STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
LIFE CARE CENTERS OF AMERICA, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 94-2409
) AGENCY FOR HEALTH CARE ADMINISTRATION, )
)
Respondent. )
)
RECOMMENDED ORDER
This case was heard by Eleanor M. Hunter, the Hearing Officer designated by the Division of Administrative Hearings, on June 6, 1994, in Tallahassee, Florida.
APPEARANCES
For Petitioner, R. Bruce McKibben, Jr., Esquire Life Care Centers PENNINGTON & HAVEN, P.A.
of America, Inc.: Post Office Box 10095
Tallahassee, Florida 32302
For Respondent, Richard Patterson, Esquire
Agency For Health Agency for Health Care Administration Care Administration: 301 The Atrium
325 John Knox Road
Tallahassee, Florida 32303-4131 STATEMENT OF THE ISSUES
Whether the Agency For Health Care Administration (AHCA) should issue a certificate of need to Life Care Centers of America, Inc. (Life Care) for a 34- bed addition to an approved 77-bed nursing home in Clay County, AHCA District 4, Subdistrict
Whether Life Care complied with the requirement in Section 408.037(2)(a), Florida Statutes, that it provide a list of all pending capital projects.
Whether Life Care's proposed project is financially feasible in the long term and short term.
PRELIMINARY STATEMENT
Life Care filed a certificate of need (CON) application #7501 to construct a 34-bed addition to the 77-bed nursing home authorized by CON #7327. The two CONs would result in the construction of a 111-bed nursing home in District 4, Subdistrict 2, in Clay County, Florida. AHCA reviewed CON application #7501 and found that it met all statutory criteria for approval except the requirement in
subsection 408.037(2)(a) that an applicant list all capital projects planned, approved, underway or proposed. AHCA also contends that the omissions made it unable to determine the financial feasibility of the proposed 34-bed addition, as required by subsection 408.035(1)(i). As a result of Life Care's failure to meet those two statutory requirements, AHCA issued its notice of intent to deny the application.
Prior to the final hearing, the parties entered into a stipulation agreeing that the Life Care application meets all statutory and rule criteria except the capital project listing requirement of Section 408.037(2)(a) and the financial feasibility determination required in Section 408.035(1)(i), Florida Statutes.
At the final hearing Life Care introduced into evidence its Exhibits 1-11 and the testimony of Richard A. Stern, expert in nursing home financial feasibility, acquisitions and development, and James S. Weigard, expert in health planning.
AHCA introduced into evidence its Exhibits 1-9 and the testimony of Michael Alexander, expert in accounting, and Alberta Granger, expert in health planning and certificate of need review.
FINDINGS OF FACT
The Agency For Health Care Administration (AHCA) is responsible for the administration of certificate of need laws for health care services and facilities in Florida.
Life Care Centers of America, Inc. (Life Care) owns, leases and/or operates 157 nursing and retirement facilities in 27 states. It is one of the largest nursing home companies in the United States. AHCA considers Life Care a "major health care provider" for CON review purposes.
In response to the fixed need pool published by AHCA in October 1993, Life Care filed a CON application, subsequently numbered CON 7501, for a 34-bed addition to a previously approved 77-bed nursing home in Clay County in AHCA District 4, Subdistrict 2.
The Letter of Intent ("LOI") deadline for Life Care's application for the December, 1993 batching cycle was November 1, 1993. Rule 59C-1.008(5)(h), Florida Statutes, requires a listing of the total approximate amount of capital projects at the time of letter of intent deadline.
The application filing date for this batching cycle was December 1, 1993, with an omissions response deadline of January 14, 1994. Section 408.037(2)(a), Florida Statutes, requires a complete list of capital projects at the time of application.
Life Care application 7501 was deemed complete by AHCA on January 14, 1994.
AHCA preliminarily denied Life Care's application for CON 7501 for failing to include the total project costs attributable to CON applications which were preliminarily denied by AHCA, but pending due to administrative challenges filed by Life Care. The amount listed on Schedule 2 of Life Care's application on the line described as "allowance for projects denied and appealed various" is $6,020,387.
In the May, 1992 nursing home batching cycle, Life Care applied for a CON to build a 120-bed nursing home in Orange County, AHCA District 7, Subdistrict 2. That application (CON 7028) was preliminarily denied and, by
Petition for Formal Administrative Hearing dated June 25, 1993, Life Care challenged AHCA's action. Life Care failed to include CON 7028 based on pending settlement negotiations on November 1, 1993, which resulted in the filing on January 12, 1994, of a Notice of Voluntary Dismissal of its challenge to the denial of CON 7028. See, DOAH Case No. 93-3912. Life Care's CON 7028 proposed total project cost was $5,644,047.
In the June, 1993 nursing home batching cycle, Life Care applied for a 69-bed nursing home addition in Citrus County, AHCA District 3. That application (CON 7322) was subsequently denied and by Petition for Formal Administrative Hearing dated October 5, 1993, Life Care challenged that preliminary agency action. By Notice dated March 7, 1994, Life Care voluntarily dismissed its challenge to the denial of CON 7322. See DOAH Case No. 93-6009. Life Care's CON 7322 proposed total project cost was $1,473,000. However, Life Care entered into a settlement for a 9-bed partial award for a total project cost of $82,100.
In June 1993, Life Care also applied for a CON to build a new 120-bed nursing home in Flagler County, in AHCA District 4, Subdistrict 4. That application (CON 7330) was subsequently denied and, by Petition dated October 6, 1993, Life Care challenged that preliminary agency action. Life Care failed to list CON 7330 on its Clay County application, based on pending settlement negotiations which resulted in its voluntary dismissal of its petition on January 14, 1994. See, DOAH Case No. 93-6011. Life Care's CON 7330 proposed total project cost was $5,656,000.
In the same June 1993 cycle, Life Care applied for a CON to construct a new 42-bed nursing home in Polk County, AHCA District 6, Subdistrict 5. That application (CON 7355) was subsequently denied, and the denial challenged by Petition dated September 27, 1993. As of the date of this hearing, that application was pending at DOAH. See, DOAH Case No. 93-5747. Life Care's CON 7355 proposed total project cost was $2,925,871.
Life Care also applied, in June 1993, for a CON to construct a new
120-bed nursing home in Palm Beach County, AHCA District 9, Subdistrict 4. That application (CON 7386) was subsequently denied, and that denial challenged by Petition dated October 6, 1993. At the time of this hearing, that application was pending at DOAH. See, DOAH Case No. 93-6006. Life Care's CON 7368 proposed total project cost was $6,101,000.
The combined total of the projects costs equals $21,799,918 for CONs 7028, 7322, 7330, 7355 and 7368, not $6,020,387 as Life Care reported for "allowance for projects denied and appealed." Life Care also reported
$15,000,000 as "other capitalization."
Accepting AHCA's claim that $21,799,918 in project costs should have been reported, Life Care asserts that the total of $21,020,387 ($6,020,387 +
$15,000,000) is available to fund the five projects, leaving an insignificant omission of 9/10 of 1 percent of total reported projects and expenditures, or
$779,531 of $92,709,260.
The Clay County CON application described the line item of $6,020,387 as "Allowance for projects denied and appealed" as follows:
(3) An allowance for potential approval of a portion of the Life Care projects applied for in Florida for the batching cycles May 1992,
November 1992, and May 1993 which were denied by the Agency and have been appealed by Life Care. These projects are for Orange County, Polk County (second project), Citrus County, Palm Beach County, and Flagler County. All of these projects were anticipated to be funded through a combination of Life Care equity and bank loans as outlined in the individual CON applications.
Life Care described "Other Capitalization" as follows:
(4) To be conservative, an allowance of
$15,000,000 for currently unidentified capital projects which may occur over the next three
years, including items such as facility renovations or additions, acquisitions, and exercising purchase options for leased facilities. These projects will be funded as they materialize, as it is anticipated that funding will be primarily through bank loans.
Life Care also listed separately the costs for projects in eleven Florida counties for which AHCA had indicated an intent to issue it CONs or for which applications were filed simultaneously with the Clay County application. These project costs total $47,830,873.
All together, approved Florida projects, other states projects, CONs with intents to deny but appealed, renovations, projects exempt from CON review and other capitalization cost reported by Life Care on Schedule 2 total
$92,709,260.
The notes drafted by Life Care to explain schedule 2 make it clear that Life Care did not expect to use the additional $15,000,000, reported to AHCA, to cover denied but appealed projects. The same is true of the other itemized projects listed on Schedule 2.
Life Care clearly states which line item was intended to apply to Orange, Polk, Citrus, Palm Beach and Flagler Counties. On the date that Life Care filed its letter of intent the total amount of these pending projects was
$21,799,918 not $6,0202,387, as reported. The notes indicate that the cost estimates are based on expectations of potential approvals of the denied but appealed CONs. In effect, as Life Care's witness testified, it expected to prevail in 25 percent of its pending administrative challenges.
The notes attached to Schedule 2 do support Life Care's claim that
$15,000,000 designated as "other capitalization" is available for an additional projects approved after administrative proceedings. By describing its availability for "unidentified projects," Life Care demonstrated that no obstacle exists to the use of the additional $15,000,000 on preliminarily denied CON projects if Life Care is more successful in administrative proceedings than it anticipates. Life Care's claim that it does not have to apply these funds to any planned capital expenditures, is also supported by an additional note attached to Schedule 2 explaining how estimated capital budget expenditures would be funded, which is as follows:
(5) Estimated capital expenditures for 1995 at Life Care facilities and the corporate, regional and divisional offices to be funded through a combination of operating cash flow and bank loans. These expenditures are pending approval when they are incorporated into the annual budget prior to each respective year.
Life Care has established that the $15,000,000 for unidentified capital projects is not otherwise committed and is available to fund preliminarily denied, but challenged CONs, if more than the expected potential projects are approved.
If Life Care prevails on all pending challenges, then its projections of capital project costs fall short by $779,531. If Life Care's projections of its commitments are inaccurate by $779,531, with total project costs of
$92,709,260, then the omission does not render Life Care's application incomplete for failing to include the total approximate amount of capital projects.
AHCA gives a preference for expanding nursing homes with fewer than
120 beds for enhanced efficiency and economics of scale. AHCA also agreed that if the $15,000,000 had been identified as available for the denied but challenged capital projects, it would have been considered by AHCA, and that Life Care has the financial resources to complete the 34-bed addition. For these reasons, Life Care's proposed 34-bed addition to its approved 77-bed construction CON is financially feasible.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over this case, pursuant to subsections 120.57(1) and 408.039(5), Florida Statutes.
Life Care has the burden to demonstrate entitlement to the CON it seeks. Florida Department of Transportation v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981); Boca Raton v. Department of HRS, 475 So.2d 260 (Fla. 1st DCA 1985).
Subsection 408.037(2)(a), Florida Statutes, provides that a CON application shall contain:
A complete listing of all capital projects, including new health facility development projects and health facility acquisitions applied for, pending, approved, or underway in any state at
the time of application, regardless of whether
or not that state has a certificate-of-need program or a capital expenditure review program pursuant to section 1122 of the Social Security Act. The department may, by rule, require less-detailed information from major health care providers.
This listing shall include the applicant's actual or proposed financial commitment to those projects
and an assessment of their impact on the applicant's ability to provide the proposed project.
(Emphasis Added.)
Rule 59C-1.008(5)(h) Florida Administrative Code, also describes capital projects which should be listed and the date for determining which projects should be listed:
(h) To comply with section 408.037(2)(a), F.S., requiring a listing of all capital projects as defined in rule 59C-1.002(9), F.A.C., the applicant shall, consistent with the applicant's capitalization policies, provide the total approximate amount of capital projects approved via authorization to execute or underway at the time of the letter of intent deadline or state there are none. (Emphasis added.)
Preliminarily denied projects in litigation are "applied for" and "pending" capital projects and the total approximate amount of those projects costs must be included in any subsequent CON application. The listing of
$6,020,387 in project costs for the five denied projects in litigation as of the letter of intent deadline for the Clay County application is inaccurate. But the total of all of Life Care's capital projects is approximately accurate and meets the minimum content requirements of the statute and rule. In University Community Hospital v. Department of HRS, 14 F.A.L.R. 1899, at 1906 (F.O.
4/14/92), the Hearing Officer held that the fact that an item may ultimately be abandoned after additional review "merely emphasizes that the expenditure is planned, rather than actual, and is characteristic of any pending project."
Based on that decision, Life Care's assertions that subsequent voluntary dismissals of some petitions, which it expected to occur, means that the projects were no longer "pending" at some time prior to the filing of those dismissals is rejected.
However, as distinguished from University Community Hospital, the explanations of the line items on Life Care's Schedule 2 show that the sources of funds for its capital budget are separate and apart from those for its capital projects.
Life Care has met its burden of establishing that it has met minimum CON application content requirements and established that the project proposed is financially feasible.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Life Care for CON No. 7501 to construct
a 34-bed nursing home addition in Clay County, AHCA District 4, Subdistrict 2, be GRANTED.
DONE AND ENTERED this 15th day of September, 1994, in Tallahassee, Leon County, Florida.
ELEANOR M. HUNTER
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 15th day of September, 1994.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-2409
To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact:
Petitioner's Proposed Findings of Fact.
Accepted in Findings of Fact 2.
Accepted in Findings of Fact 3.
Accepted in or subordinate to Finding of Fact 3.
Subordinate to Finding of Fact 2.
Accepted in Findings of Fact 5.
Accepted in Findings of Fact 4.
Accepted in Findings of Fact 5.
Accepted in Findings of Fact 6.
Subordinate to Finding of Fact 6.
10-13. Accepted in or subordinate to Findings of Fact 7 and 13. 14-15. Accepted in Findings of Fact 16-17.
16-(16-B) Accepted in Findings of Fact 17.
Accepted in Findings of Fact 18.
Accepted in Findings of Fact 7 and subordiante to preliminary statement.
Accepted in Findings of Fact 7.
Accepted in Finding of Fact 14.
Accepted in Findings of Fact 8.
Accepted in Findings of Fact 10. 23-24. Issue not reached.
25. Accepted in Findings of Fact 20.
26-30. Accepted in or subordinate to Finding of Fact 21.
Accepted in Findings of Fact 14 and 23.
Issue not reached.
Accepted in Finding of Fact 21.
34-39. Accepted in or subordinate to Findings of Fact 14 and 23. 40-49. Accepted in or subordinate to Finding of Fact 24.
Respondent's Proposed Findings of Fact.
Accepted in or subordinate to Finding of Fact 3.
Accepted in or subordinate to Findings of Fact 4 and 7.
Accepted in Findings of Fact 8.
Accepted in Findings of Fact 9.
Accepted in Findings of Fact 10.
Accepted in Findings of Fact 11.
Accepted in Findings of Fact 12.
8-10. Accepted in part in Findings of Fact 13-24 and rejected in part.
11. Accepted in Finding of Fact 7.
COPIES FURNISHED:
R. Bruce McKibben, Jr., Esquire PENNINGTON & HAVEN, P.A.
Post Office Box 10095 Tallahassee, Florida 32302
Richard Patterson, Esquire
Agency for Health Care Administration
301 The Atrium, 325 John Knox Road Tallahassee, Florida 32303-4131
R. S. Power, Agency Clerk
Agency for Health Care Administration Atrium Building, Suite 301
325 John Knox Road Tallahassee, Florida 32303
Harold D. Lewis, Esquire The Atrium, Suite 301
325 John Knox Road Tallahassee, Florida 32303
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions to this recommended order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
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AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
AGENCY FOR HEALTH CARE ADMINISTRATION
LIFE CARE CENTERS OF AMERICA, INC.,
Petitioner, CASE NO.: 94-2409 CON NO.: 7501
vs. RENDITION NO.: AHCA-94-561-FOF-CON
STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Agency for Health Care Administration (AHCA). The Recommended Order entered September 15,1994, by Hearing Officer Eleanor M. Hunter is incorporated by reference.
RULING ON EXCEPTIONS
Counsel for the agency excepts to the Hearing Officer's recommendation that Life Care's omission of project costs for projects proposed in other pending CON applications be excused. Section 408.037(2)(a), Florida Statutes, requires a listing of all capital projects including the applicant's proposed financial commitment to the projects. The application included a 15 million dollar allowance for "other capitalization" or "unidentified projects". The allowance for "other capitalization" is approximately the same amount as the omitted projects costs although it was intended for items such as renovations, additions, and acquisitions. Life Care did not expect to use the allowance to cover project costs for projects proposed in other pending CON applications.
See findings 15 and 19. The Hearing Officer allowed the applicant to amend its CON application at the final hearing by permitting the applicant to earmark at the final hearing the 15 million dollar allowance to cover the omitted project costs contrary to the purpose of the allowance identified in the application.
Since the landmark decision in Gulf Court vs. Department of Health and Rehabilitative Services, 483 So2d 700 (Fla. 1st DCA 1986) /1 the agency has strictly interpreted its rules precluding the amendment of a completed application after initial agency review. Manor Care vs. Department of Health and Rehabilitative Services, 558 So2d 26, 28 (Fla. 1st DCA 1990). In Manor Care the applicants were not permitted to "update" applications at the Section 120.57 hearing to substantially change a proposed project or to cure technical deficiencies of an application. The Hearing Officer's recommendation allows an impermissible update or amendment of Life Care's application; therefore the exception is granted. Because the unamended application does not satisfy minimum statutory requirements, it must be denied. Humhosco vs. Department of Health and Rehabilitative Services, 561 So2d 388 (Fla. 1st DCA 1990).
FINDINGS OF FACT
The agency hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where inconsistent with the ruling on exceptions.
CONCLUSIONS OF LAW
The agency hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the ruling on exceptions.
Based upon the foregoing, it is
ADJUDGED, that the application of Life Care Centers of America, Incorporated for CON 7501 be DENIED.
DONE and ORDERED this 24th day of October, 1994, in Tallahassee, Florida.
Douglas M. Cook, Director Agency for Health Care
Administration
ENDNOTE
1/ Prior to Gulf Court the concept of de novo review in a Section 120.57 proceeding was interpreted very broadly and in effect amounted to a completely new decision making process, instead of a review of the initial agency decision. In Gulf Court the court strongly criticized the existing scope of review in the Section 120.57 hearing noting on page 708 that it encouraged the filing of applications in every batching cycle regardless of consistency with existing health plans "on the chance that new information or developments coming to light between the denial of an application and a Section 120.57 formal hearing thereon may breath new life into the project and afford unwarranted priority over a subsequently, timely filed application based on the new plan."
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
COPIES FURNISHED:
R. Bruce McKibben, Jr., Esquire PENNINGTON & HABEN, P. A.
Post Office Box 10095 Tallahassee, Florida 32302
Richard Patterson, Esquire Senior Attorney, Agency for Health Care Administration
325 John Knox Road
Atrium Building, Suite 301 Tallahassee, Florida 32303-4131
Eleanor M. Hunter Hearing Officer
The DeSoto Building 1230 Apalachee Parkway
Tallahassee, Florida 32399-1550 Elizabeth Dudek (AHCA/CON) Alberta Granger (AHCA/CON)
Elfie Stamm (AHCA/CON)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addresses by U.S. Mail this 25th day of October, 1994.
R. S. Power, Agency Clerk State of Florida, Agency for
Health Care Administration
325 John Knox Road
The Atrium Building, Suite 301 Tallahassee, Florida 32303
(904)922-3808
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DISTRICT COURT OPINION
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IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA
LIFE CARE CENTERS OF NOT FINAL UNTIL TIME EXPIRES TO AMERICA, INC., FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED.
Appellant,
CASE NO. 94-3565
v. DOAH CASE NO. 94-2409
STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION,
Appellee.
/ Opinion filed June 12, 1995.
An appeal from an order of the Agency for Health Care Administration.
R. Bruce McKibben of Pennington & Haben, Tallahassee, for Appellant.
Richard A. Patterson, Senior Attorney, Tallahassee, for Appellee.
PER CURIAM.
Life Care Centers of America, Inc. (Life Care) appeals from a denial by the appellee, Agency for Health Care Administration (the agency), of an application for a certificate of need (CON) on the ground that Life Care did not satisfy minimum statutory requirements. we reverse and remand for further proceedings.
Section 408.037(2), Florida Statutes (1993), provides that an application for a CON shall contain a statement of the financial resources needed by and available to the applicant to accomplish the proposed project. This statement shall include a complete listing of all capital projects, including new health facility development projects and health facility acquisitions applied for, pending, approved or underway in any state at the time of application, regardless of whether or not that state has a certificate-of-need program or a capital expenditure review program pursuant to section 1122 of the Social Security Act. This listing shall include the applicant's actual or proposed financial commitment to those projects and an assessment of their impact on the applicant's ability to provide the proposed project.
The application filing date for the application at issue was December 1, 1993. Rule 59C-1.002(9), at the time the application was filed, defined "capital project" to mean:
a project involving one or more expenditures which has received final approval via authorization `to execute for which capitalization will be required under generally accepted accounting principles. For the purpose of this definition, final approval includes letters of intent to issue a certificate of need issued by the agency.
Rule 59C-1.008(h) provided:
to comply with section 408.037(2)(a), F.S., requiring a listing of all capital projects as defined in rule 59C- 1.002(9), F.A.C., the applicant shall, consistent with the applicant's capitalization policies, provide the total amount of capital projects approved via authorization to execute or underway at the time of the letter of intent deadline or state there are none. An itemized list or grouping of capital projects is not required; however, an applicant may choose to itemize or group its capital projects. The applicant shall also indicate the actual or proposed financial commitment to finance those projects, and include an assessment of the impact of those projects on the applicant's ability to provide the proposed project.
Capital projects and expenditures were set forth on schedule 2 of Life Care's application. Under Part B of Schedule 2, Projects or Expenditures Applied For, Pending Approval, or Planned, Life Care listed those CONs for which the agency had issued an intent to issue or which had been applied for in the same batching cycle as the application at issue. Life Care also set forth an "Allowance for projects denied & appealed" in the amount of $6,020,387. The accompanying note describing this figure stated:
An allowance for potential approval of a portion of the Life Care projects applied for in Florida for the batching cycles May 1992, November 1992, and May 1993 which were denied by the Agency and have been appealed by Life Care. These projects are for Orange County, Polk County (second project), Citrus County, Palm Beach County, and Flagler County. All of these projects were anticipated to be funded through a combination of Life Care equity and bank loans's as outlined in the individual CON applications.
Also included on Part B of schedule 2 was the item "Other Capitalization" with an amount of 15 million dollars. The accompanying note describing this figure stated:
T0 be conservative, an allowance of $15,000,000 for currently unidentified capital projects which may occur over the next three years, including items such as facility renovations or additions, acquisitions, and exercising purchase options for leased facilities. These projects will be funded as they materialize, and it is anticipated that funding be will (sic) primarily through bank loans.
The agency denied Life Care's application based on failure to include the total project costs attributable to five CON applications which were preliminarily denied by the agency, but pending due to administrative challenges filed by Life Care. The total project costs for these five applications equals
$21,99,918, not $6,020,387 as Life Care reported on the line item for "allowance for projects denied and appealed." The agency also contended that the omissions made it unable to determine the financial feasibility of the proposed project.
At the final hearing, the parties stipulated that the Life Care application met all statutory and rule criteria except the capital project listing requirement of section 408.037(2)(a), and the financial feasibility determination required by section 408.035(1)(i) , Florida Statutes (1993). Life Care introduced testimony that it was anticipated that appeals would be successful on approximately 25 percent of the total project costs of the denied- but-in-litigation applications and that this was the reason for an allowance of
$6,020,387 rather than' $21,799,918. Life Care also introduced testimony explaining that the $15,000,000 set forth on schedule 2 as "other capitalization" is available to fund the five projects should Life Care experience a greater success rate than anticipated.
The hearing officer determined that the notes drafted by Life Care to explain schedule 2 make it clear that Life Care did not expect to use the additional $15,000,000 to cover denied but appealed projects. The hearing officer also determined that the notes support Life Care's claim that the
$15,000,000 designated as "other capitalization" is available for additional projects approved after administrative proceedings. The hearing officer concluded that Life Care met its burden of establishing that it met minimum CON application content requirements' and established that the project proposed was financially feasible and recommended that the application be granted.
In the final order, the agency concluded that the hearing officer improperly allowed amendment of the application at the final hearing by permitting Life Care at the final hearing to earmark the 15 million dollar allowance to cover the omitted project costs, contrary to the purpose of the allowance identified in the application. The application was denied.
Life Care argues on appeal that there was no improper amendment of the application and that the information supplied in Life Care's schedule 2 complied with the statutory requirement that an applicant list all proposed capital projects and address the financial commitment to those projects. We agree.
Life Care introduced, without objection, testimony explaining the $15,000,000 allowance. The record supports the hearing officer's determination that Life Care does not have to apply these funds to any planned capital expenditures and there is no obstacle to use of the funds on preliminarily denied CON projects if Life Care is more successful in administrative proceedings than it anticipates. we also note that under the rules in effect at the time of the application at issue, Life Care was not required to include the denied-but-in-litigation projects as "capital projects." Arbor Health Care Co. v. Florida Agency for Health Care Admin, Case No. 94-1969 (Fla. 1st DCA, May 16, 1995).
The record supports the hearing officer's determination that Life Care met minimum CON application content requirements. The final order is set aside and this case is remanded for further agency action.
BARFIELD and ALLEN, JJ., and SMITH, Senior Judge, CONCUR.
| Issue Date | Proceedings |
|---|---|
| Sep. 29, 1995 | Final Order filed. |
| Oct. 26, 1994 | Final Order filed. |
| Oct. 05, 1994 | Life Care's Response to the Agency's Exceptions to Recommended Order filed. |
| Sep. 15, 1994 | Recommended Order sent out. CASE CLOSED. Hearing held 06/06/94. |
| Aug. 25, 1994 | Letter to EMH from R. Bruce McKibben, Jr. (re: request RO be expedited) filed. |
| Jun. 30, 1994 | Respondent's Proposed Recommended Order filed. |
| Jun. 28, 1994 | Letter to Counsel from Dawn Seigh (re: Transcript) filed. |
| Jun. 28, 1994 | Proposed Recommended Order of Petitioner, Life Care Centers of America, Inc. filed. |
| Jun. 21, 1994 | Transcript filed. |
| Jun. 03, 1994 | Notice of Hearing sent out. (hearing set for June 7, 1994; 1:00pm; Tallahassee) |
| Jun. 01, 1994 | Letter to EMH from R.B. McKibben (RE: change in start of hearing time) filed. |
| May 25, 1994 | Notice of Name And Address Change (from R. B. McKibben) filed. |
| May 24, 1994 | (Petitioner) Agreed Response to Prehearing Order and Prehearing Stipulation filed. |
| May 11, 1994 | Prehearing Order sent out. |
| May 10, 1994 | Service List filed. (From John D.C. Newton, Jr.) |
| May 10, 1994 | Letter to DOAH Clerk from John Newton (enclosed service list to go with Galencare Petition to Intervene) filed. |
| May 06, 1994 | Notification card sent out. |
| May 03, 1994 | Notice; Petition for Formal Administrative Hearing; Agency Action letter filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 12, 1995 | Opinion | |
| Dec. 05, 1994 | Agency Final Order | |
| Oct. 24, 1994 | Agency Final Order | |
| Sep. 15, 1994 | Recommended Order | Not normal circumstances exist when comprehensive medical rehabilitation unit is under 20 bed minimum and over 90% occupancy and can be enlarged without adverse impact. |
| Sep. 15, 1994 | Recommended Order | Capital projects list is complete with funds available for total approximate amount of projects regardless of designation of line items on Schedule 2. |
