STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OCALA HEALTH CARE ASSOCIATES, )

)

Petitioner, )

)

vs. ) CASE NO. 88-1862

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

) COUNTRY CLUB CENTER V, LIMITED )

PARTNERSHIP COUNTRY CLUB )

RETIREMENT CENTER V, )

)

Petitioner, )

) CASE NO. 88-1863

vs. )

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent,

)

LEESBURG REGIONAL MEDICAL CENTER, INC., )

)

Intervenor. )

) NATIONAL HEALTH CARE, INC., )

28 CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 88-1864

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing in this case was held in Tallahassee, Florida on August 16-17, 1988, before Jose A. Diez-Arguelles, a hearing officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner Ocala R. Bruce McKibben, Jr., Esquire Health Care Associates Karen Goldsmith, Esquire

307 West Park Avenue Post Office Box 10651

Tallahassee, Florida 32302

For Petitioners Country Grafton Wilson, II, Esquire Club Center V, Limited Suite 4

Partnership Country 711 Northwest 23rd Avenue Club Retirement Center V Gainesville, Florida 32609 and National Health Care,

Inc., 28 Corporation

For Respondent Department Theodore Mack, Esquire

of Health and Assistant General Counsel Rehabilitative Services 2727 Mahan Drive

Tallahassee, Florida 32308

For Intervenor Leesburg Darrell White, Esquire Regional Medical Center, 215 S. Monroe St.

Inc. Suite 600

First Florida Bank Building. Tallahassee, Florida 32301

BACKGROUND AND PROCEDURAL STATEMENT

These cases deal with three applications for Certificates of Need (CON). Petitioner Ocala Health Care Associates (Ocala) filed CON application No. 5338 to convert 21 sheltered beds to community beds in Marion County. Petitioner Country Club Center V, Limited Partnership, Country Club Retirement Center V (Country Club) filed CON application No. 5340 for a 60-bed community nursing facility in Lake County. Petitioner National Health Care, Inc., 28 Corporation (Twenty-Eight Corporation) filed CON application No. 5341 for a 60-bed community nursing facility in Levy County.

Respondent, Department of Health and Rehabilitative Services (HRS), issued a State Agency Action Report denying the three applications. Each Petitioner timely requested a hearing, and HRS requested that the Division of Administrative Hearings conduct the hearings.

By Order dated May 31, 1988, the three cases were consolidated for hearing, since the applications had been comparatively reviewed by HRS. A fourth applicant's, Advocare, Inc.'s, petition for hearing was also consolidated for hearing, but the petition was voluntarily dismissed prior to the hearing. By Order dated June 23, 1988, Leesburg Regional Medical Center, Inc. (Leesburg) was granted leave to intervene in Case No. 88-1863, in opposition to Country Club's application.

At the hearing, Ocala presented the testimony of Islora Soto, Linda Childers, Jim Bailey, David Young, Steve Smith, and Walter Ray, and offered 7 exhibits. Ocala exhibits numbered 1-5 were accepted into evidence at the hearing. A ruling on exhibits numbered 6 and 7 was reserved. Twenty-Eight Corporation presented the testimony of Gary Keach and offered 6 exhibits, numbered 1-5 and 1A, which were accepted into evidence. Country Club presented the testimony of Gary Keach and offered 4 exhibits which were accepted into

evidence. HRS provided the testimony of Reid Jaffe and offered 1 exhibit which was accepted into evidence. Finally, Leesburg presented the testimony of E. Eugene Nelson and offered 3 exhibits which were accepted into evidence.

After the hearing, all parties filed proposed recommended orders. The proposed findings of fact contained in the proposed recommended orders are addressed in the Appendix attached to this Recommended Order.

Stipulations

At the beginning of the hearing, the parties entered into the following three stipulations:

1. All three petitioners agreed that there is no numeric need in District III for nursing home beds under the methodology set forth in subparagraphs a.-i. of Rule 10-5.011(1)(k) 2., Florida Administrative Code.

   
   

2. In all three cases the parties agreed that the issue of need is controlled by the provisions of subparagraph (j) of Rule 10-5.01l(1)(k)2., Florida Administrative Code.

   
   

3. HRS and Ocala agreed that Ocala's application meets all applicable criteria, except for need.

   
   

   ISSUE

   
   

   Whether Petitioners' applications for Certificates of Need should be approved?

   
   

   FINDINGS OF FACT

   
   

   Ocala

   
   

4. Ocala is a general partnership composed of three partners: Ocala Health Care Associates, Inc., Casterfield, Ltd., and Big Sun Healthcare Systems, the lessee and operator of Munroe Regional Medical Center.

   
   

5. Ocala is the current holder of an approved CON for 35 community beds in Marion County. If the 21-bed transfer of sheltered beds to community beds is approved, Ocala intends to operate a 56-bed facility. A 56-bed facility is more viable than a 35-bed facility.

   
   

6. At the time of the hearing, there were 642 approved and licensed beds and 215 approved not yet licensed beds in Marion County. The 215 beds include Ocala's 35-bed CON.

   
   

7. A patient needing subacute care is one who has been released from acute care status by a physician and is ready to be released from a hospital (acute care) to a less costly facility, e.g. a skilled nursing home. Subacute care patients are those needing, e.g., intravenous tubes, respirators, IV medication, decubitus ulcer care, tracheotomy tubes, or antibiotic therapy.

   
   

8. Patients needing subacute care should be placed in a nursing home, since this is less costly than hospital care and it allows for acute care beds in a hospital to be used for patients needing acute care.

9. Skilled nursing homes are authorized to provide subacute care, but are not required to do so. In order to provide subacute care, a nursing home may need additional staff and equipment.

   
   

10. There is a problem in Marion County with the placement of subacute care patients in nursing homes. This problem is caused by a variety of factors and usually results in a patient remaining in a hospital longer than is necessary.

    
    

11. One factor is that some of the existing nursing homes will not accept patients needing certain types of subacute care, e.g., patients needing ventilators or feeding tubes.

    
    

12. Another equally important factor is that the nursing homes want to make sure they will get paid and there is usually some delay in determining how the nursing home will be compensated.

    
    

13. Other factors include the patients inability to pay and, on occasion, the unavailability of beds.

    
    

14. Ocala intends to use its 35-bed approved CON to provide subacute care.

    
    

    Country Club

    
    

15. While the application shows the applicant's name as "Country Club Retirement Center," that is the name of the project. The applicant is Mr. J. E. Holland.

    
    

16. Mr. Holland's application is for a 60-bed nursing home which will be part of a 250-apartment continuing care community. The facility is to be located in Clermont, in Lake County. Lake County is in Planning Area VII of HRS District III. Planning Area VII also includes Sumter County.

    
    

17. Mr. Keach, the only witness presented by Country Club, is Vice President of National Health Care. National Health Care operates a nursing home in Gainesville, Florida. In addition to operating the nursing home, National Health Care assists persons seeking a CON with preparation of the CON application. Mr. Keach and other National Health Care employees assisted Mr. Holland with the preparation of the CON application submitted in this case.

    
    

18. National Health Care will not own or operate Mr. Holland's facility.

    
    

19. Mr. Keach is of the opinion that there is need in Clermont for a 60- bed nursing home. He bases his opinion on letters of support for the construction of the facility, on petitions signed by persons attending a public hearing, and on four or five visits to the area.

    
    

20. Mr. Keach never performed a study which would indicate the number of persons with a "documented need" for nursing home services who have been denied access to a nursing home.

    
    

21. At the time HRS issued its State Agency Action Report there were 958 beds approved and licensed in Planning Area VII. Of these, 838 are located in Lake County, with 142 located in a nursing home in Clermont. Also these are swing-beds providing long-term care at a hospital in Clermont. Finally, there were 236 beds approved not yet licensed in Planning Area VII, with 176 to be located in Lake County.

22. The occupancy rate for the nursing home facility located in Clermont is approximately 89 percent.

    
    

23. For the six months ending March, 1988, the occupancy rate for Planning Area VII was below 80 percent. There are at least two nursing homes in operation within a 20-mile radius of Clermont. These two nursing homes are located in Winter Garden and one of them has received a CON to add 89 beds.

Twenty-Eight Corporation

1. The applicant in this case is Twenty-Eight Corporation. "The owner of the nursing home will be the Levy Nursing Care Center, a limited partnership, which will be owned and secured by Twenty-Eight Corporation." (28 Corporation, Composite Exhibit 1.)

   
   

2. Twenty-Eight corporation seeks approval of a CON for 60 nursing home beds to be operated as part of a continuing care project which will include a 50-unit apartment complex.

   
   

3. The facility is to be located in Chiefland, Florida, in Levy County. Levy County is in Planning Area II of HRS District III. Planning Area II also includes Alachua, Gilchrist and Dixie counties.

   
   

4. At the time HRS issued its State Agency Action Report, there were 1112 licensed nursing home beds in Planning Area II. Of these, 120 are located in Trenton, in Gilchrist County, 180 are located in Williston, in Levy County, and the rest are located in Alachua County. Also, there are 147 beds approved not yet licensed to be located in Alachua County.

   
   

5. Chiefland is approximately 12 miles from Trenton. Williston is approximately 27 miles from Trenton.

   
   

6. Mr. Keach was the only witness who testified on behalf of Twenty-Eight Corporation. Mr. Keach is vice-president of National Health Care. (See Finding of Fact 17, supra.)

   
   

7. Mr. Keach is of the opinion that there is need in the Chiefland area for a 60-bed nursing home. His opinion is based on letters of support and petitions of support he received for the project. Also, his opinion is based on the fact that there is no nursing home located in Chiefland and the nearest nursing home is located in Trenton, 12 miles away. The 1986 District III Health Plan shows the Trenton facility having an occupancy rate of 99.93 percent.

   
   

8. Mr. Keach never performed a study which would indicate the number of persons with a "documented need" for nursing home services who have been denied access to a nursing home.

   
   

   CONCLUSIONS OF LAW

   
   

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

   
   

10. Petitioners, being the applicants for a certificate of need, have the burden of proving their entitlement to the certificate. Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 475

    So.2d 260 (Fla. 1st DCA 1985); Florida Department of Transportation v. J.W.C. Company, 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

11. Applications for certificates of need are to be evaluated using the criteria set forth in Section 381.705, Florida Statutes, and in Rule 10-5.011, Florida Administrative Code. The appropriate weight to be given each criterion will vary, depending on the facts present in each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

    
    

12. While these three cases were consolidated for hearing, they do not involve a situation where the applicants are trying to establish their superiority over another applicant in order to be entitled to a CON for a fixed number of beds which are needed in the district. Here, each applicant is trying to establish that it is entitled to a CON even though there is no numeric need for beds under Rule 10-5.011(1)(k), and each applicant is seeking to establish the need under the provisions of Rule 10- 5.011(1)(k)2.j. Therefore, each applicant's case will be separately discussed below.

    
    

    Ocala

    
    

13. Ocala's application seeks a CON to convert 21 sheltered nursing home beds to community nursing home beds, to be added to an approved 35-bed facility.

    
    

14. HRS and Ocala agree that if Ocala can show that need exists under the provisions of Rule 10-5.011(1)(k)2.j., Florida Administrative Code, (the Rule) Ocala is entitled to the CON. The Rule provides that:

    
    

    3. In the event that the net bed allocation is zero, the applicant may demonstrate that circumstances exist to

    justify the approval of additional beds under the other relevant criteria specifically contained in Section 10-5.011. Specifically, the applicant may show that persons using existing and like services are in need of nursing home care but will be unable to access nursing home services currently licensed or approved within the subdistrict. Under this provision, the applicant must demonstrate that those persons with a documented need for nursing home services have been denied access to currently licensed but unoccupied beds or that the number of persons with a documented need exceeds the number of licensed unoccupied and currently approved nursing home beds. Existing and like services shall include the following as defined in statute or rule, adult congregate living facilities, adult foster homes, homes for special services, home health services, adult day health care, adult day care, community care for the elderly, and home care for the elderly. Patients' need for nursing home care must be documented by the attending physicians' plans of care or orders, assessments performed by staff of the

    Department of Health and Rehabilitative Services, or equivalent assessments performed by attending physicians indicating need for nursing home care.

    
    

15. The evidence presented by Ocala shows that Munroe Regional Medical Hospital has difficulty placing patients needing subacute care in nursing homes in Marion County. This difficulty translates into patients spending more time in the hospital than they should. The reason for the difficulty is that nursing homes in the area are not always willing to accept patients who will require extensive treatment and are unwilling to accept patients until payment arrangements have been made. This evidence, however, is not sufficient to establish need under the Rule.

    
    

16. Ocala has failed to show that those persons with a documented need for nursing home services have been denied access to currently licensed but unoccupied beds or that the number of persons with a documented need exceeds the number of licensed unoccupied and currently approved nursing home beds." Id. No competent evidence was presented to show the number of patients in need of subacute care who were denied access to currently licensed but unoccupied beds. The logs and summaries presented by Ocala show delays, not denials.

    
    

17. Additionally, no evidence was presented to establish that the need for subacute care beds, if it exists, exceeds the number of approved not yet licensed beds. At the time HRS issued the State Agency Action Report, there were 275 approved beds in Marion County, including the 35-bed CON held by Ocala. No competent evidence was offered to show that the 275 beds will not alleviate the problem of delays in placing patients needing subacute care in nursing homes in Marion County, especially since Ocala plans to provide subacute care with its 35-bed CON.

    
    

18. In reaching this conclusion, Ocala's Exhibits 6 and 7 have been considered. While HRS's desire to want full and complete applications is understandable, Exhibits 6 and 7 are not new information, but help to support and expand materials which were a part of the application.

    
    

    Country Club

    
    

19. Country Club, Leesburg and HRS agree that the issue of need is controlled by the provisions of the Rule. Unlike the

    Ocala case, however, all statutory and rule criteria are at issue in this case, except those that are clearly not applicable. For the reasons set forth below, Country Club has failed to prove that it is entitled to a CON.

    
    

20. Even though Country Club agrees that the issue of need is controlled by the Rule, it failed to introduce evidence of the type needed to demonstrate need under the Rule. Country Club failed to "show that persons using existing and like services are in need of nursing home care but will be unable to access nursing home services currently licensed or approved ..." Id.

    
    

21. The only evidence presented by Country Club on the issue of need is Mr. Keach's opinion that need exists in the Clermont area. Mr. Keach bases his opinion on letters of support for the project, petitions signed by persons attending a public hearing, and conversations he had during visits to the area. Letters and petitions of support, while indications that the community would like to see the project built, are not indications of "need" for nursing home services and are not the type of evidence which can be used to establish need

    under the Rule. Country Club failed to show even one case where a person with a "documented need for nursing home services" was denied access to a nursing home bed.

    
    

22. In addition to not establishing that need exists for the facility, Country Club failed to present competent, substantial evidence to establish that it meets the other evaluation criteria set forth in Section 381.705, Florida Statutes. Mr. Keach was not competent to testify on a number of the other criteria, since his testimony was based on information he received from others. His testimony in these areas was classic hearsay which was not corroborated by other competent evidence. Section 120.58, Florida Statutes.

    
    

    Twenty-Eight Corporation

    
    

23. Twenty-Eight Corporation has failed to prove that it is entitled to a CON for the same reasons set forth above for Country Club. Twenty-Eight Corporation failed to show that any "need" exists under the Rule and failed to present competent, substantial evidence that it met the other applicable criteria.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that HRS enter a Final Order denying Petitioners' applications in these three cases.

DONE and ENTERED this 3rd day of March, 1989, in Tallahassee, Leon County, Florida.

JOSE A. DIEZ-ARGUELLES

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NOS. 88-1862, 88-1863, 88-1864

Rulings on Proposed Findings of Fact Ocala's Proposed Findings of Fact:

1. Accepted.

2-4. Supported by competent, substantial evidence but unnecessary to the decision reached.

5-7. Accepted.

1. Irrelevant.

2. Accepted.

3. Rejected as not supported by the weight of the evidence. There is not an absolute absence of facilities willing to accept all patients needing subacute care.

4. Irrelevant. "Serious concerns" are not what is needed under the Rule.

5. First sentence rejected as recitation of testimony. Second sentence irrelevant; issue is whether nursing homes will accept patients, not whether nursing homes will enter into agreement with MRMC.

13-16. True, but irrelevant.

1. Accepted.

2. (a) Rejected to the extent it implies that the approved facilities would not provide subacute care. Mr. Bailey's testimony is that the facilities refused to enter into a relationship with MRMC; this does not establish that the facilities would not provide subacute care.

1. Rejected as a recitation of testimony. The weight of the evidence shows that some facilities would accept same subacute patients.

2. True, but it is unclear if these are the physician's notations the HRS witness referred to.

3. True that charts and logs were provided, but they did not establish the number of patients in need of subacute care in excess of licensed or approved beds.

19-26. Irrelevant.

27-29. Accepted-for what they are, but insufficient to establish need.

Twenty-Eight Corporation's Proposed Findings of Fact: 1-4 Accepted.

1. Irrelevant. This is a de novo proceeding.

2. True, but irrelevant.

3. Accepted.

4. Accepted.

5. Rejected as hearsay. But see Finding of Fact 31.

6. Mr. Keach testified that Chiefland is 40 miles from Williston. The road map published by the Department of Transportation shows the distance between the two cities at 27 miles.

7. True, but irrelevant.

8. True, but irrelevant.

9. Accepted.

10. Accepted. However, this special consideration should be given only where numeric need has been established in the District.

11. True, but irrelevant.

12. True, but irrelevant.

13. Rejected as hearsay.

14. True, but irrelevant.

15. Rejected as hearsay. Also, a determination by a family member does not establish medical "need".

16. True that this is Mr. Keach's opinion. However, Mr. Keach's opinion is rejected. His opinion of need is not based on what the Rule requires or on what health planners rely on to establish need. Mr. Keach is not able to testify as to the financial feasibility of the facility because he has no first- hand knowledge of the finances.

21-22. Irrelevant.

23. Rejected. See ruling on 10., supra. 24-26. Irrelevant.

1. Rejected as contrary to the weight of the evidence.

2. Irrelevant.

3. Irrelevant; this is not a rule challenge.

4. Irrelevant.

5. True, but irrelevant.

6. Irrelevant.

7. Accepted.

8. Rejected as hearsay.

9. Rejected as not supported by the weight of the evidence.

10. Rejected as argument. Also, unable to determine what the "second portion" is.

37-38. Irrelevant.

1. First phrase accepted. Second phrase rejected to extent implies that only need to show that no other facility exists within 20 miles.

2. Irrelevant.

Country Club's Proposed Findings of Fact: 1-4. Accepted.

1. Irrelevant. This is a de novo proceeding.

2. True, but irrelevant.

3. Accepted.

4. Irrelevant.

5. True, but irrelevant.

6. Accepted.

7. Accepted. However, this special consideration should be given only where numeric need has been established in the District.

8. True, but irrelevant.

9. True, but irrelevant. 14-17. Irrelevant.

1. Rejected as contrary to the weight of the evidence.

2. Accepted.

3. Rejected as not supported by competent evidence; hearsay.

4. Accepted.

5. Rejected as not supported by competent evidence; hearsay.

6. Irrelevant.

7. Rejected as not supported by competent evidence; hearsay.

8. True, but irrelevant. See ruling on 11, supra.

9. Irrelevant.

10. Rejected as not supported by competent evidence; hearsay.

11. Irrelevant. The Rule also recognizes this.

12. Irrelevant.

13. Rejected as not supported by the weight of the evidence and irrelevant.

14. True, but irrelevant.

15. True, but irrelevant.

33-34. True, but irrelevant. This is a de novo proceeding. 35-39. Irrelevant.

40. Rejected as argument. Also, unable to determine what the "second portion" is.

41-42. Accepted 43. Rejected as contrary to the weight of the evidence.

44. True, but irrelevant. Also, there are approved beds within 20 miles, but located in a different HRS District.

Leesburg's Proposed Findings of Fact 1-7. Accepted.

1. Rejected as not a finding of fact.

2. Accepted.

10-15. See Conclusions of Law section of RO.

1. Accepted.

2. Rejected as argument.

3. Accepted.

4. Rejected. Fact that need does not exist under HRS rule doesn't necessarily mean that that facility will not be financially feasible. In any event, Country Club was not able to establish financial feasibility.

20-21. See Conclusions of Law.

22. Rejected as argument.

23-28. Supported by competent substantial evidence but unnecessary to the decision reached.

1. Accepted.

2. Rejected as a recitation of testimony.

3. Accepted.-

HRS's Proposed Findings of Fact 1-19. Accepted.

1. Rejected. The HRS witness did not specifically state that HRS needs to see the actual physician referral.

2. Accepted. See Conclusions of Law.

22-28. Accepted. See Conclusions of Law.

29. Not a finding of fact. 30-37. Accepted.

38. Irrelevant.

39-42. Unnecessary to the decision reached.

1. Irrelevant.

2. Accepted.

45-46. See Conclusions of Law.

1. Accepted.

2. Accepted.

3. Not a finding of fact.

50-65. Accepted. See Conclusions of Law.

66. Not a finding of fact.

67-71. Accepted, but Ocala's Exhibits 6 & 7 are not amendments to the application but simply more of the same information that was provided with the application.

COPIES FURNISHED:

Gerald B. Sternstein, Esquire Darrell White, Esquire

Post Office Box 2174

First Florida Bank Building Suite 600

215 South Monroe Street Tallahassee, Florida 32301

Theodore Mack, Esquire Assistant General Counsel 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, Florida 32308

R. Bruce McKibben, Jr., Esquire

307 West Park Avenue Post Office Box 10651

Tallahassee, Florida 32302

Grafton Wilson, II, Esquire 711 NW 23rd Avenue, Suite #4

Gainesville, Florida 32609

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

Tallahassee, Florida 32399-0700

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

Tallahassee, Florida 32399-0700

Docket for Case No: 88-001862

Orders for Case No: 88-001862