02-002533RX Anne Z. Benson And Rose Marie Gibson vs. Department Of Children And Family Services Status: Closed Settled and/or Dismissed prior to entry of RO/FO on Tuesday, December 7, 2004.

Summary: Agency failure to include health insurance premiums in the calculation of Medicaid recipients` patient responsibilities is invalid exercise of delegated legislative authority.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ANNE Z. BENSON AND ROSE MARIE )

GIBSON, )

)

Petitioners, )

)

vs. ) Case No. 02 - 2533RX

)

DEPARTMENT OF CHILDREN AND )

FAMILY SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a telephonic hearing was held in

Tallahassee, Florida, in this case on February 7, 2003, on the

parties' motions for final summary order, before the Division

of Administrative Hearings, by its designated Administrativ e

Law Judge, Barbara J. Staros.

APPEARANCES

For Petitioners: Jack M. Rosenkranz, Esquire

Kevin M. Gilhool, Esquire

Rosenkranz Law Firm

Post Office Box 1999

Tampa, Florida 33601

For Respondent: Herschel C. Minnis, Esquire

Department of Children and

Family Services,

1317 Winewood Blvd.

Building Two, Room 204 - N

Tallahassee, Florida 32399 - 0700

STATEMENT OF THE ISSUE

Whether Rule 65A - 1.714, Florida Administrative Code, is

an invalid exerci se of delegated legislative authority for

reasons described in the Petition to Determine Partial

Invalidity of Rule.

PRELIMINARY STATEMENT

Petitioners, Anne Z. Benson, by and through her son and

attorney - in - fact, Dr. Andre Benson, and Rose Marie Gibson, b y

and through her daughter and attorney - in - fact, Anna Marie

Ippolito, filed a Petition to Determine Partial Invalidity of

Rule with the Department of Children and Family Services

(DCFS) on or about June 18, 2002. The Petition was forwarded

to the Division of Administrative Hearings on June 24, 2002,

and was assigned to the undersigned on June 25, 2002.

A Notice of Hearing was issued on June 27, 2002,

scheduling a formal hearing for July 25, 2002. On July 24,

2002, the parties filed a Joint Motion for A batement and

Stipulation in which the parties moved for a continuance and

requested an abatement of the case. The parties stipulated as

follows:

1. This action was filed to challenge the

legal sufficiency of Rule 65A - 1.714,

Florida Administrative Code, w ith

Petitioners contending that the rule in its

current form is not consistent with the

provisions of Title 42 United States Code

Annotated section 1396a(r) and Title 42

Code of Federal Regulations subpart

435.725(c)(4).

2. Petitioners, without waiving t heir

claims, and Respondent, without waiving any

of its defenses, have discussed settlement

of this case and its related issues, both

factual and legal. The parties believe

that the process outlined and stipulated to

below will adequately address all issu es

set forth in the petition and end the need

for any adjudicatory action in the case.

3. Petitioner agrees to an abatement of

the action until November 2002. During the

abatement period Respondent agrees to do

the following:

A. Publish in the Florida

Administrative Weekly no later

than August 16, 2002, a notice of

rule development.

B. Take all steps necessary to

file a notice of final adoption

no later than November 2002

concerning a rule that complies

with 42 United States Code

Annotated section 13 96a(r) and 42

Code of Federal Regulations

subpart 435.725(c)(4).

C. Provide petitioners'

attorneys of record copies of all

notices and proposed rule

language developed throughout the

rulemaking process.

D. Provide petitioners'

attorneys of record a cop y of the

final rule language, as adopted.

E. Modify Petitioners Anne

Benson and Rose Marie Gibson's

patient responsibilities by

deducting their respective health

insurance premiums.

4. The parties understand and agree that

this joint motion and stipula tion may be

used by either party to support withdrawal

and/or dismissal of any administrative Fair

Hearing now pending before the Department

of Children and Family Services, Office of

Appeal Hearings, concerning Petitioner Anne

Z. Benson or Petitioner Rose Marie Gibson,

or both, and Respondent, pertaining to

Respondent's eligibility determinations of

February 25, 2002 (for Ms. Benson) and

May 15, 2002 (for Ms. Gibson).

5. Upon final adoption of a rule that

complies with 42 United States Code

Annotated sec tion 1396a(r) and 42 Code of

Federal Regulations subpart 435.725(c)(4),

Petitioners agree to voluntarily dismiss

these proceedings with prejudice. The

notice of voluntary dismissal will be filed

by petitioners no later than five (5) days

after receipt of a copy of the notice of

final adoption.

6. Upon filing the notice of dismissal

with prejudice, Respondent agrees to

immediately take all steps necessary to

compensate petitioners' attorneys a total

of $1,500.00, representing complete

compensation for pet itioners' costs and

attorneys' fees. Payment of such costs and

fees will be made no later than ten (10)

business days following receipt by

Respondent of an order dismissing the case

with prejudice.

An Order Granting Continuance and Placing Case in

Abeyan ce was issued on July 24, 2002, requiring a status

report to be filed no later than September 25, 2002.

The parties timely filed a Joint Status Report on

September 23, 2002, which stated in pertinent part as follows:

1. On July 24, 2002, the case was abated

based upon the Joint Motion for Abatement

and Stipulation, filed on the same date.

2. Pursuant to Paragraph 3.A. of the

stipulation, Respondent published its

Notice of Rule Development in the Florida

Administrative Weekly on August 2, 2002, in

Vo lume 28, Number 31. See Attachment 1.

3. On August 19, 2002, the State of

Florida, Agency for Health Care

Administration, sought further

clarification from the Center for Medicare

and Medicaid Services, in Atlanta, Georgia,

of the Center for Medicare an d Medicaid

Services' Program Issuance Transmittal

Notice dated March 5, 1999, which serves as

part of the legal and factual basis of this

litigation.

4. Specifically, the State indicated that

it " . . . is extremely interested in

placing reasonable limit s upon the extent

to which the costs of health insurance

premiums may be deducted from a resident's

share of cost . . .", to eliminate

the risk or probability of expending

limited state funds unnecessarily. See

Attachment 2.

5. The State reasonabl y believes that it

will receive a response from the Center for

Medicare and Medicaid Services within the

next few weeks. The response will provide

necessary guidance to the State with

respect to the pending issue.

6. Respondent requests that this matter be

continued for approximately forth - five

[sic] (45) days for the purpose of

receiving a response from the Center for

Medicare and Medicaid Services. Petitioner

does not object to this request.

7. The parties do not believe, at this

time, that a final hearing will be required

to resolve this matter. (Emphasis in

original)

On September 30, 2002, an Order Continuing Case in

Abeyance was issued requiring the parties to file a status

report no later than November 15, 2002. The parties filed a

Joint Statu s Report on November 18, 2002, which requested

additional time to file a status report and stated:

The State of Florida has not received a

written response from the Center for

Medicare and Medicaid Services, as of this

date. Moreover, the State has been a dvised

that the reason for "no response" is the

unavailability of Ms. Rhonda Cottrell,

National Coordinator of Medicaid Alliance

for Program Safeguard, at the Center for

Medicare and Medicaid Services.

An Order Continuing Case in Abeyance was issued on

No vember 25, 2002, requiring a status report to be filed no

later than December 10, 2002.

The parties filed a Joint Status Report on December 10,

2002, which stated:

1. On December 9, 2002, the state received

a written response from the Centers for

Medicar e and Medicaid Services to its

August 19, 2002 letter. Despite receipt of

a response from the Centers for Medicare

and Medicaid Services, the state contends

it is unable to currently engage in

rulemaking.

2. The Centers for Medicare and Medicaid

Service s informed the state that the

proposal as stated, was not permissible

under federal guidelines. It, therefore,

denied the state's proposal.

3. The state agrees to use its best

efforts to pursue and obtain sufficient

funding from the upcoming state legis lative

budgetary sessions to cover the total costs

associated with absorbing expenses that

would be deducted from a Medicaid

recipient's share of cost.

4. The state further agrees to continue to

contact and work with the Centers for

Medicare and Medicaid Services to effect a

policy approvable by the federal

authorities until a policy is developed

that could be and is approved by the

Centers for Medicare and Medicaid Services.

5. Wherefore, the parties request a

telephonic status conference to discuss

fi nal disposition of this case.

The text of the letter dated December 5, 2002, from the

Centers for Medicare and Medicaid Services reads as follows:

The [sic] is in response to your letter

dated August 19, 2002 requesting guidance

on federal Medicaid requir ements pertaining

to the post - eligibility treatment of

income.

We understand and sympathize with the

budgetary constraints faced by the State

and the need to conserve Medicaid dollars.

However, there are no provisions under

Medicaid law to permit a State to exclude

amounts for Medicare and other health

insurance premiums, deductibles, or

coinsurance from the post - eligibility

calculations for Medicaid beneficiaries.

Post eligibility calculations are made to

determine the amount (if any) that Medicaid

redu ces its payment to providers, and to

determine the amount (if any) by which an

individual is liable to contribute to the

cost of his/her own health care. After

initial Medicaid eligibility has been

established, the post - eligibility process

applies to Medi caid beneficiaries who are

institutionalized (most commonly to those

in nursing facilities), and certain

Medicaid beneficiaries receiving home and

community - based waiver services.

The State Medicaid agency has the authority

to calculate the individual's t otal

countable income, and then deduct certain

amounts from that income to determine how

much of that income the individual may be

required to contribute toward his cost of

care. Specifically, the individual's

contribution is his or her total income

less required deductions for:

• personal needs,

• a family and spouse allowance, if

applicable, and

• an amount for medical or remedial

expenses not subject to payment by a

third party. The medical or remedial

care deduction includes Medicare and

other hea lth insurance premiums,

deductibles, and coinsurance charges and

necessary medical or remedial care

recognized under State law but not

covered under the state plan.

• For institutionalized individuals, the

State has the option to also deduct an

amount for the maintenance of the

individuals' home in the community if

the individual is expected to return to

the home within six months.

These calculations allow the State to

reduce its payment to the provider. It

also allows the State to use this amount as

the beneficiary's share of the cost of his

or her care, i.e., the amount the

beneficiary is responsible for paying to

the provider.

The State is requesting use of "reasonable

limits" to exclude the deduction of certain

health insurance premiums from the post -

eligibility calculation; however, neither

the statute nor regulations would permit

this. The following regulations provide

guidance as to why this is not permissible.

• Section 1902(r)(l)(A) requires that the

State must take into account amounts for

inc urred expenses for medical and

remedial care that are not subject to

payment by a third party.

• Section 1902(r)(1)(A)(i) and regulations

42 CFR 435.725(c)(4)(l) or

435.726(c)(4)(1) require States to

deduct amounts for Medicare and other

health insurance premiums, deductibles,

or coinsurance without limitations.

• Reasonable limits are only applicable to

necessary medical or remedial care

recognized under State law but not

covered under the state plan, as

specified under 1902(r)(1)(A)(ii) of the

Act and 4 2 CFR 435.725(c)(4)(ii) or

435.726(c)(4)(ii). Excluding, rather

than limiting, necessary medical or

remedial care would not be considered a

reasonable limit.

Under the post - eligibility process, Florida

is required to fully deduct premiums,

deductibles, a nd coinsurance charges

(including co - payments) imposed under

health insurance programs (including

Medicare) and Medicaid state plans. If you

need additional guidance or more

information regarding this matter, please

contact Carol Langord at (404)562 - 7412,

Cathy Kasriel at (404)562 - 7411 or Renard

Murray at (404)562 - 7417.

The direction given to DCFS in the above letter is

similar to a March 5, 1999, transmittal notice issued by the

Health Care Financing Administration (HCFA) now known as the

Centers for Me dicare and Medicaid Services, which was

referenced in the parties' September 23, 2002, Joint Status

Report. It reads in pertinent part as follows:

SUBJECT: Application of Income of

Institutionalized Recipients Towards the

Cost of Care

This HCFA Program Issuance Transmittal

Notice (PITN) is a clarification of long

standing Medicaid policy. The Medicare

Catastrophic Coverage Act (MCCA) of 1988

amended the Social Security Act by adding

§1902(r)(1). This provision codified a

requirement that was formerly s tated only

in Federal regulations. This rule requires

States to take into account incurred

expenses for medical or remedial care that

are not subject to payment by a third

party, including Medicare, as well as

health insurance premiums, deductibles, and

c oinsurance when determining the amount of

an institutionalized recipient's income to

be applied to cost of his/her care. These

provisions also apply to recipients getting

home and community - based waiver services.

With the Congressional mandate in mind, w e

are requesting that all States review their

current State Plans and operational

procedures to determine if you are in

compliance with this provision of the law.

If not, States should take action by

March 31, 1999 to bring your plan and

program into comp liance. . . .

A case status conference was conducted by telephone on

January 2, 2003. As a result of the telephone conference and

by agreement of the parties, a Notice of Hearing was issued

scheduling the final hearing for February 7, 2003.

On Janu ary 21, 2003, the parties each filed a Motion for

Summary Final Order asserting that there were no disputed

issues of material fact. Pursuant to a telephone conference

call on January 27, 2003, an Amended Notice of Hearing was

issued changing the February 7, 2003, hearing to a telephonic

hearing for consideration of the parties' motions for summary

final order in accordance with Section 120.57(1)(h), Florida

Statutes, and Rule 28 - 106.204(4), Florida Administrative Code.

Oral argument was heard on the parti es' motions for

summary final order on February 7, 2003. The parties timely

filed Proposed Final Orders which have been considered in the

preparation of this Final Order.

FINDINGS OF FACT

1. Petitioners Benson and Gibson are nursing home

residents in Clearwater and Tampa, Florida, respectively.

They are participants of the Institutional Care Program (ICP)

which is part of the Medicaid program. Their eligibility to

participate in ICP is not disputed.

2. DCFS is the state agency responsible for Medic aid

eligibility determinations, including, but not limited to,

policy, rules, and the agreement with the Social Security

Administration for Medicaid eligibility determinations for

Supplemental Security Income recipients, as well as the actual

determination of eligibility. Section 409.902, Florida

Statutes.

3. The Rule which is challenged in this proceeding reads

as follows:

65A - 1.714 SSI - Related Medicaid Post -

Eligibility Treatment of Income.

After an individual satisfies all non -

financial and financial eligibility

criteria for Hospice, institutional care

services or

ALW/HCBS, the department determines the

amount of the individual’s patient

responsibility. This process is called

post - eligibility treatment of income.

(1) For Hospice and institutional ca re

services, the following deductions are

applied to the individual’s income to

determine patient responsibility:

(a) Individuals residing in medical

institutions shall have $35 of their

monthly income protected for their personal

need allowance.

(b) S ingle veterans or surviving spouses

with no dependents residing in medical

institutions who receive a reduced VA

Improved Pension of $90, or less, are

entitled to keep their reduced VA pension

payment and shall have $35 of their income

protected for their personal need

allowance.

(c) If the individual earns therapeutic

wages an additional amount of income equal

to one - half of the monthly therapeutic

wages, up to $111, shall be protected for

personal need. This protection is in

addition to the $35 persona l need

allowance.

(d) Individuals who elect hospice services

have an amount of their monthly income

equal to the federal poverty level

protected as their personal need allowance

unless they are a resident of a medical

institution, in which case $35 of th eir

income is protected for their personal

need.

(e) The department applies the formula and

policies in 42 U.S.C. § 1396r - 5 to compute

the community spouse income allowance after

the institutionalized individual is

determined eligible for institutional c are

benefits. The standards used are in

paragraph 65A - 1.716(5)(c), F.A.C. The

current standard Food Stamp utility

allowance is used to determine the

community spouse’s excess utility expenses.

(f) For community hospice cases, a spousal

allowance equal to the SSI FBR minus the

spouse’s own monthly income shall be

deducted from the individual’s income.

(g) For ICP, income may be protected for

the first and last months of eligibility if

the individual’s income for that month is

obligated to directly pay for their cost of

food or shelter outside of the facility.

(2) For ALW/HCBS, the following deductions

shall apply in computing patient

responsibility:

(a) An allowance for personal needs in an

amount equal to the Optional State

Supplementation (OSS) (a s defined in

Chapter 65A - 2, F.A.C.) cost of care plus

the OSS personal need allowance.

(b) An amount equal to the SSI FBR minus

the spouse’s monthly income for the

spouse’s maintenance needs;

(c) An amount equal to the cash assistance

consolidated need standard minus the

dependent’s income for a spouse with

dependents or for dependents not living

with a community spouse. (Emphasis added)

4. Each Petitioner has a monthly health insurance

premium expense which is paid to a health insurance provider.

5. DCFS calculated Petitioners' post - eligibility

treatment of income. In its determination of Petitioners'

patient responsibility (i.e., the amount of money each

participant must pay towards their nursing home costs), DCFS

did not deduct the cost of each P etitioner's health insurance

premium.

6. Subsequent to the commencement of this Rule

challenge, DCFS adjusted Petitioners' patient responsibility

to take into consideration Petitioners' health insurance

premiums. This adjustment was made pursuant to par agraph 3E.

of the parties' July 24, 2002, Joint Motion for Abatement and

Stipulation as set out in the Preliminary Statement.

CONCLUSIONS OF LAW

7. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

procee ding pursuant to Section 120.56(1) and (3), Florida

Statutes.

8. Petitioners have proven that they have standing to

challenge the Rule which is the subject of this dispute.

Respondent argues that since the Agency adjusted Petitioners'

patient responsibil ity to reflect the amount of their monthly

insurance premiums, there is no longer any controversy and,

therefore, Petitioners lack standing. However, at the time

this Rule challenge was filed, the patient responsibility

calculation for Petitioners did not take into account their

respective health insurance premiums. They were and are

persons substantially affected by the Rule and entitled to

bring a Rule challenge pursuant to Section 120.56(1) and (3),

Florida Statutes. The stipulation of the parties upo n which

Respondent relies does not remove Petitioners' right to

perfect this challenge. Moreover, the stipulation did not

result in a resolution of the case in that the primary remedy

sought by Petitioners, i.e., the determination of the

invalidity of the Rule, was not accomplished.

9. The party attacking an existing agency rule has the

burden to prove that the rule constitutes an invalid exercise

of delegated legislative authority. Cortes v. State Board of

Regents , 655 So. 2d 132 (Fla. 1st DCA 1995). The challenger's

burden is a stringent one. Id. ; Charity v. Florida State

University , 680 So. 2d 463 (Fla. 1st DCA 1996).

10. The Petition to Determine Partial Invalidity of Fla.

Admin. Code R. 65A - 1,714 alleges that Rule 65A - 1.714, Florida

Administrative Code, is an invalid exercise of delegated

legislative authority within the context of Section 120.52(8),

Florida Statutes. 1/

11. Petitioners assert that the subject Rule is in

violation of Section 120.52(8)(b)(c) and (e), Florida

Statutes, in that it e xceeds Respondent's rulemaking

authority; enlarges, modifies and contravenes the specific

provisions of law implemented; and is arbitrary and

capricious. Petitioners base this allegation on DCFS' refusal

to include Petitioners' health insurance premiums a s a

deduction which Petitioners assert is impermissible under

applicable state and federal law.

12. In the pursuit of state implementation, operation,

or enforcement of federal programs, an agency is empowered to

adopt rules substantively identical to regu lations adopted

pursuant to federal law. Section 120.54(6), Florida Statutes.

13. Section 409.902, Florida Statutes, reads in

pertinent part:

. . . The Department of Children and Family

Services is responsible for Medicaid

eligibility determinations, inc luding, but

not limited to, policy, rules, and the

agreement with the Social Security

Administration for Medicaid eligibility

determinations for Supplemental Security

Income recipients, as well as the actual

determination of eligibility. . . .

14. Sectio n 120.52(8), Florida Statutes, reads as

follows:

(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 o f 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 au thority, 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

adequ ate 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 perso n, county, or city which

could be reduced by the adoption of less

costly alternatives that substantially

accomplish the statutory objectives.

15. Section 409.919, Florida Statutes, states:

Rules. -- The agency shall adopt any rules

necessary to comply with or administer

ss. 409.901 - 409.920 and all rules necessary

to comply with federal requirements. In

addition, the Department of Children and

Family Services shall adopt and accept

transfer of any rules necessary to carry

out its responsibilities for receiv ing and

processing Medicaid applications and

determining Medicaid eligibility, and for

assuring compliance with and administering

ss. 409.901 - 409.906, as they relate to

these responsibilities, and any other

provisions related to responsibility for

the dete rmination of Medicaid eligibility.

16. Federal law provides for the establishment of state

plans for medical assistance and the requirements of the state

plans must comply with 42 U.S.C. Section 1396a. In

particular, Section 1396a requires that the state plan

"provide for flexibility in the application of such standards

with respect to income by taking into account except to the

extent prescribed by the Secretary, the costs (whether in form

of insurance premiums, payments made to the State under

Section 1 396b(d)(2)(B) of this title or otherwise and

regardless of whether such costs are reimbursed under another

public program of the State or political subdivision thereof)

incurred for medical care or for any other type of remedial

care recognized under State law." 42 U.S.C. Section

1396a(a)(17).

17. Title 42 U.S.C. Section 1396a(r)(1)(A) provides:

(1)(A) For purposes of sections

1396(a)(17) and 1396r - 5(d)(1)(D) of this

title and for purposes of a waiver under

section 1396n of this title, with respect

to th e post - eligibility treatment of income

of individuals who are institutionalized or

receiving home or community - based services

under such a waiver, . . . there shall be

taken into account amounts for incurred

expenses for medical or remedial care that

are n ot subject to payment by a third

party, including -

(i) medicare and other health insurance

premiums, deductibles, or coinsurance, and

(ii) necessary medical or remedial care

recognized under State law but not covered

under the State plan under this subchapter,

subject to reasonable limits the State may

establish on the amount of these expenses.

18. Title 42 C.F.R. Section 435.725 contains the federal

regulation for post - eligibility treatment of income of

institutionalized individuals. It provides that a state

agency must reduce its payments to an institution for services

by the amount remaining from the individual's income after

certain deductions are applied. The regulation specifies

those required deductions from the individual's income to

deter mine patient's share of cost.

19. In particular, 42 C.F.R. Section 435.725(c)(4)

provides:

435.725 Post - eligibility treatment of

income of institutionalized individuals in

SSI States: Application of patient income

to the cost of care.

* * *

(c) R equired deductions. In reducing its

payment to the institution, the agency must

deduct the following amounts, in the

following order, from the individual's

total income, as determined under paragraph

(e) of this section. Income that was

disregarded in de termining eligibility must

be considered in this process.

* * *

(4) Expenses not subject to third party

payment. Amounts for incurred expenses for

medical or remedial care that are not

subject to payment by a third party,

including --

(i) Medicare and other health insurance

premiums, deductibles, or coinsurance

charges; and

(ii) Necessary medical or remedial care

recognized under State law but not covered

under the State's Medicaid plan, subject to

reasonable limits the agency may establish

on am ounts of these expenses.

Rule Challenge Analysis

Section 120.52(8)(b), Florida Statutes

20. Petitioners assert that because Rule 65A - 1.714,

Florida Administrative Code, provides an exclusive list of all

deductions from the patient responsibility an d does not permit

a deduction for health insurance premiums, the Rule exceeds

its grant of rulemaking authority in violation of Section

120.52(8)(b), Florida Statutes. 2/

21. "The authority to adopt an administrative rule must

be based on an explicit po wer or duty identified in the

enabling statute . . . [T]he authority for an administrative

rule is not a matter of degree. The question is whether the

statute contains a specific grant of legislative authority for

the rule, not whether the grant of autho rity is specific

enough ." (Emphasis in original) Florida Board of Medicine, et

al., v. Florida Academy of Cosmetic Surgery, Inc., et al. , 808

So. 2d 243 (Fla. 1st DCA 2002), quoting Southwest Florida

Water Management District v. Save the Manatee Club, Inc . , 773

So. 2d 594, 599 (Fla. 1st DCA 2000).

22. Section 409.919, Florida Statutes, requires DCFS to

adopt and transfer all rules necessary to comply with federal

law to carry out its responsibilities for receiving and

processing Medicaid application s and determining Medicaid

eligibility, and for assuring compliance with and

administering Sections 409.901 through 409.906, Florida

Statutes. Sections 409.901 through 409.906, Florida Statutes,

set forth the statutory framework of the Medicaid program in

Florida.

23. Section 409.919, Florida Statutes, gives DCFS broad

authority to adopt all rules necessary to assure compliance

with and administer the Medicaid program. "The Legislature

itself is hardly suited to anticipate the endless variety of

situatio ns that may occur or to rigidly prescribe the

conditions or solutions to the often fact - specific situations

that arise." Avatar Development Corp. v. State , 723 So. 2d

199 (Fla. 1998). Accordingly, DCFS has not exceeded its grant

of rulemaking authority c oncerning the opportunity to adopt a

rule(s) on this subject in enacting Rule 65A - 1.714, Florida

Administrative Code.

Section 120.52(8)(c), Florida Statutes

24. Petitioners assert that the failure by DCFS to

permit a deduction for health insurance pre miums enlarges,

modifies, or contravenes the specific provisions of law

implemented in violation Section 120.52(8)(c), Florida

Statutes. The specific laws implemented cited as required by

Section 120.54(3)(a)1., Florida Statutes, are Sections

409.903. 409 .904, and 409.919, Florida Statutes.

25. Sections 409.903 and 409.904 direct the Agency for

Health Care Administration to make certain mandatory and

optional payments on behalf of persons who are determined to

be eligible " subject to the income, assets, a nd categorical

eligibility tests set forth in federal and state law ."

(Emphasis supplied) Section 409.919, Florida Statutes, as

discussed previously, requires DCFS to adopt rules necessary

to comply with or administer the Medicaid program " and to

comply with federal requirements" . (Emphasis supplied) The

federal requirements set forth above require the recipients'

health insurance premiums to be taken into consideration in

the calculation of Petitioners' patient responsibility. 3/

26. The language of Rule 65A - 1.714, Florida

Administrative Code, does not enlarge or modify the specific

laws implemented. However, the failure to include health

insurance premiums in the calculation of a recipient's patient

responsibility is contrary to the federal requirements set

forth above, and, therefore, contravenes the specific laws

implemented. 4/

Section 120.52(8)(e), Florida Statutes

27. Petitioners assert that DCFS' failure to incorporate

the cost of health insurance premiums in its calculation of a

recipient's pat ient responsibility in Rule 65A - 1.714, Florida

Administrative Code, is arbitrary and capricious.

28. "A rule is 'arbitrary' only if it is 'not supported

by facts or logic,' and 'capricious' only if it is

irrational." Florida Board of Medicine v. Florid a Academy ,

supra , at 255, citing Board of Clinical Laboratory Pers. v.

Florida Assn. of Blood Banks , 721 So. 2d 317, 318 (Fla. 1st

DCA 1998).

29. There is insufficient evidence in the record to

determine the status of state and federal law regarding thi s

issue at the time of DCFS' promulgation of the Rule.

Accordingly, the record is insufficient to support a

conclusion that the Rule is arbitrary or capricious.

ORDER

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is

ORDERED:

1. R ule 65A - 1.714, Florida Administrative Code, in its

omission of including a Medicaid recipient's health insurance

premium costs in its calculation of the recipient's patient

responsibility, is an invalid exercise of delegated authority.

2. Jurisdiction of the Division of Administrative

Hearings is retained for consideration of Petitioner's request

for attorney's fees pursuant to Section 120.595(3), Florida

Statutes.

DONE AND ORDERED this 12th day of March, 2003, in

Tallahassee, Leon County, Florida.

______ _____________________________

BARBARA J. STAROS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.sta te.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 12th day of March, 2003.

ENDNOTES

1/ Although framed as a partial challenge, Petitioners are

actually challenging the validity of the rule because of

omissions in its conten t.

2/ Petitioners assert that the Rule also fails to permit a

deduction for medical or remedial care expenses not covered by

a third party. However, the few facts presented do not

establish that these Petitioners were denied deductions for

medical or remedial care. The Petition only asserts that

their health care premiums were not deducted.

3/ See generally Bell v. Agency for Health Care

Administration , 768 So. 2d 1203 (Fla. 1st DCA 2000)

(Administrative rule dealing with durable medical equipment

for Medicaid recipients violates federal law by excluding

coverage of benefits that may be medically necessary.)

4/ Contravene is defined as "to go or act contrary to:

VIOLATE [~a law]. Webster's Ninth New Collegiate Dictionary

(Merriam - Webster, Inc. 1 984)

COPIES FURNISHED :

Herschel C. Minnis, Esquire

Department of Children and

Family Services

1323 Winewood Boulevard

Building Two, Room 204

Tallahassee, Florida 32399 - 0700

Jack M. Rosenkranz, Esquire

Kevin M. Gilhool, Esquire

Rosenkranz Law Firm

Post Office Box 1999

Tampa, Florida 33601

Paul F. Flounlacker, Jr., Agency Clerk

Department of Children and

Family Services

1317 Winewood Boulevard

Building Two, Room 204B

Tallahassee, Florida 32399 - 0700

Josie Tomayo, General Counsel

Department of C hildren and

Family Services

1317 Winewood Boulevard

Building Two, Room 204

Tallahassee, Florida 32399 - 0700

Carroll Webb, Executive Director

Joint Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399 - 1300

NOTIC E 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 proceeding s are

commenced by filing the original notice of appeal with the

Clerk of the Division of Administrative Hearings and a copy,

accompanied by filing fees prescribed by law, with the

District Court of Appeal, First District, or with the District

Court of App eal 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.