STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LeHIGH ACRES HOSPITAL, INC. )

d/b/a EAST POINTE HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 85-3979H

)

STATE OF FLORIDA, HOSPITAL )

COST CONTAINMENT BOARD, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to written notice a formal hearing was held in this case before Larry J. Sartin, duly designated Hearing Officer of the Division of Administrative Hearings, on December 10, 1985, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Ronald R. Richmond, Esquire

Richmond, Booth & Cook

1311 Executive Center Drive, Suite 235

Tallahassee, Florida 32301

For Respondent: Curtis A. Billingsley, Esquire

Hospital Cost Containment Board

325 John Knox Road, Suite L101 Tallahassee, Florida 32303

STATEMENT OF THE CASE

The Hospital Cost Containment Board in its Preliminary Findings and Recommendations as contained in the Hospital Cost Containment Board's 1986 Budget Report for Lehigh Acres Hospital, Inc., d/b/a East Pointe Hospital, recommended that the Petitioner's 1986 net operating revenue be adjusted in the amount of $2,653,592.00 pursuant to Section 395.509(11), Florida Statutes. In response to this recommendation, the Petitioner

filed a Petition for Administrative Hearings with the Respondent on November 8, 1985.

The Petition for Administrative Hearing was filed with the Division of Administrative Hearings by letter dated November 19, 1985. The Petition was assigned case number 85-3979H and set for final hearing.

At the final hearing, the Respondent presented the testimony of Bob Maryanski. The Petitioner did not call any witnesses.

The parties offered two exhibits. The exhibits were identified as Joint Exhibits 1 and 2. Joint Exhibit 2 consists of the deposition testimony of Richard William Klusmamn, Joseph Feith and Julie Cox, and eleven exhibits. Joint Exhibits 1 and 2 were accepted into evidence.

The parties filed a Prehearing Stipulation at the commencement of the hearing. The Prehearing Stipulation contains a statement of those facts which the parties agreed should be admitted into evidence without presenting further proof at the bearing. This statement of the facts has been quoted and accepted as facts under the Findings of Fact portion of this Recommended Order.

The Petitioner also filed a Request for Judicial Notice at the commencement of the hearing. A ruling on the Request was reserved. The Request is granted.

Pursuant to Section 395.509(1), Florida Statutes (1984 Supp.), the Petitioner's budget which is the subject of this case will be deemed approved without any adjustment proposed by the Respondent unless a final order is issued approving the adjustment within 120 days from the date the budget was filed.

As authorized by Section 395)509(1), Florida Statutes (1984 Supp.), the parties have extended the 120 day limit in this case.

The parties have timely submitted proposed findings of fact pursuant to Section 120.57(1)(b)4, Florida Statutes (1984 Supp.). A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order.

Additionally, attached to this Recommended Order is an Appendix which indicates where proposed findings of fact which have been accepted have been made in this Recommended Order and

why proposed findings of fact which have not been accepted have been rejected.

ISSUE

Whether the Petitioner is a hospital which "opened since May 18, 1982" and therefore comes within the purview of Section 395.509(11), Florida Statutes (1984 Supp.), as amended by Section 2, Chapter 85-157, Laws of Florida?

FINDINGS OF FACT

1. The following findings of fact are contained in the Prehearing Stipulation filed by the parties and are hereby adopted:

   
   

   1. On July 1, 1983, Lehigh Acres Hospital, Inc., a subsidiary corporation of Hospital Corporation of America, entered into a Purchase and Lease Agreement with Lehigh Acres General Hospital Association wherein the corporation agreed to enter into a thirty

      (30) month lease with the Association for the facility known as Lehigh Acres General Hospital and the license of Lehigh Acres General Hospital was to be purchased by the corporation contingent upon the corporation's ability to obtain a Certificate of Need for a replacement hospital. The corporation purchased property adjacent to the property owned by the Association for the purpose of building a new facility for Lehigh Acres General Hospital. The Certificate of Need was acquired, the new facility built and on December 21, 1983, the patients at Lehigh Acres General Hospital were transferred to the new facility. When the new replacement hospital opened on December 21, 1983, Lehigh Acres Hospital, Inc., began doing business as EAST POINTE HOSPITAL. The Department of Health and Rehabilitative Services, State of Florida, issued a new hospital license to EAST POINTE HOSPITAL on December 16, 1983, license no. 1769. Lehigh Acres General Hospital's license no. was 416.

   2. When EAST POINTE HOSPITAL opened, services were substantially expanded as follows:

      1. When East Pointe Hospital opened, the bulk of the laboratory testing was able to be done inhouse, whereas prior to opening East Pointe, most of the laboratory was a contracted service;

      2. When East Pointe Hospital opened, the cardiology area was able to begin perform- ing stress testing, and echocardiology;

      3. When East Pointe Hospital opened, the radiology department was able to perform ultrasound analysis;

      4. In Lehigh Acres General Hospital twenty of the beds were skilled nursing beds, in East Pointe Hospital there are no skilled nursing beds, all beds are acute care beds.

      5. There was no change in the Medicare contractual number in the change from the old hospital to the new hospital for the reasons that (a) it was not required; and (b) it was not to the economic advantage of the hospital to do so.

   3. The parties stipulate to all facts found within the attached depositions of Richard Klusmann, Joseph Feith and Julie Cox, except that the deposition of Julie Cox is modified (by her off the record testimony with respect to East Pointe Hospital's preopening costs)

      as follows: as the preopening costs were incurred, they were expensed against Lehigh Acres Hospital (see item #2 on attached Exhibit A) rather than capitalized by East Pointe Hospital.

   4. East Pointe Hospital utilizes the same sales tax number acquired in 1982 by Lehigh Acres Hospital.

   5. When East Pointe Hospital began operations, patients were not discharged from Lehigh Acres Hospital and re-admitted to East Pointe Hospital. Patients were simply transferred to East Pointe Hospital. One reason for this procedure was to maintain continuity of billings.

      
      

2. Pursuant to the Purchase and Lease Agreement entered into between Lehigh Acres Hospital, Inc., and Lehigh Acres General Hospital Association, the sale of the hospital license was contingent upon the Petitioner obtaining a certificate of need for a replacement facility and the construction of a replacement facility within 30 months after the date of the sale and lease. The replacement facility had to be completed by December 31, 1983.

   
   

3. Requiring a replacement facility as a condition of the sale of the hospital license was provided because of a study which Lehigh Acres General Hospital Association had conducted. As a result of this study, the Association had concluded that a new facility was needed because the old facility was not meeting the need for a general acute care hospital in Lehigh Acres, Florida.

   
   

4. The Department of Health and Rehabilitative Services issued a certificate of need on October 23, 1981, to the Petitioner authorizing it to construct an 88-bed replacement facility. This certificate of need was a prerequisite to construction of the replacement facility.

   
   

5. Construction of the replacement facility was completed in December of 1983.

6. On December 21, 1983, all of the patients in the old facility were transferred to the replacement facility and the replacement facility began operating as East Pointe Hospital.

   
   

7. The old facility, which had been operated as Lehigh Acres General Hospital, ceased operation as a hospital on December 21, 1983. That facility is presently being converted for operation as a nursing home.

   
   

8. The replacement facility consist of approximately twice the square footage as the old facility. Because of the greater available space, the Petitioner was able to expand some of the services it had been offering in the old facility. The expanded services have been stipulated to by the parties and findings of fact concerning those services have been made under finding of fact 1, supra. There was no change in the general types of services offered by the Petitioner as a result of the move.

   
   

9. When the replacement facility was moved into, the Petitioner moved all of the patients then in the old facility to the replacement facility. No patient was treated as having been discharged from the old facility or as having been admitted or readmitted to the replacement facility.

   
   

10. All of the supplies and some of the equipment in the old facility were also moved to the replacement facility by the staff of the hospital and the Lehigh Acres Fire Department.

    
    

11. There was no change in the staff of the hospital when the replacement facility was moved into. The staff, including physicians, of the replacement facility was the same as the staff of the old facility.

    
    

12. The Blue Cross participating contract of the old facility was not changed as a result of the move and was used as the participating contract at the replacement facility.

    
    

13. The accreditation of the old facility was transferred as the accreditation of the replacement facility.

    
    

14. The Medicare contractual number of the old facility was transferred to the replacement facility. This number could not have been changed under Federal law. A change in the number would not have been financially advantageous to the Petitioner because it would have lost approximately $600.00 per admission in reimbursements if it had acquired a new number.

15. The employer number used for purposes of collecting withholding tax at the old facility was transferred to the replacement facility.

    
    

16. A new license was issued in the name of East Pointe Hospital by the Department of Health and Rehabilitative Services when the replacement facility began operating.

    
    

17. The Department of Health and Rehabilitative Services issues a new license anytime a hospital changes its ownership or its name, renews its license or replaces an old facility with a replacement facility.

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Section 120.57(1), Florida Statutes (1984 Supp.).

    
    

19. Section 395.509(11), Florida Statutes (1984 Supp.), as amended by Section 2, Chapter 85-157, Laws of Florida, provides, in pertinent part, as follows:

    
    

    The base-year projected budget and actual experience for each hospital shall be the 1984 audited actual experience for that hospital, as required by s. 395.507(7), and shall be inflated for 1985 by the maximum allowable rate of increase. However, if the 1984 audited actual experience of a hospital for net revenues per adjusted admission exceeds its 1984 projected budget for such revenues filed with the board by greater than

    10 percent, then the projected budget of that hospital for such revenues for fiscal year 1986 shall be reduced by the amount of such excess which is over 10 percent, except that the base year reduction shall not apply to hospitals opened since May 18, 1982. [Emphasis added]

    
    

20. The sole issue in this case is the question of whether the Petitioner is a hospital which "opened since May 18, 1982."

    
    

21. The term "opened" and its root "open" are not specific terms of special legal significance. They are terms of common usage and should be construed in their plain and ordinary sense.

    49 Fla. Jur. 2d, Statutes, s. 123. The term "open" has been defined as "accessible . . . or available." Black's Law Dictionary, Rev. 4th Ed. 1968. It has also been defined as "ready for business, patronage, or use . . .." "to make available for or active in a regular function . . ." and "to make accessible for a particular purpose . . . ." Webster's Ninth New Collegiate Dictionary 1984.

    
    

22. The term "hospital" is defined by Section 395.502(12), Florida Statutes (1984 Supp.), as "a health care institution as defined in s. 395.002(6)." Section 395.002(6), defines hospital as "any establishment" offering services normally associated with a hospital.

    
    

23. The term "establishment" is also a term of no special legal significance. It is a term of common usage and should be construed in its plain and ordinary sense. The term "establishment" has been defined as "a place of business or residence with its furnishings and staff." Webster's Ninth New Collegiate Dictionary 1984. It has also been defined as a "place of business and fixtures." Black's Law Dictionary, Rev. 4th Ed. 1963.

    
    

24. Applying these definitions to the exception of Section 395.509(11), it appears that the exception was intended to apply to any "place of business or residence with its furnishings and staff" providing hospital services which became "accessible or available" since May 18, 1982. If this definition is then applied to the facts in this case, it appears clear that the Petitioner did in fact open since May 18, 1982. The "hospital" in this case is the place of business with its furnishings and staff currently used by the Petitioner to provide hospital services. That place of business did not "open" or become accessible and available until after May 18, 1982.

    
    

25. Based upon the foregoing, it is concluded that the exception of Section 395.509(11), Florida Statutes (1984 Supp.), as amended by Section 2, Chapter 85-157, Laws of Florida, applies to the Petitioner.

RECOMMENDATION

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

RECOMMENDED that the Hospital Cost Containment Board enter its final order approving the Petitioner's budget without application of the reduction provided for in Section 395.509(11), Florida Statutes (1984 Supp.), as amended by Section 2, Chapter 85-157, Laws of Florida.

DONE and ENTERED this 9th percent day of January 1986, in Tallahassee, Florida.

LARRY J. SARTIN

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this 9th day of January 1986.

APPENDIX

The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they were accepted. Those proposed findings of fact which have been rejected and the reason for their rejection has also been noted. Paragraph numbers in the Recommended Order are

Paragraph 1: This proposed finding of fact is contrary to the facts as stipulated to by the parties. The parties stipulated that the Purchase and Lease Agreement was entered into on July 1, 1983. The parties also stipulated that the purchase was made by Lehigh Acres Hospital, Inc., a subsidiary of Hospital Corporation of America.

Paragraph 2: Accepted in RO 2.

Paragraph 3: Accepted in RO 2 and 3.

Paragraph 4: Accepted in RO 4.

Paragraph 5: Accepted in RO 4.

Paragraph 6: Accepted in RO 1, 5 and 6.

Paragraph 7: Accepted in RO 7.

Paragraph 8: Accepted in RO 8.

Paragraph 9: Accepted in RO 6 and 9.

Paragraph 10: Accepted in RO 1 and 9.

Paragraph 11: Accepted in RO 10 and 11.

Paragraph 12: Accepted in RO 12.

Paragraph 13: Accepted in RO 13.

Paragraph 14: Accepted in RO 14.

Paragraph 15: Accepted in RO 1.

Paragraph 16: Accepted in RO 15.

Paragraph 17: Accepted in RO 16 and 17.

Paragraph 18: Accepted in RO 1.

COPIES FURNISHED:

Curtis Ashley Billingsley, Esquire Hospital Cost Containment Woodcrest Office Park

325 John Knox Road, Suite 101 Tallahassee, Florida 32303

Ronald R. Richmond, Esquire Richmond, Booth & Cook

1311 Executive Center Drive Suite 235

Tallahassee, Florida 32301

James J. Bracher, Director Hospital Cost Containment Boar

325 John Knox Road, Suite L-101 Tallahassee, Florida 32303

Docket for Case No: 85-003979

Orders for Case No: 85-003979