98-003419RU Paul David Johnson vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Tuesday, May 18, 1999.

Summary: Challenge to an Agency statement as an unpromulgated rule dismissed as being moot after Agency adopted statement as rule during pendency of proceeding.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PAUL DAVID JOHNSON, )

)

Petitioner, )

)

vs. ) Case No. 98-3419RU

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

__________________________________)

FINAL ORDER OF DISMISSAL

On July 24, 1998, Petitioner filed a petition (Petition)

challenging, pursuant to Section 120.56, Florida Statutes, "the

Agency for Health Care Administration's (ACHA or the Agency) rule

as evidenced by or embodied in its four (4) page printed policy

entitled 'Direct Reimbursement/Payment to Recipients'", which was

attached to the petition and referred to therein (as it will be

in this Order) as the "Rule." The Rule, as Petitioner indicated

in his Petition, "limits reimbursement for out-of-pocket

expenditures to only those bills incurred following an erroneous

denial of benefits" and, in addition, "limits the amount of

reimbursement to the Medicaid payment level- regardless of how

much a recipient was forced to pay out-of-pocket." In his

Petition, Petitioner challenges the Rule on the following

grounds:

A. The Agency has materially failed to

follow the applicable rulemaking procedures

required by the Administrative Procedures

Act. The "policy" meets the statutory

definition of a "rule" and it was not

promulgated. Section 120.52(15), Fla. Stat.

It is the Agency's statement of general

applicability implementing, interpreting or

prescribing law or policy. The rule was not

adopted under section 120.54, Florida

Statutes, requiring that rules be properly

promulgated.

B. The rule is arbitrary and capricious and

denies petitioner reimbursement to which he

is entitled. The rule violates section

120.52(8)(e), Florida Statutes.

C. The rule contravenes section

409.901(14),(15),(18), Florida Statutes in

that it violates federal law.

During a telephone conference call held on August 3, 1998,

both parties indicated that they would be available for hearing

on October 8, 1998, and that they would have no objection to the

hearing being held more than 30 days from the date of the

undersigned's assignment to the instant case if the undersigned

determined that good cause existed to extend the hearing date

beyond this 30-day period. Based upon the information provided

by the parties during the telephone conference call, the

undersigned determined that there was good cause for such an

extension and, accordingly, on August 5, 1998, he issued a notice

advising the parties that the final hearing in this case would be

held on October 8, 1998.

On September 11, 1998, Respondent filed a Motion for Summary

Final Order Dismissing the Petition (Respondent's First Motion),

in which it asserted that the issue raised by Petitioner in his

Petition is now moot inasmuch as Respondent "has commenced

rulemaking by proposing a rule" addressing the agency policy set

forth in the Rule. On September 15, 1998, the undersigned issued

an Order directing Petitioner to file a written response to

Respondent's First Motion. On September 25, 1998, Petitioner

filed such a written response opposing Respondent's First Motion.

On October 2, 1998, the undersigned issued an Order denying

Respondent's First Motion. In his Order, the undersigned gave

the following explanation for his ruling:

It appears from a review of "Respondent's

Exhibit 3," which was referenced in, and

appended to, Respondent's [First] Motion,

that, although Respondent has taken steps

which may one day lead to the adoption of a

rule codifying the agency statement which is

the subject of Petitioner's rule challenge

petition, Respondent, at present, is merely

in the "rule development" stage of rulemaking

and thus has not yet even published notice,

pursuant to Section 120.54(3)(a), Florida

Statutes, of its intention to adopt such a 1

rule. Under such circumstances,

Respondent's request that Petitioner's

petition be dismissed on the ground of

mootness is premature.

On October 1, 1998, Petitioner filed a motion requesting

that the final hearing in this case, scheduled for October 8,

1998, be continued. In his motion, Petitioner announced that he

intended to file a motion for summary final order and requested

permission to do so on or before October 23, 1998. On October 2,

1998, the undersigned issued an Order continuing the final

hearing and giving Petitioner until October 23, 1998, to file his

motion for summary final order. The Order provided, in pertinent

part, as follows:

1. Good cause having been shown,

Petitioner's Motion for Continuance is

granted.

2. Petitioner's request that he be given

until October 23, 1998, to file a motion for

summary final order in this case is granted.

3. Petitioner's motion for summary final

order shall comply with the requirements of

Rule 28-106.204, Florida Administrative Code.

In addition, the motion shall contain a

statement of those undisputed material facts

upon which he believes the undersigned should

base his decision in the instant case.

4. Respondent shall file a response to

Petitioner's motion for summary final order

within 14 days of being served with the

motion. In its response, in addition to

presenting any legal argument it wishes to in

support of its position on the motion,

Respondent shall identify with specificity:

(1) any fact contained in Petitioner's

statement of undisputed material facts that

it disputes; and (2) any fact not contained

in Petitioner's statement of undisputed

material facts on which it believes the

decision in the instant case should be based.

On October 22, 1998, Petitioner filed a Motion for Summary

Final Order Declaring Rule Invalid and Statement of Undisputed

Material Facts (Petitioner's Motion), 2 in which he stated the

following:

Petitioner PAUL DAVID JOHNSON, pursuant to 3

Fla. Admin. Code R. 60Q-2.030, moves for

Summary Final Order declaring that

Respondent's Rule (attached as Exhibit "A" to

the Petition to Determine Invalidity of

Respondent's Rule) entitled "Direct

Reimbursement/Payment of Recipients" is

invalid. There are no material facts in

dispute and only legal issues remain to be

interpreted. A full statement of uncontested 4

facts and citations to the record is as

follows:

1. Paul David Johnson resides at 1109

Fleming Street, Key West, Florida 33040.

2. He applied for Supplemental Security

Income (SSI) and Medicaid on February 29,

1996.

3. This application was denied on July 19,

1996.

4. Following an administrative hearing, by

decision dated March 13, 1998, petitioner was

found eligible for SSI and Medicaid.

5. The decision found that he was disabled

as of January 26, 1996.

6. By notice dated July 6, 1998, Petitioner

was advised that Medicaid was approved

effective July 1, 1998.

7. Prior to August 4, 1998, when his

Medicaid card was issued, he was forced to

pay the market rate for medically necessary

prescription medications. The pharmacy would

not extend credit or accept less than full

payment. He had no health insurance to pay

for the prescriptions.

8. Florida's Medicaid program covers

medically necessary prescription medications.

Section 409.906(19), Fla. Stat.

9. The Agency for Health Care Administration

(AHCA) is the agency affected by this

petition.

10. Exhibit A to the Petition (referred to

as "the Rule" or "the Policy") embodies the

Agency's policy regarding direct

reimbursement to Medicaid recipients.

11. Under the Rule, Petitioner's

out-of-pocket expenses for medically

necessary medications are not fully

reimbursable.

12. The rule states, "Any bills that were

paid before the applicant/recipient received

an erroneous decision are not eligible for

reimbursement." It is AHCA's policy not to

reimburse for bills paid prior to an

erroneous denial of benefits.

13. Further, the Rule provides that AHCA

will reimburse Medicaid covered services

provided on or after an erroneous denial of

benefits only at the Medicaid rate.

14. Petitioner submitted medical bills

totaling $1,080.92 for reimbursement and was

reimbursed only $665.75.

15. AHCA determines reimbursement for

Medicaid covered services on behalf of

Medicaid recipients and promulgates rules

regarding reimbursement.

16. The Rule is the Agency's statement of

general applicability implementing,

interpreting or prescribing law or policy.

17. Nevertheless, AHCA did not promulgate

its Rule under section 120.54, Florida

Statutes.

As a matter of law:

a. Petitioner has been substantially

affected by the challenged rule and therefore

has standing to bring this action.

b. The challenged rule is an invalid

exercise of legislatively delegated authority

pursuant to section 120.52(8), Florida

Statutes because the rule conflicts with 42

U.S.C. Sections 1396(a)(10)(B) and (34), 42

U.S.C. Section 1396o(b)(3), 42 C.F.R. Section

431.426 and the cases of Kurnik v. Dept. of

Health & Rehab. Serv. , 661 So. 2d 914 (Fla.

1st DCA 1995), Greenstein v. Bane , 833 F.

Supp. 1054 (S.D.N.Y 1993) and Blanchard v.

Forrest , 71 F.3d 1163 (5th Cir. 1996), cert .

denied 135 L.Ed. 2nd 1062 (1996).

WHEREFORE, petitioner requests that the

[Administrative Law Judge] enter a Final

Summary Order declaring that the Rule is an

invalid exercise of delegated legislative

authority.

On November 2, 1998, Respondent filed a Second Motion to

Dismiss the Petition and Response to Petitioner's Motion for

Summary Final Order (Respondent's Second Motion), in which it

stated the following: 5

Respondent, State of Florida, Agency for

Health Care Administration (AHCA) moves again

to dismiss this case as moot and responds to

Petitioner's motion for summary judgment

final order. In support of its motion,

Respondent says as follows:

1. On October 2, 1998, the Administrative

Law Judge ruled that:

"... Respondent, at present is merely in the

'rule development' stage of rulemaking and

thus has not yet even published notice,

pursuant to Section 120.54(3)(a), Florida

Statutes, of its intention to adopt such a

rule. Under such circumstances, Respondent's

request that Petitioner's petition be

dismissed on the ground of mootness is

premature."

2. Attached is AHCA's notice of proposed

rulemaking.

3. AHCA is the state agency authorized to

administer the Medicaid program. Section

409.902, Fla. Stat. Petitioner has finally

conceded this point.

4. AHCA's proposed rule addresses the

allegations in the petition that a rule is

needed to allow AHCA to reimburse Medicaid

recipients, like Mr. Johnson. Section

120.56(4)(e), Fla. Stat.

5. Petitioner sought an administrative

determination that AHCA's policy statement on

direct reimbursement of Medicaid recipients

violated Section 120.54(1)(a), Fla. Stat.

Section 120.54(4)(a), Fla. Stat.

6. AHCA can make direct reimbursement to

Medicaid recipients, like Mr. Johnson, who

paid for covered services after the Social

Security Administration's erroneous

determination for ineligibility was reversed.

42 CFR Section 447.25(b).

7. Payment is made at the level of AHCA's

fee schedule or the upper limits as specified

in the State plan for the services in

question, which was in effect at the time the

service was provided, even though Mr. Johnson

may have paid more than that amount. 42 CFR

Section 447.25(d).

8. Petitioner's September 25, 1998 response

to the motion to dismiss conceded that [the]

AHCA policy statement is being adopted by the

proper statutory rulemaking procedures. See

Sections 120.54(1)(a) and 120.56(4)(e), Fla.

Stat.

9. On September 29, 1998, Petitioner's own

counsel participated in the hearing on the

rule.

10. AHCA believes that the relevant and

material facts viewed in a light most

favorable to Petitioner now justify a

dismissal of the petition in this case.

11. AHCA's proposed rule makes moot the issue

raised by the Petitioner. See State v.

Hazellief , 148 So. 2d 28 (2nd DCA 1962),

where the question of the extent to which

additional grounds for relief may be

considered and reviewed became moot because

the court found that the trial court did not

err. See St. Pierre v. United States , 319

U.S. 41, 63 S.Ct. 910, 87 L.Ed. 1199 (1943)

where the court dismissed a moot petition.

12. The amount reimbursed for services to

Petitioner, [a] Medicaid recipient, must be

the same as those paid on behalf of other

medically needy recipients to the extent of

actual funds expended. See 42 U.S.C. Section

1396(a)(10)(B) and 42 CFR Section 440.20.

13. Petitioner has been reimbursed on his

claims for medical assistance under the

Medicaid program.

14. The sole basis of Petitioner's standing

to bring his challenge to the policy in this

case was his request for reimbursement of

medical expenses under the Medicaid program.

See petition paragraphs 17-21. Minnehoma

Auto Ass'n, Inc. v. Bill Seidle's Nissan,

Inc. , 560 So. 2d 385 (3rd DCA 1990), where a

party was dismissed with the understanding it

could file its action appropriately. Compare

State ex rel. Sheven v. Morgan , 289 So. 2d

782 (2nd DCA 1974), where a party maintained

standing.

15. If Petitioner is substantially affected

by a change in the proposed rule, then he can

seek a determination of the validity of such

change. Section 120.56(2)(a), Fla. Stat.

See Dep't of Business and Professional

Regulation v. Calder Race Course, Inc. , 23

Fla. L. Weekly D1795, 1998 WL 422515 (1st DCA

1998).

Therefore, AHCA respectfully requests that

the petition be dismissed and this case

closed.

On November 3, 1998, the undersigned issued an Order directing

Petitioner, by November 10, 1998, to file a written response to

Respondent's Second Motion "identify[ing] those assertions in the

Motion, factual or otherwise, with which he disagrees and

explain[ing] the basis of his disagreement."

Petitioner filed such a response on November 10, 1998. In

his response, Petitioner stated, among other things, the

following:

AHCA's Second Motion to Dismiss and Response

to Petitioner's Motion for Summary Final

Order, primarily reiterates the arguments

made in its first Motion for Summary Final

Order. (The first motion) The only new

development is that Respondent has now

published notice of a proposed rule. This

proposed rule incorporates the same

reimbursement policies which petitioner

challenges. Publication of the proposed rule

abates petitioner's procedural claim that

AHCA's policies have not been properly 6

promulgated as a rule. However, such

publication does not affect the continued

viability of petitioner's other claims

challenging the substance of these

policies. . . .

This case raises both procedural and

substantive challenges to AHCA's unpublished

rule. Section 120.56(4)(f), Fla. Stat.

specifically authorizes this consolidation of

substantive and procedural claims into the

same action. Certainly, such consolidation

is more efficient than dual litigation.

Nevertheless, AHCA argues that it may moot

substantive, as well as procedural,

challenges simply by publishing a virtually

identical proposed rule. If AHCA's

interpretation is correct, the prudent

petitioner would file separate cases raising

his procedural and substantive claims or

simply forgo raising procedural claims

altogether.

Either alternative frustrates the public

policy of the Administrative Procedures Act.

In one case, dual litigation impedes judicial

economy. In the second case, the Agency's

failure to duly promulgate rules is never

brought to judicial scrutiny. Indeed, if

AHCA can prevent litigation of substantive

claims merely by publishing a rule identical

in substance to the challenged rule, its

initial reliance on an unpromulgated policy

is rewarded. AHCA cites no authority which

compels such ludicrous results. Petitioner

substantive claims remain viable. . . .

Oral argument on Petitioner's Motion and Respondent's Second

Motion was heard on November 16, 1998. On November 17, 1999, the

undersigned issued an Order, which provided, in pertinent part,

as follows:

In the instant case, Petitioner is

challenging a policy statement made by

Respondent that he claims constitutes a

"rule," within the meaning of Section 7

120.52(15), Florida Statutes, but has not

yet been adopted by Respondent in accordance

with the rulemaking provisions of Chapter

120, Florida Statutes. He initiated his

challenge by filing a petition directly with

Division of Administrative Hearings

(Division) pursuant to Section 120.56,

Florida Statutes.

Any person substantially affected by an

unpromulgated rule may challenge that rule

pursuant to Section 120.56, Florida Statutes.

Such a challenge must be brought pursuant to

subsection (4) of Section 120.56, Florida

Statutes. See Section 120.56(4)(f), Florida

Statutes ("All proceedings to determine a

violation of s. 120.54(1)(a) shall be brought

pursuant to this subsection.").

It is apparent from a reading of subsection

(4) of Section 120.56, Florida Statutes, that

the only issue to be decided by the

administrative law judge in a proceeding

brought under this subsection is "whether all

or part of [the agency] statement [in

question] violates s. 120.54(1)(a)," Florida

Statutes, which provides as follows:

"(a) Rulemaking is not a matter of agency

discretion. 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.

1. Rulemaking shall be presumed feasible

unless the agency proves that:

a. The agency has not had sufficient time to

acquire the knowledge and experience

reasonably necessary to address a statement

by rulemaking;

b. Related matters are not sufficiently

resolved to enable the agency to address a

statement by rulemaking; or

c. The agency is currently using the

rulemaking procedure expeditiously and in

good faith to adopt rules which address the

statement.

2. Rulemaking shall be presumed practicable

to the extent necessary to provide fair

notice to affected persons of relevant agency

procedures and applicable principles,

criteria, or standards for agency decisions

unless the agency proves that:

a. Detail or precision in the establishment

of principles, criteria, or standards for

agency decisions is not reasonable under the

circumstances; or

b. The particular questions addressed are of

such a narrow scope that more specific

resolution of the matter is impractical

outside of an adjudication to determine the

substantial interests of a party based on

individual circumstances."

If the administrative law judge rules in

favor of the challenger on this issue, the

agency must "immediately discontinue all

reliance upon the statement or any

substantially similar statement as a basis

for agency action." Section 120.56(4)(d),

Florida Statutes. Furthermore, upon the

entry of an order finding in favor of the

challenger, the administrative law judge must

"award reasonable costs and reasonable

attorney's fees to the [challenger], unless

the agency demonstrates that the statement is

required by the Federal Government to

implement or retain a delegated or approved

program or to meet a condition to receipt of

federal funds."

The agency can avoid an adverse ruling in a

Section 120.56(4) proceeding (and the

aforementioned consequences of such a ruling)

if, prior to the entry of a final order in

the case, it publishes, pursuant to Section

120.54(3), Florida Statutes, a proposed rule

"which address[es] the statement" and acts

"expeditiously and in good faith" to adopt

the rule in accordance with the rulemaking

requirements of Chapter 120, Florida 8

Statutes. Sections 120.54(1)(a)1.c and

120.56(4)(e), Florida Statutes; Savona v.

Agency for Health Care Administration , 23

Fla. L. Weekly D2246a (Fla. 1st DCA September

28, 1998). The taking of these steps by the

agency, however, does not leave those

substantially affected by the agency's policy

statement without a means to challenge the

substance of the agency policy on the ground

that it is a "invalid exercise of delegated

legislative authority," within the meaning of

Section 120.52(8), Florida Statutes, which

provides as follows:

"As used in this act [Chapter 120, Florida

Statutes]:

(8) 'Invalid exercise of delegated

legislative authority' means action which

goes beyond the powers, functions, and duties

delegated by the Legislature. A proposed or

existing rule is an invalid exercise of

delegated legislative authority if any one of

the following applies:

(a) The agency has materially failed to

follow the applicable rulemaking procedures

or requirements set forth in this chapter;

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is

required by s. 120.54(3)(a)1.;

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required by

s. 120.54(3)(a)1.;

(d) The rule is vague, fails to establish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(e) The rule is arbitrary or capricious;

(f) The rule is not supported by competent

substantial evidence; or

(g) The rule imposes regulatory costs on the

regulated person, county, or city which could

be reduced by the adoption of less costly

alternatives that substantially accomplish

the statutory objectives.

A grant of rulemaking authority is necessary

but not sufficient to allow an agency to

adopt a rule; a specific law to be

implemented is also required. An agency may

adopt only rules that implement, interpret,

or make specific the particular powers and

duties granted by the enabling statute. No

agency shall have authority to adopt a rule

only because it is reasonably related to the

purpose of the enabling legislation and is

not arbitrary and capricious, nor shall an

agency have the authority to implement

statutory provisions setting forth general

legislative intent or policy. Statutory

language granting rulemaking authority or

generally describing the powers and functions

of an agency shall be construed to extend no

further than the particular powers and duties

conferred by the same statute."

Such a challenge may be made pursuant to

subsection (2) of Section 120,56, Florida

Statutes, by filing a petition with the

Division "within 21 days after the date of

publication of the notice [of the proposed

rule] required by s. 120.54(3)(a), within 10

days after the final public hearing is held

on the proposed rule as provided by s.

120.54(3)(c), within 20 days after the

preparation of a statement of estimated

regulatory costs required pursuant to s.

120.541, if applicable, or within 20 days

after the date of publication of the notice

required by s. 120.54(3)(d)," Florida

Statutes. In addition, if, prior to the

adoption of the proposed rule, the agency

seeks to rely on the policy statement in a

Section 120.57(1) proceeding, the statement

is "subject to [at the request of the

aggrieved party] de novo review by [the]

administrative law judge" conducting the

proceeding pursuant to Section 120.57(1)(e),

Florida Statutes, which provides as follows:

"(1) ADDITIONAL PROCEDURES APPLICABLE TO

HEARINGS INVOLVING DISPUTED ISSUES OF

MATERIAL FACT.-

(e)1. Any agency action that determines the

substantial interests of a party and that is

based on an unadopted rule is subject to de

novo review by an administrative law judge.

2. The agency action shall not be presumed

valid or invalid. The agency must demonstrate

that the unadopted rule:

a. Is within the powers, functions, and

duties delegated by the Legislature or, if

the agency is operating pursuant to authority

derived from the State Constitution, is

within that authority;

b. Does not enlarge, modify, or contravene

the specific provisions of law implemented;

c. Is not vague, establishes adequate

standards for agency decisions, or does not

vest unbridled discretion in the agency;

d. Is not arbitrary or capricious;

e. Is not being applied to the substantially

affected party without due notice;

f. Is supported by competent and substantial

evidence; and

g. Does not impose excessive regulatory

costs on the regulated person, county, or

city.

3. The recommended and final orders in any

proceeding shall be governed by the

provisions of paragraphs (i) and (j), except

that the administrative law judge's

determination regarding the unadopted rule

shall not be rejected by the agency unless

the agency first determines from a review of

the complete record, and states with

particularity in the order, that such

determination is clearly erroneous or does

not comply with essential requirements of

law. In any proceeding for review under s.

120.68, if the court finds that the agency's

rejection of the determination regarding the

unadopted rule does not comport with the

provisions of this subparagraph, the agency

action shall be set aside and the court shall

award to the prevailing party the reasonable

costs and a reasonable attorney's fee for the

initial proceeding and the proceeding for

review."

In the instant case, both parties agree that

Respondent has published a proposed rule

which "address[es]" the Rule. It does not

appear, however, that the rulemaking process

has concluded, and it therefore remains to be

seen whether Respondent will act

"expeditiously and in good faith" to adopt

the proposed rule.

In view of the foregoing, it is hereby

ORDERED:

1. Respondent's request that the

undersigned enter a summary final order of

dismissal on the ground of mootness is

denied.

2. The more appropriate course of

action is to hold the matter in abeyance

pending the outcome of the rulemaking

process.

3. No later than 60 days from the date

of this Order, Respondent shall advise the

undersigned in writing of the status of the

rulemaking process.

4. If it appears that Respondent is not

acting "expeditiously and in good faith" to

adopt the policy statement which is the

subject of the instant Section 120.56(4)

proceeding, or if Respondent fails to timely

file the written advisement required by the

preceding paragraph, the abeyance ordered

herein will be vacated.

5. Petitioner's request that the

undersigned "enter a Final Summary Order

declaring that the Rule is an invalid

exercise of delegated legislative authority"

is denied. Petitioner's "claims challenging

the substance of the [Rule]" raise issues

that are beyond the scope of this Section

120.56(4) proceeding. These claims are

properly raised in a Section 120.56(2)

proceeding or a Section 120.57(1) proceeding.

While subsection (4)(f) of Section 120.56,

Florida Statutes, would authorize (but not

require) the consolidation of the instant

Section 120.56(4) proceeding with any Section

120.56 proceeding or Section 120.57(1)

proceeding in which these "substantive"

claims were made, Petitioner has not

identified, nor is the undersigned aware of,

any such Section 120.56 proceeding or Section

120.57(1) proceeding that is presently

pending before the Division. Accordingly,

Petitioner's suggestion that subsection

(4)(f) of Section 120.56, Florida Statutes,

gives the undersigned the authority to hear

and decide his "substantive" claims is

without merit. Cf , Wetherington v. State

Farm Mutual Automobile Insurance Company , 661

So. 2d 1276 (Fla. 2d DCA 1995)("[A] court may

only order consolidation of actions that are

'pending before the court.' Only one of the

cases ordered to be consolidated was 'pending

before the court,' that being the case filed

in the circuit court of the Thirteenth

Judicial Circuit in Hillsborough County. The

second case was pending in the circuit court

of the Eighth Judicial Circuit in Gilchrist

County. More importantly, the trial court

was without authority to exercise any

jurisdiction over the case pending in the

Eighth Judicial Circuit. . . . The chief

justice of the supreme court may assign a

judge to temporary duty in any court for

which the judge is qualified. Article V,

Sec. 2(b), Fla. Const. No order of

temporary assignment was entered in this

case. Therefore, the trial court acted in

excess of its jurisdiction by ordering that a

case pending outside the confines of its

territorial jurisdiction be consolidated with

a case over which it did have jurisdiction.

As such, the order granting the motion to

consolidate is a nullity.").

On January 15, 1999, Respondent filed a response to the

undersigned's November 17, 1998, Order, in which it stated the

following:

1. AHCA held a public hearing in this matter

on December 7, 1998, at which public input

was gathered on this proposed rule.

2. Due to the input from the public and the

intervening holidays, AHCA has not published

a rule as of the date of this response.

3. AHCA is working diligently, expeditiously

and in good faith to consider and act on the

public comment received regarding the policy

statement, which is the subject of this case.

THEREFORE, AHCA would request that this

action be held in abeyance for an additional

90 days to complete the rule promulgation

process.

On January 27, 1999, the undersigned issued an Order

granting Respondent's request and directing the parties to advise

the undersigned in writing, no later than April 15, 1999, "of the

status of the rulemaking process and whether further proceedings

in this case are necessary." On April 12, 1999, and again on

April 22, 1999, Respondent filed such written advisements. In

its April 22, 1999, written advisement, Respondent informed the

undersigned that "AHCA ha[d] filed for final adoption FAC Rule

59G-5.110, Claims Payment." In response to his receipt of this

written advisement, the undersigned, on April 27, 1999, issued an

Order directing the parties to advise him in writing, no later

than 21 days from the date of the Order, "what action they

believe[d] the undersigned should take now that Rule 59G-5.110,

Florida Administrative Code, has been filed with the Department

of State for final adoption."

Respondent, on April 29, 1999, filed motion requesting that

the undersigned "dismiss this case as moot." On May 4, 1999,

Petitioner filed the following response to Respondent's Motion to

Dismiss (and to the undersigned's April 27, 1999, Order):

Pursuant to section 120.54(3)(e)6, Fla.

Stat., newly filed rule 59G-5.110 will become

effective on May 10, 1999. As of the that

date, abatement is no longer appropriate.

As previously urged, this case should not

then be dismissed as moot. Rather, this

tribunal should proceed to adjudicate the

issues raised in the original petition

challenging the Agency's policy of limiting

reimbursement of out-of-pocket medical

expenses to the Medicaid payment rate.

(Petition, Par. 11) The newly filed Rule

59G-110 likewise provides, "All payments

shall be made at the Medicaid established

payment rate in effect at the time the

services were rendered."

If this case is dismissed the Agency will

successfully evade judicial scrutiny of this

policy. It will, in effect, be rewarded for

its initial failure to duly promulgate a

rule.

The undersigned agrees with Respondent that, inasmuch as

there is no dispute that the agency "policy" that Petitioner

seeks to challenge in the instant case pursuant to Section

120.56(4), Florida Statutes (which authorizes a challenge to an

agency statement on the ground that it "constitutes a rule under

s. 120.52," but "has not [been] adopted . . . by the rulemaking

procedures provided by s. 120.54," Florida Statutes), is

contained in a rule (Rule 59G-5.110, Florida Administrative Code)

that Respondent has adopted during the pendency of this

proceeding, Petitioner's challenge is now moot. See Savona v.

Agency for Health Care Administration , 717 So. 2d 1129 (Fla. 1st

DCA 1998); Lund v. Department of Health , 708 So. 2d 645 (Fla. 1st

DCA 1998); Martin Memorial Medical Center, Inc., v. Agency for

Health Care Administration , 1995 WL 1052596 (Fla. DOAH

1995)(Final Order).

Accordingly, Petitioner's challenge is hereby DISMISSED. 9

DONE AND ORDERED this 18th day of May, 1999, in

Tallahassee, Leon County, Florida.

___________________________________

STUART M. LERNER

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 18th day of May, 1999.

ENDNOTES

1/ Pursuant to Section 120.56(4)(e), Florida Statutes:

Prior to entry of a final order that all or

part of an agency statement violates s.

120.54(1)(a), if an agency publishes,

pursuant to s. 120.54(3)(a), proposed rules

which address the statement and proceeds

expeditiously and in good faith to adopt

rules which address the statement, the agency

shall be permitted to rely upon the statement

or a substantially similar statement as a

basis for agency action if the statement

meets the requirements of s. 120.57(1)(e).

If an agency fails to adopt rules which

address the statement within 180 days after

publishing proposed rules, for purposes of

this subsection, a presumption is created

that the agency is not acting expeditiously

and in good faith to adopt rules. If the

agency's proposed rules are challenged

pursuant to subsection (2), the 180-day

period for adoption of rules is tolled until

a final order is entered in that proceeding.

2/ The motion was accompanied by a memorandum of law.

3/ Chapter 60Q-2, Florida Administrative Code, was repealed,

effective October 7, 1998. Rule 28-106.204(4), Florida

Administrative Code, now governs the filing of motions for

summary final orders in cases where the administrative law judge

has final order authority.

4/ In reciting the contents of this pleading, the undersigned

has omitted the "citations to the record" included in the

pleading.

5/ In reciting the contents of this pleading, the undersigned

has omitted references made therein to attachments to the

pleading.

6/ In a footnote, Petitioner added the following:

AHCA argues that the rule publication moots

the procedural challenge. In fact,

technically this claim would be abated but

not mooted. The procedural claim would be

mooted only by adoption of a rule. Mere

publication of a proposed rule only abates

the challenge while the agency "proceeds

expeditiously and in good faith to adopt

rules." Section 120.56(4)(e), Fla. Stat.

7/ Section 120.52(15), Florida Statutes, provides as follows:

"Rule" means 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 any form which imposes

any requirement or solicits any information

not specifically required by statute or by an

existing rule. The term also includes the

amendment or repeal of a rule. The term does

not include:

(a) Internal management memoranda which do

not affect either the private interests of

any person or any plan or procedure important

to the public and which have no application

outside the agency issuing the memorandum.

(b) Legal memoranda or opinions issued to an

agency by the Attorney General or agency

legal opinions prior to their use in

connection with an agency action.

(c) The preparation or modification of:

1. Agency budgets.

2. Statements, memoranda, or instructions to

state agencies issued by the Comptroller as

chief fiscal officer of the state and

relating or pertaining to claims for payment

submitted by state agencies to the

Comptroller.

3. Contractual provisions reached as a

result of collective bargaining.

4. Memoranda issued by the Executive Office

of the Governor relating to information

resources management.

8/ If an agency fails to adopt rules which address the statement

within 180 days after publishing proposed rules, for purposes of

this subsection [subsection (4) of Section 120.56, Florida

Statutes], a presumption is created that the agency is not acting

expeditiously and in good faith to adopt rules. If the agency's

proposed rules are challenged pursuant to subsection (2) [of

Section 120.56, Florida Statutes], the 180-day period for

adoption of rules is tolled until a final order is entered in

that proceeding." Section 120.56(4)(e), Florida Statutes.

9/ If Petitioner wishes to pursue the "substantive" claims

concerning the challenged "policy," he must seek to do so

pursuant to Section 120.56(3), Florida Statutes (which deals with

"challeng[es to] existing rules").

COPIES FURNISHED:

Paulette Ettachild, Esquire

Legal Services of the Florida Keys

600 White Street

Key West, Florida 33040

Anne Swerlick, Esquire

Florida Legal Services, Inc.

2121 Delta Boulevard

Tallahassee, Florida 32303

Miriam Harmatz, Esquire

Florida Legal Services, Inc.

3000 Biscayne Boulevard, Suite 450

Miami, Florida 33137

Moses Williams, Esquire

Paul J. Martin, Esquire

Office of the General Counsel

Agency for Health Care Administration

Building Three, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

Carroll Webb, Executive Director

and General Counsel

Joint Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

Liz Cloud, Chief

Bureau of Administrative Code

The Elliott Building

Tallahassee, Florida 32399-0250

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 Agency 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.