STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ORCHARD MEADOWS ASSISTED )

LIVING FACILITY, )

)

Petitioner, )

)

vs. ) Case Nos. 02-1909

)

AGENCY FOR HEALTH )

CARE ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held pursuant to notice on July 30, 2002, by Barbara J. Staros, assigned Administrative Law Judge of the Division of Administrative Hearings, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Christine T. Messana, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

For Respondent: Lee Dougherty, Esquire

245 Washington Street Monticello, Florida 32344

STATEMENT OF THE ISSUE

Whether Petitioner's license to operate an assisted living facility should be renewed.

PRELIMINARY STATEMENT

On February 27, 2002, the Agency for Health Care Administration (AHCA) issued a Notice of Intent to Deny, which informed Petitioner that Petitioner's renewal application for an assisted living facility license be denied. The denial was based on Petitioner's failure to submit a completed renewal license application within specified time frames pursuant to Sections 400.414(1)(i) and 414.417, Florida Statutes.

Specifically, the notice alleged that Petitioner failed to provide proof of liability insurance and failed to pay an outstanding fine in final order status.

Petitioner disputed the application renewal denial and requested a formal administrative hearing. AHCA forwarded the case to the Division of Administrative Hearings on or about May 9, 2002. A hearing was scheduled for July 30, 2002, in Tallahassee, Florida.

On July 17, 2002, AHCA filed a Motion for Order Closing File. Oral argument was heard on the motion on July 25, 2002, and the motion was denied.

At hearing, Petitioner presented the testimony of two witnesses, Nathaniel Gallon and Eula Fogle. Petitioner's Exhibit 1 was admitted into evidence. Respondent presented the testimony of Greg Rice. Respondent's Exhibits 1 through 5 were

admitted into evidence. Official Recognition was taken of Sections 400.408, 400.414, and 400.417, Florida Statutes.

A Transcript, consisting of one volume, was filed on August 13, 2002. Respondent filed a Proposed Recommended Order on September 3, 2002. Petitioner did not file any post-hearing submission.

FINDINGS OF FACT

1. AHCA is the agency responsible for the licensing and regulation of assisted living facilities in Florida pursuant to Chapter 400, Florida Statutes.

2. Orchard Meadows is an assisted living facility (ALF) which is owned by Nathaniel Gallon, and is located in Monticello, Florida.

   Prior Case and Administrative Fine

   
   

3. In a prior case involving AHCA and Nathaniel Gallon, d/b/a Orchard Meadows, AHCA issued a Final Order dated

   September 27, 2001. The Final Order incorporated by reference a Settlement Agreement entered into between the parties, which read in pertinent part:

   1. The Respondent agrees to pay half of the administrative fine imposed, in the amount of seven thousand eight hundred seventy-five ($7,875) dollars, to be paid within sixty

      (60) days of entry of the Final Order adopting this settlement stipulation agreement.

   2. The Respondent agrees to maintain the facility in substantial compliance with all applicable statutes and rules governing assisted living facilities, as determined by the Agency field office manager, for a period of one year from the entry of the Final Order incorporating this settlement stipulation agreement. In the event that the conditions in paragraph 6 and 7 are not met, the following consequences shall result:

      
      

      1. the remaining seven thousand eight hundred seventy-five ($7,875) dollars outstanding from the administrative fine initially imposed by the Agency in the amount of fifteen thousand seven hundred fifty ($15,750) dollars, shall become due immediately.

         
         

      2. the Agency shall consider Respondent ineligible for renewal of licensure as an assisted living facility based on the demonstrated inability to comply with requirements of continued licensure.

      
      

4. Eula Fogle is the Administrator of Orchard Meadows and has been in that position since May of 2000. According to both Mr. Gallon and Ms. Fogle, Orchard Meadows made efforts to acquire the funds to pay the $7,875.00 administrative fine referenced in paragraph 6 of the stipulation but acknowledge that they were unable to do so within the 60 days following the entry of the Final Order referenced above. However, a few days after the 60-day time period expired, they were able to acquire the funds and Ms. Fogle personally took a check for $7,875.00 to Mr. Rice at AHCA. AHCA did not accept the check but referred Ms. Fogle to the agency's lawyers. Ms. Fogle attempted to get

   in touch with the appropriate agency lawyer(s) in an effort to pay the fine but was unsuccessful in doing so.

   License renewal

   
   

5. Orchard Meadows first received a license to operate an ALF by AHCA effective December 23, 1994. Orchard Meadows renewed its license and was issued a conditional license from December 23, 1996 through March 22, 1997. Orchard Meadows received a standard license for the period March 23, 1997 through December 22, 1998.

6. On August 18, 1999, AHCA sent a letter to Orchard Meadows enclosing a standard renewal license #AL8362 issued for the period December 23, 1999 to December 22, 2002.

7. Greg Rice is a Government Operations Consultant III in the Assisted Living Licensing Office of AHCA. According to

   Mr. Rice, ALF licenses are issued for two-year periods. Thus, the license issued from December 23, 1999 until December 22, 2002, was issued in error.

8. On October 25, 1999, AHCA sent another letter to Orchard Meadows with a standard renewal license enclosed. The letter stated that the enclosed license was being issued to correct the dates of the one previously sent. The letter also requested that Orchard Meadows return the license previously issued. The renewal standard license #AL8362 was issued for the period December 23, 1998 until December 22, 2000, which resulted

   in a two-year licensure period beginning one year prior to the first renewal license and ending two years earlier.

9. On July 31, 2000, AHCA sent a letter to Orchard Meadows notifying Petitioner that the license to operate expired December 22, 2000. The letter instructed Orchard Meadows to complete an enclosed application and return it with the appropriate fee 90 days before the expiration date. The letter further stated that failure to file a renewal application within that time frame will result in a late fee as allowed by law. The return-receipt card was signed by Demetria Poe on August 2, 2000. Ms. Poe is a former employee of Orchard Meadows and did not testify at the hearing.

10. There is no evidence of any correspondence from AHCA to Orchard Meadows regarding the license status between the July 31, 2000 letter and a January 11, 2002 letter, a period of approximately one and one-half years.

11. Despite the position by AHCA that the license expired December 22, 2000, AHCA continued to come to the facility to conduct surveys during the period of time in which AHCA contends that Orchard Meadows was operating without a license. According to Ms. Fogle, AHCA's most recent survey of the facility was conducted four to six months prior to the final hearing date.

12. Mr. Rice's explained why Orchard Meadows was permitted to operate:

    Q. And even though that renewal was not submitted, they were permitted to continue to operate because they were in litigation; is that correct?

    
    

    A. Yes.

    
    

    Q. Okay. And so, because they were in litigation and because there was a settlement that needed to be complied with, is that the reason that there was no further notice to the facility after the July 2000?

    
    

    A. Yes.

    
    

13. On January 11, 2002, AHCA sent a letter to Eula Fogle, Administrator of Orchard Meadows. The letter notified Ms. Fogle that the license to operate Orchard Meadows expired on

    December 22, 2000, and that no renewal application had been filed nor had the license fee been paid. The letter instructed Ms. Fogle to cease and desist operating Orchard Meadows.

14. Ms. Fogle was surprised to receive the January 11, 2002 letter as the license with the 2002 expiration date was on the wall of the office in Orchard Meadows. According to

    Ms. Fogle, she was unaware of the July 31, 2000 letter signed for by the former employee, Demetria Poe, or of the license with the expiration date of December 22, 2000, that was issued in 1999. It was her understanding that Orchard Meadows' license was current until December 2002.

15. Orchard Meadows filed a renewal application in early 2002. The record is not clear as to the exact date it was filed. However, Mr. Rice established that it was filed sometime subsequent to the January 11, 2002 letter from AHCA to Orchard Meadows.

16. On February 27, 2002, AHCA issued the subject Notice Of Intent to Deny Orchard Meadows' renewal of their ALF license, which states as follows:

    Dear Ms. Fogle:

    
    

    It is the decision of this Agency that your renewal application for an assisted living facility (ALF) license be DENIED.

    
    

    The Specific Basis for this determination is:

    
    

    The applicant's failure to submit a completed renewal license application within the specified time frames pursuant to Section 400.414(1)(i), Florida Statutes (F.S.), and Section 400.417, F.S. Specifically, the applicant failed to provide proof of liability insurance and failed to pay an outstanding fine in final order status (AHCA Case No's: 02-00-063-ALF, 02-00-004-ALF, 02-00-016-ALF and 02-00-053-

    ALF). The omitted information was requested by the Agency in a certified letter dated February 4, 2002, received by the applicant on February 6, 2002. The applicant failed to submit the required information to the Agency by February 25, 2002.

    
    

17. No proof was presented at hearing describing any omissions request as referenced in the Notice of Intent to Deny.

18. Nonetheless, Orchard Meadows' current liability insurance is with United National Insurance Company with an effective date of March 27, 2002 until March 27, 2003.

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Sections 120.569 and 120.57, Florida Statutes.

20. Section 400.414, Florida Statutes, reads in pertinent part as follows:

    400.414 Denial, revocation, or suspension of license; imposition of administrative fine; grounds.--

    
    

    1. The agency may deny, revoke, or suspend any license issued under this part, or impose an administrative fine in the manner provided in chapter 120, for any of the following actions by an assisted living facility, any person subject to level 2 background screening under s. 400.4174, or any facility employee:

       
       

       * * *

       
       

       1. Failure of the license applicant, the licensee during relicensure, or a licensee that holds a provisional license to meet the minimum license requirements of this part, or related rules, at the time of the license application or renewal.

    * * * Administrative proceedings challenging

    agency action under this subsection shall be reviewed on the basis of the facts and conditions that resulted in the agency action.

    * * *

    
    

    (3) The agency may deny a license to any applicant . . . [which] has an outstanding fine assessed under this chapter.

    
    

21. Section 400.417, Florida Statutes, reads in pertinent part as follows:

    400.417 Expiration of license; conditional license.--

    
    

    (1) Biennial licenses, unless sooner suspended or revoked, shall expire 2 years from the date of issuance. Limited nursing, extended congregate care, and limited mental health licenses shall expire at the same time as the facility's standard license, regardless of when issued. The agency shall notify the facility by certified mail at least 120 days prior to expiration that a renewal license is necessary to continue operation. Ninety days prior to the expiration date, an application for renewal shall be submitted to the agency. Fees must be prorated. The failure to file a timely renewal application fee shall result in a late fee charged in an amount equal to 50 percent of the current fee.

    
    

    (3) . . . A license for the operation of a facility shall not be renewed if the licensee has any outstanding fines assessed pursuant to this part which are in final order status.

    
    

22. In its Proposed Recommended Order, AHCA also relies upon Section 400.408, Florida Statutes, which states that it is unlawful to own, operate, or maintain an assisted living facility without obtaining a license under this part. Reliance on this statute is misplaced. AHCA conducted surveys of the

    facility after entering into a settlement agreement which references Orchard Meadows' agreement to maintain the facility in substantial compliance with all applicable statutes and rules for one year, prior to issuing the January 11, 2002 letter.

    During this time, AHCA asserts that it permitted the facility to operate because it was in litigation, although the litigation ended with the September 27, 2001 final order incorporating the settlement stipulation. Under the circumstances, the Agency cannot now contend that the facility operated inappropriately in the interim. Most importantly, the Notice of Intent to Deny does not charge Orchard Meadows with operating without a license, and does not base the denial on Section 400.408, Florida Statutes.

23. Section 400.414, Florida Statutes, provides that administrative proceedings challenging agency action under Section 400.414(1), Florida Statutes, shall be reviewed on the basis of the facts and conditions that resulted in the agency action.

24. The evidence established that there was, at a minimum, confusion as to the licensure status of Orchard Meadows during the one and one-half years between the July 31, 2000 and

    January 11, 2002 letters from AHCA to Orchard Meadows.

25. The Agency's argument that it is prohibited from renewing the license pursuant to Section 400.417(3), Florida Statutes, is unpersuasive. The license can be renewed if the outstanding fine is paid. Orchard Meadows made a good faith attempt to pay the full amount of the fine within a few days of the required due date. It is unclear why the money was not accepted late, given the fact that the closure of a facility was at stake. Had that money been accepted, there would no longer have been any outstanding fine. Again, it is not too late to pay the fine. Orchard Meadows has provided evidence of current liability insurance.

26. Pursuant to 400.417(1), Florida Statutes, the failure to file a timely renewal application results in a late fee charged to the facility in an amount equal to 50 percent of the current fee. Accordingly, that is the appropriate penalty for failure to timely file the renewal application.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is

RECOMMENDED:

That the Agency for Health Care Administration enter a final order requiring Orchard Meadows to pay the $7,875.00 fine and any renewal application fees, including any appropriate late fees, within 30 days of the issuance of the final order.

Upon payment of the fine and license fees, Orchard Meadows' license should be renewed. If the fine and license fees are not paid within 30 days of the final order, the renewal application of Orchard Meadows should be denied and Orchard Meadows should cease operations as a licensed assisted living facility.

DONE AND ENTERED this 16th day of September, 2002, in Tallahassee, Leon County, Florida.

BARBARA J. STAROS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 16th day of September, 2002.

COPIES FURNISHED:

Christine T. Messana, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Lee Dougherty, Esquire

245 East Washington Street Monticello, Florida 32344

Leland McCharen, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Valinda Clark Christian, Acting General Counsel Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 02-001909

Orders for Case No: 02-001909