STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE ADMINISTRATION,

Petitioner,

vs.

TR AND SNF, INC., d/b/a THE NURSING CENTER AT UNIVERSITY VILLAGE,

Respondent,

and

DREW M. DILLWORTH,

Intervenor.

/

Case No. 15-2128

RECOMMENDED ORDER

Administrative Law Judge, John D. C. Newton, II, of the Division of Administrative Hearings, heard this case by video teleconference at sites in Tampa and Tallahassee, Florida, on December 8, 2015.

APPEARANCES

For Petitioner: Thomas J. Walsh, II, Esquire

Agency for Health Care Administration Suite 330

525 Mirror Lake Drive North St. Petersburg, Florida 33701

For Respondent: M. Stephen Turner, Esquire

John F. Loar, Esquire Broad and Cassel Suite 400

215 South Monroe Street Tallahassee, Florida 32301

STATEMENT OF THE ISSUES

1. Did Respondent, TR & SNF, Inc., d/b/a The Nursing Center at University Village (TR & SNF), violate requirements to demonstrate the financial ability to operate in accordance with statutes and rules? If so, what penalty should be imposed? (Count I)

2. Did TR & SNF violate requirements to report changes in the administrator or manager of its licensed facility? If so, what penalty should be imposed? (Count II)

3. Did TR & SNF, by committing the offenses charged in Counts I and II, commit violations that support revocation of its nursing home license? (Count III)

PRELIMINARY STATEMENT

By three-count Administrative Complaint, dated March 11, 2015, Petitioner, Agency for Health Care Administration (Agency), began proceedings to revoke the nursing home license of TR & SNF and impose fines of $10,000. TR & SNF contested the action and, on April 1, 2015, requested a formal administrative hearing. On April 17, 2015, the Agency referred the matter to the Division of Administrative Hearings to conduct the requested hearing. Drew

Dillworth, receiver for TR & SNF intervened. He later filed a notice of withdrawal. But he never moved to withdraw. The hearing was scheduled for July 1, 2015. The hearing was re- scheduled three times to provide counsel time to conduct discovery and prepare for hearing.

The undersigned conducted the hearing on December 8, 2015.

The Agency presented the testimony of Bernard Hudson and Katherine Benjamin. Agency Exhibits A through E and G were admitted. TR & SNF presented testimony from John Bartle and Doug Klinowski. Its Exhibits 1 through 6 were admitted.

The proceedings were recorded and transcribed. At the hearing’s conclusion, the parties requested and were granted additional time to file and serve proposed recommended orders. Later the parties moved to abate the proceedings until April 26, 2015, to conduct settlement discussions. That motion was denied. But the deadline for filing proposed recommended orders was extended until April 26, 2016, to provide a reasonable period during which the parties could conduct settlement discussions.

The parties timely filed their proposed recommended orders. They have been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Parties

   
   

   1. The Agency is the State regulatory authority responsible for licensing nursing homes and enforcing applicable federal regulations, state statutes, and rules governing skilled nursing facilities pursuant to the Omnibus Reconciliation Act of 1987, Title IV, Subtitle C (as amended), Chapters 400, Part II, and 408, Part II, Florida Statutes, and Florida Administrative Code Chapter 59A-4.

   2. At all times material to this proceeding, TR & SNF was a licensed nursing facility in Tampa, Florida, under the licensing authority of the Agency. TR & SNF does business as The Nursing Center at University Village. It is and was required to comply with all applicable rules and statutes.

2. Reporting Changes in Management

   
   

   1. The ownership, control, and management of TR & SNF are intertwined with that of a 446-bed assisted living facility and

      46 villas located on a campus with TR & SNF and the assisted living facility. The aggregate is sometimes called University Village and operated as a continuing care community. The shifting roles of various landlords of the properties and the management of them cloud the operations of TR & SNF and the related facilities.

      
      

   2. Westport Holdings, Tampa, LP, owns 446 assisted living units. Westport Holdings Tampa, II, LP, owns 46 villas.

      Westport Nursing, Tampa, LLC (Westport Nursing), owns the nursing home. BVM University Village, LLC, owns 40 percent of Westport Nursing. Compliance Concepts, LLC, is the managing member of BVM University Village, LLC. Rebecca Bartle, wife of John Bartle, is the sole member of Compliance Concepts, LLC, and the managing member of BVM University Village, LLC.

   3. TR & SNF leases the nursing home from Westport Nursing.

      
      

      BVM guarantees about $25,000,000 of Westport Nursing’s debt.

      
      

   4. John and Rebecca Bartle are key actors in all of these various companies and shift in and out of roles. For example, a March 15, 2015, letter from Mr. Bartle identified him as “John Bartle, Board Member, TR & SNF, Inc., Tampa.” The next day,

      Mr. Bartle sent the Agency an email identifying him as “Director, Senior Housing Division,” with an Indiana address and the website http://bvmmanagement.com. The April 9, 2015, letter transmitting a proof of financial ability filing identifies Mr. Bartle as Board Chairman, TR & SNF.

   5. On July 1, 2014, BVM Management, Inc., TR & SNF, Inc., and TALF, Inc. (the assisted living facility), signed a Corporate Administration Agreement with BVM Management, Inc. The agreement recites that TR & SNF and TALF, Inc., acquired University Village Inn and Health Center. It states that they wished to have BVM

      
      

      Management, Inc., provide corporate governance functions and that BVM Management had experienced personnel to provide the governance functions.

   6. The Agreement states that BVM Management shall provide the following services to University Village Inn and Health Center:

      1. Coordination and formulation of strategic plans and goals for the Owners, including making recommendations to the Board of Directors concerning changes in key personnel, vendors, and appropriate plans of action and responses to strategic opportunities and changes in the senior care industry;

         
         

      2. Review and an analysis of financial and operating information of each of the Owners’ properties, including preparing and reviewing financial statements, operating reports and other financial data of each of the Owners’ businesses;

         
         

      3. Periodic meetings with each representative Owner to review the performance of each of the Owners’ businesses, including financial and operational status of each facility;

         
         

      4. Visits to each facility on a regular basis;

         
         

      5. Periodic review of operations of each facility, employee staffing and quality of care and the maintenance and repair of each facility and communicate with the Owners as such observations are made regarding same;

         
         

      6. Review all operating and capital budgets proposed by Owners, discussing and negotiating same and communicating with Owners and others regarding same;

         
         

      7. Reviewing periodic “Statement of Deficiencies” and making recommendations for any “Plan of Correction” to be filed with state or federal agencies;

         
         

      8. Monitoring and overseeing each Owner’ compliance with covenants and financial obligations as set forth in various loan agreements;

         
         

      9. Coordination and implementation of consolidated programs involving each Owner dealing with workmen’s compensation, claims, other insurance as required and assisting in negotiation with current Collective Bargaining Agreement (CBA);

         
         

      10. Coordination of relationships with lenders and lenders’ agents that may request information from time to time;

          
          

      11. Assistance in the recruitment of key employees of the Owners business;

          
          

      12. Review of performance and outside professionals on behalf of Owners, including legal counsel, auditors and insurance consultants;

          
          

      13. Review of performance of all duties of Owners [sic] business in order to insure that Owners are in compliance with all local, state and federal regulations.

          
          

   7. It also limits BVM Management’s responsibilities. The limits are:

      The Parties agree that the responsibility for the development, renovation, operation and management of the day-to-day business of the Owners is the responsibility of the Owners.

      Owners have employed qualified personnel, licensed in the state of Florida, in order for the Owners’ businesses to remain in compliance with local, state, and federal regulation.

      
      

   8. The Agreement says that BMV Management will be paid for its services. The Agreement does not say how much BMV Management will be paid or how payment will be determined. Mr. Bartle signed the agreement on behalf of TR & SNF.

   9. The Agency contends that the terms of the agreement effectively mean that officers and employees of BMV Management including Mr. Bartle, Robert Rinerd, Dana Huth, Jeffery Wendell, and Sandy Guion provided management and supervision to TR & SNF. The Agency argues that TR & SNF should therefore have reported their involvement.

   10. Karen Northover became the health facility administrator for TR & SNF on October 27, 2014.

   11. At some point in 2015, a company called NOVUM contracted to provide TR & SNF administrative services. A NOVUM partner, Janet Balsely, became the health facility administrator for TR & SNF.

   12. The Agency contends that TR & SNF did not report either change in health facility administrators to it.

   13. The Agency did not prove by clear and convincing evidence that TR & SNF did not give notice of management by Ms. Northover, Ms. Balsely, or the assorted BVM companies, officers, and employees. The closest it came was Mr. Hudson, unit manager for the Agency’s long-term care unit since 2008.

       When asked if he ever received notification from TR & SNF that it

       
       

       had changed management he stated: “No, I don’t believe so.” (TR- 37, lines 8-12). The record does not show that Mr. Hudson was the person who would receive notice or that he had reviewed records and determined that there were no notifications.

   14. The Agency contends, understandably, that Mr. Bartle’s involvement and shifting, uncertain roles make him a manager whose involvement should have been reported. The Agency failed to provide clear and convincing evidence showing TR & SNF did not advise the Agency that Mr. Bartle was a manager. The record on this issue has the same failings as described in paragraph 15.

   15. Similarly the Agency did not offer evidence tending to prove that TR & SNF had not reported employees or officers of BVM Management as managers of TR & SNF.

   16. The Agency’s proposed recommended order highlights this failure of proof. Paragraphs 20 and 30 of the Agency’s proposed recommended order proposed finding that TR & SNF had not reported to the Agency that it had contracted with a new management company. The proposed findings do not cite to the record.

3. Proof of Financial Ability

1. In early February of 2015, Florida’s Office of Insurance Regulation (Insurance Regulation) drew the Agency’s attention to University Village and the health care facilities that comprise it. Insurance Regulation employees told Bernard Hudson, manager of the Agency’s Long Term Care Unit, about

   
   

   information they had that raised concerns about the financial stability of TR & SNF. Mr. Hudson investigated the issue.

   Later, Insurance Regulation provided a copy of its Initial Order of Suspension in Case No. 168-243-15, issued February 13, 2015, suspending the Certificate of Authority for Westport Holdings, Tampa, LP, d/b/a University Village, to operate a continuing care community under chapter 651, Florida Statutes. The suspension order asserts that John Bartle exercised control over the management and operations of University Village, that John Bartle and Rebecca Bartle refused to allow investigators access to key employees, that University Village (which includes TR & SNF) had underfunded the required minimum financial reserves by $370,324, and that University Village had unlawfully encumbered the reserves that it did have.

2. This was sufficient evidence of the financial instability of TR & SNF to support a decision to request proof of financial ability.

3. The Agency sent Katherine Benjamin to survey TR & SNF on February 23, 2015. Ms. Benjamin conducted a thorough investigation, reviewed financial records and other documents, interviewed employees, inspected supplies, and interviewed employees. She returned with 87 pages of documents identified as aged accounts payable.

   
   

4. The Agency did not offer evidence about when, how, or by whom these records were created, how current they were, the source of the information in them or the duties of the individuals creating the records.

5. Before the survey, on February 17, 2015, Mr. Hudson, sent a certified letter addressed to the administrator of The Nursing Center at University Village (TR & SNF). The letter reminded TR & SNF of its duty to provide the Agency proof of financial ability to operate at any time if there was evidence of financial instability. The letter demanded that TR & SNF complete and return a “Proof of Financial Ability Form that includes a balance sheet and income and expense statement for the next 2 years of operation which provide evidence of having sufficient assets, credit, and projected revenues to cover liabilities and expenses.” It directed TR & SNF to forward the completed form no later than March 3, 2015.

6. On March 3, 2015, Mr. Bartle sent Mr. Hudson a letter on TR & SNF, Inc., stationery stonewalling the request. The failure to comprehend that the Agency was different from the Insurance Regulation, the dismissive tone, and the intransigence of the letter make quoting it instructive.

   The Provider, The Nursing Center of University Village, is in receipt of your letter dated February 17, 2015. Please be advised this Provider operates under Florida Statute 651 [continuing care retirement

   
   

   community regulation by the Office of Insurance Regulation], and its certificate holder number is 88104. Recent communications with representatives of your office have shown that there exists over

   $5,900,000 in liquid reserves deposited in institutions pursuant to Florida Statute 651 and related sections.

   
   

   Additionally, representatives of AHCA provided an on-site visit in December 2014, alleging there were financial issues that would provide some concern for AHCA, however, those allegations were unsubstantiated and resulted in “no findings.” Your letter to the Provider refers to “a recent review of documents provided to the agency warrants a more thorough review of the facility’s financial ability to continue operations.”

   In an effort to clarify the agency’s concerns, please provide copies of the documents your agency believe are causing any degree of concern. The residents at the Provider’s location have not been deprived of any service or product that is specified under Florida statute 408.810(8). All services, supplies and other expenses necessary to provide “a basic level of service” has [sic] been provided to all residents of the Nursing Center at University Village. In an effort to expeditiously review “documents provided by the agency” please forward those documents to: Jeffrey Wendel, Controller, and P.O. Box 501188, Indianapolis, IN 46250.

   
   

   If there are any further questions regarding this certificate holder and the location of its minimum liquidity reserve (MLR) please direct those inquiries to Mr. Wendel as well. Thank you for your concern, hopefully after review of the certificate holder’s identification number your office will find the liquidity to be sufficient.

   
   

7. Mr. Bartle signed the letter “Board Member, TR & SNF.” It shows copies to Jeffery Wendel, Controller, and Anna Small, Esquire. The letter does not request an extension of time to supply the requested information.

8. Mr. Bartle denies writing the letter and any knowledge of it being sent.

9. The next day Mr. Bartle sent Mr. Hudson an email saying he had just learned of the March 3 letter. Mr. Bartle’s email says he thinks a lawyer wrote it and someone, unknown to him, signed and sent it because they thought “that there was something ‘urgent’ about the March 3, 2015, date.” TR & SNF did not provide evidence showing who authored or signed the March 3 letter.

10. The email goes on to say: “I did ‘not’ sign the letter, and do not agree with some of the statements made in that letter.” This careful, conditioned statement leaves open the likelihood that Mr. Bartle approved the letter and agrees with many of its statements.

11. The email apologizes for the March 3, 2015, letter and states that Mr. Bartle had engaged an accounting firm to complete the form and provide the requested documents. The letter does not request an extension of time or say when TR & SNF would provide the completed form. The last sentence of the letter states: “I will confirm with you when CLA [the accounting firm]

    
    

    can turn over the PFA [proof of financial ability] to your Agency tomorrow.” There is no evidence that Mr. Bartle fulfilled that pledge.

12. The email identifies Mr. Bartle, as “Director Senior Housing Division.” It has a website address of http://bvmmanagement.com.

13. The letter and the email reveal Mr. Bartle’s view that deadlines established by regulatory authorities performing the duties imposed on them for the protection of the public by the Legislature are not significant. This disregard, if not disdain, for the statutes and rules governing nursing home services and the enforcement of them is patent in the letter and e-mail,

    Mr. Bartle’s dismissive testimony about the shifting relationships of the various entities, his demeanor when testifying, and his evasive manner of answering questions when testifying. For these reasons, Mr. Bartle’s denial of the March 3 letter and much of his uncorroborated testimony are not accepted as credible.

14. On March 11, 2015, the Agency issued its Administrative Complaint.

15. On April 1, 2015, TR & SNF requested a formal administrative hearing.

    
    

16. TR & SNF submitted its proof of financial ability sometime after April 9, 2015. By the time TR & SNF provided the document, the Administrative Complaint had issued and TR & SNF had requested a hearing to challenge it.

17. On April 23, 2015, Everett Broussard of the Agency sent Mr. Hudson an interoffice memorandum providing “staff requests [for] additional documentation and/or correction of errors and omissions to the initial response (listed below).”

18. The memorandum does not identify Mr. Broussard’s position or provide any information about his qualifications to conduct financial reviews. The Agency chose not to offer testimony from Mr. Broussard or any other witness about an analysis of the document provided by TR & SNF.

19. The Agency did not seek further information from TR &

    
    

    SNF.

    
    

    CONCLUSIONS OF LAW

    
    

    Jurisdiction and Burden of Proof

    
    

20. DOAH has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569 and 120.57(1), Fla. Stat (2015)1/.

21. The Agency bears the burden of proving the allegations of its Administrative Complaint. See Dep't of Banking & Fin., Div. of Sec. & Investor Prot. v. Osborne Stern & Co., 670 So. 2d

    932, 935 (Fla. 1996; Fla. Dep't of Transp. v. J.W.C. Co., Inc.,

    
    

    396 So. 2d 778, 788 (Fla. 1st DCA 1981). Since the Agency seeks to impose fines and revoke a license, the Agency must prove its allegations by clear and convincing evidence. Nair v. Dep’t of

    Bus. & Prof’l Reg., Bd. of Med., 654 So. 2d 205 (Fla. 1st DCA 1995).

    Count I

    
    

22. Count I of the Administrative Complaint charges that TR & SNF violated section 408.810(8), Florida Statutes. It requires a nursing home applicant to furnish satisfactory proof of financial ability to operate in accord with statutes and rules. The statute says that the Agency shall establish standards for this purpose including information about applicant’s controlling interests.

23. Section 408.810(8) also says: “The agency may require a licensee to provide proof of financial ability to operate at any time if there is evidence of financial instability, including, but not limited to, unpaid expenses necessary for the basic operations of the provider.”

24. Clear and convincing evidence, in the form of the order suspending the certificate for the continuing care community, showed that the Agency had sufficient evidence of financial instability to require proof of financial ability.

25. Florida Administrative Code Rule 59A-35.062(7) authorize the Agency to require a provider to submit proof of

    
    

    financial ability by completing and submitting a Proof of Financial Ability Form, a balance sheet, and an income and expense statement.

26. TRF & SNF did not provide the requested proof. It did not request an extension of time. It did not take the request or the Agency’s authority to make it seriously until after the Agency filed the Administrative Complaint.

27. TR & SNF argues that the Agency did not permit a reasonable period of time for it to gather and provide the information. TR & SNF cites no authority for a “reasonable time requirement,” no authority stating what a reasonable time is, or authority establishing how to determine what is a reasonable time. TR & SNF also did not provide persuasive evidence to support this argument. There was no testimony from the accounting firm about the time needed to prepare the proof of financial ability and accompanying documents. Most importantly Mr. Bartle’s communications of March 3 and March 4 demonstrate that TR & SNF was avoiding providing the requested information.2/

    Count II

    
    

28. Count II of the Administrative Complaint charges that TR & SNF violated the requirement of Florida Administrative Code Rule 59A-35.110(1)(c) for a nursing home to report changes of administrator or similar person responsible for the day to day operation of the provider. During the relevant time period the

    
    

    persons who served as administrator of TR & SNF changed more than once. But the Agency offered no evidence that the changes were not appropriately reported. Consequently, the Agency did not prove the charges of Count II.

    Count III

    
    

29. The charges of Count III are derivative of the charges of Counts I and II. Count III relies upon section 408.815(1)(c), which authorizes revoking a license for violations of chapter 408 or applicable rules. Proof of the charge in Count I amounts to proof of the charges of Count III.

    Penalty

    
    

30. Section 400.121(1)(a), Florida Statutes, allows the Agency to revoke a license and impose an administrative fine not to exceed $500.00 per violation per day for any violation of chapter 408, or applicable agency rules. The Agency has proven by clear and convincing evidence that TR & SNF violated section 408.810(8). There is no evidence supporting mitigation of the possible penalties. The Agency’s proposed administrative fine of

$10,000.00 and revocation of the license of TR & SNF is reasonable.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency enter a final order imposing an administrative fine in the amount of $10,000 and revoking the license of TR & SNF, Inc.

DONE AND ENTERED this 31st day of May, 2016, in Tallahassee, Leon County, Florida.

S

JOHN D. C. NEWTON, II

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 2016.

ENDNOTE

1/ All citations to the Florida Statutes are to the 2015 edition.

2/ Only whether TR & SNF provided proof of financial ability is an issue in this case. This Recommended Order makes not findings or conclusions on whether TR & SNF can prove it has the financial ability to operate.

COPIES FURNISHED:

Thomas J. Walsh, II, Esquire

Agency for Health Care Administration Suite 330

525 Mirror Lake Drive North St. Petersburg, Florida 33701 (eServed)

Jay Adams, Esquire Broad and Cassel Suite 400

215 South Monroe Street Tallahassee, Florida 32301 (eServed)

John F. Loar, Esquire Broad and Cassel Suite 400

215 South Monroe Street Tallahassee, Florida 32301 (eServed)

M. Stephen Turner, Esquire Broad and Cassel

Suite 400

215 South Monroe Street Tallahassee, Florida 32301 (eServed)

Eric Silver

Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.

Suite 2200

150 West Flagler Street Miami, Florida 33130 (eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 (eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308 (eServed)

Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 (eServed)

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: 15-002128

Orders for Case No: 15-002128