Findings Of Fact The parties present at the hearing stipulated to the following facts which are hereby entered as findings of fact: All letters of intent submitted by the applicants involved herein with the exception of FCC were timely filed on or before December 15, 1984 and the relating applications by these applicants were timely filed on or before January 15, 1985. As a result, these applications addressed a January, 1988 bed need planning horizon. All applications, as mentioned above, were deemed complete by DHRS and were reviewed under a January, 1988 bed need planning horizon. All applications as cited above, were preliminarily denied by DHRS based on a lack of need and notice of these denials were timely published in the Florida Administrative Weekly. All unsuccessful applicants herein thereafter timely filed petitions for formal administrative hearing to contest the denial of their applications. The application filed by FCC for CON number 2738, filed by the applicant in July, 1983, and addressing a July, 1986 bed need was initially denied by DHRS in November, 1983. FCC thereafter timely filed a petition for formal, administrative hearing contesting the denial of this application and on January 10, 1985, DHRS and FCC entered into a stipulated settlement in which DHRS agreed to grant CON Number 2738 to FCC. This CON was issued to FCC on January 19, 1985, for 91 community nursing home beds and on March 15, 1985, a Final Order was entered by DHRS confirming the grant off CON Number 2738 to FCC. FCC's original application under CON Number 2738 was for a 120 bed community nursing home to be located in Indian River County, Florida. DHRS's initial denial of FCC's application was based on a lack of bed need at the time. When DHRS entered into the stipulation with FCC reversing its position and granting a CON to FCC for 91 community nursing home beds, it did so on the basis of bed need figures utilizing statistics relating to the subsequent January, 1988 bed need planning horizon even though FCC's application did not pertain to that planning horizon. In fact the beds taken and awarded to FCC came from the fixed pool of beds that, under the DHRS rule in effect at the time, was reserved for applicants in the January, 1985 batching cycle with a planning horizon of January, 1988. Rule 10-5.11(21)(b), F.A.C., sets out the bed need rule methodology for determining projected need for new or additional community nursing home beds. Pursuant to this rule, need is projected three years into the future. The methodology provided in this rule is clear and reasonable. If this methodology is followed precisely as set forth in the rule and utilizing the DHRS statistics available to personnel in the health care professions, such as its semi-annual nursing home census report as well as the Florida population estimates and projections by DHRS district and county, a net bed need of 116 additional beds in Indian River County is established for the period January, 1988. This figure does not, however, include an award of 91 beds to FCC under CON Number 2738 by DHRS under the terms of its settlement and those 91 beds are included within the 116. The expert testifying for the applicants herein concluded that the award of the 91 beds to FCC outside its planning horizon was erroneous and improper and based on no calculation of bed need appropriate to the applicant's original July, 1986 planning horizon and it was so found. In this case, DHRS, by awarding beds to FCC from a subsequent planning horizon is implementing a bed need policy which establishes a "planning horizon" three years from the date the Petitioners' applications were filed but updating all available data to that existing as of the date of the final hearing. This would include July, 1986 population data, current licensed beds, current approved beds, and the latest occupancy rate. The procedure followed by DHRS here is, however, a DHRS policy interpretation rather than a literal interpretation of the rule and the DHRS expert was unable to establish or in any way justify DHRS' policy of updating all data to the date of hearing in contravention of the terms of its own rule. If the unjustified and unsubstantiated DHRS policy were accepted and utilized here, calculations would reflect a surplus of 70 nursing home beds in Indian River County for the January, 1988 planning horizon as opposed to the more reasonable and rational bed need of 116.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED THAT Certificate of Need Number 2733, previously issued to Florida Convalescent Centers be rescinded and that the 91 beds relating thereto be returned to the January, 1988 planning horizon fixed pool. It is further recommended that the Secretary, Department of Health and Rehabilitative Services remand the case to the Division of Administrative Hearings for the conduct of a comparative hearing to evaluate the pending applicants within that batching cycle. RECOMMENDED this 28th day of January, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 1987. APPENDIX The following constitutes my specific ruling pursuant to Section 120.57(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by National Health Corporation, FMSC and Forum 1. Incorporated in Finding of Fact 4 except for the actual calculations outlined in the formulas which are incomplete. 2 & 3 Incorporated in Finding of Fact 5. 4-6 Incorporated in Finding of Fact 5. 7-13 Incorporated in Finding of Fact 6. 14 Not a Finding of Fact. Rulings on Proposed Findings of Fact Submitted by Health Care and Retirement Corporation Incorporated in Finding of Fact 4 except for the citation of the rule which is incomplete. Accepted. Accepted. Accepted and incorporated. 5-9 Accepted. 10 & 11 Accepted. 12 Rejected as not the best analysis. Rulings on Proposed Findings of Fact Submitted by Beverly Enterprises 1-3 Accepted. 4-6 Incorporated into Findings of Fact. 7 & 8 Accepted. Rejected as legal argument and not a Finding of Fact. & 11 Accepted. Rejected as legal argument and not a Finding of Fact. Cumulative to other findings. Rejected as legal argument and not a Finding of Fact. Incorporated in Finding of Fact. 16-20 Legal Argument not a Finding of Fact. 21-22 Cumulative to other evidence of record. Rulings on Proposed Findings of Fact Submitted by DHRS 1-3 Accepted. 4-8 Rejected as not supported by the weight of the evidence. 9 Accepted as to the calculation including the 91 beds available to FCC. Rejected as to the propriety of the award and the reason. Copies Furnished: William Page, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Robert D. Newell, Jr., Esquire 200 South Monroe Street Tallahassee, Florida 32301 Kenneth A. Hoffman, Esquire Alfred W. Clark, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 Stephen K. Boone, Esquire Post Office Box 1596 Venice, Florida 34284 R. Terry Rigsby, Esquire Post Office Box 10555 Tallahassee, Florida 32302 John Rodriguez, Esquire, Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact The Application West Florida Regional Medical Center is a 400-bed acute care hospital in Pensacola, Escambia County, Florida. The hospital is located in a subdistrict which has the greatest population aged 65 and over who are living in poverty. That group constitutes the population qualified for Medicare. Some 17 percent of Escambia County's population falls into the medicare category. Prior to October, 1987, HRS had determined that there was a fixed pool need in the Escambia County area for 120 nursing home or extended care beds. Several hospitals in the Escambia County area applied for the 120 nursing home beds. Those beds were granted to Advocare (60 beds) and Baptist Manor (60 beds). The award of the 120 beds to Baptist Manor and Advocare is not being challenged in this action. West Florida, likewise, filed an application for an award of nursing home beds in the same batch as Advocare and Baptist Manor. However, Petitioner's application sought to convert 8 acute care beds to nursing home or extended care beds. West Florida's claim to these beds was not based on the 120 bed need established under the fixed need pool formula. West Florida's application was based on the unavailability of appropriately designated bed space for patients who no longer required acute care, but who continued to require a high skill level of care and/or medicare patients. The whole purpose behind West Florida's CON application stems from the fact that the federal Medicare system will not reimburse a hospital beyond the amount established for acute care needs as long as that bed space is designated as acute care. However, if the patient no longer requires acute care the patient may be re-designated to a skilled care category which includes nursing home or extended care beds. If the patient is appropriately reclassified to a skilled care category, the hospital can receive additional reimbursement from Medicare above its acute care reimbursement as long as a designated ECF bed is available for the patient. Designation or re-designation of beds in a facility requires a Certificate of Need. Petitioner's application for the 8 beds was denied. When the application at issue in this proceeding was filed Petitioner's 13-bed ECF unit had been approved but not yet opened. At the time the State Agency Action Report was written, the unit had just opened. Therefore, historical data on the 13 bed unit was not available at the time the application was filed. Reasons given for denying West Florida's application was that there was low occupancy at Baptist Hospital's ECF unit, that Sacred Heart Hospital had 10 approved ECF beds and that there was no historical utilization of West Florida 13 beds. At the hearing the HRS witness, Elizabeth Dudek stated that it was assumed that Baptist Hospital and Sacred Heart Hospital beds were available for West Florida patients. In 1985 West Florida applied for a CON to establish a 21-bed ECF unit. HRS granted West Florida 13 of those 21 beds. The 8 beds being sought by West Florida in CON 5319 are the remaining beds which were not granted to West Florida in its 1985 CON application. In order to support its 1985 CON application the hospital conducted a survey of its patient records to determine an estimate of the number of patients and patient days which were non acute but still occupied acute care beds. The hospital utilized its regularly kept records of Medicare patients whose length of stay or charges exceeded the Medicare averages by at least two standard deviations for reimbursement and records of Medicare patients whose charges exceed Medicare reimbursement by at least $5,000. These excess days or charges are known as cost outliers and, if the charge exceeds the Medicare reimbursement by $5000 or more, the excess charge is additionally known as a contractual adjustment. The survey conducted by the hospital consisted of the above records for the calendar year 1986. The hospital assumed that if the charges or length of stay for patients were excessive, then there was a probability that the patient was difficult to place. The above inference is reasonable since, under the Medicare system, a hospital's records are regularly reviewed by the Professional Review Organization to determine if appropriate care is rendered. If a patient does not meet criteria for acute care, but remains in the hospital, the hospital is required to document efforts to place the patient in a nursing home. Sanctions are imposed if a hospital misuses resources by keeping patients who did not need acute care in acute care bed spaces even if the amount of reimbursement is not at issue. The hospital, therefore goes to extraordinary lengths to place patients in nursing home facilities outside the hospital. Additionally, the inference is reasonable since the review of hospital records did not capture all non-acute patient days. Only Medicare records were used. Medicare only constitutes about half of all of West Florida's admissions. Therefore, it is likely that the number of excess patient days or charges was underestimated in 1986 for the 1985 CON application. The review of the hospital's records was completed in March, 1987, and showed that 485 patients experienced an average of 10.8 excess non-acute days at the hospital for a total of 5,259 patient days. The hospital was not receiving reimbursement from Medicare for those excess days. West Florida maintained that the above numbers demonstrated a "not normal need" for 21 additional ECF beds at West Florida. However as indicated earlier, HRS agreed to certify only 13 of those beds. The 13 beds were certified in 1987. The 13-bed unit opened in February, 1988. Since West Florida had planned for 21 beds, all renovations necessary to obtain the 8-bed certification were accomplished when the 13- bed unit was certified in 1987. Therefore, no capital expenditures will be required for the additional 8 beds under review here. The space and beds are already available. The same study was submitted with the application for the additional eight beds at issue in these proceedings. In the present application it was assumed that the average length of stay in the extended care unit would be 14 days. However, since the 13 bed unit opened, the average length of stay experienced by the 13-bed unit has been approximately 15 days and corroborates the data found in the earlier records survey. Such corroboration would indicate that the study's data and assumptions are still valid in reference to the problem placements. However, the 15- day figure reflects only those patients who were appropriately placed in West Florida's ECF unit. The 15-day figure does not shed any light on those patients who have not been appropriately placed and remain in acute care beds. That light comes from two additional factors: The problems West Florida experiences in placing sub-acute, high skill, medicare patients; and the fact that West Florida continues to have a waiting list for its 13 bed unit. Problem Placements Problem placements particularly occur with Medicare patients who require a high skill level of care but who no longer require an acute level of care. The problem is created by the fact that Medicare does not reimburse medical facilities based on the costs of a particular patients level of care. Generally, the higher the level of care a patient requires the more costs a facility will incur on behalf of that patient. The higher costs in and of themselves limit some facilities in the services that facility can or is willing to offer from a profitability standpoint. Medicare exacerbates the problem since its reimbursement does not cover the cost of care. The profitability of a facility is even more affected by the number of high skill Medicare patients resident at the facility. Therefore, availability of particular services at a facility and patient mix of Medicare to other private payors becomes important considerations on whether other facilities will accept West Florida' s patients. As indicated earlier, the hospital goes to extraordinary lengths to place non- acute patients in area nursing homes, including providing nurses and covering costs at area nursing homes. Discharge planning is thorough at West Florida and begins when the patient is admitted. Only area nursing homes are used as referrals. West Florida's has attempted to place patients at Bluff's and Bay Breeze nursing homes operated by Advocare. Patients have regularly been refused admission to those facilities due to acuity level or patient mix. West Florida also has attempted to place patients at Baptist Manor and Baptist Specialty Care operated by Baptist Hospital. Patients have also been refused admission to those facilities due to acuity level and patient mix. 16 The beds originally rented to Sacred Heart Hospital have been relinquished by that hospital and apparently will not come on line. Moreover the evidence showed that these screening practices would continue into the future in regard to the 120 beds granted to Advocare and Baptist Manor. The president of Advocare testified that his new facility would accept some acute patients. However, his policies on screening would not change. Moreover, Advocare's CON proposes an 85 percent medicaid level which will not allow for reimbursement of much skilled care. The staffing ratio and charges proposed by Advocare are not at levels at which more severe sub-acute care can be provided. Baptist Manor likewise screens for acuity and does not provide treatment for extensive decubitus ulcers, or new tracheostomies, or IV feeding or therapy seven days a week. Its policies would not change with the possible exception of ventilated patients, but then, only if additional funding can be obtained. There is no requirement imposed by HRS that these applicants accept the sub-acute-patients which West Florida is unable to place. These efforts have continued subsequent to the 13-bed unit's opening. However, the evidence showed that certain types of patients could not be placed in area nursing homes. The difficulty was with those who need central lines (subclavian) for hyperalimentation; whirlpool therapy such as a Hubbard tank; physical therapy dither twice a day or seven days a week; respiratory or ventilator care; frequent suctioning for a recent tracheostomy; skeletal traction; or a Clinitron bed, either due to severe dicubiti or a recent skin graft. The 13-bed unit was used only when a patient could not be placed outside the hospital. The skill or care level in the unit at West Florida is considerably higher than that found at a nursing home. This is reflected in the staffing level and cost of operating the unit. Finally, both Advocare and Baptist Manor involve new construction and will take approximately two years to open. West Florida's special need is current and will carry into the future. The Waiting List Because of such placement problems, West Florida currently has a waiting list of approximately five patients, who are no longer acute care but who cannot be placed in a community nursing home. The 13-bed unit has operated at full occupancy for the last several months and is the placement of last resort. The evidence showed that the patients on the waiting list are actually subacute patients awaiting an ECF bed. The historical screening for acuity and patient mix along with the waiting list demonstrates that currently at least five patients currently have needs which are unmet by other facilities even though those facilities may have empty beds. West Florida has therefore demonstrated a special unmet need for five ECF beds. Moreover, the appropriate designation and placement of patients as to care level is considered by HRS to be a desirable goal when considering CON applications because the level of care provided in an ECF unit is less intense than the level of care required in an acute care unit. Thus, theoretically, better skill level placement results in more efficient bed use which results in greater cost savings to the hospital. In this case, Petitioner offers a multi-disciplinary approach to care in its ECF unit. The approach concentrates on rehabilitation and independence which is more appropriate for patients at a sub-acute level of care. For the patients on the awaiting proper placement on the waiting list quality of care would be improved by the expansion of the ECF unit by five beds. Finally, there are no capital costs associated with the conversion of these five beds and no increase in licensed bed capacity. There are approximately five patients on any given day who could be better served in an ECF unit, but who are forced to remain in an acute care unit because no space is available for them. This misallocation of resources will cost nothing to correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services issue a CON to Petitioner for five ECF beds. DONE and ORDERED this 30th day of March, 1989, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 1989. APPENDIX The facts contained in paragraph 1-29 of Petitioner's proposed Findings of Fact are adopted in substance, insofar as material. The facts contained in paragraph 1, 2, 3, 4, 5, 6, 8, 12, 15, 16, 20, 27, 28, 29, 31 and 33 of Respondent's Proposed Findings of Fact are subordinate. The first sentence of paragraph 7 of Respondent's Proposed Findings of Fact was not shown to be the evidence. Strict compliance with the local health plan was not shown to be an absolute requirement for CON certification. The remainder of paragraph 7 is subordinate. The facts contained in paragraph 9, 10, 11 and 30 of Respondent's Proposed Findings of Fact were not shown by the evidence. The first part of the first sentence of paragraph 13 of Respondent's Proposed Findings of Fact before the semicolon is adopted. The remainder of the sentence and paragraph is rejected. The first sentence of paragraph 14 of Respondent's Proposed Findings of Fact was not shown by the evidence. The remainder of the paragraph is subordinate. The facts contained in paragraph 17, 26 and 32 of Respondent's Proposed Findings of Fact are adopted in substance, insofar as material. The acts contained in paragraph 18 are rejected as supportive of the conclusion contained therein. The first (4) sentences of paragraph 19 are subordinate. The remainder of the paragraph was not shown by the evidence. The first (2) sentences of paragraph 21 are adopted. The remainder of the paragraph is rejected. The facts contained in paragraph 22 of Respondent's Proposed Findings of Fact are irrelevant. The first sentence of paragraph 23 is adopted. The remainder of paragraph 23 is subordinate. The first sentence of paragraph 24 is rejected. The second, third, and fourth sentences are subordinate. The remainder of the paragraph is rejected. The first sentence of paragraph 25 is subordinate. The remainder of the paragraph is rejected. COPIES FURNISHED: Lesley Mendelson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Donna H. Stinson, Esquire MOYLE, FLANIGAN, KATZ, FITZGERALD & SHEEHAN, P.A. The Perkins House - Suite 100 118 North Gadsden Street Tallahassee, Florida 32301 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue Whether Petitioners' applications for Certificates of Need should be approved?
Findings Of Fact Ocala Ocala is a general partnership composed of three partners: Ocala Health Care Associates, Inc., Casterfield, Ltd., and Big Sun Healthcare Systems, the lessee and operator of Munroe Regional Medical Center. Ocala is the current holder of an approved CON for 35 community beds in Marion County. If the 21-bed transfer of sheltered beds to community beds is approved, Ocala intends to operate a 56-bed facility. A 56-bed facility is more viable than a 35-bed facility. At the time of the hearing, there were 642 approved and licensed beds and 215 approved not yet licensed beds in Marion County. The 215 beds include Ocala's 35-bed CON. A patient needing subacute care is one who has been released from acute care status by a physician and is ready to be released from a hospital (acute care) to a less costly facility, e.g. a skilled nursing home. Subacute care patients are those needing, e.g., intravenous tubes, respirators, IV medication, decubitus ulcer care, tracheotomy tubes, or antibiotic therapy. Patients needing subacute care should be placed in a nursing home, since this is less costly than hospital care and it allows for acute care beds in a hospital to be used for patients needing acute care. Skilled nursing homes are authorized to provide subacute care, but are not required to do so. In order to provide subacute care, a nursing home may need additional staff and equipment. There is a problem in Marion County with the placement of subacute care patients in nursing homes. This problem is caused by a variety of factors and usually results in a patient remaining in a hospital longer than is necessary. One factor is that some of the existing nursing homes will not accept patients needing certain types of subacute care, e.g., patients needing ventilators or feeding tubes. Another equally important factor is that the nursing homes want to make sure they will get paid and there is usually some delay in determining how the nursing home will be compensated. Other factors include the patients inability to pay and, on occasion, the unavailability of beds. Ocala intends to use its 35-bed approved CON to provide subacute care. Country Club While the application shows the applicant's name as "Country Club Retirement Center," that is the name of the project. The applicant is Mr. J. E. Holland. Mr. Holland's application is for a 60-bed nursing home which will be part of a 250-apartment continuing care community. The facility is to be located in Clermont, in Lake County. Lake County is in Planning Area VII of HRS District III. Planning Area VII also includes Sumter County. Mr. Keach, the only witness presented by Country Club, is Vice President of National Health Care. National Health Care operates a nursing home in Gainesville, Florida. In addition to operating the nursing home, National Health Care assists persons seeking a CON with preparation of the CON application. Mr. Keach and other National Health Care employees assisted Mr. Holland with the preparation of the CON application submitted in this case. National Health Care will not own or operate Mr. Holland's facility. Mr. Keach is of the opinion that there is need in Clermont for a 60- bed nursing home. He bases his opinion on letters of support for the construction of the facility, on petitions signed by persons attending a public hearing, and on four or five visits to the area. Mr. Keach never performed a study which would indicate the number of persons with a "documented need" for nursing home services who have been denied access to a nursing home. At the time HRS issued its State Agency Action Report there were 958 beds approved and licensed in Planning Area VII. Of these, 838 are located in Lake County, with 142 located in a nursing home in Clermont. Also these are swing-beds providing long-term care at a hospital in Clermont. Finally, there were 236 beds approved not yet licensed in Planning Area VII, with 176 to be located in Lake County. The occupancy rate for the nursing home facility located in Clermont is approximately 89 percent. For the six months ending March, 1988, the occupancy rate for Planning Area VII was below 80 percent. There are at least two nursing homes in operation within a 20-mile radius of Clermont. These two nursing homes are located in Winter Garden and one of them has received a CON to add 89 beds. Twenty-Eight Corporation The applicant in this case is Twenty-Eight Corporation. "The owner of the nursing home will be the Levy Nursing Care Center, a limited partnership, which will be owned and secured by Twenty-Eight Corporation." (28 Corporation, Composite Exhibit 1.) Twenty-Eight corporation seeks approval of a CON for 60 nursing home beds to be operated as part of a continuing care project which will include a 50-unit apartment complex. The facility is to be located in Chiefland, Florida, in Levy County. Levy County is in Planning Area II of HRS District III. Planning Area II also includes Alachua, Gilchrist and Dixie counties. At the time HRS issued its State Agency Action Report, there were 1112 licensed nursing home beds in Planning Area II. Of these, 120 are located in Trenton, in Gilchrist County, 180 are located in Williston, in Levy County, and the rest are located in Alachua County. Also, there are 147 beds approved not yet licensed to be located in Alachua County. Chiefland is approximately 12 miles from Trenton. Williston is approximately 27 miles from Trenton. Mr. Keach was the only witness who testified on behalf of Twenty-Eight Corporation. Mr. Keach is vice-president of National Health Care. (See Finding of Fact 17, supra.) Mr. Keach is of the opinion that there is need in the Chiefland area for a 60-bed nursing home. His opinion is based on letters of support and petitions of support he received for the project. Also, his opinion is based on the fact that there is no nursing home located in Chiefland and the nearest nursing home is located in Trenton, 12 miles away. The 1986 District III Health Plan shows the Trenton facility having an occupancy rate of 99.93 percent. Mr. Keach never performed a study which would indicate the number of persons with a "documented need" for nursing home services who have been denied access to a nursing home.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that HRS enter a Final Order denying Petitioners' applications in these three cases. DONE and ENTERED this 3rd day of March, 1989, in Tallahassee, Leon County, Florida. JOSE A. DIEZ-ARGUELLES Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 88-1862, 88-1863, 88-1864 Rulings on Proposed Findings of Fact Ocala's Proposed Findings of Fact: 1. Accepted. 2-4. Supported by competent, substantial evidence but unnecessary to the decision reached. 5-7. Accepted. Irrelevant. Accepted. Rejected as not supported by the weight of the evidence. There is not an absolute absence of facilities willing to accept all patients needing subacute care. Irrelevant. "Serious concerns" are not what is needed under the Rule. First sentence rejected as recitation of testimony. Second sentence irrelevant; issue is whether nursing homes will accept patients, not whether nursing homes will enter into agreement with MRMC. 13-16. True, but irrelevant. Accepted. (a) Rejected to the extent it implies that the approved facilities would not provide subacute care. Mr. Bailey's testimony is that the facilities refused to enter into a relationship with MRMC; this does not establish that the facilities would not provide subacute care. Rejected as a recitation of testimony. The weight of the evidence shows that some facilities would accept same subacute patients. True, but it is unclear if these are the physician's notations the HRS witness referred to. True that charts and logs were provided, but they did not establish the number of patients in need of subacute care in excess of licensed or approved beds. 19-26. Irrelevant. 27-29. Accepted-for what they are, but insufficient to establish need. Twenty-Eight Corporation's Proposed Findings of Fact: 1-4 Accepted. Irrelevant. This is a de novo proceeding. True, but irrelevant. Accepted. Accepted. Rejected as hearsay. But see Finding of Fact 31. Mr. Keach testified that Chiefland is 40 miles from Williston. The road map published by the Department of Transportation shows the distance between the two cities at 27 miles. True, but irrelevant. True, but irrelevant. Accepted. Accepted. However, this special consideration should be given only where numeric need has been established in the District. True, but irrelevant. True, but irrelevant. Rejected as hearsay. True, but irrelevant. Rejected as hearsay. Also, a determination by a family member does not establish medical "need". True that this is Mr. Keach's opinion. However, Mr. Keach's opinion is rejected. His opinion of need is not based on what the Rule requires or on what health planners rely on to establish need. Mr. Keach is not able to testify as to the financial feasibility of the facility because he has no first- hand knowledge of the finances. 21-22. Irrelevant. 23. Rejected. See ruling on 10., supra. 24-26. Irrelevant. Rejected as contrary to the weight of the evidence. Irrelevant. Irrelevant; this is not a rule challenge. Irrelevant. True, but irrelevant. Irrelevant. Accepted. Rejected as hearsay. Rejected as not supported by the weight of the evidence. Rejected as argument. Also, unable to determine what the "second portion" is. 37-38. Irrelevant. First phrase accepted. Second phrase rejected to extent implies that only need to show that no other facility exists within 20 miles. Irrelevant. Country Club's Proposed Findings of Fact: 1-4. Accepted. Irrelevant. This is a de novo proceeding. True, but irrelevant. Accepted. Irrelevant. True, but irrelevant. Accepted. Accepted. However, this special consideration should be given only where numeric need has been established in the District. True, but irrelevant. True, but irrelevant. 14-17. Irrelevant. Rejected as contrary to the weight of the evidence. Accepted. Rejected as not supported by competent evidence; hearsay. Accepted. Rejected as not supported by competent evidence; hearsay. Irrelevant. Rejected as not supported by competent evidence; hearsay. True, but irrelevant. See ruling on 11, supra. Irrelevant. Rejected as not supported by competent evidence; hearsay. Irrelevant. The Rule also recognizes this. Irrelevant. Rejected as not supported by the weight of the evidence and irrelevant. True, but irrelevant. True, but irrelevant. 33-34. True, but irrelevant. This is a de novo proceeding. 35-39. Irrelevant. 40. Rejected as argument. Also, unable to determine what the "second portion" is. 41-42. Accepted 43. Rejected as contrary to the weight of the evidence. 44. True, but irrelevant. Also, there are approved beds within 20 miles, but located in a different HRS District. Leesburg's Proposed Findings of Fact 1-7. Accepted. Rejected as not a finding of fact. Accepted. 10-15. See Conclusions of Law section of RO. Accepted. Rejected as argument. Accepted. Rejected. Fact that need does not exist under HRS rule doesn't necessarily mean that that facility will not be financially feasible. In any event, Country Club was not able to establish financial feasibility. 20-21. See Conclusions of Law. 22. Rejected as argument. 23-28. Supported by competent substantial evidence but unnecessary to the decision reached. Accepted. Rejected as a recitation of testimony. Accepted.- HRS's Proposed Findings of Fact 1-19. Accepted. Rejected. The HRS witness did not specifically state that HRS needs to see the actual physician referral. Accepted. See Conclusions of Law. 22-28. Accepted. See Conclusions of Law. 29. Not a finding of fact. 30-37. Accepted. 38. Irrelevant. 39-42. Unnecessary to the decision reached. Irrelevant. Accepted. 45-46. See Conclusions of Law. Accepted. Accepted. Not a finding of fact. 50-65. Accepted. See Conclusions of Law. 66. Not a finding of fact. 67-71. Accepted, but Ocala's Exhibits 6 & 7 are not amendments to the application but simply more of the same information that was provided with the application. COPIES FURNISHED: Gerald B. Sternstein, Esquire Darrell White, Esquire Post Office Box 2174 First Florida Bank Building Suite 600 215 South Monroe Street Tallahassee, Florida 32301 Theodore Mack, Esquire Assistant General Counsel 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 R. Bruce McKibben, Jr., Esquire 307 West Park Avenue Post Office Box 10651 Tallahassee, Florida 32302 Grafton Wilson, II, Esquire 711 NW 23rd Avenue, Suite #4 Gainesville, Florida 32609 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The broad issue for resolution is whether FHFC's application meets the criteria contained in Section 381.494(6)(c) F.S. and Rule 10-5.011 F.A.C. FHFC contends that its application meets all the criteria in Section 381.494(6)(c) F.S., and when (1)(k) of Rule 10-5.011 F.A.C. is properly applied, a net need for at least 93 beds results. DHRS contends that a need for only 17 beds exists when the numerical need methodology is applied consistent with its current policy. DHRS did not present any evidence on any criteria other than need. The more specific issue to be determined in this proceeding is focused on the data for current and future population used to calculate numerical need under Rule 10-5.011(1)(k) F.A.C. FHFC contends that the most recently released population estimates and projections should be used; DHRS asserts that the data available at the time of the application should be used. The parties' differing results in the net bed need (93 beds, as opposed to 17 beds) are based upon those separate theories for application of the rule.
Findings Of Fact FHFC currently operates a 120-bed nursing home in Polk County, on the northeastern outskirts of the City of Lakeland. Its application for an additional 60 beds was submitted in July 1985, in time for the July 1985 batching cycle. The application was deemed complete and was later denied in December 1985. The cover letter from HRS dated December 9, 1985, accompanying the State Agency Action Report, "SAAR", states the basis for denial: "There is insufficient need for the project proposed for this subdistrict at this time." Comments within the SAAR explain that the application of the methodology in Rule 10-5.011(1)(k) F.A.C. results in insufficient need for the project proposed by the applicant. "...Further, nursing home utilization within Polk County does not warrant the addition of nursing home beds at this time." (SAAR, P. 9, Petitioner's exhibit No. 2) Walter Eugene Nelson is a health planning consultant and former administrator of the HRS Office of Comprehensive Health Planning, the office responsible for administering the certificate of need program. He was tendered by Petitioner and was accepted, without objection, as an expert in health care planning and nursing home CON reviews. Mr. Nelson prepared a break-out of the need methodology described in Rule 10-5.011(1)(k) F.A.C. With one significant exception, his application of the methodology conforms to that of Herbert Straughn, HRS' expert witness. For the factors related to current and projected population (POPA, POPB, POSC and POSD), Mr. Nelson used data released from the Office of the Governor in January 1987. Mr. Straughn used data available as of the date of the application, that is, data released on July 1, 1985. Both parties agree that "current population" is that population at the time of application, July 1985. The projected horizon year population is three years later, or July 1988. Both parties agree that the source of the data is the official estimates and projections adopted by the Office of the Governor. Actual population census counts are made every ten years. During the decennium, population figures are extrapolated and updated through current data on utility hook-ups, building permits, employment, school enrollment and similar sources. When the data is applied to population in a future date, the resultant population count is called a "projection"; when the data is applied to population for a current or past date, the population count is called an "estimate". The Office of the Governor revises and updates its population estimates and projections every six months. Sometimes the figures are adjusted upward, sometimes downward. In the opinion of Eugene Nelson, the later-released figures are more accurate. In this instance, as to the figures released in July 1985, for the current (July 1985) population, the "estimates" were really projections since the data was collected in Spring 1985, before the relevant period. By January 1987, the estimates for the July 1985 population had the advantage of hindsight and the projections for the population in July 1988 had the advantage of data collected between July 1985 and January 1987. Herbert Straughn contends that the estimates and projections released in July 1985 are more appropriate. His explanation is best expressed in his own words: * * * [direct examination by Mr. Powell] Q What set of population figures did you use in your calculations? [response by Mr. Straughn] A I used the populations that were current at the time of the submission of the application, that being of July, 1985, and then the proper planning horizon of July, 1988. Q Why did you use those figures? A Because it more truly reflects the entire set of data that the Department sees fit to use on calculating bed need during or prior to, an administrative hearing. Q Why do you-all consider that to be more appropriate? A Because, well, because it more truly reflects the entire set of data by which to derive the methodology, that, you know, including the population, the occupancy, the number of licensed beds, and the number of approved beds. Q Well, just referring to the population, which Mr. Nelson has used a different set of figures, which set is the better set of figures to use, current as of the date of the application? A Well, I know it could be the current, or the date of the application, because then it truly reflects the input of the other set of data to derive the methodology to come up to the number of beds either needed, or not needed. Q Which figures do you consider more accurate, so far as population figures? A I would consider these that were current at the time that we did the analysis. Q Why? A Well, contrary, I think, to what Mr. Nelson says, that the closer that you can get to the population at the time you do the review, based on the ten-year span of when the population, or census, is taken, because it's taken every ten years, the further you get away from the base year, I think that the calculations that get further away from the base year, therefore, become less accurate. Q Would you say less reliable? A And less reliable. * * * (transcript, pgs. 89-90) As recently as September 1986, HRS used the most current available population data in its bed need methodology. Even now HRS still uses the approved bed figures available at the time the SAAR is signed, rather than at the time the application is submitted. Herbert Staughn's break-out of the methodology, Respondent's exhibit No. 1, reflects on its face the updated adjustment of another variable: "licensed beds" ("LBD" in the rule formula). His break-out initially included 1685 licensed beds, but shortly before the hearing this figure was adjusted downward to 1655 licensed beds after it was determined that Johnson Health Center's 30 beds were sheltered nursing home beds which are not applied in computing net need for community nursing home beds. Both parties apply an occupancy rate in the Polk County subdistrict of 84.9 percent. Herbert Straughn contends that this rate indicates lack of need, as it is less than an alleged minimum standard of 90 percent occupancy. This "minimum standard" is not described by rule or statute, nor was it adequately explained by the HRS expert. The CON review criteria listed in the SAAR correspond, in substance, to the review criteria in Section 381.494(b)(c) F.S. and Rule 10-5.011 F.A.C. The SAAR is used by the agency as a convenient check list to inform an applicant of the extent to which the criteria are satisfied. There are criteria, other than need, identified in the checklist. In its case FHFC presented affirmative testimony that each criteria was met by the applicant. The only evidence presented by HRS related to need as addressed in paragraphs Nos. 8, 9 and 10, above. FHFC presented no evidence of special circumstances pursuant to Rule 10-5.011(1)(k)2.j. F.A.C. This provision applies in the event that the net bed allocation is zero. FHFC's break out of the bed need methodology yielded a net bed allocation of 93 beds for the planning horizon year 1988. HRS' break out yielded an allocation of 17 beds.
The Issue As stipulated to by the parties, the issue in this case is: Whether there is a numerical need for FHFC's proposed facility when the need is calculated in accordance with Rule 10-5.11(21), F.A.C. [sic].
Findings Of Fact In July of 1985 the Petitioner filed an application for a certificate of need (number 4123), for the construction of a 120-bed nursing home in Citrus County Florida. The Petitioner's application was initially denied by the Respondent and the Petitioner timely filed a Petition for Formal hearing contesting this proposed agency action. The Amended Prehearing Stipulation contains the following stipulation: 2. DHRS and FHFC stipulate, as a matter of fact and law, that, providing FHFC demonstrates in accordance with Rule 10- 5.11(21), F.A.C., a numerical need for not less than 60 beds [sic] nursing home beds in Citrus County, then FHFC's application for 60 community nursing home beds in Citrus County meets all the remaining applicable criteria in S.381.494(6)(c) & (d), Fla. Stat., Rule 10-5.11, F.A.C. The Petitioner is willing to accept a certificate of need for 60 nursing home beds for Citrus County. The following procedures generally apply in reviewing certificate of need applications filed in a July batching cycle, as the Petitioner's application was: Thirty days prior to the application due date, a letter of intent must be filed with the Respondent and the local health council; The application must be filed by July 15; Approximately one month after the application is received, an error and omissions letter is sent by the Respondent to the applicant; A reply to the error and omissions letter is due 45 days after the omissions letter is sent; The application is deemed complete or incomplete; An opportunity for public comment is given; and A decision to approve or disapprove the application is made. In this case, the letter of intent was filed in June, 1985, and the application was filed on July 15, 1985. The error and omissions letter was sent in August, 1985, and completeness was determined in September, 1985. A State Agency Action Report (hereinafter referred to as the "SAAR") was signed on November 7, 1985, by the reviewer of the application and on November 29, 1985, by the unit supervisor. The parties have stipulated that if there is sufficient numerical bed need for at least 60 nursing home beds, the Petitioner's application should be granted. Numerical bed need is determined pursuant to Rule 10-5.011(1)(k)2, Florida Administrative Code (formerly Rule 10-5.11(21)(b), Florida Administrative Code). Pursuant to Rule 10-5.011(1)(k)2, Florida Administrative Code (hereinafter referred to as the "Need Methodology"), need for nursing home beds is determined for the relevant planning district and for the relevant planning horizon. Citrus County is located in the Respondent's planning district 3. For purposes of the Need Methodology, bed need is to be determined on a district- wide basis. The planning horizon in this case is July, 1988. The calculation of bed need pursuant to the Need Methodology requires a calculation of gross need and a calculation of net need. The calculation of gross bed need pursuant to the Need Methodology is based upon certain population figures, occupancy rates and the number of licensed beds in the district. In this case, the parties agreed that the relevant population figures (see Joint exhibit 1) are as follows: June 1, 1985 65 to 74 years population of 96,130; June 1, 1985 75 and over population of 56,717; July, 1988 projected 65 to 74 years population of 107,914; and July, 1988 projected 75 and over population of 68,413. The relevant population figures were released on July 1, 1985, and were applied to applications submitted on July 15, 1985. Occupancy data used in the Need Methodology is for the period October, 1984 through March, 1985. The parties agreed that the occupancy data collected by the local health council was the appropriate data. That data indicated an occupancy rate of .9037. The relevant number of licensed beds for purposes of calculating gross bed need in district 3 is the number of licensed beds as of June 1, 1985. Rule 10-5.011(1)(k)2g, Florida Administrative Code. There were 3,789 licensed beds in district 3 as of June 1, 1985. Although the Petitioner presented evidence that the Respondent had published a report of the number of licensed beds in district 3 indicating that there were 3,849 licensed beds on June 1, 1985, the evidence proved that 60 beds were included on that report in error. Those 60 beds were listed as licensed beds of Suwannee Valley Nursing Center on Joint exhibit 2. The evidence proved that those beds were not in fact licensed as of June 1, 1985, and were not even licensed as of November 27, 1985. The Petitioner also argued in its proposed recommended order that the Respondent had failed to take into account 60 additional licensed beds at Lake Highlands Nursing Home. This is not correct. Although it is true that the 60 beds in question were not included on the Semiannual Nursing Home Census Report and Bed Need Application report of June 3, 1985 (Joint exhibit 2), that report also indicates that there were 60 licensed beds at Suwannee Valley Nursing Center. Those beds were not, however, licensed. If the 60 beds at Suwannee are taken out and the 60 additional beds at Lake Highlands are added in, the June 3, 1985 report indicates that there were 3,789 licensed nursing home beds as of June 1, 1985. Additionally, the list of licensed nursing home beds attached to the SAAR includes the 60 additional nursing home beds at Lake Highlands. The SAAR list also includes 60 beds at Suwannee and 15 too many beds at Eustis Manor. If these 75 beds are subtracted from the correct total of 3,864 licensed beds listed on the SAAR attachment, there were 3,789 licensed nursing home beds as of June 1, 1985. In calculating gross bed need, the Need Methodology also provides for a poverty adjustment. The parties agreed, however, that the poverty adjustment does not apply in this case because there were more than 27 beds per 1,000 population at the time the application was filed. The Need Methodology also provides that the district-wide gross bed need is to be allocated to subdistricts where appropriate. The parties agreed that a subdistrict allocation of gross bed need is not required or appropriate in this case. The Need Methodology provides specific times or time periods for the determination of occupancy rates, population estimates and licensed beds for purposes of determining gross bed need. Once gross bed need is determined pursuant to the Need Methodology, net bed need must be determined. Rule 10-5.011(1)(k)2i, Florida Administrative Code, provides that net need is determined as follows: The net bed allocation for a subdistrict, which is the number of beds available for Certificate of Need approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs 1 through 9 [sic] unless the subdistrict's average estimated occupancy rate-for the most recent six months is less than 80 percent, in which case the net bed allocation is zero. [Emphasis added]. In calculating net bed need, the parties have disputed the point in time when approved beds are to be inventoried. The Need Methodology does not provide a specific date for determining approved beds (or licensed beds) for purposes of calculating net bed need. The Respondent has taken the position that the inventory of approved beds is to be determined immediately prior to the signing of the SAAR by the unit supervisor. This non-rule policy is based upon Policy Memorandum No. 26 (FHFC exhibit 3). This Policy Memorandum contains no explanation of the policy or the rationale for counting approved beds in this manner. Although Mr. Carter, the Respondent's only witness, speculated (he did not know why the Respondent adopted the policy) that the policy was implemented to prevent a proliferation of beds, the weight of the evidence does not support a conclusion that the policy is reasonable. Based upon the Respondent's policy as to the relevant date for determining the number of approved beds, there were 933 approved beds as of November 29, 1985. The Petitioner has taken the position that the inventory of approved beds for purposes of determining net bed need should be determined prior to the application filing deadline, at the same time data used to calculate gross bed need are determined. There were 753 approved nursing home beds for district 3 at the time the Petitioner's application was filed. The Office of Community Medical Facilities of the Respondent prepares monitoring reports in order to periodically capture the inventory of approved beds. Based upon the Respondent's position with regard to the calculation of net bed need, there is a net surplus of 109 beds for district 3 in July, 1988: 4,520 gross beds needed minus (3,789 licensed beds plus 840 approved beds (90 percent of 933 total approved beds))(109). Based upon the Petitioner's position with regard to the calculation of net bed need and using the correct number of licensed beds in the' calculation of gross bed need there is a net need for 53 beds for district 3 in July, 1988: 4,520 gross beds needed minus (3,789 licensed beds plus 678 approved beds (90 percent of 753 total approved beds)) 53. Although the parties did not dispute the date for determining the number of licensed beds for purposes of determining the net need for nursing home beds, it has been concluded as a matter of law that the number of licensed beds for purposes of determining net bed need is to be determined based upon on the most current information as of the date of the final hearing. It has also been determined that the appropriate date for the determination of approved beds is also the date of the final hearing. The Petitioner has failed to prove what the number of licensed beds and approved beds was as of the date of the final hearing. In light of the fact that the evidence fails to prove the number of licensed and approved beds as of the date of the final hearing, the net need for nursing home beds in district 3 in July, 1988, cannot be determined. The most current information concerning the number of licensed beds was the number of beds relied upon by the Respondent: 3,789 licensed beds. The most current information concerning the number of approved beds is contained in the Quarterly Status Report of the Office of Community Medical Facilities dated January 7, 1987 (DHRS exhibit 1): 1,029 approved beds for district 3. Applying the Need Methodology to the facts in this case indicates a gross need for 4,250 nursing home beds in district 3 in July, 1988: STEP 1: BA = LB / (POPC + (6 X POPDD)): 3789 / (90,130 + (6 X 56,717)) 3789 / 436,432 BA = .008681764 STEP 2: BB = 6 X BAs 6 X .008681764 BB = .052090554 STEP 3: A (POPA X BA) + (POPB X BB) (107,914 X .008681764) + (68,413 X .052090584) 936.88 + 3563.67 A = 4501 STEP 4: SA = A X (LBD/LB) X (OR/.90) 4501 X l X (.9037/.90) SA = 4520 Using the most recent information as to the number of licensed and approved beds in calculating net bed need, there is a surplus of 195 nursing home beds for district 3 in July, 1988: 4,520 gross beds needed minus (3,789 licensed beds plus 926 approved beds (90 percent of 1,029))(195). Based upon the foregoing, there is insufficient need pursuant to the Need Methodology to warrant approval of the Petitioner's application.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner's application for certificate of need number 4123 be DENIED. DONE and ORDERED this 25th day of March, 1987, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0049 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s), if any, in the Recommended Order where they have been accepted. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Paragraph numbers in the Recommended Order are refereed to as "RO ." Petitioner's Proposed Findings of Fact: Proposed Finding RO Number of Acceptance of Fact Number or Reason for Rejection RO 5. RO 6. 3 RO 13-14. 4 RO 13. See RO 16 and 31. Although it is proper to count the number of licensed beds as of June 1, 1985, for purposes of determining gross bed need, it has been concluded as a matter of law that it is not proper to count the number of licensed beds as of June 1, 1985 for purposes of determining net bed need pursuant to the Need Methodology. The first sentence is accepted in RO 17. Although the second and third sentences are technically correct, the weight of the evidence established that there were 3,789 licensed nursing home beds as of June 1, 1985. Irrelevant. Although Mr. McElreath did so testify, the weight of the evidence supports a finding of fact that there were 3,789 licensed nursing home beds as of June 1, 1985. See RO 17. Not supported by the weight of the evidence. The additional 60 beds of Lake Highlands Nursing Home (for a total of 142) were taken into account in the SAAR. Although the first sentence is correct, there was evidence that indicates there was an error in the report. The last sentence is not supported by the weight of the evidence. See RO 17. 11 RO 15. 12 RO 18. The first sentence is generally true-- the specific point in time for the calculation of licensed beds is only for purposes of calculating gross bed need. See RO 20 and 31. The last sentence is irrelevant. The first sentence is accepted in RO 21. The second sentence is rejected to the extent that it suggests that a date is specified for inventoring licensed beds for purposes of determining net bed need. See RO 20 and 31. The first sentence is accepted in RO 28. The last sentence is irrelevant. Irrelevant. 17 RO 23. 18 RO 23. The evidence did not prove that there is not "any other published statement of the rationale...." The testimony only proved that none of the witnesses were aware of any such publication. 19 RO 24. Irrelevant. Not supported by the weight of the evidence. Mr. Carter gave a reason for the policy. 22-23 and 25-31 Irrelevant. These proposed findings of fact are proposed in support of the Petitioner's proposed interpretation of the Need Methodology. The correct interpretation of the Need Methodology is a question of law. 24 Not supported by the weight of the evidence. The witnesses were not aware of any such statement and no evidence was presented to find that such a statement exists, but the evidence did not prove that none exist. 32 Not supported by the weight of the evidence. See RO 36-37. The Respondent's Proposed Findings of Fact: 1 RO 1-2. RO 3. RO 4. Although the parties stipulated that for purposes of this case, approval of the Petitioner's application would depend upon whether need exists under the Need Methodology, this conclusion of law is not generally correct. The determination depends upon a weighing of all the criteria, absent a stipulation of the parties, of Section 381.494(6)(c) , Florida Statutes (1985). RO 9. Not supported by the weight of the evidence. See RO 36-37. Although this is the Respondent's position, the evidence failed to support a conclusion that the Respondent has adopted a valid policy. See RO 23 and 24. COPIES FURNISHED: Robert D. Newell, Jr., Esquire 200 South Monroe Street Suite B Tallahassee, Florida 32301 Paul V. Smith, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue The issue presented for determination herein is whether or not F.A.C. Health Care, Inc., d/b/a Spring Hill Health Facility (Petitioner) is entitled to a Certificate of Need to establish a 60-bed nursing home to serve Hernando County.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at hearing, including the pre-hearing stipulation, the following relevant facts are found. F.A.C. Health Care, Inc. is a wholly-owned subsidiary of First American Corporation. First American Corporation has owned, operated and developed approximately 75 long-term care and retirement facilities over the past 15 years. These operations are primarily located in the southeastern United States. At present, First American Corporation operates 20 facilities and has seven Certificates of Need in the developmental stages. (TR. 35, Fulmer) On January 14, 1984, Petitioner filed an application with the Respondent for a Certificate of Need to construct and operate a community nursing home in the City of Spring Hill in Hernando County, at a total cost of $3,180,000. (Petitioner's Exhibit 1) The letter of denial accompanying the state agency action report dated April 30, 1984, noted the basis for denial as follows: Existing and approved bed capacity in Citrus/Hernando Counties is sufficient to satisfy projected need for 1986. There are 60 nursing home beds that have been approved but have not been constructed at the present time, which, when added to the existing nursing home bed supply in Citrus/Hernando Counties, will serve to satisfy a portion of the projected need for skilled nursing home beds in the sub-district through 1986. The proposed 120 beds are in excess of the 37 beds needed to reduce the prospective base utilization rate to a reasonable level by 1986. (TR. 36, Fulmer; Petitioner's Exhibit 2) On September 26, 1984, Petitioner amended its original application to reflect a reduction from 120 to 60 nursing home beds. Documents reflecting the corresponding reduction in project costs from 53,180,000 to 51,780,000 were submitted with the amended proposal. (Petitioner's Exhibit 3) FINANCIAL FEASIBILITY OF THE PROPOSED SPRING HILL FACILITY The immediate and long-term financial feasibility of a project is one criteria considered during the Certificate of Need review process. Section 381.494(6)(c)9., Florida Statutes. The total cost of the project of 51,780,000 appears reasonable and in line with similar projects. Funds for full 100 per cent financing of the project are available through industrial revenue bonds at 14 per cent interest over 30 years. In order to acquire an industrial revenue bond application, Petitioner would maintain a $150.000 debt service reserve fund. (Petitioner's Exhibit 3) Other methods of financing available to finance the subject project include conventional financing, syndicated equity programs and insurance investment programs. (Testimony of Fulmer at TR. 39-40) Due to the largely rural setting, projected utilization for the first year would be 81 per cent Medicaid, 5 per cent Medicare and 14 per cent private pay. Occupancy is projected to reach 97 per cent by the fifth full month of operation and would be supported in part by the increased utilization of nursing home beds as a direct result of the implementation of diagnostic related groupings. Pro forma statements for the first and second years of operation show a net operating profit beginning in the ninth month and continuing through the second year. The equipment costs, staffing patterns and personnel budget also appear reasonable for this type of project. METHODS AND CONSTRUCTION COSTS Another issue in this proceeding was whether Spring Hill satisfied the criteria in Section 381.494(6)(c)13., Florida Statutes, regarding the cost and methods of construction. Spring Hill's proposed facility will provide 11,981 square feet devoted to patient care and 9,710 square feet for administrative and common service areas at a construction cost of $41.50 per square foot. (Petitioner's Exhibit 3) Proposed construction costs and methods of construction efficiently minimize square footage space requirements and related construction costs and will permit the most efficient operation of the facility at a low per diem cost. The construction cost appears reasonable and is also supportive of a primarily Medicaid based facility. Finally, Respondent offered no evidence to controvert the reasonableness of construction costs and methods proposed by Petitioner. IMPACT ON HEALTH CARE COSTS Section 381.494(6)(c)12., Florida Statutes provides that as part of the Certificate of Need review, probable impact of the proposed project on the cost of providing health care services be considered. Petitioner's expert, Fulmer, urges that there would either be no impact on the cost of care or due to the availability of additional Medicaid beds, costs would be reduced since the private pay demands of family and relatives having to pay for the care of an individual rather than participating in the Medicaid program would reduce the costs of health care to the community rather than increase the financial burden. In this regard, Petitioner offered no evidence to substantiate the claim that the demand for Medicaid beds exceeded the supply, or that Medicaid patients had been refused health services by the available Medicaid health care providers. AVAILABILITY AND ACCESSIBILITY OF EXISTING SERVICES Hernando County lies within HRS District III which is composed of 16 counties in north-central Florida, stretching from the Gulf of Mexico north of Tampa to the Georgia border. (Petitioner's Exhibit 6) The District is further divided into sub-districts. Hernando County represents a separate sub-district. Petitioner's facility is proposed to be located in the City of Spring Hill, located in the fastest growing area of Hernando County. (Petitioner's Exhibits 1 and 2) The latest bulletin (No. 69) from the University of Florida, Bureau of Economic and Business Research, shows a 90 per cent projected growth between 1980 and 1990. Much of the population in the Spring Hill area falls in the 65 and older age bracket. County age group projections released by HRS on September 24, 1984, reveal that the elderly population of 65 and over in Hernando County in 1985 is projected as 17,616, or approximately 27 per cent of total population. By 1990, those projections will grow to 24,887 or approximately 29 per cent of total population. (Respondent's Exhibit 2) The growth trend in Hernando County is an extension of the rapid coastline development occurring in the New Port Richey- Clearwater areas and the counties to the south of Hernando. Previously, the only major development in Hernando County was centered in Brooksville, the middle of the county. Consequently, the existing community nursing home services in Hernando County are concentrated in the Brooksville area. Although Petitioner, through its expert (Konrad) testified that there is a mal-distribution of existing beds and community nursing home services which renders them neither available nor accessible to the rapidly growing elderly population in the southwestern Hernando County corridor and that high occupancy rates in existing community nursing homes in the area and the existence of waiting lists corroborates the lack of availability and accessibility of community nursing home services in the area, the evidence introduced herein failed to establish either the existence of waiting lists or that the existing community nursing homes in the area were overcrowded. SHELTERED VERSUS COMMUNITY NURSING HOME BEDS Petitioner contends that certain nursing home beds associated with the adult congregate living facility at Evergreen Woods in the Spring Hill area are not actually available and accessible to the general public but instead are functioning as sheltered nursing home beds. Respondent, on the other hand, considers the 60 nursing home beds associated with Evergreen Woods to be available and accessible to the general public. A review of the entire record compiled herein failed to substantiate Petitioner's claim that those beds at Evergreen Woods are unavailable and/or inaccessible to the general public. DETERMINATION OF NEED, SECTION 381.494(6)(c)1., FLORIDA STATUTES. In determining need for nursing home beds, a Certificate of Need project is reviewed on a 3-year planning horizon. In this case, predicted need for nursing home beds in District III and the sub-district of Hernando County is calculated through 1987. Hernando County is a single county sub-district located within in HRS planning District III in north central Florida. HRS has determined the overall nursing home bed need for District III as well as sub-district allocations by applying the uniform nursing home bed need methodology for community nursing home services contained in Florida Administrative Code Rule 10- 5.11(21). (Petitioner's Exhibit 5) Respondent provided a step-by-step application of the community nursing home bed need rule and introduced their exhibits supporting the calculation period (Testimony of expert medical facilities consultant, R. Jaffe and Respondent's Exhibits 1 and 2). Briefly stated, application of the pertinent rules reveals an extrapolated need for 31 beds which are available for CON approval based on data available to Respondent on June 29, 1984 and that 36 beds are available based on later data released on September 24, 1984. (TR. 91, Conrad; TR. 130, Jaffe and Petitioner's Exhibit 6) The census report applicable herein reflects that there were 360 licensed beds in the Hernando sub-districts and no approved beds for a total of 360 beds. 2/ Application of the nursing home bed need methodology is not the sole factor used in determining whether a CON application should be granted. Other factors, such as access, high occupancy rates, chronically underserved population and high Medicaid utilization are definite factors in approval of additional beds in cases where the rule shows either no need or only slight need. Respondent has, on several occasions, granted 60-bed applications where accessibility issues justified the grant of a minimum-sized facility in spite of the lesser numerical need indicated under the rules. 3/ Petitioner referred to instances wherein Respondent had granted approval for CON's in other districts where there were unusual circumstances such as accessibility issues as referred to herein above. A review of those cases reveals that a departure from the usual bed-need methodology is warranted in cases of extremely high occupancy rates (95 per cent or higher) or the facilities with lower occupancy rates, e.g. 85.7 per cent for homes in Sarasota County, which were located in inaccessible distances away from the population concentration. Petitioner has not demonstrated sufficient basis herein to warrant a departure from the usual bed need rule methodology. The instances wherein a departure from the usual bed need rule methodology has occurred are distinguishable, inasmuch as in the instant case, there are three existing facilities presently in Hernando County offering 360 nursing home beds. Current occupancy rate has been shown to be reasonable and is standing at or below average for District III. Additionally, Respondent introduced a "Stipulation of Settlement" dated September 28, 1984 which was entered into by and between Evergreen Woods Health Care Center and Respondent. The substance of that stipulation reveals that during October of 1983, Evergreen Woods Health Care Center (EWHCC) as Petitioner, filed an application with Respondent for a Certificate of Need to add 60 beds to its existing 60-bed nursing home located in Spring Hill, Hernando County, Florida. The application sought 45 community beds and 15 sheltered beds. As a means of amicably resolving that proceeding and based on available need data based on applicable quarterly census reports and application of the need criteria, EWHCC, as Petitioner in that proceeding, amended its Certificate of Need application filed October, 1983, to add a total of 60 beds to its existing facility; 31 beds to be designated as community beds and 29 to be designated as sheltered beds. A review of the public records reveal that the Certificate of Need has been issued (amended CON No. 2959 issued early October, 1984) pursuant to that stipulation of settlement. 4/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that: The application of First American Corporation d/b/a Spring Hill Health Facility for establishment of a 60-bed nursing home facility in Hernando County, Florida, be DENIED. RECOMMENDED this 14th day of February, 1985, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 1985.
The Issue Whether Petitioner's application to divide the beds authorized by CON 2696 and combine a portion of those beds with an existing facility should be granted expedited review?
Findings Of Fact Health Quest owns and operates a 107-bed nursing home at 7130 Southside Boulevard in Jacksonville, located within Subdistrict 3 of HRS District IV. Location of CON 2696 In July of 1983, Health Quest filed the application for CON 2696. Such application sought approval for a 120-bed nursing home in Duval County, which at that time constituted a separate planning subdistrict. The application for CON 2696 was denied and Health Quest filed a 120.57 petition contesting such denial; the petition was referred to DOAH and designated as Case No. 84-0031. Case No. 84-0031 was thereafter consolidated with the cases involving the other CON applications filed in July of 1983 for Duval County. The other applications were: (1) an application by Beverly Enterprises ("Beverly"), seeking a 12-bed addition (CON 2748) to its previously-approved 108-bed facility; (2) an application by Beverly for a new 120-bed facility (CON 2732); (3) an application by Florida Convalescent Centers, Inc. ("FCC") for a 120-bed facility (CON 2969). The cases were consolidated under Case No. 83-3746. On January 9, 1985, Case No. 83-3746 was settled by the execution of a stipulation between the applicant-petitioners and HRS. By the terms of the stipulation, CON 2748 was issued in full and each of the other applications was partially approved: CON 2696 was approved for a 105-bed facility, CON 2969 was approved for a 106-bed facility, and CON 2732 was approved for a 100-bed facility. The CONs were issued in accordance with the stipulation. CON 2696 was issued on January 31, 1985. On March 7, 1985, a 120.57 petition objecting to the issuance of CONS 2696, 2969, 2732 and 2748 was filed by Methodist Regional Hospital System, Inc., d/b/a Methodist Manor Nursing Home ("Methodist"). The petition, which demanded that Methodist's own application be reviewed comparatively with the July 1983 applications, was referred by HRS to DOAH and designated as Case No. 85-0824. On April 9, 1985, HRS amended Fla. Admin. Code Rule 10-17.016 to provide for new subdistricting of HRS District IV. Duval County, by the new rule (which is still in place) was divided into three subdistricts, with adjoining counties included in each subdistrict. Methodist's petition was initially dismissed by HRS in accordance with a Hearing Officer's recommendation; however, such dismissal was reversed by the First District Court of appeals, which remanded the case for further hearing pursuant to an opinion dated September 24, 1986. Methodist Reg. Hos. System v. State, 497 So.2d 272 (Fla. 1st DCA 1986). After Case 85-0824 was remanded, Hearing Officer Charles C. Adams entered an Order dated February 20, 1987, directing the applicants to file an indication within 30 days of their choice of "planning horizon" and planning subdistrict. On March 16, 1987, Health Quest filed a notice in Case No. 85-0824 stating that it wished to proceed in Subdistrict 2 with a July 1986 planning horizon. On March 20, 1987, Methodist filed a Notice of Voluntary Dismissal of its petition in Case No. 85-0824. On June 8, 1987, HRS issued a Final Order in Case No. 85-0824. The Final Order in Case No. 85-0824 states, in part, that: Petitioner's petition for formal administrative proceeding is hereby DISMISSED. The following Certificates of Need ("CON") issued by the Department thereby become final action of the Department: CON No. 2732 to Beverly Enterprises for a 100 bed nursing home facility in Subdistrict 1 of Duval County; CON No. 2696 to Health Quest Management Corporation for a 105 bed nursing home facility in Subdistrict 2 of Duval County; CON No. 2969 to Florida Convalescent Centers, Inc., for a 106 bed nursing home facility in Duval County. The Final Order in Case No. 85-0824 was not appealed. After HRS issued CON 2696 on January 31, 1985, Health Quest applied for and received three CONs to add beds to CON 2696: CON 4133 for 15 beds, CON 4674 for 30 beds and CON 5494 for 30 beds. The stated purpose of these additions was for Health Quest to build a 180-bed facility in Southwest Duval County. Southwest Duval County is part of Subdistrict 2 of HRS District IV. By application for CON 5653, filed on July 18, 1988, Health Quest sought expedited review from HRS for approval to divide the 180 beds received in CON 2696 (105 beds), CON 4133 (15 beds), CON 4674 (30 beds) and 5498 (30 beds), which were to have been constructed as a 180-bed facility in Subdistrict 2. Health Quest requested that it be allowed to transfer 60 beds to Careage II Healthcare Center, to be added to the 60 beds authorized by Careage's CON 4675. Approval of the application would result in two 120-bed nursing home facilities being developed in Subdistrict 2. By CON 5657, issued November 16, 1988, HRS approved the transfer of CONs 4674 (30 beds) and 5498 (30 beds) from Health Quest to Careage. By letter dated August 25, 1988, Health Quest advised HRS that it was amending its application for CON 5653. Instead of building a 120-bed facility in Subdistrict 2 with the remaining 120 beds, Health Quest now wanted to add 13 beds without any new construction to Health Quest's existing facility in Subdistrict 3 of HRS District IV, in Duval County, and add 60 beds by constructing a 60-bed addition to the same existing facility. By letter dated September 6, 1988, HRS returned the application for CON 5653, stating that the proposal by Health Quest was not subject to expedited review. In every CON application to add beds to, or divide beds from, the beds approved in CON 2696, Health Quest stated that the project was to be built in Southwest Duval County in Subdistrict 2, with the exception of the amended application at issue in this case. At the time Duval County was divided into three subdistricts (see Finding of Fact 8), HRS had to determine, for inventory purposes, in what subdistrict beds which had previously been approved for all of Duval County were located, For existing nursing homes, the beds were allocated based on the facility's address. For beds which had been approved but the facility had not been built, HRS looked at final orders and at declarations by the applicant made either as part of an administrative hearing process or in letters indicating where the facility would be located. The inventories are used to calculate the fixed need pools and to make the determination of whether additional beds are needed in each subdistrict. Since the final order was issued in Case No. 85-0824, HRS has considered the beds approved by CON 2696 to be located in Subdistrict 2 for purposes of its inventory and need projections, based on the pleadings filed by Health Quest in Case No. 85-0824 (see Finding of Fact 11) and on the Final Order issued in Case No. 85-0824 (See Finding of Fact 14). The 1988 Amendments to Chapter 381, Florida Statutes. On September 29, 1987, Health Quest filed with HRS an application seeking expedited review for a proposal to divide CON 3278, authorizing a 180- bed nursing home facility in Sarasota County, into two components. One component was to be a 120-bed freestanding facility and another component was to be a 60-bed addition to an existing 53-bed nursing home operated by Health Quest. HRS denied the application for expedited review based on its interpretation of Section 381.706(1)(e), Florida Statutes. HRS interpreted that section to mean that the addition of beds to an existing facility could only be accomplished through batched, comparative review and not through expedited review. In response to HRS's denial, Health Quest filed a petition for an Administrative Hearing and decided to pursue legislation which would make it clear that Health Quest could do what HRS was refusing to approve. Health Quest hired a legislative lobbyist and Mr. Kevin Krisher, Health Quest's Vice President for Planning, wrote statutory language which, in his opinion, would allow Health Quest to accomplish what it wanted. HRS initially opposed the proposed legislation. However, when it became clear that the proposed legislation would become law, HRS contacted Health Quest to propose modifications to the proposed statutory language. After a negotiating session on May 30, 1988, Health Quest and HRS agreed on the language changes proposed by HRS. The changes proposed by HRS dealt with the language which is now codified in Section 381.705(3), Florida Statutes (1988 Supp.). On May 31, 1988, Health Quest and HRS entered into a written agreement regarding the effect of the proposed legislation on Health Quest's application to divide CON 3278. The relevant parts of the agreement provide that: RECITALS Health Quest holds CON No. 3278 ("the CON") authorizing a 180-bed nursing home in Sarasota County. Health Quest operates a 53-bed nursing home ("the Facility") adjacent to the Lake Pointe Woods retirement complex in Sarasota. On September 29, 1987, Health Quest filed with HRS an application seeking expedited review for its proposal to divide the CON into a 60-bed component and a 120-bed component. As set forth in the application, the 60-bed component is for an addition to the Facility and the 120-bed component is for a freestanding facility. Since on or before September 4, 1987, it has been the Department's position that such division or consolidation could be accomplished only through batched comparative review. * * * 5. The Florida Legislature is considering the enactment of the Affordable Health Care Assurance Act of 1988 ("the Act"). The Act would amend Section 381.706(2), Florida Statutes, to add subsections (j) and (k), providing for expedited review of applica- tions to divide a single approved facility or to consolidate two or more approved certificates of need into a single facility. The Act would also add Section 381.705(3) to limit the criteria for review of certain applications filed under Section 381.706(2)(j) or 381.706(2)(k) and would add Section 381.710(2)(d) providing for extension of the validity period of CONs for which applications under Section 381.706(2)(j) or 381.706(2)(k) are filed. * * * TERMS HRS acknowledges that an applicant would be entitled, under the Act, to expedited review of applications not only to divide or consolidate CONs but to do both at the same time, e.g., divide 60 beds from CON 3278 and consolidate these beds into the existing beds at the Facility now operated by Health Quest. At such time as the Act becomes law and Health Quest files an application ... Upon approval of the application, Health Quest shall dismiss the DOAH proceeding and the District Court of Appeals proceeding involving the division of CON 3278. The agreement was signed by J. Robert Griffin, HRS's Deputy Assistant Secretary for Regulation and Health Facilities, and Charles M. Loeser, Health Quest's Vice President and General Counsel. The proposed statutory language was enacted by the legislature in Sections 20-22 of Chapter 88-294, Laws of Florida and is codified in Sections 381.705(3), 381.706(2)(j), (k), and 387.710(d), Florida Statutes (1988 Supp.). The statutory language contained in paragraphs (j) and (k) of Subsection 381.706(2), Florida Statutes, is language proposed by Health Quest and the language did not change after HRS and Health Quest entered into the agreement of May 31, 1988. After Chapter 88-294, Laws of Florida, was enacted and the provisions of sections 20-22 became effective, HRS approved Health Quest's application to divide CON 3278 and issued CON 5651A for a freestanding 120-bed facility and CON 5651B for a 60-bed addition to an existing facility. Even though HRS approved Health Quest's application to divide CON 3278 and add beds to an existing facility, HRS now interprets the provisions of Section 381.706(2)(j) and (k), Florida Statutes, as not allowing for expedited review of an application to divide a CON and add a portion of the beds to an existing facility. HRS still views the provisions of 381.706(1)(e), Florida Statutes, as mandating full comparative review of any application seeking to add beds to an existing facility. This interpretation is the same interpretation HRS had prior to the passage of Chapter 88-294, Laws of Florida.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that HRS issue a Final Order finding that Health Quest's application is not subject to expedited review and that CON 2696 has expired. DONE AND ORDERED this 13 day of March, 1989, in Tallahassee, Leon County, Florida. JOSE A. DIEZ-ARGUELLES Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 88-5079 & 88-5846 Rulings on Health Quest's Proposed Findings of Fact 1-2. Accepted. 3. First sentence accepted. Rest of paragraph is argument. 4-19. Accepted. 20-21. True, but irrelevant. Rejected as argument. Accepted. Rejected as cumulative. Rejected as cumulative and argument. Also, no competent evidence was presented which establishes why HRS's Final Order placed Beverly's CON in Sub- district 1; therefore, the arguments relating to Beverly's CON are conjecture. Rejected as argument. 27-29. Rejected as argument. Also, the argument that moving the beds from Subdistrict 2 to Subdistrict 3 will have no effect is without merit. Health Quest would be awarded additional beds in Subdistrict 3 without having to compete for them, or, if Health Quest is correct that there is no need in Subdistrict 3, without having to show need for them. The argument that having the beds inventoried in Subdistrict 2 has had no effect because Subdistrict 2 now has too many beds is equally without merit. The question is what effect the inventory had in determining the amount of need in prior years when beds were awarded. 30. Rejected as argument. 31-37. Accepted. 38. Rejected as argument. 44-46. Accepted. 47-49. Subordinate to facts found. 50-59. Rejected as argument. Rulings on HRS's Proposed Findings of Fact 1-22. Accepted. A number of these proposed findings of fact are subordinate to facts found. 23. Irrelevant. 24-26. Accepted. Accepted. Rejected as argument. 29-30. Accepted. 31-32. Recitation of testimony. Irrelevant. Accepted. Accepted that this is HRS's view. Rejected. HRS approved the Health Quest Sarasota CON. 37 . Accepted First sentence rejected as not supported by the evidence. Accepted that this reflects the testimony of the HRS witness. However, reject that the testimony serves as justification. The issue here is not adding new beds to a subdistrict, but in which facility the beds should be placed. Any time new beds are to be added all applicants can compete. COPIES FURNISHED: Charles M. Loeser, Esquire Health Quest Corporation 315 West Jefferson Boulevard South Bend, Indiana 46601-1586 Leslie Mendelson, Esquire Theodore E. Mack, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Steven W. Huss, Esquire 1017-C Thomasville Road Tallahassee, Florida 32303 =================================================================
Findings Of Fact HCR initially applied for a CON to construct a 120-bed nursing home facility in Lee County, DHRS District VIII. DHRS assigned this application CON Action 3854, which it denied. Manor Care also initially applied for a CON to construct a 120- bed nursing home facility in Lee County, DHRS District VIII. DHRS assigned this application CON Action No. 3850, which it denied. Manor Care and HCR timely filed petitions for formal administrative hearings which resulted in the DOAH Consolidated Case Nos. 85-2937 and 85-3240. During the hearing, Manor Care and HCR offered updated CON applications (respectively MCI and HCRS). While the Manor Care proposal is a "scale-down" to 60 beds (HCR still proposes 120 beds. both applications propose nursing home beds be set aside to offer a therapeutic environment for patients with Alaheimer's Disease and patients with related disorders. Manor Care's update also provides for an attached 60-bed adult congregate living facility (ACLF), which does not require a certificate of need. DHRS objected to the admission in evidence of the respective applications but did not move for relinquishment of jurisdiction to the agency for consideration by its experts of the updated material in lieu of formal hearing (Vol. III p. 54). Both applications had been submitted to the DHRS attorney prior to hearing. Upon the Hearing Officer's own motion, an evidentiary hearing was conducted prior to the taking of other evidence solely on the propriety of consideration of the updated applications without resubmittal to DHRS. The HCR update did not change the number of beds, nor the patient mix. The Manor Care update was downsized to 60 beds, and this is permitted as a matter of law. Neither update requires amendment of the District Health Plan or the same fixed pool; neither attempts to alter the January 1988 planning horizon contemplated by the original January 1985 applications. The other changes contained in the updated applications relate to a description of the Alzheimer's Disease (AD) program and design of the AD unit for each application, or other changes such as increase or decrease in costs due to inflation and the passage of time, including particularly, the fact that subsequent to the filing of the original application there was a recognition in the District Health Plan and the State Health Plan of the special needs of AD patients, which was contained in the 1985-87 State Health Plan, Vol. III, p. 109. (T-73-74, Vol. II - testimony of HCR expert, Milo Bishop; DHRS Exhibit 5), and the subsequent Local District VIII Health Plan also identified the concern of availability of beds for Medicaid patients. Specifically, the District VIII Health Plan recommends priority consideration for nursing home beds to be given to applicants that will propose to accept a proportion of Medicaid eligible patients that is at least equal to the most recent quarterly figure of Medicaid occupancy in the district. (T-75, Vol. III, DHRS Exhibit 5). The updated application of HCR was filed to reflect these recently identified needs of the AD patients, sub- acute patients and Medicaid patients. The update of each Petitioner also clarifies assurances of Medicaid availability. The updated applications of both Manor Care and HCR proposed special programs for AD patients and a separate wing which appears now to be a treatment of choice for these types of patients. Awareness of AD and its ramification has increased significantly in the recent past. Recognition of the special needs of these patients in the respective updated CON applications constitutes refined material describing the current state of knowledge in medical care. The proposals by Manor Care and HCR to designate separate units and programs for AD patients does not constitute a substantial change in the applications for all of the foregoing reasons but also because any nursing home may admit and treat AD, related disorders, and sub-acute care patients without obtaining a specialized CON and because these types of patients could have been treated in the nursing homes described in the original applications. As far as the identification of newly available information on AD and related disorder patients are concerned, the updates are clearly encouraged within the purview of Balsam v. Department of Health and Rehabilitative Services, 486 So. 2d 1341 (Fla. 1st DCA 1986). Over all, none of the amendments of the Petitioners are substantial and the updated applications of both Manor Care and HCR are proper amendments permitted in these de novo proceedings pursuant to McDonald v. Department of Banking & Finance, 346 So. 2d 569 (Fla. 1st DCA 1977); and Gulf Court Nursing Center v. DHRS, 483 So. 2d 700 (Fla. 1st DCA 1985), Motion for Rehearing (Feb. 14, 1986). The ruling that both amended applications were not substantial amendments and therefore no remand to the agency was necessary was entered on the record (Vol. III, p. 103 and is accordingly reiterated and confirmed here, within the Recommended Order. During the hearing, all the parties stipulated to the reasonableness of construction (and equipment) cost, and financial feasibility of both projects. DHRS (but not the Petitioners) stipulated that both Petitioners projects satisfied all quality of care considerations. Upon all the evidence (oral, documentary, and demonstrative) including but not limited to the testimony of Loma Overmeyer, Charlotte Young, Tal Widdes, and John Lee, it is found that both Petitioners have affirmatively demonstrated their respective abilities to provide satisfactory quality of care to their patients through these respective proposed projects. Rule 10-5.11(21), Florida Administrative Code, contains DHRS' methodology for computing nursing home bed need. The need methodology provides that the need for proposed new community nursing home beds is to be determined 3 years into the future. Here, the applicable planning horizon is January, 1988, which is 3 years from the time the initial applications were filed. Applications for new community nursing home beds will not normally be approved if such approval would cause the number of community nursing home beds in an area to exceed the bed need calculated pursuant to Rule 10-5.11(21)(b) 1-10 Florida_ Administrative Code. Applications for community nursing home facilities are normally approved for a minimum of 60 beds. All need experts utilized current population figures provided July 1, 1986 by the Office of the Governor. However, DHRS has arrived at a 37 bed surplus. The DHRS expert, Joyce Farr, testified she used the date of hearing (July 1986) as a basis and current population figures, rendering a gross need of 1,089 beds. If current population figures are used and the January 1985 (initial application date) is used, there is a gross bed need of 1,204 beds. There are 996 licensed nursing home beds in Lee County as of June 1, 1986. Applying the rule to either gross bed need leaves 93 (1089 minus 996) net need or 208 (1204 minus 996) net need. Manor Care calculated both ways and would qualify by either method if it were the sole applicant, but the net bed need by either calculation greatly exceeds the beds proposed by Manor Care. The latter calculation, based on January 1985 instead of the 1986 population projections is urged by HCR as preserving the sanctity and logic of batching cycles and planning horizons. Such an application of the rule's methodology would clearly permit a CON for 60 nursing home beds to be issued to Manor Care and also permit a CON for 120 nursing home beds to be issued to HCR, with a surplus of 28 beds. This solution of awarding a total of 180 beds (60 plus 120) would not offend DHRS established policy that applications for community nursing home facilities are normally approved for a minimum of 60 beds. Nonetheless, HCR's reading of the rule mixes 1985 and current figures without adequate justification in the record and is neither literal nor in conformity with the agency policy and interpretation which witness Farr testified has been applied by her on behalf of DHRS in at least 100 contested CON formal hearings. Further, it is clearly logical and in the best interests of the public and the health planning professions, and in accord with the intent of Chapter 381 F.S. to apply those figures which will most accurately reflect the bed need at the projected (January 1988) planning horizon. In this instance, that set of figures renders the net general community nursing home bed need as 93. However, Joyce Farr also testified that she had been instructed by her supervisor not to apply the rule as promulgated but instead to reserve 143 beds for Lee County and to subtract these beds as if they were already approved. The "reserved" 143 beds represent DHRS' interpretation of Gulf Court v. DHRS. Pursuant to directions in the opinion of the First District Court of Appeal in that case, DHRS has received, for comparative review, CON applications from the three party applicants in that case. Those parties' applications were originally filed in 1981 and 1982, and are for nursing home beds in Lee County. As of date of formal hearing in the instant cause, none of the "Gulf Court" parties' applications had been approved. The Department's stated intention regarding the three "Gulf Court" applications is to award 143 beds to one or more of the party applicants in that case. This intention is based upon the Department's interpretation of the Gulf Court case, and not upon any calculation of need for a planning horizon. As of date of hearing, DHRS had not given any consideration to the effect of changed statutes, regulations, facts, or circumstances on the "fixed pool" of beds applied for by the "Gulf Court" applicants. In her calculation of net need for the sub-district of Lee County, the DHRS witness counted the 143 beds set aside for the "Gulf Court" applicants as "approved" beds. Other than those beds, there are no other approved beds, nor any applications pending from prior batches. The DHRS methodology used to subtract 143 beds is not consistent with the provisions of Rule 10-5.11(21), Florida Administrative Code. (See Conclusions of Law). If the DHRS bed need formula contained in Rule 10- 5.11(21), Florida Administrative Code, is used, the correct number of beds needed for the planning horizon of January 1985 through January 1988 is 93 general community nursing home beds. Each applicant has included, in the updated applications presented at hearing, a number of beds set aside in a unit for Alaheimer's Disease (AD) patients. Manor Care has indicated that 18 beds would be so designated. HCR proposes to establish a 30 bed unit for both "Alzheimer's and the related disorders"' including 15 beds "just for wanderers." AD "is a degenerative process of the brain, characterized by memory impairment and impairment in several mental and physical functions." The disease progresses at certain levels or stages. There are four progressively worsening stages of this disease. In the first stage, the patient starts to forget names and facts in the recent past, and also begins to be unable to perform some complex tasks that the patient was able to perform before the disease began. In stage two, the impairment in memory increases. The patient starts to forget common names of objects usually used in daily living, and the patient starts to wander. There are often behavioral problems, such as agitation or depression. In stage three, there is. physical impairment, including incontinency, speech disturbances, and problems with communication. In stage four, the patient most of the time is confined to a bed, and largely unaware of his_ environment. He is incontinent. Without adequate care, he has sores on his back. He is nearing death at that point. AD is irreversible and the cause is unknown. Diagnosis is very difficult. The only positive method of diagnosis is by brain biopsy. The most common method of diagnosis is by a process of elimination and this often fails in the early stages of AD. Incidence of AD increases in the over 65 population but there are cases of some patients as young as 30. A large percentage of any nursing home is suffering from some form of dementia. The estimated need of "irreversible dementia" patients in nursing homes in Lee County for the year 1988 is 2,189. Out of this number of patients, 60% would be specifically AD patients or 1,313. Dr. Baquero presently has 100 AD patients in existing area nursing homes. AD patients are cared for in almost all nursing homes, but usually there is no separate area or program. There are no specialized programs or units for AD patients currently established in Lee County. The existing facilities in Lee County do not provide adequate care to persons suffering from AD. Because of the lack of facilities, AD patients are often kept at home until families are to the pint of desperation. Care of the AD patient is an enormous, 24 hour-a-day burden on the care-givers. Additional stress is caused by personality changes that often accompany the disease. Most facilities in Lee County will not accept a difficult patient. Families of AD patients have placed patients in facilities out of country, out of state, and out of country, because of the lack of facilities in Lee County. Dr Baquero, practicing medical physician in Ft. Myers, who is experienced in treating AD patients and who has knowledge gained as Medical Director for two existing nursing homes, was qualified as an expert in the care and treatment of AD patients. Upon his evidence and upon evidence of the representatives of the Alzheimer's Disease and Related Disorders Association (ADRDA), it is found that AD patients frequently have to be placed outside Lee County, as far as 60 to 70 miles from home. Approximately 50% of AD patients consulting ADTDA return to northern home states or go to foreign countries rather than awaiting long- delayed Lee County placement. Placement of AD patients also on Medicaid or needing sub-acute care is even more difficult. The Petitioners further demonstrated that other patients in addition to AD patients are not adequately served by the existing facilities in Lee County. It is extremely difficult in Lee County to place a patient who is in need of high technology or "sub-acute" care. Such patients include those in need of intravenous antibiotic therapy, ventilators, oxygen, feeding tubes or pumps, decubitus ulcer care (bed sores), etc. Feeding pumps and bed sores may eventually become a way of life for AD patients. AD patients may also require other forms of sub acute care and can be on Medicaid. Many of the existing nursing homes are not capable of handling such patients who often must be placed out of county. These difficult patients are frequently placed out of county or at great distance from their homes within the county, creating added burdens on elderly spouses and family members. The burden of out of county placement has created or intensified "separation syndrome" accidents and death for such patients elderly spouses. Implementation of the Diagnostic Related Grouping (DRG) system of Medicare reimbursement has been an incentive for hospitals to release patients as soon as they are no longer in need of "acute care," but due to the inability to place these patients, they stay in hospitals longer than necessary, resulting in a much higher expense than would be the case if a nursing home placement could be achieved. Additionally "cost shifting' to private and third party insurance payments may be inferred from the DRG statistics admitted. Both Lee Memorial Hospital and Ft. Myers Community Hospital experience difficulty in placing sub-acute care patients, especially those on Medicaid. Fifty per cent or more of Ft. Myers Community Hospital referrals are of sub-acute care patients. Ft. Myers Community Hospital records reflect an increase in hold-overs due to unavailability of nursing home beds. Since October, 1984, Lee Memorial Hospital has had to place 75 out of 941 discharge patients out of county. Only one of these patients was private pay. The majority of Lee Memorial discharges to nursing homes are Medicaid and Medicare patients; 48.3% are Medicare and 22.6% are Medicaid patients for a total of 70.9% of the total discharges to nursing homes. Only 29% of Lee Memorial discharges-to nursing homes are private pay patients. Twenty per cent of all of Lee Memorial's Medicaid discharges to nursing homes are required to be placed out of county and 11.2% of their Medicare discharges are placed out of the County. Mary Shell, the DHRS District Human Services Coordinator confirmed the difficulty of placing Medicaid patients in the county as sub-district and testified to a serious but unquantified shortage of both Medicaid and sub-acute nursing home beds in Lee County. Mr. Dennis Eskew, Supervisor of the DHRS Adult Payments Unit, which determines the eligibility for Medicaid nursing home programs, presented a chart (HCR 15) showing 20% of 203 approved Medicaid patients (41) had to be placed out of county during the immediately preceding six months because of unavailability of such beds in Lee County. Existing nursing homes in Lee County are almost always full. Hospital discharge planners, families, and medical physicians seeking placement of patients uniformly testified that there is a shortage of beds and long waiting periods, even for non-problematic patients and that there is a need for additional nursing home beds for all types of patients including Medicare/Medicaid patients, sub-acute patients, AD patients and routine nursing home patients. However, these witnesses did not attempt to quantify the number of beds needed. There is strong evidence that recently opened nursing homes are not making available promised Medicaid beds and there have been no DHRS enforcement procedures. Although minimally demonstrated, it may be inferred from the foregoing type of testimony that the absence of competition has reduced the incentive of existing local nursing homes to accept those out of the "walkie talkie" category, those still cognitive, ambulatory patients who are able to feed and care for themselves to a large degree. Both Petitioners meet the guidelines in the local health plan that applicants should provide at least 33 1/3% of beds available to Medicaid patients. HCR agreed to provide 46% Medicaid beds (55 beds out of 120) which was the prevailing district rate. The plan gives priority to those applicant who meet this percentage. Manor agrees only to provide 35% Medicaid beds. Both Petitioners indicate a willingness to treat sub- acute patients, but neither seeks a specific number of beds for this purpose. Sub-acute care is considered within the designation of skilled care. Manor Care's emphasis on rehabilitation in its existing facilities has had significant results. Manor Care's historical Medicare percentage is above the industry average. Both Petitioners are in the forefront of developing programs for the diagnosis and treatment of AD disease. Manor Care is prepared to totally commit 18 beds exclusively to AD and related diseases and 21 beds to Medicaid. These may overlap. HCR is prepared to totally commit 32 beds exclusively to AD and related diseases and 55 beds to Medicaid. These may overlap. The special attributes of each proposed AD unit (30 beds by HCR and 18 beds by Manor Care) include a higher staff-to- patient ratio, which is needed to supervise and assist confused and wandering patients and a great deal of attention to the physical environment, from a home-like atmosphere and certain relaxing shades of pink, to special furnishing and fixtures. Particular care is necessary in preparation and serving of food, to allow patients with AD and related disorders to eat adequately and without assistance and to prevent considerable weight loss in the wandering stage which can result in further rapid debilitation. One of the goals of AD programs is to reduce the need for traditionally utilized physical restraints or heavy sedation, and to promote prolonged individual functioning. There is no competent expert testimony contrary to the theme that AD patients require special care and special programs designed to meet their unique medical and custodial needs. The experts with any personal background in the area also uniformly agreed that a separate wing or another isolated area of the nursing home facility is most desirable because of the wandering tendencies of these patients, their hostile, unpredictable, and bizarre behavior, and the other special needs specific to this type of brain degeneration. HCR's Wander Guard security system is viewed as superior by some witnesses.
Recommendation Based on the foregoing, it is RECOMMENDED: That DHRS enter a Final Order approving HCR's updated application for a 120 nursing home bed facility in Lee County limited and conditioned upon HCR's updated application's specific provision for 46% Medicaid beds and upon 30 beds being dedicated as set out in the application and evidence at formal hearing for the specific for treatment of AD patients, and denying the application of Manor Care for a 60 bed facility. DONE and Ordered this 23rd day of December, 1986 in Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32309 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December 1986. COPIES FURNISHED: Jean Laramore, Esquire Kenneth A. Hoffman, Esquire 325 North Calhoun Street Tallahassee, Florida 32302 Donna H. Stinson, Esquire The Perkins House, Suite 100 118 North Gadaden Street Tallahassee, Florida 32301 John Rodriguez, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Building One, Room 407 Tallahassee, Florida 32399-0700 William Page, Jr., Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 APPENDIX_ The following paragraphs constitute specific rulings upon the parties' respective proposed findings of fact as required by Section 120.59(2) F.S. Petitioner Manor Care's Proposals: Covered in Findings of Fact 1, 3. Covered in Findings of Fact 3 and 12. Covered in Finding of Fact 8. Covered in Findings of Fact 3, 9-12. Sentence 1 is covered in Finding of Fact 4; remainder rejected as taken out of context and not clear from the record as a whole. Covered in Finding of Fact 9. Covered in Finding of Fact 12. Covered in Finding of Fact 9-12. Covered in Findings of Fact 9-12. Up to the comma covered in Findings of Fact 12; after the comma accepted but not adopted as unnecessary. Covered in part in Finding of Fact 12; remainder accepted but unnecessary. Covered in Findings of Fact 12. 16-19. Covered in Finding of Fact 6. 20. Covered in Findings of Fact 9-12. Proposals 9, 14, and 15 are accepted but not adopted because subordinate and unnecessary. Petitioner Health Care and Retirement Corporation of America's_ Proposals: Covered in Finding of Fact 1. Covered in Findings of Fact 2. sentence 1 is covered in Finding of Fact remainder rejected as subordinate and unnecessary. Covered in Finding of Fact 3. Covered in Finding of Fact 3. Covered in Finding of Fact 3. Covered in Finding of Fact 3 Covered in Finding of Fact 3. 10-12. Covered in Findings of Fact 3 and 12. Covered in Finding of Fact 12.a. Covered in Findings of Fact 3 and 10. 16. Covered in Finding of Fact 3. 19. Covered in Finding of Fact 3. 20-22. Covered in Finding of Fact 4; rejected in part as not supported by the record. 23-24. Covered in Finding of Fact 4. Covered in Findings of Fact 8 and 9. Covered in Finding of Fact 12. 27-32. Covered in Finding of Fact 8. Covered in Findings of Fact 5 and 6. Covered in Finding of Fact 8. 38-39. Are accepted in principle but rejected in their specificity as subordinate, unnecessary and cumulative. To a large degree the same subject matter is covered in Findings of Fact 8-12. Covered in Findings of Fact 9 and 12. Covered in Finding of Fact 8. Covered in Findings of Fact 9 and 12. 43-49. Covered in Findings of Fact 9-12. What is not covered is rejected as subordinate, unnecessary, and cumulative. Covered in Findings of Fact 9-10. Covered in Findings of Fact 9-12, particularly lOe. Covered in Findings of Fact 10-11. Accepted in principle but as stated is too broad and applies to situations outside of nursing home beds. Rejected in part as taken out of context and with insufficient predicate and in part as subordinate and unnecessary. What is accepted is covered in Finding of Fact 11. 60. Covered in Findings of Fact 10-11, particularly 10. 64. Covered in Findings of Fact 10-11, particularly 10. 66. Covered in Findings of Fact 9-12, particularly lOd. 67-69. Covered in Findings of Fact 10-11, what is rejected is rejected as unnecessary, subordinate and/or cumulative. 70. Covered in Finding of Fact 11. 71-73. Covered in Findings of Fact 10-11, what is rejected is rejected as unnecessary, subordinates and/or cumulative. Covered in Findings of Fact 10-11. Covered in Findings of Fact 9-12. Covered in Findings of Fact 6 and 11-12. 77-90. Covered in Finding of Fact 6. Matters rejected are rejected as not supported by the record or as contrary to the appropriate application of law and incipient policy. See Conclusions of Law. Represents the sum total of all the Findings of Fact made and is more in the nature of a conclusion of law. See Conclusions of Law. Rejected as covered in Finding of Fact 6, and the Conclusions of Law. 93-95. Accepted and incorporated in Finding of Fact 12. 96. Covered in Findings of Fact 6, 11, and 12. Proposals 3, 15, 17, 18, 35, 36, 37, 55, 56, 57, 58, 59, 61, 62, 63, 65, are accepted but not adopted because subordinate and unnecessary. Respondent Department of Health and Rehabilitative Services' Proposals: 1-2. Covered in Finding of Fact 1. 3. Covered in Finding of Fact 2. 4. Covered in Finding of Fact 4. 5. Covered in Findings of Fact 3 and 12. 6. Covered in Finding of Fact 3. 7-9. Covered in Findings of Fact 3, 5, and 6._ 10. Covered in Finding of Fact 6. 11. Accepted but not specifically set out in Findings of Fact. Sentences 1-2 are accepted and sentence 3 is rejected in Finding of Fact 6 and in the Conclusions of Law. Rejected for the reasons set out in Finding of Fact 6 and Conclusions of Law. Covered in Findings of Fact 5 and 6 and Conclusions of Law. Rejected as set out in Findings of Fact 6, and 9-12 and as a conclusion of law. Rejected as out of context and immaterial to the facts as found. Similar material is covered in Findings of Fact 6 and 9-12. Rejected as set out in Findings of Fact 6, and 9-12 and as a conclusion of law. ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES MANOR CARE, INC., Petitioner, CASE NO. 85-2937 vs. CON NO. 3850 DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Respondent. / HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, d/b/a HEARTLAND OF LEE, Petitioner, vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Respondent. / CASE NO. 85-3240 CON NO. 3854
Findings Of Fact The Petitioner, St. Jude Manor Nursing Home, is a skilled nursing facility within the meaning of Title XIX of the Social Security Act. In the past, and as recently as October 14, 1976, the Petitioner has received permission for a variance in its seven-bed ward which exceeds the number of beds per ward specified by Section 405.1134(e), Code of Federal Regulations (CFR). The most recent permission for variance has been received from the State of Florida, Department of Health and Rehabilitative Services. The terms and conditions of that variance may be found in Petitioner's Exhibit No. 2 admitted into evidence. In particular, that variance was allowed with the proviso that as patients whose needs justified the type of occupancy in excess of the limit were discharged, the seven-bed ward would be reduced to four beds to achieve compliance with the terms of the Code of Federal Regulations. It was further indicated in the statement of permission that the Respondent expected the reduction to be completed by November 30, 1977. The variance of October 14, 1976, came about after an inspection had been performed by the Respondent at the Petitioner's facility. Following that inspection a statement of deficiencies and plan of correction was made and one of the items, which is the sole item in dispute at this time, dealt with the seven-bed-ward. Out of the August 16-18, 1977, inspection performed by the Respondent, a request for waiver was made by the Petitioner that led to the permission found in the October 14, 1976, letter by the Respondent. (The statement of deficiencies and plan of correction which indicates this request may be found as Hearing Officer's Exhibit No. 1 admitted into evidence.) One of the items in support of the request for variance was a letter from Richard J. Wilhelm, M.D., which spoke to the criteria found in Section 405.1134(e), Code of Federal Regulations (CFR), and apparently this explanation and reason for requesting a variance was persuasive, due to the subsequent grant of the variance. (Dr. Wilhelm's letter may be found as Petitioner's Exhibit 3 admitted into evidence for limited purposes as set forth in the transcript of the hearing.) It is not abundantly clear what transpired beyond the suspension date of the variance; however, the action of the parties beyond that time has led to the current hearing. In essence what has occurred is the fact that the Respondent has taken the position that no further variance may be granted beyond the period of the normal attrition of the three extra patients in the seven-bed ward, which patients were in excess of the four patients allowed in any given room under the terms of the aforementioned Code of Federal Regulations. The Respondent has come the conclusion that no further variance may be granted, premised upon its understanding that it is required to operate within the dictates and requirements and interpretations of the Code of Federal Regulations which have been placed by employees within the United States, Department of Health, Education and Welfare. The Respondent has come to this conclusion after receiving a January 30, 1976 communication from John E. Pipes, Director of the Office of Long Term Care Standards Enforcement, Region IV, United States, Department of Health, Education and Welfare, Atlanta, Georgia. A copy of this letter may be found as Respondent's Exhibit No. 1 admitted into evidence. Within the body of that correspondence Mr. Pipes states that Section 405.1134(e), Code of Federal Regulations (CFR), will only allow a variance to last for as long as the needs of the affected patients justify. Subsequent to that correspondence, officials with the Respondent wrote to Mr. Pipes on March 4, 1976, to try to clarify the status of those nursing homes in the state of Florida which had wards with more than four beds per room, and to try to emphasize to Mr. Pipes the potential loss of beds if the opinion of Mr. Pipes was allowed to go forth on the question of not allowing variances after the first attrition of the patients who were housed in the excess beds. (The full details of the March 4, 1976 letter may be found in a copy of that letter which is Respondent's Exhibit No. 3 admitted into evidence. On April 1, 1976, Mr. Pipes responded to the March 4, 1976 letter and refused to change his position on the question of the variance letter. Henceforward, the Respondent has taken the position that Mr. Pipes' opinion of the meaning of Section 405.1134(e), Code of Federal Regulations (CFR), is dispositive of that issue and the Respondent, as the agent for the State of Florida; in the Respondent's opinion, may not use its independent judgment in determining whether a variance may be granted to a facility with more than four beds in a ward. The position taken by the Respondent is contrary both to the language of Section 405.1134(e), Code of Federal Regulations (CFR), and the terms of the State Plan for Medical Assistance, under Title XIX of the Social Security Act, Revision MSA-PI-75-3 August 20, 1974. This conclusion is reached due to the unequivocal statement found within the referenced section of the Code and the written agreement by the State of Florida to take the responsibility for making determinations under the Code of Federal Regulations in matters pertaining to Title XIX of the Social Security Act, without the necessity of the permission of the United States, Department of Health, Education and Welfare or its officials. The efficacy of this conclusion may be seen by a reading of the portion of Section 405.1134(e), Code of Federal Regulations (CFR), which states: * * * "The Secretary (or in the case of a facility participating as a skilled nursing facility under Title XIX only, the survey agency - See Section 249.33(a)(1)(i) of this title) may permit variations in individual cases where the facility demonstrates in writing that such variations are in accordance with the particular needs of the patients and will not adversely affect their health and safety. Each room is equipped with or is conveniently located near, adequate toilet and bathing facilities. Each room has direct access to a corridor and outside exposure, with the floor at or above grade level. The Petitioner is a facility participating as a skilled nursing facility under Title XIX and the State of Florida, Department of Health and Rehabilitative Services, under the terms of its contract with the United States, Department of Health, Education and Welfare, is the surveying agency, within the meaning of the above referenced provision. Moreover, when this is considered in conjunction with the terms and conditions of that contract, the only reasonable interpretation to be given this matter is that the Respondent not only has the power but has the duty to make determinations on various requests make by those skilled nursing facilities operating under Title XIX only, which are found in the state of Florida. (The after-filed exhibit which is the State Plan for Medical Assistance, under Title XIX of the Social Security Act, Revision MSA-PI- 75-3 August 20, 1974, is hereby made Hearing Officer's Exhibit No. 2 admitted into evidence.) Having resolved this issue in favor of the Petitioner, the question then becomes whether or not the Petitioner has sufficiently demonstrated a right to a variance on the merits of his claim as tendered at the time of the hearing. The principle witness in behalf of the Petitioner who appeared at the hearing for purposes of speaking to the substance of the request was Richard Wilhelm, M.D. Dr. Wilhelm attends the patients in the seven-patient ward and feels that the care that those patients are receiving in the seven-patient ward is equal to the care received by others in the four-patient or less wards. He felt that psychologically the patients in the seven-patient ward are progressing as well as patients in the other rooms and some patients who have been in the seven- patient ward have progressed to the point of being sent to intermediate care or home care. Overall, he is extremely impressed with the care and to cutback the number of beds from seven to four would not help the quality of that care. At present, according to Dr. Wilhelm, none of the original patients who were in the seven-bed ward at the time of the variance being granted in October, 1976, are still in that ward. This is born out by Petitioner's Exhibit No. 6 admitted into evidence, which Is a list of admissions in the seven-patient ward, beginning in August, 1976. through January 11, 1978. C. M. Knight, the Petitioner's administrator, testified at the hearing to the effect that there is more staff participation in the seven-patient ward than in other patient rooms. He also indicated that the patients who were in semiprivate rooms and were subsequently moved to the seven-bed ward have improved. He further stated that patients who had been in the seven-bed ward and been moved to other wards had requested to return to the seven-bed ward. Mr. Knight also expressed some concern that removal of the three beds would hurt the ability of the city of Jacksonville, Florida to respond to the needs for skilled nursing care. He had no particular basis for this conclusion, but it does seem consistent with the fears expressed by Joseph C. Thompson, Acting Chief of the Bureau of Health Facilities, State of Florida, Department of Health and Rehabilitative Services, in his March 4, 1976, correspondence to Mr. Pipes, which is Respondent's Exhibit No. 3. As may be recalled, this letter indicated that at that time 144 beds were feared to be lost by a reduction of beds in the wards with more than four patients. After full consideration of the testimony offered by the Petitioner on the question of a variance, it must be concluded that the variance should be rejected at this time, due to the failure of the Petitioner to sufficiently address the issue of safety, adequate toilet and bathing facilities, and access to the corridor and outside exposure, with floors at or above grade level, as required by Section 405.1134(e), Code of Federal Regulations (CFR). Should these areas of consideration be satisfactorily met, and should the excessive number of patients in the subject ward continue to be in accordance with the particular needs of the patients and not adversely affect their health; then the Respondent acting in its own discretion and not that of the United States Department of Health, Education and Welfare, may grant a variance on the number of patients in the seven-patient ward. Notwithstanding any decision on the request for variance by the Petitioner that may be made in the future, the undersigned is absolutely convinced that the Respondent may not arbitrarily refuse to consider the merits of the variance request based upon its interpretation of the Pipes' correspondence which has been referred to in the course of this Recommended Order.
Recommendation It is recommended that the Petitioner's request for variance under Section 405.1134(e), Code of Federal Regulations (CFR) be denied; however, future consideration of variance requests should be made when those requests are tendered and the request should be considered in keeping with the judgment of the Respondent, State of Florida, Department of Health and Rehabilitative Services. DONE and ENTERED this 26th day of May, 1978, In Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: C. M. Knight, Administrator St. Jude Manor Nursing Home 2802 Parental Home Road Jacksonville, Florida 32206 Robert A. Eisenberg, Esquire Department of HRS District IV Counsel Post Office Box 2417F Jacksonville, Florida 32231 Joseph Dowless, Jr., Director Leonard Schaeffer, Esquire Office of Licensure and Certification Suite 1300, 1845 Walnut Department of HRS Philadelphia, Pa. 19103 Post Office Box 210 Jacksonville, Florida 32201
