STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATIONAL HEALTHCORP, )

)

Petitioner, )

)

vs. ) CASE NO. 88-1836

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES and )

H.B.A. CORPORATION, d/b/a )

OCEAN VIEW NURSING HOME, )

)

Respondents. )

) MERIDIAN INC., MERIDIAN NURSING ) CENTERS, INC. and VOLUSIA MERIDIAN ) LIMITED PARTNERSHIP, )

)

Petitioners, )

)

vs. ) CASE NO. 88-1839

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES and )

1. CORPORATION, d/b/a )

   OCEAN VIEW NURSING HOME, )

   )

   Respondents. )

   )

   
   

   RECOMMENDED ORDER

   
   

   Pursuant to written notice a formal hearing was held in these cases before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on December 20, 1988, and January 9 through 12, 1989, in Tallahassee, Florida.

   
   

   APPEARANCES

   
   

   For Petitioners Meridian, Inc., Meridian Nursing Centers, Inc. and Volusia Meridian Limited Partnership:

   Thomas W. Stahl, Esquire NEWELL & STAHL, P.A.

   817 North Gadsden Street Tallahassee, Florida 32303-6313

   For Petitioner National Healthcorp:

   Gerald B. Sternstein, Esquire Darrell White, Esquire Charles A. Stampelos, Esquire McFARLAIN, STERNSTEIN, WILEY & CASSEDY, P.A.

   600 First Florida Bank Building Post Office Box 2174 Tallahassee, Florida 32316-2174

   
   

   For Respondent H.B.A. Corporation, d/b/a Ocean View

   Nursing Home:

   Charles D. Hood, Jr., Esquire Monaco, Smith, Hood & Perk Post Office Box 15200

   Daytona Beach, Florida 3201

   
   

   For Respondent Department of Health and Rehabilitative Services:

   Edgar Lee Elzie, Jr., Esquire Post Office Box 82 Tallahassee, Florida 32302

   
   

   John Rodriguez, Esquire Department of Health and Rehabilitative Services Fort Knox Executive Center 2727 Mahan Drive

   Tallahassee, Florida 32308 STATEMENT OF THE ISSUE

   Whether a certificate of need for nursing home beds to be located in Subdistrict 4 of District 4, in July, 1990, should be granted to Meridian, National and/or HBA?

   
   

   PRELIMINARY STATEMENT

   
   

   In October of 1987, thirteen certificate of need applications were filed with the Respondent, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department"), seeking approval of certificates of need for nursing home beds to be located in either Flagler County or Volusia County, Florida. All thirteen applications were reviewed by the Department comparatively and competitively.

   
   

   By notice published in the Florida Administrative Weekly on March 4, 1988, the Department indicated its intent to grant the application filed by the Respondent, H.B.A. Corporation, d/b/a Ocean View Nursing Home (hereinafter referred to as "HBA"), and to deny the other twelve applications.

   
   

   Ten of the denied applicants, including the Petitioners in these cases, filed Petitions for a formal hearing challenging the Department's proposed action. The ten Petitions were filed with the Division of Administrative Hearings. The ten cases were subsequently consolidated. All of the applicants except the two Petitioners in these cases and Health Care and Retirement Corporation of America, Inc., d/b/a Heartland of Volusia County (hereinafter referred to as "HCR"), subsequently voluntarily dismissed their Petitions and

   their cases were closed before the commencement of the formal hearing of these cases. HCR participated in the formal hearing of these cases but voluntarily dismissed its case subsequent to the conclusion of the formal hearing.

   
   

   Prior to the commencement of the formal hearing the parties filed a Joint Pre-Trial Compliance in which the parties stipulated that all of the criteria of Sections 381.705(1) and (2), Florida Statutes (1987), are applicable to these proceedings, except Sections 381.705(1)(d), (f), (g) and (j), Florida Statutes (1987). The parties also stipulated that the provision of training programs for the public, the accessibility of the applicants' facilities to health care schools and the appropriateness and cost of equipment are not at issue in these proceedings. Finally, the parties stipulated that:

   
   

   1. All applicants have properly filed letters of intent and complied with all notice requisites required by statute and rule as conditions precedent to the granting of a certificate of need by the Department of Health and Rehabilitative Services.

   2. All applicants are ready, willing and capable of raising all the required capital and obtaining all financing at the rates, conditions and amortizations shown in the applicants' certificate of need applications submitted in this cause.

   3. All applicants have the ability to recruit the necessary staff required to open and operate the proposed nursing homes and addition.

   4. Regarding the criteria in Section 381.705(2)(b), Fla. Stat. (1987), such requisite is met sufficient to warrant approval of additional beds.

   5. Regarding Section 381.705(2)(c), Fla. Stat. (1987), such criteria is not at issue and does not require proof by the applicants; however, all applicants agree that such criteria does not address cost efficiencies of an addition versus a free standing facility.

The parties were ordered to file the testimony of their financial feasibility expert witnesses, if they intended to present such testimony, prior to the commencement of the formal hearing. Meridian, Inc., Meridian Nursing Centers, Inc. and Volusia Meridian Limited Partnership (hereinafter collectively referred to as "Meridian") pre-filed the testimony of Joseph J. Dvorak.

National Healthcorp (hereinafter referred to as "National") pre-filed the testimony of Robert Adams. HBA pre-filed the testimony of Dennis O'Leary and Daniel Sullivan. The Department did not file pre-file any testimony.

At the formal hearing Meridian presented the testimony of the following individuals, who were accepted as experts in the areas noted: Bill Neugroschel (health planning and nursing home development); Don Cochran (nursing home administration); Judy Turner (nursing and geriatric nursing care); Georgina Rose Haigh (activities for geriatric patients in a long-term care setting); Sylvia R.

Cohen (quality of life programs for geriatric patients); D. Wendall Hall (architecture and designing and constructing health care facilities); Melanie Cox (nursing and nursing care to geriatric patients in a long-term setting); and Joseph J. Dvorak (nursing home financial feasibility and third party reimbursement. Meridian offered 19 exhibits. Meridian exhibits 1, 3-7 and 9-19 were accepted into evidence. Meridian exhibits 2 and 8 were rejected.

National presented the testimony of the following individuals, who were accepted as experts in the areas noted: Bruce K. Duncan (health care planning);

1. Eugene Nelson (health planning); Tom Morgan (nursing home project development, including construction and property management); and Robert Galloway Adams (nursing home feasibility by National and nursing home administration and operations, including maintaining quality assurance standards). The deposition testimony of James H. Bailey, III, an expert in architecture and design of nursing home facilities, was also presented by National. National offered nine exhibits which were accepted into evidence. Exhibit one to Mr. Bailey's deposition is hereby accepted into evidence.

   
   

   HBA presented the testimony of the following individuals, who were accepted as experts in the areas noted: Barton D. Weisman (nursing home development cost, nursing home administration and nursing home finances); Michell Dale Mastrin (nursing home design and construction methods); Michael Jackson Haile (nursing home construction methods and costs) ; Dennis William O'Leary (nursing home administration and staffing); Keith Kroeger (nursing home administration and staffing); and Daniel J. Sullivan (health care planning, health care need analysis, health care finance and health care financial feasibility). HBA exhibits 1-14 were accepted into evidence.

   
   

   Finally, the Department presented the testimony of the following individuals, who were accepted as experts in the areas noted: Reid Jaffey (health planning and Florida certificate of need review); and Elfie Stamm (health planning and rule development). The Department also presented testimony from Daniel J. Sullivan. Two exhibits were offered by the Department. Those exhibits were accepted into evidence.

   
   

   The parties have filed proposed recommended orders containing proposed findings of fact. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order or the proposed finding of fact has been accepted or rejected in the Appendix which is attached hereto.

   
   

   FINDINGS OF FACT

   
   

   1. Procedural.

      
      

      1. Meridian, National, HBA and ten other applicants filed certificate of need applications with the Department in the October, 1987, nursing home bed certificate of need review cycle of the Department for Subdistrict 4 of District

      1. This area includes Flagler and Volusia Counties, Florida.

         
         

         1. Each of the applicants involved in these cases filed a letter of intent with the Department and the District 4 Local Health Council within the time required for the filing of letters of intent for the October, 1987, nursing home bed certificate of need review cycle.

            
            

         2. Each of the applicants involved in these cases filed their certificate of need applications within the time required for the filing of certificate of

            need applications for the October, 1987, nursing home bed certificate of need review cycle. The applications were deemed complete by the Department.

            
            

         3. The Department comparatively reviewed the applications of the applicants involved in these cases and those of ten other applicants. Based upon this review the Department issued a State Agency Action Report for the October, 1987, nursing home bed review cycle (hereinafter referred to as the "SAAR") on February 18, 1988.

            
            

         4. The SAAR was published by the Department in the Florida Administrative Weekly on March 4, 1988.

            
            

         5. In the SAAR the Department proposed to approve the certificate of need application filed by HBA and to deny all other applications.

            
            

         6. Ten of the applicants whose certificate of need applications were denied by the Department filed Petitions pursuant to Section 120.57(1), Florida Statutes, challenging the Department's proposed action. All of the Petitioners except the two Petitioners in these cases and HCR withdrew their Petitions prior to the formal hearing of these cases. HCR participated in the formal hearing of these cases but withdrew its Petition prior to the issuance of this Recommended Order.

            
            

   2. The Parties.

      
      

      1. The Department.

         
         

         1. The Department is the agency responsible for reviewing certificate of need applications for nursing home beds to be located in Flagler and Volusia Counties.

            
            

      2. Meridian.

         
         

         1. Meridian, Inc., is a corporation headquartered in Towson, Maryland. The stock of Meridian, Inc., is owned by five individuals. Volusia Meridian

            Limited Partnership (hereinafter referred to as the "Partnership") is a Maryland limited partnership authorized to conduct business in Florida. Meridian, Inc., is the Partnership's general partner. The Partnership owns a nursing home in Ormond Beach, Florida. The Ormond Beach nursing home is leased to Meridian Nursing Centers, Inc.

            
            

         2. For the past twenty years, Meridian has owned, operated, developed and managed long-term health care facilities, retirement communities and other health care services for the elderly.

            
            

         3. Meridian owns and operates thirty-three facilities, in five States. These facilities have approximately 4,800 beds.

            
            

         4. In Florida, Meridian owns nursing homes in Lakeland, Plantation and Ormond Beach. As of the date of the formal hearing, Meridian had two other facilities under construction in Florida: one located in Longwood, Florida; and the other located in Melbourne, Florida.

      3. National.

         
         

         1. National is a publicly traded Delaware limited partnership, authorized to conduct business in Florida. National's principal offices are located in Murfreesboro, Tennessee.

            
            

         2. National was created in 1971 with the purchase of fourteen existing nursing homes located in Tennessee, Kentucky, and Georgia. National now operates seventy nursing homes and health care centers in ten different States. Twenty-two of these homes and health care centers are managed, but not owned, by National. National also operates four retirement complexes, eighteen home health agencies and seven to ten specialized Alzheimer's units.

            
            

         3. In Florida, National owns two health care centers and manages eighteen centers owned by other companies. None of these facilities are located in Flagler or Volusia Counties.

            
            

      4. HBA.

      
      

      1. HBA is a Florida corporation engaged in the business of developing, constructing and operating nursing homes. The principals of HBA have owned and operated nursing homes for approximately twenty years and in Florida for approximately fifteen years. HBA's corporate headquarters are located in Ft. Lauderdale, Florida. HBA owns or operates twenty-four nursing homes located in Florida, New Jersey, Pennsylvania and Washington D.C.

         
         

      2. In Florida, HBA owns or operates six nursing homes. They are located in New Smyrna Beach, Ft. Lauderdale, Plantation, Tamarac and Miami. The New Smyrna Beach nursing home, Ocean View Nursing Home (hereinafter referred to as "Ocean View"), is located in southern Volusia County.

         
         

   3. The Proposals.

      
      

      1. Meridian's Proposal.

         
         

         1. Meridian's Ormond Beach nursing home is located in northeast Volusia County. This facility consist of 60 nursing home beds. It began operation in November, 1987.

            
            

         2. In this proceeding, Meridian is seeking approval of the addition to its Ormond Beach nursing home of an additional 60 nursing home beds.

            
            

         3. Meridian is proposing the construction of a 14,531 square foot (329 square feet per bed) addition to its existing Ormond Beach nursing home. The total size of the Ormond Beach facility will be 39,000 gross square feet if Meridian's proposal is approved. The total proposed cost of Meridian's project is $1,247,800.00. The total project cost of the resulting 120-bed Ormond Beach facility will be $4,262,361.00.

            
            

      2. National's Proposal.

         
         

         1. In this proceeding, National is seeking approval of a certificate of need authorizing the construction and operation of an 80-bed nursing home to be located in the Palm Coast area of Flagler County, Florida. The exact location of the facility has not been identified by National.

         2. National is proposing the construction of a facility consisting of approximately 44,183 gross square feet (552 square feet per bed). The total proposed cost of National's project is $3,786,846.00.

            
            

      3. HBA'S Proposal.

      
      

      1. HBA currently owns and operates Ocean View. Ocean View is located in southeast Volusia County. Ocean View currently is licensed to operate 179 nursing home beds.

         
         

      2. In this proceeding, HBA is seeking approval of the addition to Ocean View of 60 nursing home beds.

         
         

      3. HBA is proposing the construction of an 18,000 gross square foot (263 square feet per bed) addition to Ocean View. The total size of Ocean View will be 63,000 gross square feet if HBA's proposal is approved. The total proposed cost of HBA's project is

         
         

   4. Section 381.705(1)(a), Florida Statutes.

      
      

      1. Numeric Need.

         
         

         1. Numeric need for additional nursing home beds is determined pursuant to the need methodology provided in Rule 10-5.011(1)(k), Florida Administrative Code (hereinafter referred to as the "Need Methodology"). The Department determines the need for additional nursing home beds by applying the Need Methodology for "planning horizons" three years into the future from the certificate of need batching cycles. For the batching cycle involved in these cases, the Department published pursuant to Rule 10-5.008(2), Florida Administrative Code, the net number of additional nursing home beds, the "fixed need pool," in the Florida Administrative Weekly, for the first time.

            
            

         2. In these cases, the Need Methodology must be applied to determine the fixed need pool for the July, 1990, planning horizon for Flagler and Volusia Counties. These Counties make up Subdistrict 4 of the Department's District 4.

            
            

         3. Initially the Department determined that the fixed need pool involved in these cases was zero. Pursuant to Department policy, the Department published a corrected fixed need pool during the grace period of Rule 10- 5.008(1)(b), Florida Administrative Code, on September 18, 1987. Based upon the corrected fixed need pool, the Department determined that there was a need for

            80 additional nursing home beds for Subdistrict 4 of District 4. No point of entry was provided by the Department for challenging this fixed need pool.

            
            

         4. The Department's calculation of a fixed need pool of 80 nursing home beds was based upon a misapplication of the Need Methodology by the Department. Based upon a proper application of the Need Methodology there is a need for 68 additional nursing home beds for the planning horizon at issue in these cases.

            
            

         5. The applicants involved in these cases filed their applications in reliance upon the Department's published fixed-need pool of 80 additional nursing home beds.

            
            

         6. The proper components of the Need Methodology for determining the gross number of nursing home beds needed for District 4 in July, 1990, are as follows:

            1. The projected population age 65-74 in District 4 for July, 1990, is 125,990 (POPA);

               
               

            2. The projected population age 75 and older in District 4 for July, 1990, is 91,109 (POPB);

               
               

            3. The population age 65-74 in District 4 in July, 1987, was 113,083 (POPC);

               
               

            4. The population age 75 and older in District 4 in July, 1987, was 77,867 (POPD);

               
               

            5. The number of licensed beds in District 4 as of July 1, 1987, was 6,005 (LB);

               
               

            6. The estimated bed rate for the population aged 65-74 of District 4 is 0.01034836 (BA);

               
               

            7. The estimated bed rate for the population aged 75 and older of District 4 is 0.06209018 (BB); and

               
               

            8. The total number of nursing home beds needed for District 4 in July, 1990, is 6,961 beds (A).

            
            

         7. The proper components of the Need Methodology for allocating the gross number of nursing home beds needed for District 4 in July, 1990, to Subdistrict

            4 are as follows:

            
            

            1. The number of licensed beds in Subdistrict 4 as of July 1, 1987, was 2,290 beds (LBD);

               
               

            2. The number of licensed beds in District 4 as of July 1, 1987, was 6,005 beds (LB);

               
               

            3. The occupancy rate of Subdistrict 4 was 85.83% (OR); and

               
               

            4. The gross number of nursing home beds allocated to Subdistrict 4 is 2,532 beds (SA).

            
            

         8. Rule 10-5.011(1)(k)2.g., Florida Administrative Code, provides the following with regard to determining the number of licensed nursing home beds to be taken into account in calculating gross bed need for the batching cycle involved in these cases:

            
            

            [B]ed rates established prior to the second batching cycle letter of intent deadline shall be calculated on the number of licensed community nursing ads and the population projections

            as of July 1...

            
            

         9. Once the gross number of nursing home beds needed in Subdistrict 4 for July, 1990, is determined, the net number of beds needed is determined by subtracting the total number of licensed beds and 90 percent of approved beds in the Subdistrict from the gross number of beds needed. Rule 10-5.011(1)(k)2.i., Florida Administrative Code, provides the manner in which net bed need is to be determined. In particular, this Rule provides the following:

            The number of approved and licensed nursing home beds for the second batching cycle in 1987 shall be based on the number of approved and licensed beds as of August 1, 1987; ...

            
            

            The number of licensed beds in Subdistrict 4 as of August 1, 1987, was 2,410 beds. The number of approved licensed beds in Subdistrict 4 as of August 1, 1987, was 60 beds.

            
            

         10. The increase in licensed beds in Subdistrict 4 from 2,290 beds as of July 1, 1987, to 2,410 beds as of August 1, 1987, was caused by the licensing of the approved 120-bed Indigo Manor nursing home owned by Health Care and Retirement Corporation of America on July 21, 1987.

             
             

         11. It is not inconsistent for the Department to use the number of licensed nursing home beds as of July 1 for purposes of determining gross bed need and August 1 for calculating net bed need. The use of these dates by the Department is consistent with good health planning and the requirements of the Need Methodology.

             
             

      2. The State Health Plan.

         
         

         1. The Florida State Health Plan contains the general goals of fostering cost containment and developing an adequate supply of accessible and appropriately utilized long-term care health services. Each of the applicants will increase the accessibility of nursing home beds and are proposing appropriate utilization of health services. HBA's proposal will enhance the accessibility of nursing home beds in southeast Volusia County.

            
            

      3. The District Health Plan.

         
         

         1. The 1987 update to the 1986 district health plan for Subdistrict 4 of the Department's District 4, contains recommendations to be considered in determining community nursing home care bed need. These recommendations, and their application, are as follows:

            
            

            1. If the state determines that Subdistrict 4 is eligible for additional beds, these beds should be awarded to the Flagler Beach/Palm Coast area of Flagler County if the occupancy rate of Meadowbrook Manor meets or exceeds 85 percent occupancy at the time of CON decision and if it could be shown that the level of occupancy is likely to continue. The average occupancy rate for Meadowbrook Manor for the period of January 1, 1987, through June 30, 1987, was

               58 percent. Meadowbrook has never achieved an 85 percent occupancy rate as of the date of the formal hearing of these cases. At the time of the "CON decision" in these cases, Meadowbrook had not achieved an 85 percent occupancy. This recommendation, therefore, does not apply.

               
               

            2. If a high rate of occupancy at Meadowbrook Manor in Flagler County does not materialize and if the occupancy rate at Ocean View Nursing Home in southeast Volusia County continues at 85 percent or higher and it could be verified that it will remain at a high rate, then 60 nursing home beds should be awarded in the New Smyrna Beach/Edgewater area of southeast Volusia County. The CON applicant must be willing to accept 50 percent Medicaid patients. The remaining portion should be awarded in West Volusia County. The average monthly occupancy of Ocean View for the period of January 1, 1987, through June 30,

               1987, was 86 percent. Since September, 1987, the occupancy rate at Ocean View has been 94 percent or higher. This high rate of occupancy should continue.

               HBA proposes to accept 50 percent Medicaid patients and proposes to add its sought after nursing home beds to the New Smyrna Beach/Edgewater area of southeast Volusia County. HBA is the only applicant that meets this recommendation.

               
               

            3. If the conditions in Nos. 1[a] and 2[b] are not met, the state should award all beds to West Volusia. The conditions of 2[b] have been met. Therefore, this recommendation does not apply.

               
               

            4. No nursing home beds should be awarded to East Volusia County out of the New Smyrna Beach/Edgewater area. Refer to recommendation 2[b] above. The Meridian proposal seeks to add beds to its facility located in East Volusia County outside of the New Smyrna/Edgewater area. Meridian's proposal is, therefore, inconsistent with this recommendation.

            
            

         2. HBA's proposal is consistent with the recommendations of the updated 1986 district health plan. Meridian's and National's proposals are not consistent with these recommendations.

            
            

         3. The 1988 district health plan does not contain the specific recommendations concerning the allocation of nursing home beds within Subdistrict 4 of District 4, quoted above. The specific recommendations concerning where beds should be located within Subdistrict 4 of District 4 were eliminated in response to a suggestion by the Department that the recommendations were too specific and did not allow more flexibility.

            
            

      4. Need for Services.

      
      

      1. All of the applicants propose to provide a full range of services to their residents, including sub-acute care. The evidence did not prove that any of the applicants are proposing services not being provided in Subdistrict 4 of District 4.

         
         

   5. Section 381.705(1)(b), Florida Statutes.

      
      

      1. The evidence in this case failed to prove that like and existing health care services in Subdistrict 4 (consisting of Flagler and Volusia Counties) of District 4 are not available, efficient, appropriate, accessible, adequate or providing quality of care, except to the extent that existing services cannot meet the need for additional nursing home beds in the subdistrict.

         
         

      2. The accessibility of nursing home beds in southeast Volusia County has been restricted since September, 1987. Ocean View's occupancy during this period of time has been at or above 95 percent.

         
         

      3. Nursing home beds in eastern Volusia County have been at 75 percent occupancy.

         
         

      4. Meadowbrook Manor, located in Bunnell, Flagler County, has not achieved an occupancy rate of 75 percent since it opened in November, 1985. Meadowbrook Manor is a 100-bed nursing home. It has been experiencing one of the lowest, if not the lowest, occupancy rates of all nursing homes in Subdistrict 4. Although the evidence proved that Meadowbrook Manor has experienced difficulties in attracting residents, the evidence failed to prove

         that Meadowbrook Manor is not an appropriate, available and accessible nursing home or that the difficulties experienced by Meadowbrook Manor will continue in the future.

         
         

   6. Section 381.705(1)(c), Florida Statutes.

      
      

      1. Meridian.

         
         

         1. Meridian's licensed nursing home facility in Plantation, Florida, is currently rated superior. Meridian has been informed by the Department that its nursing home facility in Ormond Beach will be rated superior. Meridian's facility in Lakeland has not been in operation long enough to be eligible for a superior rating. Therefore, the Lakeland nursing home has been rated standard.

            
            

         2. Meridian will provide extensive training for its staff at its Ormond Beach nursing home.

            
            

         3. Meridian will provide staff for the Ormond Beach facility in excess of the staffing levels required by the Department.

            
            

         4. Meridian has an extensive quality assurance program, including its Quality of Life Program. Meridian's findings of fact numbers 5-12 and 14-22 are hereby adopted and incorporated herein by reference.

            
            

         5. Meridian proposes to provide sufficient services, safeguards and staff. Meridian should be able to provide adequate quality of care in its facility.

            
            

      2. National.

         
         

         1. Four of National's fourteen existing nursing home facilities in Florida have been rated superior. The other ten facilities have be rated standard.

            
            

         2. National has a policy of seeking accreditation by the Joint Commission for Accreditation of Health Care Organizations.

            
            

         3. National will provide staff for its proposed facility in excess of the staffing levels required by the Department.

            
            

         4. National has an extensive quality assurance program. National's finding of fact number 24a-g and k is hereby adopted and incorporated herein by reference.

            
            

         5. National proposes to provide sufficient services, safeguards and staff. National should be able to provide adequate-quality of care in its proposed nursing home facility.

            
            

      3. HBA.

      
      

      1. Four of HBA's seven nursing home facilities in Florida have been rated superior. The other three facilities have been rated standard. Ocean View has been rated a superior facility by the Department for the past five years.

         
         

      2. HBA will provide extensive training and development for its staff at Ocean View.

      3. HBA proposes to provide sufficient services, safeguards and staff. HBA should be able to provide adequate quality of care at Ocean View.

         
         

   7. Section 381.705(1)(e), Florida Statutes.

      
      

      1. All three of the applicants in these cases operate a number of nursing homes and other health care facilities in Florida and other areas. Each will enjoy the benefits, including joint purchasing power, which inure to multi- facility organizations. None of the applicants, however, proved that they will provide joint, cooperative or shared health care resources more effectively than the other applicants.

         
         

   8. Section 381.705(1)(h), Florida Statutes.

      
      

      1. All of the applicants' proposals will be accessible to all of the residents of Flagler and Volusia Counties.

         
         

      2. Meridian has proposed to provide 53% and 51% of its patient days during its first year and its second year of operation, respectively, to the care of Medicaid patients.

         
         

      3. Meridian has proposed to provide 4% of its patient days during its first two years of operation to the care of Medicare patients.

         
         

      4. National has proposed to provide 57% of its patient days during its first two years of operation to the care of Medicaid patients.

         
         

      5. National has proposed to provide 10% of its patient days during its first two years of operation to the care of Medicare patients. National has not determined, however, how many nursing home beds it will dedicate to the care of Medicare patients. National has indicated that it will dedicate fourteen to twenty-four beds as a Medicare certified distinct-part unit. Nationally, 8% of National's total patient days for the fiscal year ending September 30, 1986, were Medicare patient days.

         
         

      6. HBA has proposed to provide 60% of its patient days during its first two years of operation to the care of Medicaid patients.

         
         

      7. HBA has proposed to provide 5% of its patient days during its first two years of operation to the care of Medicare patients.

         
         

   9. Section 381.705(1)(i), Florida Statutes.

      
      

      1. Immediate Financial Feasibility.

         
         

         1. The parties have stipulated to the following with regard to immediate financial feasibility of the proposals in these cases:

            
            

            All applicants are ready, willing and capable of raising all the required capital and obtaining all financing at the rates, conditions and amortizations shown in the applicants' certificate of need applications submitted in this cause.

      2. Long-term Financial Feasibility. (1). Meridian.

      1. Meridian has projected a profit of $67,976.00 on revenue of

         $2,536,518.00 for the first year of operation of its proposed 120-bed Ormond- Beach facility and a profit of $136,712.00 on revenue of $2,881,804.00 for the second year of operation of its proposed 120-bed Ormond Beach facility.

         Meridian has also projected a profit from the operation of its proposed 60-bed addition for the first two years of operation.

         
         

      2. Meridian has projected a payor mix of 49% Medicaid, 4% Medicare, 44% private pay and 3% other during the first year of operation and 46% Medicaid, 4% Medicare, 46% private pay and 4% other during the second year of operation. These projections are reasonable.

         
         

      3. Meridian's Ormond Beach facility opened in November, 1987. Although it was projected to fill up in twelve months, it only took five months. The facility had a waiting list of twenty people when it opened. Meridian's projected fill up rate for the additional 60 beds is reasonable.

         
         

      4. Meridian's projected patient charges are reasonable. Meridian's proposed Medicare charges are the lowest of the three applicants.

         
         

      5. Meridian's projected revenue and expenses are reasonable.

         
         

      6. Meridian's project is financially feasible in the long term. (2). National.

      7. National has projected a loss of $96,990.00 on revenue of $986,598.00 for the first year of operation of its proposed facility and a profit of

         $269,603.00 on revenue of $1,847,865.00 for the second year of operation of its proposed facility.

         
         

      8. National has projected a payor mix of 52% Medicaid, 12% Medicare, 31% private pay and 4% other during the first year of operation and 48% Medicaid, 13% Medicare, 33% private pay and 5% other during the second year of operation. These projections are reasonable.

         
         

      9. National's projected fill up rate is reasonable.

         
         

      10. National's projected patient charges are reasonable.

          
          

      11. National's projected revenue and expenses are reasonable.

          
          

      12. National's project would be financially feasible in the long term if there was a need for 80 nursing home beds.

          
          

          (3). HBA.

          
          

      13. HBA has projected a profit of $127,542.00 on revenue of $5,658,984.00 for the first year of operation of its proposed 239-bed facility and a profit of

          $188,614.00 on revenue of $6,213,164.00 for the second year of operation of its proposed 239-bed facility.

      14. HBA has projected a payor mix of 53% Medicaid, 6% Medicare, 34% private pay and 7% other during the first two years of operation. These projections are reasonable.

          
          

      15. HBA's projected fill up rate for the additional 60 beds is reasonable.

          
          

      16. HBA's projected patient charges are reasonable.

          
          

      17. HBA's projected revenue and expenses are reasonable.

          
          

      18. HBA's project is financially feasible in the long term.

          
          

   10. Section 381.705(1)(k), Florida Statutes.

       
       

       1. The evidence failed to prove that this criterion applies in this proceeding.

          
          

   11. Section 381.705(1)(l), Florida Statutes.

       
       

       1. Generally, all of the applicants will improve competition if their projects are approved.

          
          

       2. Based upon projected Medicaid and Medicare rates, Meridian will have the least adverse impact on patient charges. HBA will have the least adverse impact on private-pay patient charges.

          
          

   12. Section 381.705(1)(m), Florida Statutes.

       
       

       1. The cost of constructing Meridian's proposed addition is $932,100.00. This amounts to a per square foot cost of $64.14.

          
          

       2. Meridian's existing Ormond Beach nursing home is located on a 5.5 acre wooded site. The existing building was constructed with sufficient ancillaries for a 120-bed nursing home. Site plans, road work, sewer, utility connections and zoning have been designed and approved for a 120-bed facility.

          
          

       3. The cost per bed for Meridian's proposed 60-bed addition is

          $20,797.00, based upon the total projected project cost. The cost per bed for the existing 60-bed facility was $51,242.00. The cost per bed for the proposed 120-bed facility will be $35,519.00.

          
          

       4. Meridian's projected costs of construction are reasonable.

          
          

       5. Meridian's proposed methods of construction, including the costs and methods of energy provision, are reasonable. The facility will comply with code and regulatory requirements.

          
          

       6. The cost of constructing National's proposed facility is

          $2,789,346.00. This amounts to a per square foot cost of $63.13.

          
          

       7. The cost per bed for National's proposed 80-bed nursing home is

          $47,355.00.

          
          

       8. National's projected costs of construction are reasonable.

       9. National's proposed methods of construction, including the costs and methods of energy provision, are reasonable. The facility will comply with code and regulatory requirements.

          
          

       10. The cost of constructing HBA's proposed addition is $1,145,000.00. This amounts to a per square foot cost of $63.61.

           
           

       11. The cost per bed for HBA's proposed facility is $25,000.00, based upon the total projected project cost.

           
           

       12. HBA's projected costs of construction are reasonable.

           
           

       13. HBA has proposed construction of its 60-bed addition as a second floor addition to an existing first floor 60-bed wing at Ocean View. The second floor will be constructed by a method of construction which uses twin T concrete planks. These planks support the second floor. When the planks are placed over the existing wing patients in the existing wing will have to be displaced for a portion of one day. The existing dining room will not be used for approximately

           4 to 6 weeks.

           
           

       14. The construction of HBA's addition will not endanger patients at Ocean View. HBA has successfully constructed second floor additions over existing facilities in the past. Although there will be some inconvenience, quality of care should still be provided during construction.

           
           

       15. The other applicants have raised a number of questions concerning the appropriateness of HBA's proposed addition. Those questions do not, however, prove that HBA will not provide an adequately designed and constructed addition or cannot provide quality of care.

           
           

       16. HBA's proposed methods of construction, including the costs and methods of energy provision, are reasonable. The facility will comply with code and regulatory requirements.

           
           

       17. The evidence failed to prove that there are alternative, less costly or more effective methods of construction to the construction methods proposed by Meridian, National or HBA available.

           
           

   13. Section 381.705(1)(n), Florida Statutes.

       
       

       1. None of the applicants presented evidence concerning past or proposed care of the medically indigent, other than their care of Medicaid patients.

          
          

       2. Meridian has committed to provide 55% of its patient days in its Ormond Beach nursing home for the care of Medicaid patients. Meridian has not yet reached this level of care of Medicaid patients, however. At the time of the formal hearing Meridian was providing 46% Medicaid care. Meridian has not declined to serve Medicaid patients if a bed was available.

          
          

       3. During its fiscal year ending September 30, 1986, National provided 20.6% of its company-wide patient days to skilled Medicaid patients and 38.5% to intermediate Medicaid patients.

          
          

       4. HBA has been providing approximately 65% of its patient days at Ocean View to the care of Medicaid patients.

       5. All of the applicants propose to provide adequate care to Medicaid patients. The projected percentages of Medicaid patient days and revenue have been listed in previous findings of fact.

          
          

   14. Section 381.705(2), Florida Statutes.

1. To the extent applicable, all of the applicants comply with the requirements of Section 381.705(2), Florida Statutes.

   
   

   CONCLUSIONS OF LAW

   
   

2. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1987).

   
   

3. The parties stipulated that the issue in this case should be resolved based upon an evaluation of the proposals of the three competing applicants pursuant to the criteria of Sections 381.705(1) and Florida Statutes. The parties stipulated that the criteria of Sections 381.705(1)(d), (f), (g), (j) and (2)(c), Florida Statutes, do not apply to the proposals subject to review in this proceeding. The parties also stipulated that the provision of training programs for the public, the accessibility of the applicants' facilities to health care schools and the appropriateness and cost of equipment are not at issue. Finally, the parties stipulated that portions of Section 381.705(1) and (2), Florida Statutes, have been met by all the applicants. The stipulations have been quoted, supra, and are accepted.

   
   

4. The decision as to which applicant should be awarded a certificate of need for nursing home beds in these cases must be based upon a balanced consideration of all of the statutory and rule criteria applicable. North Ridge General Hospital, Inc. v. Capital NME Hospitals, Inc., 478 So.2d 1138 (Fla. 1st DCA 1985); and Humana, Inc. v. Department of Health and Rehabilitative Services,

   469 So.2d 83 (Fla. 1st DCA 1985). The burden of proving entitlement to a certificate of need is on the party proposing such entitlement. See Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

   
   

5. Section 381.705(1)(a), Florida Statutes, requires that an application for a certificate of need be evaluated with respect to the "need for health care facilities and services in relation to the applicable district plan and state health plan..." The applicants in these cases are seeking to meet a need for additional nursing home beds for Subdistrict 4 of District 4 for July, 1990.

   
   

6. The Department is required by Rule 10-5.011(1)(k), Florida Administrative Code, to determine the need for additional nursing home beds by applying the Need Methodology. Pursuant to Rule 10-5.008(2), Florida Administrative Code, the Department is required to publish its calculation of the number of nursing home beds needed, the "fixed need pool," as determined pursuant to the Need Methodology, in the Florida Administrative Weekly. The evidence in this case proved that the net number of nursing home beds needed in Subdistrict 4 of District 4 is 68 beds.

   
   

7. In applying the Need Methodology in these cases, the Department incorrectly calculated the net number of nursing home beds needed twice. Initially the Department published a fixed need pool incorrectly indicating that the net need for nursing home beds was zero. The Department realized that it had incorrectly applied the Need Methodology during the grace period for filing certificate of need applications in the batching cycle involved in these cases

   and published a corrected fixed need pool indicating that there was a net need for 80 nursing home beds. The Department's determination that there was a net need for 80 nursing home beds was also incorrect.

   
   

8. The Department has argued that its determination that there is a net need for 80 nursing home beds must be adhered to in this case based upon the Department's policy that a fixed need pool cannot be changed once it Is published in the Florida Administrative Code, after the grace period of Rule 10- 5.008(1)(b), Florida Administrative Code, has elapsed. This argument is rejected. The Department cannot circumvent the requirement of its own Rules. Rule 10-5.011(1)(k), Florida Administrative Code, requires that the need for additional nursing home beds be determined pursuant to the Need Methodology. Applying the Need Methodology indicates that there is a need for only 68 additional nursing home beds. The Department, by merely publishing an incorrect projection of nursing home bed need in the Florida Administrative Weekly, cannot ignore the clear requirement of Rule 10-5.011(1)(k), Florida Administrative Code.

   
   

9. At the formal hearing the undersigned indicated that the Department might be estopped from concluding that there is a need for less than 80 nursing home beds for the planning horizon involved in these cases. Upon further reflection, it is concluded that such a conclusion of law would not be proper. The Department's publication of an 80-bed fixed need pool constitutes a misstatement of law. In Florida, agencies are not estopped from correcting a misstatement of the law. Tri-State Systems, Inc. v. Department of Transportation, 500 So.2d 212 (Fla. 1st DCA 1986), rev. denied, 506 So.2d 1041 (1987).

   
   

10. National has argued that the correct method of applying the Need Methodology results in a net nursing home bed need of 148 nursing home beds. This argument is based upon National's conclusion that the number of "licensed" nursing home beds used in determining the subdistrict allocation of nursing home beds ("SA") in applying the Need Methodology should be determined as of August 1, 1987.

    
    

11. In calculating the Need Methodology, the number of licensed nursing home beds is taken into account a number of times. Pursuant to Rule 10- 5.011(1)(k)2.g., Florida Administrative Code, the number of licensed nursing home beds to be taken into account in establishing "bed rates" for these applicants is to be determined as of July 1, 1987. Pursuant to Rule 10- 5.011(1)(k)2.i., Florida Administrative Code, the number of licensed nursing home beds to be taken into account in calculating the net number of nursing home beds needed from the gross number of nursing home beds needed is to be determined as of August 1, 1987.

    
    

12. The August 1, 1987, date specified by Rule 10-5.011(1)(k)2.i., Florida Administrative Code, for calculating licensed nursing home beds does not apply in determining SA as contended by National. The evidence proved that the Department's determination of licensed nursing home beds as of July 1, 1987, for purposes of calculating SA is appropriate. National has, therefore, failed to prove that the Department's application of the Need Methodology is not proper.

    
    

13. Based upon the foregoing it is concluded that the evidence in this case proved there is a need for 68 additional nursing home beds for Subdistrict

    4 of District 4 in July, 1990. Therefore, there is sufficient need to warrant approval of either Meridian's or HBA's certificate of need application. There is insufficient need to warrant approval of National's application. Even if

    there were sufficient need to warrant approval of National's application, the evidence proved that the application of HBA is the better application.

    
    

14. Pursuant to Section 381.705(1)(a), Florida Statutes, nursing home bed need is to be determined in relation to the district health plan and the State health plan. In its proposed recommended order Meridian has raised the question of whether the district health plan applicable to Subdistrict 4 of District 4 has been properly adopted pursuant to Section 381.703(1)(b)1., Florida Statutes, by the Department. Based upon the stipulation of the parties that Section 381.705(1)(a), Florida Statutes, is applicable in this proceeding, it is concluded that Meridian's argument is contrary to its stipulation. Meridian should have specified that other sections of Chapter 381, Florida Statutes, other than the sections stipulated to be applicable by the parties, apply to this proceeding or indicated it did not agree that all of Section 381.705(1)(a), Florida Statutes, applies in these cases.

    
    

15. Based upon the evidence presented in these cases, HBA's proposal complies with the recommendations contained in the 1986 district health plan for Subdistrict 4 of District 4. Meridians and National's proposals do not comply. The 1986 district health plan was updated, however, by the local health council during 1987. Based upon the update to the district health plan, the evidence failed to prove that any applicant complies with the district health plan better than any other applicant.

    
    

16. Finally, all of the applicants comply with the Florida State Health Plan. HBA's proposal, as discussed, infra, will enhance the accesibility of nursing home beds in southeast Volusia County. HBA, therefore, is more consistent with the Florida State Health Plan than the other applicants.

    
    

17. Section 381.705(1)(b), Florida Statutes, requires a consideration of the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of "like and existing health care services." The evidence in this case failed to prove that like and existing services in Flagler and Volusia Counties are not available, efficient, appropriate, adequate or providing quality of care, except to the extent that existing services cannot meet the need for the additional nursing home beds needed for those Counties for the July, 1990, planning horizon.

    
    

18. The evidence presented in these cases also failed to prove that existing nursing home services are not accessible to all the residents of Subdistrict 4 of District 4 except to the extent that additional nursing home beds are needed in the Subdistrict. In determining where within the Subdistrict the additional beds are needed the most, and, therefore, existing beds are the least accessible, the evidence proved that the beds are needed in southeast Volusia County. Accessibility of beds in southeast Volusia County have been restricted since September, 1987. The occupancy rate at Ocean View, the only nursing home located in southeast Volusia County, has been at or above 95 percent. The occupancy rate in eastern Volusia County and Flagler County facilities has been approximately 75 percent.

    
    

19. HBA is the only applicant proposing to locate the additional nursing home beds it is seeking in southeast Volusia County. HBA's proposal, therefore, meets Section 381.705(1)(b), Florida Statutes, better than the Meridian or National proposals.

20. Section 381.705(1)(c), Florida Statutes, requires that an applicant be able to provide quality of care. The evidence proved that all of the applicants can provide quality of care.

    
    

21. The parties stipulated that Section 381.705(1)(d), Florida Statutes, does not apply to these proceedings.

    
    

22. Section 381.705(1)(e), Florida Statutes, provides for a consideration of the probable economies and improvements in services that may be derived from the operation of joint, cooperative, or shared health care resources. The weight of the evidence failed to prove that any applicant meets this criterion to any greater extent than the other applicants.

    
    

23. The parties stipulated that Sections 381.705(1)(f) and (g), Florida Statutes, do not apply to these proceedings.

    
    

24. Section 381.705(1)(h), Florida Statutes, requires a consideration of the availability of resources, including health manpower, management personnel, and funds for capital and operating expenses. The weight of the evidence proved that all of the applicants meet this portion of Section 381.705(1)(h), Florida Statutes. Section 381.705(1)(h), Florida Statutes, also requires a consideration of the availability of alternative uses of resources for the provision of other health services. The evidence failed to prove that this portion of Section 381.705(1)(h), Florida Statutes, applies. Finally, Section 381.705(1)(h), Florida Statutes, requires a consideration of the extent to which a proposed facility will be accessible to all residents of the service district. HBA's proposed facility will meet this portion of the criterion beater than Meridian or National. To the extent applicable, the other considerations of Section 381.705(1)(h), Florida Statutes, have been met by all of the applicants.

    
    

25. Section 381.705(1)(i), Florida Statutes, requires a consideration of the immediate and long-term financial feasibility of a project. The parties stipulated that all of the applicants are financially feasible in the short- term. The weight of the evidence proved that all of the applicants' proposals will be financially feasible in the long-term if there was a need for 80 additional nursing home beds. Based upon the conclusion that there is only a need for 68 additional nursing home beds, however, National has failed to prove that its proposal is financially feasible.

    
    

26. The parties stipulated that Section 381.705(1)(j), Florida Statutes, does not apply.

    
    

27. Section 381.705(1)(k), Florida Statutes, requires a consideration of the needs of entities providing a substantial portion of their services or resources to individuals residing outside the service district. The weight of the evidence failed to prove that this criteria applies to any of the applicants.

    
    

28. Section 381.705(1)(l), Florida Statutes, requires a consideration of the probable impact of a project on the cost of providing health services proposed by the applicant. The weight of the evidence proved that all of the applicants will generally enhance competition.

    
    

29. Section 381.705(1)(m), Florida Statutes, requires a consideration of the costs and methods of the proposed construction. The weight of the evidence proved that all of the applicants will meet this criterion.

30. Finally Section 381.705(1)(n), Florida Statutes, requires a consideration of the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. All of the applicants meet this provision.

    
    

31. In addition to the criteria discussed, supra, projects which involve a capital expenditure for new health services must meet the criteria of Section 381.705(2), Florida Statutes. To the extent that these criteria apply in these proceedings, all of the applicants proved that they meet this criteria.

    
    

32. Based upon the foregoing, it is concluded that the proposals of Meridian and HBA meet the criteria of Sections 381.705(1) and (2), Florida Statutes. National's proposal does not meet these criteria because the evidence failed to prove that there is a need for 80 additional nursing home beds. Therefore, there is insufficient need for National's proposal and it failed to prove that it would be financially feasible. All three of the applicants in these cases would meet the criteria of Sections 381.705(1) and (2), Florida Statutes, if there was a need for 80 additional nursing home beds.

    
    

33. Comparing the proposals of Meridian and HBA, it is concluded that, based upon a balanced consideration of the applicable criteria, the proposal of HBA should be approved. HBA's proposal complies with Sections 381.705(1)(a),

(b) and (h), Florida Statutes, better than Meridian's proposal because the proposed additional beds will be located in southeast Volusia County and because HBA is proposing the highest percentage of care to Medicaid patients. If National's proposal is also considered (if there was a need for 80 additional nursing home beds), the same conclusion would be reached.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a Final Order granting HBA's

application for a certificate of need authorizing the addition of 60 nursing

home beds to Ocean View and denying Meridian's and National's applications for certificates of need.

DONE and ENTERED this 1st day of June, 1989, in Tallahassee, Florida.

LARRY J. SARTIN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 1989.

APPENDIX

CASE NUMBERS 88-1836 88-1839

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

All of the parties have filed proposed findings of fact which pertain to HCR. HCR also filed a proposed recommended order. In light of the fact that HCR has voluntarily dismissed its case, those proposed findings of fact have not been considered in this Appendix.

Meridian's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1 9, 11-12 and 46.

2 19-20.

3 90. The last two sentences are hereby accepted.

4 70.

5-12 See 49.

13 The parties stipulated that the criterion to which this proposed finding of fact relates has been met by all the parties.

14-22 See 49.

23 67-73.

24-27 These proposed findings of fact fail to take into account the fact that some of the costs attributable to the additional 60 nursing home beds sought by Meridian in this proceeding have been included in the cost of the existing facility.

28 107.

29 The proposed construction cost per square foot is $64.14. See finding of fact 89.

30-33 90. Hereby accepted.

34-41 Proposed findings of fact pertaining to HCR.

42 16-17.

43 23-25.

44 101 and hereby accepted.

45-49 See 103. Although there was evidence that supported these proposed findings of fact generally, the proposed findings of fact overlook the fact that HBA's drawings are preliminary and will be revised as needed to comply with the Department's requirements. The weight of the evidence supports a conclusion that HBA's proposed methods of construction and costs are reasonable

despite the necessary corrections in its preliminary plans. The proposed finding of fact concerning parking spaces is not relevant to this proceeding because the weight of the evidence failed to prove that any costs associated with additional parking spaces which may be needed have been left out of HBA's projected costs. The availability of parking spaces is not a consideration under the criteria of Section 381.705, Florida Statutes, except to the extent that costs associated with parking spaces should be taken into account.

1. The first sentence is hereby accepted. The rest of the proposed finding of fact is not supported by the weight of the evidence.

2. The first two sentences are not relevant to these proceedings. The rest of this proposed finding of fact is not supported by the weight of the evidence.

52-53 Not supported by the weight of the evidence. The evidence did prove that, as of the date of the hearing of these cases, HBA should have filed a different pro forma which takes into account changes in its projected Medicaid revenue and its salary projections if this proceeding was a completely de novo proceeding. The Department has, however, taken the position that applicants cannot "amend" their applications between the date that an application is reviewed and a formal administrative hearing concerning the application. Therefore, HBA did not change its pro forma to reflect the most current information concerning Medicaid and salaries. HBA's financial expert was aware of the changes in Medicaid and salary expenses. Despite this knowledge, he testified that HBA's proposed facility is financial feasible. This testimony was accepted.

54 14-15.

55 21-22 and 95.

1. Not relevant to this proceeding.

2. 64. The last sentence is not supported by the weight of the evidence.

58 51.

59 Not supported by the weight of the evidence. National presented evidence that it would designate a portion of its proposed facility as a dedicated Medicare unit.

60 18, 21, 24 and 27.

61 26-29.

1. 29. The last sentence is not relevant to this de novo proceeding.

2. Not relevant to this de novo proceeding.

64-65 Contrary to the stipulation of the parties.

66 Contrary to the stipulation of the parties and not relevant.

National's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1 2 and 21.

2 1 and 3.

3-4 Hereby accepted.

5 4-6.

6 13-14.

1. 15 and hereby accepted.

2. Hereby accepted.

3. 21 and 64 and hereby accepted.

10 21-22.

11 26.

12 27.

1. See 28.

2. Not supported by the weight of the evidence.

3. 31-32 and hereby accepted.

4. Not supported by the weight of the evidence and erroneous conclusion of law. See 34-35.

17 35.

1. Not supported by the weight of the evidence and erroneous conclusion of law.

2. The first sentence is accepted in finding of fact 34. The rest of the proposed finding of fact is not supported by the weight of the evidence or is an erroneous conclusion of law.

20 28.

1. See 37-38 and 45. National's proposal is not consistent with the 1987 district health plan. Subparagraph A. is not relevant to this de novo proceeding. Subparagraph B. is not relevant or not supported by the weight of the evidence. The last sentence of subparagraph C. is not relevant to this de novo proceeding. The last sentence of subparagraph D. and subparagraphs e-h are not supported by the weight of the evidence. Although subparagraph I. is generally correct, it is not sufficient to justify locating the nursing home beds to be awarded in this case in Flagler County. Subparagraph j. is not supported by the

   weight of the evidence.

2. The first and last sentences are hereby accepted. The second sentence is not supported by the weight of the evidence.

3. Hereby accepted.

4. 49 and 51-55. Subparagraph h. is not supported by the weight of the evidence.

5. See 59.

6. Stipulated by the parties as true of all of the applicants.

27 60 and 63.

28 67 and see 75-79.

29 86.

1. Section 381.705(1)(l), Florida Statutes, is to be applied to all of Subdistrict 4 of District 4 and not just Flagler County.

2. 22, 94, 97 and hereby accepted.

32 64 and 108.

33 See 111.

1. Not supported by the weight of the evidence.

2. Hereby accepted.

HBA's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1 1

2 2-3.

3 4.

4 5.

5 6.

6 7.

7 8.

8 9-12.

9 14-15. National does not have a corporate headquarters since it is not a corporation.

10, 14, 21, 25, 32

and 35 Proposed findings of fact pertaining to HCR.

11 16-17. The evidence proved that HBA owns 6, not 7, nursing homes in Florida.

12 18-20.

13 21-22.

15 23-24.

1. 28, 30 and 34-35. Subparagraph b) is a statement of arguments advanced by Meridian and National.

2. 27, 38 and hereby accepted. Subparagraph's c)1)-4) and 7) pertain to HCR.

18 See 42-45.

19 See 46-47 and 50. Subparagraph b) is not supported by the weight of the evidence.

20 20, 51 and 54.

22 56-58 and hereby accepted.

23 59.

24 60.

26 Stipulated.

27 67.

28 85. See, however, 79.

29-30 Hereby accepted.

31 See 89.

33 18-20, 89 and 93.

34 22 and 96-97.

36 24-25, 101-104 and hereby accepted.

37 111.

The Department's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1-2 28.

3 30.

4 2-3 and 7.

1. 4 and 6.

2. Not relevant to this proceeding.

7 26 and 28.

8-15 Although there is evidence to support these proposed findings, they are not relevant to this proceeding. As a matter of law, the Department cannot through agency policy circumvent the requirements of the Need Methodology of Rule 10-5.011(1)(k), Florida Administrative Code, by publishing a "fixed need pool" for which no point of entry to challenge has been provided.

1. Not relevant to this de novo proceeding.

2. Hereby accepted.

3. Not relevant because the parties have stipulated that Section 381.705(1)(a), Florida Statutes, applies to these cases.

4. Not supported by the weight of the evidence.

20 32 and 36.

21 Hereby accepted.

22 32.

23 34.

24 33.

25 36.

26 29.

27 28.

28 Hereby accepted.

COPIES FURNISHED:

Gerald B. Sternstein, Esquire Darrell White, Esquire

Post Office Box 2174 Tallahassee, Florida 32316-2174

Charles D. Hood, Jr., Esquire Post Office Box 15200

Daytona Beach, Florida 32015

Lee Elzie, Esquire Post Office Box 82

Tallahassee, Florida 32302

Thomas W. Stahl, Esquire 817 North Gadsden Street

Tallahassee, Florida 32303-6313

Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

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

Tallahassee, Florida 32399-0700

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

NATIONAL HEALTHCORP,

Petitioner,

CASE NO.: 88-1836

vs. CON NO.: 5360

5369

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and

H. B. A. CORPORATION d/b/a OCEAN VIEW NURSING HOME,

Respondents.

/

MERIDIAN INC., MERIDIAN NURSING CENTERS, INC. and VOLUSIA MERIDIAN LIMITED PARTNERSHIP,

Petitioners,

vs. CASE NO.: 88-1839

CON NO.: 5364

DEPARTMENT OF HEALTH AND 5369

REHABILITATIVE SERVICES and

1. B. A. CORPORATION d/b/a OCEAN VIEW NURSING HOME,

   
   

   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 THE DEPARTMENT

   
   

   1. HRS takes exception to those conclusions of law appearing on page 30 of the Recommended Order in which the Hearing Officer rejected HRS' position that there is a net need for eighty nursing-home beds. The department's policy is that a published fixed need pool cannot be changed after the grace period of Rule 10-5.001(1)(b), Florida Administrative Code, has elapsed.

      It is the department's policy to correct errors in the fixed need pool in the batch for which they are published only if the error is brought to the department's attention in time for it to publish a correction in the Florida Administrative Weekly within the grace period. This policy gives all prospective applicants the opportunity to apply or not to apply based on the same information and is the most equitable method for dealing with errors in the published fixed need pool number. By virtue of this policy the department does not ignore the numeric need formula of Rule 10-5.011(1)(k), Florida Administrative Code, but places a greater priority on the necessity of certainty and equity in health planning. The exception is granted.

      
      

   2. HRS takes exception to that part of the conclusion of law which appears on page 35 of the Recommended Order in which the Hearing Officer finds that National Healthcorp has failed to prove its proposal financially feasible because there is only a need for sixty-eight additional nursing-home beds. The published net need for eighty nursing-home beds must be adhered to in this case based upon the department's policy that a fixed need pool cannot be changed once it is published in the Florida Administrative Code, after the grace period of Rule 10-5.008(1)(b), Florida Administrative Code, has elapsed. The exception is granted.

      
      

   3. HRS takes exception to those portions of the conclusions of law appearing on page 36 of the Recommended Order in which the Hearing Officer concluded that National Healthcorp's proposal does not meet the statutory and rule criteria because the evidence failed to prove there is need for eighty additional nursing-home beds. Under HRS' policy as elucidated in Exception 1 hereof, the applications under review should be analyzed on the basis of the eighty-bed need published in the Florida Administrative Weekly. The exception is granted.

RULING ON EXCEPTIONS FILED

BY NATIONAL HEALTHCORP. (NATIONAL)

In exceptions 1 and 3 National maintains that the numeric need number should be 148. The numeric need is 80; therefore, the exceptions are denied.

In exceptions 2 and 4 National maintains that the Hearing Officer's findings on access and need in Southeast Volusia County should be rejected. The findings are supported by competent, substantial evidence; therefore, the exceptions are denied.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where inconsistent with the rulings on the exceptions,

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the ruling on the exceptions.

Based upon the foregoing, it is

ADJUDGED, that H. B. A.'s application for certificate of need number 5369 be APPROVED. It is further adjudged that National Healthcorp's and Meridian's

applications for certificate of need numbers 5360 and 5364 respectively be DENIED.

DONE and ORDERED this 18th day of July, 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 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:

Thomas W. Stahl, Esquire NEWELL & STAHL, P.A.

817 N. Gadsden Street Tallahassee, FL 32303-6313

Larry J. Sartin Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

Gerald Sternstein, Esquire Darrell White, Esquire Charles A. Stampelos, Esquire McFARLAIN, STERNSTEIN, WILEY & CASSEDY, P. A.

600 First Florida Bank Bldg. Post Office Box 2174 Tallahassee, FL 32316-2174

Charles D. Hood, Jr., Esquire MONACO, SMITH, HOOD & PERKINS

Post Office Box 15200 Daytona Beach, FL 32015

Edgar Lee Elzie, Esquire MACFARLANE, FERGUSON, ALLISON

& KELLY

215 S. Monroe Street, Ste 804 First Florida Bank Bldg. Tallahassee, FL 32302

FALR

Post Office Box 385 Gainesville, FL 32602

Janie Block (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 21 day of July, 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

Docket for Case No: 88-001836

Orders for Case No: 88-001836