20-002121 Pacific Employers Insurance Company vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Friday, September 18, 2020.

Summary: Outpatient surgical implant reimbursement standard in Fla. Admin Code R. 69L-7.501 cannot be applied pursuant to section 120.57(1)(e). Carrier failed to prove it made proper adjustment of hospital's bill.

S TATEMENT OF T HE I SSUE S

Whether the proposed agency a ction challenged by Petitioner improperly

relies on a rule that is an invalid exercise of delegated legislative authority;

and whether Petitioner has met its burden to prove that it properly adjusted

a hospital’s bill for implants used in connection with a n injured worker’s

scheduled outpatient surgery when judged by a lawful standard.

P RELIMINARY S TATEMENT

On June 3, 2019, the Department of Financial Services, Division of

Workers’ Compensation (Department or Respondent) , received a Petition for

Resolution of Reimbursement Dispute from Adventist Health

System/Sunbelt, doing business as Florida Hospital Orlando (Florida Hospital) , to resolve a reimbursement dispute pursuant to section 440.13(7),

Florida Statutes.

2 On July 1, 2019, the Department received the Carrier

Response to Petition for Resolution of Reimbursement Dispute from Pacif ic

Employers Insurance Company (Petitioner) .

On July 15, 2019, the Department issued a Reimbursement Dispute

Determination. Petitioner timely filed with the Department a Peti tion for

Administrative Hearing pursuant to sections 120.569 and 120.57(1) . The

Department referred the petition to DOAH on May 6, 2020, for the

assignment of an administrative law judge to conduct a chapter 120 hearing.

On June 17, 2020, the Department f iled and served a Notice to Interested

Party: Adventist Health System/Sunbelt (Florida Hospital Orlando). The Notice indicated Florida Hospital’s substantial interests may be affected by

the final disposition of these proceedings and provided the manner fo r Florida

2 The 2019 version of chapter 440 is cited for ease of reference. T he statute at issue, section

440.13 , has been unchanged since 2016 , which is prior to the occurrence of the relevant facts

of this case.

Hospital to intervene. Florida Hospital did not move to intervene and did not

participate in these proceedings.

Prior to the hearing, the parties filed a Parties’ Pre - Hearing Stipulation in

which they stipulated to a number of facts. The agreed facts are incorporated

in the findings below, to the extent relevant.

The final hearing was held on July 20, 2020, with both parties present

and appearing from different locations in Florida via Zoom Conference.

Petitioner presented the testimony of Amand a Wheatley (Ms. Wheatley), who

was accepted as an expert in medical billing. Petitioner’s Exhibits 1 through

8 were admitted into evidence.

3 Respondent presented the testimony of Lynn

Metz (Ms. Metz), the Department’s registered nurse consultant. The parti es’

Joint Exhibits A through E were admitted into evidence. The parties were

reminded that, even though their individual and joint exhibits were admitted

into evidence, hearsay evidence contained in the exhibits would not be relied on as the sole basis for findings of fact unless the hearsay evidence would be

admissible over objection in a civil action in Florida. See § 120.57(1)(c), Fla.

Stat.; Fla. Admin. Code R. 28 - 106.213(3).

At the close of the hearing, the parties were advised of a ten - day

timeframe following DOAH’s receipt of the hearing transcript to file proposed

recommended orders. A one - volume Transcript of the final hearing was filed

with DOAH on August 7, 2020. Petitioner submitted Petitioner’s Proposed

3 are hearsay with no predicate to support a hearsay Petitioner’s Exhibits 1 through 8

exception, and as such, cannot be the sole basis for a finding of fact. Accordingly, Petitioner’s

Exhibits 1 through 7 (Comparable Invoices) and Petitioner’s Exhibit 8 ( CMS 2019 Statewide

Average Cost to Charge Ratios for Acute Care Hospitals ) , although admitted, are not relied

on for the truth of the statements therein .

Final Order 4 on August 10, 2020. The Dep artment submitted Respondent’s

Proposed Recommended Order on August 17, 2020. Both post - hearing

submittals were duly considered in preparation of this Recommended Order.

F INDINGS OF F ACT

1. The Department is the state agency responsible for administration of

the Workers’ Compensation Law. Ch. 440 , Fla. Stat. The Department has

exclusive jurisdiction to decide any matters concerning reimbursement under

the Workers’ Compensation Law . See § 440.13 (11)(c) , Fla. Stat.

2. Petitioner is a carrier as defined by s ection 440.13(1)(c).

3. Florida Hospital, a non - party, is a health care provider as defined by

section 440.13(1)(f ) and (g) .

4. Under Florida’s statutory workers’ compensation system, injured

workers report their injury to their employer and/or workers’ c ompensation insurance carrier. See Ch. 440 , Fla. Stat.

5. As a condition of eligibility for payment, a health care provider who

renders services to an injured worker must receive authorization from the

carrier before providing treatment. The only noted ex ception is emergency

care, i n which case , if a hospital admission occurs after emergency treatment,

the carrier must be notified by the hospital within 24 hours as a condition to eligibility for payment. § 440.13(3), Fla. Stat.

6. A health care provider p roviding n e cessary remedial treatment, care, or

attendance to any injured worker must submit treatment reports to the

carrier in a format prescribed by the Department. § 440.13(4)(a), Fla. Stat.

7. In addition, after providing treatment, health care provid ers must

submit their bills to the carriers. These bills include line items for various

4 Petitioner seeks a f inal o rd er declaring a Department rule invalid. However, that can only

be the result of a rule challenge under section 120.56 , Florida Statutes . Here, the petition

raised the invalidity of a rule as a defense to the proposed agency action which is challenged

in th is substantial interests proceeding. See § 120.57(1) (e )2., Fla. Stat. Proceedings initiated

pursuant to section 120.57(1), including those in which defenses are raised under section

120.57(1)(e), ar e resolved by recommended order .

health - care - related services and supplies, such as implants, pharmacy, and

X - rays.

8. The carrier may pay, adjust, 5 or dispute line items i n a bill on certain

conditio ns: if a carrier finds that overutilization of medical services or a

billing error has occurred, or there is a violation of the practice parameters

and protocols of treatment established in accordance with chapter 440, it

must disallow or adjust payment fo r such services or error . The disallowance

or adjustment may only occur if the carrier, in making its determination, has

complied with section 440.13 and the rules adopted by the Department.

§ 440.13(6), Fla. Stat.

9. To adjust or di sallow line items in a bill, the carrier must submit an

Explanation of Bill Review (EOBR) to the health care provider .

10. An EOBR is the “ document used to provide notice of payment or notice

of adjustment, disallowance or denial by a claim administrato r , or any entity

acting on behalf of an insurer to a health care provider containing code(s) and

code descriptor(s), in conformance with subsection 69L - 7.740(13), F.A.C. ” Fla.

Admin. Code R. 69L - 7.710(1)(y).

11. If a health care provider wants to contest a carrier’s disallowanc e or

adjustment of payment , it must file a Petition for Resolution of

Reimbursement Dispute Form (Petition for Resolution) with the Department

within 45 days after receipt of the EOBR from the carrier . § 440.13(7)(a), Fla.

Stat.; Fla. Admin. Code R. 69L - 31 .003.

12. Coventry Health Care (Coventry) is a third - party entity that

maintains a network of contracts with health care providers. Essentially,

Petitioner is a third - party beneficiary of the rates negotiated between Florida

Hospital and Coventry.

5 “Adjust” means payment is made with modification to the information provided on the bill.

Fla. Admin. Code R. 69L - 7.710(1)(b).

13. At all times relevant to the facts of this case, Florida Hospital and

Petitioner had a Coventry - negotiated PPO contract in place. Th e contract

permitted a five percent discount for hospital outpatient services .

14. Florida Hospital filed a Petition for Resol ution with attachments,

dated May 29, 2019, with the Department.

15. Through that Petition for Resolution, Florida Hospital requested

resolution of disputed carrier adjustments to a bill tendered to Petitioner for

payment for services rendered to a worke rs’ compensation patient on

December 26, 2018.

16. Florida Hospital’s Petition for Resolution included its entire bill of

charges for payment by Petitioner; however, the only items at issue are

adjustments to two charges for implants that are designated o n Florida

Hospital’s bill as C17 78 and C17 67 .

17. Florida Hospital’s bill included charge s of $45,961.00 for C1778 and

$161,564.60 for C1767. 6

1 8 . The implant charges at issue were for implants used in connection

with scheduled outpatient surgery for the injured worker.

19. Petitioner does not dispute the medical necessity of the implants, nor

does Petitioner dispute that the charges on the bill were Florida Hospital’s

actual charges for these implants pursuant to its chargemaster.

20. Instead, Petitioner asserts that the undersigned and the Department

cannot use the implant reimbursement standard that was used by the Department in its proposed agency action, because that standard,

promulgated as a rule, is an invalid exercise of delegated legislative

autho rity.

6 The parties stipulate that C1767 was divided into two line items. In this Recommended

Order, the amounts billed and/or paid for C1767 are referred to as a total of the two line

items.

Applicable Reimbursement Standard

21. T he Department contends that the applicable implant reimbursement

standard is contained in chapter 6 of the 2014 edition of the Florida Workers’

Compensation Reimbursement Manual for Hospitals (Hospital Manual) ,

promulgated as a rule and incorporated by reference in Florida

Administrative Code Rule 69L - 7.501. Chapter 6 contains the outpatient

reimbursement schedules. The introduction to this chapter provides, in

pertinent part:

Pursuant to section 440.13(12)(a), F.S., all

compensable charges for hospital outpatient care

shall be reimbursed at 75 percent of usual and

customary charges for medically necessary services

and supplies, except as otherwise specified in this

Chapter. The exception is for scheduled outpat ient

surgery, which shall be reimbursed at 60 percent of

usual and customary charges .

Usual and customary charges are reimbursed based on average charges of outpatient hospital bills, by

CPT® code and HCPCS® Level II code, in a specific

geographic area . Please see Appendix A of this

Manual for the adopted geographic modifiers by

county and Appendices B and C for a listing of the

Base Rates by CPT® code and HCPCS® Level II code for non - scheduled outpatient services and

scheduled surgical services.

In the absence of a CPT® or HCPCS® Level II

procedure code in the applicable Appendix or a

mutually agreed upon contract between the hospital and the insurer/employer, reimbursement

shall be made at the applicable percentage of the

hospital’s usual and customary charge. (emphasis

added).

22 . Specific to surgical implant reimbursement, the Hospital Manual

provides at page 23 as follows:

Reimbursement for surgical implant(s), also referred to as “other implant” by the National

Uniform Billing Manual, and associate d disposable

instrumentation required during outpatient

surgery billed under Revenue Code 278 shall be

determined by one of the following methods:

For those utilized during unscheduled surgeries,

surgical implants and associated disposable instrumentat ion shall be reimbursed seventy - five

percent (75%) of the hospital’s usual and customary charge; or

For those utilized during scheduled surgeries,

surgical implants and associated disposable

instrumentation shall be reimbursed sixty percent

(60%) of t he hospital’s usual and customary charge;

or

According to a mutually agreed upon contract

between the hospital and the insurer/employer.

Note : Since there are no CPT or HCPCS level II

codes for implants and associated disposable

instrumentation incor porated into Appendices B or

C, pursuant to the description of usual and

customary charges provided in the Introduction

of this chapter, these items are reimbursed at the

applicable percentage of the hospital’s usual and

customary charge.

23. The Introdu ction section of chapter 6 properly sets forth the statutory

reimbursement standard for hospitals providing scheduled outpatient

surgery, “which shall be reimbursed at 60 percent of usual and customary

charges.” (Hospital Manual, Ch. 6 Introduction, p. 21) .

24. Although t he Hospital Manual correctly describes the statutory

reimbursement standard as generally applicable to hospital scheduled

outpatient surgery bills , the Hospital Manual nonetheless creates an

exception to that reimbursement standard for impl ants .

25. The Hospital Manual states that i n the absence of a CPT or HC PCS

Level II procedure code — the tools the Department chose to measure usual

and customary charges — or a mutually agreed upon contract between the

hospital and the insurer/employer, reim bursement shall be made at 60

percent of the hospital’s usual and customary charge.

26. B ecause CPT or HCPCS L evel II procedure codes do not exist for

implants and the Coventry - negotiated PPO contract does not specifically

address reimbursement for surgic al implants utilized during hospital

outpatient scheduled surgeries , the Department rule provides the

reimbursement standard of 60 percent of the hospit al’s usual and customary

charge .

27 . Since the statutory reimbursement standard for all compensable

c harges for scheduled outpatient surgeries is “60 percent of usual and

customary charges” as recognized by the Hospital Manual, then that is the applicable reimbursement standard for implants used by hospitals in

scheduled outpatient surgery for injured wor kers.

28 . The portion of the Department’s rule, creating an exception to the

applicable reimbursement standard for implants, solely because there are no

CPT or HCPCS level II codes for implants, is contrary to the statute it

purports to implement.

29. Fur ther, t he substituted reimbursement standard for implants ,

allowing a hospital to be reimbursed at the hospital’s usual and customary charges, rather than the usual and customary charges by all hospitals in the same geographical area, is contrary to the st atute it purports to implement.

Petitioner’s Evidence Offered to Prove “Usual and Customary Charges”

30 . Both in the carrier response submitted to the Department for its

Reimbursement Dispute Resolution and at the hearing in this case,

Petitioner correctly contended that the appropriate reimbursement standard

is “usual and customary charges” by hospitals in Florida Hospital’s

community/area.

31 . However, neither in the carrier response nor at the hearing in this

case did Petitioner offer evidence of the u sual and customary charges of

hospitals in Florida Hospital’s community or area for implants used in

scheduled outpatient surgeries.

32 . Petitioner presented the testimony of its expert in medical billing , who

testified that in her experience the usual and customary hospital markup for

implants in Florida is 3.5 times the invoice cost of the implants. She referred

to this as the “standard industry ma rkup.” Using this standard — invoice cost

times 3.5 — Petitioner contends that it properly adjusted Florida Hospi tal’s

bill for implants. The invoice cost for C1778 was $5,000.00 and the invoice

cost for C1767 was $18,500.00.

3 3 . Petitioner’s adjustments cannot be found to be proper as it is based on

a reimbursement standard that is not set forth in either the statut e or the

Department rule. If, as th e Department’s rule specifies is generally true for

scheduled outpatient surgery, the proper reimbursement standard is usual

and customary charges by hospitals in the provider’s geographic area, then it was incumbent on P etitioner to prove it properly adjusted the charges based

on the proper measure: the usual an d customary charges by hospital s in the

provider’s geographic area for implants used in scheduled outpatient surgery.

3 4 . Usual and customary charges are calculate d based on the average

charges of outpatient hospital bills in a specific geographic area.

( See Hospital Manual, Ch. 6 Introduction, p. 21) . Invoice cost times 3.5 is a

different standard — a different measure — than usual and customary charges.

As the Departm ent recognized, charges for implants can vary greatly.

7 The

7 The Department’s witness, Ms. Metz , testified that the Department is unable to use usual

and customary charges in Florida Hospital’s geographical area when determining the

amount of reimbursement for implants because i t cannot determine a fixed reimbursement

rate for something that has such a widely variable charge . Surgical implants , she testified,

can range in cost from $25 to thousands of dollars and, as such, the Department cannot

justify using a fixed rate for one particular implant. The difficulty in determining what the

usual and customary charges in the community are does not relieve the Department of its

responsibility to use that standard in determining the reimbursement amount.

average charge, considering all hospital charges for implants (or specific

types of implants) used in scheduled outpatient surgeries in the specific

geographic area , would be the usual and customa ry charge.

3 5 . The Department does use a reimbursement standard that starts with

the in voice cost and adds a markup for implants, but not in the context of

hospital scheduled outpatient surgeries. A cost - plus reimbursement standard

applies to implants used in connection with hospital inpatient surgeries. 8

That reimbursement standard, codified in chapter 5 of the Hospital Manual,

does not apply here.

3 6 . The Hospital Manual adopts a rule standard for defining a hospital’s

community, which is considered the c ounty in which the hospital is located. Petitioner offered no evidence under any reimbursement standard that was

limited to Florida Hospital’s community. Instead, Petitioner’s expert only offered testimony regarding the “industry standard markup” for impla nts

statewide. For this reason, too, Petitioner’s evidence fails to address the reimbursement standard it says is applicable.

C ONCLUSIONS OF L AW

3 7 . DOAH has jurisdiction over the parties and the subject matter of this

cause pursuant to sections 120.569 a nd 120.57(1).

3 8 . The burden of proof in an administrative proceeding, absent a

statutory directive to the contrary, is on the party asserting the affirmative of the issue. Dep’t of Transp. v. J.W.C. Co. , 396 So. 2d 778 (Fla. 1st DCA 1981);

see also Dep’t of Banking & Fin., Div. of Sec. & Investor Prot. v. Osborne Stern & Co. , 670 So. 2d 932, 935 (Fla. 1996). The standard of proof is the

preponderance of the evidence standard. § 120.57(1)(j), Fla. Stat.

8 “Reimbursement for surgical i mplant(s), also referred to as “other implant” by the National

Uniform Billing Manual, required during inpatient hospitalization billed under Revenue

Code 278 shall be sixty percent (60%) over the manufacturer’s acquisition invoice cost for the

implant(s). ” ( Hospital Manual, Ch. 5, p. 18) .

39 . As the party asserting the affirmative of the issu e, Petitioner has the

burden of proving by a preponderance of the evidence, that it made a proper

adjustment of payment to Florida Hospital’s medical bill regarding the

surgical implant charges for items C1778 and C1767 .

4 0 . The Department has jurisdiction over disputed workers’ compensation

claims pursuant to section 440.13(7) and c hapter 69L - 31.

4 1 . Section 440.13(7) provides in pertinent part:

(a) Any health care provider who elects to contest

the disallowance or adjustment of payment by a

carrier under subsection (6) must, within 45 days

after receipt of notice of disallowance or adjustment

of payment, petition the department to resolve the dispute. The petitioner must serve a copy of the

petition on the carrier and on all affected parties by

certified mail. The petition must be accompanied by

all documents and records that support the allegations contained in the petition. Failure of a petitioner to submit such documentation to the

department results in dismissal of the petition.

(b) The carrier must submit to the department

within 30 days after receipt of the petition all

documentation substantiating the carrier’s

disallowance or adjustment. Failure of the carrier

to timely submit such documentation to the department within 30 days c onstitutes a waiver of all objections to the petition.

(c) Within 120 days after receipt of all

documentation, the department must provide to the petitioner, the carrier, and the affected parties a written determination of whether the carrier

properly adj usted or disallowed payment. The

department must be guided by standards and

policies set forth in this chapter, including all applicable reimbursement schedules, practice parameters, and protocols of treatment, in

rendering its determination.

(d) If the d epartment finds an improper

disallowance or improper adjustment of payment

by an insurer, the insurer shall reimburse the

health care provider, facility, insurer, or employer within 30 days, subject to the penalties provided in

this subsection.

(e) The de partment shall adopt rules to carry out

this subsection. The rules may include provisions

for consolidating petitions filed by a petitioner and

expanding the timetable for rendering a determination upon a consolidated petition.

4 2 . Pursuant to section 440 .13(12), a three - member panel was established

to determine statewide reimbursement allowances for treatment and care of

injured workers. Section 440.13(12) provides, in pertinent part:

(12) CREATION OF THREE - MEMBER PANEL;

GUIDES OF MAXIMUM REIMBURSEMENT

ALLOWANCES. —

(a) A three - member panel is created, consisting of

the Chief Financial Officer, or the Chief Financial Officer’s designee, and two members to be

appointed by the Governor, subje ct to confirmation by the Senate, one member who, on account of present or previous vocation, employment, or

affiliation, shall be classified as a representative of

employers, the other member who, on account of previous vocation, employment, or affiliatio n, shall

be classified as a representative of employees. The

panel shall determine statewide schedules of

maximum reimbursement allowances for medically necessary treatment, care, and attendance provided by physicians, hospitals, ambulatory surgical center s, work - hardening programs, pain programs,

and durable medical equipment. The maximum reimbursement allowances for inpatient hospital care shall be based on a schedule of per diem rates, to be approved by the three - member panel no later

than March 1, 1994, to be used in conjunction with

a precertification manual as determined by the department, including maximum hours in which an outpatient may remain in observation status, which shall not exceed 23 hours. All compensable

charges for hospital outpatient car e shall be

reimbursed at 75 percent of usual and customary charges, except as otherwise provided by this

subsection. Annually, the three - member panel shall

adopt schedules of maximum reimbursement

allowances for physicians, hospital inpatient care, hospita l outpatient care, ambulatory surgical

centers, work - hardening programs, and pain

programs. An individual physician, hospital,

ambulatory surgical center, pain program, or work -

hardening program shall be reimbursed either the

agreed - upon contract price or the maximum

reimbursement allowance in the appropriate schedule.

(b) It is the intent of the Legislature to increase the

schedule of maximum reimbursement allowances

for selected physicians effective January 1, 2004,

and to pay for the increases through r eductions in payments to hospitals. Revisions developed pursuant to this subsection are limited to the

following:

1. Payments for outpatient physical, occupational,

and speech therapy provided by hospitals shall be reduced to the schedule of maximum

reimb ursement allowances for these services which

applies to nonhospital providers.

2. Payments for scheduled outpatient

nonemergency radiological and clinical laboratory

services that are not provided in conjunction with a

surgical procedure shall be reduced to the schedule of maximum reimbursement allowances for these services which applies to nonhospital providers.

3. Outpatient reimbursement for scheduled

surgeries shall be reduced from 75 percent of charges to 60 percent of charges. (emphasis added)

4 3 . Pursuant to its rulemaking authority in sections 440.13(12),

440.13(14), and 440.591, the Department promulgated rule 69L - 7.501 to

implement section 440.13(7), (12), and (14). Rule 69L - 7 .501 incorporates by

reference the Hospital Manual , which includes the applicable reimbursement

schedule created by the pane l. The Introduction section of c hapter 6 of the

Hospital Manual provides the general reimbursement schedule for scheduled

outpatient surgery and provides a standard for “usual and customary ”:

Pursuant to section 440.13(12)(a), F.S., all

compensable charges for hospital outpatient care

shall be reimbursed at 75 percent of usual and customary charges for medically necessary services and supplies, except as otherwise specified in this Chapter. The exceptio n is for scheduled outpatient

surgery, which shall be reimbursed at 60 percent of usual and customary charges.

Usual and customary charges are reimbursed based on average charges of outpatient hospital bills, by

CPT® code and HCPCS® Level II code, in a s pecific

geographic area. Please see Appendix A of this

Manual for the adopted geographic modifiers by county and Appendices B and C for a listing of the

Base Rates by CPT® code and HCPCS® Level II

code for non - scheduled outpatient services and

scheduled su rgical services.

In the absence of a CPT® or HCPCS® Level II

procedure code in the applicable Appendix or a

mutually agreed upon contract between the hospital and the insurer/employer, reimbursement shall be made at the applicable percentage of the hospi tal’s

usual and customary charge.

In the event that a CPT® code or HCPCS® Level II code is substantially revised due to the creation of a new CPT® code or HCPCS® Level II code or a new

CPT® code or HCPCS® Level II code is created in a

CPT® manual releas ed subsequent to the

applicable CPT® manual incorporated by reference by rule, the hospital may bill and the insurer shall reimburse, subject to any other provision of this

manual, statute, or applicable rule, such

substantially revised or newly created CP T® code

or HCPCS® Level II code at the applicable

percentage of the hospital’s usual and customary charge, as described above. (emphasis added)

4 4 . Chapter 6, page 23, of the Hospital Manual goes on to create a carve -

out exception for surgical implant rei mbursement s . It sets forth as follows:

Reimbursement for surgical implant(s), also referred to as “other implant” by the National Uniform Billing Manual, and associated disposable instrumentation required during outpatient surgery billed under Revenue Code 278 shall be

determined by one of the following methods:

For those utilized during unscheduled surgeries,

surgical implants and associated disposable

instrumentation shall be reimbursed seventy - five

percent (75%) of the hospital’s usual and customary

charge; or

For those utilized during scheduled surgeries,

surgical implants and associated disposable instrumentation shall be reimbursed sixty percent (60%) of the hospital’s usual and customary charge;

or

According to a mutually agreed upon contr act

between the hospital and the insurer/employer.

Note : Since there are no CPT or HCPCS level II

codes for implants and associated disposable

instrumentation incorporated into Appendices B or

C, pursuant to the description of usual and

customary charges provided in the Introduction

of this chapter, these items are reimbursed at the applicable percentage of the hospital’s usual and customary charge.

4 5 . This exception , based on implants not having an associated CPT or

HCPCS level II code, is not support ed by statute. There are two germane

references to hospital outpatient “charges” in section 440.13(12): The first, as

set forth in section 440.13(12)(a), is that “[a]ll compensable charges for

hospital outpatient care shall be reimbursed at 75 percent of u sual and

customary charges , except as otherwise provided by this subsection. ”

(emphasis added). The second , one of the “revisions” to carry out the

Legislative intent in section 440.13(12)(b) , is that “[o]utpatient

reimbursement for scheduled surgeries sha ll be reduced from 75 percent of

charges to 60 percent of charges .” § 440.13(12)(b)3., Fla. Stat. (emphasis

added).

4 6 . The statute does not define the term “charges” in section

440.13( 12 ) (b)3 . or “usual and customary” in section 440.13 (12)(a) .

4 7 . Where t he Legislature has not defined words or phrases used in a

statute, they must be construed in accordance with their common and

ordinary meaning. Donato v. American Tel. & Tel. Co. , 767 So. 2d 1146 (Fla.

2000). The plain and ordinary meaning of a word may be ascertained by

reference to a dictionary. Green v. State , 604 So. 2d 471 (Fla. 1992). The term

“charge” is defined as a “[p]rice, cost, or expense .” Black’s Law Dictionary 248

(8th ed. 2004 ). The dictionary definition of the term “charge” as used in

secti on 440.13(12)(b)3. is helpful, but still leaves the statute, if read on its

own, ambiguous, as it does not provide guidance as to whose or what prices,

costs, or expenses it refers.

4 8 . Section 440.13(12)(a) states that a ll compensable charges for hospita l

outpatient care shall be reimbursed at 75 percent of usual and customary

charges, except as otherw ise provided by “ this subsection. ” The subsection in

(12)(b) adopts “revisions” to carry out the Legislative intent of reducing

hospital reimbursement s. One of the revisions is in section 440.13 (12)(b)3.

which reduces outpatient reimbursement for scheduled surgeries . It plainly

states that when the outpatient care is related to a scheduled surgery, the charges should then be reduced from 75 percent to 60 perc ent.

49 . The language used in the Hospital Manual provides clarity regarding

the meaning of “ usual and customary charges ” referenced in section

440.1 3(12)(a). The Hospital Manual defines “usual and customary charges ” as

the average charges of outpatien t hospital bills, by CPT® code and HCPCS®

Level II code, in a specific geographic area .” (emphasis added). This is in line

with the dictionary definition: “[u] sual” is defined as “[o]rdinary; customary”

and “[e]xpected based on previous experience.” Black’ s Law Dictionary 1579

(8th ed. 2004) ; “[c] ustomary” is defined as “[a] record of all of the established

legal and quasi - legal practices in a community.” Id. at 413.

5 0 . The reference to “char ges” in section 440.13(12)(b)3., does not repeat

th e modifier “us ual and customary ” ; however, that does not mean that it does

not apply. In stead, section 440.13(12)(b)3. i s the “ otherwise provided ”

exception to the standard provided in 440.13 (12)(a). Statutes related to the

same subject matter must be read in pari mater ia . Hill v. Davis , 70 So. 3d

572, 577 (Fla. 2011). “Where, as here, the Florida Legislature has provided a

unified and comprehensive statutory scheme, this Court will ‘attempt to

follow the requirements that it has set forth.’” Id. (quoting E.A.R. v. State , 4

So. 3d 614, 629 (Fla. 2009)).

5 1 . The only reference to “75 percent” in this entire statutory section is to

section 440.13(12)(a)’s “75 percent of usual and customary charges” which

deals with the same subject matter — that is , reimbursements related to

outpatient care.

5 2 . It is clear, by reading both section 440.13 (12)(a) and (12)(b)3. , that the

charges referenced in (12)(b)3 . that are being reduced from 75 percent to 60

percent are “usual and customary charges.” The lead - in language in

paragraph (12) (b) makes it clear that (12)(b)3. was adopted as a “revision” to

reduce reimbursement for hospital outpatient care provided by (12)(a).

Section 120.57(1)(e) Defense

5 3 . Section 120.57(1)(e)1. provides that an administrative law judge and

an agency may not base agency action that determines the substantial

interests of a party on a rule that is an invalid exercise of delegated

legislative authority.

5 4 . T he Department, in rule 69L - 7.501 (the Hospital Manual) , adds its

own modifier to the term “charges” as used in section 440.13(12)(b)3. In the

context of implants used in outpatient scheduled and unscheduled surgeries,

t he rule changes the “charge” to the “ hospital’s usual and customary charge.”

5 5 . An existing rule is an invalid exercise of delegated legis lative

authority if the rule “enlarges, modifies, or contravenes the specific

provisions of law implemented.” § 120.52(8)(c), Fla. Stat. To determine if a rule contravenes the implementing statutory authority, both the statute and

rule must be reviewed to assess whether the rule gives effect to the

implementing law and whether the rule interprets the law’s specific powers

and duties. See Bd. of Trs. of Int. Imp. Trust Fund v. Day Cruise Ass’n , 794

So. 2d 696, 704 (Fla. 1st DCA 2001).

5 6 . T he statute requir es a calculation based on the usual and customary

charges in the hospital’s geographical area. The rule, on the other hand,

requires a calculation based on the hospital’s usual and customary charges.

Where there is a conflict between a statute and an admin istrative rule, the

statute takes precedence. See State of Fla., Dep’t of Ins. v. Ins. Servs. Off. , 434

So. 2d 908 (Fla. 1st DCA 1993); One Beacon Ins. v. Ag. for Health Care

Admin. , 958 So. 2d 1127 (Fla. 1st DCA 2007).

5 7 . Here, although the general reim bursement rule for hospital scheduled

outpatient surgeries is consistent with the statutory reimbursement

standard, the carve - out exception for implants is contrary to both the statute

and the Department’s general reimbursement rule. The Department ’s

impla nt carve - out exception requires calculations not based on a percentage

of the usual and customary charges in the hospital’s geographical area , but

rather, on a percentage of the hospital’s usual and customary charges . This

part of the rule is an invalid ex ercise of delegated legislative authority and

cannot be the basis for determining Petitioner’s substantial interests.

Conclusion

5 8 . Petitioner met its burden of proving its section 120.57(1)(e) defense,

and the rule standard for scheduled outpatient im plant reimbursement

cannot be applied. Instead, the reimbursement standard is 60 percent of the

usual and customary charges for implants in Florida Hospital’s county.

59 . Petitioner’s adjustment s to Florida Hospital’s charges for implants

were not based on a reimbursement standard set forth in either the statute or

the Department ’s rule . Moreover , Petitioner failed to present any evidence of

the usual and customary hospital charges for implants used in scheduled

outpatient surgeries in Florida Hospital’s co unty. In failing to do so,

Petitioner did not meet its burden of proving that it properly adjusted its

payment of Florida Hospital’s bill.

R ECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

R ECOMMENDED that the Departmen t of Financia l Services, Division of

Workers’ Compensation, enter a final order dismissing the Petition for

Administrative Hearing .

D ONE A ND E NTERED this 18th day of September , 2020 , in Tallahassee,

Leon County, Florida.

S

J ODI - A NN V. L IVINGSTONE

Admin istrative 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 Hearin gs

this 18th day of September , 2020 .

C OPIES F URNISHED :

Robert B. Bennett, Esquire

Bennett, Jacobs and Adams, P.A.

Post Office Box 3300

Tampa, Florida 33601

(eServed)

John R. Darin, Esquire

Bennett, Jacobs and Adams, P.A.

1925 East Second Avenue

Post O ffice Box 3300

Tampa, Florida 33601

(eServed)

Thomas Nemecek, Esquire Department of Financial Services

Division of Workers ’ Compensation

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Keith C. Humphrey, Esquire

Department of Financial Se rvices

Division of Workers’ Compensation

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 03 90

(eServed)

N OTICE OF R IGHT T O S UBMIT E XCEPTIONS

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.