05-002207 Fcci Insurance Group vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Thursday, April 27, 2006.

Summary: Petitioner did not participate for an improper purpose by reducing the amount of hospital reimbursement, requesting a hearing, or challenging Respondent`s interpretation and enforcement of a rule promulagated by the Department of Financial Services.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FCCI INSURANCE GROUP , )

)

Petitioner , )

)

vs. )

)

AGENCY FOR HEALTH CARE ) Case Nos. 05 - 2018

ADMINISTRATION , ) 05 - 2161

) 05 - 2204

Respondent, ) 05 - 2205

) 05 - 2206

and ) 05 - 2207

) 05 - 2256

CAPE CANAVERAL HOSPITAL, INC., ) 05 - 2257

HOLMES REGIONAL MEDICAL CENTER, )

INC. , AND INDIAN RIVER MEMORIAL )

HOSPITAL , )

)

Intervenor s . )

)

FINAL ORDER

Administrative Law Judge (ALJ) Daniel Manry conducted the

formal hearing in this proceeding on January 18 and 19, 2006, in

Orlando, Florida, and on January 31, 2006, in Tallahassee,

Florida, on behalf of the Division of Administrative Hearing s

(DOAH).

APPEARANCES

For Petitioner: Daniel R. Goodman, Esquire

Cindy R. Galen, Esquire

Eraclides, Johns, Hall, Gelman,

Eikner & Johannssen, LLP

Post Office Box 49137

S arasota, Florida 34230 - 9137

For Respondent: Joanna Daniels, Esquire

Agency for Health Care Administration

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Intervenors: Karen Walker, Esquire

Matthew H. Mears, Esquire

Holland & Knight LLP

Post Office Drawer 810

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

The issue for determination is wheth er Intervenors are

entitled to reasonable attorney fees and c osts pursuant to

Section 57.105 , Florida Statutes (2003). 1

PRELIMINARY STATEMENT

On December 2 9, 2 005, Intervenors filed Intervenors ' Motion

for Attorneys ' F ees. The motion seeks attorney fees an d costs

pursuant to Section 57.105 , Florida Statutes (200 3 ).

At the formal hearing, Intervenors presented the testimony

of eight witnesses and submitted 43 exhibits for admission into

evidence. Petitioner called one witness and submitted no

exhibits for admission into evidence.

The identity of th e witnesses and exhibits and the rulings

regarding each are reported in the four - volume Transcript filed

with DOAH on March 6 and 7, 2006. On March 14, 2006, the ALJ

granted Petitioner ' s request to exten d the time in whi ch to file

proposed final orders (PF Os) until March 27, 2006. Intervenors

and Respondent timely filed their si ngle PF O on March 27, 2006.

Petitioner filed its PF O on March 28, 2006.

FINDINGS OF FACT

1. Petitioner is an insurer and carrier within the meaning

of Subsections 440.02(4) and 440.02 (38), Florida Statutes

(2005), and Florida Administrative Code Rule 69L - 7.602(1)(w). 2

Petitioner is licensed in the state as a workers ' compensation

insurance carrier (carrier). 3

2. Respondent is a st ate agency within the meaning of

Subsection 440.02(3), Florida Statutes (2005), and Florida

Administrative Code Rule 69L - 7.602(1)(b). In relevant part,

Respondent i s responsible for resolving reimbursement dispute s

between a carrier and a health care prov ider.

3. Intervenors are health care providers within the

meaning of Subsection 440.13(1)(h), Florida Statutes (2005), and

Florida Administrative Code Rule 69L - 7.602(1)(u). Each

Intervenor is a health care facility within the meaning of

Subsection 440.13 (1)(g), Florida Statutes (2005).

4. Intervenors seek an award of attorney fees and costs

against Petitioner pursuant to Sections 57.105 and 120.595,

Florida Statutes (2003). The proceeding involving

Section 120.595 , Florida Statutes (2003), is the subje ct of a

separate Recommended Order entered on th e same date as this

Final Order. The scope of this Final Order is limited to

Section 57.105 , Florida Statutes (2003).

5. Intervenors allege that Petitioner is the " non -

prevailing party " in an underlying pro ceeding and participated

in the underlying proceeding for reasons prohibited in

S ection 57. 1 05 , Florida Statutes (2003) (prohibited purposes) .

The underlying proceeding involves eight consolidated Petitions

for Administrative Hearing.

6. Petitioner fil ed each Petition for Administrative

Hearing after Respondent determined Petitioner had improperly

discounted the amount of reimbursement Petitioner paid for

hospital services that Intervenors provided to eight patients

from March 13, 2004, through February 11, 2005. From April 13

through May 23, 2005, Respondent issued separate orders

directing Petitioner to pay the disputed amounts pursuant to

Subsection 440.13(7), Florida Statutes (2005). From June 1

through June 21, 2005, Petitioner filed eight separat e Petitions

for Administrative Hearing. The eight petitions were

subsequently consolidated into one underlying proceeding.

7. Petitione r is the non - prevailing party in the

underlying proceeding. On December 8, 2005, Petitioner filed a

Notice of Voluntar y Dismissal in the underlying proceeding.

8. On December 29 , 2005, Intervenors filed their motion

for attorney f ees based on Section 57.105 , Florida Statutes

(2003). The formal hearing in the underlying proceeding was set

for January 18, 2006. The ALJ amended the issue for the formal

hearing to exclude the original reimbursement dispute and to

limit the scope of the formal hearing to the fee dispute. The

ALJ did so to avoid delay in the resolution of the proceeding.

9 . T his proceeding includes attorn ey fees for only six of

the original eight reimbursement disputes because Intervenors

were not the medical providers in two of the original eight

disputes. 4 In the six reimbursement disputes involving

Intervenors, Respondent ordered Petitioner to p ay addi tional

reimbursements in the aggregate amount of $54,178.52.

10. Approximately $51,489.27 of the $54,178.52 in

additional reimbursement involved inpatient hospital services

provided to one patient. 5 The remaining $2,689.25 in additional

reimbursement i nvolved outpatient hospital services in the

emergency room. 6

11. Subsection 440.13(12), Florida Statutes (2005),

mandates that a three - member panel must determine statewide

schedules for reimbursement allowances for inpatient hospital

care. The statute r equires hospital outpatient care to be

reimbursed at 75 percent of " usual and customary " charges with

certain exceptions not relevant to this proceeding.

12. Notwithstanding the statutory mandate to schedule

reimbursement rates for hospital inpatient se rvices, the

inpatient services at issue in the underlying proceeding were

apparently unscheduled inpatient services. By letter dated

April 13, 2005, Respondent ordered Petitioner to pay Intervenor,

Holmes Regional Medical Center, Inc. (Holmes), an additio nal

reimbursement in the amount of $51,489.27. The total

reimbursement to Hol mes was 75 percent of the charges that

Holmes submitted to Petitioner for reimbursement. 7

13. Respondent interprets Subsection 440.13(12), Florida

Statutes (2005), to authorize reimbursement of both unscheduled

inpatient hospital services and outpatient hospital services at

the same rate. There is no dispute that Respondent reimburses

unscheduled inpatient hospital services and outpatient hospital

services at 75 percent of the " usual and customary " charges.

14. The dispute in the underlying proceeding was over the

meaning of the phrase " usual and customary " charges. Petitioner

challenged the interpretation asserted by Respondent and

Intervenors .

15. Respondent and Intervenors contend ed that the quot ed

statutory phrase mean s Intervenors ' usual and customary charges

evidenced in a proprietary document identified in the record as

the " charge master. " Each Intervenor maintains its own charge

master, and the information in each ch arge master is proprietary

and confidential to each Intervenor.

16. Petitioner asserted that the statutory phrase " usual

and customary " charges means the usual and customary charges

imposed by other hospitals in the community in which Intervenors

a re located. Petitioner maintains a database that contains

information sufficient to determine the usual and customary

charges in each community.

17. Petitioner did not participate in the underlying

proceeding for prohibited purposes . Rather, Petitioner

presented a good faith claim or defense to modify or reverse the

then - existing interpretation of Subsection 440.13(12), Florida

Statutes (2005) , in accordance with Subsection 57.105(2),

Florida Statutes (2003) .

18. Petitioner had a reasonable expectatio n of success .

The statutory phrase " usual and customary " charges is not

defined by statute. Nor has the phrase been judicially defined.

Respondent bases its interpretation of the disputed phrase on

two agency final orders and relevant language in the Flo rida

Workers ' Compensation Reimbursement Manual for Hospitals (2004

Second Edition) (the Manual ) . The Manual is developed by the

Florida Department of Financial Services (DFS). 8

19. The Manual interprets the quoted statutory phrase to

mean the " hosp ital ' s charges. " However, after the effective

date of the Manual in 2004, DFS developed a proposed change to

the Manual that, in relevant part, interprets " usual and

customary " charges to mean the lesser of the charges billed by

the hospital or the median charge of hospitals located within

the same Medicare geographic locality. 9

20. The trier of fact does not consider the new

interpretation of the disputed statutory phrase as evidence

relevant to a disputed issue of fact. As Respondent determined

in an Order to Show Cause issued on February 16, 2006, and

attached to Intervenors ' proposed recommended order , " what

constitutes ' usual and customary ' charges is a question of law,

not fact. "

21. The ALJ considers the new statutory interpretation

proposed by DFS for the purpose of determining whether

Petitioner satisfied the requirements of Subsection 57.105(2),

Florida Statutes (2003). The ALJ also considers the new DFS

interpretation to determine whether the interpretation asserted

by Petition er presented a justiciable issue of law.

22. Intervenors assert that Petitioner ' s prohibited

pur pose in the underlying proceeding is evidenced, in relevant

part, by Petitioner ' s failure to initially explain its reduced

reimbursement to Intervenors with one of the codes authorized in

Florida Administrative Code Rule 69L - 7.602(5)(n) as an

explanation of bill review (EOBR). None of the EOBR codes,

however, contemplates a new interpretation of the statutory

phrase " usual and customary " charges.

23. Intervenors further ass ert that Petitioner ' s

prohibited purpose in the underlying proceeding is evidenced, in

relevant part, by Petitioner ' s failure to respond to discovery.

However, responses to discovery would not have further

elucidated P etitioner 's rule - challenge . Petitio n er stated eight

times in the Petition s for Administrative Hearing that Florida

Administrative Code Rule 69L - 7.501, the DFS rule incorporating

the Manual by reference:

[S]hould be read to allow recovery of 75% of

the usual and customary fee prevailing in

th e community, and not 75% of whatever fee

an individual provider elects to charge.

Respondent and Intervenors were fully aware of the absence of

statutory and judicial authority to resolve the issue.

24. Petitioner did raise at least one factual issue i n

each Petition for Administrative Hearing. Petitioner alleged

that Respondent ' s decision letters ordering Petitioner to pay

additional reimbursement amounts had no legal effect because

Respondent acted before each provider requested and received the

carr ier ' s reconsidered reimbursement decision.

25. The absence of a formal hearing in the underlying

proceeding foreclosed an evidential basis for a determination of

whether each provider in fact requested and received a

reconsidered reimbursement decision before the date Respondent

ordered Petitioner to pay additional reimbursements. In this

fee dis pute, Petitioner presented sufficient evidence to support

the factual allegation . It is not necessary for Petitioner to

present enough evidence to show that Pe titioner would have

prevailed on that factual issue in the underlying proceeding.

26. If the letters of determination issued by Respondent

were without legal effect, Petitioner would not have waived its

objections to further reimbursement within the m eaning of

Subsection 440.13(7)(b), Florida Statu t es (2005). A

determination that Petitioner did, or did not, submit the

required information is unnecessary in this proceeding.

27 . During the formal hearing in this proceeding,

Petitioner called an exper t employed by a company identified in

the record as Qmedtrix. The testimony showed a factual basis

for the initial reimbursement paid by Petitioner. It is not

necessary for Petitioner to show that this evidence was

sufficient to prevail on the merits in the underlying case.

28 . Intervenors seek attorney fees in the amount of

$36,960 and costs in the amount of $2,335.37 through the date

that Petitioner voluntarily dismissed the underlying proceeding.

Absent a finding that Petitioner participated in the underl ying

proceeding for prohibited purpose s , it is unnecessary to address

the amount and reasonableness of the attorney fees and costs

sought by Intervenors.

29 . If it were determined that Petitioner participated in

the underl ying proceeding for a pr ohibited purpose, the trier of

fact cannot make a finding that the proposed attorney fees and

costs are reasonable. Such a finding is not supported by

competent and substantial evidence.

30 . The total amount of time billed and costs incurred in

the under lying proceeding is evidenced in business records

identified in the record as Intervenors ' Exhibits 20 through 23.

However, those exhibits do not evidence the reasonableness of

the fees and costs billed by the attorneys. 10

31 . Either the testimony of the billing attorneys or the

actual time slips may have been sufficient to support a finding

that the attorney fees and costs are reasonable. However,

Intervenors pretermitted both means of proof .

32 . Intervenors asserted that the time slips contain

infor mation protected by the attorney - client privilege.

However, Intervenors neither submitted re dacted time slips nor

offered the actual time slips for in - camera review. Nor did

Intervenors allow the attorneys to testify concerning

unprivileged matters.

3 3 . The absence of both the testimony of the attorneys and

the time slips is fatal. T he fact - finder has insufficient

evidence to assess the reasonableness of the fees and costs ,

based on the novelty and difficulty of the questions involved.

34 . Intervenor s ' expert opined that the attorney fees and

costs are reasonable. The expert based her opinion, in relevant

part, on her review of the actual time slips maintained by each

attorney. However, Petitioner was unable to review t he tim e

slips before cross - exa mining the expert.

35 . In lieu of the actual time slips, Intervenors

submitted a summary of the nature of the time spent by each

attorney. The summary is identified in the record as

Intervenors ' Exhibit 2.

36 . Petitioner objected to Intervenors ' Exhi bit 2, in

relevant part, on the ground that it is hearsay. The ALJ

reserved ruling on the objection and invited each side to brie f

the issue in its respective PF O. The paucity of relevant

citations in the PF Os demonstrates that neither side vigorously

em brac e d the ALJ ' s invitation.

37 . Intervenors ' Exhibit 2 is hearsay within the meaning

of Subsection 90.801(1)(c), Florida Statutes (2005). 1 1 The

author of Intervenors ' Exhibit 2 summarized the uns worn

statements of attorneys from their time slips and sub mitte d

those statements to prove the truth of the assertion that the

time billed was reasonable. Intervenors made neither the

attorneys nor their time slips available for cross - examination . 1 2

38 . Even if the summary were admissible , the summary and

the t estimony of its author are insufficient to show the

attorney fees and costs were reasonable . The insu fficiency of

the summary emerged during cross - examination of its author . The

author is the lone attorney from the billing law firm who

testified at the h earing.

Q. What other information did you look at

to decide what time to actually bill . . .?

A. The information I used was the

information from the actual bill.

Q. If we look at the first entry . . . were

you the person that conducted that telephone

conference?

A. No, I wasn ' t.

Transcript (TR) at 510 - 511.

Q. In other words, [the entries] go with

the date as opposed to the event [such as a

motion to relinquish]?

A. That ' s correct.

Q. So if I wanted to know how much time it

took you to actually work on the motion to

relinquish, I would have to look at each

entry and add up all the hours to find out

how long it took you to do one motion. Is

that how I would do that?

A. It would be difficult to isolate that

information from this record, we bill and

explain in the narrative what work is

performed each day, and unless that was the

single thing worked on for several days,

there would be no way to isolate the time,

because we don ' t bill sort of by motion or

topic. . . .

Q. Well, if I ' m trying to d ecide whether

the time billed is reasonable, wouldn ' t I

need to know how much time was spent on each

task?

A. I ' m not sure how you would want to

approach that. . . . Looking at this

document, it does not give you that detail.

It doesn ' t provide that bre akout of

information.

Q. Is there a way for us to know who you

spoke with on those entries?

A. The entry . . . doesn ' t specify who

participated in the conference. . . . I

don ' t recall what the conference entailed

. . . . And many of these entries a re from

months ago, and I can ' t specifically recall

on that date if I was involved in a

conference and who else might have been

there. . . . And so my guess is . . . where

the conference is listed on a day when lots

of activity was performed on behalf of the

client, most of it in this case was

research.

TR at 516 - 521.

39 . The expert testified that she based her opinion in

large measure on a review of the pleadings and other documents

prepared by the billing law firm. However, as the author of the

sum mary testified, the summary does not group time billed

according to the document prepared by the billing attorneys.

The summary does not enable opposing counsel to cross - examine

the expert concerning her opinion that the time billed was

reasonable based o n the documents she reviewed.

CONCLUSIONS OF LAW

40 . DOAH has jurisdiction over the parties and subject

matter in this proceeding. §§ 120.569 and 120.595, Fla. Stat.

(2003). DOAH provided the parties with adequate notice of the

formal hearing.

41 . The burden of proof is on Intervenors to show they are

entitled to reasonable attorney fees and costs. Lee Engineering

& Construction Co. v. Fellows , 209 So. 2d 454, 457 (Fla. 1968);

Mason v. Reiter , 564 So. 2d 142, 146 (Fla. 3d DCA 1990). In

relevant part, Intervenors must show by a preponderance of the

evidence that Petitione r is the non - prevailing party in the

underlying proceeding , that Petitioner participated in the

underlying proceeding for a prohibited purpose , and that the

amount of attorn ey fees and costs is reasonable. § 57.105 , Fla.

Stat. (2003).

42 . Intervenors showed by a preponderance of the evidence

that Petitione r is the non - prevailing party in the underlying

proceeding. Petitioner voluntarily dismissed that proceeding.

43 . The preponderance of evidence does not support a

finding that Petitioner participated in the underl ying

proceeding for a prohibited p urpose. Rather, the evidence shows

Petitioner made a good faith attempt to modify the agency ' s

interpretation of " us ual and customary " charges in

Subsection 440.13(12), Florida Statutes (2005). § 57.105(2),

Fla. Stat. (2003).

44 . A party that asserts a good faith and soundly based

attempt to change an existing rule of law is not subject to

attorney fees. Compare J ones v. Charles , 518 So. 2d 445 (Fla.

4th DCA 1988)(applying the stated proposition in a negligence

action). Petitioner had a reasonable basis to seek t o modify

Respondent ' s interpretation of a rule promulgated by DFS.

45 . DFS has recently developed pr oposed ch anges to its

rule. Relevant portions of the proposed changes are

substantially similar to the statutory interpre tation that

Petitioner asserted in the underlying proceeding.

46 . Petitioner submitted the proposed rule after the

conclusion of th e evidentiary hearing. Interveno rs moved to

strike it from the record. The ALJ denies the motion to strike.

47 . As Respondent determined in an order attached to

Intervenors ' proposed recommended order , the correct

interpretation of the phrase " usual and customary " charges

presents an issue of law, not fact. Intervenors presented their

legal arguments in the motio n to strike. The ALJ is

unpersua ded .

48 . The proposed changes to the existing definition of

" usual and customary " charges may indicate the in tent of DFS to

clarify its interpretation of the quoted statutory phrase rather

than change its interpretation. See G.E.L. Corporation v.

Department of Environmental Protection , 875 So. 2d 1257, 1262 -

1263 (Fla. 5th DCA 2004) reh. denied July 1, 2004 (subs equently

enacted legislation may indicate legislative intent to clarify

the law rather than change it). Even if the proposed rule were

intended to change the agency ' s interpretation of the quoted

statutory phrase, Subsection 440.13(12), Florida Statutes

( 2005), is procedural, and an interpretation of a procedural law

may be applied retroactively. Compare Terners of Miami

Corporation v. Freshwater , 599 So. 2d 674 (Fla. 1st DCA

1992)(former § 440.13(2)(i) is procedural and may be applied

retroactively).

49 . If the proposed rule were to emerge as a correct

interpretation of the statutory phrase " usual and customary "

charges, the proposed and original interpretations would be

mutually exclusive. Under such circumstances, the original

interpretation adopted i n the rule in effect in 2004 would have

been an invalid exercise of delegated legislative authority

within the meaning of Subsection 120.52(8), Florida Statutes

(2003). The original interpretation would have enlarged,

modified, or contravened the specific provisions of

Subsection 440.13(12), Florida Statutes (2003).

50 . In order to preserve the validity of the ru le in

effect in 2004, it would be ne cessary to interpret that rule in

accordance with the proposed change , nunc pro tunc . An agency

is author ized to adopt only those rules that implement,

interpret, or make specific the particular powers and duties

granted by the enabling statute. § 120.52(8), Fla. Stat.

(2003).

51 . The competing agency interpretations of the statutory

phrase " usual and cust omary " charges illustrate the

reasonableness and justiciabilit y of the interpretation asserted

by Petitioner in the underlying case. Petitioner need not sh ow

in this proceeding that its asserted interpretation would have

prevailed in the underlying procee ding or that DFS will adopt

the proposed rule changes.

5 2 . Petitioner was legally entitled to challenge the

existing rule in a proceeding conducted pursuant to

Subsection 1 20.57(1), Florida Statutes (2003 ). If the

chal lenged rule were invalid, the agen cy could not have enforce d

the ru l e merely because Petitioner did not initiate a separate

rule challenge pursuant to Sectio n 120.56, Florida Statutes

(2003 ).

53 . Sections 120.56 and 120.5 7, Florida Statutes (2003 ) ,

authori ze joint and several procedures for chall enging agency

action . Petitioner elected to challenge an existing rule in a

proceeding conducted pursuant to Subsection 1 20.57(1), Florida

Statutes (2003 ).

54 . D uplicative proceedings under Sections 120.56

an d 120.57, Florida Statutes (2003 ), are not required if a

party's rule challenge is presented with other grievances in a

proceeding conducted pursuant to Subsection 120.57(1) , Florida

Statutes . State ex rel. Department of General Services v.

Willis , 344 So. 2d 580, 592 (Fla. 1st DCA 1977); accord St. Joe

Paper Company v. Florida Department of Natural Resources , 536

So. 2d 1119, 1122 (Fla. 1st DCA 198 8 ); McDonald v. Department of

Banking and Finance , 346 So. 2d 569, 580 (Fla. 1st DCA 1977).

The legislature has adopted judicial construction of the

relevant statute s through longstanding re - enactment . State ex

rel. Szabo Food Services, Inc. v. Dickinson , 286 So. 2d 529

(Fla. 1973).

55 . If the rule challenged by Petitioner in the underlying

p roceeding were invalid , the agency could not enforce an invalid

rule merely because Petition er elected one statutory procedure

over another . See § 120.52(8) , Fla . Stat . (2003) (agency may

adopt only rules that implement, interpret, or make specific the

particular powers and duties gra nted by the enabling s tatute).

An agency has no authority to interpret a statute in a manner

that expands the statute. Great American Banks, Inc. v.

Division of Administrative Hearings, Department of

Administration , 412 So. 2d 373, 375 (Fla. 1st DCA 1982).

56 . If the rule that Petitioner challenged in the

underlying proceeding were to enlarge, modify, or contravene the

law implemented, agency enforcement of the rule would risk

violation of the separation of powers clause . In relevant part,

the separation of powers clause pr ohibits the executive branch

and its administrative agencies from performing any legislative

function; including the modification, amend ment, or enlargement

of a statute implemented by the agency . Fla. Const., Art. 2,

§ 3; Ch. 20, Fla. Stat. (2005).

5 7 . The non - delegation doctrine is a corollary of the

separation of powers clause. The non - delegation doctrine

requires the legislature to provide standards and guid elines in

an enactment that are ascertainable by reference to the terms of

the enactme nt. Bush v. Shiavo , 885 So. 2d 321 (Fla. 2004); B.H.

v. State , 645 So. 2d 987, 992 - 994 (Fla. 1994); Askew v. Cross

Key Waterways , 37 2 So. 2d 913, 925 (Fla. 1978).

58 . The legislature may not delegate to the executive

branch the power to enact a law or the right to exercise

unrestricted discretion in applying the law. S tatutes granting

power to the executive branch must clearly define the power

delegat ed, preclude unbridled discretion , preclude the

enlarge ment or modification of the law implemented , an d ensure

the availability of meaningful judicial review . Shiavo , 885 So.

2d at 332.

59 . The determination of whether Petitioner asserted

factual issues in the underlying procee ding for an improper

purpose involves an issue of fact. 1 3 The issue must b e resolved

based on all of the evidence submitted during a proceeding

conducted pursuant to Subsection 120.57(1), Florida Statu t es

(2003). Glover v. School Board of Hillsborough County , 462 So.

2d 116 (Fla. 2d DCA 1985)(to properly award attorney fees

pur suant to former § 57.105, Fla. Stat. (1983), it is necessary

to find that entire action, not just a portion of it, is devoid

of merit both as to law and fact) . See also Burke v. Harbor

Estates Associates, Inc. , 591 So. 2d 1034, 1037 (Fla. 1st DCA

1991)(co nstruing the statutory predecessor to § 120.595, Fla.

Stat. (2003) , for the stated proposition) ; G.E.L. Corporation ,

875 So. 2d at 1262 - 1263 (legislative provisions in § 57.105,

Fla. Stat. (2003), evince legislative intent for § 120.595, Fla.

Stat. (2003)) .

60 . After Petitioner voluntarily dismissed the underlying

proceedin g, the parties were entitled to an evidentiary hearing

in th e fee dispute authorized in S ection 57.105 , Florida

Statutes (2003). § 57.105(5), Fla. Stat. (2003) (voluntary

dismissal do es not divest ALJ of jurisdiction under § 57.105).

During the evidentiary hearing, each party had an opportunity to

show, in relevant part, that if an adjudicatory hearing had been

conducted in the underlying proceeding all of the evidence would

have esta blished that Petitioner did, or did not , participate in

the underlying proc eeding for a prohibited purpose. Id .

61 . Petitioner is not required to submit sufficient

evidence in this proceeding to show that Petitioner would have

prevailed on the factual issues if an adjudicatory hearing had

been conducted in the underlying proceeding. Petitioner nee d

only submit sufficient evidence to satisfy the requirements of

Subsection 57.105(1)(a) , Florida Statutes (2003), and show that

Petitioner did not engage in any activity prohibited in

Subsection 57.105(3) .

62 . If it were found that Petitioner participated in the

underl ying proceeding for a prohibited purpose, Subsections

57.105 (1) and (5) , Florida Statutes (2003), require the entry of

a final order award ing reasonable attorn ey fees and costs . Th e

reasonableness of attorney fees must be supported by competent

substantial evidence. Sierra v. Sierra , 505 So. 2d 432, 434

(Fla. 1987).

63 . Competent and substantial evidence requires expert

testimony and eit her the actual time slips from the billing

attorney or the testimony of the billing attorney. Expert

testimony alone does not satisfy the requirement for competent

and substantial evidence. Nants v. Geraldine Griffin and State

Farm Insurance , 783 So. 2d 363, 366 (Fla. 5th DCA 2001); Wiley

v. Wiley , 485 So. 2d 2 (Fla. 5th DCA 1986).

64 . Intervenors satisfied the evidential requirement for

expert testimony. The testimony of the billi ng attorneys would

not have been necessary if their time slips were in ev idence.

Florida Patient ' s Compensation Fund v. Rowe , 472 So. 2d 1145

(Fla. 1985)(trial court should determine hours reasonably

expended based, in relevant part, upon a review of attorney ' s

time records). Compare Nants , 783 So. 2d at 366 (requirement

for competent and substantial evidence is satisfied by attorney

affidavit with attached time sheets detailing work performed)

and Mason , 564 So. 2d at 146 (attorney should present accurate

contemporaneous records detailing work performed); with Cohen v.

Cohen , 400 So. 2d 463 (Fla. 4th DCA 1981)(testimony of billing

attorney is necessary for award of attorney fees) and Nivens v.

Nivens , 312 So. 2d 201 (Fla. 2d DCA 1975)(reversing award of

attorney fe es without testimony of billing attorney ). See also

Morton v. Heathcock , 913 So. 2d 662, 670 (Fla. 3d DCA 2005).

65 . The requirement for either time slips or the testimony

of the billing attorney is intended to facilitate an adequate

cross - examination by the opposing party. Sierra , 505 So. 2d at

434; Morgan v. Sout h Atlantic Production Credit Association , 528

So. 2d 491, 492 (Fla. 1st DCA 1988). The omission from the

record of both the time slips and the testimony of the billing

attorneys impeded cross - examination of : Intervenors ' Exhibit 2;

and the expert witness because the expert witness based her

testimony, in part, on her review of the actual time slips.

66 . Intervenors ' Exhibit 2 is a summary by one b illing

attorney of the time slips of other billing attorneys that does

not attach the underlying data upon whi ch the summary is based. 1 4

The summary includes unsworn statements by the attorneys who did

not testify at the hearing. Unsworn statements of attorneys do

not constitute competent substantial evidence of the

reasonableness of their fees. Faircloth v. Bl iss , 917 So. 2d

1005, 1006 - 1007 (Fla. 4th DCA 2006); Brown v School Board of

Palm Beach County , 855 So. 2d 1267 (Fla. 4th DCA 2003).

67 . The reasonableness of attorney fees is not subject to

judicial notice. Nor should it be left to local custom,

conject ure, or guesswork. Lyle v. Lyle , 167 So. 2d 256, 257

(Fla. 2d DCA 1964). As the decision in Lyle , explained:

To those lawy ers whose practice brings them

more than an occasional suit in whi ch the

fee is set by the court, . . . testimony

detailing the serv ices . . . may seem

tedious. . . . However . . . the . . .

rules of evidence [cannot] be ignored.

[L] awyers who treat such evidence lightly

defeat their own purpose; and such evidence

. . . must be adduced else the court is

without authority to make any award since

the award must be based on competent

evidence.

Lyle , 167 So. 2d at 257.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED that Intervernors ' Motion for Attorneys ' Fees is

denied.

DONE AND ORDERED this 2 7 t h day of April, 2006 , in

Tallahassee, Leon County, Florida.

S

DANIEL MANRY

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.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 2 7 th day of April , 2006 .

ENDNOTES

1/ Statutes authorizing attorney fees create substantive,

rather than procedu ral, rights and must be applied

prospectively. Whitten v. Progressive Casualty Insurance

Company , 410 So. 2d 501 (Fla. 1982); Mullins v. Kennelly , 847

So. 2d 1151 (Fla. 5th DCA 2003); Love v. Jacobson , 390 So. 2d

782 (Fla. 3d DCA 1980). Since the first h ospital services were

provided in March 2004, prior to the effective date of the 2004

statute, the statute in effect in 2003 is cited in this

proceeding.

2/ References to Florida Administrative Code Rule 69L - 7.602 are

to the rule amended on "7 - 4 - 04." T h at is the version of the

rule provided by Intervenors in Tab 7 of the "Materials

Supporting Billing Hospitals' Motion Requesting Official

Recognition. "

3 / The statute enacted on or after July 2005, is cited even

though the relevant facts occurred prior to July 2005, as

further explained in Finding 6. The provisions in Subsections

440.13(7) and 440.13 (12), Fl orida Stat utes (2005), are

procedural rather than substantive. While the substantive

rights of parties in reimbursement disputes are determined by

the law in effect at the time the relevant facts occurred, the

rule does not apply to procedural enactments. The statutory

provisions of Subsections 440.13(7) and 440.13 (12), Fl orida

Stat utes (2005) , are procedural because they do not create

substantive r ights to reimbursement but, in relevant part,

merely prescribe procedures for calculating the amount of

reimbursement and for resolving reimbursement disputes.

Procedural enactments are properly applied retroactively to

relevant facts that preceded the ef fective date of the statute.

Compare Terners of Miami Corporation v. Freshwater , 599 So. 2d

674 (Fla. 1st DCA 1992)(applying former sec. 440.13(2)(i)

retroactively).

4 / The DOAH case numbers for the cases involving the six

reimbursement disputes for whi ch Intervenors seek attorney fees

and costs in this proceeding are 05 - 2018, 05 - 2161,

and 05 - 2204 through 05 - 2207. Halifax Medical Center was the

billing hospital in DOAH C ase No s . 05 - 2256 and 05 - 2257 and did

not participate in either this or the underlyi ng proceeding.

5 / Respondent ordered the additional reimbursement for hospital

inpatient services in DOAH Case No. 05 - 2161.

6 / Respondent ordered the remaining reimbursement for hospital

outpatient services in DOAH Case Nos. 05 - 2018 and 05 - 2204

through 05 - 2207.

7 / Holmes provided services in the amount of $125,062.35.

Petitioner paid Holmes $42,307.49. Respondent ordered

Petitioner to reimburse Holmes an additional $51,489.27. The

total reimbursement was $93,796.76 or approximately 75 percent

of $1 25,062.35.

8 / DFS promulgates the rule that incorporates the Manual by

reference. Thus, Respondent relies on and purports to enforce a

rule and Manual promulgated by DFS as a basis for Respondent's

interpretation of the statutory phrase "usual and cust omary"

charges. Respondent does not base its statutory interpretation

on a rule promulgated by Respondent. Respondent is not entitled

to great deference for its interpretation and enforcement of

another agency's rule.

9 / The proposed rule change is a d raft submitted by the three -

member panel on April 7, 2006. DFS developed the proposed

changes for incorporation by reference "into" Fl orida

Admin istrative Code R ule 69L - 7.501. The proposed changes are in

addition to the requirements established in Fl orid a

Administrative Code R ule 69L - 7.602. See Florida Workers'

Compensation Reimbursement Manual for Hospitals (2006 ed.), § 1,

page 2, second para.

10 / Co - counsel for Intervenors represented during the hearing

that Intervenors' Exhibits 22 and 23, pertain ing to fees rather

than costs, were submitted for the sole purpose of evidencing

the total amount of time billed in the underlying proceeding

rather than the reasonableness of the time billed.

1 1 / Intervenors' Exhibit 2 is also a summary within the meani ng

of Sec tion 90.956, Fl orida Stat utes (2005), for which

Intervenors failed to satisfy the statutory prerequisites to

admissibility. Intervenors provided neither timely no tice nor

the underlying data, including the actual time slips. However,

Petitioner did not object to the admissibility of the exhibit on

the ground that it is a summary.

1 2 / Intervenors' Exhibit 2 does not explain or supplement

competent and substantial evidence admitted in Intervenors'

Exhibits 20 - 23 within the meaning of S ubs ec tion 1 20.57(1)(c),

Fl orida Stat utes (2005). Co - counsel for Intervenors represented

during the hearing that the latter exhibits are submitted solely

to prove the total amount of fees and costs and not to prove the

truth of reasonableness of the fees. Intervenor s' Exhibit 2 is

submitted to prove the reasonableness of the fees.

1 3 / The factual issues Petitioner presented in the underlying

proceeding include allegations that Intervenors petitioned

Respondent for an order requiring additional reimbursement from

P etitioner without first giving Petitioner an opportunity to

issue a reconsidered reimbursement decision.

1 4 / Of the relevant judicial decisions uncovered by the ALJ,

only one involved a summary. However, the summary was supported

by the actual time slip s as well as the testimony of the

attorney as to his own work in the case. Saussy v. Saussy , 560

So. 2d 1385, 1386 (Fla. 2d DCA 1990).

COPIES FURNISHED :

Joanna Daniels, Esquire

Agency for Health Care Administration

200 East Gaines Street

Tallahasse e, Florida 32399 - 4229

Daniel R. Goodman, Esquire

Eraclides, Johns, Hall, Gelman,

Eikner & Johannessen, LLP

Post Office Box 49137

Sarasota, Florida 34230 - 9137

Matthew H. Mears, Esquire

Holland & Knight LLP

Post Office Drawer 810

Tallahassee, Florida 32302

Jerome W. Hoffman, Esquire

Holland & Knight, LLP

Post Office Drawer 810

Tallahassee, Florida 32302

Cindy R. Galen, Esquire

Eraclides, Johns, Hall, Gelman,

Eikner and Johannessen, L.L.P.

Post Office Box 49137

Sarasota, Florida 34230

Karen Walke r, Esquire

Holland & Knight LLP

Post Office Drawer 810

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, Mail Stop 3

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 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 proce edings are commenced by

filing the original Notice of Appeal with the agency 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 Appeal in

the Appellate District where the party resides. The notice of

appeal must be filed within 30 days of rendition of the order to

be reviewed.