“Judicial deference never requires that courts adopt an agency’s interpretation of a statute or rule when the agency’s interpretation cannot be reconciled with the plain language of the statute. . .”
How later courts described this case
- “Judicial deference never requires that courts adopt an agency’s interpretation of a statute or rule when the agency’s interpretation cannot be reconciled with the plain language of the statute. . .”
Written by the judges who cited it.
The opinion
FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D17-2027
_____________________________
SOUTHERN BAPTIST HOSPITAL OF
FLORIDA d/b/a BAPTIST MEDICAL
CENTER NASSAU; SOUTHERN
BAPTIST HOSPITAL OF FLORIDA
d/b/a BAPTIST MEDICAL CENTER
OF THE BEACHES; SOUTHERN
BAPTIST HOSPITAL OF FLORIDA
d/b/a BAPTIST MEDICAL CENTER;
MARTIN MEMORIAL MEDICAL
CENTER; SOUTH LAKE HOSPITAL;
ORLANDO HEALTH, INC. d/b/a
ORLANDO HEALTH; ORLANDO
HEALTH CENTRAL, INC. d/b/a
HEALTH CENTRAL,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
_____________________________
No. 1D17-2028
_____________________________
SOUTHERN BAPTIST HOSPITAL OF
FLORIDA d/b/a BAPTIST MEDICAL
CENTER NASSAU; SOUTHERN
BAPTIST HOSPITAL OF FLORIDA
d/b/a BAPTIST MEDICAL CENTER
OF THE BEACHES; SOUTHERN
BAPTIST HOSPITAL OF FLORIDA
d/b/a BAPTIST MEDICAL CENTER;
MARTIN MEMORIAL MEDICAL
CENTER; SOUTH LAKE HOSPITAL;
ORLANDO HEALTH, INC. d/b/a
ORLANDO HEALTH; ORLANDO
HEALTH CENTRAL, INC. d/b/a
HEALTH CENTRAL,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
2
_____________________________
No. 1D17-2033
_____________________________
THE PUBLIC HEALTH TRUST OF
MIAMI-DADE COUNTY, FLORIDA,
which governs and operates
JACKSON HEALTH SYSTEM,
including JACKSON MEMORIAL
HOSPITAL, JACKSON NORTH
MEDICAL CENTER and JACKSON
SOUTH COMMUNITY HOSPITAL,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
3
_____________________________
No. 1D17-2034
_____________________________
MIAMI BEACH HEALTHCARE
GROUP, LTD., d/b/a AVENTURA
HOSPITAL AND MEDICAL CENTER;
HCA HEALTH SERVICES OF
FLORIDA, INC., d/b/a BLAKE
MEDICAL CENTER; GALENCARE,
INC., d/b/a BRANDON REGIONAL
HOSPITAL; TALLAHASSEE
MEDICAL CENTER, INC., d/b/a
CAPITAL REGIONAL MEDICAL
CENTER; CENTRAL FLORIDA
REGIONAL HOSPITAL, INC., d/b/a
CENTRAL FLORIDA REGIONAL
HOSPITAL; CITRUS MEMORIAL
HOSPITAL, INC., d/b/a CITRUS
MEMORIAL HOSPITAL; SARASOTA
DOCTORS HOSPITAL, INC., d/b/a
DOCTORS HOSPITAL OF
SARASOTA; ENGLEWOOD
COMMUNITY HOSPITAL, INC.,
d/b/a ENGLEWOOD COMMUNITY
HOSPITAL; FAWCETT MEMORIAL
HOSPITAL, INC., d/b/a FAWCETT
MEMORIAL HOSPITAL; FORT
WALTON BEACH MEDICAL
CENTER, INC., d/b/a FORT
WALTON BEACH MEDICAL
CENTER; BAY HOSPITAL, INC.,
d/b/a GULF COAST MEDICAL
CENTER; JFK MEDICAL CENTER
LIMITED PARTNERSHIP, d/b/a
JFK MEDICAL CENTER; JFK
MEDICAL CENTER LIMITED
PARTNERSHIP, d/b/a JFK
MEDICAL CENTER-NORTH
CAMPUS; KENDALL HEALTHCARE
4
GROUP, LTD., d/b/a KENDALL
REGIONAL MEDICAL CENTER;
NOTAMI HOSPITALS OF FLORIDA,
INC., d/b/a LAKE CITY MEDICAL
CENTER; LARGO MEDICAL
CENTER, INC., d/b/a LARGO
MEDICAL CENTER; LARGO
MEDICAL CENTER, INC., d/b/a
LARGO MEDICAL CENTER-INDIAN
ROCKS; LAWNWOOD MEDICAL
CENTER, INC., d/b/a LAWNWOOD
REGIONAL MEDICAL CENTER &
HEART INSTITUTE; NEW PORT
RICHEY HOSPITAL, INC., d/b/a
MEDICAL CENTER OF TRINITY;
NEW PORT RICHEY HOSPITAL,
INC., d/b/a MEDICAL CENTER OF
TRINITY WEST PASCO CAMPUS;
MEMORIAL HEALTHCARE GROUP,
INC., d/b/a MEMORIAL HOSPITAL
JACKSONVILLE; WEST FLORIDA –
MHT, LLC, d/b/a MEMORIAL
HOSPITAL OF TAMPA;
PLANTATION GENERAL HOSPITAL
LIMITED PARTNERSHIP, d/b/a
MERCY HOSPITAL, A CAMPUS OF
PLANTATION GENERAL
HOSPITAL; NORTH FLORIDA
REGIONAL MEDICAL CENTER,
INC., d/b/a NORTH FLORIDA
REGIONAL MEDICAL CENTER;
GALENCARE, INC., d/b/a
NORTHSIDE HOSPITAL;
NORHTWEST MEDICAL CENTER,
INC., d/b/a NORTHWEST MEDICAL
CENTER; HCA HEALTH SERVICES
OF FLORIDA, INC., d/b/a OAK
HOLL HOSPITAL; MARION
COMMUNITY HOSPITAL, INC.,
d/b/a OCALA REGIONAL MEDICAL
CENTER; MARION COMMUNITY
5
HOSPITAL, INC., d/b/a WEST
MARION COMMUNITY HOSPITAL;
ORANGE PARK MEDICAL CENTER,
INC., d/b/a ORANGE PARK
MEDICAL CENTER; OSCEOLA
REGIONAL HOSPITAL, INC., d/b/a
OSCEOLA REGIONAL MEDICAL
CENTER; WEST FLORIDA – PPH,
LLC, d/b/a PALMS OF PASADENA
HOSPITAL; PALMS WEST
HOSPITAL LIMITED
PARTNERSHIP, d/b/a PALMS WEST
HOSPITAL; PLANTATION
GENERAL HOSPITAL LIMITED
PARTNERSHIP, d/b/a PLANTATION
GENERAL HOSPITAL; POINCIANA
MEDICAL CENTER, INC., d/b/a
POINCIANA MEDICAL CENTER;
PUTNAM COMMUNITY MEDICAL
CENTER OF NORTH FLORIDA,
LLC, d/b/a PUTNAM COMMUNITY
MEDICAL CENTER; OKEECHOBEE
HOSPITAL, INC., d/b/a
RAULERSON HOSPITAL; HCA
HEALTH SERVICES OF FLORIDA,
INC., d/b/a REGIONAL MEDICAL
CENTER BAYONET POINT; HCA
LONG TERM HEALTH SERVICES
OF MIAMI, INC., d/b/a SISTER
EMMANUEL HOSPITAL; SUN CITY
HOSPITAL, INC., d/b/a SOUTH BAY
HOSPITAL; MEMORIAL
HEALTHCARE GROUP, INC., d/b/a
SPECIALTY HOSPITAL
JACKSONVILLE; HCA HEALTH
SERVICES OF FLORIDA, INC., d/b/a
ST. LUCIE MEDICAL CENTER;
GALEN OF FLORIDA, INC., d/b/a
ST. PETERSBURG GENERAL
HOSPITAL; WEST FLORIDA –
TCH, LLC, d/b/a TAMPA
6
COMMUNITY HOSPITAL;
OKALOOSA HOSPITAL, INC., d/b/a
TWIN CITIES HOSPITAL;
UNIVERSITY HOSPITAL, LTD.,
d/b/a UNIVERSITY HOSPITAL AND
MEDICAL CENTER; WEST
FLORIDA REGIONAL MEDICAL
CENTER, INC., d/b/a WEST
FLORIDA HOSPITAL; and
COLUMBIA HOSPITAL
CORPORATION OF SOUTH
BROWARD, d/b/a WESTSIDE
REGIONAL MEDICAL CENTER,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
7
_____________________________
No. 1D17-2035
_____________________________
THE PUBLIC HEALTH TRUST OF
MIAMI-DADE COUNTY, FLORIDA,
which governs and operates
JACKSON HEALTH SYSTEM,
including JACKSON MEMORIAL
HOSPITAL, JACKSON NORTH
MEDICAL CENTER and JACKSON
SOUTH COMMUNITY HOSPITAL,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
8
_____________________________
No. 1D17-2038
_____________________________
MIAMI BEACH HEALTHCARE
GROUP, LTD., d/b/a AVENTURA
HOSPITAL AND MEDICAL CENTER;
HCA HEALTH SERVICES OF
FLORIDA, INC., d/b/a BLAKE
MEDICAL CENTER; GALENCARE,
INC., d/b/a BRANDON REGIONAL
HOSPITAL; TALLAHASSEE
MEDICAL CENTER, INC., d/b/a
CAPITAL REGIONAL MEDICAL
CENTER; CENTRAL FLORIDA
REGIONAL HOSPITAL, INC., d/b/a
CENTRAL FLORIDA REGIONAL
HOSPITAL; CITRUS MEMORIAL
HOSPITAL, INC., d/b/a CITRUS
MEMORIAL HOSPITAL; SARASOTA
DOCTORS HOSPITAL, INC., d/b/a
DOCTORS HOSPITAL OF
SARASOTA; ENGLEWOOD
COMMUNITY HOSPITAL, INC.,
d/b/a ENGLEWOOD COMMUNITY
HOSPITAL; FAWCETT MEMORIAL
HOSPITAL, INC., d/b/a FAWCETT
MEMORIAL HOSPITAL; FORT
WALTON BEACH MEDICAL
CENTER, INC., d/b/a FORT
WALTON BEACH MEDICAL
CENTER; BAY HOSPITAL, INC.,
d/b/a GULF COAST MEDICAL
CENTER; JFK MEDICAL CENTER
LIMITED PARTNERSHIP, d/b/a
JFK MEDICAL CENTER; JFK
MEDICAL CENTER LIMITED
PARTNERSHIP, d/b/a JFK
MEDICAL CENTER-NORTH
CAMPUS; KENDALL HEALTHCARE
9
GROUP, LTD., d/b/a KENDALL
REGIONAL MEDICAL CENTER;
NOTAMI HOSPITALS OF FLORIDA,
INC., d/b/a LAKE CITY MEDICAL
CENTER; LARGO MEDICAL
CENTER, INC., d/b/a LARGO
MEDICAL CENTER; LARGO
MEDICAL CENTER, INC., d/b/a
LARGO MEDICAL CENTER-INDIAN
ROCKS; LAWNWOOD MEDICAL
CENTER, INC., d/b/a LAWNWOOD
REGIONAL MEDICAL CENTER &
HEART INSTITUTE; NEW PORT
RICHEY HOSPITAL, INC., d/b/a
MEDICAL CENTER OF TRINITY;
NEW PORT RICHEY HOSPITAL,
INC., d/b/a MEDICAL CENTER OF
TRINITY WEST PASCO CAMPUS;
MEMORIAL HEALTHCARE GROUP,
INC., d/b/a MEMORIAL HOSPITAL
JACKSONVILLE; WEST FLORIDA –
MHT, LLC, d/b/a MEMORIAL
HOSPITAL OF TAMPA;
PLANTATION GENERAL HOSPITAL
LIMITED PARTNERSHIP, d/b/a
MERCY HOSPITAL, A CAMPUS OF
PLANTATION GENERAL
HOSPITAL; NORTH FLORIDA
REGIONAL MEDICAL CENTER,
INC., d/b/a NORTH FLORIDA
REGIONAL MEDICAL CENTER;
GALENCARE, INC., d/b/a
NORTHSIDE HOSPITAL;
NORHTWEST MEDICAL CENTER,
INC., d/b/a NORTHWEST MEDICAL
CENTER; HCA HEALTH SERVICES
OF FLORIDA, INC., d/b/a OAK
HOLL HOSPITAL; MARION
COMMUNITY HOSPITAL, INC.,
d/b/a OCALA REGIONAL MEDICAL
CENTER; MARION COMMUNITY
10
HOSPITAL, INC., d/b/a WEST
MARION COMMUNITY HOSPITAL;
ORANGE PARK MEDICAL CENTER,
INC., d/b/a ORANGE PARK
MEDICAL CENTER; OSCEOLA
REGIONAL HOSPITAL, INC., d/b/a
OSCEOLA REGIONAL MEDICAL
CENTER; WEST FLORIDA – PPH,
LLC, d/b/a PALMS OF PASADENA
HOSPITAL; PALMS WEST
HOSPITAL LIMITED
PARTNERSHIP, d/b/a PALMS WEST
HOSPITAL; PLANTATION
GENERAL HOSPITAL LIMITED
PARTNERSHIP, d/b/a PLANTATION
GENERAL HOSPITAL; POINCIANA
MEDICAL CENTER, INC., d/b/a
POINCIANA MEDICAL CENTER;
PUTNAM COMMUNITY MEDICAL
CENTER OF NORTH FLORIDA,
LLC, d/b/a PUTNAM COMMUNITY
MEDICAL CENTER; OKEECHOBEE
HOSPITAL, INC., d/b/a
RAULERSON HOSPITAL; HCA
HEALTH SERVICES OF FLORIDA,
INC., d/b/a REGIONAL MEDICAL
CENTER BAYONET POINT; HCA
LONG TERM HEALTH SERVICES
OF MIAMI, INC., d/b/a SISTER
EMMANUEL HOSPITAL; SUN CITY
HOSPITAL, INC., d/b/a SOUTH BAY
HOSPITAL; MEMORIAL
HEALTHCARE GROUP, INC., d/b/a
SPECIALTY HOSPITAL
JACKSONVILLE; HCA HEALTH
SERVICES OF FLORIDA, INC., d/b/a
ST. LUCIE MEDICAL CENTER;
GALEN OF FLORIDA, INC., d/b/a
ST. PETERSBURG GENERAL
HOSPITAL; WEST FLORIDA –
TCH, LLC, d/b/a TAMPA
11
COMMUNITY HOSPITAL;
OKALOOSA HOSPITAL, INC., d/b/a
TWIN CITIES HOSPITAL;
UNIVERSITY HOSPITAL, LTD.,
d/b/a UNIVERSITY HOSPITAL AND
MEDICAL CENTER; WEST
FLORIDA REGIONAL MEDICAL
CENTER, INC., d/b/a WEST
FLORIDA HOSPITAL; and
COLUMBIA HOSPITAL
CORPORATION OF SOUTH
BROWARD, d/b/a WESTSIDE
REGIONAL MEDICAL CENTER,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
12
_____________________________
No. 1D17-2040
_____________________________
SACRED HEART HEALTH SYSTEM,
INC. d/b/a SACRED HEART
HOSPITAL OF PENSACOLA,
SACRED HEART HEALTH SYSTEM,
INC. d/b/a SACRED HEART
HOSPITAL ON THE EMERALD
COAST AND SACRED HEART
HEALTH SYSTEM, INC. d/b/a
SACRED HEART HOSPITAL ON THE
GULF, ST. VINCENT’S MEDICAL
CENTER, INC. d/b/a ST.
VINCENT’S MEDICAL CENTER
RIVERSIDE, ST. LUKE’S-ST.
VINCENT’S HEALTHCARE, INC.
d/b/a ST. VINCENT’S MEDICAL
CENTER SOUTHSIDE and ST.
VINCENT’S MEDICAL CENTER-
CLAY COUNTY, INC. d/b/a ST.
VINCENT’S MEDICAL CENTER-
CLAY COUNTY,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
13
_____________________________
No. 1D17-2041
_____________________________
CGH HOSPITAL, LTD d/b/a CORAL
GABLES HOSPITAL, DELRAY
MEDICAL CENTER, INC. d/b/a
DELRAY MEDICAL CENTER, GOOD
SAMARITAN MEDICAL CENTER,
INC. d/b/a GOOD SAMARITAN
MEDICAL CENTER, HIALEAH
HOSPITAL, INC. d/b/a HIALEAH
HOSPITAL, NORTH SHORE
MEDICAL CENTER, INC. d/b/a
NORTH SHORE MEDICAL CENTER,
NORTH SHORE MEDICAL CENTER,
INC. d/b/a FLORIDA MEDICAL
CENTER – A CAMPUS OF NORTH
SHORE, PALM BEACH GARDENS
COMMUNITY HOSPITAL, INC.
d/b/a PALM BEACH GARDENS
MEDICAL CENTER, LIFEMARK
HOSPITALS OF FLORIDA, INC.
d/b/a PALMETTO GENERAL
HOSPITAL, ST. MARY’S MEDICAL
CENTER, INC. d/b/a ST. MARY’S
MEDICAL CENTER and WEST
BOCA MEDICAL CENTER, INC.
d/b/a WEST BOCA MEDICAL
CENTER,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
14
_____________________________
No. 1D17-2042
_____________________________
SACRED HEART HEALTH SYSTEM,
INC. d/b/a SACRED HEART
HOSPITAL OF PENSACOLA,
SACRED HEART HEALTH SYSTEM,
INC. d/b/a SACRED HEART
HOSPITAL ON THE EMERALD
COAST AND SACRED HEART
HEALTH SYSTEM, INC. d/b/a
SACRED HEART HOSPITAL ON THE
GULF AND ST. VINCENT’S
MEDICAL CENTER, INC. d/b/a ST.
VINCENT’S MEDICAL CENTER
RIVERSIDE, ST. LUKE’S-ST.
VINCENT’S HEALTHCARE, INC.
d/b/a ST. VINCENT’S MEDICAL
CENTER SOUTHSIDE AND ST.
VINCENT’S MEDICAL CENTER-
CLAY COUNTY, INC. d/b/a ST.
VINCENT’S MEDICAL CENTER-
CLAY COUNTY,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
15
_____________________________
No. 1D17-2045
_____________________________
CGH HOSPITAL, LTD d/b/a CORAL
GABLES HOSPITAL, DELRAY
MEDICAL CENTER, INC. d/b/a
DELRAY MEDICAL CENTER, GOOD
SAMARITAN MEDICAL CENTER,
INC. d/b/a GOOD SAMARITAN
MEDICAL CENTER, HIALEAH
HOSPITAL, INC. d/b/a HIALEAH
HOSPITAL, NORTH SHORE
MEDICAL CENTER, INC. d/b/a
NORTH SHORE MEDICAL CENTER,
NORTH SHORE MEDICAL CENTER,
INC. d/b/a FLORIDA MEDICAL
CENTER – A CAMPUS OF NORTH
SHORE, PALM BEACH GARDENS
COMMUNITY HOSPITAL, INC.
d/b/a PALM BEACH GARDENS
MEDICAL CENTER, LIFEMARK
HOSPITALS OF FLORIDA, INC.
d/b/a PALMETTO GENERAL
HOSPITAL, ST. MARY’S MEDICAL
CENTER, INC. d/b/a ST. MARY’S
MEDICAL CENTER AND WEST
BOCA MEDICAL CENTER, INC.
d/b/a WEST BOCA MEDICAL
CENTER,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
16
_____________________________
No. 1D17-2047
_____________________________
ADVENTIST HEALTH
SYSTEM/SUNBELT, INC., d/b/a
FLORIDA HOSPITAL HEARTLAND
MEDICAL CENTER, FLORIDA
HOSPITAL ORLANDO, and
FLORIDA HOSPITAL WACHULA;
FLORIDA HOSPITAL ORLANDO,
and FLORIDA HOSPITAL
WACHULA; FLORIDA HOSPITAL
WATERMAN, INC.; FLORIDA
HOSPITAL ZEPHYRHILLS, INC.;
MEMORIAL HEALTH SYSTEMS,
INC. d/b/a FLORIDA HOSPITAL
MEMORIAL MEDICAL CENTER;
MEMORIAL HOSPITAL FLAGLER,
INC.; MEMORIAL HOSPITAL-WEST
VOLUSIA, INC., d/b/a FLORIDA
HOSPITAL DELAND; PASCO-
PINELLAS HILLSBOROUGH
COMMUNITY HEALTH SYSTEM,
INC., d/b/a FLORIDA HOSPITAL
WESLEY CHAPEL; SOUTHEAST
VOLUSIA HEALTHCARE
CORPORATION, d/b/a FLORIDA
HOSPITAL NEW SMYRNA;
SOUTHWEST VOLUSIA
HEALTHCARE CORPORATION,
d/b/a FLORIDA HOSPITAL FISH
MEMORIAL; TARPON SPRINGS
HOSPITAL FOUNDATION, INC.,
d/b/a FLORIDA HOSPITAL NORTH
PINELLAS; and UNIVERSITY
COMMUNITY HOSPITAL, INC.,
d/b/a FLORIDA HOSPITAL NORTH
PINELLAS; and UNIVERSITY
COMMUNITY HOSPITAL, INC.,
17
d/b/a FLORIDA HOSPITAL
CARROLLWOOD, FLORIDA
HOSPITAL AT CONNERTON-
LTACH, and FLORIDA HOSPITAL
TAMPA,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
18
_____________________________
No. 1D17-2049
_____________________________
BAYFRONT HMA MEDICAL
CENTER, LLC, d/b/a BAYFRONT
HEALTH – ST. PETERSBURG;
CITRUS HMA, LLC, d/b/a SEVEN
RIVERS REGIONAL MEDICAL
CENTER; CRESTVIEW HOSPITAL
CORPORATION, d/b/a NORTH
OKALOOSA MEDICAL CENTER;
HAINES CITY HMA, LLC, d/b/a
HEART OF FLORIDA REGIONAL
MEDICAL CENTER; HERNANDO
HMA, LLC, d/b/a BAYFRONT
HEALTH-BROOKSVILLE AND
BAYFRONT HEALTH – SPRING
HILL; HMA SANTA ROSA
MEDICAL CENTER, LLC; KEY
WEST HMA, LLC, d/b/a LOWER
KEYS MEDICAL CENTER; LAKE
SHORE HMA, LLC, d/b/a SHANDS
LAKE SHORE REGIONAL MEDICAL
CENTER; LAKE WALES HOSPITAL
CORPORATION d/b/a LAKE WALES
MEDICAL CENTER; LIVE OAK
HMA, LLC, d/b/a SHANDS LIVE
OAK REGIONAL MEDICAL
CENTER; NAPLES HMA, LLC,
d/b/a PHYSICIANS REGIONAL
MEDICAL CENTER – PINE RIDGE
AND PHYSICIANS REGIONAL
MEDICAL CENTER – COLLIER
BOULEVARD; MELBOURNE HMA,
LLC; MUNROE HMA HOSPITAL,
LLC, d/b/a MUNROE REGIONAL
MEDICAL CENTER; OSCEOLA SC,
LLC, d/b/a ST. CLOUD REGIONAL
MEDICAL CENTER; PASCO
19
REGIONAL MEDICAL CENTER,
LLC, d/b/a BAYFRONT HEALTH –
DADE CITY; PORT CHARLOTTE
HMA, LLC d/b/a BAYFRONT
HEALTH – PORT CHARLOTTE;
PUNTA GORDA HMA, LLC, d/b/a
BAYFRONT HEALTH PUNTA
GORDA; ROCKLEDGE HMA, LLC;
SEBASTIAN HOSPITAL, LLC, d/b/a
SEBASTIAN RIVER MEDICAL
CENTER; SEBRING HOSPITAL
MANAGEMENT ASSOCIATES, LLC,
d/b/a HIGHLANDS REGIONAL
MEDICAL CENTER; STARKE HMA,
LLC, d/b/a SHANDS STARKE
REGIONAL MEDICAL CENTER;
AND VENICE HMA, LLC, d/b/a
VENICE REGIONAL BAYFRONT
HEALTH,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
20
_____________________________
No. 1D17-2051
_____________________________
CAPE CANAVERAL HOSPITAL,
INC., HOLMES REGIONAL
MEDICAL CENTER, INC., and
VIERA HOSPITAL, INC.
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
21
_____________________________
No. 1D17-2053
_____________________________
BAYFRONT HMA MEDICAL
CENTER, LLC, d/b/a BAYFRONT
HEALTH – ST. PETERSBURG;
CITRUS HMA, LLC, d/b/a SEVEN
RIVERS REGIONAL MEDICAL
CENTER; CRESTVIEW HOSPITAL
CORPORATION, d/b/a NORTH
OKALOOSA MEDICAL CENTER;
HAINES CITY HMA, LLC, d/b/a
HEART OF FLORIDA REGIONAL
MEDICAL CENTER; HERNANDO
HMA, LLC, d/b/a BAYFRONT
HEALTH-BROOKSVILLE AND
BAYFRONT HEALTH – SPRING
HILL; HMA SANTA ROSA
MEDICAL CENTER, LLC; KEY
WEST HMA, LLC, d/b/a LOWER
KEYS MEDICAL CENTER; LAKE
SHORE HMA, LLC, d/b/a SHANDS
LAKE SHORE REGIONAL MEDICAL
CENTER; LAKE WALES HOSPITAL
CORPORATION d/b/a LAKE WALES
MEDICAL CENTER; LIVE OAK
HMA, LLC, d/b/a SHANDS LIVE
OAK REGIONAL MEDICAL
CENTER; NAPLES HMA, LLC,
d/b/a PHYSICIANS REGIONAL
MEDICAL CENTER – PINE RIDGE
AND PHYSICIANS REGIONAL
MEDICAL CENTER – COLLIER
BOULEVARD; MELBOURNE HMA,
LLC; MUNROE HMA HOSPITAL,
LLC, d/b/a MUNROE REGIONAL
MEDICAL CENTER; OSCEOLA SC,
LLC, d/b/a ST. CLOUD REGIONAL
MEDICAL CENTER; PASCO
22
REGIONAL MEDICAL CENTER,
LLC, d/b/a BAYFRONT HEALTH –
DADE CITY; PORT CHARLOTTE
HMA, LLC, d/b/a BAYFRONT
HEALTH – PORT CHARLOTTE;
PUNTA GORDA HMA, LLC, d/b/a
BAYFRONT HEALTH PUNTA
GORDA; ROCKLEDGE HMA, LLC;
SEBASTIAN HOSPITAL, LLC, d/b/a
SEBASTIAN RIVER MEDICAL
CENTER; SEBRING HOSPITAL
MANAGEMENT ASSOCIATES, LLC,
d/b/a HIGHLANDS REGIONAL
MEDICAL CENTER; STARKE HMA,
LLC, d/b/a SHANDS STARKE
REGIONAL MEDICAL CENTER; and
VENICE HMA, LLC, d/b/a VENICE
REGIONAL BAYFRONT HEALTH,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
23
_____________________________
No. 1D17-2054
_____________________________
ADVENTIST HEALTH
SYSTEM/SUNBELT, INC., d/b/a
FLORIDA HOSPITAL HEARTLAND
MEDICAL CENTER, FLORIDA
HOSPITAL ORLANDO, and
FLORIDA HOSPITAL WACHULA;
FLORIDA HOSPITAL ORLANDO,
and FLORIDA HOSPITAL
WACHULA; FLORIDA HOSPITAL
WATERMAN, INC.; FLORIDA
HOSPITAL ZEPHYRHILLS, INC.;
MEMORIAL HEALTH SYSTEMS,
INC. d/b/a FLORIDA HOSPITAL
MEMORIAL MEDICAL CENTER;
MEMORIAL HOSPITAL FLAGLER,
INC.; MEMORIAL HOSPITAL-WEST
VOLUSIA, INC., d/b/a FLORIDA
HOSPITAL DELAND; PASCO-
PINELLAS HILLSBOROUGH
COMMUNITY HEALTH SYSTEM,
INC., d/b/a FLORIDA HOSPITAL
WESLEY CHAPEL; SOUTHEAST
VOLUSIA HEALTHCARE
CORPORATION, d/b/a FLORIDA
HOSPITAL NEW SMYRNA;
SOUTHWEST VOLUSIA
HEALTHCARE CORPORATION,
d/b/a FLORIDA HOSPITAL FISH
MEMORIAL; TARPON SPRINGS
HOSPITAL FOUNDATION, INC.,
d/b/a FLORIDA HOSPITAL NORTH
PINELLAS; and UNIVERSITY
COMMUNITY HOSPITAL, INC.,
d/b/a FLORIDA HOSPITAL
CARROLLWOOD, FLORIDA
HOSPITAL AT CONNERTON-
24
LTACH, and FLORIDA HOSPITAL
TAMPA,
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
_____________________________
No. 1D17-2057
_____________________________
CAPE CANAVERAL HOSPITAL,
INC., HOLMES REGIONAL
MEDICAL CENTER, INC., and
VIERA HOSPITAL, INC.
Appellants,
v.
AGENCY FOR HEALTH CARE
ADMINISTRATION,
Appellee.
_____________________________
On appeal from a Final Order of the Division of Administrative
Hearings.
J. Lawrence Johnston, Administrative Law Judge.
April 26, 2019
M.K. THOMAS, J.
25
In this consolidated matter, Appellants 1 (“the Hospitals”)
appeal a final order declaring valid the Agency for Health Care
Administration’s (“the Agency”) existing and proposed rules which
implement legislative mandates to reduce reimbursement rates for
Medicaid outpatient hospital services. The Hospitals argue the
existing and proposed versions of Florida Administrative Code
Rule 59G-6.030 are an invalid exercise of delegated legislative
authority. We agree and reverse.
I. Facts
The Hospitals provide inpatient and outpatient hospital care
in Florida to Medicaid patients. Reimbursement for the services
provided is based on Medicaid rates calculated by the Agency each
year. The Agency is the single state agency authorized to make
Medicaid payments for services rendered. See § 409.902(1), Fla.
Stat.
Historically, the Agency reimbursed hospitals on a fee-for-
service basis. Under the fee-for-service model, hospitals submitted
claims to the Agency, and reimbursement was paid at an
established rate. The Agency set reimbursement rates on the most
recent complete and accurate cost reports submitted by each
hospital, re-established the Outpatient Hospital Reimbursement
Plan (“Outpatient Plan”), and adopted the Outpatient Plan by
reference in Rule 59G-6.030. Beginning in 2005, the Legislature
periodically included provisions in its General Appropriations Acts
(“GAA”), directing the Agency to reduce hospital outpatient
reimbursement rates to comply with specific budget reductions for
that year. These reductions are referred to as Medicaid Trend
Adjustments (“MTA”).
In 2005, the GAA reported that funds appropriated for
Medicaid outpatient hospital services reflected a cost savings of
$16,796,807.00 “as a result of modifying the reimbursement
methodology for outpatient hospital rates.” The GAA further
provided: “[T]he agency shall implement a recurring methodology
in the [Outpatient Plan] that may include, but is not limited to, the
1 120 hospitals comprised of for-profit, not-for-profit, and
governmental entities.
26
inflation factor, variable cost target, county rate ceiling or county
ceiling target rate to achieve the cost savings.” In response, the
Agency amended the Outpatient Plan to provide: “Effective July 1,
2005, a recurring rate reduction shall be established until an
aggregate total estimated saving of $16,796,807 is achieved each
year.” This directive became known as “cut 1.” The Outpatient
Plan was then adopted by reference in Rule 59G-6.030. After 2005,
the Legislature mandated five more relevant MTA reductions
through the GAAs, which are known as “cuts 2-4” and “cuts 7-8.” 2
The Agency used similar language in the Outpatient Plans to
address cuts 2, 3, and 8. Regarding cut 4, in the Outpatient Plan,
the Agency restated the GAA as follows, “[the Agency] shall
implement a recurring methodology to reduce individual
outpatient hospital rates proportionately . . . .” In total, the
Legislature directed the Agency to implement cuts of
approximately $224 million.
From 2005 through 2009, the Agency, after collaboration with
the hospitals, achieved the MTA reductions using each hospital’s
unaudited costs and actual occasions of service 3 in the year of the
reduction. The Agency then utilized an Excel spreadsheet and the
“goal seek” function therein to proportionally calculate the
reduction to each hospital’s outpatient rates. The Agency’s goal
was to spread the rate reductions equally among the hospitals.
In 2011, the Legislature instituted what became known as the
“unit cost cap,” a ceiling on Medicaid outpatient rates. Section
409.908, Florida Statutes, was amended to provide: “The Agency
shall establish rates at a level that ensures no increase in
statewide expenditures resulting from a change in unit costs
effective July 1, 2011. Reimbursement rates shall be as provided
2 The Legislature enacted cuts 5-6 in 2009 and 2010. However,
these cuts were not taken pursuant to GAA instruction.
3The Outpatient Plan provides the following definition:
“Florida Medicaid outpatient occasions of service – the number of
distinct revenue center code line items listed on a valid claim that
a hospital has filed . . . and that have been paid by the fiscal agent,
which represent covered Florida Medicaid outpatient services.”
27
in the General Appropriations Act.” § 409.908(23)(a), Fla. Stat.
(2011). The GAA that year further elaborated:
In establishing rates through the normal process, prior to
including this reduction [cut 7], if the unit cost is equal to
or less than the unit cost used in establishing the budget,
then no additional reduction in rates is necessary. In
establishing rates through the normal process, if the unit
cost is greater than the unit cost used in establishing the
budget, then rates shall be reduced by an amount
required to achieve this reduction, but shall not be
reduced below the unit cost used to establish the budget.
“Unit cost” was not defined by statute or the GAA. Additionally, no
insight was provided regarding reference to establishing rates
through the “normal process.”
Existing Rule 59G-6.030 did not set out the methodology the
Agency used to calculate either the initial 2011 unit cost base or
the subsequent years’ unit cost(s). However, the Agency has
continued to apply the unit cost cap with reference to a 2011 unit
cost base of $141.51. In calculating the unit cost base, the Agency
used an unadopted fraction methodology in which the numerator,
the total Medicaid outpatient payments to all hospitals, is divided
by a denominator, the number of Medicaid occasions of service for
all hospitals.
After 2011, the Agency has compared the 2011 unit cost base
to each years unit cost. However, the Agency changed the fraction
methodology originally used to calculate unit cost base. As
instructed in the GAA, the Agency began dividing the same
numerator, the total dollar amount of Medicaid payments made to
all hospitals, by a different denominator, now the number of
Medicaid occasions of service for all hospitals, except in children’s
and rural hospitals. Invariably, this method results in a unit cost
that is higher than if the services of all hospitals were included.
In setting the individual hospitals’ reimbursement rates, the
Agency first applied cut 7 in the same manner as cuts 1-4. The
result was a 16.5% rate adjustment for cut 7, which was
substantially higher than previous cuts, which were usually in the
28
12% range. To make the adjustment more consistent with the
Legislature’s expectations, the Agency adjusted the method for
calculating the reduction. The rate setting methodology used for
cuts 1-4 applied occasions of service based on a hospital’s current
cost report. Regarding cuts 7-8, the Agency applied Medicaid
budgeted occasions of service. Medicaid occasions of service are
actual paid claims which match up with the cost reporting year;
Medicaid budgeted occasions of service are claims which were
budgeted for that upcoming fiscal year for which the cut was going
to take place.
In 2014, the Legislature directed the Agency to transition
from a fee-for-service model to a managed care model. Under the
fee-for-service model, Medicaid payments are made directly by the
Agency to hospitals; while under the managed care model, the
payments are made by third-party Medicaid managed care plans
pursuant to rates negotiated and set forth in third-party contracts
between Medicaid managed care plans and hospitals. The number
of Medicaid recipients enrolled in managed care plans now far
exceeds those being paid on a fee-for-service basis. With the decline
of the number of fee-for-service claims, the rate reductions
substantially increased as the cuts were being apportioned over a
much smaller number of claims. 4
Although cut 8 was the last rate cut mandated by the
Legislature, the Agency continued to apply the previous and
recurring cuts in subsequent years. Three years after cut 8 was
4 In applying cut 1 in 2015/2016, the Agency divided
$16,796,807 (GAA reduction mandate) by 6,385,424 claims,
resulting in an average cut per claim of $2.63. The following year,
with the transition to Medicaid managed care, that same cut 1 of
$16,796,807 was divided by only 3,336,762 claims, resulting in an
average cut per claim of $5.03. The same analysis is true for cuts
2-4. Regarding cuts 7-8, the Agency changed its methodology.
Thus, the Hospitals provided outpatient services to essentially the
same number of Medicaid recipients for rate periods 2015/16 and
2016/17 (but a significantly greater percentage were through
managed care), yet there was a 91% increase in the average
reduction per claim associated with each of cuts 1-4.
29
enacted, the Agency changed its method to apply cut 7 and 8
reductions. Rather than using budgeted claims as it did previously,
the Agency calculated the cut 7 and 8 reductions using actual
occasions of service as it did for cuts 1-4.
While the transition to managed care began in 2014, the
decrease in fee-for-service claims was first reflected in the data
used to set the 2016/2017 hospital outpatient rates, effective July
1, 2016. Approximately 75% to 80% of Florida Medicaid claims are
now paid under Medicaid managed care.
Before the 2016 legislative session, a legislative proposal
recommended determining prospective Medicaid outpatient
reimbursement rates using a completely new method called
Enhanced Ambulatory Patient Groups (“EAPGs”). This new
method would eliminate dependence on hospital cost reports and
complicated calculations to determine the effects of the MTA
reductions on reimbursement rates. When it became apparent that
the EAPGs method would not be used for the 2016/2017 fiscal year,
the Agency basically repeated the 2015/2016 process but adjusted
the occasions of service used for calculating the hospital’s rate
reductions for cuts 7-8 by adding 14,000 occasions of service. 5 At
the end of July, the Agency published new rates effective July 1,
2016. The language of the implementing statutes and GAAs
remained unchanged.
The Hospitals filed actions challenging the Agency’s MTA
methodologies as invalid exercises of delegated legislative
authority. In response, the Agency published a proposed Rule 59G-
6.030. Thereafter, the Hospitals filed a subsequent Petition
challenging both the existing and proposed rules.
In the Final Order, the ALJ found that neither the existing
nor proposed Rule 59G-6.030 exceeds the grant of legislative
authority; specifically, the ALJ concluded neither the existing nor
the proposed rules regarding MTAs enlarge, modify or contravene
the specific provisions of law implemented; are not arbitrary or
The Final Order contains no factual findings as to how this
5
number was calculated by the Agency.
30
capricious; are not vague; and do not vest unbridled discretion in
the Agency. The ALJ held similarly with regard to the unit cost
cap. The Final Order further concluded that despite this
legislatively mandated change in Medicaid reimbursement and
corresponding budget changes, the Agency never changed its
methodology to account for the transition to managed care in the
calculation of cuts 1-4.
The Hospitals appeal asserting the ALJ erred in declaring
both the existing and proposed rules as valid exercises of delegated
legislative authority and that implementing the MTA and unit cost
cap methodologies does not constitute an invalid unadopted rule
under section 120.52(8)(a), (c)-(e), Florida Statutes. The Hospitals
argue that while the Agency has implemented a variety of different
methodologies to apply the MTA reductions since 2005, it did not
engage in rulemaking to adopt the methodologies into the
Outpatient Plan. The Hospitals deny the unveiling of the proposed
rule resolved the deficiencies because it still fails to provide an
MTA recurring methodology as required by implementing law.
II. Analysis
Standard of Review
The standard of review by which we determine whether an
agency has exceeded its rulemaking authority or enlarged the
specific provisions of law purportedly implemented is de novo. See,
e.g., State Bd. of Trs. of Internal Improvement Tr. Fund v. Day
Cruise Ass'n, Inc., 794 So. 2d 696, 701 (Fla. 1st DCA 2001). An
ALJ’s factual findings are reviewed for competent, substantial
evidence. Moreland v. Agency for Persons with Disabilities, 19 So.
3d 1009, 1011 (Fla. 1st DCA 2009) (citing § 120.68(7), Fla. Stat.).
If challenging an existing rule, the petitioner has the burden of
proving by a preponderance of the evidence that the existing rule
is an invalid exercise of delegated legislative authority.
§ 120.56(3)(a), Fla. Stat. If challenging a proposed rule, the burden
shifts to the agency to prove by a preponderance of the evidence
that the proposed rule is not an invalid exercise of delegated
legislative authority. § 120.56(2)(a), Fla. Stat.; Fla. Bd. of Med. v.
Fla. Acad. of Cosmetic Surgery, 808 So. 2d 243, 251 (Fla. 1st DCA
2002).
31
The Statutes and GAAs
The Agency makes payment to qualified providers as set forth
in Chapter 409, Florida Statutes, subject to the limitations or
directions enumerated in the GAAs. § 409.902(1), Fla. Stat.
Section 409.908, Florida Statutes, provides:
Subject to specific appropriations, the agency shall
reimburse Medicaid providers, in accordance with state
and federal law, according to methodologies set forth in
the rules of the Agency and in policy manuals and
handbooks incorporated by reference therein. These
methodologies may include fee schedules, reimbursement
methods based on cost reporting, negotiated fees,
competitive bidding pursuant to s. 287.057, and other
mechanisms the agency considers efficient and effective
for purchasing services or goods on behalf of recipients. .
. . Further, nothing in this section shall be construed to
prevent or limit the agency from adjusting fees,
reimbursement rates, lengths of stay, number of visits, or
number of services, or making any other adjustments
necessary to comply with the availability of moneys and
any limitations or directions provided for in the General
Appropriations Act, provided the adjustment is
consistent with legislative intent. (Emphasis added.)
Section 409.905, Florida Statutes, also gives the Agency the
authority to make any adjustments necessary to comply with the
funds allocated and which are consistent with directions set forth
in the GAA. Specific to outpatient services, the statute directs,
“[t]he agency shall implement a prospective payment methodology
for establishing reimbursement rates for outpatient hospital
services.” § 409.905(6)(b), Fla. Stat. (emphasis added).
The various GAAs further instruct, “the Agency shall
implement a recurring methodology in the Title XIX Outpatient
Hospital Reimbursement Plan that may include, but not limited
to, the inflation factor, variable cost savings.” (Emphasis added.)
A. Both the Existing and Proposed Rules Relating to the MTAs
Enlarge, Modify, or Contravene the Enabling Statutes.
32
An agency may not propose or create a rule that “enlarges,
modifies, or contravenes the specific provisions of . . . the language
of the enabling statute.” §§ 120.52(8)(c), (9), 120.56(2)-(3), Fla.
Stat. Existing Rule 59G-6.030 provides, “[r]eimbursement to
participating hospitals for services provided shall be in accordance
with the Florida Title XIX Outpatient Hospital Reimbursement
Plan (the Plan), Version XXVII, effective July 1, 2016, incorporated
by reference . . .” The companion Outpatient Plan provides,
“Effective July 1, 2005, a recurring rate reduction shall be
established . . .” (Emphasis added.) The Outpatient Plan does not
describe the methods established.
Upon the filing of the petition challenging existing Rule 59G-
6.030, the Agency published a proposed rule. It addressed how the
Agency had set the 2016 rates but did not establish a recurring
methodology. The proposed rule did not adopt the methodologies
that the Agency applied to calculate cuts 7-8 when it set the 2011
through 2015 outpatient rates. Nor did the proposed rule set forth
a methodology for cuts 1-4. Rather, the stated purpose of the
proposed rule was merely to “clarify” how the Agency had already
set the 2016 rates. Therefore, the proposed rule, like the existing
rule, provided no detail or announcement of a recurring MTA
methodology.
Below, the ALJ determined that the implementing statutes
require the Agency to adopt its rate-setting methodologies as a rule
in the Outpatient Plan. And specific to the MTA, the ALJ further
found the GAAs require that the Agency adopt a “recurring” MTA
methodology to achieve the mandated savings. The Final Order,
however, concluded the Agency had not adopted any recurring
MTA methodologies into any version of the existing rule and
Outpatient Plan. The Final Order found that “[t]he versions of the
rule 59G-6.030 adopted up to and including the existing rule did
little more than restate language in the statutes and the GAAs.”
The Final Order made specific findings that the Agency applied a
variety of MTA methodologies to reduce hospital outpatient rates
in an attempt to achieve the savings mandated by the GAAs from
2005 through 2016, and that these methodologies were not set
forth in a rule. Further, the Final Order found the proposed rule
simply parroted the language in the GAA—that the Agency was
required to adopt a recurring methodology to achieve the
33
mandated savings. However, no such recurring methodology is
provided.
Despite its finding that the Agency had not implemented
methodologies as directed, the ALJ ultimately concluded that
neither the existing nor proposed rules enlarged, modified or
contravened the specific provisions of law implemented. This
conclusion rested entirely upon deference to the Agency’s
interpretation of the implementing statutes. But, the ALJ’s
deference to Agency interpretation was in error. Based on the clear
and unambiguous language of the statute, the Agency was
required to adopt a rule setting forth the methodology by which it
would reimburse Medicaid providers and apply the MTAs. See §
409.908, Fla. Stat. Prior to passage of the newly enacted article V,
section 21 of the Florida Constitution, this Court deferred to an
agency’s interpretation of statutes it implemented unless such
interpretation was clearly erroneous. See, e.g., Falk v. Beard, 614
So. 2d 1086, 1089 (Fla. 1993); Addison v. Agency for Persons with
Disabilities, 113 So. 3d 1053, 1056 (Fla. 1st DCA 2013). Notably,
this deference does not extend to proposed rules which are not to
be presumed valid or invalid. See § 120.56(2)(c), Fla. Stat.
Under the new constitutional amendment, appellate courts no
longer defer to agency interpretation; rather, a de novo standard
of review applies. Art. V, § 21, Fla. Const. (2019). Here, we decline
to address the question of whether this amendment is retroactively
applied, as it is not necessary to our legal analysis, because even if
deference were provided to the Agency’s interpretation of the
statute, “judicial adherence to the Agency’s view is not demanded
when it is contrary to the statute’s plain meaning,” as is the case
here. PAC for Equality v. Dep’t of State, Fla. Elections Comm’n,
542 So. 2d 459, 460 (Fla. 2d DCA 1989), quoted in Werner v. Dep’t
of Ins. & Treasurer, 689 So. 2d 1211, 1214 (Fla. 1st DCA 1997); see
also Kessler v. Dep’t of Mgmt. Servs., Div. of State Grp. Ins., 17 So.
3d 759, 762 (Fla. 1st DCA 2009) (“Judicial deference never requires
that courts adopt an agency’s interpretation of a statute or rule
when the agency’s interpretation cannot be reconciled with the
plain language of the statute. . .”).
The language of the implementing statutes and the GAAs is
clear and unambiguous. As the Final Order found, the GAAs
34
unambiguously state that the Agency must “implement a
recurring methodology in the [Outpatient Plan] . . . to achieve the
cost savings.” Similarly, section 409.905(6)(b) requires the Agency
to “implement a methodology” for establishing rates, and section
409.908 requires the Agency to reimburse Medicaid providers
“according to methodologies set forth in the rules of the agency and
in policy manuals and handbooks incorporated by reference
hereto.” Existing Rule 59G-6.030 does little more than restate
language in the statute and GAAs. A plain reading of section
409.908 certainly contemplates more. Thus, the existing rule is
improper as it fails to adopt a methodology “set forth in the rules
of the agency” in contravention of the statutes implemented.
Regarding the proposed rule, the Agency merely
supplemented the existing rule with an announcement of the 2016
rates. The proposed rule does not adopt the methodologies that the
Agency applied to calculate cuts 7-8 for the purpose of setting the
2011 through 2015 rates. The proposed rule certainly did not
provide explanation as to the different methodology used for cuts
1-4. The proposed rule states, “Additions and changes to this
section from the preceding year(s) are intended to clarify the rate-
setting process, not to make substantive changes to it.” In fact, the
Agency did not even adopt the methodology that it actually used to
set the 2016 rates. In calculating cuts 7-8 for the 2016 rates, the
Agency utilized the actual occasions of service to calculate the 2015
rates with the addition of 14,000 claims, while the proposed rule
directs calculation based on the budgeted occasions of service used
to set the 2015/2016 rates but without the addition of 14,000
claims to account for managed care transition.
At the merits hearing, the Agency argued that it had complied
with the implementing statutes and GAAs as it adopted a
methodology in setting the rates—that reimbursement rate
reductions were to be proportionally implemented among the
hospitals. Accordingly, the specific math for achieving that
proportional reduction did not have to be fixed, recurring, or
adopted into a rule. However, on appeal, the Agency changes its
position and argues it exercised its discretion and chose not to
adopt a methodology, and no methodology existed to be adopted by
rule. The Agency asserts that each year it carried out the MTA
reductions using “simple math,” and because the use of math is not
35
a “methodology” contemplated by section 409.908, it did not need
to promulgate its use of math as a rule. The Agency claims section
409.908, which applies to adjustments such as the MTA, grants
the Agency the authority and flexibility to make adjustments to
reimbursement rates that may be necessary when the Legislature
chooses to impose limitations on reimbursements, without
promulgating its mathematical calculations for such adjustments
in a rule. The Agency claims its conclusion is bolstered by the
language in the GAAs, which simply required it to “implement”
(not adopt) a process for reaching the specified MTA reductions
each year that were to be applied. However, this argument ignores
the GAA directive that the recurring methodology be described in
the Outpatient Plan.
The Agency does not suggest that the implementing statutes
exempt it from the rulemaking requirement of the APA. Even if
the Agency practices were “just math,” there is nothing in the
statutes that establishes “math” as an exception to the Legislative
directive that all reimbursement methodologies must be contained
in the Outpatient Plan and promulgated as a rule. The APA
defines a “rule” as “each agency statement of general applicability
that implements, interprets, or prescribes law or policy or
describes the procedure or practice requirements of an agency . . .
.” § 120.52(16), Fla. Stat. The Final Order made numerous findings
that the Agency’s MTA methodology meets the definition of a
“rule.” As the Agency has not cross-appealed these findings, it is
bound by them, and as such, the Agency’s MTA methodology is a
rule that the Agency must adopt through rulemaking. It is well
established Florida law that rulemaking is not a matter of agency
discretion. § 120.54(1), Fla. Stat. Florida courts have long
recognized that “every agency action is ‘a recognizable rule or an
order’ under the APA or is ‘incipiently a rule or order.’” Friends of
Hatchineha, Inc. v. State, Dep’t of Envtl. Regulation, 580 So. 2d
267, 271 (Fla. 1st DCA 1991); see also § 120.52(2), Fla. Stat.
The Final Order is silent regarding whether the Agency’s
unadopted methodologies achieved the mandated savings. Thus,
despite a clear legislative directive to achieve a specific dollar
amount of savings, the Agency did not prove at the hearing
whether its methodologies have achieved the legislative mandates
or resulted in cuts less than or in excess of the cuts authorized. The
36
Agency defends that the absence of auditing is irrelevant to the
outcome of this proceeding because the “math” the Agency used
was “correct,” and the statutes do not impose an auditing
requirement. We disagree. As the Agency never implemented its
methodology by rule or in the Outpatient Plan, and never
conducted an audit, the accuracy of the MTA reductions cannot be
verified. The Agency’s failure to verify its procedures were
achieving the legislatively directed cuts and to promulgate its
methodologies as rules constitutes an enlargement, modification,
and contravention of the laws implemented.
We, therefore, find that both the existing and proposed rules
are invalid under section 120.52(8)(c), Florida Statutes.
B. Both the Existing and Proposed Rules Relating to the MTAs
are Vague, Fail to Establish Adequate Standards for Agency
Decision, and Vest Unbridled Discretion in the Agency.
A rule is an invalid exercise of delegated legislative authority
when “[t]he rule is vague, fails to establish adequate standards for
agency decisions, or vests unbridled discretion in the Agency[.]” §
120.52(8)(d), Fla. Stat. “An administrative rule is invalid under
section 120.52(8)(d), Florida Statutes, if it forbids or requires the
performance of an act in terms that are so vague that persons of
common intelligence must guess at its meaning and differ as to its
application.” State, Dep’t of Fin. Servs. v. Peter R. Brown Const.,
Inc., 108 So. 3d 723, 728 (Fla. 1st DCA 2013) (citing Bouters v.
State, 659 So. 2d 235, 238 (Fla. 1995)).
Under the existing rule, the Agency used occasions of service
to achieve cuts 1-4, while it used budgeted claims of service for cuts
7-8. Yet, the language related to cuts 1-4 and 7-8 are nearly
identical. Thus, under the rule that states, “[Agency] shall
implement a recurring methodology,” the Agency was able to
implement two separate methodologies, without change to the
rule. Essentially, by applying the rule as it has, the Agency has
determined the language in the existing rule is so vague “persons
of common intelligence” could “differ as to its application.” Id.
Despite amendment, the proposed rule fails to establish
adequate standards and vests unbridled discretion in the Agency.
37
Although the proposed rule indicates cuts 1-4 will utilize occasions
of service, while cuts 7-8 will utilize budgeted occasions of service,
questions remain as to whether these are the set methodologies
which must be used by the Agency in administering the MTAs. In
the first section of the proposed rule, it states “[the Agency] shall
implement a methodology for establishing base reimbursement
rates” without setting forth the actual methodology and certainly
not a “recurring” methodology. Additionally, the lack of
verification via audit or otherwise to determine if the rate
reductions are GAA compliant further supports a vesting of
unbridled discretion in the Agency. Thus, the proposed rule fails,
just as the existing rule does.
C. Both the Existing and Proposed Rules Concerning the Unit
Cost Cap are Invalid Exercises of Delegated Legislative
Authority and are Unadopted Rules.
In 2011, the Legislature directed that a unit cost comparison
be implemented in the rate process. The GAA provided:
In establishing rates through the normal process, prior to
including this reduction [cut 7], if the unit cost is equal to
or less than the unit cost used in establishing the budget,
then no additional reduction in rates is necessary. In
establishing rates through the normal process, if the unit
cost is greater than the unit cost used in establishing the
budget, then rates shall be reduced by an amount
required to achieve this reduction, but shall not be
reduced below the unit cost used in establishing the
budget.
The Agency failed to include in its existing rule the
methodology used to calculate the unit cost cap. Rather, the
existing rule simply mirrors the language in the GAA, stating,
“Effective July 1, 2011, [the Agency] shall establish rates at a level
that ensures no increase in statewide expenditures resulting from
a change in unit costs.” The existing rule does not define “unit
cost” or set out the methodology used to calculate either the initial
2011 unit cost base or the subsequent years’ unit cost(s).
When originally calculating the unit cost cap in 2011, the
Agency divided the total dollar amount of Medicaid payments
38
made to hospitals by the number of Medicaid occasions of service
for all hospitals. Since 2011, it has compared the 2011 unit cost
base to the current unit cost, calculated by dividing the total dollar
amount of Medicaid payments made to all hospitals by the number
of Medicaid occasions of service for all hospitals, except in
children’s and rural hospitals, to determine whether the unit cost
cap would require a further rate reduction, after applying the MTA
cuts.
The GAA instructed the Agency to compare the unit cost set
in 2011 to the unit cost in future years. We find merit in the
Hospitals’ argument that the Agency’s comparison of unit costs
that are not calculated the same way constitutes unbridled
discretion. 6 Dividing the total amount of Medicaid payments by a
smaller number of occasions of service inevitably results in the
subsequent years’ unit cost being higher, which could result in
additional reductions (where it would not if the unit cost was
calculated consistent with that methodology used in 2011). If the
unit cost is not calculated the same way, a valid comparison is not
possible. 7
While the Agency has not adopted as a rule the methodology
for the unit cost cap into the Outpatient Plan, it has implemented
a methodology to calculate rates. This methodology constitutes
general applicability that implements, interprets, or prescribes
law or policy, and meets the definition of a rule, yet the Agency did
not adopt the methodology as a rule. As such, the unit cost cap is
invalid as it was not adopted through rulemaking. § 120.52(8)(a),
Fla. Stat.
III. Conclusion
6 The Agency argues that the Hospitals do not have standing
to challenge the unit cost cap calculation. However, as found by
the ALJ, the Hospitals have standing as they are substantially
affected by the rule. See § 120.56(1), Fla. Stat.
7To date, the unit cost cap has not been exceeded. However,
the Hospitals argue this is an inevitable result due to the
migration to managed care.
39
For the foregoing reasons, we hold that the ALJ erred in
concluding the existing and proposed Rule 59G-6.030 are valid
exercises of delegated legislative authority. The existing and
proposed rules go beyond the powers, functions, and duties
delegated by the Legislature, and the methodologies utilized by the
Agency are unadopted rules.
REVERSED.
BILBREY and WINOKUR, JJ., concur.
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
Stephen A. Ecenia, David M. Maloney, Tana D. Storey, and
Gabriel F.V. Warren of Rutledge Ecenia, Tallahassee; Kyle L.
Kemper and Steven Mindlin of Sundstrom & Mindlin, LLP,
Tallahassee; Joanne B. Erde and Donna Holshouser Stinson of
Duane Morris LLP, Miami; Michael J. Glazer and E. Dylan Rivers
of Ausley McMullen, Tallahassee; and Christopher C. Kokoruda
and Laura E. Wade of the Miami-Dade County Attorney’s Office,
Miami, for Appellants.
Joseph Goldstein of Shutts & Bowen LLP, Fort Lauderdale; Amber
Stoner of Shutts & Bowen LLP, Tallahassee; and Stephen T.
Maher of Shutts & Bowen LLP, Miami, for Appellee.
40