STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BEVERLY ENTERPRISES-FLORIDA, )

INC. (Collier County), )

)

Petitioner, )

)

vs. ) CASE NO. 84-0404

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case in Tallahassee, Florida, on June 4, 1984, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. At the hearing the parties were represented by the following counsel:

For Petitioner: E. G. Boone, Esquire and

Steven Boone, Esquire Post Office Box 1596 Venice, Florida 34284

For Respondent: Claire Dreyfuss, Esquire 1/

Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301 INTRODUCTION

Beverly Enterprises-Florida, Inc., filed an application for a certificate of need to construct a new 120-bed nursing home on Marco Island in Collier County, Florida. On December 5, 1983, the Department of Health and Rehabilitative Services issued its proposed agency action in which it advised that it intended to deny the application. The Petitioner thereafter filed a petition for a formal administrative proceeding pursuant to Section 120.57(1), Florida Statutes, to contest the denial of its application. At the hearing the parties stipulated that the Petitioner's application satisfied all of the statutory criteria with the exception of the need criteria which appear at subparagraphs 1. and 2. of Section 381.494(6)(c), Florida Statutes.

At the hearing the Petitioner presented the testimony of the following witnesses: Mr. Michael Dray, Ms. Margaret Martin, Ms. Anna Pusz, Ms. Carol Wortham, and Mr. Harold Knight, III. Petitioner's exhibits of the following numbers were received in evidence: 1, 2, 3, 5, 6, 7, 8(a), 8(b), and 8(c). Petitioner's exhibit number 4 was offered into evidence, but was rejected on the grounds that it was irrelevant and unduly repetitious. 2/

The Respondent presented the testimony of Ms. Elizabeth Dudek. The Respondent did not offer any exhibits into evidence.

FINDINGS OF FACT

Based on the stipulations of the parties, on the testimony of the witnesses, and on the exhibits received in evidence, I make the following findings of fact.

1. By application dated April 15, 1983, Beverly Enterprises-Florida, Inc., (hereinafter "Beverly" or "Petitioner") applied to the Department of Health and Rehabilitative Services for the issuance of a certificate of need for the construction of a new 120-bed nursing home in Marco Island, Collier County, Florida. The application was deemed by HRS to be complete effective September 15, 1983. (Pet. Ex. 1)

   
   

2. By letter dated December 5, 1983, HRS advised Beverly that its application was denied. (Pet. Ex. 2) The letter included the following reasons for denial:

   
   

   The proposed project is not consistent with Chapter 10-5.11(21), Florida Administrative Code, nursing home bed need methodology.

   
   

   With a six month occupancy of 58.2 percent in the subdistrict of Collier County, the utilization threshold of 90 percent developed from the application of Chapter 10-5.11(e), (f), and (h), Florida Administrative Code, is not satisfied and no further bed need is demonstrated for this subdistrict.

   
   

   There are 97 approved but unlicensed beds in the subdistrict which, when added to the existing licensed bed supply, should effectively maintain the county-wide occupancy at a reasonable level through 1986.

   
   

   Further explication was contained in the State Agency Action Report which accompanied the HRS letter of December 5, 1983.

   
   

3. Florida Administrative Code Rule 10-5.11(21)(a), adopted by HRS, reads as follows:

   
   

   1. Departmental Goal. The Department will consider applications for community nursing home beds in context with the applicable statutory and rule criteria. The Department will not normally approve applications for new or additional community nursing home beds in any departmental service district if approval of an application would cause the number of community nursing home beds in that departmental service district to

      exceed the number of community nursing home beds calculated by the methodology described in subsections (21)(b), (c), (a), (f), (g), and (h) of this rule. (Pet. Ex. 3)

      
      

4. A step-by-step application of the methodology described in Rule 10- 5.11(21)(b) through (h) to the facts in this case is as follows. Under the formula, bed need is determined by first looking at the poverty level in District VIII and in Collier County (Pet. Ex. 5, Tr.252). The poverty level is computed by comparing the number of elderly living in poverty in the district, which is 8.61, to the number of elderly living in poverty in the State, which is 12.70, resulting in a poverty ratio of .68 (Tr.252). The bed need ratio is computed by multiplying the poverty ratio of .68 times 27 beds per thousand population 65 or older, which results in a bed need ratio of 18.3 beds per thousand residents 65 years or older (Tr.252). When the bed need ratio is applied to the 65 and over population in District VIII, the total bed need is 3,858. The bed need for the subdistrict of Collier County is 514 beds (Tr.252). The number of licensed and approved beds in the district is 4,618 and the number of licensed and approved beds in the subdistrict is 429 (Tr.252). When the need for beds is subtracted from the total number of licensed and approved beds, there is a surplus of 760 beds in District VIII, but a need for 85 beds in the subdistrict of Collier County (Tr.253). When a need for beds exists in the subdistrict but not the district as a whole, subsection (g) of the rule allows new beds to be added only if existing beds are being utilized at a 90 percent or greater occupancy rate (Pet. Ex. 5, Tr.253-255). The current utilization rate for nursing home beds in Collier County is 61.1 percent (Pet. Ex. 7, Tr.255). Since the current utilization rate is less than 90 percent, no additional beds are needed in Collier County (Tr.256).

   
   

5. Approval of the Beverly application to construct a 120-bed nursing home in Marco Island would, in the words of the applicable rule, "cause the number of community nursing home beds in that departmental service district to exceed the number of community nursing home beds calculated by the methodology described in subsections (21)(b), (c), (d), (e), and (h) . . . " of Rule 10-5.11(21), Florida Administrative Code. (Pet. Ex. 2, 5, 6, and 7; testimony of expert witnesses Mr. Knight and Ms. Dudek.)

   
   

6. HRS is presently considering the adoption of amendments to the nursing home need methodology provisions presently found in Florida Administrative Code Rule 10-5.11 (21)(b) through (h). If the present form of the tentative amendments to Rule 10-5.11(21)(b) through (h) were to be adopted and become effective soon enough to be applicable to Beverly's application in this case the result would be the same as under the current rule. Approval of Beverly's application would cause the number of community nursing home beds in HRS District VIII to exceed the number of community nursing home beds calculated by the methodology of both the existing rule and the tentative amendments to the rule. (Testimony of expert witness Knight.)

   
   

7. Florida Administrative Code Rule 10-17.020(2)(b), adopted by HRS, reads as follows:

   
   

   (2) Policies and Priorities. In addition to the statewide criteria against which applications are evaluated, applications from District 8 will be evaluated against the following local criteria:

   a. * * *

   b. Nursing home services should be available within at least one hour typical travel time by automobile for at least 95 percent of all residents of District 8. (Pet. Ex. 3)

   
   

8. HRS District VIII consists of seven counties. The current population estimate of these seven counties is 679,019. According to the most recent census information, the permanent population of Marco Island is 8,605.

   
   

9. Four community nursing homes are located in Naples, which is also in Collier County. Typical travel time by automobile from the center of Marco Island to the center of Naples is approximately 30 to 45 minutes, depending on the season of the year. (Tr.59-60, 83, 118, and 151)

   
   

10. In arriving at the current utilization rates for purposes of applying the need determination methodology, HRS relied on the latest available quarterly nursing home census reports. (Pet. Ex. 7; Tr.255-256)

    
    

11. In compiling the Collier County average occupancy rate for purposes of applying the need determination methodology, HRS counted as existing beds all of the licensed beds of all of the community nursing homes in Collier County, which included 114 beds licensed for Gulf Drive Residence, Inc., and 120 beds for Americana Healthcare Center. (Pet. Fx. 2)

    
    

    CONCLUSIONS OF LAW

    
    

    Based on the foregoing findings of fact, and the applicable rules, and legal principles, I make the following conclusions of law:

    
    

12. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case.

13. Section 381.494(6)(c)(1-13), Florida Statutes, and Rule 10-5.11(1-12, 21), Florida Administrative Code, are applicable to this proceeding. The parties stipulated that the only statutory criteria at issue are Sections 381.494(6)(c)(1 and 2), Florida Statutes, and Rule 10-5.11(21), Florida Administrative Code. All other statutory criteria are either not applicable or have been stipulated as being satisfied in this action.

1. There is no need for additional nursing home beds in Collier County based upon Rule 10-5.11(21), Florida Administrative Code.

   
   

2. Petitioner contends that there are unusual or extenuating circumstances in this case which require Respondent to grant a certificate of need for 120 additional nursing home beds in Collier County, notwithstanding the fact that Rule 10-5.11(21), Florida Administrative Code, shows that no new beds are needed in Collier County through 1987. The unusual and extenuating circumstances argued by the Petitioner relate to the travel time between Marco Island and the nearest existing nursing homes, the size of the elderly population in Collier County, and the accessibility of nursing home beds for Medicaid patients in Collier County

3. The Petitioner has failed to present any competent substantial evidence to establish the unusual or extenuating circumstances upon which it relies. There is no competent substantial evidence that Collier County is significantly different from other counties in Florida with respect to the circumstances cited by the Petitioner.

   
   

4. With regard to the Petitioner's travel time contentions, it must first be noted that the population of Marco Island comprises less than 1.3 percent of the total population of HRS District VIII. Thus, standing alone, the distance which must be traveled by Marco Island residents on their way to a nursing home is statistically irrelevant to the rule provision which establishes as a priority the availability of nursing services "within at least one hour typical travel time by automobile for a least 95 percent of all residents of District VIII." To be relevant to the application of the quoted rule provision, there must be evidence that more than 5 percent of the District population is more than one hour from a nursing home.

   
   

5. Further, absent proof of some other intent by the agency when it promulgated the rule or proof of some other interpretation of the rule by the agency, the words of the rule must be given their plain and ordinary meaning. 3/ As written, the plain and ordinary meaning of the language of Rule 10-

   17.020(2)b, Florida Administrative Code, is that 95 percent of the population of the District should reside no more than a one-hour drive from a nursing home; i.e., that a one-way trip from a residence to a nursing home should be no longer than one hour. The evidence in this case establishes that the residents of Marco Island are less than a one-hour drive from an existing nursing home.

   
   

6. With regard to the Petitioner's argument that HRS used stale figures in determining "current utilization," it should first be noted that it is a reasonable application of the rule for HRS to use the most recent quarterly census report for Florida nursing homes. This has been the consistent practice of HRS and is a logical implementation of the term "current." It must also be noted that the quarterly census report figures relied on by HRS in this case are the only utilization figures for which there is any competent substantial evidence in the record. The testimony about utilization of Collier County nursing homes as of the Friday immediately preceding the hearing in this case is hearsay evidence upon which I cannot base a finding of fact. See Tr.71-72; Section 120.58(1)(a), Florida Statutes. 4/

   
   

7. Although there is testimony in the record regarding difficulties experienced by HRS personnel in locating nursing home beds in Collier County for Medicaid patients, I have not made any findings of fact in that regard because it is irrelevant and immaterial to the issues in this case. It is irrelevant, first, because the actual usage aspect of the need methodology formula in Rule 10-5.11(21) does not discriminate between usage by Medicaid patients and usage by other patients, but considers only total bed usage. 5/ Second, the testimony is irrelevant because it relates only to experience in Collier County and does not show anything about availability of Medicaid nursing home beds in the other five counties in District VIII. Finally, it is irrelevant even in support of Petitioner's theory that a shortage of nursing home beds for Medicaid

   patients in Collier County would require or justify an exception to the application of the need methodology formula. Although there is testimony that, due to special circumstances HRS has on some occasions granted certificates of need to nursing home applicants who did not meet the need methodology formula, there is no testimony in this case that demonstrates that difficulty in placing Medicaid patients in a single county is one of those special circumstances used by HRS to deviate from application of the need methodology formula of the rule.

   
   

8. Many of the proposed findings of fact submitted by the Petitioner have been rejected in whole or in part. The reasons for these rejections are set forth in the subparagraphs which follow:

   
   

   1. Petitioner's proposed findings of fact number 3 and 4 rejected in part because they contain language which is more in the nature of conclusions of law than findings of fact.

   2. Petitioner's proposed findings of fact number 5 rejected because not supported by competent substantial evidence.

   3. Petitioner's proposed finding of fact number 6 rejected because it is a statement of position rather than a proposed fact.

   4. Petitioner's proposed finding of fact number 7 and 8 rejected because they are irrelevant and immaterial and not supported by competent substantial evidence.

   5. Petitioner's proposed finding of fact number 9 rejected because it is not supported by competent substantiai evidence and because competent substantial evidence supports a contrary finding.

   6. Petitioner's proposed findings of fact number 10, 11, and 12 rejected because they are irrelevant and immaterial.

   7. Petitioner's proposed findings of fact number 14 and 15 rejected because they constitute argument rather than proposed findings.

   8. Petitioner's proposed finding of fact number 16 rejected because it is not supported by competent substantial evidence.

   9. Petitioner's proposed findings of fact number 17, 18, 19, and 20 rejected because they are irrelevant and immaterial.

   10. Petitioner's proposed findings of fact number 21 and 22 rejected because they are not supported by competent substantial evidence and because the greater weight of the evidence is to the contrary.

   11. Petitioner's proposed finding of fact number 23 rejected because it comes closer to being a proposed conclusion of law than a proposed finding of fact, and because it is a conclusion which is not warranted by the evidence in this case.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is recommended that the Department of Health and Rehabilitative Services enter a final order in this case DENYING the application of Beverly Enterprises-Florida, Inc., for a certificate of need to construct a new community nursing home in Marco Island, Collier County, Florida.

DONE and ORDERED this 20th day of September, 1984 in Tallahassee, Florida.

MICHAEL M. PARRISH

Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of September, 1984.

ENDNOTES

1/ Subsequent to the hearing Douglas L. Mannheimer, Esquire, and Thomas W. Stahl, Esquire, of the firm of Culpepper, Turner, and Mannheimer, entered their appearances as attorneys for the Respondent.

2/ Petitioner also had exhibits numbered 9(a), 9(b) and 10 marked for identification, but withdrew them in the face of objections by Respondent.

3/ See Gaulden v. Kirk, 47 So.2d 567 (Fla. 1950); Gasson v. Gay, 49 So.2d 525 (Fla. 1950); Harper v. State, 217 So.2d 591 (Fla. 4th DCA 1969), for the proposition that the words in statutes must be given plain and ordinary meaning. Administrative rules are construed pursuant to the same rules of construction that apply to statutes.

4/ Even if the hearsay testimony on this point would support a finding of fact, such findings would not assist the Petitioner. Even using the version of the hearsay testimony most favorable to the Petitioner, the hearsay utilization figures would show a utilization rate of 65.6 percent for community nursing homes in Collier County as of the Friday immediately preceding the hearing; a utilization rate which is substantially below the 90 percent threshold in the rule.

5/ Although the formula does not include as one of its distinct elements any measure of actual bed usage experience by Medicaid patients, the rule does not overlook those needs. The anticipated needs of such patients is factored into the rule by an adjustment based on the "percentage of elderly living in poverty

. . . according to the latest available U.S. census."

COPIES FURNISHED:

E. G. Boone, Esquire Post Office Box 1596 Venice, Florida 34284

Douglas L Mannheimer, Esquire CULPEPPER, TURNER & MANNHEIMER

Post Office Drawer 11300 Tallahassee, Florida 32303-3300

Claire Dreyfuss, Esquire Assistant General Cousel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

David H. Pingree, Secretary Department of Health and

Rehabilitative Services 1321 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 84-000404

Orders for Case No: 84-000404