STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH CARE MANAGEMENT, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 83-1668

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William E. Williams, held a public hearing in this cause on November 17, 1983, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Robert D. Newell, Jr., Esquire

646, Lewis State Bank Building Tallahassee, Florida 32301

For Respondent: Robert P. Daniti, Esquire

Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Building 1, Room 406

Tallahassee, Florida 32301

By Petition filed with the Department of Health and Rehabilitative Services ("HRS") on May 6, 1983, Petitioner, Health Care Management, Inc. ("HCM" or "Petitioner"), requested a formal hearing, pursuant to Section 120.57(1), Florida Statutes, to contest the denial by HRS of HCM's application for a certificate of need ("CON") to add 42 additional nursing home beds to Petitioner's existing 78-bed facility, which had been shelled in for 120 beds, located in Fort Myers, Lee County, Florida.

At the final hearing, HRS' Motion in Limine was denied, thereby allowing HCM to demonstrate any special circumstances that might exist in Lee County sufficient to relieve HCM from a strict application of the numerical need methodology contained in Rule 10-5.11(21), Florida Administrative Code. HCM called Marty Clark, Don Rapp, and Michael Schwartz as its witnesses. Petitioner offered Petitioner's Exhibits 1 through 13, which were received into evidence.

HRS called Herbert Straughn as its only witness, and offered Respondent's Exhibits 1 through 8, which were received into evidence.

The parties orally stipulated that HCM had satisfied the criteria contained in Section 381.494(6)(c)(4), (8), and (13), Florida Statutes. The parties

further stipulated that the criteria contained in subparts (5), (6), (10), and

1. are not applicable in this proceeding. Accordingly, the only criteria at issue in this proceeding are those contained in Section 381.494(6)(c)(1), (2), (3), and (12).

   
   

   The parties further stipulated that HCM satisfied the criteria contained in Rule 10-5.11(4), (5), (6), (7), and (9). It was also stipulated that the criteria in subparts (8) and (11) of Rule 10-5.11 are not applicable herein.

   Accordingly, remaining in dispute are the criteria contained in Rule 10-5.11(1), (3), and (12).

   
   

   Both Petitioner and Respondent have submitted proposed findings of fact for consideration by the Hearing officer. To the extent that those proposed findings of fact are not contained in this Recommended Order, they have been specifically rejected as being either irrelevant or unnecessary to a determination of the issues in this cause, or as not having been supported by evidence of record.

   
   

   FINDINGS OF FACT

   
   

   1. On or about January 7, 1981, HCM was issued CON No. 1616, authorizing construction of a 78-bed nursing home facility to be located in Lee County, Florida. HCM has commenced construction of this project on a 120-bed frame.

      
      

   2. Subsequently, HCM applied to HRS for a CON for an additional 42 nursing home beds to be added to the above-described project.

      
      

   3. By letter dated April 28, 1983, HRS informed HCM of its intent to deny HCM's application for the additional 42 nursing home beds on the grounds that the proposed project was not consistent with the nursing home bed need methodology contained in Rule 10-5.11(21), Florida Administrative Code.

      
      

   4. Lee County has been established as a specific subdistrict of HRS District VIII for determination of nursing home bed need. Rule 10-5.11(21)(c), Florida Administrative Code. The record in this cause establishes a percentage of 8.61 of elderly living in poverty in Lee County, as compared to a percentage of 12.70 statewide. There exists a statewide bed need of 27 community nursing home beds per 1,000 population age 65 years and older. Finally, a population of 65,703 is projected for Lee County in 1986. When these factors are combined in accordance with the need methodology formula contained in Rule 10-5.11(21)(b), a need of 1,203 community nursing home beds is established for Lee County in 1986. When this same calculation is made districtwide, using a projected 1986 population for District VIII of 201,392 age 65 and older, a need for 3,686 community nursing home beds results.

      
      

   5. At the time of final hearing in this cause, there were 748 existing licensed community nursing home beds in Lee County, and an additional 222 such beds which had previously been approved by HRS. When the total of 970 existing and approved beds are subtracted from the 1986 projected bed need in Lee County, a net bed need of 233 beds results for 1986.

      
      

   6. At the time of final hearing in this cause, there were 3,335 existing licensed community nursing home beds in District VIII, and an additional 1,337 which had been approved. The total of 4,512 existing and approved community nursing home beds in District VIII exceeds the need in District VIII according to the requirements of Rule 10-5.11(21) by 824 beds. Where, as here, the evidence establishes that a subdistrict indicates a need for additional bed

      capacity, but the district as a whole shows no additional need, Rule 10- 5.11(21)(f)2, Florida Administrative Code, establishes a current utilization threshold of 90 percent or higher in the subdistrict. In this case, the evidence establishes that the appropriate current utilization rate for Lee County is 91.5 percent.

      
      

   7. In addition, Rule 10-5.11(21)(h)2, Florida Administrative Code, requires a prospective base rate of utilization of 80 percent when the need methodology indicates a subdistrict need and the lack of need in the district as a whole. The evidence in this cause establishes an average Lee County patient census of 684, and 970 currently licensed and approved community nursing home beds which must be factored together with HCM's request for an additional 42 beds. When the formula contained in Rule 10-5.11(21)(g) is applied to this data, the prospective utilization rate is 67.6 percent, which fails to meet the threshold 80 percent requirement contained in Rule 10-5.11(21)(h)2.

      
      

   8. HCM apparently does not contest the results of the application of the bed need methodology contained in Rule 10-5.11(21), but instead argues that the results of the formulae should not be applied to its application because of the existence of exceptional circumstances in Lee County. In this regard, HCM adduced testimony attempting to establish an historical imbalance between the number of community nursing home beds located in Lee and Sarasota Counties, purportedly necessitating the placement of Lee County residents receiving Medicaid or assistance from the Veterans Administration 70 to 100 miles from their families, or continuing hospitalization of those patients in a more costly acute care facility. It is specifically concluded, that the record in this cause fails to contain any competent, credible evidence to establish that Medicaid and VA recipients in Lee County have been so historically underserved as to merit the granting of the 42 additional nursing home beds requested by HCM. Further, even if this were not the case, HCM has failed to establish that the 222 additional community nursing home beds approved for Lee County will not adequately serve the interests of Medicaid and VA recipients in Lee County in 1986. Rule 10-5.11(21) purports on its face to account for the needs of the elderly over 65 years of age living in poverty, and this record contains no showing that the rule in any way underestimates that need.

      
      

      CONCLUSIONS OF LAW

      
      

   9. The Division of administrative Hearings has jurisdiction over the subject matter of, and the parties to, this proceeding. Section 120.57(1), Florida Statutes.

      
      

   10. Rule 10-5.11(21)(a), Florida Administrative Code, provides as follows:

       
       

       Departmental Goal. The Department will consider applications for community nursing home beds in context with applicable statutory and rule criteria. The Department will not normally approve applications for new or additional community nursing home beds in any departmental service district if approval of an application would cause the number of community nursing home beds in that department service district to exceed the number of community nursing home beds calculated by the methodology described in subsections (21)(b), (c), (d), (e), (f), (g), and (h) of this rule.

       It is specifically concluded, based upon the foregoing Findings of Fact, that HCM's application for a CON to add 42 additional nursing home beds to its existing 78-bed facility does not comply with the need methodology contained in Rule 10-5.11(21)(b)-(h), Florida Administrative Code, in that the addition of these 42 beds does not meet the threshold 80 percent prospective utilization rate requirement contained in Rule 10-5.11(21)(h) 2.

       
       

   11. It is further concluded, as a matter of law, that Petitioner has failed to demonstrate exceptional circumstances which would merit the granting of the requested CON under the requirements of Section 381.494(6)(c)(1), (2), (3), and (12) Florida Statutes, or Rule 10-5.11(1), (3), and (12), Florida Administrative Code.

Accordingly, based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED:

That a Final Order be entered by the State of Florida, Department of Health and Rehabilitative Services, denying Health Care Management's application for a certificate of need for an additional 42 nursing home beds.

DONE AND ENTERED this 12th day of September, 1984, at Tallahassee, Florida.

WILLIAM E. WILLIAMS

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 12th day of September, 1984.

COPIES FURNISHED:

Robert D. Newell, Jr., Esquire Oertel & Hoffman, P.A.

646 Lewis State Bank Tallahassee, Florida 32301

David H. Pingree, Secretary Department of Health and

Rehabilitative Services 1321 Winewood Boulevard

Tallahassee, Florida 32301

Robert P. Daniti, Esquire Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 83-001668

Orders for Case No: 83-001668