00-003553RU Medimpact Healthcare Systems, Inc. vs. Department Of Management Services Status: Closed DOAH Final Order on Tuesday, November 21, 2000.

Summary: Statements contrary to agency rules are not statements of general applicability. They are statements with no applicability.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MEDIMPACT HEALTHCARE SYSTEMS, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 00-3553RU

)

DEPARTMENT OF MANAGEMENT )

SERVICES, )

)

Respondent, )

)

and )

)

MERCK-MEDCO MANAGED CARE, L.L.C. )

and CAREMARK INC., )

)

Intervenors. )

__________________________________)

MEDIMPACT HEALTHCARE SYSTEMS, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 00-3900BID

)

DEPARTMENT OF MANAGEMENT )

SERVICES, )

)

Respondent, )

)

and )

)

MERCK-MEDCO MANAGED CARE, L.L.C. )

and CAREMARK INC., )

)

Intervenors. )

__________________________________)

FINAL ORDER

These consolidated cases were heard on October 3, 2000,

before David M. Maloney, Administrative Law Judge, in

Tallahassee, Florida. This Final Order covers the issues in

Case No. 00-3553RU. A separate Recommended Order is being issued

simultaneously in Case No. 00-3900BID.

APPEARANCES

For Petitioner: Rober t P. Smith, Esquire

Timothy G. Schoenwalder, Esquire

Shannon L. Novey, Esquire

Hopping, Green, Sams & Smith, P.A.

123 South Calhoun Street

Post Office Box 6526

Tallahassee, Florida 32302-6526

For Respondent: Julia P. Forrester, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

For Intervenor Caremark Inc:

Thomas J. Maida, Esquire

Austin B. Neal, Esquire

Foley & Lardner

300 East Park Avenue

Tallahassee, Florida 32301

Donna H. Stinson, Esquire

Broad & Cassell

215 South Monroe Street, Suite 400

Tallahassee, Florida 32301

For Intervenor Merck-Medco Managed Care, L.L.C.:

Fred McCormack, Esquire

Landers & Parson, P.A.

310 West College Avenue

Tallahassee, Florida 32301

STATEMENT OF THE ISSUES

Whether the Department of Management Services ("DMS") or the

("Department") has an unpromulgated rule which states, in effect,

that the Department will select the solicitation procurement

method known as an Invitation to Negotiate when it is in the

Department's best interests to do so even if rule requirements

for the selection have not been met? Whether the statement

contained in the Invitation to Negotiate (ITN Number-DSGI 00-001)

issued in April 2000 by the Division of State Group Insurance

("DSGI") for the purchase of pharmacy benefits management

services to the effect that "a late-submitted offer to negotiate

will be returned unopened" is an unpromulgated rule? Whether,

although not pled, the Petitioner proved at final hearing the

existence of other unpromulgated rules?

PRELIMINARY STATEMENT

On August 28, 2000, MedImpact Healthcare Systems, I nc.

("MedImpact"), filed a petition with the Division of

Administrative Hearings ("DOAH"). Denominated "MedImpact

Healthcare Systems, Inc's Petition to Determine Violations of

s.120.54(1)(a) by Department Statements Constituting Unadopted

Rules," the petition invokes DOAH's authority under Section

120.56(4)(a), Florida Statutes. It requests DOAH

(1) to determine that the Department of

Management Services ("DMS") has violated

s.120.54(1)(a) by failing to adopt as rules

one or both of the two statements of general

applicability hereinafter described, and (2)

to order, in accordance with s.120.56(4)(d),

that DMS must discontinue all reliance on

such statement(s) and, as remedy to

Petitioner, must rescind all action taken

adverse to Petitioner's interest in reliance

on such statements, as also hereinafter

described.

The petition further alleges the following with regard to the

first of the two statements it declares to be of general

applicability:

DMS . . . proceeded to effectuate an agency

statement of general applicability which

[w]as described in sworn deposition testimony

. . . in terms or effect, that "We [DMS] will

use the Invitation to Negotiate

[("ITN")]whenever it is to the agency's best

interests to do so."

Petition, p. 3. As for the second statement of which the

petition complains, the petition cites to Section 3.1 of the

Invitation to Negotiate where the petition alleges it is stated

unequivocally "PROPOSALS RECEIVED AFTER THE SPECIFIED DATE AND

TIME WILL BE RETURNED UNOPENED." Petition, p. 5. The petition

further alleges that the quoted sentence from Section 3.1 of the

ITN is in conflict with the statement in Section 2.19 of the ITN

that "Proposals may be rejected" for reasons including when

"received after the submission deadline."

On Septembe r 1, 2000, the Bureau of Administrative Code at

the Department of State was notified of the existence of the

petition and provided with a copy. One week later, following

assignment of Case No. 00-3553RU to the petition, the undersigned

was designated as the administrative law judge to conduct the

proceedings.

An Order was rendered September 11, 2000, following a

telephone conference call with the parties, requiring the

Division of State Group Insurance ("DSGI") in DMS to notify all

respondents to the ITN of the existence of the proceeding. On

the same day, the case was set for hearing to commence October 3,

2000, at DOAH.

A hearing was conducted on September 21, 2000, on DSGI's

motion to dismiss. At the hearing, discussion occurred with

regard to a related case pending at DOAH, Case No. 00-3900BID.

Following the hearing, an Order of Consolidation was rendered

consolidating the two proceedings for all purposes except that

the DOAH proceedings would culminate in separate orders: in the

instance of Case No. 00-3553RU, a final order; in the instance of

Case No. 00-3900BID, a recommended order.

The motion to dismiss was denied on September 26, 2000. By

the same order denying the motion to dismiss, petitions to

intervene filed by Merck-Medco Managed Care, L.L.C. ("MMMC") and

Caremark, Inc., were granted subject to proof of standing. After

further motion practice, including a motion which resulted in an

order excluding consideration of the scoring process by which

Caremark's response was ranked higher than MMMC's, the

consolidated cases proceeded to hearing as scheduled originally

in Case No. 3553RU. A description of the hearing is contained in

the R ecommended O rder rendered in Case No.00-3900BID

simultaneously with the rendition of this O rder.

Proposed final orders were received in a timely fashion from

all parties. This final order follows.

FINDINGS OF FACT

1. The findings of fact in the Recommended Order in Case

No. 00-3900BID are hereby incorporated into this Final Order.

2. In the ITN there is the st atement that " PROPOSALS

RECEIVED AFTER THE SPECIFIED TIME AND DATE WILL BE RETURNED

UNOPENED. "

3. It was not proven that Dr. Phillips on behalf of DSGI

made the statement to the effect that "DMS will use the

Invitation to Negotiate whenever it is in the agency's best

interest to do so."

4. Other statements made by DSGI in the context of

selection of the ITN as the solicitation method in this case were

statements that demonstrated DSGI was not in compliance with an

existing DMS R ule, Rule 60A-1.001(2), Florida Administrative

Code.

CONCLUSIONS OF LAW

5. The Division of Administrative Hearing has jurisdiction

over the parties and the subject matter of this proceeding

pursuant to Section 120.56(4), Florida Statutes.

6. The term "rule" is defined in th e Administrative

Procedure Act, Chapter 120, Florida Statutes, to mean

each agency statement of general

applicability that implements, interprets, or

prescribes law or policy or describes the

procedure or practice requirements of an

agency and includes [certain forms] . . .

Section 120.52(15), Florida Statutes.

7. "Each agency statement defined as a rule by s. 120.52

shall be adopted by the rulemaking procedure provided by this

section as soon as feasible and practicable." Section 120.54(1),

Florida Statutes.

8. Under Section 120.56(4)(a), Florida Statutes, "a

substantially affected person may seek an administrative

determination of the invalidity of an existing rule at any time

during the existence of the rule."

9. The statement in the ITN that lat e proposals will be

returned unopened does not meet the definition of a rule. It is

not a statement of "general" applicability. It is a statement

that is specific to the ITN. It has no applicability other than

to the specific organizations or persons who submit an offer to

negotiate pursuant to the agency's invitation to negotiate.

10. The statement alleged to have been made by Dr. Phillips

in deposition to the effect that DSGI will use ITNs when in the

agency's interest was not proven to have been made.

11. The other statements not pled but proven to have been

made by Dr. Phillips that she chose the ITN as most "appropriate"

when the ITN Rule, whether she was aware of its existence or not,

required a finding that ITBs and RFPs were not practicable and

then required documentation of the finding, are not rules. They

are statements evincing the A gency's failure to comply with DMS

rules or interpretations of rules that significantly deviate from

the plain reading of the ITN Rule. See Best Western Tivoli Inn

et al. v. Department of Transportation , 448 So. 2d 1052 (Fla. 1st

DCA 1984).

12. In the final analysis, an agency must follow its own

rules. Marrero v. Department of Professional Regulation , 622 So.

2d 1109, 1112 (Fla. 1st DCA 1993). Statements confirming the

failure to do so do not constitute unpromulgated rules. The

statements are not ones of general applicability. They are

statements with no applicability.

ORDER

Based on the foregoing, it is hereby

ORDERED that MedImpact Healthcare Systems, Inc.'s Petition

to Determine Violations of Section 120.54(1)(a) by Department

Statements Constituting Unadopted Rules is DENIED.

DONE AND ORDERED this 21st day of November, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

DAVID M. MALONEY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 21st day of November, 2000.

COPIES FURNISHED:

Thomas D. McGurk, Secretary

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Bruce Hoffmann, General Counsel

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Julia P. Forrester, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Robert P. Smith, Esquire

Timothy G. Schoenwalder, Esquire

Hopping, Green, Sams & Smith, P.A.

123 South Calhoun Street

Post Office Box 6526

Tallahassee, Florida 32302-6526

Fred McCormack, Esquire

Landers & Parson, P.A.

310 West College Avenue

Tallahassee, Florida 32301

Thomas J. Maida, Esquire

Austin B. Neal, Esquire

Foley & Lardner

300 East Park Avenue

Tallahassee, Florida 32301

Donna H. Stinson, Esquire

Broad & Cassel

215 South Monroe Street, Suite 400

Tallahassee, Florida 32301

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to Section 120.68, Florida Statutes.

Review proceedings are governed by the Florida rules of Appellate

Procedure. Such proceedings are commenced by filing one copy of

a notice of appeal with the Clerk of the Division of

Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First

District, or with the District Court of Appeal in the Appellate

District where the party resides. The notice of appeal must be

filed within 30 days of rendition of the order to be reviewed.