Lutheran Servs. Fla., Inc. v. Dep't of Children & Families

Decision Date25 November 2015
Docket NumberNo. 2D13–5840.,2D13–5840.
Citation199 So.3d 286
Parties LUTHERAN SERVICES FLORIDA, INC., Appellant, v. DEPARTMENT OF CHILDREN AND FAMILIES, Appellee.
CourtFlorida District Court of Appeals

G. Logan Elliott, Erika Dine and Sierra Pino of Dine Law, P.L., Sarasota, for Appellant.

Deanne Fields, Department of Children and Families, Tampa, for Appellee.

SLEET, Judge.

Lutheran Services Florida, Inc. (LSF), is the court-appointed guardian for the person and property of the ward Larry Peron. Mr. Peron resides in a nursing home facility as a beneficiary of the Medicaid Institutional Care Program (ICP). As part of that program, Mr. Peron pays a portion of his income to the facility as his patient responsibility payment and Medicaid ICP pays the balance of the cost of his care. In this administrative appeal, LSF challenges the final order of the Department of Children and Families Office of Appeal Hearings affirming the Department's denial of LSF's request to have a $200 monthly guardianship fee for LSF deducted from Mr. Peron's income.1 We affirm the hearing officer's order because Florida law does not deem a fee paid to the guardian of an incapacitated ward to be a “medically necessary” expense for purposes of the state's Medicaid program.

Since 2003, LSF has been the court-appointed professional guardian of the person and property of Mr. Peron. Mr. Peron is not capable of participating in his medical care or providing consent for treatment. As the professional guardian, LSF's duties have included reviewing and monitoring Mr. Peron's medical information, consulting with medical providers to provide consent for treatment, monitoring changes in Mr. Peron's condition, and preparing annual reports regarding Mr. Peron's medical, mental health, and rehabilitative needs.

Mr. Peron has been approved by the Department to receive Medicaid ICP benefits since 2008. Medicaid ICP is a program that provides coverage for healthcare services to individuals who require institutional care in nursing facilities. The Department is the state entity that determines ICP eligibility. § 409.902, Fla. Stat. (2013). The Department conducts periodic reviews to determine Mr. Peron's ongoing ICP eligibility.

In December 2012, LSF obtained from the circuit court an order authorizing the payment of a monthly $200 guardian fee to be deducted from Mr. Peron's income and paid to LSF. At that time, Mr. Peron's total income consisted of a $985 monthly Social Security benefit. The Department calculated Mr. Peron's monthly personal needs allowance to be $35. Subtracting that amount from Mr. Peron's total income left $950 remaining as his monthly patient responsibility payment to the nursing facility. However, LSF then petitioned the Department to deduct the monthly $200 guardian fee from Mr. Peron's patient responsibility amount. The Department denied LSF's petition, concluding that its guardianship services to Mr. Peron were not medically necessary pursuant to Florida law. LSF timely appealed that denial and requested a hearing with the Department's Office of Appeal Hearings.

The Department conducted a hearing on September 17, 2013, at which both parties submitted testimony and documentary evidence. Mr. Peron's attending physician, Dr. Ingrid Zumaran, testified that Mr. Peron is not capable of participating in his medical care or consenting to medical treatment. She further testified that when a medical decision must be made, she is required to contact LSF to obtain consent. According to Dr. Zumaran, absent an emergency, she could not treat Mr. Peron without first obtaining LSF's consent. When asked whether a guardian was medically necessary for Mr. Peron, Dr. Zumaran testified, “Yes, it's medically necessary.”

The Department did not call any medical expert witnesses; rather it argued that a guardian fee is not a “medically necessary” expense pursuant to the definition of that term contained in section 409.9131(2)(b) and that therefore a guardian fee cannot be deducted from an individual's income for purposes of determining his or her patient responsibility payment. The hearing officer agreed with the Department and issued a final order affirming the Department's action. This appeal ensued.

[I]f [an administrative] agency's decision is not supported by substantial, competent evidence established in the record ..., it will be overturned. But an appellate court reviews the agency's conclusions of law de novo.” Wise v. Dep't of Mgmt. Servs., Div. of Ret., 930 So.2d 867, 870–71 (Fla. 2d DCA 2006) (citation omitted). An appellate court may set aside an agency action where the court finds that the agency erroneously interpreted a provision of law and a correct interpretation compels a particular result. Metro. Dade Cty. v. Dep't of Envtl. Prot., 714 So.2d 512, 515 (Fla. 3d DCA 1998) ; see also § 120.68(7)(b), (d), Fla. Stat. (2013).

The issue before this court is whether a guardian fee for an incapacitated ward falls within Florida's statutory definition of a medically necessary expense so as to be considered an allowable deduction from an individual's income for purposes of determining the individual's patient responsibility payment under Medicaid. LSF argues that the hearing officer's reading of the statute is too restrictive in that it ignores LSF's witnesses who testified that having a guardian for Mr. Peron is a medically necessary expense. LSF contends that the services it provides to the incapacitated ward, including the provision of consent to medical treatment, fall within the broad definition of “medically necessary” that is set forth in section 409.9131(2)(b).

Because Medicaid is a joint federal and state program, our resolution of this issue must start with a review of the federal statutes implementing this program. Federal law provides for the establishment and funding of state plans for medical assistance, see 42 U.S.C. § 1396–1, and sets forth the requirements with which each state must comply if it elects to participate in the program, see 42 U.S.C. § 1396a. Specifically, 42 U.S.C. § 1396a(a)(17) provides that each state plan must

provide for flexibility in the application of such standards with respect to income by taking into account ... the costs (whether in the form of insurance premiums, payments made to the State under section 1396b(f)(2)(B) of this title, or otherwise and regardless of whether such costs are reimbursed under another public program of the State or political subdivision thereof) incurred for medical care or for any other type of remedial care recognized under State law.

(Emphasis added.) Additionally, 42 U.S.C. § 1396a(r)(1)(a) provides as follows:

For purposes of sections 1396a(a)(17)... with respect to the posteligibility treatment of income of individuals who are institutionalized or receiving home or community-based services under such a waiver ... there shall be taken into account amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party, including—(i) medicare and other health insurance premiums, deductibles, or coinsurance, and; (ii) necessary medical or remedial care recognized under State law but not covered under the State plan under this subchapter, subject to reasonable limits the State may establish on the amount of these expenses.

(Emphasis added.)

The federal rules for posteligibility treatment of income of institutionalized individuals are found in 42 C.F.R. § 435.725. That section provides that a state “agency must reduce its payment to an institution, for services provided to [disabled individuals who are eligible for Medicaid] by the amount that remains after deducting ... from the individual's total income” certain specified amounts. 42 C.F.R. § 435.725(a), (b). The amount that remains after those deductions are made is the individual's patient responsibility payment. Required deductions under this section include a personal needs allowance for the individual; the maintenance needs of the individual's spouse; the maintenance needs of the individual's family; Medicare and other health insurance premiums, deductibles, or coinsurance charges; and medical or remedial care expenses not subject to third-party payment. 42 C.F.R. § 435.725(c). The statute defines this last category as including an individual's [n]ecessary medical or remedial care recognized under State law but not covered under the State's Medicaid plan.” 42 C.F.R. § 435.725(c)(4)(ii).

Under Florida law, “in the pursuance of state implementation ... of federal programs, an agency is empowered to adopt rules substantively identical to regulations adopted pursuant to federal law.”

§ 120.54(6). Florida Administrative Rule 65A–1.7141(1)(g) is substantively identical to 42 C.F.R. § 435.725(c)(4) and reads as follows:

Effective January 1, 2004, the department allows a deduction for the actual amount of health insurance premiums, deductibles, coinsurance charges and medical expenses, not subject to payment by a third party, incurred by a Medicaid recipient for programs involving post eligibility calculation of a patient responsibility, as authorized by the Medicaid State Plan and in accordance with 42 C.F.R. 435.725.
1. The medical/remedial care service or item must meet all the following criteria:
a. Be recognized under state law;
b. Be medically necessary;
c. Not be a Medicaid compensable expense; and
d. Not be covered by the facility or provider per diem.

(Emphasis added.)

Thus, rule 65A–1.7141(1)(g)(1) sets forth a four-prong test in determining whether a medical or remedial care service is deductible. In the instant case, the hearing officer concluded that LSF's requested guardian fee satisfied the first, third, and fourth prongs of the test but failed to meet the second prong of the test because guardianship is not a medically necessary service under the statutory definition contained in section 409.9131(2)(b). That statute reads as follows:

“Medical necessity” or “medically necessary” means any goods or services
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