03-002530MPI Agency For Health Care Administration vs. Love And Care Pharmacy Status: Closed Recommended Order on Monday, November 3, 2003.

Summary: Agency for Health Care Administration is entitled to $1,096,489.77 plus 10% interest for the failure of the pharmacy to show documentation proving the acquisition of 10 audited drugs for which it received Medicaid payments during the audit period.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE , )

ADMINISTRATION, )

)

Petitioner, )

)

vs. ) Case No. 03 - 2530MPI

)

LOVE AND CARE PHARMACY, INC., )

)

Respondent. )

______________________________)

RE COMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Tallahassee, Florida, on September 22, 2003.

APPEARANCES

For Petitioner: Grant P. Dearborn

Assista nt General Counsel

Building 3, Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308 - 5407

For Respondent: No appearance

STATEMENT OF THE ISSUE

The issue is whether Petitioner overpai d Respondent

Medicaid funds, for which Section 409.913(10), Florida Statutes

(2002), authorizes Petitioner to seek repayment from Respondent.

PRELIMINARY STATEMENT

By letter dated April 8, 2002, Petitioner advised

Respondent that it had completed an audi t of paid Medicaid

claims from January 1, 1998, through December 31, 1998 and had

determined that Petitioner had overpaid Respondent

$1,096,489.77. Respondent timely requested a formal hearing.

On August 27, 2003, Petitioner filed a Motion to Compel

Dis covery, For Sanctions, and To Deem Admissions Admitted. On

September 19, 2003, the Administrative Law Judge entered an

Order Granting Motion to Deem Admitted Requests for Admission

and Granting Motion to Exclude Documents.

On September 19, 2003, Responde nt filed an Emergency Motion

to Stay Proceedings and Supporting Memorandum seeking an

abatement of this case until the resolution of a pending

criminal case involving the same matter. On the same day, the

Administrative Law Judge entered an Order denying the motion.

After the close of business on the same day, Respondent's

counsel faxed a letter to the Administrative Law Judge, with a

copy to opposing counsel, advising that his "clients" had

instructed him not to appear at the final hearing in this case

a nd restating his "clients'" reassertion of their Fifth

Amendment rights. Respondent's counsel offered to appear at the

hearing, but only to restate the matters contained in the motion

and letter.

At the hearing, Petitioner called one witness and offered

into evidence six exhibits: Petitioner Exhibits 1 - 4, 6, and 8.

At the request of Petitioner, the Administrative Law Judge also

took official notice of, and admitted, Petitioner Exhibits 7 and

9 - 16. Respondent did not appear at the hearing.

The court r eporter filed the transcript on October 15,

2003. Petitioner filed a Proposed Recommended Order on

September 29, 2003. Respondent did not file a proposed

recommended order.

FINDINGS OF FACT

1. During 1998, Respondent was an authorized Medicaid

provider, pursuant to Medicaid provider number 105425200, and

was a party to a valid Medicaid Provider Agreement with

Petitioner. Respondent filed claims with Petitioner for

payment, under the Medicaid program, for the goods and services

that are the subject of th e audit described below, and

Petitioner paid Respondent for these claims.

2. The audit period in this case is 1998. During 1998,

Respondent submitted to Petitioner 36,257 claims for nearly 5.5

million units of over one thousand types of drugs. These cla ims

totaled $3,075,449.88, which Petitioner paid Respondent.

3. On June 2, 1999, Petitioner sent a letter to Respondent

informing it of a review of its pharmacy claims for 1998. The

letter requests documentation of all purchases of 12 named drugs

for 1998 and documentation of all credits for these drugs during

the same period. The letter states that acceptable

documentation includes itemized wholesaler sales history

reports, itemized manufacturer sales history reports, itemized

invoices, and credit r eturn receipts. By letter dated June 5,

1999, Respondent provided the requested information.

4. By letter dated June 23, 2000, Petitioner advised

Respondent that it had examined the paid Medicaid claims for

1998 and the acquisition documentation that Res pondent had

provided in June 1999. The letter states: "You have failed to

provide adequate documentation to the effect that the available

quantity of certain drugs of given strength was as great as the

quantity of those drugs billed to and reimbursed by Medicaid.”

Thus, Petitioner made a "provisional" determination that it had

overpaid Respondent $1,092,205.32. The letter invites

Respondent to provide additional information to reduce the

overpayment determination.

5. The June 23 letter contains an Over payment Attachment

that lists ten of the twelve drugs for which Petitioner had

sought documentation in its earlier letter. For each of these

ten drugs, the Overpayment Attachment lists the generic code,

number of units for which Medicaid paid, the total a mount of

Medicaid payments, the total units documented by Respondent to

have been available during the relevant period, and the number

of units for which Respondent provided no availability

documentation. The Overpayment Attachment also calculates the

amo unt of Medicaid payments attributable to the unavailable

units and the total overpayment, which is $1,092,205.32.

6. The overpayment calculations described in the preceding

paragraph assume that all available units of the audited drugs

were sold to Medica id patients. The effect of this improbable

scenario reduces the amount of the overpayment. The overpayment

calculations attempt no extrapolation of overpayments on the

over 10,000 other drugs for which Respondent received Medicaid

payments during 1998. The effect of limiting the overpayment

calculation to the ten listed drugs reduces the amount of the

overpayment. However, the ten listed drugs are the drugs that

generated the most Medicaid payments to Respondent and account

for over one - third of the tot al Medicaid payments during the

relevant period.

7. Respondent provided additional information to

Petitioner on August 30 and November 3, 2000. However, after

examining the information, Petitioner advised Respondent, by

letter dated April 8, 2002, that i ts final determination was

that Respondent owed $1,096,489.77 due to its receipt of

Medicaid overpayments. The overpayment increased by over $4000

due to the determination that Respondent's records documented

1000 fewer available units of two dosages of R isperdone than

Petitioner had previously determined.

CONCLUSIONS OF LAW

8. The Division of Administrative Hearings has

jurisdiction over the subject matter. Section 120.57(1),

Florida Statutes. (All references to Sections are to Florida

Statutes (2002). )

9. Section 409.913(10) authorizes Petitioner to "require

repayment for inappropriate, medically unnecessary, or excessive

goods or services from the person furnishing them, the person

under whose supervision they were furnished, or the person

causing th em to be furnished."

10. Section 409.913(14)(n) provides that Petitioner may

seek any remedy available provided by law if the "provider fails

to demonstrate that it had available during a specific audit or

review period sufficient quantities of goods . . . to support

the provider's billings to the Medicaid program."

11. Section 409.913(20) directs Petitioner to prepare and

issue an audit report when making a determination of an

overpayment. Section 409.913(21) provides that the audit report

is "evidence of the overpayment" and limits certain evidence in

opposition to the audit report to documentary evidence that has

been exchanged at least two weeks prior to the hearing. Section

409.913(1)(e) defines an "overpayment" as "any amount that is

not authorized to be paid by the Medicaid program whether paid

as a result of inaccurate or improper cost reporting, improper

claiming, unacceptable practices, fraud, abuse, or mistake."

12. Section 409.913(8) requires Medicaid providers to

maintain all business, medic al, and financial records pertaining

to Medicaid - paid goods and services for five years.

13. Section 409.913(24)(b) provides for interest at the

annual rate of ten percent from the date of Petitioner's

determination of overpayment on the amount of the ove rpayment.

14. Petitioner has proved that Respondent owes Petitioner

$1,096,489.77 in Medicaid overpayments that it has received,

plus interest at the annual rate of ten percent from April 8,

2002. These are the sole remedies that Petitioner seeks in this

case.

RECOMMENDATION

It is

RECOMMENDED that the Agency for Health Care Administration

enter a final order directing Respondent to pay Petitioner

$1,096,489.77, plus interest, to repay overpayments that it

received from the Medicaid program for the sale of drugs in

1998.

DONE AND ENTERED this 3rd day of November, 2003, in

Tallahassee, Leon County, Florida.

S

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 30 60

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 3rd day of November, 2003.

COPIES FURNISHED:

Rhonda M. Medows, M.D., Secretary

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building, Suite 3116

Tallahassee, Florida 32308

Valda Clark Christian, General Counsel

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building, Suite 3431

Tallahassee, Florida 32308

Grant P. Dearborn

Assistant General Counsel

Building 3, Mail Stop 3

2727 Mahan Drive

Tallahassee, Flor ida 32308 - 5407

Jose M. Herrera

Jose M. Herrera, P.A.

1401 Ponce de Leon Boulevard

Suite 200

Coral Gables, Florida 33134

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions

to this recommended order must be filed with the agency that

will issue the final order in this case.