96-001709 Stadtlander Drug Company, Inc. vs. Agency For Health Care Administration
 Status: Closed
Recommended Order on Friday, August 16, 1996.


View Dockets  
Summary: No auditing hardship placed on AHCA by approving application of out-of- state prescription drug provider.

1STATE OF FLORIDA

4DIVISION OF ADMINISTRATIVE HEARINGS

8STADTLANDER DRUG COMPANY, INC., )

13)

14Petitioner, )

16)

17vs. ) CASE NO. 96-1709

22)

23AGENCY FOR HEALTH CARE )

28ADMINISTRATION, )

30)

31Respondent. )

33________________________________)

34RECOMMENDED ORDER

36Pursuant to notice, this matter was heard before the Division of

47Administrative Hearings by its assigned Hearing Officer, Donald R. Alexander, on

58July 16, 1996, in Tallahassee, Florida.

64APPEARANCES

65For Petitioner: Mark Herron, Esquire

70Post Office Box 10555

74Tallahassee, Florida 32302-2555

77For Respondent: Roger R. Maas, Esquire

83Building 3, Suite 3431

872727 Mahan Drive

90Tallahassee, Florida 32308-5403

93STATEMENT OF THE ISSUE

97The issue is whether petitioner's request for enrollment as an out-of-state

108Medicaid provider should be approved.

113PRELIMINARY STATEMENT

115This matter began on February 28, 1996, when respondent, Agency for Health

127Care Administration, issued a letter denying a request by petitioner,

137Stadtlander Drug Company, Inc., for enrollment as a Medicaid provider. As

148reasons for the denial, the agency stated that petitioner did not "meet the

161requirements for enrollment of out-of-state providers as outlined in Rule 59G-

1725.050, F. A. C.," and its "locality would create undue hardship on AHCA for

186meeting the requirements and oversight duties set forth in applicable federal

197laws, state statutes, administrative rules, regulations and manuals."

205Petitioner then requested a formal hearing under Section 120.57(1), Florida

215Statutes, to contest the proposed action.

221The matter was referred by respondent to the Division of Administrative

232Hearings on April 5, 1996, with a request that a Hearing Officer be assigned to

247conduct a formal hearing. By Notice of Hearing dated May 1, 1996, a final

261hearing was scheduled on June 18, 1996, in Tallahassee, Florida. At

272petitioner's request, the hearing was continued to July 16, 1996, at the same

285location.

286At final hearing, petitioner presented the testimony of William P.

296McCormick, its general counsel. The parties also offered joint exhibits A-J.

307All exhibits were received in evidence.

313The transcript of hearing was filed on July 26, 1996. Proposed findings of

326fact and conclusions of law were filed by petitioner and respondent on August 6

340and 9, 1996, respectively. A ruling on each proposed finding of fact has been

354made in the Appendix attached to this Recommended Order.

363FINDINGS OF FACT

366Based upon all of the evidence, the following findings of fact are

378determined:

3791. Petitioner, Stadtlander Drug Company, Inc. (SDC), is a provider of

390pharmacy services located at 600 Penn Center Boulevard, Pittsburgh,

399Pennsylvania. It is licensed by respondent, Agency for Health Care

409Administration (AHCA), as a special non-resident mail order pharmacy having been

420issued License No. PH 0013072.

4252. Petitioner is now enrolled as a Medicaid provider in twenty-three

436states around the country and provides mail-order drugs in all those states. In

449addition, it holds at least forty pharmacy licenses in various states, as well

462as thirty-five drug wholesale licenses. Petitioner's specialty is to target

472certain "disease states" and provide expensive, "high-tech" drugs to persons

482with serious, chronic illnesses such as cancer and AIDS.

4913. On November 7, 1995, petitioner submitted an application to respondent

502for enrollment as an out-of-state Medicaid provider. If the application is

513approved, petitioner would be assigned a Medicaid provider number and be able to

526provide prescription drugs by mail to Florida residents who reside within the

538State of Florida. It would then be reimbursed under the state's Medicaid

550program.

5514. After reviewing the application, including a supplemental submission by

561SDC, on February 28, 1996, AHCA denied the application on the following grounds:

574(Y)ou have failed to demonstrate that SDC meet

582the requirements for enrollment of out-of-state

588providers as outlined in Rule 59G-5.050, Florida

595Administrative Code (F.A.C.) Furthermore, SDC's

600locality would create an undo hardship on AHCA

608for meeting the requirments and oversight duties

615set forth in applicable federal laws, state

622statutes, administrative rules, regulations and

627manuals. For example, conducting on site audit

634reviews of your pharmacy operations, which

640requires (that) our field auditors take a

647physical inventory of the pharmacy department,

653and enforcing the oversight provisions cited in

660Section 409.913, Florida Statutes (F.S.), would

666be difficult and create an unwarranted expense.

673After receiving this advice, SDC filed a petition for hearing claiming that it

686had satisfied all pertinent requirements for enrollment.

6935. The parties have stipulated that there are no federal laws,

704administrative rules or manuals that would preclude SDC's enrollment as a

715Florida Medicaid provider and prevent it from providing prescribed drug services

726to qualified Medicaid beneficiaries who reside in the State of Florida.

7376. Under both federal and state law, AHCA is authorized to conduct audits

750of Medicaid pharmacy providers. The manner in which such audits are to be

763performed is set forth in the "Florida Medicaid/Unisys, Inc. Pharmacy Audit

774Program" manual. As a ground for denial, AHCA contends that, if the application

787is approved, an undue burden would be placed on the agency in auditing

800petitioner's records in Pittsburg.

8047. SDC acknowledges that there could be some hardship to AHCA in

816performing its audit responsibilities. SDC has, however, made accommodations to

826other states in attempting to address their concerns about the need to audit

839Medicaid pharmacy providers. For example, for the State of California, SDC

850maintains certified copies of all documents within that state to permit on-site

862inspection and comparison of records in California by the auditor. SDC has

874proposed to make the same kind of accommodation for AHCA.

8848. In addition to this accommodation, SDC is willing to answer by

896telephone any questions raised by Medicaid auditors and provide documentation

906for specific patients. Alternatively, if a Florida auditor found it necessary

917to make an audit of petitioner's offices in Pittsburg, SDC would willingly allow

930an on-site inspection.

9339. Other than the ground cited in its letter of denial, respondent offered

946no evidence to rebut SDT's showing that the accommodations are reasonable and

958adequate. Further, given these accommodations, there is no evidence that AHCA

969would suffer "an undue hardship" or that it would be unable to perform its

983auditing responsibilities under the Medicaid manual. Finally, since no Medicaid

993auditors from any of the twenty-three states in which SDC is certified as a

1007Medicaid provider have found it necessary to make an audit in SDC's home office

1021during the last four years, it is fair to draw an inference that the proffered

1036accommodations would be satisfactory.

104010. AHCA has also denied the application on the ground petitioner does not

1053meet any of the four criteria in Rule 59G-5.050(1), Florida Administrative Code.

1065That rule specifies the circumstances under which an out-of-state provider may

1076enroll in the Florida Medicaid program. Those criteria apply, however, when

1087out-of-state providers intend to provide services to Florida recipients who

1097purchase drugs while out of the State of Florida. In this case, petitioner

1110intends to provide services by mail to recipients who reside within the State of

1124Florida. Therefore, the rule does not apply.

113111. Because SDC has completed a provider agreement, is not under

1142suspension in Florida or any other state, and has a current pharmacy license

1155from AHCA, and its locality will not create an undue auditing hardship on AHCA,

1169its application for enrollment as an out-of-state Medicaid provider should be

1180approved.

1181CONCLUSIONS OF LAW

118412. The Division of Administrative Hearings has jurisdiction over the

1194subject matter and the parties hereto pursuant to Section 120.57(1), Florida

1205Statutes.

120613. Because petitioner is the party seeking relief, as in most Medicaid-

1218related proceedings, it bears the burden of proving by a preponderance of the

1231evidence that its application should be approved. See, e. g., Golfcrest Nursing

1243Home v. State, Agency for Health Care Admin., 662 So.2d 1330, 1334 (Fla. 1st DCA

12581995).

125914. Rule 59G-4.250(2)(a), Florida Administrative Code, requires that an

1268applicant for enrollment as a Medicaid provider:

1275(a) Sign a participating agreement with a

1282state agency;

1284(b) Not be currently under suspension from

1291the Florida Medicaid program or any other

1298state's Medicaid program; and

1302(c) Have a current pharmacy license or

1309dispensing practitioner's license from the

1314agent in the state in which the pharmacy

1322is located.

1324The undisputed evidence shows clearly that SDC meets all requirements of this

1336rule.

133715. Section 409.913(1), Florida Statutes, imposes upon AHCA a requirement

1347that it "conduct . . . investigations, analyses, and audits of possible fraud,

1360abuse and neglect in the Medicaid program." The evidence shows that AHCA will

1373be able to carry out this responsibility without undue hardship if SDC's

1385application is approved.

138816. Respondent further contends that petitioner has failed to satisfy the

1399requirements of Rule 59G-5.050(1), Florida Administrative Code. That rule

1408specifies the criteria for enrollment as an out-of-state provider when the

1419applicant intends to provide services to Florida residents while they are in

1431another state. Although respondent contends that the rule is controlling in the

1443case at bar, this is not so since the rule merely implements 42 C.F.R. s.

1458431.52, which requires each state plan to contain provisions that Medicaid

1469services be furnished to its residents while absent from the state. Since SDC

1482does not intend to provide the type of services contemplated by this rule, the

1496provision is deemed to be inapplicable.

150217. Finally, in its proposed recommended order, respondent has cited the

1513case of Nutritional Support Services, L.P. et al v. Miller, 806 F.Supp. 977

1526(N.D. Ga. 1992) to support its position. In that case, the State of Georgia

1540imposed a new policy which required suppliers of durable medical supplies to

1552Georgia Medicaid recipients to have a valid business license and an in-state

1564business location or be located within a fifty mile radius of the state border.

1578Plaintiffs, who were out-of-state suppliers, filed a motion for preliminary

1588injunction to prevent the state from enforcing the new policy. They did so on

1602the theory that the policy violated the Social Security Act and various federal

1615constitutional precepts. In denying the motion for an injunction, the court

1626held that the plaintiffs had failed to prove that they would have a substantial

1640likelihood of ultimate success on the merits of their claims. For purposes of

1653ruling on the motion, the court accepted the state's contention that the

1665challenged restrictions were "intended to ensure that services can be monitored

1676in a manner that protects the best interests of the recipients," and that these

1690restrictions were consistent with the statutory Medicaid scheme. Id. at 981.

1701Drawing upon this language in the opinion, AHCA suggests here that its

"1713restrictions" are likewise reasonable and in the best interests of the

1724recipients. While this may be true, the purpose and reasonableness of the

1736restrictions are not in issue. Rather, SDC contends only that it has satified

1749all pertinent requirements for enrollment, and that the remaining requirement is

1760not relevant. This being so, the case is not deemed to be controlling, and

1774SDC's application for enrollment should be approved.

1781RECOMMENDATION

1782Based on the foregoing Findings of Fact and Conclusions of Law, it is

1795RECOMMENDED that the Agency for Health Care Administration enter a final

1806order granting petitioner's application for enrollment as an out-of-state

1815Medicaid provider.

1817DONE AND ENTERED this 16th day of August, 1996, in Tallahassee, Florida.

1829___________________________________

1830DONALD R. ALEXANDER, Hearing Officer

1835Division of Administrative Hearings

1839The DeSoto Building

18421230 Apalachee Parkway

1845Tallahassee, Florida 32399-1550

1848(904) 488-9675

1850Filed with the Clerk of the

1856Division of Administrative Hearings

1860this 16th day of August, 1996.

1866APPENDIX TO RECOMMENDED ORDER

1870Petitioner:

18711. Partially accepted in finding of fact 1.

18792. Partially accepted in finding of fact 3.

18873-4. Partially accepted in finding of fact 4.

18955-6. Partially accepted in finding of fact 11.

19037. Partially accepted in finding of fact 5.

19118. Rejected as being unnecessary.

19169. Partially accepted in finding of fact 5.

192410. Partially accepted in finding of fact 10.

193211. Partially accepted in finding of fact 3.

194012. Rejected as being unnecessary.

194513. Partially accepted in finding of fact 6.

195314-15. Rejected as being unnecessary.

195816. Partially accepted in finding of fact 9.

196617. Partially accepted in finding of fact 7.

197418-19. Partially accepted in finding of fact 9.

198220. Partially accepted in finding of fact 7.

199021. Partially accepted in finding of fact 10.

199822. Rejected as being unnecessary.

2003Respondent:

20041. Rejected as being unnecessary.

20092. Rejected. See finding of fact 10.

20163. Partially accepted in finding of fact 10.

20244. Rejected as being unsupported by the evidence.

2032Note - Where a proposed finding of fact has been partially accepted, the

2045remainder has been rejected as being irrelevant, not supported by the evidence,

2057unnecessary, subordinate, or a conclusion of law.

2064COPIES FURNISHED:

2066Mark Herron, Esquire

2069Post Office Box 10555

2073Tallahassee, Florida 32302-2555

2076Roger R. Maas, Esquire

2080Building 3, Suite 3431

20842727 Mahan Drive

2087Tallahassee, Florida 32308-5403

2090R. S. Power, Agency Clerk

2095Agency for Health Care Administration

2100Building 3, Suite 3431

21042727 Mahan Drive

2107Tallahassee, Florida 32308-5403

2110Jerome W. Hoffman, General Counsel

2115Agency for Health Care Administration

2120Building 3, Suite 3431

21242727 Mahan Drive

2127Tallahassee, Florida 32308-5403

2130NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

2136All parties have the right to submit to the agency written exceptions to this

2150Recommended Order. All agencies allow each party at least ten days in which to

2164submit written exceptions. Some agencies allow a larger period within which to

2176submit written exceptions. You should contact the Agency for Health Care

2187Administration concerning its rules on the deadline for filing exceptions to

2198this Recommended Order. Any exceptions to this Recommended Order should be

2209filed with the Agency for Health Care Administration.

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Date
Proceedings
Date: 11/04/1996
Proceedings: Notice of Appeal received. (filed by: Petitioner)
Date: 10/14/1996
Proceedings: (Respondent) Final Order received.
PDF:
Date: 10/03/1996
Proceedings: Agency Final Order
PDF:
Date: 10/03/1996
Proceedings: Recommended Order
PDF:
Date: 08/16/1996
Proceedings: Recommended Order sent out. CASE CLOSED. Hearing held 07/16/96.
Date: 08/09/1996
Proceedings: (Respondent) Notice of Filing Proposed Recommended Order; (Respondent) Proposed Recommended Order received.
Date: 08/06/1996
Proceedings: (Petitioner) Notice of Filing Proposed Recommended Order; (Petitioner) Proposed Recommended Order (for Hearing Officer signature) received.
Date: 07/26/1996
Proceedings: Notice of Filing; DOAH Court Reporter Final Hearing Transcript received.
Date: 07/16/1996
Proceedings: CASE STATUS: Hearing Held.
Date: 06/17/1996
Proceedings: Petitioner`s First Request for Production of Documents received.
Date: 06/05/1996
Proceedings: Second Notice of Hearing sent out. (Hearing set for 7/16/96; 9:00am;Tallahassee; Petitioner`s unopposed request for continuance is granted)
Date: 06/04/1996
Proceedings: Petitioner`s Request for Continuance; Cover Letter received.
Date: 05/01/1996
Proceedings: Notice of Hearing sent out. (Hearing set for 6/18/96; 9:00am; Tallahassee)
Date: 05/01/1996
Proceedings: Amended Joint Response to Initial Order received.
Date: 05/01/1996
Proceedings: Joint Response to Initial Order received.
Date: 04/29/1996
Proceedings: Joint Response to Initial Order; Cover Letter received.
Date: 04/12/1996
Proceedings: Initial Order issued.
Date: 04/05/1996
Proceedings: Notice; Petition for Formal Administrative Hearing; Agency Action letter received.

Case Information

Judge:
D. R. ALEXANDER
Date Filed:
04/05/1996
Date Assignment:
04/12/1996
Last Docket Entry:
11/04/1996
Location:
Tallahassee, Florida
District:
Northern
Agency:
ADOPTED IN TOTO
 

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Related Florida Statute(s) (2):

Related Florida Rule(s) (1):