STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
COMPASSIONATE CARE HOSPICE OF FLORIDA,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
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) Case No. 10-9381CON
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RECOMMENDED ORDER
Administrative Law Judge John D. C. Newton, II, of the Division of Administrative Hearings (DOAH), heard this case, as noticed, on May 8 and 9, 2012, in Tallahassee, Florida.
APPEARANCES
For Petitioner, Compassionate Care Hospice of Florida, Inc. (Compassionate Care or CCH):
Geoffrey D. Smith, Esquire Susan C. Smith, Esquire Smith and Associates
2834 Remington Green Circle, Second Floor Tallahassee, Florida 32308
For Respondent, Agency for Health Care Administration (AHCA):
Lorraine M. Novak, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
STATEMENT OF THE ISSUES (AS STIPULATED)
Did Compassionate Care demonstrate not normal or special circumstances exist to justify approval of its Certificate of Need (CON) application to establish a new hospice program in Service District (Service Area) 11 in the absence of published numeric need?
If Compassionate Care demonstrated not normal or special circumstances to justify approval, does Compassionate Care's CON application satisfy the requirements of Florida Administrative Code Rule 59C-1.0355, and section 408.035, Florida Statutes (2010)?1/
PRELIMINARY STATEMENT
On April 2, 2010, AHCA published a zero fixed need pool for hospices in Service Area 11, for the applicable planning horizon because one hospice provider in the area, HCR Manor Care Services II (a/k/a Heartland Hospice Services), had not been licensed for two or more years before publication of the fixed need pool and, at that time, had not been licensed at all.
Compassionate Care filed a CON application to establish a new hospice program in Service Area 11. The application relied upon the theory that "not normal" and "special circumstances," as provided in Florida Administrative Code Rule 59C-1.0355(4)(c) and (d), supported approval of a program, in the absence of fixed need.
AHCA preliminarily denied Compassionate Care's application in its State Agency Action Report (SAAR), and published notice of the denial in the September 3, 2009, Florida Administrative Weekly. Compassionate Care filed a petition challenging denial of its CON application. On September 29, 2010, AHCA referred the petition to DOAH. On October 11, 2010, DOAH set the matter for final hearing to be held April 19, 2011, the month requested by all parties. After two continuances following agreed motions for continuance, the final hearing was scheduled for May 8
and 9, 2012.
The final hearing began on May 8, 2012, and concluded on May 9, 2010. As the parties represented that they would in their motion for continuance, the parties significantly narrowed the factual and legal issues by stipulation.
Compassionate Care presented the testimony of Patricia Greenberg, health care consultant, accepted as an expert in health care and financial planning; Lillian Montalvo, program director for the Clifton, New Jersey, office of Compassionate Care's parent corporation, accepted as an expert in the management and operation of hospices; and Judith Grey, chief operating officer of Compassionate Care's parent corporation, accepted as an expert in hospice operation and management. In addition, the deposition testimony of Al Martin (Mr. Martin) was accepted (Compassionate Care Exhibit 12). Compassionate Care
Exhibits 1 through 7, and 9 through 14, were admitted into evidence.
AHCA presented the testimony of Jeffrey N. Gregg, AHCA director of the Florida Center for Health Information and Policy Analysis, accepted as an expert in health care planning, CON regulation, and health care regulation. AHCA Exhibit 1 was admitted into evidence.
The parties stipulated to many issues of fact and law in the Joint Pre-hearing Stipulation dated May 1, 2012. Joint Exhibit 1 (the CON application) and Joint Exhibit 2 (the SAAR) were also admitted into evidence.
A Post-hearing Order granted the parties' motion at the close of the hearing to extend the time period for filing proposed recommended orders. The period was extended again upon the joint motion of the parties. On July 17, 2012, the parties timely filed their proposed recommended orders. They have been considered in preparation of this Recommended Order.
STIPULATIONS (AS STATED BY THE PARTIES)2/
The Applicant
In CCH's program proposal, outlined in CON application number 10091, the expected sources of patient referrals are reasonable, appropriate and are not at issue in this proceeding. Rule 59C-1.0355(6)(b), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the identification of services that will be provided directly by hospice staff and volunteers and those that will be provided through contractual arrangements are reasonable, appropriate and not at issue in this proceeding. Rule 59C- 1.0355(6)(f), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the proposed arrangements for providing inpatient care are reasonable, appropriate and not at issue in this proceeding. Rule 59C-1.0355(6)(g), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the proposed number of inpatient beds that will be located in a freestanding inpatient facility, in hospitals, and in nursing homes are reasonable, appropriate and not at issue in this proceeding. Rule 59C-1.0355(6)(h), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the circumstances under which a patient would be admitted to an inpatient bed are reasonable, appropriate and not at issue in this proceeding. Rule 59C-1.0355(6)(i), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the provisions for serving persons without primary caregivers at home are reasonable, appropriate and not at issue in this proceeding. Rule 59C-1.0355(6)(j), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the arrangements for the provision of bereavement services are reasonable, appropriate and not at issue in this proceeding. Rule 59C-1.0355(6)(k), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the proposed community education activities concerning hospice programs are reasonable, appropriate and not at issue in this proceeding. Rule 59C-1.0355(6)(l), F.A.C.
In CCH's program proposal, outlined in CON application No. 10091, the fundraising activities, or lack thereof, are reasonable, appropriate and not at issue in this proceeding. Rule 59C-1.0355(6)(m), F.A.C.
Nationally, CCH has a history and demonstrated ability to provide quality of care, and the applicant's national record of providing quality of care is not in dispute and not an issue in this proceeding. Section 408.035(1)(c), Fla. Stat. Based upon this, AHCA does not dispute CCH's ability to provide high quality care if approved for this CON.
CCH's proposed hospice program and services will enhance access to health care for residents of Service Area 11 and CCH's proposal satisfies this criteria. Section 408.035(1)(e), Fla. Stat.
CCH's proposed program will foster competition that promotes quality and cost-effectiveness and CCH's proposal satisfies this criteria. Section 408.035(1)(g), Fla. Stat.
The costs and methods of proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction is not an issue in this proceeding. Section 408.035(1)(h), Fla. Stat.
CCH's past and proposed provision of health care services to Medicaid patients and the medically indigent on a national level is not an issue in this proceeding, and CCH's proposal satisfies this criteria. Section 408.035(1)(i), Fla. Stat.
As outlined in its program proposal in CON application number 10091, CCH is committed to serving populations with unmet needs. Rule 59C-1.0355(4)(e)1., F.A.C.
As outlined in its CON application number 10091, CCH will be able to provide the inpatient care component of its hospice program through contractual arrangements with existing health care facilities and, as such, this is not an issue in this proceeding. Rule 59C-1.0355(4)(e)2., F.A.C.
As outlined in its CON application number 10091, CCH is committed to serving patients who do not have primary
caregivers at home, the homeless, and patients with AIDS, as per Rule 59C-1.0355(4)(e)3., F.A.C.
As outlined in its CON application number 10091, CCH proposes to provide services that are not specifically covered by private insurance, Medicaid or Medicare, as per Rule 59C- 1.0355(4)(e)5., F.A.C.
Additionally, CCH has the availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. Section 408.035(1)(d), F.S.
CCH is financially feasible in the immediate and long- term. Section 408.035(1)(f), F.S.
CCH provided a detailed program description in its CON Application which included proposed staffing and the use of volunteers. Rule 59C-1.0355(6)(a), F.A.C.
CCH provided a detailed program description in its CON Application which included a projected number of admissions for the first two years of operations by payor type, by terminal illness and by age group. Rule 59C-1.0355(6)(c), (d) and (e), F.A.C.
CCH will report utilization information to the Agency or its designee on or before July 20 of each year and January 20 on the following year, as required under Rule 59C-1.0355(8), F.A.C.
Fixed Need Pool
Pursuant to Rule 59C-1.0355, Florida Administrative Code, the Agency has a hospice numeric need formula for publication of a Fixed Need Pool (FNP) applicable to each hospice Service Area in each CON batching cycle.
The formula takes into account historic and projected deaths in each service area for a particular planning horizon, as well as the historic and projected number of hospice admissions within the service area in four specific categories of patients: cancer age 65 and over; noncancer age 65 and over; cancer under age 65; and noncancer under age 65.
Under the numeric need formula, if the number of projected admissions to hospice in the planning year (here, the July 2011 Hospice Planning Horizon) using a statewide average penetration rate applied to the four specific patient categories is at least 350 more than the current number of hospice admissions in the service area, there is a numeric need for another hospice provider in the service area.
Specifically, Rule 59C-1.0355(4)(a) provides the following calculation:
Numeric Need for a New Hospice Program. Numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in a service area is calculated as follows:
(HPH) - (HP) > 350
where: (HPH) is the projected number of patients electing a hospice program in the service area during the 12 month period beginning at the planning horizon. (HPH) is the sum of (U65C × P1) + (65C × P2) + (U65NC
× P3) + (65NC × P4) where: U65C is the projected number of service area resident cancer deaths under age 65, and P1 is the projected proportion of U65C electing a hospice program. 65C is the projected number of service area resident cancer deaths age 65 and over, and P2 is the projected proportion of 65C electing a hospice program. U65NC is the projected number of service area resident deaths under age 65 from all causes except cancer, and P3 is the projected proportion of U65NC electing a hospice program. 65NC is the projected number of service area resident deaths age 65 and over from all causes except cancer, and P4 is the projected proportion of 65NC electing a hospice program. The projections of U65C, 65C, U65NC, and 65NC for a service area are calculated as follows:
U65C | = | (u65c/CT) × | PT |
65C | = | (65c/CT) × | PT |
U65NC | = | (u65nc/CT)× | PT |
65NC | = | (65nc/CT) × | PT |
where:
u65c, 65c, u65nc, and 65nc are the service area's current number of resident cancer deaths under age 65, cancer deaths age 65 and over, deaths under age 65 from all causes except cancer, and deaths age 65 and over from all causes except cancer.
CT is the service area's current total of resident deaths, excluding deaths with age unknown, and is the sum of u65c, 65c, u65nc, and 65nc.
PT is the service area's projected total of resident deaths for the 12-month period beginning at the planning horizon.
R. 59C-1.0355(4)(a), F.A. C.
The formula above, (HPH) – (HP) > 350, applied to applicable batching cycle resulted in 3,113 "projected unserved patients who would elect a hospice program" in the applicable planning horizon, and therefore "numeric need" was established under the formula.
Rule 59C-1.0355(4)(b) provides that:
Regardless of numeric need shown under the formula in paragraph (4)(a), the agency shall not normally approve a new hospice program for a service area unless each hospice program serving that area has been licensed and operational for at least 2 years as of 3 weeks prior to publication of the fixed need pool.
On April 2, 2010, the Agency published a zero fixed need pool for the applicable planning horizon because one Service Area 11 provider (HCR Manor Care Services II) had been licensed for less than 2 years prior to the fixed need publication.
Thereafter, CCH filed a Certificate of Need Application to establish a new hospice program in Service Area 11 based on the presence of "not normal" and special
circumstances per Rule 59C-1.0355(4)(c) and (d), F.A.C., in the absence of fixed need.
32. Rule 59C-1.0355(4)(c) and (d), F.A.C., provides:
Approved Hospice Programs. Regardless of numeric need shown under the formula in paragraph (4)(a), the agency shall not normally approve another hospice program for any service area that has an approved hospice program that is not yet licensed.
Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following:
That a specific terminally ill population is not being served.
That a county or counties within the service area of a licensed hospice program are not being served.
That there are persons referred to hospice programs who are not being admitted within 48 hours. The applicant shall indicate the number of such persons.
Rule 59C-1.0355(4)(c) and (d), F.A.C., distinguishes a difference between "not normal" circumstances, under which a new hospice program can be approved regardless of numeric need, and "special circumstances," under which a new hospice program can be approved where there is no numeric need.
AHCA preliminarily denied CCH’s application in its State Agency Action Report (SAAR), published in Florida Administrative Weekly on September 3, 2010.
On page 6 of the SAAR, the Agency listed seven (7) hospice providers that were serving Service Area 11:
Catholic Hospice, Inc.
Hospice Care of South Florida
Hospice of the Florida Keys, Inc.
VITAS Healthcare Corporation of Florida
HospiceCare of Southeast Florida, Inc.
Douglas Gardens Hospice, Inc.
Odyssey Healthcare
The SAAR states, on page 7: "HCR Manor Care Services of Florida II, Inc. has CON #10043 approved but yet to be licensed to establish a hospice program in Service Area11."
Effective October 1, 2011, HCR Manor Care Services of Florida III completed the acquisition of HospiceCare of Southeast Florida, also in Service Area 11. HCR Manor Care Services II and HCR Manor Care Services III are both wholly owned by the same parent company.
As provided on the AHCA Health Care Licensing Application for HCR II and HCR III, the entities share the following:
Same Fictitious Name ("Heartland Hospice Services")
Same Provider Website
Same Licensee Address
Same Licensee Telephone
Same Licensee Fax Number
Same Licensee Owner
Same Licensee Board Members
HospiceCare of Southeast Florida, that was acquired by HCR Manor Care III, was a pre-existing hospice provider that was licensed to provide services in Service Area 11 since 1998--
approximately 12 years prior to CCH’s CON application submission.
An acquisition of an existing program does not cause projected need to default to zero under Rule 59C-1.0355 (4)(b), F.A.C.
Overview of Hospice Services
Florida law requires a hospice program to provide a continuum of palliative and supportive care for terminally ill patients and their families.
"Palliative care" means services or interventions which are not curative, but are provided for the reduction or abatement of pain and suffering.
A terminally-ill patient is defined under Florida law as having a medical prognosis of 12 months or less life expectancy. Sections 400.601(3), (7) and (10), Fla. Stat. (2011).
The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to dying patients and their families.
Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of physicians, nurses, home health aides, social workers, bereavement counselors, spiritual care counselors, chaplains, and others.
There are four levels of service in hospice care: routine home care, continuous care, general inpatient care, and respite care. Routine home care (provided where patients reside) accounts for the vast majority of admissions and patient days.
Continuous care, sometimes called "crisis care," is provided in a home care setting or in any setting where patients reside, including nursing homes and ALFs. Continuous care is provided for short durations when symptoms become so severe that around the clock care is necessary for pain and symptom management.
General inpatient level of care is provided in either a hospital setting, a skilled nursing unit, or in a free- standing hospice inpatient unit. The symptoms managed in continuous care and general inpatient care are the same, but the settings in which patients are treated are different. For patients wishing to remain at home, e.g., at an Assisted Living Facility, continuous care is an option to avoid being moved to an inpatient facility.
Respite care is generally designed for caregiver relief. It allows patients to stay in facilities for brief periods to provide breaks for caregivers.
The Medicare hospice benefit requires terminally ill patients to have life expectancy prognosis of six months or less
to be eligible to elect the Medicare benefit. Like Florida law (Chapter 400, Florida Statutes), the federal Medicare benefit excludes patients seeking curative treatments from hospice eligibility.
Medicare is the largest payor source for hospice services. Others sources include Medicaid, private insurance, managed care plans, other government payors and charity.
Hospices are required to accept all patients regardless of ability to pay.
Statutory and Rule Review Criteria
CON applications must be evaluated by weighing and balancing all statutory and rule criteria found in Sections 408.035 and 408.043(2), Florida Statutes, and
Rules 59C-1.030 and 59C-1.0355, Florida Administrative Code.
The Hospice CON Rule set forth in 59C-1.0355(3)(b),
F.A.C. provides:
(b) Conformance with Statutory Review Criteria. A certificate of need for the establishment of a new hospice program, construction of a freestanding inpatient hospice facility, or change in licensed bed capacity of a freestanding inpatient hospice facility, shall not be approved unless the applicant meets the applicable review criteria in Sections 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule,
unless other criteria in this rule and in Sections 408.035 and 408.043(2), F.S.,
outweigh the lack of a numeric need.
Rule 59C-1.030, F.A.C., Criteria Used in Evaluation of Applications, provides additional criteria to be used in the review of a CON application, including Health Care Access Criteria in subsection (2) as follows:
The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services.
The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admissions policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care.
The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority.
In determining the extent to which a proposed service will be accessible, the following will be considered:
The extent to which medically underserved individuals currently use the applicant's services, as a proportion of the medically underserved population in the applicant's proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved;
The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant;
The extent to which Medicare, Medicaid and medically indigent patients are served by the applicant; and
The extent to which the applicant offers a range of means by which a person will have access to its services.
In any case where it is determined that an approved project does not satisfy the criteria specified in paragraphs (a) through (d), the agency may, if it approves the application, impose the condition that the applicant must take affirmative steps to meet those criteria.
In evaluating the accessibility of a proposed project, the accessibility of the current facility as a whole must be taken into consideration. If the proposed project is disapproved because it fails to meet the need and access criteria specified herein, the Department will so state in its written findings.
FINDINGS OF FACT
The Parties
AHCA
AHCA is the single state agency responsible for the administration of Florida's CON Program. § 408.031, Fla. Stat. (2010).
AHCA is designated both "as the state health planning agency for purposes of federal law . . . [and as] the single state agency to issue, revoke, or deny certificates of
need . . . in accordance with present and future federal and state statutes." § 408.034(1), Fla. Stat.
Compassionate Care
Compassionate Care exists for the sole purpose of providing hospice services in Florida, particularly Miami-Dade and Monroe Counties. It is a wholly owned subsidiary of Compassionate Care Hospice Group, Ltd., which is privately owned by its founder Milton Heching, an ordained Rabbi with an interest in end-of-life care. Compassionate Care's parent company, Compassionate Care Hospice Group, Ltd., provides hospice services in 21 states through 48 licensed programs.
Compassionate Care Hospice Group, Ltd., has strong success and experience as a hospice provider working in culturally diverse urban markets, including the Bronx in New York City, Newark, New Jersey, and Philadelphia, Pennsylvania.
It also operates hospice programs in the southeast including Atlanta, Savannah, and Macon, Georgia.
Compassionate Care Hospice Group, Ltd.'s history of and ability to provide high quality care is undisputed. All of its hospices are accredited by the Community Health Accreditation Program (CHAP). The hospice proposed here would also be CHAP accredited.
Compassionate Care Hospice Group, Ltd., has a strong record of success in hospice start-up operations. All of its programs began as start-ups, as opposed to acquisitions. Compassionate Care Hospice Group, Ltd., attributes its success to a decentralized model of care. While the company provides resources and support, the company philosophy is to let each program develop autonomously according to local needs, rather than seeking to impose a national model or plan on the locality.
In Florida, Compassionate Care Hospice Group, Ltd., companies are licensed to provide hospice services in Service Area 6B, consisting of Polk, Highlands, and Hardee Counties.
Service Area 11 and "Need" Projections
Service Area 11 consists of Miami-Dade and Monroe counties. It is the most highly populated service area in the state of Florida, with more than 1.5 million residents. It also has the greatest number of resident deaths annually, 18,635 in 2008.
Service Area 11 has far more hospice admissions than any other service area in the state. But it has traditionally and consistently experienced a lower hospice use rate than the other service areas. In each year from 2008-2011, Service Area
11 had the lowest hospice use rate among Florida's 27 service areas.
In determining whether there is a need for a new hospice program in a service area, the Hospice Rule (Rule 59C- 1.0355) uses a "Numeric Need" formula that considers the state- wide hospice use rate in four categories of projected patient deaths. They are: (1) cancer age 65 and over, (2) cancer under age 65, (3) non-cancer age 65 and over, and (4) non-cancer under age 65. The hospice use rate in Service Area 11 has consistently been less than the state average for all four categories.
Predictably, this regularly results in the number of projected hospice patients projected for Service Area 11 by AHCA's rule exceeding the number of hospice patients served each year. The difference for Service Area 11 between projected hospice patients and those served is higher than any other service area in Florida, by more than double. For the planning year that applies in this proceeding, the number is 3,113, over six times the 350 that is the rule's threshold for approving a new program.
The rule applies the state-wide use rate to the projected number of deaths in a service area for each of the four categories to project the number of possible hospice patients. Although the participants call the number a "need," that is not accurate. It is a projection of the number of people who could use hospice services. In the case of Service Area 11, it has for many years been an inaccurate projection of the number of people who will use hospice services.
AHCA's rule uses the projection to then determine "need" for a new hospice. If the projected number of people who could use hospice services exceeds 350, the rule projects a need for one new hospice in the service area. But the rule defaults to zero if the service area includes an approved hospice that has not yet been licensed or a hospice that has been licensed for less than two years.
As testified to by Jeffrey Greg, who is AHCA's director of the Florida Center for Health Information and Policy Analysis and overseer of the CON program, the purpose of this default to zero provision is to allow "new hospices a period to start up and get going without the threat of additional competition."
Presently eight hospices serve Service Area 11. HCR Manor Care Services of Florida II, Inc. (a/k/a Heartland Hospice Services), is the most recent hospice to obtain CON approval and licensure in Service Area 11. AHCA licensed HCR Manor Care
Services of Florida II in March of 2011. Because HCR Manor Care Services of Florida II was not yet licensed at the time AHCA issued the SAAR, AHCA applied its rule to determine that Service Area 11 did not "need" a new hospice. It continues to maintain that there is no need because HCR Manor Care Services of Florida II has not been licensed for more than two years.3/
The market for hospice services in Service Area 11 is substantial. Adding another provider to the market would not have a material adverse effect on the existing providers or the quality of hospice care in the service area.
HCR Manor Care Services of Florida III (a/k/a HospiceCare of Southeast Florida)
Effective October 2011, the parent company of HCR Manor Care Services of Florida II, acquired an existing provider, HospiceCare of Southeast Florida, through another subsidiary named HCR Manor Care Services III, Inc.4/ The result of the transaction is that the same company owns and controls HCR Manor Care Services of Florida II, Inc., and HCR Manor Care Services of Florida III, Inc. HospiceCare of Southeast Florida (HCR Manor Care Services of Florida III) has been licensed to provide hospice services in Service Area 11 for 12 years.
In every meaningful way, as established in paragraphs 36 and 38, the two entities are effectively, operationally, and functionally the same although they
officially hold separate licenses. In addition, they both have authority to serve all of Service Area 11.
Due to the acquisition, HCR Manor Care Services of Florida II, Inc. (a/k/a Heartland Hospice Services), is not, as a factual matter, a newly-licensed hospice. It is part of a hospice, HCR Manor Care Services of Florida III a/k/a HospiceCare of Southeast Florida), that has been licensed far more than two years.
Because of the acquisition, HCR Manor Care Services of Florida II, Inc. (a/k/a Heartland Hospice Services) is not in a start-up period or subject to the vulnerabilities of a newly- licensed hospice.
The acquisition in this case is unique in the history of Florida's CON regulation of hospices. AHCA has never before faced a situation in which a newly-approved hospice acquires an existing licensed hospice provider before the newly approved hospice has been licensed for two years. AHCA has issued no final orders on the subject and does not have a rule addressing it.
AHCA did not present a credible, persuasive, or rational basis for ignoring the factual situation created by the acquisition. Its witness just dismissed the facts resulting from the acquisition as "an incidental factor." He said there is no "relationship between the CON program and future changes in
ownership that may occur." But this case involves an actual and material change, not a "future change."
Hispanic Utilization of Hospice Services
Miami-Dade County is unique in Florida in that the majority of the population is Hispanic. As would be expected, Hispanic deaths constitute a majority of the deaths in the Service Area.
Hispanic deaths as a percentage of overall deaths in Service Area 11 have increased from 47.2 percent of all deaths in calendar year 2000 to 59.9 percent in 2010.
Hispanics constituted 49.5 percent of overall deaths in calendar year 2000, among over age 65, population age cohort. In 2012, they made up 64 percent of overall deaths age 65 and over.
Hispanics are a minority of hospice patients in Service Area 11. Hispanics represented 59.9 percent of the service area deaths in 2010. But only 28.3 percent of the service area hospice admissions that year were Hispanic.
However, the use of hospice services by Hispanics has been increasing at a greater rate than hospice utilization in general. The percentage of Hispanic hospice discharges in Service Area 11 increased from 45.8 percent in 2008 to 53.5 percent in 2010. This was more than double the increase in the state-wide utilization rate from 61.4 percent to 64.8 percent.
Compassionate Care relies heavily upon its argument that it will serve Hispanic residents to justify approving its certificate of need application despite the absence of a published need. But, given the opportunity in Schedule C of the CON application to condition its certificate of need upon a measurable enforceable commitment to serve a "[p]ercent of a particular population subgroup," Compassionate Care did not offer to accept the condition.
Although Compassionate Care checked the box indicating it would accept a condition, and said that the requested population subgroup and percentage would be supplied in an attachment, the attachment did not provide either. This is not an oversight. The text of the CON application on page 41, discussing conditions, also does not include a commitment to serve a certain number or percentage of Hispanic patients. This omission results in the conclusion that either Compassionate Care is not certain or confident enough that it can deliver what it promises or that it is not sincere. In either case, this is another reason that Compassionate Care has not proven that it will serve more Hispanic patients than the existing providers.
There is no persuasive evidence of the reasons for the difference between hospice utilization by Hispanics and overall hospice utilization. Compassionate Care relied on the theory that making sure half of its workforce was bilingual and focusing
its marketing on the Hispanic population would increase utilization. But it offered no evidence that existing providers were not providing bilingual employees or were not marketing to the very numerous potential client pool of Hispanic patients in Service Area 11. Compassionate Care relied upon vague hearsay statements, conclusions of its expert witness, Ms. Greenberg, drawn from Hispanic utilization statistics, and scant else.
Ms. Greenberg, in turn, relied upon unsupported comparisons of national utilization data and utilization data from other states, without a credible explanation of why the data, which came from different types of sources than the Florida data, could rationally be compared to Florida's.
In addition, Ms. Greenberg was not a persuasive witness. She testified more as an advocate than an analytical expert. For example, on page 95, counsel asked her: "[D]o you have an opinion as to whether this Hispanic Outreach plan as described in the application would be effective in enhancing access to hospice services for Hispanics in Service Area 11?" She responded: "It absolutely will." The evidence did not support such an eager, extreme, and adamant opinion.
Ms. Greenberg's characterization of a generic letter of support from Borinquen Health Care Center, Inc., is another example of positions that undermine her persuasiveness and
credibility. She relied on the letter as a significant example of how Compassionate Care could increase Hispanic utilization.
The letter writer states: "I am pleased to provide this letter of support and urge you to approve Compassionate Care Hospice's CON Application." He goes on to say: "We would welcome the opportunity to coordinate with Compassionate Care Hospice for the care of terminally ill patients should they be approved for a CON. Given their experience in other areas of the County with large urban populations, and large numbers of Hispanic patients, they should be a good fit in our community.
We look forward to working with Compassionate Care Hospice upon their approval for a CON." The majority of the letter describes the center and its services.
Ms. Greenberg, on page 91 of the transcript, inaccurately describes the letter as saying that "[I]t would partner with Compassionate Care in meeting the hospice need of its client [sic]." In contrast the Hispanic Outreach Plan" of the CON application says only, and more accurately, Compassionate Care "will also seek to partner with Borinquen Health Care Center.
One final example of the statements making the witness unpersuasive is this one, on page 93 of the transcript: "[T]hey've [Compassionate Care] already made inroads that others haven't in this community, clearly the problem is fixable and
should not be just blown off that this is the way it is and life goes on." But there is no evidence of what others have or have not done. The testimony is offered in a case where the record contains no evidence of what existing providers have done to reach out to the Hispanic community.
There is no credible, persuasive evidence of barriers to access by Hispanic individuals to hospice services in Service Area 11.
Assisted Living Facilities
As of March 2012, Service Area 11 contained 1,017 Assisted Living Facilities (ALFs). Of those, 710 have less than ten beds. The number of ALFs per 100,000 population aged 65 and older is more than double that of any other service area in the state.
Compassionate Care theorized that the lower hospice utilization rate in Service Area 11 was due to residents and managers of ALFs not being aware of the availability and benefits of hospice. Compassionate Care did not prove its theory with credible and persuasive evidence. Such evidence as it presented was broad, vague, and hearsay amplified by speculation. Compassionate Care did not present specific non-hearsay evidence to support its theory.
For instance, it presented no evidence tending to prove the ALF marketing practices of existing hospices. It did not
present testimony from a single ALF operator or resident to support its theory. The record does not establish what proportion, if any, of ALF residents are likely to be appropriate candidates for hospice services. The record contains no information about admissions to hospices from ALFs or evidence indicating that a progression from ALF services to hospice is a normal pattern. There is no survey of ALF operators or residents about access to hospice services.
The testimony of Compassionate Care witness,
Mr. Martin, about availability of hospice services to ALF residents was not persuasive. Mr. Martin is a consultant who advises ALFs about compliance with statutes and rules. He has no expertise or experience in health planning or marketing. In his own words: "[M]y business is consulting on issues that have to do with statute and rule, and anything else is for someone else to handle."
Mr. Martin's testimony consisted mostly of hearsay and unsubstantiated opinion. Mr. Martin could not describe a single specific example of an ALF resident not having access to or knowing about hospice services. He had no knowledge of the practices of existing hospice providers. He did not conduct any surveys or studies of ALF resident and operator knowledge of or access to hospice services. He did not know what efforts
existing hospices were making to market to Hispanics or ALF residents.
There is no credible or persuasive evidence of barriers to access by ALF residents to hospice services in Service
Area 11.
CONCLUSIONS OF LAW
Jurisdiction
DOAH has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569, 120.57(1), and 408.039(5), Fla. Stat. (2011)
Burden of Proof
As the applicant, Compassionate Care bears the burden of proving entitlement to a CON by the preponderance of the evidence. Boca Raton Artificial Kidney Ctr., Inc. v. Dep't of HRS, 475 So. 2d 260 (Fla. 1st DCA 1985); § 120.57(1)(j), Fla. Stat. (2011).
The award of a CON to an applicant must be based on a balanced consideration of all applicable and statutory rule criteria. Balsam v. Dep't of HRS, 486 So. 2d 1341 (Fla. 1st DCA 1986). "[T]he appropriate weight to be given to each individual criterion is not fixed, but, rather must vary on a case-by-case basis, depending upon the facts of each case." Collier Med.
Ctr., Inc. v. Dep't of HRS, 462 So. 2d 83, 84 (Fla. 1st DCA 1985).
An administrative hearing involving disputed issues of material fact is a de novo proceeding, in which the administrative law judge independently evaluates the evidence presented. Fla. Dep't of Transp. v. J.W.C. Co., Inc., 396 So. 2d 778, 787 (Fla. 1st DCA 1981); § 120.57(1), Fla. Stat. (2011). AHCA's preliminary decisions on CON applications, including its findings in the SAAR, are not entitled to a presumption of correctness. Id.
There is no question, and no dispute, that Compassionate Care satisfies all the criteria and requirements for approval of a CON that relate to quality of care, adequacy of staffing, financial feasibility, reasonableness of its proposal, and the effect of its project on existing providers and the community. The undisputed benefits of competition and an additional provider's philosophy resulting from the addition of Compassionate Care to Service Area 11 weigh in favor of approving the CON. So does the fact that Compassionate Care will not cause a material adverse effect on the existing providers. The only issue is whether those factors outweigh the absence of a calculated "need."
AHCA's fixed need pool was zero. This means that Compassionate Care's CON will not be approved, unless it establishes "not normal" or "special circumstances," that support
approval despite the absence of published need. Fla. Admin. Code R. 59C-1.0355(4)(b), (c), and (d).
Not Normal Circumstances
Florida Administrative Code Rules 59C-1.0355(4)(b) and (c), create the possibility of approving a hospice CON despite the absence of a published need. They provide:
Licensed Hospice Programs. Regardless of numeric need shown under the formula in paragraph (4)(a), the agency shall not normally approve a new hospice program for a service area unless each hospice program serving that area has been licensed and operational for at least two years as of three weeks prior to publication of the fixed need pool.
Approved Hospice Programs. Regardless of numeric need shown under the formula in paragraph (4)(a), the agency shall not normally approve another hospice program for any service area that has an approved hospice program that is not yet licensed.
Applying similar "not normal" language in a variety of health care service "need" rules, courts and AHCA have approved CONs when there is no published need.
The opinion in Balsam v. Dep't of HRS, 486 So. 2d 1341 (Fla. 1st DCA 1986) reversed AHCA's predecessor agency, the Department of Health and Rehabilitative Services (HRS), on facts much like the facts of this case. HRS denied an application to establish new short-term psychiatric treatment and short term substance abuse treatment beds. Relying upon its official
inventory of beds and applying its need formula, HRS concluded there was no need for additional beds. It rejected a recommended order finding that the actual number of beds available as a practical matter was different from the number shown by the official inventory.
The evidence proved, and the hearing officer found, that although beds were licensed, they were not, as a factual matter, available to patients. The reasons included strict admissions policies that made beds in some facilities unavailable to many patients and physical plants of some facilities that were inadequate to house the beds for which they were licensed.
Here, the official records show that Heartland Hospice (HCR Manor Care Services of Florida II) is a recently approved and newly-licensed hospice. But the facts establish that it is functionally merged with a hospice in operation for 12 years.
The facts also show that the reasons for the default to zero provision do not exist in this case. Heartland (HCR Manor Care Services of Florida II) is not a new provider struggling to establish itself. It is part and parcel of a long existing provider in no need of a start up period without additional competition.
The Balsam opinion recognized that application of the need rule and determination of the inventory of beds involved the agency's exercise of its discretion and the deference due the
agency. But the issue went beyond interpretation of a statute or a rule. It involved a factual question: How many beds are there really, not just how many are in the inventory? HRS could permissibly initially rely upon its official inventory to establish the number of beds. But HRS could not reject factual findings that the inventory included beds that were, as a factual matter, not available although approved and licensed.
In this case, AHCA offers no rational explanation for refusing to acknowledge and consider the fact that the two facilities operate as one. Instead it refuses, as HRS did in Balsam, to look beyond its own records.
The facts presented by this case are very similar. By official records Heartland is newly approved and licensed. But the fact is that HCR Manor Care Services of Florida II, Inc. (a/k/a Heartland Hospice Services) is now part of a long established and licensed provider. Consequently, the absence of published "need" should receive no weight in evaluating the criteria for approval of Compassionate Care's CON application. AHCA cannot "simply stand on these [need] calculations and abandon its responsibility to consider and weigh the other criteria." Balsam v. Dep't of HRS, 486 So. 2d 1341, 1349 (Fla. 1st DCA 1986). The reasons for the lack of calculated need must be considered. Halifax Hospital Medical Center v. Agency for Health Care Administration, Case No. 95-0742 (Fla. DOAH Sept. 30,
1996; AHCA Jan. 14, 1997), (holding that where facts show the reasons for applying am analogous "default to zero" provision designed to protect existing providers are not at play in a specific situation, the provision should not be weight against approval). See also Florida Health Sciences Center, Inc., v.
Agency for Health Care Administration, Case No. 00-0481(Fla. DOAH March 30, 2001), (AHCA rejects conclusion that lack of impact on existing providers "is not a 'not normal' circumstance"), Rendition No. AHCA-01-203-FOF-CON (Fla. AHCA Aug. 7, 2001).
Here, all the factors except for the "need" calculation weigh heavily in favor of approval. The proven "not normal" circumstance of the acquisition make the calculated need determination of little weight in this case.
The doctrine requiring tribunals to give due deference to agency interpretations of statutes and rules over which the agency has substantive jurisdiction has been considered. The doctrine requires due deference, not absolute deferral. When the agency's interpretation is clearly erroneous, it does not merit deference. See Fla. Wildlife Fed'n v. Collier Cnty., 819 So. 2d
200 (Fla. 1st DCA 2002); D.A.B. Constructors, Inc. v. State of Fla. Dep't of Transp., 656 So. 2d 940 (Fla. 1st DCA 1995).
The determination of "not normal" circumstances is a mixed question of law and fact. So AHCA's interpretation of its rule alone cannot govern. The facts must be considered. Balsam
v. Dep't of HRS. To the extent that AHCA maintains that the absence of a calculated need is absolutely and undisputedly dispositive, that legal position is clearly erroneous. Id.
Special Circumstances
Compassionate Care also relies upon alleged lack of access to hospice services by the Hispanic population and ALF residents of Service Area 11 as "special circumstances" supporting approval of its CON application.
Florida Administrative Code Rule 59C-1.0355(4)(d) is the "special circumstances" provision. It provides:
Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice.
Evidence submitted by the applicant must document one or more of the following:
That a specific terminally ill population is not being served.
That a county or counties within the service area of a licensed hospice program are not being served.
That there are persons referred to hospice programs who are not being admitted within 48 hours. The applicant shall indicate the number of such persons.
Compassionate Care maintains that Hispanic people and residents of ALFs in Service Area 11 are not being served by the existing hospices. Compassionate Care did not prove its assertions.
Hispanic people in Service Area 11 use hospice services less than others. But Compassionate Care did not prove what the reasons for this were or establish that it would somehow increase utilization.
Compassionate Care did not prove that residents of ALFs in Service Area 11 are not being served by existing hospices. Consequently, that argument fails from the outset.
Accordingly, based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Agency for Health Care Administration issue a Final Order granting Compassionate Care Hospice of Florida, Inc.'s Certificate of Need Application Number 10091.
DONE AND ENTERED this 23rd day of August, 2012, in Tallahassee, Leon County, Florida.
S
JOHN D. C. NEWTON, II
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of August, 2012.
ENDNOTES
1/ All citations to Florida Statutes are to the 2010 edition unless otherwise noted.
2/ The parties' stipulation is quoted in paragraphs 1 through 54.
3/ Neither party raises an issue about consideration of the licensure that occurred after AHCA issued the SAAR. Consequently the propriety of considering the changes is not addressed or ruled upon in this recommended order.
4/ Neither party raises an issue about consideration of the ownership change that occurred after AHCA issued the SAAR. Consequently the propriety of considering the change is not addressed or ruled upon in this recommended order.
COPIES FURNISHED:
Lorraine M. Novak, Esquire
Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive, Suite 3431
Tallahassee, Florida 32308
Corinne T. Porcher, Esquire Smith and Associates
2834 Remington Green Circle, Suite 201
Tallahassee, Florida 32308
Richard Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
Elizabeth Dudek, Secretary
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1
Tallahassee, Florida 32308
Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 27, 2012 | Agency Final Order | |
| Aug. 23, 2012 | Recommended Order | Newly approved hospice acquisition of existing provider made "default to zero" requirement have no weight in need determination. Without "default," need for new hospice shown. Applicant did not prove barriers to access for Hispanics and ALF residents. |
