11-000535RU Esther Strong vs. Department Of Children And Families Status: Closed DOAH Final Order on Tuesday, March 22, 2011.

Summary: Challenged statements constitute unpromulgated rules. Rulemaking is feasible and practicable nothwithstanding Executive Order 11-01.

S TATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ESTHER STRONG , )

)

Petitioner, )

)

vs. ) Case No. 11 - 0535 RU

)

DEPARTMENT OF CHILDREN )

AND FAMILIES , )

)

Respondent . )

)

FINAL ORDER

A final hearing was conducted in this case on February 21,

2011 , in Tallahassee, Florida, before W. David Watkins ,

Administrative Law Judge with the Division of Administrative

Hearings .

APPEARANCES

For Petit ioner : Jack M. Rosenkranz , Esquire

Rosenkranz Law Firm

Post Office Box 900

Ta mpa , Florida 3 360 1

For R espondent: Herschel Minnis , Esquire

Reginald Mitchell , Esquire

Department of Children and Families

1317 Winewood Boulevard

Building 2, R oo m 204

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue is w hether the Department's Access Policy Manual

Sections 1840.0906.04 and 1840.0906.07 (Policy Manual); Training

Module 4 (Training Module 4 ); Request for Veteran's Informati on

Form CF - ES 2262 (Form CF - ES 2262 ); and Common Nursing Home and

Waiver Medicaid Terminology ( M edicaid Terminology) constitute

agency statements defined as rules but not adopted as such, in

violation of s ection 120.54, Florida Statutes.

PRELIMINARY STATEMENT

Petitioner Esther Strong ( Petitioner or Ms. Strong ) filed

her Petition for Administrative Determination of Invalidit y of

Agency Statements ("Petition") on J anuary 28, 2011 . The P etition

alleged that Respondent developed and appl ied certain non - rule

documents in determining that Petitione r was no longer eligible

for p articipation in the Medicaid Diversion Program because "her

income is too high to qualify for the program and they did not

receive all information necessary to determine eligibility . "

Pe tition er assert s that the use of the documents amounts to a

rule under s ection 120.52(16), which must be adopted pursuant to

s ection 120.54.

A Notice of Hearing and Order of Pre - hearing Instructions

dated February 1, 2011 , schedul ed this matter for hearing on

February 21, 2011 .

On February 9, 2011 , Respondent , Department of Children and

Families (Respondent or DCF) filed a Motion f or Continuance on

the basis that the Governor's Executive Order 11 - 01 required

prior authorization from the Office of Fiscal Accountability and

Regulatory Reform (OFARR) before Respo ndent could initiate

rulemaking addressed to the challenged statements . The motion

stated that Respondent would "confer" with OFARR to determine

whether approval would be given to initiate rulemaking.

Petitioner filed an Objection to Request for Continua nce on

February 9, 2011, and the motion was denied by Order dated

February 11, 2011.

On February 18 , 20 11 , Respondent filed a Second Motion for

Continuance; again on the basis that Respondent was without

authorization to begin rulemaking on the challenged statements

absent approval by OFARR . The motion recited that " Respondent,

t h is date, has submitted the necessary documents and m a terials to

receive authori zation to submit the attached d o cuments for

p u blication. Respondent reasonably a n ticipates receiving the

authorization for publication no l a ter than Monday, February 21,

2011. " Attached to the motion were draft amendments to the

Department's r ule 65A - 1.7 13 title d " SSI - Related Medicaid Income

Eligibility Criteria ".

On February 16, 2011, Respondent filed a Motion for Partial

Sum mary Final Order, arguing that Petitioner had failed to prove

that the Training Module and Medicaid Terminology were rules and

that it was not feasible or practicable for Respondent to

initiate rulemaking addressed to the Policy Manual and

Information Form in light of Executive Order 11 - 01.

The final hearing was convened on February 21, 2011, and at

the outset the pending mo tions for continuance and for partial

summary final order were addressed . As to the motion for

continuance, counsel for Respondent stated that authorization had

not yet been received from OFARR to begin rule development .

Following additional argument fro m counsel on both motions, both

were denied.

Also at the outset of the hearing the parties filed their

Joint Pre - Hearing Stipulation, portions of which have been

incorporated in this Final Order.

P etitioner did not call any witnesses to testify at final

hearing . Petitioner's E xhibits P - 1 through P - 3 were received in

evidence, while Petitioner's Exhibit P - 4 was rejected, and ruling

was reserved on the admissibility of Petitioner's Exhibit P - 5.

By Order dated March 2, 2011, Petitioner 's P - 5 was received in

evidence. Post - hearing, Respondent was permitted to supplement

Petitioner's Exhibit P - 3 with Page I - 95 of the Training Module.

Respondent presented the testimony of two witnesses , and

Respondent ' s E xhibits R - 1 and R - 2 were received in evidence.

Th e parties filed proposed o rders on March 4 , 20 11, and t he

court r eporter filed the transcript of the proceedings with the

Division of Administrative Hearings on March 10 , 20 11 .

Unless otherwise indicated, all references are to the 20 10

Florida Statutes.

FINDINGS OF FACT

1 . Petitioner is a resident of an assisted living faci lity

and receives a stipend under the Florida Medicaid Nursing Home

Diversion Program. The program is one of the Medicaid "home and

community - based services waiver" programs administered through

DCF. In order to qualify for the Assisted Living Waiver Program,

applicants must comply with level of care, income and asset

limitations. For example, eligible individuals may not h ave a

monthly income greater than $2,022.00 . The agency statements

under challenge in this proceeding relate to the manner in which

DCF calculated Petitioner's income in eval uating eligibility

under the AL Waiver Program.

2 . Section 409.919, Florida Sta tutes, requires DC F to adopt

and accept transfer of any rules necessary to carry out its

responsibilities for receiving and processing Medicaid

applications and determining Medicaid eligibility .

3 . Respondent has adopted Florida Administrative Code Rule

65A - 1.713 relating to SSI - Related Medicaid Income Eligibility

Criteria . This rule requires DCF to follow the exclusionary

policies specified in 20 C.F.R. § 416.1100 , including

exclusionary policies r egarding Veterans Administration (VA)

benefits such as VA Aid and Attendance, unreimbursed medical

expenses (UME) and reduced VA improved Pensions (VAIP) to

determine what counts as income and what is excluded from income

for eligibility determinations .

4 . Rule 65A - 1.713, provides in relevant part:

(2) Included and Excluded Income. For all

SSI - related coverage groups the department

follows the SSI policy specified in 20 C.F.R.

416.1100 (2007) (incorporated by reference)

et seq., including exclusionary policies

regarding Veterans Administration benefits

s uch as VA Aid and Attendance, unreimbursed

Medical Expenses, and reduced VA Improved

pensions, to determine what counts as income

and what is excluded as income with the

following exceptions:

(a) In - kind support and maintenance is not

considered in determining income eligibility

(b) Exclude total of irregular or infrequent

earned income if it does not exceed $30 per

calendar quarter.

(c) Exclude total of irregular or infrequent

unearned income if it does not exceed $60 per

calendar quarter.

(d) In come placed into a qualified income

trust is not considered when determining if

an individual meets the income standard for

ICP, institutional Hospice program or HCBS.

(e) Interest and dividends on countable

assets are excluded, except when determining

pa tient responsibility for ICP, HCBS and

other institutional programs.

5 . On or about A ugust 3, 2010, Petitioner applied to DCF

for re - certification to participate in the AL Waiver Program. On

August 10, 2010, DCF issued a notice to Petitioner's designated

representative that Petitioner needed to provide a copy of a

qualified income trust statement and a bank account for the

trust , since her combined income from Social Security and the

a mount she was receiving from the VA exceeded the income limit of

$2,022.00.

6 . On August 27, 2010 , DCF issued a notice to P etitioner

that she was no longer eligible for the Medicaid Diversion

Program because "her income is too high to qualify f or the

program and they did not receiv e all information necessary to

determine eligibility."

7 . Petitioner timely requested a Medicaid Fair Hearing

because she disagreed with the way her income was evaluated by

DCF. The Fair Hearing was held on December 1, 2010. At the Fair

Hearing, repres entatives of DCF referenced the Policy Manual,

Training Module and Medicaid Terminology in explaining what

policy required DCF to count payments received from the VA in

determining eligibility for the AL Waiver Program.

8 . Shawnee T. Daniels, a DCF manag er with supervisory

responsibility for DCF case workers, testified at Petitioner's

Fair Hearing. When asked if DCF employees could exercise

independent thought or judgment in evaluating applications,

Ms. Daniels stated that DCF case workers rely on DCF policy and

knowledge from their training materials and information they

receive from their clients in making determinations about

eligibility.

9 . Petitioner has challenged Respondent's Access Policy

Manual Sections 1840.0906.04 and 1840.0906.07 as unpro mulgated

rules. Those sections provide:

1840.0906.04 Veterans Administration Improved

Pension (MSSI, SFP)

The Veterans and Survivors Pension

Improvement Act changed the method of

determining the pension payable and pension

rates effective January 1979 , but the new

rates of payment are not automatic. Since

the new rates are not automatic, the veteran

or survivor who was receiving benefits prior

to January 1979 must apply to VA to establish

entitlement under the Act. All individuals

who apply for or re ceive Medicaid benefits

must apply for the Veterans Administration

Improved Pension Program (VAIP). An

individual who receives a VA pension under

the old law must apply for improved pension

under the new law unless the individual's VA

benefit would be low ered under the improved

pension. If an individual's pension would be

lower under the improved pension, he may

continue to receive the pension under the old

law. VAIP includes allowances for aid and

attendance, housebound, and unreimbursed

medical expense s.

Section 8003 of the Omnibus Budget

Reconciliation Act of 1990 (OBRA '90)

provides for a reduction in Veterans

Administration Improved Pensions (VAIP) for

single veterans and surviving spouses

residing in Title XIX nursing facilities who

have no depend ents and who are Medicaid

eligible. The pension will be reduced to $90

or less per month, which is all considered

aid and attendance and is not counted as

income for the eligibility determination.

Also, it's not added back i nto the patient

responsibility.

However, if the veteran is enrolled in the

Medically Needy Program in the nursing home

and Medicaid is not paying for nursing home

care, the veteran is entitled to the full VA

benefit, and must apply to receive it.

1840.0906.07 VA Unreimbursed Medical Expenses

(MSSI, SFP)

This policy does not apply to OSS.

VA provides an allowance for unreimbursed

medical expenses (UME) incurred by the

veteran that exceed five percent of an

individual's annual income. UME is excluded

income.

10 . Respondent has stipulated that Access Policy Manual

s ections 1840.0906.04 and 1840.0906.07 meet the definition of a

"rule" as that term is defined in section 120.52(16), Florida

Statutes (2010). (Joint Pre - hearing Stipulation, p. 5;

Respondent's Proposed Final Order, p. 2). Respondent also

stipulated that as a n agency statement meeting the definition of

a rule, DCF was required to go through the rule promulgation

process required by section 120.54(1), and has not done so.

(Joi nt Pre - Hearing Stipulation, p. 1 , 5 ).

11 . Request for Veteran's Information Form CF - ES 2262 is a

form used to gather information about pensions and other benefits

provided by the VA to applicants for the Medicaid AL Waiver

Program . The form itself is addressed to the "Department of

Veterans Affairs" and requires verification from a VA

representative. The bottom of the form includes a footer reading

"CF - ES 2262, PDF 10/2005", indicating that this version of the

form was developed in Octo ber, 2005.

12 . Respondent has stipulated that Form CF - ES 2262 meets

the definition of a "rule" as that term is defined in section

120.52(16), Florida Statutes (2010). (Joint Pre - hearing

Stipulation, p. 5; Respondent's Proposed Final Order, p. 2).

Respo ndent also stipulated that as an agency statement meeting

the definition of a rule, DCF was required to go through the rule

promulgation process required by section 120.54(1), and has not

done so. (Joint Pre - Hearing Stipulation, p. 1, 5).

13 . Responden t has stipulated that Petitioner is

substantially affected by DCF 's use of Access Policy Manual

s ections 1840.0906.04 and 1840.0906.07 and Form CF - ES 2262.

(Respondent's Proposed Final Order, p. 2).

14 . Training Module 4 is a tool used to train DCF

empl oyees, and describes the duties of DCF employees who

determine public assistance eligibility. It is used by DCF

employees in carrying out their assigned job dutiesaining

Module 4 contains a section entitled "Policy: Identify Income

from the Veterans Administration" found at pages I - 49 through

I - 51. On page I - 49 of Training Module 4 appears the following

statement:

Only the following types of Veterans'

benefits are excluded as income for all

programs:

1. Reductions in basic pay while in active

duty service or selected reserve servi ce

to provide for future basic educational

assistance

2. Payments to a natural child of a Vietnam

veteran born with spina bifida, except

spina bifida occulta, as a result of the

exposure of one or both parents to Agent

Orange

3. Payments to a natural ch ild of a woman

Vietnam veteran born with one or more birth

defects resulting in permanent physical or

mental disability

4. Payments for aid and attendance,

housebound al lowance or unreimbursed medical

expenses (except OSS)

15 . Page I - 51 of Training Module 4 contains a section

entitled "Manual Citation", in which there are references to "On -

Line Policy Manual" sections. Among those citations are section

1840.906.05 entitled "VA Improved Pension", and section

1840.906.08 entitled "VA Un - reimbursed Medical Expenses".

Notwithstanding the single digit difference in the numbering of

these two sections from the numbering in the Policy Manual , given

the identical titling o f the sections it is reasonable to

conclude that these are a reference to Policy Manual Sections

1840.0906.04 and 1840.0906.07 . 1

16 . Respondent stipulated that Training Module 4 contains

agency statements of general applicability and describes the

p ractice or procedure requirements of the agency. Respondent

also acknowledges that Training Module 4 has not been adopted as

a rule. (Joint Pre - Hearing Stipulation, P. 3). However,

Respondent denies that Training Module 4 meets the definition of

a rule.

17 . " Common Nursing Home and Waiver Medicaid Terminology "

contains definitions of numerous terms used in administering the

Medicaid program. Within the section entitled "Other SSI - Related

Medicaid Terminology" appears the terms:

Aid and Attendance (VA AA) is a special

Veterans Administration allowance for

individuals who require the constant aid and

attendance of another person to help with

personal needs. Most often this allowance is

paid to persons in a nursing facility. VA AA

payments do not count in the Medicaid

eligibility test or post - eligibility budget,

but do count in State Funded Programs.

a nd ,

Un - reimbursed Medical Expense (UME) is a term

used by the Veterans Administration for

medical expenses they recognize as a factor

in computing pens ion amounts. VA UME is not

counted in the Medicaid eligibility test or

post - eligibility budget, but it counts for

State Funded Programs.

The document bears a footer on each page

which reads "CCC Vocabulary Helps/Updated

12/05/06".

18 . Medicaid Terminology is a tool that is used to train

DCF employees to perform their job and describes how agency

policy should be applied in any given situation. When asked

during the Fair Hearing what the DCF policy was regarding VA

unreimbursed medic al expenses, DCF Medicaid Specialist for the

Policy Unit of the Suncoast Region, Naureen Yazdani read the

above definition of UME as set forth in the Medicaid Terminology

document.

19 . Respondent stipulated that the Medicaid Terminology

contains agency s tatements of general applicability and

interprets or prescribes law or policy. Respondent also

acknowledges that the Medicaid Terminology has not been adopted

as a rule. (Joint Pre - Hearing Stipulation, P. 3). However,

Respondent denies that the Medicaid Terminology meets the

definition of a rule.

20 . Respondent received actual notice of the rule challenge

p etition on December 23, 2010, more than 30 days prior to the

filing of the petition at the Division of Administrative Hearings

on January 28, 2011.

21 . Pursuant to the Governor's Executive Order 11 - 01, dated

January 4, 2011, all rulemaking by exec utive agencies, including

DCF, wa s suspended pending approval from the newly creat ed Office

of Fiscal Accountability and Regulatory Reform . As of the date

of the hearing Respondent had not received approval from OFARR to

engage in rulemaking addressed to any of th e challenged agency

statements . 2 /

22 . Although Respondent concedes that the challenged

provisions of the Policy Manual and Form CF - ES 2262 meet the

statutory definition of a rule, Respondent contends that

rulemaking addressed to the challenged statements is not feasible

or practicable. However, a side from the lack of approval from

OFARR to proceed with rulemaking, Respondent has n ot offered

evidence in this record to establish that rulemaking addressed to

the challenged statements is not feasible or practicable.

CONCLUSIONS OF LAW

23 . The Division of Admin istrative Hearings has

jurisdiction of th e subject matter and the parties to this

proceeding. See §§ 120.569 and 120.57(1), Fl a. Stat .

24 . Section 120.56(4) (a) , Florida Statutes, states in

pertinent part, that Ð [a] ny person substantially affected by an

agency statement may seek an administrat ive determination that

the statement violates s. 120.54(1)(a) . Ñ A person or entity

demonstrates it is "substantially affected" by demonstrating

that: (a) it will suffer an injury in fact of sufficient

immediacy to entitle it to a formal administrative proceeding;

and ( b ) the substantial injury is of a type or nature that the

proceeding is designed to protect. See Ameristeel v. Clark ,

691 So. 2d 473 (Fla. 1997).

25 . In this case , Petitioner ha s standing to challenge the

documents at issue as unpromu lgated rules because her application

for participation in the Medicaid AL Waiver Program was evaluated

by Respondent, at least in part, in accordance with the policies

set forth in the challenged statements. Moreover, Respondent has

stipulated that Petiti oner is substantially affected by DCF's use

of Access Policy Manual Sections 1840.0906.04 and 1840.0906.07

and Form CF - ES 2262.

26 . Petitioner has the burden of establishing by a

preponderance of the evidence that the challenged agency

statements constitute unpromulgated rules. See Bravo Basic

Material Co., Inc. v. Dep't of Transp. , 602 So. 2d 632 (Fla. 2nd

DCA 1992); Fla. Dep't of Tr ansp. v. J.W.C. Co. , 396 So. 2d 778

(Fla. 1st DCA 1981).

27 . Petitioner alleges that the following agency statements

are rules, as defined by Section 120.52 (16) :

(1) Access Policy Manual Sections

1840.0906.04 and 1840.0906.07;

(2) Training Module 4;

(3) Request for Veteran's Information Form

CF - ES 2262; and

(4) Common Nursing Home and Waiver Medicaid

Terminology.

28 . Sec tion 120.54(1) provides:

120.54 Rulemaking. Ï

(1 ) GENERAL PROVISIONS APPLICABLE TO ALL

RULES OTHER THAN EMERGENCY RULES. Ï

(a ) Rulemaking is not a matter of agency

discretion. Each agency statement defined as

a rule by s. 120.5 2 shall be adopted by the

rulemaking procedure provided by this section

as soon as feasible and practicable.

1 . Rulemaking shall be presumed feasible

unless the agency proves that:

a . T he agency has not had sufficient time to

acquire the knowledge and experience

reasonably necessary to address a statement

by rulemaking; or

b. Related matters are not sufficiently

resolved to enable the agency to address a

statement by rulemaking.

2 . Rulemaking shall be presumed practicable

to the extent necessary to provide fair

notice to affected persons of relevant agency

procedures and applicable principles,

criteria, or standards for agency decisions

unless the agency proves that:

a . Detail or precision in the establishment

of principles, criteria, or standards for

agency decisions is not reasonable under the

circumstances; or

b . The particular questions addressed are of

such a narrow scope that more specific

resolution of the matter is impractical

outside of an adjudication to determine the

substantial interes ts of a party based on

individual circumstances.

29 . Section 120.52(16) defines a rule as follows in

pertinent part :

(16) "Rule" means e ach agency statement of

general applicability that implements,

interprets, or prescribes law or policy or

describes the procedure or practice

requirements of an agency and includes any

form which imposes any requirement or

solicits any information not spec ifically

required by statute or by an existing rule.

The term also includes the amendment or

repeal of a rule. The term does not include:

( a) Internal management memoranda which do

not affect either the private interests of

any person or any plan or p rocedure important

to the public and which have no application

outside the agency issuing the memorandum.

30 . An agency statement is invalid only if it falls within

the definition of a rule. See DepÓt of Rev . v. Novoa , 745 So. 2d

378 (Fla. 1st DCA 1999).

31 . It was stipulated that the challenged Policy Manual

provisions and Form CF - ES 2202 meet the definition of a "rule" as

defined by secti on 120.52(16) for which rulemaking was required

by sec tion 120.54(1) . However, Respondent contends that

rulemaking is not currently fe asible or practicable due to

Executive Order 11 - 1's prohibition on rulemaking absent prior

approval from the Office of Fiscal Accountability and Regulatory

Reform. However, no evidence was presented that Respon dent has

not had sufficient time to acquire the knowledge and experience

reasonably necessary to ad dress the statements by rulemaking 3 / ,

or that r elated matters are not sufficiently resolved to enable

the agency to address a statement by rulemaking. Similarly,

Respondent did not prove that one of the circumstances des cribed

in section 120.54(1)(a)2 exists which has rendered rulemaking

impracticable. Accordingly, there is no factual or legal basis

in this record to conclude that rulemaking by DCF to address the

challenged statements is not feasible and practicable. See Spear

v. Dep ' t of High . Saf . & Motor Veh . , Case No. 92 - 4816RU (Fl a.

DOAH October 29, 199 2) , a ff'd, 632 So. 2d 1030 (Fla. 1st DCA

1994) .

32 . With respect to the other two challenged statements,

Respondent stipulated that Training Module 4 contains agency

statements of general applicability 4 / and describes the practice

or procedure requirements of the agency. Respondent also

stipulated that the Medicaid Terminology contains agency

statements of general applicability and interprets or prescribes

law or policy. In denying that Training Module 4 and the

Medicaid Terminology constitute rules, Respondent is evidently

contending that the statements are "i nternal management

memora nda " as that term is defined in Section 120.52(16) (a) ,

Florida Statutes .

33 . In Dep artment of Revenue v. Vanjaria Enterprises, Inc. ,

675 So. 2d 252, 255 (Fla. 5th DCA 1996), the court held that the

Department of RevenueÓs training manual used for the tax

assessment procedure was a statement of general applicability

because it was the sole guide for the auditors and was not

applied on a case - by - case basis . In Vanjaria , the au ditors had

no discretion to act outside of the procedure.

34 . L ike Vanjaria , DCF's Training Module 4 appears to set

forth mandatory policies for case worker s to use in determining

eligibility for benefits under the Medicaid AL Waiver Program .

For example, Training Module 4 states that " Only the following

types of Veteran's Benefits are excluded as income f or all

programs." Clearly, the Training Module does not vest discretion

in caseworkers as to the categories of VA benefits that may be

exc luded for purposes of determining eligibility. 5 /

35 . Similarly, the "Medicaid Terminology" document includes

express directives to Medicaid caseworkers as to how VA payments

are to be treated in determining income eligibility under the

Medicaid waiver programs. For example, the Aid and Attendance

term includes the statement: "VA AA payments do not count in the

Medicaid eligibility test or post - eligibility budget, but do

count in State Funded Programs." Additionally, the Un - reimbursed

Medical Expense t erm includes the statement: "VA UME is not

counted in the Medicaid eligibility test or post - eligibility

budget, but it counts for State Funded Programs." Respondent has

stipulated that the Medicaid Terminology contains statements of

general applicability that interpret or prescribe law or policy.

And l ike the Training Module, the Medicaid Terminology does not

vest discretion in caseworkers as to the categories of VA

benefits that may be excluded for purposes of determining

eligibility.

36 . The challenge d statements do not fall within the

"internal management memoranda" exception. The statements are

uniformly relied upon by DCF employees when making Medicaid

program eligibility determinations, including evaluating

Petitioner's eligibility for the AL Waiv er Program. Dep ' t of

Bus . & Prof'l Reg . v. Harden , 10 So. 3d 647 (Fla. 1st DCA 2009).

37 . In determining whether an agency statement is an

unpromulgated rule, the effect of the statement must be taken

into consideration. See Vanjaria , 675 So. 2d at 255. An agency

statement that requires compliance , creates certain rights while

adve rsely affecting others , or otherwise has the direct and

consistent effect of law , is a rule. Id .

38 aining Module 4 and Medicaid Terminology are used by

DCF caseworkers to determine eligibility for Medicaid waiver

programs . The determination as to what VA benefits qualify for

exclusion from an applicant's income is made by DCF caseworkers

while applying the policies set forth in the Training M odule and

Medic aid Terminology . Application of the policies contained in

the Training Module and Medicaid Terminology directly affect the

determination of whether an applicant's "income" exceeds the

allowable limit, and consequently, whether an applicant

(including Peti tioner) is entitle d to participate in the Medicaid

waiver program . 6 / The statements have the potential to directly

affect the private interests of Petitioner and the public at

large.

39 . There are other instances in which agency statements

similar to the Training Module and Medicaid Terminology have been

held to be rules. In McCarthy v. Dep ' t of Ins. and Treasurer ,

479 So. 2d 135 (Fla. 2d DCA 1985) a letter setting forth

eligibility quali fications for an exam was found to be a rule

because agency employees were required to comply with categorical

requirements. And in Dep ar t ment of Transp ortation v. Blackhawk

Quarry , 528 So. 2d 447 (Fla. 5th DCA 1985) a standard operating

procedure was hel d to be a rule because the agency required third

parties to meet certain specific criteria before they could be

permitted to bid on a state project.

40 . It is concluded that t he four c hallenged s tatement s

each constitute a "rule," as defined in s ection 120.52(16 ) , and

they ha ve not been adopted in accordance with the rule making

procedures set forth in section 120.54, (nor has the rulemaking

process commenced). Although DCF has argued that engaging in

such rulemaking is not feasible or practicable, the o bstacle to

rule promulgation (Executive Order 11 - 01) is not among the

justifications circumscribed by section 120.54(1)(a) .

Accordingly, the existence of the challenged s tatement s violates

s ection 120.54(1)(a) and therefore, pursuant to s ection

120.56(4)(d), DCF must "immediately discontinue all reliance upon

the statement or any substantially similar statement as a basis

for agency action."

41 . Section 120.595(4) provides:

(4 ) CHALLENGES TO AGENCY ACTION PURSUANT TO

SECTION 120.56(4). Ï

(a ) If the appellate court or administrative

law judge determines that all or part of an

agency statement violates s. 120.54 (1)(a), or

that the agency must immediately discontinue

reliance on the statement and any

substantially similar statement pursuant to

s. 120.56 (4)(e), a judgment or order shall be

entered against the agency for reasonable

costs and reasonable attorneyÓs fees, unless

the agency demonstrates that the statement is

required by the Federal Government to

implement or retain a delegated or approved

program or to meet a condition to receipt of

federal funds.

42 . There having been no showing made that the challenged

s tatement s are "required by the Federal Government to implement

or retain a delegated or approved program or to meet a condit ion

to receipt of federal funds " Petitioner is entitled, pursuant to

s ection 120.595(4)(a), to recover a reasonable sum for the

att orneys' fees and costs she has incurred in the prosecution of

this action. See Security Mutual Li fe Ins . Co. v. Dep' t of Ins . ,

707 So. 2d 929, 930 (Fla. 1st DCA 1998).

ORDER

Based on the foregoing, it is

ORDERED:

The relief requested by Petitioner in its petition filed

with DOAH pursuant to s ection 120.56(4), Florida Statutes (to

wit: an administrative determination that the challenged

statements violate s ection 120.54(1)(a), Florida Statutes, and an

award pursuant to s ection 120.595(4), Florida Statutes) is

granted.

The undersigned reserves jurisdiction to determine, if

necessary, th e amount of attorneys' fees and costs Petitioner

should be awarded. Should the parties be unable to amicably

resolve this issue, Petitioner shall file with the Division of

Administrative Hearings a written request that the undersigned

resolve the matter. No such request filed more than 60 days of

the date of this Final Order will be considered.

DONE AND ORDERED this 22nd day of March , 2011 , in

Tallahassee, Leon County, Florida.

S

W. DAVID WATKINS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 22nd day of March , 20 11 .

ENDNOTES

1/ The single - digit difference in the numbering of the two

sections may be attributable to more recent updating of Training

Module 4, which bears the date "10/05/2010".

2/ At hearing, DCF witness Florence Hollinghead testified that a

request to proceed wi th rulemaking had been filed by DCF with

OFARR, but that no authorization had yet been received.

3/ It is notable that one of the challenged agency statements

(Form CF - ES 2262) has been in existence since October, 2005, and

another (Medicaid Terminology ) since December, 2006.

4/ Statements of general applicability, as referred to in

Section 120.52(16), Florida Statutes, are statements that are

intended by their own effect to create rights or require

compliance, or otherwise have the direct and consiste nt effect of

law. McDonald v. DepÓt of Banking & Fin . , 346 So. 2d 569, 581

(Fla. 1 st DCA 1977).

5/ It is notable that the cited authority for the policies

appearing on pages I - 49 through I - 51 of the Training Module are

contained in the Policy Manual, which DCF concedes, is itself an

unpromulgated rule.

6/ This proceeding was brought pursuant to section 120.56(4),

rather than section 120.57(1)(e). Accordingly, although this

Order determines that the challenged statements constitute

unpromulgated rul es which may no longer be relied upon by

Respondent, the effect of the invalidation of the statements upon

PetitionerÓs ultimate entitlement to participation in the

Medicaid AL Waiver Program ha s not been determined herein.

COPIES FURNISHED:

Jack M. R osenkranz, Esquire

Rosenkranz Law Firm

Post Office Box 1999

Tampa, Florida 33601

Herschel C. Minnis, Esquire

Department of Children

and Famil ies

1317 Winewood Boulevard

Building 2, Room 204N

Tallahassee, Florida 32399 - 0700

Gregory Venz , Agency Clerk

Department of Children

and Famil ies

1317 Winewood Boulevard

Building 2, Room 204 B

Tallahassee, Florida 32399 - 0700

David Wilkins, Secretary

Department of Children

and Famil ies

1317 Winewood Boulevard

Building 2, Room 204 B

Tal lahassee, Florida 32399 - 0700

F. Scott Boyd, Executive Director

and General Counsel

Joint Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399 - 1300

Liz Cloud, Chief

Bureau of Administrative Code

The Elliott Building, Room 201

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.

Revie w 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

l aw, 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.