STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MANOR CARE, INC., )
)
Petitioner, )
)
vs. ) Case No. 85-2937
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
) HEALTH CARE AND RETIREMENT ) CORPORATION OF AMERICA, d/b/a ) HEARTLAND OF LEE, )
)
Petitioner, )
)
vs. ) Case No. 85-3240
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Upon due notice, final formal hearing was held before Ella Jane P. Davis, a duly assigned Hearing Officer of the Division of Administrative Hearings, in Tallahassee, Florida, on July 15, 16, 17, 1986, and in Fort Myers, Florida on July 21 and 22, 1986.
The parties consolidated for this hearing as originally noticed were, Manor Care, Inc. against DHRS, Heartland of Lee against DHRS, Case No. 85-3240; Beverly Enterprises-Florida, Inc., d/b/a Beverly-Gulf Coast Florida, Inc. against DHRS; Case No. 85-3275; and Cypress Grove Convalescent Center against DHRS, Case No. 85- 3370.
At the time of hearing, Lee Meridian in Case No. 85-3010 and Beverly Enterprises-Florida in Case No. 85-3275 had voluntarily dismissed. Cypress Grove Convalescent Center in Case No. 85-3370 by its absence at the first day of formal hearing was deemed to have waived its opportunity for a formal 120.57(1) hearing and subsequently voluntarily dismissed. Department of Health and
Rehabilitative Services' final orders have since been entered dismissing these petitions.
APPEARANCES
For Petitioner: Manor Care, Inc.:
Donna H. Stinson, Esquire The Perkins House, Suite 100
118 North Gadsden Street Tallahassee, Florida 32301
For Petitioner: Health Care and Retirement
Corp. of America
Jean Laramore, Esquire Kenneth A. Hoffman, Esquire
325 North Calhoun Street Tallahassee, Florida 32302
For Respondent: Department of Health and
Rehabilitative Services John Rodriguez
Legal Representative 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700
BACKGROUND AND PROCEDURES
Originally, both remaining Petitioners applied for certificates of need to construct 120-bed nursing homes in Lee County, Florida. The applications were denied, resulting in the instant administrative hearing.
Petitioner Health Care and Retirement Corporation of America (HCR) presented the testimony of Milo Bishop, Charlotte Young, Elizabeth Murphy, Loma Overmeyer, Paul Sieben, Nikki Rybarozyk, Alana Kluttz, Carolyn Lookabill, Washington Baquero, M.D., Susan
Workman, Charles Pollard, Mary Shell, Dennis Eskew, and William Paul Hittel, and had admitted 15 exhibits. Petitioner Manor Care, Inc., (Manor Care presented the testimony of Diane Jacobson, Tal Widdes, J. Susan Hines, John Lee, and Donald Reppy, and had admitted 4 exhibits.
Respondent Department of Health and Rehabilitative Services, (HRS), presented the testimony of Joyce Farr and had admitted 4 exhibits.
Transcript was provided and the parties timely filed post- hearing proposals pursuant to stipulation and extensions granted. A ruling upon each proposed finding of fact is contained in the appendix to this Recommended Order.
FINDINGS OF FACT
HCR initially applied for a CON to construct a 120-bed nursing home facility in Lee County, DHRS District VIII. DHRS assigned this application CON Action 3854, which it denied. Manor Care also initially applied for a CON to construct a 120- bed nursing home facility in Lee County, DHRS District VIII. DHRS assigned this application CON Action No. 3850, which it denied.
Manor Care and HCR timely filed petitions for formal administrative hearings which resulted in the DOAH Consolidated Case Nos. 85-2937 and 85-3240.
During the hearing, Manor Care and HCR offered updated CON applications (respectively MCI and HCRS). While the Manor Care proposal is a "scale-down" to 60 beds (HCR still proposes
120 beds. both applications propose nursing home beds be set aside to offer a therapeutic environment for patients with Alaheimer's Disease and patients with related disorders. Manor Care's update also provides for an attached 60-bed adult congregate living facility (ACLF), which does not require a certificate of need.
DHRS objected to the admission in evidence of the respective applications but did not move for relinquishment of jurisdiction to the agency for consideration by its experts of the updated material in lieu of formal hearing (Vol. III p. 54). Both applications had been submitted to the DHRS attorney prior to hearing. Upon the Hearing Officer's own motion, an evidentiary hearing was conducted prior to the taking of other evidence solely on the propriety of consideration of the updated applications without resubmittal to DHRS. The HCR update did not change the number of beds, nor the patient mix. The Manor Care update was downsized to 60 beds, and this is permitted as a matter of law. Neither update requires amendment of the District Health Plan or the same fixed pool; neither attempts to alter the January 1988 planning horizon contemplated by the original January 1985 applications.
The other changes contained in the updated applications relate to a description of the Alzheimer's Disease (AD) program and design of the AD unit for each application, or other changes such as increase or decrease in costs due to inflation and the passage of time, including particularly, the fact that subsequent to the filing of the original application there was a recognition in the District Health Plan and the State Health Plan of the special needs of AD patients, which was contained in the 1985-87 State Health Plan, Vol. III, p. 109. (T-73-74, Vol. II - testimony of HCR expert, Milo Bishop; DHRS Exhibit 5), and the subsequent Local District VIII Health Plan also identified the
concern of availability of beds for Medicaid patients. Specifically, the District VIII Health Plan recommends priority consideration for nursing home beds to be given to applicants that will propose to accept a proportion of Medicaid eligible patients that is at least equal to the most recent quarterly figure of Medicaid occupancy in the district. (T-75, Vol. III, DHRS Exhibit 5). The updated application of HCR was filed to reflect these recently identified needs of the AD patients, sub- acute patients and Medicaid patients. The update of each Petitioner also clarifies assurances of Medicaid availability.
The updated applications of both Manor Care and HCR proposed special programs for AD patients and a separate wing which appears now to be a treatment of choice for these types of patients. Awareness of AD and its ramification has increased significantly in the recent past. Recognition of the special needs of these patients in the respective updated CON applications constitutes refined material describing the current state of knowledge in medical care. The proposals by Manor Care and HCR to designate separate units and programs for AD patients does not constitute a substantial change in the applications for all of the foregoing reasons but also because any nursing home may admit and treat AD, related disorders, and sub-acute care patients without obtaining a specialized CON and because these types of patients could have been treated in the nursing homes described in the original applications.
As far as the identification of newly available information on AD and related disorder patients are concerned, the updates are clearly encouraged within the purview of Balsam v. Department of Health and Rehabilitative Services, 486 So. 2d 1341 (Fla. 1st DCA 1986). Over all, none of the amendments of the Petitioners are substantial and the updated applications of both Manor Care and HCR are proper amendments permitted in these de novo proceedings pursuant to McDonald v. Department of Banking & Finance, 346 So. 2d 569 (Fla. 1st DCA 1977); and Gulf Court Nursing Center v. DHRS, 483 So. 2d 700 (Fla. 1st DCA 1985), Motion for Rehearing (Feb. 14, 1986). The ruling that both amended applications were not substantial amendments and therefore no remand to the agency was necessary was entered on the record (Vol. III, p. 103 and is accordingly reiterated and confirmed here, within the Recommended Order.
During the hearing, all the parties stipulated to the reasonableness of construction (and equipment) cost, and financial feasibility of both projects. DHRS (but not the Petitioners) stipulated that both Petitioners projects satisfied all quality of care considerations. Upon all the evidence (oral, documentary, and demonstrative) including but not limited to the testimony of Loma Overmeyer, Charlotte Young, Tal Widdes, and
John Lee, it is found that both Petitioners have affirmatively demonstrated their respective abilities to provide satisfactory quality of care to their patients through these respective proposed projects.
Rule 10-5.11(21), Florida Administrative Code, contains DHRS' methodology for computing nursing home bed need. The need methodology provides that the need for proposed new community nursing home beds is to be determined 3 years into the future. Here, the applicable planning horizon is January, 1988, which is
3 years from the time the initial applications were filed.
Applications for new community nursing home beds will not normally be approved if such approval would cause the number of community nursing home beds in an area to exceed the bed need calculated pursuant to Rule 10-5.11(21)(b) 1-10 Florida_ Administrative Code. Applications for community nursing home facilities are normally approved for a minimum of 60 beds.
All need experts utilized current population figures provided July 1, 1986 by the Office of the Governor. However, DHRS has arrived at a 37 bed surplus. The DHRS expert, Joyce Farr, testified she used the date of hearing (July 1986) as a basis and current population figures, rendering a gross need of 1,089 beds. If current population figures are used and the January 1985 (initial application date) is used, there is a gross bed need of 1,204 beds. There are 996 licensed nursing home beds in Lee County as of June 1, 1986. Applying the rule to either gross bed need leaves 93 (1089 minus 996) net need or 208 (1204 minus 996) net need. Manor Care calculated both ways and would qualify by either method if it were the sole applicant, but the net bed need by either calculation greatly exceeds the beds proposed by Manor Care. The latter calculation, based on January 1985 instead of the 1986 population projections is urged by HCR as preserving the sanctity and logic of batching cycles and planning horizons. Such an application of the rule's methodology would clearly permit a CON for 60 nursing home beds to be issued to Manor Care and also permit a CON for 120 nursing home beds to be issued to HCR, with a surplus of 28 beds. This solution of awarding a total of 180 beds (60 plus 120) would not offend DHRS established policy that applications for community nursing home facilities are normally approved for a minimum of 60 beds. Nonetheless, HCR's reading of the rule mixes 1985 and current figures without adequate justification in the record and is neither literal nor in conformity with the agency policy and interpretation which witness Farr testified has been applied by her on behalf of DHRS in at least 100 contested CON formal hearings. Further, it is clearly logical and in the best interests of the public and the health planning professions, and in accord with the intent of Chapter 381 F.S. to apply those
figures which will most accurately reflect the bed need at the projected (January 1988) planning horizon. In this instance, that set of figures renders the net general community nursing home bed need as 93.
However, Joyce Farr also testified that she had been instructed by her supervisor not to apply the rule as promulgated but instead to reserve 143 beds for Lee County and to subtract these beds as if they were already approved.
The "reserved" 143 beds represent DHRS' interpretation of Gulf Court v. DHRS. Pursuant to directions in the opinion of the First District Court of Appeal in that case, DHRS has received, for comparative review, CON applications from the three party applicants in that case. Those parties' applications were originally filed in 1981 and 1982, and are for nursing home beds in Lee County. As of date of formal hearing in the instant cause, none of the "Gulf Court" parties' applications had been approved.
The Department's stated intention regarding the three "Gulf Court" applications is to award 143 beds to one or more of the party applicants in that case. This intention is based upon the Department's interpretation of the Gulf Court case, and not upon any calculation of need for a planning horizon. As of date of hearing, DHRS had not given any consideration to the effect of changed statutes, regulations, facts, or circumstances on the "fixed pool" of beds applied for by the "Gulf Court" applicants.
In her calculation of net need for the sub-district of Lee County, the DHRS witness counted the 143 beds set aside for the "Gulf Court" applicants as "approved" beds. Other than those beds, there are no other approved beds, nor any applications pending from prior batches.
The DHRS methodology used to subtract 143 beds is not consistent with the provisions of Rule 10-5.11(21), Florida Administrative Code. (See Conclusions of Law).
If the DHRS bed need formula contained in Rule 10- 5.11(21), Florida Administrative Code, is used, the correct number of beds needed for the planning horizon of January 1985 through January 1988 is 93 general community nursing home beds.
Each applicant has included, in the updated applications presented at hearing, a number of beds set aside in a unit for Alaheimer's Disease (AD) patients. Manor Care has indicated that 18 beds would be so designated. HCR proposes to establish a 30 bed unit for both "Alzheimer's and the related disorders"' including 15 beds "just for wanderers."
AD "is a degenerative process of the brain, characterized by memory impairment and impairment in several mental and physical functions." The disease progresses at certain levels or stages. There are four progressively worsening stages of this disease. In the first stage, the patient starts to forget names and facts in the recent past, and also begins to be unable to perform some complex tasks that the patient was able to perform before the disease began. In stage two, the impairment in memory increases. The patient starts to forget common names of objects usually used in daily living, and the patient starts to wander. There are often behavioral problems, such as agitation or depression. In stage three, there is. physical impairment, including incontinency, speech disturbances, and problems with communication. In stage four, the patient most of the time is confined to a bed, and largely unaware of his_ environment. He is incontinent. Without adequate care, he has sores on his back. He is nearing death at that point. AD is irreversible and the cause is unknown. Diagnosis is very difficult. The only positive method of diagnosis is by brain biopsy. The most common method of diagnosis is by a process of elimination and this often fails in the early stages of AD. Incidence of AD increases in the over 65 population but there are cases of some patients as young as 30. A large percentage of any nursing home is suffering from some form of dementia. The estimated need of "irreversible dementia" patients in nursing homes in Lee County for the year 1988 is 2,189. Out of this number of patients, 60% would be specifically AD patients or 1,313. Dr. Baquero presently has 100 AD patients in existing area nursing homes.
AD patients are cared for in almost all nursing homes, but usually there is no separate area or program. There are no specialized programs or units for AD patients currently established in Lee County.
The existing facilities in Lee County do not provide adequate care to persons suffering from AD. Because of the lack of facilities, AD patients are often kept at home until families are to the pint of desperation. Care of the AD patient is an enormous, 24 hour-a-day burden on the care-givers. Additional stress is caused by personality changes that often accompany the disease. Most facilities in Lee County will not accept a difficult patient. Families of AD patients have placed patients in facilities out of country, out of state, and out of country, because of the lack of facilities in Lee County.
Dr Baquero, practicing medical physician in Ft. Myers, who is experienced in treating AD patients and who has knowledge gained as Medical Director for two existing nursing homes, was
qualified as an expert in the care and treatment of AD patients. Upon his evidence and upon evidence of the representatives of the Alzheimer's Disease and Related Disorders Association (ADRDA), it is found that AD patients frequently have to be placed outside Lee County, as far as 60 to 70 miles from home. Approximately 50% of AD patients consulting ADTDA return to northern home states or go to foreign countries rather than awaiting long- delayed Lee County placement. Placement of AD patients also on Medicaid or needing sub-acute care is even more difficult.
The Petitioners further demonstrated that other patients in addition to AD patients are not adequately served by the existing facilities in Lee County. It is extremely difficult in Lee County to place a patient who is in need of high technology or "sub-acute" care. Such patients include those in need of intravenous antibiotic therapy, ventilators, oxygen, feeding tubes or pumps, decubitus ulcer care (bed sores), etc. Feeding pumps and bed sores may eventually become a way of life for AD patients. AD patients may also require other forms of sub acute care and can be on Medicaid. Many of the existing
nursing homes are not capable of handling such patients who often must be placed out of county.
These difficult patients are frequently placed out of county or at great distance from their homes within the county, creating added burdens on elderly spouses and family members. The burden of out of county placement has created or intensified "separation syndrome" accidents and death for such patients elderly spouses.
Implementation of the Diagnostic Related Grouping (DRG) system of Medicare reimbursement has been an incentive for hospitals to release patients as soon as they are no longer in need of "acute care," but due to the inability to place these patients, they stay in hospitals longer than necessary, resulting in a much higher expense than would be the case if a nursing home placement could be achieved. Additionally "cost shifting' to private and third party insurance payments may be inferred from the DRG statistics admitted.
Both Lee Memorial Hospital and Ft. Myers Community Hospital experience difficulty in placing sub-acute care patients, especially those on Medicaid. Fifty per cent or more of Ft. Myers Community Hospital referrals are of sub-acute care patients. Ft. Myers Community Hospital records reflect an increase in hold-overs due to unavailability of nursing home beds. Since October, 1984, Lee Memorial Hospital has had to place 75 out of 941 discharge patients out of county. Only one of these patients was private pay. The majority of Lee Memorial discharges to nursing homes are Medicaid and Medicare patients;
48.3% are Medicare and 22.6% are Medicaid patients for a total of 70.9% of the total discharges to nursing homes. Only 29% of Lee Memorial discharges-to nursing homes are private pay patients.
Twenty per cent of all of Lee Memorial's Medicaid discharges to nursing homes are required to be placed out of county and 11.2% of their Medicare discharges are placed out of the County.
Mary Shell, the DHRS District Human Services Coordinator confirmed the difficulty of placing Medicaid patients in the county as sub-district and testified to a serious but unquantified shortage of both Medicaid and sub-acute nursing home beds in Lee County. Mr. Dennis Eskew, Supervisor of the DHRS Adult Payments Unit, which determines the eligibility for Medicaid nursing home programs, presented a chart (HCR 15) showing 20% of 203 approved Medicaid patients (41) had to be placed out of county during the immediately preceding six months because of unavailability of such beds in Lee County.
Existing nursing homes in Lee County are almost always full. Hospital discharge planners, families, and medical physicians seeking placement of patients uniformly testified that there is a shortage of beds and long waiting periods, even for non-problematic patients and that there is a need for additional nursing home beds for all types of patients including Medicare/Medicaid patients, sub-acute patients, AD patients and routine nursing home patients. However, these witnesses did not attempt to quantify the number of beds needed. There is strong evidence that recently opened nursing homes are not making available promised Medicaid beds and there have been no DHRS enforcement procedures. Although minimally demonstrated, it may be inferred from the foregoing type of testimony that the absence of competition has reduced the incentive of existing local nursing homes to accept those out of the "walkie talkie" category, those still cognitive, ambulatory patients who are able to feed and care for themselves to a large degree.
Both Petitioners meet the guidelines in the local health plan that applicants should provide at least 33 1/3% of beds available to Medicaid patients. HCR agreed to provide 46% Medicaid beds (55 beds out of 120) which was the prevailing district rate. The plan gives priority to those applicant who meet this percentage. Manor agrees only to provide 35% Medicaid beds.
Both Petitioners indicate a willingness to treat sub- acute patients, but neither seeks a specific number of beds for this purpose. Sub-acute care is considered within the designation of skilled care.
Manor Care's emphasis on rehabilitation in its existing facilities has had significant results. Manor Care's historical Medicare percentage is above the industry average.
Both Petitioners are in the forefront of developing programs for the diagnosis and treatment of AD disease. Manor Care is prepared to totally commit 18 beds exclusively to AD and related diseases and 21 beds to Medicaid. These may overlap. HCR is prepared to totally commit 32 beds exclusively to AD and related diseases and 55 beds to Medicaid. These may overlap.
The special attributes of each proposed AD unit (30 beds by HCR and 18 beds by Manor Care) include a higher staff-to- patient ratio, which is needed to supervise and assist confused and wandering patients and a great deal of attention to the physical environment, from a home-like atmosphere and certain relaxing shades of pink, to special furnishing and fixtures. Particular care is necessary in preparation and serving of food, to allow patients with AD and related disorders to eat adequately and without assistance and to prevent considerable weight loss in the wandering stage which can result in further rapid debilitation. One of the goals of AD programs is to reduce the need for traditionally utilized physical restraints or heavy sedation, and to promote prolonged individual functioning. There is no competent expert testimony contrary to the theme that AD patients require special care and special programs designed to meet their unique medical and custodial needs. The experts with any personal background in the area also uniformly agreed that a separate wing or another isolated area of the nursing home facility is most desirable because of the wandering tendencies of these patients, their hostile, unpredictable, and bizarre behavior, and the other special needs specific to this type of brain degeneration. HCR's Wander Guard security system is viewed as superior by some witnesses.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter and the parties to this proceeding. Section 120.57(1), Florida Statutes.
Section 381.494(6)(c) and (d), Florida Statutes, and Rule 10-5.11(1-12), Florida Administrative Code, are applicable to this proceeding. The parties stipulated to the applicants meeting or it was clearly demonstrated that each applicant met statutory criteria, 381.494(6)(c)(3), (9) and (13),Florida Statutes. All other statutory criteria are applicable, the total number of nursing home beds, which may be approved to be installed in a given health care planning district or sub-
district by approvals of certificates of need, is governed by the provisions of Rule 10-5.11(21), Florida Administrative Code.
Pursuant to Section 381.494(6)(c), Florida Statutes, the first issue to be determined is whether there is a need for additional nursing home beds in Lee County. Rule 10-5.11(21), Florida Administrative Code, provides a formula (need methodology) for determining the number of nursing home beds which may be needed in a service area. The determination of need is to be made for the service district or sub-district. In this case, Rule 10-17.018, Florida Administrative Code, had designated Lee County as the appropriate sub-district.
The need for nursing home beds under the need methodology is to be determined three years into the future. In this case, the Petitioners filed applications in January of 1985; therefore, the proper planning horizon is January 1988. See Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 483 So 2d 700 (Fla. 1st DCA 1986). Clarified on rehearing, 11 F.L.W. 437.
The Petitioners' updated applications are entirely appropriate to this type of de novo proceeding. Neither is such a substantial amendment as to require remand for reassessment by DHRS prior to due process proceedings pursuant to Section 120.57(1), Florida Statutes. (See Findings of Fact 3 and cases cited therein.) The updated applications presented at hearing do not constitute a substantial amendment of the original proposals for all of the reasons set out more fully in the foregoing Finding of Fact. Need was not predicated upon special services or needs but significantly contemplated that an area within already proposed facilities would be set aside for patients who would otherwise be commingled with the general nursing home population and whom the "state of the art" now targets as better served by newly developed patient management systems. Moreover, Rule 10-5.11(21) is somewhat different from other rules in that it contains more explicit guidelines for determining exceptional circumstances (subparagraph (b) 10. of the rule), but the effect is the same: the application need not be remanded to DHRS when the applicant seeks to prove entitlement under the "not normal" portion of the rule, even though the initial application did not mention this basis for approval. The application still is lodged under the community nursing home rule and proof of "not normal" conditions is not a substantial change in the application.
Rule 10-5.11(21) Florida Administrative Code specifically requires utilization of current population projections from the Governor's office, and the most recent occupancy data available to DHRS, and a subtraction of any "approved" beds.
The provisions of the rule very specifically require the calculations of bed need to include a projection of three years into the future from the date of application. The applicable horizon year is 1988. DHRS attempted to establish that since Gulf Court, supra, the agency has interpreted the planning horizon to be a fixed point, three years from date of application. Contrary to HCR's argument, DHRS further asserted on the basis that same is appropriate to a de novo proceeding, that "current population" used by DHRS is the population at time of hearing (1986-1988 rather than at date of application, so that, in this case, the projections are for only 18 months instead of 3 years. However, for all the policy and accuracy reasons set forth in Finding of Fact 6 supra, these methodologies are accepted and the general community nursing home bed need as most accurately projected to the 1988 planning horizon is accepted to be 93.
In its calculations, the Department also counted as "approved" beds, 143 that it had set aside for applicants involved in the Gulf Court case, supra, although none of these applications had been approved, The decision to set aside 143 beds was based on a belief that the District Court required it, Since the "Gulf Court" applicants filed in 1981 and 1982, there have been changes in statutes and rules regarding certificates of need for nursing home beds. The rule methodology changed, None of those factors was considered by DHRS in its determination to "reserve" 143 beds. Application of the methodology in Rule 10- 5.11(21) to the planning horizon of 1985 (three years from the later of the "Gulf Court" applications), results in an excess of nursing home beds, rather than a need for 143.
The First District Court in Gulf Court that:
Substantial changes have been made to the cited Florida Statutes and rules since 1982. These changes have altered the methodology for determining bed need and may well affect the manner for determining what, if any, fixed pool of beds is involved in a particular application….. Whether or to what extent changed facts, circumstances, and statutes may affect the rights of these parties to receive the applied-for CONs remains to be determined in further proceedings before the hearing officer and the agency.
Clearly, the changed facts and circumstances must be reviewed before a determination can be made that 143 beds are to be
awarded to the "Gulf Court" applicants. This not having been done, it cannot be said that those beds are "approved" from the pool of available beds applied-for by the applicants in this case.
The DHRS contention that the 143 beds for which the agency may issue certificates of need in the future should be counted as approved, is rejected as contrary to their own rule, the DHRS semi-annual nursing home report, and the applicable case law.
What DHRS may or may not intend to do in regard to the "Gulf Court" applicants in the future is simply speculative and does not legally equate "reserved" with "approved beds, the latter designation being the only type of bed cognizable by rule.
A case directly on point is the case of Health_ Care Associates, Inc. v. DHRS, 8 FALR 2091. By Final Order of the Department dated March 19, 1986, the Secretary adopted the Recommended Order of the Hearing Officer in that case where DHRS had attempted to count as "approved", a number of beds to be awarded to prior-batched applicants in the future.
The Hearing Officer rejected DHRS' contention that the
155 nursing home beds which may be approved in the future should be taken into account in determining if there were a need for those applicants in that proceeding.
In that case, DHRS had unofficially agreed to grant beds to a prior-batched applicant and had calculated the "agreed" or "intended-to-be-approved" beds in applying the rule formula to later applicants even though the stipulation with the prior- batched applicants had not been executed. Hearing Officer Sartin concluded:
The problem with the Respondent's argument is that it is contrary to the Respondent's own rules. Section 10-5.11(21), Florida Administrative Code, provides the manner in which the number of nursing home beds in district 3 is to be determined. Under this rule, it is provided that the total number of nursing home beds need in district 3 is to be reduced by the number of licensed nursing home beds in district 3 and 90% of the approved nursing home beds for district 3. applying this rule to the present case, there is a need for 136 nursing home beds in district 3. Despite these facts, the Respondent argues, in effect, that the number
of nursing home beds which are needed based upon an application of its own rules should be reduced by nursing home beds which may or probably will be approved by the Respondent for construction by prior batch applicants. To take into account these as yet unapproved beds is contrary to Section 10-5.11(21).
This conclusion of law was adopted by DHRS in its Final Order. Under this ruling, it is contrary to Rule 10-5.11(21) to count as "approved," beds which are "reserved" for other applicants.
Counting the 143 beds is in error, therefore, for two reasons: First, Gulf Court requires a determination of need under changed circumstances, which has not occurred, and second, the beds are, in any event, not "approved".
A proper application of the DHRS rule methodology contained in 10-5.11(21) demonstrates a need for not less than 93 general community nursing home beds by the year 1988. In addition to the numerical need demonstrated by a mere calculation of the DHRS rule, the actual statistics of local hospitals, physicians, and DHRS Medicaid offices demonstrate that there is a substantial need for additional nursing home beds in Lee County at the present time and that the present absence of such care for specifically under served groups such as Medicaid patients, Medicare patients, sub-acute care patients, and AD patients and those patients with related disorders, can reasonably be projected into 1988.
Both HCR and Manor Care meet all applicable statutory criteria, but due to the combined impact of the 60 bed increment policy, net general community bed need, and the size of facility proposed by the respective applicants, this comparative review must devolve upon a determination regarding Petitioners' theory that there is bed need based on the under served nature of AD, sub-acute, Medicare and Medicaid patients by existing nursing homes in Lee County.
The exception contained in subparagraph (b) 10. of Rule 10-5.11(21) provides in pertinent part:
Specifically, the applicant may show that persons using existing and like services are in need of nursing home care but will be unable to access nursing home services currently licensed or approved within the sub-district. Under this provision, the
applicant must demonstrate that those persons
with a documented need for nursing home services have been denied access to currently licensed but unoccupied beds or that the number of persons, with a documented need exceeds the number of licensed unoccupied and currently approved nursing home beds...
Patients' need for nursing home care must be documented by the attending physicians' plans of care or orders, assessments performed by staff of the Department of Health and Rehabilitative Services, or equivalent assessments performed by attending physicians indicating need for nursing home care.
By a combination of DHRS assessments and assessments equivalent to those commonly done by DHRS, Petitioners have established rough estimates of the needs of specific types of patients: sub- acute care, Medicaid and AD patients. The proof of need with respect to sub-acute care and Medicaid beds is strong and credible but largely unquantified. As to need for sub-acute care, it is not quantified separate and apart from the need for Medicaid and AD patient beds, as to which there was established a general failure of service. Also, although both applicants have provided for sub-acute care patients generally, neither has attempted to isolate a specific number of beds for sub-acute care patients who are normally considered within the skilled nursing bed designation. Both applicants have provided for a full range of services for AD patients: day care, respite care, nursing care, and sub-acute care. Both have demonstrated that although AD patients are treated within existing nursing home facilities they are denied access to the necessary services for their unique health needs when placed within these existing facilities and where an AD patient simultaneously suffers the placement disabilities of Medicaid and sub-acute care need, there is no access for such patients to existing facilities. Both applicants have made the minimally necessary guarantees of Medicaid services for their respective entire proposed facilities. Both have fully demonstrated quality of care as to all unaccessed care categories. However, the HCR application for 120 beds is entitled to priority consideration under the District VIII Health Plan Nursing Home Component because HCR has agreed to provide 46% Medicaid, which is the prevailing district related disorders wing, 30 beds compared to 18 beds. Because of the 60 bed increment, it is more logical and feasible to award a single 120 bed CON to HCR, provided the CON is conditioned upon the specific representations contained in the updated application and the testimony at formal hearing that no fewer than 30 beds will be devoted to AD and related disorders with 46% of the 120 bed total (55 beds being guaranteed for Medicaid qualified patients. It is
concluded upon the foregoing, that the evidence supports only an award of a 120 bed CON to HCR conditioned as set out sunra.
Based on the foregoing, it is RECOMMENDED:
That DHRS enter a Final Order approving HCR's updated application for a 120 nursing home bed facility in Lee County limited and conditioned upon HCR's updated application's specific provision for 46% Medicaid beds and upon 30 beds being dedicated as set out in the application and evidence at formal hearing for the specific for treatment of AD patients, and denying the application of Manor Care for a 60 bed facility.
DONE and Ordered this 23rd day of December, 1986 in Tallahassee, Florida.
ELLA JANE P. DAVIS
Hearing Officer
Division of Administrative Hearings 2009 Apalachee Parkway
Tallahassee, Florida 32309
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December 1986.
COPIES FURNISHED:
Jean Laramore, Esquire Kenneth A. Hoffman, Esquire
325 North Calhoun Street Tallahassee, Florida 32302
Donna H. Stinson, Esquire The Perkins House, Suite 100
118 North Gadaden Street Tallahassee, Florida 32301
John Rodriguez, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd.
Building One, Room 407 Tallahassee, Florida 32399-0700
William Page, Jr., Secretary Department of Health and Rehabilitative Services
1323 Winewood Blvd.
Tallahassee, Florida 32399-0700
APPENDIX_
The following paragraphs constitute specific rulings upon the parties' respective proposed findings of fact as required by Section 120.59(2) F.S.
Petitioner Manor Care's Proposals:
Covered in Findings of Fact 1, 3.
Covered in Findings of Fact 3 and 12.
Covered in Finding of Fact 8.
Covered in Findings of Fact 3, 9-12.
Sentence 1 is covered in Finding of Fact 4; remainder rejected as taken out of context and not clear from the record as a whole.
Covered in Finding of Fact 9.
Covered in Finding of Fact 12.
Covered in Finding of Fact 9-12.
Covered in Findings of Fact 9-12.
Up to the comma covered in Findings of Fact 12; after the comma accepted but not adopted as unnecessary.
Covered in part in Finding of Fact 12; remainder accepted but unnecessary.
Covered in Findings of Fact 12. 16-19. Covered in Finding of Fact 6.
20. Covered in Findings of Fact 9-12. Proposals 9, 14, and 15 are accepted but not adopted because subordinate and unnecessary.
Petitioner Health Care and Retirement Corporation of America's_ Proposals:
Covered in Finding of Fact 1.
Covered in Findings of Fact 2.
sentence 1 is covered in Finding of Fact remainder rejected as subordinate and unnecessary.
Covered in Finding of Fact 3.
Covered in Finding of Fact 3.
Covered in Finding of Fact 3.
Covered in Finding of Fact 3
Covered in Finding of Fact 3.
10-12. Covered in Findings of Fact 3 and 12.
Covered in Finding of Fact 12.a.
Covered in Findings of Fact 3 and 10.
16. Covered in Finding of Fact 3.
19. Covered in Finding of Fact 3.
20-22. Covered in Finding of Fact 4; rejected in part as not supported by the record.
23-24. Covered in Finding of Fact 4.
Covered in Findings of Fact 8 and 9.
Covered in Finding of Fact 12. 27-32. Covered in Finding of Fact 8.
Covered in Findings of Fact 5 and 6.
Covered in Finding of Fact 8.
38-39. Are accepted in principle but rejected in their specificity as subordinate, unnecessary and cumulative.
To a large degree the same subject matter is covered in Findings of Fact 8-12.
Covered in Findings of Fact 9 and 12.
Covered in Finding of Fact 8.
Covered in Findings of Fact 9 and 12.
43-49. Covered in Findings of Fact 9-12. What is not covered is rejected as subordinate, unnecessary, and cumulative.
Covered in Findings of Fact 9-10.
Covered in Findings of Fact 9-12, particularly lOe.
Covered in Findings of Fact 10-11.
Accepted in principle but as stated is too broad and applies to situations outside of nursing home beds.
Rejected in part as taken out of context and with insufficient predicate and in part as subordinate and unnecessary. What is accepted is covered in Finding of Fact 11.
60. Covered in Findings of Fact 10-11, particularly 10.
64. Covered in Findings of Fact 10-11, particularly 10.
66. Covered in Findings of Fact 9-12, particularly lOd. 67-69. Covered in Findings of Fact 10-11, what is rejected
is rejected as unnecessary, subordinate and/or cumulative.
70. Covered in Finding of Fact 11.
71-73. Covered in Findings of Fact 10-11, what is rejected is rejected as unnecessary, subordinates and/or cumulative.
Covered in Findings of Fact 10-11.
Covered in Findings of Fact 9-12.
Covered in Findings of Fact 6 and 11-12.
77-90. Covered in Finding of Fact 6. Matters rejected are rejected as not supported by the record or as contrary to the appropriate application of law and incipient policy. See Conclusions of Law.
Represents the sum total of all the Findings of Fact made and is more in the nature of a conclusion of law. See Conclusions of Law.
Rejected as covered in Finding of Fact 6, and the Conclusions of Law.
93-95. Accepted and incorporated in Finding of Fact 12.
96. Covered in Findings of Fact 6, 11, and 12.
Proposals 3, 15, 17, 18, 35, 36, 37, 55, 56, 57, 58, 59,
61, 62, 63, 65, are accepted but not adopted because subordinate and unnecessary.
Respondent Department of Health and Rehabilitative Services' Proposals:
1-2. | Covered in Finding of Fact 1. | |
3. | Covered in Finding of Fact 2. | |
4. | Covered in Finding of Fact 4. | |
5. | Covered in Findings of Fact 3 and | 12. |
6. | Covered in Finding of Fact 3. | |
7-9. | Covered in Findings of Fact 3, 5, | and 6._ |
10. | Covered in Finding of Fact 6. | |
11. | Accepted but not specifically set | out in Findings |
of Fact. |
Sentences 1-2 are accepted and sentence 3 is rejected in Finding of Fact 6 and in the Conclusions of Law.
Rejected for the reasons set out in Finding of Fact 6 and Conclusions of Law.
Covered in Findings of Fact 5 and 6 and Conclusions of Law.
Rejected as set out in Findings of Fact 6, and 9-12 and as a conclusion of law.
Rejected as out of context and immaterial to the facts as found. Similar material is covered in Findings of Fact 6 and 9-12.
Rejected as set out in Findings of Fact 6, and 9-12 and as a conclusion of law.
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
MANOR CARE, INC.,
Petitioner,
CASE NO. 85-2937
vs. CON NO. 3850
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent.
/ HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, d/b/a HEARTLAND OF LEE,
Petitioner,
vs.
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent.
/
CASE NO. 85-3240
CON NO. 3854
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto. Exceptions to the Recommended Order were filed by Petitioner, Manor Care, Inc.,
RULING ON EXCEPTIONS FILED BY MANOR CARE
Exception number 1 is denied. There is insufficient numeric need for 1988 under either the HRS policy at the time of the hearing or under the current policy.
Exception numbers 2, 3, and 4 are denied for the same reasons as expressed in the ruling on exception number 1.
FINDINGS OF FACT
The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order. Any conclusions of law found in the Recommended Order under the heading "Findings of Fact" which are inconsistent with the conclusions of law expressed in this Final Order are rejected.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has Jurisdiction of the subject matter and the parties to this proceeding.
Section 120.57(1), Florida Statutes.
Section 381.494(6)(c), and (d), Florida Statutes, and Rule 10-5.11(1-12), Florida Administrative Code, are applicable to this proceeding. The parties stipulated to the applicants meeting or it was clearly demonstrated that each applicant met statutory criteria, 381.494(6)(c)(3), (9) and (13), Florida Statutes. All other statutory criteria are applicable. The total number of nursing home beds, which may be approved to be installed in a given health care planning district or sub district by approvals of certificates of need, is governed by the provisions of Rule 10-5.11(21), Florida Administrative Code.
Pursuant to Section 381.494(6)(c), Florida Statutes, the first issue to be determined is whether there is a need for additional nursing home beds in Lee County. Rule 10-5.11(21), Florida Administrative Code, provides a formula (need methodology) for determining the number of nursing home beds which may be needed in a service area. The determination of need is to be made for the service district or sub district. In this case, Rule 10-17.018, Florida Administrative Code, had designated Lee County as the appropriate sub district.
The need for nursing home beds under the need methodology is to be determined three (3) years into the future. In this case, the Petitioners filed applications in January of 1985; therefore, the proper planning horizon is January 1988. See Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 483 So 2d 700 (Fla 1st DCA 1986).
Rule 10-5.11(21), Florida Administrative Code specifically requires utilization or current population projection" from the Governor's office, and the most recent occupany data available to DHRS, and a substraction of any "approved" beds.
At the final 120.57 hearing both petitioners relied on amended applications, over HRS objection, which had not been reviewed by HRS during the free form phase of review. 1/ HRS concludes that the Hearing Officer erred and that an applicant for a CON is not allowed to amend its application during 120.57 proceedings by adding additional services, beds, or concepts not initially reviewed. The Division of Administrative Hearings (DOAH) is not the proper forum for new concepts to be initially considered. Initial consideration at DOAH renders meaningless the requirement of Chapters 120 and 381, Florida Statutes that HRS conduct the initial review.
The Hearing Officer found (Recommend Order page 12) that persons suffering from Alzheimer's disease "require special are and special programs designed to meet their unique medical and custodial needs yet she allowed both petitioners to amend during the 120.57 proceedings and address for the first time these unique needs by concluding:
that amending the applications to address these needs did not constitute substantial amendment and,
that consideration of the amended applications was proper at the final 120.57 hearing because of the concept of de novo review.
HRS rejects the first conclusion on the basis that it is a matter infused with overriding policy consideration. Baptist Hospital, Inc. vs. Department of Health and Rehabilitative Services et al., 500 So 2d 620 at 623 (Fla 1st DCA 1987). The amended applications changed the scope and character of the proposed facilities and services and thus, must be reviewed initially at HRS. HRS has been assigned the responsibility for health planning by the legislature, not the Division of Administrative Hearings.
HRS rejects the second conclusion on the authority of Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services et al, 483 So 2d 700 (Fla 1st DCA 1986). At page 709 the court noted that it found no appellate decisions applying "the de novo concept to final administrative hearings reviewing the denial of a CON application", and on page 710 it limited the
de novo concept by requiring that evidence of changed circumstances be considered only if relevant to the application. Again, I point out that the applications reviewed by HRS during the free form phase did not address the unique needs of Alzheimers disease patients; thus, evidence of these unique needs was not relevant to the petitioner's applications and cannot serve as the foundation for the grant of CONS.
As noted by the Secretary in Health Care and Retirement Corporation d/b/a Heartland of Palm Beach vs. Department of Health and Rehabilitative Services, Case number 84-3337, Final Order of September 24, 1986, Before Gulf Court full de novo review was allowed in a 120.57 hearing wherein an applicant challenged the denial of a CON. Applications were commonly updated and amended up to and including the time of the final
120.57 hearing; often times, changing greatly the character and scope of the originial proposal. Gulf Court pointed out that this policy along with the 'first in line, first in right' policy of awarding CONs encouraged that 'buy a ticket and stand in line' behavior of health care providers, resulting in needless applications, administrative reviews, and litigation."
HRS in this case is making a good faith effort to implement the reforms mandated by the court in Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services et al, 483 So 2d 700 (Fla 1st DCA 1986). Hopefully, HRS is not guilty of hyperbole in calling Gulf Court the Miranda
At least two (2) important goals of Gulf Court are seen by HRS
ENDNOTES
1/ It is noted that after the commencement of 120.57 proceedings HRS can act only as a party litigant, Chapter 120.57(1)(b)3; thus, HRS cannot conduct an initial review while jurisdiction is at the Division of Administrative Hearings.
2/ The landmark decision of the United States Supreme Court requiring law enforcement officers to advise criminal suspects of their rights before beginning interrogation. Miranda vs.
Arizona, 384 U. S. 436, 16 Led 2d 694 (1966).
3/ of Certificate of Need Law. Inevitable and especially in view of the fact that certificates of need are of great economic value there are differences of opinion in interpreting Gulf Court.
4/ It is noted that subsequent to the hearing in this case HRS adopted a new policy on Rule requirement that, "current" data be used in obtaining the figures for population estimates to be used in the Rule formula. Manor Care of Hillsborough vs. Department of Health and Rehabilitative Services, Case Number 96-0051, Final Order filed February 5, 1987. HRS has not received a Motion to Reopen the Record in the present case for consideration of the impact of the new policy.
To discourage the filing of applications in every batching cycle on the chance that developments coming to light between the denial of an application and the 120.57 hearing would breath new life into a project, Gulf Court at page 708, and
To emphasize the importance of HRS' statutorily mandated role of initially investigating and reviewing CON applications. Chapters 120 and 381, Florida Statutes and Gulf Court at page 708.
The court also narrowed the scope of de novo review in a 120.57 proceeding noting that it found no precedential authority requiring de novo review of a CON application. Gulf Court at page 709. The de novo concept is applicable only to evidence relevant to the application. Gulf Court at 710.
The amended applications submitted by petitioners during the 120.57 proceedings changed the character of the proposed nursing homes and services and even more important were never subject to initial free form review by HRS because HRS can act only as a litigant while jurisdiction rests at the Division of Administrative Hearings. Chapter 120.57(1)(b)3. HRS' interpretation of Gulf Court serves as the foundation for the policy conclusion that applications amended during 120.57 proceedings cannot be considered. An application may be updated to address facts extrinsic to the application such as the effect of inflation on interest rates and construction costs.
HRS rejects the Hearing Officers conclusion that an applicant may seek to prove entitlement to a CON despite lack of numeric need by addressing for the first time during 120.57 proceedings alleged special circumstances. To allow evidence of special circumstances to be initially reviewed in 120.57 proceedings elevates litigation strategy over the statutorily mandated initial review by HRS.
Assuming arguendo, that there is no legal bar to consideration of the merits of the amended applications, entitlement to CON approval turns on whether the petitioners
proved need under Rule 10-5.11(21). In this case the Hearing Officer concluded that both petitioners failed to show entitlement to CON approval under the special circumstances exception of the need rule. Rule 10-5.11(21)(b)10, (See Recommended Order pages 13, 17, and 18). Thus, entitlement to approval would turn on whether or not numeric need under the prescribed formula was shown. Rule 10-5.11(21)(b) 1 through 6.
The Hearing Officer accepted the HRS computation of numeric need with one exception and found a numeric need of 93. (See Recommended Order pages 7 and 14). The disagreement was on whether 143 (144) beds should be counted as approved per the order of the First District Court of Appeals in Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services et al, 483 So 2d 700 (Fla 1st DCA 1986). The 143 beds at issue were approved by HRS on February 21, 1982, Gulf Court at 702, in certificates of need number 1991 and 1992 (144 beds were approved). The court found that there was a need for 143 beds projected for the year 1985, Gulf Court at 702. The court's factual findings were based on a Stipulation of the parties, Gulf_ Court at 711, and HRS is not free to disregard the court's factual findings. The court reversed and remanded for a comparative review to determine which parties should receive the stipulated beds. Had HRS, on remand, declined to award the beds to one or more of the parties in Gulf Court on any basis except unfitness or voluntary withdrawal of a party it would violate its obligation to abide by the mandate of the court and would likely face a large attorney's fee award. Clearly, HRS cannot ignore the judicial mandate and the batching cycle concept by awarding the Gulf Court beds to the present petitioners.
Thus, HRS concludes the Hearing Officer erred in not counting the beds approved in certificates of need numbers 1991 and 1992. The Hearing Officer found a numeric need of 9 beds (See Recommended Order pages 7 and 14). When the 144e approved beds are counted per the Rule (90% of 144) there is no.
numeric need, instead there is a surplus of 37 beds projected for Lee County for January 1988. 3/ Official notice is taken regarding the reissuance on December 5, 1986, after comparative review, of CON numbers 1991 and 1992, to Beverly Enterprises.
Based upon the foregoing, it is
ADJUDGED, that 1. Manor Care's application for CON number 3850 be denied and 2. Health Care and Retirement Corporation's application for CON number 3854 be denied.
DONE and ORDERED this 24th day of March, 1987, in Tallahassee, Florida.
GREGORY L. COLER
Secretary
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED
Copies furnished to:
Donna H. Stinson, Esquire John Rodriguez
Attorney at Law Legal Representative
The Perkins House, Suite 100 1323 Winewood Boulevard
118 North Gadsden Street Building One, Room 407
Tallahassee, Fl 32301 Tallahassee, Fl 32399-
0700
Jean Laramore, Esquire Ella Jane P. Davis
Kenneth A. Hoffman, Esquire Hearing Officer
Attorney at Law DOAH, The Oakland Building
325 North Calhoun Street 2009 Apalachee Parkway
Tallahassee, Fl 32302 Tallahassee, Fl 32301
Nell Mitchcem (PDDR) CON Office
Mahan Drive F.L.A.R.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 27th day of March, 1987.
R. S. Power, Agency Clerk Assistant General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700 904/488-2381
| Issue Date | Proceedings |
|---|---|
| Dec. 23, 1986 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 27, 1987 | Agency Final Order | |
| Dec. 23, 1986 | Recommended Order | Pets competing for nursing home Certificate of Need. HCR's 120-bed facility meets need best (with larger AD unit and more Medicaid beds) than Manor Care's 60-bed facility. |
