Rule Challenge Filed by Disability Rights Florida - Residential Fee

STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS DISABILITY RIGHTS FLORIDA, INC., PETITIONER, v. Case No. ALJ: AGENCY FOR PERSONS WITH DISABILITIES, RESPONDENT. ________________________________/ PETITION FOR ADMINISTRATIVE DETERMINATION OF INVALIDITY OF PROPOSED RULE 65G-2.016 (RESIDENTIAL FEE COLLECTION) Pursuant to § 120.56(2) of the Florida Statutes, Petitioner DISABILITY RIGHTS FLORIDA, INC. (d/b/a Disability Rights Florida) challenges proposed rule amendments by the Agency for Persons with Disabilities (APD) as an invalid exercise of delegated legislative authority, violating both state and federal law. Proposed rule 65G-2.016, providing for the collection of third-party benefits from residents of facilities licensed under section 393.067, Florida Statutes, reflects agency action that goes beyond the powers, functions, and duties delegated by the Legislature, § 120.52(8), Fla. Stat. Portions of the proposed rule, specified below: 1. Enlarge, modify, or contravene the specific provisions of law implemented, § 402.33(3); 2. Are vague, fail to establish standards for agency decisions, or vest unbridled discretion in the agency, § 120.52(8)(d); and 3. Are arbitrary or capricious because they are not supported by logic or the necessary facts; are adopted without thought or reason; or are irrational, § 120.52(8)(e). PROCEDURAL BACKGROUND 4. A Notice of Development for rule 65G-2.016 was filed in the Florida Administrative Weekly Volume 37 Number 47 on September 23, 2011. 5. A Notice of Proposed Rule for rule 65G-2.016 was filed in the Florida Administrative Weekly Volume 38 Number 02 on January 13, 2012 6. A workshop for proposed rule 65G-2.016 was held on February 3, 2011 from 9 A.M. until 11 P.M. at the Agency for Persons with Disabilities, 4030 Esplanade Way, Room 301, Tallahassee, Florida 32399 (Notice of Proposed Rule for rule 65G-2.016, filed in the Florida Administrative Weekly Volume 38 Number 02 on January 13, 2012). 7. A Notice of Change for rule 65G-2.016 was filed in the Florida Administrative Weekly Volume 38 Number 11 on March 16, 2012 8. A Notice of Change for rule 65G-2.016 was filed in the Florida Administrative Weekly Volume 38 Number 12 on March 23, 2012 9. A Notice of Change for rule 65G-2.016 was filed in the Florida Administrative Weekly Volume 38 Number 14 on April 6, 2012 10. A Notice of Correction for rule 65G-2.016 was filed in the Florida Administrative Weekly Volume 38 Number 14 on April 6, 2012 PARTIES A. Petitioner 11. Petitioner Disability Rights Florida (f/k/a Advocacy Center for Persons with Disabilities, Inc.) is Florida’s federally-mandated protection and advocacy system that provides legal and other services to persons with disabilities. See 45 C.F.R. § 1386.20. 12. Disability Rights Florida maintains offices in Tampa, Hollywood, and Tallahassee. Its main office is located at 2728 Centerview Drive, Suite 102, Tallahassee, Florida 32301, located in Leon County. 13. As Florida’s protection and advocacy system, Disability Rights Florida is charged with protecting the rights of individuals with developmental disabilities by pursuing administrative and legal remedies. 45 C.F.R. § 1385.3. 14. The substantial interests of Disability Rights Florida are adversely affected by the proposed Rule 65G-2.016 as Disability Rights Florida’s clients, potential clients, and stakeholders include individuals who receive room and board payments while residing in facilities licensed through APD. These individuals will be wrongly deprived of their third-party benefits and will face significant challenges in accessing the community without the financial resources to do so. 15. Disability Rights Florida has standing to file this action as it provides representation and other legal services to persons receiving Medicaid services. See Florida Institutional Legal Services, Inc. v. Florida Parole & Probation Commission, 391 So.2d 247 (Fla. 1st DCA 1980). The Residential Fee Collection rule falls within Disability Rights Florida’s general scope of interest and activity, and the relief requested—invalidation of the proposed rule—is the type of relief appropriate for Disability Rights Florida to receive on behalf of the individuals who Disability Rights Florida is mandated to serve. See NAACP, Inc. v. Florida Bd. of Regents, 863 So.2d 294 (Fla. 2003). B. Respondent 16. The affected agency is the Agency for Persons with Disabilities, a state agency created under the provisions of § 20.197, Florida Statutes. APD “is responsible for providing all services provided to persons with developmental disabilities under chapter 393,” specifically the operation and management of the DD Waiver program. § 20.197(3), Fla. Stat. (2011). LAWS IMPLEMENTED 17. Proposed rule 65G-2.016 (Rule, Proposed Rule) implements § 402.33, Florida Statutes. That statute authorizes the Department of Children and Family Services, the Department of Health, and the Agency for Persons with Disabilities to collect fees for services that those organizations offer to their clients. It also authorizes those organizations to collect those fees from a variety of benefits paid to recipients, such as Supplemental Security Income, Medicare, Social Security Disability Insurance, payments from the Department of Veterans Affairs, and insurance payments. 18. The statute also provides limits on which fees can be assessed and upon whom, including limiting some fees by income level and other factor. As to the amount of the fee, the statute states: (3) Fees not specifically set elsewhere by statute shall be reasonably related to the cost of providing the service but may not exceed the average cost of the service, and the client receiving or benefiting from the service or the client’s responsible party shall be liable for any such fee assessed. The department may actively assist a client or his or her responsible party in obtaining any financial benefits he or she is entitled to by law, or as the beneficiary of a trust, annuity, retirement fund, or insurance contract. Designation of payee or assignment of benefits shall comply with rules adopted by the department. The department may serve as the representative payee in receiving such benefits for the client or responsible party and shall use such benefits received to reduce the client’s or responsible party’s liability for fees assessed. Before reducing such liability, the department shall provide for the client’s incidental personal expenses allowed by departmental rule and shall bill any insurer or other payor of third-party benefits who may be obligated by contract or law to provide, or to participate in the cost of providing, the service or services to the client for which the fees have been assessed. § 402.33(3), Fla. Stat. INVALID EXERCISE OF DELEGATED LEGISLATIVE AUTHORITY § 120.52(8), Fla. Stat. A. § 120.52(8)(c), Fla. Stat. (enlarge, modify, or contravenes § 402.33, Fla. Stat. and federal law) I. The Proposed Rule contravenes § 402.33, Fla. Stat. 19. In the Proposed Rule, the Agency contravenes the limitations put in place by § 402.33(3), Fla. Stat. Specifically that rule requires that: “Fees not specifically set elsewhere by statute shall be reasonably related to the cost of providing the service but may not exceed the average cost of the service…” Here, the fee is not set by statute. The rule is designed to create a fee structure to offset “room and board” payments to the operators of residential facilities or programs licensed by the Agency. Within the rule, the Agency sets the amount of this room and board fee at $543.42 per month. Proposed Rule 65G-2.016(2)(f). 20. This room and board fee arises in response to room and board payments paid by the Agency to licensed residential providers. This rule assesses a fee on eligible residents to offset that payment. The fee, however, is improperly divorced from the amount of the room and board cost itself. Where the Agency had previously assessed fees only to cover up to the amount of the room and board payment, $543.42 per month, the Proposed Rule will allow the agency to confiscate the entirety of the resident’s monthly income minus certain exceptions set forth in the Rule. 21. Some clients may pay substantially more into this fee than others. A client with few third-party benefits may pay less into this fee than the prescribed room and board fee of $543.42 while another with substantial third-party benefits may pay hundreds of dollars into the fee above the $543.42 amount. In both cases, the actual amount paid by the client bears no actual relationship to the amount assessed for room and board, but rather are wholly dependent on their financial resources. 22. Given these discrepancies, it seems clear that the Proposed Rule is contradictory to the statute it purports to implement. § 402.33(3), Fla.Stat. requires that the assessed fee be “reasonably related to the cost of providing the service”. As indicated in paragraph 21 above, the Proposed Rule creates a fee contingent on income, not the actual cost of service. The statute also requires that the fee “…may not exceed the average cost of the service”, the Proposed Rule creates a fee that may easily exceed the cost of service that the rule itself establishes, $543.42, for an individual with sufficient third-party benefits. Id. The type of fee put forward in the Proposed Rule is not authorized by § 402.33, Fla. Stat., upon which the Proposed Rule relies for its authority. II. The Proposed Rule contravenes Federal Social Security statutes 23. Per 42 U.S.C. 1007, it is unlawful for a Representative Payee to convert funds received on behalf of a qualified beneficiary to any purpose other than the use and benefit of that recipient. Social Security guidelines indicate Representative Payees can only use beneficiary funds to benefit the individual, and that benefits should be spent on the individuals’ immediate and essential needs including: food, clothing, shelter, utilities, medical care and insurance, dental care, personal hygiene, education, and rehabilitation services. GN 00602.001, Social Security Procedures and Operations Manual. The Proposed Rule would require a Representative Payee to divert a recipient’s funds into the residential fee without any exception for money used to pay for services not covered by Medicaid, such as some dental treatments. The Proposed Rule would, in effect, require representative payees to violate federal law. B. § 120.52(8)(d), Fla. Stat. (vague, fail to establish adequate standards for agency decisions, or vest unbridled discretion in the agency) I. The Proposed Rule fails to adequately define the elements of “gross income” 23. The Proposed Rule does not adequately define some of its key terms and in doing so fails to establish standards for the implementation of the rule and therefore vests unbridled discretion in the agency. Prominently, the Proposed Rule defines Benefit Payments and third party benefits by reference to their definitions in § 402.33, Fla. Stat. That statute defines them as such: (a) “Benefit payments” means cash payments from retirement, survivors, or disability insurance or from supplemental security income programs, and includes, but is not limited to, payments from social security, railroad retirement, and the United States Department of Veterans Affairs. (h) “Third-party benefits” means moneys received by or owing to a client or responsible party because of the client’s need for or receipt of services such as those provided by the department. Such benefits include, but are not limited to, benefits from insurers, Medicare, and workers’ compensation. 24. These definitions are open ended and can be interpreted very broadly if the agency so chooses. While a client may assume that Supplemental Security Income would be assessed under the Proposed Rule, less common income, such as a large backpayment of Social Security Disability Insurance, is not addressed in either the statute or Proposed Rule. The rule, in fact, does nothing to narrow or further define these categories which, as written, could encompass an incredibly broad swathe of potential funding sources. This places an impossible regulatory burden on clients and their representative payees as they struggle to determine what constitutes a client’s gross income and vests the Agency with improperly broad discretion in finally making that determination. II. The Proposed Rule fails to adequately define a “voluntary reduction” 25. The Proposed Rule also provides a deduction from a client’s gross income for purposes of the rule for third-party benefits used to offset a “voluntary reduction” in the client’s Medicaid Waiver services. Proposed Rule 65G-2.016(2)(d). The Proposed rule does not define what a voluntary reduction represents nor does it create a mechanism for determining what might constitute such a thing nor how a client could take a voluntary reduction if he or she so chose. It creates no provision for individuals transferring services from the state Medicaid plan to the Developmental Disabilities Waiver as they age out of the federal Early Periodic Screening, Diagnosis, and Treatment program. No existing law or rule exists within the Florida Statutes or the Florida Administrative Code to explicate voluntary reductions within the bounds of the Medicaid Waiver. III. The Proposed Rule contravenes F.S. § 393.125 and creates a chilling effect on due process 26. Defined without sufficient specificity in the rule, the Agency’s broad discretion means that this “Voluntary Reduction” may also conflict with § 393.125, Fla. Stat., requiring the Agency to ensure the due process rights of individuals who receive their services. By creating this exception, the Agency is holding the due process rights of its clients hostage. A client must choose to either relinquish a service voluntarily, forgoing their due process in exchange for a possible reduction to the fee under promulgation, or move ahead with an appeal and face both losing the service and paying the full amount of this fee if they should not prevail in court. This will, in effect, create a chilling effect on appellate advocacy, discouraging clients from utilizing the full breadth of their civil rights as established in Goldberg v. Kelly, 397 U.S. 254 (1970). C. § 120.52(8)(e), Fla. Stat. (arbitrary or capricious) 27. The Proposed Rule, in determining the amount of the fee, contingent only on a client’s third party benefits, is capricious, unreasonable, and unsupported by logic. As written, the Proposed Rule will impose a fee on many clients that is wildly out of line with the actual cost of the service provided. With no set guidelines on the actual amount of the fee, and particularly no upper limit, the fee cannot be based in any present law or empirical data. 28. The Proposed Rule relies on standards for exemptions to a client’s gross income that are mysterious, unknown, and opaque to the public. 29. A final example of the Agency’s capricious implementation of this Proposed Rule can be found in the Agency’s “Notice Regarding Residential Fee Collection”, attached as Exhibit A. That document states that: “The first fees will be due on May 15, 2012 (for any federal benefits received beginning on April 1, 2012).” This Agency statement indicates that a collection is already occurring per the Proposed Rule; that the rule has effectively gone into place for any benefits accrued since April 1, 2012. As of the date of this filing, the Proposed Rule is still undergoing promulgation and no final rule is in place. This implementation is an unadopted rule in violation of Section 120.54(1)(a), Florida Statutes. If not an unadopted rule, this implementation is impermissibly ex post facto and abridges Agency Clients’ Constitutional rights. PRAYER FOR RELIEF Petitioners respectfully request that the Department of Administrative Hearings: 1. Find that APD’s Proposed Rule 65G-2.016, Residential Fee Collections, is an invalid exercise of legislative authority under § 120.52(8)(c), Fla. Stat., because it enlarges, modifies, or contravenes the specific provisions of law implemented, in this case. 2. Find that APD’s proposed rule 65G-2.016 is an invalid exercise of legislative authority under § 120.52(8)(d), Fla. Stat., because the rule is vague and fails to establish adequate standards for agency decisions. 3. Find that APD’s proposed rule 65G-2.016 is an invalid exercise of legislative authority under § 120.52(8)(e), Fla. Stat., because the rule is arbitrary or capricious because it is not supported by logic or the necessary facts and is adopted without thought or reason or is irrational. Respectfully submitted on this 26th day of April, 2012. _______________________________________ Bryan Funk, Esq., Fla. Bar No. 84998 bryanf@disabilityrightsflorida.org Amanda Heystek, Esq., Fla. Bar No. 0285020 amandah@disabilityrightsflorida.org Disability Rights Florida 2728 Centerview Dr. Tallahassee, Florida 32301 Phone: (850) 488-9071 Facsimile: (850) 488-8640 ATTORNEYS FOR PETITIONER DISABILITY RIGHTS FLORIDA CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and accurate copy of the foregoing Petition for Adminstrative Determination of Invalidity of Proposed Rule 65G-2.016 was sent via email and regular mail on this 26th day of April, 2012 to: Michael Palecki, Esq. General Counsel Mike_Palecki@apd.state.fl.us Pete Mallison, Esq. Assistant General Counsel and Agency Clerk Pete_Mallison@dcf.state.fl.us Agency for Persons with Disabilities 4030 Esplanade Way, Suite 380 Tallahassee, Florida 32399 __________________________________ ATTORNEYS FOR PETITIONER