STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BROWARD HEALTHCARE, LTD., d/b/a ) BROWARD CONVALESCENT CENTER, )
)
Petitioner, )
)
vs. ) CASE NO. 86-2708
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a public hearing in the above-styled case on November 17, 1986, in Tallahassee, Florida.
APPEARANCES
For Petitioner: W. David Watkins, Esquire
Oertel & Hoffman, P.A. Post Office Box 6507
Tallahassee, Florida 32314-6507
For Respondent: Darrell White, Esquire
Department of Health and Rehabilitative Services
1323 Winewood Boulevard
Tallahassee, Florida 32301 PRELIMINARY STATEMENT
Petitioner, Broward Healthcare, Ltd., d/b/a Broward Convalescent Center, contests the decision of the Respondent, Department of Health and Rehabilitative Services, to deny its application for a certificate of need to construct a 120-bed nursing home in Broward County, Florida. The sole issue in this proceeding is whether there is a numeric need for 120 community nursing home beds in Broward County (District X) pursuant to the methodology established by Rule 10-5.11(21)(b), Florida Administrative Code.
At hearing Petitioner called as witnesses: Deborah P. Kennedy, accepted as an expert in health care planning and nursing home project developmental, and Michael D. Jernigan, accepted as an expert in health care planning and long-term care administration. Petitioner's exhibits 1-15 were received into evidence. Respondent called as witnesses: Herbert E. Straughn, accepted as an expert in health planning and certificate of need review, and Reid Jaffe, accepted as an expert in health planning and certificate of need review administration. Respondent's exhibits 1-6 were received into evidence.
The transcript of hearing was filed December 31, 1986, and the parties were granted leave until January 14, 1987, within which to file proposed findings of fact. The parties' proposed findings have been addressed in the appendix to this recommended order.
FINDINGS OF FACT
In January 1986, Petitioner, Broward Healthcare, Ltd., d/b/a Broward Convalescent Center (Broward) filed an application with Respondent, Department of Health and Rehabilitative Services (Department) for a certificate of need (CON) to construct a 120- bed nursing home in Broward County, Florida. That application was denied by the Department on June 2, 1986, and Broward timely petitioned for formal administrative review.
The parties agree that Broward meets all statutory and rule criteria for issuance of a certificate of need for additional community nursing home beds in Broward County (District X) except need and the impact such lack of need would exert on the other criteria. (Prehearing Stipulation). Specifically, the parties have narrowed the issue to be resolved in these proceedings to whether a numeric need for Broward's proposed facility is demonstrated under the methodology established by Rule 10-5.11(21)(b)1-9, Florida Administrative Code. (Transcript, page 6).
The first step in calculating need pursuant to the rule methodology is to establish a "planning horizon". Subparagraph
(b) of the rule provides:
Need Methodology . . .. [T]he Department will determine if there is a projected need for new or additional beds three years into the future according to the methodology specified under subparagraphs 1 through 10. . .
The Department interprets subparagraph (b) establish a "planning horizon" in certificate of need proceedings calculated
from the filing deadline for applications established by Department rule. This interpretation is consistent with the numeric methodology prescribed by subparagraph (b), and with the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Flat 1st DCA 1986).
Applying the Department's interpretation to the facts of this case, establishes a "planning horizon" of January 15, 1989. See: Rule 10-5.08(1), Florida Administrative Code.
The next step in calculating need, would be to calculate gross need pursuant to subparagraphs (b)1-4 and 7 of the methodology. Before those calculations can be made, however, several disputes between the parties must be resolved.
Subparagraph (b)2 demands that POPC ("current population age 5-74") and POPD ("current population age 75 and over") be based on "current" population. The Department interprets "current" population to mean the population existent on the application filing deadline (January 15, 1986). This interpretation is consistent with the numeric methodology prescribed by subparagraph (b), and with the decision in Gulf Court.
Broward does not dispute the propriety of applying a three year planning horizon from the filing deadline established by rule, or the calculation of the "current" POPC and POPD populations as of the filing deadline established by rule. The dispute between the parties is whether population estimates developed after the application was filed can be used to establish the "current" population.
The Department advocates the use of population estimates existent when the application was filed. Accordingly, it would apply the official estimates and projections adopted by the Office of Governor as of January 1, 1986. Broward would apply the more recent estimates adopted by the Office of the Governor as of July 1, 1986.
In this case, the use of either estimate would have no significant effect on the result reached under the rule methodology; however, since all population estimates and projections are only approximations rather than actual counts, it would be more reasonable to use the latest estimates of the 1986 population than the estimates available at the time of application. In this case, this means using July 1, 1986, estimates of January 1986 populations. These estimates are still "current" as of January 1986, since it is still the January 1986 population that is to be measured, and presumably more accurate than the prior projection. In the same manner, July 1, 1986, estimates of horizon year 1989 populations (POPA and POPB, infra)
would also be used rather than January 1, 1986, estimates of that population. Accordingly, use of Broward's calculation of POPC (158, 878), POPD (110,217), POPA (164,821) and POPB (125,678) is
appropriate.
Pertinent to this case, subparagraph (b)7 mandate that LB/LBD (number of licensed beds in the district/subdistrict) be based upon the number of licensed beds as of December 1 preceding the batching cycle. At the time of the Department's state agency action report (SAAR), the number of licensed beds reported, as of December 1, 1985, was 3115. The Department established at hearing, however, that Daystar, Inc., a Christian Science facility with 44 beds was improperly included in that inventory, and that Covenant Care, a 120-bed facility was inadvertently omitted. Accordingly, the Department seeks to adjust the inventory it had previously calculated to reflect the true state of that inventory as of December 1, 1985. Broward contests the propriety of such an adjustment.
The accuracy of LB/LBD is critical to a meaningful calculation of gross need under the Department's methodology. Therefore, where, as here, it is established that beds were improperly included or excluded from that inventory, it is not only appropriate, but essential, that the inventory count be reformed.1 See: Federal Property Management Corporation v. Department of Health and Rehabilitative Services, 482 So.2d 475 (Fla. 1st DCA 1986). Accordingly, use of the Department's calculation for LB (3191) and LBD (3191) is appropriate.
The final issue to be resolved before gross need can be calculated, is the impact, if any, of Federal Property Management Corporation v. Department of Health and Rehabilitative Services, supra, on the licensed bed inventory established for December 1, 1985. In Federated Property, the court found that the Department had improperly applied the nursing bed rule formula by counting a Christian Science facility (Daystar, Inc.) and two licensed specialty hospitals (St. John's Nursing and Rehabilitative Center, and Manor Oaks, Inc.) as nursing home facilities. Accordingly, the court's opinion rendered January 20, 1986, concluded:
. . . we reverse and remand for a proper application of the rule formula, that portion of the final order in which HRS characterized as immaterial the fact that HRS has included in its nursing home bed inventory a total of
340 beds in a Christian Science Facility and two specialty hospitals. (Emphasis added).
The Department's licensed bed inventory as of December 1, 1985, included Daystar, St. John's and Manor Oaks. Daystar, as discussed supra, was subsequently removed from inventory, but the Department continues to carry St. John's and Manor Oaks as licensed nursing home facilities.
Broward does not contest the propriety of St. John's and Manor Care's inclusion in licensed inventory, and there is logic to Broward's position. If St. John's and Manor Oaks are excluded from inventory, the effect through application of the need methodology is to reduce the district's gross nursing home bed need.
Since Broward does not contest the inclusion of St. John's and Manor Oaks, and since Broward was not a party to Federal Properties and exercised its right not to be bound by it, the competent proof supports the inclusion of St. John's and Manor Oak's in the licensed bed inventory of this case.
The Gross Bed Need Calculation.
Subparagraphs (b)1-4 and 7 provide the methodology for calculating gross bed need for the district/subdistrict (in this case the district and subdistrict are the same -- Broward County) in the horizon year. Normally, it would add nothing to a resolution of the parties' dispute to define each term used in the methodology, and to detail each calculation. In this case, however, the parties have failed to demonstrate an appreciation for the manner in which each subparagraph of the rule relates to the other. Accordingly, step by step analysis is appropriate.
The first step in the calculation of gross need for the horizon year is to derive BA, the current bed rate for the age group 65-74. This rate is defined by subparagraph (b)2 as follows:
BA = LB / (POPC + (6 x POPD)
Where:
LB is the number of community nursing home beds in the relevant district.
POPC is the current population age 65-74.
POPD is the current population age 75 years and over.
The district licensed bed figure (LB) is then defined by subparagraph (b)7 as follows:
Review of applications submitted for the July batching cycle should be based upon the number of licenses (sic) beds (LB and LBD) as of June 1 preceding that cycle; applications for the January batching cycle shall be based upon the number of licensed beds (LB and LBD) as of December 1 preceding that cycle.
Application of the methodology prescribed by subparagraph (b)2 to this case produces the following calculation:
BA = LB / (POPC + (6 x POPD)
BA = 3,191 / (158,878 + (6 x 110,217)
BA = 3,191 / (158,878 + 661,302)
BA = 3,191 / 820,180
BA = .0038906
The second step in the calculation of gross need for the horizon year is to derive "BB", the current bed rate for the population age group 75 and over. This methodology is defined by subparagraph (b)3, and calculated in this case as follows:
BB = 6 x BA
BB = 6 x .0038906
BB = .0233436
The third step in the calculation of gross need for the horizon year is to derive "A", the district's "age-adjusted number of community nursing home beds" at the horizon year. This methodology is defined by subparagraph (b)1 as follows:
A = (POPA x BA) + (POPB x BB)
Where:
POPA is the population age 65-74 years in the relevant departmental district projected three years into the future.
POPB is the population age 75 years
and older in the relevant departmental district projected three years
into the future ....
Simply, A is the derivation of a bed need developed by imposing the current bed rates (BA and BB) on the population expected to be served in the horizon year (POPA and POPB).
Application of the methodology prescribed by subparagraph (,)1 to this case produces the following calculation:
A = (POPA x BA) + (POPB x BB)
A = (164,821 x .0038906) + (125,678 x
.0233436)
A = 641.25258 + 2933.7769
A = 3575
The final step in the calculation of gross need in the horizon year is to derive "SA", the "preliminary subdistrict allocation of community home beds" (gross bed need in this case.)2 This calculation is defined by subparagraph (b)4 as follows:
SA = A x (LBD/LB) x (OR/.90)
Where:
LBD is the number of licensed community nursing home beds in the relevant subdistrict.
OR is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the January batching cycle shall be based upon occupancy rate data for the months of April through September preceding that cycle
The subdistrict licensed bed figure (LBD) is defined, consistently with LB, by subparagraph (b)7, supra. In Broward County (District X) LB and LBD are the same, since the county has not been divided into subdistricts.
Application of the methodology prescribed by subparagraph (b)4 to this case produces a gross need in January 1989 of 3499 beds, as follows:
SA | = | A x (LBD/LB) x (OR/.90) |
SA | = | 3575 x (3191/3191) x (.8809/.90) |
SA | = | 3575 x 1 x .9787777 |
SA | = | 3499 |
The Net Need Calculation.
The final step in the numeric need methodology is to derive net need from gross need. According to subparagraph (b)9, this need is derived as follows:
The net bed allocation for a subdistrict, which is the number of beds available for Certificate of Need approval, is determined by subtracting the total number of licensed and 90% of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs 1 through 9 (sic 8) .... (Emphasis added).
While the rule requires that net need be calculated by subtracting "the total number of licensed and 90% of the approved beds" in the subdistrict from the gross need calculated under subparagraphs (b)1-8, it is silent as to the date that inventory should be calculated. The Department asserts, through application of a new "incipient policy" that the number of licensed beds should be calculated as of December 1, 1985 (the date established by subparagraph (b)7 as the data base for calculating LB and LBD), and the number of approved beds as of May 20, 1986 (the date the Department's supervisory consultant signed the SAAR). Broward would likewise calculate licensed beds as of December 1, 1985, but would calculate approved beds as of December 1, 1985.
The Department's new incipient policy was established approximately two months before hearing, and had its genesis with the Department's administrator, Robert Maryanski. Mr. Maryanski advised all the Department's consultants and consultant supervisors by memorandum of the new policy. At hearing, however, neither the memorandum nor Mr. Maryanski were produced. Instead, the Department called the consultant and consultant supervisor who reviewed Broward's application, and called upon them to provide a rational explanation for the Department's policy choice. Neither the consultant nor consultant supervisor were privy to the decision making process, or the rationale, to establish the date that inventory should be calculated under subparagraph (b)9.
The Department's witnesses assumed, without explanation, that subparagraph (b)7 defined the date for calculating license bed inventory under subparagraph (b)9, and opined that the appropriate date for calculating approved bed inventory was the date the consultant supervisor signed the SAAR because: (1) you have to stop counting sometime, (2) the supervisor's date was appropriate because it was the date of last review before the SAAR was sent forward for final agency action, and (3) the Department's date was better than Broward's because reference to the most current data is essential to prevent over- bedding.
The proof offered by the Department to expose and elucidate its policy choice was unpersuasive. As will be discussed in the conclusions of law, the dates used by the Department and Broward to calculate total licensed and approved beds for purposes of subparagraph (b)9 were facially unreasonable and legally incorrect since they failed to calculate that inventory at the date of de novo administrative review.
As of the date of the administrative hearing, there were 3191 licensed beds and 441 approved beds in the district/subdistrict.3 Applying the methodology prescribed by subparagraph (b)9 to the facts of this case calculates a surplus of 89 community nursing home beds in Broward County for the January 1989 planning horizon.
Other Considerations.
Notwithstanding its stipulation that numeric need was the sole determinative issue in this case, Broward suggests in paragraph 8 and 10 of its proposed findings of fact that, apart from numeric need, there is a need for additional nursing home beds in Broward County. Broward predicates its assertion based on the belief of Ms. Kennedy, its health care planner, founded on conversations she had with community providers. (Transcript pages 34-5) Ms. Kennedy's belief, based on conversations she had with community providers, is not competent proof to establish any special circumstances. Further, the lack of any quantitative proof to support her conclusion renders her testimony unpersuasive. In sum, Broward failed to demonstrate by competent and persuasive evidence that any person requiring any nursing home service in Broward County was being denied access to that service.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
When the Department seeks to interpret its own rules, or deviate from its past practices, it is required to present evidence at hearing to expose and elucidate its policy choice. Florida City's Water Company v. Public Service Commission, 384 So.2d 1280 (Fla. 1980). In the instant proceeding, the agency has failed to present a reasonable evidentiary basis for its interpretation of the date at which the total number of licensed and approved beds are to be calculated under subparagraph ( b) 9.
The inventory of licensed and approved beds under subparagraph (b)9 are inextricably linked. As approved beds are licensed, the approved bed inventory decreases and the licensed bed inventory increases. The Department's interpretation of the date at which licensed and approved beds are to be counted is neither logical nor rational, since it could result in some nursing home beds not being counted as either licensed or approved. For example, if beds were approved and not yet licensed on December 1, 1985, but licensed before the consultant supervisor signed the SAAR, they would not be counted in either inventory.
The fundamental flaw in the parties' approach to establishing an inventory date under subparagraph (b)9, was their myopic assumption that subparagraph (b)7 defined licensed bed inventory for purposes of subparagraph (b)9. The Department's rule must, however, be construed in its entirety, and all parts of the rule must be construed so as to work harmoniously with its other parts. So construed, the only logical conclusion to be drawn, as hereinafter demonstrated, is that subparagraph (b)7 defines LB and LBD ("current" licensed beds) for the gross need calculation under subparagraphs (b)1-4, and does not presume to define licensed beds under subparagraph (b)9.
Subparagraphs (b)1-4 and 7 of the numeric need methodology is designed to yield a gross bed need for the horizon year. The keys to this methodology are the calculation of a current "bed rate" (BA) and current occupancy rate (OR) for the current using population, and the projection of those rates on the population to be served in the horizon year. (In effect the rule projects the status quo into the future).
A meaningful calculation of the current bed rate cannot, however, be derived without a current inventory of licensed beds (LB and LBD). Accordingly, the relationship between
subparagraph (b)7, which defines the data base (December 2, 1985, in this case) for defining LB and LID (the "current" licensed bed inventory) to the gross bed need calculation is apparent.
The parties' suggestion that subparagraph (b)7 defines licensed bed inventory under subparagraph (b)9 not only ignores the inextricable link between subparagraph (b)7 and the gross bed need methodology, but also the language and purpose of subparagraph (b)9. The purpose of that subparagraph is to derive a realistic estimate of actual (net) bed need in the horizon year. Since all licensed and approved beds from previous batching cycles were intended to serve at least a portion of the horizon population, it would be illogical to ignore any of those beds when calculating net need. Accordingly, it would be unreasonable in this case not to count any beds licensed or approved between December 1, 1985, and the date a decision is rendered on Broward's application. Indeed, subparagraph (b)9 speaks to "the total number" of licensed and approved beds, not beds existent on December 1, 1985.4 In sum, subparagraph (b)7 cannot be read to define licensed bed inventory under subparagraph (b)9, and the parties' suggestion that it can is rejected as contrary to the clear language of the rule methodology. See: Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 493 So.2d 1055 (Fla. 1st DCA 1986).
Since the purpose of subparagraph (b)9 is to calculate a realistic estimate of the net bed need for the horizon year, it is appropriate, as the Department suggests, to use the most up- to-date information at the point a decision is rendered on an application. This assures, to the greatest extent possible, that the horizon population will not be over or under-served.
In those circumstances where the SAAR becomes final agency action, the Department's approach of calculating inventory on the date the consultant supervision signs the SAAR, assuming that inventory includes licensed and approved beds on that date, might be reasonable. However, where, as here, the SAAR constitutes only preliminary agency action, and a de novo review of the application is undertaken, there is no rational basis for subsuming that inventory at final hearing. The rule methodology considered, the only rational conclusion is that licensed and approved bed inventory, for purposes of deriving net bed need under subparagraph (b)9, must be calculated on the date of de novo administrative review.
The parties have stipulated that numeric need, as defined by Rule 10-5.11(21)(b)1-9, Florida Administrative Code, is dispositive of Broward's request for licensure. Since Broward
has failed to satisfy that criteria, its application must be denied.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED:
That the application of Broward for a certificate of need to establish a 120-bed nursing home in Broward County, Florida, be DENIED.
DONE AND ORDERED this 29th day of January, 1987, in Tallahassee, Florida.
WILLIAM J. KENDRICK
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 29th day of January, 1987.
ENDNOTES
1/ Any addition or deletion from licensed bed inventory also impacts the occupancy rate (OR) established for licensed beds under subparagraph (b)4. Accordingly, where inventory is adjusted, OR must be recalculated. In this case the OR rate is correctly recalculated by the Department to be 88.09 percent.
2/ SA is denoted as preliminary since an additional adjustment (poverty adjustment) is possible under subparagraphs (b)5 and 6. Where, as here, that adjustment is not appropriate, SA is the gross bed need for the horizon year.
3/ The proof establishes that there were 3191 licensed community home nursing beds in Broward County on December 2, 1985, and that there has been no change in that inventory. The number of approved beds (CON granted, but facility not yet licensed) for previously batched applicants has, however, increased since the filing of Broward's application. Existent when Broward filed its
application was an approved 101-bed CON for Heartland of Broward. (The Department also asserted that Colonial Palms Nursing Home held an approved CON for 74 beds. The proof established, however, that the Department's records were in error. Colonial Palms (CON No. 1746) is a licensed 120-bed facility and included, as such, in licensed bed inventory.) Subsequently, on January 24, 1986, the parties to Federal Property Management, supra, stipulated to a resolution of their dispute by agreeing that each of the applicants (Federal Property Management Corp., Richmond Healthcare, Inc., Health Care and Retirement Corporation of America, and Health Quest Corporation) would receive a certificate of need for 85 community nursing home beds in Broward County. By order of February 19, 1986, the Department granted a certificate of need for 85 beds to each applicant. These certificates ultimately issued on May 14, 1986, to Health Care and Retirement Corporation, on May 30, 1986, to Health Quest corporation, on July 3, 1986, to Richmond Healthcare, Inc., and on July 21, 1986, to Federal Property Management Corporation.
4/ In the same vein, subparagraph (b)7 speaks to licensed bed inventory as of December 1, 1985, a limited number, and does not speak to a total inventory or even mention approved beds.
COPIES FURNISHED:
W. David Watkins, Esquire Oertel & Hoffman, P.A. Post Office Box 6507
Tallahassee, Florida 32314-6507
Darrell White, Esquire Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
Gregory L. Coler, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
APPENDIX
Broward's proposed findings of fact are addressed as follows:
Addressed in paragraph 1.
Addressed in paragraph 2.
Not a finding of fact or irrelevant. 4-4. Addressed in paragraph 3-30.
5. Addressed in paragraph 25 and paragraph 3 of the of the conclusions o law.
6-8. Addressed in paragraph 16-29. The last two sentences of paragraph 8 are rejected as not supported by competent proof.
Rejected as not supported by competent proof.
Addressed in paragraph 9.
12 & 26. Not finding of fact or not relevant.
9, 13-19. Not necessary to the result reached since the parties
23 & 24. have stipulated that except for need Broward meets the necessary criteria. As to the sentences 3-4of paragraph 16, that conclusion is rejected. A conditional rating does not demonstrate substandard care and there was no proof that any patient in Broward County was receiving substandard care.
20-22.,29. To the extent relevant, addressed in paragraphs 4, 6 and 25-27.
25. Rejected as contrary to result reached. 27-28. Addressed in paragraphs 10-11 and 29. 30-31. Addressed in paragraphs 26-28.
Addressed in paragraph 29.
Addressed in paragraphs 7-9.
34-35. Not relevant in view of result reached. The Department is required to apply its existent rule until amended. See Conclusions of Law.
Addressed in paragraph 28 and Conclusions of Law. Mr. Jernigan's "testimony" is not a findings of fact, and his conclusions are rejected.
Addressed in paragraph 29.
Addressed in paragraphs 26-28.
Not relevant in light of the result reached.
The Department's proposed findings of fact are addressed as follows:
1. Addressed in paragraph 1.
2-3. Addressed in paragraph 2.
Addressed in paragraphs 2 and 22.
Addressed in paragraphs 3 and 4.
Rejected as contrary to result reached.
Addressed in paragraphs 7-9.
Addressed in paragraphs 24-29.
Addressed in paragraphs 2 and 29.
| Issue Date | Proceedings |
|---|---|
| May 18, 1999 | Case(s): 86-002708 |
| May 18, 1999 | Case(s): 86-002707 |
| May 18, 1999 | Case(s): 86-002706 |
| May 18, 1999 | Case(s): 86-002705 |
| Jan. 29, 1987 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 31, 1987 | Agency Final Order | |
| Jan. 29, 1987 | Recommended Order | Department's interpretation of numeric need rule for nursing home beds lacked reasonable evidence basis. Applied rule failed to show need. |
