16-003254 Donna Krysa-Mcvay vs. Department Of Management Services, Division Of State Group Insurance Status: Closed Recommended Order on Tuesday, January 31, 2017.

Summary: Petitioner failed to demonstrate entitlement to reimbursement for Husband's medical expenses after DSGI changed to secondary payer according to PPO Plan.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DONNA KRYSA - MCVAY,

Petitioner,

vs. Case No. 16 - 3254

DEPARTMENT OF MANAGEMENT

SERVICES, DIVISION OF STATE

GROUP INSURANCE,

Respondent.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this

case on November 29, 2016, in Tallahassee, Florida, before

Administrative Law Judge June C. McKinney of the Division of

Administrative Hearings.

APPEARANCES

For P etitioner: Paul D. Edwards, Esquire

104 Southeast 8th Avenue

Fort Lauderdale, Florida 33301

For Respondent: Gavin D. Burgess, Esquire

Office of the General Counsel

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399 - 0950

STATEMENT OF THE ISSUE S

Whether the Respondent is responsible to cover Petitioner ' s

husband ' s medical claims as the primary payer from May 1, 2015,

through July 1, 2016; and , if so, the amount Respond ent would be

required to cover.

PRELIMINARY STATEMENT

By letter dated August 21, 2015, Department of Management

Services, Division of State Group Insurance ( " DSGI " or

" Respondent " ), notified Petitioner of its Level II denial of

Petitioner ' s request to post pone Respondent ' s status change to

secondary payer until Medicare Part B became effective on

July 1, 2016. Petitioner filed a timely Petition contesting the

denial. Subsequently, the case was referred to the Division of

Administrative Hearings ( " DOAH " ). Pursuant to notice, a final

hearing proceeded as scheduled on November 29, 2016.

At the final hearing, Petitioner testified on her own

behalf and called her husband as a witness, Gary McVay ( " G.M. "

or " Husband " ). Petitioner ' s Exhibits numbered 1, 3, 11, and 12

were admitted into evidence. Respondent presented the testimony

of two witnesses: Kathy Flippo and Jessica Bonin. Respondent ' s

Exhibits numbered 1, 3 through 6, 8 through 14, and 18 were

admitted into evidence.

The parties did not order a transcr ipt of the hearing. The

parties availed themselves of the right to submit proposed

recommended orders 20 days after the final hearing. Both

parties filed timely Proposed Recommended Orders, which have

been considered in the preparation of this Recommende d Order.

FINDING S OF FACT

1. In 1976, Petitioner became employed with the State of

Florida.

2. Since 1995, Petitioner and G.M. were insured under the

State Employee ' s PPO Plan ( " PPO Plan " ).

3. As a prima ry payer, the PPO Plan paid 100 percent of

all cl aims incurred, subject to the payment schedule set forth

in the PPO Plan.

4. In 2007, G.M. became Medicare - eligible due to a

disability. On October 1, 200 7, he enrolled in Medicare Part A

and Medicare Part B.

5. On November 30, 2007, although he was el igible for

Medicare Part B, Husband deferred enrollment in Medicare Part B

and terminated Medicare Part B.

6. On December 31, 2012, Petitioner retired from her

employment with the State of Florida.

7. During her employment and after retirement, Petition er

received the annual Group Health Insurance Plan Booklet and

Benefits Document booklets detailing the PPO Plan. Petitioner

did not review the eligibility requirements for Medicaid Part B

until 2015.

8. The PPO Plan s that were mailed to Petitioner in

2007, 2012, and 2015 all contained identical language on

page 13 - 2 , which stated " If the disabled dependent is your

spouse, your spouse ' s coverage under this Plan will continue to

be primary, paying bene fits first, as long as you are a n active

employee. "

9. The PPO Plan coordination of benefits provision

designates DSGI as th e primary payer, which pays 100 percent of

the benefits for a retiree or her spouse until the retiree or

spouse becomes eligible for Medicare Part B. Once the retiree

or spouse becom es Medicare - eligible, DSGI becomes the secondary

payer and pays 20 percent of benefits, as Medicare - eligible

parti cipants are entitled to have 80 percent of their expenses

covered by Medicare Part B. The PPO Plan also provides that

DSGI will be the second ary payer even if the retiree or spouse

is not enrolled in Medicare Part B.

10. Petitioner and G.M. looked at plans annually during

open enrollment. They needed health insurance because of G.M. ' s

health problems. Petitioner would call People First annu ally to

confirm continuance of the PPO Plan because the McVays did not

want to be changed to an HMO.

11. From January 1, 2013, to May 1, 2015, Petitioner paid

full premiums, which Respondent accepted , and Respondent paid

all claims in full as the primary payer. In reliance on this

coverage and the representation of Respondent through its

actions and inactions, G.M. continued to defer his coverage

through Medicare Part B.

12. DSGI contracts Florida Blue as a third - party

administrator.

13. Florida Blue c onducted a routine audit and discovered

the error that Medicare Part B should have been the primary

payer for Husband not Respondent. Husband ' s disability status

had slipped through the system when Petitioner retired.

14. On April 13, 2015, Florida Blue notified DSGI by email

that G.M. was eligible for Medicare Part B due to disability.

15. On or about April 30, 2015, Florida Blue notified

Petitioner by letter of DSGI ' s intent to assume secondary payer

status. The letter provided the audit results and stated:

During a recent audit it was discovered that

your h[u]sband is enrolled in Medicare Parts

A & B and have been for quite some time.

Therefore, Medicare should pay your claims

as primary and your retiree health coverage

will be your secondary cover age. Your

current insurance premium will be reduced by

$407.16 per month effective May 1, 2015, as

described below.

You are also due a refund of premium however

you can only receive a refund for two years

of overpayments.

16. DSGI switched to seconda ry payer status and changed

G.M. ' s benefit level to Medicare II tier, effective May 1, 2015.

17. Upon Respondent ' s discovery that Husband was Medicare -

eligible, Respondent prospectively applied the coordination of

benefits provision of the PPO Plan. The adjustment reduced

Petitioner ' s premium payment to correspond with Respondent ' s

status as a secondary payer. Additionally, Respondent refunded

all amounts that Petitioner overpaid as a result of previously

scheduled automatic deductions.

18. As a secon dary p ayer, the PPO Plan pays only 20

percent of all claims incurred.

19. Upon DSGI ' s switch from primary payer, Petitioner and

G.M. attempted to obtain Medicare Part B for G.M. but were not

able to do so until the open enrollment period .

20. As a result , G.M. was exposed to paying 80 percent of

all claims that would have otherwise been paid by Medicare had

he been enrolled in Medicare Part B.

21. Petiti oner and G.M. would have made alternative

arrangements for health insurance coverage had they been

inf ormed that G.M. ' s status would change their primary payer and

they would have a lapse in coverage.

22. Petitioner and Husband went to the Social Security

Office several times in an attempt t o get special enrollment but

were unable to obtain coverage.

23 . Respondent ' s decision to drop coverage is not

considered a qualifying event by Medicare for special

enrollment.

24. Petitioner and Husband also sought private brokers for

coverage , but were not able to obtain insurance.

25. For 14 months, May 1, 201 5, through July 1, 2016, G.M.

did not have a primary payer, only the PPO Plan as a secondary

payer.

26. In January 2016, Husband was able to enroll in

Medicare Part B during open enrollment with coverage beginning

on July 1, 2016.

27. During the time G.M . was uncovered, he had several

medical incidents, which incurred medical expenses.

28. On April 4, 2016, the EMT transported Husband to the

hospital after his defibrillator went off.

29. Husband also was hospitalized at A ventura Hospital and

Medical Ce nter from December 22 through 24, 2015, when blood was

seeping into his bone fracture of his left ankle.

30. Husband received health statements ( " statements " ),

Petitioner ' s Exhibit 12, from Florida Blue summarizing his

medical expenses. Each statement c ontains the language in all

capital letters " THIS IS NOT A BILL. "

31. The statements to which the Medicare primary was

denied also provided language " Resubmit with EOMB. "

32. The statements, which indicated a network provider was

utilized , also stated , " Therefore no patient responsibility. "

33. For the December 2015 hospital stay, claim 8288, the

billing statement designates $30,402.03 is owed. However, the

statement provides Medicare had not processed the claim. It

also states " THIS IS NOT A BILL. "

3 4. Each statement also designated o ut - of - p ocket amounts

of $0.00 or indicated that a network provider was used and

eliminated member debt by stating " no patient responsibility. "

35. Petitioner appealed Respondent ' s decision to terminate

Husband ' s cover age. She seeks reimbursement for medical

expen ses G.M. incurred during the 14 - month period when the PPO

Plan was the secondary payer and G.M. was not enrolled in

Medicare Part B from May 1, 2015, through July 1, 2016.

36. Both Petitioner ' s Level I and L evel II appeals were

denied because DSGI maintains the termination was proper based

on the language of the PPO Plan.

37. Petitioner initially sought relief through extension

coverage until Husband would be covered by Medicare Part B.

38. Once the case was transferred to DOAH, Petitioner

sought damages in the amount of health - related expenses incurred

by Petitioner from the date of DSGI ' s termination of G.M. ' s

primary coverage.

39 . At the final hearing, Je ssica Bonin ( " Bonin " ) , a

12 - year employee of Fl orida Blue who handles appeals and

processes PPO Plan payments, explained the provisions of the PPO

Plan coordination of benefits. She testified that the PPO Plan

pays benefits based on the allowed amount, which represents the

rate negotiated between Flor ida Blue and a network provider.

When calculating amounts that are covered under the terms of the

PPO Plan, the deductible, coinsurance, and amount allowed for

each claim have to be applied. Therefore, not all charges

billed by a provider will count towa rd the deductible or

coinsurance maximum or be reimbursed after the deductible or

coinsurance maximum is reached when calculating medical

expenses.

40 . Bonin calculated G.M. ' s medical expenses in

Respondent ' s Exhibit 18 and concluded that DSGI owed Petit ioner

$80.04 for a claim incurred on or about June 11, 2015. The

reimbursement amount of $80.04 represents the amount the PPO

Plan covers as secondary payer.

41 . At hearing, DSGI also stipulated to another

reimbursement in the amount of $18.03.

42 . H usband testified he was seeking reimbursement for the

entire amount of the combined statements regardless of whether

charges were covered by Medicare or the PPO Plan ' s payment

schedule. He totaled the statements from the health care

providers at $47,056.5 6. G.M. also testified he did n o t know

what monies were due on what bills.

43 . G.M. specifically requested the $30,401.03 for the

inpatient hospitalization at Aventura in December 2015. He

clarified that the bill that he received from Aventura was

$3 , 45 5.72.

44 . Medicare Part A, in which G.M. was enrolled at all

times relevant to this matter , covers inpatient hospital

expenses.

4 5 . To date , G.M. has paid $4,415.19 out - of - pocket for

medical expenses.

4 6 . Petitioner failed to provide competent evidence to

demonstrate a reimbursable amount for G.M. ' s medical expenses.

CONCLUSIONS OF LAW

47 . The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to sections 120.569 and 120.57(1), F lorida

Statutes (2016) . 1/

4 8 . Respondent is the agency charged by the legislature

with the duty to oversee the administration of the State Group

Insurance Program pursuant to section 110.123 , Florida Statutes .

49 . The general rule is that the burden of p roof, apart

from a statutory directive, is on the party asserting the

affirmative of an issue before an administrative tribunal.

Young v. Dep ' t of Cmty. Aff. , 625 So. 2d 831, 833 - 834 (Fla.

1993); Dep ' t of Transp. v. J.W.C. Co. , 396 So. 2d 778, 788 (Fla.

1 st DCA 1981); Balino v. Dep ' t of HRS , 348 So. 2d 349, 350 (Fla.

1st DCA 1977). Petitioner, as the party asserting the r ight to

a reimbursement for out - of - pocket medical expenses has the

initial burden of demonstrating by a preponderance of the

evidence he r claim. If Petitioner meets this requirement, the

burden shifts to Respondent to prove that the claim was not

covered due to the application of policy exclusion. Herrera v.

C.A. Seguros Catatumbo , 844 So. 2d 664, 668 (Fla. 3d DCA 2003);

State Comprehens ive Health Ass ' n v. Carmichael , 706 So . 2d 319,

320 (Fla . 4 th DCA 1997).

50 . Petitioner seeks damages in the amount of health -

related expenses incurred by Husband from the date of DSGI ' s

termination of G.M. ' s primary coverage for the period of May 1,

201 5, until July 1, 2016. Petitioner asserts the application of

estoppel applies in this matter. Petitioner maintains that

Respondent is e stopped from reliance on the PPO Plan language to

the extent it removes Respondent from being primary payer. To

prevai l under estoppel, the part y must prove the following:

(1) the state agency represented a material fact contrary to its

later asserted position; (2) the opposing party relied on the

agency ' s earlier representation; and (3) the opposing party

changed its po sition to its detriment, based on the state

agency ' s representation. Hoffman v. Dep ' t of Mgmt. Servs., Div.

of Ret. , 964 So. 2d 163, (Fla. 1st DCA 2007) ; Black Bus. Inv.

Fund of Cent. Fla., Inc. v. State, 178 So. 3d 931, 934 (Fl a . 1st

DCA 2015).

51 . The undersigned is not persuaded by Nova Cas. Co. v .

Waserstein , 424 F. Supp. 2d 1325 (S.D. Fla. 2006) , to support

Petitioner ' s contention that estoppel can be used to prevent

forfeiture of insurance coverage. The instant matter is

distinguishable because it is against a state agency , not

private insurer, which has a different threshold standard for

estoppel. Albright v . Union Bankers Ins. Co. 105 F. Supp . 2d

1330 (S.D. Fla. 2000) , also fails to be compelling precedent in

this matter as it addresses estoppel for ERISA , not the standard

for a state agency.

5 2 . As such, the standard for equitable estoppel only

applies against a governmental entity in exceptional

circumstances and must include some positive act or affirmative

conduct on the part of a state offic er that caused a serious

injustice and upon which Petitioner had a right to rely and did

rely to her detriment. See Wise v. Dep ' t of Mgmt. Servs., Div.

of Ret., 930 So. 2d 867, 873 (Fla. 2d DCA 2006); Council Bros.

v. City of Tallahassee , 634 So. 2d 264 ( Fla. 1st DCA 1994).

53 . The credible evidence as a whole does support a

finding that Petitioner retired in 2012, thereby triggering the

PPO Plan language allowing DSGI to pay secondary on medical

claims. Despite the PPO Plan language, Respondent failed t o

act. It i s uncontested that for over two years, Petitioner paid

full premiums and received full coverage under the plan. The

representations of DSGI by accepting full payment and offering

full cove rage were contrary to the later - asserted position that

Respondent intended to rely on the provisions of the PPO P lan

and serve as a secondary payer. Furthermore, the McVays showed

they relied on the representation. Petitioner testified they

would have obtained alternative coverage , but they presumed they

wer e covered by the PPO Plan since they were calling and

renewing it annually. The reliance also caused G.M. to be

without primary coverage for 14 months to his detriment.

5 4 . It is important to note, Petitioner admitted at

hearing that she received the P PO plans that were mailed to her

although she did not review the part about Medicare Part B and

eligibility. Hence, she was on constructive notice of the

provisions regarding coordinated benefits and page 13 - 2.

Additionally, DSGI admitted that the Husban d ' s status was an

administrative error that slipped through the system and was n o t

caught. Even so, the record is void of any evidence proving

either a positive act or affirmative conduct on the part of

DSGI, which caused Petitioner to rely to her detrime nt.

Accordingly, the agency standard for equitable estoppel has not

been established in this case and any further inquiry for the

remaining elements of estoppel is not required.

5 5 . Even if Petitioner were able to meet her burden in

establishing th e ele ments of estoppel against DSGI, Petitioner

failed to prove Respondent shoul d be the primary payer from

May 1, 2015, through July 1, 2016, or that Petitioner is

entitled to reimbursement for out - of - pocket medical expenses.

G.M. was vague and vacillating wh en he was questioned regarding

the medical expenses and statements. The record lacks competent

substantial evidence of an amount Respondent would be required

to cover or the actual amount Petitioner is responsible for out -

of - pocket expenses . The undersig ned is not persuaded by

Petitioner ' s Exhibit 12, which specifically confirms " This is

not a bill " on each statement. No credible c ompetent evidence

demonstrated that there was a reimbursable amount due for

medical expenses. Therefore, the burden was not met regarding

how much, if any , Respondent should cover. The evidence only

establishes a conclusion that Respondent owes Petitioner $98.07,

to which the parties stipulated.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Management Services,

Division of State Group Insurance, enter a final order denying

the Petition and finding that Petitioner is entitled to

reimbursement for Husband ' s medical ex penses in the amount of

$98.07.

DONE AND ENTERED this 31st day of January , 2017 , in

Tallahassee, Leon County, Florida.

S

JUNE C. MCKINNEY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florid a 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 31st day of January , 2017 .

ENDNOTE

1/ All references are to Florida Statutes 2016 unless otherwise

stated.

COPIES FURNISHED:

Gavin D. Burgess, Esquire

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399 - 0950

(eServed)

Paul D. Edwards, Esquire

104 Southeast 8th Avenue

Fort Lauderdale, Florida 33301

(eServed)

J. Andr ew Atkinson, General Counsel

Office of the General Counsel

Department of Management Services

4050 Esplanade Way, S ui te 160

Tallahassee, Florida 32399 - 0950

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written except ions 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.