STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CONVALESCENT SERVICES, INC. ) BREVARD MEDICAL INVESTORS, LTD., )

)

Petitioner, )

)

vs. ) CASE NO. 87-3492

) [CON 5010]

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

) MANOR CARE, INC. (Brevard), )

)

Petitioner, )

)

vs. ) CASE NO. 87-3493

) [CON 5022]

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Final hearing in this proceeding was held on February 16, 1988, in Tallahassee, Florida, before Mary Clark, Hearing Officer of the Division of Administrative Hearings.

The parties were represented as follows:

For Petitioner: W. David Watkins, Esquire

Convalescent Services, Oertel & Hoffman, P. A.

Inc., Brevard Medical Post Office Box 6507 Investors, Ltd. Tallahassee, Florida 32314-6507

For Petitioner: Donna H. Stinson, Esquire

Manor Care, Inc. Moyle, Flanigan, Katz, (Brevard) Fitzgerald and Sheehan

118 North Gadsden Street Tallahassee, Florida 32301

For Respondent: Theodore E. Mack, Esquire

Department of Health

and Rehabilitative Services Regulation and Health Facilities 2727 Mahan Drive

Tallahassee, Florida 32308

BACKGROUND AND PROCEDURAL MATTERS

Petitioners, hereinafter referred to as "BMI" and "Manor," filed Certificate of Need applications for nursing home beds in Brevard County, in January 1987. The applications were both denied by HRS in May 1987, on the basis that the methodology contained in Rule 10-5.011(1)(k), F.A.C., disclosed no need for additional beds in that subdistrict in the January 1990 planning horizon.

Petitioners filed timely petitions for review and the cases were forwarded to the Division of Administrative Hearings for formal hearing. In an order dated September 8, 1987, the two cases were consolidated.

On February 10, 1988, the parties filed a prehearing stipulation limiting the issue at hearing to whether there is a need for additional community nursing home beds in Brevard County in the January 1990 planning horizon. (The stipulation incorrectly refers to a January 1989 horizon. All the evidence and the parties' post-hearing proposed recommended orders properly establish January 1990 as the planning horizon.)

At the final hearing, each party presented the testimony of one witness; each witness was qualified as an expert in health care planning and related areas, without objection. In addition, three exhibits by BMI were admitted, eight exhibits by Manor were admitted, and a single exhibit by HRS was admitted.

Upon request, and without objection, official recognition was taken of the following: Final Order, Corrected Final Order, and Amended Final Order in Wuesthoff Health Services, Inc., et al v. HRS, Division of Administrative Hearings case number 85-2868; and Final Order and per curiam Opinion in Broward Healthcare Ltd., d/b/a Broward Convalescent Center v. DHRS, Division of Administrative Hearings case number 86-2708, and 1st DCA case number, BT-258.

After the final hearing, BMI and Manor submitted a joint proposed recommended order. This, and HRS' proposed recommended order have been considered, and specific rulings on the proposed findings of fact are included in the attached appendix.

ISSUES

The broad issue in this proceeding is whether either of the petitioners should be granted a community nursing home CON.

The parties disagree as to the appropriate application of the need methodology described in Rule 10-5.011(1)(k), F.A.C. Both Petitioners argue that the approved bed inventory should be determined as of December 1, 1986, at the same time that the number of licensed beds was determined for the January 1987 batching cycle. HRS computed approved beds as of the date that the supervisor signed its State Agency Action Report (SAAR), in May 1987.

The parties further disagree as to the effect of subsequent changes to a Final Order in Wuesthoff Health Services, Inc., et al. v. HRS, cited above, originally entered in April 1987.

FINDINGS OF FACT

1. BMI's application number 5010, and Manor's application number 5022, were timely filed for review by HRS in the January 1987 batching cycle. Both applications were denied in HRS' State Agency Action Report (SAAR) dated May 19, 1987.

   
   

2. BMI previously received a CON for 73 nursing home beds in Brevard County. Its current application is for 47 additional beds, to create a single 120-bed facility. The entire facility is currently under construction, with the intention that the portion unlicensed as nursing home beds will be utilized as a distinct section of adult congregate living facility (ACLF) beds.

   
   

3. Manor also previously received a CON for 60 nursing home beds in Brevard County. CON number 3828 was granted in a prior batching cycle after the current application for 120 beds was filed. At the final hearing, Manor explained that it is now seeking only 60 more beds as it intends to construct a 120-bed facility in Brevard County.

   
   

4. In their pre-hearing stipulation the parties agreed that if numeric need is demonstrated, numeric need would first be met through partial or total approval of BMI's application. If the need exceeds 47 beds, the excess should be applied toward determination of approval of Manor's application.

   
   

5. The parties also stipulated that all criteria, except those directly related to numeric need for the projects, have either been satisfied by both applicants or are not applicable to this proceeding.

   
   

6. In calculating bed need for Brevard County, the parties have agreed, through their exhibits and testimony, that the first portion of the need methodology in Rule 10-5.011(1)(k), F.A.C., yields a subdistrict allocation of 1560 community nursing home beds. It is further undisputed that the relevant number of licensed beds for the period in question is 1,180 beds.

   
   

7. The version of Rule 10-5.011(1)(k) F.A.C. in effect at the time of review requires that licensed beds be counted as of December 1, 1986, for the January 1987 batching cycle. The rule is silent as to when approved beds should be counted.

   
   

8. Both applicants argue that approved beds should be counted at the same time as licensed beds for consistency and planning purposes. The current version of Rule 10-5.011(1)(k) F.A.C., known as the fixed pool rule, establishes a bed need for each batching cycle, thus providing the certainty and consistency sought by Petitioners' health planners.

   
   

9. Prior to its adoption of the fixed pool rule, HRS experimented with various policies as to the determination of "current" data utilized in the need methodology.

   
   

10. At the time of the January 1987 batching cycle, HRS' non-rule policy regarding approved beds was to count those beds as of the date that health services and facilities consultant supervisor signs off on the SAAR. In this case, that individual was Reid Jaffe, and the date was May 11, 1987.

    
    

11. At the hearing, Mr. Jaffe explained the policy was an attempt to reach a balance between deriving a proper number of beds and minimizing the duplication of services and overbedding. Because the need for future beds is

    partially predicated on how many beds have already been approved, the Department felt it necessary to take into consideration all those beds which had been approved up until its decision time. Generally the difference between the number of beds published in initial projections of need by HRS' Office of Comprehensive Health Planning and the number of approved beds considered at the time of the decision, are those beds which were approved in final orders issued during that period.

    
    

12. Contrary to Petitioners'assertions, those beds which became licensed after the December 1st cut-off date, but before the SAAR sign off, were not lost, but rather were computed by HRS as "approved" beds under the policy.

    
    

13. The policy described by Reid Jaffe in his testimony at final hearing is also reflected in HRS' Final Order in Broward Healthcare, Ltd., d/b/a Broward Convalescent Center v. Department of Health and Rehabilitative Services, 9 FALR 1974 (DOAH #86- 2708, Order dated March 21, 1987), aff. per curiam, without opinion, January 21, 1988, 1st DCA case no. BT-258.

    
    

14. Utilizing the HRS policy of counting approved beds at the time the supervisor signs the SAAR yields the following total:

    
    

    Approved Facilities Beds Date Approved West Melbourne Health Care 60 7/27/84

    Unicare Health Facility of Brevard 120 5/30/86

    Brevard Medical Investors 73 9/02/86

    Meridian 60 2/ /87

    Palm Bay Care Center 60 4/17/87

    Forum Group 60 4/17/87

    Courtney Springs 36 4/17/87 Total 469

15. In its SAAR, HRS neglected to include the 60 beds approved for Meridian. These beds were properly included by the applicants' health care planner in her adjustment to the SAAR count and HRS agrees the beds should be included. (See transcript, p. 20 and HRS proposed finding of fact #6.)

    
    

16. In June 1985, Courtney Springs received a CON for 36 beds in Broward County. The action was challenged, and the proceeding was consolidated with challenges by other applicants who were denied CONs in the same batching cycle. Wuesthoff Health Services, Inc., et al. v. Department of Health and Rehabilitative Services and Courtney Springs, consolidated cases #85-2868, 85- 2936, 85-2934, 85-3243, 85-3322, 85-3365, 85-3366.

    
    

17. In its Final Order, filed on April 17, 1987, HRS granted 60 beds each to Palm Bay Care Center, Forum Group and Courtney Springs.

    
    

18. The Final Order was corrected on May 19, 1987, to provide that the award to Courtney Springs was 36, rather than 60 beds, as there was no intent to award the facility more beds than originally provided. In all other respects the final order of April 17, 1987, remained in full force and effect.

    
    

19. On July 6, 1987, another order was entered and styled "Amended Final Order." The stated purposes of the amendment were to correct a scrivener's error in failing to serve the final order on a moving party, Brevard Medical Investors, Ltd., (BMI) and to give that party an "opportunity to exercise its right to judicial review."

20. The Amended Final Order addressed BMI's lack of standing for failure to file a timely petition to intervene in the consolidated Wuesthoff cases. This is the only subject of the amended final order. The original final order, dated April 17, 1987, did not address this subject.

    
    

21. It is not at all clear that the "Amended Final Order" dated July 6, 1987, amends the April 17, 1987, Final Order, since it references only an April 9th Final Order, not the April 17th Final Order. The record in this proceeding does not include a subsequent correction of "scriveners error", if indeed the referenced date was an error.

    
    

22. The applicants argue that the 120 beds awarded to Forum Group and Palm Care should not be regarded as ?approve even under HRS' policy, since the amended final order was dated in July 1987, well after the SAAR was signed by Reid Jaffe in May.

    
    

23. Application of this theory would result in 349 approved beds, and a net bed need of 66 beds in the January 1990 planning horizon. (Manor Care, exhibit #5)

    
    

24. Application of Petitioners' theory that approved beds should be counted on December 1, 1986, results in 289 approved beds, and a need for 120 beds in the January 1990 planning horizon.

    
    

25. HRS' application of its policy regarding the time at which approved beds are to be counted results in 469 approved beds, and a surplus of 42 beds in the January 1990 planning horizon.

    
    

26. There is no evidence in this proceeding of circumstances which would justify the approval of beds in excess of a net bed allocation derived through the bed need methodology in Rule 10-5.011(1)(k), F.A.C.

    
    

    CONCLUSIONS OF LAW

    
    

27. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding pursuant to Section 120.57(1) F.S., Florida Statutes.

    
    

28. In determining numeric need for nursing home beds, the relevant formula is found in Rule 10-5.011(1)(k), F.A.C., formerly Rule 10-5.11(21), F.A.C.

    
    

29. While Petitioners' theory as to how the formula should be applied is reasonable, so also is HRS' position. HRS' position was explained and justified sufficiently to meet the standards for non-rule policy described in McDonald v. Department of Banking and Finance, 346 So 2nd 569 (Fla. 1st DCA 1977). The later data, where flexibility is permitted by the rule, is more accurate and more effectively assures that the horizon population will be appropriately served.

    
    

30. It was also reasonable for HRS to consider the beds granted to Forum and Palm Bay Care Center, even though the April 1987 Final Order may have been later corrected for reasons wholly unrelated to the substantive effect of the original order.

31. The May 19, 1987, reduction of bed award to Courtney was nothing more than a nunc pro tunc correction of the original order, with retroactive effect.

    32 Fla. Jur. 2nd Judgments and Decrees, Sections 52-55.

    
    

32. . As reflected in Manor Care exhibits #6 and #7 and Section 381.709,

1. HRS can and does award CONS for identifiable portions of a project. This issue, however, is not relevant here, since the appropriate application of the need methodology results in a projected surplus of 42 beds in the January 1990 horizon.

   
   

   RECOMMENDATION

   
   

   Based on the foregoing, it is, hereby

   
   

   RECOMMENDED: That the CON applications by BMI and Manor for nursing home beds in Brevard County be denied

   
   

   DONE and RECOMMENDED this 1st day of April, 1988, in Tallahassee, Florida.

   
   

   MARY CLARK

   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 1st day of April, 1987.

   
   

   APPENDIX TO RECOMMENDED ORDER

   
   

   The following reflect on my specific rulings on the findings of fact proposed by the parties:

   
   

   Petitioners' Proposed Findings

   
   

   1. Adopted in paragraph 1.

   2. Adopted in paragraph 5.

   3. Adopted in paragraph 4.

   4. Rejected as unnecessary.

   5. Rejected as contrary to the weight of evidence. Reid Jaffe testified that need for 12 beds exists, but this conclusion did not include the 60 beds approved for Meridian in February 1987.

   6. Rejected as contrary to the weight of evidence and to the legal effect of the changes to HRS' April 1987 Final Order.

   7. Adopted, as to the characterization of applicants' position, in paragraph 7.

   8. Adopted in paragraph 7.

   9. Rejected as contrary to the weight of evidence.

   10. Rejected as unnecessary. 11-12. Adopted in paragraph 8.

1. Rejected as contrary to the evidence and law.

2. Rejected as contrary to the evidence.

3. Rejected as unnecessary.

4. Rejected as immaterial.

5. Rejected as irrelevant.

18-19. Rejected as immaterial.

1. Adopted in paragraph 7.

2. Adopted in paragraph 3.

22-26. Rejected as immaterial and irrelevant. Respondents' Proposed Findings

1-2. Adopted in paragraph 1.

1. Adopted in paragraph 3.

2. Adopted in paragraph 2.

3. Addressed in paragraph 11.

4. Adopted in paragraphs 9 and 10.

5. Adopted in paragraph 8.

6. Adopted in paragraph 10.

9-11. Rejected as unnecessary.

1. Adopted in paragraph 6.

2. Adopted in paragraph 9.

3. Adopted in paragraph 15.

COPIES FURNISHED:

W. David Watkins, Esquire Oertel & Hoffman, P. A. Post Office Box 6507

Tallahassee, Florida 32314-6507

Donna H. Stinson, Esquire Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P. A. The Perkins House Suite 100

118 North Gadsden Street Tallahassee, Florida 32301

Theodore E. Mack, Esquire Department of Health and Rehabilitative Services Regulation and Health Facilities 2727 Mahan Drive

Tallahassee, Florida 32308

Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407

Tallahassee, Florida 32399-0700

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

Tallahassee, Florida 32399-0700

John Miller, Esquire General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407

Tallahassee, Florida 32399-0700

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

CONVALESCENT SERVICES, INC. BREVARD MEDICAL INVESTORS, LTD.,

Petitioner, CASE NO.: 87-3492 CON NO.: 5010

vs.

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent.

/ MANOR CARE, INC. (Brevard),

Petitioner, CASE NO.: 87-3493 CON NO.: 5022

vs.

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent.

/

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.

FINDINGS OF FACT

The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The department hereby Adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except for conclusion of law number five (5).

Based upon the foregoing, it is

ADJUDGED, that applications for certificates of need number 5010 and 5022 be denied.

DONE and ORDERED this 22nd day of April, 1988, in Tallahassee, Florida.

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

by Assistant secretary for Programs

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:

W. David Watkins, Esquire OERTEL & HOFFMAN, P.A. Post Office Box 5507

Tallahassee, Florida 32314-6507

Donna H. Stinson, Esquire MOYLE, FLANIGAN, KATZ, FITZGERALD & SHEEHAN, P.A.

The Perkins House - Suite 100

118 North Gadsden Street Tallahassee, Florida 32301

Theodore Mack, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, Florida 32308

Mary Clark Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301 Nell Mitchem (PDDR)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 28th day of April, 1988.

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

Docket for Case No: 87-003492

Orders for Case No: 87-003492