15-003496MPI Agency For Health Care Administration vs. Leeland Er Svcs Partnership Status: Closed Recommended Order on Monday, April 11, 2016.

Summary: Agency for Health Care Administration proved by a preponderance of the evidence the sufficiency of its statistical sampling method and the overpayments made to Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Petitioner,

vs. Case No. 15 - 3496MPI

LEELAND ER SVCS PARTNERSHIP,

Respondent.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case

on November 12, 2015, before Lawrence P. Stevenson, a duly -

designated Administrative Law Judge of the Division of

Administrative Hearings , in Tallahassee, Florida.

APPEARANCES

For Petitioner: Ephraim D uran d Livingston, Esquire

Willis F. Melvin, Jr., Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 - 5403

For Respond ent: Richard B. Robins, Esquire

Brach Eichler, LLC

101 Eisenhower Parkway

Roseland, New Jersey 07068

STATEMENT OF THE ISSUE S

The following are the issues presented:

1. Whether Respondent , Leeland ER SVCS Partnership

(ÐLeelandÑ) , is liable to the Agency for Health Care

Administration (ÐAHCAÑ) for Medicaid overpayments in the amount

of $12,377.17 , during the audit period of March 1, 2009 , through

August 31, 2011;

2. Whether Leeland should be required to pay an

administrative fine of $2,475.43, pursuant to Florida

Administrative Code R ule 59G - 9.070(7)(e); and

3. Whether Leeland is liable to AHCA for the agencyÓs

investigative, legal, and expert witness costs pursuant to

section 409.913(23)( a), Florida Statutes.

PRELIMINARY STATEMENT

AHCA conducted an audit of LeelandÓs Medicaid billing and

payment records for dates of service from March 1, 2009 , through

August 31, 2011. AHCAÓs Preliminary Audit Report (ÐPARÑ),

issued on June 20, 2013, found that Leeland had been overpaid

$200,349.16 for claims not covered by Medicaid. On August 16,

2013, AHCA issued a Final Audit Report (ÐFARÑ) that revised the

alleged overpayment downward to $33,111.52, imposed a fine for

failure to comply with Medicaid ru les in the amount of

$6,622.30, and further imposed on Leeland the agencyÓs costs

incurred as a result of the audit.

Leeland disputed the proposed agency action of the FAR and

timely filed a Petition for Formal Administrative Hearing. AHCA

forwarded the Petition to the Division of Administrative

Hearings (ÐDOAHÑ) for the assignment of an Administrative Law

Judge (ÐALJÑ) and the conduct of a formal hearing. The matter

was assigned DOAH Case No. 13 - 3888MPI.

On October 17, 2013, AHCA filed an A greed Motio n to Remand

and Relinquish Jurisdiction Without Prejudice, stating that the

parties believed they could settle the matter without need for a

hearing , but retaining the option of bringing the case back to

DOAH should their negotiations fail. On October 17, 2013,

ALJ F. Scott Boyd entered an Order Closing File and

Relinquishing Jurisdiction of the case to AHCA, without

prejudice.

During the settlement negotiations, additional

documentation submitted by Leeland led to AHCAÓs further

reducing the claimed over payment amount to $12,377.17 and the

administrative fine to $2,475.43.

On June 18, 2015, AHCA filed with DOAH a Motion to Reopen

Proceedings stating that the parties had been unable to settle

the matter and requesting that the DOAH case be reopened. The

c ase was assigned to the undersigned and given DOAH Case No. 15 -

3496 MPI . The case was origina lly scheduled for August 20

and 21, 2015. One continuance was granted and the case was

convened and completed on November 12, 2015.

At the hearing, AHCA presented the testimony of

Robi Olmstead, supervisor of the Practitioner Care Unit in

AHCAÓs Office of Medicaid Program Integrity (ÐMPIÑ);

Lisa Robinson, an investigator for MPI; and Fred W. Huffer,

Ph.D., a professor in the Florida State University Department of

S tatistics , who was accepted as an expert in statistics,

statistical analysis , and calculation, including random

sampling. AHCAÓs Exhibits 1 through 8 were admitted into

evidence. Leeland presented no witnesses. LeelandÓs Exhibits 1

through 6 were admitt ed into evidence.

The one - volume Transcript of the final hearing was filed at

DOAH on November 30, 2015. One extension of the time for filing

proposed r ecommended o rders was granted. In accordance with the

modified schedule, all parties timely filed thei r Proposed

Recommended Orders and accompanying memoranda on January 8,

2016.

Unless otherwise stated, all statutory references are to

the 2015 edition of the Florida Statutes.

FINDING S OF FACT

Based on the oral and documentary evidence adduced at the

fina l hearing, and the entire record in this proceeding, the

following F indings of F act are made:

1. ACHA is designated as Ð the single state agency

authorized to make payments for medical assistance and related

services under Title XIX of the Social Security Act,Ñ i.e., the

ÐMedicaid program.Ñ § 409.902(1), Fla. Stat. Among its duties

as the Medicaid agency, AHCA is required to conduct audits of

medical providers participating in the Medicaid program , and to

Ðrecover overpayments and impose sanctions as app ropriate.Ñ

§ 409.913, Fla. Stat.

2. Section 409.913(1)(e) defines "overpayment" to include

"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, unaccep table practices, fraud,

abuse, or mistake."

3. The Medicaid provider agreement is a voluntary contract

between AHCA and the provider. An enrolled Medicaid provider

must comply fully with all state and federal laws pertaining to

the Medicaid Program, incl uding the Medicaid provider handbooks

incorporated by reference into AHCAÓs rules, as well as all

federal, state, and local laws pertaining to licensure to

receive payment from the Medicaid program.

4. This case involves an AHCA Medicaid audit conducted o f

LeelandÓs paid Medicaid claims as to the dates of service from

March 1, 2009 , through August 31, 2011, hereinafter referenced

as the Ðaudit period.Ñ Leeland was randomly selected for audit

and had no prior violations of Medicaid law. Therefore, any

san ction imposed on Leeland in this proceeding would constitute

a Ðfirst offenseÑ under the operative rule discussed in the

Conclusions of Law below.

5. During the audit period, Leeland was an enrolled

Medicaid provider and had a valid Medicaid provider agr eement

with AHCA. As an enrolled provider, Leeland was subject to all

relevant federal and state statutes, rules, policy guidelines,

and Medicaid handbooks incorporated by reference into rule.

6. AHCA issued a PAR, dated June 20, 2013, alleging that

Leel and was overpaid $200,349.16 for certain claims that in

whole , or in part , were not covered by Medicaid.

7. AHCA later issued a FAR, dated August 16, 2013,

alleging that Leeland was overpaid $33,111.52 for certain claims

that in whole , or in part , were no t covered by Medicaid. The

FAR further informed Leeland that AHCA intended to impose a fine

of $6,622.30 (20% of the total overpayment) as a sanction for

violation of rule 59G - 9.070(7)(e) and to impose costs pursuant

to section 409.913(23 ) .

8. Leeland received the FAR on August 23, 2013. Leeland

timely filed a Petition for Formal Administrative Hearing on

September 24, 2013. On October 9, 2013, Leeland tendered

payment to AHCA in the amount of $33,111.52, as requested in the

FAR, to be held in escrow pending the administrative hearing.

9. The FAR set forth the basis for the overpayment

determination as follows:

Medicaid policy defines the varying levels

of care and expertise required for the

evaluation and management procedure codes

for office vis its. The documentation you

provided supports a lower level of office

visit than the one for which you billed and

received payment. This determination was

made by a peer consultant in accordance with

Sections 409.913 and 409.9131, F.S. The

difference bet ween the amounts you were paid

and the correct payment for the appropriate

level of service is considered an

overpayment.

10. The FAR also stated that the overpayment calculation

was based on a statistical formula by which a random sample of

the claims s ubmitted by Leeland was selected and extrapolated to

the total number of claims in order to arrive at the amount of

the total overpayment:

A random sample of 63 recipients respecting

whom you submitted 134 claims was reviewed.

For those claims in the samp le, which have

dates of service from March 1, 2009, through

August 31, 2011, an overpayment of $308.96

or $2.30567164 per claim, was found. Since

you were paid for a total (population) of

26,060 claims for that period, the point

estimate of the total over payment is 26,060

x $2.30567164 = $60,085.80. There is a 50

percent probability that the overpayment to

you is that amount or more.

We used the following statistical formula

for cluster sampling to calculate the amount

due the Agency: [ 1/ ]

All of the cl aims relating to a recipient

represent a cluster. The values of

overpayment and number of claims for each

recipient in the sample are shown on the

attachment entitled ÐOverpayment Calculation

Using Cluster Sampling.Ñ From this

statistical formula, which is generally

accepted for this purpose, we have

calculated that the overpayment to you is

$33,111.52 with a ninety - five percent (95%)

probability that it is that amount or more.

11. After issuance of the FAR, Leeland provided additional

information and d ocumentation to MPI, which conducted a peer

review of the new material. AHCA subsequently reduced the

alleged overpayments in the sample to $171.38. Overpayments

were found on claims involving seven of the 63 recipients. 2/

AHCA concluded that this overp ayment amounted to 2.45 percent of

the total payments of $6,987.99 made to Leeland for the claims

in the sample. The overpayment amount of $171.38 was

extrapolated to the entire population of claims using the

formula set forth above. AHCA concluded that the total amount

of overpayments to Leeland for all Medicaid recipients in the

population was $12,377.17, with a 95 percent confidence level.

12. This reduction in the alleged overpayment led AHCA to

make a proportional reduction in the proposed fine, to

$2,475.43.

13. Leeland does not challenge the agencyÓs conclusion

that the actual overpayment found in the sample amounted to

$171.38. Leeland does challenge the method by which AHCA used

that actual overpayment to extrapolate an overall overpayment

amou nt of $12,377.17 for the entire body of Medicaid claims

submitted by Leeland during the audit period.

14. AHCA is required by statute to use an Ðaccepted and

valid statistical calculationÑ to determine Medicaid

overpayments. ACHA submitted its audit repo rt and work papers

into evidence. To support the validity of the cluster sampling

method used in this case, AHCA presented the testimony of

Dr. Fred Huffer, a professor in the Statistics Department at

Florida State University, as well as the AHCA employee s who

provided the data to which the formula was applied.

15. Robi Olmstead, supervisor of MPIÓs Practitioner Care

Unit, testified that Leeland was randomly selected for audit.

Once the selection was made, Ms. Olmstead assigned the case to

an investigato r. Her office applied a computerized claim

sampling program to select the recipients and claims to be

audited. The program pulled all claims for the provider during

the audit period. Ms. Olmstead sorted the claims, selecting

only those that were fee - for - service, then generated the ÐseedÑ

and selected the cluster sample.

16. Ms. Olmstead testified that the program tells her how

many recipients should be reviewed to make a statistically valid

sample. In LeelandÓs case, the program stated that 62.6

recipi ents should be used, so the number was rounded up to 63.

17. Lisa Robinson, the MPI investigator who handled the

Leeland audit, testified that the claim sampling program

selected the list of 63 recipients to be audited. Ms. Robinson

sent a request for me dical records to Leeland. Once Leeland

submitted the records for the 63 recipients, Ms. Robinson

reviewed the records. The claim sampling program generated a

worksheet listing each billed claim for each recipient.

Ms. Robinson attached the worksheets to the records and prepared

them for the nurse reviewer.

18. The nurse reviewer reviewed and organized the records

for a peer review by a physician. After the physician reviewed

and determined any disallowed amounts, the records were returned

to Ms. Robins on, who entered the disallowed amounts into the

claim sampling program to determine the amount of the

overpayment.

19. Ms. Olmstead testified that she has no statistical

expertise and that she relied on Dr. Huffer to review and

validate the results obtain ed by the claim sampling program.

Ms. Robinson likewise claimed no statistical expertise or any

real knowledge of how the cla im sampling program works.

Ms. Robinson simply enters data into the program and accepts the

results it generates.

20. Dr. Huffe r, who has consulted with MPI since 2004,

testified that when he received the overpayment calculation

results, he first checked the calculations. Next, he

constructed hypothetical populations based on MPIÓs sample to

test the confidence level of 95 percen t asserted in the FAR.

21. Dr. Huffer explained that a confidence level is a

probability attached to the correctness of some statement or

procedure. The 95 percent confidence level in this case means

that if MPI runs its audit procedure repeatedly, the n umber that

it states as the overpayment from a sample of the population

will be less than the ÐtrueÑ overpayment in the overall

recipient population 95 percent of the time. The ÐtrueÑ

overpayment value remains unknown, but the simulations performed

by Dr. Huffer lead to a Ðreasonably confidentÑ conclusion that

the assessed overpayment is an underestimate of that ÐtrueÑ

value.

22. Dr. Huffer stated that the simplest type of sampling

scheme is a simple random sample, in which units are selected at

random and audited. He noted that sometimes the units are

naturally grouped into clusters, and much sampling effort can be

saved by sampling the clusters of units rather than the units

individually.

23. In this case, AHCA was interested in auditing a

populat ion of claims, but the claims were naturally grouped by

recipients. Therefore, to conserve resources, AHCA used single -

stage cluster sampling, with each selected resident constituting

a cluster of claims to be audited. Dr. Huffer noted the

practical adva ntages of this method:

[T]hereÓs a lot less effort in accessing the

records of a smaller number of recipients,

and also thereÓs a lot less effort in making

decisions about medical necessity for a

small number of recipients versus, say, a

large number of re cipients. So thereÓs a

lot of savings in sampling effort by doing a

cluster sampling based upon clusters, which

are the recipients.

24. Dr. Huffer testified that a sample size of 63 was

valid, independent of the size of the population from which the

sam ple was taken. He stated that Ðit is a well - known fact in

statistics that it is the sample size which primarily governs

the accuracy of the result, not the population size.Ñ He noted,

for instance, that a sample size of 35 could be validly used for

a pop ulation of one million.

25. Dr. Huffer explained that he constructed a

hypothetical population that is Ðlike a large scaled - up version

of the sample.Ñ He ÐclonedÑ every recipient and every claim for

all recipients about 208 times to make a hypothetical p opulation

of approximately 13,000 recipients. From this population, he

sampled 63 recipients at random and performed the same

calculation that AHCA did on its sample. He performed the

calculation procedure on two million samples of 63 recipients

drawn fr om his hypothetical population.

26. Dr. HufferÓs two million simulations yielded an

emp irical confidence level of 97.7 percent , meaning that ÐweÓre

even more confident in this case that the number we announce as

the overpayment is less than the true ove rpayment . . . in the

population.Ñ

27. Dr. Huffer explained the extrapolation of the sample

to the population. By taking the $171.38 of total overpayments

found in the 134 claims for the population of 63 residents in

the sample, MPI derived an average ov erpayment per sample claim

of $1.27. 3/ There were 26,060 claims in the entire population.

Multiplying the total number of claims by the $1.27 average

overpayment yielded a Ðpoint estimateÑ of the total overpayment

of a little more than $33,000.

28. D r. Huffer stated that while the overpayments in the

population may be Ðin the neighborhoodÑ of the point estimate,

there is never an expectation that the point estimate will be

exactly correct. Every random sample of recipients would yield

a somewhat diff erent total. Therefore, a standard error of the

overpayment was introduced as an estimate of how far wrong the

point estimate might be.

29. The standard error in this case was $12,547.82. The

true overpayment could be plus or minus some multiple of th e

standard error. Dr. Huffer testified that to reach the lower

bound of the 95 percent confidence level, MPI subtracted about

one and one - half times the standard error from the point

estimate to arrive at an overpayment value of $12,377.17.

30. Dr. Huff er concluded that there was Ðstrong evidenceÑ

that the true overpayments exceeded $12,377.17 , because that

figure was an Ðintentional underestimate.Ñ

31. Counsel for Leeland questioned Dr. Huffer about the

validity of the statistically derived overpayment , given that

the actual overpayment drawn from the sample, $171.38, was so

small compared to the total Medicaid payments for those

recipients. Dr. Huffer testified that the 95 percent confidence

rate is Ðtotally unrelatedÑ to the magnitude of the actua l

overpayments.

32. To counter Dr. HufferÓs testimony on the irrelevancy

of the size of the actual overpayment to the validity of the

sampling method, counsel for Leeland presented a federal

Medicare statute, 42 U.S.C. § 1395ddd(f)(3), which provides as

f ollows, in relevant part:

(3) Limitation on use of extrapolation

A medicare contractor may not use

extrapolation to determine overpayment

amounts to be recovered by recoupment,

offset, or otherwise unless the Secretary

determines that Ï

( A) there is a sus tained or high level of

payment error; or

(B) documented educational intervention has

failed to correct the payment error . . . .

33. Dr. Huffer responded that the federal statute does not

imply that extrapolation is not allowed for statistical reasons.

He believed that the reason for the Medicare lawÓs disallowance

of extrapolation in smaller cases could be simply to forgive

errors below a certain threshold.

34. Counsel for Leeland offered another example, an ÐOpen

Letter to Health Care ProvidersÑ i ssued by the Office of

Inspector General of the U.S. Department of Health and Human

Services in 2001. The letter set s forth new claims review

procedures, including a statement that if the net financial

error rate in a discovery sample is below five percen t , the

provider is not required to perform any further audit work and

only the actual identified overpayments must be refunded.

35. Dr. Huffer pointed out that the letter, like the

statute, does not question the statistical validity of

extrapolation. Ð They do not give any statistical reason for

saying that it would be wrong to proceed in this case. As far

as I know, theyÓre just saying if you [have] a small error rate,

weÓll forgive it.Ñ Dr. Huffer agreed that there was not a

Ðsustained or high level of payment errorÑ in this case, but

observed that this case was not being decided under the federal

Medicare statute.

36. Dr. Huffer opined that the sampling method used in

this case was reasonable and comported with generally accepted

statistical methods . His opinions and explanation were

credible, were unrebutted, and are accepted. Leeland's attempt

to undermine Dr. HufferÓs opinions through cross - examination was

ineffective and lacked the support of contradictory expert

testimony regarding generally a ccepted statistical methods.

37. AHCA seeks to recover its investigative, legal, and

expert witness costs pursuant to section 409.913(23)(a). AHCA

has established its right to recover these costs. At the outset

of the final hearing, the parties agreed t hat if AHCA prevailed

in the case - in - chief , and was found to be entitled to costs,

then this tribunal would retain jurisdiction for the limited

purpose of allowing AHCA to document its costs in the manner

provided by section 409.913(23)(b).

CONCLUSIONS OF LAW

38. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

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

39. AHCA is empowered to "recover overpayments . . . as

appropriate." § 409.913, Fla. Sta t. An "overpayment" 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) , F la. Stat .

40. Payments are not "authorized to be paid by the

Medicaid program" when the provider has not complied with

section 409.913(7), which provides as follows, in relevant part:

When presenting a claim for payment under

the Medicaid program, a provi der has an

affirmative duty to supervise the provision

of, and be responsible for, goods and

services 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 accura te and that

is for goods and services that:

* * *

(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.

41. Section 409.913(11) provides:

The agency shall deny payment or require

repayment for inappropriate, medically

unnecessary, or excessive goods or services

from the person furnishing them, the person

under whose supervision they were furnished,

or the person causing them to be furnished.

42. Section 409.913(15) provides as follows, in relevant

part:

(15) The agency shall seek a remedy provided

by law, including, but not limited to, any

remedy provided in subsections (13) and (16)

and s. 812.035, [4/] if:

* * *

(e) The provider is not in compliance with

provisions of Medicaid provider publications

tha t 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 found on

cl aim 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 . . . .

43. AHCA has the burden of establishing an alleged Medicaid

ov erpayment by a preponderance of the evidence. S. Med. Servs.,

Inc. v. Ag. for Health Care Admin. , 653 So. 2d 440, 441 (Fla. 3d

DCA 1995); Southpointe Pharmacy v. Dep't of HRS , 596 So. 2d 106,

109 (Fla. 1st DCA 1992). The burden of proof with respect to t he

imposition of fines is by clear and convincing evidence. Dep't

of Banking and Fin. v. Osborne Stern & Co. , 670 So. 2d 932, 935

(Fla. 1996).

44. Although AHCA bears the ultimate burden of persuasion ,

and thus must present a prima facie case, section 40 9.913(20)

provides that "[i]n meeting its burden of proof . . . the agency

may introduce the results of [generally accepted and valid]

statistical methods as evidence of overpayment.Ñ Section

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

age ncy work papers, showing an overpayment to the provider

constitutes evidence of the overpayment." Thus, AHCA can make a

prima facie case by proffering a properly - supported audit report,

which must be received in evidence.

45. For the reasons set forth in the Findings of Fact

above, the undersigned concludes that AHCA made a prima facie

case by presenting its properly - supported audit report, including

work papers. AHCA's overpayment calculation was based on

generally accepted statistical methods, properly applied to this

provider.

46. Leeland did not contest AHCAÓs peer review findings

that overpayments were made on the sample claims. LeelandÓs

challenge to the AHCA audit was limited to its contention that

the $171.38 in overpayments found in the sample claims could not

be extrapolated to the entire body of Medicaid claims submitted

by Leeland during the audit period.

47. LeelandÓs effort to discredit AHCAÓs sampling

methodology was ineffective. Dr. Huffer was a credible and

persuasive expert witness. Leeland presented no expert

testimony to contest Dr. HufferÓs opinions. Leeland attempted

to undercut the Ðgenerally acceptedÑ aspect of AHCAÓs sampling

method by reference to a federal Medicare statute that places a

floor on the level of claims errors for which extrapolation from

sample to entire claim popul ation is allowed. However,

Dr. Huffer effectively parried this thrust by observing that

none of the federal sources cited by Leeland (to the extent they

are relevant at all) raised any statistical o bjection to the

kind of sampling method employed in the instant case.

48. It is concluded that the single - stage cluster sampling

method employed by AHCA in this case met the criterion set forth

in section 409.913(20) for Ðappropriate statistical methods.Ñ

49. AHCA has established by a preponderance of the

evidence that Leeland is liable for overpayments in the amount

of $12,377.17, pursuant to section 409.913(7)(e), including

interest as set forth in section 409.913(25)(c).

50. As set forth in Conclu sion of Law 42, section

409.913(15) requires AHCA to pursue remedies for overpayments ,

such as those proven in this case. Section 409.913(16)(c)

provides as follows:

(16) The 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):

* * *

(c) Imposition of a fine of up to $5,000

for each violation. Each day that an

ongoing violatio n continues, such as

refusing to furnish Medicaid - related records

or refusing access to records, is considered

a separate violation. Each instance of

improper billing of a Medicaid recipient;

each instance of including an unallowable

cost on a hospital or nursing home Medicaid

cost report after the provider or authorized

representative has been advised in an audit

exit conference or previous audit report of

the cost unallowability; each instance of

furnishing a Medicaid recipient goods or

professional serv ices that are inappropriate

or of inferior quality as determined by

competent peer judgment; each instance of

knowingly submitting a materially false or

erroneous Medicaid provider enrollment

application, request for prior authorization

for Medicaid servic es, drug exception

request, or cost report; each instance of

inappropriate prescribing of drugs for a

Medicaid recipient as determined by

competent peer judgment; and each false or

erroneous Medicaid claim leading to an

overpayment to a provider is conside red a

separate violation.

51. Rule 59G - 9.070 sets forth the specific administrative

sanctions for the violations described by the statute.

Subsection (7) of the rule provides as follows, in relevant

part:

(7) Sanctions: In addition to the

recoupment o f the overpayment, if any, the

Agency will impose sanctions as outlined in

this subsection. 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 as follows:

* * *

(e) For failure to comply with the

provisions of the Medicaid laws: For a

first offense, $1,000 fine per claim found

to be in violation. For a second offense,

$2,500 fine per claim found to be in

violation. For a third or subsequent

offense, $5,00 0 fine per claim found to be

in violation (Section 409.913(15)(e), F.S.)

52. Because at least seven claims were found to have

constituted overpayments, Leeland would be subject to a fine of

at least $7,000 as a first offender under subsection (7).

Howev er, subsection (4) of the same rule provides the following

relevant limitations on sanctions:

(4) Limits on sanctions.

(a) Where a sanction is applied for

violations of Medicaid laws (under paragraph

(7)(e) of this rule), for a pattern of

erroneous claim s (under paragraph (7)(h) of

this rule), or shortages of goods (under

paragraph (7)(n) of this rule) and the

violations are a Ðfirst offenseÑ as set

forth in this rule, if the cumulative amount

of the fine to be imposed as a result of the

violations giving rise to that overpayment

exceeds twenty - percent of the amount of the

overpayment, the fine shall be adjusted to

twenty - percent of the amount of the

overpayment.

53. Because the cumulative amount of the fine would exceed

20 percent of the amount of overp ayment and because LeelandÓs

violations are a first offense, AHCA has properly adjusted the

amount of the proposed fine to $2,475.43.

54. As noted above, AHCA had to prove the overpayments by

a preponderance of the evidence. To impose an administrative

f ine, AHCA must establish by clear and convincing evidence the

factual grounds for doing so.

55. In Evans Packing Co. v. Depar t ment of Agric ulture and

Consumer Ser vices , 550 So. 2d 112, 116 n. 5 (Fla. 1st DCA 1989),

the Court defined clear and convincing evidence as follows:

[C]lear and convincing evidence requires

that the evidence must be found to be

credible; the facts to which the witnesses

testify must be distinctly remembered; the

evidence must be precise and explicit and

the witnesses must be lackin g in confusion

as to the facts in issue. The evidence must

be of such weight that it produces in the

mind of the trier of fact the firm belief of

conviction, without hesitancy, as to the

truth of the allegations sought to be

established. Slomowitz v. Wal ker , 429 So.

2d 797, 800 (Fla. 4th DCA 1983).

56. Judge Sharp, in her dissenting opinion in Walker v.

Florida Dep ar t ment of Bus iness and Prof essional Reg ulation ,

705 So. 2d 652, 655 (Fla. 5th DCA 1998)(Sharp, J., dissenting),

reviewed recent pronouncemen ts on clear and convincing evidence:

2 3

Clear and convincing evidence requires more

proof than preponderance of evidence, but

less than beyond a reasonable doubt. In re

Inquiry Concerning a Judge re Graziano ,

696 So. 2d 744 (Fla. 1997). It is an

intermed iate level of proof that entails

both qualitative and quantative [sic]

elements. In re Adoption of Baby E.A.W. ,

658 So. 2d 961, 967 (Fla. 1995), cert.

denied , 516 U.S. 1051, 116 S. Ct. 719, 133

L.Ed.2d 672 (1996). The sum total of

evidence must be suffic ient to convince the

trier of fact without any hesitancy. Id.

It must produce in the mind of the trier of

fact a firm belief or conviction as to the

truth of the allegations sought to be

established. Inquiry Concerning Davey , 645

So. 2d 398, 404 (Fla. 1 994).

57. AHCAÓs rule defines a ÐsanctionÑ in terms of a

ÐdisincentiveÑ to a provider. Fla. Admin. Code R. 59G -

9.0 70(3)(n). Under the facts of this case, AHCA has not

demonstrated by clear and convincing evidence that such a

disincentive is warranted. The overpayments to Leeland were

relatively small and were discovered in the course of a random

audit, not a referral. It did not appear that Leeland was

engaged in a pattern or practice of upcoding claims. Leeland

cooperated with the audit at every ste p of the way, providing

documentation that lowered the alleged overpayments from over

$200,000 to the present amount of $12,377.17. Leeland readily

conceded that the actual overpayments found by the audit were

valid. LeelandÓs only dispute sprang from a laymanÓs

understandable confusion about the arcana of statistical

sampling. No salutary purpose would be served by adding an

administrative fine to the overpayment refund to which AHCA has

established entitlement.

58. Section 409.913(23)(a) provides that AHCA Ð is entitled

to recover all investigative, legal, and expert witness costs if

the agencyÓs findings were not contested by the provider or, if

contested, the agency ultimately prevailed.Ñ AHCA prevailed in

demonstrating its entitlement to a refund of the overpayments

made to Leeland and is therefore also entitled to recover its

investigative, legal , and expert witness costs. Jurisdiction is

retained as to this issue, should the parties be unable to agree

on the amount to which AHCA is entitled.

RECOM MENDATION

Based on the foregoing, it is, therefore,

RECOMMENDED that the Agency for Health Care Administration

enter a final order requiring Leeland ER SVCS Partnership to

repay the sum of $12,377.17 for overpayments on claims that did

not comply with the requirements of Medicaid laws, rules, and

provider handbooks, including interest.

Jurisdiction is retained to determine the amount of costs

and attorney's fees, if the parties are unable to agree to the

amount, and either party may file a request for a hea ring within

30 days after entry of the final order to determine the

appropriate amounts.

DONE AND ENTERED this 11th day of April , 2016 , in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. STEVENSON

Administrative Law Judg e

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 11th day o f April , 2016 .

ENDNOTE S

1/ AHCAÓs statistical expert, Dr. Fred Huffer, testified that

the set of formulas used by AHCA were standard cluster sampling

formulas that can be found in any sampling textbook. Dr. Huffer

stated that he had checked their vali dity on many occasions.

2/ Under rule 59G - 9.070(7)(e), the fine is calculated on a per

claim, not a per recipient, basis. No evidence was presented

establishing the number of claims that were found to involve

overpayments. However, it is safe to assume that there must

have been at least seven such claims, which would yield a fine

of $7,000 for a first offense under the rule. Even this

conservative number is sufficient to trigger the 20 percent

sanction limitation of rule 59G - 9.070 (4)(a), thus explainin g why

AHCA seeks a fine of only $2,475.43.

3/ The actual number was $1.27895522, which yielded a point

estimate of $33,329.57 when multiplied by 26,060, the total

number of claims.

4/ Sections 409.913(13) and 812.035 contemplate criminal actions

by pro viders that are not relevant to this proceeding.

COPIES FURNISHED:

Willis F. Melvin, Jr., Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 - 5403

(eServed)

Ephraim Durand Livingston, Esquire

Agency f or Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308 - 5403

(eServed)

Leilani M. Dornfeld, Esquire

Brach Eichler, LLC

2875 South Ocean Boulevard

Palm Beach, Florida 33480

(eServed)

Richard B. Robins, Esquire

Brach Eichler , LLC

101 Eisenhower Parkway

Roseland, New Jersey 07068

(eServed)

Richard J. Shoop, Agency Clerk

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)

Stuart Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

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 the agency that

will issue the Final Order in this case.