13-001849RP G. B., Z. L., Through His Guardian K. L., J. H., And M. R. vs. Agency For Persons With Disabilities Status: Closed DOAH Final Order on Monday, September 9, 2013.

Summary: The rules proposed by APD are not an invalid exercise of delegated legislative authority.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

G. B., Z. L., THROUGH HIS

GUARDIAN K. L., J. H., AND

M. R. ,

Petitioners ,

vs. Case No. 13 - 1849RP

AGENCY FOR PERSONS WITH

DISABILITIES ,

Respondent .

/

FINAL ORDER

Pursuant to notice to all parties, the final hearing was

conducted in this case on July 9 - 11, 2013 , in Tallahassee,

Florida, before Administrative Law Judge R. Bruce McKibben of the

Division of Administrative Hearings.

APPEARANCES

For Petitione r s : Gigi Rollini, Esquire

Karen D. Walker, Esquire

Matthew H. Mears, Esquire

Holland & Knight, LLP

Post Office Drawer 810

Tallahassee, Florida 32302

For Respondent: Harry O. Thomas, Esquire

Donna E. Blanton , Esquire

David Yon, Esquire

Radey, Thomas, Yon & Clark, P.A.

301 S outh Bronough Street, Suite 200

Tallahassee, Florida 32301

Karl David Acuff, Esquire

1615 Village Square B oulevard , Suite 2

Tallahassee, Florida 32309 - 2770

Richard Ditscher, General Counsel

Agency for Persons with Disabilities

4030 Esplanade Way, Suite 380

Tallahassee, Florida 32399 - 0950

STATEMENT OF THE IS SUE

The issue in this case is whether proposed rules 65G - 4.0210

through 65G - 4.027 (the ÐProposed RulesÑ) are an invalid exercise

of delegated legislative authority as defined in section

120.52(8), Florida Statutes. (Unless specifically stated

otherwise he rein, all references to Florida Statutes shall be to

the 2012 codification.) Specifically, Petitioners assert that

the Proposed Rules (1) enlarge, modify, and contravene the

specific provisions of the law they purport to implement; (2)

contain vague and i nadequate standards that vest unbridled

discretion in the Agency for Persons with Disabilities (the

ÐAgencyÑ or ÐAPDÑ); (3) are arbitrary and capricious; and (4)

exceed the grant of rulemaking authority in section 393.0662(9),

Florida Statutes. Petitioner s further argue that, (5) APD failed

to follow applicable rulemaking procedures required by sections

120.54(3) and 120.541, Florida Statutes, because APD failed to

provide a Statement of Estimated Regulatory Costs (ÐSERCÑ) as a

part of the rulemaking proce ss.

PRELIMINARY STATEMENT

I n 2007, the Florida Legislature amended section 393.0661,

Florida Statutes, and instructed APD to develop and implement a

comprehensive redesign of the home and community - based delivery

system for persons with developmental disa bilities. APD

implemented a four - tiered waiver system. Rules implementing the

four - tiered system were struck by the court in Moreland ex rel.

Moreland v. Agency for Persons with Disabilities , 19 So. 3d 1009

(Fla. 1 st DCA 2009). APD restructured the tier assessment

process resulting in the system under which Petitioners received

services under the federally a pproved Home and Community - Based

Services Medicaid Waiver Program for persons with developmental

disabilities (the ÐDD waiver programÑ).

In 2010, t he Florida Legislature directed APD to develop and

implement another comprehensive redesign of the DD waiver service

delivery system using individual budgets (called ÐiBudgetsÑ).

The Proposed Rules were developed to implement the new iBudget

system. Peti tioners challenge the Proposed Rules as being an

invalid exercise of delegated legislative authority.

At the final hearing in this matter, Petitioners called six

witnesses: Dr. Jim McClave, accepted as an expert in the fields

of statistics and econometric s; Susan Chen, data analyst;

Hillary Brazzell, management analyst; Catherine Bedell, deputy

general counsel for APD; K.L., parent of Petitioner, Z.L.; and

Denise Arnold, deputy director of programs for APD. PetitionersÓ

E xhibits 1 - 14 were admitted into ev idence. Respondent called two

witnesses: Denise Arnold and Dr. Xufeng Niu, accepted as an

expert in statistics. RespondentÓs E xhibits 1 - 3 were admitted

into evidence. The parties also submitted J oint E xhibits 1 - 25,

all of which were admitted into evide nce.

FINDINGS OF FACT

1. Each of the Petitioners is a recipient of services under

the DD Waiver Program. For example, Petitioner Z.L. is a 26 -

year - old male who was born with Cri - du - Chat syndrome, a fifth

chromosome abnormality. As a result, Z.L. is low - functioning,

with a non - measurable IQ level (but likely well below the level

designating mental retardation). Z.L. speaks only a few words

and communicates with some sign language. He is ambulatory, but

he is totally dependent on others for all activiti es of daily

living. Z.L. also has some extreme behavioral issues, including

self - abuse and physical abuse of others. He lives in a private

residence with two other developmentally disabled men. The home

where they reside belongs to the family of K.L. (Z .L.Ós father

and legal guardian). K.L. rents the home for Z.L. and the other

two men at less than its actual market value. (The home is a

1 , 500 square foot home located on 15 acres. K.L. pays about $600

per month rent; the home could rent for two or thr ee times that

much.)

2. Z.L. receives the following services under the DD Waiver

Program: 24 - hour assistance with activities of daily living;

behavioral analysis through a certified behavior analyst; and

personal care assistance. The cost of his care pl an for the

previous year was $61,824.22 (i.e., that was the amount paid by

the DD Waiver Program).

3. Z.L.Ós father and mother are unable to care for Z.L. in

their home. The father is CEO of a bank and is involved in other

businesses as well. The mothe r recently suffered closed head

injuries as a result of a bicycle accident. She must be cautious

about any further head injuries and fears that Z.L.Ós aggression

could result in physical harm to her.

4. As a result of the implementation of the iBudget

process, APD is proposing to reduce Z.L.Ós care plan by the sum

of $8,175.98. Under the iBudget process, Z.L. has the right to

challenge the reduction of his care plan amount in a Fair Hearing

before a Department of Children and Families Hearing Officer,

which he has done. K.L. has expended about $6,000 in legal fees

to contest the reduction of Z.L.Ós care plan amount under the new

iBudget system. He expects that if the matter goes to appeal, he

will expend as much as $70,000 more in legal fees. K.L. ha s also

hired a lawyer for one of Z.L.Ós roommates. 1/

5. APD is the state agency responsible for distributing

funds from the DD Waiver Program. Prior to implementation of the

iBudget process, APD used a four - tier system to provide the level

of funds eac h client would receive. 2/ The tier system was more

rigid in its application than the iBudget system. Under the tier

system, there were strict funding policies in place. For

example, if dollars were allocated toward a specific service,

e.g., transportati on, those dollars could not be used for any

other service, such as companion care or personal care. As will

be discussed more fully below, the funds provided in the iBudget

process are more flexible regarding services they can purchase.

6. The DD Waiver funds administered by the Agency are the

funds of last resort. If a service received by a client can be

paid for by another agency or source of payment, those must be

utilized before the Agency can allocate funds for the service.

Development of the iBudge t System

7. The 2010 Florida Legislature mandated creation of an

iBudget process for distributing funds from the DD Waiver

Program. Section 393.0662(1) states in pertinent part:

The agency shall establish an individual

budget, referred to as an iBudget, for each

individual served by the home and community -

based services Medicaid waiver program. The

funds appropriated to the agency shall be

allocated through the iBudget system to

eligible, Medicaid - enrolled clients . . . .

(a) In developing each clientÓ s iBudget, the

agency shall use an allocation algorithm and

methodology. The algorithm shall use

variables that have been determined by the

agency to have a statistically validated

relationship to the clientÓs level of need

for services provided through t he home and

community - based services Medicaid waiver

program . . . .

(b) The allocation methodology shall provide

the algorithm that determines the amount of

funds allocated to a clientÓs iBudget. The

agency may approve an increase in the amount

of fund s allocated, as determined by the

algorithm, based on the client having one or

more of the following needs that cannot be

accommodated within the funding as determined

by the algorithm and having no other

resources, supports, or services available to

meet the need:

1. An extraordinary need that would

place the health and safety of the client

. . . in immediate, serious jeopardy . . . .

2. A significant need for one - time or

temporary support or services . . . .

3. A significant increase in the ne ed

for services after the beginning of the

service plan year . . . .

The agency shall reserve portions of the

appropriation for the home and community -

based services Medicaid waiver program for

adjustments required pursuant to this

paragraph . . . .

(c) A clientÓs iBudget shall be the total of

the amount determined by the algorithm and

any additional funding provided pursuant to

paragraph (b). A clientÓs annual

expenditures for home and community - based

services Medicaid waiver services may not

exceed th e limits of his or her iBudget. The

total of all clientsÓ projected annual

iBudget expenditures may not exceed the

agency appropriation for waiver services.

8. In response to the statutory mandate, the Agency sought

input from Ðstakeholders,Ñ i.e., ind ividuals and families

receiving services, family care counsel groups, various provider

groups, and organizations such as the Association of Retarded

Citizens and the like. APD also looked at how other states had

addressed the issue of fund distribution to developmentally

disabled individuals. The Agency hired consultants to help make

the process as equitable and fair as possible within the limits

of its finite budget.

9. One of the AgencyÓs hired consultants was Dr. Xufeng

Niu, chair of the statistics de partment at Florida State

University. Dr. Niu is a recognized expert in the field of

statistics and had used his expertise in many areas, including

transportation issues such as railroad crossing safety and

environmental issues for the Department of Envir onmental

Protection. Dr. Niu has been an academician and consultant since

obtaining his Ph.D. in statistics from the University of Chicago

in 1991. Dr. NiuÓs testimony was extremely credible.

10. APD hired Dr. Niu to develop an algorithm which would

be the key feature to any individual budget calculation. APDÓs

goal in developing the algorithm was to create a formula fitting

data patterns of past expenditures, then to mathematically

replicate decisions that were made to establish a clientÓs prior

budget amount.

11. Dr. Niu, by way of statistical modeling techniques,

developed certain factors which could be utilized by the Agency

in determining which clients would receive funds for specific

services. Using a catalogue of predictors or variables derived

from information provided to him by the Agency, Dr. Niu built a

tool to predict what each clientÓs cost for needed services would

be. A Bell Curve was used to keep the application of the

variables more symmetrical. In order to effectuate this desire,

Dr. Niu utilized a form of ÐtransformationÑ referred to as the

Box - Cox Transformation Family. The Box - Cox Method involved

raising data to a different mathematical power as a means of

analyzing and applying the data.

12. D r. Jim McClave, who operates a stati stical consulting

firm, is an expert statistician and econometrician. His work

involves regular stints as an expert in legal proceedings such as

this rule challenge matter. His testimony was credible, but less

persuasive than that of Dr. Niu. 3/ Dr. McCl ave would have used a

log transformation method rather than the Box - Cox method relied

upon by Dr. Niu. However, while not discounting the log

transformation method, Dr. Niu competently testified that the

Box - Cox worked best in this particular case.

13. After the transformation process, it was necessary to

narrow down the number of variables to be used. Dr. Niu

ultimately decided to use nine specific variables, includ ing :

the clientÓs living setting; whether the client is an adult; the

clientÓs score o n the six elements set forth in the Questionnaire

for Situational Information (ÐQSIÑ) which was provided to all

potential recipients of services; the clientÓs score on the 11

elements in the functional summary section of the QSI; and the

clientÓs score on each of three specific elements in the QSI

related to transfers (ability to transfer or change position),

hygiene, and capacity for self - protection. Not all variables are

necessarily useful and having too many variables causes over -

fitting, i.e., trying t o fit every situation into a perfect

model, which simply is not possible. In fact, it is better to

have fewer variables as long as sufficient data can be captured.

A statistician must reach a balance on the number of variables in

order to find the best m odel for each project. Dr. NiuÓs

affirmation of the variables he used is credible.

14. Dr. Niu utilized the Generalized Information Criterion

(ÐGICÑ), a method of finding the best set of predictors when

creating an algorithm. GIC is a criterion that tri es to balance

the model by carefully adding more variables without

overpopulating the model with too many variables. GIC was used

by Dr. Niu in conjunction with the concept of R - squared. That

concept is a statistical measure of how well an algorithm fits

the data in order to test how well the model predicts. The

algorithm developed for use in the Proposed Rules has an R -

squared value of .6757, meaning that it accounts for about 68

percent of the variation in the population of APD clientsÓ DD

Waiver expen ditures.

15. By contrast to the GIC and R - squared approach, there is

in the field of statistics a tool referred to as Residual

Standard Error. This tool helps determine whether a model is

predicting within two standard deviations and thus has a measure

of certainty. The algorithm proposed by APD did not utilize the

Residual Standard Error tool, relying instead on the combination

of GIC and R - squared. Based upon Dr. NiuÓs testimony, APDÓs

reliance on those tools is reasonable.

16. Dr. Niu developed a number of models for possible use

in the iBudget process, settling at last on Model 7b. The model

was then applied to the pool of clients who would be affected by

the new iBudget system. The client pool contained a large number

of different situations an d scenarios, as each client and client

family is unique despite some similar developmental issues. As a

result of these differences, there were cases in which a

particular client -- because of his or her needs, or those of his

or her family -- did not fit the model. These cases were called

ÐoutliersÑ and had to be treated differently by the Agency. Of

the total group of some 26,000 clients, 9.37 percent , or about

2,400 clients, were deemed outliers. Dr. McClave criticized this

percentage of outliers, bu t Dr. Niu's substantiation of the

percentage is credible.

17. Dr. Niu utilized actual expenditures by APD for DD

Waiver Program clients during the 2007 - 2008 fiscal year as an

indicator of what APD had faced in the past. Those data were

recent enough i n time to be linked to current assessment data for

the clients and to be assigned scores from the QSI. APD also

found that the 2007 - 2008 data more accurately reflected service

needs compared to other recent years because the data pre - dated

the implementat ion of the more restrictive Tier system. Dr. Niu

did not use clients with less than one year of claims because

they may not project the clientÓs actual annual expenditures.

Dental services, environmental services, and durable medical

equipment purchases were excluded because they are generally a

once - a - year purchase. Four of Florida's 67 counties were

excluded from the calculations because they had a much higher

cost of living than the rest of the state. Mismatches and

clerical errors in clientsÓ record s were also taken into

consideration. Age was used as a predictor, but after trial and

error Dr. Niu decided upon a single division, i.e., persons under

21 years of age versus persons 21 or older. The rationale was

that people under 21 receive services f rom other sources, like

the public school system, for example. Persons over 21 begin to

require more services as they age. Dr. Niu considered more

factors than just the mathematical statistical accuracy. His

extensive work resulted in the best model out of many

possibilities.

18. Transportation needs and costs were considered during

the stakeholder meetings as a factor to be considered when

discussing possible variables. Dr. Niu attempted to use a

transportation index in his models, but that resulted in a

negative coefficient which is less valid statistically. Applying

the current yearÓs transportation costs did not work. It was

also impossible to apply a portion of a yearÓs transportation

costs as an indicator of the entire yearÓs transportation cos ts.

And, because transportation costs constitute only about 1.5

percent of overall expenses, it was reasonably determined that

such costs could be handled by way of an extra needs review.

19. Upon completion of the iBudget system, it was

implemented and introduced to all eligible DD Waiver clients.

The program was introduced in Ðwaves,Ñ i.e., not all DD waiver

clients being served by APD received their iBudgets at one time.

Rather, the new system was phased in over time.

How the iBudget System Is Empl oyed

20. APD sends an information packet to each client, i.e.,

each person seeking services to be paid for under the DD Waiver

Program. This information packet, called a Welcome Guide, is

meant to help the client understand the new system. The Welcome

G uide provides a large amount of information, plus education and

training possibilities as well. It is understandably difficult

to absorb all of the information contained in the packet, but APD

opted for completeness rather than over - simplifying the

inform ation. Z.L.Ós father, who is a licensed attorney and CEO

of a bank, expressed difficulty understanding the information

contained in the Welcome Guide. However, he testified that he

has "some kind of memory block" about DD Waiver services. It is

understa ndable that this would be a difficult thing for a parent

to review .

21. The first step of the process for requesting funds for

services under the iBudget system is to have the client complete

a QSI form.

22. After the QSI assessment is done, the second s tep of

the process is for the Agency to run its algorithm using the

previously discussed variables such as age, living arrangement,

behavioral status, functional status, and the responses to

various personal questions concerning the client. Running the

al gorithm then creates a dollar value for the services deemed

appropriate for the client. The cost of the services is then

related back to the appropriation of funds received by APD from

the Legislature for providing all needed services. Each clientÓs

sum for needed services is then given a pro rata reduction (or,

theoretically, an increase) based on the total funds available to

APD.

23. There are then adjustments which can be made to the

algorithm amount. For example, if the algorithm amount for a

client was greater than the amount set forth in the clientÓs

existing care plan, that clientÓs Ðalgorithm amountÑ was reduced

to the existing care plan amount, at least temporarily pending

further possible actions under the iBudget process.

24. There are spec ific services identified in the Proposed

Rule (at 65G - 4.0212(b)(2)), which are indicative of certain

health and safety needs. If a client needs any of those services

and the cost of those services is greater than the algorithm

amount, the greater sum will be substituted.

25. If the algorithm amount was less than the clientÓs care

plan amount but within $1 , 000 of the existing care plan amount,

then the care plan amount was used as the Ðalgorithm amount.Ñ

This $1 , 000 buffer will necessarily mean that a c lient whose care

plan amount is $999 more than the algorithm amount may be treated

differently from a person whose care plan amount is $1 , 001 more

than the algorithm amount. Still, the decision to employ a

$1 , 000 threshold is generally reasonable as APD a ttempts to

maintain a sufficient care plan allocation despite the change in

systems. APD reasonably believes it would be more time - consuming

and costly to deal with changes of $1,000 or less than to simply

accept the prior care plan amount (which was base d upon the

client's needs).

26. If the algorithm amount is less than the amount in the

clientÓs existing care plan, then APD determines whether the

reduction is greater than 50 percent of the existing care plan

amount. If so, the algorithm amount is rais ed to an amount equal

to at least 50 percent of the existing care plan amount.

27. After application of the above - reference factors and --

if warranted -- adjustments are made, the client is provided an

amount which is referred to as the ÐTarget Allocatio n.Ñ

28. The fourth step in the process is for APD to provide

the Target Allocation amount to the client and WSC.

29. Step five of the process is a review to determine

whether, notwithstanding the algorithm amount , a client has extra

needs that warrant a n increase in their ultimate allocation of

funds for services. This is called the Extraordinary Needs

Review. The first phase of this step is an allocation

implementation meeting (AIM), wherein the client is advised about

the changes -- if any -- to his/h er care plan. The client and his

or her waiver support coordinator (WSC) are given information

about how the reductions may be handled, e.g., that under the

iBudget it might be possible to utilize funds to pay for one

service even if they are allocated fo r another service. Or,

there may be ways under the iBudget system to merge two or more

services into one. One example of that is that in - home personal

service caregivers may be allowed to perform other tasks, e.g.,

they may be able to provide services ou tside the home setting.

After almost a full year of implementing the iBudget system, this

portability of funds from one service to another has proven to be

one of the most appreciated functions of the new process by

waiver support coordinators.

30. If th e client and WSC agree that the service needs can

be met by the Target Allocation, that amount becomes the clientÓs

iBudget Allocation amount.

31. If the client and WSC do not think the Target

Allocation amount is sufficient to meet the service needs, the

AIM form is completed and sent to APD for further review. If the

health and safety of the client, clientÓs caregiver, or the

public is placed in immediate jeopardy without an increase in the

allocation, then an increase will be approved.

32. APD then gi ves the client notice as to its decision and

the final iBudget Allocation is provided. This constitutes step

six of the process.

33. Subsequent to setting and providing notice of the final

iBudget Allocation, a client may seek supplemental funding for

s ignificant one - time or temporary needs. If a significant

increase in need for services arises after the beginning of a

plan year, a process exists for further consideration of the

clientÓs needs.

34. For new clients, i.e., those who do not have an

exis ting care plan when the iBudget is applied to them, the

process is slightly different. First there is an eligibility

determination (which has already occurred for existing clients).

The client then responds to the QSI. The algorithm is calculated

to for m the target allocation for the new client. An extra needs

review is then performed to make sure that all health and safety

needs are being met.

35. It is possible that a new client with exactly the same

condition, circumstances, and needs as an existin g client (albeit

an extremely unlikely occurrence), could receive a larger amount

under the iBudget than the existing client. If both clients were

assigned exactly the same score under the algorithm, but the

existing clientÓs allocation amount were larger than the care

plan amount under the Tier system, then the existing clientÓs

allocation would be reduced. There would not be a concomitant

reduction of the new clientÓs allocation. Although Petitioners

pointed out this alleged flaw, no remedy was suggest ed that would

make it possible for APD to make the treatment of two similarly

situated clients more equal. The iBudget system is not flawless,

but it is an admirable effort toward equality of application to

all Ðclients.Ñ

36. The Agency did not set asid e or reserve any portion of

their allocation from the Legislature as a Reserve Fund, per se.

Rather, APD uses the reserve fund concept as a management tool to

be used when making adjustments to an individual clientÓs final

allocation of funds. Thus, duri ng the AIM process or the

Supplemental Cost Funding phase, APD might raise a clientÓs

allocation based on funds it has ÐreservedÑ under the algorithm

calculation.

Statement of Estimated Regulatory Costs

37. APD published the initial proposed rule on Augus t 3,

2012. The publication included a statement that the Agency had

determined there would not be an adverse impact on small business

nor would it increase regulatory costs in excess of $200,000

within one year. PetitionersÓ contention that clients may h ave

difficulty understanding the welcome packet information and may

challenge iBudget Allocations by way of fair hearings does not

establish the necessity for SERC.

CONCLUSIONS OF LAW

38. The Division of Administrative Hearings jurisdiction

over the parti es and the subject matter of this proceeding

pursuant to s ection 120.56, Florida Statutes.

39. Section 120.56(1)(a), Florida Statutes, provides that,

ÐAny person substantially affected by a rule or a proposed rule

may seek an administrative determination of the invalidity of the

rule on the ground that the rule is an invalid exercise of

delegated legislative authority.Ñ Section 120.56(2)(a), Florida

Statutes, provides that in challenges to proposed rules,

Ð[P]etitioner has the burden of going forward. Th e agency then

has the burden to prove by a preponderance of the evidence that

the proposed rule is not an invalid exercise of delegated

legislative authority as to the objections raised.Ñ See SW Fla.

Water Mgmt. Dist. v. Charlotte Co. , 774 So. 2d 903, 908 (Fla. 2d

DCA 2001) ( quoting St. John's River Water Mgmt. Dist. v.

Consolidated - Tomoka Land Co. , 717 So. 2d 72, 77 (Fla. 1st DCA

1998) ) .

40. I n order to prove they are Ðperson[s] substantially

affectedÑ in this case, G.B., Z.L., J.H., and M.R. must show t hat

they will suffer injury in fact of sufficient immediacy to

entitle them to a hearing, and that their substantial injury is

of a type or nature which the requested hearing is designed to

protect. Agrico Chem . Co. v. DepÓt of Env t l . Reg . , 406 So. 2d

478 , 482 (Fla. 2d DCA 1981). The Agrico court set out a test for

determining whether a petitioner had standing to challenge a

governmental action. Each of the Petitioners satisfies the test

requirements. The Ðinjury in factÑ aspect of the test deals with

t he degree of the injury, and the Ðzone of interestÑ aspect deals

with the nature of the injury. Id. See also Lanoue v. Fla.

DepÓt of Law Enf . , 751 So. 2d 94, 96 - 97 (Fla. 1 st DCA 1999).

41. Petitioners are current recipients of Medicaid services

under th e DD Waiver. Each Petitioner has received notice that

their allocation of funds for services under their prior care

plan is being reduced under the new iBudget system. The

Petitioners are affected by the Proposed Rules and have standing

to initiate and p ursue the challenge to those rules.

42. Section 120.56(1)(e), Florida Statutes, provides that

a rule challenge proceeding is de novo in nature and the standard

of proof is a preponderance of the evidence. The Administrative

Law Judge should consider and base the decision upon all the

available evidence, regardless of whether the evidence was placed

before the agency during its rulemaking proceedings. DepÓt of

Health v. Merritt , 919 So. 2d 561, 564 (Fla. 1 st DCA 2006)

(concluding that the Legislature has overruled the courtÓs

holding in Board of Medicine v. Fl orida Academy of Cosmetic

Surgery , 808 So. 2d 943 (Fla. 1 st DCA 2002), that an

Administrative Law JudgeÓs role in a proposed rule challenge is

limited to a review of the record and a determination as to

whether the agency action was supported by legally sufficient

evidence).

4 3 . Section 120.52(8), Florida Statutes, states as follows:

ÐInvalid exercise of delegated legislative

authorityÑ means action that goes beyond the

powers, functions, and duties delegated by

the Legislature. A proposed or existing rule

is an invalid exercise of delegated

legislative authority if any one of the

following applies:

(a) The agency has materially failed to

follow the applicable rulemaking procedures

or requirement s set forth in this chapter;

(b) The agency has exceeded its grant

of rulemaking authority, citation to which is

required by s. 120.54 (3)(a)1.;

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required by

s. 120.54 (3)(a)1.;

(d) T he rule is vague, fails to

establish adequate standards for agency

decisions, or vests unbridled discretion in

the agency;

(e) The rule is arbitrary or

capricious. A rule is arbitra ry if it is not

supported by logic or the necessary facts; a

rule is capricious if it is adopted without

thought or reason or is irrational; or

(f) The rule imposes regulatory costs

on the regulated person, county, or city

which could be reduced by the a doption of

less costly alternatives that substantially

accomplish the statutory objectives.

A grant of rulemaking authority is

necessary but not sufficient to allow an

agency to adopt a rule; a specific law to be

implemented is also required. An agency m ay

adopt only rules that implement or interpret

the specific powers and duties granted by the

enabling statute. No agency shall have

authority to adopt a rule only because it is

reasonably related to the purpose of the

enabling legislation and is not arbi trary and

capricious or is within the agencyÓs class of

powers and duties, nor shall an agency have

the authority to implement statutory

provisions setting forth general legislative

intent or policy. Statutory language

granting rulemaking authority or gen erally

describing the powers and functions of an

agency shall be construed to extend no

further than implementing or interpreting the

specific powers and duties conferred by the

enabling statute.

4 4 . In this case, Petitioners challenge the proposed rule

as being an invalid exercise of delegated legislative authority

in that it violates subsections (a), (b), (c), (d), and (e) of

section 120.52(8). Each of these potential reasons for

invalidating the rule will be discussed below.

Section 120.52(8)(a)

4 5 . As stated previously, APD did not need to include a

SERC because it had determined that there was no economic impact

created by the Proposed Rules. The Agency did not fail to follow

the applicable rulemaking procedures or requirements.

Section 120.52(8)( b)

4 6 . Section 393.0662(9), Florida Statutes, authorizes APD

to adopt rules which specify: (1) the allocation algorithm and

methodology described in the statute; (2) the criteria and

processes for clients to access reserved funds for extraordinary

needs, temporarily or permanently changed needs, and one - time

needs; (3) and the processes and requirements for selection and

review of services, development of support and cost plans, and

management of the iBudget system.

4 7 . The Proposed Rules establish an allocation algorithm

and methodology. There are criteria established in the Proposed

Rules whereby clients can access additional funds for

extraordinary needs, e.g., one - time or temporary expenses.

Section 120.52(8)(c)

4 8 . Petitioners argue that the sys tem created by the

Proposed Rules enlarges, modifies, or contravenes the iBudget

statute because the algorithm allocation is not the final iBudget

amount for each client. The post - algorithm steps of the process

are, according to Petitioners, in violation of the statute

because those steps are outside the algorithm. However, APDÓs

credible explanation of its process refutes PetitionersÓ

argument. The step - by - step process created by APD ultimately

results in an iBudget for each client which Ðensures the

eq uitable allocation of available funds to each client based on

the clientÓs level of need, as determined by the variables in the

allocation algorithm.Ñ It is splitting hairs to say that APD

cannot adjust the initial algorithm amount using pertinent

informa tion concerning each clientÓs unique situation and

circumstances. The statute specifically allows for adjustments

to the algorithm amount; the Proposed Rules reasonably attempt to

effectuate that end.

49 . The ÐmethodologyÑ mandated by the statute include s Ðthe

algorithm that determines the amount of funds allocated to a

clientÓs iBudget.Ñ £ 393.0662(1)(b) , Fla. Stat . That the

clientÓs iBudget allocation is further adjusted based upon

additional factors in order to make all allocations as equitable

as po ssible does not invalidate the algorithm; that element of

the methodology remains appropriate.

5 0 . The Proposed Rules, in whole, assure that Ðthe total of

all clientsÓ projected annual iBudget expenditures [do not]

exceed the AgencyÓs appropriation for wa iver services. "

§ 393.06 61(1)(c), Fla. Stat.

Section 120.52(8)(d)

5 1 . Petitioners argue that the Proposed Rules contain vague

and inadequate standards that vest unbridled discretion in the

Department.

5 2 . Though not easy rule s to read, there is no amb iguity or

vagueness in the Proposed Rules. The consideration of additional

information for each client is clearly enunciated in the Proposed

Rule. Its purpose is clearly defined. APD could not set forth

in the rules every single potential scenario that a client might

be faced with as they ask for services. Rather, the Agency

created a function within the rules to help it deal with all

possible situations.

5 3 . The test for vagueness of a rule or statute is Ðwhether

men of common understanding and intel ligence must guess at [the

provisionÓs] meaningÑ and differ as to its application.Ñ DepÓt

of Health & Rehab. Servs. v. Health Care and Ret . Corp. of Amer. ,

593 So. 2d 539, 541 (Fla. 1 st DCA 1992) quoting State v. Cumming ,

365 So. 2d 153, 156 (Fla. 1978) ) . See also Witmer v. DepÓt of

Bus. & Prof 'l . Reg. , 662 So. 2d 1299, 1302 (Fla. 4 th DCA 1995).

5 4 . In this case, people of common understanding should be

able to see that the Agency may increase the algorithm amount if

a client has additional needs.

Secti on 120.52(8)(e)

5 5 . Petitioners say that the Proposed Rules are arbitrary

and capricious because they are not supported by logic or the

necessary facts, were adopted without adequate thought or reason,

and are irrational.

5 6 . Case law provides that an ÐarbitraryÑ decision is one

not supported by facts or logic, or despotic, and a ÐcapriciousÑ

decision is one taken irrationally, or without thought or reason.

Bd. o f Clin i cal Lab. Pers . v. Fla. Ass 'n of Blood Banks , 721 So.

2d 317, 318 (Fla. 1 st DCA 1998) ; Bd. o f Trs . of the Int . Imp .

Trust Fund v. Levy , 656 So. 2d 1359, 1362 (Fla. 1 st DCA 1995).

5 7 . It is clear Petitioners disagree with how the algorithm

was created and believe that other statistical analytical tools

could have been used to change the algorithm. Nonetheless, APD's

method of dealing with this complex issue is reasonable. The

Proposed Rules are neither arbitrary nor capricious as

promulgated.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED:

Proposed Rules 65G - 4.0210 through 65G - 4.027 are not invalid

exercises of delegated legislative authority.

DONE AND ORDERED this 9th day of September , 2013 , in

Tallahassee, Leon County, Florida.

S

R. BRUCE MCKIBBEN

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 9t h day of September , 2013 .

ENDNOTE S

1/ K.L. says that he cannot afford to provide necessary care for

his son or to pay for services which will be lost due to the

iBudget reduction to Z.L.Ós care plan. That testimony is

difficult to reconcile with K.L.Ó s description of his business

interests. This is not to say K.L.Ós son is not entitled to

government - funded assistance for his needs, but begs the question

of whether these were the funds of last resort.

2 / The tier system has expired and is no longer available as a

means of allocating funds under the DD Waiver Program. If the

Proposed Rules are invalidated, the Agency will not be able to

automatically return to the tier system.

3/ Dr. McClave stated during his testimony that he wanted to Ðrun

model sÑ in order to test or replicate Dr. NiuÓs technical

findings, but was unable to do so because he did not receive

sufficient data from APD. Thus, Dr. McClaveÓs understanding of

the algorithm is somewhat limited.

COPIES FURNISHED:

Gigi Rollini, Esquir e

Karen D. Walker, Esquire

Matthew H. Mears, Esquire

Holland and Knight, LLP

Post Office Drawer 810

Tallahassee, Florida 32302

Karl David Acuff, Esquire

Suite 2

1615 Village Square Boulevard

Tallahassee, Florida 32309 - 2770

Richard Ditschler, Gener al Counsel

Agency for Persons with Disabilities

Suite 380

4030 Esplanade Way

Tallahassee, Florida 32399 - 0950

(e S erved)

Harry O. Thomas, Esquire

Donna Blanton, Esquire

David Yon, Esquire

Brittany Adams Long, Esquire

Radey, Thomas, Yon and Clark, P.A.

Suit e 200

301 South Bronough Street

Tallahassee, Florida 32301

Barbara Palmer, Executive Director

Agency for Persons with Disabilities

Suite 380

4030 Esplanade Way

Tallahassee, Florida 32399 - 0950

(e S erved)

Amanda Soule, Acting Agency Clerk

Agency for Per sons with Disabilities

Suite 380

4030 Esplanade Way

Tallahassee, Florida 32399 - 0950

(e S erved)

Liz Cloud, Program Administrator

Administrative Code

Department of State

R. A. Gray Building, Suite 101

Tallahassee, Florida 32399

(eServed)

Ken Plante, Coord inator

Joint Administrative Procedures Committee

Room 680, Pepper Building

111 West Madison Street

Tallahassee, Florida 32399 - 1400

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicia l 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 administrative appeal with the agency clerk of the

Divisio n of Administrative Hearings within 30 days of rendition

of the order to be reviewed, and a copy of the notice,

accompanied by any filing fees prescribed by law, with the clerk

of the District Court of Appeal in the appellate district where

the agency main tains its headquarters or where a party resides or

as otherwise provided by law.