STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA LAND TRUST NUMBER 43372 ) OF THE BANK OF PALM BEACH AND ) TRUST COMPANY, d/b/a ATLANTIS ) CONVALESCENT CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 82-1908

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, on September 22 1982, in Orlando, Florida.

APPEARANCES

For Petitioner: Karen L. Goldsmith, Esquire and

D. Andrew DeBevoise, Esquire Post Office Box 1980 Orlando, Florida 32802

For Respondent: Joseph L. Shields, Esquire

Building 3, Room 219

1317 Winewood Boulevard

Tallahassee, Florida 32301 BACKGROUND

In this proceeding, Petitioner, Florida Land Trust Number 4372 of the Bank of Palm Beach and Trust Company, d/b/a Atlantis Convalescent Center, has challenged certain adjustments to its 1978 medicaid cost report proposed by Respondent, Department of Health and Rehabilitative Services. The controversy arose when Respondent issued a letter dated May 28, 1982, wherein it concluded that Petitioner had overstated allowable expenses by $230,946 thereby resulting in overpayments totaling $13,946.

Petitioner requested a formal hearing pursuant to Subsection 120.57(1), Florida Statute to contest five proposed adjustments. These included two adjustments to depreciation expense ($12,928), a medicare adjustment ($186,838), a decrease in utilization review costs ($581), and an adjustment to return on equity capital ($17,492.). 1/ The matter was forwarded by Respondent to the Division of Administrative Hearings on July 13, 1982, with a request that a Hearing Officer be assigned to conduct a hearing. By notice of hearing dated September 2, 1982, the final hearing was set for September 22, 1982, in Orlando,

Florida. By agreement of the parties, this matter was heard on a consolidated basis with Case No 82-1894. However, separate recommended orders are being entered.

At the final hearing, Petitioner presented the testimony of Dr. John A. McCoy, president of Health Care Associates, Inc., and offered Petitioner's Exhibits 1-17 and 19-23; all were received in evidence. Respondent presented the testimony of John T. Donaldson, audit review analyst with Respondent's Office of Audit and Quality Services, and offered Respondent's Exhibits 1-3; all were received except Exhibit 2 upon which a ruling was reserved.

There was no transcript of hearing in this Proceeding. By agreement of the parties, the time for filing proposed findings of fact and conclusions of law was extended to October 25, 1982; the same were filed by Petitioner and Respondent on October 22 and 25, 1982, respectively, and have been considered by the undersigned in the preparation of this order. Findings of fact not included in this order were considered irrelevant to the issues, immaterial to the results reached, or not supported by competent and substantial evidence. The parties have also agreed to waive the requirement that a recommended order be filed within thirty days after the date of the hearing.

The issue herein is whether petitioner is required to repay Respondent for medicaid overpayments allegedly received for calendar year 1978.

Based upon all the evidence, the following findings of fact are determined: FINDINGS OF FACT

1. Petitioner, Florida Land Trust Number 4372 of the bank of Palm Beach and Trust Company, operates a nursing home facility in Lantana, Florida, under the name of Atlantis Convalescent Center (Atlantis). It is licensed by Respondent, Department of Health and Rehabilitative Services.

   
   

2. Applicable depreciation guidelines adopted by the American Hospital Association require that a 30-year life be used on fire-resistant structures and a 40-year life be used on all fireproof construction. Accordingly, if a structure is determined to be fire-resistant, it may accrue a higher annual depreciation allowance.

   
   

3. The structure was described by Petitioner as having masonry walls with steel studs, sheetrock glued on and steel bar joists. This type of construction places the structure within the category of "fireproofed" rather than "fire- resistant". Therefore, the useful life of the building should be 40 years and depreciation expense reduced by $8,172.

   
   

4. Petitioner claimed reimbursement for utilization review costs totaling

   $581 on its cost report. These costs involve an evaluation by the provider of the necessity, appropriateness, and efficiency of the use of medical services, procedures and facilities. However, such costs are reimbursed under another reimbursement program, and should not be claimed on the medicaid cost report.

   
   

5. The parties have agreed that the return on equity should be recomputed in accordance with any adjustments made herein.

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

   
   

7. In proceedings of this nature, Petitioner carries the burden of proof in establishing its entitlement to reimbursement of expenses incurred while participating in the medicaid program. See, e.g., Department of Transportation

   v. J.W.C. Construction Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

   
   

8. Requiring resolution herein are two issues. These are (a) the appropriate useful life for the structure, and (b) whether the utilization review costs should be allowed. Each will be discussed separately hereinafter.

   
   

   1. Useful life of Building

      
      

9. This issue concerns a determination as to the proper useful life to apply to Petitioner's building. The evidence discloses that the composition of the building is more akin to a fireproof structure, and that a 40-year useful life is appropriate. Accordingly, depreciation expense should be reduced by

   $8,172.

   
   

   1. Utilization Review Costs

   
   

10. Crucial to the resolution of this issue is whether the utilization review costs ($581) incurred by Petitioner in 1978 are reimbursed under a program other than medicaid. Because they are (see Rule 10C-7.58(4), F.A.C.; 2102.1, HIM-15), reimbursement under the medicaid program is inappropriate, and such costs should be disallowed.

    
    

11. Consistent with the agreement of the parties, the return on equity should be computed in a manner consistent with each of the foregoing adjustments.

    
    

12. The objection to Respondent's Exhibit 2 is hereby sustained.

    
    

13. A pleading styled "Petitioner's Response to Respondent's Memorandum of Law" has been disregarded since such a filing is not contemplated nor authorized by the Model Rules of Procedure.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner's 1978 medicaid Cost report be modified in

accordance with the foregoing adjustments.

DONE and ENTERED this 10th day of November, 1982, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 1982.

ENDNOTE

1/ The issues were later narrowed to include only a challenge to one depreciation adjustment, the decrease in utilization to review costs, and the adjustment to return on equity.

COPIES FURNISHED:

Karen L. Goldsmith, Esquire and

D. Andrew DeBevoise, Esquire Post Office Box 1980 Orlando, Florida 32802

Joseph L. Shields, Esquire Building 3, Room 219

1317 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 82-001908

Orders for Case No: 82-001908