07-001511MPI Agency For Health Care Administration vs. Jamarel Enterprises, Inc., D/B/A Camaguey Pharmacy Status: Closed Recommended Order on Thursday, January 3, 2008.

Summary: Petitioner proved that the pharmacy overpaid, as it could not produce invoices or proof of purchase for drugs dispensed to Medicaid recipients.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Petitioner, )

)

vs. ) Case No. 07-1511MPI

)

JAMAREL ENTERPRISES, INC., )

d/b/a CAMAGUEY PHARMACY, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in this case on

October 25, 2007, in Tallahassee, Florida, before J. D. Parrish,

a designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: L. William Porter, II, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Building 3, Mail Stop 3

Tallahassee, Florida 32308-5403

For Respondent: No Appearance

STATEMENT OF THE ISSUE

Whether the Petitioner, Agency for Health Care

Administration (AHCA or Petitioner) is entitled to a recoupment

for a Medicaid overpayment to the Respondent, Jamarel

Enterprises, Inc., d/b/a Camaguey Pharmacy (Respondent or

Jamarel) in the amount of $29,366.12. The Petitioner also seeks

the imposition of a fine and costs in this matter in the amounts

of $6,500.00 and $4,568.00. The Respondent denied it was

overpaid any amount.

PRELIMINARY STATEMENT

On or about February 6, 2007, the Petitioner issued a Final

Audit Report that advised the Respondent an audit of Jamarel's

Medicaid claims for the period May 1, 2005 through April 30,

2006, was complete. According to the Petitioner's claim, the

Respondent was overpaid for drugs dispensed for which the

Respondent could not establish an invoice or other proof of

purchase. In accordance with Florida Administrative Code Rule

59G-9.070, the Petitioner sought the amount of the overpayment

together with a fine and the cost of the audit and recoupment

proceeding.

Thereafter, the Respondent timely filed a Petition for

Formal Hearing to dispute the factual allegations of the audit

and to request a formal hearing to address the allegations of the

audit. The case was then forwarded to the Division of

Administrative Hearings for formal proceedings on April 2, 2007.

The case was initially scheduled for final hearing for June 11

and 12, 2007. The case was continued on two occasions and

ultimately rescheduled to October 25 and 26, 2007. A third

Motion for Continuance filed by the Respondent on October 24,

2007, was denied.

At the hearing, the Petitioner presented the testimony of

Ramona Stewart and Arlene Elliott. The Petitioner's Exhibits

numbered 1-19 and 10-A were admitted into evidence. The

Respondent did not appear for the hearing and no evidence was

presented on its behalf.

The transcript of the proceeding was filed on November 8,

2007. The parties were afforded 30 days within which to file

Proposed Recommended Orders. The Petitioner timely filed a

proposal that has been considered in the preparation of this

Recommended Order.

FINDINGS OF FACT

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

the Petitioner is the state agency charged with the

responsibility of administering the Medicaid program in Florida.

See § 409.907, Fla. Stat. (2007).

2. As part of its duties, the Petitioner attempts to

recover Medicaid overpayments to Medicaid providers.

See § 409.913, Fla. Stat. (2007).

3. At all times material to this case, the Respondent was a

licensed pharmacy under contract to AHCA as a Medicaid provider,

provider number 026840200.

4. As a Medicaid provider, the Respondent was subject to

audit. This case arose as result of a routine audit that was

conducted by the Petitioner for the audit period May 1, 2005

through April 30, 2006.

5. This audit sought information regarding a selected and

limited number of drugs that had been dispensed to Medicaid

recipients during the audit period. Essentially, the

Petitioner's audit team asked the Respondent to produce documents

to establish that it had lawfully acquired the subject drugs so

that they would be "on hand" during the audit period.

6. If a certain drug was dispensed, the pharmacy should

have been able to show it lawfully purchased that drug prior to

the dispensing of same.

7. The Petitioner's auditor reviewed the purchases made by

the Respondent to verify that each drug was purchased by Jamarel

before it was billed to Medicaid as dispensed.

8. To verify the purchase, the Respondent was asked to

produce invoices or other proof of purchase for the drugs being

audited.

9. The total of "overpayment" in this case is the total for

all drugs for which the Respondent could not produce an invoice

or other documentation establishing proof of purchase.

10. The Petitioner claims a total overpayment of

$29,366.12.

11. The $29,366.12 is the total paid by the Petitioner to

Respondent for drugs it allegedly dispensed to Medicaid

recipients for which it could not establish a prior invoice of

acquisition.

12. In addition to the overpayment amount claimed, the

Petitioner also seeks a fine in the amount of $6,500.00 and costs

of the case in the amount of $4,568.00. The Petitioner's

presentation regarding its costs incurred has been credited. The

fine is a calculated amount as authorized by rule.

13. The Respondent presented no evidence to refute the

amounts claimed by the Petitioner. If records were available to

refute the Petitioner's claim, the Medicaid provider agreement

required that Respondent retain such records and make them

available to the agency for review.

14. Pharmacy records are to be retained for a period of at

least five years.

15. The Petitioner gave the Respondent credit for any

record it produced to reduce the amount of the overpayment. The

overpayment cannot be reduced further without credible records.

CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. § 120.57(1), Fla. Stat. (2007).

17. As the party asserting the overpayment, AHCA bears the

burden of proof to establish the alleged overpayment by a

preponderance of the evidence. See Southpointe Pharmacy v.

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

(Fla. 1st DCA 1992).

18. Section 409.913, Florida Statutes (2007), provides, 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 extent

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 provision

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, and

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 must be made

available during normal business hours.

However, 24-hour notice must be provided if

patient treatment would be disrupted. The

provider is responsible for furnishing to the

agency, and keeping the agency informed of

the location of, the provider's Medicaid-

related records. The authority of the agency

to obtain Medicaid-related records from a

provider is neither curtailed nor limited

during a period of litigation between the

agency and the provider.

* * *

(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 analytical

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 products 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

overpayments.

(21) The audit report, supported by agency

work papers, showing an overpayment to a

provider constitutes evidence of the

overpayment. A provider may not present or

elicit testimony, either on direct

examination or cross-examination in any court

or administrative proceeding, regarding the

purchase or acquisition by any means of

drugs, goods, or supplies; sales or

divestment by any means of drugs, goods, or

supplies; or inventory of drugs, goods, or

supplies, unless such acquisition, sales,

divestment, or inventory is documented by

written invoices, written inventory records,

or other competent written documentary

evidence maintained in the normal course of

the provider's business.

19. Section 409.907, Florida Statutes (2007), provides, in

part:

The agency may make payments for medical

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, and who agrees

that no person shall, on the grounds of

handicap, race, color, or national origin, or

for any other reason, be subjected to

discrimination under any program or activity

for which the provider receives payment from

the agency.

* * *

(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-related

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.

20. In this case the Petitioner seeks the overpayment based

upon an inadequate records keeping system that could not document

purchases of the drugs dispensed and billed to Medicaid. The

plain language of the statute directing a provider to maintain in

a “systematic and orderly manner” all Medicaid records dictates

that AHCA may demand repayment regardless of the circumstances

that produced the payment. Participation in the Medicaid program

is voluntary. The Respondent 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 Respondent is not entitled to payment for its

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

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

21. Section 409.906(20), Florida Statutes (2007),

authorized the Agency to pay for medications that were prescribed

for a recipient by a physician or other licensed practitioner and

that were dispensed to the recipient by a licensed pharmacist in

accordance with applicable state and federal law. During the

audit period the Agency paid Jamarel for all Medicaid claims at

issue in this proceeding. In effect, the Agency honored the

claims submitted. Now, after-the-fact, and through the audit

process, the Agency attempted to verify that those claims were

supported by the documentation required by law. The Respondent

could not produce records to support the overpayment amount.

22. The “overpayment” in this cause results from an

unacceptable practice. The unacceptable practice was the

Respondent’s lack of documentation to support the claims filed.

All of the record-keeping requirements were known or should have

been known to Respondent, inasmuch as the Agency has always

requested an audit trail for Medicaid claims.

23. In this case, the audit report supports and constitutes

evidence of the overpayment claimed. See § 409.913(22), Fla

Stat. (2007). The Respondent has failed to present substantial,

credible evidence to rebut the overpayment claimed.

24. The Petitioner has met its burden of proof in this case

and has established by a preponderance of the evidence that the

Respondent received an overpayment the amount of $29,366.12.

25. Florida Administrative Code Rule 59G-9.070 authorizes

the imposition of fines and the assessment of costs for Medicaid

violations. In this case it is established the Petitioner

incurred costs in the amount of $4,568.00 in the audit and

administrative action to seek recoupment of the overpayment.

Additionally, the fine in the amount of $6,500.00 is within the

guidelines of the rule.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Agency for Health Care

Administration enter a Final Order that accepts an amended audit

report to support an overpayment and recoupment against the

Respondent in the amount of $40,434.12.

DONE AND ENTERED this 3rd day of January, 2008, in

Tallahassee, Leon County, Florida.

S

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 3rd day of January, 2008.

COPIES FURNISHED :

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

Craig H. Smith, General Counsel

Agency for Health Care Administration

Fort Knox Building, Suite 3431

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

Dr. Andrew C. Agwunobi, Secretary

Agency for Health Care Administration

Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308

Lawrence R. Metsch, Esquire

Metsch & Metsch, P.A.

Aventura Corporate Center

20801 Biscayne Boulevard, Suite 307

Aventura, Florida 33180-1423

L. William Porter, Esquire

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 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 that will

issue the Final Order in this case.