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THE RETREAT vs. HEATH CARE COST CONTAINMENT BOARD, 89-003579 (1989)

Court: Division of Administrative Hearings, Florida Number: 89-003579 Visitors: 32
Judges: LARRY J. SARTIN
Agency: Agency for Health Care Administration
Latest Update: May 21, 1990
Summary: Whether the Respondent may reject a budget letter for The Retreat's 1990 fiscal year and require The Retreat to file a detailed budget pursuant to a non- rule policy of the Respondent?Healthcare Cost Containment Board (HCCB) should accept petitioner's budget letter. Policy and proposed rule supporting HCCB declared invalid in 89-4219R & 89-3436R.
89-3579

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS


THE RETREAT, )

)

Petitioner, )

)

vs. ) CASE NO. 89-3579H

) STATE OF FLORIDA, HEALTH CARE ) COST CONTAINMENT BOARD, )

)

Respondent, )

)

and )

) CITIZENS OF THE STATE OF FLORIDA, )

)

Intervenor. )

)


RECOMMENDED ORDER


Pursuant to written notice a formal hearing was held in this case before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on November 20, 1989, in Tallahassee, Florida.


APPEARANCES


For Petitioner: Michael J. Glazer, Esquire

Ausley, McMullen, McGehee, Carothers & Proctor

Post Office Box 391 Tallahassee, Florida 32302


For Respondent: Robert D. Newell, Jr., Esquire

Newell & Stahl, P.A.

817 North Gadsden Street Tallahassee, Florida 32303-6313


For Intervenor: Peter Schwarz, Esquire

David R. Terry, Esquire Office of the Public Counsel c/o The Florida Legislature 801 Claude Pepper Building

111 W. Madison Street Tallahassee, Florida 32399-1400


STATEMENT OF THE ISSUES


Whether the Respondent may reject a budget letter for The Retreat's 1990 fiscal year and require The Retreat to file a detailed budget pursuant to a non- rule policy of the Respondent?

PRELIMINARY STATEMENT


By letter dated May 24, 1989, the Petitioner, The Retreat, filed a budget for the fiscal period September 1, 1989 through August 31, 1990, with the Respondent, the Health Care Cost Containment Board. By letter dated June 5, 1989, the Respondent informed The Retreat that it was rejecting its budget. The Retreat filed a Petition for Formal Administrative Hearing dated June 29, 1989, challenging the Respondent's decision. The Petition was forwarded to the Division of Administrative Hearings by letter on July 7, 1989. The Petition was assigned case number 89-3579H by the Division of Administrative Hearings.


This case was consolidated with Division of Administrative Hearings' case numbers 89-3436R and 89-4219R. Separate Final Orders have been issued in case numbers 89-3436R and 89-4219R.


The Citizens of the State of Florida, represented by the Office of the Public Counsel, intervened in the consolidated cases.


Prior to the commencement of the formal hearing, The Retreat filed a Motion to Stay and Petitioner's Motion to Quash. At the commencement of the formal hearing The Retreat indicated that the issues raised in those Motions had been resolved.


Official recognition of Chapter 407, Florida Statutes (1988 Supp.), and Chapter 88-394, Laws of Florida, was taken.


The parties filed a Stipulation prior to the commencement of the formal hearing. To the extent that the parties stipulated to relevant facts concerning this case, they have been incorporated into this Recommended Order.


At the formal hearing The Retreat presented the testimony of Sarah Fitzgerald. Ms. Fitzgerald was accepted as an expert in health care finance. The Retreat also presented the deposition testimony of James Bracher. Four exhibits were offered by The Retreat. All four exhibits were accepted into evidence.


The Respondent, the Health Care Cost Containment Board, presented the testimony of Duane A. Ashe. Mr. Ashe was accepted as an expert in financial analysis of health care facilities and hospital cost containment. Respondent's exhibit 1 was offered and accepted into evidence.


The Intervenor, the Citizens of the State of Florida, did not call any witnesses or offer any exhibits.


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 Final Order or the proposed finding of fact has been accepted or rejected in the Appendix which is attached hereto.


The Retreat has filed a proposed recommended order in this case and a proposed final order addressing the validity of the Respondent's policy and the validity of the rule adopting the policy. The proposed findings of fact contained in The Retreat's proposed recommended order filed in this case have been addressed in the Appendix. To the extent that proposed findings of fact contained in The Retreat's proposed final order are relevant to this case, they have also been addressed in the Appendix. Proposed findings of fact pertaining

to case number 89-4219R have been addressed in the Appendix of the Final Order in case number 89-4219R, issued simultaneously with this Recommended Order.


The Intervenor has filed a separate proposed final order in case number 89- 3436R and in case number 89-4219R and a proposed recommended order in this case. The proposed findings of fact contained in the proposed final orders and the proposed recommended order are identical. Only those proposed findings of fact contained in the Intervenor's proposed recommended order filed in this case which are relevant to this case have been addressed in the Appendix.


FINDINGS OF FACT


1. The parties stipulated to the following facts:


  1. The Retreat is a 100 bed short-term psychiatric specialty and substance abuse hospital located at 555 S.W. 148th Avenue, Sunrise, Broward County, Florida.


  2. The Retreat admitted its first patient on September 12, 1988.


  3. The Retreat operates on a fiscal year from September 1, through August

    1. Therefore, The Retreat's 1989 fiscal year was for the period beginning when The Retreat opened on September 12, 1988, through August 31, 1989.


  4. The Retreat filed its 1989 budget with the Respondent on June 3, 1988.


  5. The Retreat's 1989 budget was approved by the Respondent on August 25, 1988, with an approved gross revenue per adjusted admission (hereinafter referred to as "GRAA"), of $20,323.00, and a net revenue per adjusted admission (hereinafter referred to as "NRAA"), of $17,973.00.


  6. The Retreat's 1990 fiscal year is from September 1, 1989, through August 31, 1990.


  7. Pursuant to Section 407.50(2)(a), Florida Statutes (1988 Supp.), The Retreat submitted a budget letter described in Section 407.50(2)(a), Florida Statutes, to the Respondent on May 24, 1989, for its 1990 fiscal year.


  8. The budget letter submitted by The Retreat certified that its FY 1990 maximum allowable rate of increase in GRAA over its budgeted GRAA in FY 1989 would be 7.8% and that its GRAA would not exceed $21,908.00 in FY 1990. Said rate of increase stated in The Retreat's budget letter represented the National Hospital Input Price Index (hereinafter referred to as the "NHIPI"), for the 1990 fiscal year plus two percentage points.


  9. At the time the Respondent received said budget letter, no administrative rule had yet been adopted that required a hospital entering into its second fiscal year of operation to file a full budget subject to detailed budget review.


  10. By letter dated June 5, 1989, the Respondent's staff advised The Retreat that, based on staff's interpretation of the controlling statute, staff could not accept said budget letter filed by The Retreat and a detailed budget would be required for The Retreat's 1990 fiscal year.


  11. The June 5, 1989, letter enunciated a non-rule agency policy based upon staff's interpretation of Section 407.50, Florida Statutes (1988 Supp.), that a

    hospital filing a budget for its second fiscal year is not eligible to file a budget letter and must file a budget subject to detailed review.


  12. On June 29, 1989, The Retreat filed a Petition to determine the invalidity of the non-rule policy explicated in said June 5, 1989, letter. Also on June 29, 1989, The Retreat filed a Petition for Formal Administrative Hearing regarding the decision by HCCCB to reject its budget letter. Said Petition was assigned DOAH Case No. 89-3579H.


  13. On May 25, 1989, proposed Rule 10N-5.015 was approved by the HCCCB. Said proposed rule was published in the Florida Administrative Weekly, in Volume 15, No. 27, Florida Administrative Weekly (July 7, 1989).


  14. The last sentence of proposed Rule 10N-5.015(15), Florida Administrative Code, provides as follows:


    A new hospital or replacement hospital relocated to a different medical services area shall submit a budget report for review in the first two years of operation, but may submit a budget letter for its third year of operation if it does not require an increase in GRAA in excess of its hospital specific MARI calculated pursuant to Rule 10N-5.013.


  15. The last sentence of proposed Rule 10N-5.015(15), Florida Administrative Code, codifies, in rule form, the non-rule policy set forth in the HCCCB letter of June 5, 1989.


  16. The Retreat filed a Petition to Determine the Invalidity of Proposed Rule 10N-5.015(15), Florida Administrative Code, on July 28, 1989. Said Petition was assigned DOAH Case No. 89-4219R.


  17. DOAH Case No. 89-3436R, 89-3579H and 89-4219R were subsequently consolidated for a single final hearing.


  18. The Retreat has standing in each of the three above-styled causes.


    1. Florida hospitals subject to Section 395.509(1), Florida Statutes (1985), were required to file detailed budgets before the start of each fiscal year prior to 1990. The Respondent reviewed each budget, including the hospital's GRAA. Depending upon the rank of a hospital's GRAA among the hospitals it was assigned to for budget review, the hospital's budget would either be automatically approved or subject to detailed review.


    2. During the 1988 legislative session Chapter 88-394, Laws of Florida, was enacted. Chapter 88-394, which was codified in Chapter 407, Florida Statutes (1988 Supp.), applies to a hospital's 1990 fiscal year and to later fiscal years.


    3. Section 407.50, Florida Statutes (1988 Supp.), provides that a hospital is required to file either a detailed budget or a "budget letter". In particular, Section 407.50(2)(a), Florida Statutes (1988 Supp.), provides that each hospital, "[e]xcept for hospitals filing a budget pursuant to subsection

      (3) . . . shall file with the board a certified statement, hereafter known as the 'budget letter' . . . ." If a budget letter is filed the hospital must acknowledge its maximum rate of increase in its GRAA from the previous year "as

      calculated pursuant to s. 407.002(17) . . ." and its maximum rate of increase for the next fiscal year, and it must affirm that it will not exceed the applicable maximum allowable rate of increase.


    4. If a budget letter is filed by a hospital the hospital's base for budget review is governed by Section 407.50(1), Florida Statutes (1988 Supp.):


      1. The base for hospital budget review for fiscal year 1990-1991 shall be the hospital's prior year actual gross revenues per adjusted admission inflated forward by the hospital's applicable current year's maximum allowable rate of increase or the board-approved budgeted gross revenues per adjusted admission, whichever is higher; provided that, in cases where the board has approved a rate of increase below the MARI, the board-approved

        maximum allowable rate of increase shall apply.


        For a 1990-1991 budget, a hospital's base is the greater of the hospital's GRAA for its 1988 fiscal year increased by its 1989 MARI or its 1989 budgeted GRAA.


    5. Section 407.50(3), Florida Statutes (1988 Supp.), requires the submission of a detailed budget for "each hospital requesting a rate of increase in gross revenue per adjusted admission in excess of the maximum allowable rate of increase for the hospital's next fiscal year . . . ." [Emphasis added].


    6. If a detailed budget is filed, Section 407.50(3), Florida Statutes (1988 Supp.), provides that the hospital's "base" shall be determined as follows:


      In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited actual experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission

      from the year before the prior year, increased by the applicable rate of increase for the prior year, and then inflated by the applicable rate of increase for the current year. . . .


    7. The filing of a detailed budget requires a more complicated form than a budget letter. If The Retreat is required to file a detailed budget, it would incur the additional cost of hiring a consultant. Therefore, The Retreat would be substantially and adversely affected if it is required to file a detailed budget for its second year of operation pursuant to the Respondent's policy.


    8. The "maximum allowable rate of increase" for budget letters or detailed budget requests is defined by Section 407.002(17), Florida Statutes (1988 Supp.), as follows:


      (17) "Maximum allowable rate of increase" or "MARI" means the maximum rate at which a hospital is normally expected to increase its average gross revenues per adjusted admission

      for a given period. The board, using the most recent audited actual experience for each hospital, shall calculate the MARI for each hospital as follows: the projected rate of increase in the market basket index shall be divided by a number which is determined by subtracting the sum of one-half of the proportion of Medicare days plus the proportion of Medicaid days and the proportion of charity days from the number one. Two percentage points shall be added to this quotient. The formula to be employed by the board to calculate the MARI shall take the following form:

      MARI = NHIPI +2 1-[(Me x .5) + Md +Cc]

      where:

      MARI = maximum allowable rate of increase applied to gross revenue.

      NHIPI = national hospital input price index which shall be the projected rate of change in the market basket index.

      Me = proportion of Medicare days, including when available and reported to the board Medicare HMO days, to total days.

      Md = proportion of Medicaid days, including when available and reported to the board Medicaid HMO days, to total days.

      Cc = proportion of charity care days to total days with a 50-percent offset for restricted grants for charity care and unrestricted grants form local governments.


      Pursuant to this definition of "maximum allowable rate of increase" hospitals are entitled to a base of the NHIPI plus two percentage points inflated by the hospital's prior year Medicare, Medicaid and charity care days, if any.


    9. The Respondent rejected The Retreat's effort to file a budget letter for its second year of operation pursuant to Section 407.02(a), Florida Statutes (1988 Supp.), pursuant to a non-rule policy. Pursuant to this non-rule policy the Respondent requires that all hospitals in their first and second year of operation file detailed budgets pursuant to Section 407.50(3), Florida Statutes (1988 Supp.) (the non-rule policy of the Respondent will hereinafter be referred to as the "Policy"). Pursuant to the Policy the Respondent requires that a hospital have both a prior year actual and a current year budgeted GRAA in order to use the budget letter base of Section 407.50(1), Florida Statutes (1988 Supp.).


    10. The Policy applied to The Retreat is an agency statement of general applicability intended to apply to all new hospitals that file budget letters for their second year of operation. The Respondent has not accepted a budget letter from any second-year hospital pursuant to the Policy. The Policy had not been adopted as a rule when it was applied to The Retreat.


    11. The Respondent has suggested that the Policy is supported by the intent of the Legislature in enacting Chapter 407, Florida Statutes, that timely and accurate data be collected from regulated health care institutions subject

      to Chapter 407, Florida Statutes. The Respondent perceives this to be the "ultimate goal" of Chapter 407, Florida Statutes.


    12. It is true that the Respondent must collect and report accurate data pursuant to Sections 407.003 and 407.02(1), Florida Statutes. The requirements of Sections 407.003 and 407.02(1), do not, however, specifically apply to Section 407.50, Florida Statutes (1988 Supp.). Nothing in Sections 407.003 or 407.02(1), require that The Retreat file the type of information The Retreat would have to file if is not allowed to file a budget letter pursuant to Section 407.50(2), Florida Statutes (1988 Supp.). Additionally, the Respondent has failed to explain why the perceived enhancement of the goal of Chapter 407, Florida Statutes, through application of the Policy should only apply to hospitals in their first and second years of operation.


    13. The Respondent's perceived "ultimate goal" of collecting timely and accurate data does not support the Policy as applied in this case to The Retreat.


    14. The Respondent has also suggested that the calculation of the MARI in accordance with Section 407.002(17), Florida Statutes, is a prerequisite to filing a budget letter and that Section 407.002(17), Florida Statutes, requires that audited actual experience be available in order for the Respondent to calculate the MARI for a hospital.


    15. In support of its position, the Respondent has suggested that it cannot "certify that a budget letter is correct pursuant to s. 407.50(2)(a) . .

      . ." This argument does not justify the Respondent's Policy because there is no requirement in Section 407.50, Florida Statutes, that the Respondent provide such a certification. Additionally, the Respondent has not adequately explained why it is only concerned about its calculation of the MARI for hospitals in their first or second years of operation and not all hospitals.


    16. The problem with the Respondent's position is that, while Section 407.002(17), Florida Statutes, does require that the Respondent use audited actual experience to calculate the MARI, Sections 407.50(1) and (2), Florida Statutes (1988 Supp.), do not require that the Respondent calculate the MARI. If a budget letter is filed by a hospital, the Respondent is only required to "determine if the gross revenues per adjusted admission submitted by the hospital are within the maximum allowable rate of increase for that hospital." The Respondent can accomplish this task without calculating the MARI; it can rely upon the MARI acknowledged by the hospital.


    17. If a hospital files a budget letter, only the hospital is required to calculate its MARI. The hospital, unlike the Respondent, is not required by Section 407.002(17), Florida Statutes to use audited actual experience in its calculation of the MARI. All of the elements of the MARI may be obtained from unaudited experience. The NHIPI is a national standard that is not hospital specific. The two percentage points are also not hospital specific. The only hospital specific information taken into account is the number of Medicare, Medicaid and charity care days. Even the Respondent agrees that audited actuarial experience is not necessary to calculate Medicare, Medicaid and charity care days. Therefore, hospitals may calculate the MARI for purposes of Section 407.50(2), Florida Statutes (1988 Supp.), without audited actual experience.

    18. The Respondent has failed to prove that the definition of the MARI of Section 407.002(17), Florida Statutes, supports the Policy as applied in this case.


    19. In further support of its Policy, the Respondent has characterized the action of The Retreat as using a "'zero', to represent an absence of value, in lieu of audited actual 1988 GRAA for purposes of calculating its budget letter base for 1990 . . . ." See the Respondent's proposed finding of fact 20. The Respondent suggests that Section 407.50(1), Florida Statutes (1988 Supp.), requires a "comparison" of the two values which may be used as a hospital's base and that The Retreat's action circumvents such a comparison.


    20. The plain language of Section 407.50(1), Florida Statutes (1988 Supp.), does not require any comparison of the two values which may be used as a hospital's base. Section 407.50(1), Florida Statutes (1988 Supp.), simply provides that a hospital's base for 1990-1991 shall be the greater of the two values. If a hospital only has one of the values, that is obviously the greater value and should be used as the hospital's base.


    21. In applying its Policy, the Respondent requires that hospital's subject to the Policy file a detailed budget pursuant to Section 407.50(3), Florida Statutes (1988 Supp.).


    22. There is no specific language in Section 407.50, Florida Statutes (1988 Supp.), that requires a hospital in its second year of operation to file a detailed budget.


    23. By its specific terms, Section 407.507(3), Florida Statutes (1988 Supp.), only requires that a detailed budget be filed if a hospital is seeking an increase in GRAA in excess of the MARI. It does not require detailed budgets for hospitals seeking an increase in GRAA at or below the MARI.


    24. The Retreat has not sought an increase in GRAA for 1990 in excess of the MARI.


    25. The Respondent has failed to sufficiently explicate the Policy. The weight of the evidence failed to prove that the Policy is valid. The Policy is inconsistent with the Respondent's delegated legislative authority and has been inconsistently applied by the Respondent to only those hospitals in their first or second years of operation. In a Final Order issued in case number 89-4219R simultaneously with this Recommended Order, it has been concluded that the Respondent's Proposed Rule 10N-5.015(15), Florida Administrative Code, adopting the Policy is an invalid exercise of delegated legislative authority.


    26. Absent the Policy and Proposed Rule 10N-5.015(15), Florida Administrative Code, The Retreat's 1990 budget letter would have been accepted by the Respondent.


      CONCLUSIONS OF LAW


    27. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1989).


    28. Based upon the weight of the evidence and by stipulation of the parties, The Retreat has standing in this case.

    29. The Respondent has refused to accept a budget letter filed by The Retreat pursuant to Section 407.50(2), Florida Statutes (1988 Supp.), for its 1990 fiscal year. The Respondent's action is based upon its Policy of not allowing hospital's in their second year of operation to file budget letters. The Policy, as applied to The Retreat, is a non-rule policy of the Respondent.


    30. The Retreat has challenged the Respondent's action in three related cases which were consolidated for purposes of the formal hearing. In case number 89-3436R, The Retreat has challenged the Policy as an unpromulgated rule under Section 120.54, Florida Statutes. In this case, The Retreat has challenged the agency action of the Respondent in rejecting the Retreat's budget letter pursuant to the Policy. Finally, in case number 89-4219R, The Retreat has challenged the Respondent's adoption of the Policy as Rule 10N-5.015(15), Florida Administrative Code.


    31. A Final Order in case number 89-3436R has been issued simultaneously with this Recommended Order concluding that the Policy is an invalid "rule" because of the failure of the Respondent to comply with the requirements of Section 120.54, Florida Statutes. The conclusion reached in that case, however, is not dispositive of this case. See Cape Cave Corporation v. Department of Environmental Regulation, 498 So. 2d 1309 (Fla. 1st DCA 1987); Home Health Professional Services, Inc. v. Department of Health and Rehabilitative Services,

      463 So. 2d 345 (Fla. 1st DCA 1985); and McDonald v. Department of Banking and Finance, 346 So. 2d 569 (Fla. 1st DCA 1977). Even though the Respondent has failed to adopt the Policy as a rule pursuant to Section 120.54, Florida Statutes, it may still apply the Policy to The Retreat in this case if the Respondent properly explicates its Policy as it was applied to The Retreat. The status of the Policy as an invalid rule does not cause the Policy itself to be deemed invalid, so long as the Policy is explicated each time it is applied.


    32. In order for the Respondent to rely upon the Policy to support its action in this case, the Respondent was required to establish the policy by expert testimony, documentary opinion or other evidence. See Florida Medical Center v. Department of Health and Rehabilitative Services, 463 So. 2d 380 (Fla. 1st DCA 1985). The Respondent had the burden of defending the Policy and explaining the reasons for its application. Anheuser-Busch, Inc. v. Department of Business Regulation, 393 So. 2d 1177 (Fla. 1st DCA 1981).


    33. An agency's interpretation and construction of the statutes it is charged to enforce is entitled to great weight and will not be overturned by the courts if the interpretation and construction is not clearly erroneous or unauthorized. See Satellite Television Engineering, Inc. v. Department of General Services, 522 So. 2d 440 (Fla. 1st DCA 1988). The deference to be accorded an agency's interpretation or construction is not, however, without limitation. Id.


    34. The Retreat filed the budget letter at issue in this case pursuant to Section 407.50(2)(a), Florida Statutes (1988 Supp.). In filing its budget letter The Retreat calculated its base pursuant to Section 407.50(1), Florida Statutes (1988 Supp.). Section 407.50(1), Florida Statutes (1988 Supp.), provides that a hospital's base for its 1990-1991 fiscal year is the greater of the hospital's actual GRAA for its 1988 fiscal year increased by the hospital's 1989 MARI or the hospital's 1989 budgeted GRAA.


    35. The Retreat's budget letter was filed for 1990, its second year of operation. The Retreat was not in operation during 1988. Therefore, The Retreat did not have an actual GRAA for 1988. The Retreat was in operation

      during 1989. As a consequence, in determining its base pursuant to Section 407.50(1), Florida Statutes, The Retreat determined that the greater of its actual GRAA for its 1988 fiscal year (it had none), or its 1989 budgeted GRAA was its 1989 budgeted GRAA.


    36. Pursuant to its Policy, the Respondent rejected The Retreat's budget letter. The Respondent took the position that The Retreat could not file a budget letter because it did not have actual GRAA for 1988. Therefore, the Respondent concluded that The Retreat could not determine its base pursuant to Section 407.50(1), Florida Statutes (1988 Supp.). Additionally, the Respondent refused to accept The Retreat's budget letter because The Retreat did not calculate its MARI based upon audited actual experience. The Respondent has taken the position that, instead of filing a budget letter, The Retreat must file a detailed budget pursuant to Section 407.50(3), Florida Statutes (1988 Supp.).


    37. The Respondent has not argued that its rejection of The Retreat's budget letter was based upon an express requirement of Section 407.50, Florida Statutes (1988 Supp.). The Respondent has agreed that its decision was based upon its Policy. The evidence supports this conclusion. Therefore, the Respondent's decision was proper only if it properly explicated the Policy. Based upon the weight of the evidence presented in this case, the Respondent has failed to sufficiently explicate its Policy. The weight of the evidence failed to prove that the Policy is authorized by, or consistent with, the language of Section 407.50, Florida Statutes (1988 Supp.).


RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent enter a Final Order accepting The Retreat's

May 24, 1989, budget letter as its budget for its 1990 fiscal year.


DONE and ENTERED this 21st day of May, 1990, in Tallahassee, Florida.


LARRY J. SARTIN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675


Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 1990.


APPENDIX TO RECOMMENDED ORDER


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.

The Retreat has filed a proposed recommended order in this case and a proposed final order addressing the validity of the Respondent's Policy and the validity of the rule adopting the Policy. The proposed findings of fact contained in The Retreat's proposed recommended order filed in this case have been addressed in this Appendix. To the extent that proposed findings of fact contained in The Retreat's proposed final order are relevant to this case, they have also been addressed in this Appendix. Proposed findings of fact pertaining to case number 89-4219R have been addressed in the Appendix of the Final Order in case number 89-4219R, issued simultaneously with this Recommended Order.


The Intervenor has filed a separate proposed final order in case number 89- 3436R and in case number 89-4219R and a proposed recommended order in this case. The proposed findings of fact contained in the proposed final orders and the proposed recommended order are identical. Only those proposed findings of fact contained in the Intervenor's proposed recommended order filed in this case which are relevant to this case have been addressed in the Appendix.


The Retreat's Proposed Findings of Fact (Proposed Recommended Order)


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


1 1.

2 1 and 10.

3 Hereby accepted. The last sentence is rejected as an incorrect conclusion of law.

4 27.

5-6 8.


The Retreat's Proposed Findings of Fact (Proposed Final Order)


Proposed Finding of Fact Number

Paragraph Number of Acceptance or

in Recommended Order Reason for Rejection

1

1.


2-4

2.


5

3.


6

4.


7

Hereby accepted.


8

6.


9-10

Hereby accepted.


11

8 and 9.


12

9.


13-14

5.


15

10.


16

Not a finding of

fact.

17-30

Hereby accepted.


31

See 12-21.


32

10 and 21.


33

21.


34-36

Hereby accepted.


37

7, 22 and hereby

accepted.

38-39

23.


40

Hereby accepted.


41

15.


42-43 18 and 19.

44-53 Hereby accepted.

54 12 and 13.

55 Hereby accepted.

56 13 and 14.

57-58 Not relevant.

  1. Hereby accepted.

  2. Not supported by the weight of the evidence.

61 1 and 11.

62-63 8.


The Respondent's Proposed Findings of Fact


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


1-14 1.

  1. See 12.

  2. See 13.

  3. See 15.

  4. See 11 and 16.

  5. This proposed finding of fact does correctly explain the "HCCCB's view" but the weight of the evidence failed to prove the Respondent's conclusion is correct.

  6. See 20.

21-22 See 20 and 21.

23-24 The weight of the evidence failed to prove that inaccuracies not acceptable under Section 407.50(2), Florida Statutes (1988 Supp.), will occur just for hospitals in their first or second years of operation. The weight of the evidence failed to prove that any inaccuracy Section 407.50, Florida Statutes (1988 Supp.), is intended to prevent will occur if The Retreat is allowed to file a budget letter.


25 18. The last two sentences are consistent with the Respondent's position but the weight of the evidence failed to prove that the Respondent's interpretation is correct.


The Intervenor's Proposed Findings of Fact


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


1-2 1.

3 See 20.

4 1.

5-6 See 15.

7 1 and 15. The first sentence is not supported by the weight of the evidence.

8 1.

9-13 These proposed findings of fact are correct. In light of the stipulation of the parties that The Retreat has standing in all three cases, however, the proposed findings are not relevant. See City of Destin v. Department of Transportation, 541 So. 2d 123 (Fla. 1st DCA 1989).

14 Not supported by the weight of the evidence. See 20 and 21.

15 1.

16-17 The weight of the evidence failed to prove that these facts apply in this case or that all inaccuracies are inconsistent with the intent of Section 407.50, Florida Statutes (1988 Supp.).

18 Not relevant.

19-20 Not relevant. The weight of the evidence failed to prove that these proposed facts are true of this matter.

21 12.

22-24 Hereby accepted. The weight of the evidence, however, failed to prove that these facts justify the Policy.

25-26 See 20 and 21.

27 Not supported by the weight of the evidence.

28 1 and 10.

  1. Not supported by the weight of the evidence.

  2. The weight of the evidence failed to prove that this proposed finding is true in this case.

31-32 Hereby accepted.

33-36 Not relevant.

37-8 Not supported by the weight of the evidence.

39 1 and 10.

40 Hereby accepted.

41 1.

42 10.

43-44 Hereby accepted.


COPIES FURNISHED:


Michael J. Glazer, Esquire Post Office Box 391 Tallahassee, Florida 32302


Robert D. Newell, Jr., Esquire 817 North Gadsden Street Tallahassee, Florida 32303-6313


Jack Shreve Public Counsel David R. Terry

Associate Public Counsel Peter Schwarz

Associate Public Counsel c/o The Florida Legislature

111 West Madison Street Room 801

Tallahassee, Florida 32399-1400


Stephen Presnell, General Counsel Health Care Cost Containment Board Woodcrest Office Park

325 John Knox Road Building L, Suite 101

Tallahassee, Florida 32303

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

AGENCY FINAL ORDER

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


STATE OF FLORIDA

HEALTH CARE COST CONTAINMENT BOARD



THE RETREAT,


Petitioner,


vs. CASE NO. 89-3579H


STATE OF FLORIDA, HEALTH CARE COST CONTAINMENT BOARD,


Respondent,


and


CITIZENS OF THE STATE OF FLORIDA,


Intervenor.

/


FINAL ORDER


This matter was heard by the Health Care Cost containment Board pursuant to Section 120.57(1), Florida Statutes, on July 26, 1990, in Tallahassee, Florida to consider the Hearing Officer's Recommended Order entered in The Retreat v.

State of Florida, Health Care Cost Containment Board, Case No. 89-3579H. Petitioner was represented by Michael J. Glazer, Esquire. Respondent was represented by Robert D. Newell, Jr., Esquire. Each Board member had reviewed the entire record of this case prior to its consideration by the Board.

Respondent filed exceptions which were ruled upon prior to consideration of the Recommended Order.


RULINGS ON RESPONDENT'S EXCEPTIONS


  1. Respondent's first exception is granted. The Hearing Officer's finding of fact set forth in numbered paragraph four of his Recommended Order is actually a conclusion of law. The conclusion is incorrect in that it implies that a hospital will acknowledge two maximum allowable rates of increase (MARIs). There is only one MARI for a budget year; it is the rate of increase from the hospital's current fiscal year to the fiscal year covered by the budget letter; it is calculated for each hospital by the Board pursuant to Section 407.002(17), Florida Statutes; and hospitals filing budget letters are required to acknowledge their MARI, as calculated pursuant to the statute. Accordingly, the Hearing Officer's paragraph four is rejected and the following interpretation of Use law is adopted.


    Section 407.50, Florida Statutes (1988 Supp.), provides that a hospital is required to file either a detailed budget or a "budget letter." In

    particular, Section 407.50(2)(a), Florida Statutes (1988 Supp.), provides that each hospital, "[e]xcept for hospitals filing a budget pursuant to subsection (3) shall file with the board a certified statement, hereafter known as the

    `budget letter'...." If a budget letter is filed the hospital must acknowledge its maximum rate of increase in its GRAA "as calculated pursuant to s. 407.002(17) . . "as its maximum rate of increase for the next fiscal year, and it must affirm that it will not exceed the applicable maximum allowable rate of increase.


  2. Respondent's second exception is granted. The Hearing Officer's finding of fact set forth in numbered paragraph five of his Recommended Order is actually a conclusion of law. The conclusion is incorrect because it ignores the effect of the portion of the statute which states, "provided that, in cases where the board has approved a rate of increase below the MARI, the board- approved maximum allowable rate of increase shall apply." The Hearing Officer's view of the statute ignores the possibility that in 1989, a hospital that filed a detailed budget in 1988 may have a Board approved rate of increase rather than a MARI for 1988. A Board approved rate of increase, rather than the MARI applies in these cases. Accordingly, the Hearing Officer's conclusion which follows his quotation of the statute is rejected.


  3. Respondent's third and fourth exceptions are granted. The Hearing Officer's finding of fact set forth in numbered paragraph sixteen of his Recommended Order is not based upon competent substantial evidence and does not accurately reflect the law to the extent that it implies that the Board has no authority to determine the accuracy of budget letters. Section 407.50(5)(a), Florida Statutes, requires the Board to determine, within thirty days of submission, whether a hospital's Gross Revenue per Adjusted Admission (GRAA) is within its MARI. Although the Board does not provide a certification, it is required to validate a budget letter. The Hearing Officer's statement regarding HCCB's position it this case is not supported by the record. The issue in this case related to first and second year hospitals and the agency's justification for its policy for these entities, not all hospitals. The Board's statutory mandate includes its responsibility for correctness of all MARI calculations. This case is clearly limited in its application to first and second year hospitals only.


  4. Respondent's fifth exception is granted. The Hearing Officer's finding of fact set forth in numbered paragraphs 17 and 18 to the extent that they imply any limitation of the Board to require audited actual data for calculation of a MARI for hospitals with actual experience. To find otherwise is contrary to the statutory scheme of budget review. The Board is required to test and may reject a budget letter for a hospital if the hospital calculation differs from the MARI calculated by the Board using audited actual data. Further, audited actual data is required for hospitals other than in their first and second year of operation.


The Board having heard argument and having ruled upon all exceptions filed, and having been otherwise fully advised in the premises makes the following findings and conclusions.

FINDINGS OF FACT


  1. The Board adopts the findings of fact set forth in the Hearing Officer's Recommended Order, a copy of which is attached and incorporated by reference, except to the extent specified in the Rulings on Exceptions set forth in this Order.


  2. The Board's findings of fact are based upon competent substantial evidence.


    CONCLUSIONS OF LAW


  3. The Board has jurisdiction over the parties and subject matter of this cause pursuant to Chapters 120 and 407, Florida Statutes.


  4. The Board adopts the conclusions of law set forth in the Hearing Officer's Recommended Order except to the extent specified in the Rulings on Exceptions set forth in this Order.


  5. There is competent substantial evidence upon which the Board bases these conclusions.


WHEREFORE, the Board adopts the Hearing Officer's recommendation. The Retreat's May 24, 1989 budget letter is hereby accepted as its budget for its 1990 fiscal year. This Order becomes effective upon its filing with the Board Clerk.


The parties are notified that they may seek an appeal of this Order by filing a notice of appeal with the District Court of Appeal and a copy of the notice of appeal with the Board's Clerk within thirty days of the effective date of this order.


DONE AND ORDERED this 6th day of August, 1990.


Helen Q. Ingram, Chairman

Health Care Cost Containment Board

301 The Atrium

325 John Knox Road Tallahassee, Florida 32303

CERTIFICATE OF SERVICE


I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by U.S. Certified Mail to Michael Glazer, Esquire, AUSLEY, MCMULLEN, MCGEHEE, CAROTHERS & PROCTOR, Post Office Box 391, Tallahassee, Florida 32302, and by U.S. Mail to Robert D. Newell, Jr., Esquire, NEWELL & STAHL, 817 North Gadsden, Tallahassee, Florida 32303-6313; Peter Schwarz and David R. Terry, Associate Public Counsel, Office of the Public Counsel, 801 Claude Pepper Building, 111 West Madison Street, Tallahassee, Florida 32399-1400; and the Division of Administrative Hearings, The DeSoto Building, 1230 Apalachee Parkway, Tallahassee, Florida 32399-1550, this 7 day of August, 1990.


Stephen M. Presnell General Counsel

Health Care Cost Containment Board


Docket for Case No: 89-003579
Issue Date Proceedings
May 21, 1990 Recommended Order (hearing held , 2013). CASE CLOSED.

Orders for Case No: 89-003579
Issue Date Document Summary
Aug. 06, 1990 Agency Final Order
May 21, 1990 Recommended Order Healthcare Cost Containment Board (HCCB) should accept petitioner's budget letter. Policy and proposed rule supporting HCCB declared invalid in 89-4219R & 89-3436R.
Source:  Florida - Division of Administrative Hearings

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