The Issue Whether the proposed agency action challenged by Petitioner improperly relies on a rule that is an invalid exercise of delegated legislative authority; and whether Petitioner has met its burden to prove that it properly adjusted a hospital’s bill for implants used in connection with an injured worker’s scheduled outpatient surgery when judged by a lawful standard.
Findings Of Fact The Department is the state agency responsible for administration of the Workers’ Compensation Law. Ch. 440, Fla. Stat. The Department has exclusive jurisdiction to decide any matters concerning reimbursement under the Workers’ Compensation Law. See § 440.13(11)(c), Fla. Stat. Petitioner is a carrier as defined by section 440.13(1)(c). Florida Hospital, a non-party, is a health care provider as defined by section 440.13(1)(f) and (g). Under Florida’s statutory workers’ compensation system, injured workers report their injury to their employer and/or workers’ compensation insurance carrier. See Ch. 440, Fla. Stat. As a condition of eligibility for payment, a health care provider who renders services to an injured worker must receive authorization from the carrier before providing treatment. The only noted exception is emergency care, in which case, if a hospital admission occurs after emergency treatment, the carrier must be notified by the hospital within 24 hours as a condition to eligibility for payment. § 440.13(3), Fla. Stat. A health care provider providing necessary remedial treatment, care, or attendance to any injured worker must submit treatment reports to the carrier in a format prescribed by the Department. § 440.13(4)(a), Fla. Stat. In addition, after providing treatment, health care providers must submit their bills to the carriers. These bills include line items for various 4 Petitioner seeks a final order declaring a Department rule invalid. However, that can only be the result of a rule challenge under section 120.56, Florida Statutes. Here, the petition raised the invalidity of a rule as a defense to the proposed agency action which is challenged in this substantial interests proceeding. See § 120.57(1)(e)2., Fla. Stat. Proceedings initiated pursuant to section 120.57(1), including those in which defenses are raised under section 120.57(1)(e), are resolved by recommended order. health-care-related services and supplies, such as implants, pharmacy, and X-rays. The carrier may pay, adjust,5 or dispute line items in a bill on certain conditions: if a carrier finds that overutilization of medical services or a billing error has occurred, or there is a violation of the practice parameters and protocols of treatment established in accordance with chapter 440, it must disallow or adjust payment for such services or error. The disallowance or adjustment may only occur if the carrier, in making its determination, has complied with section 440.13 and the rules adopted by the Department. § 440.13(6), Fla. Stat. To adjust or disallow line items in a bill, the carrier must submit an Explanation of Bill Review (EOBR) to the health care provider. An EOBR is the “document used to provide notice of payment or notice of adjustment, disallowance or denial by a claim administrator, or any entity acting on behalf of an insurer to a health care provider containing code(s) and code descriptor(s), in conformance with subsection 69L-7.740(13), F.A.C.” Fla. Admin. Code R. 69L-7.710(1)(y). If a health care provider wants to contest a carrier’s disallowance or adjustment of payment, it must file a Petition for Resolution of Reimbursement Dispute Form (Petition for Resolution) with the Department within 45 days after receipt of the EOBR from the carrier. § 440.13(7)(a), Fla. Stat.; Fla. Admin. Code R. 69L-31.003. Coventry Health Care (Coventry) is a third-party entity that maintains a network of contracts with health care providers. Essentially, Petitioner is a third-party beneficiary of the rates negotiated between Florida Hospital and Coventry. 5 “Adjust” means payment is made with modification to the information provided on the bill. Fla. Admin. Code R. 69L-7.710(1)(b). At all times relevant to the facts of this case, Florida Hospital and Petitioner had a Coventry-negotiated PPO contract in place. The contract permitted a five percent discount for hospital outpatient services. Florida Hospital filed a Petition for Resolution with attachments, dated May 29, 2019, with the Department. Through that Petition for Resolution, Florida Hospital requested resolution of disputed carrier adjustments to a bill tendered to Petitioner for payment for services rendered to a workers’ compensation patient on December 26, 2018. Florida Hospital’s Petition for Resolution included its entire bill of charges for payment by Petitioner; however, the only items at issue are adjustments to two charges for implants that are designated on Florida Hospital’s bill as C1778 and C1767. Florida Hospital’s bill included charges of $45,961.00 for C1778 and $161,564.60 for C1767.6 The implant charges at issue were for implants used in connection with scheduled outpatient surgery for the injured worker. Petitioner does not dispute the medical necessity of the implants, nor does Petitioner dispute that the charges on the bill were Florida Hospital’s actual charges for these implants pursuant to its chargemaster. Instead, Petitioner asserts that the undersigned and the Department cannot use the implant reimbursement standard that was used by the Department in its proposed agency action, because that standard, promulgated as a rule, is an invalid exercise of delegated legislative authority. 6 The parties stipulate that C1767 was divided into two line items. In this Recommended Order, the amounts billed and/or paid for C1767 are referred to as a total of the two line items. Applicable Reimbursement Standard The Department contends that the applicable implant reimbursement standard is contained in chapter 6 of the 2014 edition of the Florida Workers’ Compensation Reimbursement Manual for Hospitals (Hospital Manual), promulgated as a rule and incorporated by reference in Florida Administrative Code Rule 69L-7.501. Chapter 6 contains the outpatient reimbursement schedules. The introduction to this chapter provides, in pertinent part: Pursuant to section 440.13(12)(a), F.S., all compensable charges for hospital outpatient care shall be reimbursed at 75 percent of usual and customary charges for medically necessary services and supplies, except as otherwise specified in this Chapter. The exception is for scheduled outpatient surgery, which shall be reimbursed at 60 percent of usual and customary charges. Usual and customary charges are reimbursed based on average charges of outpatient hospital bills, by CPT® code and HCPCS® Level II code, in a specific geographic area. Please see Appendix A of this Manual for the adopted geographic modifiers by county and Appendices B and C for a listing of the Base Rates by CPT® code and HCPCS® Level II code for non-scheduled outpatient services and scheduled surgical services. In the absence of a CPT® or HCPCS® Level II procedure code in the applicable Appendix or a mutually agreed upon contract between the hospital and the insurer/employer, reimbursement shall be made at the applicable percentage of the hospital’s usual and customary charge. (emphasis added). Specific to surgical implant reimbursement, the Hospital Manual provides at page 23 as follows: Reimbursement for surgical implant(s), also referred to as “other implant” by the National Uniform Billing Manual, and associated disposable instrumentation required during outpatient surgery billed under Revenue Code 278 shall be determined by one of the following methods: For those utilized during unscheduled surgeries, surgical implants and associated disposable instrumentation shall be reimbursed seventy-five percent (75%) of the hospital’s usual and customary charge; or For those utilized during scheduled surgeries, surgical implants and associated disposable instrumentation shall be reimbursed sixty percent (60%) of the hospital’s usual and customary charge; or According to a mutually agreed upon contract between the hospital and the insurer/employer. Note: Since there are no CPT or HCPCS level II codes for implants and associated disposable instrumentation incorporated into Appendices B or C, pursuant to the description of usual and customary charges provided in the Introduction of this chapter, these items are reimbursed at the applicable percentage of the hospital’s usual and customary charge. The Introduction section of chapter 6 properly sets forth the statutory reimbursement standard for hospitals providing scheduled outpatient surgery, “which shall be reimbursed at 60 percent of usual and customary charges.” (Hospital Manual, Ch. 6 Introduction, p. 21). Although the Hospital Manual correctly describes the statutory reimbursement standard as generally applicable to hospital scheduled outpatient surgery bills, the Hospital Manual nonetheless creates an exception to that reimbursement standard for implants. The Hospital Manual states that in the absence of a CPT or HCPCS Level II procedure code—the tools the Department chose to measure usual and customary charges—or a mutually agreed upon contract between the hospital and the insurer/employer, reimbursement shall be made at 60 percent of the hospital’s usual and customary charge. Because CPT or HCPCS Level II procedure codes do not exist for implants and the Coventry-negotiated PPO contract does not specifically address reimbursement for surgical implants utilized during hospital outpatient scheduled surgeries, the Department rule provides the reimbursement standard of 60 percent of the hospital’s usual and customary charge. Since the statutory reimbursement standard for all compensable charges for scheduled outpatient surgeries is “60 percent of usual and customary charges” as recognized by the Hospital Manual, then that is the applicable reimbursement standard for implants used by hospitals in scheduled outpatient surgery for injured workers. The portion of the Department’s rule, creating an exception to the applicable reimbursement standard for implants, solely because there are no CPT or HCPCS level II codes for implants, is contrary to the statute it purports to implement. Further, the substituted reimbursement standard for implants, allowing a hospital to be reimbursed at the hospital’s usual and customary charges, rather than the usual and customary charges by all hospitals in the same geographical area, is contrary to the statute it purports to implement. Petitioner’s Evidence Offered to Prove “Usual and Customary Charges” Both in the carrier response submitted to the Department for its Reimbursement Dispute Resolution and at the hearing in this case, Petitioner correctly contended that the appropriate reimbursement standard is “usual and customary charges” by hospitals in Florida Hospital’s community/area. However, neither in the carrier response nor at the hearing in this case did Petitioner offer evidence of the usual and customary charges of hospitals in Florida Hospital’s community or area for implants used in scheduled outpatient surgeries. Petitioner presented the testimony of its expert in medical billing, who testified that in her experience the usual and customary hospital markup for implants in Florida is 3.5 times the invoice cost of the implants. She referred to this as the “standard industry markup.” Using this standard—invoice cost times 3.5—Petitioner contends that it properly adjusted Florida Hospital’s bill for implants. The invoice cost for C1778 was $5,000.00 and the invoice cost for C1767 was $18,500.00. Petitioner’s adjustments cannot be found to be proper as it is based on a reimbursement standard that is not set forth in either the statute or the Department rule. If, as the Department’s rule specifies is generally true for scheduled outpatient surgery, the proper reimbursement standard is usual and customary charges by hospitals in the provider’s geographic area, then it was incumbent on Petitioner to prove it properly adjusted the charges based on the proper measure: the usual and customary charges by hospitals in the provider’s geographic area for implants used in scheduled outpatient surgery. Usual and customary charges are calculated based on the average charges of outpatient hospital bills in a specific geographic area. (See Hospital Manual, Ch. 6 Introduction, p. 21). Invoice cost times 3.5 is a different standard—a different measure—than usual and customary charges. As the Department recognized, charges for implants can vary greatly.7 The 7 The Department’s witness, Ms. Metz, testified that the Department is unable to use usual and customary charges in Florida Hospital’s geographical area when determining the amount of reimbursement for implants because it cannot determine a fixed reimbursement rate for something that has such a widely variable charge. Surgical implants, she testified, can range in cost from $25 to thousands of dollars and, as such, the Department cannot justify using a fixed rate for one particular implant. The difficulty in determining what the usual and customary charges in the community are does not relieve the Department of its responsibility to use that standard in determining the reimbursement amount. average charge, considering all hospital charges for implants (or specific types of implants) used in scheduled outpatient surgeries in the specific geographic area, would be the usual and customary charge. The Department does use a reimbursement standard that starts with the invoice cost and adds a markup for implants, but not in the context of hospital scheduled outpatient surgeries. A cost-plus reimbursement standard applies to implants used in connection with hospital inpatient surgeries.8 That reimbursement standard, codified in chapter 5 of the Hospital Manual, does not apply here. The Hospital Manual adopts a rule standard for defining a hospital’s community, which is considered the county in which the hospital is located. Petitioner offered no evidence under any reimbursement standard that was limited to Florida Hospital’s community. Instead, Petitioner’s expert only offered testimony regarding the “industry standard markup” for implants statewide. For this reason, too, Petitioner’s evidence fails to address the reimbursement standard it says is applicable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order dismissing the Petition for Administrative Hearing. DONE AND ENTERED this 18th day of September, 2020, in Tallahassee, Leon County, Florida. S JODI-ANN V. LIVINGSTONE 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 18th day of September, 2020. COPIES FURNISHED: Robert B. Bennett, Esquire Bennett, Jacobs and Adams, P.A. Post Office Box 3300 Tampa, Florida 33601 (eServed) John R. Darin, Esquire Bennett, Jacobs and Adams, P.A. 1925 East Second Avenue Post Office Box 3300 Tampa, Florida 33601 (eServed) Thomas Nemecek, Esquire Department of Financial Services Division of Workers’ Compensation 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Keith C. Humphrey, Esquire Department of Financial Services Division of Workers’ Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
Findings Of Fact Based on the stipulations 3/ and admissions of the parties, the exhibits received in evidence, and the testimony of the witnesses at hearing, I make the following findings of fact: FIRST HOSPITAL's address is the World Trade Center, Suite 870, Norfolk, Virginia 23510. CHARTER GLADE HOSPITAL is a freestanding psychiatric hospital located in Fort Myers, Lee County, Florida. CHARTER GLADE has (80) licensed psychiatric beds, and twenty-four (24) licensed substance-abuse beds. The service area served by CHARTER GLADE includes Collier, Lee, and Charlotte Counties. The address of HRS is 1317 Winewood Boulevard, Tallahassee, Florida 32301. HRS is responsible for the administration of the "Health Facilities and Health Services Planning Act," Section 381.493, et seq., Florida Statutes (the Act), and has implemented its provisions through the adoption of rules set forth in Chapter 10, Florida Administrative Code. FIRST HOSPITAL applied to HRS for a certificate of need (CON) for the establishment of a freestanding specialty hospital in Naples, Florida. Pursuant to the Act, a CON is required before FIRST HOSPITAL can establish its specialty hospital. FIRST HOSPITAL's application was denied by HRS. FIRST HOSPITAL appealed the denial of its application to the Division of Administrative Hearings, DOAH Case No. 84-1835. CHARTER GLADE has intervened in DOAH Case No. 84-1835. In this proceeding, Petitioner has challenged the validity of Rule 10- 5.11(25) and (26), Florida Administrative Code, asserting that the rule is arbitrary and capricious and, therefore, invalid. By virtue of the fact that CHARTER GLADE is an existing facility located in the same service area in which Petitioner proposes to construct and operate its facility, and further by virtue of its participation in DOAH Case No. 84-1835, at least in part, on the basis of the provisions of Rule 10 15.11(25) and (26), Florida Administrative Code, CHARTER GLADE is substantially affected by the issues presented for determination in this cause and should be allowed to participate as a party. The Act contemplates rule adoption by HRS of specialty bed-need methodologies for psychiatric services. See, e.g., Subsection 381.494(8)(g), Florida Statutes (1983). Toward this end, HRS has adopted Rules 10-5.11(25) and (26), Florida Administrative Code. Rule 10-5.11(25), cited as the basis for denying FIRST HOSPITAL's CON application, addresses need for short-term psychiatric beds; Rule 10-5.11(26) purports to address need for long-term psychiatric beds. FIRST HOSPITAL's substantial interest in establishing its proposed specialty hospital has been determined by both of these rules. In particular, Rule 10-5.11(25), Florida Administrative Code, was applied by HRS in the denial of FIRST HOSPITAL's CON application. In addition, FIRST HOSPITAL alleges that Rules 10-5.11(25) and (26) combined fail to assess the need for intermediate inpatient specialty psychiatric services, one of the types of psychiatric services proposed by FIRST HOSPITAL. FIRST HOSPITAL's CON application proposes intermediate inpatient specialty psychiatric services. Rules 10-5.11(25) and (26), Florida Administrative Code, were adopted in early 1983. The adoption process began in the summer of 1982 when HRS assigned to one of its employees, Elfie Stamm, the task of developing a bed-need rule for psychiatric services. Ms. Stamm, at that time, was a planner in the Office of Comprehensive Health Planning of HRS. Ms. Stamm has been a planner with HRS for several years and had been responsible for the development of the State Health Plan and for the development of various rules used in the CON process. She had also been employed in the Mental Health Program Office of HRS, where her responsibilities included the development of a state plan with regard to alcoholism and mental health. She was also responsible for monitoring statewide mental health programs. Upon being assigned the task of developing the subject rules, Ms. Stamm made a thorough review of all information available to HRS with regard to the number of existing psychiatric beds and programs throughout Florida. She also evaluated all available local health plans and spoke with various individuals who had been involved in health planning, particularly those with interest in mental health planning. Ms. Stamm surveyed the available literature on health planning emphasizing mental health planning and bed-need methodologies for psychiatric beds. Ms. Stamm wrote the initial draft of Rule 10-5.11(25) based upon her collection and evaluation of data regarding existing and approved psychiatric beds in Florida and her review of literature, both Florida specific and national. A primary feature of the drafts, as well as of the adopted version, of Rule 10-5.11(25) is a fixed bed-to-population ratio of .35/1000, meaning that normally there should be no more than .35 short-term psychiatric beds for each 1,000 persons. Ms. Stamm was instructed to develop rules to assess the need for inpatient psychiatric services. As finally adopted, short-term care is defined in Rule 10-5.11(25) as care not exceeding three months and averaging a length of stay of 30 days or less for adults and 60 days or less for children and adolescents, and long-term care is defined in Rule 10-5.11(26) as care averaging a length of stay of 90 days. Neither rule defines the term "intermediate care." The documents contained in HRS Composite Exhibit IX and reviewed by Ms. Stamm are a representative sample of the literature available in the field and the level of knowledge among health planners as of the date of the promulgation of the subject rules. The documents are a reasonable cross-section of the literature available in the area of psychiatric bed-need assessment. In terms of the literature that was available at the time of the rule adoption in the area of psychiatric bed-need assessment, there is nothing missing from these documents which would have been important to a health planner in developing a psychiatric bed-need methodology. There is discussion in those documents of all the basic methodologies for determining psychiatric bed need. After reviewing all of the available materials, the HRS established a range of from .35 to .37 beds per 1,000 population and from that point made a policy decision to establish a figure of .35 to use in the bed-need formula. In promulgating the subject rules HRS invited and received comment from a broad cross-section of the public, with particular emphasis on those persons and organizations with special knowledge and interest in the provision of mental health services and the determination of psychiatric bed need. HRS conducted a workshop to which it invited a broad cross-section of individuals and organizations with particular knowledge about psychiatric bed need, including representatives of the Florida Hospital Association, Florida Psychiatric Association, Florida Council for Community Mental Health, Florida State Association of District Mental Health Boards, Florida League of Hospitals, Florida Association of Voluntary Hospitals, and the Florida Alcohol and Drug Abuse Association. The comments and results of the workshop were considered by Ms. Stamm and HRS in the promulgation of the subject rules. In response to several requests, HRS conducted a public hearing in accordance with Section 120.54(3), Florida Statutes, to receive comments from interested persons on the subject rules. More than fifteen (15) people representing various hospitals and organizations concerned with psychiatric services entered appearances and made comments at the public hearing. In addition to the oral comment presented at the public hearing, various persons and organizations submitted numerous written comments expressing their opinion with regard to the proposed rules. The comments, both oral and written, were all considered by Ms. Stamm and HRS prior to the promulgation of the subject rules. The process engaged in by HRS, primarily through Ms. Stamm, in the development of the subject rules was extensive and reasonably calculated to invite substantive public comment and to procure the knowledge on the part of HRS necessary to write workable and rational rules concerning psychiatric bed need. The knowledge acquired by HRS through this process with regard to the assessment of psychiatric bed-need methodologies was reasonably sufficient to allow it to knowledgeably draft and promulgate the subject rules. Consideration of this substantive public comment led to several changes in the subject rules as originally drafted. As originally promulgated, Rules 10-5.11(25) and (26) were challenged pursuant to Section 120.54, Florida Statutes, in various petitions filed with the Division of Administrative Hearings. In settling these proposed rule challenges, HRS modified the rules to provide for even greater flexibility in their application. HRS Composite Exhibits I through XII constitute all written matters considered or produced by HRS in the rule adoption process with regard to the subject rules. All of those documents and papers have been maintained in the records of HRS since the promulgation of the subject rules. The statutory criteria for reviewing CON applications are set out in Sections 381.494(6)(c) and (d), Florida Statutes. Rule 10-5.11, Florida Administrative Code, sets forth the rule criteria against which CON applications are evaluated. Subsections (1) through (12) and (25) of Rule 10-5.11 are the rule criteria against which applications for CONs for short-term hospital inpatient psychiatric services are to be evaluated. Subsections (1) through and (26) of Rule 10-5.11 are rule criteria against which applications for CONs for long-term psychiatric services are to be evaluated. Rule 10-5.11(25) sets forth certain criteria specifically for the evaluation of CON applications for short term hospital inpatient psychiatric services. Short-term services are in part defined as services averaging a length of stay of thirty (30) days or less for adults and a stay of sixty (60) days or less for children and adolescents under eighteen (18) years. Rule 10- 5.11(25) in its adopted form provides in relevant part as follows: Short Term Hospital Inpatient Psychiatric Services. Short term hospital inpatient psychiatric services means a category of services which provides a 24-hour a day therapeutic milieu for persons suffering from mental health problems which are so severe and acute that they need intensive, full-time care. Acute psychiatric inpatient care is defined as a service not exceeding three months and averaging a length of stay of 30 days or less for adults and a stay of 60 days or less for children and adolescents under 18 years. Short term hospital inpatient psychiatric services may be provided in specifically designated beds in a hospital holding a general license, or in a facility holding a specialty hospital license. Applications for proposed short term hospital inpatient psychiatric services will be reviewed according to relevant statutory and rule criteria. A favorable need determination for proposed general acute care psychiatric inpatient services will not normally be given to an applicant unless a bed need exists according to paragraph (25)(d) of this rule. A favorable Certificate of Need determination may be made when the criteria, other than as specified in (25)(d), as provided for in Section 381.494(6)(c), Florida Statutes, and paragraph (25)(e) of this rule, demonstrate need. Bed allocations for acute care short term general psychiatric services shall be based on the following standards: A minimum of .15 beds per 1,000 population should be located in hospitals holding a general license to ensure access to needed services for persons with multiple health problems. These beds shall be designated as short term inpatient hospital psychiatric beds. .20 short term inpatient hospital beds per 1,000 population may be located in specialty hospitals, or hospitals holding a general license. The distribution of these beds shall be based on local need, cost effectiveness, and quality of care considerations. The short term inpatient psychiatric bed need for a Department service district five years into the future shall be calculated by subtracting the number of existing and approved beds from the number of beds calculated for year x based on a bed need ratio of .35 beds per 1,000 population projected for year and based on latest mid-range projections published by the Bureau of Economic and Business Research at the University of Florida. These beds are allocated in addition to the total number of general and acute care hospital beds allocated to each Department District established in Rule 10-5.11(23). Occupancy Standards. New facilities must be able to project an average 70 percent occupancy rate for adult psychiatric beds and 60 percent for children and adolescent beds in the second year of operation, and must be able to project an average 80 percent occupancy rate for adult beds and 70 percent for children and adolescent short term psychiatric inpatient hospital beds for the third year of operation. No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 2 month period. Hospitals seeking additional short term inpatient psychiatric beds must show evidence that the occupancy standard defined in paragraph six is met and that the number of designated short term psychiatric beds have had an occupancy rate of 75 percent or greater for the preceding year. Unit size. In order to assure specialized staff and services at a reasonable cost, short term inpatient psychiatric hospital based services should have at least 15 designated beds. Applicants proposing to build a new but separate psychiatric acute care facility and intending to apply for a specialty hospital license should have a minimum of 50 beds. Other standards and criteria to be considered in determining approval of a Certificate of Need application for short term hospital inpatient psychiatric beds are as follows: . . . . 7. Access standard. Short term inpatient hospital psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of the service area's population. There are three basic types of methodologies generally accepted in the field of health planning as valid for determining the need for psychiatric hospital beds. The first type is a need-based methodology which evaluates the need for services. The second is a demand or utilization-based method, which utilizes current or projected utilization statistics for a particular service. The third is a fixed-ratio method which involves the use of a ratio, or rate, of service to population to determine projected need for that service in the future. All three of these methodologies are generally accepted and utilized by health planners throughout the United States. Each has its advantages and disadvantages, but all are valid. The fixed ratio methodology is that which HRS has employed in Rule 10 5.11(25). The ratio of .35 beds per thousand population is a reasonable ratio with a rational basis in fact. It is not arbitrary and capricious as a measure of short-term psychiatric bed need. The National Institute of Mental Health developed draft guidelines in the late 197Os suggesting a range of .15 beds to .40 beds per thousand population as an appropriate fixed-bed ratio program for psychiatric short-term acute-care programs. At least four other states presently or in the past have utilized a fixed bed-need ratio in planning for health care needs. They are Massachusetts, Indiana, Michigan and Georgia. Some of those states used fixed-bed ratios less than .35 per thousand. Ms. Stamm, in developing this rule methodology for HRS, considered and balanced the different approaches relating to the establishment of need. One of her concerns on behalf of HRS, in developing the methodology was to strike a proper balance between need and demand since not everyone who needs psychiatric care will choose to seek that care or can afford to seek that care. In 1982, during the time of the rule adoption process, the ratio of existing short-term psychiatric beds per thousand population in Florida was .29 per thousand. Ms. Stamm selected .35 per thousand, in part, to allow for growth in the number of psychiatric beds for reasons other than just population growth. The current rate of existing licensed short-term psychiatric beds in Florida in 1985 is .28 beds per thousand. However, the ratio for currently existing short-term psychiatric beds, plus CON approved beds not yet licensed in 1985, is .39 beds per thousand. The fact that the existing and approved inventory of psychiatric beds is greater than the .35 ratio specified in the rule demonstrates that HRS has applied Rule 10-5.11(25) in a flexible manner as envisioned by the "not normally" language in the rule. A theoretically ideal way to determine psychiatric bed need would be for HRS to go into each community and conduct epidemiological surveys to identify the people who actually need mental health care. While such a survey, properly conducted, might produce momentarily reliable date, it is not a realistic method for statewide planning purposes because of several problems attendant to such a methodology. Such a survey would be very expensive and very time-consuming and is not practical for use on a statewide basis in a state the size of Florida. Because of the time-consuming nature of such a methodology, if applied on a statewide basis, some of the data would be stale before all of the data was gathered. Further, the rapidly changing population in Florida would require that such a survey be continually updated. The allocation of short-term beds between general and specialty hospitals set forth in subsections (d)1 and 2 of Rule 10-5.11(25) has a rational basis in fact and is not arbitrary. There are many patients who simultaneously need medical as well as psychiatric care. To have those patients located in a specialty hospital, away from a general hospital, would be inappropriate. There are also patients who have acute episodes of psychiatric illness and who need to be treated very rapidly. Because there are many more general hospitals than there are freestanding psychiatric specialty hospitals, it is appropriate to ensure that psychiatric beds are available to general hospitals to fill the particular episodic acute needs. Further, there are many patients in Florida who can afford health care only through Medicaid. Because Medicaid does not provide funding of mental health inpatient services in psychiatric specialty hospitals, it is appropriate to include in the methodology an incentive for the location of some psychiatric beds in general hospitals where psychiatric services can be funded by Medicaid. The specific allocation of the .35 per thousand bed need ratio set forth in Rule 10-5.11(25)(d)(1) and (2) is that .15 beds per thousand "should" be associated with general hospitals and .20 beds per thousand "may" be associated with specialty hospitals. This allocation was designed to be flexible so that, in any given circumstance, an allocation other than the .15 and .20 guideline could be applied. The occupancy rate standards set forth in Rule 10 5.11(25) specify that normally, additional beds should not be approved unless the average occupancy of all existing beds in a service district exceeds 75 percent for adults and 70 percent for children and adolescents. The occupancy rate standards set forth in Rule 10- 5.11(25) were not arrived at in an arbitrary fashion and are reasonable in themselves. The occupancy rates are designed to ensure that a reasonable number of beds in each facility are filled. Hospitals with a substantial number of empty beds are not cost effective. Therefore, it is reasonable to project occupancy rates in the range of those projected in the subject rule. Indeed, the occupancy rates in the rule are liberal in terms of minimum occupancy levels, compared with those in the past and those recommended by others in the industry. With regard to the travel access standard in the rule, the Task Force for Institutional Care recommended a 60 minute travel standard for 90 percent of the population in the district. The 45 minute standard is reasonable. The rule does not exclude from within the travel standard area other facilities providing the same service. At the time of the final hearing, there were sixty five (65) existing hospital facilities in Florida which had psychiatric bed services. Of those sixty-five (65) facilities, sixty-one (61), or 93 percent, had more than fifteen (15) psychiatric beds, and fifty-five (55), or 84 percent, had more than twenty (20) psychiatric beds. In the exceptional event that the average occupancy rate for a particular district did not accurately reflect the availability of beds, the language of Rule 10-5.11(25)(d)5, which says that no additional beds shall "normally" be approved unless the occupancy rates are met is sufficiently flexible to account for the exceptionality. The methodology set forth in Rule 10-5.11(25) is designed to identify and express a need for short-term psychiatric inpatient beds for the overall population of Florida. The rule was intended to be sufficiently flexible that, when balanced with the other criteria set forth in Rule 10-5.11(1) through (12), it would allow substantive input from the district and community levels with regard to the need for beds by subpopulation groups such as child, adolescent, adult, and geriatric. The "national guidelines" referred to by Ms. Stamm were proposed hut never adopted. They recommended fixed bed ratios between .15/1000 and .40/1000. The guidelines were based on a 1978 survey by the National Institute of Mental Health (NIMH), which indicated that .15/1000 was the 25th percentile and .40/1000 was the 75th percentile of 1978 existing short-term psychiatric beds nationwide. The NIMH report stated that selection of an appropriate ratio for a particular state depended on the development of the state's mental health system and recognized that special consideration was necessary for traditionally underserved groups such as children, adolescents, and geriatrics. In the context of inpatient psychiatric care, there has been a trend over the last twenty years, and more particularly over the last five years, toward the development of specialty treatment programs, separately planned for children, adolescents, adults, and geriatrics. In recent years in Florida there has also been a trend toward the provision of alternatives to inpatient psychiatric services in facilities such as residential care. In 1982, Ms. Stamm considered evidence that children, adolescents, and geriatrics were not being adequately served by Florida's mental health facilities. Nevertheless, she did not plan for these subgroups in the rule because in her judgment decisions about allocation of services to subpopulation groups were best made at the district level by the local health councils.
The Issue The issues are whether proposed and existing Florida Administrative Code rules, both numbered 59G-6.030, are valid exercises of delegated legislative authority.
Findings Of Fact The Petitioners are 120 hospitals--some not-for-profit, some for-profit, and some governmental--that are licensed under chapter 395, Florida Statutes, provide both inpatient and outpatient services, and participate in the Medicaid program. AHCA is the state agency authorized to make payments for services rendered to Medicaid patients. Before 2013, all Medicaid outpatient services were provided and paid fee-for-service. Under the fee-for-service model, hospitals submit claims to AHCA, and AHCA reimburses the hospitals based on the established rate. For many years, AHCA has set prospective Medicaid fee- for-service reimbursement rates for outpatient hospital services, either semi-annually or annually, based on the most recent complete and accurate cost reports submitted by each hospital; has re-published the Florida Title XIX Hospital Outpatient Reimbursement Plan (Outpatient Plan) that explained how the rates were determined; and has adopted the current Outpatient Plan by reference in rule 59G-6.030. In 2005, the Florida Legislature’s General Appropriations Act (GAA) stated that the funds appropriated for Medicaid outpatient hospital services reflected a cost savings of $16,796,807 “as a result of modifying the reimbursement methodology for outpatient hospital rates.” It instructed AHCA to “implement a recurring methodology in the Title XIX Outpatient Hospital Reimbursement Plan that may include, but is not limited to, the inflation factor, variable cost target, county rate ceiling or county ceiling target rate to achieve the cost savings.” AHCA responded by amending the Outpatient Plan to provide: “Effective July 1, 2005, a recurring rate reduction shall be established until an aggregate total estimated savings of $16,796,807 is achieved each year. This reduction is the Medicaid Trend Adjustment.” The amended Outpatient Plan was then adopted by reference in rule 59G-6.030, effective July 1, 2005. AHCA collaborated with the hospitals to determine how to accomplish the legislatively mandated reduction in a manner that would be fair to all the hospitals. It was decided to take the hospitals’ unaudited cost reports from the most recent complete fiscal year and the number of Medicaid occasions of service from the monthly report of AHCA’s Medicaid fiscal agent that corresponded to the hospitals’ fiscal years, and use an Excel spreadsheet program with a function called Goal Seek to calculate proportionate rate adjustments for each hospital to achieve the legislatively mandated aggregate savings. The resulting rate adjustments were incorporated in the hospital reimbursement rates, effective July 1, 2005. In 2006, there was no further Medicaid Trend Adjustment (MTA) reduction. However, in accordance with the instructions in the 2005 GAA, the 2005 MTA reduction of $16,796,807 was treated as a recurring reduction and was applied again in the 2006 Outpatient Plan, which again stated: “Effective July 1, 2005, a recurring rate reduction shall be established until an aggregate total estimated savings of $16,796,807 is achieved each year. This reduction is the Medicaid Trend Adjustment.” The 2006 Outpatient Plan also stated: “This recurring reduction, called the Medicaid Trend Adjustment, shall be applied proportionally to all rates on an annual basis.” It also came to be known as the first cut or cut 1. It again was applied by taking the hospitals’ most current unaudited cost reports and the corresponding occasions of service from the appropriate monthly report of the fiscal agent, and using the Excel spreadsheets and the Goal Seek function to calculate rate adjustments for each hospital. The cut 1 rate adjustments were incorporated in the hospital reimbursement rates, effective July 1, 2006. In 2007, the GAA stated that the funds appropriated for Medicaid outpatient hospital services were reduced by $17,211,796 “as a result of modifying the reimbursement for outpatient hospital rates, effective July 1, 2008.” This has been referred to as the second cut or cut 2. It instructed AHCA to “implement a recurring methodology in the Title XIX Outpatient Hospital Reimbursement Plan to achieve this reduction.” The 2008 Outpatient Plan again applied the first cut as a recurring reduction and stated that it was to be “applied proportionally to all rates on an annual basis.” It then made the second cut, which was to be “applied to achieve a recurring annual reduction of $17,211,796.” These cuts were again applied by taking the hospitals’ most current unaudited cost reports and the corresponding occasions of service from the appropriate monthly report of the fiscal agent, and using the Excel spreadsheets and the Goal Seek function to calculate rate adjustments for each hospital. The resulting rate adjustments were incorporated in the hospital reimbursement rates, effective July 1, 2008. This process was repeated in subsequent years. The third cut (cut 3) was in 2008; it was a $36,403,451 reduction. The fourth cut (cut 4) was in 2009, during a special session; it was a $19,384,437 reduction; however, per the GAA that made the fourth cut, it was not applied to the rates of certain children’s specialty hospitals, which were excluded from the reduction. In addition, using language similar to what AHCA had been using in the Outpatient Plans, the 2009 GAA stated: “The agency shall reduce individual hospital rates proportionately until the required savings are achieved.” The Legislature enacted cut 5 and cut 6 in 2009 and 2010. However, the GAAs stated that AHCA should not take these cuts if the unit costs before the cuts were equal to or less than the unit costs used in establishing the budget. AHCA determined that cuts 5 and 6 should not be taken. However, cuts 1 through 4 continued to be applied as recurring reductions, and rates were adjusted for cuts 1 through 4 in 2009 and 2010 in the same manner as before. In 2011, the GAA enacted cut 7; it was for $99,045,233 and was added to the previous cuts for all but certain children’s specialty and rural hospitals, which were excluded from the additional reduction. In setting the individual hospitals’ reimbursement rates, AHCA first applied cut 7 in the same manner as cuts 1 through 4. The result was a 16.5 percent rate adjustment for cut 7, which was much higher than for previous cuts. Some of the hospitals pointed this out to AHCA and to the Legislature and its staff. There was lots of discussion, and it was determined that the rate adjustment from cut 7 would be more like what the Legislature was expecting (about 12 percent), if budgeted occasions of service were used, instead of the number from the fiscal agent’s monthly report that corresponded to the most recent cost reports. AHCA agreed to change to budgeted fee-for- service occasions of service for cut 7, with the concurrence of the hospitals and the Legislature and its staff. The year 2011 was also the year the Legislature instituted what became known as the “unit cost cap.” In that year, the Legislature amended section 409.908, Florida Statutes, to provide: “The agency shall establish rates at a level that ensures no increase in statewide expenditures resulting from a change in unit costs effective July 1, 2011. Reimbursement rates shall be as provided in the General Appropriations Act.” § 409.908(23)(a), Fla. Stat. (2011). This part of the statute has not changed. The GAA that year elaborated: In establishing rates through the normal process, prior to including this reduction [cut 7], if the unit cost is equal to or less than the unit cost used in establishing the budget, then no additional reduction in rates is necessary. In establishing rates through the normal process, if the unit cost is greater than the unit cost used in establishing the budget, then rates shall be reduced by an amount required to achieve this reduction, but shall not be reduced below the unit cost used in establishing the budget. “Unit cost” was not defined by statute or GAA. To calculate what it was in 2011, AHCA divided the total dollar amount of Medicaid payments made to hospitals by AHCA by the number of Medicaid occasions of service for all hospitals. The result was $141.51. Since 2011, AHCA has applied the unit cost cap with reference to the 2011 unit cost of $141.51. Since then, AHCA has compared the 2011 unit cost to the current cost, calculated by dividing the total dollar amount of Medicaid payments made to all hospitals by AHCA by the number of Medicaid occasions of service for all hospitals, except in children’s and rural hospitals, to determine whether the unit cost cap would require a further rate reduction, after applying the MTA cuts. Using this comparison, the unit cost cap never has been exceeded, and no further rate adjustments ever have been required. It is not clear why AHCA excluded Medicaid occasions of service for children’s and rural hospitals from the unit cost calculations made after 2011. It could have been because those hospitals were excluded from cut 7 and cut 8. Cut 8 was enacted in 2012; it was for $49,078,485 and was added to the previous cuts for all but certain children’s specialty and rural hospitals, which were excluded from the additional reduction. In 2012, the Legislature specified in the GAA that budgeted occasions of service should be used in calculating the MTA reduction for inpatient hospitals. AHCA always treated inpatient and outpatient MTAs the same, and it viewed the specific legislative direction for the inpatient MTA as guidance and indicative of legislative intent that it should continue to use budgeted occasions of service for the outpatient cut 7 and should also use them for the outpatient cut 8. Again, the hospitals did not object since the result was a higher reimbursement rate. In 2014, the Florida Medicaid program began to transition Medicaid recipients from a fee-for-service model to a managed care model. Under the managed care model, AHCA pays a managed care organization (MCO) a capitation rate per patient. The MCOs negotiate contracts with hospitals to provide outpatient care at an agreed reimbursement rate per occasion of service. Since August 2014, the majority of Medicaid recipients has been receiving services through MCOs, rather than through fee-for-service. Currently, about 75 to 80 percent of Medicaid outpatient hospital occasions of service are provided through managed care In recognition of the shift to MCOs, the Legislature began to divide the Medicaid outpatient hospital reimbursement appropriation in the GAA between what AHCA reimburses directly to hospitals under the fee-for-service model and what it pays MCOs to provide those services under the MCO delivery system. This allocation of the budgets between fee-for-service and managed care necessarily accomplished a corresponding division of the recurring MTA reductions between the two delivery systems. The Legislature did not enact any statutes or GAAs requiring AHCA to change how it applies MTA reductions to determine fee-for-service outpatient reimbursement rate adjustments, or make any other changes in response to the transition to MCOs. There were no additional MTA reductions in 2015. The 2015 Outpatient Plan, which is incorporated in existing rule 59G- 6.030, applied the previous cuts as recurring reductions. The evidence was confusing as to whether cuts 7 and 8 were applied using the occasions of service in the fiscal agent’s monthly report corresponding to the hospitals’ most current unaudited cost reports, or using budgeted occasions of service. If the former, the numbers did not yet reflect much of the shift to the managed care model because of a time lag in producing cost reports, and the evidence suggested that the numbers were approximately the same as the budgeted occasions of service used previously. Whichever numbers were used, the resulting rate adjustments were incorporated in the hospitals’ reimbursement rates, effective July 1, 2015. Leading up to the 2016 legislative session, there was a legislative proposal to determine prospective Medicaid outpatient reimbursement rates using a completely new method called Enhanced Ambulatory Patient Groups (EAPGs). EAPGs would eliminate the need to depend on hospital cost reports and complicated calculations to determine the effects of MTA reductions on prospective hospital outpatient reimbursement rates, effective July 1, following the end of the legislative session each year. Hospitals, including some if not all of the Petitioners, asked the Legislature not to proceed with the proposed EAPG legislation until they had an opportunity to study it and provide input, and EAPGs were not enacted in 2016. However, section 409.905(6)(b) was amended, effective July 1, 2017, to require the switch to EAPGs. See note to § 409.905, Fla. Stat.; and ch. 2016-65, § 9, Laws of Fla. (2016). When it became apparent that EAPGs would not be in use for prospective reimbursement rates for fiscal year 2016/2017, AHCA basically repeated the 2015/2016 process, but adjusted the occasions of service used for calculating the hospitals’ rate reductions for cuts 7 and 8 by adding 14,000 occasions of service. At the end of July, AHCA published new rates effective July 1, 2016. When the new rates were published, they were challenged by some of the Petitioners under section 120.57(1), Florida Statutes. Citing section 409.908(1)(f)1., AHCA took the position that there was no jurisdiction and dismissed the petitions. That decision is on appeal to the First District Court of Appeal. The Petitioners also challenged the methodology used to calculate the new prospective reimbursement rates as a rule that was not adopted as required, and challenged the validity of existing rule 59G-6.030, which incorporated the 2015 Outpatient Plan by reference. These challenges became DOAH cases 16-6398RX through 16-6414RX. In response to DOAH cases 16-6398RX through 16-6414RX, AHCA adopted the 2016 Outpatient Plan by reference in proposed rule 59G-6.030. The 2016 Outpatient Plan provides more detail than the 2015 version. AHCA’s position is that the additional detail was provided to clarify the 2015 version. However, it changed the occasions of service used for calculating the hospitals’ rate reductions for cuts 7 and 8, as indicated in Finding 22, as well as some other substantive changes. The 2015 Outpatient Plan addressed the unit cost cap by stating: “Effective July 1, 2011, AHCA shall establish rates at a level that ensures no increase in statewide expenditures resulting from a change in unit costs.” The 2016 Outpatient Plan elaborates and specifies the calculation AHCA has been using, as stated in Finding 14. The 2015 Outpatient Plan provided that an individual hospital’s prospective reimbursement rate may be adjusted under certain circumstances, such as when AHCA makes an error in the calculation of the hospital’s unaudited rate. It also stated: “Any rate adjustment or denial of a rate adjustment by AHCA may be appealed by the provider in accordance with Rule 28-106, F.A.C., and section 120.57(1), F.S.” The 2016 Outpatient Plan deleted the appeal rights language from the existing rule. The effect of the existing and proposed rules on the Petitioners through their effect on managed care contract rates is debatable. Those rates do not have to be the same as the fee- for-service outpatient reimbursement rates, although they are influenced by the fee-for-service rates, and it is not uncommon for them to be stated as a percentage of the fee-for-service rates. By law, managed care contract rates cannot exceed 120 percent of the fee-for-service rates unless the MCO gets permission from AHCA, as provided in section 409.975(6). Currently, rates paid by MCOs for Medicaid hospital outpatient services average about 105 percent of the fee-for-service reimbursement rates. AHCA has indicated that it would not expect or like to see the contract rates much higher than that. It is not clear whether that still is AHCA’s position. If higher rates were negotiated, the impact of fee-for-services rate adjustments on managed care rates could be reduced or even eliminated. The effect of the existing and proposed rules on the Petitioners through their effect on how fee-for-service reimbursement rates are calculated is not disputed. With the transition to managed care, the effect is greater and clearly substantial. The recurring MTA reductions enacted by the Legislature through 2014, which total $224,015,229 (after taking into account $10,656,238 that was reinstated, and $4,068,064 that was added in consideration of trauma centers), are being spread over fewer fee-for-service occasions of service, especially for cuts 7 and 8, which significantly lowers the fee-for-service outpatient reimbursement rates calculated under the proposed rule. The Petitioners’ objections to the validity of the proposed and existing rules can be summarized as follows: a lack of legislative authority for recurring (i.e., cumulative) MTA reductions; a failure to adopt a fixed methodology to calculate individual hospital outpatient reimbursement rate adjustments resulting from MTA reductions; specifically, a failure to derive the number of fee-for-service occasions of service used in calculating individual hospital outpatient reimbursement rate adjustments in the same manner every year; conversely, a failure to increase the occasions of service used to calculate individual hospital outpatient reimbursement rate adjustments resulting from cuts 1 through 4; a failure of the unit cost cap in the existing rule to specify how it is applied; a failure of the unit cost cap in the proposed rule to compare the 2011 unit cost to the current cost, calculated by dividing the total dollar amount of Medicaid payments made to all hospitals by AHCA by the number of Medicaid occasions of service for all hospitals, including in children’s and rural hospitals; and proposed rule’s deletion of the language in the existing rule stating that a rate adjustment or denial can be appealed in accordance with Florida Administrative Code Rule 28-106 and section 120.57.
Findings Of Fact Respondent is Hooshang Hooshmand, a licensed physician at all times relevant to these proceedings. He was issued license number ME 0021496 by the State of Florida. Medicare is a program of the U.S. Department of Health and Human Resources which is administered by the Health Care Financing Administration (HCFA). The program allows for third party payment, by the federal government, for diagnostic programs and medical treatments administered on an inpatient and outpatient basis to individuals eligible for medicare coverage. Among providers of medical services, only licensed physicians may be paid by the program for rendition of services. Others who may be reimbursed include health care professionals, such as durable medical equipment suppliers, as well as patients themselves in the instance of medical services rendered by a nonparticipating physician. On October 9, 1987, in the United States District Court for the Southern District of Florida, Respondent was convicted, after a jury trial, of ten counts of submission of fraudulent medicare claims in violation of Title 18, U.S.C. Section 287 and Section 2. He was also convicted on 11 counts of devising a scheme to defraud by mail, the U.S. Department of Health and Human Resources in violation of Title 18, U.S.C., Section 1341 and Section 2. Respondent's sentence upon his conviction included a term of 18 months imprisonment and five years probation upon completion of imprisonment and any parole period; payment of restitution in the amount of $3,101.24; payment of a fine of $250,000; payment of an assessment of $300; performance of 5,000 hours of community service during the five year probationary period following imprisonment. The verdict and sentence are presently on appeal to the United States Circuit Court of Appeals for the Eleventh Judicial Circuit. The expert testimony of Michael Gutman, M.D., a specialist in forensic psychiatry in the State of Florida, establishes that the practice of medicine in Florida encompasses not only a physician's technical competence; but also the relationship between a physician and the patient. Such a relationship is based upon trust and honesty. While the physician's expectation of payment for services is part of the patient/physician relationship, fraudulent billing for those services by the physician to either the patient or a third party payor directly affects the practice of medicine through its impact on that relationship. A fraudulent billing scheme, such as that of which Respondent was convicted, introduces dishonesty to the physician/patient relationship and prevents a proper evaluation of the patient in favor of a methodology permitting fraudulent billing. Such methodology would necessarily be one chosen to permit fraudulent billing in a way which would escape detection; a choice not necessarily in the best interest of the patient. Gutman's testimony also provides an adequate record upon which to find that fraud, such as that reflected by Respondent's criminal conviction, also directly relates to the ability to practice medicine because the physician's professional judgement and ethical standards are involved. Such judgement has a direct bearing on the ability to practice medicine. How that judgement is exercised could very well affect the life of the patient in some situations. While it is found Respondent's conviction of fraud in the use of the billing apparatus in his practice directly relates to professional judgement and the ability to practice medicine, there has been no showing that the Respondent's judgemental aberration at that time detrimentally affected his patients' health or his technical competence. In mitigation of the charge in the administrative complaint, Respondent provided testimony of witnesses establishing his technical competence and expertise in his areas of specialization; his extremely impressive professional credentials; the high regard in which he is held by certain of his peers and patients; and his previously unblemished record in the practice of medicine. Respondent also provided testimony of witnesses establishing the complexity of medicare billing and the fact that many physicians, while holding ultimate responsibility for the accuracy of such billing, delegate this task to subordinates. Testimony of Respondent establishes that the complexity of medicare procedures played a major role in his violation of the legal requirements in that system of reimbursement and is partially to blame for his criminal conviction. The testimony of Eleanor Breckner, offered by Petitioner to rebut Respondent's testimony, is not credited. In addition to Beckner's demeanor while testifying, her testimony is diminished in view of her admission that she committed perjury and embezzlement on previous occasions. Beckner also admitted to incidents of attempted suicide indicative of mental instability. Her testimony is not credited with any probative value.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent pay an administrative fine of $2,500 and that his license be placed on probation for a period of two years upon terms and conditions to be established by the Board of Medicine. It is further recommended that a condition of such probation require the satisfactory completion by Respondent of a course of study designed to provide him the information and skills necessary to properly comply with medicare reimbursement procedures. DONE AND ENTERED this 3rd day of March, 1989, in Tallahassee, Leon County, Florida. DON W. DAVIS 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 3rd day of March, 1989. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. RESPONDENT'S PROPOSED FINDINGS 1.-4. Addressed. 5.-6. Unnecessary to result. 7. Addressed in part, remainder unnecessary. 8-10. Unnecessary to result. 11. Addressed in part; remainder unnecessary. 12.-14. Unnecessary to result. Addressed in part; remainder unnecessary. Adopted by this reference. Rejected, not supported by the evidence. Unnecessary to result. 19.-20. Not supported by the weight of the evidence. Unnecessary to result; also cumulative. Adopted by this reference. Rejected as cumulative. Not supported by the weight of the evidence. Unnecessary to result and not relevant. 26.-27. Unnecessary to result. Unnecessary to result and cumulative. Addressed in part; remainder unnecessary to result. 30.-31. Unnecessary to result; cumulative. 32. Reject, not supported by weight of the evidence. 33.-36. Rejected, not relevant. 37.-41. Unnecessary to result. 42.-43. Addressed in part, remainder unnecessary. 44.-45. Unnecessary to result reached. 46. Addressed in part, remainder unnecessary. 47.-50. Unnecessary to result. Unnecessary and cumulative. Unnecessary to result. Rejected on basis of relevancy. 54.-56. Addressed in part, remainder unnecessary. Unnecessary to result reached. Rejected, not relevant. Unnecessary to result reached. Rejected, not relevant. 61.-67. Unnecessary to result reached. Rejected, not credible and not supported by the weight of the evidence. Also a legal conclusion. Addressed. Unnecessary to result. Adopted by this reference. Adopted in substance. Rejected as a legal conclusion. PETITIONER'S PROPOSED FINDINGS 1.-7. Adopted in substance. 8.-9. Addressed. COPIES FURNISHED: Jonathan King, Esq. Department of Professional Regulation 130 North Monroe Street Tallahassee, FL 32399-0750 Joesph C. Jacobs, Esq. Melissa Fletcher Allaman, Esq. 305 South Gadsden Street P.O. Box 1170 Tallahassee, FL 32302-1170 Roy L. Glass, Esq. 3000-66th Street North Suite B St. Petersburg, FL 33710
Findings Of Fact In its 1969 legislative session, the Florida Legislature enacted Section 409.266, Florida Statutes, entitled "Medical Assistance for the Needy," providing the original state legislative basis and authority for Florida's entry into the Medicaid program. Section 409.266(2), Florida Statutes, as enacted, authorized the Florida Department of Social Services or any other department that the Governor might designate to: Enter into such agreement with other state agencies or any agency of the federal government and accept such duties with respect to social welfare or public aid as may be necessary to implement the provisions of subsection (1) and to qualify for federal aid including compliance with provisions of Public Law 86-778 and the "Social Security Amendments of 1965" [estab- lishing Title XIX of the Social Security Act] Section 409.266(3), Florida Statutes, as enacted, stated that: The Department is authorized and directed to prepare and operate a program and budget in order to implement and comply with the provisions of public law 86-778 and the "Social Security Amendments of 1965." No provisions of Florida law other than Section 409.266, Florida Statutes, as enacted, authorized any agency to perform any function specifically to implement the Medicaid program. The State of Florida formally commenced participation in the Medicaid program effective January 1, 1970. At all times pertinent to this controversy, respondent, Florida Department of Health and Rehabilitative Services or its predecessor agencies (referred to as "HRS"), has been and continues to be the "State Agency" identified in 42 U.S.C. Section 1396a(a)(5), and charged under Section 409.266, Florida Statutes, as amended, with the formulation of a State Plan for Medical Assistance ("State Plan"), 42 U.S.C. Section 1396a, and with the ongoing responsibility for the administration of the Medicaid program in the State of Florida. Since Florida's entry into the Medicaid program in 1970, HRS has been authorized essentially to "[e]nter into such agreements with appropriate agents, other State agencies, or any agency of the Federal Government and accept such duties in respect to social welfare or public aid as may be necessary or needed to implement the provisions of Title XIX of the Social Security Act pertaining to medical assistance." Section 409.266(2)(a), Fla. Stat., as amended. HRS has never been authorized to enter into any agreements, accept any duties, or perform any functions with respect to the Medicaid program that are in contravention of or not authorized by Title XIX of the Social Security Act and implementing federal regulations and requirements. As a prerequisite for Florida's entry into the Medicaid program, HRS prepared and filed with the United States Department of Health, Education, and Welfare ("HEW") a State Plan, pursuant to Title XIX of the Social Security Act, and pursuant to its delegated legislative authority set forth in Section 409.266(2)(a), Florida Statutes. (In May, 1980, HEW was redesignated the United States Department of Health and Human Services, but for purposes of this action both shall be referred to as HEW.) C.W. Hollingsworth was the HRS official who had the responsibility for supervising the preparation, the filing, and for obtaining the approval of HEW of Florida's initial State Plan. Florida's initial State Plan was approved by HEW effective January 1, 1970. At the time that Florida received approval of its initial State Plan, Title XIX of the Social Security Act required state plans to provide for the payment of the reasonable cost of inpatient hospital services. At the time that Florida received approval of its initial State Plan, HEW regulations governing reimbursement for inpatient hospital services under Medicaid required the State Plan to provide for reimbursement of Medicaid inpatient hospital services furnished by those hospitals also participating in the Medicare program, applying the same standards, cost reimbursement principles, and methods of cost apportionment used in computing reimbursement to such hospitals under Medicare. 45 C.F.R. Section 250.30(a), and (b), 34 Fed. Reg. 1244 (January 25, 1969). At the time that Florida entered the Medicaid program, Medicare cost reimbursement principles in effect governing reimbursement for the cost of inpatient hospital services required payment of a participating hospital's actual and reasonable costs of providing such services to Medicare beneficiaries, and, moreover, that such payment be made on the basis of the hospital's current costs rather than upon the costs of a prior period or upon a fixed negotiated rate. 42 U.S.C. Section 1395x(v)(1)(A); 20 C.F.R. Sections 405.451(c)(2), 405.402(a) [later renumbered 42 C.F.R. Section 405.451(c)(2) and Section 405.402(a)]. Such Medicare principles and standards also provided for interim payments to be made to the hospital during its fiscal year. At the conclusions of the subject fiscal year, the hospital was required to file a cost report wherein the hospital included all of its costs of providing covered inpatient services to Medicare beneficiaries. A settlement or "retroactive adjustment" process then was required to reconcile the amount of interim payments received by the hospital during the fiscal period with its allowable costs incurred during that period. If the hospital had been overpaid during the year, it was required to refund the amount of that overpayment to the Medicare program. Conversely, if the hospital had been underpaid during the year, the Medicare program was required to make an additional payment to the hospital, retroactively, in the amount of the underpayment. 20 C.F.R. Sections 405.402(b)(2), 405.451(b)(2). Essentially the same Medicare principles and standards governing reimbursement of inpatient hospital services described in the two preceding paragraphs have been in effect at all times pertinent to this controversy. 42 C.F.R. Section 405.401, et seq. Florida's approved State Plan as of January 1, 1970, governing reimbursement of inpatient hospital services under the Medicaid program, committed HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. The only versions of Florida's State Plan provisions that have been approved by HEW and that have governed HRS's reimbursement of inpatient hospital services prior to July 1, 1981, each commit HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. Attached as an appendix to the recommended order is the form agreement drafted with the supervision of C.W. Hollingsworth, which has been in use from January 1, 1970, until July 1, 1981. From the inception of the Florida Medicaid program, and as a prerequisite for participation therein, a hospital has been required to execute a copy of the form agreement. A hospital may not participate in the Medicaid program without having executed such an agreement, nor may it propose any amendments thereto. The intent and effect of the form agreement is to require HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. The form agreement requires HRS to compute a percentage allowance in lieu of the retroactive adjustments ("percentage allowances") in determining the rates that hospitals will be paid for providing inpatient hospital services to Medicaid patients. The form agreement requires HRS to compute a new percentage allowance each year based on hospital cost trends. The meanings of the terms "allowance in lieu of retroactive adjustments" in all pertinent state plans and "percentage allowance for the year in lieu of retroactive payment adjustment" contained in the form agreement are identical. In drafting the form agreement HRS intended that the "percentage allowance for the year in lieu of retroactive payment adjustment" be set at a level sufficient to ensure that hospitals participating in the Medicaid program would be reimbursed their "reasonable costs" of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. At all times pertinent to this controversy, participating hospitals, like petitioner, have been reimbursed by HRS for inpatient hospital services provided to Medicaid patients in the following manner: Within ninety (90) days following the close of its fiscal year, the partici- pating hospital files a Form 2551 or 2552 Annual Statement of Reimbursable Costs, as applicable, with both Blue Cross of Florida, Inc., the major fiscal intermediary respon- sible for the administration of Part A of the federal Medicare program in the State of Florida, and with HRS. This document, also referred to as a "cost report" details various hospital and financial statistical data relating to the patient care activities engaged in by the hospital during the sub- ject fiscal period. Upon receipt of the participating hospital's cost report for a fiscal period, HRS makes an initial determination based upon Medicare cost reimbursement principles and standards of the hospital's total allow- able inpatient costs, charges, and total patient days during the subject fiscal period, and then determines an inpatient per diem reimbursement rate for the period. To the inpatient per diem reimburse- ment rate is then added a percentage allow- ance in lieu of making any further retroactive corrective adjustments in reimbursement which might have been due the hospital applicable to the reporting period. The adjusted inpa- tient per diem reimbursement rate is applied prospectively, and remains in effect until further adjustments in the rate are required. If HRS determines that total inpa- tient Medicaid reimbursement to a partici- pating hospital during a fiscal period exceeds the hospital's allowable and rea- sonable costs of rendering such covered inpatient services applying Medicare cost reimbursement principles and standards, then the hospital is required to remit to HRS the amount of such overpayment. If, however, HRS determines that the total inpatient Medicaid reimbursement received by a participating hospital is less than the hospital's actual and reason- able costs of rendering such covered inpa- tient services to Medicaid patients during the period applying Medicare cost reimburse- ment principles and standards, no further retroactive corrective adjustments are made; provided, however, that should an overpayment occur in a fiscal period, it may be offset and applied retroactively against an under- payment to the participating hospital which occurred during the next preceding fiscal period only. HRS has used the following "percentage allowances" in determining Medicaid reimbursement rates for inpatient hospital services: a. January 1, 1970 - June 30, 1972 . . . 12 percent July 1, 1972 - approximately March 30, 1976 . . . . . . . . . . 9 percent Approximately March 31, 1976 - June 30, 1981 . . . . . . . . . . . 6 percent Since at least January 1, 1976, HRS has not recomputed the "percentage allowance" on an annual basis. Since at least January 1, 1976, HRS has not based the "percentage allowance" that it has applied in determining Medicaid inpatient hospital reimbursement rates upon hospital cost trends. HRS has used no technical methodology based upon hospital cost trends to develop any of the "percentage allowances." At least since January 1, 1974, HRS's "percentage allowances" have been less than the corresponding average annual increases in the costs incurred by Florida hospitals of providing inpatient hospital services. Prior to March 30, 1976, all of HRS's published regulations addressing reimbursement of participating hospitals for their costs of providing inpatient hospital services to Medicaid patients required HRS to reimburse such hospitals in accordance with Medicare cost reimbursement principles and standards. In certain internal documents, Petitioner's Exhibits P-44 and P-12, HRS states that the average costs of providing inpatient hospital services in the State of Florida rose at least 18 percent during calendar year 1975. In November, 1975, the Secretary of HRS was informed by HRS officials that HRS faced a projected budgetary deficit for its fiscal year ended June 30, 1976. A decision memorandum presented options to the HRS Secretary for reducing the projected deficit. Among such options presented to and approved by the HRS Secretary was to reduce the "percentage allowance" from 9 percent to 6 percent. The reduction of the "percentage allowance" by HRS from 9 percent to 6 percent was effected in response to HRS's projected deficit, and was not based upon an analysis of hospital cost trends. HRS incorporated the 6 percent "percentage allowance" into its administrative rules which were published on March 30, 1976. In response to objections raised by the Florida Hospital Association to the reduction in the percentage allowance by HRS from 9 percent to 6 percent, HRS officials reexamined that reduction. During HRS's reexamination of its previous "percentage allowance" reduction, HRS was aware of and acknowledged the fact that Florida hospital costs were increasing at an average annual rate in excess of both the earlier 9 percent and the resulting 6 percent "percentage allowance." In a memorandum dated September 13, 1976, from HRS official Charles Hall to the Secretary of HRS, Petitioner's Exhibit P-45, Charles Hall informed the Secretary that the methods and standards then used by HRS to reimburse participating hospitals for their costs of providing inpatient hospital services to Medicaid patients was out of compliance with federal requirements. Charles Hall further informed the Secretary that the reason HRS had not theretofore been cited by HEW for noncompliance was the manner in which the Florida State Plan had been drafted, i.e., that the State Plan required HRS to reimburse hospitals under Medicaid for the reasonable costs that they would have been reimbursed applying Medicare cost reimbursement principles and standards. In a letter dated September 20, 1976, Petitioner's Exhibit P-31, HEW informed HRS that HEW had received a complaint from the Florida Hospital Association that the methods HRS was actually using to reimburse hospitals for the costs of providing inpatient hospital services to Medicaid patients were in violation of Federal Regulation 45 C.F.R. Section 250.30(a). A proposed amendment to Florida's State Plan submitted by HRS to HEW in November, 1976, Petitioner's Exhibit P-49, if approved, would have allowed HRS to reimburse hospitals for the cost of providing inpatient hospital services to Medicaid patients under methods differing from Medicare cost reimbursement principles and standards (an "alternative plan"). "Alternative plans" have been permitted under applicable federal regulations since October 21, 1974. A state participating in the Medicaid program may elect to establish an "alternative plan, but may not implement such "alternative plan" without the prior written approval of HEW. Florida has not had in effect an "alternative plan" of reimbursing participating hospitals for their costs of providing inpatient hospital services to Medicaid patients that was formally approved by HEW at any time prior to July 1, 1981. By letter dated January 7, 1977, Petitioner's Exhibit P-32, HEW notified HRS that it had formally cited HRS for noncompliance with federal regulations governing reimbursement of inpatient hospital services under Medicaid. HRS acknowledged their noncompliance and between November, 1976, and October 30, 1977, HRS attempted to revise its proposed "alternative plan" on at least two occasions in an attempt to obtain HEW approval. In October, 1977, HRS withdrew its proposed "alternative plan" then pending with HEW. HRS then contracted with an outside consultant, Alexander Grant & Company, to assist in the formulation of a new "alternative plan" proposal. In January, 1978, Alexander Grant & Company delivered its draft of an "alternative plan" to HRS. In October, 1978, HRS submitted a draft "alternative plan" to HEW for review and comment, and HEW expected HRS to submit a formal "alternative plan" proposal to HEW for its approval by November 1, 1978. HRS did not submit the formal "alternative plan" proposal to HEW until August 12, 1980. In a letter dated February 21, 1979, from Richard Morris, HEW Regional Medicaid Director, Region IV, to United States Senator Richard Stone of Florida, Mr. Morris advised Senator Stone: For more than two years the Florida Medicaid Program has not met Federal Requirements for inpatient hospital services reimbursement. Their payment methodology under-reimburses certain hospitals year after year. The pros- pective interim per diem rate paid by Florida to hospitals includes a percentage allowance to cover increased costs during the forthcom- ing year that is consistently less than increased costs in some hospitals. If the payments are less than costs, the difference is not reimbursed. This results in underpay- ments. We have worked closely with Florida to develop an acceptable alternative system that would meet Federal requirements. To date, Florida has not implemented such a system despite having received informal HEW agreement on a draft plan developed more than a year ago. It is our understanding that this alternative plan is not a high priority item at this time. We will continue to work with HRS staff to secure Florida compliance re- garding this requirement. Petitioner's Exhibit P-46. Since August 12, 1980, HRS has submitted to HEW for its approval at least four more versions of an "alternative plan." Petitioner's Exhibits P-120, P-121, P-123, and P-152. Each of these versions was approved by the Secretary of HRS, and HRS believes each to comply with applicable Florida law. Mr. Erwin Bodo, Ph.D., was and is the HRS official responsible for the development and drafting of Exhibits P-120, P-121, P-123, and P-152. In June, 1981, HEW approved an "alternative plan" for the State of Florida (Exhibit P-152), and such "alternative plan" was implemented effective July 1, 1981. Until July 1, 1981, HRS continued to use the 6 percent "percentage allowance" to compute inpatient hospital reimbursement under Medicaid. Even after its repeal, Rule 10C-7.39(6), Florida Administrative Code, is applied by respondent in calculating reimbursement for Medicaid services provided between March 30, 1976, and July 1, 1981. From November 20, 1976, until July 1, 1981--the period in which HRS was attempting to secure HEW approval for an alternative plan--HRS was aware that the costs of inpatient hospital se vices were increasing at an average annual rate in excess of the 6 percent "percentage allowance." From September 1, 1976, through July 1, 1981, HRS has been out of compliance with its a proved State Plan provisions, and HEW regulations governing reimbursement for inpatient hospital services under Medicaid because HRS's methods for reimbursing hospitals for the cost of providing those services to Medicaid patients have resulted in a substantial number of hospitals-- including petitioner--being reimbursed at a lower rate than the hospitals would have been reimbursed applying Medicare cost reimbursement principles and standards. Since the quarter ending December 31, 1976, until July 1, 1981, HEW has formally cited HRS as being in contravention of its approved State Plan provisions, and HEW (now HHS) regulations, governing reimbursement for inpatient hospital services under Medicaid because HRS's methods for reimbursing hospitals for the cost of providing those services to Medicaid patients have resulted in a substantial number of hospitals--including petitioner--being reimbursed at a lower rate than the hospitals would have been reimbursed applying Medicare cost reimbursement principles and standards. PAN AMERICAN HOSPITAL CORPORATION Petitioner, Pan American Hospital Corporation, is a not-for-profit corporation, duly organized and existing under the laws of the State of Florida. Petitioner is a tax-exempt organization as determined by the Internal Revenue Service pursuant to Section 501(c)(3) of the Internal Revenue Code of 1954, as amended. At all times pertinent to this controversy, petitioner has operated and continues to operate a duly licensed 146-bed, short-term acute care general hospital, located at 5959 Northwest Seventh Street, Miami, Florida 33126. At all times pertinent to this controversy, petitioner has been and continues to be a duly certified provider of inpatient hospital services, eligible to participate in the Florida Medicaid program since January 27, 1974. The appendix to this recommended order is a true and correct copy of the "Participation Agreement" entered into between petitioner and HRS, whereunder, inter alia, petitioner became eligible to receive payment from HRS for covered inpatient hospital services provided to Medicaid patients. At all times pertinent to this controversy, petitioner has been a certified "provider of services" participating in the Medicare program. During the fiscal periods in dispute in this action, petitioner did provide covered inpatient hospital services to Medicaid patients, and became eligible for payment by HRS of its reasonable costs of providing such services, determined in accordance with Medicare cost reimbursement principles and standards. With respect to each of the fiscal periods in dispute in this action, petitioner timely filed all cost reports and other financial data with HRS or its contracting agents, including Blue Cross of Florida, Inc., to enable HRS to determine petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients. During each of the fiscal periods in dispute in this action, to reimburse petitioner for its reasonable costs of providing covered inpatient hospital services to Medicaid patients, determined in accordance with applicable Medicare cost reimbursement principles and standards. Such costs incurred by petitioner were reasonable, necessary, related to patient care, and less than customary charges within the meaning of those Medicare principles and standards. With respect to each of the fiscal periods in dispute, HRS and/or its contracting agent, Blue Cross of Florida, Inc., reviewed and audited the cost reports filed by petitioner, and as a result of such review and audits set or adjusted, as applicable, the Medicaid inpatient per diem reimbursement rate at which petitioner would be paid during the next succeeding fiscal period or until that rate was again adjusted. On May 3, 1976, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1975, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period in respect to those services. During its fiscal year ended March 31, 1975, petitioner received $86,469 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On February 14, 1979, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1976, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1976, petitioner received $199,328 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On September 29, 1978, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1977, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1977, petitioner received $6,083 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On March 13, 1980, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1978, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1978, petitioner received $178,506 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On June 30, 1981, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1979, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1979, petitioner received $302,347 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On or about June 30, 1981, the audit of petitioner's Medicaid cost report for the period ending March 31, 1980, was concluded. A formal Notice of Program Reimbursement had not been issued at the time of the hearing. MOTION TO DISMISS DENIED Respondent contends that these proceedings should be summarily concluded "for failure to join an indispensable party," viz., the Federal Government, because it "is Respondent's intention, should any liability result from this action, to make a claim for federal financial participation as to approximately fifty-nine percent of such liability . . . [See generally] 42 U.S.C. Section 1320b-2(a)(2)." Motion to Dismiss, p. 2. This contention must fail for several reasons. Neither the Division of Administrative Hearings nor the Department of Health and Rehabilitative Services has the power or means to bring an unwilling party into a proceeding instituted pursuant to Section 120.57, Florida Statutes (1979). At most, "the presiding officer may, upon motion of a party, or upon his own initiative enter an order requiring that the absent person be notified of the proceeding and be given an opportunity to be joined as a party of record." Rule 28-5.107, Florida Administrative Code. There exists no administrative writ for joining a non-petitioning party in a substantial interest proceeding in the way judicial process can join a party within a court's jurisdiction in a pending judicial proceeding. The two cases respondent cites in support of its motion, Bannon v. Trammell, 118 So. 167 (Fla. 1928), and Heisler v. Florida Mortgage Title and Bonding Co., 142 So.2d 242 (Fla. 1932), are inapposite, because both cases involve judicial, not administrative proceedings. HRS does not really seek joinder of the United States Department of Health and Human Services; instead, HRS argues that the petition should be dismissed and the controversy relegated to federal court because it "believes that the Secretary [of the United States Department of Health and Human Services] will not succumb voluntarily to the jurisdiction of the Division of Administrative Hearings." 2/ Motion to Dismiss, p. 3. Participation by the Department of Health and Human Services in the present proceedings would have been welcomed, as the Hearing Officer indicated at the prehearing conference, but neither the Department itself nor either of the parties requested such participation. In any event, petitioner is seeking additional reimbursement from respondent HRS, not from any federal agency. Medicaid providers like petitioner do not receive any funds directly from the Department of Health and Human Services. Since "[t]he contracts involved are clearly between the hospitals and [H]RS [, n]o third party requirement appears," Montana Deaconess Hospital v. Department of Social and Rehabilitation Services, 538 P.2d 1021, 1024 (Mont. 1975), and the Department of Health and Human Services is not an indispensable party to administrative proceedings arising out of contracts between HRS and Medicaid providers. HRS protests that it might find itself making additional reimbursement to petitioner, yet be deprived of the federal component of such expenditures. See 42 U.S.C. Section 1396b. This prospect is an unlikely one in view of the fact that the Department of Health, Education, and Welfare has repeatedly cited HRS for noncompliance because of under-reimbursements to Medicaid providers. If the Federal Government fails to contribute to any additional reimbursement, it would not be for want of a forum in which HRS could present its claim. There are administrative mechanisms within the Department of Health and Human Services, including its Grant Appeals Board. See 42 U.S.C. Section 1116(d). After exhaustion of administrative remedies, HRS would have access to the courts, if necessary. See Georgia v. Califano, 446 F. Supp. 404 (N.D. Ga. 1977). There is no danger that HRS will be deprived of an opportunity to litigate any question about federal contribution because the United States Department of Health and Human Services is not a party to the present proceedings. MOTION FOR PARTIAL SUMMARY JUDGMENT Petitioner's motion for partial summary judgment was amended ore tenus at the final hearing to delete "and FYE March 31, 1981," on page 1 of the motion, after leave to amend was granted, without objection by respondent. As a technical matter, the motion is a misnomer, since substantial interest proceedings before the Division of Administrative Hearings eventuate in recommended orders, not judgments. But, petitioner's contention that there is no genuine issue as to any material fact is well founded. The parties have so stipulated. (T. 70; Mr. Weiss's letter of November 12, 1981.) At the time the petition was filed, the parties contemplated numerous factual disputes which, however, had all been resolved by the time of final hearing through the commendable efforts of counsel. In the absence of a disputed issue of material fact, the Administrative Procedure Act provides for informal proceedings pursuant to Section 120.57(2), Florida Statutes (1979), "[u]nless otherwise agreed." Section 120.57, Florida Statutes (1979). On December 7, 1981, the parties filed their Stipulation and Agreement to proceed pursuant to Section 120.57(1), Florida Statutes (1979), notwithstanding the absence of any factual dispute. DISPUTE COGNIZABLE In the present case, as in Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), there "can be no doubt that the Department's contract . . . calls for agency action which potentially affects . . . substantial interests," 363 So.2d at 812, of the petitioning contractor. Cf. Solar Energy Control, Inc. v. State Department of Health and Rehabilitative Services, 377 So.2d 746 (Fla 1st DCA 1979) (reh. den. 1980) (disappointed bidder substantially affected). See Section 120.52(10)(a), Florida Statutes (1979). In Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), the petitioner sought "additional money and construction time under its contract," 363 So.2d at 813, with a state agency. The court found "no difficulty . . . with sovereign immunity," 363 So.2d at 813, and held that a contractor with a state agency could invoke the Administrative Procedure Act in order to enforce its contract, even though the contract purported to establish another method for settling the contract dispute. A clause in the contract at issue in the Graham Contracting case contemplated agency action outside the parameters of Chapter 120, Florida Statutes, in resolving certain disputes under the contract. In contrast, each of the successive contracts on which petitioner predicates its claim in the present case contains the following provision: "The hospital agrees to comply with the rules, policies, and procedures required by [HRS's] Division of Family Services for this program." Among the rules thus incorporated by reference into the contracts between petitioner and respondent is Rule 10C-7.35, Florida Administrative Code, which provides: An official representative of a facility participating in Medicaid, . . . or . . . representative, may appeal Medicaid Program policy, procedure, or administrative rulings whenever the provider feels there has been an unfair, illegal or inappropriate action by the Department affecting them or their facility. (1) Provider Appeals The Administrative Procedures [sic] Act, Chapter 120 F.S., provides for provider appeals and hearings, which are conducted by the Division of Administrative Hearings in the Department of Administration. The spe- cific rule relative to the appeal and hearing process is Chapter 28-3 [sic] of the Florida Administrative Rules. . . Since, by reference to Rule 10C-7.35, Florida Administrative Code, the contract in the present case incorporates Chapter 120, Florida Statutes, the applicability of the Administrative Procedure Act is even clearer here than in the Graham Contracting case. THE MERITS The parties have stipulated that petitioner has been reimbursed by respondent less than its reasonable costs of providing covered inpatient hospital services over the time period in question. Under-reimbursement of this kind is not authorized by Section 409.266, Florida Statutes, which incorporates the federal statutory requirement that hospitals which, like petitioner, provide Medicaid services be reimbursed by respondent for reasonable costs incurred, in accordance with an approved State Plan, and not some lesser amount. 42 U.S.C. Section 1396a(a)(13)(B), Pub. L. 89-97, Section 121(a) redesignated 42 U.S.C. Section 1396a(a)(13)(D), Pub. L. 90-248, Section 224(a). All Florida "State Plan provisions . . . approved by HEW and . . . govern[ing] HRS's reimbursement of inpatient hospital services prior to July 1, 1981, commit HRS to reimburse hospitals [like petitioner] that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards." Prehearing Stipulation, Paragraph 19. The record is clear. Respondent consistently reimbursed petitioner less than its reasonable costs of providing inpatient hospital services in order to cut its own expenses and in doing so jeopardized the entire Medicaid program. This cannot be condoned, even though respondent acted under color of law, viz., Rule 10C-7.39(6), Florida Administrative Code [now repealed and declared invalid; see Pan American Hospital Corporation v. Department of Health and Rehabilitative Services, No. 81-1480R (DOAH; December 4, 1981)], and even though a lack of money or, at least, an apparent shortage was the reason for respondent's parsimony. The question remains, however, whether this dereliction on respondent's part should inure to the benefit of petitioner; and the answer turns on the construction of the agreement between the parties attached as an appendix to this order. Petitioner argues cogently that public policy has clearly been enunciated by statute to be full reimbursement for costs reasonably incurred by Medicaid providers in furnishing covered services. There can be no clearer expression of public policy than a statute duly enacted; and the reasons behind the full reimbursement policy are themselves compelling: to deal fairly with the providers, not only for fairness sake, but also to assure their participation in the program, and to remove any temptation to give indigent patients substandard care, inter alia. But, there is surely an overriding public policy requiring that a contractor with state government who voluntarily agrees to forego a claim against the public fisc be held to that agreement in administrative proceedings like these. The form agreement between petitioner and respondent, which they renewed annually, states: "It is understood that reimbursement will be made on the basis of an interim payment plan in the form of a per diem cost rate, plus a percentage allowance for the year in lieu of retroactive payment adjustment. However, . . . in the event the hospital did not receive its audited reasonable costs in the year prior to the current year then the hospital may deduct from the refund the prior year deficiency." (Emphasis supplied.) The agreement thus contemplated under-reimbursement and specified the method for recoupment, if there was to be any. Any "retroactive payment adjustment," as the result of administrative proceedings or otherwise, is specifically ruled out. Elsewhere in the parties' agreement is found this language: [T]he fiscal responsibility of [respondent's] Division of Family Services is subjected [sic] to the appropriation and availability of funds to the Medicaid program . . . by the state legislature every year." The terms of the agreement make clear that under-reimbursement is not in itself a breach. Respondent's failure to compute annually a "new percentage . . . based on hospital cost trends" was attributable to a shortage of funds; and the agreement provided that respondent's "fiscal responsibility" was subject to just such a shortage. In sum, provisions of the agreement petitioner voluntarily entered into with respondent operate in much the same way as a liquidated damages clause and preclude the relief petitioner seeks. Petitioner's invocation of the parol evidence rule is unavailing. Even if the stipulated facts outside the four corners of the form agreement are looked to, the course of dealing between these parties buttresses the construction outlined above. The fact that respondent may have settled a case it litigated against another hospital in some other way, as asserted by petitioner, is technically irrelevant.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny the prayer of the petitioner for additional reimbursement. DONE AND ENTERED this 10th day of December, 1981, in Tallahassee, Florida. ROBERT T. BENTON II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of December, 1981.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Central Florida Surgical Ambulatory Center be DENIED. DONE and ORDERED this 27th day of March, 1985, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of March, 1985.
Findings Of Fact HRS is a state agency responsible for the administration of the Florida Medicaid Program provided for in Title XIX of the Social Security Act. The medicaid program was implemented through Section 409.902, Florida Statutes. The peer review aspect of the Florida Medicaid Program involves the responsibility of insuring that hospitals comply with state and federal utilization review requirements. The Petitioner, at all times material hereto, was the treating facility for the four patients involved in the issues in this case. It is assigned Medicaid Provider No. 011976800. The medicaid/medical benefits program for the State of Florida administered by HRS under Title XIX of the Social Security Act reimburses hospitals for "medically necessary" in-patient hospital care provided to medicaid beneficiaries. See Rule 10C-7.039, et. seq. The determination of "medical necessity" is to be made by the hospitals' utilization review committee and by the utilization and quality control PRO which is under contract to provide that service with HRS. Utilization review is defined as "regular prescribed program for the review of each recipient's need for services to insure efficient provision of care". HRS has established procedures for determining the medical necessity and appropriateness of care for use by hospitals and by the PRO's. The procedures include a review of medical record documentation against a list of criteria published by HRS. These criteria are popularly called ISD criteria. "ISD" is an acronym signifying severity of illness, intensity of service, and "discharge screens." Each medicaid recipient must meet ISD criteria for severity of illness before being admitted to a hospital. They must also meet the intensity of service ISD criteria for continued hospitalization. Once a patient meets one of the ISD discharge screens (standards), there is the indication that the patient is ready to be discharged. The ISD criteria are to be used as a "basis for professional determinations of the medical necessity of acute care hospitalizations" by the hospital utilization review (UR) committee and the PRO. These criteria are not an absolute measure of medical necessity. They may be balanced or overridden by a physician during the review process. The severity of illness (SI) criteria are acknowledged by HRS to be set at a high level. The SI criteria need not be met to justify an admission, however. "If treatment has been rendered and the intensity of service criteria are met, or if evidence relevant to more than one severity of illness indicator is available, lower levels than those specified in the criteria may justify certifying the admission. A case presenting marginal findings for certifying an admission will be referred to the physician advisor." See Respondent's Exhibit 4, page 6. According to the policy expressed in the HRS manual for hospitals providing services to medicaid beneficiaries, the hospital UR committee may consider "other supporting data as the committee deems appropriate" and contact the attending physician when determining medical necessity. Similarly, when medical necessity is an issue at the PRO level of review, the attending physician is to be contacted by the PRO and given an opportunity to speak to the physician advisor of the PRO so as to provide additional information going to the question of medical necessity. If the PRO denies coverage, HRS then accepts the PRO determination and does not conduct any independent review. HRS, having charged the hospital UR committee and the PRO with the evaluation of medical necessity, does not conduct its own review of the medical record or undertake any independent evaluation of medical necessity before notifying the relevant physician and hospital if reimbursement is denied. The Petitioner is in compliance with the medicaid program concerning utilization review. The hospital has established a UR plan which has been approved by the PRO and by HRS. The UR plan utilizes the same ISD criteria as the PRO. The UR committee was monitored to make sure that it was complying with the utilization review requirements. The five cases at issue were reviewed by five different physicians on the Center's UR committee and were felt to meet the criteria and to be medically necessary as appropriate admissions and appropriate lengths of stay. The PRO, however, disagreed with the UR committee. The attending physician was contacted by the PRO and asked to call a physician advisor to discuss these cases and to provide additional information to the advisor. The attending physician followed those instructions and attempted numerous times to contact the physician advisor with additional information concerning the cases but was never given the opportunity to do so. These PRO denials included one admission denial following a suicide attempt, despite the fact that "suicide attempt" is included in the ISD criteria as justification for admission. This denial of admission itself is clearly in error. Although this proceeding is a de novo one and not a proceeding designed to simply review the appropriateness and legal efficacy of the HRS initial decision, it is noteworthy, to the extent that HRS' position relies heavily on the PRO review of the patient admissions and lengths of stay in question, that the PRO's work product is of marginal credibility. This is because the PRO which was responsible for the UR and reviewed these cases lost its designation as an approved PRO and became involved in criminal litigation concerning a failure to carry out medical reviews properly. The PRO was unable to meet payroll obligations for its nursing and physician reviewers. The records of the PRO reviews of the five cases at issue in this proceeding were not available to HRS. Consequently, HRS had no information concerning the underlying data or facts relied upon by the PRO nor whether the PRO actually consulted the attending physician or whether its physician advisor did. Thus, the testimony of the attending physician, to the effect that he attempted to contact the physician advisor but was not permitted to as to any of these cases, is uncontraverted. The approved UR committee, in conducting its procedure at the Center, determined that the admission and lengths of stay of the five patients involved was medically necessary and compensable as determined by five physicians taking part in that process. The PRO, although it informed the physicians that they had the right to speak to a physician advisor, did not actually afford them that opportunity. The PRO determination was accepted by HRS without any HRS personnel speaking to the attending physician. Although HRS later allowed one day of an admission immediately following a suicide attempt, it upheld the other PRO determinations without actually knowing or reviewing any underlying information which might have been relied upon by the PRO and without HRS personnel conferring with the attending physician or affording him the opportunity to provide them with additional information. If the PRO, its physician advisor and HRS had given the attending physician the opportunity to explain and provide additional information concerning medical necessity, perhaps this dispute could have been resolved without the necessity and expense of formal proceedings. This is a de novo proceeding and, therefore, the information from the attending physician which was not utilized by the PRO or HRS in the review of these cases can be brought forward at this time providing the attending physician's testimony and evidence is deemed relevant, material, competent and credible. The attending physician named above, in fact, testified in this proceeding. His testimony is deemed competent and credible on the material issues and is not refuted by the Respondent. Based upon the attending physician's testimony, which is accepted, especially since no other physician with knowledge of the facts concerning these patients testified, the following findings of fact are made: Patient M.D.: This patient was treated at the emergency room following a suicide attempt on August 19th and transferred by the police to the Center where she was then admitted. She had previously sought out-patient treatment unsuccessfully. The initial examination showed her to be moderately depressed, avoiding eye contact, showing psycho-motor retardation, and crying easily. She made the statement that her two children would be better off if she were dead. She was placed on the medication prozac but after several days remained depressed and crying and complaining of insomnia. She was then given "Pamelor" which caused some adverse side effects, but she appeared to respond to the medication as to her depression. During her stay, she received an intensive rehabilitation program of at least three encounter therapies per day. On the basis of the medical record alone, patient M.D. met the following criteria: AK11-A (suicide attempt); AK57-B (treatments). These criteria do not require that the patient remain suicidal or admit to being suicidal during the in- patient stay in order to justify further treatment. The HRS representative testified that nursing notes indicated that the patient could perform some self- care functions during her hospitalization ("activities of daily living" or "ADL's"). Because of this and because the physician noted that the patient was denying suicidal ideations, she interpreted that circumstance to mean that the discharge "screen" or standard of "able to function in a non-hospital environment" was met after August 20th, the day of admission. However, HRS also admitted that whether the patient could function in a non-hospital environment was a medical decision to be made on the hospital level and the PRO level. The attending physician testified that records of self-care in a restricted hospital environment do not mean that the patient could function in a non-hospital setting. He further testified that the patient in this instance required treatment and did not meet the discharge standard or "screen" of being "able to function in a non-hospital environment" before August 30th. He testified that the services could not be effectively provided on an out-patient basis prior to August 30th. That testimony is accepted and the fact established. The ISD criteria and explanatory bulletins promulgated by HRS do not contain requirements that a patient remain suicidal during a stay nor a discharge criteria that equates self-care in the hospital environment with the ability to care for oneself safely and adequately in a non-hospital environment. On the basis of the evidence presented, the in-patient admission of M.D. from August 20th to August 30th met the criteria for admission and continued stay. The services provided were shown by unrefuted testimony to be medically necessary and the discharge screens or criteria were not satisfied until August 30, 1991. Patient M.D. (Admission of September 21, 1990 through September 29, 1990): Nineteen (19) days after her first discharge, patient M.D. again attempted suicide. She had been referred for out-patient care after her previous hospitalization but did not follow up and obtain that care and did not continue to take her medication. She wrote a suicide note on the second attempt and was treated in an intensive care unit for three days before being re- admitted to the Center. Throughout her hospitalization, she received intensive rehabilitation therapy as before and remained in a highly-restricted, locked unit, where suicide precautions were in effect. She was assigned to a counselor for "one-on-one" therapy in addition to her group therapy. Her attending physician did not consider her able to function in a non-hospital environment prior to September 29th, and his testimony so establishes. The HRS witness, when asked whether she had an opinion when the patient should have been released, stated a date prior to the actual discharge based upon her opinion that the patient was able to function in a non-hospital environment. That decision, however, is a medical decision which the witness was not qualified to make. In any event, the fact that a patient might be able to perform some "ADL" functions in a highly-supervised, protective hospital setting does not mean that the patient is well enough and responsible enough to perform those functions adequately and safely on her own outside a supervised hospital setting. In summary, based upon the unrefuted evidence presented, particularly the testimony of the attending physician, the in-patient admission of M.D. on September 21, 1990 met the ISD criteria for admission and continued stay. The services were medically necessary and the patient was not appropriately ready for discharge until September 29, 1991. Patient W.P. (Admission of April 11, 1990 to April 16, 1990): This patient suffered a severe psychotic episode a month before her admission and then presented to an emergency room stating that she was "about to lose it" and that it was only her religious beliefs which prevented her from committing suicide. This alarmed the attending physician concerning her suicidal ideation and possibility. The patient had been married five times and was then seeing a married man and also allegedly contemplating a lesbian relationship with that man's wife. She had been blamed by her family for the death of her grandchild. Upon her admission, it took her approximately three days to become aware that she was in a locked psychiatric unit. This indicated to the physician that she did not fully comprehend where she was or what she was doing in terms of her orientation as to reality of time and place. She was severely depressed, out of touch with reality, and not able to perform the affairs of daily living (ADL's). She exhibited anorexia and insomnia at the time of admission. She indicated merely that she was not eating as much as she had previously. She was placed on prozac, to which she responded in approximately five days. The services provided to her after her admission met the intensity of service criteria for a continued stay. The physician testified that she did not meet discharge standards prior to the actual discharge date whereupon she was referred to out-patient care for follow-up treatment. The physician's testimony establishes that necessary medical services could not have been effectively or safely provided on an out-patient basis prior to the discharge date. The physician's testimony establishes that in the artificial environment of a hospital, the notations in medical records that a patient is eating and sleeping does not mean that she is able to perform those functions outside of the hospital safely and adequately or will consistently do so if left to her own devices. The HRS witness admitted that not eating and not sleeping is relevant to the question of whether a patient can perform normal ADL's. The later contention by HRS that inability to perform ADL's requires a patient to be in a "nearly vegetative" state is simply unsupported by medical testimony nor by any definition in evidence. The unrefuted testimony of the attending physician establishes that the in-patient admission of patient W.P. on April 11, 1990 met the ISD criteria for admission and continued stay and that the services were medically necessary. The patient was not recovered sufficiently for appropriate discharge until April 16, 1990. Patient D.G. (Admission of May 4, 1990 to May 11, 1990): This patient had a recent history of heavy drug usage and criminal convictions near the time of her admission. HRS had removed her children from her custody, which created an additional crisis in her life, as did the fact that her husband was then in prison. The attending physician stated that the patient was exhibiting acute withdrawal symptoms from drug usage and delirium tremors from the drugs upon her admission. She was at a high risk of resuming her heroin use and threatened suicide if she did not get help for her addiction. A urine screen performed was positive upon her admission for drug usage and withdrawal symptoms. Impending delirium tremors were exhibited at that time. She was depressed and required acute medication, being placed on a high dose of both librium and anti- depressants. D.G. could not be treated in a de-toxification unit because of her suicidal ideation and attendant depression. She received intensive therapy consisting of three sessions per day while she was hospitalized. Her depression responded to the medication and discharge planning began on her third day of admission, with a view toward placing her in a de-toxification unit. She was discharged to complete her de-toxification as soon as a placement was available. The HRS witness opined that because D.G. was not "comatose" or "impending comatose", she did not meet the admission standards for substance abuse and because she was able to sleep, eat, and dress herself in the hospital, she did not meet the admission criteria concerning performance of ADL's. The attending physician testified, however, that she was in withdrawal from heroin use, needed de-toxification, and could not be admitted to a de-toxification program until her other psychiatric problems had been stabilized. The attending physician, by his training, his experience, and by his personal contact with and treatment of the patient, is best able to evaluate the patient's medical circumstance, need for admission and treatment and the length of treatment required. Consequently, his testimony as to this patient and all the others is accepted over that of the non-physician HRS witness. Based upon the evidence presented at hearing, the in-patient admission and stay of D.G. was medically necessary and could not have been provided effectively in a less-restrictive or out-patient setting. Patient S.R. (Admission of June 20, 1990 to June 29, 1990): Upon this patient's admission, she related not having slept for two months and not having eaten for five days. She had then undergone approximately three years of out- patient treatment unsuccessfully and had no family or community-support system in the area where she lived. She related that her ex-husband had been abusive and had recently abducted her daughter and vandalized her home. She related that her ex-husband had threatened her daughter's life and had had S.R. arrested and supposedly transported to the Palm Beach County Women's Stockade. She testified that she was unable to sleep or eat and was taking 10 to 12 baths per day. She complained of being unable to remember simple tasks, to take care of simple matters such as paying her rent, and was in the habit of wearing the same clothes from three to five days in a row without changing or washing, or being unable to remember whether she had washed or not. The patient was also taking a high dosage of a chronic asthma medication, which includes steroids. This can cause serious problems with depression. The patient was severely depressed and had recently started smoking. The patient met the ADL admissions criteria and while she was in the hospital, she received services which met the intensity of services criteria. The HRS witness admitted that the medical record note which stated "past two months she had not slept at all" constitutes insomnia and the record note "is not eating, has gone five days without food" constitutes anorexia. Based upon the evidence submitted at hearing, the in-patient treatment of S.R. from June 20, 1990 to June 29, 1990 met the criteria for admissions and continued stay and was shown by the treating physician's testimony to be medically necessary. The services could not have been safely and adequately provided on an out-patient basis, and the discharge standards were not satisfied as to this patient until June 29, 1990, when she was discharged.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is therefore
