STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDEAN NURSING HOME, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 81-414

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on January 8, 1982, in Miami, Florida. On March 22, 1982, both parties filed proposed findings of fact and memoranda of law.

Petitioner, Floridean Nursing Home, Inc., was represented by Jack R. Rice, Jr., Esquire, Miami, Florida; and Respondent, Department of Health and Rehabilitative Services, was represented by Martha F. Barrera, Esquire, Coral Gables, Florida.

On December 1, 1980, Respondent notified Petitioner that it was in violation of a federal Medicaid requirement as to the minimum square footage per patient and number of allowable beds per room. Respondent ordered Petitioner to reduce its patient census from 52 to 37 and ordered no new admissions be made to the facility until such time as the reduced census figure be achieved.

Petitioner's request for a variance from the federal requirement was denied by Respondent, and Petitioner requested a formal hearing regarding that proposed denial. Prior to the hearing in this cause, the parties agreed that a moratorium on admissions would not be imposed. Accordingly, the issue for determination is whether Petitioner should be granted a variance from the federal regulation.

Petitioner presented the testimony of Julia Rice; James Jackson Hutson, M.D.; Ruth Pearce; Jorge Costelas; Kevin W. Gordon; and Frank C. Rice.

Additionally, Petitioner's Exhibits numbered 1, 2, 3, 4, 5, and 7 were admitted in evidence. Petitioner's Exhibits numbered 6 and 8 were marked for identification only and were not admitted in evidence.

Respondent presented the testimony of Steven C. Biondi and Howard Thornton Chastain. Additionally, Respondent's Exhibits numbered 1 and 2 were admitted in evidence.

Ruling was reserved on Respondent's objections to testimony by Petitioner's witnesses regarding the economic feasibility of complying with the subject regulation, which compliance Petitioner contends would require it to permanently go out of business. Upon a review of the record in this cause and the applicable law, Respondent's objections are hereby overruled.

Both parties submitted posthearing proposed findings of fact in the form of a proposed recommended order. To the extent that any proposed findings of fact have not bean adopted in this Recommended Order, they have been rejected as not having been supported by the evidence, as having been irrelevant to the issues under consideration herein, or as constituting unsupported argument of counsel or conclusions of law.

FINDINGS OF FACT

1. Floridean Nursing Home is a licensed 52-bed skilled nursing facility (SNF) which has been in continuous operation since 1944, long prior to any state licensing requirements and Medicaid certification requirements. Since the inception of licensure requirements by the State of Florida, Floridean Nursing Home (hereinafter "Floridean") has been licensed as a skilled nursing home facility. Respondent is the state survey agency authorized by the federal government to administer the Medicaid program. Since the inception of the Medicaid program, Floridean has obtained certification by Respondent to receive Medicaid funds.

   
   

2. Floridean has been operated by the same ownership and management since 1944. Staff employees enjoy an excellent longevity record. The patients have an excellent longevity record, with patients residing there 14 and 22 years. The facility has operated on an approximately 98 percent occupancy rate since its inception.

   
   

3. Respondent has stipulated that the facility provides excellent care to its patients, that no question of safety is involved, and that the facility has been designated by the State as a Class "A" care facility. Additionally, a grand jury investigating nursing homes in Dade County concluded that the Floridean consistently provides a very good quality of care. The State has further stipulated that the Floridean meets all staffing requirements.

   
   

4. Unlike many nursing homes, the Floridean only admits private patients, and does not admit Medicaid patients. The only exception to this policy occurred during 1981 when the Floridean admitted three Medicaid patients at the request of those patients' doctors and Congressman Pepper, since the nursing home in which they had resided was being closed and there was no other home in which those patients could have been placed at the time. Other than this one exception, Floridean's participation in the Medicaid program arises solely when one of its private patients runs out of funds and therefore becomes a recipient of Medicaid benefits. The patient can reside at the Floridean for years prior to such an event.

   
   

5. A Medicaid certification requirement prohibits more than four beds in any room and further requires that each patient in a multi-bed room be provided with not less than 80 square feet of space. The State of Florida has a similar requirement for licensure. Since nursing homes were in operation in the State of Florida prior to the inception of the State's licensure program, a "grandfather" clause was included in the legislation. The "grandfather" clause applies to the Floridean. Accordingly, the Floridean is not required to provide more than 80 square feet of space to each patient and is not required to limit the number of beds per room to four beds insofar as state licensure is concerned. Respondent stipulates that if the Floridean only had private patients as residents, the space requirements would not apply, and the Floridean could continue to operate with 52 patients.

6. If Respondent imposes on the Floridean the minimum space requirements for certification by Respondent under the Medicaid program, the Floridean would be required to remove three beds from its dormitory and one bed each from a substantial number of its other patient rooms. Accordingly, the Floridean would be licensed to operate as a 52-bed facility under its state licensure, but only

   37 beds could be utilized so long as some of its private patients require Medicaid assistance after depletion of their personal funds.

   
   

7. The Floridean Nursing Home is located in the city of Miami in a residential district. The Floridean is classified as a nonconforming use under the city's zoning ordinances. As a nonconforming use, the Floridean cannot obtain a building permit to enlarge its structure and cannot obtain a variance from the city for such enlargement. Further, since the South Florida Building Code and the Fire and Safety Code require a minimum width for interior corridors, no building permit can be obtained to enlarge the rooms within the structure.

   
   

8. The Floridean does not discriminate in room assignment between solvent and insolvent patients. No separate section in the facility is maintained for Medicaid recipients only. Rather, room assignments are made based upon similarity of patient needs; for example, an alert patient is not placed in a room where the other resident(s) suffer from senility. If a patient's condition changes, then relocation of that patient might be made.

   
   

9. Medical testimony on behalf of the Petitioner explained Petitioner's policy against relocating patients. Patients in nursing homes become very possessive of their beds and develop a sense of ownership for their individual portions of a room. They become very disturbed when they are moved and become aggressive. There have been incidents where nursing homes have been closed; and after their long-term residents have been moved to another facility, those patients have become overly passive, have failed to thrive, and have died within a short period of time. The same phenomena apply even when patients are moved around within the same room.

   
   

10. A division within the Respondent Department is responsible for placing persons needing nursing home beds. Dade County has more requests for beds in nursing homes than the number of beds available. As of two weeks prior to the hearing in this cause, there were approximately 100 patients with pending requests for placement. At the time of the hearing, the Floridean had 18 Medicaid patients, with two additional residents becoming Medicaid patients later that month. If the Floridean were to reduce its patient census from its

    52 licensed beds to the 37 allowable beds if the Respondent enforces the Medicaid minimum footage requirement, the Floridean would have to discharge its Medicaid patients even though no other beds might be available to them.

    
    

11. Due to staffing requirements and fixed expenses, the Floridean would be forced to cease operation if its patient census were reduced to 37 patients. In addition to being medically inadvisable, relocation of patients within the facility is not possible, since all rooms at the Floridean are the same size except for the dormitory.

    
    

12. In 1977, Respondent's employees cited Petitioner for violation of the minimum footage requirements and proposed denial of Petitioner's certification to participate in the Medicaid program. Petitioner requested a formal hearing, and the matter was referred to the Division of Administrative Hearings. A Recommended Order was entered by the presiding hearing officer recommending that Petitioner be granted a variance from the Medicaid minimum space requirement so

    that Petitioner continues to be certified to participate in the Medicaid program. By Final Order entered February 6, 1978, the Secretary of the Department of Health and Rehabilitative Services adopted the Recommended Order and granted a variance. Floridean Nursing Home v. Department of Health and Rehabilitative Services, DOAH Case No. 77-1413. Since a variance must be renewed each year, the variance granted by the Secretary of the Department of Health and Rehabilitative Services, the agency head, was valid through the period ending December, 1978. In November, 1978, the Department's certification employees renewed Petitioner's variance until December, 1979, but added a condition that as a patient left a room, no new admission to that room be made. On December 10, 1979, the certification employees again granted a variance with the same condition for the period ending December, 1980. On December 1, 1980, the certification personnel advised Floridean that the Floridean had violated the terms of the two prior variances by admitting new patients as beds were vacated and that the Floridean would be required to meet federal minimum space requirements or certification would be withheld. The formal hearing in this cause involves Petitioner's request for relief from the proposed agency action contained in that December 1, 1980, letter. The facts and the law between the entry of the Final Order by the Secretary of the Department of Health and Rehabilitative Services approving that request for variance with no conditions and the entry of this Recommended Order have remained the same.

    
    

13. Petitioner's medical testimony that the particular needs of the patients at Floridean are well met and that the provision of minimum square footage per patient less than the requirement in no way adversely affects their health and safety is uncontroverted. Rather, Respondent has stipulated that the patients receive excellent care even though the dormitory contains seven beds rather than four and even though many patients are provided less than 80 square feet of space.

    
    

14. There is no evidence that the federal government has disputed the variances granted to Petitioner by the Respondent. There is no evidence that the federal government has disputed the certification of Petitioner's eligibility to receive Medicaid funds. There is no evidence that Medicaid funds have been withheld from Petitioner during the years that Petitioner has received a variance from the Respondent.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto. Section 120.57(1), Florida Statutes (1981).

    
    

16. The only issue in this cause involves Petitioner's request for variance from the Medicaid requirement that a minimum of 80 square feet be provided per patient and that no more than four beds be placed in one room. Petitioner's dormitory as it exists now would violate both requirements, but the remainder of the rooms in question would only violate the minimum square footage requirement. The applicable Medicaid requirement is found in Section 405.1134(e), Code of Federal Regulations, and requires:

    
    

    Patient rooms are designed and equipped for adequate nursing care and the comfort and privacy of patients, and have no more than four beds . . . . [M]ultipatient rooms provide a minimum of 80 square feet per bed. The Secretary(or in the case of a facility

    participating as a skilled nursing facility under title XIX only, the survey agency--see 249.33(a)(1)(i) of this title) may permit variations in individual cases where the facility demonstrates in writing that such variations are in accordance with the particular needs of the patients and will not adversely affect their health and safety. . .

    
    

    Respondent is the state survey agent; and, accordingly, the Secretary of the Department of Health and Rehabilitative Services has discretion to grant a variance if such variance accords with the particular needs of the patients and will not adversely affect their health and safety.

    
    

17. Respondent introduced in evidence certain correspondence between its employees and employees of the United States Department of Health, Education, and Welfare regarding the interpretation of Section 405.1134(e). Although that correspondence indicates the importance attributed by both agencies in the enforcement of space requirements, it also clearly reflects the recognition by both agencies that a variance from the requirements is proper in certain circumstances as pointed out by the United States Department of Health, Education, and Welfare in its Regional Standards and Certification State Letter No. 4-78, "[T]here will be a few facilities where the application of the variance procedure is still appropriate." A detailed discussion of the variance procedures is found in the United States Department of Health, Education, and Welfare All-State Letter No. 2-76. That same Letter places the burden of demonstrating the need for a variance on the facility in question and reiterates that a variance needs to be reapproved at the beginning of each new Medicaid agreement cycle. Respondent has stipulated that Petitioner has provided all information necessary for determining the propriety of granting a variance.

    When the Secretary of the Department of Health and Rehabilitative Services entered his order granting to Petitioner a variance in February, 1978, he determined that Petitioner should be certified as eligible to participate in the Medicaid program and granted a variance from the minimum space requirements. In doing so, he made the specific determination that Petitioner had demonstrated in writing that the variance was in accordance with the particular needs of the patients and would not adversely affect their health and safety. Nothing has changed since then. Petitioner continues to provide excellent care to the patients in its facility, and its method of operation remains the same. The only change that has occurred is that Respondent's employees in granting the two subsequent variances appeared to have changed the language "particular needs of the patients" to "needs of the particular patients." Respondent argues that the variance was granted to cover not the rooms which violated the space requirements, but rather the specific individual patient who happened to be assigned to each of those rooms. That argument is not supported by the record in this cause. The Recommended Order and the Final Order in DOAH Case No. 77- 1413 discuss the reasons for the violation by the Floridean of the minimum space requirements, the particular needs of the patients of finding beds in nursing homes providing high-quality care in a county where the number of available beds is exceeded by the demand for those beds, and the inability of the Floridean to comply with the requirement and continue in operation. No specific patients are referred to in either of those orders. Respondent further argues that the regulation prohibits consideration of financial hardship to the facility as a result of the enforcement of the rule. Respondent is correct in that interpretation, but overlooks the fact that the hardship involved in enforcing the regulation against the Floridean under the facts of this case is not

    hardship to the Floridean, but rather is hardship to the persons who will be displaced with no other facility available to take them and therefore no place to reside while they become additional members of the waiting list for available nursing home beds.

    
    

18. Respondent further argues that it must rigidly enforce the minimum space requirements, since the federal government retains authority to "look behind" the grant of a variance and terminate federal financial participation if that grant of variance be in error. Consideration of that "look-behind" authority is appropriate, but ignores the fact that the federal government has not terminated Petitioner's federal financial participation due to the Respondent's granting of a variance for each of the last several years. One can therefore assume that the federal government has agreed with Respondent's granting of variance to the Floridean based upon the identical circumstances present now.

    
    

19. Respondent further argues that Krestview Nursing Home v. State of Florida, Department of Health and Rehabilitative Services, Office of Licensure and Certification, 374 So.2d 638 (3 DCA Fla. 1979), requires strict enforcement of the minimum space requirements. Although the Krestview court affirmed Respondent's denial of Krestview's request for variance, there is no similarity between the Krestview facts and the facts surrounding Floridean's request for variance. Krestview only accepted patients dependent upon public welfare assistance and was entirely dependent upon Medicaid funds. Further Krestview sought a permanent waiver of the space requirements. The Krestview court rightly determined that a permanent waiver of the space requirements could not be granted, but that rather only a variance could be granted in individual cases where a nursing home demonstrates in writing that the variance is in accord with the particular needs of the patients and will not adversely affect their health and safety. The court went on to point out that Krestview had failed to make any such demonstration in writing and had accordingly failed to sustain its burden of proof.

    
    

20. The Krestview holding does not apply in this cause. As stipulated, Petitioner has been in operation since 1944 and continuously provides excellent care to its patients in spite of its failure to provide the minimum space to each patient and in spite of the dormitory containing seven beds instead of four. Respondent has given Petitioner a Class "A" rating, and the medical testimony that the particular needs of the patients are being met is uncontroverted. Petitioner only accepts private patients and only receives Medicaid funds due to its failure to discharge patients when the patient's funds are depleted. Petitioner cannot take corrective action by enlarging its facility due to the zoning laws in the city of Miami. The only option open to Petitioner would be to reduce the number of patients to comply with the space requirements and then go out of business. While the hardship to Petitioner of going out of business is immaterial, the hardship on the Floridean's residents where no alternate placement is available cannot be ignored. Petitioner has met its burden of showing entitlement to the variance sought, and the unconditional variance granted by order of the Secretary in February, 1978, under the circumstances present then should again be granted, as the circumstances remain the same.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore,

RECOMMENDED THAT;

A final order be entered granting Petitioner's request for variance from the requirements of Section 405.1134(e), Code of Federal Regulations, and certifying Petitioner under the Medicaid program.

RECOMMENDED this 20th day of September, 1982, in Tallahassee, Florida.

LINDA M. RIGOT

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings

this 20th day of September, 1982, in Tallahassee, Florida.

COPIES FURNISHED:

Jack R. Rice, Jr., Esquire Mr. David Pingree Post Office Box 350838 Secretary

Miami, Florida 33135 Department of Health and

Rehabilitative Services Martha F. Barrera, Esquire 1323 Winewood Boulevard Office of Long Term Care Tallahassee, Florida 32301 Department of Health and

Rehabilitative Services 1320 South Dixie Highway 11th Floor

Coral Gables, Florida 33146

Docket for Case No: 81-000414

Orders for Case No: 81-000414