STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WHITEHALL BOCA, an Illinois ) limited partnership, and )

HEALTH CARE CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 83-1370

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Final hearing was held in this matter before Marvin E. Chavis, duly designated Hearing Officer of the Division of Administrative Hearings, on November 29, 1983, in Boca Raton, Florida.

APPEARANCES

For Petitioner: Jean Laramore, Esquire

G. Steven Pfeiffer, Esquire Laramore & Clark, P.A.

325 North Calhoun Street Tallahassee, Florida 32301

For Respondent: Douglas L. Mannheimer, Esquire

Culpepper, Turner and Mannheimer Post Office Drawer 11300 Tallahassee, Florida 32301-3300

ISSUES AND BACKGROUND

This case involves the issue of whether the certificate of need law applies to Whitehall Boca's intended conversion of 100 beds in an adult congregate living facility to skilled nursing beds. The second issue is, in the event that it is determined that the certificate of need law does apply, whether Whitehall Boca is entitled to convert a limited number of its adult congregate living facility beds to skilled nursing beds without the need for obtaining a certificate of need in accordance with Section 381.494(1)(d), Florida Statutes.

At the final hearing Petitioner called Carol J. Wortham, Steve Mulder, and Jeffrey W. Smith. The Respondent called as its only witness Gene Nelson. The Petitioner offered and had admitted into evidence seventeen exhibits. The Respondent offered and had admitted into four exhibits.

Subsequent to the final hearing, the parties submitted proposed findings of fact and conclusions of law for consideration by the Hearing Officer. To the extent that those proposed findings and conclusions of law are inconsistent with

this Recommended Order, they were rejected by the Hearing Officer as unsupported by the evidence or as unnecessary to the resolution of this cause.

FINDINGS OF FACT

1. Whitehall Boca is a 187-bed health care facility located in Boca Raton, Palm Beach County, Florida. Sixty-nine (69) of Whitehall Boca's beds are licensed by the Department of Health and Rehabilitative Services as skilled nursing beds in accordance with Chapter 400, Part I, Florida Statutes. One hundred eighteen (118) of Whitehall Boca's beds are licensed by the Department as an adult congregate living facility (hereafter ACLF) in accordance with Chapter 400, Part II, Florida Statutes. Whitehall Boca is seeking to convert

   100 of its adult congregate living facility beds to skilled nursing beds. Whitehall Boca holds two separate licenses for the nursing home beds and for the ACLF.

   
   

2. Whitehall Boca was opened on December 17, 1982, and was the culmination of the owner's goal of attempting to build the finest nursing home that has ever been built. The Whitehall Boca facility has received a superior rating from the Department of Health and Rehabilitative Services' office of licensure.

   
   

3. The cost of construction of Whitehall Boca was approximately five and one-half million dollars. The funds for this construction were obtained from

   100 percent private funds, which was arranged by Oak Park Trust Bank in Illinois and invested capital provided by the Mulder family. The loans were not guaranteed by the federal government or any governmental entity whatsoever.

   
   

4. The 100 existing ACLF beds which Petitioner seeks to convert fully comply with all applicable federal, state and local license requirements for skilled nursing beds in their present condition. Only a few ancillary items such as medicine carts would be needed in order to make the conversion. Such items would involve a capital expenditure of no more than $5,000 to $6,000. The Respondent conceded at the formal hearing that cost of conversion is not an issue.

   
   

5. It has been the policy of Whitehall Boca since 1955 not to accept federal funds nor to accept Medicaid or Medicare patients. Whitehall Boca does not accept Medicare and Medicaid patients in any of its homes because they offer an elite type of nursing home care which is not offered in other existing nursing homes.

   
   

6. Whitehall Boca did not obtain its initial certificate of need for the

   69 skilled nursing home beds by the usual statutory procedure. Whitehall Boca purchased Health Care Corporation, the entity who had originally obtained the certificate of need. However, after Whitehall Boca obtained the certificate of need, it applied for a license from DHRS and specifically informed them in its application that it would not accept Medicare or Medicaid patients.

   
   

7. Whitehall Boca, an Illinois limited partnership, owns and operates the 187-bed nursing home complex in Boca Raton, Florida. At present, this is the only home owned by the Petitioner in the State of Florida. Whitehall Boca is owned by a father and a son, Paul and Steve Mulder. They own three nursing homes in Chicago, Illinois.

   
   

8. Daily rates for the skilled nursing home beds at Whitehall Boca are $68 per day for three persons to a room, $80 per day for two persons to a room, with private rooms beginning at $125 per day. These rates are substantially higher

   than most other nursing homes in the area. Whitehall Boca caters to a very small segment of the population that is able to afford the luxuries and amenities available at Whitehall Boca. For most residents who have chosen the luxury accommodations at Whitehall Boca, the only alternative which would provide comparable care and maintenance of their lifestyle, would be private duty nursing arrangements at home.

   
   

9. In the alternative to a total exemption from certificate of need review, Whitehall Boca contends it is entitled to convert 18 of its ACLF beds to skilled nursing beds without CON review pursuant to the provisions of Section 381.494(1)(d), Florida Statutes. DHRS does not consider an ACLF a health care facility and contends therefore that Section 381.494(1)(d) is not applicable to Petitioner's request.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action.

    
    

11. There are two issues which must be resolved in this proceeding. The first issue involves the question of whether Whitehall Boca is exempt from the CON process and may convert 100 ACLF beds to skilled nursing home beds without first obtaining a certificate of need. The second issue is whether Petitioner may convert 18 ACLF beds to skilled nursing home beds pursuant to Section 381.494(d), Florida Statutes.

    
    

12. Before addressing each of these issues, there are several terms which are defined by the Florida Statutes which are relevant to these proceedings. Those terms and their definitions are as follows:

    
    

    (g) "Health care facility" means a hospital, skilled nursing facility, intermediate care facility, ambulatory surgical center, or freestanding hemodialysis center. A facility, such as one provided by the Christian Science Church, relying solely on spiritual means through prayer for healing shall not be included as a health care facility within the meaning of ss. 381.493-381.497.

    F.S. 381.493(3)(g)

    (i) "Health services" means clinically related (i.e., diagnostic, curative, or rehabilitative) services and includes alcohol, drug abuse, and mental health services.

    F.S. 381.493(3)(i)

    (s) "Skilled nursing facility" means an institution, or a distinct part of an institution, which is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care or rehabilitation services for the rehabilitation of injured, disabled, or sick persons.

    F.S. 381.493(3)(s)

    (n) "Intermediate care facility" means an institution which provides, on a regular basis, health-related care and services to

    individuals who do not require the degree of care and treatment which a hospital or skilled nursing facility is designed to provide, but who, because of their mental or physical condition, require health-related care and services, above the level of room and board.

    F.S. 381.493(3)(n)

    (7) "Facility" means any institution, building, residence, private home, or other place,

    whether operated for profit or not, including a place operated by a county or municipality, which undertakes through its ownership or management to provide for a period exceeding 24-hour nursing care, personal care, or custodial care for three or more persons not related to the owner or manager by blood or marriage, who by reason of illness, physical infirmity, or advanced age require such services, but does not include any place providing care and treatment primarily for the acutely ill. A facility offering services for fewer than three persons is within the far meaning of this definition if it holds itself out to the public to be an establishment which regularly provides such services.

    1. "Nursing home facility" means any facility which provides nursing services as defined in chapter 464 and which is licensed according to this part.

    2. "Nursing service" means such services or acts as may be rendered, directly or indirectly, to and in behalf of a person by individuals as defined in s. 464.003.

    F.S. 400.021(10) and (11)

    (2) "Adult congregate living facility" hereinafter referred to as "facility," means any building or buildings, section of a building, or distinct part of a building, residence, private home, boarding home, home for the aged, or other place, whether operated for profit or not, which undertakes through its ownership or management to provide, for a period exceeding 24 hours, housing, food service, and one or more personal services for four or more adults, not related to the owner or administrator by blood or marriage, who require such services. A facility offering personal services for fewer than four adults is within the meaning of this definition if it formally or informally advertises to our solicits the public for residents or referrals and holds itself out to the public to be an establishment which regularly provides such services.

    F.S. 400.402(2)

    (8) "Personal services" include, but are not limited to, such services as: individual

    assistance with or supervision of essential activities of daily living, such as eating, bathing, grooming, dressing, and ambulating; supervision of self-administered medication; and other similar services which the department may define. "Personal services" shall not be construed to mean the provision of medical, nursing, dental, or mental health services by the staff of a facility, except as provided in subsection (12)

    F.S. 400-402(80)

    1. "Supervision of activities of daily living" means reminding residents to engage in personal hygiene and other self-care activities and, when necessary, observing or assisting residents while they attend to activities such as bathing or shaving to assure their health, safety, or welfare.

       F.S. 400.402(11)

    2. "Supervision of self-administered medication" means reminding residents to take medication, opening bottle caps for residents, reading the medication label to residents, observing residents while they take medication, checking the self-administered dosage against the label of the container, reassuring residents that they have obtained and are taking the dosage as prescribed, keeping daily records of when residents receive supervision pursuant to this subsection, and immediately reporting noticeable changes in the condition of a resident to the resident's physician. Supervision of self-administered medication shall not be construed to mean that facility staff shall provide such supervision to residents who are capable of administering their own medication. Persons under contract to the facility, facility staff, or volunteers, who are licensed according to chapter 464, or those persons exempted under s. 464.022(1),

    are limited in their practice in an adult congregate living facility to the administration of medication to residents. F.S. 400.402(12)

    
    

13. Petitioner contends that because it does not accept Medicare and Medicaid patients or any type of government reimbursement it does not fall within the intent of the federal statute requiring states which receive such federal reimbursement to require CON review of health care facilities. See Bio- Medical Applications v. Department of Health and Rehabilitative Services, 370 So.2d 19 (Fla. 2d DCA 1979). However, the question of whether a CON is required in order to convert ACLF beds to skilled nursing home beds is purely a question of Florida law and is controlled by Section 381.494, Florida Statutes. That section provides in relevant part:

    
    

    1. APPLICATION.--All health care related projects as described in paragraphs (a)-(n)

       shall be subject to review under this act and, accordingly, shall file applications for a certificate of need.

       1. The conversion from one type of health care facility to another, including the conversion from one level of care to another in a skilled or intermediate nursing facility, if such conversion affects a change in the level of care of 10 beds or 10 percent of total bed capacity of such skilled or intermediate nursing facility within a 2-year period. If such nursing facility is certified

          for both skilled and intermediate nursing care, the provisions of this paragraph do not apply.

       2. An increase in licensed bed capacity.

       
       

       In order to properly discuss the contentions of the Petitioner and Respondent in this action, it is incumbent that the intent of the Florida CON law be considered. The stated legislative intent of that law is:

       
       

    2. LEGISLATIVE INTENT.--It is the intent of the Legislature to stimulate the establishment and continuous reevaluation of community- oriented health goals by providers, consumers, and public agencies; to assist in the rational examination of alternate methods of achieving those goals; and to aid in their achievement through the most effective means possible within the limits of available resources. It is imperative to plan the rendering of health services in order to meet and provide for community health needs in a responsible and effective manner, and this planning by the community must be assisted by a state health planning agency which is intended to coordinate the activities of all health planning agencies. It is the intent of the Legislature to invest the state health planning agency with the roles of provider of information, consultant, stimulator, and adviser to all health care institutions, health service providers, hospices, and consumers. It is intended that the agency work closely with local health councils, health care facilities, health service providers, and hospices in developing a planning process to define service needs in specific geographic areas and assist health care facilities, health service providers, and hospices in those areas to develop programs of service that will assure the best possible service to the community. It is also intended that the agency work with the community to find and define areas of need and to consider available alternatives to meet the needs. Every consideration shall be given to the elimination of unnecessary duplication of

       health services and the provision of health services which are not currently available or which are insufficiently provided within the community. It is further intended that health care facilities, certain health service providers, and hospices shall not change the scope of those services without the approval and authorization of the state health planning agency. It is intended that strengthening of competitive forces in the health services industry be encouraged. Section 381.493(2), Florida Statutes.

       
       

       A clear reading of Section 381.494, Florida Statutes, with this statement of legislative intent reveals that Petitioner is not exempt from the CON process.

       
       

14. In its present facility Petitioner has 69 licensed beds and an ACLF containing 118 beds. ACLFs are licensed under Part II of Chapter 400 of the Florida Statutes. A review of Part II, Sections 400.401 through 400.454, Florida Statutes, indicates that in licensing an ACLF, a single facility and not individual beds is the basis upon which the license is granted. In contrast, Sections 400.062 and 400.71, Florida Statutes, make it clear that in licensing a nursing home under Part I of Chapter 400, the state is licensing a specific number of beds. Section 400.071(7) provides that the Department of Health and Rehabilitative Services may not issue a license to a nursing home which fails to receive a certificate of need under the provisions of Sections 381.493-381.495, Florida Statutes. No such CON is required in order to obtain a license for an ACLF.

    
    

15. The only "licensed beds" within Whitehall Boca are the 69 skilled nursing home beds. Conversion of any ACLF beds to skilled nursing home beds would therefore increase the number of licensed beds within that facility. Therefore, a CON is required under Section 381.494(1)(e), Florida Statutes.

    
    

16. Petitioner also contends that if it is not exempt from the CON process it is entitled to convert at least 18 beds under Section 381.494(1)(d), Florida Statutes. This is based upon the contention that its ACLF is an intermediate nursing facility and that Petitioner can therefore convert 10 percent of its total 187 beds to a higher level of care (skilled nursing) within a two-year period. A close reading of the relevant Florida Statutes establishes that this contention is also without merit.

    
    

17. An "intermediate care facility" as defined above is a facility which provides required health-related care and services above the level of room and board but below the degree of care and treatment a hospital or skilled nursing facility would provide. Section 381.493(3)(n), Florida Statutes. The section relied upon by Petitioner refers specifically to "skilled or intermediate nursing facility." Section 381.494(1)(d), Florida Statutes. A "nursing home facility" as defined in Section 400.021(10) means any facility "which provides nursing services as defined in Chapter 464 and which is licensed according to this part." It is concluded then that an "intermediate nursing facility" refers to a nursing facility which provides nursing services below the level of care of a skilled nursing home but above the level of room and board and is licensed as a nursing home. An ACLF is not licensed as a nursing home and is not permitted to provide "nursing services" as defined in Section 464.003, Florida Statutes. Therefore, an ACLF is not an intermediate nursing facility and the 10 percent exemption under Section 381.494(1)(d), Florida Statutes, does not apply.

18. Chapter 400, Florida Statutes, clearly contemplates that in order to obtain a license for a skilled nursing home one must first obtain a certificate of need. To accept Petitioner's contention of total exemption would permit health care providers to totally bypass the CON process for skilled nursing homes by building and licensing an ACLF with rooms adequate for skilled nursing care and then converting the ACLF to skilled nursing beds. Accepting Petitioner's argument under Section 381.494(1)(d), Florida Statutes, would result in the same bypassing of the CON process but would require 12 years rather than one year to convert all 100 ACLF beds. Such a result would be contrary to the letter and the intent of Chapter 381 and Chapter 400 of the Florida Statutes.

RECOMMENDATION

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

That a final order be entered by the Department of Health and Rehabilitative Services denying an exemption for Petitioner to convert ACLF beds to skilled nursing home beds and requiring that such a request be subject to review under Sections 381.493, et seq., Florida Statutes.

DONE AND ENTERED this 6th day of July, 1984, at Tallahassee, Florida.

MARVIN E. CHAVIS

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 July, 1984.

COPIES FURNISHED:

Jean Laramore, Esquire

G. Steven Pfeiffer, Esquire Laramore & Clark, P.A.

325 North Calhoun Street Tallahassee, Florida 32301

Douglas L. Mannheimer, Esquire Culpepper, Turner and Mannheimer Post Office Drawer 11300 Tallahassee, Florida 32301-3300

David H. Pingree, Secretary Department of Health and

Rehabilitative Services 1321 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 83-001370

Orders for Case No: 83-001370