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explaining that the issue of whether a party has standing to bring an action is a question of law reviewable de novo on appeal
Summary of this case from AHF MCO of Fla., Inc. v. Agency for Health Care Admin.Opinion
Nos. 1D19-326 1D19-355 No. 1D19-838
08-17-2020
State of Florida AGENCY FOR HEALTH CARE ADMINISTRATION and Molina Healthcare of Florida, Inc., Appellants, v. BEST CARE ASSURANCE, LLC, Appellee. Best Care Assurance, LLC, Appellant, v. State of Florida Agency for Health Care Administration and Molina Healthcare of Florida, Inc., Appellees.
Joseph M. Goldstein, Daniel E. Nordby, and Andrew E. Schwartz of Shutts & Bowen LLP, Tallahassee; Tracy Lee Cooper George and Joseph Helton, Florida Agency for Health Care Administration, Tallahassee, for Agency for Health Care Administration. Eduardo S. Lombard and Brittany Adams Long of Radey Law Firm, Tallahassee, for Molina Healthcare of Florida, Inc. D. Ty Jackson, George Levesque, and Allison Goodson of GrayRobinson, P.A., Tallahassee, for Best Care Assurance, LLC.
Joseph M. Goldstein, Daniel E. Nordby, and Andrew E. Schwartz of Shutts & Bowen LLP, Tallahassee; Tracy Lee Cooper George and Joseph Helton, Florida Agency for Health Care Administration, Tallahassee, for Agency for Health Care Administration.
Eduardo S. Lombard and Brittany Adams Long of Radey Law Firm, Tallahassee, for Molina Healthcare of Florida, Inc.
D. Ty Jackson, George Levesque, and Allison Goodson of GrayRobinson, P.A., Tallahassee, for Best Care Assurance, LLC.
Winokur, J. This appeal involves two orders: a circuit court's final judgment and an agency final order. Molina Healthcare of Florida, Inc. (Molina) and the Agency for Health Care Administration (AHCA) appeal the circuit court's final judgment in favor of Best Care Assurance, LLC (Best Care). Best Care appeals AHCA's final order dismissing Best Care's petition to challenge a contract award to Molina. We reverse the circuit court's final judgment and direct the circuit court to enter a final judgment in favor of AHCA and Molina. We affirm AHCA's final order.
I.
AHCA issued an invitation to negotiate, seeking vendors to provide Statewide Medicaid Managed Care (SMMC) Program services for Region 8. AHCA posted its Initial Notice of Intent to Award Contracts in April 2018. Best Care was identified as an original intended awardee for Region 8. AHCA awarded three other contracts for Region 8 to the following plan providers: Humana Medical Plan, Inc., Sunshine State Health Plan, Inc., and Wellcare of Florida, Inc.
Humana was identified as a provider receiving an "additional contract" in Region 8 by virtue of its contract award in Regions 1 or 2. See § 409.966(3)(e), Fla. Stat. (stating that "the agency shall award an additional contract to each plan with a contract award in Region 1 or Region 2" and that "[s]uch contract shall be in any other region in which the plan submitted a responsive bid and negotiates a rate acceptable to the agency").
AHCA did not initially select Molina as an intended awardee in any region. Molina filed a protest of AHCA's Initial Notice of Intent to Award Contracts. AHCA and Molina entered into a settlement agreement under which AHCA would award a contract in Region 8 (and in Region 11) to Molina in exchange for Molina dismissing its protests in all 11 regions. AHCA issued a Final Order incorporating the settlement agreement. AHCA posted its notice of intent to award a contract to Molina.
Best Care then protested the additional award to Molina, arguing that the additional award violated section 409.974(1)(h), Florida Statutes, which—according to Best Care—limits the number of service providers in Region 8 to four. Best Care also argued that Molina was not a responsive or responsible bidder for purposes of the additional contract. AHCA referred the matter to the Division of Administrative Hearings (DOAH), and Molina intervened.
Molina moved to dismiss Best Care's protest, asserting that Best Care lacked standing to challenge the additional award to Molina because it would not suffer an injury, and alternatively requested the Administrative Law Judge (ALJ) to relinquish jurisdiction to AHCA, arguing the material facts were not in dispute. The ALJ relinquished jurisdiction to AHCA, finding that Best Care lacked standing.
AHCA then conducted an informal hearing pursuant to section 120.57(2), Florida Statutes. The informal hearing officer's recommended order found that Best Care lacked standing.
Prior to AHCA making its final decision, Best Care filed an action in circuit court, seeking a declaration that AHCA's additional award to Molina was without colorable statutory authority, and to enjoin AHCA from entering into any such contract. Molina and AHCA filed motions to dismiss and motions for summary judgment, arguing, in part, that Best Care could not seek relief from the circuit court because Best Care did not exhaust all available administrative remedies. Best Care also filed a motion for summary judgment.
In January 2019, the circuit court entered final judgment for Best Care, holding that "AHCA's attempted award of a fifth Region 8 Medicaid Managed Care contract to Molina is invalid, void as a matter of law, and contrary to Florida law, including section 409.9[7]4(1)(h), Florida Statutes." AHCA and Molina timely appealed the order.
In February 2019, AHCA issued its final order, adopting the findings of fact and conclusions of law set forth in the recommended order. Best Care appealed AHCA's final order. Both the appeal of the circuit court's final judgment and appeal of AHCA's final order are before this Court.
II.
A.
We first address the circuit court's final judgment. Appellate courts review orders granting summary judgment de novo. See Major League Baseball v. Morsani , 790 So. 2d 1071, 1074 (Fla. 2001) ("The standard of review governing a trial court's ruling on a motion for summary judgment posing a pure question of law is de novo."). "A trial court's ruling on a motion to dismiss ... is subject to de novo review." Rudloe v. Karl , 899 So. 2d 1161, 1162 (Fla. 1st DCA 2005) (quoting Execu-Tech Bus. Sys., Inc. v. New Oji Paper Co. Ltd. , 752 So. 2d 582, 584 (Fla. 2000) ). Likewise, "[s]tatutory interpretation is a question of law subject to de novo review." Bay County v. Town of Cedar Grove , 992 So. 2d 164, 167 (Fla. 2008) (quoting BellSouth Telecomms., Inc. v. Meeks , 863 So. 2d 287, 289 (Fla. 2003) ).
Generally, a party must exhaust available administrative remedies before filing suit in circuit court. See Fla. Marine Fisheries Comm'n v. Pringle , 736 So. 2d 17, 19–20 (Fla. 1st DCA 1999) ; Bankers Ins. Co. v. Fla. Residential Prop. & Cas. Joint Underwriting Ass'n , 689 So. 2d 1127, 1129 (Fla. 1st DCA 1997). The exhaustion requirement includes "pursuing an appeal from an administrative ruling where a method of appeal is available." Robinson v. Dep't of Health , 89 So. 3d 1079, 1081 (Fla. 1st DCA 2012). We discussed exceptions to the exhaustion requirement in Bankers :
[R]elief is available as a remedy for adverse administrative action "only in those extraordinary cases where a party has no other adequate administrative remedy to cure egregious agency errors or where a party's constitutional rights are endangered," Metropolitan Dade County v. Department of Commerce, 365 So. 2d 432, 433 (Fla. 3d DCA 1978), or "where the agency is alleged to have acted without colorable statutory authority and in excess of its delegated powers ." Department of Revenue v. Brock, 576 So. 2d 848, 850 (Fla. 1st DCA), rev. denied, 584 So. 2d 997 (Fla. 1991).
689 So. 2d at 1129 (emphasis added) (quoting State Dep't of Envtl. Prot. v. PZ Constr. Co. , 633 So. 2d 76, 78 (Fla. 3d DCA 1994) ). "[I]t is permissible to pursue ... relief in a circuit court—without first pursuing and exhausting administrative remedies—if ‘an agency acts without colorable statutory authority that is clearly in excess of its delegated powers.’ " Baker Cty. Med. Servs., Inc. v. State , 178 So. 3d 71, 75 (Fla. 1st DCA 2015) (quoting Dep't of Agric. & Consumer Servs. v. City of Pompano Beach, 792 So. 2d 539, 546 (Fla. 4th DCA 2001) ). However, "[t]his narrow exception is inapplicable, and exhaustion of administrative remedies will be required, where the agency's assertion of jurisdiction has apparent merit ...." State, Dep't of Revenue v. Brock , 576 So. 2d 848, 850 (Fla. 1st DCA 1991).
It is undisputed that Best Care did not exhaust its administrative remedies, either before AHCA or by appealing any AHCA action, before filing suit. Regarding exceptions to the exhaustion requirement, we note that Best Care does not claim that AHCA violated its constitutional rights. Nor is this an "extraordinary case[ ] where [Best Care] has no other adequate administrative remed[ies] to cure egregious agency errors ...." Bankers , 689 So. 2d at 1129 (quoted source omitted). Section 120.57(3)(b), Florida Statutes, explicitly permits an adversely affected party to file a bid protest against an agency. This is precisely what Best Care did. Shortly after AHCA issued its notice of the additional contract awards to Molina, Best Care filed a protest in accordance with section 120.57(3)(b). Once Best Care's petition for protest was referred to DOAH and then back to AHCA for informal hearing, Best Care was permitted to submit argument in favor of its position. Moreover, Best Care—pursuant to section 120.68, Florida Statutes —is timely appealing AHCA's final order with this Court. Accordingly, Best Care has an "adequate administrative remedy" to address its grievance with AHCA. See Bankers , 689 So. 2d at 1129 (quoted source omitted).
Finally, we reject Best Care's claim that AHCA was acting "without colorable statutory authority that [was] clearly in excess of its delegated powers" when it granted Molina a contract in Region 8. See City of Pompano Beach , 792 So. 2d at 546 (quoting State, Dep't of Envtl. Regulation v. Falls Chase Special Taxing Dist. , 424 So. 2d 787, 796 (Fla. 1st DCA 1982) ). As discussed below, AHCA did not violate section 409.974(1)(h), when it awarded the contract to Molina. We need not address the arguments on the merits here, other than to state that AHCA was acting with colorable authority. Accordingly, because Best Care had not exhausted its administrative remedies, and because no exception to the exhaustion requirement is applicable, the circuit court erred in ruling in favor of Best Care.
B.
1.
We now address whether AHCA erred in its final order. First, we review AHCA's denial of Best Care's petition based on a lack of standing. "Whether a party has standing to bring an action is a question of law that is 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) (citing Hospice of Palm Beach Cty. Inc. v. State, Agency for Health Care Admin. , 876 So. 2d 4, 7 (Fla. 1st DCA 2004) ). "In determining whether [a party] ha[s] standing, the allegations contained in its petition must be taken as true." Hospice of Palm Beach Cty. , 876 So. 2d at 7.
We find that AHCA did not err in holding that Best Care lacked standing to pursue an administrative challenge to the contract awarded to Molina. Standing to challenge agency action, including an agency decision to award a public contract, arises when a petitioner's substantial interests are affected by the agency action. See Madison Highlands, LLC v. Fla. Hous. Fin. Corp. , 220 So. 3d 467, 473 (Fla. 5th DCA 2017) (citing Preston Carroll Co. v. Fla. Keys Aqueduct Auth. , 400 So. 2d 524, 525 (Fla. 3d DCA 1981) ). Agrico Chemical Co. v. Department of Environmental Regulation , 406 So. 2d 478 (Fla. 2d DCA 1981), is the seminal case concerning whether a litigant has a substantial interest in the outcome of an administrative proceeding sufficient to establish standing. The court in Agrico set forth the following test:
[B]efore one can be considered to have a substantial interest in the outcome of the proceeding he must show 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.
Best Care claims that they will suffer injury in fact from AHCA's action because Molina's additional contract in Region 8 will result in reduced Medicaid enrollment, which in turn will result in reduced revenue. AHCA found that the alleged injury was insufficient to confer standing, because Best Care's claim was conjectural and speculative. We do not address whether AHCA erred in this determination, because we find that Best Care failed to establish the second prong of the Agrico standing test. The second prong of Agrico requires that the party's "substantial injury is of a type or nature which the proceeding is designed to protect." Id. Where economic injuries are alleged as a basis for standing, the inquiry is whether the statute "contemplates consideration of such interests." Fla. Med. Ctr. v. Dep't of Health & Rehab. Servs. , 484 So. 2d 1292, 1294 (Fla. 1st DCA 1986) (quoting Fla. Med. Ass'n v. Dep't of Prof'l Regulation , 426 So. 2d 1112, 1118 (Fla. 1st DCA 1983) ).
Best Care claims that its alleged injury is one that is subject to protection because section 409.974(1)(h) places a "cap" on the number of plans in Region 8 to four. Best Care argues this statutory requirement demonstrates that the Legislature intended to protect the economic viability of the health plans. Best Care claims, "[t]he purpose and effect of this explicit limitation on the number of plans is the protection of the economic interests of the health plans." (emphasis added). Best Care supports this argument with the staff analysis of the bill that added section 409.974(1)(h), which notes that the purpose of the limitation on the number of plans was to "ensure stability but allow significant patient choice." (quoting Fla. H.R. Comm. on Health & Hum. Servs., CS/HB 7107 (2011), Staff Analysis 1 (final June 28, 2011), available at http://www.flsenate.gov/Session/Bill/2011/7107/Analyses/h7107z.HHSC.PDF). We disagree. Even if we were to conclude that staff analyses add meaning to the language of statutes, one could conclude that the "cap" was intended to protect Medicaid recipients, not the economic interests of the plans. In any event, we do not read the statutory language to protect Best Care's interest in limiting competitors.
Moreover, Best Care cites to numerous cases as support for its argument that potential harm to economic interests is sufficient to confer standing under the second prong of Agrico , but those cases are dissimilar to this one. The cited cases concern either the State's trauma system statutes or the State's certificate of need (CON) statutes—all of which include express provisions requiring the respective state agencies to consider impact on existing providers.
For example, in Shands Jacksonville Medical Center, Inc. v. State, Department of Health , we held that certain hospitals with existing trauma centers had standing to challenge an agency's granting of provisional trauma-center licenses to nearby hospitals. 123 So. 3d 86, 87 (Fla. 1st DCA 2013). This was because the trauma-care statutes ( sections 395.402 and 395.4025, Florida Statutes ) expressly required the agency to consider the impact that new trauma centers will have on existing trauma centers. See id. Specifically, the statutes required a "need" for a new trauma center and required the Department of Health to notify existing trauma centers when it was accepting applications for new trauma centers. Id. at 90. Additionally, this statute provided that "[a]ny hospital that wishes to protest a decision made by the department based on the department's preliminary or in-depth review of applications ... shall proceed as provided in chapter 120." Id. at 90–91 (quoting § 395.4025(7), Fla. Stat. (2004) ). In short, the trauma system statutes plainly contemplated consideration of the effect on other trauma centers and specifically provided that existing and competing trauma centers could challenge the approval of new trauma centers.
The CON cases do not help Best Care either. See generally First Hosp. Corp. of Fla. v. Dep't of Health & Rehab. Servs. , 589 So. 2d 310 (Fla. 1st DCA 1991) ; Fla. Med. Ctr. , 484 So. 2d at 1292. Like the trauma system statutes, the CON statutes specifically contemplate the right of an existing center to challenge the issuance of a CON to a competing facility. "Existing health care facilities may initiate or intervene in such administrative hearing upon a showing that an established program will be substantially affected by the issuance of a certificate of need to a competing proposed facility or program within the same district." First Hosp. Corp. , 589 So. 2d at 311 (citing § 381.709(5)(b), Fla. Stat. (1989) ); see also Fla. Med. Ctr. , 484 So. 2d at 1294 (finding that Chapter 381, Florida Statutes, required HRS "to examine the economic effect that a CON will have on an existing, competing facility").
Thus, the trauma and CON regulatory statutes are plainly dissimilar to the SMMC statutes at issue here. In the trauma system and CON proceedings, there is an application process, during which the agency considers the need for the program and the impact on current providers. The SMMC statutes do not impose this requirement on AHCA. Instead, the SMMC statutes provide for a competitive bidding process to select plans. The SMMC statutes do not authorize AHCA to consider the economic impact to a competing health plan.
In sum, the SMMC statutes do not authorize or command AHCA to consider the economic impact of competing health plans. Thus, Best Care fails to satisfy the second prong of Agrico . Consequently, because Agrico requires that both prongs be met for standing in an administrative proceeding, Best Care lacks standing to challenge AHCA's contract award to Molina. See Agrico , 406 So. 2d at 482 (stating that a party must show an "injury in fact which is of sufficient immediacy ... and ... that [the party's] substantial injury is of a type or nature which the [statute] is designed to protect") (emphasis added).
2.
Even assuming that Best Care did have standing to challenge the award to Molina, we find that its argument lacks merit. Best Care contends that AHCA misinterprets sections 409.966(3)(e) and 409.974(1)(h), and that section 409.974(1)(h) places a limit on the number of plans that AHCA can award in Region 8. More specifically, Best Care argues that AHCA cannot grant more than four awards in Region 8, and therefore, any fifth contract awarded in Region 8 violates section 409.974(1)(h) —even if the fifth contract in Region 8 was awarded based on section 409.966(3)(e). We disagree.
"When the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statute must be given its plain and obvious meaning." Holly v. Auld , 450 So. 2d 217, 219 (Fla. 1984). Indeed, "when the text is unambiguous, [the] inquiry is at an end ." E.A.R. v. State , 4 So. 3d 614, 629 (Fla. 2009) (emphasis added). However, "if a part of a statute appears to have a clear meaning if considered alone but when given that meaning is inconsistent with other parts of the same statute or others in [pari materia ], the Court will examine the entire act and those in pari materia ...." Fla. Dep't of Envtl. Prot. v. ContractPoint Fla. Parks, LLC , 986 So. 2d 1260, 1265–66 (Fla. 2008) (quoting Fla. State Racing Comm'n v. McLaughlin , 102 So. 2d 574, 575–76 (Fla. 1958) ).
Additionally, "[i]t is an elementary principle of statutory construction that significance and effect must be given to every word, phrase, sentence, and part of the statute if possible, and words in a statute should not be construed as mere surplusage." Am. Home Assur. Co. v. Plaza Materials Corp. , 908 So. 2d 360, 366 (Fla. 2005) (quoting Hechtman v. Nations Title Ins., 840 So. 2d 993, 996 (Fla. 2003) ). "Further, ‘a basic rule of statutory construction provides that the Legislature does not intend to enact useless provisions, and courts should avoid readings that would render part of a statute meaningless.’ " Id. (quoting State v. Goode, 830 So. 2d 817, 824 (Fla. 2002) ).
Section 409.974(1)(h) directs AHCA to "procure at least two plans and up to four plans for Region 8 . At least one plan must be a provider service network if any provider service networks submit a responsive bid." § 409.974(1)(h), Fla. Stat. (emphasis added). In relevant part, section 409.966(3)(e) states:
To ensure managed care plan participation in Regions 1 and 2, the agency shall award an additional contract to each plan with a contract award in Region 1 or Region 2 . Such contract shall be in any other region in which the plan submitted a responsive bid and negotiates a rate acceptable to the agency.
(emphasis added).
Reading sections 409.974(1)(h) and 409.966(3)(e) in pari materia makes evident that the Legislature directs AHCA perform two different acts. First, AHCA must procure contracts for Region 8 under section 409.974(1)(h). Section 409.966(2), Florida Statutes, directs AHCA to select plans using an invitation-to-negotiate solicitation in accordance with section 287.057(1)(c), Florida Statutes. See § 409.966(2), Fla. Stat. (stating, in pertinent part, that "[t]he agency shall select a limited number of eligible plans to participate in the Medicaid program using invitations to negotiate in accordance with [ section] 287.057(1)(c)"). In turn, "[t]he invitation to negotiate is a solicitation used by an agency which is intended to determine the best method for achieving a specific goal or solving a particular problem and identifies one or more responsive vendors with which the agency may negotiate in order to receive the best value ." § 287.057(1)(c), Fla. Stat. (emphasis added). Thus, to "procure" plans under section 409.974(1)(h) is to solicit and receive bids—not to grant or "award" contracts.
Second, in contrast to procurement under section 409.966(3)(e), AHCA must "award an additional contract to each plan with a contract award in Region 1 or Region 2. Such contract shall be in any other region ...." § 409.966(3)(e), Fla. Stat. (emphasis added). If section 409.974(1)(h) were read as placing a "cap" on the number of plans that AHCA can award in Region 8, as Best Care contends, it would nullify the plain language in section 409.966(3)(e). See Goode , 830 So. 2d at 824 ("[A] basic rule of statutory construction provides that the Legislature does not intend to enact useless provisions, and courts should avoid readings that would render part of a statute meaningless."). Consequently, AHCA did not err when it awarded a contract to Molina in Region 8.
III.
Because the circuit court erred in ruling in favor of Best Care when Best Care had not exhausted its administrative remedies, we reverse the circuit court's final judgment and remand with instructions to enter a final judgment in favor of AHCA and Molina. In addition, because Best Care failed to establish standing to challenge AHCA's contract award to Molina, we affirm AHCA's final order on the issue of standing. Moreover, even assuming Best Care had standing, on the merits, we find that AHCA did not violate section 409.974(1)(h) when it awarded a fifth contract in Region 8.
REVERSE the final judgment; REMAND with instructions to enter a final judgment; AFFIRM the final order.
Lewis and M.K. Thomas, JJ., concur.