STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OSCEOLA HEALTH CARE, LTD., d/b/a ) OSCEOLA HEALTH CARE CENTER, et al., )

)

Petitioners, )

)

vs. ) CASE NOS. 94-6250

) 94-6252

AGENCY FOR HEALTH ) 94-6912

CARE ADMINISTRATION, et al., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, Don W. Davis, a duly designated Hearing Officer of the Division of Administrative Hearings, held a formal hearing in the above-styled case on November 13, through November 17, 1995, in Tallahassee, Florida.

APPEARANCES

For Petitioners Osceola Health Care Center and Southern Oaks Health Care, Inc.:

Gerald B. Sternstein, Esquire Frank P. Rainer, Esquire

Ruden, Barnett, McClosky, et al.

215 South Monroe Street, Suite 815 Tallahassee, Florida 32301

For Respondent Arbor Health Care Company:

John L. Wharton, Esquire Chris H. Bentley, Esquire Rose, Sundstrom and Bentley 2548 Blairstone Pines Drive Tallahassee, Florida 32301

For Respondent Agency for Health Care Administration:

Richard Patterson, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Building 3

Tallahassee, Florida 32308 STATEMENT OF ISSUE

The issue presented is which of three competing Certificate of Need (CON) applications should be approved for the construction of new nursing home beds in Osceola County.

PRELIMINARY STATEMENT

Arbor Health Care Company (Arbor), Osceola Health Care, Ltd. d/b/a Osceola Health Care Center (Osceola), and Southern Oaks Health Care, Inc. d/b/a the Oaks of Kissimmee (the Oaks), among others, filed applications for CON's authorizing the construction of community nursing home beds in response to established need in Agency for Health Care Administration (AHCA) District VII, consisting of Osceola County. The parties stipulated that 131 beds remain in the fixed need pool. AHCA performed a comparative review of the applications and preliminarily determined to grant the application of Arbor while denying applications of Osceola and the Oaks, among others.

Petitions filed by Osceola, the Oaks, and others requesting formal administrative proceedings were transferred to DOAH, assigned separate case numbers, and consolidated for hearing. With exception of the Petitions filed by Osceola and the Oaks, all Petitions of the consolidated cases were disposed of prior to final hearing.

By order of the undersigned dated May 21, 1996, the parties were requested to comment upon applicability of the decision in Health Care and Retirement Corporation of America, etc., v. Tarpon Springs Hospital Foundation, Inc., etc.,

So.2d , 21 FLW D828 (Fla. 1st DCA 1996), to the instant case. Upon review of the responses of the parties and the decision in Tarpon Springs, it is concluded that there is no applicability to the instant proceeding which involves competing CON applications by nursing homes for stipulated fixed need of community nursing home beds.

At final hearing, Arbor presented the testimony of Liz Dudek, an expert in health planning, the CON review process and administration and in CON law; Stephan Bricker, an expert in architecture and the design of nursing homes and nursing homes with subacute units; Donna Fitzgerald, an expert in subacute rehabilitative services and long-term care facilities; Marion Leeman, an expert in long-term care nursing and quality assurance and improvement; Joe Mitchell, an expert in accounting, generally accepted accounting principles, health care finance, health care accounting, financial feasibility of health care facilities and Medicaid and Medicare reimbursement; Bill Bryan, an expert in the design, construction and development of long-term care facilities; Dale Zaletel, an expert in the operation and administration of nursing homes including those with subacute units; and Dan Sullivan, an expert in health care planning and health care finance. Arbor offered 9 exhibits which were admitted into evidence.

Osceola presented the testimony of Keith Kreidel, an expert in nursing home administration; Sharon Walters, an expert in nursing administration and long- term care nursing; Dennis O'Keefe, an expert in nursing home project cost, project design, and architectural matters; Lynne Mulder, an expert in health care planning and administrative rules relating to the CON process; and Robert Beiseigel, an expert in health care finance and financial feasibility analysis. Osceola Exhibits 1 through 14, 17 through 19 and 21 through 23 were offered and admitted into evidence. Reserved ruling on Exhibit 15 is made at this time and admission of the exhibit is denied on the basis of relevancy.

The Oaks presented the testimony of Richard Hodder, an expert in nursing home administration; JoAnne Tufts, an expert in nursing administration and long- term care nursing; Dennis O'Keefe; Lynne Mulder; and Robert Beiseigel. Oaks' Exhibits 1 through 15, 17 through 19, and 21 through 22 were offered and admitted into evidence. Reserved ruling on Exhibit 16 is made at this time and admission of the exhibit is denied on the basis of relevancy.

AHCA adopted the testimony and exhibits of Arbor.

The parties requested and were granted leave to file posthearing submissions more than 10 days after the filing of the transcript, and in accordance with Rule 60Q-2.031, Florida Administrative Code, waived provisions of Rule 28-5.402, Florida Administrative Code.

The transcript was filed with DOAH on February 5, 1996. Proposed Recommended Orders submitted by the parties on May 1, 1996, have been considered by the undersigned and are addressed in the appendix to this Recommended Order.

FINDINGS OF FACT

Based on evidence presented, the following Findings of Fact are made:

1. AHCA is the state agency responsible for the administration of the CON program in Florida pursuant to Section 408.034, Florida Statutes.

   
   

2. After comparative review of the applications of various applicants for nursing home beds in Osceola County, AHCA noticed its intent to issue a CON to Arbor for the construction of a new 120-bed community nursing home. The proposed decision would deny a CON to the Oaks for the construction of 61 additional nursing home beds to an existing 59-bed facility and also deny a CON to Osceola for the construction of 60 additional nursing home beds to an existing 120-bed facility.

   
   

   Stipulations

   
   

   Facts set forth in paragraphs 3., through 8., below, are the subject of stipulation between the parties and are accepted in this proceeding.

   
   

3. The following sections of the three CON applications which are the subject of this proceeding are admitted into evidence without further proof or foundation witnesses:

   
   

   1. each applicant's corporate resolution;

   2. notice of publication;

   3. the page entitled "Certification of the Applicant";

   4. the page entitled "Identification of Principal Parties";

   5. pages relating to the CON remittance form and payment;

   6. all Audited Financial Statements; and

   7. the letters or resolutions of project financing.

      
      

4. The three CON applications are admitted into evidence for identification and authentication, but not for the truth of the matters asserted therein.

   
   

5. All three CON applications and corresponding letters of intent were timely received by AHCA and the local health council and all required publications occurred.

   
   

6. There is remaining a fixed numeric need for 131 nursing home beds in District VII.

7. The statutory criteria and provisions applicable to and governing this proceeding are Section 408.035(1) and Section 408.037(2), Florida Statutes. Provisions of Section 408.037(3) and (4), Florida Statutes are satisfied. Rules 59C-1.008, 59C-1.036, Florida Administrative Code, are applicable to this proceeding.

   
   

8. As to review criteria set forth in Section 408.035(1) and (2), Florida Statutes, the parties stipulated:

   
   

   1. As to subparagraph (a), there is a need for 131 remaining beds as stated in the fixed need pool. The remainder of that criterion is at issue.

   2. Subparagraphs (b), (c), (d), (i), (l), (m), (n), and (o) are in dispute.

   3. Subparagraphs (e), (f), (g), (j) and

      (k) are not applicable or not at issue.

   4. As to Section 408.035(2), Florida Statutes, subsection (b), (c) and (d) are at issue, but subsections (a) and (e) are either not applicable, not at issue, or are included within the stipulations as to section (1) above.

   5. As to subparagraph (h) in 408.035(1), Florida Statutes, the only sections of this review criteria in dispute are the availa- bility of "funds for capital and operating expenditures, for project accomplishment and operation," and "the extent to which the pro- posed services would be accessible to all residents of the service district." The remainder of (h) is either not in dispute or not applicable.

      
      

      Arbor's Proposal CON Number 7756

      
      

9. Arbor has operated in the State of Florida since August 6, 1985, and currently owns and operates ten nursing homes in Florida.

   
   

10. Arbor maintains a corporate structure which devotes substantial financial, manpower and other resources to its individual nursing homes. The individual nursing homes are directed by well-established, centralized corporate policies in the areas of finance, quality of care, quality assurance, prototype services, structural design, subacute services, and all areas of nursing home operations. Arbor has in place extensive dietary mechanisms and procedures to serve the nutritional needs of its residents.

    
    

11. Arbor provides pharmaceutical, nutritional support, and medical supply support to its facilities through wholly-owned subsidiaries.

    
    

12. Arbor has extensive in-house design and construction capabilities and employs architects, engineers, interior designers, health planners, real estate selection and zoning experts, and estimators.

    
    

13. Arbor also has in place extensive mental health programs with regard to persons suffering from Alzheimer's or related dementia.

14. Arbor's application proposes a 120-bed nursing home in Osceola County, Florida. Arbor's proposal includes a specified commitment to an 18-bed subacute unit, one bed dedicated to pediatric patients, one bed dedicated to AID's patients, one bed dedicated to hospice care, one bed dedicated to respite care, the establishment of an inpatient and outpatient rehabilitation program and mental health program, and a minimum of 72 percent of its total annual patient days provided to Medicaid patients.

    
    

    The Oaks Proposal, CON Number 7770

    
    

15. The Oaks, located in Osceola County, is a 59-bed existing facility which was built in 1971. It has historically experienced a high (approximately

    90 plus percent) occupancy rate and is the oldest facility of its kind in Osceola County. The Oaks' facility is located downtown in the City of Kissimmee, landlocked in an urban setting.

    
    

16. The Oaks proposes a 61-bed addition which would include a cognitive behavioral disorders unit. The Oaks' application was conditioned for 71.6 percent Medicaid patient days. The application did not condition the specific number of beds for the cognitive behavioral disorders unit.

    
    

    Osceola's Proposal, CON Number 7769

    
    

17. Osceola operates a 120-bed home in St. Cloud, Florida. Located on a five acre site encompassing numerous trees and grassy areas, Osceola proposes the addition of 60 nursing home beds to its existing facility.

    
    

18. While the application of Osceola agreed to a condition of 71.6 percent Medicaid and a condition for a Medicare/oncology and Alzheimer's/dementia special care units, Osceola did not specifically condition the CON for a specific number of beds in either unit.

    
    

19. The Osceola facility was originally constructed pursuant to a CON obtained by Arbor. Arbor then sold the facility to Osceola.

    
    

    ALLOCATION FACTORS

    
    

    Relationship to District and State Health Plans Section 408.035(1)(a), Florida Statutes

    
    

    District Health Plan

    
    

20. The District VII local health plan contains three allocation factors to be used in the evaluation of community nursing home applications.

    
    

21. Factor I of the local health plan gives preference to applicants proposing to locate beds in designated zip codes in Orange County. This factor is not applicable to any of the three applicants because these applications are for Osceola County.

    
    

22. Factor II gives preference to applicants proposing services for a newborn or pediatric population. Neither Osceola nor Oaks proposes services for newborns or pediatric patients and therefore do not receive preference under this factor. Arbor is committed to a condition for the reservation of one bed for pediatric patients and has described the types of patients it expects to

    serve and the sources from which it expects to receive pediatric referrals. Arbor qualifies for preference under this factor.

    
    

23. Factor III gives preference to applicants who propose the development of a specific specialty service (e.g., medically complex, psychiatric disorders, AIDS/HIV positive) or commit to work with an existing provider of specialty services. Arbor has conditioned its application on the provision of several specialty services that are not readily available to residents of Osceola County, including a specialized subacute care unit, respite care, hospice care, services to AIDS patients and pediatric patients, and mental health/dementia programs. Arbor qualifies for priority under this factor.

    
    

24. Neither the Oaks nor Osceola's applications met the preferences in the local health plan.

    
    

    State Health Plan

    
    

25. The Florida state health plan contains 12 allocation factors for reviewing CON applications for community nursing home beds.

    
    

26. Factor I provides a preference for applicants proposing to locate in subdistricts with occupancy rates exceeding 90 percent. Osceola County's historical and current occupancy rates exceed 90 percent occupancy. All applicants qualify for preference under this factor.

    
    

27. Factor II provides a preference for applicants who propose to serve Medicaid patients in proportion to the average subdistrict-wide percentage of nursing homes. All applicants meet this preferential requirement.

    
    

28. Factor III provides preference to applicants proposing specialized services to special care residents including AIDS, Alzheimer's, and mentally ill residents. Arbor has conditioned its application on the provision of several specialty services that are not readily available to residents of Osceola County, including a specialized subacute care unit, respite care, hospice care, services to AIDS patients and pediatric patients, and mental health/dementia programs. Arbor qualifies for priority under this factor.

    
    

29. Neither the Oaks nor Osceola have clearly defined the special programs that they would offer in their respective facilities, the number of beds those programs would offer, nor the need for these services. Oaks and Osceola are not consistent with Factor III and should not receive preference.

    
    

30. Factor IV provides preference to applicants proposing a continuum of services. While all applicants meet this preference in degree, none offer adult day care. All propose to offer respite care. On balance, Arbor proposes to offer a multi-level continuum of services, inclusive of respite care, general and restorative nursing care, specialized subacute care, other less intensive levels of subacute care, and should receive preference.

    
    

31. Factor V provides preference to applicants proposing facilities that provide maximum resident comfort and quality of care. Innovative quality of life features that minimize institutional appearances and create a residential- style environment qualify Arbor for priority under this factor.

    
    

32. The sixth state health plan allocation factor provides preference to applicants proposing innovative therapeutic programs that enhance residents' physical and mental functional level and that emphasize restorative care. Arbor

    presents plans to implement such activities that will contribute to enhancement of residents' physical and mental functioning. Multiple levels of rehabilitative services will be offered to provide support and restorative assistance to residents. Arbor qualifies for priority under this factor.

    
    

33. A preference is accorded by Factor VII to applicants proposing charges that do not exceed the highest Medicaid per diem rate in the subdistrict. Arbor's charges will exceed the highest Medicaid per diem rate in the subdistrict. The Oaks and Osceola will not exceed the highest rate and receive preference under this factor.

    
    

34. All applicants receive preference under Factor VIII for a history of providing superior resident care in existing facilities in Florida and other states. Both Osceola and the Oaks have consistent histories of superior care. Arbor seeks and obtains accreditation from the Joint Commission for the Accreditation of Healthcare Organizations (JCAHO) for its facilities and its subacute programs, implements patient care strategies which are attentive to the individual needs of the residents, provides innovative approaches to high quality of care.

    
    

35. Factor IX provides preferences to applicants proposing staffing levels which exceed the minimum staffing standards contained in licensure administrative rules. All applicants' propose staffing ratios that exceed minimum staffing ratios under the licensure rules.

    
    

36. Factor X provides preference to applicants who will use professionals from a variety of disciplines to meet the residents' needs for social services, special therapies, nutrition, recreation activities, and spiritual guidance. All applicants meet requirements for this preference.

    
    

37. Factor XI provides preference to applicants who document how they will ensure residents' rights and privacy, if they use resident council, and if they plan to implement a well-designed quality assurance and discharge planning program. All applicants meet requirements for this preference through existing programs or, as regards Arbor, have adequately documented plans to protect residents' rights and privacy, inclusive of a residents' council and provision of an effective discharge planning program.

    
    

38. Factor XII provides a preference to applicants proposing lower administrative costs and higher resident care costs compared to the average nursing home in the district. Osceola does not meet this preference. The Oaks and Arbor qualify for the preference. Arbor proposes higher resident care costs than the district average consistent with this preference. The proposed administrative costs are higher than the district average; however, these administrative costs are explained and justified by the higher acuity subacute services proposed by Arbor, which require coordination of an interdisciplinary team to provide necessary treatments. Arbor best qualifies for priority under this factor.

    
    

    Statutory Review Criteria:

    
    

    Section 408.035(1)(b): The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, inad- equacy of like and existing health care ser- vices and hospices in the service district

    of the applicant.

    Arbor's Subacute Facility

    
    

39. Subacute services, as defined within Arbor's application, by expert witnesses, and by JCAHO, are a level of care that is higher than that which nursing homes traditionally provide in skilled and general beds but which are below the level of acute care provided in a hospital. Evolution of these services results from pressure by third party payors to discharge patients from hospitals as soon as they no longer need a hospital's high intensity acute care. Selective services are provided by some nursing homes on a subacute basis with concomitant higher staffing, more expensive and sophisticated equipment, and other facilities and capabilities not traditionally available in a nursing home.

    
    

40. Arbor proposes provision of subacute services, delivered through an interdisciplinary team to patients with complex medical problems and involving application of a higher intensity of treatments and services than have historically been provided within nursing homes.

    
    

41. Lynne Mulder, an expert planner for the Petitioners declined to opine whether the subacute beds proposed by Arbor were not needed in Osceola County. Daniel J. Sullivan, expert planner presented by Arbor, ventured the opinion that the eighteen subacute care beds which Arbor proposes to construct in its dedicated subacute unit were needed in Osceola County. Sullivan based his opinion on a subacute need methodology developed by Arbor and his independent analysis to determine the need for subacute beds in Osceola County.

    
    

42. Subacute care, by definition and as it is rendered in Arbor's existing facilities, is high-intensity medical care given to patients sometimes having multi-system failure that requires medical direction, physician intervention, specialized therapies and nursing care at a higher level than traditional skilled care. Arbor's subacute units can and do routinely provide the type of oncology services which Osceola has proposed to provide in its dedicated unit.

    
    

43. Arbor entered the emerging subacute market in 1988, and operates one total subacute facility. Additionally, there are subacute units included in all Arbor facilities approved and under construction in Florida. Arbor also operates 22 subacute units in existing facilities.

    
    

44. Arbor's proposed subacute unit is an integral part of Arbor's continuum of care. On one side of the proposed facility, is a 60-bed unit which would render services considered to be traditional nursing home care. The other side of Arbor's building is a 60-bed unit encompassing its skilled and subacute wing. Within that wing is the proposed location of an 18-bed specialized subacute unit which will render high intensity services for medically complex patients and 42 additional skilled nursing home beds for patients who range in multiple levels of acuity.

    
    

45. The subacute wing of Arbor's facilities are specifically designed for the provision of such services with larger rooms which accommodate different types of additional equipment, have medical gas outlets, accommodate different power and lighting requirements, and have bathrooms which are designed for the provision of subacute services to patients.

    
    

46. JCAHO, the nationally recognized organization which establishes standards of care for various health care industries, implemented its accreditation program specifically for subacute care in January of 1995. This

    accreditation process involves review by JCAHO of facility staffing, the physical plant, "self-definition" of subacute, care plans, and organizational structure. Arbor's Bayonet Point facility was the first facility in Florida to receive JCAHO subacute accreditation. Presently only four facilities in Florida have been accredited by JCAHO for the provision of subacute care and two of those facilities are Arbor facilities.

    
    

    Osceola's Alzheimer's Unit and Oncology Unit

    
    

47. Osceola has proposed an Alzheimer's unit and an Medicare/oncology unit as a portion of its proposed 60-bed addition.

    
    

48. Osceola's application failed to "condition" its proposed unit to a specific number of dedicated Alzheimer's beds. As a consequence, AHCA did not accord Osceola preference under the specialized services provision of the applicable local health plan.

    
    

49. Osceola already has a condition for its existing facility which requires a 16-bed Alzheimer's unit, notwithstanding that Osceola's administrator admits to not having any experience in operating an Alzheimer's or dementia unit; admits that the Alzheimer's patients at the facility are currently mainstreamed; and admits that the facility does not currently have an Alzheimer's unit. Notably, the administrator stated there were no conditions of which he was aware other than specified Medicaid percentages which were applicable to the facility.

    
    

50. Neither of Osceola's two expert operations witnesses, the facility's administrator and the facility's Director of Nursing, have experience in a facility operating a separate Alzheimer's unit.

    
    

51. As established by testimony of Mulder, Osceola or any other nursing home in Osceola County, could construct and implement such an unit within its existing facility without a CON.

    
    

52. A special Alzheimer's unit, however, is not required to provide superior care to persons suffering from Alzheimer's or related dementia. As established by testimony of Marion Leeman, Arbor's expert witness in long-term care nursing, quality assurance and improvement, such specialized units are unnecessary to provide a good quality of care to such individuals.

    
    

53. Persons in Osceola's existing facility who suffer from Alzheimer's receive superior or excellent care. Forty to forty-five percent of Osceola's existing patients currently have Alzheimer's or some form of dementia and are mainstreamed with the facility's general population.

    
    

54. As acknowledged by Osceola's expert planner, Lynne Mulder, the literature on separate Alzheimer's units presents arguments on both sides as to the benefit of such units. Mulder also acknowledged that research on the benefits of such units is currently inconclusive.

    
    

55. Mulder also acknowledged that the type of training, staffing, and expertise which the application states Osceola will use in its proposed unit could be implemented in any facility without a dedicated unit. Further, she did not believe that Arbor's application was somehow negative or inferior because it does not propose a special Alzheimer's unit.

56. Marion Leeman, Arbor's expert who has had experience working in facilities and for entities which both "mainstream" Alzheimer's patients and which operate secured units, opined that Arbor will offer all the services in its facilities that Osceola's witnesses had testified would be offered in its proposed "locked" unit since Arbor provides extensive resources including, but not limited to, programmatic, staffing, and selectivity in hiring with regard to the treatment of persons with Alzheimer's or related dementias.

    
    

57. Osceola did not establish what types of patients would go into its proposed dementia/Alzheimer's unit. Osceola's planner opined that "there is a place for mainstreaming and there is a place for a special care unit. They serve different types of residents at different stages of the disease." Although Osceola has not yet developed the admission criteria for the Alzheimer's unit, the testimony of Sharon Walter, an expert for Osceola, establishes that it is not the intent of Osceola that all Alzheimer's patients would go into the Alzheimer's unit. Osceola has failed to demonstrate that its proposed dedicated Alzheimer's unit is needed in Osceola County.

    
    

58. Osceola also proposed an oncology unit as a portion of its proposed 60-bed addition, but failed to "condition" its proposed unit to a specific number of dedicated oncology beds. As a result, Osceola was not accorded preference under the specialized services provision of the applicable local health plan. Osceola could provide oncology services in the present facility's subacute unit in accordance with current CON conditions, but, despite existence of the condition, does not.

    
    

59. Osceola's oncology unit is a proposal without a documented track record although Osceola has treated oncology patients in the past without a special unit. Notably, with the exception that there will not be any persons in the oncology unit whose primary payor source is Medicaid (at the present rates), admission criteria for the oncology unit is not yet firmly established. Based on testimony of Osceola's administrator, it is uncertain whether other types of patients would go into the "oncology unit" if those beds were unoccupied. Both the administrator and Osceola's planner professed a lack of knowledge of a nursing home having an oncology unit.

    
    

60. Oncology services are subacute services. A subacute unit, with proper training and staff, could offer all the same advantages as an oncology unit.

    The oncology unit proposed by Osceola would provide oncology services, for which Osceola is already conditioned, in a subacute unit.

    
    

61. Osceola currently provides excellent and superior care to cancer patients without a dedicated oncology unit. Osceola, and any other nursing home in Osceola County, could implement an oncology unit without a separate CON. All the services Osceola proposes to provide in its oncology unit could be provided in Arbor's skilled or subacute wing. At present, Arbor has numerous patients receiving oncology-type services in the subacute units in its present facilities.

    
    

62. Osceola has failed to prove a need for the oncology unit proposed in its application. Lynne Mulder, testifying on behalf of Osceola, acknowledged that there was no formula she could utilize to determine the need for oncology beds. The oncology need analysis presented in Osceola's application is not a reasonable basis for projecting need for an oncology unit.

    The Oaks' Cognitive and Behavioral Disorders Unit

    
    

63. As previously noted, the Oaks' application failed to "condition" its proposed cognitive and behavioral disorder unit (CBDU) to a specific number of dedicated beds, and consequently is not accorded preference under the specialized services provision of the applicable local health plan.

    
    

64. While the specific number of beds was not conditioned by the applicant, the Oaks' CBDU would utilize approximately 32 beds. Residents of the unit would be those persons with behavioral problems resulting from either psychological difficulties or organic brain disease.

    
    

65. The Oaks has failed to demonstrate that the services it proposes to provide in its CBDU are either needed or, in the alternative, could not be provided in the Oaks' existing facility. The Oaks' administrator currently has twenty-six persons in his facility who have behavioral disorders (twelve of whom he believed to be appropriate for placement in the proposed unit). All of these persons are receiving superior care. The facility could implement the same types of activities, the same staffing levels, and the same types of training that are proposed without the construction of a special unit. The most significant difference between the way the facility renders the services now and the way the services would be rendered in its proposed unit is that the proposed unit is a "locked" unit.

    
    

66. The Oaks' admissions criteria to the proposed unit is also confusing. Certain persons with Alzheimer's might be appropriate for admission into the CBDU while other persons with Alzheimer's might not. Certain persons with cognitive disorders might remain in the nursing home population at large even after the unit was opened. Persons in the CBDU might be as young as eighteen, despite the facility's Director of Nursing having significant concerns about persons younger than thirty-five being placed into the unit.

    
    

67. The needs of the twelve persons currently in the Oaks' population who would be appropriate for placement on the CBDU are currently being met. In addition to responding to needs of Osceola County, the unit will draw from outside the subdistrict, including from Orange County, areas as far out as Tampa and Melbourne, and also to the south of Osceola County.

    
    

68. The primary focus of the unit would be upon those persons with a primary diagnosis of a psychiatric disorder. There is a psychiatric hospital only a block and a half away from the Oaks' facility. The proposed CBDU would treat the same population as a psychiatric hospital except the patients would have "medical issues."

    
    

69. Under AHCA regulations, a psychiatric hospital should admit someone with a primary diagnosis of schizophrenia or a primary diagnosis of manic depression or a primary diagnosis of anxiety disorder. There are significant concerns with the appropriateness of placing patients in a nursing home who have a principal psychiatric diagnosis. The Oaks' application is inconsistent as to exactly what types of proposed services would be offered in their CBDU.

    
    

70. The Oaks' planner acknowledged that there was no established admissions criteria and no existing database to reveal the bed need for cognitively impaired patients in Osceola County outside of the general nursing home bed need. Almost every nursing home has patients with some form of a cognitive disorder.

    Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care.

    
    

71. Osceola is a superior-rated facility, but is not JCAHO accredited. This applicant's ability to provide quality of care is related to its management contract with National Health Care. If NHC ceased to manage the facility, it is possible that the personnel and resources which comprise Osceola's quality of care mechanisms could be removed.

    
    

72. The Oaks is also a superior-rated facility. It is a facility that is old and needs to be remodeled. The patient mix at present is 100 percent Medicaid.

    
    

73. Arbor has a history of providing superior quality of care in its facilities. The majority of Arbor's facilities which are eligible for a superior rating (several are too new to be eligible for a superior rating) have a superior rating from the State of Florida.

    
    

74. Arbor has obtained accreditation for its facilities from JCAHO, a private non-profit organization which sets standards for health care facilities, which is the highest level of accreditation achievable.

    
    

75. Arbor's quality improvement program, "CORE" program, and dietary programs ensure a high quality of care in Arbor's facilities. Additionally, Arbor provides an excellent quality of care to persons suffering from dementia or Alzheimer's and has special training, special programs, and special activities in place to assure that these residents receive superior care. Arbor also has in place extensive mental health programs and quality assurance mechanisms to further ensure that residents in Arbor's facilities receive the best possible care.

    
    

    Section 408.035(1)(d): The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as outpatient care and ambulatory or home care services, which may serve as alternatives for the health care facilities and services to be provided by the applicant.

    
    

76. Other health care facilities available to provide the subacute services Arbor has proposed are highly utilized. There is little flexibility left in the utilization of existing subacute beds. Based on testimony of Arbor's expert, Daniel Sullivan, absent the approval of the Arbor project there would be significant problems for patients in accessing those services in Osceola County.

    
    

77. Conversely, availability or adequacy of other health care facilities with regard to the proposed services of the Oaks and Osceola applications presently exists. The Oaks and Osceola propose additions to existing facilities. The existing facilities of the Petitioners may be upgraded without obtaining a CON or significant new construction to provide the specialty services which both applicants propose.

    
    

78. The Oaks proposes the construction of a CBDU. The Oaks is, however, currently serving persons who would be appropriate for placement in the unit and

    those persons are receiving superior care. The facility currently has planned programs for people with cognitive or behavioral disorders. The Oaks could, in its present facility, implement the same types of activities, the same staffing levels, and the same types of training which the proposed unit would provide.

    If need were established, the Oaks could be even awarded beds for a CBDU outside of the fixed need pool, given the proper application.

    
    

79. Likewise, the existing facility which Osceola operates is available and adequate to provide the special programs proposed by Osceola's application. Osceola proposes an Alzheimer's unit. Osceola currently services Alzheimer's patients, "mainstreams" them, and they currently receive superior care in the facility. Osceola's expert planner acknowledged that the type of training, staffing and expertise its application proposes for its proposed unit could be implemented in a facility without a dedicated unit, and that Osceola's proposed Alzheimer's unit could be put into place in its existing facility without a CON.

    
    

80. Osceola also proposes an oncology unit in its applied-for addition. Osceola treats oncology patients now without a special unit and provides excellent and superior care to those patients. Any additional services sought to be provided in the proposed oncology unit could be provided now without such a unit. Osceola's expert planner acknowledged that the oncology unit could be implemented in its existing facility without a CON.

    
    

81. The existing facilities of the Oaks and Osceola are available and adequate to provide the specialized services proposed in their applications. There are no other health care facilities which are available or adequate to provide the specialized subacute services which Arbor proposes to provide in Osceola County.

    
    

    Section 408.035(1)(h) and (i): The avail- ability of resources, including . . . funds for capital and operating expenditures for project accomplishment and operation . . . Immediate and long term financial feasibility of the proposal.

    
    

82. Robert Beiseigel, a financial expert, testified on behalf of both Petitioners' in an attempt to establish that Arbor had omitted certain projects from Schedule 2 of its application. That testimony is not credited because the rule establishing the reporting date for capital expenditures which were planned or pending had recently changed. Beiseigel acknowledged that as to each and every capital project which he contended was omitted from Schedule 2, he had no personal knowledge as to any aspect of the transaction or the timing of the transaction as of the effective reporting date.

    
    

83. Testimony of Arbor's financial expert, Joseph D. Mitchell, establishes that Schedule 2 of the Arbor application is accurate, Arbor's project is feasible both in the short-term and in the long-term, and Arbor has the financial strength to accomplish the project. Mitchell, a certified public accountant who represents 150 long-term care facilities, was formerly a C.P.A. on staff for the CON office and has been qualified as an expert 30-35 times. He testified that he personally reviewed the pertinent documents pertaining to the transactions referenced by Beiseigel and that none were transactions which were required to be included on Schedule 2. In Mitchell's opinion, Schedule 2 of Arbor's application was actually overstated by 17 million dollars.

84. As established by testimony of Arbor's health care finance expert, Daniel J. Sullivan, the Oaks' project will not be financially feasible in the short-term and fails to demonstrate immediate financial feasibility. Based on Sullivan's opinion, the Oaks cannot provide the financing it anticipates obtaining based on its financial statements. The source for approximately 400,000 dollars in funding is not indicated in the Oaks' application.

    
    

    Sections 408.035(1)(l) and (m): Impact of the project on cost of health services; cost effectiveness; construction costs.

    
    

85. Petitioners presented no evidence as to the impacts their proposed services would have upon the costs of providing health care services in Osceola County. On the other hand, Arbor demonstrated that its subacute unit would provide services which might otherwise be provided in the acute care setting with a resulting savings of 30 percent to 60 percent to the health care delivery system.

    
    

86. Four of the eight nursing homes in Osceola County, including the two Petitioners, are under common ownership, through the person of Mr. Michael Siemer and/or corporations he owns and controls. The health care market in Osceola County will benefit by the approval of Arbor's application, a competitive alternative to a further concentration of ownership of nursing home beds under one owner in Osceola County.

    
    

87. Arbor's facility was designed by an architect who is an expert in not only architecture and the design of nursing homes, but also specifically in the design of nursing homes with subacute units. Arbor's proposed building was designed for eighteen subacute beds and specifically incorporates several design features for the provision of subacute services.

    
    

88. Arbor has in-house certified architects, computer-aided designers, individuals with degrees in design, project managers who are also Florida general contractors, three superintendents, one of who is a Florida general contractor, purchasing managers and licensed interior designers.

    
    

89. Arbor's cost is below the median cost for comparable facilities primarily as the result of cost effectiveness due to having in-house architecture and construction capabilities. Testimony of Dennis O'Keefe, architectural expert for Petitioners, that Arbor's project cost per square foot was understated is not credited in view of his lack of personal knowledge or factual information as to Arbor's construction cost per gross square foot on any recent projects and his lack of any firsthand knowledge regarding whether Arbor has ever failed to construct a project for the cost projected in its CON application.

    
    

90. In the past, Arbor has passed 100 percent of its final AHCA inspections and is currently achieving projected costs in current construction projects.

    
    

91. Operationally, Arbor's buildings are very efficient and provide ample space and sufficient layout for Arbor to render the services which it proposes in its application.

    
    

92. As established by testimony of William P. Bryant, Arbor's expert in the design, construction and development of long-term care facilities, total project cost for the Oaks', projected in the Oaks' application to be more

    expensive per square foot than Arbor's projected total project cost, was understated by 520,000 to 525,000 dollars. Osceola also proposes a significantly higher cost per square foot than does Arbor.

    
    

93. Arbor does not own or operate a facility in Osceola County. There is no alternative to new construction for the services Arbor proposes to provide.

    
    

94. With regard to applications of Petitioners, Osceola and the Oaks could implement the same types of activities, the same staffing levels, and the same types of training they propose to provide in their dedicated units without the necessity of construction. The services proposed by Osceola in its two dedicated units (oncology and Alzheimer's) are not only provided in the facility currently, but could be provided in the facility (with or without a dedicated unit) without a CON. Likewise, the services which the Oaks proposes to provide in its CBDU are currently provided in the facility and could also be provided in the facility (with or without a dedicated unit) without a CON.

    
    

95. The Oaks ownership has conceded in the past the questionability of attempting to renovate the existing facility. Previously, the Oaks' ownership combined a 60 bed CON award for the Oaks with another 60 bed CON to construct an entirely new facility, stating in that application that the construction of a new facility made more sense in view of the land-locked site and current condition of the Oaks.

    
    

    Section 408.035(1)(n): The applicant's past and proposed provision of health care services

    to Medicaid patients and the medically indigent.

    
    

96. Arbor's application is specifically conditioned for the provision of

    .20 percent of all patient days for charity care patients and 72 percent of all patient days for Medicaid patients.

    
    

97. Osceola's current facility is subject to a Medicaid condition of 33 percent. In the application currently under consideration, Osceola commits to a Medicaid condition of 71.6 percent.

    
    

98. Osceola's planner, Lynne Mulder, speculated at hearing that Arbor would not meet its Medicaid condition. Mulder did not have any personal knowledge whether any Arbor facility is presently out of compliance with its Medicaid conditions and did not have an opinion on whether Arbor has made a sufficient corporate commitment to meet the conditions for service to Medicaid patients agreed to in its application. Mulder's opinion that Arbor's will not meet its Medicaid condition of 72 percent is not credited.

    
    

99. Similarly, Robert Beiseigel's testimony that Arbor would fail to meet its Medicaid percentage in order to obtain certain profit margins cannot be credited in view of his inability to demonstrate that Arbor has turned away any Medicaid patients; his lack of personal knowledge as to the margin that Arbor "expects" from any specific facility; and his lack of personal knowledge of any pending modification requests for Medicaid conditions by Arbor on any current CONs. He acknowledged that Osceola County has a higher subdistrict Medicaid occupancy than any subdistrict where Arbor has a facility.

    
    

100. The Chief of the CON and Budget Review sections of AHCA is familiar with Arbor and its operations and did not have any concerns that Arbor would not live up to CON; certifies that Arbor has no pending requests for modification

     for any CON conditions; and is aware that Arbor has withdrawn one previous modification request.

     
     

101. Arbor will certify 100 percent of its beds for Medicaid and will render skilled nursing services to Medicaid patients within the skilled and subacute side of its facilities. Subacute services will be provided to Medicaid patients within its specialized subacute units.

     
     

     Section 408.035(1)(o): The applicant's past and proposed provision of services which promote a continuum of care in a multilevel health care system.

     
     

102. While all applicants meet this criterion the evidence presented best establishes Arbor's claim to a continuum of care within its proposed facility through the interaction of health care professionals in a multilevel health care system. The Oaks and Osceola proposals do not promote a continuum of care to the extent proposed by Arbor.

     
     

     Section 408.035(2)(b): Whether existing inpatient facilities providing inpatient services similar to those being proposed are being used in an appropriate and efficient manner.

     
     

103. The parties have stipulated to the existence of the bed need at issue in this proceeding. The evidence also reflects that the existing facilities in the district are operating at, or near, capacity, and are being used in an appropriate and efficient manner.

     
     

     Section 408.035(2)(c): In the case of new construction, the alternatives to new const- ruction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable.

     
     

104. In consideration of this criterion, the evidence discloses that alternatives to new construction in the form of sharing arrangements are not existent with regard to the Oaks. Further, modernization of that facility is definitely needed.

     
     

     Section 408.035(2)(d): That patients will experience serious problems in obtaining in- patient care of the type proposed, in the absence of the proposed new service.

     
     

105. As previously noted, there is a growing emphasis by third party payors for the provision of inpatient subacute care in non-hospital settings. This phenomena and the stipulation to the need for the beds at issue in this proceeding, inferentially indicate that serious problems in obtaining subacute services will occur if that need is not met. Of the proposals presented, the Arbor proposal appears best suited at this time to meet that need.

     CONCLUSIONS OF LAW

     
     

106. The Division of Administrative Hearings has jurisdiction over this subject matter and the parties to this action pursuant to Sections 120.57(1) and 408.039(5), Florida Statutes.

     
     

107. In accordance with the stipulation of the parties, the criteria set out in Section 408.035(1), Florida Statutes and Rules 59C-1.036 and 59C-1.008, Florida Administrative Code, must be considered in comparatively reviewing the CON applications at issue in this case. Each applicant has the burden of demonstrating its entitlement to the CON, Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 475 So. 2d 260 (Fla. 1st DCA 1985), and a balanced consideration must be made of each applicant in light of all of the matters specified in the relevant criteria. Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So. 2d 889 (Fla. 1st DCA 1985); Department of Health and Rehabilitative Services v. Johnson and Johnson,

     447 So. 2d 361, 363 (Fla. 1st DCA 1984). Varying weight must be accorded each criterion depending on the facts and circumstances of each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So. 2d 83 (Fla. 1st DCA 1985).

     
     

108. Based upon the evidence presented at final hearing, Arbor's application best meets review criteria. On balance, its application is superior to the applications of Osceola and the Oaks. Arbor's application should therefore be approved.

RECOMMENDATION

Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED:

1. That AHCA issue CON Number 7765 to Arbor Health Care Company, reflecting those conditions agreed to by Arbor in its application.

   
   

2. That AHCA deny CON Number 7769 to Osceola Health Care, Ltd. d/b/a Osceola Health Care Center and deny CON Number 7770 to Southern Oaks Healthcare, Inc. d/b/a the Oaks of Kissimmee.

DONE and ENTERED this 17th day of June, 1996, in Tallahassee, Leon County, Florida.

DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 17th day of June, 1996.

APPENDIX CASE NOS. 94-6250, 94-6252 and 94-6912

The following documents my rulings on proposed findings of fact submitted by the parties.

Respondents' Proposed Findings 1.-11. Accepted.

1. Accepted, except for last sentence.

2. Rejected, unnecessary to result. 14.-16. Accepted.

1. Accepted, except for last sentence.

2. Accepted.

19.-20. Rejected, subordinate to HO findings. 22.-24. Accepted.

25. Rejected, subordinate to HO findings. 26.-33. Accepted.

34. Rejected, subordinate to HO findings. 35.-38. Accepted.

39.-40. Rejected, subordinate to HO findings. 41.-44. Accepted.

45.-51. Accepted, subject to comprehensive restatement. 52.-63. Accepted.

64.-69. Rejected, subordinate to HO findings.

70. Rejected, no record citation.

71.-75. Accepted, subject to substantial restatement. 76.-82. Rejected, subordinate to HO findings.

83.-89. Accepted.

1. Rejected, redundant.

2. Rejected, argument.

92.-98. Adopted. Osceola's Proposed findings

41. Incorporated by reference.

42.-47. Rejected, subordinate to HO findings. 48.-50. Accepted.

51.-64. Rejected, subordinate to HO findings. 65.-68. Accepted.

69.-81. Rejected, subordinate to HO findings.

82. Rejected, credibility.

83.-93. Rejected, subordinate to HO findings.

94. Accepted, except for last sentence, speculative. 95.-96. Rejected, weight of the evidence.

97.-98. Rejected, subordinate to HO findings.

1. Rejected, no record citation.

2. Rejected, subordinate to HO findings.

3. Rejected, procedurally improper and subordinate.

Southern Oaks' Proposed Findings

1.-2. Accepted.

1. Rejected, subordinate to HO findings.

2. Accepted.

5.-7. Rejected, subordinate.

8. Rejected, relevance, legal conclusion. 9.-12. Accepted.

13.-15. Rejected, subordinate.

16.-18. Accepted.

1. Rejected, subordinate.

2. Accepted.

3. Rejected, subordinate.

4. Accepted.

5. Rejected, subordinate.

6. Incorporated by reference. 25.-26. Rejected, subordinate.

27.-28. Accepted.

1. Rejected, subordinate.

2. Accepted.

31.-32. Rejected, subordinate.

33.-35. Accepted.

36. Rejected, subordinate. 37.-43. Accepted.

44. Rejected, subordinate. 45.-46. Accepted.

47.-64. Rejected, subordinate.

65. Accepted.

66.-69. Rejected, subordinate.

70.-73. Accepted.

74.-77. Rejected, subordinate.

78. Accepted.

79.-103. Rejected, subordinate.

104. Accepted.

105.-118. Rejected, subordinate.

119. Accepted.

120.-123. Rejected, subordinate.

1. Rejected, weight of the evidence.

2. Accepted.

126.-127. Rejected, unnecessary to result. 128.-129. Rejected, weight of the evidence. 130.-131. Accepted.

132.-141. Rejected, subordinate.

COPIES FURNISHED:

Richard Patterson, Esquire Agency for Health

Care Administration

2727 Mahan Drive, Building 3

Tallahassee, Florida 32308

Gerald B. Sternstein, Esquire Ruden Barnett, et al.

Suite 815

215 South Monroe Street Tallahassee, Florida 32302

John L. Wharton, Esquire Chris H. Bentley, Esquire Rose, Sundstrom & Bentley 2548 Blairstone Pines Drive Tallahassee, Florida 32301

R. Sam Power, Clerk Agency for Health

Care Administration Building 3, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308

Douglas M. Cook, Director Agency for Health

Care Administration 2727 Mahan Drive

Tallahassee, Florida 32308

Jerome W. Hoffman, General Counsel Agency for Health

Care Administration 2727 Mahan Drive

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

================================================================= AGENCY FINAL ORDER

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

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

OSCEOLA HEALTHCARE, LTD. and SOUTHERN OAKS HEALTH CARE, INC.,

Petitioners,

CASE NO.: 94-6250

vs. 94-6252

94-6912

STATE OF FLORIDA, AGENCY FOR CON NO.: 7769, 7770, 7765 HEALTH CARE ADMINISTRATION and RENDITION NO:

ARBOR HEALTH CARE COMPANY, AHCA-96-1065-FOF-CON

Respondents.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Agency for Health Care Administration (AHCA). The Recommended Order entered June 17, 1996, by Hearing Officer Don W. Davis is incorporated by reference.

RULING ON EXCEPTIONS FILED BY SOUTHERN OAKS AND OSCEOLA

Southern Oaks and Osceola (Petitioners) filed Joint Exceptions and Arbor filed a Response to the Joint Exceptions. The Petitioners challenge most if not all of the hearing officer's findings adverse to the Petitioners. I concur with Arbor that the Petitioners essentially seek to "retry" the case in that they restate many of the arguments the Petitioners made in their Proposed Recommended Orders and ask the agency to reweigh conflicting evidence. It is fundamental that the agency has no authority to reweigh the evidence and has no authority to make supplemental findings of fact. Heifetz vs. Department of Business Regulation, 475 So2d 1277, 1281 (Fla. 1st DCA 1985)(Agency may not reweigh the evidence); Friends of Children vs. Department of Health and Rehabilitative Services, 504 So2d 1345 (Fla. 1st DCA 1987)(Agency may not make supplemental findings of fact); Britt vs. Department of Professional Regulation 492 So2d 697 (Fla. 1st DCA 1986)(No error to not explicitly address exceptions which merely reiterated what was asserted before the hearing officer and addressed by the hearing officer).

The Petitioners except to paragraphs 16,18, 23, 24, 28, 29, 30, 32, 48, 58, 63, and 65 to the extent that the hearing officer gave no preference to their proposals for special programs because they did not specify on the "conditions page" the number of beds to be dedicated to the special programs. The Petitioner's cite Beverly vs. Agency for Health Care Administration, 17 FALR

3569 (AHCA 9113195) which held that the agency has the authority to condition a CON approval on any expression of intent in an application. It is noted that the hearing officer did not state that his recommendations were based on whether the Petitioners made a commitment on any particular page within the application. Instead, the hearing officer's recommendations were based on the merits of proposed special programs. Paragraph 29 reads in part as follows;

Neither the Oaks nor Osceola have clearly defined the special programs that they would offer in their respective facilities, the number of beds those programs would offer, nor the need for these services.

The challenged findings are supported by competent, substantial evidence; therefore, the exceptions are denied.

The Petitioners except in whole or in part to findings of fact found in paragraphs 29, 32, 41, 51, 59, 60, 62, 65, 76, 77, 79, 80, 94 and 105. The

Petitioners argue that the weight of the evidence is contrary to the findings. Again, the challenged findings are supported by competent, substantial evidence; therefore, the exceptions are denied. With respect to the findings of need for Arbor's proposed subacute program, the Petitioners also maintain the findings are invalid because the hearing officer did not apply Health Care and Retirement Corporation et al. vs. Tarpon Springs Hospital, 671 So2d 217 (Fla. 1st DCA 1996) to this proceeding. The court held Rule 59C-1.036(1) to be invalid. The rule requires that CON proposals seeking community nursing home beds be comparatively reviewed with CON proposals by hospitals seeking to create or add beds to a skilled nursing unit within a hospital. The cited case does not apply to CON decisions made on the basis of fixed need pools calculated and published before the need rule was found invalid. Arbor et al vs. Agency for Health Care Administration et al., Order remanding of July 9, 1996, Case Numbers 95-5483 et al. The Petitioners' Motion for Attorney Fees against Arbor for taking a position herein different from the position it took in the proceedings leading up to the July 9 Order of Remand is denied. The present proceeding is sufficiently different in that none of the competing proposals at issue are for hospital based nursing beds.

The Petitioners except in whole or in part to findings of fact in paragraphs 31, 34, 38, 73, 74, 75, 82, 83, 84, 85, 86, 92, 95 and 108. The

challenged findings are supported by competent, substantial evidence; therefore, the exceptions are denied. The Petitioner, Southern Oaks maintains that it was improperly denied the ability to present rebuttal testimony on the issue of whether its proposal is financially feasible. The hearing officer concluded that he allowed Southern Oaks to make a sufficient proffer at the hearing. He also offered Southern Oaks the option of reducing the proffer to a written form to create a distinct and succinct document for easy access for possible appellate review. After the final hearing, Southern Oaks took exparte testimony from its rebuttal witnesses and filed the transcript of that testimony at the Division of Administrative Hearings on November 27, 1995. The other parties were not served with the transcript of the exparte testimony until July 5, 1996, after the Recommended Order was issued. A possible explanation for this disparity in service dates is the hearing officer's instructions that a written proffer be sealed. Thus, Arbor's Motion for Attorney's Fees is denied. The sealing appears to have been unnecessary as there was no concern expressed about issues of confidentiality. I am satisfied that the hearing officer's rulings regarding rebuttal evidence and the sufficiency of the opportunity to proffer at the hearing were correct. The exceptions are denied.

FINDINGS OF FACT

The agency hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The agency hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except for the last sentence of paragraph 78.

Based upon the foregoing, it is

ADJUDGED, that the Petitioners' applications for CONs 7769 and 7770 are denied. Arbor's application for CON 7765 is granted.

DONE and ORDERED this 24th day of September, 1996, in Tallahassee, Florida.

STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION

Douglas M. Cook, Director

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

COPIES FURNISHED:

Gerald B. Sternstein, Esquire Richard Patterson, Esquire Ruden, McClosky, Smith, Senior Attorney, Agency for Schuster & Russell, P. A. Health Care Administration

215 South Monroe Street, Suite 815 2727 Mahan Drive, Suite 3431 Post Office Box 10888 Fort Knox Building III Tallahassee, Florida 32302 Tallahassee, Florida 32308

John L. Wharton, Esquire Don W. Davis

Chris H. Bentley, Esquire Hearing Officer

Rose, Sundstrom & Bentley The DeSoto Building 2548 Blairstone Pines Drive 1230 Apalachee Parkway

Tallahassee, Florida 32301 Tallahassee, Florida 32399 Alberta Granger (AHCA/CON) Elfie Stamm (AHCA/CON)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addresses by U.S. Mail this26th day of September, 1996.

R. S. Power, Agency Clerk State of Florida, Agency for Health Care Administration 2727 Mahan Drive

Fort Knox 3, Suite 3431

Tallahassee, Florida 32308-5403

(904) 922-3808

Docket for Case No: 94-006250CON

Orders for Case No: 94-006250CON