96-001709
Stadtlander Drug Company, Inc. vs.
Agency For Health Care Administration
Status: Closed
Recommended Order on Friday, August 16, 1996.
Recommended Order on Friday, August 16, 1996.
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.
- Date
- Proceedings
- Date: 11/04/1996
- Proceedings: Notice of Appeal received. (filed by: Petitioner)
- Date: 10/14/1996
- Proceedings: (Respondent) Final Order received.
- 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