STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNIVERSITY NURSING CARE )

CENTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 89-6465

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

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 January 23, 1990, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Grafton B. Wilson, II

Attorney at Law

Post Office Box 1292 Gainesville, Florida 32602

For Respondent: Carl Bruce Morstadt

Chief Medicaid Counsel Department of Health and

Rehabilitative Services 1317 Winewood Boulevard

Building 6, Room 230

Tallahassee, Florida 32399-0700 STATEMENT OF THE ISSUES

Whether the Petitioner's request for a Medicaid interim rate increase should be approved by the Respondent?

PRELIMINARY STATEMENT

The Petitioner, University Nursing Care Center, Inc. (hereinafter referred to as "University"), filed a request for a Medicaid interim rate increase with the Respondent, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department"). In a letter dated October 19, 1989, the Department indicated its intent to grant part and deny part of the interim rate increase requested by University. University filed a Petition for Hearing to Contest Partial Denial of Interim Rate Increase with the Department. The Petition was filed with the Division of Administrative Hearings by Notice from the Department on November 27, 1989.

At the formal hearing University presented the testimony of Gary L. Keach, Charlotte Albano and James A. Norman, Jr. University also offered nineteen exhibits which were accepted into evidence.

The Department presented the testimony of Durward Culver, Carlton Dyke Snipes, Frank D. Hughes and Susan Sherman Bander Acker. Ms. Acker was accepted as an expert in nursing home administration and nursing home programs. The Department also offered three exhibits which 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. The Parties.

   
   

   1. University is a 180-bed skilled nursing home located in Gainesville, Florida. The facility was licensed by the Department and all 180 beds were Medicaid certified at all times relevant to this proceeding.

      
      

   2. University's facility is managed by Covenant Care Corporation.

      
      

   3. The Department is the State agency designated the responsibility for administering Florida's Medical Assistance (Medicaid) Program. Section 409.266, et. seq., Florida Statutes.

      
      

   4. The Office of Licensure and Certification is the office of the Department responsible for licensing and the certification of nursing homes in Florida.

      
      

2. 1989 Annual Survey.

   
   

   1. The Office of Licensure and Certification (hereinafter referred to as "OLC"), conducted an annual survey of University's nursing home facility for 1989 from February 28, 1989, through March 3, 1989, to determine the extent of University's compliance with federal and state laws.

      
      

   2. At the conclusion of the 1989 annual survey the Department issued a Statement of Deficiencies and Plan of Correction, Form HCFA-2567 (10-84) (hereinafter referred to as the "Annual Survey Statement"). The Annual Survey Statement was provided to University.

      
      

   3. A number of deficiencies in the operation of University's facility were noted on the Annual Survey Statement. In relevant part, the deficiencies involved the need for University to improve the manner in which patient rehabilitation care was provided.

      
      

   4. The Annual Survey Statement did not indicate that University was required to add staff to its facility to correct the deficiencies.

      
      

   5. The Annual Survey Statement included space for University to indicate how it intended to correct the deficiencies noted by OLC. University completed this portion of the Annual Survey Statement noting how it intended to correct each deficiency and the date by which the deficiency would be corrected.

   6. University indicated on the Annual Survey Statement that it would correct the deficiencies by May 12, 1989. University did not indicate that it intended to add staff to its facility in order to correct any deficiency noted on the Annual Survey Statement.

      
      

   7. As part of its plan of correction, University drafted and adopted a Rehabilitative and Restorative Care Program (hereinafter referred to as the "Care Program"). The Care Program provided for the employment of a "Rehabilitative-Restorative Registered Nurse" and "Rehabilitative-Restorative Certified Nursing Assistant(s)".

      
      

   8. The Annual Survey Statement with the corrections University intended to make noted on it was submitted to OLC.

      
      

   9. A copy of University's Care Program was also provided to employees of the Department as part of University's corrective plan.

      
      

   10. The Department, through OLC, accepted University's corrections and its Care Program. By "accepting" University's corrections and Care Program, OLC agreed that the corrections addressed the deficiencies noted in the Annual Survey Statement. OLC did not, however, inform University that it "approved" of the corrections University indicated it intended to make or the Care Program.

       
       

3. May 31, 1989 Survey.

   
   

   1. On May 31, 1989, OLC personnel surveyed University's facility in response to a complaint the Department had received concerning alleged inadequate certified nursing assistants at University.

      
      

   2. Certified nursing assistants perform "hands on" rehabilitation work at skilled nursing homes. Rehabilitation work performed by certified nursing assistants includes assisting residents to walk, eat and with other activities of daily living.

      
      

   3. A Statement of Deficiencies and Plan of Correction (hereinafter referred to as the "May Survey Statement") was issued by OLC as a result of the May 31, 1989, survey. The May Survey Statement was provided to University.

      
      

   4. The May Survey Statement noted the following deficiencies:

      
      

      NH-106. Review of facility staffing for five of seven days selected at random revealed significant shortages of non-licensed nursing staff as evidenced by but not limited to:

      
      

      Insufficient staff to meet the personal care and hygiene needs of the residents.

      
      

      Insufficient staff to monitor the nutritional needs of the residents ([?] residents with significant weight loss).

      
      

      Insufficient staff to implement the restorative nursing program so as to maximize the optimal level of independence enjoyed by each resident. Ref: 405.1124(c)(B)3; 10D-29.108(4)

   5. The overall deficiency of University's facility noted in the May Survey Statement was based upon OLC's determination that, although University had sufficient certified nursing assistants scheduled to work during the seven shifts reviewed, an insufficient number of certified nursing assistants actually reported to work during five of those shifts. This determination formed the basis of OLC's determination that there was "insufficient staff" and not a determination that additional staff needed to be scheduled for work.

      
      

   6. University indicated in the May Survey Statement that it intended to take the following actions to correct the deficiencies noted by OLC:

      
      

      5 bonus, recruitment and retention programs established along with the use of nursing pools (see attached).

      
      

      Seven new positions above the required standards established and filled (see attached staffing schedule).

      
      

      New assignment policy assures monitoring of feeding (3 meals a day) 7 days a week.

      
      

      New Rehab. R.N. and five restorative aides now assigned to restorative programs (see attached).

      
      

   7. The May Survey Statement with the corrections University intended to make noted on it was submitted to OLC.

      
      

   8. The Department, through OLC, accepted University's corrections. Again, by "accepting" University's corrections, OLC agreed that the corrections addressed the deficiencies noted in the May Survey Statement. OLC did not, however, inform University that it "approved" of the corrections University indicated it intended to make.

      
      

4. June 5, 1989, Survey.

   
   

   1. On June 5, 1989, OLC personnel visited University's facility. As a result of this survey, a moratorium on admissions to University's facility was imposed.

      
      

   2. University was informed of the moratorium at the conclusion of the June 5, 1989, survey and in a letter from the Department dated June 6, 1989. In the letter of June 6, 1989, University was informed, in pertinent part:

      
      

      This moratorium is being imposed . . . because of the serious deficiencies identified by personnel from the Pensacola Office of Licensure and Certification during a survey conducted on

      June 5, 1989. These deficiencies include but are not limited to the following:

      
      

      • Number of staff insufficient to meet minimum standards.

        
        

      • Lack of adequate staff to meet resident needs.

      • Lack of adequate monitoring of changes in residents' conditions.

        
        

      • Lack of nutritional monitoring. [Emphasis added].

        
        

   3. University and the Department ultimately entered into a Joint Stipulation resolving the issues which gave rise to the moratorium. Pursuant to the Joint Stipulation, the Department rescinded the moratorium effective June 29, 1989. Although the Joint Stipulation did not specifically require that University add staff to its facility, it did provide, in pertinent part, the following:

      
      

      3. Effective upon signing this stipulation, Respondent [University] shall maintain the minimum staffing standards for licensed and non- licensed nursing personnel to meet the resident care needs.

      
      

5. June 22-23, 1989, Survey.

   
   

   1. The Joint Stipulation called for interim visits to University's facility by OLC.

      
      

   2. An interim visit was conducted on June 22-23, 1989.

      
      

   3. A Statement of Deficiencies and Plan of Correction (hereinafter referred to as the "June Survey Statement") was issued by OLC as a result of the June 22-23, 1989, survey.

      
      

   4. Among other things, OLC noted in the June Survey Statement the following deficiency:

      
      

      NH-106 Progress has been made but "NOT CORRECTED" as evidenced by: Continued insufficient staff

      to monitor nutritional needs or residents

      (see F-181) implement restorative nursing program. Ref: 405.1124(c)(b)3 10D-29.108(4) Class III

      7-23-89

      
      

   5. The June Survey Statement was provided to University.

      
      

   6. University indicated in the June Survey Statement that it intended to take the following actions to correct the deficiency noted in finding of fact 29:

      
      

      Five Rehab. Aides (in addition to required number of certified aides) are monitoring all meals. In addition to Two new positions of Resident Care Supervisors whose duties include meal monitoring.

      
      

   7. The June Survey Statement with the corrections University intended to make noted on it was submitted to OLC and was "accepted" by OLC in the same manner that the Annual and May Survey Statements were accepted.

6. Additional Staff at University's Facility.

   
   

   1. Between May, 1989, and August, 1989, University established the following positions and employed individuals for those positions:

      
      

      1 Rehabilitation Coordinator

      5 Rehabilitation Aides

      7 Certified Nursing Assistants

      4 Resident Care Supervisors

      
      

      University also employed the services of a nursing consultant and used pooled nursing staff.

      
      

   2. University incurred the following costs associated with the newly created positions, the pooled nursing staff and the nursing consultant:

      
      

      Rehabilitation Coordinator	$ 26,817.78
      Rehabilitation Aides	-0-
      Certified Nursing Assistants	121,919.60
      Nursing Consultant	25,000.00
      Resident Care Supervisors	60,559.38
      Pooled Nursing Staff	183,040.00
      Total	$417,336.76

      
      

   3. The Rehabilitation Aide positions were filled with 5 employees who were serving as certified nursing assistants.

      
      

7. Medicaid Reimbursement.

   
   

   1. The method by which Medicaid providers are reimbursed for their services is provided for in the Florida Title XIX Long-Term Care Reimbursement Plan (hereinafter referred to as the "Reimbursement Plan").

      
      

   2. The Reimbursement Plan is a "cost-based prospective plan." The rate of reimbursement is determined by calculating a provider's historical costs for a specified reporting period and factoring in an inflation index to estimate the provider's future costs. The provider is then paid a rate of Medicaid reimbursement based upon the projected future costs. In Florida, prospective rates are calculated January 1 and July 1 of each year.

      
      

   3. During a reimbursement period a providers' actual expenditures may be greater or less than the estimated costs for the period. If actual expenditures are less, the additional amount the provider receives may be kept. If actual expenditures are more, the provider must absorb the difference.

      
      

   4. The Reimbursement Plan allows providers to request and receive a rate change between reporting periods if certain exceptional circumstances are met. The rate change is referred to as an "interim rate change." The requested rate increase at issue in this case was a request for an interim rate change.

      
      

   5. Section IV, J.2. of the Reimbursement Plan provides the following concerning requests for interim rate changes:

      
      

      Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes shall be considered only if such changes were made to comply with existing State or Federal

      rules, laws, or standards, and if the change in cost to the provider is at least $5000 and would

      cause a change of 1 percent or more in the provider's current total per diem rate. [Emphasis added].

      
      

   6. The Department stipulated that the requirements of the Reimbursement Plan that interim rate changes involve a change in cost of at least $5,000.00 and cause a change of 1% or more have been met in this case.

      
      

8. Interim Rate Increase.

1. On August 23, 1989, the Controller of Covenant Care Corporation requested a Medicaid interim rate increase from the Department in University's Medicaid funding.

   
   

2. This was the first time during 1989 that University requested an interim rate increase. University had not sought approval of an interim rate increase at any time while the surveys conducted during the first 8 months of 1989 were being conducted. Nor had the Department indicated that it would approve a rate increase as a result of its surveys, the deficiencies it found at University's facility or the acceptance of University's plan of correction.

   
   

3. The request was reviewed by the Medicaid Cost Reimbursement Analysis section of the Department in consultation with OLC.

   
   

4. University requested a rate increase for the $417,336.76 of additional costs incurred by University for additional staff during 1989. This resulted in an increase in per diem of $6.90 per patient day.

   
   

5. The rate increase requested by University was very large. If approved, University would have the highest per diem patient care cost of all Medicaid approved nursing homes in the Department's District 3 where University is located.

   
   

6. By letter dated October 19, 1989, the Department informed University that it would allow an increase in rate of $1.16 per patient day and that the additional requested increase of $5.74 was denied. The approved increase was effective August 12, 1989.

   
   

7. The increase in rate approved by the Department was attributable to 7 new certified nursing assistant positions.

   
   

8. The Department was confused during its review of the rate increase request and during the formal hearing of this case about the number of newly established certified nursing assistant positions and rehabilitation aide positions. The Department believed that there were only 7 new positions created. The evidence established that there were a total of 12 newly created positions: 5 rehabilitation aide positions (which were filled by 5 existing certified nursing assistants) and 7 new certified nursing assistant positions. The 7 new certified nursing assistant positions and the 5 certified nursing assistant positions which were vacated by employees filling the 5 new rehabilitation aide positions were filled by new employees. The amounts expended by University for these 5 new rehabilitation aide positions were included with the amounts expended for the 7 new certified nursing assistant positions.

   I. Standard Imposed by the Department.

   
   

9. During the period of time at issue in this proceeding, University's facility met the nursing staff requirements of Rule 10D-29, Florida Administrative Code. The nursing staff requirements of Rule 10D-29, however, are minimum requirements. Nursing home facilities may have to provide nursing staff in excess of the requirements of Rule 10D-29 in order to provide proper resident care.

   
   

10. The Department informed University, as a result of the surveys conducted by OLC during 1989, that residents at University's facility were not receiving adequate care. The Department indicated on a number of occasions that inadequate care was being provided because of "insufficient staff." The Department did not, however, inform University specifically that it needed to add staff positions at its facility.

    
    

11. When used by OLC, the terms "insufficient staff" can mean that a facility has an insufficient number of employees assigned and hired to work on shifts. "Insufficient staff" may also mean that, although a sufficient number of employees have been assigned and hired to work on shifts, the employees are not properly carrying out their tasks. In the latter instance, required tasks may not be carried out because an insufficient number of the employees who were scheduled to be present were actually at work or because those present were simply not working adequately.

    
    

12. When the Department uses the terms "insufficient staff" to mean that an insufficient number of employees were assigned and hired, then it would be appropriate to hire additional staff. When the Department uses the terms "insufficient staff" to mean that required tasks are not being carried out because an insufficient number of employees were present or because those employees present were simply not working adequately, then it would not be appropriate to hire additional staff.

    
    

13. In this case the Department did not consistently inform University what it meant by "insufficient staff." In some instances (i.e., the May Survey Statement) the Department did clearly indicate that it meant that, although a sufficient number of employees were assigned and hired to work, an insufficient number of employees actually were at work. On other occasions, however, this was not the clearly expressed intent.

    
    

14. The Department's determination that University needed to improve the quality of the care it was providing to its residents and its use of the terms "insufficient staff" were reasonably interpreted by University to mean that University had an insufficient number of employees scheduled to provide the care required by the Department. Therefore, it was reasonable for University to conclude that it needed to increase its staff to some extent to meet the standards imposed upon it by the Department. This finding of fact is consistent with the Department's determination that an interim rate increase based upon an additional 7 certified nursing assistant positions established at University's facility should be granted. The crucial determination in this case is a determination of the extent to which University should have reasonably added staff in response to the Department's surveys.

    
    

15. Based upon the weight of the evidence, it was reasonable for University to establish the 5 new rehabilitation aide positions and the 7 new certified nursing assistant positions in response to the Department's findings of deficiencies during its surveys of University's facility during 1989. These

    positions resulted in a total increased cost of $121,919.60 and a per diem increase of $2.02.

    
    

16. Although it may have been good health planning to establish the rehabilitation coordinator position and the 4 resident care supervisor positions, and to hire a nursing consultant and use pooled nursing staff, it was not reasonable for University to conclude that it was being required to take these steps by the Department. Therefore, University did not incur the costs associated with these staffing changes in order to "comply with existing State or Federal rules, laws, or standards "

    
    

17. University did not reasonably rely on the Department's findings of deficiencies or any comments or actions of Department employees during 1989, in establishing the rehabilitation coordinator position or the 4 resident care supervisor positions, or in employing the nursing consultant or pooled nursing staff. The $4.88 of increased per diem and the costs associated with these positions should not be reimbursed as part of an interim rate increase.

    
    

    CONCLUSIONS OF LAW

    
    

18. 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).

    
    

19. Medicaid is a governmental health care program which provides assistance in meeting the costs of medical care to eligible needy persons. The Department is the agency of the State of Florida responsible for the administration of Medicaid funds under Title XIX of the Social Security Act.

    
    

20. In order to carry out its responsibility, the Department enters into contracts with various health care providers to provide services funded through the Medicaid program. Such providers are funded pursuant to Florida Title XIX Long-Term Care Reimbursement Plan. The Department has entered into such a contract with University. University's entitlement to Medicaid funding is, therefore, controlled by the Reimbursement Plan.

    
    

21. At issue in this case is University's entitlement to an interim rate increase in University's Medicaid reimbursement rate. University's entitlement to the requested rate increase is governed by Section IV, J.2. of the Reimbursement Plan. Section IV, J.2. of the Reimbursement Plan, which has been incorporated by reference in Rule 10C-7.0482, Florida Administrative Code, provides:

    
    

    Interim rate changes reflecting increased costs occurring as a result of patient care or operating changes shall be considered only if such changes were made to comply with existing State or Federal rules, laws, or standards, and if the change in cost to the provider is at least $5000 and would

    cause a change of 1 percent or more in the provider's current total per diem rate. [Emphasis added].

    
    

22. The Department stipulated that University's requested change in rate was at least $5,000.00 and that it would cause a change of 1 percent or more in University's current total per diem rate. At issue is the requirement that the change in rate be made "to comply with existing State or Federal rules, laws, or standards "

23. Based upon the weight of the evidence presented in this case University proved that its decision to hire 7 new certified nursing assistants and 5 rehabilitation aides was made in order to comply with State standards imposed upon University by the Department through its Office of Licensure and Certification. Therefore, University is entitled to an interim rate increase of

    $2.02. The weight of the evidence failed to prove, however, that the other positions created by University, the use of pooled nursing staff or the use of the services of a nursing consultant were required by the imposition of a State standard by OLC or any other office of the Department. Therefore, University is not entitled to the remaining $4.88 of rate increase it requested.

    
    

24. University has argued in support of its argument that all of the costs it incurred were required by the imposition of State standards that all of the costs are allowable costs under the Reimbursement Plan. It may be true that the costs are of a type which are normally allowable under the provisions of the Reimbursement Plan cited by University. Those provisions, however, merely define the type of costs which are reimbursable pursuant to the normal cost- based prospective method of reimbursing Medicaid providers. This case does not involve reimbursement of costs pursuant to the normal method of Medicaid reimbursement; it involves reimbursement pursuant to an exception to the normal method of reimbursement.

    
    

25. University has also argued that the doctrine of equitable estoppel applies in this case. Although the doctrine of equitable estoppel may be applied against the State, it applies only in rare instances and under exceptional circumstances. See Department of Revenue v. Anderson, 403 So. 2d

    397 (Fla. 1981); and Calusa Golf, Inc. v. Dade County, 426 So. 2d 1165 (Fla. 3d DCA 1983). In order for equitable estoppel to apply, the following elements must be present:

    
    

    1. A representation as to a material fact that is contrary to a later-asserted position;

    2. reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon.

    
    

    Tri-State Systems, Inc. v. Department of Transportation, 500 So. 2d 212, 215-216 (Fla. 1st DCA 1986), rev. denied, 506 So. 2d 1041 (1987). See also, Florida State University v. Brown, 436 So. 2d 287 (Fla. 1st DCA 1983).

    
    

26. The weight of the evidence in this case failed to prove that all of the elements of estoppel exist. The Department did not represent to University that it was required to employ a rehabilitation coordinator or 4 resident care supervisors or that University should utilize the services of a nursing consultant or pooled nursing staff. The Department also did not represent to University that it would approve an interim rate increase for those positions or services. Therefore, University failed to prove that the Department made any representation of material fact which University relied upon to its detriment. Consequently, the doctrine of equitable estoppel does not apply in this case.

    
    

27. Based upon the foregoing, it is concluded that University has proved that it is entitled to an interim rate increase of only $2.02.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be issued by the Department granting

University an interim rate increase of $2.02 and denying the remaining $4.88 of interim rate increase requested by University.

DONE and ENTERED this 24th day of April, 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 24th day of April, 1990.

APPENDIX

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.

University's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order

1. See 49.

2. See 34 and hereby accepted.

21 41.

22 45 and 47.

23 34.

24-25 Hereby accepted.

26-31 Not totally supported by the weight of the evidence. See 50-58.

32 36-41.

33 Not totally supported by the weight of the evidence. See 50-58.

The Department's Proposed Findings of Fact

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

44 47-48 and 55.

45 46.

46 See 51-58.

1. See 57.

2. Hereby accepted.

49 47-48.

Copies Furnished To:

Grafton B. Wilson, II, Esquire Post Office Box 1292 Gainesville, Florida 32609

Carl Bruce Morstadt, Esquire Chief Medicaid Counsel Department of Health and

Rehabilitative Services 1317 Winewood Boulevard

Building 6, Room 230

Tallahassee, Florida 32399-0700

Sam Power, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0500

Docket for Case No: 89-006465

Orders for Case No: 89-006465