08-000398RX Ffva Mutual vs. Department Of Financial Services Status: Closed DOAH Final Order on Tuesday, March 4, 2008.

Summary: DOAH does not have jurisdiction to consider a challenge to the 2004 version of Workers` Compensation Reimbursement Manual because the manual is no longer incorporated by reference into any rule. The petitions are dismissed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FFVA MUTUAL , )

)

Petitioner , )

)

vs. ) Case No. 08 - 0398RX

)

DEPARTMENT OF FINANCIAL )

SERVICES , )

)

Respondent , )

)

and )

)

HOLMES REGIONAL MEDICAL )

CENTER, INC., )

)

Intervenor. )

)

TECHNOLOGY INSURANCE COMPANY, )

)

Petitioner, )

)

vs. ) Case No. 08 - 0711RX

)

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Respondent. )

)

FINAL ORDER

These cases are before the undersigned based upon the

parties' responses to the Orders to Show Cause issued on

January 30, 2008, and February 15, 2008. No hearing is

necessary.

APPEARANCES

For Petitioners: Timothy L. Newhall, Esquire

Law Offices of Timoth y L.

Newhall, L.L.C.

1334 Timberlane Road, Suite 11

Tallahassee, Florida 32312

For Respondent: Jill Bennett, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Intervenor: Jerome W. Hoffman, Esquire

Gigi Rollini, Esquire

Holland & Knight, LLP

Post Office Drawer 810

Tallahassee, Florida 32302

ISSUE

The issue is whether Section 11B(3) of the Florida Workers'

Compensation Reimbursement M anual for Hospitals , 2004 Second

Edition, is an invalid exercise of delegated legislative

authority.

PRELIMINARY STATEMENT

On or about November 15, 2007, FFVA Mutual (FFVA) filed a

Petition for Formal Administrative Hearing with the Agency for

Health Care Administration (AHCA). The petition requests a

hearing under Sections 120.569 and 120.57(1), Florida Statutes, 1/

on AHCA's determination that FFVA is required to reimburse

Holmes Regional Medical Center, Inc. (HRMC) , more than $55,000

for in - patient serv ices that HRMC provided to P atient E.C. The

petition also seeks a determination under Section 120.56,

Florida Statutes, that Section 11B(3) of the Florida Workers'

Compensation Reimbursement Manual for Hospitals , 2004 Second

Edition ("the 2004 Manual"), i s an invalid exercise of delegated

legislative authority. The petition alleges that the 2004

Manual is incorporated by reference into Florida Administrative

Code Rule 69L - 7.501.

On November 28, 2007, AHCA referred the petition to the

Division of Administ rative Hearings (DOAH). The petition was

designated DOAH Case No. 07 - 5414 and assigned to Administrative

Law Judge Bram D.E. Canter.

On January 16, 2008, the Department of Financial Services

(Department) filed a motion in DOAH Case No. 07 - 5414 requesting

that it be added to the case style , because it was the agency

that promulgated the rule incorporating the manual challenged by

FFVA. The Department's motion also requested that DOAH Case

No. 07 - 5414 be consolidated with two other cases – - DOAH Case

Nos. 07 - 5489 and 07 - 5661 – - in which the same provision of the

2004 Manual was being challenged. 2/

Judge Canter denied the motion to consolidate in an Order

entered in DOAH Case No. 07 - 5414 on January 24, 2008. The Order

also stated that DOAH had "opened Case No. 08 - 0398RX, based on

the rule challenge included in the petition for hearing filed by

FFVA Mutual in the companion case of 07 - 5414."

On January 28, 2008, HRMC filed a petition to intervene in

DOAH Case No. 08 - 0398RX. The petition was granted in an Order

entered on January 30, 2008.

Judge Canter held a telephonic status conference in DOAH

Case No. 08 - 0398RX on January 29, 2008, at which "the parties

appeared to be in agreement that the rule being challenged in

this case, a manual adopted by reference in F lorida

Administrative Code Rule 69L - 7.501, is no longer adopted by

reference." Because the challenged rule did not appear to be a

proposed rule or an existing rule and because DOAH only has

jurisdiction to consider challenges to proposed rules and

existin g rules, Judge Canter issued an Order to Show Cause on

January 30, 2008, directing FFVA to "show cause in writing . . .

why this rule challenge should not be dismissed." Thereafter,

on February 6, 2008, this case and the related DOAH Case

No. 07 - 5414 were transferred to the undersigned.

FFVA filed a response to the Order to Show Cause on

February 6, 2008. The Department and HRMC filed replies to

FFVA's response on February 12, 2008.

On February 11, 2008, DOAH established Case No. 08 - 0711RX

based upon the Petition for Formal Hearing filed by Technology

Insurance Company (TIC) with AHCA and referred to DOAH. The

petition filed by TIC, like FFVA's petition, requests a hearing

under Sections 120.569 and 120.57(1), Florida Statutes, on the

determination is sued by AHCA in the reimbursement dispute

between TIC and a health care provider, 3/ and also seeks a

determination under Section 120.56, Florida Statutes, that

Section 11B(3) of the 2004 Manual is an invalid exercise of

delegated legislative authority.

On February 15, 2008, the undersigned issued an Order to

Show Cause in DOAH Case No. 08 - 0711RX. The Order directed the

parties to show cause as to why DOAH Case Nos. 08 - 0398RX and

08 - 0711RX should not be consolidated and also directed TIC to

show cause "as to why this case should not be dismissed for the

reasons identified in the Order to Show Cause issued in DOAH

Case No. 08 - 0398RX on January 30, 2008."

The Department filed a response to the Order to Show Cause

on February 24, 2008, and TIC filed a respons e on February 25,

2008. An Order consolidating DOAH Case Nos. 08 - 0398RX and

08 - 0711RX was entered on February 26, 2008.

Due consideration has been given to the parties' filings.

No hearing is necessary to rule on the jurisdictional issue

framed by the Or ders to Show Cause and the parties' responses to

the Orders.

FINDINGS OF FACT

1. The petitions filed by FFVA and TIC challenge the

validity of Section 11B(3) of the 2004 Manual , 4/ which prior to

October 1, 2007, was adopted by reference as part of Florida

Administrative Code Rule 69L - 7.501(1).

2. Florida Administrative Code Rule 69L - 7.501(1) was

amended effective October 1, 2007, to adopt by reference the

Florida Workers' Compensation Reimbursement Manual for

Hospitals , 2006 Edition ("the 2006 Manual").

3. Florida Administrative Code Rule 69L - 7.501(1), as it

existed when the petitions were filed and as it currently

exists, adopts by reference the 2006 Manual, not the 2004

Manual.

4. The 2004 Manual is no longer adopted by reference as

part of Florida Ad ministrative Code Rule 69L - 7.501, or any other

rule.

5. AHCA applied the 2004 Manual in the reimbursement

dispute initiated by HRMC against FFVA under Section 440.13,

Florida Statutes, as reflected in the determination letter

issued by AHCA on October 24, 2007, which was attached to FFVA's

petition. The reimbursement dispute is the subject of the

pending DOAH Case No. 07 - 5414.

6. AHCA applied the 2004 Manual in a reimbursement dispute

involving TIC under Section 440.13, Florida Statutes, as

reflected in the determination letter issued by AHCA on

January 9, 2008, which was attached to TIC's petition. The

reimbursement dispute is the subject of the pending DOAH Case

No. 08 - 0703.

CONCLUSIONS OF LAW

7. DOAH has jurisdiction to consider rule challenges

purs uant to Section 120.56, Florida Statutes.

8. DOAH's jurisdiction is limited to considering

challenges to proposed rules, existing rules, agency statements

that meet the definition of a rule but that have not been

formally adopted as rules , and emergency rules. See

§ 120.56(2) - (5), Fla. Stat.

9. DOAH does not have jurisdiction to consider challenges

to rules that have been repealed or that are otherwise "no

longer in existence." See Dept. of Revenue v. Sheraton Bal

Harbour Ass'n, Ltd. , 864 So. 2d 454 ( Fla. 1st DCA 2003); Fla.

Retail Federation v. Agency for Health Care Admin. , Case

No. 04 - 1828RX, 2004 Fla. Div. Adm. Hear. LEXIS 2018, at ¶ 22

(DOAH July 19, 2004) (concluding that "the general principle

announced in Sheraton -- that rules no longer in exist ence cannot

be challenged -- extends beyond Section 120.56 proceedings

involving rules that have been formally repealed"), per curiam

aff'd , 903 So. 2d 939 (Fla. 1st DCA 2005) (table);

§ 120.56(3)(a), Fla. Stat. ("A substantially affected person may

seek an administrative determination of the invalidity of an

existing rule at any time during the existence of the rule ."

(emphasis supplied)).

10. Sheraton is materially indistinguishable from this

case. In that case, a taxpayer filed a petition under Section

1 20.56, Florida Statutes, challenging a rule that had been

repealed by operation of law , but that was still being applied

to determine the taxpayer's substantial interests in a pending

tax refund case. The agency moved to dismiss the rule challenge

on the ground that DOAH lacked jurisdiction to consider a

challenge to a rule that had been repealed. The Administrative

Law Judge denied the motion, and the agency petitioned for a

writ of prohibition from the appellate court. The court granted

the petition in a per curiam opinion, agreeing with the agency's

argument that "section 120.56, Florida Statutes does not

authorize a rule challenge to a rule that is no longer in

existence." Sheraton , 864 So. 2d at 454.

11. Petitioners argue in their responses to the Orders to

Show Cause that Sheraton is distinguishable because the rule at

issue in that case had been repealed, whereas the 2004 Manual

"remains in full force and effect for hospital admissions

occurring prior to October 1, 2007." The fact that AHCA may

s till be applying the 2004 Manual in disputes involving services

rendered prior to October 1, 2007, does not change the fact that

the rule adopting the 2004 Manual is no longer in existence.

12. Petitioners also argue that it would be "an

unreasonable resul t" and "a clear violation of [their] due

process rights" if they were precluded from challenging the

validity of the 2004 Manual because AHCA is still using the

manual to determine their substantial interests. The

undersigned is not unsympathetic to Petit ioners' argument, but

this result is mandated by Sheraton and Section 120.56, Florida

Statutes.

13. In sum, DOAH does not have jurisdiction to consider

Petitioners' rule challenge to Section 11B(3) of the 2004

Manual , because the manual is no longer adopt ed as part of

Florida Administrative Code Rule 69L - 7.501 or any other rule

and , therefore , is no longer in existence for purposes of

challenge under Section 120.56, Florida Statutes.

14. Finally, to the extent that Petitioners are

challenging AHCA's interp retation of the 2004 Manual or its

application of the manual in the reimbursement disputes, those

issues are beyond the scope of a rule challenge proceeding. See

Fairfield Communities v. Fla. Land & Water Adj. Comm'n , 522

So. 2d 1012, 1014 (Fla. 1st DCA 1 988) (explaining that the

purpose of a rule challenge is "to determine the facial validity

of [the challenged rules], not to determine their validity as

applied to specific facts, or whether the agency has placed an

erroneous construction on them").

ORDER

Based upon the foregoing findings of fact and conclusions

of law, it is

ORDERED that:

1. The portions of the petitions filed by FFVA and TIC

challenging the validity of Section 11B(3) of the 2004 Manual

under Section 120.56, Florida Statutes, are dismis sed.

2. The other aspects of the petitions remain pending in

DOAH Case Nos. 07 - 5414 and 08 - 0703.

3. The files in DOAH Case Nos. 08 - 0398RX and 08 - 0711RX are

closed.

DONE AND ORDERED this 4th day of March , 2008 , in

Tallahassee, Leon County, Florida.

S

T. KENT WETHERELL, II

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.doa h.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 4th day of March , 2008 .

ENDNOTES

1/ All statutory references are to the 2007 version of the

Florida Statutes.

2/ DOAH Case No. 07 - 5489 was voluntarily dismissed on

February 1, 2008. DOAH Case No. 07 - 5661 was bifurcated, and the

rule challenge included in the petition in that case was

designated DOAH Case No. 07 - 5676RX. DOAH Case Nos. 07 - 5661 and

07 - 5676RX were voluntarily dismissed on February 28, 2008.

3/ This portion of the petition is pending as DOAH Case

No. 08 - 0703 , which is assigned to Administrative Law Judge P.

Michael Ruff .

4/ According to the petitions, Section 11B(3) of the 2004

Manual states: " When charges for inpatient services at either

an acute care hospital or a trauma center exceed $50,000.00, the

stop - loss method for reimbursement shall be used to reimburse

the hospital instead of the established per diem. Reimbursement

shall be at 75 percent of charges. "

COPIES FURNISHED :

Timothy L. Newha ll, Esquire

Law Offices of Timothy L.

Newhall, L.L.C.

1334 Timberlane Road, Suite 11

Tallahassee, Florida 32312

Jill Bennett, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 422 9

Jerome W. Hoffman, Esquire

Gigi Rollini, Esquire

Holland & Knight, LLP

Post Office Drawer 810

Tallahassee, Florida 32302

Honorable Alex Sink

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32 399 - 0300

Daniel Sumner, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0307

Scott Boyd, Executive Director

and General Counsel

Joint Administrative Procedures Committee

120 Holland Building

Tall ahassee, Florida 32399 - 1300

Liz Cloud, Program Administrator

Bureau of Administrative Code

Department of State

R.A. Gray Building, Suite 101

Tallahassee, Florida 32399 - 0250

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 proceedings are commenced by

filing the original notice of appeal with the 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

app eal must be filed within 30 days of rendition of the order to

be reviewed.