Prescription Partners, LLC v. State

• Decision Date: 28 March 2013
• Docket Number: No. 1D12–3305.,1D12–3305.
• Citation: 109 So.3d 1218
• Parties: PRESCRIPTION PARTNERS, LLC, Appellant, v. STATE of Florida, DEPARTMENT OF FINANCIAL SERVICES, Appellee.
• Court: Florida District Court of Appeals

109 So.3d 1218

PRESCRIPTION PARTNERS, LLC, Appellant,

v.STATE of Florida, DEPARTMENT OF FINANCIAL SERVICES, Appellee.

No. 1D12–3305.

District Court of Appeal of Florida,

First District.

March 28, 2013.

Thomas F. Panza, of Panza, Maurer & Maynard, P.A., Ft. Lauderdale, for Appellant.

P.K. Jameson, General Counsel, and Mary E. Ingley, Assistant General Counsel, Florida Department of Financial Services, Division of Legal Services, Tallahassee, for Appellee.

SWANSON, J.

Prescription Partners, LLC (“Partners”), appeals the Final Order of the Department of Financial Services (“the Department”) concluding Partners lacked standing to file petitions for administrative hearings challenging the dismissals of thirty-five Petitions for Resolution of Reimbursement Dispute by the Department's Office of Medical Services (“OMS”). We reverse.

This cause is rooted in chapter 440, Florida Statutes. According to the plan outlined in section 440.13, Florida Statutes, workers' compensation physicians licensed to dispense prescription medication to injured claimants may seek reimbursement from the claimants' employers or the employers' compensation insurance carriers based on the pharmacy fee schedule set forth in section 440.13(12)(c), Florida Statutes. Partners is a Florida business that contracts with these physicians to purchaseand process their claims for reimbursement of pharmacy-related services. The contracts typically provide for the physicians to assign all of their right, title, and interest in and to the claims, including the right to bill and receive payment from insurance carriers or self-insured employers. As consideration for the physician's unqualified assignment of the claim, Partners pays the physician a percentage of the claim's value, regardless of the amount Partners is ultimately able to collect from the payor.

With limited exception, when reimbursing a medical provider for services rendered to an injured worker, if full payment is not made, the payor must issue an Explanation of Bill Review (“EOBR”) explaining the reason why it denied, disallowed or adjusted the payment. SeeFla. Admin. Code R. 69L–7.602(5)(j)1. & (q). If the provider chooses to challenge the reimbursement amount, or the refusal to reimburse, section 440.13(7), Florida Statutes, along with its corresponding provisions in chapter 69L–31, Florida Administrative Code, provides the mechanics for resolving the dispute. Specifically, section 440.13(7)(a) states in relevant part, that “[a]ny health care provider, carrier, or employer who elects to contest the disallowance or adjustment of payment by a carrier ... must, within 30 days after receipt of notice of disallowance or adjustment of payment, petition the department to resolve the dispute.” § 440.13(7)(a), Fla. Stat. The present record demonstrates that Partners has routinely pursued dispute resolution by filing with the Department a petition denoted “DFS Form 3160–0023,” incorporated by reference in Florida Administrative Code Rule 69L–31.003. The form expressly allows the petition for dispute resolution to be filed by parties other than the medical provider who are “acting on behalf” of the provider.

Thus, according to practice, in late 2011 and early 2012, Partners filed numerous petitions with the OMS challenging underpayments made by carriers for medications dispensed to workers' compensation claimants. The OMS adjudicated many of the petitions in Partners' favor, but dismissed others ruling they had not been filed within thirty days “of notice of disallowance or adjustment of payment,” as required by section 440.13(7)(a). As the party filing the petition, Partners was served with a copy of each dispute resolution dismissal and was notified of “its right to an administrative hearing concerning this proposed agency action by the department under sections 120.569 and 120.57, Florida Statutes.” Partners subsequently filed, pursuant to section 120.57(2), Florida Statutes, ninety-six petitions for administrative hearings challenging OMS's dismissal of its petitions for dispute resolution. On February 8, 2012, the Department entered an order dismissing all of the petitions without prejudice on the grounds that (1) the petitions lacked the required pleading elements found in section 120.569, and (2) Partners lacked standing to pursue an administrative challenge to the Department's dismissals of its petitions. Partners was given fifteen days to file amended petitions and to show cause why it had standing to pursue the administrative challenges.

Partners timely amended and refiled thirty-five of the petitions, but this time sought full evidentiary hearings pursuant to section 120.57(1), Florida Statutes. Attached to the petitions were redacted copies of Partners' contracts with its health care clients, documenting each physician's unqualified assignment to Partners of all of the physician's “right, title and interest in and to the Claim including, without limitation, rights to bill and receive payment for the Claim from insurance carriers or self-insured parties.” Partners also filed a motion to strike the Department's order to show cause and, in the alternative, a response arguing Partners' standing to file the petitions. The Department issued an order consolidating all of the petitions and referring them to a hearing officer for informal resolution under section 120.57(2). The Department claimed there were no disputed issues of material fact warranting a hearing under section 120.57(1), instead ruling the issue of whether OMS had properly interpreted the time limitations in section 440.13(7)(a) was purely a question of law. Partners objected to the assignment of the cases to an informal hearing officer, requesting they be transferred to the Division of Administrative Hearings (“DOAH”) for formal proceedings.

On May 4, 2012, the informal hearing officer entered a Report and Recommendation to the Department that it dismiss Partners' thirty-five amended petitions due to Partners' lack of standing. The hearing officer also rejected Partners' request for a formal administrative hearing. On review, the Department entered its Final Order fully adopting the hearing officer's findings of fact and conclusions of law. The Department concluded that section 440.13(7)(a) “expressly authorizes only health care providers, carriers, or employers to contest the disallowances or payment adjustments here in question,” and Partners “fits into none of those categories.” (Emphasis in original.) Further, the Department ruled that Partners

does not fit within the definition of a ‘party’ under Section 120.52(13), Fla. Stat., because its only interest in this proceeding is economic, to wit: the profit it expects to make by virtue of purported assignments of collection rights from individual doctors allowing it to retain all the monies it collects on their respective claims.... Thus, it is clear that the economic interest at stake here is that of the doctors' selling, and Prescription Partners' buying, of debt. There is nothing in Section 440.13(7), Fla. Stat. that indicates the legislature's desire to extend its statutory contestation opportunity to anyone other than providers, carriers or employers actually involved in workers' compensation medical services remuneration disputes. There is nothing in the applicable statutes that indicates a legislative desire to protect sellers and buyers of debt. Thus, Prescription Partners LLC fails the Agrico Chemical Company v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 2d DCA 1981) test to be considered a Chapter 120, Fla. Stat., “party” in this matter because its economic interests are not within the type or nature of interests sought to be protected by Section 440.13(7), Fla. Stat., proceedings.

In determining the soundness of the Department's foregoing ruling on the standing issue, several well-established principles inform our analysis. First, the dismissal of a petition for lack of standing is a question of law to be reviewed de novo. Mid–Chattahoochee River Users v. Fla. Dep't of Envtl. Prot., 948 So.2d 794, 796 (Fla. 1st DCA 2006). Second, an administrative agency's action may be set aside if “[t]he agency has erroneously interpreted a provision of law and a correct interpretation compels a particular action[.]” § 120.68(7)(d), Fla. Stat. See also Young v. Dep't of Educ., Div. of Vocational Rehab., 943 So.2d 901, 902 (Fla. 1st DCA 2006) (“A reviewing court may set aside agency action when it finds that the action is dependent on any finding of fact that is not supported by competent substantial evidence in the record, a material error in procedure, an erroneous interpretation of law, or an abuse of discretion.”). Third, to achieve standing to challenge agency action, an individual or entity must be a “party” as that term is defined, in relevant part, in section 120.52(13), Florida Statutes, to mean:

(a) Specifically named persons whose substantial interests are being determined in the proceeding.

(b) Any other person who, as a matter of constitutional right, provision of statute, or provision of agency regulation, is entitled to participate in whole or in part in the proceeding, or whose substantial interests will be affected by proposed agency action, and who makes an appearance as a party.

Finally, the seminal decision in Agrico Chemical Co. v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 2d DCA 1981), cited by the Department as providing the underpinning of its holding, offers a two-prong test to determine when a third party challenger to agency action meets the “substantial interest” element of sub-paragraph (b) of section 120.52(13). The Agrico test requires a would-be party to demonstrate “1) that he will suffer injury in fact which is of sufficient immediacy to entitle him to a section 120.57 hearing, and 2) that his substantial injury is of a type or nature which the proceeding is designed to protect.” Id. at 482.

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