STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
LIFE CARE CENTERS OF AMERICA, ) INC., )
)
Petitioner, )
)
vs. ) CASE NOS. 95-4684
) 95-5213
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent, )
and )
) FLORIDA CONVALESCENT CENTERS, ) INC., d/b/a PALM GARDENS OF ) WINTER HAVEN, )
)
Intervenor/Petitioner. )
)
RECOMMENDED ORDER
This case was heard on December 28, 1995, and January 4 and 5, 1996, in Tallahassee, Florida, by David M. Maloney, Hearing Officer of the Division of Administrative Hearings.
APPEARANCES
Petitioner: R. Bruce McKibben, Jr., Esquire Holland & Knight
Post Office Drawer 810 Tallahassee, Florida 32302-0810
Respondent: John F. Gilroy, III, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Building 3, Room 3431
Tallahassee, Florida 32308-5403
Intervenor/
Petitioner: Gerald B. Sternstein, Esquire
Frank P. Rainer, Esquire
Ruden, McClosky, Smith, Schuster & Russell, P.A.
215 South Monroe Street, Suite 815 Tallahassee, Florida 32301
STATEMENT OF THE ISSUE
Whether the Agency for Health Care Administration (AHCA) should award Life Care Centers of America, Inc., Certificate of Need 8069 which would authorize both the transfer of an existing certificate of need and the combination of the
transferred certificate with another certificate of need. The combination would allow Life Care to operate a 130-bed nursing facility to be built on Cypress Boulevard in Winter Haven within 1000 feet of a nursing home owned and operated by Florida Convalescent Center, Inc., a site on which Life Care intends and is authorized to build a 57-bed facility regardless of the outcome of this case.
PRELIMINARY STATEMENT
On September 15, 1995, the Clerk for AHCA forwarded a notice to the Division of Administrative Hearings that it had received Life Care's petition for a formal administrative hearing. The notice requested the Division to assign a hearing officer to conduct proceedings culminating in a Recommended Order.
Attached to the Notice was Life Care's Petition for Formal Administrative Hearing. Paragraph 3., in part, alleges:
Life Care filed an application seeking a Certificate of Need to transfer CON No. 7354 from SHCC Services and to combine that CON with CON No. 7138 for a new 130-bed nursing home in Polk County, FL. That application, filed in April, 1995, was assigned CON Action No. 8069 and was preliminarily Denied...
Also attached to the Notice was a second petition, although the text of the notice makes no mention of it. 1/
This second petition, denominated "Petition for Formal Administrative Hearing, and, in the Alternative, to Intervene," was filed with the agency by Florida Convalescent Centers, Inc., d/b/a Palm Gardens of Winter Haven ("FCC".) Received first by the Agency Clerk on August 25, 1995, and subsequently by the Division of Administrative Hearings when it received the submission from AHCA on September 20, 1995, (although never filed by FCC directly with DOAH), FCC's petition raises a number of bases for sustaining the agency's preliminary decision in order to fend off any persuasive power of Life Care's petition.
On the same day of receipt of the notice, the case was assigned to Hearing Officer Eleanor M. Hunter; shortly thereafter, it was transferred to the undersigned. A pre-hearing order was issued on September 29, 1995. On October 10, 1995, pursuant to a response filed by Life Care in which preferences for hearing dates agreed to by both Life Care and AHCA were stated, and in accord with those preferences, the case was noticed for hearing to take place on October 26, 1995.
On October 13, 1995, since the division did not have on file any response to that part of FCC's petition seeking intervention, an order was issued granting FCC the status of intervenor in Case No. 95-4684. On the same day, Life Care served a motion to dismiss FCC's petition for hearing. Amidst other procedural motions and orders, an order of continuance was granted re- setting the case for October 31, 1995.
In the meantime, the day before FCC was granted intervenor status in Case No. 95-4684, to be precise, Life Care and AHCA filed a pre-hearing stipulation. The stipulation, filed October 12, 1995, reduced the issues in the case to the single issue of whether the application should be denied because of the location of the new facility on Cypress Boulevard, "within 1,000 feet of [FCC's] nursing
home [which] might therefore have a negative effect on that facility." The agency agreed in the stipulation that Life Care's application satisfies the other relevant statutory and rule criteria and stated further that it was "re- considering whether [the] stated basis justifies denial of the application." The agency promised in the stipulation to "file a formal change of position if it decide[d] to alter its initial position." 2/
A flurry of motions and responses ensued, most of which were disposed of by an order entered October 31, 1995. Additionally, the order sorted out the disorder with which the case was beset because of the confusion over FCC's role in the proceeding. In the October 31 order, it was decided that FCC took Case No. 95- 4684, "as it finds it as of the date the petition to intervene was granted," that is, subject to the Prehearing Stipulation in which it had neither joined nor had an opportunity to participate.
This ruling of the October 31 order, an observance of basic intervention law, was entered over FCC's strenuous objection. The objection was sparked by the ruling's effect of limiting the issues in the case to the single issue contained in the Pre- hearing Stipulation. FCC perceived the limitation to be fundamentally unfair in light of the numerous grounds on which it had based its petition for hearing, a petition then, notwithstanding the grant of intervention, not part of Case No. 95-4684. The potential for harm to FCC's ability to litigate the issues raised in its petition, however, was averted by another ruling in the October 31 order: FCC's petition for formal hearing would be treated as its own case, that is, separate from Case No. 95-4684.
Accordingly, it was assigned DOAH Case No. 95-2513. This treatment was entered to protect FCC's substantial interests, interests clearly implicated in the agency's preliminary decision, despite the absence of a request from the agency to do so. The new case was consolidated sua sponte with the existing case. And the consolidated cases were set for hearing in mid-December.
Life Care's Motion to Dismiss FCC's petition, the pleading underlying Case No. 95-2513, was later denied. After additional procedural skirmishes and requests for continuance, the consolidated cases finally reached hearing on December 28, 1995, continued on January 4, 1996 and finished up on January 5,
1996.
At hearing, Life Care called as witnesses: James Weigard, expert in Health Planning; Bo Russ, expert in Nursing Home Design and Construction; Richard Stern, expert in Nursing Development and Finance; Clint Davis, expert in Nursing Home Operations and Programs; and, Nadine Nolan, Nursing Home Administrator.
FCC called as witnesses: Thomas C. Morgan, expert on estimating project costs for nursing homes; Robert C. McGuire, former AHCA CON review consultant; Gene Nelson, expert in health planning and Florida certificate of need policies and procedures; Ann Monroe Hecker, Nursing Home Administrator; and Bruce Duncan, expert in health care planning, gerontology, and certificate of need rules and regulations. And the agency called Alberta Granger, expert in Health Planning.
Life Care's Exhibits marked 1, 4, 6, 10, 12, 15, 16, 17 and 18 were admitted into evidence. These included two depositions, one of Tom Morgan (Life Care's Ex. No. 10) and one of Charles Wysocki (Life Care's Ex. No. 16.) No other exhibits were offered into evidence by Life Care. FCC's Exhibits marked 1
- 9 were all admitted into evidence.
A Joint Proposed Recommended Order was filed on February 12, 1996 by the agency and Life Care, and FCC's Proposed Recommended Order was filed on February
26, 1996. Rulings on the findings of fact proposed by the parties are contained in the appendix to this order.
FINDINGS OF FACT
The Parties
Life Care
Life Care of America, Inc., is a privately held company, the largest privately held nursing home company in the nation. Founded by Forest Preston in 1975, it currently operates in 27 states, with approximately 170 facilities.
A Tennessee corporation authorized to do business in Florida, Life Care owns and/or operates six nursing homes in the state. Whether CON 8069 is awarded or not, Life Care will add a seventh nursing home to its Florida operations: a newly built facility on Cypress Boulevard in Winter Haven, Polk County. If CON 8069 is granted, the facility will be authorized to house 130 beds; if not, then only 57 will be built, these under the authority of another CON, discussed below.
FCC
FCC began operation in Florida in the mid-1980's and currently operates
16 nursing home facilities in the state.
Florida Convalescent Centers, Inc., d/b/a Palm Garden of Winter Haven, operates the 120-bed skilled nursing facility which recently opened a 35-bed addition during 1995 on Cypress Boulevard in Polk County. Licensed by the state, the facility is superior rated. Most significantly, the facility's Cypress Boulevard location is less than 1000 feet from the proposed site of the nursing home facility Life Care hopes to build and operate under the authority of CON 8069.
3. AHCA
The Agency for Health Care Administration (the "agency" or "AHCA") is the "single state agency [designated by statute] to issue, revoke, or deny certificates of need ... in accordance with the district plans, the statewide health plan, and present and future federal and state statutes." Section 408.034(1), F.S.
Background 1. CON 7138
On March 10, 1994, Life Care, as the result of a settlement with FCC whereby both parties were given beds from a 92-bed fixed need pool, was awarded CON 7138. Fifty-seven of the 92 beds were apportioned to Life Care. In issuing the certificate, the agency authorized Life Care to construct a "freestanding
... community nursing home consisting of 34,025 GSF and involving $2,308,512 in construction costs."
The only condition that appears on the face of the CON is that, "[a] minimum of 74 percent of the total annual patient days of care for the 57 bed facility shall be allocated to Medicaid patients."
Of course, the terms of the CON are not limited to just the conditions expressed on the face of the Certificate of Need, itself. Indeed, the Applicant explicitly recognized that it would be subject to many other terms when, in
support of the application, it filed the Certification of the Applicant dated March 9, 1995. There, Life Care certified that "if issued a Certificate of Need as a result of [the] application, [it would be] bound by the representations in it." Life Care's Ex. No. 1, Certification of the Applicant, p. 3.
Although Life Care originally proposed to locate the facility authorized by CON 7138 somewhere within a triangle bounded by Lakeland, Bartow and Winter Haven, no specific site was selected. More pertinently, no condition or term of the CON restricted the facility's site within the triangle.
Despite the absence of any condition or term of the CON limiting the site within the proposed triangle in the subdistrict, FCC believed it had an understanding with Life Care that Life Care would not build the 57 beds from CON 7138 in close proximity to FCC's existing nursing home on Cypress Boulevard in Winter Haven. Life Care acknowledges that, in fact, it discussed the location of the facility authorized by CON 7138. But beyond this discussion, there was no definitive evidence produced in this proceeding that the two had a meeting of the minds on the issue. No written contract exists reducing the ephemeral agreement to writing. And as stated above, AHCA was not persuaded by either of the parties, let alone both as the result of any agreement, that CON 7138 should have a limit on where within the subdistrict the 57 bed facility could be located.
Life Care plans to build the facility authorized by CON 7138 on the Cypress Boulevard site (and there is no apparent impediment to this plan), the same site it proposes for the facility it hopes will be authorized by CON 8069. Whatever may be the origin of the dispute over the site of the facility authorized by CON 7138, (discussions between FCC and Life Care, or even some unwritten agreement if ever entered,) the appropriateness of the Cypress Boulevard site for CON 7138 is beyond dispute. Rather, the issue in this case centers on whether the Cypress Boulevard site may accommodate more than just the "CON 7138" facility. The issue, in short, is whether the Cypress Boulevard site may serve as the location for 73 beds authorized by a CON issued later than CON 7138 with which Life Care hopes to combine CON 7138. This later CON is CON 7354.
2. CON 7354
Certificate of Need 7354 was granted to SHCC Services, Inc., by Final Order rendered by AHCA on February 21, 1995. It authorized the addition of 42 beds to an existing 31-bed facility. It did more. It also authorized the replacement of the existing facility. The facility is found in Lake Alfred, a short drive north of Winter Haven. At the time CON 7354 was issued, the facility had long been known as the Lake Alfred Restorium. In the meantime, its name has been changed. It will be referred to in this order, for the most part, therefore, as the "Lake Alfred Facility."
The Lake Alfred Facility
Now known as the Lake Alfred Health Care Center, the Lake Alfred Facility, as one would expect from its name, is in Lake Alfred, Florida. Lake Alfred, approximately two miles north of the northern boundary of the City of Winter Haven, is unincorporated. The facility, itself is more than five miles from the proposed site on Cypress Boulevard where Life Care will build at least a 57-bed facility. With a history extending back for many decades to its inception as a "restorium," it is one of the oldest facilities of its kind in
the state. There is no question that this physically declining facility needs to be replaced.
Constructed initially as a residence, the Lake Alfred Facility, some time ago, was converted to a nursing home. It is presently owned and operated by Life Care, having been owned previously by SHCC Services, Inc.
At the time of hearing, there were about 30 residents living at the Lake Alfred Facility. Of the thirty, six are from Lake Alfred. Most of the families of the Lake Alfred residents, however, now reside in Winter Haven. The residents of the facility receive the bulk of needed medical support from sources outside Lake Alfred, (primarily from Winter Haven), because there are neither hospitals nor physicians with offices in Lake Alfred.
SHCC awarded CON 7354
In February of 1994, prior to Life Care's acquisition of the Lake Alfred Facility, SHCC was awarded CON 7354 by the agency. Prior to the final decision by the agency, SHCC had been in competition with Life Care for 42 beds based on a fixed need pool of like number. Indeed, Life Care had requested an administrative hearing on the agency's initial decision to award the 42 beds to SHCC. But, the hearing was never held. Life Care voluntarily dismissed its petition as part of a settlement agreement. Whatever the terms of the settlement agreement, the award was at least a partial, if not total, victory for SHCC in the battle for the 42 beds; SHCC was awarded all 42 while Life Care's application was denied.
Certificate of Need 7354, however, did not just authorize 42 new beds. It authorized the construction of a 73- bed nursing home in AHCA District 6, Subdistrict 5, Polk County. The 73 beds were awarded based upon the fixed need pool of 42 beds and the applicant's desire to replace the aging 31-bed restorium.
One of main reasons, if not the paramount reason, for awarding the 42 beds to SHCC rather than Life Care, was that the beds could be added to the 31 existing beds at the restorium. This expansion, in turn, would be the catalyst for the replacement of the 31 beds. The result of such an arrangement would be the continuation of a single replaced and expanded facility in Lake Alfred, as opposed to the scenario should Life Care prevail: a new 42-bed facility elsewhere, leaving in Lake Alfred an existing 31-bed restorium, badly in need of replacement but without the incentive to carry it out. A decision favoring SHCC over Life Care was appealing as well because it retained for the Lake Alfred Community a facility which the community had utilized for many years and over those years had come to depend on. Furthermore, these many years of the facility's service to the community had led to the firm establishment of the venerable restorium's reputation for high quality of care.
Terms Relating to the Location of the 31-Bed Replacement Facility
Authorized by CON 7354
Just as in the case of CON 7138, SHCC agreed when it submitted its Certification of the Applicant on AHCA Form 1455A, Oct 92, as part of its application for the CON that it would be "bound by the representations contained in [the] application." FCC Ex. No. 8, Omissions Response, CON Number 7354, p. 3.
As part of the same application, again on AHCA Form 1455A, Oct 92, SHCC submitted a page entitled "Conditions Predicated Upon Award." See FCC Ex. No. 8, Omissions Response, CON Number 7354, p. 4. In the Omissions Response, in Paragraph C., of the "Conditions" page, the following is stated:
I have checked and described the items which represent special features or address unique circumstances that shall appear as conditions on a certificate of need should one be issued. Id.
Four items follow, the first of which reads, "Specific site within the subdistrict. The parcel or address is as follows". No address, however, is listed nor is the item checked.
The State Agency Action Report ("SAAR") for CON 7354, which co- incidentally reports on CON 7455, lists Objective 5 of the eight objectives existing for the CON review criteria found in Section 408.035, Florida Statutes, as, "To Locate Nursing Homes in Market Areas Where They Become Integral Component[s] of the Local Health Care Delivery System Continuum (125 points)." FCC Ex. No. 2, p. 21.
Three items comprise Objective 5:
5A-Community Linkages, Non-Nursing Home Services and Geographic Access;
5B-Geographic Area Served;
5C-Geographically Underserved Area. Id.
The SAAR goes on to state with regard to "CON Number 7354:"
SHCC Services, Inc. attained 100 points out of a maximum 125 points ... In addressing geographic access issues, the applicant
stated, "the facility is planned to be located within 5 miles of Lake Alfred. By locating the facility close to the existing facility, the existing relationships with medical providers and social service agencies listed above will remain intact."
Id. (e.s.)
Indeed, a review of SHCC's application for CON 7354 proves that the quoted statement in the SAAR was made by SHCC as part of its application. In its Omissions Response, Part 2: Requirements, under Item 5A and the heading, "Geographic Access," at p. 27c, the following appears:
The proposed facility location will maximize geographic access for residents and their families, facility staff, and other providers and agencies in Polk County. As discussed in question 5B, [the facility is planned to be located within 5 miles of Lake Alfred]. By relocating the replacement facility close to the existing facility the existing relation- ships with medical providers and social service agencies listed above will remain
intact. Furthermore, the geographic access of these providers and agencies will remain undisturbed. (Emphasis added).
The import of locating the expanded replacement facility within five miles of Lake Alfred is explained further elsewhere in the application. Under Item 5B in the Omissions Response, "Reasons for Selecting Particular Geographic Area to be Served," there are several references to the distance "5 miles." For example on p. 27e, the following appears: "... Lake Alfred is located approximately 5 miles from Winterhaven [sic] ...". On p. 27f, the following references are made, "Located just 5 miles north of Winterhaven [sic], Lake Alfred serves as a bedroom community for Winterhaven [sic]", and "Lake Alfred is also only 5 miles from Interstate 4 which connects Orlando and Tampa."
As evidenced by SHCC's application, however, its intent was that the replacement nursing home be not just within 5 miles of Lake Alfred, but actually in Lake Alfred. The following unambiguous statement appears as the first sentence under Item 5B on p. 27e of the Part 2: Requirements, Omissions Response, FCC Ex. No. 8: "SHCC has chosen Lake Alfred in Polk County for the location of the replacement nursing home."
In the main, the remainder of the discussion of Item 5b, "Reasons for Selecting Particular Geographic Area to be Served," is devoted to the basis for a "Lake Alfred" location for the replacement facility. Among the reasons are SHCC's desire to continue to operate the Lake Alfred Restorium because the restorium's "established presence and reputation in the area took years to build," id. p. 27e. In addition, "[w]ithin Polk County, Lake Alfred provides a favorable combination of geographic access and small town comforts for residents," id. p. 27f. Finally, in elaboration of these points, SHCC represented:
Residents of Lake Alfred enjoy the small town atmosphere as well as access to larger towns. The elderly Lake Alfred Restorium residents are especially appreciative of the quietness and safety of this town. The crime rate is low, and the local police department and fire department are nearby and very responsive.
The surrounding area has many lakes and parks which the nursing home residents visit on outings.
Id.
Of course, since Lake Alfred is unincorporated, it is difficult to state with certainty what is within the limits of Lake Alfred as opposed to what is not within it yet within 5 miles of it. Nonetheless, there is no doubt that any location within the city limits of Winter Haven cannot be, at the same time, in Lake Alfred.
Other Issues
1. Construction and Other Matters Relating to Site
The proposed 130-bed facility will have distinct units of 60, 50 and
20 beds, comprising approximately 66,000 square feet, for a cost of about $82.00 per square foot. With a reasonable construction schedule and using Type 5 construction, the project satisfies all state and federal requirements for a nursing home.
Life Care chose the proposed site on Cypress Boulevard for many of the same reasons FCC chose its location less than 1,000 feet away. It is close to hospitals and has good access to roads and highways which promotes accessibility to most needed medical services. In contrast to the Lake Alfred Facility, the Cypress Boulevard site is much better in terms of medical services accessibility, one of the primary considerations in selecting a nursing home site.
The site for the nursing home is a 5.8 acre parcel which is part of a larger (12.3) acre piece of property in Winter Haven. Life Care paid $1,387,000 for the entire 12.3 acres, but is allocating only $360,000 for the 130-bed project. The remainder of the property will be used for an assisted living facility and for a drainage pond via easement to the Department of Transportation. Life Care had not purchased the site at the time the application for CON 8069 was filed, but had begun negotiations for the site as a potential location for the facility. The negotiations resulted in a contract. Life Care did not make a final decision on the site until after the CON application had been filed. It was intended from the beginning of negotiations that only a part of the 12.3 acres would (if purchased) be used for the 130-bed project and that $360,000 would be allocated to the project at issue.
Life Care projected land costs for the project based upon the combination of land costs from the CONs which it is attempting to combine. This combination of costs is an acceptable method for compiling figures for "combination" applications and was accepted as reasonable by the agency.
The projections, based upon reasonable expectations, indicate the project will be financially feasible in the short term and long term.
2. Compliance with Health Plans
Life Care's application complies with the three allocation factors in the District Health Plan. As for Allocation Factor 1, (the provision of services to Medicaid patients,) although the weighted average of all 130-beds in the newly proposed combined facility is 57.2 percent, well below the present district average of about 70 percent, it agreed to conditions for the newly- approved beds (those other than the 31 beds from the old Lake Alfred Restorium), in excess of 74 percent. The weighted average of all 130-beds is lower than the percentage for newly-authorized beds only because there is no condition, nor has there ever been one, relating to Medicaid allocation for the existing 31 beds at the Lake Alfred Facility.
Life Care has also agreed to have specialized nursing home services at the facility (Allocation Factor 2) and not to discriminate against the provision of services and care to HIV infected residents, (Allocation Factor 3). Backing up its stance of non-discrimination against HIV infected residents is Life Care's history of serving "some HIV patients." (Tr. 176)
There is no competing applicant against which Life Care's Medicaid average can be tested. But it is fair to point out that FCC's Cypress Boulevard facility has a condition that only 44 percent of its resident population be
Medicaid patients. Granting CON 8069, therefore, will likely increase Medicaid patient access to nursing homes in Winter Haven.
The need in Polk County for the beds Life Care wants to place at its Cypress Boulevard location has previously been determined and are not at issue. Since the issuance dates of the two underlying CONs, 7138 and 7354, the agency has projected need numbers for over 200 new beds in addition to the 130 beds Life Care hopes to house at the Cypress Boulevard facility.
3. Other Health Planning Concerns
The five nursing homes in Winter Haven are currently operating at over
90 percent occupancy. Both the state and local health plans prefer beds to be located in areas with high occupancy.
Winter Haven is the second largest city in Polk County and contains a high percentage of elderly persons, a population that is rapidly growing.
The bed to population ratio is a health planning measurement used in determining need. Winter Haven has a lower ration of nursing home beds per 1,000 residents than Polk County as a whole.
In contrast, Lake Alfred, with only 2500 or so residents, has a much smaller population than Winter Haven. As stated elsewhere, one of the main advantages of Winter Haven over Lake Alfred for placing a nursing home is the closer proximity to hospitals and medical services.
4. Operations and Programs
Life Care is proposing a complete range of programs at its facility, including Alzheimer's Care, adult day care, subacute care, respite care and numerous non-nursing services.
Relocation of the existing facility to Winter Haven would have a positive effect on services being provided.
Staff necessary to provide the services and programs would come primarily from a 15-mile radius of the facility. Skilled personnel to perform those services would come, at least in part, from local nursing programs already existing in Winter Haven. The majority of the staff at Lake Alfred Care Center come from outside Lake Alfred. Many or most are from the City of Winter Haven. Life Care has obtained commitments from all staff at the Lake Alfred Facility to continue employment with Life Care upon completion of the new facility if authorized by CON 8069.
There would be a broader range of services available at the 130-bed facility than at the two smaller facilities, the Lake Alfred Facility and a smaller 57-bed Cypress Boulevard facility.
The construction and operation of the facility proposed under CON 8069 would have a positive impact on care in the area because it would force FCC to remain even more competitive in the provision of quality services in a quality work environment than if Life Care's new facility were to be limited to 57 beds.
5. Life Care's Service Record
Life Care's facilities in Florida meet or exceed the Medicaid average in the subdistricts in which they are located.
Of Life Care's six existing facilities in Florida, the three facilities eligible for Superior Rating are indeed rated Superior by the State. The other three facilities have the highest rating to which they are entitled.
Life Care maintains affiliations with schools to provide scholarships for students pursuing professions in long term health care.
The agency considers Life Care a major provider of care and a provider of quality health care services.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties in this action pursuant to Sections 408.039(5) and 120.57(1), Florida Statutes.
An applicant for a certificate of need bears the burden of proving its entitlement to a certificate of need based on a balanced review of statutory review criteria. Collier Medical Center, Inc. v. DHRS, 462 So.2d 83 (Fla. 1st DCA 1985). The weight given each criterion may vary on a case-by-case basis. Charter Medical-Southeast, Inc. v. DHRS, 495 So.2d 759 (Fla. 1st DCA 1986). Although in this case, as explained further, below, the heart of the issue is not so much a balancing of statutory criteria as honoring terms of an existing CON.
The CON application at issue does not concern beds in a fixed need pool. Nor is there a dispute as to the numeric need for the beds in AHCA District 6, Subdistrict 5 (Polk County).
Life Care is the holder of CON 7138 authorizing the construction of 57 nursing home beds in Polk County. Other than that the construction must take place in Polk County, there are no geographic restrictions or limitations on CON 7138. There is nothing that has come to light in this proceeding to indicate that the Cypress Boulevard site is inappropriate for the construction of the 57- bed facility authorized by CON 7138.
The 130-bed facility to be authorized by the combination of CON 7138 with CON 7354 is quite another matter. Under the terms of CON 7354 it is quite clear that the 73 beds it authorized must be in Lake Alfred or within 5 miles of the Lake Alfred facility. Since Lake Alfred is unincorporated and therefore by its very nature has no clearly defined boundaries, there is no practical distinction between "in Lake Alfred," and "within 5 miles of Lake Alfred." The question remains: is the proposed Cypress Boulevard site an appropriate site for the 73 beds authorized by CON 7354?
Life Care and the agency point out correctly that there are no conditions on the face of CON 7354 which limit the location within Polk County of the 73 beds authorized by CON 7354. Nor was a specific site for the 73 beds listed for the facility on the "Conditions," page of the Omissions Response submitted by SHCC.
In contraposition, FCC argues that the statement in the State Agency Action Report (SAAR) for CON 7354 that the facility will be located "within 5 miles of Lake Alfred," prevents the Cypress Boulevard site from housing CON
7354's 73 beds. FCC's argument is based on Rule 59C-1.012(2)(c), Florida Administrative Code, and Section 408.039(4)(d), Florida Statutes, which in FCC's view, confers the status of final order on the State Agency Action Report. The statue is operative only "[i]f no administrative hearing is requested." Section 408.039(4)(d), F.S. This was not the case with regard to CON 7354. Life Care requested an administrative hearing which it later dismissed. The rule, on the other hand, does not make the SAAR part of a final order. It is only the "noticed intended award," which becomes "final agency action." Rule 59C- 1.012(2)(c), F.A.C. It is not clear, therefore, whether the rule and the statute are applicable in this proceeding or, whether, together, they have the result desired by FCC.
There is, however, a more fundamental reason that it is problematic to construct a facility housing the beds authorized by CON 7354 at the proposed site in Winter Haven. The representations in the application supporting CON 7354, representations by which SHCC, the applicant for CON 7354, agreed it would be bound, require that the 73 beds be in a single facility expanding and replacing the Lake Alfred Facility in Lake Alfred. SHCC was granted CON 7354 because it represented that the 42 new beds it authorized would be added to the senescent, desperately-in-need of replacement Lake Alfred Restorium. This expanded and replaced, indeed modern, Lake Alfred Facility would remain in Lake Alfred for all of the beneficial reasons advanced in the application. No party should have a clearer understanding of this than Life Care which lost the new 42 beds authorized by CON 7354 precisely because it wanted to house those beds in a facility separate from the Lake Alfred Restorium.
When CON 7354 was issued the representations that the beds would be in Lake Alfred became terms of the Certificate of Need, itself. While some terms of an application may well be regarded as not material to a CON and ones the agency could authorize a party to disregard even over the opposition of existing providers, location is not likely to be one of them. For instance, the agency has recently emphasized the importance of location when it comes to Certificate of Need cases in regard to whether they may be subject to expedited review or not. See Cleveland Clinic Florida Hospital v. Agency for Health Care Administration et al., DOAH Case No. 95-4962, 1st DCA Case No. 95-4368, (Feb. 23, 1996).
Even if location could be viewed in some case as not material, this case is surely not one of those. SHCC represented that it should receive CON 7354 because of the established reputation of the restorium, one which it took years to build, and because of the small town atmosphere of Lake Alfred with its quietness, safety, low crime rate and quick access to the local police and fire departments and because of the surrounding lakes and parks easily accessible to its elderly residents. Furthermore, the addition of the 42 beds at issue when CON 7354 was applied for, became the active agent for the replacement of the 31 beds then existing at the time-worn restorium.
As evident from the record in this case and the facts found, above, there are numerous beneficial reasons for relocating the beds authorized by CON 7354 from the Lake Alfred Facility to Life Care's proposed site in Winter Haven. Nevertheless, it is clear that a representation material to the granting of CON 7354 and now a term of that very CON is that the 42 beds would be added to the
31 beds of the Lake Alfred Facility to create a facility in Lake Alfred. Wherever the outer limits of Lake Alfred in the unincorporated part Polk County, it is without question that those limits do not intrude into Winter Haven.
Still, prohibiting the addition of CON 7354's 73 beds to the facility to be built on the Cypress Boulevard site seems to be a dry, sterile result, if based on controlling terms of a CON that Life Care never agreed to itself but will inherit as the successor to CON 7354 if the CON is ever transferred from SHCC to Life Care. There was, for example, no testimony in this proceeding from residents or staff of the Lake Alfred Facility or the Lake Alfred community, or for that matter, from anyone else with an interest in Lake Alfred, about the continued need for the facility in the community or the impact to the community of losing the 42 beds to be added to it under CON 7354. On the other hand, it was never explained, in light of Life Care's seeking the transfer of the CON, what would be the effect on CON 7354 if CON 8069 was denied on the basis that beds authorized from CON 7354 could not be housed in a Winter Haven facility. Would CON 7354 remain as SHCC's and therefore never be used? Would the Lake Alfred Facility continue to be operated by Life Care as a 31-bed facility in a failing structure? Would the 42 newly-authorized beds not be added to the facility nor the facility be replaced? Such a result surely defeats the agency's purpose behind the issuance of CON 7354 to SHCC.
There is, moreover, no conclusion that can be drawn from this proceeding that granting CON 8069 will have a negative impact on FCC's nearby facility. At the same time, it is crystal clear that a material term of CON 7354 is that the 42 new beds it authorized be in Lake Alfred, not in Winter Haven. Furthermore, it seems quite clear from the proceedings surrounding CON 7354 that it was never then contemplated that the 31 existing beds at the aging restorium would leave Lake Alfred.
There has been a change in circumstances since CON 7354 was issued. Life Care now owns and operates the Lake Alfred Facility instead of SHCC. Perhaps this change justifies a modification of CON 7354. But this proceeding is not to modify CON 7354. It is to combine CON 7354 under its current terms with CON 7138 to produce CON 8069.
In the final analysis, as legalistic and dissatisfying as it may be, it must be recommended that CON 8069 be denied because the beds authorized by CON 7354 under terms clearly material to that CON must remain in Lake Alfred and cannot, therefore, be moved to Winter Haven. If the terms of CON 7354 relating to location could be construed to be not material, or if the change in circumstances could be viewed to require a modification to CON 7354, the result would be different.
Based on the foregoing, it is, hereby, RECOMMENDED:
That the Agency for Health Care Administration deny CON 8069.
DONE AND ENTERED this 2nd day of May, 1996, in Tallahassee, Leon County, Florida.
DAVID M. MALONEY, 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 2nd day of May, 1996.
ENDNOTES
1/ There was, therefore, no indication that this second petition was granted by the agency. Nor was there, of course, a request in the notice to assign a hearing officer to conduct the proceedings necessary for disposition of the petition. It may be that the petition was overlooked by the agency or perhaps the agency viewed it solely as a petition to intervene. The latter is distinctly possible since, by itself, (that is, without Life Care's petition challenging the agency's denial,) the petition does not raise an issue subject to Section 120.57(1) determination inasmuch as it supports the agency's decision.
2/ Indeed, the agency did just that. In an addendum to the prehearing stipulation, AHCA joined in the following, "It is the position of AHCA and Life Care that CON 8069 should be approved." Addendum to Prehearing Stipulation, p. 3.
APPENDIX TO RECOMMENDED ORDER, CASE NOS. 95-4684, 95-5213
The following rulings are made on the parties' proposed findings of fact: Life Care and AHCA's:
Paragraphs 1, 2, 4 - 9, 11 - 17, 19 - 46 and 48 are accepted.
Paragraph 3 is accepted with the exception of the second sentence to the extent it implies the facility could be located anywhere in the subdistrict. It is true that there was no condition on location, but location was a term of the CON because of the representations as to location in the application supporting it.
Paragraph 10, while not inaccurate, is rejected as argumentative.
Paragraph 18 is accepted except to the extent it is argumentative.
Paragraph 47's second sentence is accepted. The first sentence is rejected to the extent it is argumentative. Any implication in the first sentence that the Lake Alfred Facility is not an integral part of the Lake Alfred Community is rejected on the basis of the representations by SHCC contained in the application supporting CON 7354.
FCC's:
1. Paragraphs 1 - 10, 12, 14, 15, 20, 26 - 29, 31 - 35, 38 - 42, 44, 49,
50, 53 - 57, 59, 60, 62, 63, 67, 68, and 73 are accepted.
Paragraph 11 is accepted except for the last sentence which is rejected in favor of the finding that the northern limit of the City of Winter Haven is two miles from Lake Alfred.
Paragraph 13 is accepted except to the extent it contains conclusions of law.
Paragraph 16 is accepted except to the extent it is argumentative.
Paragraph 17 is accepted subject to recognition that the agency gave no preference for the factor of providing specialized services because no new ones were proposed. Life Care, however, will provide those specialized services proposed in the underlying CONs.
Paragraph 18 is rejected on the strength of Alberta Granger's testimony.
Paragraph 19 is accepted as to the first sentence. The second sentence is accepted but, just as in the case of Paragraph 18 the implication FCC would have drawn from the fact is rejected on the basis of the agency's witness.
Paragraph 21 is accepted with the exception of the last sentence which is argumentative. Gene Nelson testified as the paragraph alleges but the testimony is rejected as against the greater weight of the evidence.
Paragraphs 22, 23, 25, 47, 48, 65 , 66 and 69 are rejected as against the greater weight of the evidence.
Paragraph 24 is accepted as to the first sentence. The second sentence is rejected as a conclusion of law. Despite the 57.2 percent condition, Life Care's application meets the preference because of the unusual nature of this CON as a combination CON and there being no Medicaid condition on the 31 original beds at the Lake Alfred Facility.
Paragraph 30 is accepted with the exception of the last sentence which is argumentative. The opinion of FCC's health expert is rejected as against the greater weight of the evidence.
Paragraph 36 is accepted except to the extent it is argumentative.
Paragraph 37 is rejected as a conclusion of law.
Paragraph 43's second sentence is rejected as against the greater weight of the evidence. The five nursing homes in Polk County, at the time of hearing, were operating at over 90 percent occupancy.
Paragraph 45 is rejected. The placement of the 130 beds near FCC's facility is inappropriate only because of the terms of CON 7354 that its 73 beds be in Lake Alfred.
Paragraph 46 is rejected to the extent it is a conclusion of law.
Paragraph 51 is accepted with the exception of Gene Nelson's testimony that Winter Haven does not have a rapidly growing elderly population.
Paragraph 52 is accepted, however, an exception to the criteria's application is recognized on the basis of testimony from the agency's witness.
Paragraph 58 is rejected. See Ruling 15, above.
Paragraph 61 is rejected as a conclusion of law.
Paragraph 64 is rejected as against the weight of the evidence.
Paragraph 70 is accepted as to the first sentence but the second sentence and Paragraphs 71 and 72 are rejected as conclusions of law.
COPIES FURNISHED:
Sam Power, Agency Clerk
Agency for Health Care Administration Fort Knox Building 3, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308-5403
Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308-5403
R. Bruce McKibben, Jr., Esquire Holland & Knight
Post Office Drawer 810 Tallahassee, Florida 32302-0810
John F. Gilroy, III, Esquire
Agency for Health Care Administration Fort Knox Building 3, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308-5403
Gerald B. Sternstein, Esquire Frank P. Rainer, Esquire
Ruden, McClosky, Smith, Schuster & Russell, P.A.
215 South Monroe Street, Suite 815 Tallahassee, Florida 32301
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.
Issue Date | Proceedings |
---|---|
Apr. 21, 1997 | Opinion from the First DCA filed. |
Jul. 18, 1996 | Notice of Administrative Cross-Appeal filed. (filed by: Florida Convalescent Centers, Inc.) |
Jul. 08, 1996 | Notice of Administrative Appeal with copy of the Agency Final Order attached filed. |
Jul. 05, 1996 | Final Order filed. |
Jun. 10, 1996 | (Respondent) Response to Exceptions to Recommended Order filed. |
May 02, 1996 | Recommended Order sent out. CASE CLOSED. Hearing held 12/28/95 & 01/04/96. |
Mar. 25, 1996 | FCC`s Response to Motion for Sanctions filed. |
Mar. 21, 1996 | (From G. Sternstein) Notice of Filing; Motion Hearing Transcript w/cover letter filed. |
Mar. 13, 1996 | (Petitioner) Motion for Sanctions for Failure to Comply With a Notice of Taking Deposition Duces Tecum filed. |
Mar. 06, 1996 | Response by Life Care Centers of America, Inc. to FCC`s Motion to Relinquish Jurisdiction filed. |
Mar. 05, 1996 | (Fl Convalescent Centers) Notice of Hearing filed. (Motion hearing set for 3/13/96) |
Feb. 26, 1996 | Florida Convalescent Centers d/b/a Palm Garden of Winter Haven`s Motion to Remand and Relinquish Jurisdiction filed. |
Feb. 26, 1996 | Florida Convalescent Center, Inc.`s Proposed Recommended Order filed. |
Feb. 12, 1996 | Joint Life Care and AHCA Proposed Recommended Order filed. |
Feb. 01, 1996 | Notice of Filing; Volume 4 (Transcript) filed. |
Jan. 29, 1996 | Volume 3 (Transcript) filed. |
Jan. 02, 1996 | (2) Volumes (Transcript) filed. |
Dec. 28, 1995 | Florida Convalescent Centers d/b/a Palm Garden of Winter Haven`s Witness and Exhibit List filed. |
Dec. 28, 1995 | (Joint) Prehearing Stipulation filed. |
Dec. 28, 1995 | (Joint) Prehearing Stipulation filed. |
Dec. 18, 1995 | Order of Continuance sent out. (hearing rescheduled for 12/28/95; at 9:00am; and 1/4/96; 9:00am; if rebuttal time is necessary it will take place on 1/5/96) |
Dec. 13, 1995 | Letter to Gerald Sternstein from R. Bruce McKibben, Jr. (cc: Hearing Officer) Re: Polk County (Winter Haven) Con Deposition schedule and final hearing filed. |
Dec. 08, 1995 | (Petitioner) Amended Notice of Taking Depositions Duces Tecum filed. |
Dec. 05, 1995 | (Petitioners) Notice of Taking Deposition Duces Tecum filed. |
Nov. 28, 1995 | (Petitioner) Notice of Taking Deposition Duces Tecum filed. |
Nov. 21, 1995 | Order sent out. (ruling on Motions) |
Nov. 17, 1995 | Florida Convalescent Centers, Inc. d/b/a Palm Garden of Winter Haven`s Response In Opposition to Life Care Center of America, Inc.`s Motion to Dismiss filed. |
Nov. 09, 1995 | (Petitioner) Notice of Hearing filed. |
Nov. 08, 1995 | Life Care Centers of America`s Response to Motion to Reconsider Filed by FCC; Life Care Center of America, Inc.`s Motion to Dismiss filed. |
Nov. 08, 1995 | (Gerald B. Sternstein) Notice of Telephonic Hearing filed. |
Nov. 06, 1995 | (Gerald B. Sternstein) Motion to Reconsider Paragraph 3 of This Court`s Order of October 31, 1995; Petition for Formal Administrative Hearing and, in the Alternative, to Intervene; Affidavit; Florida Convalescent Centers d/b/a Palm Garden of Winter Have |
Nov. 02, 1995 | Letter to Hearing Officer from John Gilroy Re: Motion Hearing on Motion for Continuance filed. |
Nov. 01, 1995 | Life Care Centers of America`s Answer to Petition for Formal Administrative Hearing Filed by FCC filed. |
Oct. 31, 1995 | Order sent out. (Consolidated cases are: 95-4684, 95-5213; hearing is continued until December 19, 1995 through December 21, 1995; 10:00am; Tallahassee) |
Oct. 27, 1995 | (Intervenor) Notice of Telephonic Hearing filed. |
Oct. 27, 1995 | Motion for Continuance By Florida Convalescent Centers, Inc. d/b/a Palm Garden of Winter Haven filed. |
Oct. 25, 1995 | (Intervenor) Motion In Opposition to Prehearing Stipulation and Request for Oral Argument filed. |
Oct. 25, 1995 | (Gerald B. Sternstein) Response to Life Care Centers of America, Inc.`s Motion to Dismiss and Request for Oral Argument filed. |
Oct. 23, 1995 | Order sent out. (relief requested by Intervenor is granted) |
Oct. 20, 1995 | (Joint) Addendum to Prehearing Stipulation filed. |
Oct. 19, 1995 | (Petitioner) Response to Motion to Clarify Prehearing Order filed. |
Oct. 18, 1995 | Order sent out. (hearing rescheduled for 10/31/95; 10:00am; Tallahassee) |
Oct. 18, 1995 | (Intervenor) Motion to Clarify Prehearing Order and Request for Oral Argument filed. |
Oct. 17, 1995 | (Petitioner) Agreed Motion for Continuance filed. |
Oct. 16, 1995 | (Intervenor) Motion for Continuance and Request for Oral Argument filed. |
Oct. 13, 1995 | Order Granting Intervention sent out. (by: Fl. Convalescent Centers d/b/a Palm Garden of Winter Haven) |
Oct. 13, 1995 | (Petitioner) Motion to Dismiss Petition for Formal Administrative Hearing (FCC) filed. |
Oct. 10, 1995 | Notice of Hearing sent out. (hearing set for 10/26/95; 10:00am; Tallahassee) |
Oct. 05, 1995 | (Petitioner) Response to Prehearing Order filed. |
Sep. 29, 1995 | Prehearing Order sent out. |
Sep. 25, 1995 | Notification card sent out. |
Sep. 20, 1995 | Notice; Petition for Formal Administrative Hearing and, In The Alternative, To Intervene; Petition for Formal Administrative Hearing filed. |
Issue Date | Document | Summary |
---|---|---|
Apr. 18, 1997 | Opinion | |
Jul. 02, 1996 | Agency Final Order | |
May 02, 1996 | Recommended Order | Combination Certificate Of Need to authorize facility in Winter Haven recommended to be denied because one of underlying Certificate Of Need's required to be in Lake Alfred. |