04-004450MPI Medical Services Consortium, Inc. vs. Agency For Health Care Administration Status: Closed Recommended Order on Tuesday, February 28, 2006.

Summary: Petitioner received overpayment from Medicaid as a result of its failure to keep required records. Extapolation was appropriately used to determine the amount of overpayment.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MEDICAL SERVICES CONSORTIUM, )

INC., d/b/a MEDICAL SERVICES )

CONSORTIUM )

)

Petitioner, )

)

vs. ) Case No. 04 - 4450MPI

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

_______________ __________________)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in this case

on October 3, 4, and 5, 2005, in Tallahassee, Florida, before

Administrative Law Judge Claude B. Arrington of the Division of

Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Kenneth W. Sukhia, Esquire

Fowler, White, Boggs, Banker P.A.

101 North Monroe Street, Suite 1090

Post Office Box 11240

Tallahassee, F lorida 32302

Ralph E. Breitfeller, Esquire

McGrath & Breitfeller, LLP

140 East Town Street, Suite 1070

Columbus, Ohio 43215

For Respondent: L. William Porter, II, Esquire

Karen Dexter, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Building 3, Mail Stop 3

Tallahassee, Florida 32308 - 5403

STATEMENT OF THE IS SUE

Whether Petitioner failed to maintain required records to

support and document Medicaid prescription claims paid by the

Medicaid program for the audit period (June 24, 1998, to Jun e 1,

2000). If so, whether Petitioner received overpayments from the

Me dicaid progra m. If so, whether extrapolation was

appropriately used to determine the amount of that overpayment

(alleged by Respondent to be $1,053,137.49).

PRELIMINARY STATEMENT

On April 9, 2001, Respondent’s Office of Medicaid Program

Integrity ( O MPI) issued the Final Agency Audit Report (FAAR)

that underpins this proceeding. The FAAR alleged that for the

audit period, Petitioner had been overpaid by the Medicaid

program in the amount of $3,946,215.96. Petitioner timely

challenged the allegations of the FAAR, and the matter was

referred to DOAH, where it was assigned DOAH Case No. 03 -

2436MPI.

Respondent has not alleged, and there is no evidence to

suggest, fraud on Petitioner’s part.

The FAAR contained the following reference to a procedure

the par ties referred to as “extrapolation”:

The audit included a statistical analysis

of a random sampling, with the results

applied to the random sample universe of

claims submitt ed during the audit period.

The actual overpayment was calculated

using a proce dure that has been proven valid

and is deemed admissible in administrative

and law courts as evidence of the

overpayment.

Respondent contracted with Heritage Information Systems,

Inc. (Heritage) to conduct the field work for the audit. After

Heritage com pleted its work, Respondent prepared the subject

FAAR. After the FAAR, Petitioner submitted additional

documentation to Respondent. Based on that documentation,

Respondent reduced the amount of the alleged overpayment to the

sum at issue.

On October 21, 2003, Petitioner filed a pleading styled

“Motion in Limine and Motion for Stay Pending Ruling in the

First District Court of Appeal on Controlling Issues . ”

Respondent thereafter filed notice that it did not oppose the

motion to stay. The purpose of the s tay was to obtain a ruling

in another case [ Agency for Health Care Administration v.

Colonial Cut - Rate Drugs, Inc. , 878 So. 2d 479 (Fla. 1 st DCA

2004)] that the parties believed would impact the issues

involved in DOAH Case No. 03 - 2436MPI. Based on the un opposed

motion to stay, on October 27, 2003, the undersigned entered an

order that closed DOAH Case No. 03 - 2436MPI.

The Colonial , supra , decision was entered at the end of

July 2004. Thereafter, the parties continued to debate the

implications of the appe llate decision. On December 13, 2004,

Respondent filed an unopposed motion to reopen this proceeding.

On December 14, 2004, the undersigned granted the motion to

reopen, and this proceedi ng was reopened under DOAH Case No. 04 -

4450MPI.

On December 23, 2 004, Petitioner filed a lengthy Motion in

Limine seeking to exclude all evidence of an overpayment that

had been calculated by the use of extrapolation . Respondent

thereafter filed a lengthy response in opposition to

Petitioner’s Motion in Limine. Follow ing a hearing by

teleconference call the undersigned entered an Order Denying

[Petitioner’s] Motion in Limine on January 28, 2005. That order

rejected Petitioner’s contention that extrapolation cannot be

used to calculate an overpayment under the circumst ances of this

case. That ruling was consistent with the ruling made by

Administrative Law Judge J. D. Parrish involving nearly

identical circumstances in DOAH Case 03 - 3238MPI ( Com p script,

Inc., d/b/a Com p script v . Agency for Health Care

Administration ). 1

The Pre - Hearing Stipulation filed by the parties on

September 29, 2005, outlined the issues to be tried, the facts

not disputed, the law not disputed, and the witnesses and

exhibits each side intended to offer at hearing. The six - volume

transcript of th e proceedings correctly chronicles the

witnesses’ testimony, the exhibits admitted into evidence, as

well as objections preserved for the record. The Petitioner was

granted a continuing objection to the use of extrapolation to

compute the alleged overpaym ent.

At the final hearing, Respondent presented the testimony of

Dana Kenneth Yon (the O MPI program administrator for

pharmacies ); Mark Tripo di (vice - president of Heritage); Mark

Snapp (an auditor employed by Heritage); John Dennis Taylor (a

pharmacist a nd former executive dir ector of the Board of

Pharmacy); Ramona Stewart (a pharmacist employed by Respondent) ;

JoAnn Jackson (a pharmacist employed by Respondent) ; Robert D.

Pierce (a statistics expert employ ed by MPI); and Mark E.

Johnson, Ph.D. ( an expert in sampling and analysis ) . Respondent

offered 4 5 sequentially - numbered exhibits, each of which was

admitted into evidence.

Petitioner offered the testimony of Jerry Kelly (a

pharmacist employed by Petitioner ’s parent corporation ) ; Lynn

D ’Avico ( a consu lting pharmacist ) ; and Michael Intriligator,

Ph.D. ( an expert in sampling and analysis ) . Petit ioner offered

35 sequentially - numbered exhibits, each of which was admitted

into evidence. Petitioner’s exhibits included depositions of

Ramona Stewart and Doug las Y. Rowland, Ph.D. ( a consultant for

Heritage in the area of statistics ) .

Both parties timely submitted Proposed Recommended Orders,

which have been considered in the preparation of this

Recommended Order. Also, pertinent stipulated facts set forth

i n the parties’ Pre - hearing Stipulation are incorporated below.

Unless otherwise noted, all references to statutes or rules

are to the version of the statute or rule in effect at the time

of the subject audit.

FINDINGS OF FACT

PETITIONER

1. At all times relevant to the allegations of this case,

the Petitioner was licensed pursuant to Chapter 465, Florida

Statutes, to provide pharmacy services in Florida with pharmacy

license number PH0012223.

2. At all times relevant to this proceeding, Petitioner

was an authorized Medicaid provider with provider number

102126500.

3. At all times relevant to this proceeding, Petitioner

had a valid Medicaid Provider Agreement with Respondent.

4. During the audit period, Petitioner provided pharmacy

services to Medica id recipients and billed those services to the

Medicaid program under its Medicaid provider number.

Specifically Petitioner sold or dispensed drugs to Medicaid

recipients who resided in nursing home s . Petitioner operate d

solely to serve nursing home popu lation s .

5 . Petitioner usually received pharmacy orders by

telephone or facsimile transmission from a nursing home.

Typically, the staff at Petitioner’s facility would take the

call or receive the facsimile transmission, write down the

pertinent inform ation, enter the data into the pharmacy’s

computer system, dispense the item, and route the drugs to the

nursing home via courier. All drugs are dispensed in sealed

containers and are delivered with a manifest listing all the

medications by name and patie nt.

6. Jerry Kelly, a pharmacist employed by Petitioner’s

parent corporation, described how nursing home orders or

prescriptions were obtained and taken, beginning on line 11,

page 716, of Volume VI of the hearing transcript:

A. The vast majority, prob ably 90, 95

percent, are faxed over from the nursing

home by nurses. A few may be called in with

the nurse acting under the regulatory

authority to act as the agent of the

physician. These orders are then reviewed

by the pharmacist. An order issue

techn ician will enter that information into

the computer, creating the original

prescription.[ 2 ] The pharmacist then checks

that data that was entered into the

prescription to make sure all elements are

there and the order entry is correct.

Labels are then pr inted, which go to the

floor to be filled by technicians. The

pharmacist then checks the final product.

That product is sent to a staging area where

delivery manifests are printed. Those

orders are then checked off the delivery

manifest to make sure tha t no orders have

been missed. The tote is sealed and then

delivered to a nursing home by courier

service.

At the nursing home, the nurse and the

driver check these orders off together, both

sign that delivery manifest, and a copy of

that delivery manife st comes back to the

pharmacy.

Q. Can you explain to the Court the

typical process at [Petitioner’s parent

corporation] by which refills, so to speak,

are received and handled.

A. Back then refills were handled by

pulling a label off of the prescrip tion

container, apply it to a refill order sheet

or a piece of paper of any kind that would

fax . . . those are faxed to the pharmacy,

those labels are pulled and faxed to the

pharmacy by a nurse acting again under the

regulatory authority of a -- to act a s the

agent of the physician. That’s also

verifying to us that those orders are

continued for another month. The

prescription number is put in by an order

entry tech. Those labels are printed and

filled.

From there on, the process is exactly the

same.

7. Prior to the audit period, Petitioner was purchased by

another corporation . Subsequent to the audit, Petitioner ceased

to operate as a pharmacy .

RESPONDENT

8. Respondent is the state agency charged with the

responsibility and authority to admin ister the Medicaid program

in Florida. Respondent’s O MPI is responsible for overseeing the

integrity of the Medicaid program in Florida. Pursuant to this

authority Respondent’s O MPI oversees audits to assure compliance

with the Medicaid provisions and pr ovider agreements. These

integrity audits are routinely performed and Medicaid providers

are aware that they may be audited.

9. At all times material to the allegations of this case,

the Medicaid program in Florida was governed by a “pay and

chase” p rocedure. Under this procedure, Respondent paid

Medicaid claims submitted by Medicaid providers and then, after -

the - fact, O MPI audited such providers for accuracy and quality

control. These integrity audits are to assure that the provider

maintains recor ds to support the paid claims.

HERITAGE

10. In 1999 O MPI contracted with Heritage through

Consultec, L.L.C. (Medicaid’s fiscal agent), to perform and

report pharmacy audits of pharmacy providers within the state.

Auditors from Heritage were assigned Pe titioner’s audit. The

Heritage employees in charge of the subject audit were

experienced and appropriately trained.

THE AUDIT

11. Respondent’s audit no 01 - 1017 - 00 - 3/H/JDJ reviewed

Petitioner’s Medicaid claims paid by Respondent for the period

June 24, 19 98, through June 1, 2000.

12 . Ken Yon is the O MPI administrator who was responsible

for managing the instant case and who worked with the Heritage

auditors to assure the policies and practices of Respondent were

met. In this case, the Heritage auditors p resented at

Petitioner’s facility unannounced on July 31, 2000 and sought

250 randomly selected claims for review. By limiting the number

of claims, the auditors were not required to sift through the

records of 139,036 claims (the total number of claims t hat the

Petitioner sub mitted during the audit period).

13 . For the universe of 139,036 claims, 250 randomly

selected claims is a reasonable sample to audit. The adequacy

of the sample number as well as the manner in which it was

generated is supported by the weight of credible evidence

presented in this matter. Also, the results of extrapolating a

sample of 250 claims to the universe of 139,036 claims would be

statistically valid if the sampled claims were randomly chosen .

The 250 sample claims selected for the subject audit were

randomly chosen .

14. H eritage asked the Petitioner to present prescription

records it was required to retain to support the claims for the

audit period. Petitioner offered the auditors its computerized

records for many of the 2 50 samples in lieu of the hard copies

the auditors requested. The auditors refused to accept the

computerized records and, as reflected by the Audit Report,

Petitioner was unable to produce acceptable evidence of

prescriptions for a great many of the 250 samples. 3

15 . The auditors found that 171 of the 250 claims sampled

were discrepant, in that they did not meet standards for

payment. The auditors analyzed the number of discrepant claims

and determined that the average overcharge per sampled claim was

$36.3434 (sic) . Multiplying the number of claims in the

universe by that average yielded a n initial estimate of the

overcharge in the amount of $5,053,040.96. The 95% one - sided,

lower - confidence limit 4 for the initial estimate was determined

to be $3,94 6.215.96, which is the amount of the overpayment

alleged in the FAAR.

THE FAAR AND SUBSEQUENT COMPUTATIONS

16. After the auditors completed their review of the

records at Petitioner’s facility, JoAnn Jackson, a licensed

pharmacist with extensive experie nce in auditing pharmacies, was

assigned by Respondent to review Heritage’s audit report and to

prepare the Respondent’s FAAR. The vast majority of the

discrepant claims (165 of the 171) were categorized as CF, which

meant that the auditors could not find required documentation of

the subject prescription or could not find required

documentation for the refill of a prescription.

17. These findings were reported to the Petitioner, who

was given additional time to locate and produce documents to

support t he claims. Respondent was willing to accept

documentation for claims up through the time of hearing. 5 Based

on additional documentation submitted by Petitioner after the

auditors had completed their field work, Respondent’s staff

recalculated the amount of the overpayment by the use of

extrapolation (including the reduction of the initial estimate

to the 95% one - sided, lower confidence limit) to be the amount

of $1,053,137.49, which is the amount of the overpayment at

issue at the formal hearing. Respond ent established that each

alleged discrepant claim that it used to recalculate the amount

of the overpayment was, in fact, discrepant and did not meet

Medicaid record - keeping standards.

RECORD RETENTION REQUIREMENTS

18 . Although Petitioner’s manner of doi ng business was

different from the conventional pharmacy (the so - called corner

drugstore), it was subject to the same Medicaid records

retention requirements as a conventional pharmacy that serves as

a Medicaid provider.

19 . Pursuant to the applicable M edicaid Provider Agreement

between Petitioner and Respondent, Petitioner was to comply with

all Medicaid handbooks in effect during the audit period.

Petitioner was also required to comply with all applicable state

and federal Medicaid Program rules and l aws in effect during the

audit period.

20 . For each claim submitted during the audit period by

Petitioner to Respondent for payment under the Medicaid Program,

Petitioner was required to “keep, maintain, and make available

in a systematic and orderly mann er all medical and Medicaid -

related records as Respondent requires for a period of at least

five (5) years.” Petitioner was also required to make these

supporting records available to Respondent upon Respondent’s

request.

21 . A Medicaid provider must ret ain all medical, fiscal,

professional, and business records on all services provided to a

Medicaid recipient. In addition to the foregoing, a Medicaid

provider must maintain a patient record for each recipient for

whom new or refill prescriptions are disp ensed. Specific to

the issues of this case, a Medicaid provider must retain

prescription records for five years from the date the

prescription was last filled or refilled . F or the audit period

in this case, the prescription that authorized the dispensing of

each drug for which Petitioner claimed payment under the

Medicaid program should have been maintained and made available

for the auditors since each prescription would have been within

the five - year period.

22 . The records may be kept on paper, magnet ic material,

film, or other media. However, in order to qualify for

reimbursement, the records must be signed and dated at the time

of service, or otherwise attested to as appropriate to the

media. Rubber stamp signatures must be initialed. The records

must be accessible, legible and comprehensive.

23 . Applicable r ecords that must be kept for quality

control so that an after - the - fact audit can verify the integrity

of the Medicaid claims that were paid by Respondent.

24 . Each claim reviewed and at issue in this cause was a

paid Medicaid claim subject to the Petitioner’s provider

agreement and the pertinent regulations.

25 . In order to stand as a sufficient prescription form, a

writing must be created contemporaneous to the order (phone

requests tha t are transcribed are acceptable), must contain

specific information (type of drug, strength, dose, patient,

doctor, DEA number, refill, etc.), and it must be kept for the

requisite time. It would be acceptable for the prescription to

be computer generate d so long as it was written contemporaneous

to the order and preserved as required by law.

26 . At the times relevant to this proceeding, Florida

Administrative Code Rule 64B16 - 28.140(1)(d) and (e) , provided,

in part, as follows :

(d) Original prescripti ons . . . shall be

reduced to writing if not received in

written form. All original prescriptions

shall be retained for a period of not less

than two years from date of last filling.

To the extent authorized by 21 C.F.R.

Section 1304.04, a pharmacy may, in lieu of

retaining the actual original prescriptions,

use an electronic imagining record keeping

system, provided such system is capable of

capturing, storing, and reproducing the

exact image of the prescription, i ncluding

the reverse side of the prescri ption if

necessary, and that such image be retained

for a period of no less than two years from

the date of the last filling.

(e) Original prescriptions shall be

maintained in a two or three file system as

specified in 21 C.F.R. 1304.04(h).

PETITIONER’ S COMPUTERIZED RECORDS

27 . There was a dispute between the parties as to whether

Petitioner’s computer records should have been accepted as

evidence that valid prescriptions underlie each dispense d drug

within the sample. That dispute is resolved by find ing that the

compu ter records maintained by the Petitioner did not retain

prescriptions in the format dictated by rule. An electronic

imaging recording system may be used when the system captures,

stores, and can reproduce the exact image of the prescript ion,

including the reverse side of the prescription if necessary.

The Petitioner’s system did not do that.

28 . An electronic system must be able to produce a

contemporaneous hard - copy printout of all original prescriptions

dispensed and refilled. The or iginal prescriptions must be

maintained in a two or three file system as specified in 21

C.F.R. 1304.04(h). If the Petitioner’s system could do that, it

did not.

29 . Fundamentally, a Medicaid claim for a drug that has

been dispensed by a Medicaid provide r must have as its basis a

valid prescription. While Petitioner’s computer records

established what drugs had been dispensed, those records did not

meet the requirements for establishing that the drugs were

dispensed pursuant to valid prescriptions.

OVE RPAYMENT

30 . Any Medicaid providers not in compliance with the

Medicaid documentation and record retention policies may be

subject to the recoupment of Medicaid payments. As set forth in

the Conclusions of Law section of this Recommended Order, the

term “overpayment” is defined by Section 409.913(1)(d), Florida

Statutes (2000) .

EXTRAPOLATION

31 . At hearing, Petitioner continued to dispute the

procedure of applying the audit sample overpayment to the

population of claims to mathematically compute the over payment

for the audit period. Extensive testimony was taken as to the

extrapolation process used in this proceeding. Respondent has

used a statistical extrapolation method to compute overpayments

for years. The statistical concept and process of applyin g a

sample to a universe to mathematically compute an overpayment is

not novel to this case. All testimony, including the testimony

of Dr. Intriligator, has been fully considered in the findings

reached in this case.

32 . The testimony of Dr. Mark Johnson , an expert in

statistical sampling and analysis, has been deemed credible and

persuasive as to the issues of the appropriateness of the sample

(as to size and how it was generated), the use of the sample

overpayment to calculate an overall payment, and th e statistical

trustworthiness of the amounts claimed in this case. The only

way to determine the amount of the actual overpayment is to

examine each of the 139,036 claims that were made during the

audit period. Dr. Johnson’s testimony established that th e

probability is overwhelming that the amount of the alleged

overpayment is substantially less than the actual overpayment.

33 . Respondent established that Petitioner received an

overpayment during the audit period as alleged in the FAAR and

it establis hed that the amount of the overpayment is at least

$1,053,137.49.

CONCLUSIONS OF LAW

34 . The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. § 120.57(1), Fla. Stat. (2005).

35 . Pursu ant to Section 409.902, Florida Statutes (2000),

the Respondent is responsible for administering the Medicaid

Program in Florida.

36 . As the party asserting the overpayment, the Respondent

bears the burden of proof to establish the alleged overpayment

b y a preponderance of the evidence. See Southpointe Pharmacy v.

Department of Health and Rehabilitative Services , 596 So. 2d 106

(Fla. 1 st DCA 1992).

37 . Petitioner does not dispute Respondent ’s authority to

perform audits such as the one at issue. Pet itioner maintains

its records are sufficient to support the paid claims and that

Respondent has unreasonably imposed its interpretation of the

requirements. An agency’s interpretation of statutes and rules

it is required to enforce is entitled to deferenc e unless the

interpretation contradicts the plain meaning of the statute or

is clearly erroneous or contrary to law. See Level 3

Communications, LLC v. Jacobs , 841 So. 2d 447 (Fla. 2003) and

Osorio v. Board of Professional Surveyors and Mappers , 898 So.

2 d 188, (Fla. 5th DCA 2005). No such conflict exists here. The

undersigned is constrained to give deference to Respondent ’s

position that Petitioner’s computer records do not constitute

prescriptions.

38 . Section 409.913, Florida Statutes (2000), provi des, in

pertinent part:

The agency shall operate a program to oversee

the activities of Florida Medicaid

recipients, and providers and their

representatives, to ensure that fraudulent

and abusive behavior and neglect of

recipients occur to the minimum ex tent

possible, and to recover overpayments and

impose sanctions as appropriate.

(1) For the purposes of this section, the

term:

* * *

(d) "Overpayment" includes 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.

* * *

(7) When presenting a claim for payment

under the Medicaid program, a provider has an

affirmative duty to supervise the pr ovision

of, and be responsible for, goods and

services claimed to have been provided, to

supervise and be responsible for preparation

and submission of the claim, and to present a

claim that is true and accurate and that is

for goods and services that:

* * *

(e) Are provided in accord with applicable

provisions of all Medicaid rules,

regulations, handbooks, and policies and in

accordance with federal, state, and local

law.

(8) A Medicaid provider shall retain

medical, professional, financial, an d

business records pertaining to services and

goods furnished to a Medicaid recipient and

billed to Medicaid for a period of 5 years

after the date of furnishing such services

or goods. The agency may investigate,

review, or analyze such records, which mu st

be made available during normal business

hours. . . .

* * *

(19) In making a determination of

overpayment to a provider, the agency must

use accepted and valid auditing, accounting,

analytical, statistical, or peer - review

methods, or combinations thereof.

Appropriate statistical methods may include,

but are not limited to, sampling and

extension to the population, parametric and

nonparametric statistics, tests of

hypotheses, and other generally accepted

statistical methods. Appropriate analytica l

methods may include, but are not limited to,

reviews to determine variances between the

quantities of products that a provider had

on hand and available to be purveyed to

Medicaid recipients during the review period

and the quantities of the same product s paid

for by the Medicaid program for the same

period, taking into appropriate

consideration sales of the same products to

non - Medicaid customers during the same

period. In meeting its burden of proof in

any administrative or court proceeding, the

agency may introduce the results of such

statistical methods as evidence of

overpayment.

(20) When making a determination that an

overpayment has occurred, the agency shall

prepare and issue an audit report to the

provider showing the calculation of

overpaym ents.

(21) The audit report, supported by agency

work papers, showing an overpayment to a

provider constitute s evidence of the

overpayment. . . .

39 . Section 409.907, Florida Statutes (2000), provides, in

part:

The agency may make payments for med ical

assistance and related services rendered to

Medicaid recipients only to an individual or

entity who has a provider agreement in

effect with the agency, who is performing

services or supplying goods in accordance

with federal, state, and local law . . .

* * *

(3) The provider agreement developed by

the agency, in addition to the requirements

specified in subsections (1) and (2), shall

require the provider to:

* * *

(b) Maintain in a systematic and orderly

manner all medical and Medicaid - re lated

records that the agency requires and

determines are relevant to the services or

goods being provided.

(c) Retain all medical and Medicaid -

related records for a period of 5 years to

satisfy all necessary inquiries by the

agency.

40 . In this cas e the Agency seeks the overpayment based

upon an inadequate records keeping system utilized by the

Petitioner. The plain language of the statute directing a

provider to maintain in a “systematic and orderly manner” all

Medicaid records dictates that the R espondent may demand

repayment regardless of the circumstances that produced the

payment. The Petitioner voluntarily participated in a program

that dictated the manner in which all records would be

maintained. Apart from the strict compliance with those

dictates, the Petitioner is not entitled to payment for its

claim. See Colonnade Medical Center, Inc. v. Agency for Health

Care Administration , 847 So. 2d 540 (Fla. 4 th DCA 2003).

41 . During the audit period Respondent paid the Petitioner

for all Medicai d claims at issue in this proceeding. Respondent

honored the claims submitted by Petitioner . T hrough the audit

process, the Agency attempted to verify that those claims were

supported by the documentation required by law.

42 . The “overpayment” in th is cause results from an

unacceptable practice not fraud, abuse, or mistake. The

unacceptable practice was Petitioner’s lack of documentation to

support the claims filed. All of the record - keeping

requirements were known or should have been known to Peti tioner .

43 . This audit and recoupment claim occurred prior to

July 11, 2003. Consequently, the auditing mandates set forth in

Section 465.188, Florida Statutes (2004) are not applicable.

See Colonial , supra . Additionally, since the Agency is not

seekin g a “penalty” in this matter, the current law does not

prohibit the use of the accounting practice of extrapolation.

T he calculation of an overpayment using extrapolation is not a

penalty. See Bennett v. Kentucky Department of Education , 470

U.S. 656, 66 2 - 63, 105 S. Ct. 1544, 1548 - 1549 (1985). In this

case, Respondent is attempting to collect monies paid to a

provider who cannot produce the documentation to support the

paid claim because it did not comply with its agreement to

maintain appropriate record s. In complying with its mandate

from the federal government, Respondent is held to a high

standard and must assure that overpayments are recouped. See 42

C.F.R. § 433.312(a)(2).

44 . In this case, the audit report supports and

constitutes evidence of t he overpayment claimed. See

§ 409.913(22), Fla Stat. (2004). The Petitioner has failed to

present substantial, credible evidence to rebu t the overpayment

claimed.

45 . Respondent has met its burden of proof in this case

and has established by a prepo nderance of the evidence that the

Petitioner received overpayments in an amount greater than

$1,053,137.49 . Moreover, it is further concluded that

Petitioner failed to comply with record - keeping requirements,

failed to produce adequate documentation to su pport the paid

discrepant claims, and failed to discredit the accounting

practices utilized by Respondent in this cause.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Agency for Health Care

Admini stration enter a Final Order that finds that Petitioner

has received an overpayment from the Medicaid program in the

amount of $1,053,137.49. It is further recommended that the

final order require Petitioner to repay that overpayment.

DONE AND ENTERED t his 28 th day of February, 2006, in

Tallahassee, Leon County, Florida.

S

CLAUDE B. ARRINGTON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 323 99 - 3060

(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 28 th of February, 2006.

ENDNOTES

1/ The are no material differences between the issues and fac ts

of this proceeding and those of DOAH Case No. 03 - 3238MPI. On

December 9, 2005, Respondent entered a Final Order in DOAH Case

No. 03 - 3238MPI based on Judge Parrish’s Recommended Order dated

October 6, 2005. From DOAH’s docket sheet for DOAH Case No. 03 -

3238MPI, it appears that the Final Order in that proceeding has

been appealed to the First District Court of Appeal. Prior to

the entry of a Final Order in this proceeding, Respondent should

determine the status of that appeal and whether the opinion, if

issued, would impact the issues in this proceeding. The

undersigned adopts the rationale expressed by Judge Parrish in

her Order entered October 22, 2004, in concluding that

extrapolation is not prohibited by the provisions of Section

465.188, Florida St atutes (2004) because the claims were

submitted for payment prior to the date more stringent audit

standards set forth in that statute are to apply (July 11,

2003), and because Respondent seeks an overpayment in this

proceeding, not the imposition of penal ties. The undersigned

has also followed the general format of Judge Parrish’s

Recommended Order in DOAH Case No. 03 - 3238MPI and has adopted

many of her conclusions of law.

2/ In a pharmacy setting where a practitioner faxes or calls in

a prescription, only a pharmacist or a pharmacist intern working

under the supervision of a pharmacist can create a prescription.

See Fla. Admin. Code R. 64B16 - 27.103.

3/ Many of the records that were subsequently accepted by

Respondent to reduce the amount of the all eged overpayment were

nursing home records that Petitioner obtained and delivered to

Respondent after the auditors had completed their field work.

These records included physician order sheets and medication

administration records.

4/ This is an accep ted statistical process that is used in

extrapolation to reduce the initial estimate of an overpayment

to a figure that has a high degree of probability of being less

than the amount of the actual overpayment had that overpayment

been calculated by examini ng each of the 139,036 claims made.

Such a reduction works to the advantage of the provider.

5/ As of May 25, 2005, Petitioner had either provided Respondent

(or Respondent’s authorized representative) with all the

Medicaid - related records and informa tion supporting each claim

submitted by Petitioner to Respondent during the audit period or

had concluded that it would be unable to obtain those records.

COPIES FURNISHED :

Ralph E. Breitfeller, Esquire

McGrath & Breitfeller, LLP

140 East Town Street, S uite 1070

Columbus, Ohio 43215

L. William Porter, II, Esquire

Karen Dexter, Esquire

Agency for Health Care Administration

Fort Knox Executive Center III

2727 Mahan Drive, Building 3, Mail Stop 3

Tallahassee, Florida 32308 - 5403

Kenneth W. Sukhia, Esquir e

Fowler, White, Boggs, Banker, P.A.

101 North Monroe Street, Suite 1090

Post Office Box 11240

Tallahassee, Florida 32302

Richard Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

Christa Calamas, General Counsel

Agency for Health Care Administration

Fort Knox Building, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

Alan Levine, Secretary

Agency for Health Care Administration

Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308

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 should be filed with the agency t hat

will issue the Final Order in this case.