STATE OF FLORIDA ot Fue AGENCY FOR HEALTH CARE ADMINISTRATION nee OS AUG 25 PH 2:33 mn SAWGRASS CARE CENTER, INC., Petitioner, DOAH’ Case “netABNE74s vs. AHCA Nos.: 2002048739 CON’s 7734 boy d STATE OF FLORIDA, AGENCY FOR 8985A (ene HEALTH CARE ADMINISTRATION, Respondent. FINAL ORDER The Agency for Health Care Administration, having entered into a Joint Stipulation and Settlement Agreement with the parties to these proceedings, and being otherwise well advised in the premises, decides as follows: The attached Joint Stipulation and Settlement Agreement is approved and adopted as a part of this Final Order and the parties are directed to comply with the terms of the Joint Stipulation and Settlement Agreement. THEREFORE, it is ORDERED and ADJUDGED that the parties hereto are directed to comply with terms of the Joint Stipulation and Settlement Agreement. DONE and ORDERED this 9) day of gett , 2003, in Tallahassee, Leon County, Florida. Grn Rhonda M. Medews, MD, Secretary A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH AGENCY CLERK AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, IN THE DISTRICT COURT OF APPEAL 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 THIRTY (30) DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Michael O. Mathis, Esq. Assistant General Counsel Agency for Health Care Administration 2727 Mahan Dr., Suite 3808-D Tallahassee, Florida (Interoffice Mail) Elizabeth Dudek Deputy Secretary Agency for Health Care Administration 2727 Mahan Drive Bidg #1 Mail Stop Code #9 Tallahassee, Florida 32308 (Interoffice Mail) Jean Lombardi Finance & Accounting Agency for Health Care Administration 2727 Mahan Drive Mail Stop Code #14 Tallahassee, Florida 32308 (Interoffice Mail) Wendy Adams (Inter-office Mail) Robert D. Newell, Jr. Esquire Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, FL 32303-6313 (U.S. Mail) Suzanne F. Hood Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-3060 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the above-named person(s) by U.S. Mail, or the method designated, on this the 1 Dbay of venst , 2003. Zahn yp neler Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 922-5865 SETTLEMENT STIPULATION AND AGREEMENT This is a Settlement Stipulation and Agreement, entered into this !2_ day of fugu , 2003, by and between: PARTIES: PREMISES: Sawgrass Care Center, Inc. (“Sawgrass”) and Agency for Healthcare Administration (“AHCA’). The parties acknowledge that: 1. Sawgrass Care Center, Inc. is a corporation, organized under the laws of the State of Missouri, with corporate offices located at 4505 Madison, Kansas City, Missouri 64111. Sawgrass is authorized to do business in the State of Florida. 2. AHCA is the state agency responsible for the implementation of Chapter 408, Fla. Stat., the Health Facilities and Services Development Act. AHCA is the only state agency affected by this Agreement. 3. Five Points is a Florida Limited Partnership authorized to do business in Florida. Five Points is the operator/licensee of Lakeside Nursing and Rehabilitation Center (‘Lakeside Center”), a 60 bed skilled nursing facility, located at 11411 Armsdale Road, in Duval County, Florida. 4. On December 9, 1996, Sawgrass was awarded Certificate of Need (“CON”) 7734. The CON authorized Sawgrass to construct an 80 bed nursing home in Duval County, Florida. CON 7734 was subsequently combined with CON 8985A, which authorized Sawgrass to construct 4 additional nursing home beds, for a total of 84 beds. 5. On October 22, 1997, Sawgrass timely requested a six month extension of the validity period for the CONs. On December 2, 1997, AHCA extended the CON validity period to June 8, 1998. 6. On or about May 28, 1998, Sawgrass, AHCA, Nationwide Health Properties, Inc. (“Nationwide”), Duval Health Care Center, Inc. (“Duval”), Retirement Care Associates, Inc. . Page 1 of 6 (‘RCA’) and Sun Healthcare Group, Inc. (“Sun”) entered into a written Agreement (“1998 Agreement’), under the terms of which _Sawgrass would construct and combine the beds authorized by the CONs with North Jacksonville Rehabilitation and Nursing Center, an existing 60 bed skilled nursing facility operated by Duval, on property owned by Nationwide and leased to Sun’s wholly owned subsidiary, Duval. The parties agreed that Sawgrass would, inter alia, construct its 84 bed facility and submit a change of ownership application to transfer the license of the 60 beds to Sawgrass. The Agreement extended the validity period of the CONs until December 8, 1998. 7. On December 14, 1998, AHCA, pursuant to Section 408.032(4), F.S. and Rule 59C-1.018(2), F.A.C, deemed construction of the CONs to have commenced within the CON validity period, based on a site visit conducted by AHCA on December 8, 1998. 8. On or about October 14, 1999, Sun, the licensee and lessee of the existing 60 bed nursing home, filed for bankruptcy. 9. Earlier, on September 4, 1998, Sawgrass had submitted the first of two Applications for Change of Ownership of the existing 60 bed Duval facility. Despite Sawgrass’ best efforts and through no fault of Sawgrass, completion and approval of the applications was prevented by Sun’s reliance on the bankruptcy Stay Order and refusal to provide information needed to complete the applications. 40. On October 19, 1999, Sawgrass notified AHCA pursuant to Rule 59C-1.021(2)(a), F.A.C., that on October 20, 1999 it would temporarily cease construction on site due to Sun's bankruptcy. On October 22, 1999, AHCA accepted Sawgrass’ notice and agreed to the cessation of construction. 11. Sawgrass subsequently and timely requested, and AHCA granted during the pendency of Sun’s bankruptcy, three additional 90-day extensions of the construction cessation period and ten additional 60-day extensions of the construction cessation period. Page 2 of 6 AGREEMENT/ TERMS 12. On October 22, 2002, AHCA sent Sawgrass a letter denying Sawgrass’ September 20, 2002 cessation request. On October 22, 2002, AHCA sent a second letter to Sawgrass “ advising that, because Sawgrass had not timely recommenced construction it intended to revoke Sawgrass’ CON 7734. 13. Although AHCA’s notice voiding CON 7734 did not expressly void CON 8985A, the consolidation of the two CONs prior to the commencement of construction and AHCA’s express notice of intent to void CON 7734, constituted an implied intent to void CON 8985A as well. 14. OnNovember 20, 2002, Sawgrass timely filed a legally sufficient Petition requesting a formal hearing, pursuant Section 120.57 F.S., to challenge AHCA’s preliminary notices of intent to deny an extension of the construction cessation period and to void Sawgrass’ CONs 7734 and 8985A. 15. Five Points applied for, and AHCA approved, effective September 23, 2002, the change of ownership of the 60 bed existing facility, now known as Lakeside Center (f/k/a SunBridge Care and Rehabilitation for Jacksonville, f/k/a North Jacksonville Rehabilitation and Nursing Center) from Sun to Five Points. 16. Five Points has declined to enter into a purchase of Sawgrass, for purposes of merging with Five Points and developing the project contemplated by the 1998 Agreement. Nationwide has declined to sell the existing facility to Five Points. AHCA and Sawgrass consider the 1998 Agreement to be repudiated by Sun, and not assumed or assumable by Five Points or Nationwide. 47. AHCA and Sawgrass desire to resolve the impasse resulting from the Sun bankruptcy, avoid unnecessary and expensive litigation, and ensure that the needs of the residents of Subdistrict 4-1 for SNF beds are met in the most cost effective and timely manner, consistent with the health planning principles and requirements contained in Section 408.031, et. seq., F.S. 48. Accordingly, AHCA and Sawgrass, for good and valuable consideration, receipt of which is acknowledged, do hereby agree to the following: fa Page 3 of 6 19. Sawgrass will submit revised plans to AHCA, obtain all necessary approvals and permits for the commencement of _ construction, sign all necessary architectural, engineering and construction contracts, complete site preparation and commence building construction on a site located in nursing home Subdistrict 4-1, Duval County, Florida. Sawgrass shall commence construction in accordance with approved plans and the provisions of §408.032(4), F.S. and Rule 59C-1.018(2), F.A.C., not later than 240 days from the date this Stipulation is executed by both parties. 20. If Sawgrass does not commence and maintain continuous construction of the CONs on the above-described site, and in accordance with the terms of this Stipulation, then the CONs shall be revoked, null and void. Sawgrass hereby waives, irrevocably, any and all rights to appeal the revocation and voiding of the CONs, provided however that plan approvals sought by Sawgrass from AHCA may not be unreasonably withheld without cause. 21. In consideration of the public policy initiatives developed by AHCA subsequent to the issuance of the CONs, the purpose of which includes the development of alternatives for reducing the number of Medicaid patient days in nursing homes, Sawgrass and AHCA further agree that the CONs shall be 0 modified to eliminate the Medicaid condition on the » CONS and To S0'/q+ thelicensed facility\shall have the following eone {izdo> iN 7 a ENTIRE This Agreement constitutes the entire agreement between AGREEMENT the parties with respect to the subject matter hereof and supersedes all prior agreements and negotiations between the parties with respect thereto. GOVERNING This Agreement shall be enforced, governed by, and LAW construed in accordance with the laws of the State of Florida. a Page 4 of 6 SEVERABILITY FORCE MAJEURE COUNTERPARTS Venue for any action to enforce this Settlement Agreement shall be Leon County, Florida. If any term or provision of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, then the remainder of this Agreement, including the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby; provided, however, if the foregoing would produce a result which is clearly contrary to the intentions of the parties as reflected in this Agreement, then the invalid or unenforceable term or provision shall be deemed modified to the extent necessary in the court's opinion to render such term or provision enforceable consistent with the intentions of the parties and, as so modified, such portion and the remainder of this Agreement shall continue in full force and effect. Any time limits provided for either party’s performance under this Agreement shall be extended for and throughout such period of time as such performance is prevented or delayed due to strikes, lockouts, acts of government, acts of God, wars, riots, acts of terrorism, civil insurrection or abnormal force of elements or other causes (except financial) beyond the parties’ reasonable control and which the affected party could not have reasonably foreseen and provided against; provided, however, that in no event shall any such extension be deemed to have occurred unless (1) the party whose performance is delayed shall have given notice to the other party within thirty (30) days after the occurrence of the event of delay, setting forth the facts giving rise to such extension, and (2) the applicable period or periods of time within which such other party may exercise its rights hereunder shall be commensurately extended. The party whose performance is delayed shall give prompt written notice to the other party of the cessation of the event or condition giving rise to such delay. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document. Page 5 of 6 ATTORNEY'S Each party shall pay its own attorney’s fees and costs. FEES DISCHARGE Sawgrass for itself and for its related or resulting organizations, its successors and transferees, attorneys, heirs, and executors or administrators, does hereby discharge the State of Florida, Agency for Health Care Administration, and its agents, representatives, and attorneys of and from all claims, demands, actions, causes of action, suits, damages, losses, and expenses, of any and every nature whatsoever, arising out of or in any way related to this matter and the Agency's actions, including, but not limited to, any claims that were or may be asserted in any federal! or state court or administrative forum, including any claims arising out of this agreement, by or on behalf of Sawgrass or related facilities. SAWGRASS CARE CENTER, INC. ENCY FOR HEALTH CARE N/A S.W. Creekmiore, Jr., as its Elizabeth Dudek, asi President Deputy Secretary AGENCY FOR HEALTH CARE ADMINISTRATION Po y py: Akh CF Valda Clark Christian, as its General Counsel AGENCY FOR HEALTH CARE ADMINISTRATION colt S, » as its Secr¢tary Page 6 of 6

Docket for Case No: 02-004745CON