Judge's ruling puts chink in Medicaid's auditing armor

TALLAHASSEE, Fla. - In an Aug. 23 ruling, an administrative law judge questioned the legality of Florida Medicaid's formula for extrapolating claims in a 2005 audit of Custom Mobility. Judge Patricia Hart, of the Division of Administrative Hearings in Tallahassee, Fla., ruled the Agency for Health Care Administration (AHCA) has never adopted its 20-year-old formula for extrapolation as a formal rule, violating state law. Hart's ruling may influence existing audits and those pending appeal, said Lester Perling, a healthcare attorney at Broad and Cassel in Fort Lauderdale, Fla., who represents Custom Mobility. "Basically, the judge's ruling says that going forward, the state can't do anything relying on this formula," he said. "Custom Mobility's overpayment and dozens and dozens of others in Florida depend on the use of that formula, so it certainly has an impact." In December 2005, AHCA asked the Largo, Fla.-based Custom Mobility to repay more than $200,000 in alleged overpayments. AHCA came to that amount by extrapolating about 30 claims worth about $4,000 over a multi-year period, said Bruce Bayes, president of Custom Mobility. Per Hart's ruling, Custom Mobility "is entitled to an award of reasonable costs and reasonable attorneys' fees." AHCA may appeal the ruling and request a stay order, which would maintain the status quo pending a final court decision, Perling said. Custom Mobility has an administrative hearing for its audit set for October, but the status of that hearing, due to Hart's ruling, is uncertain, Perling said. With presumably only $4,000 at stake (vs. more than $200,000), Custom Mobility or the state may drop their cases. Meanwhile, word of Hart's ruling "spread with lightening speed through legal circles" in Florida, Bayes said. Perling's firm alone is handling about a dozen cases that could be impacted. "I've believed for a few years that the formula for extrapolation was never promulgated as a rule in Florida," he said. "I'd always raise the issue with clients, but Custom Mobility was the first to say, 'Yeah, let's give it a shot.'" Industry attorney Jeff Baird wouldn't be surprised if other states also haven't gone through the proper rule-making for extrapolation. "Even though this ruling isn't binding on other states, it'd certainly be persuasive," said Baird, a healthcare attorney with Brown & Fortunato in Amarillo, Texas.