11-001671MPI Agency For Health Care Administration vs. Ideal Pugh, Sr., D/B/A Services On Time, Llc Status: Closed Recommended Order on Thursday, May 31, 2012.

Summary: The Agency proved that Respondent received Medicaid overpayments that must be repaid and that fines should be imposed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE )

ADMINISTRATION , )

)

Petitioner , )

)

vs. ) Case No. 11 - 1671MPI

)

IDEAL PUGH, SR., d/b/a SERVICES )

ON TIME, LLC , )

)

Respondent . )

)

RECOMMENDED ORDER

An administrative hearing was conducted in this case on

February 1, 2012 , by video teleconference in Jacksonville and

Tallahassee , Florida , before James H. Peterson, III,

Administrative Law Judge with the Division of Administrati ve

Hearings.

APPEARANCES

For Petitioner: Dwight O. Slater, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

For Respondent: Sheldon J. Vann, Esquir e

Law Offices of

Sheldon J. Vann & Associates

841 Prudential Drive, Suite 1201

Jacksonville, Florida 32207

Mamie L. Davis, Esquire, CPA

Mamie L. Davi s, P.A.

841 Prudential Drive, Suite 1200

Jacksonville, Florida 32239

STATEMENT OF THE ISSUE

Whether the Agency for Health Care Administration ( Agency

or Petitioner) is entitled to recover from Ideal Pugh, Sr.,

d/b/a Serv ices on Time, LLC (Respondent) , alleged Medicaid

overpayments, administrative fines, and investigative, legal,

and expert witness costs .

PRELIMINARY STATEMENT

On August 16, 2010, the Agency issued a letter and final

audit report ( Final Audit Report) advisi ng Respondent of its

intention to seek reimbursement of $600,536.89 in alleged

Medicaid overpayments, $521.52 in audit cost s , and a $2,500

administrative fine from Respondent based upon an audit of

Respondent's records for Medicaid claims Respondent made f rom

January 1, 2007 through December 31, 2008 (the audit period) .

The Final Audit Report also notified Respondent that he had the

right to request an administrative hearing within 21 days from

his receipt of the notice.

Respondent timely requested an ad mi nistrative hearing under

section 120.57(2), Florida Statutes . Thereafter , following

Respondent's unopposed motion to change his request for a

hearing under section 120.57(1), the Agency's informal hearing

officer issued an Order Relinquishing Jurisdiction dated

November 3, 2010 , as well as an order granting the parties'

request for a period of abeyance prior to its referral to the

Division of Administrative Hearings (DOAH).

Following abeyance, o n April 4, 2011, t he Agency referred

the case to DOAH. Upon referral, this case was originally

scheduled for a hearing to begin July 27, 2011, but , by Order

granting Respondent's unopposed motion for continuance, was

r escheduled for h earing to begin October 27, 2011 .

T he he aring was convened as scheduled on Octo ber 27, 2011,

at which time Petitioner's pending Motion for Official

Recognition filed October 18, 2011, was granted . In granting

the motion , the undersigned took official recognition of certain

provisions of chapters 393, 408 , and 409 of the 2007 and 200 8

Florida Statu t es; sections of Florida Administrative Code Rule

59G; several chapters from the Florida Medicaid Provider General

Handbook from January 2007 and July 2008 (Medicaid Handbook) ;

enumerated chapters and appendices from the Ju ne 23, 2005,

June 2007, and December 3, 2008, Developmental Disabilities

Waiver Services Coverage and Limitations Handbook (DD Handbook) ;

and the case of Agency for Health Care Administration v. Custom

Mobility, Inc. , 995 So. 2d 984 (Fla. 1st DCA 2008), cert.

denied , 3 So. 3d 1246 (Fla. 2009), as more particularly listed

in the Agency's Motion for Official Recognition .

Following the granting of Respondent's Motion for Official

Recognition and discussion of preliminary matters, including the

fact that the parties were in dis agreement as to the pertinent

issues in this case and had failed to enter into a prehearing

stipulation, the final hearing convened on October 27, 2011, was

continued in order to give the parties additional time to agree

on the disputed issues and to prepa re a joint prehearing

stipulation. The case was rescheduled and reconvened by video

teleconference on February 1, 2012.

At the hearing, the Agency presented the testimony of

Magdalena Olsson , an investigator with the Agency's Medicaid

Program Integrity Bureau ; Robi Olmste a d, a n Agency administrator

with the Medicaid Program Integrity Bureau's waiver unit;

Kristen Koelle, a medical health care program analyst with the

Agency's Medicaid Program Integrity Bureau; and D r. Fred W.

Huffer, Ph.D., a professor i n mathematics at Florida State

University. The Agency offered 2 1 exhibits which were received

into evid ence as Exhibits P - 1 through P - 2 1 , without objection .

Respondent testified on his own behalf and presented the

testimony of Ms. Olsson . During the hear ing, Respondent

described a letter dated July 22, 2008, from the Agency for

Persons with Disabilities, a non - party. Respondent had not

previously shared a copy of the letter with the Agency's

counsel, and a copy was not otherwise available for review

duri ng the hearing. Respondent was given time to proffer a copy

of the letter within ten days after the end of the hearing, but

failed to do so. Respondent did not submit any exhibits into

evidence.

By permission, the Agency filed post - hearing submittals

upd ating Exhibits P - 6 and P - 10 to reflect the most recent

submissions by Respondent in support of his Medicaid claims at

issue. These updates resulted in further reduction of the

amount of overpayments claimed by the Agency.

At the close of the hearing, t he parties were given 30 days

from the filing of the transcript within which to file their

respective proposed recommended orders. The two - volume

Transcript of these proceedings was filed March 1, 2012 . By two

separate Order s granting motions for extension of time, the

parties were g iven additional time within which to file their

proposed recommended orders. Thereafter, t he parties timely

filed their respective Proposed Recommended Orders, which have

been taken into consideration in preparing this Recommend ed

Order.

FINDING OF FACTS

1. The Agency is the state agency responsible for

administering the Florida Medicaid Program ("Medicaid ").

Medic aid is a federally funded state - administered program that

provides health care services to certain qualified indivi duals.

2. Respondent , Ideal Pugh, Sr. , is an individual doing

business as a limited - liability corporation called Services on

Time, LLC, and was enrolled as a provider in the Florida

Medicaid program at all material times. By enrolling in the

Medicaid pro gram, Respondent agreed to fully comply with all

state and federal laws, policies, procedures, and handbooks

pertaining to the Medicaid program.

3. Respondent submitted bills to Medicaid while he was

enrolled and these bills were processed and paid to Res pondent

through the Florida Med icaid automated payment system. Claimed

services for which Respondent submitted bills and was paid by

Medicaid include transportation, in - home support, respite care,

companion, homemaker, self - care/home management training, non -

residential supports, and personal care assistance.

4. The Agency is authorized to recover Medicaid

overpayments , as appropriate . § 409.913(1)(e), Fla. Stat. 1 /

5. One method the Agency uses to discover Medicaid

overpayments is by auditing billing an d payment records of

Medicaid providers . Such audits are performed by staff in the

Agency's Bureau of Medicaid Program Integrity (MPI).

6. Providers are identified as potential candidates for

auditing either randomly, or through data collection and

anal ysis performed by MPI staff .

7. In 2009, Investigator Magdalena Olsson identified

Respondent as a potential audit candidate when his name appeared

as an additional service provider for clients of a different

provider that she was investigating.

8. During her investigation, Ms. Olsson reviewed the

Delmarva quality assurance inspection summaries for Respondent,

available on the Agency for Persons with DisabilitiesÓ (ADP)

website. Delmarva is an organization under contract with the

Agency to review provider s that render services through APD and

the Development Disabilities Waiver Program (ÐDD WaiverÑ).

Based upon her review of Delmarva inspection summaries

indicating that Respondent had ÐpoorÑ results, specifically with

respect to records or service documen tation , Ms. Olsson de cided

that further investigation of Respondent was warranted.

9. First , Ms. Olsson conducted an unannounced site visit

of RespondentÓs facility , but Respondent was not there, so s he

left Respondent a letter requesting that he contact her.

10. When she did not hear from him, Ms. Olsson sent

Respondent a Ðdemand letterÑ requesting documentation for claims

billed during the three - month period beginning October 1, 2008,

and ending December 31, 2008. After Respondent failed to

respond, th e Agency imposed a $1,000 sanction against Respondent

for failure to timely submit the requested records . Thereafter ,

Respondent paid the sanction and contacted Ms. Olsson and made

arrangements to bring the requested documents to her office.

11. Instead of submitting copies according to Agency

policy, Respondent delivered original records to Ms. Olsson .

Ms. Olsson reviewed the records and f ound significant

deficiencies in the documentation ranging from no documentation

whatsoever to insufficient supporti ng documentation for the

claimed services. Ms. Olsen was Ðdisturbed by seeing so many

documents that were not signed, [or] that did not have the

times when t he services were provided.Ñ

12. Ms. Olsson decided to give Respondent another

opportunity to prov ide the records , so she arranged another

visit to Respondent's facility. D uring the site visit, however,

Respondent still did not produce sufficient documentation. As a

result , Ms. Olsson referred Respondent to Agency Administrator

Robi Olmstead and reco mmended a full audit.

13. Ms. Olmstead reviewed Ms. OlssonÓs referral and agreed

that an audit of RespondentÓs billing and payment records was

appropriate. She opened a case on Respondent and assigned it to

Ms. K risten Koelle for a full audit.

14. Ms. K oelle completed the first steps of the audit

process according to established protocols . She reviewed

RespondentÓs provider information and billing t o determine what

types of services he provided, what types of claims he had

submitted, and how much had be en paid by Medicaid. S he reviewed

RespondentÓs Delmarva inspection summaries, and selected

January 1, 2007 through December 31, 200 8 , as the audit period.

During that audit period, Respondent submitted 13,119 claims for

62 recipients allegedly served by Respondent .

15. When the Agency audits a Medicaid provider for

possible overpayments it "must use accepted and valid auditing,

accounting, analytical, statistical, or peer - review methods, or

combinations thereof. Appropriate statistical methods may

inclu de, but are not limited to, sampling and extension to the

population . . . and other generally accepted statistical

meth ods." § 409.913(20), Fla. Stat.

16. The audit method used by the Agency depend s on the

characteristics of the provider and of the cla ims. For example,

where a provider serves thousands of Medicaid recipients during

the audit period, but there are not many claims for each

recipient , then the Agency may use a single - stage cluster

sampling methodology. Under this approach, a random sampl e of

recipients is selected, and then all claims are examined for the

recipient sample group.

17. Alternatively, where there are so many claims per

recipient that it would be impractical to review all claims for

each recipient or all claims for a sample group of recipients, a

two - stage cluster sample methodology may be used, whereby a

random sample of recipients is first selected , followed by a

random selection of sample claims f or the recipients in the

sample .

18. As a general target, the Agency conside rs samples of

between five and 15 claims, per recipient, to be reasonable

sample sizes for the second stage of two - stage cluster sampling.

However, if a given recipient has fewer than 15 claims, a

smaller n umber of claims for that recipient will be select ed.

19. Because of the high volume of claims generated by

Respondent during the audit period in this case, Ms. Koelle

determined with her supervisor that a two - stage cluster sampling

methodology would be used. In other words, it was not feasible

to revie w all 13,119 claims generated by the 62 recipients

claimed to have been served by Respondent during the audit

period .

20. Using a computer program to carry out the random

sampling , t he Agency's two - stage cluster sampling software

selected a random sample of 30 recipients from the population of

62 recipients served by Respondent . It then select ed a random

sample of from 5 to 15 claims for each recipient from

RespondentÓs paid - claims data in the AgencyÓs data warehouse for

the two - year audit period. A tota l of 347 sample claims were

randomly selected from that portion of the 13,119 claims

submitted by Respondent for the 30 sample recipients du ring the

audit period.

21. Thereafter, Ms. Koelle prepared a letter to send to

Respondent that served to notify him that an audit had been

initiated, and to request that he provide all Medicaid - related

records for the random sample of 30 recipients generated by the

cluster sampling program, as well as the employment/personnel

records or files for any of Respondent Ós st aff that provided

services to Medicaid recipients during the audit period. The

letter gave Re spondent the standard 21 - day period to submit the

requested records.

22. Ms. Olmstead reviewed and signed the letter and it was

mailed , along with a "Provider Qu est ionnaireÑ and ÐCertification

of Completeness of Records , Ñ to Respondent on April 27, 2010.

23. Ms. Koelle received the first set of records from

Respondent in late May or early June 2010. Respondent also

returned the Provider Questionnaire and a signe d Certificati on

of Completeness of Records . certifying the accuracy,

truthfulness, and completeness of the records submitted.

24. P ersons who provide Medicaid services must meet

certain minimum qualifications and obtain certain trainings ,

otherwise the pe rson is deemed ÐineligibleÑ or ÐdisqualifiedÑ

and Medicaid cannot reimburse for services provided by such

persons. All persons who provide services directly to Medicaid

recipients mus t also pass a Level 2 background screening.

T raining and screening requ irements for staff of Medicaid

providers during the audit period are set forth in the Medicaid

Handbook and DD Handbook .

25. Upon recei ving records sent by Respondent in response

to the Agency's April 27, 2010 letter , Ms. Koelle first reviewed

Respondent' s staff files to determine whether each staff member

m et requirements necessary to be able to provide Medicaid or

Medicaid waiver servi ces. After discovering that Respondent had

only submitted files for three staff members , she contacted

Respondent and as ked for additional staff records. After

receiving additional record s from Respondent , Inspector Koelle

reviewed Respondent's submissions and recorded her findings.

26. Ms. Koelle reviewed the documentation Respondent

submitted for each recipient against the 347 claims in the

random sample and recorded her findings on worksheets along with

her descriptions of any deficiencies or noted violations of

Medicaid law. Claims that she found to be supported by

documentation, in full compliance with Medicaid rules , were

marked on the worksheet next to the ÐallowÑ option , thus

indicating that no overpayment was found .

27. Claims that Inspector Koelle determined were not in

compliance with Medicaid rules were marked on the worksheet next

to the ÐadjustÑ or ÐdenyÑ op tion. If she found that no portion

of the claim complied with Medicaid law, she checked ÐdenyÑ and

the entire amount paid was written in the worksheet space marked

Ðdis - amt,Ñ shorthand for Ðdisallowed amount , Ñ indicating an

alleged overpayment.

28. If I nspector Koelle found that some, but not all, of a

given claim complied with Medicaid law, she marked the ÐadjustÑ

option on the worksheet and only a portion of the amount paid

was written in the space marked Ðdis - amt.Ñ

29. Ms. Koelle completed her review and entered all

amounts that she found to be disallowed into the computer

program . The program added the figures together to find the

overpayment amount for the sample, and then extended the

overpayment to the entire universe of recipients, according to

an established statistical methodology, which yield ed the total

overpayment amount . The computer program generated a printout

showing the exact overpayment amount for each of the 347 claim s

in the sample, and the total overpayment extended to the

populati on. The figures on the printout correspond to the

figures on the worksheets.

30. Utilizing this methodology, Ms. Koelle determined that

Respondent had been overpaid by an amount of $632,264.51.

Thereafter, she prepared the P reliminary Audit Report

(Pre liminary Audit ), describing the methodology applied to

determine overpayment and the deficiencies that le d to that

determination . She attached to the Preliminary Audit the

printout, copies of her worksheets, and a copy of the

spreadsheet with staff findin gs . A provision in the Preliminary

Audit explains that Respondent may submit additional

documentation to support the sample claims , although such

submission may be deemed evidence of previous non - compliance.

31. Ms. Olmstead reviewed , approved, and signe d the

Preliminary Audit , which was mailed with attachments to

Respo ndent on June 7, 2010.

32. After receiving the Preliminary Audit , Re spondent

submitted additional records in an effort to further support the

sample claims.

33. In preparation of the Fina l Audit Report, Ms. Koelle,

in consultation with Ms. Olmstead, reviewed Respondent's

documentation and found that there were incorrect, illegible, or

insufficient documents to support 319 of the 347 claims (91.93

percent of the claims) in the sa mple. The deficiencies included

incomplete or m issing staff files, lack of documentation of

services, no service authorization, no trip log s or trip log s

that did not meet Medicaid handbook requirements, no monthly

summary, and indications that unqualified staff mem bers were

providing services.

34. The documents, or lack thereof, demonstrated that

Respondent overbilled, leading to overpayment, because the

number of service units billed were not supported by documented

activities, and that Respondent billed and was p aid for services

and activities beyond the scope of services authorized in the

recipients' s upport p lan or s ervice a uthorization.

35. T he Agency's review of Respondent's billing against

documentation submitted by Respondent also revealed overbilling

based upon the fact that Respondent billed and was paid for

services performed by staff members who did not meet Level 2

background screening requirements.

36. In addition, Respondent's billings and records showe d

that many claims for services were performed b y staff members

that were not trained in accordance with Medicaid requirements

for the services performed.

37. As before, Ms. Ko elle recorded her findings on

spreadsheet s . She documented all the records received for each

staff member regarding minimum qualifications and trainings .

The spreadsheet s also set forth the documentation that remained

outstanding.

38. Ms. Koelle also reviewed all recipient records

submitted by Respondent against the claims in the random sample

and against the requirements of Medicaid law, including all

applicable handbook provisions . As in the Preliminary Audit,

Ms. Koelle detailed her findings on worksheets, making notes to

describe deficiencies in the records or other violations of

Medicaid law. Claims that were found to b e supported by

documentation, in full compliance with Medicaid rules, were

marked on the worksheet with a check mark next to the ÐallowÑ

option. The remaining claims were either ÐadjustedÑ or

Ðdenied.Ñ

39. Ms. Koelle recorded her findings in a spreadshee t .

The spreadsheet , organized by r ecipient numbered 1 through 30 ,

contains the following information for each of the 347 claims in

the sample : Date of s ervice (DOS), procedure code, procedure

des cription, unit of service (UOS ), cost per unit of service,

a mount paid to R espondent, claim determination (Allow, Adjust,

or Deny ), review determination, whether there was a document

deficiency (Doc. Def.), an overbilling iss ue, or a background

screening ( Bkgrd. Screen) issue; and the amount of the

overpayment for the claim (O/P).

40. Next, Ms. Koelle entered the disallowed amounts into

the computer program , which then added the amounts together,

found the overpayment amount for the sample, and extended the

overpayment to the entire population of 13,119 claims .

41 . Ultimately, Ms. Koelle prepared the Final Audit Report

which Ms. Olmstead signed and sent to Respondent on August 16,

2010. Because some records submitted by Respondent since the

Preliminary Audit supported previously unsubstantiated claims,

Ms. Koelle adjusted the overpayment to $600,536.89.

42. The Final Audit Report notified Respondent of the

adjusted total overpayment , described the types of non -

compliance found in the sample claims , and explained the

methodology employed to select the claims for r eview and extend

the sample overpayment to a rrive at the total overpayment.

43. The Final Audit Report also adv ised Respondent that

the Agency intended to recover a $2,500.00 fine and $521.52 for

audit costs. C opies of the worksheets, as well as the two

spreadsheets deta iling the staff review findings , were attached .

44. Respondent elected to dispute the Final Audit Report

and the Agency referred the matter to DOAH.

45. Over the course of the proceedings, on at least three

separate occasions, Respondent submitted additional records .

Many of them were duplicative. Nevertheless, Ms. Koelle

accepted and reviewed all of the additional documentation,

conside red all explanations given, and, to the extent warranted,

revised the audit determinations. S he upda ted the spreadsheets

containing the audit findings and the staff findings to reflect

the most recent information , including post - hearing filings of

updated versions of Exhibits P - 6 and P - 10.

46. The subsequent submissions resulted in downward

adjustments to the total overpayment amount , so that the final

overpayment, not including fines or costs, was calculated to be

$563,073.76.

47. The findings of the Preliminary Audit and Final Audit

Report were substantiated at the final hearing through the

testimony of both Ms. Koelle and Ms. Olmsted.

48. At the final hearing, Respondent contended that he had

submitted original documents substantiating his claims to the

Agency Investigator Olsson early on in the process and that the

Agency lost the records. Responde nt, however, did not retain

copies of the records . According to Ms. Olsson , the documents

were returned to Respondent.

49. Under the facts and circumstances, including the fact

that Respondent submitted originals against Agency policy,

failed to keep cop ies, and otherwise failed to substantiate over

90 percent of the sample claims, it is found that Respondent's

testimony that the Agency lost his records is unpersuasive. It

is otherwise found that Ms. Olsson's recollection is accurate ,

and that the Agency did not lose any of Respondent's documents

submitted in support of his claims that are the subject of the

Final Audit Report.

50. Respondent further argued in Respondent's Proposed

Recommended Order that the Agency "neither alleged nor presented

evidence that services were not provided . " Respondent's

Proposed Recommended Order (PRO), ¶ 2. In the same paragraph,

however, Respondent admits, "[a]ll deficiencies were due to

incorrect, illegible or insufficient documentation."

51. While suggesting that "Res pondent shall repay [the

Agency] $23,824.48 due to overpaid claims [derived from

unsubstantiated claims in the sample], Respondent further argues

that "[b]ecause [the Agency] did not properly implement the

'Two - Stage Cluster Sampling Method,' the projected extension of

sample results to the population is statistically invalid and

cannot be used to assess an enlarged overpayment amount."

Respondent's PRO, ¶¶ 3 - 4. Respondent, however, did not produce

evidence, by expert testimony or otherwise, that the two - stage

cluster sampling utilized by the Agency was invalid or

unreliable.

52. On the other hand, t he methodology and description of

two - stage cluster sampling were explained and confirmed at the

final hearing by the Agency's expert witness, Professor Fred

Huffer, Ph.D., who is an expert on statistical sampling. In

addition, the methodology comports with established law. See

§ 409.913, Fla. Stat. et seq . ; Ag. f or Health Care Admin. v.

Custom Mobility, Inc. , 995 So. 2d 984 (Fla. 1st DCA 2008), cert.

denied , 3 So. 3d 1246 (Fla. 2009).

53. Fred Huffer, Ph .D., is a professor of statistics at

Florida State University , with a Bachelor of Science degree in

mathematics from the Massachusetts I nstitute of Technology and a

Ph.D. in Statistics from Stanford Universi ty . He has taught and

researched statistics for more than 30 years in various

institutions of higher learning.

54. Dr. Huffer was familiar with the case at hand and with

the science of random sampling of populations and the analysis

of samples, including extension of results to the universe of

objects.

55. Dr. Huffer analyze d the sampling method utilized by

the Agency in this case with repeated random simulation that

recreated the audit circumstances, randomly, many thousands of

times , and found them to be accurate in this case.

56. Because the sampled recipients in this case are only

30 out of 62 recipients in the entire universe, the software

multiplie d by 62/30 to Ðscale upÑ the number from the 30

recipients that were sampled to the entire population size.

E very recipient in the sample was weighted according their

number of claims. And, the AgencyÓs software correct ed for the

variability within each cluster, within each recipient.

57. T he software utilized by the Agency determined the

amount of ove rpayments a t a 95 percent confidence level. As

explained by Dr. Huffer, if the entire procedure is repeated

Ðmany, many times, typically itÓs around 95 % of the time that

the number you arrived at will be less than the true amountÑ of

the overpayment.

58 . In other words, the amount the Agency has asked

Respondent to repay is most likely lower than the actual

overpayment . According to Dr. Huffer's calculations, the

overpayment in this case is 64.6 percent of t he Ðpoint

estimate,Ñ w hich is already only 86 percent of the t otal

overpayment.

59. Dr. Huffer testified that he has Ðno doubtsÑ about the

calculations the Agency made in this case or the efficacy of the

statis tical sampling method employed. According to Dr. Huffer's

testimony, ÐYou can th ink of it as a random discount . . . .

ItÓs undeniable that there was an overpayment.Ñ

60. In sum, Dr. Huffer credibly explained that the

A gencyÓ s cluster sampling method is appropriate and that it that

comports with the technical meaning of random sample and

gen erally accepted statistical methods.

61. Instead of presenting contradictory expert testimony,

Respondent attempt ed to undermine Dr. Huffer's opinions through

cross - examination and argument . Respondent, however, was not

effective in this regard.

62. Dr. Huffer's opinion s that the audit in this case

utilized a correct and reasonable application of two - stage

cluster sampling, and that the sampling method used in this case

was reasonable and comported with generally accepted statistical

methods , are accepte d as credible and accurate.

CONCLUSIONS OF LAW

63. The Division of Administrative Hearings has

jurisd iction over the parties and subject matter of this

proceeding . §§ 120.569 and 120.57(1), Fla. Stat.

64. The Agency is required to conduct, or cause to b e

conducted by contract or otherwise, reviews, investigations,

analyses, audits, or any combination thereof, to determine

possible fraud, abuse, overpayment, or recipient neglect in the

Medicaid program and to report the findings of any overpayments

in aud it reports as appropriate. § 409.913(2), Fla. Stat.

65. The audit process that led to the claim for

overpayment s in this case was properly initiated by the Agency

in accordance with s ection 409.913 .

66. An Ðo verpaymentÑ 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. "

§ 409.913(1)(e), Fla. Stat.

67. The statutes and rules in effect during the period for

which the services were provided, including the Medicaid

Handbook and DD Handbook which are promulgated as rules, govern

the outcome of this dispute. Toma v. Ag. for Health Care

Admin. , Case No. 95 - 2419, RO at ¶ 213 (Fla. DOAH July 26, 1996 ;

Fla. AHCA Sept. 24, 1996).

68. The 2007 version of section 409.913(15), Florida

Statutes, in effect at the end of the audit period in this case,

specifically authorizes the Agency to recoup overpayments if:

(c) The provider has not furnished or has

fai led to make available such Medicaid -

related records as the agency has found

necessary to determine whether Medicaid

payments are or were due and the amounts

thereof;

* * *

(e) The provider is not in compliance with

provisions of Medicaid provider public ations

that have been adopted by reference as rules

in the Florida Administrative Code; with

provisions of state or federal laws, rules,

or regulations; with provisions of the

provider agreement between the agency and

the provider; or with certifications f ound

on claim forms or on transmittal forms for

electronically submitted claims that are

submitted by the provider or authorized

representative, as such provisions apply to

the Medicaid program ;

69. Pertinent portions from the Medicaid Handbook and DD

Ha ndbook of which official recognition was taken in this

proceeding include , but are not limited to, the following

excerpts :

Medicaid will only reimburse for waiver

services, at an approved rate , that are

specifically identified in the approved plan

of care by service type, frequency and

duratio n and for which there is sufficient

documentation support the provision of a

service to a recipient. [ DD Handbook , p. 2 -

5, June 23, 2005 (documentation

requirements) (Ex. P - 13 at 621) ]

Documentation is a written recor d that

supports the fact that a service has been

rendered . . . . All documentation must be

dated and signed by the individual rendering

the service. [ Id. ]

Incomplete records are records that lack

documentation that all requirements or

conditions for se rvices have been met.

Medicaid may recover payment for services or

goods when the provider has incomplete

records or cannot locate the records.

[ Medicaid Handbook , p. 5 - 8, Jan. 2007

(recovery of costs) (Ex. P - 13 at 594) ]

Records must be retained for a p eriod of at

least 5 years from the date of service.

* * *

The provider must send, at his expense ,

legible copies of all Medicaid - related

information to the authorized state and

federal agencies and their authorized

repr esentatives of request of [the Agen cy].

[ Medicaid Handbook , p. 2 - 51, Jan. 2007

(Record Keeping) (Ex. P - 13 at 592 ) ]

P roviders who are not in compliance with the

Medicaid documentation and record retention

policies described in this chapter may be

subject to administrative sanctions and

reco upment of Medicaid payments. [ Medicaid

Handbook , p. 2 - 57, July 2008 (Record

Keeping) (Ex. P - 13 at 599 ) ]

Medicaid payments for services that lack

required documentation or appropriate

signatures will be recouped. [Id.]

70. The burden of establishing an alleged Medicaid

overpayment by a preponderance of the evidence falls on the

Agency. S . Med. Servs., Inc. v. Ag. for Health Care Admin. , 653

So. 2d 440, 441 (Fla. 3d DCA 1995); Southpointe Pharmacy v.

DepÓt of H RS , 596 So. 2d 106, 109 (Fla. 1st DCA 1992). The

burden of proof with respect to the imposition of fines or

sanctions is by clear and convincing evidence. Dep't of Banking

and Fin. v. Osborne Stern & Co. , 670 So. 2d 932, 935 (Fla.

1996).

71. Although the Agency bears the ultimate burden of

persua sion and thus must present a prima facie case, s ection

409.913(22) provides that "[t]he audit report, supported by

agency work papers, showing an overpayment to a provider

constitutes evidence of the overpayment." Further, section

409.913( 20 ), Florida Sta tutes, provides that "[i]n meeting its

burden of proof . . ., the agency may introduce the results of

[accepted and valid] statistical methods as evi dence of

overpayment. "

72. The Agency made out its prima facie case of

overpayment through the introductio n into evidence of the

Preliminary Audit and Final Audit Report, as well as the

supporting work papers . In addition, it is concluded that the

Agency's overpayment calculation was based upon an accepted and

valid statistical method of cluster sampling whic h was properly

applied to determine the amount of overpayment s .

73. Respondent did not overcom e the Agency's prima facie

case and was otherwise ineffective in attempting to discredit

the statistical sampling method used by the Agency to determine

the tota l amount of overpayment s .

74. Further, the Agency demonstrated, by a preponderance

of the evidence , that documentation provided by Respondent to

the Agency was insufficient to support the services for which he

billed Medicaid. A preponderance of evidence also demonstrated

that Respondent was not in compliance with the Medicaid

documentation and record retention policies for most of his

claims submitted during the audit period, that many services

were rendered by untrained or unqualified individuals , and t hat ,

as a result, over 90 percent of amounts claimed by Respondent

during the audit period resulted in overpayments.

75. In accordance with the Findings of Fact and

Conclusions of Law, above, it is found that t he Agency

established, by a preponderance of evidence, that Respondent

received payment for multiple Medicaid claims that, in whole or

in part, did not comply with applicable law and rules for

Medicaid reimbursement purposes and, that, as a result,

Respondent w as overpaid at least $563,073.76 , which amount the

Agency is entitled to recover from Respondent .

76. Overpayments owed to the Agency bear interest at the

rate of 10 percent per annum from the date of determination of

the overpayment. § 409.913(2 5 )( c) .

77. In addition to recovery of overpay ments set forth

above , section 409.913(16) provides that Ðthe agency shall

impose any of the following sanctions or disincentives on a

provider or a person for any of the acts described in subsection

(15) . . . [including] i mposition of a fine of up to $5, 000 for

each violation ."

78. The acts described in subsection (15) include , inter

alia :

(b) The provider has failed to make

available or has refused access to Medicaid -

related records to an auditor , investigator ,

or other authorized employee or agent of the

agency, the Attorney General, a state

attorney, or the Federal Government.

(c) The provider has not furnished or has

failed to make available such Medicaid -

related records as the agency has found

necessary to determine whether Medicaid

payments are or were due and the amounts

thereof;

(d) The provider has failed to maintain

medical records made at the time of service ,

or prior to service if prior authorization

is required, demonstrating the necessity and

appropriateness of the goods or services

re ndered;

(e) The provider is not in compliance with

provisions of Medicaid provider publications

that have been adopted by reference as rules

in the Florida Administrative Code; . . .

§ 409.913(15), Fla. Stat.

79. The first page of the Final Audit Rep ort states:

Be advised of the following:

(1) In accordance with Sections

409.913(15), (16), and (17), Florida

Statutes (F.S.), and Rule 59G - 9.070,

Florida Administrative Code (F.A.C.),

the Agency shall apply sanctions for

violations of federal and state l aws,

including Medicaid policy. This letter

shall serve as notice of the following

sanction(s):

A fine of $1,000 for violations of

Rule Section 59G - 9.070(7)(c),

F.A.C.

A fine of $1,500 for violation(s)

of Rule Section 59G - 9.070(7)(e),

F.A.C.

(2) Pursu ant to Section 409 .913(23)(a),

F.S., the Age ncy is entitled to recover

all investigat ive, legal, and expert

witness costs.

80. Florida Administrative Code Rule 59G - 9.070,

promulgated in 2005, provide d notice as how the Agency would

normally exercise its sanction authority.

81. Rule 59G - 9.070(7)(c) and (e) recited in the Final

Audit Report correspond to subsection s 409.913(15)(c) and (e),

Florida Statutes. The rules state:

(7) SANCTIONS: Except when the Secretary

of the Agency determines not to impos e a

sanction . . . sanctions shall be imposed

for the following:

* * *

(c) Failure to make available or furnish

all Medicaid - related records, to be used by

the Agency in determining whether Medicaid

payments are or were due, and what the

appropriate cor responding Medicaid payment

amount should be within the timeframe

requested by the Agency or other mutually

agreed upon timeframe. [Section

409.913(15)(c), F.S.];

* * *

(e) Failure to comply with the provisions

of the Medicaid provider publications tha t

have been adopted by reference as rules,

Medicaid laws, the requirements and

provisions in the provider's Medicaid

provider agreement, or the certification

found on claim forms or transmittal forms

for electronically submitted claims by the

provider of a uthorized representative.

[Section 409.913(15)(e), F.S.]

82. The fines recited in the Final Audit Report are

consistent with guidelines for sanctions in the version of rule

59G - 9.070(10) in effect at the time Respondent committed the

acts 2/ described in subsection s 409.913(15)(c) and (e), Florida

Statutes, and corresponding rules.

83. The Agency showed by clear and convincing evidence

that Respondent failed to furnish all Medicaid - related records

within the timeframe requested by the Agency as require d by

section 409.913(15)(c). Thus, a $1,000 fine pursuant to the

2008 version of 59G - 9.070(10) was warranted.

84. Moreover, the clear and convincing evidence showed

that Respondent was not in compliance with the Medicaid

documentation and record re tentio n policies for most of the

claims he submitted during the audit period, and that many of

the services for which Respondent made claims were rendered by

untrained or unqualified individuals. The version of the

guidelines rule 59 G - 9.070(10) in effect at the time of these

claims - based violations was the version amended in April 2006.

That version provides for first offenders a fine of $1,000 per

violation, no t to exceed $3,000 per agency action for a

"pattern" of acts.

85. A "pattern" is defined in rule 5 9G - 9.070(2)(s)2.a., as

when the number of individual claims found to be in violation is

greater than 6.25 percent of the total claims reviewed. The

evidence submitted by the Agency in this case clearly and

convincingly showed that substantially more than 6.25 percent of

the claims reviewed did not comply with the Medicaid laws,

rules, and provider handbooks. Therefore, under the facts and

the law, imposition of the $1,500 fine sought by the Agency for

violation of section 409.913(7)(e), Florida Statutes, and

corresponding rule was appropriate .

86. As to costs, s ection 409.913(23)(a), Florida Statutes,

provides:

In an audit or investigation of a violation

committed by a provider which is conducted

pursuant to this section, the agency is

entitled to recover all investigative,

legal, and expert witness costs if the

agency's findings were not contested by the

provider or, if contested, the agency

ultimately prevailed.

87. In support of the Agency's claim for costs, the Agency

attached to its Proposed Recomme nded Order "Appendix A "

detailing investigativ e costs for Investigator Koelle and expert

witness costs for Dr. Huffer.

88. The Agency , however, presented no evidence of costs at

the final hearing and a procedure for a recommendation on the

award of costs was not discussed. Moreover, Respondent has not

been given the opportunity to contest the amount of costs

requested in the Agency's post - hearing submittal.

89. While the Agency may ultimately prevail by the entry

of a final order consistent with this Rec ommended Order, a

determination of costs at this stage of the proceedings , under

the circumstances, is premature.

90. If the Agency ultima tely prevail s , it may recover its

costs pursuant to section 490.913(23)(a) .

91. Sh ould a disputed issue of mater ial fact arise as to

the appropriate amount of those costs , the Agency may refer the

matter to DOAH for further recommendation limited to the issue

of allowable c osts pursuant to subsection 409.913(23)(a).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Petitioner, Agency for Health Care

Administration, enter a final order requiring Respondent, Ideal

Pugh, Sr., d/b/a Services on Time, LLC:

(1) To repay the sum of $563,073.76 , for overpayments on

claims that did not comply with the requirements of Medicaid

laws, rules, and provider handbooks;

(2) To pay interest on the sum of $563,073.76 at the rate

of ten percent per annum from the date of the overpayment

determination;

(3) To pay a fine of $1,000 fo r failure to furnish all

Medicaid - related records within the requested timeframe;

(3) To pay a fine of $1,500 for violations of the

requirements of Medicaid laws, rules, and provider handbooks;

and

(4) To pay allowable costs pursuant to subsection

409.9 13(23)(a), Florida Statutes. If a dispute d issue of

material fact arise s regarding the appropriate amount of those

costs, the matter may be referred back to DOAH for a further

recommendation regarding costs.

DONE AND ENTERED this 31st day of May , 2012 , in

Tallahassee, Leon County, Florida.

S

JAMES H. PETERSON, III

Administrative Law Judge

Division of Administrative H earings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Fili ng (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 31st day of May , 2012 .

ENDNOTE S

1/ Unless otherwise noted, all references to the Florida

Statutes are to the 2007 version in effect at the end o f the

audit period at issue in this case.

2/ Rule 59G - 9.70 was amended effective October 29, 2008, to

increase the amounts of fines in the guidelines. Since many of

Respondent's claims at issue were in 2007 , before that 2008

effective date, the rule ver sion amended April 26, 2006, is

applicable to claims - based violations under section

409.913(15)(e) . However, the 2008 rule amendment is applicable

to determine fines for Respondent's failure in 2010 to provide

all Medicaid - related records within the reque sted timeframe in

violation of section 409.913(15)(c) .

COPIES FURNISHED:

Dwight O. Slater, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

[e-mail]

Sheldon Jerome Vann, Esquire

L aw Offices of Sheldon J. Vann & Associates

841 Prudential Drive

Jacksonville, Florida 32207

[e-mail]

Mamie L. Davis, Esquire, CPA

Mamie L. Davis, P.A.

841 Prudential Drive, Suite 1200

Jacksonville, Florida 32239

Richard J. Shoop, Agency Cle rk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

Stuart Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

Elizabeth Dudek, Secretar y

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

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 e xceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.