STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BOCA RATON ARTIFICIAL KIDNEY )

CENTER, INC., and DELRAY ) ARTIFICIAL KIDNEY CENTER, INC., )

)

Petitioners, )

)

vs. ) CASE NO. 86-4459

) (Formerly 84-2714)

DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, and WEST ) BOCA RATON ARTIFICIAL KIDNEY CENTER, )

)

Respondents. )

)

RECOMMENDED ORDER UPON REMAND *

This matter came on for consideration pursuant to remand by the First District Court of Appeal. Due to the retirement of the original hearing officer, entry of a new recommended order pursuant to the limited jurisdiction of that remand devolves upon the undersigned.

APPEARANCES

For Petitioners C. Gary Williams, Esquire Boca Raton AKC, Ausley, McMullen, McGehee Inc. and Delray and Carothers & Proctor AKC, Inc.: Post Office Box 2391

Tallahassee, Florida 32302

For Respondent/ E. G. Boone, Esquire Applicant West Steven K. Boone, Esquire Boca AKC, INC.: E. G. Boone, P.A.

Post Office Box 1596 Venice, Florida 34284

For Respondent/HRS: Richard A. Patterson, Esquire

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32301 BACKGROUND

On or about June 29, 1984, Department of Health and Rehabilitative Services (HRS) issued Certificate of Need (CON) #2461 to Respondent, West Boca Raton Artificial Kidney Center (West Boca) for a seven station kidney dialysis facility in Palm Beach County Florida. On July 17, 1984, Petitioners, Boca Raton Artificial Kidney Center, Inc. (Boca Raton AKC) and Delray Artificial Kidney Center, Inc. (Delray ARC) challenged the issuance of CON 2461 to West Boca. An 8-day administrative hearing was held in May, June and July of 1985.

West Boca submitted 49 exhibits into evidence, Boca Raton ARC and Delray AKC submitted 29 exhibits into evidence, and HRS submitted 1 exhibit. Twenty-four witnesses testified on behalf of West Boca, 10 on behalf of Boca Raton ARC and Delray ARC, and one on behalf of HRS.

On September 18, 1985, the original hearing officer, R. T. Carpenter, entered a recommended order recommending that HRS issue a CON to West Boca for a 5-station kidney dialysis facility to be opened no sooner than July 1, 1986, and not to be expanded prior to July 1, 1988, without HRS approval. The original hearing officer further recommended that the West Boca CON be conditioned upon the acceptance of hepatitis and hepatitis positive patients. All parties filed exceptions to the recommended order.

On October 13, 1985, HRS entered a final order adopting the hearing officer's recommended order, but rejecting the conditions imposed on the CON relating to opening date and expansion as being arbitrary and capricious and not permitted by law.

As noted in the original recommended order, the West Boca facility opened prematurely, that is, even prior to formal hearing. West Boca's present submissions represent that it now has 10 stations because when the facility was operating at maximum capacity, it applied for 5 additional dialysis stations, and following independent assessment, on April 1, 1986, the Health Care Financing Administration, the federal agency which regulates the expansion of dialysis facilities, granted West Boca's expansion request. This occurred while this cause was in the appellate process.

On November 4, 1985, Boca Raton AKC and Delray AKC filed an appeal with the First District Court of Appeal, Case No. BJ-390. The appellate court rendered its decision on or about July 29, 1986, reversing and remanding the cause back to the Division of Administrative Hearings (DOAH) for entry of a new recommended order and eventual final order by the agency based on the need for additional dialysis stations as demonstrated by the 1983-1984 population data.

The court also expressly found "no error in [Petitioners's] Issues II-V," relating to West Boca satisfying the 13 statutory criteria, Petitioners' restrictive policies, and Petitioners' due process rights.

Accordingly, the jurisdiction for purposes of the present remand is closely limited. Specifically, the First District Court of Appeal remanded this case to DOAH solely to determine whether the West Boca facility was justified based on the need methodology contained in Rule 10-5.11(18) and "1983-84 population data as received into evidence at the previous administrative hearing." Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services, 493 So.2d 1055, 1057 (Fla. 1st DCA 1986).

Upon remand to DOAH, Hearing Officer Linda M. Rigot considered Respondent's Motion to Expedite Assignment of Hearing Officer and Motion to Expedite Hearing, heard argument of all counsel by telephonic conference call, and on November 6, 1986, entered an Order which provided in pertinent part:

Respondent West Boca Raton Artificial Kidney Center shall file its memorandum of law setting forth and summarizing the evidence of the need for additional dialysis stations as demonstrated by the 1983-84 population data presented at the

previous hearing, citing the page numbers of the record containing that evidence, no later than December 19, 1986.

Respondent Department of Health and Rehabilitative Services and Petitioners Boca Raton Artificial Kidney Center, Inc., and Delray Artificial Kidney Center, Inc., shall file their response memoranda of law setting forth and summarizing the evidence of the need for additional dialysis stations as demonstrated by the 1983-84 population data presented at the previous hearing, citing the page numbers of the record containing that evidence, no later than January 23, 1987.

Thereafter, by order of Hearing Officer Rigot entered December 5, 1986, a Request to Modify the filing schedule was denied and a new file number was assigned to this case, thereby changing its number from 84-2714 to 86-4459.

Neither order granted leave for the filing anew of old proposed findings of fact and conclusions of law by the parties or for the filing of completely new proposed findings of fact and conclusions of law by the parties. Nonetheless, West Boca filed a "Proposed Recommended Order" of 36 pages complete with appendix (of 36 exhibits) which is approximately 2 and 3/4 inches thick with unnumbered pages. HRS also filed a "Proposed Recommended Order." Although Boca Raton AKC and Delray AKC have filed a joint pleading captioned "Memorandum in Opposition," that pleading also purports to contain proposed findings of fact and conclusions of law. Any proposed findings of fact are outside the leave granted by the orders previously entered by Hearing Officer Rigot. They are also outside the authority granted by Section 120.57(1), Florida Statutes, in that the parties have already submitted and had considered by the original hearing officer, R. T. Carpenter, their proposed findings of fact and conclusions of law. Moreover, certain submissions address issues far beyond the limited scope of the First District Court of Appeal's remand of jurisdiction in this cause. Some have attempted to introduce material outside the record of the previous hearing, including but not limited to HRS rules proposed subsequent to the original hearing. Therefore, all submissions by the parties filed in response to the November 6, 1986 order have been treated as the legal memoranda contemplated by that order and all have been read and considered to the extent contemplated in that order for the purpose of directing the undersigned to appropriate evidence received at the original hearing. However, only evidence within the record has been used as the basis of new findings of fact and no specific rulings pursuant to Section 120.59(2), Florida Statutes, have been made on the parties' voluminous submissions.

FINDINGS OF FACT

New findings of fact have only been made in accord with the limited mandate/remand jurisdiction of the appellate court. Otherwise, findings of fact contained in the recommended order of Hearing Officer R. T. Carpenter entered September 18, 1985, have been adopted and incorporated by reference. To the extent the adopted original findings impact on the new findings, they have been adopted, following review of the record and the parties' submissions, for content. Any language from the original recommended order which has not been adopted is rejected in accord with the court's limited remand.

1. Paragraph 1 (including footnote 1) of the original recommended order entered in this cause, copy attached as Exhibit "A", is adopted and incorporated by reference.

   
   

2. The "service area" at issue was disputed by the parties. HRS District

   9 encompasses Palm Beach, Indian River, Okeechobee, Martin and St. Lucie counties.

   
   

3. Paragraph 3 of the original recommended order entered in this cause, copy attached as Exhibit "A", is adopted and incorporated by reference.

   
   

4. Only the second and third sentences of paragraph 4 of the original recommended order entered in this cause, copy attached as Exhibit "A", are adopted and incorporated by reference.

   
   

5. Paragraph 5 including (footnote 3) of the original recommended order entered in this cause, copy attached as Exhibit "A", is adopted and incorporated by reference. See also new finding of fact 8 infra.

   
   

6. The Network 19 representative, who was similarly qualified, calculated a need for five additional stations but his methodology, calculations, and ultimate result is rejected for reasons clear from the remand opinion dealing with application by Mr. Moutsatos of the wrong population data and for use of an incorrect "service area" as set forth in new finding of fact 7 infra.

   
   

7. As noted, the geographic location wherein the applicant, West Boca, seeks to locate, is Boca Raton, Palm Beach County, Florida, a county within HRS District 9. Rule 10-5.11(18), Florida Administrative Code, does not define "service area." District 9 has not been subdivided by either the local health council or HRS. The original application filed by West Boca indicated the proposed service area would be Palm Beach County. At the administrative hearing, West Boca, over Boca Raton AKC's and Delray AKC's objections, was permitted to introduce an amended application which designated a sub-area of Palm Beach County as its "service area", and the original recommended order entered herein recognized such an abbreviated area. Contrariwise, the HRS final order ruled that Palm Beach County was the appropriate service area to be used in applying the need methodology contained in the rule. Because this aspect of the final order was affirmed by the First District Court of Appeal, it becomes "law of the case" and Palm Beach County must be used as the service area for applying the methodology to this applicant. State v. Stebile, 443 So.2d 398 (Fla. 4th DCA 1984), Marine Midland Central v. Cote, 384 So.2d 658, (Fla. 5th DCA 1980). However, because the parties' submissions have insinuated this element of "service area" into the remand consideration of this cause, it may be noted that the record is clear that at all times relevant (including but not limited to the date West Boca's application was deemed complete, the date the application was preliminarily reviewed by HRS, and the date of hearing) HRS used Palm Beach County as the appropriate "service area" as contemplated by Rule 10- 5.11(18). West Boca has failed to demonstrate within the evidence received at the prior hearing that a smaller area should be defined for purposes of these proceedings. This determination is made notwithstanding evidence of desirable driving times for end stage renal dialysis (ESRD) patients and superfluous language employed by HRS' expert witness, Ms. Dudek, to the effect that although HRS policy and procedure always utilized Palm Beach County, a sub-area need determination is not an inappropriate measure of need for health planning purposes. These latter elements have been considered but are not persuasive that a smaller sub-area is appropriate in the face of sound health planning

   reasons for not using smaller than county sub-areas. The present submissions of West Boca on remand also fail to demonstrate any compelling reason to depart from normal HRS policy and procedure.

   
   

8. In evaluating an application for a CON for a proposed chronic renal dialysis facility, HRS utilizes the methodology contained in Rule 10-5.11(18), Florida Administrative Code. The First District Court of Appeal has ruled that the need for the West Boca facility must be determined utilizing the "1983-84 population data as received into evidence at the prior hearing" and determining need for the proposed dialysis center one year from the date that the application is deemed complete by HRS. West Boca's application was deemed complete in February of 1983. The 1984 population of the service area (Palm Beach County) was 689,325. The 1984 new patient acquisition rate was 197.29 per million. The 1984 service area mortality rate was 23.8 percent. This data was gathered by the District 9 Health Council and the HRS Office of Community Medical Facilities from ESRD providers for the calendar year 1984. In calculating the need under the ESRD methodology the first variable is "current ESRD patients by census for service area." At the administrative hearing in this case, Elizabeth Dudek, Community Medical Facilities Consultant for HRS concluded that 4 stations were needed. (See original Finding of Fact 5, adopted in new Finding of Fact 5 supra.) However, Ms. Dudek also testified that this "patient census" number was 260. Ms. Dudek obtained this "260" figure from the Florida ESRD Network 19 First Quarter Report 1985. She totaled the in-patient census figures for the Palm Beach County facilities to obtain this figure. However, since that figure represents only in-center patients, from which the second variable ("ESRD patients on home dialysis") is to be subtracted, the patient census number of 260 as given by Ms. Dudek and as contained in HRS exhibit 1 is in error. The correct number for the first variable in the ESRD methodology can only be determined by adding in-center patients and home dialysis patients (260

   + 24 284). HRS is required to correct any factual errors within its knowledge. Balsam v. HRS, 486 So.2d 1341 (Fla. 1st DCA 1986). Since the patient census in HRS exhibit 1 is in error, the correct figure should be substituted. Once this is done, the correct procedure for calculating the need for a proposed ESRD facility in Palm Beach County, which application was deemed complete in 1983, is as follows:

   
   

   Current ESRD patients by census for service area (Palm Beach County) 284

   Less ESRD patients on home dialysis 24 Plus new ESRD patients per 1 million

   population for one year [computed using 1984

   new patient acquisition rate multiplied by 1984 projected population] 136

   
   

   Less projected number of ESRD patients to receive home dialysis training 12

   
   

   Less number of ESRD patients receiving transplant operations for one year 7

   
   

   Less number of unsuccessful transplants for one year 0

   
   

   Less ESRD patient mortality for one year [In calculating need under the ESRD methodology,

   if the "patient census" number is changed, then the variable "ESRD patient mortality for one year" will also change. Therefore, the patient mortality is determined by

   the following procedure: mortality rate based on experience for service area applied to the subtotal of previous calculations (284-24+136-12-7-0--377; 377 x 23.8 percent

   90). See Rule 10-5.11(18)(b)1. Florida Administrative Code and HRS exhibit 1.] 90

   
   

   Plus 10 percent of current and projected ESRD patients on home dialysis 4

   
   

   Equals number of patients requiring chronic dialysis services for one year in the service area 291

   
   

   The Rule also provides that 80 percent of the capacity of four patients per station per week is to be utilized, yielding a factor of 3.2. This is divided into the number of patients requiring chronic dialysis services for one year in the service area (291). The dividend, 91, is the number of stations needed in the service area, less the 84 existing stations, for a net need of seven stations in Palm Beach County in 1984. (Note that where permitted all figures have been "rounded" to the nearest whole number).

   
   

9. Petitioners identified some relatively minor errors in input data and calculations. These errors would not, however, significantly change the so- called "hard numbers" stated above in new Finding of Fact 8. The more significant error of Ms. Dudek described therein is purely one of arithmetic and its required correction, in no way does violence to that witness' correct application of the rule methodology.

   
   

10. Both the Applicant and Petitioners presented additional expert testimony of health care consultants. Not surprisingly, their conclusions tended to reduce the need on one hand (Petitioners) and increase it on the other (Applicant). Although their testimony is incorporated in those considerations discussed in new Finding of Fact 11 (adopting original recommended order paragraphs 11-24 inclusive), it is rejected as to modification of the data utilized and generated by the HRS witness.

11. Paragraphs 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 (see also

new findings of fact 5-8,) 23, and 24 of the previous recommended order entered in this cause, copy attached as Exhibit "A", are adopted and incorporated by reference.

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings has jurisdiction of the parties and subject matter of this cause pursuant to the limited remand of jurisdiction encompassed in the opinion of the First District Court of Appeal in Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services, 493 So.2d 1055, 1057 (Fla. 1st DCA 1986).

   
   

2. At issue in this proceeding is the need for a 7- station kidney dialysis clinic in West Boca Raton, Florida, a county contained within HRS District 9.

3. Rule 10-5.11(18), Florida Administrative Code, provides a mathematical formula for projecting need for kidney dialysis stations in the "service area" in which the applicant proposes to locate. Unfortunately, the term "service area" is not defined in the rule. Based on a review of the record in this case, it is concluded that Palm Beach County constitutes the appropriate service area for this applicant. This threshold issue may be resolved simply by indicating that HRS has demonstrated that at all times relevant in this cause, its application of the methodology called for Palm Beach County to be utilized as the "service area" and that no party has demonstrated good cause for deviating therefrom. This much is formalized in the final order appealed from and since this element was undisturbed on appeal, it remains a "given" for purposes of this instant recommended order on remand. State v. Stabile and Marine Midland Central v. Cote, supra. However, even if it were not a "given," Palm Beach County clearly constitutes the appropriate service area for this applicant.

   This is so, first, because the original application filed by West Boca and preliminarily reviewed by HRS designated all of Palm Beach County as its proposed service area and second, because allowing an applicant to choose its own smaller than county sub-area of "service area" could obviously skew the rule application and easily lead to an overabundance of dialysis stations. Even by its submissions on remand, West Boca has demonstrated no compelling reason to deviate from the service area (Palm Beach County) unequivocally used by the agency in this and all similar reviews and has not shown that the use of Palm Beach County as the appropriate service area does not remain "law of the case."

   
   

4. The determination of need for additional kidney dialysis stations is a function of population, existing inventories (dialysis stations), patient census, etc. Upon the foregoing findings of fact it is concluded that there is a need for 7 additional end stage renal dialysis stations in Palm Beach county under the methodology for determining need in Rule 10-5.11(18), Florida Administrative Code.

CONCLUSION

Upon the foregoing findings of fact and conclusions of law it is recommended that HRS issue a Final Order approving the certificate of need to West Boca Raton Artificial Kidney Center for a seven station kidney dialysis clinic located in Palm Beach County which will accept hepatitis and hepatitis positive patients.

DONE and Ordered this 2nd day of April, 1987, in Tallahassee, Florida.

ELLA JANE P. DAVIS

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 2nd day of April, 1987.

COPIES FURNISHED:

Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

C. Gary Williams, Esquire Post Office Box 2391 Tallahassee, Florida 32302

E. G. Boone, Esquire Steven K. Boone, Esquire Post Office Box 1596 Venice, Florida 34284

Richard A. Patterson, Esquire Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32301

* NOTE: Previous DOAH case number assigned was 84-2714, with Recommeded Order issued 09/18/85.

Docket for Case No: 86-004459

Orders for Case No: 86-004459