STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH QUEST REALTY II, )

)

Petitioner, )

)

vs. ) CASE NO. 83-810

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, on February 15, 1984 in Fort Myers, Florida.

APPEARANCES

For Petitioner: Charles M. Loeser, Esquire

315 West Jefferson Boulevard South Bend, Indiana 46601

For Respondent: James M. Barclay, Esquire

Building Two, Room 256 1317 Winewood Boulevard

Tallahassee, Florida 32301 BACKGROUND

By proposed agency action issued on January 27, 1983, respondent, Department of Health and Rehabilitative Services, advised petitioner, Health Quest Realty II, that it intended to deny petitioner's application for a certificate of need to construct a 120-bed nursing home in Fort Myers, Florida. In brief, the agency stated that no need for additional nursing home beds in Lee County existed, and that the application should accordingly be denied.

Petitioner filed a petition requesting a formal hearing on February 24, 1983 to contest the proposed agency action. The matter was referred by respondent to the Division of Administrative Hearings on March 17, 1983 with a request that a Hearing Officer be assigned to conduct a formal hearing.

By agreement of the parties, the final hearing was scheduled for February 15, 1984 in Fort Myers, Florida. A motion to continue the hearing filed by petitioner on February 7, 1984 was denied.

At the final hearing petitioner presented the testimony of Dr. Fred E. West, who was accepted as an expert in the field of health care planning for the elderly, and offered petitioner's exhibits 1-11; all were received in evidence except exhibit 11 upon which a ruling was reserved. Respondent presented the

testimony of its medical facilities consultant, Herbert E. Straughn, and offered respondent's exhibits 3-8; all were received in evidence.

The transcript of hearing was filed on March 2, 1984. Proposed findings of fact and conclusions of law were filed by petitioner and respondent on March 19 and 20, 1984, respectively, and have been considered by the undersigned in the preparation of this order. Findings of fact not included in this order were considered irrelevant to the issues, immaterial to the results reached, or were not supported by substantial and competent evidence.

During the course of the hearing, the parties agreed that petitioner has satisfied all statutory criteria except as to need. The issue, then, is whether petitioner has demonstrated a need to construct the proposed nursing home project in Lee County, Florida.

Based upon all of the evidence the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner, Health Quest Realty II, filed an application with respondent, Department of Health and Rehabilitative Services (HRS), on an undisclosed date seeking a certificate of need to construct a 120-bed nursing home in Lee County, Florida at a cost of $3,108,000.

   
   

2. After reviewing the application, HRS issued its state agency action report on January 27, 1983 in which it stated that a need for additional nursing home beds in Lee County did not exist, and that it accordingly intended to deny the application. The letter of denial accompanying the report summarized the basis for denial in the following manner:

   
   

   The proposed projects are not consistent with Chapter 10-5.11, Florida Administrative Code, nursing home bed need methodology.

   
   

   A need does not exist to add nursing home beds to Lee County through 1985. There are 347 approved but not constructed beds in the county. The bed need methodology produces an excess of 494 nursing home beds in the county through 1985.

   
   

3. In determining need for nursing homes, a three year planning horizon is used. In this case, HRS has projected the needs of the area for the year 1986, or three years after the most current actual available data. Petitioner has a used a three year planning horizon of 1987, or three years after the hearing was held. Since 1983 data has been used and is the most current, 1986 is the more appropriate planning horizon for this proceeding.

   
   

4. Lee County lies within HRS District 8 which is made up of six counties in Southwest Florida. The District in turn is made up of several subdistricts, of which Lee county alone constitutes one. HRS has determined the overall nursing home bed need for the District, as well as bed requirements for subdistricts within the district. The actual numbers are obtained by making calculations required by a formula contained in Rule 10-5.11(21), Florida Administrative Code.

5. According to exhibits introduced by HRS, there are currently 3,668 licensed beds and 1,217 approved beds within District 8, for a total of 4,895 beds. The formula produces a district-wide need of 3,685 beds. Therefore, there will be a surplus of 1,210 beds throughout the District in 1986.

   
   

6. The same HRS exhibits reflect that there are currently 808 licensed beds and 222 approved beds within Lee County for a total of 1030 beds. Under the formula, a need for 1,202 beds exists. Accordingly, there exists a mathematical need for 172 beds in 1986 under the rule. 1/ However, the rule provides that where a shortage of beds exists within a sub-district, but the district as a whole shows no additional need, beds may be used up to the point at which further additions would cause the prospective utilization rate for the subdistrict (county) to drop below the prospective occupancy rate (80 percent) specified in the rule. After factoring the number of proposed beds into the formula, the countywide prospective occupancy rate drops to 64.3 percent, which is below the 80 percent rate required by the rule. 2/

   
   

7. Petitioner relies upon a number of factors to support the authorization of additional beds in Lee County, Florida. First, it introduced into evidence the District 8 Health Council report issued on June 29, 1983 which concluded there will exist a need for 331 additional nursing home beds in 1986. But it was not disclosed whether this report was ever adopted by HRS. It also introduced the 1981 State Health Plan which reflected a need for 312 more beds on a district-wide basis in 1986. But these calculations must be discounted in view of the outdated source data used in the Plan. Petitioner further relied upon a recent HRS decision finding a need for 552 additional nursing home beds in 1986 in Lee County. However, other than the decision itself, petitioner offered no other independent evidence to support that decision's reasoning and rule interpretation or why it should apply to this proceeding. Finally, petitioner attempted to demonstrate that Lee County has a small number of nursing home beds in relation to its impoverished elderly population. But these factors are already considered by HRS in its formula for determining need, and if used in the manner suggested by petitioner, would constitute a deviation from the rule.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

   
   

9. The parties have stipulated that all statutory criteria have been met by the applicant except those criteria relating to need. These are codified in Subsection 381.494(6)(c) 1. and 2., Florida Statutes, and provide as follows:

   
   

   1. The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan adopted pursuant to Title

      XV of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.

   2. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices

      in the applicant's health service district area.

      The applicant must also meet the criteria imposed by Rule 10-5.11(21), Florida Administrative Code. That rule contains the formula by which bed need for nursing homes is determined. The rule is binding as to need, and HRS is bound to observe it in administering its certificate of need program. Page v. Capitol Medical Center, Inc., 371 So.2d 1987, 1089 (Fla. 1st DCA 1979).

      
      

10. Under the formula prescribed by Rule 10-5.11(21), there is no need for additional beds in Lee County, Florida in 1986. Although petitioner cites the recent decision of CHA, Inc. v. DHRS, DOAH case No. 83-615, Final Order entered 1/27/84, for the proposition that HRS itself had determined that additional beds are needed, no independent evidence was offered to support the reasoning used in CHA in the case at bar. The remaining arguments of applicant have been considered, and either constitute a deviation from the rule, or are based on outdated data or materials not binding on the agency.

    
    

11. It is concluded that no need for additional nursing home beds in Lee county, Florida has been shown, and that the application should be denied.

    
    

12. The objection to petitioner's exhibit 11 is hereby sustained.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Health Quest Realty II for a

certificate of need to construct a 120-bed nursing home in Lee County, Florida be DENIED.

DONE and ENTERED this 6th day of April, 1984, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of April, 1984.

ENDNOTES

1/ In January, 1984 HRS authorized the addition of 110 more nursing home beds in Lee County. These were not taken into account by HRS when making the above calculations. Assuming no other variables changed, this would decrease the subdistrict need to 62 beds.

2/ Although the Department used a 90 percent rate, this is incorrect. The proper utilization rate is 80 percent according to Subsection (h) of the applicable rule.

COPIES FURNISHED:

Charles M. Loeser, Esquire Health Quest Realty III

315 West Jefferson Street South Bend, Indiana 46601

James M. Barclay, Esquire Building Two, Suite 256 1317 Winewood Boulevard

Tallahassee, Florida 32301

Alicia Jacobs, Esquire General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 83-000810

Orders for Case No: 83-000810