STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HEALTH QUEST CORPORATION, )
)
)
Petitioner, )
vs. ) CASE NO. 87-3503
) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, ) FLORIDA CONVALESCENT )
CENTERS-COLUMBIA, AND )
FLORIDA CONVALESCENT )
CENTERS, MARION )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William R. Cave, held a formal hearing in the above- styled case on October 10-12, 1988, in Tallahassee, Florida.
APPEARANCES
For Petitioner: Steven W. Huss, Esquire
1017-C Thomasville Road Tallahassee, FL 32303
For Respondents: E. Lee Elzie, Jr., Esquire
804 First Florida Bank Building Post Office Box 82
Tallahassee, FL 32302 Attorney for Department of Health and Rehabilitative Services
Robert P. Daniti, Esquire Post Office Box 14348 Tallahassee, FL 32317 Attorney for Florida Convalescent Centers, Inc.
STATEMENT OF THE ISSUES
Whether Petitioner, Health Quest Corporation should be granted a certificate of need for a 120-bed nursing home in Palatka, Florida.
Whether, after comparative review, Petitioner, Health Quest Corporation should be granted a Certificate of Need for a 120-bed nursing home in Palatka, Florida rather than Respondent, Florida Convalescent Centers, Inc., being
granted Certificates of Need for a 60-bed nursing home in Lake City, Florida and a 60-bed addition to its existing facility in Ocala, Florida.
PRELIMINARY STATEMENT
Petitioner, Health Quest Corporation, filed an application dated January 14, 1987, for a certificate of need (CON) for a 163-bed nursing home in the Ocala, Florida area. In its omissions response, Health Quest changed the location of the nursing home to Palatka and requested that the CON be considered as either a 150-bed facility or a 120-bed facility. The Respondent, Department of Health and Rehabilitative Services considered the data for both a 150-bed and a 120-bed facility to be located in Palatka, Florida and denied Health Quest's CON.
In the same batching cycle, Respondent, Florida Convalescent Center, Inc., applied for a CON to construct a 120-bed nursing home in Lake City, Florida, and a CON to add 60 beds to its existing facility in Ocala, Florida. Florida Convalescent in its omissions response to HRS, reduced the size of the Lake City facility to 60 beds. HRS preliminarily approved Florida Convalescent's CON for the 60-bed addition in Ocala and its CON to construct the 60-bed facility in Lake City.
Health Quest contested HRS's preliminary approval of Florida Convalescent's CONs as well as the denial of its CON.
Health Quest prefiled the direct testimony of its expert witnesses Kevin C. Krisher, Paul Reilly and Robert Beiseigel and each testified at the hearing.
Health Quest's exhibits 1 through 19, 21, 22 and 23 were received into evidence.
HRS prefiled the direct testimony of its expert witness Reid Jaffe who testified at the hearing. HRS's exhibits 1 through 4 were received into evidence.
Florida Convalescent prefiled the direct testimony of its expert witnesses Mark Druash, Bruce K. Duncan, William T. Searcy, Tom C. Morgan, John F. Robenalt, Richard F. Laroche, Peter Prins, Martin Bakke, Robert G. Adams and Julia W. Powell and each testified at the hearing. Florida Convalescent's exhibits 2, 9A, 9B, 13, 14, 19A, 19B-1, 19B-2, 19C, 20 through 26, 29A, 29B,
30A, 30B and 36 were received into evidence.
A transcript of this proceeding was filed with the Division of Administrative Hearings on October 31, 1988. The parties requested, and were granted, additional time to submit posthearing Proposed Findings of Fact and Conclusions of Law with the understanding that the time frame for submission of the Recommended Order by the Hearing Officer was waived. The parties timely filed their posthearing Proposed Findings of Fact and Conclusions of Law.
However, Florida Convalescent exceeded the 40-page limitation for proposed recommended orders set forth in Rule 22I-6.031(3), Florida Administrative Code, and was required to file an Amended Proposed Findings of Fact and Conclusions of Law conforming to the 40-page limitation which resulted in its Amended Proposed Findings of Fact and Conclusions of Law not being filed until December 27, 1988. A ruling on each proposed finding of fact has been made as reflected in the Appendix to this Recommended Order.
FINDINGS OF FACT
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
BACKGROUND
Health Care and Retirement Corporation of America d/b/a Maple Leaf of Putnam County (HCR), Health Quest Corporation (Health Quest) and Florida Convalescent Centers, Inc. (FCC), each timely filed an appropriate letter of intent and timely applied to the Department of Health and Rehabilitative Services (HRS) for certificates of need (CON) for nursing home beds in District III for the January, 1987, batching cycle, with a January, 1990 horizon.
HRS preliminarily approved FCC's CON application 4944 to construct a 60 bed nursing home in Columbia County, FCC's CON application 4948 to add 60 beds to its facility in Marion County, partially approved HCR's CON application 4951 to construct a 120 bed nursing home in Putnam County, and denied Health Quest's CON application 4949 to construct a nursing home in Putnam County.
Southern Medical Associates, Inc. (SMA), did not apply for beds in this batch, but challenged the partial approval of CON 4951 to HCR.
At the beginning of the hearing SMA withdrew its challenge to HCR, as did FCC and Health Quest. Their actions ended all challenges to the partial award of CON 4951 to HCR, and HCR withdrew its challenge to the 60 beds it had been denied when it received its partial approval. HCR also withdrew any objections to the applications of FCC and Health Quest.
The hearing then became a comparative review of the two applications of FCC, preliminarily approved by HRS and challenged by Health Quest, and the application of Health Quest, preliminarily denied by HRS, which denial was challenged by Health Quest.
District III is a 16-County region in Florida defined by Section 20.19(5), Florida Statutes, to include Columbia, Marion and Putnam Counties.
Columbia, Marion and Putnam Counties are each in a separate nursing home planning area established by the local health plan.
It is highly unlikely that residents of Columbia, Marion and Putnam County would seek nursing home care, when they need such care, from nursing homes other than those located in their county of residence because of the distance between the counties.
HRS accepted for review in this batching cycle only completed applications.
Health Quest's Application
Health Quest submitted a letter of intent dated November 26, 1986, which was received by HRS on December 1, 1986 for the January, 1990 planning horizon for a 163-bed nursing home in District III, "probably in the Ocala area".
Health Quest submitted its CON application to HRS pursuant to its letter of intent for a 163-bed nursing home at a cost of $4,669,024 at Ocala, Marion County, Florida (District III), in January, 1987.
By letter dated February 13, 1987, HRS requested additional information from Health Quest in order for Health Quest to complete its application.
Health Quest responded to HRS by letter and attachments dated March 27, 1987, amending its application by moving the location of the proposed nursing home from Ocala, Marion County, Florida to Palatka, Putnam County, Florida. Health Quest also provided tables for HRS to consider its project as a 150-bed or a 120-bed facility rather than the 163-bed nursing home it originally requested.
But for Health Quest's letter and attachments dated March 27, 1988, Health- Quest's CON application (NO. 4949) would not have been completed.
The information provided by Health Quest to complete CON Application No. 4949 is all directed to and pertains to a nursing home in Palatka, Putnam County, Florida.
Health Quest's witnesses referred to its application as the Putnam facility.
Although HRS deemed Health Quest's application (No. 4949) complete as a nursing home project for Marion County, this was a mistake in that:
the only material completing the application amends it and is directed only toward constructing a nursing home in Putnam County.
in the State Agency Action Report (SAAR), HRS clearly reviews Health Quest's application as pertaining only to Putnam County.
Health Quest did not repudiate HRS' review of its CON application (No. 4949) for Putnam County only.
Health Quest's petition for an administrative hearing on this CON application (No. 4949) identifies its application as a nursing home project for Putnam County.
Health Quest's CON Application NO. 4949 is a CON application for a nursing home in Putnam County only.
Health Quest relies on only the data it submitted in support of a 120- bed nursing home project in this case.
Health Quest does not propose a locked unit for the care it will provide Alzheimers patients under CON No. 4949.
During the delay caused by litigation in this case, inflation resulted in an approximate 8% increase in costs, or 4% per year for two years.
Table 25(c) dealing with costs of professional services shows an increase from $109,394 in the omissions response to $149,754 in the Health Quest update. This increase was not simply the result of inflation, but rather was the result of a change in architectural services and how these services were to be paid for.
Equipment cost increased by approximately $35,000 from Table 3 of the Health Quest omissions response to Table 3 of the Health Quest update. This increase was not shown by Health Quest to be attributable to inflation or other extrinsic circumstances.
Health Quest changed its payor mix in Table 7 of its update from that in its omissions response and could offer no explanation for the change.
Health Quest changed its proposed patient charges in Table 7 of the update by as much as 57% from that in its omissions response. Health Quest could not explain this increase in terms of extrinsic circumstances in light of an 8% inflation rate during the applicable time period.
The utilization rates in Table 10 for the proposed facility dropped considerably in the update from those in the omissions response.
In the Health Quest updated pro forma, the salary and wage expense for the first year increased less than 1% over those projected in the omissions response.
While the salary expense increased by less than 1% from the omissions response to the update of Health Quest, its FTE manpower requirements in Table
11 increased from 77.9 to 90.3. This was not shown to be the result of extrinsic circumstances.
Although Health Quest used Hospital Cost Containment Board (HCCB) data to project Medicare projections in its update, its original application was not based on HCCB data because Health Quest said it was not available at the time. The HCCB data used by Health Quest was statewide data, not data from Putnam County. No reason was offered by Health Quest as to why it was necessary to use HCCB statewide data in the update, and in fact Health Quest did not use HCCB data for Medicaid rates in its update, but projected a rate at less than half of the statewide HCCB figure.
Health Quest changed its patient charges on Table 8 of its update because it came up with what it considered more realistic data. Health Quest made no showing that this information was not available earlier, and offered no proof that the increase was due to extrinsic circumstances. The change was simply due to a change in what Health Quest understood the rates in Florida to be.
Health Quest failed to demonstrate that its change in utilization rate in Table 10 of the update was the result of extrinsic circumstances. It cited no study to show the effect two approved facilities in Putnam County would have on utilization rates. Health Quest was not even aware of the utilization rates in Putnam County.
The Medicare Diagnostic Related Group's base reimbursement program started in 1983, and Health Quest could not demonstrate what effect, if any, it had on nursing home admissions between the time of Health Quest's omissions response and its update.
FCC's Application
FCC submitted to HRS a CON application for a 120-bed nursing home in Columbia County, District III, for the January 1987 batching cycle, CON Action NO. 4944 ("Columbia project").
HRS requested additional information and FCC submitted its omissions response on its Columbia project. FCC also requested to reduce its Columbia project from 120 to 60 beds before the application completion deadline of March 31, 1987.
HRS accepted FCC's Columbia project as a complete CON application for a 60-bed nursing home effective March 31, 1987, and reviewed this project as a CON application for 60-bed nursing home in the SAAR.
HRS reduced the size of FCC's Columbia project from 120 to 60 nursing home beds, preliminarily approved the application in the SAAR, and issued CON 4944 to FCC. CON No. 4944 preliminarily authorizes FCC to construct a 60-bed nursing home in Columbia County of 20,836 gross square feet, at a cost of
$2,450,854, conditioned on the project providing 75 percent of patient days to Medicaid patients.
Although FCC submitted amended Tables and Pro Forma in support of reducing the number of beds in its Columbia County CON application (No. 4944) after March 31, 1987, HRS made its decision to approve this FCC project without reference to the amended Tables and Pro Forma, since HRS routinely made such calculations on its own at that time pursuant to Section 381.494(8)(c), Florida Statutes (1985), now 381.709(4)(b), Florida Statutes (1987).
HRS has a policy of approving identifiable portions of a CON application even where the applicant does not submit supporting data in its attached tables, including the bed need allocation plan of the District Health Plan, and treats a single bed as an identifiable portion of a nursing home CON project.
FCC also applied to HRS for a CON to add 60 beds to Palm Garden of Ocala ("Palm Garden"), its licensed nursing home in Marion County, District III, for the January, 1987 batching cycle, CON Action No. 4948 ("Marion addition").
HRS requested additional information and FCC submitted its omissions response for its Marion addition prior to the application completion deadline of March 31, 1987.
HRS accepted FCC's Marion addition as a completed application for a 60-bed addition to Palm Garden effective March 31, 1987.
HRS preliminarily approved the Marion addition in the SAAR and issued CON No. 4948 to FCC. CON 4948 preliminarily authorizes FCC to add 60 beds to Palm Garden of 14,022 gross square feet, at a cost of $1,185,702, conditioned on the project providing 50 percent of patient days to Medicaid patients.
FCC relies on the amended Tables and Pro Forma only to rebut the challenge of Health Quest to the final approval of the Columbia project and the Marion addition.
Numeric Need
The parties agree with the HRS need calculation which showed a need for 296 beds in the district, except that Health Quest disputes the number of CON-approved beds used by HRS in its calculations.
Health Quest's only disagreement as to net numeric need is that HRS should not include as approved nursing home beds, those beds involved in FCC's CON Nos. 2760 and 3763 which HRS is attempting to revoke through the administrative process. These CONs are for one project totalling 120 approved beds in Bradford County, Florida, District III.
Since HRS has not entered a final order revoking these CONs, the 120 nursing home beds are "approved beds" and should be retained in the inventory and, the numeric need calculation by HRS showing a need for 296 nursing home beds in District III is correct.
HRS preliminarily issued CONs for 218 nursing home beds for District III for the January, 1990 planning horizon, of which 98 have become final agency action.
Although the local health plan recommended 120 beds in Putnam County, when the 60 beds awarded to SMA after the 120 bed figure was promulgated are subtracted, the remaining bed need in Putnam County is 60 beds. These 60 beds have been awarded to HCR and there is no bed need left in Putnam County for Health Quest to fill.
Of the 296 beds that were shown to be needed in District III, the award of 98 beds has become final, 120 beds have been preliminarily approved for FCC and challenged in this proceeding. The remaining 78 beds have not been allocated by HRS because there were no applicants for these beds in the appropriate county pursuant to the methodological approach of the local health plan.
HRS is opposed to placing beds in areas where the methodological approach of the local health plans show they are not needed and such placement could cause problems for existing providers.
Where there are applicants for more beds in a location than there is bed need in that location, it is not good health planning to place more beds in the location than needed.
State and District Health Plans - Section 381.705(1)(a), Florida Statutes (1987)
The applicable state health plan is the three volume 1985-1987 Florida State Health Plan (SHP).
The goal of the SHP is to develop an adequate supply of long-term care services throughout Florida by the January, 1990 planning horizon and to assure that appropriate long-term care services are accessible to all Florida residents, especially medically indigent Medicaid-eligible patients.
There is a need for increased access of Medicaid- eligible patients for nursing home care in District III. During calendar year 1986, 69.23 percent of nursing home patient days in District II were devoted to medical patients.
The District III health plan prefers increasing the number of nursing home beds in small increments to meet any need throughout the district.
The District III health plan prefers additions to existing facilities rather than constructing new facilities.
FCC's Columbia project and Marion addition will better meet the goals of both the SHP and the District III health plan in that these projects will be more consistent with the distribution of the supply of beds in the district and better assure the accessibility of long-term care services to the residents of the district, especially medicaid-eligible patients.
Accessibility - Section 381.705(1)(b), Florida Statutes.
In Columbia County, FCC proposes to devote 75 percent of its patient days to Medicaid patients.
In Marion County, FCC proposes to devote 50 percent of its patient days of the 60-bed addition to Palm Garden to Medicaid patients. Presently, Palm Garden provides 70 percent of its patient days to Medicaid patients.
FCC's Palm Garden has admitted patients who required extensive skilled care, such as tube feeding, as well as those who were difficult to manage.
The care for Medicaid patients is paid by HRS and is significantly less than the amount paid for the care of private-pay patients.
For the calendar year 1986, over 70 percent of patient days of nursing homes in District III were devoted to Medicaid, 69 percent Medicaid in Marion County, and 89 percent Medicaid in Putnam and Columbia counties.
Health Quest markets its nursing homes, including the nursing home it proposes in this case, for private-pay patients and not Medicaid patients.
Although Health Quest proposes access to Medicaid patients (approximately 31 percent of its patient days), its proposal will not appreciably increase the access of Medicaid patients to nursing home care in District III, particularly in Marion, Columbia and Putnam counties.
Both of FCC's proposals will increase, not only accessibility to nursing home residents in Columbia and Marion counties, but the access of Medicaid patients to nursing home care based on FCC's commitment to serve these patient groups.
Quality of Care - Section 381.705(1)(c), Florida Statutes.
Both FCC's and Health Quest's proposals demonstrate their ability to provide quality of care along with their record of having provided quality of care in other projects.
Both Health Quest and FCC will provide specialized care to Alzheimers's patients, but only FCC will provide respite care at both of its facilities. Respite care is short-term placement for patients while their primary care giver fulfills other responsibilities or takes a vacation.
Health Quest's corporate philosophy emphasizes quality of care and this philosophy is communicated to all staff members who share in the
responsibility for maintaining high quality of care. Health Quest's nursing facilities in Jacksonville and Boca Raton have been awarded "Superior" licenses by HRS. The other facility operated by Health Quest in Florida has not been open long enough to be eligible for "Superior" license.
No Health Quest facility in Florida has ever been fined or had a moratorium placed on its admission.
Because of certain deficiencies HRS has imposed moratoria on admissions to three nursing homes managed by National Health Corporation (NHC), two of these facilities are owned by FCC. However, the deficiencies were corrected and the moratoria lifted. Additionally, these deficiencies resulted in two FCC facilities initially being denied federal Medicaid condition of participation.
Any deficiency found by HRS at FCC's licensed nursing homes managed by NHC have either been successfully disputed or corrected, including those deficiencies found by HRS in its survey of Palm Garden of Ocala in February 22- 24, 1988.
The staffing pattern proposed by FCC for both of its projects exceed state licensure and Medicare certification quality of care standards and will meet patient care needs.
Of FCC's twelve licensed nursing homes in Florida, all operated by NHC, one has a superior rating, ten have standard ratings, and one has a conditional rating. Many of FCC's nursing homes have not operated long enough to be eligible for superior rating.
NHC operates four additional nursing homes in Florida, two of which have a superior rating, ten have standard ratings, and one facility is conditional.
FCC benefits from NHC's incentive program which rewards its nursing home administrators and directors of nursing for deficiency-free state and federal surveys.
NHC provides quality assurance to the nursing homes it manages for FCC through nurse consultants, patient assessment programs, a policy of having 24- hour registered nurse coverage, staff training programs, and a "Director of Nurses in Training" program.
Alternatives - Section 381.705(1)(d), Florida Statutes.
There was no alternative to nursing home care projects presented in this proceeding.
I. Economies and Improvements From Shared Resources - Section 381.705(1)(e), Florida Statutes.
Only FCC's proposed 60-bed Marion addition will result in economies and improvements in services derived from shared health care resources in that the project will benefit from the dining, kitchen, laundry and other ancillary services already in place sufficient to accommodate 60 additional patients.
Specialized Services - Section 381.705(1)(f), Florida Statutes.
Alzheimer's and respite care are not reasonably and economically accessible to District III residents.
While both Health Quest and FCC will provide Alzheimer's care under their projects, only FCC offers respite care under its two projects.
Need for Research and Educational Facilities - Section 381.705(1)(g), Florida Statutes.
Neither applicant proved that this criterion applies in this proceeding.
Availability of Resources - Section 381.705(1)(h), Florida Statutes.
Both Health Quest's and FCC's proposals will be accessible to all residents of District III. Health Quest will, however, provide less access to Medicaid residents than FCC.
Both of FCC's projects will be managed by NHC. NHC has established a Director of Nurses in Training Program and a scholarship program which provides tuition to nursing students who contract to work for NHC when they complete nurses training. Both of these programs benefit not only FCC's projects, but the community and health-care practitioners in the district.
Both applicants will be able to attract and maintain the staff necessary to operate their proposed facilities. Presently, Palm Garden of Ocala has a contract physical therapist on an interim basis; however, FCC's policy is to have a full-time registered physical therapist.
FCC, through NHC, also maintains an employee incentive program to recruit and reward staff for quality patient care.
FCC, through NHC, has a policy of providing registered nurse coverage on a 24-hour basis at its nursing homes and will implement this policy for the Columbia project and the Marion addition.
Both applicants have shown that funds for capital and operating expenditures for project accomplishment and operation are available.
Immediate and Long-Term Financial Feasibility - Section 381.705(1)(i), Florida Statutes.
The total projected cost of FCC's Columbia project is $2,450,854.00. The total project cost of FCC's Marion addition is $1,185,702.00. FCC has experienced cost overruns on twelve of its past projects of which HRS has reviewed seven and disallowed approximately $7 million of the approximately $12 million overruns. FCC has appealed HRS's disallowance of these costs overruns. Notwithstanding these past cost overruns, FCC's projected costs are reasonable.
On the immediate or short-term basis, FCC has financing available for capital expenditures and working capital for both of its projects.
FCC's projected utilization for both projects is reasonable and the nursing homes should be filled as projected. Although there are some discrepancies as to Medicare utilization by FCC, there was no showing that these discrepancies would have any significant effect on the projected feasibility.
FCC's projected rates and payor mix are reasonable and are appropriately based on the volume of Medicaid patients anticipated and actual experience at Palm Garden.
FCC's pro formas, taken as a whole, reasonably project expected results of operation for both projects for the first two years.
FCC has recently refinanced six of its Florida- licensed nursing homes at a reduced interest rate.
FCC has obtained a guarantee from NHC to finance both projects or guarantee repayment to third party lenders.
NHC has ample partnership equity, cash reserves, and a $30 million revolving line of credit with Sun Trust to guarantee the financing of both FCC projects. NHC's annual report and SEC Form 10k demonstrate the financial strength of NHC to guarantee FCC's development of both of these projects.
FCC's first and second year revenue projections for both projects are attainable.
FCC's first and second year expenses for operating both projects are reasonable.
Both of FCC's projects are financially feasible on a long-term basis in that projected revenues are attainable and will exceed projected expenses which are reasonable after two years of operation.
The total projected cost of Health Quest's 120 bed facility is
$3,729,813.00 of which ninety percent will be financed with ten percent cash to be furnished by Health Quest.
On an immediate basis, Health Quest has financing available for capital expenditures and working capital for its proposal. Health Quest has experienced only one cost overrun in Florida which was approved by HRS. However, due to its assumption of low Medicaid utilization in an area where Medicaid utilization is usually high and the possibility of lower occupancy rates than anticipated by Health Quest due to HRS filling the bed need in Palatka by issuing to each HCR and SMA a 60-bed CON, Health Quest's revenue
projections are questionable. Therefore, even though Health Quest's proposal may be financially feasible on both an immediate and long-term basis, the immediate and long-term financial feasibility of FCC's proposals are much better than Health Quest's.
The parties stipulated that Section 381.705(1)(j) and (k), Florida Statutes, were deemed met and not applicable in this proceeding.
Probable Impact - Section 381.705(1)(1), Florida Statutes.
Neither applicant proved that this criterion applies in this proceeding.
Development Costs - Section 381.705(1)(m) and Section 381.705(2), Florida Statutes.
FCC's projected financing costs, equipment and furnishing costs and construction costs for both projects are reasonable.
FCC has ample land, properly zoned, to add sixty beds to Palm Garden. There are no zoning issues or easements which would impede the construction, development and operation of Palm Garden as a 120-bed nursing home.
There is land available in Columbia county for FCC's 60-bed nursing home project which FCC may obtain at a cost within its projection.
Health Quest's projected financing costs, equipment and furnishing costs and construction costs are reasonable. However, Health Quest presented no evidence to support the cost of acquiring land for its project.
Proposed and Past Medicaid Utilization - Section 381.705(1)(n), Florida Statutes.
FCC not only proposes but has a higher past utilization of Medicaid patients than does Health Quest.
Project Design and Completion Forecast
FCC's Columbia project and the Marion addition are each designed to sufficiently accommodate sixty patients, the nursing stations and proposed activities. The design provides a comfortable environment for each resident, ample space for health care staff, including nursing staff, and sufficient space to provide activities for Alzheimer's and dementia patients. Adequate services will be provided at both of FCC's projects.
FCC's completion forecast for both of its projects is reasonable.
Both FCC and Health Quest have transferred CONs to other providers of care and received compensation for such transfers. However, there is insufficient evidence to show that these transfers were due to the parties' lack of resources or inability to develop the projects.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding pursuant to Section 120.57(1), Florida Statutes.
In a case involving the comparative review of applications for a Certificate of Need, the applicants FCC and Health Quest have the burden of demonstrating not only their entitlement to a certificate, but the superiority of their application over all other applications. Boca Raton Artificial Kidney Center, Inc. v. Florida Department of Health and Rehabilitative Services, 475 So.2d 260 (1 DCA Fla. 1985); Florida Department of Transportation v. J. W. C. Company, Inc. 396 So.2d 788 (1 DCA Fla. 1981).
Section 381.705, Florida Statutes, and Rule 10- 5.011(1)(k), Florida Administrative Code, establish the criteria pertinent to this proceeding which must be considered by the approval authority in evaluating the applications. Balsam v. Department of Health and Rehabilitative Services, 486 So.2d 1341 (1 DCA Fla. 1986). In determining whether the parties should be granted a CON for a nursing home, a balanced consideration of all statutory and rule criteria must be conducted. Department of Health and Rehabilitative Services v. Johnson and Johnson Home Health Care, Inc., 447 So.2d 361 (1 DCA Fla. 1984).
The weight to be accorded to each criterion and the balancing of the pertinent criteria will vary depending on the facts and circumstances of each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (1 DCA Fla. 1985); Graham v. Estuary Properties, Inc, 399 So.2d 1374 (Fla. 1981).
An evaluation of the evidence presented at the hearing and an independent application of the numeric methodology contained in HRS' rule indicates that a numeric need of 296 nursing home beds exists in District III for the January 1990 planning horizon of which the issuance of 98 beds has become final agency action leaving a bed need in District III of 198 beds. There exists sufficient bed need in District III to approve either Health
Quest's 120-bed application or FCC's 60-bed application for the Columbia project and FCC's 60-bed application for the Marion addition, but not both Health Quest's and FCC's applications. Therefore, a comparative review of the applications is necessary to determine which application best meets the criteria.
By statute, HRS is charged with the responsibility of initial investigation and review of CON applications. Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, et al., 483 So.2d 700, 708 (1 DCA Fla. 1986), and the application may not be changed , updated, or amended after it has been deemed complete. However, case law has modified this to allow consideration of relevant evidence of changed economic conditions and other current circumstances external to the application, McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (1 DCA Fla. 1977), if such evidence is due to changed circumstances beyond the control of the applicant and is relevant to the application. Hialeah Hospital v. HRS, et al., 9 FALR 2363 (May 1, 1987).
The evidence regarding Health Quest's update relied upon by Health Quest to reinforce its application was not a part of the original application or omissions response. Further, that portion of Health Quest's update discussed in Findings of Fact 24 through 34 did not result from any extrinsic circumstances or changed conditions not known or discoverable at the time of application or omissions response, and did not fall within the parameters of the above cited cases. It is, therefore, considered not pertinent to this evaluation.
After careful review and consideration of the evidence presented at the hearing, it is clear that FCC's applications not only meet the statutory and rule criteria but are superior to Health Quest's application, particularly in meeting the priorities of the Local Health Plan for location of the beds and the needs of the patients in the district, specifically Medicaid patients. The same results would be reached whether the Health Quest application was considered for Marion County or Putnam County.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter
a Final Order granting certificate of need number 4944 to Florida Convalescent Centers for construction of a 60-bed nursing home in Columbia County, Florida and a certificate of need number 4948 to Florida Convalescent Centers for the addition of 60 beds to its existing facility in Marion County, Florida, and denying Health Quest Corporation's certificate of need number 4949 for construction of a 120-bed nursing home in either Marion County or Putnam County, Florida.
DONE AND ENTERED this 23rd day of June, 1989, in Tallahassee, Leon County, Florida.
WILLIAM R. CAVE
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of June, 1989.
APPENDIX TO RECOMMENDED ORDER IN CASE NO. 87-3503
The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the * in this case.
Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Health Quest
Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1-4(1); 5(38,44); 7-9(70); 10(71); 11(68,70); 14-15(102); 18-19(10); 20(11); 21(11,12); 74-75(90); 77(112); 78(72); 80(74); 82(72); 87(72-73)and; 94(47).
Proposed findings of fact 6, 12, 13, 23 and 25 are unnecessary.
Proposed findings of fact 26 and 95 are rejected as being argument and as relating to legal conclusions.
4. Proposed findings of fact 16, 17, 29-36, 38-42, 76, 79, 81 and 88-93 are rejected as not being relevant or material.
Proposed finding of fact 22 is rejected for the reasons set forth in findings of fact 13 - 20 and as not being supported by substantial competent evidence in the record.
Proposed finding of fact 24 is rejected for the reasons set forth in findings of fact 23 - 34 and as not being supported by substantial competent evidence in the record.
The first sentence of proposed finding of fact 27 is rejected for the reasons set forth in finding of fact 102. The balance of proposed finding of fact 27 and proposed finding of fact 28 are adopted in substance in finding of fact 102.
Proposed findings of fact 37, 43-73 and 83-86 are rejected as being a restatement of testimony or argument going to the credibility of witnesses rather than a finding of fact that is material or relevant to the issue.
Specific Rulings on Proposed Findings of Fact Submitted by Respondent, FCC
1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1); 2(6); 3(8); 4(7); 5(4); 7-13(35-40); 14(45); 18-21(41-44); 24(45); 27-28(21-22); 29- 39(10-20); 41(50); 42-44(4); 45-47(46-48); 49-50(48-49); 51(2); 52-53(49-51); 55-57(54-59); 60-61(67); 62(50,52,53); 63(65-66); 64-69(61,62,66); 70-74(63-66); 77(83); 78-80 (71,77,78); 82-88(73-76,68,79); 90(80); 92-93(81-82); 95(85); 101(91); 104-107(90,95,96); 109(94); 110- 112(90,100); 113-114(74); 116-120(74,88,86,85,77); 124- 126(112); 133-139(91,92,93,98,99,94,100); 145(30); 157- 159(77,40,80); 162-165(105); 166(108) and 169- 175(106,107,110,110,111,110,110).
2. Proposed findings of fact 6, 15, 16, 22, 23, 25, 40, 54, 58,
59, 75, 76, 89, 91, 94, 96-100 102, 108, 115, 121, 122, 140,
152, 153, 155, 156, 160, 161, 167 and 168 are unnecessary.
3. Proposed findings of fact 17, 26, 48, 81, 103, 123, 129-132, 141-144, 148 and 151 are rejected as not being material or relevant.
4. Proposed findings of facts 127, 128, 146, 147, 149, 150 and
154 are rejected as not being supported by substantial competent evidence in the record.
Specific Rulings on Proposed Findings of Fact Submitted by Respondent, HRS
1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1-7(1, 2, 3, 4, 5, 13, 17); 8(17,18); 9(17, 18, 19); 10-21(23-34); 22(36, 37); 23(46); 24(48,50,52):25-26(48, 50); 27(51, 52) and 28(53).
COPIES FURNISHED:
Steven W. Huss, Esquire 1017-C Thomasville Road Tallahassee, FL 32303
E. Lee Elzie, Jr., Esquire
804 First Florida Bank Building Post Office Box 82
Tallahassee, FL 32303
Robert P. Daniti, Esquire Post Office Box 14348 Tallahassee, FL 32317
Gregory L. Coler, Secretary Department of HRS
1323 Winewood Boulevard
Tallahassee, FL 32399-0700
Sam Power, Clerk Department of HRS
1323 Winewood Boulevard
Tallahassee, FL 32399-0700
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
HEALTH QUEST CORPORATION,
Petitioner,
CASE NO.: 87-3503
vs. CON NO.: 4944
4948
DEPARTMENT OF HEALTH AND 4949
REHABILITATIVE SERVICES, FLORIDA CONVALESCENT CENTERS-COLUMBIA, and FLORIDA CONVALESCENT CENTERS-MARION,
Respondents.
/
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.
RULING ON EXCEPTIONS FILED BY FCC
FCC requests that the second sentence of finding of fact 56 be corrected to read as follows:
During calendar year 1986, 69.23 percent of nursing home patient days in District III were devoted to Medicaid patients. It is clear that the errors cited in the Recommended Order are typographical or clerical errors; thus, the request is granted.
FCC excepts to finding of fact 72. The finding is supported by competent, substantial evidence; therefore, the exception is denied.
FINDINGS OF FACT
The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except as noted in the ruling on the exceptions and as follows:
Paragraph 40 on page 10 states the policy in effect at the time of initial review, not the current policy.
CONCLUSIONS OF LAW
The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order.
Based upon the foregoing, it is
ADJUDGED, that FCC's application for CON 4944 for a 60 bed nursing home in Columbia County be APPROVED and that FCC's application for CON 4948 to add 60 beds to Palm Garden of Ocala be APPROVED. It is further adjudged that Health Quest's application for CON 4949 be DENIED.
DONE and ORDERED this 8th day of August, 1989, in Tallahassee, Florida.
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services
by Deputy 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 FEES 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:
Steven W. Huss, Esquire FALR
Attorney at Law Post Office Box 385
1017 Thomasville Road Gainesville, FL 32602 Suite C
Tallahassee, FL 32303
E. Lee Elzie, Jr., Esquire Robert P. Daniti, Esquire MACFARLANE, FERGUSON, ALLISON Attorney at Law
& KELLY 1017 Thomasville Road
215 S. Monroe Street, Ste 804 Suite C
First Florida Bank Bldg. Tallahassee, FL 32303 Tallahassee, FL 32302
William R. Cave Wayne McDaniel (PDDR) Hearing Officer
DOAH, The DeSoto Building 1230 Apalachee Parkway
Tallahassee, FL 32399-1550
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 11 day of Aug, 1989.
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 |
|---|---|
| Jun. 23, 1989 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Aug. 08, 1989 | Agency Final Order | |
| Jun. 23, 1989 | Recommended Order | Applicant's Cerificate of Need shows it better serves priorities of local health plan for location of beds and needs of patient,then that Certificate of Need should be awarded beds. |
