STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 79-2007

) JOHONSON-COLEMAN, INC., t/a ) LAKE WALES CONVALESCENT CENTER, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Lake Wales, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on January 10, 1980. At the hearing the parties were represented by counsel:

APPEARANCES

For Petitioner: Anthony N. DeLuccia, Jr., Esquire

Post Office Box 06085

Ft. Myers, Florida 33906

For Respondent: Clay A. Terry, Esquire

Post Office Box 1260

Lake Wales, Florida 33863

By letter dated April 23, 1979, petitioner advised respondent that "a debt of $11,180.00 is still outstanding regarding the Audit Report FYE 12/31/72 ($8,796.00) and FYE 12/31/76 ($2,384.00)" and apprised respondent that it had "until May 20, 1979, to remit the $11,180.00," before petitioner began withholding monies from payments to respondent "per 10C-7.48(6)" Florida Administrative Code. On May 1979, respondent petitioned for a formal administrative hearing. Respondent disputes petitioner's disallowance of a bad debt item for the year 1972 and petitioner's disallowance of interest paid by respondent to its owners during the year 1976. In addition, respondent argues that the statute of limitations bars petitioner's claim for recovery of any overpayment petitioner may have made in 1972.

FINDINGS OF FACT

1. Respondent operates Lake Wales Convalescent Center (the Center) in Lake Wales, Florida. The administrator of the Center and her husband are long time residents of Lake Wales, who have known many of the nursing home residents over a period of years. The Center enjoys a reputation for excellent nursing home care, and charges less for its services than most other nursing homes. In the past fourteen years, petitioner has received not one complaint about the care of any patient at the Center. The Center provides residential care and nursing

   services for privately paying and indigent persons alike. At all pertinent times, the Center provided services to indigent persons under a series of annual agreements between the Center and petitioner. See respondent's exhibit No. 2.

   
   

2. In 1972, a "service worker" in petitioner's employ told the Center's administrator, Winifred J. Coleman, that one Lizzie Wilson was eligible for care at the Center at petitioner's expense, in accordance with the agreement then in force between the parties. With this understanding, Ms. Wilson was admitted to the Center. Eventually, however, another employee of petitioner, a "payments worker," determined that Ms. Wilson was ineligible for care at petitioner's expense. The latter determination held sway within petitioner agency.

   
   

3. By the time petitioner notified respondent of Ms. Wilson's ineligibility, Ms. Wilson had stayed at the Center some four months. A few days after respondent was notified, Ms. Wilson left the Center. If petitioner had reimbursed respondent for the expenses incurred in the care of Ms. Wilson up to the time petitioner notified respondent that she was ineligible, petitioner would have paid respondent $1,750.00. If respondent had been reimbursed for the services rendered during the additional time it took to find another place for Ms. Wilson, respondent would have received another $268.00. All told, respondent furnished care to Ms. Wilson for 144 days, and missed reimbursal in the amount of $2,018.00. During the year 1972, respondent's occupancy rate was

   99.67 percent.

   
   

4. In calculating the basis for reimbursal under its contract with petitioner for services rendered in 1972, the Center included the $2,018.00 in the $3,162.00 bad debt item which it reported in its unaudited statement of cost operations. Respondent's exhibit No. 1. No later than December 16, 1975, petitioner furnished respondent a copy of an audit report dated September 30, 1975, disallowing the bad debt item in its entirety. Respondent's exhibit No. 2.

   
   

5. During the year 1976, respondent paid interest at the rate of 6 percent to its shareholders on a loan the shareholders had made to respondent. Interest for 1976 amounted to $3,189.00. Respondent claimed the interest as an expense in calculating its costs for reimbursal purposes. On March 10, 1978, petitioner completed its audit of the figures for the year 1976. Petitioner treated the loan made to respondent by its shareholders as if it were equity invested in respondent. Petitioner allows a rate of return on equity in excess of 10 percent. Although Petitioner disallowed the interest as an expense, Petitioner's treatment of the loan as equity resulted in a net benefit to respondent.

   
   

   CONCLUSIONS OF LAW

   
   

6. Relying on the statute of limitations, Section 95.11, Florida Statutes (1979), respondent contends that it is now too late for petitioner to recover any overpayment it made in 1972. A cause of action accrued upon respondent's receipt, in 1972, of the overpayment, respondent argues. If the cause of action is viewed in the light most favorable to petitioner, argues respondent, it is one "founded on a written instrument." Section 95.11(2)(d) Florida Statutes (1979), which must be brought within five years.

   
   

7. The statutory provisions on limitations of action, Chapter 95, Florida Statutes (1979), govern judicial, not administrative proceedings. The doctrine of laches has been applied in administrative proceedings, however. Sea Lake Worth Towers, Inc. v. Gerstung, 262 So.2d 1 (Fla. 1972); Gamma Phi Chapter of

   Signa Chi Building Fund Corp. v. Dade County, 199 So. 2d 717 (Fla. 1967); Askew

   v. Taylor, 299 So.2d 72, 73 (Fla. 1st DCA 1974); Christian and Missionary Alliance Foundation, Inc., v. Schooley, 289 So.2d 778 (Fla. 2d DCA 1974). To invoke the doctrine of laches, a party must show actual change in position to its detriment, not simply the passage of time. Here respondent has not been injured by the lapse of time since the overpayment. In fact, respondent has had the use of a substantial sum of money without paying interest.

   
   

8. As counsel for petitioner conceded at the hearing, the 1972 overpayment should be reduced by $1,750.00, because respondent took Ms. Wilson in on the basis of representations by petitioner's employee that petitioner would reimburse respondent for the expenses of her care. The 1972 overpayment should also be reduced by $268.00, which corresponds to the expenses respondent incurred in caring for Ms. Wilson until another, suitable placement could be found. Petitioner should not give nursing homes with which it contracts an incentive to evict indigent persons before provision has been made for their relocation.

   
   

9. Rule 10C-7.48(6)(c), Florida Administrative Code, specifies that the "methods of reimbursement outlined in the Department of Health, Education and Welfare Publication, Provider Reimbursement Manuel (HIM 15)" be used "[t]o determine the cost settlement" in cases like the present one. Portions of HIM

   15 were received in evidence without objection, including Section 218.1 which provides that "interest paid by the provider to. . .stockholders. is not allowable as a cost." Instead "the funds are considered invested funds or capital, rather than borrowed funds." Section 218.1, HIM. Petitioner's disallowance of interest paid by respondent to its shareholders during the year 1976, was proper.

   
   

10. Pursuant to Rule 10C-7.48(6)(i), Florida Administrative Code, petitioner is authorized to "withhold regular payments to the facility after opportunity for fair hearing is offered and, if requested, completed and a decision is rendered."

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That petitioner withhold all or part of regular payments to respondent until it has recovered nine thousand one hundred sixty-two dollars ($9,162.00) from respondent.

DONE and ENTERED this 7th day of February, 1980, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

Anthony N. DeLuccia, Jr., Esquire Post Office Box 06085

Ft. Myers, Florida 33906

Clay A. Terry, Esquire Post Office Box 1260

Lake Wales, Florida 33863

Docket for Case No: 79-002007

Orders for Case No: 79-002007