect was code 90260. Code 90260 was for intermediate hospital services. It was in effect through February 29, 1992. Until December 31, 1991, it was reimbursed $32; for the first two months of 1992, it was reimbursed $22. In the following instances, $32 for a code 90260 was the most reimbursement to which the Petitioner could have been entitled instead of the $50 for the code 90843 she billed, for an overpayment of $18 each: Patient 6 (J.G.) -- 12/02/91 12/04/91 12/06/91 12/09/91 12/11/91 12/13/91 12/16/91 12/18/91 12/20/91 12/23/91 12/27/91 12/30/91 -$216 Patient 30 (M.H.) -- 12/13/91 12/16/91 12/18/91 12/20/91 12/23/91 12/27/91 12/30/91 -$126 The total of these overpayments is $342. Patient 6 (J.G.) -- 01/03/92 01/06/92 01/08/92 01/10/92 01/13/92 01/15/92 01/17/92 Patient 30 (M.H.) -- 01/03/92 01/06/92 01/08/92 01/10/92 01/13/92 01/15/92 01/17/92 01/20/92 In the following instances, $22 for a code 90260 was the most reimbursement to which the Petitioner could have been entitled instead of the $35 for the code 90843 she billed, for an overpayment of $13 each: -$91 -$104 The total of these overpayments is $195. It can be inferred from the evidence that, except as set out above, the 90862 codes used by the AHCA auditor were proper. They occurred at times when the patient was not hospitalized and when, based on the evidence, none of the hospital codes were appropriate. The following overpayments result from downcoding from 90843 to 90862 (a difference in reimbursement of $17.50 each): Patient 3 (J.J.) -- 02/10/93 02/17/93 02/24/93 -$52.50 Patient 6 (J.G.) -- 05/21/92 07/30/92 09/17/92 10/22/92 10/30/92 -$87.50 Patient 13 (M.B.) -- 08/11/92 08/14/92 -$35.00 The total of these overpayments is $175. It was noticed that the second KePro consultant did not think any codes were appropriate for Patient 3 (J.J.) for February 10, 17, and 24, 1993, because the medical records did not indicate individual therapy with the patient. But it was clear from the evidence that the absence of individual therapy did not preclude the use of code 90862. Summary of Findings as to Audited Claims Altogether, there were $3749 in overpayments among the 741 claims in the sample, or $5.059379217274 per claim. See Findings 37, 44, 71-73, 76, 80, 82, and 84-86. These overpayments are distributed among the patients making up the sample as follows: Patient 1 $ 56.00 Patient 3 219.00 Patient 4 283.00 Patient 5 168.00 Patient 6 530.00 Patient 7 31.00 Patient 8 291.50 Patient 9 112.00 Patient 10 28.00 Patient 11 0 00 Patient 13 290.00 Patient 14 25.50 Patient 15 276.00 Patient 18 84.00 Patient 21 87.00 Patient 22 0.00 Patient 23 0 00 Patient 24 122.50 Patient 25 84.00 Patient 26 0.00 Patient 27 156.00 Patient 28 88.00 Patient 29 98.00 Patient 30 294.00 Patient 31 67.00 Patient 32 0.00 Patient 33 358.50 Multiplying the mean overpayments per claim by the 11,673 claims in the sample, the point estimate overpayment is $58,992.92 (as compared to the $84,751.34 reflected in the Adjustment to Amended Final Agency Audit Report that resulted from the desk audit.) Using the same statistical formula as before, and the list of overpayments per patient set out in Finding 88, AHCA can convert this lower point estimate overpayment to a lower total overpayment amount with a 95% confidence level. Continued Validity of Statistical Sample and Formula The Petitioner took the position that deletion of claims for services rendered from January 1 through September 4, 1991, invalidated the statistical sample and formula used by AHCA. As a result of the deletion of these claims, seven of the original 34 sample clusters were not examined; nor were some of the claims in the remaining 27 cluster samples. Notwithstanding the deletion of these claims, the number of clusters and claims remained the same for purposes of the statistical sample and formula used by AHCA. The actual effect of deleting these claims was to presume that they did not include any overpayments, a presumption to the benefit of the Petitioner. This did not invalidate the formula or the "t" value used in the formula. The decision not to examine claims for services rendered from January 1 through September 4, 1991, would only have invalidated the statistical sample and formula used by AHCA if examination of them would have resulted in underpayments, instead of "zero overpayment." Given the limited scope of the desk audit, examination of the deleted claims clearly would not have resulted in underpayments. Clearly, no underpayment could result from the disallowance of claims because no supporting documentation could be found or because Dr. Goldman, not the Petitioner, performed the service. Likewise, there was no evidence that there were appropriate alternatives to codes 90844 and 90843 that reimbursed more than those codes. The Petitioner also claimed that there were other bills, besides those for services rendered between January 1 and September 4, 1991, that were omitted from AHCA's audit. If so, the failure to examine those bills could call into question the validity of the statistical sample and formula used by AHCA in the audit. The Petitioner's current billing clerk testified, based on a review of the Petitioner's billing records, that some services that appeared from those records to have been billed were not included in the audit. Apparently, some of those bills were sent to AHCA's fiscal agent, but it was not proven that any of them were paid. (To the contrary, the Petitioner and her current billing clerk testified that the Petitioner was not paid for approximately $22,000 of bills that allegedly were sent to AHCA's fiscal agent during the audit period.) Apparently, other services were not billed at all. (The Petitioner's expert valued unbilled services at approximately $1633.) The Petitioner's evidence did not overcome AHCA's more convincing evidence that the 741 bills that made up the sample were all of the paid bills on all 34 patients in the cluster sample. AHCA only intended to audit paid bills; it never intended to audit unpaid bills, much less services never billed. Since the audit covered all paid bills on all 34 patients in the cluster sample, the statistical sample and formula used by AHCA in the audit was valid notwithstanding the existence of unpaid bills or services never billed that were not included in the audit. Petitioner's Claim of Offsets The Petitioner also took the position that, in conducting the audit and assessing overpayments, AHCA did not give her proper credit for offsets outside the scope of the desk audit itself. If true, failure to give her proper credit would invalidate the audit of the claims in the sample. In addition, examination of the deleted claims could have resulted in underpayments that could invalidate the statistical sample and formula used by AHCA in the audit. One offset claimed by the Petitioner was for the value of services she either never billed or billed but was never paid. See Finding 95. Another offset claimed by the Petitioner was for her use of codes (other than 90844 and 90843) when higher-paying codes allegedly were more appropriate. (The Petitioner also alleged that some codes she used should have been upcoded to 90843, as the two KePro consultants sometimes did; but as previously found, it was inappropriate to use either 90844 or 90843 since the Petitioner never documented any time intervals.) The evidence was clear that, until the final hearing in this case, the Petitioner never sought an adjustment from AHCA for these alleged offset claims. The 1991 Medicaid Physician Provider Handbook had a Policy for Adjustment Requests stating: "You must submit an adjustment request (when additional money is due to the provider due to provider filing error) within one year of the original claim's payment date." It is not clear from the evidence whether the 1992 and 1993 versions of the Handbook included this policy statement.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA use the same statistical formula to convert the reduced total point estimate overpayment of $58,992.92 to a total overpayment amount with a 95% confidence level and enter a final order requiring the Petitioner to repay the new reduced overpayment. RECOMMENDED this 9th day of December, 1997, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 9th day of December, 1997. COPIES FURNISHED: John D. Buchanan, Jr., Esquire Henry, Buchanan, Hudson, Suber & Williams, P.A. 117 South Gadsden Street Tallahassee, Florida 32302 Thomas Falkinburg, Esquire Moses E. Williams, Esquire Agency for Health Care Administration Fort Knox Executive Center No. 1 2727 Mahan Drive Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Douglas M. Cook, Director Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308
Findings Of Fact The findings below are based on the undisputed facts set forth in Petitioner's Protest and supplements thereto, Respondent's Motion to Dismiss, Petitioner's Response in Opposition to Motion to Dismiss, and representations by the parties during the motion hearing. On October 7, 2009, Respondent electronically posted its final ranking of firms which had submitted proposals to provide mechanical engineering services for six HVAC projects for Respondent in 2010. Respondent's electronic posting of the final ranking of firms included the following language: "Failure to file a protest within the time prescribed in Section 120.57(3), shall constitute a waiver of proceeding under Chapter 120, Florida Statutes." On October 12, 2009, Petitioner filed a Notice of Intent to Protest the final rankings. On October 22, 2009, Petitioner filed its Protest. Although Petitioner's Protest was timely filed, Petitioner initially did not file a bond or other security. The Protest alleges that Petitioner was not required to file a bond, because Respondent did not include in its final ranking notice that a failure to post a bond would constitute a waiver of proceedings under Subsection 120.57(3)(a), Florida Statutes. Additionally, the Protest alleges that Respondent: (1) failed to provide Petitioner with notice of the estimated contract amounts within 72 hours, exclusive of Saturdays and Sundays and state holidays, of the filing of a notice of protest as required by Subsection 287.042(2)(c), Florida Statutes; and (2) because Respondent had not provided that notice, Petitioner was unable to calculate the amount of the bond required and was, therefore, relieved of the obligation to file a bond. On October 30, 2009, Respondent, through counsel, wrote to Petitioner. In this correspondence, Respondent informed Petitioner that Section 287.042, Florida Statutes, did not apply to Respondent because it was not an "agency" for purposes of that law. Respondent further informed Petitioner that Section 255.0516, Florida Statutes, allowed Respondent to require a bond in the amount of two percent of the lowest accepted bid or $25,000. Respondent also notified Petitioner that because it was protesting all six project awards, all awards must be included in the calculation of the bond amount required. Finally, Petitioner was allowed ten days within which to post a bond. On November 3, 2009, Petitioner submitted to Respondent a cashier's check in the amount of $3,143.70 and noted that the check was intended to serve as security for the Protest "as required by F.S. 287.042(2)(c)." In the letter which accompanied the check, Petitioner also noted that: (1) the amount of the check was determined by calculating one percent of the largest proposed contract award amount of $314,370.00; and (2) Petitioner was providing that amount "under duress," because Respondent had "just published the contract award amounts." The relief requested by Petitioner in the Protest is that: (1) it be awarded one of the six HVAC projects comprising the final ranking; and/or (2) alternatively, all six awards be rescinded and "start the entire process over." The final ranking which Petitioner protests included six separate projects, each of which had a separate construction budget. Those projects and their respective construction budgets are as follows: Northwest--$1,144,000; Tampa Palms--$2,649,081; Yates--$2,770,828; Ferrell--$2,550,758; Stewart--$2,805,437; and Erwin--$4,191,603. The proposed fees for each project were as follows: $97,240 (Northwest); $211,926 (Tampa Palms); $221,666 (Yates); $204,061 (Ferrell); $224,435 (Stewart); and $314,370 (Erwin).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Hillsborough County School Board, issue a final order dismissing the Protest filed by Petitioner, RHC and Associates, Inc. DONE AND ENTERED this 20th day of January, 2010, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 20th day of January, 2010.
Findings Of Fact On February 7, 14 and 21, 1989, respondent, School Board of Pinellas County (Board), published a legal advertisement in an area newspaper inviting prospective bidders to submit proposals for certain construction work to be performed on two elementary schools, Walsingham and Cross Bayou, located in Largo and Pinellas Park, Florida, respectively. The bidders were advised that their bids must be "prepared and submitted in accordance with the drawings and specifications" and that such drawings and specifications could be obtained from the Board. Such bids were to be filed with the Board no later than 2:00 p.m. on March 6, 1989. The notice also provided that the bids would be opened the same day. Bids were timely filed by at least five contracting firms, including petitioner, Prelude Construction Company, Inc. (Prelude), and intervenors, Lincoln Construction Company (Lincoln) and Bandes Construction Company (Bandes). In filing these proposals, each bidder represented he had "thoroughly examined all of the contract documents." After the bids were opened and reviewed by Board personnel, Lincoln, Prelude and Bandes were ranked first, second and fourth, respectively, based upon the dollar amount of their proposals. 2/ Thereafter, the Board issued its notice of intended action on March 7, 1989, wherein it advised all parties of its intention to award the contract to Lincoln. In doing so, the Board concluded that, although a bid bond accompanying Lincoln's proposal was not dated March 5 or 6 as required by the specifications, the deviation was minor and could be waived. That action prompted Prelude to file its protest. Through testimony of Lincoln's vice-president, it was established that the Board staff intended to change its initial position and to recommend to the Board that Lincoln's bid proposal be rejected and the contract awarded to Bandes. This change was prompted by the Board staff's discovery on the day of hearing (April 3) that, with the exception of Bandes, all bidders had failed to list the, roofing subcontractor on their bid proposals. The Board staff accordingly concluded that all bidders except Bandes should be disqualified. The bid specification upon which the Board relies to award the contract to Bandes is found in Part One, paragraph 1.1 of section 07511 of the bid specifications. The requirement is a relatively new one and imposes the following requirement upon bidders: NOTE: The contractor is required to list the name of the roofing subcontractor on the form of proposal, Section 1C. Section 1C is entitled "Form of Proposal" and includes the following section on page 1C-3 to be filled in by the bidder: The following subcontractors will be contracted with on this project. Type of Subcontractor Name of Subcontractor (Trade Specialty) (Company/Firm) The column on the left side is intended to identify the subcontractor by specialty, such as plumbing or roofing, while the blank spaces in the right hand column are to be filled in by the bidders with the name of the subcontractor who will perform the specialty. The Board has not been consistent in requiring bidders to list the name of subcontractors on the bid documents. According to the uncontroverted testimony of Lincoln, the Board requires the listing of subcontractors on some projects but not on others. For example, on the specifications for the recently let contract for the prototype new media center at four elementary schools, the left hand column on the above form was filled in by the Board with five types of subcontractors who were required on the project, including roofing. This meant that the bidder was to fill in the blanks in the right hand column with the name of the subcontractor who he intended to use on each specialty. However, on other contracts, including the one under challenge, both columns in the Form for Proposal have been left blank, and Lincoln construed this to mean that the name of the subcontractor was not required. Indeed, Lincoln pointed out, without contradiction, that on a recent contract which left both columns blank, as was true in this case, it was awarded the contract even though it did not identify the roofing subcontractor on its proposal. Because of this prior agency practice, Lincoln assumed the same policy would be used again. However, Lincoln conceded it had failed to read the requirement in paragraph 1.1 of section 07511 before preparing its proposal. There was no evidence that Lincoln gained any substantial advantage over other bidders by this omission. Also relevant to this controversy is Paragraph 10A of the General Requirements. This item is found on page 1B-11 and reads as follows: Each bidder shall indicate the names of specific major Subcontractors if called for on the form of proposal. If listing of Subcontractors is required and the Bidder fails to list them, the bid may, at Owner's option, be disqualified. (Emphasis added) This authority to waive the requirement is reinforced by language in Paragraph 21 of the General Requirements which provides in part that "(t)he owner reserves the right to waive minor technicalities." According to the Board's outside architectural consultant, who was the author of a portion of the contract specifications including section 07511, the omission of the name of the roofing subcontractor is a "minor" technicality that can be waived. However, the consultant had no personal knowledge as to whether the provision had actually been waived by the Board on prior contracts.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered awarding the contract in question to Bandes Construction Company. DONE AND ORDERED this 20th day of April, 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of April, 1989.
Findings Of Fact As project architect under contract to HRS, Greenleaf/Telesca Planners, Engineers, Architects, Inc. (Greenleaf) prepared a project manual (manual). The manual invited contractors to bid on a contract for construction of the forensic services building at the South Florida State Hospital in Pembroke Pines, Florida, project No. HRS-0278. The manual contained specifications for a base contract covering construction of the building itself, and for four alternate additive bids, covering various equipment and furnishings. The first alternate called for installation of mess hall tables and seats. For the first alternate, the manual specified tables and seats manufactured by Folger Adam Company, their model number 522, or "upon prior approval" the equivalent. From the floor plan it is clear that 24 tables and corresponding seats would be required. The language of the manual describing alternate No. 1 presents no particular ambiguity or difficulty. The Folger Adam Company is well known in the construction business. Harold Wayne Blackwell, petitioner's president, used the manual in preparing Blackwell's bid for the contract. Blackwell bid on the base contract and on each of the four alternates. There are seven or eight contract hardware suppliers in Dade and Broward Counties, all of whom have access to Folger Adam Company products. Folger Adam Company does not have exclusive distributors. To determine the price of the tables, Mr. Blackwell telephoned several contract hardware suppliers, including Christensen Hardware Services, Inc. (Christensen). Christensen quoted Blackwell a price of ten thousand eight hundred dollars ($10,800.00) for twenty-four sets of Folger Adam model number 522 tables and seats. Blackwell submitted a bid of eleven thousand dollars ($11,000.00) on alternate No. 1. Forsythe bid on the base bid but did not bid on alternate No. 1, because Forsythe failed to obtain a quote on the tables and seats, before preparing its bid. Richard B. Solomon, Greenleaf's project manager for the forensic services building, opened the bids on March 20, 1979. As tabulated by Greenleaf, the bids were: Base Bid Alt. No. 1 Alt. No. 2 Alt. No. 3 Alt. No. 4 M.D. Forsythe Construction Co. $375,000 $ --- $50,842 $27,220 $33,020 Porfiri Construction Co. 406,200 7,000 45,534 25,315 44,130 Wayne Blackwell and Co., Inc. 397,735 11,000 47,000 25,000 35,000 Ed Ricke & Sons, Inc. 405,000 14,900 52,000 28,300 47,650 McKee Construction Co. 407,000 --- 45,000 28,000 --- L.G.H. Construction Corp. 524,176 18,014 43,464 24,712 35,048 Creswell Construction Co. 394,000 41,000 43,000 23,000 33,000 Petitioner's exhibit No. 2. On the base bid, Forsythe was lowest, Creswell Construction Company next lowest, and Blackwell third lowest. Among contractors who bid on the base bid and all alternates, Blackwell's combined bids were lowest for the base bid plus alternate No. 1, the base bid plus alternates Nos. 1 and 2, the base bid plus alternates Nos. 1, 2 and 3, and the base bid plus alternates Nos. 1, 2, 3 and 4. Mr. Solomon was aware of two telephone calls received by Greenleaf during the time for preparation of the bids, inquiring about the price of the tables and seats. In examining the bids, he noticed that two contractors had not bid on alternate No. 1, and that the base bids as well as the bids on alternates Nos. 2, 3 and 4 were "pretty tight" as compared to the range of bids on alternate No. 1. From looking at the bids on alternate No. 1, it was hard for Mr. Solomon to tell what a reasonable price for the tables and seats was. Mr. Solomon recommended to HRS that the bids on alternate No. 1 be thrown out. Charles Robert Yates, an architect employed by HRS, concurred in Mr. Solomon's recommendation. He was under the impression that funding for the project would not be available unless the contract was let before April 1, 1979. Mr. Yates could not recall such diversity among bids in his thirty-year career, yet he had no difficulty learning what the tables and chairs cost when he called architectural firms to find out. After the bids were opened, Blackwell promptly protested Forsythe's bid. Under the heading of alternates, the manual states: If the Base Bid is within the amount of funds available to finance the construction contract and the Owner wishes to accept alternate additive bids, then contract award will be made to that responsible Bidder submitting the low combined bid, consisting of the Base Bid plus alternate additive bids (applied in the numerical order in which they are listed in the Bid Form). Petitioner's exhibit No. 1, Paragraph B-9, Alternates. HRS wrote Blackwell on April 3, 1979, denying Blackwell's protest and stating, as reasons: M.D. Forsythe Construction Co., Inc. did not ignore Alternate No. 1, but completed that section of their bid by stating "No bids received on this item." Proposals for Alternate No. 1 ran the gamut for "No Bid" to prices extending from $7,000 to $41,000. The Department holds, as concurred in by the attached letter from our consultants, that there was confusion in the marketplace regarding the intent of Alternate No. 1, as attested to by the disparity among the proposals, and therefore we choose not to consider Alternate No. 1. Provisions for this deletion include Sections B-17, B-22 and B-24 of the Contract Documents. Petitioner's exhibit No. 3. HRS then awarded the base contract and additive alternates Nos. 2 and 3 to Forsythe, and gave orders to proceed with construction on May 7, 1979. After construction began, Mr. Solomon wrote Forsythe to inquire what Forsythe would charge to install the tables and seats called for by additive alternate No. 1. Forsythe eventually agreed to do it for eleven thousand dollars ($11,000.00), after first quoting a higher price. On August 1, 1979, Greenleaf prepared a change order at HRS' behest, directing Forsythe to install the tables and seats originally called for by additive alternate No. 1, at a price of eleven thousand dollars ($11,000.00). Other provisions of the manual relied on by the parties include the following: B-17 PREPARATION AND SUBMISSION OF BIDS Each Bidder shall copy the Proposal Form on his own letterhead, indicate his bid prices thereon in proper spaces, for the entire work and for alternates on which he bids. Any erasure or other correction in the proposal may be explained or noted over the signature of the Bidder. Proposals containing any conditions, omissions, unexplained erasures, alternations, items not called for or irregularities of any kind may be rejected by the Owner. . . DISQUALIFICATION OF BIDS Any or all proposals will be rejected if there is reason to believe that collusion exists among the Bidders and no participants in such collusion will be considered in future proposals for the same work. Proposals in which the prices obviously are unbalanced will be rejected. Falsification of any entry made on the Contractor's bid proposal will be deemed a material irregularity and will be grounds, at the Owner's option, for rejection. REJECTION OF BIDS The Owner reserves the right to reject any and all bids when such rejection is in the interest of the State of Florida, and to reject the proposal of a Bidder who is not in position to perform the contract. AWARD OF CONTRACT The contract will be awarded as soon as possible to the lowest qualified Bidder provided his bid is reasonable and it is in the best interest of the Owner to accept it. The Owner reserves the right to waive any informality in bids received when such waiver is in the interest of the Owner. The lowest bidder will be determined by adding to the Base Bid such alternates, in numerical order, as available capital funds will allow. The Agreement will only be entered into with responsible contractors, found to be satisfactory by the Owner, qualified by experience, and in a financial position to do the work specified. Each Bidder shall, if so requested by the Owner, present additional evidence of his experience, qualifications, and ability to carry out the terms of the contract, including a financial statement. Petitioner's exhibit No. 1. At no time did Forsythe attempt to influence the award of the contract improperly. At the time of the final hearing, the project was approximately 95 percent complete.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That, in the future, HRS adhere to the letter of language like that contained in paragraph B-9 of the manual whenever such language is used in an invitation for bids. DONE and ENTERED this 6th day of March, 1980, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Louis L. LaFontisee, Jr., Esquire 200 South East First Street, Suite 802 Miami, Florida 33131 Leonard Helfand, Esquire 401 North West 2nd Avenue Room 1040 Miami, Florida 33128 Richard Morgentaler, Esquire 1600 North East Miami Gardens Drive North Miami Beach, Florida 33179 =================================================================
Findings Of Fact On or about January 26, 1990, the Respondent sought competitive bids for Lease Number 590:2154 for the lease of certain office space in Brandon, Florida. The bid opening occurred on March 1, 1990, and Intervenor was determined to have submitted the lowest responsive bid. In addition to Intervenor's bid, the only other bid received in response to this invitation to bid was from Regina M. Hasey, for whom Petitioner purports to act as agent in this proceeding. A condition set forth in the invitation to bid was that bids would remain valid for a minimum of forty-five days following the bid opening. There is no dispute that Regina M. Hasey withdrew her bid and terminated her offer on April 18, 1990, after the expiration of this forty-five day period. Petitioner's representative admitted that he knew of Hasey's termination of her offer prior to the filing of this protest, and that he had been copied on the letter of April 18, 1990 withdrawing her bid. On or about May 8, 1990, the Department notified Hasey of its intent to award this lease to Intervenor, and on May 10, 1990, the Petitioner filed its notice of protest concerning this award claiming that Intervenor's bid was not responsive to the parking requirements in the invitation to bid. Petitioner is designated in the Hasey bid as agent for Hasey, and it is clear that Petitioner did not submit this bid in its own right, but rather solely as agent for Hasey. Petitioner's protest was filed without any reasonable inquiry by Petitioner into the facts surrounding the Respondent's invitation to bid, Intervenor's bid, and the legal consequences of the withdrawal of Hasey's bid. As a result of Petitioner's protest, the award of Lease Number 590:2154 to Intervenor has been delayed, at this stage of the proceeding, for almost three months, and the Respondent and Intervenor have had to incur legal expenses to oppose Petitioner's protest and proceed with this award. There is no evidence in this record to indicate that Petitioner filed this protest in an attempt to change the agency's mind regarding the award of this lease to Intervenor, and in fact there is no possible basis upon which this award could have been made to Petitioner after Hasey withdrew her bid. As such, Petitioner's protest was entirely frivolous. See Mercedes Lighting and Electrical Supply v. Department of General Services, et al., 12 F.A.L.R. 1912 (Fla. 1st DCA 1990).
Recommendation Based on the foregoing, it is recommended that the Respondent enter a Final Order dismissing Petitioner's protest for lack of standing, and awarding Lease Number 590:2154 to Intervenor. DONE AND ENTERED this 27th day of July, 1990, in Tallahassee, Leon County, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 1990. APPENDIX Rulings on Intervenor's Proposed Findings of Fact: Adopted in Findings 1 and 2. Adopted in Finding 3. 3-4. Adopted in Finding 4. Rejected as procedural matters and otherwise as unnecessary. Adopted in Finding 3. Rejected as unnecessary. Adopted in Findings 3 and 4. Adopted in Finding 6. 10-11. A ruling has been reserved on the issue of an award of attorney's fees and costs, and these proposed findings are solely related to that issue which has not been addressed in this Recommended Order. Copies furnished: Jack Farley, Esquire District 6 Legal Office 4000 West Dr. Martin Luther King, Jr., Blvd. 5th Floor, Room 520 Tampa, FL 33614-9990 Alan Taylor P. O. Box 7077 Winter Haven, FL 33883-7077 Mark A. Brown, Esquire Theo J. Karaphillis, Esquire P. O. Box 3239 Tampa, FL 33601 R. S. Power, Agency Clerk 1323 Winewood Blvd. Building One, Room 407 Tallahassee, FL 32399-0700 John Miller, General Counsel 1323 Winewood Blvd. Tallahassee, FL 32399-0700
