STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RESIDENTIAL TREATMENT CENTER ) OF THE PALM BEACHES, INC., )

(RTCPB), )

)

Petitioner, )

)

vs. ) CASE NO. 87-2037

)

DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES (HRS) and ) FLORIDA RESIDENTIAL TREATMENT ) CENTERS, INC. (FRTC), )

)

Respondents. )

) COMMUNITY HOSPITAL OF THE PALM ) BEACHES, INC., d/b/a HUMANA ) HOSPITAL PALM BEACHES (Humana), )

)

Petitioner, )

)

vs. ) CASE NO. 87-2050

)

DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES (HRS) and ) FRTC OF PALM BEACH COUNTY (FRTC), )

)

Respondents. )

)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on December 1-3, 8-9 and 14, 1987, before Ella Jane P. Davis, a duly assigned Heading Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner Residential Michael J. Glazer, Esquire Treatment Center of the AUSLEY, McMULLEN, McGEHEE, Palm Beaches, Inc. (RTCPB): CAROTHERS & PROCTOR

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32202

and

John T. Brennan, Jr., Esquire BONNER & O'CONNEL

900 17th Street, Northwest Washington, D.C. 20006

For Petitioner Community James C. Hauser, Esquire Hospital of the Palm Beaches, Joy Heath Thomas, Esquire Inc., d/b/a Humana Hospital MESSER, VICKERS, CAPARELLO, Palm Beaches (Humana): FRENCH & MADSEN

215 South Monroe Street Post Office Box 1876 Tallahassee, Florida 32302

For Respondent Florida Fred W. Baggett, Esquire Treatment Centers, Inc. Stephen A. Ecenia, Esquire (FRTC) ROBERTS, BAGGETT, LaFACE

& RICHARD

101 East College Avenue Tallahassee, Florida 32301

For the Department of Lesley Mendelson, Esquire Health and Rehabilitative Assistant General Counsel Services (HRS) Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700 ISSUE

Whether a Certificate of Need (CON) application for specialty hospital licensure as an Intensive Residential Treatment Program (IRTP) filed by Florida Residential Treatment Center (FRTC) should be approved by the Department of Health and Rehabilitative Services (HRS). Residential Treatment Center of the Palm Beaches, Inc. (RTCPB) and Community Hospital of the Palm Beaches, Inc., d/b/a Humana Hospital of the Palm Beaches (Humana) timely filed petitions requesting formal hearing pursuant to Section 120.57(1), F.S., and oppose HRS' intent to issue this CON.

Organic Law and Legislative Background

Due to recent statutory amendments, a new type of health care entity has emerged in Florida's Certificate of Need experience. This is the "Intensive Residential Treatment Program." (IRTP)

An IRTP licensed pursuant to Chapter 395, F.S, is defined at Section 395.002(8), F.S. (1987), as:

'Intensive residential treatment programs for children and adolescents' means a specialty hospital accredited by the Joint Commission on Accreditation of Hospitals which provides 24-hour care and which has the primary functions of diagnosis and treatment of patients under the age of 18 having psychiatric disorders in order to restore such patients to an optimal level of functioning.

An IRTP can be licensed under Section 395.003(2)(f), F.S. (1987), which provides:

(f) Intensive residential treatment programs for children and adolescents which have received accreditation from the Joint Commission on Accreditation of Hospitals and which meet the minimum standards developed by rule of the department for such programs may be licensed by the department under this part. (Emphasis added).

However, before a license can be issued, a CON must be obtained pursuant to Section 381.704(2), F.S. (1987). That statute provides in pertinent part, as follows:

...the department shall not issue a license to any health care facility, health care provider, hospice, or part of a health care facility which fails to receive a Certificate of Need for the licensed facility or service.

Procedural and Evidentiary Matters

At the commencement of oral hearing and after consideration of written motions and all argument, several oral rulings were made which are here memorialized.

It was ruled that the statutory criteria as amended in 1987 would apply to this proceeding (TR-54). See Section 381.705(1) and (2), F.S. (1987). See also Rule 10-5.011(b).

FRTC's Motion to Dismiss both Petitioners for lack of standing was denied (TR-39), subject to revisitation within this Recommended Order, infra.

FRTC's Motion in Limine was granted in part by the undersigned and waived in part by the movant. (TR-53). It was granted so as to limit consideration of bed need to the inventory of intensive residential treatment programs licensed as specialty hospitals in HRS District IX. Since FRTC has applied for a CON for specialty hospital licensure as an Intensive Residential Treatment Program, the existence or nonexistence of IRTP-licensed beds in District IX is relevant to the issue of this case, and the inventory of beds should be properly limited to those licensed in District IX. Unlicensed residential treatment beds which may exist within District IX have not been reviewed for consistency with CON criteria and therefore no determination has been made as to whether such unlicensed beds meet CON criteria, regardless of whether certain such beds may be reviewed pursuant to other statutory provisions administered by HRS. Therefore, non-CON licensed residential treatment beds which exist within District IX should not be included in the inventory of beds against which any gross need established by applicant FRTC should be compared, because unlicensed beds are not, in fact, what applicant FRTC seeks to offer at its proposed facility. Among many other factors, this ruling took into consideration and inherently rejects RTCPB's argument that its and others' unlicensed beds should be subtracted from any gross need demonstrated by FRTC and further rejects FRTC's suggestion that because FRTC purportedly intends to build its proposed facility regardless of CON grant/licensure, some other calculation should be employed. See FOF No. 1.

Humana's Motion in Limine filed November 30, 1987, with regard to limiting evidence upon various "updates" to FRTC's CON application filed November 2, 1987, was denied. (TR-89). The Motion in Limine was so long delayed as to be untimely. Given the opportunity at hearing to address Humana's concerns, HRS specifically waived remand to the agency for consideration of the updates (TR- 87-88). The instant case is not a comparative review of competing CON applications, and the undersigned ruled the FRTC updates to be insubstantial and appropriate modifications and admitted evidence thereon. See FOF No. 11.

FRTC presented the testimony of Ronald T. Luke, W. Stephen Love, Joseph C. Wood, R. Lee deLoache III, Greg Hughes, Robert Ellzey, Charles Hal Brunt, Claude William Brett, Albert Joyner, Jr., and Paul Bodner, and had admitted 29 exhibits. HRS presented the oral testimony of Robert May and Elizabeth Dudek and had three exhibits admitted. RTCPB presented the oral testimony of Christopher Knepper, Mary Neil Blakemore, Donald Wilson, Walter Grono, and Dan Sullivan and had admitted 21 exhibits, including the deposition of John Griffin. Additionally, in the course of formal hearing, the undersigned reserved ruling on admissibility of the deposition of Dr. Spencer D. Marcus (RTCPB's Exhibit 7, marked "Res-7") pending review of the deposition and consideration of post- hearing arguments of the parties (TR 871-873). Upon consideration thereof, the deposition has been admitted and considered. Humana Presented the oral testimony of Mary Certo and Neils Vernegard and had 9 exhibits admitted in evidence.

The parties have submitted a transcript and post-hearing proposed findings of fact and conclusions of law, the proposed findings of fact of which have been ruled on in the Appendix to this Recommended Order pursuant to Section 120.59(2).

FINDINGS OF FACT

The Parties

1. FRTC is a wholly-owned subsidiary of Charter Medical Corporation (Charter) which proposes to construct and operate a freestanding, 60 bed, 24- hour-a-day, Intensive Residential Treatment Program for children between the ages of 6 and 18 in Palm Beach County within HRS District IX, pursuant to Rule 10-28.152(8), F.A.C. and Chapter 395, F.S. Although FRTC represents it will construct its proposed facility with or without CON licensure, which it is entitled to do, given the peculiarities of this type of health care entity, it is clear that a prime motivator in FRTC's CON application is that with CON licensure, FRTC potentially will have greater access to insurance reimbursement because it may then call itself a "hospital." FRTC will seek JCAH accreditation.

   
   

2. HRS is the state agency with the authority and responsibility to consider CON applications, pursuant to Chapter 10-5.011, F.A.C. and Sections 381.701-381.715, F.S. (1987). HRS preliminarily approved FRTC's application, and supported it through formal hearing and post-hearing proposals.

   
   

3. RTCPB is an existing 40 bed residential treatment center for adolescents between the ages of 12 and 18, located in Palm Beach County, on the campus of Lake Hospital of the Palm Beaches. It provides services similar or identical to those services proposed to be offered by FRTC. It is JCAH accredited through an extension of Lake Hospital's accreditation and is close to JCAH accreditation in its own right. RTCPB is a subsidiary of Psychiatric

   Hospitals, Inc. (PIA) . PIA operates two residential treatment centers in Florida. RTCPB is not CON licensed as an IRTP, under Chapters 381 and 395, F.S., but is licensed as a child care facility under Chapter 395, F.S., as a provider of services to HRS under Chapters 10M-9 and 10E-10, F.A.C. RTCPB accepts substance abusers in residency.

   
   

4. RTCPB has also applied for CON licensure as an IRTP in a batching cycle subsequent to the present one. That application has been preliminarily denied by HRS and RTCPB is awaiting a Section 120.57(1), F.S., formal administrative hearing thereon. RTCPB now estimates its current patients' average length of stay (ALOS) as 106 days but projects a 315 day (10 1/2 months) ALOS in its subsequent CON application. RTCPB is charging $185 per day or HRS patients and

   $255 with $23-26 ancillaries [sic] per day for private pay patients. Like FRTC, it uses a "levels" system of behavior modification and patient control.

   
   

5. Humana is a 250 bed JCAH accredited hospital located in Palm Beach County, Florida. Of Humana's 250 beds, 162 are traditional acute care beds and

   88 are psychiatric beds. The 88 psychiatric beds are administratively divided into different units, one of which is a 27 bed adolescent psychiatric unit; this unit opened January 20, 1987, and has an average length of stay of nine months. Humana's existing CONs are for short-term adult psychiatric beds and do not authorize an adolescent unit with an average length of stay of over 30 days. Ninety days is the demarcation, by rule, between short- and long-term psychiatric beds. Humana recently applied for a CON for more psychiatric beds and also applied for an IRTP CON in a subsequent batch to the present one. Humana's present 27 bed adolescent psychiatric unit provides grossly similar services to those proposed to be offered by FRTC, but its emphasis is more medical-psychiatric than emotional-behavioral. Like FRTC, Humana does not accept in residency adolescents with a primary diagnosis of substance abuse. Like FRTC and RTCPB, Humana uses a "levels" system.

   
   

6. Eighty percent of Humana's patient mix are commercial pay, and the unit is running at a 15 to 20 percent profit margin. Humana usually charges $325 per day on their adolescent unit plus ancillaries [sic] amounting to 10 percent of the patient's bill, but HRS contract patients pay only $225 per day. Humana has lost a number of adolescent unit referrals to RTCPB since RTCPB opened June 1, 1987, but the unit continues to be almost fully occupied. Humana's main referral asset, as well as the source of the confusion of referring entities, appears to be the reputation of its director, Dr. Kelly. Dr. Kelly previously directed a program at Lake Hospital which was identical to the program that he now directs at Humana. Lake Hospital currently has RTCPB operating under its auspices, but not Dr. Kelly.

   
   

   Nature of the FRTC Program

   
   

7. FRTC's proposed program is designed to serve those persons in the designated age group who have psychiatric diagnoses of a severity requiring a long-term approach in a multidisciplinary structured living setting to facilitate recovery. It will not, however, treat adolescents with an active diagnosis of chemical dependency or substance abuse. It also only commits to

   1.5 percent indigent care. The proposed FRTC program differs from an acute care setting in significant quantitative and qualitative ways, the most visible of which is that acute care psychiatric settings (either long- or short-term) are geared toward dealing with patients actively dangerous to property, themselves, or others, but patients whom it is reasonably assumed will respond primarily to physiologically-oriented physicians and registered nurses administering daily medication, treatment, and monitoring, as opposed to a long-term living

   arrangement emphasizing behaviorally-oriented group interaction as an alternative to parental care at home. FRTC will, however, accept patients with psychiatric diagnoses of effective disorders, depression, schizophrenia and impulse disorders and those who may be potentially harmful to themselves, others, or property for whom no other less intensive or less restrictive form of treatment would be predictably helpful. FRTC would fall on the continuum of care below an acute psychiatric facility such as Humana.

   
   

8. Assessment of such a target group on a patient by patient basis is obviously subject to a wide variation of interpretation by qualified health care professionals, but FRTC anticipates both verifying referral diagnoses and assuring quality of care by insuring that each new patient is seen by a psychiatrist within 24 hours of admission, and by having each case reviewed by an independent utilization review committee. FRTC also plans to complete appropriate patient assessments and develop and update individual, integrated treatment programs. FRTC will provide, where appropriate, for continuity of care from previous acute care institutions through the FRTC program and out into more normal individual or family living arrangements. Parents will have to consent to their child's placement at FRTC.

   
   

9. FRTC's program proposes an average length of stay of 365 days (one year) with a range of six months to two years. Based upon all the credible record evidence as a whole, including, but not limited to, the protestants' respective ALOS, this is a reasonable forecast despite contrary evidence as to Charter's experience at its "template" Virginia institution, Charter Colonial. FRTC's program components will include individual therapy, recreational therapy, occupational therapy, and general education. The general education component in FRTC's proposed program is more general and more open than that offered in acute care settings, such as Humana. FRTC's overall program will utilize a "levels" system of behavioral management based upon patients earning privileges, which levels system has a good patient rehabilitation and functional administrative track record in many different kinds of psychiatric health care facilities, including Humana and RTCPB. FRTC intends that each patient's program will be individualized according to age and program component directed to his/her diagnosis and each patient will receive individual, resident group, and family therapies. As to assessment, types of therapy, continuity of care, and general education provisions, FRTC's proposal is grossly consistent with that of its "template." To the extent there is evidence of inconsistencies between the two programs in the record, the FRTC proposal represents either improvements over, or refinements of, its template program which have been developed as Charter/FRTC has learned more about what actually "works" for the IRTP form of health care, or it represents changes to accommodate Florida's perception of what less restrictive but still intensive residential treatment should be, or it anticipates local community needs.

   
   

   Quality of Care

   
   

10. The applicant's parent corporation is an experienced provider of many types of accredited psychiatric facilities. The type of quality assurance program proposed and the staff mix provide reasonable quality care assurances.

    
    

    Design, Construction, and Personnel

    
    

11. Refinements to FRTC's original schematic take into consideration the influence that physical structure has on an Intensive Residential Treatment Program. Those refinements include modification of a multipurpose room into a half-court gymnasium, addition of a classroom, addition of a mechanical room,

    modification of the nursing station to decrease the amount of space, and the deletion of one seclusion room and addition of a four to six bed assessment unit. The modifications resulted in the addition of approximately 1,000 square feet to the original design. A minimum of four to six acres would be necessary to accommodate the modified design which totals approximately 32,000 square feet. Public areas, such as administration and support services, dining room, and housekeeping areas, are to the front; private areas, such as the nursing units, are to the back. The facility's middle area houses gym, classrooms, and occupational therapy areas. The location encourages residential community involvement. Each of three, 20-bed units is made up of a group of two consultation rooms, a galley, a laundry, a day room and core living space located directly across from the nursing station for maximum observation and efficiency. Each unit comprises a separate wing. Six handicapped accessible patient beds are contemplated; the building will be handicapped-accessible. The staffing projections have increased and the pattern has been minimally altered in the updates. The updated pro forma also modified the initial financial projections so as to increase salary expense and employee benefits based on this change in staffing. An increase in the total project cost impacted on depreciation, and interest expense changed with time. All these changes are reasonable and insubstantial. FRTC's design is adequate for providing a suitable environment for intensive residential treatment for children and adolescents even though it is not identical to Charter's "template" for residential treatment and even though Charter's extensive experience with acute care facilities has focused these changes in its residential treatment concepts. The parties stipulated to the adequacy of FRTC's proposed equipment list and costs. Total construction cost was demonstrated to be reasonably estimated at

    $2,078,000. The square footage costs of $64.86 per square foot represet an increase from the square footage costs contained in the original CON application. The original budget was updated based upon a three percent inflation factor and the addition of the approximately 1,000 square feet. The additional space is not a significant construction change. The total project costs of $4,728,000 are reasonable. The testimony of HRS Deputy Assistant Secretary for Regulation and Health Facilities, John Griffin, who testified by deposition, (RTCPB's Exhibit 8, pp. 21-22) revealed no firm policy on what the agency, within its expertise, views as substantial and impermissible amendments to a CON application; HRS did not move at hearing to remand for further review; and the undersigned concludes that the changes in facility design, costs, and staffing do not represent significant changes which would be excludable as evidence and that they do represent permissible minor modifications and refinements of the original FRTC application.

    
    

    Site Availability

    
    

12. No party contended that FRTC's application was a "site specific" application, that a residential treatment program is otherwise required to be "site specific," or that an IRTP CON is governed by a "site specific" rule or by "site specific" statutory criteria. Therefore, it was only necessary for FRTC in this noncomparative proceeding to establish that several suitable sites were available within the required geographic parameters at the financial amount allotted in FRTC's projections. FRTC did establish financially and geographically available and suitable sites through the testimony of Robert H. Ellzey, a qualified expert in commercial real estate values.

    
    

    The Non-Rule Need Policy

    
    

13. There are no hospital licensed Intensive Residential Treatment Programs in Palm Beach County or in District IX. IRTPs are in a separate

    licensure category by law from psychiatric beds, acute care beds, and rehabilitation beds. There is a separate need methodology for long-term psychiatric beds and there are no CON licensed long-term psychiatric programs for children and adolescents in District IX, unless one considers Humana which is treating adolescents well beyond 30 or 90 days residency.

    
    

14. HRS has no promulgated rule predicting need for IRTPs seeking specialty hospital licensure under Chapter 395, F.S. Subsequent to advice of its counsel that a CON must be obtained as a condition of IRTP licensure pursuant to Chapter 395, F.S., HRS elected to evaluate all IRTP CON applications in the context of the statutory criteria of Chapter 381, F.S., and in the context of HRS' non-rule policy establishing a rebuttable presumption of need for one "reasonably sized" IRTP in each HRS planning district. The May 5, 1988 Final Order in Florida Psychiatric Centers v. HRS, et al., DOAH Case No. 88- 0008R, held this non-rule policy invalid as a rule due to HRS' failure to promulgate it pursuant to Section 120.54, F.S., but that order also held the policy not to be invalid as contrary to Chapter 381, F.S. That Final Order intervened between the close of final hearing in the instant case and entry of the instant Recommended Order, however, it does not alter the need for the agency to explicate and demonstrate the reasonableness of its non-rule policy on a case by case basis. HRS was unable to do so in the formal hearing in the instant case. Notwithstanding the oral testimony of Robert May and Elizabeth Dudek, and the deposition testimony of John Griffin, it appears that the non- rule policy is not based upon generally recognized health planning considerations, but solely on the agency's statutory interpretation of recent amendments to Chapter 395 and some vague perception, after internal agency discussions, that the policy is consistent with certain promulgated need rules and with certain other non-rule policies for other types of health care entities, which other non-rule policies were never fully enunciated or proved up in this formal hearing. The HRS non-rule policy was also not affirmatively demonstrated to be rational because it does not take into account the reasonableness of a proposed facility's average length of stay, referral sources, geographic access, or other factors common to duly promulgated CON rules.

    
    

    Numerical Need and Conformity to Applicable Health Plans

    
    

15. FRTC sought to support HRS' non-rule policy on numerical need for, and definition of, a "reasonably sized" IRTP through the testimony of Dr. Ronald Luke, who was qualified as an expert in health planning, development of need methodologies, health economies, survey research, and development of mental health programs. In the absence of a finding of a rational non-rule policy on numerical need, Dr. Luke's evidence forms the cornerstone of FRTC's demonstration of numerical need. Through the report and testimony of Dr. Luke, and despite contrary expert health planning testimony, FRTC established the numerical need for, and reasonableness of, its 60 licensed IRTP beds in District IX with projected 60 percent occupancy in the first year and 50 percent in the second year of operation using two bed need methodologies. Dr. Luke ultimately relied on a utilization methodology based upon 1991 population projections. Dr. Luke used a census rate per 100,000 population of 21.58. This is appropriately and reasonably derived from national data for residential treatment patients aged 0-17, regardless of the fact that the types of residential treatment considered by the NIMH data base employed by Dr. Luke greatly vary in concept and despite HRS having not yet clearly defined the nature of the programs and services it expects to be offered by a Florida specialty hospital licensed IRTP. Therefrom, Dr. Luke derived an average daily census of 52 in 1991. That figure yields a bed sizing of between 58 and 61 beds, depending on whether an 85

    percent or 90 percent occupancy factor is plugged in. Either 58 or 61 beds is within the range of ratios calculated by Dr. Luke's other methodology for currently licensed Florida IRTPs in other districts. Assuming a target occupancy rate of 85 percent and an ALOS of one year, Dr. Luke considered the gross District IX IRTP bed need to be 60. In the absence of any like program to assess occupancy for and in the presence of similar programs such as Humana operating at nearly full occupancy now and RTCPB forecasting its occupancy at 88 percent in 1990 if it were IRTP-licensed, it is found that 60 beds are justified. Since there are no IRTP beds licensed as specialty hospitals in the current district bed inventory, no adjustment of this figure must be made to account for existing licensed IRTP beds. Simply stated, this is a CON application for an IRTP, nothing more and nothing less, and the subtrahend to be subtracted from gross district bed need is zero when there is a zero specialty hospital licensed IRTP bed inventory. Luke's calculated gross need of 60 bed is also his net need and is accepted.

    
    

16. Fifty beds is generally the minimum size HRS will approve to be feasible for any free standing facility to be eonomically efficient and to be able to benefit from economies of scale. This 50 bed concept is within the wide range of bed ratios that HRS implicitly has found reasonable in, previously- licensed IRTP CON approvals.

    
    

    Conformity With Applicable Health Plans

    
    

17. Section 38l.705(1)(a), F.S., requires HRS to consider CON applications against criteria contained in the applicable State and District Health Plans.

    In this regard, neither the applicable State Health Plan nor the applicable District IX Local Health Plan make any reference to a need for intensive residential treatment facilities.

    
    

18. The District IX Health Plan addresses the need for psychiatric and substance abuse services to be available to all individuals in District IX. FRTC's project addresses this goal only in part. The District Health Plan states that priority should be given to CON applicants who make a commitment to providing indigent care. FRTC proposes only 1.5 percent indigent care which works out to only 1/2 of the ALOS of one patient at the proposed facility and is hardly optimum, but in a noncomparative hearing, it stands alone as advancing the given accessibility goal within the plan.

    
    

19. Objective 1.3 of the State Health Plan provides:

    
    

    Through 1987, additional long-term inpatient psychiatric beds should not normally be approved unless the average annual occupancy for all existing and approved long-term hospital psychiatric beds in the HRS District is at least 80 percent.

    
    

    FRTC's project is neutral as to this goal. The District Plan also contains a goal for a complete range of health care services for the population of the district. FRTC advances this goal.

    
    

20. The State Health Plan further provides:

    
    

    Goal 10: DEVELOP A COMPLETE RANGE OF ESSENTIAL PUBLIC MENTAL HEALTH SERVICES IN EACH HRS DISTRICT

    OBJECTIVE 10.1:

    Develop a range of essential mental health services in each HRS district by 1989.

    
    

    OBJECTIVE 10.3:

    Develop a network of residential treatment settings for Florida's severely emotionally disturbed children by 1990.

    
    

    RECOMMENDED ACTION:

    1.03A: Develop residential placements within Florida for all SED children currently receiving ing treatment in out-of-state facilities by 1990.

    
    

    The FRTC project advances these goals in part. To the extent SED patients placed outside the state for residential treatment services are HRS patients whom FRTC as yet has not contracted to treat, the FRTC project does not advance this goal. However, increased insurance reimbursement will advance accessibility for those SED children and adolescents in need of this type of care whose families have insurance coverage. The State Plan also emphasizes a goal for a continuum of care. The FRTC plan advances this goal.

    
    

    Financial Feasibility

    
    

21. William S. Love, Senior Director of Hospital Operations for Charter, was accepted as an expert in health care finance. Mr. Love prepared the pro forma financial statement contained in the original CON application and the update of the pro forma in response to HRS' completeness questions. Mr. Love also had input into the updated financial information which increased salary and benefit expense. (See FOF No. 11). The revised pro forma utilized an assumption of gross patient revenues of $300 per day and a 365 day ALOS, both of which are reasonable and both of which support the rest of FRTC's assumptions (See FOF No. 9). Routine revenues are based on the types of routine services patients normally receive on a daily basis. Ancillary revenues are support revenues such as pharmacy charges, X-rays, lab charges, and other charges not generally utilized on a routine basis. The only charges to patients at the proposed FRTC facility are the routine and ancillary charges.

    
    

22. The assumptions with regard to contractual adjustments are that there will be no Medicare utilization since the facility is projected for children and adolescents and no Medicaid since freestanding facilities in Florida are not eligible for Medicaid. Two percent of gross patient revenues are estimated to be contractual adjustments which relate to HMOs and PPOs. FRTC addresses indigent care by 1.5 percent of gross revenues which will be dedicated to Charter Care which is free care. The assumptions with regard to bad debt are that 8 percent of gross revenue will be the allowance for bad debt.

    
    

23. An assumption of 20 percent of salaries was used for employee benefits which include the FICA tax, health insurance, dental insurance, retirement plans, and other benefits. Supplies and expenses were calculated as a function of patient day with a $90 per day estimate. Included in supplies and expenses are supplies utilized in the delivery of health care services as well as medical professional fees such as the half-time medical director and purchased services such as laundry, linen, speech and hearing services, utilities, telephone, malpractice insurance, repairs and maintenance. The depreciation assumptions are that the building would be depreciated over 40 years, fixed equipment over

    20 years and major movable equipment over 10 years. Pre-opening expenses for the first 45 days of operation have been capitalized over 60 months with low amortization costs over 15 years. There is no income tax assumed in the first year but the assumption in subsequent years is that the tax rate will be 38 percent. The failure to assume a hospital tax is inconsequential.

    
    

24. The assumptions for the second fiscal year are basically the same. Although staffing remained the same, the FTEs per occupied bed increased, and a

    7 percent inflation factor was added.

    
    

25. The project will be financially feasible even though the facility is pessimistically projecting a loss of $102,000 for the first year because a facility can suffer a loss in its first year of operation and remain financially feasible. The facility projects a $286,000 profit in its second year of operation.

    
    

26. With regard to utilization by class of pay, FRTC has assumed that the insurance category represents 65.5 percent of total revenues projected and includes such things as commercial insurance, Blue Cross and any third party carrier other than Medicare and Medicaid. Assumptions with regard to the private pay are that 25 percent of the total revenues will be generated by private pay patients and would include the self pay portions of an insurance payor's bill, such as deductible and co-insurance. Bad debt was assumed to be 8 percent, and Charter Care or free care, 1.5 percent. FRTC's projected utilization by class of pay is reasonable and is supported by the protestants' current experience with commercial insurance utilization and reimbursement and the predicted recoveries if RTCPB were IRTP-licensed.

    
    

27. In the second year of operation, the assumptions with regard to utilization by class of pay demonstrated an increase in the insurance category from 65.5 to 66.5 percent with everything else remaining the same except for a decrease in bad debt to 7 percent. The assumption with regard to a decrease in bad debt is based upon the establishment of referral patterns from acute psychiatric facilities, outpatient programs, mental health therapists, and miscellaneous programs. The assumption is that 65 percent of the patients would be covered by insurance, not that 65 percent of each bill would be paid by insurance. Charter's experience has been that a good portion of the deductible and co-insurance payments are collectible. FRTC did not assume payment from any governmental contracts or HRS reimbursement. FRTC's projected self pay percentages assumption reasonably contemplates the percentage of households in the district which can afford its projections for self pay.

    
    

28. For purposes of evaluating the financial feasibility of this proposal, a management fee was not included because in looking at the financial feasibility of a facility the expenses of a corporate home office are incurred whether or not the facility is built. It was not appropriate to allocate a management fee to the hospital because it showed a loss in its first year of operation and a profit in its second. When the facility becomes profitable, FRTC anticipates passing the profit through to the corporation to help reduce the corporate overhead. If a management fee had been allocated to this facility, allocations would have had to have been made to the other Charter facilities to show where their management expense had decreased and their profitability increased. It would have been inappropriate to take these fixed expenses and allocate a portion of them to the proposed FRTC facility. In addition to the fact that the failure to include a management fee in the pro forma should not affect the feasibility of the project, Charter has good cause not to apply a $44 per patient day management fee in its IRTP.

29. FRTC's categories of payor class are generally reasonable based in part on the results of a survey performed in Florida. FRTC's assumptions and calculations are reasonable, based upon the testimony of William S. Love and Dr. Ronald Luke, notwithstanding the testimony of Dan Sullivan, Donald Wilson, and Christopher Knepper, also qualified as experts. Specifically, it is found that Dr. Luke's assessment that the designation of a facility as a licensed specialty hospital has a beneficial effect on its ability to obtain insurance reimbursement for services, that reimbursement impacts to increase ALOS, and that the breakdown of sources of payment that FRTC has used is reasonable, is a credible assessment, supported elsewhere in the record. It is also found that Mr. Knepper's assessment for bad debt is inadequately supported and inconsistent with other evidence, and therefore not credible. Mr. Sullivan's testimony is not persuasive.

    
    

    Staffing and Recruitment

    
    

30. Dr. Brett, a Charter regional director for hospital operations, was accepted as an expert in staffing psychiatric facilities including residential treatment centers. His distinctions between the acute care and residential types of facilities are corroborated and explained by other witnesses and evidence. Mr. Joyner was accepted as Charter's expert recruiter. Although the depth of Mr. Joyner's hands-on involvement in active recruitment is not extensive, the Charter network of manpower referrals and "head hunting" will obviously support this project. Upon the combined testimony of Dr. Brett, Mr. Joyner, and Paul Bodner, Charter's senior director of physician relations, there is sufficient evidence that FRTC can recruit a suitable staffing pattern to ensure quality of care (see FOF Nos. 9 and 10) in its proposed program, even if it has to hire from out of state and pay somewhat higher salaries due to some qualified manpower shortages in certain categories in Palm Beach County. In making this finding, the undersigned has considered the testimony of Donald Wilson concerning certain institution-specific recruiting problems of his principal, RTCPB, and the "step down" status of residential treatment as testified by Mary Certo, of Humana.

    
    

    Impact on Costs and Competition

    
    

31. The FRTC project can reasonably be expected to attract patients with insurance coverage who would otherwise go to existing facilities for care, however, in light of the relatively consistent occupancy rates at Humana and RTCPB despite both their geographical proximity and the unique confusion of referrals arising over the relocation of Dr. Kelly, this impact is not altogether clear. Dr. Kelly's reputation will not be impacted by granting of a CON to FRTC. It is also not possible upon the basis of the record created in this hearing to factor out reimbursement differences inherent in Humana's current CON classification and RTCPB's circumstance as an unlicensed intensive residential treatment center. In any case, the negative impact upon Humana must be measured against the health planning goals expressed by several witnesses that it is desirable to substitute more suitable, less restrictive facilities for institutionalization of the severely emotionally disturbed child and adolescent whenever possible and that it is also desirable to encourage residential treatment upon a continuum of care basis after acute psychiatric care. The FRTC project will obviously increase the accessibility to this type of treatment for young people who have the appropriate insurance coverage. These goals are in conformity with the applicable health plans.

32. The FRTC project can reasonably be expected to initially increase some costs of health services throughout the district because it will inflate some salary costs due to competition, but the negative impact will probably be short term.

    
    

    CONCLUSIONS OF LAW

    
    

33. The Division of Administrative Hearings has juris- diction over the parties and subject matter of this cause. See, Section 120.57(1), F.S.

    
    

34. Although FRTC can operate its planned facility without a CON, it cannot call itself a specialty licensed hospital without obtaining a CON. In seeking licensure as a specialty hospital licensed IRTP pursuant to Sections 395.002(8) and 395.003(2)(f), F.S. (1987), FRTC must obtain a CON pursuant to Section 381.704(2), F.S. (1987)

    
    

35. Petitioners have clearly shown that they will suffer injury in fact if FRTC's updated application is granted due to FRTC's enhanced ability to attract patients with insurance coverage and also FRTC's ability to attract qualified staff due to higher salaries it proposes to offer. Moreover, Petitioners' substantial interest is within the "zone of interest" this proceeding is designed to protect. Psychiatric Institutes of America, Inc. v. Department of Health and Rehabilitative Services, 491 So.2d 1199 (Fla. 1st DCA 1986); Agrico Chemical Co. v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 2nd DCA 1981) cert. den. 415 So.2d 1359 (Fla. 1982). Facilities of one type can be substantially affected by, and therefore have standing to challenge, the CON of a different type. This is no less so because of the posture of the parties of this case. See Palms Residential Treatment Center, Inc., et al. v. HRS and Florida Residential Treatment Center, DOAH case Nos. 87-2036 and 87-2049 (Recommended Order, Dec. 22, 1987 and Final Order Feb. 17, 1988). See also Balsam v. Department of Health and Rehabilitative Services, et al., 486 So.2d 1341 (Fla. 1st DCA 1986); St. Francis Parkside Lodge of Tampa Bay v. Department of Health and Rehabilitative Services, 482 So.2d 32 (Fla. 1st DCA 1986) , Baptist Hospital, Inc. v. Department of Health and Rehabilitative Services, 500 So.2d 620 (Fla. 1st DCA 1987).

36 FRTC urges that RTCPB should be dismissed for lack of standing due to Section 381.709(5)(b), F.S., effective date October 1, 1987. See, Chapter 87- 92, Laws of Florida. That section purportedly limits initiation of, or intervention in, CON proceedings to existing health care facilities. Because RTCPB is an unlicensed Intensive Residential Treatment Program, without a CON, albeit a facility that is up and running, FRTC asserts that RTCPB has no standing to bring its petition. Although the undersigned has ruled that CON criteria Sections 381.701-381.715, F.S., should be applied in this cause because they took effect as enacted by Chapter 87-92, Laws of Florida, on October 1, 1987, prior to commencement of this formal hearing, the "standing," as it were, of RTCPB is preserved by Section 38 of Chapter 87-92, which prohibits abatement of a proceeding initiated and pending on July 1, 1987, as was RTCPB's petition. FRTC's argument that abatement is somehow permissible due to specific HRS rule amendments is rejected also, upon authority of Palms Residential Treatment Center, Inc., et al. v. HRS and Florida Residential Treatment Center, DOAH Case Nos. 87-2036 and 87-2049, supra. The standing of Humana is challenged upon the same grounds because Humana has admitted its operation of a 27 bed adolescent unit in the absence of a specific CON therefor. The argument is not persuasive. The standing of Petitioners vested with the enactment of a nonabatement provision and cannot thereafter be retrospectively removed by HRS rule. The FRTC Motion to Dismiss the Petitions is denied.

1. The applicant bears the ultimate burden of demonstra-ting entitlement to a CON. Florida Department of Transportation v. J. W. C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981). In a de novo proceeding, the position of the parties is relevant to determine whether the applicant has met its burden of proof. For this reason and for all the foregoing reasons, but most particu-larly because they have been found to be insubstantial in the scheme of a project of this size, the updates to the FRTC application are relevant, admissible, and have been considered. McDonald v. Department of Banking and Finance, 346 So.2d 769 (Fla. 1st DCA 1977); Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA 1985), Hialeah Hospital, Inc. v. Department of Health and Rehabilitative Services, 9 FALR 2363 May 1, 1987), Palms Residential Treatment Center, Inc., et al. v. HRS and Florida Residential Treatment Center, DOAH Case Nos. 87-2036 and 87-2049, supra.

   
   

2. In attempting to apply a non-rule policy, the burden of establishing both its existence and its rationality rests with the agency. The non-rule policy does not have the presumption of validity accorded duly promulgated rules. Barker v. Board of Medical Examiners, 428 So.2d 720 (Fla. 1st DCA 1983), Florida Psychiatric Centers v. Department of Health and Rehabilitative Services, et al., DOAH Case No. 88-0008R, supra. Herein, HRS was unable to meet its burden and the non-rule policy cannot be relied upon. UpJohn Health Care Services, Inc. v. HRS, 496 So.2d 147 (Fla. 1st DCA 1986)

   
   

3. Thus, we must apply the statutory criteria found at Section 381.705(1), formerly Section 381.494(6)(c), F.S., to determine whether FRTC has established its entitlement to the CON it seeks.

   
   

4. In determining if there is a need for the proposed facility, a balanced consideration of all relevant statutory and rule criteria must be made. Department of Health and Rehabilitative Services v. Johnson and Johnson, 447 So.2d 361 (Fla. 1st DCA 1984), Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985). The weight given to each individual criterion is not fixed, but varies depending on the facts of each case. Northridge General Hospital, Inc. v. NME Hospitals, 478 So.2d 1138 (Fla. 1st DCA 1985), Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

   
   

5. FRTC has met its burden of proof as to Section 381.705(1)(a), in that it has established that the project is grossly consistent with the applicable State and District Health Plans and that a need exists for the facility based upon a utilization methodology which confirms a Florida bed ratio methodology. The project promotes the plans' announced goals of developing a network of residential treatment settings for Florida's severely emotionally disturbed children and youth. It offers less restrictive intensive care than institutionalization or inpatient hospitalization in an acute care facility. In light of there being no hospital licensed IRTPs in District IX and in light of this being a non-comparative proceeding, FRTC prevails on this criterion.

   
   

6. Section 381.705(1)(b) requires assessing the project against availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services. Section 381.705(1)(d) requires examination of health care facilities and services and hospices in the service district, such as ambulatory or home care services, which may serve as alternatives. Ambulatory and home care services are so contrary to the concept of any type of long-term residential care, particularly intensive residential treatment, as to be inapplicable here.

   However, FRTC has established that it will provide quality care and adequate staffing for patients at its facility. While there are beds in the district for severely emotionally disturbed children, there are no licensed IRTP beds in District IX and the geographic "draw" of the other facilities was not clear.

   Humana's ALOS appears to be outside its CON licensure, and although this is impressive by itself, when balanced with other evidence, it is clear that FRTC's projection of a 6 months to two year range with a one year ALOS is not unreasonable. Humana's nebulous situation makes its "likeness" as an alternative facility hard to assess, particularly due to its staffing and medication concept being closely akin to an acute care modality. However, Humana is "similar" to FRTC in that it will not take active substance abuse cases. RTCPB, on the other hand, will accept active substance abuse cases. In this respect, RTCPB is not "like" FRTC's proposed project but is, in almost every other way, identical. Some of the available beds in the District are unlicensed, such as those at RTCPB. Therefore, adequate alternatives to the FRTC facility have not been shown to exist within District IX. FRTC's facility will be more accessible to patients with insurance coverage due to its status as a specialty hospital and result in ready acceptance for reimbursement purposes

   
   

7. FRTC has demonstrated conformity to Section 381.705(1)(c) requiring that the applicant have the ability to provide quality of care and have a record of providing quality of care.

   
   

8. Section 381.705(1)(e) refers to probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources. To the degree that planned networking and referrals demonstrate conformity with this criterion, FRTC has met its burden. However, due to the absence of IRTPs in the district, it is not fully applicable and should be accorded little weight in this proceeding.

   
   

9. Regarding Section 381.705(1)(f), the need for services which are not reasonably and economically accessible in adjoining areas, there is insufficient competent evidence to show that the need demonstrated in District IX can be addressed by out of district facilities. Indeed, much of the State and District Health Plan goal-setting involved localizing treatment and returning out-of- state SED children to Florida, presumably to their original locale. For these reasons, Subsection (f) is deemed to have been adequately met.

   
   

10. The parties have stipulated that Section 381.705(g) is not applicable.

    
    

11. The parties have stipulated that FRTC has the availability of funds for capital and operating expenditures. As to the remainder of Section 381.705(1)(h), FRTC has demonstrated the availability of manpower and the pro forma demonstrates reasonable expectation of profit in the second year of operation. FRTC's program will be no less accessible than any other hospital or unlicensed residential treatment entity in District IX. There is nothing to inhibit district-wide accessibility of any group, except active substance abusers, to FRTC, and on balance, the enhanced accessibility of FRTC to patients covered by insurance, once the CON is granted, Satisfies this criterion.

    
    

12. Section 381.705(1)(i) as to immediate and long-term financial feasibility has been demonstrated. A profit in the second year is reasonably forecast in the pro forma, despite any concerns raised by the Petitioners about failure to include therein a management fee and hospital tax.

13. Section 381.705(1)(j) concerning HMOs was addressed in the pro forma, however, the undersigned concurs with the assessment in the State Agency Action Report that this criterion is not applicable to this case.

    
    

14. Application of Section 381.705(1)(k) is not appropriate due to the nature of intensive residential treatment programs.

    
    

15. With regard to Section 381.705(1)(l), the negative impact upon existing facilities has been assessed as very real but minimal and short-term.

    
    

16. Section 381.705(1)(m) has been met in that the design and construction costs are reasonable and appropriate. The parties have stipulated to the reasonableness of FRTC's equipment list and cost.

    
    

17. The 1.5 percent of FRTC's gross revenues allotted for provision of indigent care is not optimum but satisfies Section 381.705(1)(n) where there is no comparative applicant with a greater commitment. Also, the FRTC facility will serve seriously emotionally disturbed children and adolescents which has been recognized in national data and in the State Health Plan as a medically underserved group.

    
    

18. With regard to the criteria of Section 381.705(2), F.S., and of Rule 10-5.011, F.A.C., which are appropriately applicable to an Intensive Residential Treatment Program, those applicable criteria have also been met, as outlined by the foregoing discussion in relation to Subsection (1) supra.

RECOMMENDATION

Upon a balanced consideration of all relevant criteria it is

RECOMMENDED that HRS enter a Final Order approving FRTC's CON application for an IRTP, as updated, for licensure as a specialty hospital.

DONE and ORDERED this 28th day of June, 1988, in Tallahassee, Florida.

ELLA JANE P. DAVIS

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-2037 & 87-2050

The following constitute specific rulings pursuant to Section 120.59(2), F.S., with regard to the parties' respective Proposed Findings of Fact.

Proposed Findings of Fact (PFOF) of FRTC:

1. Covered in "issue" and FOF 1.

2. Covered in FOF 1 and 2.

3-7. Except as subordinate or unnecessary, accepted in "procedural and evidentiary matters" and FOF 11.

8. Accepted in FOF 12.

9-12. Except as subordinate, unnecessary, or cumulative, accepted in FOF 7-9.

13. Accepted in FOF 10.

14-17. Accepted in part and rejected in part in FOF 7-11, 30. Although portions of the underlying data referred to in proposal 16 and by Mr. Joyner in his testimony was excluded from evidence, he was qualified as a recruitment expert and for the reasons set forth in FOF 30, his opinion is accepted.

18-19. Accepted in FOF 21.

1. Accepted in FOF 22, 26, 29.

2. Accepted in FOF 23.

3. Accepted in FOF 24.

4. Accepted in FOF 25 and 29.

5. Accepted in FOF 26 and 29.

6. Except as subordinate or unnecessary, covered in FOF 27.

7. Except as mere argument or statement of position, accepted in FOF 26-27, and 29.

27-29. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found; in part rejected as mere argument or recital of testimony, not distinguishing opinion from fact. To the degree adopted or accepted upon the record as a whole, see FOF 26-29.

30-31. Accepted in FOF 28.

32-40. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found; in part rejected as mere argument or recital of testimony, not distinguishing opinion from fact. To the degree adopted or accepted upon the record as a whole, see FOF 9, 11, 21, 26-29.

41-44. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found in FOF 29-32.

45-47. Rejected, as recital or summation of testimony and as part of preliminary agency review not relevant to this de novo proceeding.

48. Covered in FOF 7, 18-20, 22, and 26.

49-52. dejected as set out in "organic law and legislative background," "procedural and evidentiary matters," FOF 13-15. See also COL.

53. Accepted in FOF 16.

54-58. Rejected in part and accepted in part as set out in FOF 14-15. Rejected where not supported in full by the record as a whole, where subordinate, unnecessary or cumulative to the facts as found and where mere recital of testimony.

59. Accepted in principle and modified to conform to the record in FOF 18-20, 31.

60-61. Accepted in part and rejected in part as stated in "procedural and evidentiary matters" and in FOF 14-16 and the COL.

1. Accepted in FOF 15 and COL.

2. Accepted in FOF 18-20, 31.

64-68. Rejected as unnecessary to the facts as found in FOF 1, 7, 13-15 and 29, also in part as not supported by the record as a whole, and as primarily legal argument and recitation of testimony.

1. Accepted in FOF 3-4 and 30.

2. Accepted in part and rejected in part in FOF 3-4, 7, 26, and 29.

71-74. Except as subordinate or unnecessary, accepted in FOF 5-9 and 30-32.

HRS' Proposed Findings of Fact (PFOF):

1-3. Accepted in "organic law and legislative background."

4. (Two paragraphs) Accepted FOF 3-4.

1. Accepted in "issue" and FOF 3-4.

2. Accepted, FOF 29-32.

3. Rejected as unnecessary.

4. Accepted, FOF 1. 10-18

& 20. Except as subordinate or unnecessary, accepted in FOF 5, 6, 15, 26, 31.

19. Rejected as irrelevant.

21-28. Accepted in part as modified to conform to the record as a whole in FOF 6-9, 30-31. The irrelevant, unnecessary or subordinate material has also been rejected.

29-31. Accepted in FOF 4, 9, 21, 26, 29-31.

32-35. Accepted in FOF 7-9.

36-41. Accepted in FOF 7-9 as modified to conform to the record as a whole, to eliminate subordinate and irrelevant matters and to comport with the rulings on the insubstantiality of updates to the CON application, in "procedural and evidentiary matters" and FOF 11.

42-45. Accepted as modified to conform to the record as a whole, to eliminate subordinate and irrelevant matters and to comport with the rulings on the insubstantiality of updates to the CON application in "procedural and evidentiary matters" and FOF 9-11, 21, 23, 30 and 32.

1. Accepted in FOF 22, 26, 29.

2. Accepted in FOF 7, 20, 22, 26. 49-52. Accepted in FOF 3, 4, 21-29.

1. Assuming, based on the transcript reference, that this proposal refers to FRTC's pro forma, this proposal is accepted but unnecessary for the reasons set forth in rulings on HRS' PFOF 36-45. See FOF 11 and 21-29.

2. Accepted in FOF 13-15. 55-58. Rejected as unnecessary.

59. Accepted but not dispositive of any material issue at bar. See FOF 13-15.

60-62. Accepted in part and rejected in part in FOF 13-14, as mere recital of testimony and statements of position.

63. Accepted in FOF 29. 64-65. Accepted in FOF 5-9.

1. Accepted in FOF 7-9.

2. Accepted that HRS made this assumption but it fails to

   explicate the non-rule policy. See FOF 13-14.

3. Accepted in FOF 16.

4. Rejected as a statement of position or COL. Peripherally, see COL.

5. Accepted in FOF 13-14 but not dispositive of any material issue at bar.

6. Rejected in FOF 13-14.

72-74. Rejected as preliminary agency action, irrelevant to this de novo proceeding.

75-76. Accepted in FOF 17-20.

1. This is a subordinate definition and not a FOF. See FOF 30-31 and COL.

2. Rejected in part and accepted in part in FOF 17-20, 31.

3. Accepted in FOF 10.

4. Accepted in FOF 13-15.

5. Accepted as stated in the "procedural and evidentiary matters," FOF 13-15 and in the COL.

82-85. Covered in FOF 3-6, 13-15.

86. Rejected as preliminary agency action, irrelevant to this de novo proceeding.

87-88. Rejected as subordinate or unnecessary.

89. Accepted in FOF 29.

90-96. Accepted as modified to conform to the record evidence as a whole and FOF 15-16 and to reject subordinate and unnecessary material.

1. Accepted without any connotations of the word "therefore" in FOF 4, 7-9, 21 and 29.

2. Rejected as unnecessary and cumulative.

3. Accepted in "organic and legislative background" and FOF 13-15.

4. Rejected as not established upon the record as a whole; unnecessary.

5. Rejected as a statement of position only.

Joint Proposed Findings of Fact of RTCPB and Humana 1-2 Accepted in FOF 1.

3-4. Accepted in FOF 2.

5-6. Accepted in "issue" and FOF 3-4.

7. Accepted in "issue" and FOF 5-6.

8-13. Accepted in part and rejected in part as set out under "procedural and evidentiary matters," FOF 3-6, 13-15, and the COL.

14-18. Except as subordinate or unnecessary, accepted in FOF 1, 7-9, 11, 21-29.

19-27. Rejected as irrelevant preliminary action to this de novo proceeding.

28-36. Rejected in part and accepted in part upon the compelling competent, substantial evidence in the record as a whole as set forth in FOF 13-14. Also as to 33 see FOF 15.

37-52. Accepted in part and rejected in part in FOF 13-16 upon the greater weight of the credible evidence of record as a whole. Irrelevant, unnecessary and subordinate material has been rejected, as has mere argument of counsel.

1. Accepted in FOF 17.

2. Rejected in FOF 20, 31.

3. Accepted as modified in FOF 20, 31.

4. Excepting the mere rhetoric, accepted in FOF 18, 31.

5. Accepted as modified in FOF 7, 18-20, 26, 31.

58-59. Accepted in part and rejected in part in FOF 17-20, 26,

1. Rejected as subordinate.

2. Rejected as recital of testimony and argument 62-63. Rejected as unnecessary.

64-67. Accepted in FOF 3-4, 6-9.

1. The first sentence is rejected as cumulative to the facts as found in FOF 3-4, 6-9. The second sentence is rejected as not supported by the greater weight of the evidence as a whole.

2. Rejected in FOF 4, 21.

3. Accepted in FOF 4 and 21, 29.

4. Rejected as unnecessary

5. Accepted in FOF 26.

6. Rejected in FOF 15-20, 31.

7. Rejected as unnecessary in a noncomparitive hearing. 75-87. Except as irrelevant, unnecessary, or subordinate,

accepted in FOF 5-9, 30, 31.

1. Rejected in part as unnecessary and in part as not comporting with the greater weight of the evidence in FOF 7-10 and 30.

2. Accepted in FOF 1, 5-9. 90-92. Accepted in FOF 5-9.

1. Rejected in FOF 5-6.

2. Rejected as subordinate. 95-98. Accepted in FOF 5-9.

99-102. Rejected as unnecessary.

103. Except as subordinate or unnecessary, accepted in FOF 5-9.

104-118. Except as unnecessary, subordinate, or cumulative to the facts as found, these proposals are covered in FOF 5-9, 30-31.

1. Except as Subordinate, covered in FOF 6 and 31.

2. Accepted in part in FOF 5-9, 21-29, otherwise rejected as misleading.

3. Except as subordinate, accepted in FOF 6.

4. Rejected as unnecessary.

5. Accepted in FOF 21.

6. Accepted in FOF 21-29.

7. Rejected in part and accepted in part in FOF 21-29.

8. Rejected as subordinate and unnecessary in part and not supported by the greater weight of the credible evidence in 21-29.

127-128. These proposals primarily recite testimony by Mr.

Grono, an administrator of a psychiatric hospital for very severely disturbed persons (Grant Center). This evidence by itself is not persuasive in light of Dr. Luke's study and other admissions of the parties referenced in FOF 21-29. Upon the greater weight of contrary evidence, it is rejected.

129. Rejected as subordinate except partly accepted in FOF 29.

130-133. Rejected upon the greater weight of the evidence in FOF 9, 11 and 21-29.

COPIES FURNISHED:

Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE,

CAROTHERS & PROCTOR

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302

John T. Brennan, Jr., Esquire BONNER & O'CONNEL

900 17th Street, N.W. Washington, D.C. 20006

James C. Hauser, Esquire Joy Heath Thomas, Esquire

MESSER, VICKERS, CAPARELLO, FRENCH & MADSEN

215 South Monroe Street Post Office Box 1876 Tallahassee, Florida 32302

Fred W Baggett, Esquire Stephen A. Ecenia, Esquire

ROBERTS, BAGGETT, LaFACE & RICHARD

101 East College Avenue Tallahassee, Florida 32301

Lesley Mendelson, Esquire Assistant General Counsel

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Sam Power, Agency Clerk

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Gregory L. Coler, Secretary

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Docket for Case No: 87-002037

Orders for Case No: 87-002037