Agency for Health Care Admin. v. MVP Health, Inc.

• Decision Date: 02 December 2011
• Docket Number: No. 1D11–1045.,1D11–1045.
• Citation: 74 So.3d 1141
• Parties: AGENCY FOR HEALTH CARE ADMINISTRATION, Appellant, v. MVP HEALTH, INC., Appellee.
• Court: Florida District Court of Appeals

74 So.3d 1141

AGENCY FOR HEALTH CARE ADMINISTRATION, Appellant,
v.
MVP HEALTH, INC., Appellee.

No. 1D11–1045.

District Court of Appeal of Florida, First District.

Dec. 2, 2011.

[74 So.3d 1143]

Dwight O. Slater, Senior Attorney, and Tracy Lee Cooper and Richard J. Saliba, Assistant General Counsels, Tallahassee, for Appellant.

Jay Adams of Broad and Cassel, Tallahassee, for Appellee.

HAWKES, J.

This appeal concerns whether the Division of Administrative Hearings (DOAH) properly found that MVP Health, Inc. (MVP) was entitled to attorney's fees and costs under section 57.111, Florida Statutes (2010). MVP requested fees because it had successfully challenged a decision made by the Agency for Health Care Administration (AHCA).

In particular, AHCA—the state agency responsible for licensing home health care facilities—had withdrawn an application for licensure filed by MVP as incomplete. AHCA rejected the application as it found MVP had provided insufficient information to verify its current controlling interests, and had lost its accreditation.

MVP challenged the withdrawal of its application to DOAH. Following a hearing before an Administrative Law Judge (ALJ), the matter was referred back to AHCA, which issued an order stating:

The evidence presented in this matter demonstrates that the Agency erroneously found [MVP's] initial licensing application to be incomplete. In actuality the [ ] application was complete, and [MVP] met all the requirements for licensure at the time the application was submitted. Thus, the Agency should have approved [MVP's] licensure application.

After receiving this favorable order, MVP moved for attorney's fees pursuant to section 57.111(4)(a), Florida Statutes (2010). AHCA objected to the fees request, arguing that its concerns over MVP's ownership and accreditation provided “substantial justification” for issuing the Notice of Withdrawal. DOAH disagreed with AHCA. Following another evidentiary hearing focusing exclusively upon the fees issue, DOAH issued the order on appeal awarding attorney's fees and costs to MVP under section 57.111(4)(a). We reverse.

The “Substantial Justification” Standard

Section 57.111(4)(a) states fees may be awarded in the following circumstances:

Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.

(emphasis added). Section 57.111(4)(a) states that a state agency may avoid fees if its action was “substantially justified.” It is the burden of the state agency to show that this exception applies. See Helmy v. Dep't of Bus. & Prof'l Regulation, 707 So.2d 366, 368 (Fla. 1st DCA 1998). Here, AHCA claims two facts “substantially justified” its decision to issue the Notice of Withdrawal: (1) the ongoing litigation over MVP's ownership; and (2) its concern over MVP's accreditation. We agree.

An action is “substantially justified” if the state agency had a “reasonable basis in law and fact” to initiate it. § 57.111(3)(e), Fla. Stat. (2010). This Court has found an agency cannot satisfy the “substantial justification” standard simply by showing an action was “not frivolous.” This is because “while governmental action may not be so unfounded as to

[74 So.3d 1144]

be frivolous, it may nonetheless be based on such an unsteady foundation factually and legally as not to be substantially justified.” Dep't of Health & Rehab. Servs. v. S.G., 613 So.2d 1380, 1386 (Fla. 1st DCA 1993). On the...