STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
PSYCHIATRIC INSTITUTES OF AMERICA, INC., ) d/b/a LAKE HOSPITAL OF THE PALM BEACHES, )
)
Petitioner, )
)
vs. ) CASE NO. 85-
1666H
)
STATE OF FLORIDA HOSPITAL COST )
CONTAINMENT BOARD, )
)
Respondent. )
)
RECOMMENDED ORDER
This case was heard at final hearing on June 17, 1985, in Tallahassee, Florida. Appearing for the parties were:
APPEARANCES
For Psychiatric Institutes C. Gary Williams, Esquire of America, Inc., d/b/a Michael J. Glazer, Esquire Lake Hospital of the AUSLEY, McMULLEN, McGEHEE Palm Beaches ("Lake CAROTHERS & PROCTOR Hospital"): Post Office Box 391
Tallahassee, Florida
32302
For Hospital Cost Curtis Billingsley, Esquire
Containment Woodcrest Office Plaza
Board ("HCCB"): Suite 101, Building L Tallahassee, Florida
32303
At issue in this case is whether the 1986 fiscal year budget of the Petitioner should be reduced pursuant to the last sentence of section 395.509(11), Fla. Stat. (1984).
Subsidiary issues are whether the Petitioner may amend its 1984 projected budget and whether the penalty provision of
subsection (11) of the statute mentioned above applies to Petitioner.
Subsection (11) of section 395.509, Fla. Stat. (1984) provides in the last sentence:
However, if a hospital's 1984 audited actual experience for net revenues per adjusted admission exceeds its 1984 projected budget for such revenues filed with the board by greater than 10 percent, then the hospital's projected budget for such revenues for fiscal year 1986 shall be reduced by the amount of such excess which is over 10 percent.
FINDINGS OF FACT
The Petitioner, Lake Hospital of the Palm Beaches, is a 72 bed psychiatric specialty hospital located in Lake Worth, Florida.
The Petitioner timely filed a request for approval of its fiscal year 1986 budget.
In preliminary staff action, the Respondent, the Hospital Cost Containment Board, proposed to reduce the gross revenues of Petitioner per adjusted admission for 1986 by $1202, for a total reduction of $751,250.
As will be discussed ahead, in the fall of 1984, the Petitioner had requested that the Respondent accept an amendment to its 1984 budget, and the Respondent, acting through staff, proposed to deny the amendment because received less than 90 days before the end of the 1984 fiscal year. Petitioner's Exhibit 4.
Effective May 18, 1984, the Legislature substantially amended the Health Care Cost Containment Act of 1979, section 395.501 et seq., Fla. Stat. See Chapter 84-35, Laws of Florida (1984), Petitioner's Exhibit 1.
Prior to the 1984 amendments, the Hospital Cost Containment Board merely received the public filing of hospital projected budgets. The Board generally had only the power to subject such budgets to publicity, and did not have the power to disapprove any portion of a budget.
Prior to the 1984 amendments, the statutes governing hospital cost containment were silent as to the question of whether a hospital budget could be amended or was required to be amended. T. 56, 57.
Prior to the summer of 1984, there was no practice or policy of the staff of the Hospital Cost Containment Board to either encourage or discourage amendment of budgets. T. 57.
The staff of the Hospital Cost Containment Board adhered to a policy or practice that amendments to a budget will not be accepted by the Hospital Cast Containment Board if received within the last 90 days of the hospital's fiscal year. T. 54.
This policy was created by staff in the summer of 1984 immediately following enactment of chapter 84-35, Laws of Florida. T. 54, 44.
The policy is applicable to all hospitals in Florida. T. 54.
The policy was never adopted by the Hospital Cost Containment Board as a rule. T. 55.
The policy has never been presented to the Hospital Cost Containment Board for adoption as a policy, and has not been adopted by the Board as a policy. T. 56.
The policy was never communicated to hospitals in Florida in any general written statement sent to all hospitals, or by notice in a newspaper or the Florida Administrative Weekly. T. 55, 56. Hospitals which submitted amendments to their 1984 budgets were notified of the policy by letter. T. 55.
Hospitals, including the Petitioner, having fiscal years ending before the summer of 1984 had no notice or knowledge of the policy prior to the end of their fiscal years. T. 56.
Petitioner's 1984 fiscal year budget ended May 31, 1984, 13 days after the 1984 amendments took effect.
Petitioner did not submit a revised or amended budget to the Hospital Cost Containment Board until late in
November 1984 because it did not learn of the penalty provision of section 395.509(11), Fla. Stat. (1984) until late September or early October 1984. T. 158.
Petitioner monitors its budget on a monthly basis, forecasting the budget for the remainder of the fiscal year. T. 85.
In the normal process of monitoring the 1984 budget, the Petitioner first became aware that its original 1984 budget was inaccurate sometime after the end of the first quarter on August 31, 1983. T. 86.
When the Petitioner became aware that its original 1984 budget was inaccurate, it did not consider filing an amended budget with the Hospital Cost Containment Board because there was no requirement to do so at that time. T. 87, 88.
The Petitioner, however, did make an internal adjustment to its original 1984 budget, based upon new forecasts after some experience during the 1984 fiscal year, and did so as an operating tool to explain to management either positive or negative performance. T. 89.
Petitioner's sole purpose of submitting the amended budget was to respond to the new penalty provision enacted as section 395.509(11), Fla. Stat. (1984). T. 177.
The penalty of section 395.509(11), Fla. Stat. (1984) applies to net revenues per adjusted admission. The Hospital Cost Containment Board then adjusts the 1984 net revenue excess amount using the usual inflation factors to 1986, and then converts the net revenues figure to gross revenues by using a ratio of gross to net revenues. T. 179, 186.
Since the penalty will reduce the allowable gross revenues for 1986, the penalty will probably cause the actual experience of the penalized hospital for 1986 to be reduced by an amount similar to the penalty. T. 179, 184, 188.
Petitioner's fiscal year 1984 budget was prepared in January and February of 1983. T. 79.
At the time of preparing the 1984 budget, the Petitioner had no formal adolescent program, but had plans for a major adolescent program. T. 79.
The idea to have a new adolescent program at Lake Hospital was first conceived in 1982. T. 118.
At the time of preparing the 1984 budget, the Petitioner assumed that the length of stay of adolescents admitted to the new program would be somewhere between three and six months. T. 80.
Dr. Thomas J. Kelly, an adolescent psychiatrist, was recruited to develop the new program. T. 80.
Dr. Kelly provided information upon which the Petitioner based its assumption that the length of stay would be between three and six months. T. 81.
Petitioner also based its length of stay assumptions upon data which showed that the length of stay in other psychiatric facilities in Florida was running from three to six months. T. 81, 119.
Petitioner also based its length of stay assumptions upon the past experience that its Administrator, Alan T. Penn, Ph.D., had had with other adolescent programs. T. 119.
Petitioner relied upon the data above to project the expected length of stay, and did not have historical data of its own. T. 82, 123 - 124.
Although there is a place for budgeting for psychiatric long-term care on the Hospital Cost Containment Board's budget worksheet, neither the initial budget of the Petitioner, nor the proposed amended budget, contain any provision in that line for such long-term care. Petitioner's Exhibit 2; Respondent's Exhibit 2.
The adolescent program was originally projected to have 14 beds. T. 80.
Petitioner originally projected in its budget that the adolescent program would not start until June 1, 1983, in a limited way, and would not exceed 14 beds at any
time during the first fiscal year, which would end May 31, 1984. T. 83; Petitioner's Exhibit 12.
The adolescent program began at Petitioner's hospital in April 1983 with 7 beds. T. 82.
When the program first opened, demand exceeded predictions, and a waiting list developed rapidly. T. 84; 126.
As a result of the demand, Petitioner expanded the adolescent program sooner than expected, taking unoccupied beds from the north wing, which were previously devoted to the alcohol abuse programs, and using them for the adolescent program. T. 84; 113.
By September, 1983, the new adolescent program first exceeded the original forecast of 14 beds. T. 127; Petitioner's Exhibit 12.
In the last quarter of the fiscal year, the average daily census of the adolescent program was 19 patients per day, and for the entire 1984 fiscal year, Petitioner had an actual average daily census of 15.3 patients. This was about 42 percent greater than the 10.8 average daily census predicted when the budget was first established. Petitioner's Exhibit 12.
At the time of the hearing, the adolescent program had increased to 26 beds. T. 113; Petitioner's Exhibit 10.
A new physician without an established practice, who comes to a hospital and begins admitting a lot of patients, could have a significant impact upon the difference between budgeted and actual net revenues per adjusted admission. T. 102; 164.
The record does not contain precise evidence as to the actual length of stay experienced by the Petitioner in its new adolescent program. One witness said that it was about nine months. T. 87. Another witness said that it was over one year.
T. 127. It is the finding of the Hearing Officer that the length of stay has been at least nine months.
In part the longer length of stay has been caused by the fact that the adolescents now admitted to the program are patients that have been unsuccessful in other programs in 1984 in Florida. T. 115.
The length of stay in a psychiatric hospital is dependent in part upon the individual characteristics of the admitting physician and the type of program to which the patient is admitted. T. 165.
The primary reason that the Petitioner experienced a variance in 1984 between budgeted and actual net revenues per adjusted admission was due to the fact that the overall length of stay was greater. T. 161.
Petitioner's original 1984 budget as filed with the Respondent projected a length of stay of 26 days, which is the result of dividing 20,805 patient days projected by a projected 800 admissions. Petitioner's Exhibit 2, worksheet B-1; T. 156-157.
The average length of stay actually experienced by the Petitioner in 1984 was 33.7 days. T. 176, 180-181.
The longer length of stay experienced in the 1984 fiscal year was caused by the new adolescent program. T. 162.
Due to the fact that admissions went up for adolescents who stayed longer in Petitioner's hospital, the total number of admissions went down. T. 133.
Lake Hospital actually experienced 510 admissions during fiscal year 1984.
Respondent's Exhibit 2 is Petitioner's revised budget for fiscal year 1984 which was prepared and submitted in the latter part of 1984 to the Hospital Cost Containment Board. T. 158.
The only change in the revised budget was to change the number of admissions from 800 to 617. T. 159; Respondent's Exhibit 2.
However, the Petitioner in fact derived the 617 "predicted" admissions by using the actual length of stay for 1984 (33.7 days) in the calculation with the projected
number of patient days (20,805) unchanged. T. 176, 180,
181.
As a result of the change in admissions to 617, the predicted net revenues per adjusted admission for the amended 1984 budget changes from $6,473 to $8,411. T. 161; Petitioner's Exhibit 13.
If the revised budget is used as the basis to compare with 1984 actual experience, the actual net revenues per adjusted admission are less than the amount in the revised budget, and do not, therefore, exceed 10 percent of the budget. T. 161-162; Petitioner's Exhibit 13.
The inaccuracy that became known after August 1983 was both in the number of adolescent patients discussed above, and the fact that the length of stay was longer than anticipated. T. 86-87.
However, at the end of the first quarter, it was still too soon to predict what the length of stay actually would be. T. 95.
Psychiatric Institutes of America, Inc. owns a number of hospitals, including Lake Hospital. T. 151.
Within Psychiatric Institutes of America, Inc., the amount that various managerial officials are paid is related to the extent that actual fiscal experience attains the projections of the budget for the fiscal year. T. 152.
The comptroller for Psychiatric institutes of America, Inc., for the region in which Lake Hospital is located and managed, Anthony Cusadi III, did not become aware of the penalty provisions of section 395.509(11), Fla. Stat. (1984) until late September or early October 1984. T. 155.
At the same time, late September or early October 1984, Mr. Cusadi also learned that Lake Hospital had experienced a variance between budget and actual net revenues per adjusted admission for fiscal year 1984. T. 156.
If the regional comptroller did not know of the variance between budget and actual experience until months
after the close of the fiscal year, it must be concluded that the policy of the Petitioner to tie executive compensation to budget accuracy must not have operated to any substantial degree with respect to Petitioner's 1984 budget.
Lake Hospital raised its rates on June 1, 1983, the first day of fiscal year 1984, and months before the 1984 amendments to the hospital cost containment law took effect. T. 167.
Lake Hospital did not raise its rates at any other time during fiscal year 1984. T. 167.
If Lake Hospital had known of the penalty provision of section 395.509(11), Fla. Stat. (1984), on May 18, 1984, when the new law took effect, it would not have had enough time to take steps to change its fiscal practices to avoid imposition of the penalty because only
13 days then remained in its 1984 fiscal year. T. 167-169.
There is no evidence to believe or conclude that the Petitioner attempted in any way to inflate its 1984 projected budget in order to gain the advantage of a larger base year for future budget approvals by the Hospital Cost Containment Board pursuant to the new law.
The Petitioner, Lake Hospital of the Palm Beaches, was ranked by the Hospital Cost Containment Board as falling below 6 the 50th percentile in 1986 budget projections for gross operating revenues per adjusted admission, and also was ranked below the 50th percentile in all other "major indicators" used by the Hospital Cost Containment Board. T. 59-60, 62. Petitioner's Exhibit 7,
p. 2.
By statute, hospitals which project budgets having gross operating revenues per adjusted admission below the 50th percentile of hospitals in their group are exempted from detailed budget review by the Hospital Cost Containment Board, T. 58, unless there was some other reason to question the underlying projections in the budget. T. 61.
The Respondent did not have any reasons to question the underlying projections of the 1986 budget of
Petitioner, and thus the Petitioner was not subjected to detailed review. T. 62.
Hospitals which are not subjected to detailed review have their budgets automatically approved by the Respondent. T. 61.
The Petitioner's 1986 budget would have been automatically approved by the Respondent, with the exception of the issue of the penalty imposed pursuant to section 395.509(11), Fla. Stat. (1984) . T. 72.
Although the Petitioner's 1986 budget fell under the 50th percentile in all relevant categories of indicators, the Petitioner's 1986 budget proposed an increase of 27.0 percent in net operating revenues per adjusted admission from the 1984 actual experience. T. 69.
The maximum allowable rate of increase for net revenues per adjusted admission from 1984 to 1986 is 21 percent. T. 69.
Although the Petitioner's 1986 budget projects an increase of net operating revenues per adjusted admission greater than the maximum allowable rate of increase, the Respondent's preliminary (staff) recommendation does not propose any corrections of alteration of the 1986 budget of the Petitioner based upon this fact, but instead recommends automatic approval coupled with imposition of the penalty of section 395.509(11) discussed above. Petitioner's Exhibit 7.
John Chaddock, who was comptroller at Lake Hospital from 1978 to June 1984, and who prepared the 1984 fiscal year budget for Lake Hospital which was submitted to the Hospital Cost Containment Board, was accepted as an expert in health care financing for psychiatric hospitals. T. 77.
Mr. Chaddock understood a "budget" to mean an operating plan for a hospital, a goal to achieve, and thus is a document for a future period of time, and not a period of time which has already occurred. T. 95.
Mr. Cusadi also was of the opinion that a "budget" is a plan, not actual experience. T. 175.
As previously mentioned, the amount of the penalty imposed due to the variance between budgeted and actual 1984 net revenues per adjusted admission is approximately $750.000. T. 170; Petitioner's Exhibit 7.
Once the actual experience of the hospital is reduced in 1986 by an amount similar to the penalty, the future allowed gross revenues will be based upon the 1986 experience, and in that way, the penalty from 1984 may affect future years. T. 180, 188.
However, the effect upon future years is quite speculative. If the hospital is below the 50th percentile, as discussed above, the budget may be automatically approved even though the hospital has increased its gross revenues per adjusted admissions to recoup its 1986 loss.
T. 190. Further, by having its budget lowered by the penalty, the hospital should fall further within the lower 50th percentile, and budgeted increases in gross revenues per adjusted admission, at least in the first few years after 1986 may still be under the 50th percentile. Finally, even if the hospital falls within the upper 50th percentile for purposes of budget review after 1986, and
thus becomes subject to detailed review, it may nonetheless be able to justify its increases of gross revenues, and still obtain Board approval for the budget. T. 190.
CONCLUSIONS OF LAW
The threshold legal question in this case is whether the Petitioner may revise or amend its fiscal year 1984 budget after that budget has become fully executed.
In a previous order entered in a related case, this Hearing Officer concluded that the Petitioner was entitled to a section 120.57(1), Fla. Stat. hearing upon the proposed denial by the Hospital Cost Containment Board of Petitioner's attempts, after-the-fact, to revise its 1984 budget. The legal issue is a difficult one, particularly in view of the fiscal impact upon this Petitioner, as well as other hospitals. After full hearing in this case, and upon further examination of the statutes and rules involved, the legal conclusion previously reached appears to be in error. While there well may be substantial constitutional issues remaining, the statutes and rules appear to preclude retrospective revision of fully executed 1984 budgets.
Generally speaking, Petitioner is correct that the burden of proof in this proceeding has been upon the Petitioner to prove its case by a preponderance of the evidence. Section 395.5135, Fla. Stat. (1984)
Prior to May 18, 1984, there was no explicit statutory procedure for amendment of budgets filed with the Hospital Cost Containment Board. The 1984 amendments created an explicit amendment procedure, but the section created, section 395.509(3), Fla. Stat. (1984), applies only "after a hospital budget is approved, approved as amended, or disapproved for a given fiscal year . . . .
The power to "approve" or "disapprove a budget was not conferred upon the Hospital Cost Containment Board until May 18, 1985, and then only with respect to budgets beginning on or after February 1, 1985. Section 395.509(11), Fla. Stat. (1984). Thus, the new statutory amendment procedure applies only to budgets beginning on or after February 1, 1985, and not to fiscal year 1984 budgets.
As discussed in the findings of fact, prior to May 18, 1984, there was no statutory prohibition, requirement, or provision of any kind for a hospital to amend a budget once filed with the Hospital Cost Containment Board.
Moreover, prior to May 18, 1984, the Hospital Cost Containment Board had no practice or policy to either encourage or discourage budget amendments.
In sum, once a hospital had filed its budget for fiscal year 1984, while the hospital might have been subjected to a public hearing and public criticism of its budget by the Hospital Cost Containment Board, it was under no legal obligation to amend its budget in the course of the 1984 fiscal year, and was not
penalized in any way for failing to do so.
Nonetheless, if a hospital had sought to amend its 1984 budget during the course of that fiscal year, the Hospital Cost Containment Board undoubtedly would have had the implied authority to accept such revisions for public filing, since this would have been "indispensable or useful to the valid purposes of a remedial law." Coca Cola Co., Food Division v. State. Department of Citrus, 406 So.2d 1079, 1081 (Fla. 1981)
Indeed the Hospital Cost Containment Board had a rule which, although in fact never used to implement a policy of budget amendment, could have been so used. Rule 4D-1.06, F.A.C. provided that the Board could grant a waiver of "any or all portions" of certain rules, including rules 4D-1.03 and 1.04 which specified the content and timing of budget reports. Waivers under rule 4D-1.06 were limited to information which was not available at that time (of the report) and which could not reasonably be developed by the hospital.
Although the Hospital Cost Containment Board may well have had the authority to recognize revisions to 1984 budgets during the 1984 fiscal year, exercise of that authority would have been impossible with respect to those portions of a budget which had been executed and were no longer prospective. (This conclusion is contrary to the conclusion reached by this Hearing Officer in the earlier order on the motions to dismiss.) The "budget" which Petitioner had to file for 1984 was specified by rule 4D- 1.04(2), F.A.C. Pursuant to that rule, the report had to be filed sixty days prior to the beginning of the fiscal year, and it had to list the "total financial needs" and "resources available or expected to become available." Thus, by explicit terms the "budget" was entirely prospective in character.
The former law did not contain a definition of "budget" but the word is of sufficiently common definition that the Legislature must have intended the normal dictionary meaning, which is a "plan or schedule adjusting expenses during a certain period to the estimated or fixed income for that period." Webster's New Twentieth Century Dictionary of the English Language, Unabridged, 2nd Ed. (1980). Thus, the normal definition of the word "budget" limits that word to a plan which remains to be executed.
While not necessarily dispositive of the meaning of the word "budget" as it relates to the 1984 fiscal year, the 1984 amendments added to the cost containment law adds a definition of the word "budget." Section 395.502(4), Fla. Stat. (1984) now provides that:
"Budget" means the projections by the hospital, for a specified future time period, of expenditures and revenues, with supporting
statistical indicators. (E.S.)
Finally, and the most important point in resolving this issue in this case, the Legislature did not just use the word "budget" in the last sentence of subsection 11, section 395.509, Fla. Stat. (1984). The Legislature, instead, made it very clear that a specific "budget" was intended: the "1984 projected budget for such revenues filed with the board . . ." (E.S.) Thus, the budget intended by the Legislature is the one originally filed with the Respondent which was executory and only a projection. Any other "budget," unless it was merely a projection and a projection filed with the Respondent as a projection, would fail to meet the definition of a "budget" as intended in the last sentence of subsection 11.
Further, if the Legislature had intended that hospitals might seek to revise executed portions of 1984 budgets, it would not have allowed a 10 percent margin of error in subsection 11. the 10 percent margin of error between actual 1984 revenues and projected 1984 revenues shows that the Legislature was aware that 1984 projections as originally filed with the Respondent might have some reasonable margin of error. Rather than allow amendments, the Legislature appears to have chosen to allow up to 10 percent error before the penalty of subsection 11 applies.
From all of the foregoing, it must be concluded that it was the intention of the Legislature that the projected 1984 budget as filed with the Respondent was to be the benchmark for calculation of the penalty of the last sentence in subsection 11, and that the 10 percent margin of error was a substitute for revision of budgets which had already been executed. Thus, subsection 11 appears to intend that there be no further revisions of 1984 budgets which have been executed. Since Petitioner's budget had already been fully executed by the time it sought to revise it, it had become fixed and unalterable, and could not thereafter be amended for purposes of applying the last sentence of section 395.509(11), Fla. Stat. (1984). Thus, there is no statutory authority for Petitioner's attempt in this case to revise its 1984 budget.
Petitioner sets forth a number of challenges to the incipient policy of the Respondent that amendments to the fiscal year 1984 budgets be disapproved if not filed sooner than 90 days before the end of the fiscal year.
Although this issue may be moot, given the above statutory analysis, the Hearing Officer will include in this recommended order recommendations on these issues.
Not all policies of general applicability need be formally promulgated as rules. Florida Cities Water Company . Public Service Commission, 384 So.2d 1280, 1281 (Fla. 1980) The 90 day policy here is clearly of general applicability, but it is limited in effect to the one time occurrence of dealing with the start up of the new cost containment law. This is sufficient reason for the Respondent to have the discretionary flexibility to either adopt the policy as a rule or to justify it as an incipient policy on a case by case basis.
Petitioner relies upon Balsam v. Department of Health and Rehabilitative Services, 452, So.2d 976 (Fla. 1st DCA 1984), which held that the HRS moratorium upon certificate of need applications was invalid as an unpromulgated rule. The Balsam case had a distinguishing factor, however. In Balsam, there was an explicit statutory mandate that review of applications for certificates of need be on a timetable or cycle basis. The moratorium was a direct means of establishing a timetable and thus by the explicit terms of the statute had to be a rule.
Petitioner's argument that the incipient policy is invalid because it is a policy of the staff that has not been adopted by the collegial governing body of the Respondent is not persuasive. Whether or not the agency is governed by a single person or a group should have no effect upon the incipient policy doctrine. If challenged in formal administrative proceedings, the policy must be justified before it becomes embodied in the final agency action. But all incipient policy must naturally be expected to begin with staff action.
An agency must, of course, justify its incipient policy by an "evidentiary basis"". . . even though the agency's conclusions are purportedly based upon matters of common-know- ledge, economic logic, or abstract statutory interpretation." Cenac v. Florida State Board of Accountancy, 399 So.2d 1013, 1018 (Fla. 1st DCA 1981) .
The Respondent's policy of refusing to consider amendments to 1984 budgets if not filed before 90 days
before the end of the fiscal year has not been justified on this record. First, prior to adoption of the policy, the Respondent had a rule, rule 40-1.06, which permitted waivers as to budget reports and had no time limit other than the implicit limit, discussed above, that waivers could operate only prospectively to revise the unexecuted portions of the budget. The Respondent has not presented any evidence to show why it should not at least consider the revision of the last 30 days or less of a budget if a hospital can show, under the rule, reasons for amending its budget for the last few days.
Moreover, the policy was adopted with respect to this Petitioner at a time after Petitioner's opportunity to comply with the policy had expired, and Petitioner was given no chance in advance to amend its budget, if needed, before it reached the last 90 days of its fiscal year.
This is fundamentally unfair, and the justification for adopting the policy in such an "ex post facto manner has not been proven in this record by the Petitioner.
In sum, the 90 day policy has not been adequately justified by the Respondent in this record.
Petitioner also argues that the provisions of section 395.509(11), Fla. Stat. (1984) were not intended by the Legislature to apply to the Petitioner because Petitioner's fiscal year ended only 13 days after the new provisions took effect, and thus the Petitioner had no opportunity to inflate its 1984 revenues. In support of this argument, Petitioner presented the testimony of Ralph Glatfelter, who was actively involved in the drafting of subsection 11, and the remarks of Senator Thomas on the floor of the Senate, which are contained in Petitioner's Exhibit 14.
The testimony of Mr. Glatfelter and Exhibit 14 were both objected to by the Respondent. Upon further research, appears that both are inappropriate to rely upon as evidence of legislative intent. It is with some reluctance that the Hearing Officer must conclude that the foregoing is inadmissible as evidence of legislative intent, since it is probable that both the testimony of Mr. Glatfelter and the remarks of Senator Thomas accurately reflect the manner in which the last sentence of subsection
11 came into being, and also probably accurately reflect
the full extent of the legislature's understanding of the sentence at that time.
Nonetheless, a Hearing Officer must follow well established rules of statutory construction. Rules of construction do not apply if the words used in a statute are plain and unambiguous. State v. State Racing Commission, 112 So.2d 825, 828 (Fla. 1959). It must be assumed that the Legislature knew the plain and ordinary meaning of words used. Rinker Materials Corp. v. City of North Miami, 286 So.2d 552, 553 (Fla. 1973) . In this regard, as discussed above, a reasonable dictionary definition of words used should be applied. ID.
Legislative history is to be consulted only if there is doubt as to meaning. Rinker, supra, 286 So.2d at
554. There is no doubt in this case because the words on their face are clear and not in conflict with any other statutory provision. Thus, the legislative history presented by Mr. Glatfelter and in petitioner's Exhibit 14 is not needed.
Petitioner's Exhibit 14 and the testimony of Mr. Glatfelter in its entirely cannot be relied upon for another reason. Statements of a single legislator as to the intent of the Legislature are not entitled to great weight, Security Feed & Seed Co. v. Lee, 189 So. 869, 870 (Fla. 1939) , and such statements are generally inadmissible, McLellan v. State Farm Mutual Automobile Insurance Co., 366 So.2d 811, 813 (Fla. 4th DCA 1979)
The testimony of Mr. Glatfelter and Petitioner's Exhibit 14 are admissible, however, under the relaxed rules of section 120.58(1)(a), Fla. Stat. (1984). This evidence is clearly of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs. The evidence, however, is not appropriate for reliance as to the issue of Legislative intent, absent some change in the law concerning legislative history.
The last sentence of subsection 11 is very short and plain in meaning. It provides:
However, if the 1984 audited actual experience of a hospital for net revenues per adjusted admission exceeds its 1984 projected budget for such revenues filed with the board by greater
than 10 percent, then the projected budget of that hospital for such revenues for fiscal year 1986 shall be reduced by the amount of such excess which is over 10 percent.
The section thus applies without exception to all hospitals.
Had the Legislature intended that subsection 11 only be aimed at preventing ``base loading,'' it would have limited the last sentence of subsection 11 to those hospitals having substantial portions of their 1984 budgets yet to be executed on the effective date of the new law.
It did not. Thus, the Legislature must have intended the last sentence of subsection 11 to have additional purposes.
Another purpose of the last sentence of subsection 11 is simply the logical consequence of the words used by the Legislature in the enactment of the section. As a result of the last sentence of subsection 11, the 1986 approved revenues of all hospitals are reduced by the amount by which 1984 actual revenues exceeded 1984 projections, with the exception of a margin of allowable error of 10 percent. The effect reduction of hospital revenues is entirely consistent with the overall purpose of the amendments contained in chapter 84-35, Laws of Florida, that is, to contain hospital costs.
Whether or not this second purpose is consistent with the constitutional rights of affected hospitals is an issue that cannot be decided in this forum. Subsection 11 contains two adjustments that are important in determination of the final approved 1986 budget. The first, not at issue in this case, is the inflation factor, the maximum allowable rate of increase, which is tied to statistical inflation factors by section 395.502(15), Fla. Stat. (1984). The second is the last sentence of subsection 11, which is not tied to market considerations, but rather is tied to the accuracy of the projected 1984 budget of each hospital.
Petitioner argues that its 1986 budget, except for the "penalty" of subsection 11, meets all other goals and criteria of the hospital cost containment law. Petitioner in fact had no opportunity to load its base, and thus at issue in this case is the propriety of exacting a reduction in Petitioner's 1986 revenues due solely to
Petitioner's inaccuracy in its 1984 fiscal year. Petitioner points out that there was no requirement, policy, or incentive to amend its 1984 budget under former
law, and that by the time it learned of its predicament, it was too late. Finally, Petitioner sets forth the reasons its 1984 budget as originally filed turned to be inaccurate. Whether these facts give rise to constitutionally based relief for the Petitioner must be resolved by a court rather than this Hearing Officer.
These proceedings have been conducted under the very narrow time constraints of section 395209(8), Fla. Stat. (1984). Petitioner during the hearing ordered a daily transcript. Since there did not appear to be any fault by either party causing the need for a speedy hearing and recommended order, and since it appeared that the rush was occasioned solely by the statute, it was the Hearing Officer's initial view that the cost of daily copy of the transcript should be shared by the parties. Respondent correctly points out, however, that costs are taxable only pursuant to statute or rule. Lake Region Paradise Island, Inc., Graviss, 323 So.2d 610, 612 (Fla. 2d DCA 1975) . Thus, the Hearing Officer has no authority to require the Respondent to pay one-half of the costs of daily copy of the transcript.
Upon consideration of the foregoing, it is recommended that the Hospital Cost Containment Board enter its final order approving the staff recommendations contained in Petitioner's Exhibit 7, such that Petitioner's 1986 budget be approved with a reduction of gross revenues per adjusted admission of $1202, and that the approved gross revenues per adjusted admission after such reduction be $11,623.
DONE and ENTERED this 9th day of July, 1985, a Tallahassee, Florida.
Hearings
Hearings
WILLIAM C. SHERRILL, JR.
Hearing Officer
Division of Administrative
The Oakland Building 2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative
this 9th day of July, 1985.
COPIES FURNISHED:
Curtis Ashley Billingsley, Esquire State of Florida Hospital Cost Containment Board
325 John Knox Road
Woodcrest Office Plaza, Suite 101 Building L
Tallahassee, Florida 32303
Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE, CAROTHERS & PROCTOR
Post Office Box 391 Tallahassee, Florida 32302
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AGENCY FINAL ORDER
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STATE OF FLORIDA DEPARTMENT OF INSURANCE
HOSPITAL COST CONTAINMENT BOARD
PSYCHIATRIC INSTITUTES OF AMERICA, d/b/a LAKE HOSPITAL OF THE PALM BEACHES,
Petitioner,
vs. CASE NO. 85-1666H
STATE OF FLORIDA, HOSPITAL COST CONTAINMENT BOARD,
Respondent,
and
CITIZENS OF THE STATE OF FLORIDA,
Intervenor.
/
FINAL ORDER
This cause came before the Hospital Cost Containment Board for consideration and final agency action, after notice, on July 31, 1985. After an administrative hearing was conducted before a Hearing Officer of the Division of Administrative Hearings, a Recommended Order was rendered by the Hearing Officer. Exceptions were filed by the staff and by the hospital and oral argument was presented by the parties. The Public Counsel intervened in this case, without objection, after the hearing but before oral argument to the Board.
The exceptions, argument and the Recommended Order, a copy attached hereto and hereby made a part of this order, have been considered. It is ordered.
The findings of fact, except a portion of paragraph 23 on page 4 of the Recommended Order, are adopted. Paragraph 3 of the findings of fact indicates that the Hospital Cost Containment Board "adjusts the 1984 net revenue excess amount using the usual inflation factors to 1986..." This specific finding is not supported by competent substantial evidence. That finding is modified to indicate that the Board "converts the net revenue excess amount to a gross revenue amount by calculating the ratio between the two revenues and applying the amount calculated to the 1986 budget."
The conclusions of law, except those contained in paragraphs 20 thru 22 at page 17, are adopted. The conclusions found in paragraphs 20 thru 22 concern an issue that is factually inapplicable to this case and has been rendered moot by adoption of the remaining conclusions of law issued by the Hearing Officer regarding amendments to 1984 budgets.
The recommendation of the Hearing Officer is adopted as modified herein. The base year adjustment provision of Section 395.509(11), Florida Statutes (1984 Supp.) mandates an adjustment to a hospital's budget for fiscal year 1986 if its 1984 actual net revenues exceed its 1984 budgeted net revenues by greater than 10 percent. The Hearing Officer recommended the adjustment be applied to gross revenues. On the basis of the provisions of Section 395.509(11),Florida Statutes (1984 Supp.), the Board declines to apply the base year adjustment to gross revenues. Accordingly, the hospital's budgeted gross revenue per adjusted admission of $12,825 is approved. Because Lake Hospital's actual 1984 experience exceeded its 1984 budgeted amount plus 10 percent by $992, its requested 1986 net revenue per adjusted admission of $10,586 is reduced by $992 and a net revenue of S9,594 per adjusted admission is approved.
Lake Hospital's exceptions which are not reflected by the resolution of the issues as discussed above are denied for the following reasons:
Lake first excepts to the Hearing Officer's finding that its 1984 budget ended on May 31, 1984. There is no significant difference between the Hearing Officer's finding and Lake's distinction; the budget at issue applies to a fiscal year which ended May 31, 1984. Lake's exception appears to suggest that an annual budget for a fiscal year has a life beyond the end of that fiscal year. In the normal course of business, this is illogical. There is no evidence supporting this exception to the Hearing Officer's findings.
Exception No. 3 objects to the Hearing Officer's finding in Paragraph 64. The inference drawn by Hearing Officer in Paragraph 64is supported by record. The distinction attempted to be made between the comptroller's awareness of the actual to budget variance as opposed to the actual to budget variance per adjusted admission is not supported by the record. The allegations made by Lake Hospital in this exception have no support in the record, are not established facts and cannot be used to overturn a Hearing Officer's findings of fact.
Exception No. 4 alleges that the findings of fact in Paragraphs 74 and 75 are irrelevant. These findings are based upon the staff's preliminary findings regarding the MARI and Lake's rate of increase. These facts are relevant regarding whether Lake's 1986 budget is subject to detailed review.
Similarly, Exception No. 5 objects to the finding that Lake's rate of increase exceeds the MARI. When the staff's preliminary findings are challenged through a de novo legal proceeding such as here, the Hearing Officer's finding is appropriate.
Exceptions 7 and 9 concern the Hearing Officer's 1984 budget amendment conclusions while Exceptions 8 and 12 concern the Hearing Officer's legislative intent conclusions. The Board concurs with the Hearing Officer's conclusions and can find no basis within these exceptions to reject his conclusions.
Exception No. 10 excepts to Paragraphs 16 and 17 of the conclusions of law. These paragraphs relate case law to the proposed 90 day budget amendment policy. The Hearing Officer's perception of the applicability of the case law to the proposed policy is correct. Further, for
purposes of Lake Hospital, the issue of the 90 day policy is moot because their amendment request was filed approximately, six months after its fiscal year end
Exception No. 11 excepts to Paragraph 18 of the conclusions of law. Lake expects the Board to initiate all policy. This is contrary to the Hearing Officer's conclusion that all incipient policy must naturally be expected to begin with staff action. Agency policy evolves over time subject to various challenges and tests to afford those who are substantially affected by the emerging policy an opportunity to exercise their due process rights regarding the validity of that policy. The Hearing Officer is correct in his observation that the evolution of incipient agency policy begins with the staff.
Exception No. 13 alleges that application of the base year adjustment is inconsistent with the purposes of the Health Care Access Act. However, as the Hearing Officer stated, a reduction of revenues is entirely consistent with containing hospital costs.
Exceptions 14 and 16 are general exceptions to the entire recommended order which have been resolved in the manner indicated herein. Exception No. 15 concerns Lake Hospitals constitutional rights. The Board is without jurisdiction to resolve this exception.
WHEREFORE, the Hearing Officer's Recommended Order, as modified herein, is adopted as the Hospital Cost Containment Board's Final Order. Lake Hospital shall submit, within 30 days from the date of this Order, a"corrected budget" that incorporates the revenues as approved herein together with a cover letter which identifies the changes from the budget as submitted, a schedule of projected rates and information sufficient to justify the manner by which the budget is corrected.
DONE AND ORDERED this 6th day of August 1985, nunc pro tunc, July 31, 1985, at Miami, Florida.
Rosar A. Kennedy Vice Chairman
Hospital Cost Containment Board
325 John Knox Road
Building L, Suite 101 Tallahassee, Florida 32303 904/488-1295
YOU ARE HEREBY NOTIFIED that you may be entitled, pursuant to Section 120.68, Florida Statutes, to judicial review of an Order which adversely affects you. Review proceedings are instituted by filing a petition with the appropriate District Court of Appeal, pursuant to Section 120.8(2), Florida Statutes. These proceedings must be conducted in accordance with the Florida Rules of Appellate Procedure. Pursuant to Rule 9.110, Florida Rules of Appellate Procedure, you must file a notice of appeal within 30 days of the rendition of this Order.
COPIES FURNISHED:
Curtis Ashley Billingsley, Esquire
325 John Knox Road Building L, Suite 101
Tallahassee, Florida 32303
Michael J. Glazer, Esquire Post Office Box 391 Tallahassee, Florida 32302
Jack Shreve, Esquire
202 Blount Street 624 Crown Building
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Jul. 09, 1985 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Aug. 06, 1985 | Agency Final Order | |
| Jul. 09, 1985 | Recommended Order | Petitioner ordered to submit corrected budget pursuant to Section 395.509(11), Florida Statutes. Rules preclude retrospective revision of fully executed budget. |
