20-004061 Adco Billing Solutions, Lp vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Tuesday, February 2, 2021.

Summary: Petitioner established that its Petition for Resolution of Reimbursement Dispute was timely filed pursuant to section 440.13(7), and alternatively, that equitable tolling would excuse an untimely filing.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

A DCO B ILLING S OLUTIONS , L P ,

Petitioner ,

vs. Case No. 20 - 4061

D EPARTMENT OF F INANCIAL S ERVICES ,

D IVISION OF W ORKERS ' C OMPENSATION ,

Respondent .

/

R ECOMMENDED O RDER

On December 2 2 , 2020, Administrative Law Judge Robert J. Telfer III, of

the Florida Division of Administrative Hearings (Division), conducted an

evidentiary hearing pursuant to section 120.57(1), Florida Sta tutes (2020), in

Tallahassee, Florida, via Zoom web - conference .

A PPEARANCES

For Petitioner: Marc J. Semago, Esquire

FL Legal Group

Suite 400

2700 West Dr. M artin L uther K ing, Jr . , Boulevard

Tampa, Florida 33607

For Respondent: Keith C. Humphr ey, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

S TATEMENT OF T HE I SSUE

W hether Petitioner ADCO Billing Solutions, L.P.Ôs (ADCO) , Petition for

Resolution of Reimbursement Dispute is entitled to be consid ered on the

merits, or whether it should be dismissed.

P RELIMINARY S TATEMENT

On June 19, 2020, ADCO submitted a Petition for Resolution of

Reimbursement Dispute with Respondent Department of Financial Services,

Division of WorkersÔ Compensation (Departmen t). On July 10, 2020, the

Department issued a Reimbursement Dispute Dismissal, dismissing the

Petition for Resolution of Reimbursement Dispute as untimely.

On August 26, 2020, ADCO filed a Petition for Administrative Hearing

Following Reimbursement Disput e Dismissal with the Department. On

September 10, 2020, the Department referred this matter to the Division.

The undersigned initially noticed this matter for a final hearing f o r

November 12, 2020. ADCO filed an unopposed Motion to Continue Final

Hearing, which the undersigned granted.

The undersigned conducted the final hearing on December 22, 2020, by

Zoom web - conference. ADCO presented the testimony of Ryan Chenchick, its

Collections Manager. The undersigned admitted PetitionerÔs Exhibit P1 into

eviden ce. Marcia Paulk, R.N., a nurse case manager for the Department,

testified on behalf of the Department. The undersigned admitted

RespondentÔs Exhibits R1 and R2 into evidence. 1

The one - volume T ranscript of the final hearing was filed with the Division

on January 11, 2021. The parties timely submitted proposed recommended

orders on January 21, 2021, which the undersigned has considered in the

preparation of this Recommended Order.

1 The parties filed a Joint Pre - hearing Stipulation on November 3, 2020. At the final hearing,

the parties jointly requested that the undersigned strike parag raphs 17 and 18 from the

partiesÔ stipulated facts, which the undersigned granted. The undersigned has considered the

partiesÔ Joint Pre - hearing Stipulation Ð and has not considered these stricken paragraphs Ð

in the preparation of this Recommended Order.

All statutory references are to the 2020 codification of the Florida

Statute s, unless otherwise indicated.

F INDINGS OF F ACT

1. The Department is the state agency with jurisdiction to resolve

reimbursement disputes between health care providers and carriers,

pursuant to section 440.13(7), Florida Statutes. Chapter 440 is known as the

FloridaÔs WorkersÔ Compensation Law. See § 440.01, Fla. Stat.

2. Michael S. Schurdell, M.D., a physician (Dr. Schurdell), is a Ñhealth

care providerÒ as defined in section 440.13(1)(g).

3. ADCO is an agent for Dr. Schurdell, responsible for preparing,

processing, and submitting workersÔ compensation bills for repackaged

prescription medication to insurers and carriers on Dr. SchurdellÔs behalf.

4. Zenith Insurance Company (Zenith), a nonparty to this proceeding, is

considered a ÑcarrierÒ as defined in s ection 440.13(1)(c).

5. The FloridaÔs WorkersÔ Compensation Law, and its implementing rules,

govern the process through which health care providers and carriers review

and make determinations on health care provider bills.

6. A carrierÔs bill review, under section 440.13(6), and implementing rules,

culminates in a reimbursement decision to either pay the bill, or to disallow,

adjust, or deny payment. An Explanation of Bill Review (EOBR) is Ñthe

document used to provide notice of payment or notice of adjustm ent,

disallowance or denial by a claim administrator or any entity acting on behalf

of an insurer to a health care provider[.]Ò Fla. Admin. Code R. 69L - 7.710(y).

7. Pursuant to Florida Administrative Law R ule 69L - 7.740(14), a carrier

(or its claim administ rator) must use an EOBR that details the reasons for a

reimbursement decision for each line item. The EOBR must reflect EOBR

codes (up to three for each line item billed), which are reasons for the

reimbursement decision.

8. The EOBR is what triggers a hea lth care providerÔs option to submit a

petition for resolution of reimbursement dispute with the Department,

pursuant to section 440.13(7).

9. Section 440.13(7) provides, in pertinent part:

(7) UTILIZATION AND REIMBURSEMENT

DISPUTES. Ð

(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 petitione r 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

petition to submit such doc umentation to the

department results in dismissal of the petition.

10. Melissa Malarae , a nonparty to this proceeding, sought medical

treatment from Dr. Schurdell, as a result of a workplace injury that occurred

on August 31, 1998.

11. Ms. Malarae subsequ ently filed a Petition for WorkersÔ Compensation

Benefits on August 29, 2002, with the Office of the Judges of Compensation

Claims (OJCC), in a matter styled Melissa Malarae v. TLC Child Care Center

of Sarasota and Zenith Insurance Company , OJCC Case Numbe r 02 -

034031RLD.

12. Dr. Schurdell provided medical care related to the 1998 workplace

injury and dispensed prescription medications to Ms. Malarae on August 8,

2019. Notably, two of the prescription medications that Dr. Schurdell

prescribed and dispensed w ere ÑLidocaine Ointment 5%Ò and ÑDiclofenac

Sodium Solution 1.5%.Ò

13. On August 8, 2019, ADCO, on behalf of Dr. Schurdell, submitted a

ÑHealth Insurance Claim FormÒ for prescription medications he had

prescribed and dispensed, to Zenith, Ms. Malarae Ôs emp loyerÔs workersÔ

compensation carrier, for payment.

14. As Zenith had not paid for those prescription medications, on

February 18, 2020, Ms. Malarae (through her attorney, Ronald S. Fanaro,

Esq uire ) filed another Petition for WorkersÔ Compensation Benefits , in OJCC

Case N o. 02 - 034031RLD, seeking payment for prescription medications that

ADCO, on behalf of Dr. Schurdell, submitted to Zenith.

15. On March 11, 2020, Zenith filed a Response to Petition for Benefits in

OJCC Case N o. 02 - 034031RLD. In the portion of the Response to Petition for

Benefits entitled ÑResponse to Each Benefit Requested,Ò Zenith stated:

Petition(s) 02/18/2020(9) are covered by this

response.

Payment in the amount of $29,942.34 to ADCO

Billing Solutions.

Attorney Fees and Costs.

Resp onse:

The EC denies entitlement to attorney fees as the

requested benefits are being paid within 30 days of

the Petition. The EC agrees to reimburse taxable

costs associated with obtaining benefits in the

Petition.

16. However, also on March 11, 2020, Ze nith issued an EOBR that

adjusted the August 8, 2019, payment for medications listed on the Health

Insurance Claim Form. The March 11, 2020, EOBR indicated a significant

downward adjustment of payment for the ÑLidocaine Ointment 5%Ò and

ÑDiclofenac Sodium Solution 1.5%Ò that ADCO requested.

17. Mr. Chenchick, the collections manager for ADCO that sought

reimbursement for the multiple medications Dr. Schurdell dispensed to

Ms. Malarae (including the Lidocaine Ointment and Diclofenac Sodium

Solution), testif ied that he worked with Mr. Fanaro in the filing of the

February 18, 2020, Petition for WorkersÔ Compensation Benefits, to seek

reimbursement in the amount of $29,942.34. Mr. Chenchick testified that,

following receipt of Ms. Malarae Ôs Petition for Workers Ô Compensation

Benefits:

[T]hey [Zenith] rescinded their denial. That was the

response from Zenith. It was from the adjuster,

Katy Lamb. It was another document that said we

rescind, and, you know, there was a guarantee of

payment of that [$]29,942.34.

1 8. Mr. Chenchick testified that he considered ZenithÔs March 11, 2020,

response to the February 18, 2020, Petition for WorkersÔ Compensation

Benefits a Ñguarantee of payment[,]Ò and that he believed that Zenith would

make full payment for the multiple medi cations at issue.

19. Mr. Chenchick testified that on March 17, 2020 Ð after he received

ZenithÔs March 11, 2020 , response to the Petition for WorkersÔ Compensation

Benefits Ð he received the EOBR, dated March 11, 2020, and payment from

Zenith. Mr. Chenchick t estified:

So the other dates of service were reimbursed

properly. This was the only date of service that was

Ï that we were taking issue with, this date of

service of 8/8/2019, and the billed amount was,

yeah, $13,536.43, and for that date of service, we

were only reimbursed $349.67.

20. After receiving the March 11, 2020, EOBR, which Mr. Chenchick

considered a Ñshort pay,Ò Mr. Chenchick contacted ZenithÔs bill review

department on March 27, 2020, to discuss this discrepancy. Mr. Chenchick

testified that a Ñshort payÒ error was common, and that ADCO regularly

addressed such an error with carriers directly, as opposed to utilizing the

dispute resolution process with the Department, pursuant to

section 440.13(7).

21. Mr. Chenchick further testified concerni ng the alleged Ñshort payÒ of

the two prescription medications:

What we had in this one, which typically we donÔt,

was the Ï a guarantee of payment is what I

considered it where they rescinded and said they

would be paying the bills. So when I had that in my

hand saying we are rescinding the denial, we will

pay this amount, and then an amount comes in

thatÔs lower than that . . . .

I didnÔt feel at that time that I needed to submit

anything to the State because it was still under

review. It had not hit a h ard denial.

22. ADCO did not contest the March 11, 2020, EOBR, pursuant to the

procedure set forth in section 440.13(7), and , therefore , did not petition the

Department within the 45 - day requirement contained in this provision. Nor

did ADCO and Zenith sub mit a Joint Stipulation of the Parties to the

Department, pursuant to rule 69L - 31.012, which would have allowed the

parties to Ñmutually s t ipulat[e] in writing that the reimbursement dispute be

held in abeyance for a specified time period, not to exceed si xty (60) calendar

days, for the parties to s eek a resolution of the reimbursement dispute

without the need for a determination by the Department.Ò

23. Instead, Mr. Chenchick testified that he continued to negotiate with

Zenith concerning the payment discre pancy through May 2020. On May 20,

2020, Mr. Chenchick, on behalf of ADCO, sent Zenith an ÑAppeal for

Reconsideration,Ò that explained ADCOÔs position that Zenith had short - paid

the two prescription medications.

24. On May 27, 2020, Zenith issued a second, separate EOBR, that ADCO

received on June 3, 2020 (Second EOBR). The Second EOBR differed from the

March 11, 2020, EOBR, in that it only concerned the two prescription

medications at issue here , and that Zenith completely disallowed payment

($13,536.43) f or them.

25. ADCO filed a Petition for Resolution of Reimbursement Dispute with

the Department on June 19, 2020, which the Department received on

June 30, 2020 , 27 days after ADCO received the Second EOBR.

26. At the time Zenith issued the Second EOBR, t he August 8, 2019 ,

billing remained at issue in OJCC Case N o. 02 - 034031RLD. A June 10, 2020 ,

mediation agreement, signed by Ms. Malarae , Mr. Fanaro, and a

representative from Zenith, states, in part:

Parties agree as follows:

Regarding PFB of 2/18/20, th e outstanding bills

submitted by ADCO Billing Solutions have been

paid and accepted by E/C, with the exception of

prescriptions for Date of Service 8/8/19 for

Diclofenac and Lidocaine ointment. E/C made a

payment for the 8/8/19 prescriptions, but the

provi der is disputing the amount paid. This dispute

between the E/C and the billing provider is not

within the purview of the JCC, who is without

jurisdiction to address such billing disputes, and

must be handled administratively.

27. The Department assigned M s. Paulk, a registered nurse consultant

with the DepartmentÔs Bureau of Monitoring and Audit within its Medical

Services Section, to review ADCOÔs Petition for Resolution of Reimbursement

Dispute. Her job duties include reviewing petitions for resolution

r eimbursement disputes for deficiencies, under section 440.13(7) and

rules 69L - 31 and 69L - 7.

28. Ms. Paulk reviewed ADCOÔs Petition for Resolution of Reimbursement

Dispute, dated June 19, 2020, and compared it to the date ADCO received an

EOBR that would t rigger section 440.13(7)Ôs 45 - day deadline for this process.

Ms. Paulk testified that she reviewed the two EOBRs, and noted that both

indicated a Ñdisallowance or adjustment of paymentÒ for the two prescription

medications. Under this circumstance, Ms. Pau lk testified that the

Department used the earlier, March 11, 2020, EOBR for purposes of

calculating the deadline for a petition for resolution of reimbursement

dispute. As ADCOÔs Petition for Resolution of Reimbursement Dispute was

filed more than 45 days after the March 11, 2020, EOBR, the Department

dismissed it as untimely served on the Department, pursuant to

section 440.13(7).

29. Ms. Paulk admitted, on cross - examination, that when she made the

decision to dismiss ADCOÔs Petition for Resolution of Rei mbursement

Dispute, she was unaware of OJCC Case N o. 02 - 034031RLD, had no contact

with either ADCO or Zenith, and that the March 11, 2020, EOBR and the

Second EOBR were not identical, as the March 11, 2020 , EOBR actually

reflected an adjustment of the amou nts for reimbursement for the two

prescription medications ( i.e., Zenith would pay an amount for the two

prescriptions totaling $349.67), while the Second EOBR reflected that Zenith

completely disallowed payment in full for the two prescriptions.

30. The u ndersigned finds that the March 11, 2020, EOBR differs from the

Second EOBR. The March 11, 2020, EOBR reflected a downward adjustment

for the two prescription medications. The Second EOBR reflects that Zenith

completely disallowed payment for these two pre scriptions. Additionally, the

March 11, 2020, EOBR considered additional dates of service, which were not

at issue in the Second EOBR.

31. With respect to the payment for the two prescription medications at

issue between ADCO and Zenith, the March 11, 2020 , EOBR also conflicts

with ZenithÔs Response to Petition for Benefits in OJCC Case N o. 02 -

034031RLD, in which Zenith admitted that it would pay for all of the

medications (including the two prescription medications at issue) listed in

ADCOÔs August 8, 2019 , Health Insurance Claim Form. The OJCC was the

wrong forum for Ms. Malarae to seek payment for these two medications. See

£ 440.13(7), Fla. Stat. However, ZenithÔs response, and Mr. ChenchickÔs

testimony that ADCO considered it a Ñguarantee of payment,Ò e stablishes

that ADCO had been lulled or misled into inaction, as ADCO relied on

ZenithÔs response, and reasonably believed that the adjustment reflected in

the March 11, 2020, EOBR was erroneous.

32. Mr. ChenchickÔs additional testimony concerning ADCOÔs a ttempt to

reconcile what he believed to be a common error known as Ñshort pay,Ò

reflected in the March 11, 2020, EOBR (which he received after Zenith filed

its Response to Petition for Benefits), is further evidence that ADCO

reasonably believed that Zenit h intended to pay, in full, the amount of the

two prescription medications at issue.

C ONCLUSIONS OF L AW

33. The Division has jurisdiction over the subject matter and the parties

to this proceeding in accordance with sections 120.569, 120.57(1) and 440.13 ,

Florida Statutes .

34. At issue in this case is whether ADCOÔs June 19, 2020, Petition for

Resolution of Reimbursement Dispute, filed pursuant to section 440.13(7),

was untimely, as the Department initially determined. If untimely filed,

ADCO raises the de fense of equitable tolling to excuse the untimeliness. 2

35. As the party raising the affirmative of the issue, ADCO has the burden

of proving, by a preponderance of the evidence, that it is entitled to the relief

2 AD CO has also raised the defense of equitable estoppel. However Ð with the exception

of equitable tolling Ð the undersigned does not have jurisdiction to award or recommend

equitable relief. Rather, in Florida, circuit courts have exclusive jurisdiction in all cases

in equity, and only circuit courts can resolve matters involving equitable relief. See

£ 26.012(2)(c), Fla. Stat. (ÑCircuit courts shall have È exclusive original jurisdiction [i]n all

cases in equity including all cases relating to juveniles excep t traffic offenses as provided i n

chapters 316 and 985 [ . ] Ò). ÑWhile an administrative agency may exercise quasi - judicial power

when authorized by statute, it may not exercise power which is basically and fundamentally

judicial such as the grant of an equit able remedy.Ò Biltmore Constr. Co. v. Fla. DepÔt of G en.

Servs. , 363 So. 2d 851, 854 (Fla. 1st DCA 1978).

it seeks. See Balino v. DepÔt of HRS, 348 So. 2d 349, 250 (Fla. 1st DCA 1977);

§ 120.57(1)(j), Fla. Stat.

36. Section 440.13(7)(a) requires that a health care provider who elects to

contest the disallowance or adjustment of payment by a carrier must, within

45 days after receipt of the notice or disallowance or adjustment of payment,

petition the department to resolve the dispute.

37. The Department contends that the March 11, 2020, EOBR, which

adjusted the payments for the two prescription medications at issue

downward, triggered the 45 - day deadl ine for ADCO to submit its Petition for

Resolution of Reimbursement Dispute. ADCO contends that the Second

EOBR (which ADCO received on June 3, 2020), which disallowed the

payments for the two prescription medications at issue, was the proper

starting poin t for calculating the timeframe for submitting its petition, and

having filed its Petition for Resolution Dispute on June 19, 2020, that it was

timely.

38. ADCO contends, and the undersigned agrees, that the Second EOBR

was a separate, different decision t han what is reflected in ZenithÔs March 11,

2020, EOBR. The March 11, 2020, EOBR adjusted the payment for the two

prescription medications downward, and considered other dates of service.

The Second EOBR, in contrast, simply disallowed payment for the two

prescription medications at issue. See Fla. Admin. Code R. 69L - 7.740(14)

(ÑAn EOBR shall specifically state that the EOBR constitutes notice of

disallowance or adjustment of payment within the meaning of

subsection 440.13(7), F.S.Ò). The plain language of section 440.13(7)(a) states

that a health care provider must, Ñwithin 45 days after receipt of notice of

disallowance or adjustment of payment, petition the department to resolve

the dispute.Ò (emphasis added). As the Second EOBR reflected a disallowance

of payment, the undersigned concludes, in accordance with

section 440.13(7)(a), that it was separate from the March 11, 2020, EOBR.

39. The undersigned concludes that ADCO timely submitted a Petition for

Resolution of Reimbursement Dispute based on the Se cond EOBRÔs

disallowance of payment for the two prescription medications. Accordingly,

the Department erred in dismissing it as untimely.

40. Although the Petition for Resolution of Reimbursement Dispute was

timely submitted to the Department, the undersig ned also concludes that

equitable tolling would excuse ADCOÔs untimely filing of the petition even if

the March 11, 2020, EOBR was considered the trigger for section 440.13(7)Ôs

45 - day deadline.

41. Section 120.569(2)(c) requires agencies to dismiss untime ly petitions,

but further provides that this direction Ñdoes not eliminate the availability of

equitable tolling as a defense to the untimely filing of a petition.Ò Madison

Highlands, LLC v. Fla. Housing Fin. Corp. , 220 So. 3d 467, 471 - 72 (Fla. 5th

DCA 201 7).

42. The Florida Supreme Court first applied the doctrine of equitable

tolling in administrative proceedings in Machules v. Department of

Administration, which it described as follows:

The tolling doctrine is used in the interests of

justice to accommo date both a defendantÔs right not

be called to defend a stale claim and a plaintiffÔs

right to assert a meritorious claim when equitable

circumstances have prevented a timely filing.

Equitable tolling is a type of equitable modification

which focuses on th e plaintiffÔs excusable ignorance

of the limitations period and on the lack of

prejudice to the defendant.

523 So. 2d 1132, 1134 (Fla. 1988)(internal quotations and citations omitted).

43. The Machules court described the type of equitable circumstances t hat

might justify equitable tolling when they prevent a timely filing in the proper

forum:

Generally, the tolling doctrine has been applied

when the plaintiff has been misled or lulled into

action, has in some extraordinary way been

prevented from asserti ng his rights, or has timely

asserted his rights mistakenly in the wrong forum.

Id.

44. The undersigned concludes that equitable tolling would be applicable

in this case because ADCO was misled or lulled into inaction by Zenith.

Mr. Chenchick testified that ADCO relied on ZenithÔs March 11, 2020,

Response to Petition for Benefits in OJCC Case Number 02 - 034031RLD, as a

Ñguarantee of payment,Ò and after later receiving the March 11, 2020, EOBR,

considered it an erroneous, but common, Ñshort payÒ that he d iligently

attempted to resolve with Zenith. ADCO was not aware that Zenith would

disallow payment on the two prescription medications until it received the

Second EOBR.

45. The undersigned further concludes that neither the Department nor

Zenith will be pr ejudiced by allowing ADCOÔs Petition for Resolution for

Reimbursement Dispute to go forward. ADCO, however, will be prejudiced if

the DepartmentÔs dismissal of its Petition for Resolution for Reimbursement

Dispute is allowed to stand, as it will be require d to write off the cost for the

two prescription drugs at issue without an opportunity to contest ZenithÔs

decision, and would have no other recourse under chapter 440.

R ECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, the

u ndersigned hereby R ECOMMEND S that the Department of Financial Services,

Division of WorkersÔ Compensation, enter an Order that reinstates the

Petition for Resolution of Reimbursement Dispute filed by ADCO Billing

Solutions.

D ONE A ND E NTERED this 2nd day of February, 2021, in Tallahassee, Leon

County, Florida.

S

R OBERT J. T ELFER III

Administrative Law Judge

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative H earings

this 2nd day of February, 2021 .

C OPIES F URNISHED :

Keith C. Humphrey, Esquire Marc J. Semago, Esquire

Department of Financial Services FL Legal Group

200 East Gaines Street Suite 400

Tallahassee, Florida 32399 - 4229 2700 West Dr. MLK Jr Boulevard

Tampa, Florida 33607

Ralph Paul Douglas, Esquire

McConnaughhay, Coonrod, Pope, Diane Wint, Agency Clerk

Weaver & Stern, P.A . Division of Legal Services

Suite 200 Department of Financial Services

1709 Hermitage Boulevard Roo m 612.17, Larson Building

Tallahassee, Florida 32308 200 East Gaines Street

Tallahassee, Florida 32399 - 0390

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 thi s Recommended

Order should be filed with the agency that will issue the Final Order in this

case.