AHCA Expert Not Allowed to “Use His Discretion” in Deciding Claims Were Improper in Medicaid Appeal Hearing

FACTS: The Agency for Health Care Administration’s (“AHCA”) Office of Medicaid Program Integrity audited Dr. Rao, an authorized provider of Medicaid services, for claims between July 1, 2007, and June 30, 2009, and found him to be in violation of certain Medicaid provider policies. AHCA prepared a Final Audit Letter on June 1, 2011, notifying Dr. Rao that he had been overpaid by the Medicaid program by $110,712.09 for services provided during the audit period. Dr. Rao’s administrative hearing challenging AHCA’s overpayment determination was pending before DOAH. On August 17, 2012, Dr. Rao filed an unadopted rule challenge, alleging that AHCA’s overpayment determination was based on unadopted rules regarding the medical necessity of long-term monitored electroencephalograms (LTM EEGs).

OUTCOME: The ALJ found that AHCA’s peer review expert applied certain standards to the Medicaid claims he examined in conducting the Medicaid audit, but “exercised his discretion as to whether to apply them based on the specifics of each patient’s medical records.” The ALJ dismissed the unadopted rule challenge, explaining that “where application of agency policy is subject to the discretion of agency personnel, the policy is not a rule. . . . The medical standards at issue in this case are not self-executing and require the exercise of discretion in their application.” The ALJ noted that “the medical standards of practice must be applied on a case-by-case basis to determine whether the services provided were medically necessary, and provided both an appropriate level of care and standard of care ‘customarily furnished by the physician’s peers and to recognized health care standards” as required by section 409.9131(2)(d), Florida Statutes.


Radhakrishna K. Rao et al. v. AHCA, DOAH Case No. 12-2813RU (Final Order Aug. 20, 2013).

About the Author: The forgoing case summary was prepared by and appeared in the DOAH case notes of the Administrative Law Section newsletter, Vol. 35, No. 2 (Dec. 2013), a publication of the Administrative Law Section of The Florida Bar.