STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GOLDEN ISLES CONVALESCENT ) CENTER, INC, d/b/a HALLANDALE ) REHABILITATION CENTER )

)

Petitioner, )

)

vs. ) CASE NO. 84-2344

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing in this cause was held on November 2, 1984, in Tallahassee, Florida, before Diane A. Grubbs, a hearing officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Karen Goldsmith, Esquire

Jonathan S. Grout, Esquire 605 East Robinson Street Suite 500, Day Building Orlando, Florida 32802

For Respondent: Theodore E. Mack, Esquire

Assistant General Counsel Department of Health and

Hehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

ISSUE

Whether or not the actions of the petitioner in amending its lease agreement resulted in increased costs which are reimbursable by the Department of Health and Rehabilitative Services through an interim rate request.

BACKGROUND

By petition dated June 27, 1984, Golden Isles Convalescent Center, Inc. d/b/a Hallandale Rehabilitation Center (Hallandale) requested a formal administrative hearing on the denial by the Department of Health and Rehabilitative Services (HRS or Department) of Hallandale's interim rate increase request. The petition was referred to the Division of Administrative Hearings on June 29, 1984.

Prior to hearing the parties filed a prehearing stipulation which set forth the facts that were admitted and the issues remaining in dispute. At the hearing Hallandale presented the testimony of two witnesses: Saul Lerner and Ray Bolt; presented the testimony of three other witnesses by deposition: Theodore Foster, James Beymer, and Beatrice Foster; and presented eight exhibits which were admitted into evidence. The Department presented the testimony of two witnesses, Dyke Snipes and Roy McCaslin, and had one exhibit admitted into evidence. Official notice was taken of the Florida Title XIX Long-Term Care Reimbursement Plan and HIM-15, sections 2100 and 2102.

Both parties timely filed proposed findings of fact and conclusions of law which have been carefully considered. Each proposed finding of fact has been addressed, directly or indirectly, in this recommended order, except those proposed findings that are subordinate, cumulative, immaterial or unnecessary.

FINDINGS OF FACT

1. Hallandale is a licensed nursing home facility located in Hallandale, Florida, and at all times material hereto, Hallandale was certified to and was participating in the Florida Medicaid Program. The participation was subject to a standard nursing home provider agreement entered into by the parties.

   Pursuant to the agreement, Hallandale provides nursing care for Medicaid recipients and receives as payment the recognized rate of Medicaid reimbursement established for Hallandale by HRS in accordance with the applicable state and federal laws, regulations, and guidelines. The agreement may be cancelled by either party after giving thirty (30) days notice.

   
   

2. In 1971, Hallandale entered into a lease agreement with the owners of the nursing home facility and began operating the nursing home. The lease called for a payment of $84.00 per month, per bed, had no escalation clause, and would not expire until 1986. At the time the lease was negotiated, the owners had been operating the nursing home themselves at a loss. To avoid bankruptcy or having to sell the property at a loss, the owners leased the property to Hallandale. However, within seven or eight years the owners began to put pressure on Hallandale to renegotiate the lease because the owners did not think they were getting a fair return on their investment.

   
   

3. In 1981, the owners and Hallandale entered into negotiations to amend the terms of the lease to provide an increased rental rate and an extension of the lease term. The negotiations were not successful, and finally, by letter dated July 6, 1983, the owners issued the following ultimatum:

   
   

   "Although the lease has a renegotiation clause six months prior to expiration, we must renegotiate the terms and conditions of this lease immediately. The partnership has made a decision that we will definitely not renew or extend your lease unless we can come to some satisfactory arrangement regarding terms and conditions, effective immediately."

   
   

4. On December 13, 1983, Hallandale and the owners entered into an amendment to the original lease. The amendment increased the lease payments and extended the lease until August of 1998. The amended lease provided for a minimum rental of $110 per month, per bed, as of September 1, 1983, with increases in the rental every year thereafter.

5. Saul Lerner has been president of Hallandale since 1975 and has been associated with the facility since it was first leased in 1971. Mr. Lerner is an astute businessman who has been involved in a variety of businesses for forty years. He was chiefly responsible for renegotiating the lease with the owners. Although the lease was renegotiated due to the owners' threats to sell the facility, 1/ Mr. Lerner did not merely accede to the owners' demands. There were several offers and counteroffers made before the final agreement was reached, and the renegotiated lease provided for a considerably lower rental rate than that demanded by the owners. Prior to entering into the lease amendment Mr. Lerner consulted with people in the industry, had a MAI appraisal performed, discussed the situation with James Beymer, a real estate broker specializing in nursing home and health related facilities, consulted with his accountants who had been in the health care field for 13 years, and talked with Sebastian Gomez of the Department of Health and Rehabilitative Services. Mr. Lerner consulted with his business associates, and the pros and cons of renegotiating the lease were carefully considered.

   
   

6. Hallandale's determination to renegotiate the lease in 1983 was a reasonable and prudent business decision. By agreeing to increased rental payments for the three years that remained on the original lease, Hallandale gained an additional 12 years to operate the facility. This permitted Hallandale to project its costs and plan for the future. It could make additions and improvements to the building, buy new equipment, and provide for stability in staffing. On the other hand, had Hallandale refused to renegotiate the lease, it faced an uncertain future. There was a strong possibility that the owners would not be willing to renew the lease when it expired, which would result in Hallandale's losing the equipment and improvements it had put into the building. In addition, the owners were threatening to sell the property, and even though Hallandale had the right of first refusal, it would have had difficulty in obtaining the money required to purchase the property. Further, Hallandale realized that even if the owners would be willing to negotiate a new lease in 1986, Hallandale would not have the same leverage or bargaining power in 1986 as it had in 1983.

   
   

7. Hallandale has participated in the Medicaid program continuously since 1971. At the time of the hearing the facility had 142 patients, of which 45 were Medicaid patients. 2/ Hallandale has never refused a Medicaid patient, and some of the patients have been there 8 or 9 years. The Medicaid patients are treated the same as the private patients, to such a degree that no one knows which patients are Medicaid patients. Although the agreement with HRS allows a provider to leave the Medicaid program with 30 days notice, Hallandale has no intention to ever discontinue participation in the Medicaid program.

   
   

8. The extended term of the renegotiated lease is not only advantageous to Hallandale, it is also beneficial to Hallandale's patients, including Medicaid patients. It secures continuity of care for the patients and ensures that the patients will not have to be moved to a new facility in 1986. The transfer from one facility to another can be a very traumatic event for an elderly person; some patients have died within weeks of a transfer. Further, the patients benefit immediately because the extended term of the lease allows Hallandale to make improvements to the facility and buy equipment that it would not have been able to do without the security of a long term lease.

   
   

9. The lease payments called for by the new lease are not out of line with lease payments made by similar institutions. Mr. Lerner looked at other lease payments being made in the community and found that $110 per bed per month was not an exorbitant amount. James Beymer leased nursing home facilities that were

   not as nice as the Hallandale facility for $138 per bed per month $166 per bed per month, and $225 per bed per month. Had Hallandale purchased the facility for $3 million, the price asked by the owners, the cost per month per bed would have been over twice the amount of the lease payment. 3/

   
   

10. Lease payments are included in a facility's "fixed costs." The fixed costs also include depreciation, real estate taxes and insurance. The state places a cap on reimbursement rates for fixed costs. In June 1983, prior to the renegotiation of the lease, Hallandale's fixed costs were $4.61 per patient day; under the renegotiated lease, the fixed costs would be $5.16 per patient day. Thus, even with the higher lease payment, the fixed costs are considerably under the state cap of $12.50 per patient day.

    
    

11. A provider's reimbursement rate is determined by HRS from a cost report submitted by a provider. The rate is a prospective per diem rate. If, during the prospective period, the provider incurs an increase in costs, the provider has a right to submit an interim rate request to HRS. The Department uses the same principles to determine whether costs submitted in an interim rate request should be allowed as in determining whether costs submitted in a cost report should be allowed. Lease payments are allowable expenses under the Medicaid program subject to the Medicaid cost reimbursement principles.

    
    

12. In calculating Hallandale's per diem rate, HRS allowed Hallandale $84 per month lease cost for each Medicaid patient in the facility based on the 1971 lease. Prior to executing the new lease, Hallandale contacted HRS to inquire if the new lease cost would be allowable and was informed that the new costs would probably not be allowable. On November 9, 1983, Hallandale submitted an interim rate request to cover the increased cost of the new lease payments. The interim rate request was procedurally correct. By letter dated May 30, 1984, HRS denied the interim rate request because "...the lease cost was negotiated for investment related reasons and is not related to patient care." On June 25, 1984, Hallandale filed its petition for a formal administrative hearing.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this proceeding. Section 120.57(1), Florida Statutes.

    
    

14. Reimbursement rates are established in accordance with the Florida Title XIX Long Term Care Reimbursement Plan (The Plan). See, Rule 10C- 7.48(4)(a)5.a., Florida Administrative Code. Section III. C. of the Plan provides:

    
    

    Implicit in any definition of allowable costs is that those costs should not exceed what a prudent and cost-conscious buyer pays for a given service or item. If costs are determined by HRS, utilizing the Title XVIII principles of reimbursement, HIM-15, and this plan, to exceed the level that a prudent buyer would incur, then the excess

    costs will not be reimbursable under the plan.

    In determining whether a specific cost is allowable, HRS applies the principles set forth in the Plan and in HIM-15, the Provider Reimbursement Manual of the United State Department of Health and Human Services. The applicable sections of HIM-15 regarding the reimbursement of provider costs are sections 2100 and 2102. Those sections provide:

    
    

    2100. PRINCIPLE

    
    

    All payments to providers of services must be based on the "reasonable cost" of services covered under title XVIII of the Act and related to the care of beneficiaries. Reasonable cost includes all necessary and proper costs incurred in rendering the services, subject to principles relating to specific items of revenue and cost.

    
    

    2102. DEFINITIONS

    
    

    2102.1 Reasonable Costs.--Reasonable costs of any services are determined in accordance with regulations establishing the method or methods to be used, and the items to be

    included. Reasonable cost takes into account both direct and indirect costs of providers of services, including normal standby costs. The objective is that under the methods of determining costs, the costs with respect to individuals covered by the program will not be borne by others not so covered, and the costs with respect to individuals not so covered will not be borne by the program.

    
    

    Costs may vary from one institution to another because of scope of services, level of care, geographical location, and utilization. It is the intent of the program that providers will be reimbursed the actual costs of providing high quality care, regardless of how widely they may vary from provider to provider, except where a particular institution's costs are found to be substantially out of line with other institutions in the same area which are similar in size, scope of services, utilization, and other relevant factors.

    
    

    "Utilization" for this purpose refers not to the provider's occupancy rate but rather to the manner in which the institution is used as determined by the characteristics of the patients treated (i.e., its patient mix--age of patients, type of illness, etc.).

    
    

    Implicit in the intention that actual costs be paid to the extent they are reasonable, is

    the expectation that the provider seeks to minimize its costs and that its actual costs do not exceed what a prudent and cost- conscious buyer pays for a given item or service (see section 2103). If costs are determined to exceed the level that such buyers incur, in the absence of clear evidence that the higher costs were unavoidable, the excess costs are not reimbursable under the program.

    
    

    2102.2 Costs Related to Patient Care.--These include all necessary and proper costs which are appropriate and helpful in developing and maintaining the operation of patient care facilities and activities. Necessary and proper costs related to patient care are usually costs which are common and accepted occurrences in the field of the provider's activity. They include costs such as depreciation, interest expenses, nursing costs, maintenance costs, administrative costs, costs of employee pension plans, normal standby costs, and others.

    Allowability of costs is subject to the regulations and prescribing the treatment of specific items under the Medicare Program.

    
    

    2102.3 Costs Not Related to Patient Care.-- Costs not related to patient care are costs which are not appropriate or necessary and proper in developing and maintaining the operation of patient care facilities and activities. Such costs are not allowable in computing reimbursab1e costs. They include, for example, costs of meals sold to visitors;

    costs of drugs sold to other than patients; cost of operation of a gift shop; and similar items.

    
    

15. The Medicaid program does not pay a profit to the provider. The intent of the program, as determined from the sections quoted above, is to reimburse the provider for actual costs incurred if those costs are reasonable and related to patient care.

    
    

16. There is no question that a lease payment is a cost related to patient care as defined by section 2102.2. It is elemental that in a leased facility the cost of the lease is an integral part of the cost of patient care: in a nursing home it provides the "home". Since there is nothing in section 2102.3 to suggest that a lease payment should be considered a cost not related to patient care, the obvious conclusion is that the cost of a lease is a cost related to patient care. In fact, the prior lease payment had always been an allowable cost and thus determined to be related to patient care. However, because Hallandale renegotiated its lease prior to its expiration, HRS determined that the "increase" in the lease payment was not related to patient care. This view is too narrow; the "increase" is part of the lease payment itself. A lease payment does not change its essential character from being related to patient care to being unrelated to patient care merely because the

    amount paid for the lease increases. This is true whether the increase is the result of the lease being renegotiated prior to its expiration, or whether the increase is the result of an escalation clause in an existing lease, or whether the increase is the result of a new lease being negotiated upon the expiration of an existing lease. In each case the former amount and the latter amount purchase the same item -- the use of the facility.

    
    

17. As is apparent from sections 2102.2 and 2102.3, the primary focus in determining whether a cost is related to patient care is not the amount paid for the service or item, but whether the item or service purchased is related to the care of beneficiaries. Cf., e.g., Martin Luther Foundation, Inc. d/b/a Swanholm Nursing Home v. DHRS, 3 FALR 747-A (costs for providing space for furnishing beautician/barber services allowable because service related to patient care); Lelah G. Wagner Nursing Home v. DHRS, 4 FALR 1692-A (costs of rent and utilities for administrator's apartment disallowed because apartment's use was not related to patient care but was for the convenience and personal benefit of administrator). When the primary focus is on the amount paid, then the question becomes whether the cost is reasonable. See, e.g., PRRB Hearing Dec. No. 80- D98, CCH Medicare and Medicaid Guide, paragraph 30,881 (1981)(where prior cost of $12.33 per nursing aide visit increased to $17.87 per nursing aide visit,

    $17.57 was unreasonable, but $14.00 per aide visit allowed as reasonable); PRRB Hearing Dec. No. 75-D11, CCH Medicare and Medicaid Guide, paragraph 27,560 (1975)(where leasehold interest requiring annual payments of $43,500 was acquired for annual sum of $40,000, the question was whether the payment of

    $40,000 per year, in addition to the existing rental payments, was reasonable). In State of Florida, Dept. or Health and Rehabilitative Services vs.

    Fountainhead Nursing and Convalescent Home, 1 FALR 1186 (1976), the Department initially disallowed $37,162 of the total $61,140 compensation for the administrator of the facility, calling the $37,162 a "bonus" not related to patient care. However, in its final order the Department stated:

    
    

    "It is undisputed that Mr. Mossey's function as an administrator is necessary and related to patient care. The disagreement thus, centers around the reasonableness of the compensation and whether the Respondent's owners were acting as 'prudent buyers' as that concept applies to the Medicaid reimbursement." (e.s.)

    
    

    From the foregoing cases and reimbursement principles it is evident that the issue in this case is not whether the "increase" in the lease payment is related to patient care, but whether, under the circumstances, the increased lease payment is reasonable.

    
    

18. The Department's initial determination to disallow the increased lease cost was based solely upon the fact that Hallandale renegotiated the lease prior to its expiration. Mr. Snipes testified that the interim rate request was denied because "...the increase in the lease cost was negotiated before the current lease expired." Mr. McCaslin's testimony that the increase was not allowable or reasonable was based on the fact that:

    
    

    "[Hallandale] had a firm lease through 1986. And I believe it was mentioned, $84 per bed per month. That was the lease cost that we would allow through 1986."

19. In essence, the determination to disallow the increased cost was based on the conclusion that any increase resulting from a lease being renegotiated prior to its expiration is unreasonable per se. This conclusion is neither supported by the principles of Medicaid cost reimbursement nor HRS's own interpretation of those principles as applied to a new provider. Mr. McCaslin testified that, in determining whether a new provider's lease cost is reasonable, the fact that the new provider had renegotiated its lease immediately prior to entering the program would not be considered. However, the reimbursement principles relating to reasonable costs do not distinguish between a new provider and an established provider. Therefore, if the fact that a lease was renegotiated is not a factor in determining the reasonableness of a new provider's lease cost, it should not be a factor in determining the reasonableness of an established provider's lease costs.

    
    

20. A provider negotiating a new lease may be offered several options in the course of negotiation. Indeed, the cost of the lease may vary depending on the length of the lease term. In renegotiating its lease, Hallandale was in no different position than a provider negotiating a new lease who is given the option of entering into a short-term lease at one price or a long-term lease at a different price. In essence, Hallandale had two options in 1983: it could have a three-year lease at $84 per bed, per month, or it could have a 15-year lease beginning at $110 per bed per month with increases thereafter. Hallandale considered the choices and made a well-reasoned determination that the long-term lease would be of greater benefit to its patients and to itself. The fact that Hallandale chose to enter into the more costly long-term lease is not determinative of its right to be reimbursed for the increased cost. If the increased lease cost is reasonable under Medicaid cost reimbursement principles, the cost is reimbursable.

    
    

21. Pursuant to the principles set forth in section 2102.1, a provider is to be reimbursed the actual costs incurred by the provider with the objective being that "the costs with respect to individuals covered by the program will not be borne by others not so covered, and the costs with respect to individuals not so covered will not be borne by the program." Obviously, if the actual lease costs associated with Medicaid patients are not reimbursed, those costs must be borne by others or the provider will suffer loss. However, the mandate that actual costs be reimbursed is qualified by the requirements that (1) a provider must seek to minimize its costs, and (2) the actual costs do not exceed what a prudent and cost-conscious buyer pays for the same item or service unless there is clear evidence that the higher costs were unavoidable.

    
    

22. In this case the actual cost of the lease is $110 per bed per month. The payment of $110 per bed per month does not exceed what a prudent and cost- conscious buyer would pay to lease the Hallandale facility. There was absolutely no testimony or other evidence presented at the hearing from which one could conclude that $110 per bed per month was excessive, and there was sufficient evidence presented to conclude that the $110 rental payment was well within the range of what a prudent buyer would pay for the facility. Further, the evidence supports the conclusion that Hallandale sought to minimize its costs. As set forth in paragraph five of the findings of fact, there were several offers and counteroffers made prior to entering into the final agreement, and the resulting rental payment represented the minimal cost at which Hallandale could obtain the extended lease. Thus, under the criteria set forth in section 2102.1, the increased lease cost is a reasonable cost that is reimbursable.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the interim rate increase requested by Hallandale be

granted.

DONE and ORDERED this 26th day of April, 1985, in Tallahassee, Leon County, Florida.

DIANE A. GRUBBS

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 26th day of April, 1985.

ENDNOTES

1/ Although Mr. Lerner never saw a contract for sale and was never asked to exercise Hallandale's right of first refusal, Mr. Lerner had no reason to doubt that the owners were sincere in their intentions to sell the property should the lease negotiations fail. Mr. Lerner was aware that people from out-of- state were looking for nursing homes in Florida and that "nursing homes were being gobbled up all over the place." Further, Mr. Lerner spoke with a representative of Beverly Enterprises who wasinterested in the facility and who had been to see the facility with a realtor.

2/ The facility has 149 beds, a 149 patient capacity.

3/ Three million dollars was not an unreasonable asking price for the facility. The cost per bed per month was determined by breaking down the purchase price to

$200,000 to the land, $300,000 to equipment, and the rest to the building. A depreciation of $112,000 per year (based on a building life of 30 years and equipment life of 10 years) was added to the interest payment of $355,000 for the first year (assuming 80 percent financing of the purchase price) yielding a total cost of $467,000 per year, or approximately $261 per bed per month for the first year.

COPIES FURNISHED:

Karen L. Goldsmith, Esquire Jonathan S. Grout, Esquire DEMPSEY & GOLDSMITH, P.A.

605 East Robinson Street Post Office Box 1980 Orlando, Florida 32502

Theodore E. Mack, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

GOLDEN ISLES CONVALESCENT CENTER, INC., d/b/a HALLANDALE REHABILITATION CENTER,

Petitioner,

vs. CASE NO. 84-2344

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. On April 26, 1985, the Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto. HRS filed exceptions to the Recommended Order.

Ruling on Exceptions

1. HRS' exceptions 1 - 4 are granted.

FINDINGS OF FACT

The findings of fact in the Recommended Order are hereby adopted and incorporated by reference as the findings of fact herein.

CONCLUSIONS OF LAW

The conclusions of law set forth in the first, second, and third paragraphs of the Recommended Order are hereby adopted and incorporated by reference as conclusions of law herein.

The balance of the conclusions of law is rejected. The following conclusions, along with the conclusions specifically adopted in the preceeding paragraph are the conclusions of law in this final order.

The intent of the Medicaid program, as determined from the sections quoted above, is to reimburse the provider for actual costs incurred if those costs are reasonable and related to patient care. Reasonable costs include all necessary and proper costs incurred in rendering the services.

There is no question that a lease payment is a cost related to patient care as defined by Section 2102.2. It is elemental that in a leased facility the cost of the lease is an integral part of the cost of patient care: In a nursing home it provides the "home". Since there is nothing in Section 2102.3 to suggest that a lease payment should be considered a cost not related to patient care, the obvious conclusion is that the cost of a lease is a cost related to patient care. In fact, the prior lease payment had always been an allowable cost and thus determined to be related to patient care. However, because Hallandale renegotiated its lease prior to its expiration, HRS determined that the "increase" in the lease payment was not necessary or related to patient care.

Since the lease payment in the instant case was enforceable or at least three more years, the reasonable cost for such payment was fixed. It is therefore incumbent upon petitioner to show that the increase is necessary and related to patient care.

As noted in paragraph 6 of the preceding findings of fact, Hallandale's determination to negotiate a new lease prior to expiration of the old lease was purely a business decision to protect the interests of the owners in the facility. Since Medicaid does not retain a financial interest in the facility itself, such a decision did not benefit the Medicaid program.

Although Hallandale indicated an interest in continuing in the Medicaid program and improving the facility, such facts are irrelevant to the issue in dispute since Hallandale has no legal duty to stay in the Medicaid program longer than 30 days. Similarly, the question of continuity of patient care is irrelevant since Hallandale may evict all Medicaid patients after giving them 30 days notice. Therefore, in determining the necessity of an incurred cost, the Medicaid program can look no further into the future than 30 days since any longer time frame would be speculative as it applied to the Medicaid program.

The principles of HIM-15 Section 2102.2, cited above, state that, "necessary and proper costs related to patient care are usually costs which are common and accepted occurrences in the field of the provider's activity". The renegotiations of a lease prior to its expiration does not meet that definition as it relates to the care of Medicaid patients. In the instant case Hallandale had, and Medicaid was calculating its costs on, a lease that was good for three more years. There was no showing that the renegotiations of the lease prior to its expiration was necessary or related to patient care. To allow such an increase in lease costs based upon nothing more than speculation would, in effect, make all lease agreements unenforceable for Medicaid reimbursement purposes.

As previously cited in Section 2102.1 of HIM 15, Medicaid principles expect that a provider "seeks to minimize its costs and that its actual costs do not exceed what a prudent and cost conscious buyer pays for a given item or service". It is clear that a prudent and cost-conscious buyer would not incur

costs that he was not legally obligated to incur. Such costs are not reimbursable by the Medicaid program, "in the absence of clear evidence that the higher costs were unavoidable". There was no showing in the instant case that the higher costs incurred in increasing the lease payments were unavoidable.

Based upon the foregoing, it is ORDERED and ADJUDGED that the interim rate increase requested by Golden Isles Convalescent Center, Inc., d/b/a Hallendale Rehabilitation Center, is DENIED.

DONE and ORDERED this 9th day of October, 1985, in Tallahassee, Florida.

DAVID H. PINGREE

Secretary

COPIES FURNISHED:

Karen L. Goldsmith, Esquire Jonathan S. Grout, Esquire DEMPSEY & GOLDSMITH, P.A.

Post Office Box 1980 Orlando, Florida 32802

Theodore E. Mack, Esquire Assistant General Counsel Department of HRS

1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301

Lesley Mendelson Agency Clerk Department of HRS

1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301

Diane A. Grubbs, Hearing Officer Department of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

Marta Hardy

Deputy Assistant Secretary for Health Planning and Development 1323 Winewood Boulevard Building One, Room 255 Tallahassee, Florida 32301

Docket for Case No: 84-002344

Orders for Case No: 84-002344