14-003218MPI Agency For Health Care Administration vs. Jrm Pharmacy, Inc., D/B/A Super Drugs Pharmacy Status: Closed Recommended Order on Tuesday, January 13, 2015.

Summary: Petitioner established that Respondent's billings to Medicaid resulted in "overpayments."

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Petitioner,

vs. Case No. 14 - 3218MPI

JRM PHARMACY, INC., d/b/a SUPER

DRUGS PHARMACY,

Respondent.

_______________________________/

RECOMMEND ED ORDER

This case came before Administrative Law Judge Darren A.

Schwartz for final hearing on October 23 , 2014, in Tallahassee ,

Florida.

APPEARANCES

For Petitioner: Debora E. Fridie, Esquire

Agency for Health Care Administrat ion

Fort Knox Building III, Mail Station 3

2727 Mahan Drive

Tallahassee, Florida 32308

For Respondent: A nthony Vitale, Esquire

Christopher A. Par rella, Esquire

The Health Law Offices of Anthony C.

Vitale, P.A.

2333 Brickell Avenue , Suite A - 1

Miami, Florida 33129

STATEMENT OF THE ISSUE S

Whether Petitioner, Agency for Health Care Administration

(ÐAHCAÑ) , is entitled to recoup from Respondent , JRM Pharmacy,

Inc., d/b/a Super Drugs Pharmacy (ÐJRMÑ) , $156,657.05 as Medicaid

overpayments; and whether investigative, legal, expert witness

costs, and fines should b e imposed against JRM .

PRELIMINARY STATEMENT

Following an audit of JRMÓs Medicaid billing for the period

of January 1, 2010 , through December 31, 2010, AHCA issued a

Final Audit Report (ÐFARÑ) on December 13, 2013. In the FAR,

AHCA determined that JRM re ceived $156,657.05 in Medicaid

overpayments. The FAR informed JRM that AHCA intended to recoup

the overpayment, impose a fine of $21,000, and seek recovery of

its costs as authorized by statute.

JRM timely requested an administrative hearing to contest

t he FAR, and on January 1 0 , 2014, this case was forwarded to the

Division of Administrative Hearings (ÐDOAHÑ) to assign an

Administrative Law Judge to conduct the final hearing. This

matter was initially assigne d DOAH Case No. 14 - 0197MPI. On

January 16, 2 014, the parties filed a Joint Motion to Remand and

Relinquish Jurisdictio n w ithout Prejudice based on their attempt s

to amicably resolve the matter. On January 16, 2014, the

undersigned entered an Order granting the partiesÓ motion,

closing the file, and relinquishing jurisdiction to AHCA .

On July 15, 2014, AHCA filed a Motion to Reopen Proceedings

based on the partiesÓ failure to reach a settlement. On July 15,

2014, the undersigned entered an Order Re - o pening File, and this

matter was reassigned DOAH Case No. 14 - 3218MPI.

On July 24, 2014, a Notice of Hearing was issued by the

undersigned setting this matter for a final hearing on

October 23, 2014. Before the final hearing, the parties

submitted a J oint Pre hearing S tipulation, in which they

stipulated to a number of facts. These agreed facts are

incorporated into the Findings of Fact below, to the extent

relevant.

T he final hearing commenced as scheduled on October 23 ,

2014, with both parties present. At the hearing, AHCA presented

the testimony o f Ramona Stewart and Kathy Herold. JRM offered

the deposition testimony of Blanca Leyva, in lieu of her in -

person testimony. 1/ AHCA Ós Exhibits 1 through 9 were received

into evidence based upon the stipulation of the parties.

At the hearing, the parties requested that proposed

recommended orders be filed within 14 days after the filing of

the final hearing transcript. The final hearing Transcript was

filed on November 10 , 2014. On November 14 , 2014, the parties

filed an agreed mo tion to extend the dead line for the parties to

file proposed recommended orders until December 1 9 , 2014. On

November 1 7 , 2014, the undersigned entered an Order granting the

motion. The parties timely filed proposed recommended orders,

which were given consideration in the prep aration of this

Recommended Order.

Unless otherwise indicated, citations to the Florida

Statutes refer to the 20 09 Florida Statutes. 2/

FINDING S OF FACT

1. AHCA is the designated state agency responsible for

administering the Medicaid Program in Florida.

2. At all times material to this case, JRM has been a

licensed pharmacy and authorized Medicaid provider pursuant to a

Medicaid Provider A greement with AHCA. The Medicaid Provider

Agreement is a voluntary contract between AHCA and JRM. JRMÓs

Medicaid provider number is 102451500.

3. As an enrolled Medicaid provider, JRM is subject to the

duly - enacted federal and state statutes, regulations, rules,

policy guidelines, Medicaid provider publications, and the

Medicaid Provider Agreement between it and AH CA .

4. At all times during the audit period, JRM was required

to follow the Florida Medicaid Prescribed Drugs, Services,

Coverage, Limitations, and Reimbursement Handbook (ÐPrescribed

Drugs Services HandbookÑ).

5 . This case involves a Medicaid audit b y AHCA of JRM as to

dates of service from January 1, 2010 , through December 31, 2010

(Ðaudit periodÑ).

6. AHCAÓs Bureau of Medicaid Program Integrity (ÐMPIÑ),

pursuant to its statutory authority, conducted an audit of JRM of

paid Medicaid claims for medi cal goods and services to Medicaid

recipients which occurred during the period from January 1, 2010 ,

through December 31, 2010.

7 . The audit included a comparison of the amount of

prescription medication s billed to Medicaid by JRM during the

audit period with the units of the corresponding medication s JRM

purchased from licensed wholesalers.

8. The audit concluded that JRM was overpaid a total of

$156,657.05 for various prescription medications it billed to

AHCA and received payment from AHCA . The cla ims which make up

the overpayment alleged by AHCA of $156, 6 57.05 were filed and

paid by AHCA prior to the institution of this matter.

9 . JRM d oes not dispute that it was overpaid $43,890.02 for

various prescription medications, and JRM concedes that AHCA is

entitled to recover this amount as an overpayment .

10 . However, JRM disputes the remaining balance of AHCAÓs

alleged overpayment of $112,767.03, which AHCA attributes to an

overpayment to JRM for the brand named prescription drug Prevacid

30 mg Caps ule DR (ÐPrevacidÑ) .

1 1 . The audit involved a review of JRMÓs purchases of

Prevacid from McKesson , and Lans oprazole from Bellco, the

authorized wholesalers, during the audit period. The audit

established that JRM billed to AHCA and received paymen t from

AHCA for more Prevacid than JRM had available during the audit

period to dispense to Medicaid recipients. Specifically, the

persuasive evidence adduc ed at hearing demonstrates JRM was

overpaid $112,767.03 for Prevacid.

12 . When a Medicaid pharm acy provider submits a claim to

Medicaid for payment, Medicaid identifies the prescription drug

on the claim by the National Drug Code (ÐNDCÑ).

13 . The generic form of Prevacid is Lan s oprazole.

Prevacid and Lan s oprazole have different NDC numbers. JR M was

required to submit the entire 11 - digit NDC number for the actual

product dispensed on the claim.

14 . During the audit period, JRM billed to Medicaid and was

paid by Medicaid for Ð NDC: 00300304613 PREVACID 30 MG CAPSULE

DR, NDC: 00300304619 PREV ACID 30 MG CAPSULE DR, AND NDC:

64664004613 PREVACID DR 30 MG CAPSULE . Ñ

1 5 . The persuasive evidence adduced at hearing demonstrates

that JRM billed Medicaid and was paid by Medicaid for 31,650

Prevacid capsules . However, JRM only purchased 10,907 unit s of

Prevacid , leaving a shortage of 20,744 capsules of Prevacid and

a n overpayment of $112,767.03. Thus, JRM received payment from

Medicaid for $112,767.03 for Prevacid that JRM did not purchase

and did not dispense to Medicaid recipients.

1 6 . T here is a significant cost difference between the

brand name Prevacid and generic Lan s oprazole, with the brand name

Prevacid being billed at a much higher rate than the generic

Lan s oprazole. J RM purchased a large amount of Lansopraz ole from

Bellco during the aud it period, but billed and received payment

from Medicaid for Prevacid .

17. On ly prescription drugs that are on the Florida

Medicaid Preferred Drug List are allowed to be paid for by

Medicaid. During the audit period, generic Lan s oprazole was not

on AHCA Ós preferred drug list. However, Prevacid was on AHCAÓs

preferred drug list. JRM often dispensed Lan s oprazole and billed

and received payment from Medicaid for dispensing Prevacid.

CONCLUSIONS OF LAW

18 . DOAH has jurisdiction over the parties hereto an d the

subject matter of this proceeding. §§ 120.569 & 120.57(1), Fla.

Stat.

19. AHCA is empowered to Ðrecover overpayments . . . as

appropriate.Ñ £ 409.913, Fla. Stat. An ÐoverpaymentÑ includes

Ðany amount that is not authorized to be paid by the Med icaid

program whether paid as a result of inaccurate or improper cost

reporting, improper claiming, unacceptable practices, fraud,

abuse, or mistake.Ñ £ 409.913(1)(e) , Fla. Stat.

20 . As the party asserting the overpayment s , AHCA bears the

burden to es tablish the alleged overpayment s by a preponderance

of the evidence. Southpointe Pharmacy v. DepÓt of HRS , 596 So.

2d 106, 109 (Fla. 1st DCA 1992).

21. The sta tutes, rules, and the Medicaid provider

h andbooks in effect during the audit period govern th e outcome of

this dispute.

22. The Florida Medicaid Prescribed Drug s , Services,

Coverage, Limitations , and Reimbursement Handbook , May 2008, is

in corporated by reference into Florida Admin istrative Code Rule

59G - 4.250 (2) . The rule provides that: ÐAll participating

prescribed drug services providers enrolled in the Medicaid

program must be in compliance with the provisions of the Florida

Medicaid Prescribed Drug Services Coverage, Limitations, and

Reimbursement Handbook, updated May 2008, which is incor porated

by reference.Ñ

23. Section 409.913(7), Florida Statutes, further provides:

When presenting a claim for payment under the

Medicaid program, a provider has an

affirmative duty to supervise the provision

of, and be responsible for, goods and

servi ces claimed to have been provided, to

supervise and be responsible for preparation

and submission of the claim, and to present a

claim that is true and accurate that is for

goods and services that:

(a) Have actually been furnished to the

recipient by t he provider prior to submitting

the claim.

* * *

(e) Are provided in accord with applicable

provisions of all Medicaid rules,

regulations, handbooks, and policies and in

accordance with federal, state, and local

law.

* * *

The agency shall deny payment or require

repayment for goods or services that are not

presented as required in this subsection.

24. ÐA Medicaid provider shall retain medical,

professional, financial, and business records pertaining to

services and goods furnis hed to a Medicaid recipient and billed

to Medicaid for a period of 5 years after the date of furnishing

such services or goods.Ñ £ 409.913(9), Fla. Stat.

25. The Prescribed Drugs Services Handbook, p age 3 - 1,

explains the NDC and the requirements for inc luding it on a

submitted claim as follows:

NATIONAL DRUG CODE

Description: Drugs are identified on

Medicaid claims and the Medicaid computer

system drug file by the National Drug Code

(NDC). The NDC is an 11 - digit number. The

first 5 digits identify th e manufacturer or

supplier, the next 4 digits identify the

product, and the last 2 digits identify the

package size.

Using NDCs: The provider must enter the

entire 11 - digit NDC for the actual product

dispensed on the claim. Billing an NDC

number other than the one for the product

dispensed is a false claim and a violation of

Medicaid policy.

NDC Code Not O n the Drug File: Medicaid can

only reimburse drugs whose NDC codes are on

the Medicaid drug file. If the NDC code is

not on the Medicaid drug file , the provider

can call MedicaidÓs Bureau of Pharmacy

Services at 850 - 487 - 4441, for information.

If Medicaid adds the drug to the file, the

provider can be reimbursed for dispensing the

drug.

Drugs Unlawfully Acquired: M edicaid will

only reimburse tho se drugs that are lawfully

acquired from entities licensed in accordance

with Chapter 499, Florida Statutes.

26. Section 409 . 913(22) states , in pertinent part , that:

(22) The audit report, supported by agency

work papers, showing an overpayment to a

provider constitutes evidence of the

overpayment. A provider may not present or

elicit testimony on direct examination or

cross - examination in any court or

administrative proceeding, regarding the

purchase or acquisition by any means of

drugs, goods, or supplies; sales or

divestment by any means of drugs, goods or

supplies; or inventory of drugs, goods, or

supplies, unless such acquisition, sales,

divestment, or inventory is documented by

written invoices, written inventory records,

or other competent wri tten documentary

evidence maintained in the normal course of

the providerÓs business. A provider may not

present records to contest an overpayment or

sanction unless such records are

contemporaneous and, if requested during the

audit process, were furnish ed to the agency

or its agent upon request. This limitation

does not apply to Medicaid cost report

audits. This limitation does not preclude

consideration by the agency of addenda or

modifications to a note if the addenda or

modifications are made before notification of

the audit, the addenda or modifications are

germane to the note, and the note was made

contemporaneously with a patient care

episode. Notwithstanding the applicable

rules of discovery, all documentation to be

offered as evidence at an adm inistrative

hearing on a Medicaid overpayment or an

administrative sanction must be exchanged by

all parties at least 14 days before the

administrative hearing or be excluded from

consideration.

27. Turning to the instant case, AHCA proved by a

prepond erance of the evidence that JRM billed Medicaid and was

paid by Medicaid for 31,650 Prevacid capsules. However, JRM only

purchased 10,907 units of Prevacid, leaving a shortage of 20,744

capsules of Prevacid and an overpayment of $112,767.03. Thus,

JRM re ceived payment from Medicaid for $112,767.03 for Prevacid

that JRM did not purchase and did not dispense to Medicaid

recipients.

28. JRM does not dispute that it was overpaid $43,890.02

for various other prescription medications, and JRM concedes that

AHCA is entitled to recover this amount as an overpayment.

29. Thus, AHCA is entitled to recoup the sum of $156,657.05

as Medicaid over payments during the audit period.

30. As to the issue of fines, AHCA must carry the burden of

proof with respect to the imposition of fines by the clear and

convincing evidence standard. DepÓt of Banking & Fin. v. Osborne

Stern & Co. , 670 So. 2d 932, 935 (Fla. 1996).

31. Fines on overpayments in this case are limited by the

2008 version of Florida Administrative Code Rule s 59G - 9.070(7)

and (10). Rule 59G - 9.070(7) state s :

(7) SANCTIONS: Except when the Secretary of

the Agency determines not to impose a

sanction, pursuant to Section 409.913(16)(j),

F.S., sanctions shall be imposed for the

following:

* * *

(n) During a specific audit or review

period, failure to demonstrate sufficient

quantities of goods, or sufficient time in

the case of services, that support the

corresponding billings or claims made to the

Medicaid program. [Section 409.913(1 5)(n),

F.S.]

Under subsection (10), entitled ÐGUIDELINES FOR SANCTIONS,Ñ rule

59G - 9.070(10)(i) provides for a $5,000 .00 fine for the first

violation. Thus, an appropriate fine in this case of first

offense is $5,000 .00 . 3/

32. In the FAR, AHCA requeste d investigative, legal, and

expert witness costs pur suant to section 409.913(23)(a) .

However, AHCA acknowledges in its Proposed R ecommended O rder that

it would be improper for the undersigned to award such costs at

this juncture. Rather, any d eterminatio n of the amount of costs

by the undersigned is necessarily dependent upon a final order

issued by AH C A indicating tha t AHCA Ðultimately prevailedÑ; a

determination of the amount of costs by AHCA in the final order;

and any dispute of the amount of costs by JRM .

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the A gency for H ealth C are

Administration enter a final order of recoupment of a Medicaid

overpayment from JRM in the amount of $156,657.05; impose a fine

of $5,000.00; and remand this matter to the undersigned for a

determination of the amount of investigative, legal, and expert

witness costs, should a final order be entered by AHCA indicating

that AHCA ultimately prevailed, and if there is any d isp ute as to

the amount of such costs following the issuance of the final

order by AHCA.

DONE AND ENTERED this 13 th day of January , 2015 , in

Tallahassee, Leon County, Florida.

S

DARREN A. SCHWARTZ

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 13 th day of January , 2015 .

ENDNOTE S

1/ At the final hearing, the parties stipulated that Ms. Leyva

was unavailable for the final hearing.

2/ The audit period involved both the 2009 and 2010 versions of

the Florida Statutes. Because there were no substantive ch anges

to the operative provisions of section 409.913, Fl orid a Stat utes ,

in 2010, the undersigned will refer to the 2009 version of the

Florida Statutes unless otherwise indicated.

3/ In the FAR, AHCA sought an administrative fine in the amount

of $21 ,000 .00 based on amendments to rule 59G - 9 . 070 that went

into effect on September 7, 2010. Rule 59G - 9.070(7)(n),

effective September 7, 2010 , provides, in pertinent part:

(n) For shortages of goods: For a first

offense, $1,000 fine per type of good f ound

to be short.

In its Proposed Recommended O rder, however, AHCA now concedes

that a reduced fine in the amount of $5,000 .00 is appropriate

pursuant to the 2008 version of rule 59G - 9.070(7)(n).

JRM argues that the fine should be reduced to $2, 500 .00 based on

an overpayment in the amount of $43,890.50. However, JRM does

not provide any legal authority for the undersigned to impose a

fine in this specific proposed amount.

COPIES FURNISHED:

Debora E. Fridie, Esquire

Agency for Health Care Administration

Fort Knox Building III, Mail Station 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

Anthony Vitale, Esquire

The Health Law Offices of Anthony C.

Vitale, P.A.

2333 Brickell Avenue , Suite A - 1

Miami, Florida 33129

(eServed)

Chri stopher A. Parrella, Esquire

The Health Law Offices of Anthony C.

Vitale, P.A.

2333 Brickell Avenue , Suite A - 1

Miami, Florida 33129

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Flo rida 32308

(eServed)

Stuart Williams, Gen eral Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with t he agency that

will issue the Final Order in this case.