STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Petitioner, )
)
vs. ) CASE NO. 79-2407
)
LAKEVIEW NURSING HOME, )
)
Respondent. )
) ROBERT BECHT and R. B. CARE, ) INC., d/b/a LAKEVIEW MANOR and ) d/b/a INTERCOASTAL NURSING )
MANOR, )
)
Petitioner, )
)
vs. ) CASE NO. 80-467
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, R. L. Caleen, Jr., held a formal hearing, in these consolidated cases, on May 29, 1980, in West Palm Beach, Florida.
APPEARANCES
For Petitioner/Respondent K. C. Collette, Esquire Department of Health and District IX Legal Counsel Rehabilitative Services: Department of Health and
Rehabilitative Services
111 Georgia Avenue
West Palm Beach, Florida 33401
For Respondent/Petitioners, Lakeview Nursing Home; 3 Robert Becht and R. B.
Care, Inc. d/b/a Lakeview Albert R. Wilber, Jr., Esquire Manor and d/b/a Inter- 15 Third Street, Suite 301 coastal Nursing Manor: West Palm Beach, Florida 33401
ISSUE
[Case No. 79-2407] Whether the Department is entitled to reimbursement of certain Medicaid funds previously paid to a nursing home owner in the amount of $118,061.00, based upon a recommendation by the Department and subsequent determination by the U.S. Department of Health, Education and Welfare, under Section 1122, Social Security Act, that Federal reimbursement of expenses attributable to the purchase of the nursing home should be withheld due to the Owner's lack of timely notice of intent to acquire the nursing home;
[Case No. 80-467] Whether, based on the Section 1122 determination, the Department wrongfully disallowed and withheld payment to the nursing home owner, certain medicaid reimbursement funds in the amount of $101,348.00.
Conclusions and Recommendation: Conclusions:
Here, each party has the burden of presenting a preponderance of evidence in support of its affirmative claim. Each claim rests on the propriety or impropriety of imposition of Section 1122 penalties against the nursing home.
Since the Department failed to present sufficient evidence justifying the imposition of Section 1122 penalties and the nursing home failed to establish the Section 1122 penalties were erroneously imposed, neither party sustained its burden of establishing entitlement to the relief requested.
Recommendation:
That the Department's Medicaid overpayment claim against the nursing home owner, in the amount of $118,061.00 be DENIED, and the nursing home owner's claim against the Department for $101.348.00 in Medicaid underpayments be DENIED.
Background:
On April 26, 1979, and May 2, 1979, Petitioner/Respondent, Department of Health and Rehabilitative Services ("Department") notified Respondent/Petitioners, Lakeview Nursing Home, Robert Becht and R. B. Care, Inc., d/b/a Lakeview Manor and d/b/a Intercoastal Nursing Manor ("Owner") that a desk review of the annual cost report for the Lakeview Nursing Home (a/k/a Lakeview Manor) indicated that the nursing home had been overpaid $18,900.00 by the Department's Medicaid Program during the eight months, ending June 30, 1978, and that such overpayment should be returned to the Department.
On October 8, 1979, the Department notified the nursing home Owner that, pursuant to a "Notice of Determination Under Section 1122" issued by the U.S. Department of Health, Education and Welfare ("HEW") the Department had recalculated the nursing home's historic per diem rates and determined that the Owner had been overpaid $61,155.00 in Medicaid funds during the period ending June 30, 1978.
On November 19, 1979, the nursing home Owner requested a formal hearing, under Section 120.57(1), Florida Statutes, to challenge the validity of the Department's overpayment claim. On November 30, 1979, the Department forwarded the Owner's request for a hearing to the Division of Administrative Hearings. [DOAH Case No. 79-2407] On January 10, 1980, the Department notified the
nursing home Owner that an additional $56,906.00 should be repaid to the State of Florida--based upon alleged overpayment to the nursing home during the period ending June 30, 1979.
On February 14, 1980, the nursing home Owner filed a Petition with the Department alleging numerous wrongful and negligent Department actions resulting in the withholding and underpayment of Medicaid funds to which the nursing home was entitled, demanding full payment, and requesting a formal Section 120.57 hearing. On March 12, 1980, the Department forwarded the nursing home Owner's Petition to the Division of Administrative Hearings for assignment of a Hearing Officer. [DOAH Case No. 80-467]
By Notice of Hearing, dated April 11, 1980, Case No. 80-467 was set for final hearing on May 29, 1980. By agreement of the parties, the two cases were subsequently consolidated for final hearing.
At final hearing, the Department called John T. Donaldson, and offered Respondent's Exhibit Nos. 1 through 9, into evidence, each of which was received. The nursing home Owner called as its witnesses, William McCaulley, Leonard Cordes, and Linda Zarecki, and offered Petitioner's Exhibit Nos. 5, (Composite) and 6, each of which was received. At the request of the nursing home, and without objection by the Department, official recognition was taken of Rule 10C-7.48(6)(c), Florida Administrative Code. The nursing home further stipulated that the only allegations which it would pursue in the administrative hearing concerned whether the Department wrongfully withheld from the nursing home certain Medicaid funds to which its was entitled.
Neither party submitted post-hearing proposed Findings of Fact or Conclusions of Law.
FINDINGS OF FACT
Pursuant to an agreement with HEW, the Department administers the Medicaid Program within Florida which includes allocation and payment of Medicaid funds to nursing homes which provide health care to patients qualifying for Medicaid benefits. (Testimony of Donaldson, Petitioners Exhibit 5; Respondent's Exhibit 9)
On November 1, 1977, Robert Becht, on behalf of R. B. Care, Inc. ("Owner") purchased a nursing care facility located at 208 Lakeview Avenue, West Palm Beach, Florida, known as Intercoastal Nursing Manor. No evidence was presented to establish the purchase price paid for the facility. Subsequent to its purchase, the name of the nursing home was changed to Lakeview Manor, although Department correspondence frequently refers to it as Lakeview Nursing Home. (Testimony of Donaldson, McCaulley, Respondent's Exhibits 1, 2, 5, 9 [Composite])
On January 9, 1978, a representative of the Regional Health Care Planning Agency--Health Planning Council, Inc.--advised the Department's Bureau of Community Medical Facilities of an apparent change in ownership of the Intercoastal Nursing Home, noted that the new owner had not "sought, applied for, or received the necessary Certificate of Need for this change of ownership transaction," and asked for Department assistance in determining the present status of the nursing facility. (Testimony of Donaldson, Respondent's Exhibit 1)
In response to the Health Planning Council's letter, the Department's Office of Medical Facilities sent a letter to the Nursing Home Owner, dated January 26, 1978. That letter enclosed Department rules which provided that, when certain expenditures have been incurred by a health care facility without prior notice of such expenditure being given to the designated planning agency (Office of Medical Facilities), that agency should notify the health care facility that such obligation was subject to review, that timely notice of the proposed expenditure was not given, and that the Agency proposed to recommend to the Secretary of HEW that the expenditure be disapproved. The nursing home was given 30 days to reply, or file the necessary application for approval of the expenditure (acquisition of the nursing home). The letter closed with the following:
"You should understand that we must report the purchase of Intercoastal Nursing Manor to the Department of Health, Education and Welfare on a no timely notice and that it may affect depreciation, interest, and fair returns on the project and reimbursement on the project." (Respondent's Exhibit 2)
By letter dated March 22, 1978 (with copy to the nursing home Owner), the Department's Office of Community Medical Facilities subsequently informed the regional office of HEW that notice had been given the nursing home Owner concerning the need to file an application for review of the November 1, 1977, acquisition of and change in ownership of the nursing home, but that it had failed to respond. The recommendation of the Office of Community Medical Facilities was attached to the transmittal letter; however, that recommendation was not offered into evidence by the Department. The letter of transmittal concluded that, because no application for approval was submitted by the nursing home Owner, there was "no indication on the HRA-45 of the amount of capital expended for the acquisition." (Respondent's Exhibit 3)
During April, 1978, the Regional Health Administrator of HEW issued a "Notice of Determination under Section 1122--Reimbursement to be Excluded." The Notice was addressed to the nursing home Owner and concluded that reimbursement for expenses related to the capital expenditure (acquisition of the nursing home facility) would be excluded from payment for services provided under the Social Security Act based upon the finding that (1) the expenditure was subject to Section 1122, and (2) Notice of Intent to make the expenditure had not timely been given. By way of explanation, the regional administrator added that reimbursement would be "withheld for an indefinite period" because the State had been unable to make a finding that the expenditure conformed to applicable plans, standards, and criteria due to the failure to submit an application. (Respondent's Exhibit 4)
By separate agreements entered into by the Department and the nursing home Owner on November 2, 1977, October 30, 1978, and September 5, 1979 (which enabled the nursing home to participate in Florida's Medicaid Program) the nursing home Owner expressly agreed to comply with state and federal laws and rules applicable to the Medicaid Program. The Owner also agreed that Medicaid cost reporting would be governed by the procedures and methods contained in the Medicare Provider Reimbursement Manual (HIM-15). The agreements relieve the nursing home from responsibility in "those instances of overpayment due to Agency [Department] errors in eligibility investigation and determination. . ." (Respondent's Exhibit 9 [Composite])
Section 2422 of HIM-15 describes the requirements concerning approval of capital expenditures imposed by Section 1122 of the Social Security Act. The Manual cautions providers desiring to make or having made expenditures subject to Section 1122 to familiarize themselves with the regulations and direct questions concerning its implementation to the designated planning agency. (Respondent's Exhibit 8)
Notwithstanding having been sent repeated notices by the Department and HEW concerning the requirements of Section 1122, the nursing home Owner has not filed an application for approval of the capital expenditure associated with acquisition of the nursing home; neither has it contended that such capital expenditure does not fall within the ambit of Section 1122 and implementing HEW and Department rules. (Testimony of McCaulley, Donaldson)
Despite the Department's withholding and disallowal of payment to the nursing home of expenses relating to the acquisition of the facility (due to the federal Section 1122 determination), the nursing home continued to qualify for and participate in the Medicaid Program. The nursing home provided efficient and satisfactory medical care to Medicaid patients during 1978, and 1979, and the Department does not assert otherwise. The three Medicaid participation agreements entered into during 1977, 1978, and 1979, do not directly address or purport to relieve health care facilities from compliance with Department rules and Section 1122. (Testimony of Donaldson, McCaulley, Respondent's Exhibit 9 [Composite])
It is probable that the nursing home received actual notice of the requirement that certain capital expenditures by health care facilities must receive Section 1122 approval. Although the nursing home Owner's secretary since June, 1978, does not recall receiving the HEW Section 1122 Notice, she was not employed by the nursing home during the time the notice was issued, and she admitted that she could not testify that the owner had not received the HEW Notice. Moreover, her testimony did not address the earlier Department correspondence to the Owner concerning the need to obtain State and Federal Section 1122 approval, including the Department's Section 1122 recommendation to HEW. (Testimony of Zarecki, Donaldson, Respondent's Exhibits 2, 3, 4, 5, 6)
Between 1977 and 1979, the Department overpaid the nursing home
$118,061.00 (which includes the $18,900.00 claimed by the Department in its May 2, 1979, letter) in per diem patient reimbursements which the nursing home was not entitled to under the Section 1122 Notice and Penalty. This overpayment was caused by the Department's failure to exclude that portion of per diem patient reimbursements attributable to the Owner's acquisition of the nursing home property. (Testimony of Donaldson, Respondent's Exhibits 5 and 7)
If the Section 1122 penalty was incorrectly recommended by the Department, and imposed by the HEW, the Department has withheld between November 1, 1977, and December 31, 1979, $101,348.00 which is now due and owing to the nursing home Owner. (Testimony of McCaulley, Petitioner's Exhibit 6)
Since January 2, 1979, the Owner has no longer owned or operated the nursing home in question. (Testimony of McCaulley, Cordes)
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Florida Statutes (1979).
The party asserting the affirmative of an issue has the burden of presenting a preponderance of the evidence in support of its claim. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977), 1 Fla. Jur.2d, Administrative Law, Section 81 (1977).
In this proceeding, both the Department and the nursing home Owner assert affirmative and independent claims against the other. The Department asserts (in Case No. 79-2407) that, due to the proper imposition of Medicaid penalties against the nursing home under Section 1122 of the Federal Social Security Act, the nursing home was overpaid and should return $118,061.00 to the State in Medicaid reimbursements. The nursing home Owner asserts (in Case No. 80-467) that, due to the Department's wrongful imposition of Section 1122 penalties, the nursing home was underpaid, and is now entitled to $101,348.00 in Medicaid reimbursements.
Each party's claim is integrally related to, and dependent upon whether the Section 1122 penalties imposed against the nursing home were, and are, supported by the evidence and consistent with law. The Department's overpayment claim against the nursing home, then, cannot prevail unless a preponderance of the evidence, and applicable law, support the imposition of Section 1122 penalties. In turn, the nursing home's underpayment claim must fail unless the evidence affirmatively establishes that the Section 1122 penalties were, and are, improperly imposed. As discussed below, neither party to this proceeding sustained its burden of affirmatively establishing its claim by a preponderance of evidence; each party's claim against the other must, therefore, be denied.
Section 1122 of the Federal Social Security Act (42 USC Section 1320
a-1) authorizes the Secretary of HEW upon recommendation of the state designated planning agency (here, the Department's Office of Community Medical Facilities), to exclude Federal reimbursement of certain Medicaid expenses to health care facilities which fail to provide the planning agency with timely notice of certain "capital expenditures" prior to their undertaking an obligation for such expenditures. Relevant implementing federal regulations define those "capital expenditures" which are subject to the reporting, and planning agency review requirements as expenditures not properly chargeable as expenses of operation and maintenance and which exceed $100,000.00. 42 C.F.R. Section 100.103(a)(1). Conversely, if the expenditure is $100,00.00 or less (and does not involve a change in bed capacity or service, which is not asserted here), it is not subject to Section 1122 reporting and review requirements.
In the instant case, the Department failed to present evidence to establish that the capital expenditure at issue, i.e., the acquisition of the nursing home on November 1, 1977, exceeded $100,000.00 or otherwise qualified as a capital expenditure subject to the reporting requirements of Section 1122. We are left to speculate as to the contents of the Department's Section 1122 recommendation to HEW because its recommendation was not offered into evidence. Having failed to present evidence on a key element of its claim, that the capital expenditure involved was subject to Section 1122, the Department cannot prevail and has not established its overpayment claim which is predicated upon the correct application of Section 1122 penalties.
The Department's principal defense against the nursing home's underpayment claim against it is that relief from the HEW "Notice of Determination Under Section 1122" must be sought through that federal agency-- not the Department. The Department's position is contradicted by its action in
granting the nursing home's request for a hearing on the underpayment claim and asking that a hearing officer be assigned for such purpose. The Department did not move to dismiss the nursing home's petition, on such jurisdiction ground, until mid-proceeding.
More importantly, the Department's argument overlooks the basic thrust of Section 1122, and the importance of state decision-making in its implementation. Section 1122 expressly prohibits judicial review of the HEW Secretary's decision, and limits his ability to independently determine, review, or reverse the State's (Designated Planning Agency's) Section 1122 recommendation, Congress intended that substantive decision-making under Section 1122 be placed in the local and state health care planning agencies. See
N.A.A.C.P. v. Medical Center, Inc., 584 F.2d 619 (3rd Cir. 1978), Wilmington United Neighbors v. U.S. Department of Health, Education and Welfare, 458 F. Supp. 628 (D.C. Del. 1978). The Department's Section 1122 recommendation to the Secretary of HEW is subject to challenge by a party under Section 120.57(1), Florida Statutes. North Miami General Hospital v. Office of Community Medical Facilities, 355 So.2d 1272 (Fla. 1st DCA 1978).
In the instant case, should the Department's prior Section 1122 recommendation to HEW be shown to be unfounded, it is reasonable to expect that corrective action by HEW would follow. As discussed below, however, the nursing home failed to establish that the Department's Section 1122 recommendation was erroneous; that recommendation was not even introduced into evidence.
The nursing home Owner, in turn, failed to present sufficient evidence to establish that the Department's recommendation to HEW and the ensuing Section 1122 penalties (in disallowing reimbursement of certain Medicaid expenses) were improperly imposed, or that the capital expenditure involved was not subject to the Section 1122 reporting requirements.
The nursing home's main argument is that the Department is estopped to recoup the $118,061.00 because of three Medicaid participation agreements it entered into with the Department in 1977, 1978, and 1979. However, the State can only be estopped under exceptional circumstances which must include a positive, and unequivocal act by the State upon which a party reasonably relied to its detriment. North American Company v. Green, 120 So.2d 603 (Fla. 1959), Greenhut Construction Company v. Knott, 347 So.2d 517 (Fla. 1st DCA 1971). Here, the Medicaid participation agreements in question do not expressly, or by reasonable inference, prohibit the State from seeking recoupment from health care facilities based on properly imposed Section 1122 penalties. The specific contact provision, upon which the facility relies, relieves the facility of responsibility when the Department errs in "eligibility investigation and determination." This proviso refers to Medicaid eligibility of patients--not to Department errors involving overpayment of health care facilities which are subject to Section 1122 penalties. Thus, the nursing home's argument is misplaced.
RECOMMENDED ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:
That (1) the Department's Medicaid overpayment claim against the Nursing Home Owner, in the amount of $118,061.00 be DENIED, and (2) the Nursing Home
Owner's claim against the Department for $101,348.00 in Medicaid underpayments be DENIED.
DONE and ORDERED this 10th day of July, 1980, in Tallahassee, Florida.
R. L. CALEEN, JR. Hearing Officer
Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
(904) 488-9675
COPIES FURNISHED:
K. C. Collette, Esquire District IX Legal Counsel Department of Health and
Rehabilitative Services
111 Georgia Avenue
West Palm Beach, Florida 33401
Albert R. Wilber, Jr., Esquire
315 Third Street, Suite 301 West Palm Beach, Florida 33401
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Petitioner,
vs. CASE NO. 79-2407
LAKEVIEW NURSING HOME,
Respondent.
/ ROBERT BECHT AND R. B. CARE,
INC., d/b/a LAKEVIEW MANOR and d/b/a INTERCOASTAL NURSING MANOR,
Petitioner,
vs. CASE NO. 80-467
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent.
/
ORDER
Albert R. Wilber, Jr., West Palm Beach, Attorney for Robert Becht and Lakeview Nursing Home.
K. C. Collette, West Palm Beach, Attorney for Department of Health and Rehabilitative Services.
On July 10, 1980, the Hearing Officer, R. L. Caleen, Jr., issued his Recommended Order in the above-styled cases. No exceptions to the Recommended Order were filed by either party. However, the record was reopened pursuant to a Motion to Reopen the record for the purpose of allowing both parties to submit further documentary evidence.
Upon review of the record, the Department of Health and Rehabilitative Services (Department or HRS) finds that there is competent substantial evidence to support the Hearing Officer's Findings of Fact except for the following Findings of Fact:
The first sentence of Finding of Fact number 10, "Despite the Department's withholding and disallowal of payment to the nursing home of expenses relating to the acquisition of the facility (due to the Federal Section 1122 determination), the nursing home continued to qualify for and participate in the Medicaid Program," is rejected as contrary to the competent substantial evidence in the record. As discussed herein, no funds were withheld from the nursing home due to a 1122 penalty.
The words, "It is probable that," at the beginning of fact number 11 are deleted. That phrase prevents the finding from displaying the necessary precision for a finding of fact. There is competent substantial evidence to support the fact that, "the nursing home received actual notice of the requirement that certain capital expenditures by health care facilities must receive Section 1122 approval."
The first sentence of fact number 12 states, "Between 1977 and 1979, the Department overpaid the nursing home $118,061 (which includes the $18,900 claimed by the Department in its May 2, 1979, letter) in per diem patient reimbursements which the nursing home was not entitled to under the Section 1122 notice and penalty." However, the amount in dispute, $118,061, does not include the $18,900 claimed by the Department in its May 2, 1979, letter. The $18,900 claim is not based upon an 1122 penalty and is not a subject of the instant petitions. Therefore, the Hearing Officer's Finding of Fact is modified to delete the language in the parenthesis.
Finding of Fact 13 is rejected in its entirety because it is not supported by competent substantial evidence. The rejected finding states:
"If the Section 1122 penalty was incorrectly recommended by the Department, and imposed by the HEW, the Department has withheld between November 1, 1977 and December 31, 1979,
$101,348.00 which is now due and owing to the nursing home owner.
This finding, like the portion of Finding of Fact number 10, is based upon the belief of a witness or Lakeview and an unsupported and unauthenticated document prepared by the witness. However, HRS did not determine the amount overpaid due to imposition of the 1122 penalty until October 8, 1979 (Petitioner's Exhibit 5) and January 10, 1980 (Respondent's Exhibit 3). Since the determination of the amount subject to the 1122 penalty during which the funds were allegedly withheld i.e. November 1, 1977 through December 31, 1979 was not determined until after the period in question had expired, it is impossible for any alleged underpayment to have occurred due to imposition of 1122 penalty. Accordingly, the Department finds that no monies were withheld due to imposition of the 1122 penalty and Petitioner's Exhibit number 6 is rejected as immaterial.
The Department adopts all other Findings of Fact made by the Hearing Officer.
The Department also makes the following additional Finding of Fact which is supported by competent substantial evidence:
The purchase price paid by Robert Becht for Intercoastal Nursing Manor (renamed Lakeview Manor after the purchase) in 1977 was $462,500. Based upon the closing statement submitted when the record was reopened, this fact is further supported by material from the nursing home's cost report which was received into evidence by the Hearing Officer. The cost report filed by the nursing home lists $26,992 as depreciation for the first eight months of the facility's operation after purchase. In applying generally accepted accounting principles for depreciation of a structure and construed in a light most favorable to the nursing home, the cost of that facility accumulating that much depreciation within that time period could not be less than $300,000 for the building alone. 1/ Depreciation does not include the cost of the land which is an additional item of the total capita1 expenditure subject to the provisions of Section 1122.
The Department has considered the Conclusions of Law made by the Hearing Officer and hereby rejects those conclusions and substitutes its own conclusions of law.
In this proceeding, both HRS and the nursing home owner assert affirmative and independent claims against the other. HRS asserts in Case No. 79-2407 that, due to the proper imposition of medicaid penalties against the nursing home under Section 1122 of the Federal Social Security Act, that Lakeview was overpaid and should return $118,061 to the State in medicaid reimbursements.
The nursing home owner asserts in Case No. 80-467 that, due to HRS' wrongful imposition of Section 1122 penalties, Lakeview was underpaid and is now entitled to $101,348 in medicaid reimbursements.
The nursing home's argument is that the Department is estopped to recoup the $118,061 because of three medicaid participation agreements it entered into with the Department in 1977, 1978 and 1979. However, the State can only be estopped under exceptional circumstances which must include a positive and
unequivocal act by the State upon which a party reasonably relied to its detriment. North American Company v. Green, 120 So.2d 603 (Fla. 1959), Greenhut Construction Company v. Knott, 347 So.2d 517 (Fla. 1st DCA 1971). Here the medicaid participation agreement in question did not expressly, or by reasonable inference, prohibit the State from seeking recoupment from health care facilities based on properly imposed Section 1122 penalties. The specific contract provision, upon which the facility relies, relieves the facility from responsibility when the Department errs in "eligibility of patients" and not to Department errors involving overpayment of health care facilities which are subject to Section 1122 penalties. Thus, the nursing home's argument is misplaced and without merit.
Proper resolution of the instant cases turns upon an issue which was not contemplated by the parties at the hearing: was the implementation of the Section 1122 penalty to the nursing home appropriate in this case? Because the parties relied upon their prehearing stipulation that incorrectly defined the dispositive issue, no evidence was presented on this subject. Accordingly, the Hearing Officer concluded that both parties failed to meet their burden of proof to sustain their respective claims against each other. Upon reopening of the record, HRS provided evidence that the purchase price of the nursing home was
$462,500. No evidence was presented by the nursing home that the Section 1122 did not apply.
Section 1122 (42 USC Section 1320A-1) authorizes the Secretary of Health and Human Services (HHS, a federal agency) upon recommendation of the State's designated planning agency (in this case the HRS's Office of Community and Medical Facilities), to exclude Federal reimbursement of certain medicaid expenses to health care facilities which fail to provide the planning agency with timely notice of certain "capital expenditures" prior to their undertaking an obligation for such expenditures. Relevant implementing Federal Regulations define those "capital expenditures" which are subject to the reporting and planning agency review requirements as expenditures not properly chargeable as expenses of operation and maintenance and which exceed $100,000. 42 CFR Section 100.103(a)(1). Conversely, if the expenditure is $100,000 or less (and does not involve a change in bed capacity or service, which is not asserted here), it is not subject to the Section 1122 reporting and review requirements.
There is no doubt that the purchase of the facility is a capital expenditure that exceeded the $100,000 threshold requirements of Section 1122. The nursing home's consistent failure to comply with the 1122 reporting requirements, even after receiving notice of its responsibility" to do so, leads to the inevitable conclusion that the 1122 penalty was properly imposed by the Secretary of HHS.
Similarly, since imposition of the 1122 penalty is appropriate, Lakeview's claim for reimbursement of monies withheld pursuant to "wrongful imposition" of the penalty is denied. Secondly, since the evidence indicates that no monies were withheld pursuant to the penalty, there is nothing to which Lakeview would be entitled if the penalty had been wrongfully imposed. 2/ Further, HRS is without jurisdiction to provide the requested relief (reimburse the monies withheld). The Department's authority regarding Section 1122 penalties is limited to recommendations by HRS' designated planning agency to the Secretary of HHS regarding imposition of the penalty. Only the Secretary of that Federal agency has the authority to grant or withhold reimbursement. 42 USC Section 1320A-1, 42 CFR Sections 100.101-100.110 and HIM 15, Sections 2422-2422.1.
Thus, had the nursing home prevailed in its claim, the appropriate remedy would
be limited to a recommendation from HRS to the Secretary of HHS that the 1-122 penalty be rescinded and the monies reimbursed.
In accordance with the foregoing, it is Ordered that Robert Becht and R. B. Care, Inc., d/b/a Lakeview Manor and d/b/a Intercoastal Nursing Manor reimburse the Department of Health and Rehabilitative Services $118,061 and that the petition in Case No. 80-467 is dismissed.
Ordered this 17th day, of October, 1980, in Tallahassee, Florida.
ALVIN J. TAYLOR
Department of Health and Rehabilitative Services
ENDNOTES
1/ Although the Hearing Officer is limited to facts in the record, an agency may go beyond the record in resolving an issue when the action involves the exercise of agency expertise. Broward County Traffic Association v. Mayo, 340 So.2d 1152 (Fla. 1977), Plant City v. Mayo, 337 So.2d 966 (Fla. 1976), and McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977. In this case, Lakeview's accountant, in a letter to HRS dated February 6, 1979, indicated that the facility was being depreciated over a 20 year time span utilizing the straight line method. The cost of the facility in the above finding is based upon the accountant's letter.
2/ There is nothing in the record to indicate any other reason why Lakeview's cost exceeded its annual payment. Had Lakeview been able to allege and prove that it had been underpaid for reasons other than its imaginative 1122 argument, the Department is prohibited from making retroactive payment to nursing homes whose costs exceed annual payment. Fla. Admin. Code Rule 10C-7(6)(i)
COPIES FURNISHED:
R. L. Caleen, Jr., Esquire Hearing Officer
Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
Albert R. Wilber, Jr., Esquire Attorney at Law
315 Third Street, Suite 301 West Palm Beach, Florida 33401
K. C. Collette, Esquire District IX Legal Counsel Department of Health and
Rehabilitative Services
111 Georgia Avenue
West Palm Beach, Florida 33401
Office of General Counsel Department of Health and
Rehabilitative Services
1323 Winewood Boulevard, Suite 406
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Oct. 21, 1980 | Final Order filed. |
| Jul. 10, 1980 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Oct. 17, 1980 | Agency Final Order | |
| Jul. 10, 1980 | Recommended Order | Neither party upheld their burden of proof. Deny claim for Medicaid reimbursement and for refund of overpayment. |
