04-001887MPI Winter Haven Hospital vs. Agency For Health Care Administration Status: Closed Recommended Order on Tuesday, December 28, 2004.

Summary: An agency action, that is an administrative substitute for a civil action that the agency initiates more than four years after the accused action, is time-barred by Subsection 95.11(3)(f), Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WINTER HAVEN HOSPITAL, )

)

Petitioner, )

)

vs. ) Case No. 04 - 1887MPI

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORD ER OF DISMISSAL

Respondent is the agency of the state that administers the

Florida Medicaid program, defined in Subsection 409.901(15),

Florida Statutes (1996), in accordance with Title XIX of the

Social Security Act, 42 USC Section 1396 et seq . Respond ent

initiated this administrative proceeding to recover alleged

overpayments in the amount of $35,158.76 for Medicaid services

that Petitioner provided from July 1, 1997, through March 31,

1999 (the audit period).

Petitioner disputed the proposed recove ry of the alleged

overpayments and requested an administrative hearing.

Respondent referred the matter to the Division of Administrative

Hearings (DOAH) to assign an administrative law judge (ALJ) to

conduct the hearing, in place of the agency head, in ac cordance

with the Administrative Procedure Act (APA), Chapter 120,

Florida Statutes (1996). DOAH assigned the matter to the

undersigned, and the administrative hearing is currently

scheduled for January 10 and 11, 2005.

Petitioner provided the Medicaid se rvices at issue more

than four years before Respondent issued either a Preliminary

Audit Report or a Final Agency Audit Report. Petitioner filed a

Motion to Dismiss on June 2, 2004, raising for the first time

the defense that the proposed agency action is time barred by

Subsection 95.11(3)(f), Florida Statutes (1996) (the statute of

limitations), pertaining to an action founded on statutory

liability.

A cursory order from the undersigned denied Petitioner's

motion with leave to submit another motion citi ng legal

authority for applying the statute of limitations in this

administrative proceeding. Petitioner filed a subsequent Motion

to Dismiss (Motion) on July 9, 2004. Respondent filed its

Response to Second Motion to Dismiss on July 14, 2004

(Response).

The parties filed legal memoranda and a joint stipulation

of facts in support of their respective positions, and the

undersigned conducted a motion hearing on October 4, 2004. At

the hearing, the ALJ requested the parties to submit

supplemental legal memoranda addressing issues raised by the ALJ

during the hearing. Petitioner filed a supplemental legal

memorandum concerning the issues of when an administrative cause

of action accrues and when Respondent initiated its recovery

action. Respondent did n ot file a supplemental memorandum.

During a telephone conference conducted on December 21,

2004, the undersigned entered an ore tenus order granting

Petitioner's request to stay discovery pending the issuance of

this Order. On December 22, 2004, the ALJ requested counsel for

the parties to submit additional legal authority. The purpose

of the request was to give respective counsel the opportunity to

cite legal authority, if any, supporting or denying the

authority of the state to enact a statute of limi tations that

shortens the federal statute of limitations barring a federal

agency from initiating collection for overpayments of Medicaid

payments after six years. In a written response filed on

December 23, 2004, Respondent admits that the six - year feder al

statute of limitations does not apply to state administrative

proceedings authority and, presumably, the federal statute of

limitations does not preclude the state from enacting a shorter

statute of limitations.

The statute of limitations, in relevant p art, provides:

A civil action or proceeding, called

"action" in this chapter, including one

brought by the state, a public officer, a

political subdivision of the state, a

municipality, a public corporation or body

corporate, or any agency or officer of an y

of them, or any other governmental

authority, shall be barred unless begun

within the time prescribed in this chapter

or, if a different time is prescribed

elsewhere in these statutes, within the time

prescribed elsewhere.

§ 95.011, Fla. Stat. (1996).

It is undisputed that a different time is not prescribed

elsewhere in Chapter 409, Florida Statutes (1996), and that, if

a state statute of limitations applies in this proceeding, the

operative statute is Section 95.011, Florida Statutes (1996).

The thres hold issue for determination is whether the

statute of limitations applies to administrative proceedings

such as this proceeding. For reasons stated hereinafter, the

ALJ concludes that the statute of limitations applies to some

administrative proceedings, including this proceeding, but not

to other administrative proceedings.

In asserting the negative of the threshold issue, the

Response argues, in substance rather than form, that the phrase

"civil action or proceeding" should be construed grammatically

to mean civil action or civil proceeding. The Response

presumably does not suggest that a civil action and a civil

proceeding are synonymous because principles of statutory

construction assume the legislature does not intend to enact

meaningless or redund ant terms. Unruh v. State , 669 So. 2d 242,

245 (Fla. 1996).

The necessary implication from the Response is that a civil

action and a civil proceeding are distinct judicial events. The

Response cites no legal authority to support the distinction,

but a recent appellate decision held that an administrative

proceeding may be a distinct event from an administrative

hearing. G.E.L. Corporation v. Department of Environmental

Protection , 875 So. 2d 1257, 1261 (Fla. 5th DCA 2004) reh.

denied (July 1, 2004).

Th e statutory construction proposed by Respondent is

problematic for at least three reasons. First, the proposed

construction ignores the fact that the legislature mandates a

substantial proportion of state "action" to be initiated through

an administrative proceeding pursuant to the APA and workers'

compensation law. Second, the proposed construction is

inconsistent with relevant case law. Third, the proposed

construction may violate the non - delegation doctrine that is

virtually unique to Florida.

T he statutory construction proposed by Respondent ignores

the practical reality that the legislature authorizes a

substantial proportion of state "action" to be initiated in the

form of an administrative "proceeding." See , e.g. , §§ 120.569

and 120.57(1), F lorida Statutes (1996) (authorizing an

administrative hearing for any proposed agency action that

affects a person's substantial interests). Similarly, the

statute of limitations is, by its terms, intended to apply to

"actions or proceedings" initiated by every conceivable form of

state or local government. For example, the legislature intends

the statute of limitations to apply to "actions or proceedings"

initiated by:

. . . the state, a municipality, a public

officer, a political subdivision of the

stat e, a municipality, a public corporation

or body corporate, or any agency or officer

of any of them, or any other governmental

authority. . . .

§ 95.011, Fla. Stat. (1996). Compare Heidt v. Caldwell , 41 So.

2d 303, 305 (Fla. 1949) (holding a different lim itations statute

did not apply to the state because the language of the statute

did not make it applicable to the state).

It would strike the undersigned as counterintuitive, and

perhaps the functional equivalent of a legislative nullity, if

the legislatur e were to apply the statute of limitations to

"actions or proceedings" initiated by such an inclusive

definition of state government and, simultaneously, reduce the

reach of the statute by excluding a significant body of action

that the legislature authori zes the state to initiate in an

administrative proceeding. The undersigned concludes that the

statute of limitations applies to proceedings that are

administrative substitutes for civil actions in the absence of

either a specifically applicable statute of limitations or an

express statutory exclusion. See Associated Coca - Cola and

Liberty Mutual Insurance v. Special Disability Trust Fund , 508

So. 2d 1305, 1306 n. 2 (Fla. 1st DCA 1987) (holding that a

general statute of limitations applies to administrative

proceedings in the absence of a specially applicable statute)

(citations omitted).

A conclusion that the legislature intended the statute of

limitations to apply to proceedings that are administrative

substitutes for civil actions, in the absence of a sp ecifically

applicable statute or an express exclusion, construes the broad

scope of state action described in the statute of limitations in

a manner that is consistent with the broad legislative mandate

for state action to be initiated pursuant to the APA. Compare

§§ 57.111(2) (expressly distinguishing civil actions from

administrative proceedings), 164.1041(1), and 164.1051, Fla.

Stat. (2004) (expressly excluding administrative proceedings

conducted pursuant to the APA from the operation of the Florida

Go vernmental Conflict Resolution Act) with § 95.011, Fla. Stat.

(2004) (not expressly limiting the term "proceedings" to

administrative proceedings).

The statutory construction proposed by Respondent is

inconsistent with cases in which courts have applied t he statute

of limitations in administrative proceedings conducted pursuant

to workers' compensation law in Chapter 440. Associated Coca -

Cola , 508 So. 2d at 1305. Accord Special Disability Trust Fund

v. Florida Crushed Stone Company , 689 So. 2d 430 (Fla. 1st DCA

1997); Special Disability Trust Fund v. Orange County Board of

Commissioners , 687 So. 2d 1368 (Fla. 1st DCA 1997); Rebich v.

Burdine's , 417 So. 2d 284 (Fla. 1st DCA 1982), review denied 424

So. 2d 762 (Fla. 1982). The cited cases did not apply the

statute of limitations to APA proceedings. It is appropriate,

therefore, to determine whether there is any practical or legal

basis for treating administrative proceedings initiated pursuant

to the workers' compensation law differently from administrativ e

proceedings initiated pursuant to the APA.

In several cases, courts have refused to apply the statute

of limitations to administrative proceedings initiated pursuant

to the APA. In each case, however, the administrative

proceeding involved disciplinar y actions in which the state

exercised a quasi - police power against a licensee (disciplinary

actions). Ong v. Department of Professional Regulation , 565

So. 2d 1384, 1386 (Fla. 5th DCA 1990); Farzad v. Department of

Professional Regulation , 443 So. 2d 373 , 375 (Fla. 1st DCA

1983); Landes v. Department of Professional Regulation , 441 So.

2d 686 (Fla. 2d DCA 1983); Donaldson v. State Department of

Health and Rehabilitative Services , 425 So. 2d 145 (Fla. 1st DCA

1983).

The parties agree that the statute of limitations does not

apply to APA proceedings that are disciplinary actions.

However, they also agree that this proceeding is not a

disciplinary action.

Judicial decisions that exclude disciplinary actions from

the statute of limitations do not a fortior i exclude other APA

proceedings from the statute of limitations. APA proceedings

that are not disciplinary actions do not comprise a subset of

disciplinary actions. Rather, disciplinary actions comprise a

subset of the universe of APA proceedings.

At l east one case has applied a statute of limitations in

an APA proceeding that was not a disciplinary action. Bishop v.

State Division of Retirement , 413 So. 2d 776 (Fla. 1st DCA

1982). In Bishop , a hearing officer concluded in an

administrative proceeding conducted pursuant to

Subsection 120.57(1), Florida Statutes (1979), that the claims

of retirees for debts owed by the state and payable in

installments were untimely tort claims that were barred by a

statute of limitations in Subsection 768.28(11), Flori da

Statutes (1979). Bishop v. Division of Retirement , DOAH Case

No. 80 - 1297 (DOAH May 12, 1981) (adopted by Final Order June 3,

1981). On appeal, the court held that the statute of

limitations applicable to contracts, rather than that applicable

to torts , runs against each installment from the day the

installment is due. Bishop , 413 So. 2d at 778. However, the

published decision of the court did not explicitly identify the

statute of limitations that barred untimely contract claims in

administrative pro ceedings.

In a subsequent case, the court identified "Chapter 95" as

the statute of limitations at issue in Bishop and attempted to

clarify the earlier decision in Bishop . Farzad , 443 So. 2d at

375. In relevant part, the court explained:

Although Donal dson indicates that Chapter 95

is not applicable to this administrative

proceeding in the absence of contrary

legislative intent, appellant urges that our

decision in Bishop (citation omitted)

dictates a contrary result. . . . Bishop

involved an action whi ch was an

administrative substitute for the common law

remedy of a suit for breach of contract,

rather than a disciplinary proceeding

brought in the name of the sovereign, as

here. We hold that this administrative

disciplinary proceeding is not barred by

Section 95.011(3)(p), Florida Statutes

(1981).

Id.

The refusal to apply "Chapter 95" to administrative

proceedings conducted pursuant to the APA is expressly limited

in the foregoing judicial explanation to the subset of APA

proceedings identified as d isciplinary actions. The decision

does not expressly reach other administrative proceedings within

which this proceeding is properly characterized.

It is uncontested that this proceeding is an action

based on statutory liability within the meaning of

Su bsection 95.11(3)(f), Florida Statutes (1996). However, this

proceeding, like federal actions to recover Medicare

overpayments, is an administrative substitute for a civil

action. See United States v. Beck , 758 F.2d 1553, 1558 (11th

Cir. 1985)(holding th at federal actions for recoupment of

overpayment of Medicare claims are contract actions).

Unlike this proceeding, disciplinary actions are penal

proceedings that are more closely analogous to criminal actions

than they are to civil actions. Courts may e xclude disciplinary

actions brought "in the name of the sovereign" from the reach of

"Chapter 95" because disciplinary actions arguably constitute

administrative substitutes for quasi - criminal actions rather

than administrative substitutes for civil action s. Compare

Farzad , 443 So. 2d at 375 and Bishop , 413 So. 2d at 778 (read

together for the proposition that non - disciplinary actions are

an administrative substitute for a civil action) with State ex

rel. Vining v. Florida Real Estate Commission , 281 So. 2 d 487,

489 and 491 (Fla. 1973) (holding that disciplinary actions are

penal proceedings; superceding the rationale in Robins v.

Florida Real Estate Commission , 162 So. 2d 535 (Fla. 3d DCA

1964) that refused to extend the right against self -

incrimination to a disciplinary action because disciplinary

actions were administrative proceedings).

A separate procedural rule that exempts disciplinary

actions from the statute of limitations is consistent with the

literal terms of Chapter 95. The statute of limitat ions, by its

terms, is limited to civil actions or proceedings.

A separate procedural rule that exempts disciplinary

actions from the statute of limitations, but does not exempt

other administrative proceedings, is consistent with other

procedural rules that treat disciplinary actions differently

from other types of APA proceedings. For example, the standard

of proof in a disciplinary action is clear and convincing

evidence while the standard of proof for other APA proceedings

is a preponderance of evide nce. Department of Banking and

Finance v. Osborne Stern and Co. , 670 So. 2d 932 (Fla. 1996).

In addition, courts require greater specificity for pleadings in

disciplinary actions than courts require in other types of APA

proceedings. Ghani v. Department of Health , 714 So. 2d 1113

(Fla. 1st DCA 1998); Cottrill v. Department of Insurance , 685

So. 2d 1371 (Fla. 1st DCA 1996).

Respondent's proposed statutory construction, if it were

accepted, would violate the non - delegation doctrine in Florida.

Art. 2, § 3 , Fla. Const. While the undersigned has no

jurisdiction to determine the constitutionality of a statute,

the undersigned is required, whenever possible, to interpret a

statute in a manner that preserves the statute's

constitutionality.

The non - delegatio n doctrine, in relevant part, prohibits

the legislature from delegating to an administrative agency the

power to exercise unrestrained discretion in the administration

of an enactment. The non - delegation doctrine requires the

legislature to make fundament al and primary policy decisions and

to provide administrative agencies, including Respondent, with

minimal standards and guidelines that are ascertainable by

reference to the legislature's enactment. Bush v. Shiavo , 885

So. 2d 321 (Fla. 2004). See also B .H. v. State , 645 So. 2d 987,

992 - 994 (Fla. 1994); Askew v. Cross Key Waterways , 372 So. 2d

913, 925 (Fla. 1978).

If the statute of limitations were inapplicable to

administrative substitutes for civil actions, the legislature

would effectively empower Re spondent to determine in each case

the amount of time within which a state agency would enforce

statutory liability without any guidelines ascertainable in the

enactment. Application of Section 95.011, Florida Statutes

(1996), to state action initiated by a state agency in an

administrative substitute for a civil action precludes an

inadvertent violation of the non - delegation doctrine.

The statutory interpretation proposed by Respondent either

nullifies the four - year limitation period; or, in the

alterna tive, enlarges the time limit to an indefinite and

variable period to be determined by a state agency in each case

with no minimal standards or guidelines that are ascertainable

by reference to the legislative enactment that Respondent seeks

to enforce. N either Respondent nor DOAH can construe the

collective provisions of the Medicaid law and the statute of

limitations in a manner that enlarges, modifies, or contravenes

the specific provision of either law. §§ 120.52(15)

and 120.68(7)(d) and (e), Fla. Sta t. (2004).

Application of the statute of limitations to APA

proceedings other than disciplinary actions is consistent with

judicial decisions applying the statute of limitations to

administrative proceedings initiated pursuant to the workers'

compensation law. Such APA proceedings, like workers'

compensation proceedings, are administrative substitutes for

civil actions; both are proceedings, within the meaning of

Section 95.011, Florida Statutes (1996); and neither is a

disciplinary action.

Having resolv ed the threshold issue by concluding that the

statute of limitations applies to proceedings that are

administrative substitutes for civil actions, the remaining

issue is whether the statute of limitations bars the proposed

agency action in this administrat ive proceeding. Resolution of

the remaining issue requires a determination of when

Respondent's cause of action accrued and when Respondent

initiated an administrative proceeding to enforce its cause of

action.

Respondent seeks reimbursement of alleged Me dicaid

overpayments in this proceeding. Respondent's cause of action

did not accrue on the date that Respondent made payments to

Petitioner. See Associated Coca Cola , 508 So. 2d at 1307

(rejecting the contention that a cause of action for

reimbursement o f workers' compensation benefits accrues on the

date of payment).

Respondent could not have known of the alleged overpayments

at the time of the payments. See Stipulations for Hearing ,

paragraph 6 (October 1, 2004) (hereinafter "Stipulations"). A

cause of action generally accrues on the date that a claimant,

such as Respondent, has knowledge sufficient to reasonably

believe that a right of action has accrued. Compare City of

Miami v. Brooks , 70 So. 2d 306, 308 - 309 (Fla. 1954) and Urie v.

Thompson , 337 U .S. 163, 69 S. Ct. 1018, 93 L. Ed. 1282 (1949)

(both holding that a right of action for a tort victim does not

accrue until the victim reasonably should have known of the

tort) with Harris v. District Board of Trustees of Polk

Community College , 9 F. Supp. 2d 1319, 1328 (M.D. Fla. 1998)

(holding that cause of action under whistle blower statute

accrues when claimant has knowledge of wrongful act).

Respondent's cause of action for recovery of alleged

Medicaid overpayments accrued on the date when Respondent

received a peer review report that Petitioner had over - utilized

medical treatment. The date of the peer review report is the

first date on which Respondent had reasonable knowledge of the

alleged overpayments. Compare Beck , 758 F.2d at 1559 (holding

that federal actions for recoupment of overpayment of Medicare

claims accrue upon payment, but due to specific federal code

provisions the federal six - year statute of limitations is tolled

until receipt of the peer review report) with United States v.

Diaz , 79 0 F.2d 866, 867 (11th Cir. 1986) and United States v.

Kass , 740 F.2d 1493, 1497 (11th Cir. 1984) (both holding that

government action for recoupment of overpayments of Medicare

claims accrues upon receipt of peer review report).

Respondent may not have k nown all of the details of the

alleged overpayments when Respondent received the peer review

reports, and the peer review reports presumably were

recommendations. Moreover, Petitioner provided additional

information that Respondent considered before issui ng a final

agency audit letter. However, it is not necessary for

Respondent to have all relevant and material information before

the statute of limitations begins to run. Once the facts

comprising the "essence" of a right of action are reasonably

knowabl e, the action accrues, and the statute of limitations

begins to run. Kass , 740 F.2d at 1497 and 1498 n.5.

Respondent, through its agent, issued 17 separate "adverse

determination letters" for the audit period, based on peer

review reports, between March 2 2, 1999, and September 20, 1999.

Stipulations , paragraph 4. Resolving unstipulated facts against

Petitioner, as the moving party, it is assumed that Respondent's

agent received each peer review report on the same date as the

date of the respective advers e determination letter. Thus,

Respondent had reasonable knowledge of the alleged overpayments

no later than September 20, 1999.

A state agency generally initiates a cause of action when

it takes action that creates a point of entry for a person whose

in terests are substantially affected by the proposed agency

action. Friends of the Hatchineha, Inc. v. Department of

Environmental Regulation , 580 So. 2d 267, 269 (Fla. 1st DCA

1991). Preliminary agency action does not affect a person's

substantial interes ts. See Florida League of Hospitals v.

Hospital Cost Containment Board, Department of Insurance , 492

So. 2d 431, 433 (Fla. 1st DCA 1986) (holding that voice vote of

board was preliminary agency action that did not entitle

regulated party to formal adminis trative hearing).

Respondent issued a preliminary audit letter on

November 20, 2003, and a final agency audit letter on April 18,

2004. Stipulations , paragraphs 2 and 3. The final agency audit

letter dated April 18, 2004, initiated agency action. The date

of the final agency audit letter was the first date on which

Respondent created a point of entry for Petitioner to request an

administrative hearing to challenge the proposed recoupment of

alleged overpayments. See §§ 409.913(20), 120.569(1),

and 1 20.57(1), Fla. Stat. (1996).

Respondent initiated an administrative proceeding to recoup

alleged overpayments on April 18, 2004, more than four years

after Respondent's cause of action accrued on September 20,

1999. Respondent's claim for alleged overpa yments based on

statutory liability is barred by the statute of limitations.

Having considered the Motion and Response, it is

RECOMMENDED that Respondent enter a final order dismissing

this proceeding as barred by the statute of limitations.

DONE AND ENTERED this 28th day of December, 2004, in

Tallahassee, Leon County, Florida.

S

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Flori da 32399 - 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 28th day of December, 2004.

COPIES FURNISHED :

Grant P. Dearborn, Esquire

Agency for Heal th Care Administration

Fort Knox Building III, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

W. David Watkins, Esquire

Karl David Acuff, Esquire

Watkins & Caleen, P.A.

1725 Mahan Drive, Suite 201

Post Office Box 15828

Tallahassee, Florida 32317 - 5828

Alan Levine, Secretary

Agency for Health Care Administration

Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308

Valda Clark Christian, General Counsel

Agency for Health Care Administration

Fort Knox Building, Suite 3431

27 27 Mahan Drive

Tallahassee, Florida 32308

Charlene Thompson, Acting Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to subm it written exceptions within

15 days from the date of this Recommended Order of Dismissal.

Any exceptions to this Recommended Order of Dismissal should be

filed with the agency that will issue the Final Order in this

case.