Findings Of Fact At the outset, it should be noted that the record in this proceeding is much less remarkable for its content than for what it fails to contain. The dispute between Petitioner and Respondent appears to revolve around Petitioner's objections to Respondent's disallowance of certain claimed items of operational costs and expense in the operation of Petitioner's nursing home. Respondent's disallowance was apparently based upon an audit of Petitioner's books, none of which were introduced into evidence, conducted by a private accounting firm, no representative of which was called to testify at the final hearing, which accounting firm submitted to Respondent a report, which was neither offered nor received into evidence. The only "pleading" on file in this cause is a letter dated March 20, 1978, from the office of Petitioner's certified public accountant, which letter is not signed by any individual, but simply bears the imprimatur of that firm. This letter details certain "specific areas of disagreement" and requests a formal administrative hearing thereon. Nowhere in this letter are the specific reasons for disagreement detailed. Respondent chose not to file any pleadings in response to the aforementioned letter. Because of the lack of detail in the "pleadings", the Hearing Officer, by Order dated April 25, 1979, required counsel for Petitioner and Respondent to meet together no later than fifteen days prior to the date of final hearing in this cause, which at that time had been set for July 10, 1979, to prepare a prehearing stipulation. The Order required the prehearing stipulation to be filed no later than ten (10) days prior to the date set for final hearing, and further required that the prehearing stipulation contain: a concise statement of the nature of the controversy; a brief, general statement of each party's position; a list of all exhibits, which shall be prenumbered, to be offered at the hearing, noting any objections thereto, and the grounds for each objection; a list of the names and addresses of all witnesses intended to be called at the hearing by each party. Expert witnesses shall be so designated. a concise statement of those facts which are admitted and will require no proof at hearing, together with any reservations directed to such admission; a concise statement of those issues of law on which there is agreement; a concise statement of those issues of fact which remain to be litigated; a concise statement of those issues of law which remain for determination by the Hearing Officer; a concise statement of any disagreement as to the application of the rules of evidence; a list of all motions or other matters which require action by the Hearing Officer; the signature of counsel for all parties. At the time of convening the final hearing in this proceeding on July 10, 1979, counsel for Petitioner and Respondent had failed to confer and prepare the prehearing stipulation required by the Hearing Officer's Order of April 25, 1979. As a result, the Hearing Officer agreed to proceed with the taking of testimony, subject to counsel for Petitioner and Respondent complying with the requirements of the prehearing order within seven (7) days from conclusion of the final hearing. On July 19, 1979, counsel for Petitioner and Respondent filed a Joint Stipulation, in two parts, which contained, in part, the following pertinent information: The nature of the controversy concerns itself with the claim of the [Petitioner] for the year ending March 31, 1976, as more fully set forth in the "adjustments to Statement of Cost of Operations" audit by Elmer Fox, Westheimer & Co., dated June 17, 1977, with particular reference to the following items: (1) Excess depreciation claimed on building through providers' use of original cost before adjustment for reduced basis from forgiveness of indebtedness ($ 6,912) (2) Excess depreciation erroneously calculated ($ 6,619) (3) The return on equity erroneously calculated ($30,873) (4) Owner/Administrator compensation ($ 5,287) In the prehearing stipulation, counsel for Petitioner and Respondent also agreed that a total of $13,513, covering insurance expense, housekeeping services and expenses for unallocatable income should be allowable to Petitioner for operational expenses. In addition, the following facts were stipulated to by counsel for Petitioner and Respondent: 3. (a) Petitioner, Sweeting Nursing Home is a facility located in Broward County, Florida, accepting Medicaid Nursing Home patients. Respondent, the Department of Health and Rehabilitative Services, is a department of the State of Florida charged by law with administrating [sic] the Medicaid program which includes auditing all nursing homes accepting Medicaid patients. At the request of the Department of Health and Rehabilitative Services, Elmer fox, Westheimer, & Co., an accounting firm in Broward County, did a fiscal year end audit of Sweeting Nursing Home for the period of March 31, 1975 to March 31, 1976. The audit report dated June 17, 1977, was forwarded to the Department of Health and Rehabilitative Services with certain recommended disallowances which included the following items: Depreciation $13,531.00 Return on Equity 30,873.00 Owner's compensation disallowance 5,287.00 After reviewing the Fox, Westheimer audit, the Department of Health and Rehabilitative Services' Audit, Evaluation and Review Unit initially notified the Sweeting Nursing Home that it had been overpaid the sum of $97,324.00, which sum was later reduced by stipulations between the parties. The nursing home requested certain adjustments and a reduction of the amount of overpayment. However, the Department disallowed the adjustments requested by letter addressed to Irving Lambert [sic] dated March 13, 1978, and Sweeting Nursing Home requested an Administrative Hearing. The Department of Health and Rehabilitative Services approved the FYE Audit Report, with disallowances, and takes the position that Sweeting Nursing Home is not entitled to the adjustments claimed by the nursing home in the areas enumerated in Paragraph (a). No exhibits to be offered. * * * Both parties admit that the audit was made by Elmer Fox, Westheimer, and Co. Both parties agree that the Department of Health and Rehabilitative Services had a legal right to audit Sweeting Nursing Home for Medicaid purposes. Further, that Fox, Westheimer, & Co., performed the audit in a manner perscribed [sic] by law. There are two issues of fact which remain to be litigated: Depreciation - "Did the Department of Health and Rehabilitative Services' validly disallow the Nursing Home's class depreciation on certain equipment, i.e., was the method used by Sweeting in depreciating certain equipment acceptable and consistent with the Medicaid HIM Manual?" "Was the Department of Health and Rehabilitative Services correct in disallowing the owner's compensation claimed by Sweeting Nursing Home?" The principal issue of law involved herein is the determination of "What is historical cost?" Historical cost touches on both item (1) of Paragraph (a), Depreciation and item (2) of Paragraph (a), Return on Equity. "May a Nursing Home, for Medicaid purposes, use an amount as historical costs of a facility, when such amount, subsequent to the original purchase, was reduced substantially by a forgiveness of an indebtedness agreement?" The Department of Health and Rehabilitative Services takes the position that the historical cost was $817,654.00 minus the $276,577.00 forgiveness of the indebtedness or actual historical cost of $541,077.00 Despite the above-mentioned provisions of the prehearing stipulation that no exhibits were to be offered, counsel for Petitioner in another section of the prehearing stipulation, which, as previously noted, was filed seven (7) days after the conclusion of the final hearing, indicated that: Petitioner relies upon as its principal exhibit the Medicare Provider Manual, HIM-15, together with all reports submitted to the Florida Department of Helath [sic] and Rehabilitative Services heretofore and objects to the introduction of the Elmer Fox audit dated June 17, 1977, since no testimony was presented with respect to said audit. Petitioner's objection in the prehearing stipulation to the introduction of the audit report was, in fact, moot, since the report was not offered into evidence at the final hearing by counsel for Respondent. In addition, neither counsel for Petitioner nor counsel for Respondent requested that the Hearing Officer take official notice of, nor did they attempt to introduce into evidence, either the Medicare Provider Manual, HIM-15; any rules or regulations of the State of Florida Department of Health and Rehabilitative Services; any applicable depreciation guidelines adopted by the American Hospital Association; or any depreciation guidelines promulgated by the Internal Revenue Service. In fact, no documents of any kind were offered for inclusion in the record in this proceeding by either Petitioner or Respondent. As indicated in the prehearing stipulation, there are four areas of disagreement between Petitioner and Respondent: the amount claimed as depreciation on Petitioner's building; the amount of depreciation claimed on certain items of equipment; the amount claimed as return on equity; and owner/administrator compensation. Although the record reflects that Petitioner used an original cost figure of $817,654.00 in calculating depreciation on its building, and that Respondent's auditors apparently used $541,077.00, there are no facts of record to substantiate the use of either amount. These same figures were apparently also used in calculating Petitioner's "return on equity", again with no factual justification for their use. Likewise, there is no competent evidence to demonstrate the manner in which Petitioner calculated depreciation on its equipment, or even the specific items of equipment on which such depreciation is claimed. Finally, although the record demonstrates that Petitioner's owner/administrator was paid $10,000 as salary for the fiscal year in question, and that he spent 25 percent to 30 percent of his time involved in the administrative functioning of the facility, there are no facts in this record on which to base a determination of the reasonableness of that salary or the owner's entitlement thereto. There is, in short, neither any competent evidence in this record concerning the methodology employed by Petitioner in computing the allowances to which it deems itself entitled, nor any reliable explanation of Respondent's rationale for disallowing those claims. To further complicate matters, the failure of both Petitioner and Respondent to introduce into evidence, or to request official notice of applicable governmental rules, regulations and guidelines against which to measure their respective claims, renders any meaningful resolution of their dispute impossible on this record.
The Issue At issue in this proceeding is whether respondent committed the offense alleged in the administrative complaint and, if so, what disciplinary action should be taken.
Findings Of Fact Respondent, Adele "Nikki" Leon, holds Florida teaching certificate number 413436, covering the area of emotional disturbances and special learning disabilities. Such certificate is valid through June 30, 1996. At all times material hereto, respondent was employed by the Dade County Public Schools, Palmetto Adult Education Center, as a part-time teacher, and was assigned to teach Adult Basic Education for the Elderly (ABE) at Snapper Creek Nursing Home. Pertinent to this case, respondent's assignment during September and October 1992, included the teaching of an ABE class at Snapper Creek Nursing Home each Tuesday from 3:00 p.m. to 5:00 p.m. According to respondent's attendance reports for that period, twenty-five residents were enrolled in the class. On September 15, 1992, Ivette Morgan, assistant principal of Palmetto Adult Education Center, at the request of Edward Gehret, principal of Palmetto Adult Education Center, visited Snapper Creek Nursing Home to evaluate the adult education program. During the course of that visit, as well as visits on September 22, September 29, and October 20, 1992, Dr. Morgan had an opportunity to observe respondent's Tuesday class. On those occasions, Dr. Morgan noted only four to six residents in the classroom. 4/ Dr. Morgan reported her observations regarding class attendance to Dr. Gehret who, at the time, had been involved with enrollment and attendance review for, inter alia, Snapper Creek Nursing Home. Based on that review, Dr. Gehret observed that respondent had routinely marked all twenty-five residents in her class as "present," which did not square with Dr. Morgan's observations. On October 22, 1992, Dr. Gehret met with respondent to review the discrepancies he perceived in her attendance report procedures. At that time, it was the School Board's policy to mark residents "present" for an ABE class if they appeared at any time during the class period, no matter how briefly; but if they never appeared, to mark them as "absent." 5/ Respondent advised Dr. Gehret that she was of a different perception, and understood that nursing home residents enrolled in an ABE class were not to be marked as "absent" but, rather as "present," whether attending or not, so long as they were still in the facility. Notwithstanding, following the meeting, respondent agreed to conform her attendance procedure to the policy Dr. Gehret outlined. Regarding the discrepancies in respondent's attendance reports, when measured against the School Board's policy, the proof demonstrates that for the attendance reporting periods of September 14-27, September 28-October 11, and October 12-25, 1992, respondent completed and signed the attendance report for her Tuesday class on which she marked as "present" nursing home residents Helen Ambler and Gertrude Monge. Ms. Ambler and Ms. Monge were not, however "present" during such periods since they had died September 2, 1992, and June 15, 1992, respectively. The proof further demonstrated that for the same reporting periods, respondent had marked as "present" nursing home residents Agaton Bolanio, Nazario Lopez, and Martin Ruiz. Mr. Bolanio, Mr. Lopez and Mr. Ruiz were not, however, "present" during such periods since they had been discharged from the nursing home on June 19, 1992, July 20, 1992, and May 14, 1992, respectively. Finally, based on Dr. Morgan's observations of respondent's Tuesday class on September 15, September 22, September 29, and October 20, 1992, wherein she observed no more than four to six residents in attendance, it is reasonable to conclude that a significant number of residents who were marked as "present," other than the residents heretofore mentioned, were likewise not "present" on those dates. Which residents and why they were not present was not, however, established of record. 6/ Regarding the ABE program and the preparation of enrollment and attendance reports at Snapper Creek Nursing Home, the proof demonstrates that the ABE program was under the direction of the nursing home activities director who, without the participation of the instructors, prepared the enrollment for each class. 7/ Accordingly, respondent would not necessarily have known the residents assigned to her class, and reasonably assumed that the list of residents she received from the activities director contained current residents of the nursing home. Likewise, respondent relied on the activities director to advise her when residents died, were discharged or were otherwise no longer able or interested in attending before removing them from the roll; however, such information was rarely provided by the activities director. Finally, absent advice to the contrary from the activities director, respondent did not consider a resident's failure to attend on a given day an absence, as in the traditional classroom setting, and routinely marked them "present." Such practice in the ABE program was reflective of the voluntary nature of the program, as opposed to compulsory attendence in the traditional school setting, and the unavailability of information, except from the activities director, as to the reason a resident did not attend. Notably, residents frequently did not attend because, inter alia, nurses aides failed to bring them to class or they were too ill to attend, as opposed to not wanting to attend the course any longer. That such was the procedure at Snapper Creek Nursing Home, and perhaps other adult education centers in Dade County, finds other support in the record apart from respondent's testimony. For example, another instructor, Evelyn Foster, during the times in question, carried Francies Lambrou as "present" on her attendance record until July 27, 1992, although she was discharged July 2, 1992; and carried Maria Diaz, Carmen Morela, and Lorenzo Legundo as "present" until at least October 9, 1992, although Ms. Diaz and Ms. Morela were discharged September 5, 1992, and Mr. Segundo was discharged September 24, 1992. Moreover, Dr. Morgan found it necessary, at sometime between September 15 and October 26, 1992, to give the activities director specific instructions on how attendance was to be recorded, and Dr. Gehret found it necessary to conduct a "rollbook workshop" at Snapper Creek Nursing Home for all instructors, as well as agreeing to urge the nurses aides to bring the residents who desired to attend to class. [Petitioner's exhibit 1, pages 17 and 21, and respondent's exhibit 12.] Finally, there is of record a memorandum of July 8, 1993, almost one year after the events at issue in this case, from Connie Gilbert, District Director, Division of Adult Education, Dade County Schools, to all adult education center principals, which suggests continued confusion in attendance procedures for off- campus classes and that the practice at Snapper Creek Nursing Home was not an isolated occurance. That memorandum provided, in part, as follows: SUBJECT: ATTENDANCE PROCEDURES Off-campus visitations have revealed problems and confusion about attendance procedures. Please inform all teachers of the following procedures: Students must be present in a teacher's class and participate in the class activities in order for the teacher to mark this student present in that class. * * * Please make sure that off-campus teachers understand that students present "someplace in the facility" can not be considered present in a particular class. Students must be physically present in a class in order to be marked present in that class. Given the proof, it must be concluded that respondent's failure to record attendance in accordance with school board policy was, more likely than not, a consequence of a misunderstanding of, or ignorance of, that policy. In this regard, it is observed that no state policy for recording ABE attendance was established of record, and no proof that any policy established by the school board had been reduced to writing or imparted to respondent, or any other adult education instructor, prior to the events giving rise to the issues in this case. Accordingly, it follows that there was no compelling proof that respondent, by completing the attendance reports in the manner she did, had any intent to deceive the school board.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered dismissing the administrative compliant. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 18th day of May 1995. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of May 1995.
The Issue The general issue for determination is whether either of the petitioners should be granted a CON for community nursing home beds in Orange County, a subdistrict within HRS planning district VII. In their prehearing statement filed on November 3, 1987, the parties limited the issues as follows: As between the Petitioners and Respondent, the sole issue is whether there is a need for the proposed services; additionally, it is Respondent's position that lack of need for a project results in the projects not being financially feasible in the long term. All other statutory and rule criteria are satisfied, at least minimally, except proof of need pursuant to Rule 10- 5.011(1)(k) [formerly 10-5.11(21)(b)], F.A.C., financial feasibility as it relates to need, and as to possible approval of a 60-bed facility, as the local health plan policy favors a minimum facility size of 120 beds. As between the applicants, it is agreed that a comparative review is appropriate to determine the best applicant, but each acknowledges for this proceeding only that the other meets all statutory and rule criteria, at least on a minimal basis. The determination of need in this case involves a determination of the proper application of the need methodology described in HRS Rule 10-5.011(1)(k), More specifically, these three questions must be answered: Which data determines "current" and "projected" population, age 65-74 and 75+, the data available in July 1986, or the most recent data available at the time of hearing? When is the "current" population to be determined (the "base period"), January 1986, or July 1986? How is the occupancy rate ("OR") to be computed? If there is a need for additional beds, the remaining issue is how to apportion those beds between the applicants.
Findings Of Fact Forum and Skilled Health each filed an application for a certificate of need for community nursing home beds in Orange County, in the July, 1986, batching cycle. Forum's application proposes a retirement living facility consisting of apartment units for independent living, an adult congregate living facility (ACLF) and 60 nursing home beds certified for skilled and intermediate care. Skilled Health's application proposes to build a 120-bed nursing home. At the final hearing, Skilled Health indicated a willingness to accept approval for 60 or 90 beds, with the balance to be built as ACLF beds. Forum is a health services company based in Indianapolis. Forum owns fourteen retirement living centers throughout the United States and approximately twenty freestanding nursing homes. Skilled Health is a partnership principally owned by Stewart and Joseph Yachnowitz, a father and son. Since 1981-82, the Yachnowitz' have owned and operated three 120-bed nursing homes and one 129-bed nursing home in Missouri. In its preliminary review of Petitioners' applications, HRS denied the certificates of need primarily due to lack of need for additional community nursing home beds in Orange County. HRS found a surplus of 50 community nursing home beds in Orange County. Forum's health planner found a need for 96.5 beds, and Skilled Health's consultant found a need for 161 beds. In reaching their respective conclusions, each party applied the methodology of Rule 10-5.011(1)(k)2., F.A.C. (the rule) in a slightly different manner. The rule provides in pertinent part as follows: Need Methodology. In addition to other relevant statutory and rule criteria to be used in considering the allocation of new or additional community nursing home beds, the Department will determine if there is a projected need for new or additional beds 3 years into the future according to the methodology specified under Sub- subparagraphs a. through j. This methodology provides for adjustments to current community nursing home bed rates based upon expected changes in the proportion of district residents age 75+ and the current utilization of community nursing home beds in the subdistricts designated by local health councils. In districts with a high proportion of elderly residents living in poverty, the methodology specifies a minimum bed rate. A (POPA X BA) + (POPB X BB) Where: A is the district's age- adjusted number of community nursing home beds for the review cycle for which a projection is being made. POPA is the population age 65-74 years in the relevant departmental district projected three years into the future. POPB is the population age 75 years and older in the relevant depart- mental district projected three years into the future. BA is the estimated current bed rate for the population age 65-74 years in the relevant district. BB is the estimated current bed rate for the population age 75 years and over in the relevant district. BA LB/(POPC + (6 X POPD)) Where: LB is the number of licensed community nursing home beds in the relevant district. POPC is the current population age 65-74 years. POPD is the current population age 75 years and over. BB + 6 X BA SA = A X (LBD/LB) X (OR/.90) Where: SA is the preliminary sub- district allocation of community nursing home beds. LBD is the number of licensed community nursing home beds-in the relevant subdistrict. OR is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the July batching cycle shall be based upon occupancy rate data for the months of October through March preceding that cycle; applications submitted for the January batch- ing cycle shall be based upon occupancy rate data for the months of April through September preceding that cycle. For the purposes of this rule, the occupancy date to be considered shall be that collected by the Department's Office of Health Planning and Development or a contractor assigned to collect the data. * * * In applying the methodology, the parties agreed to the following: The application date is July 1986. The horizon date is July 1989. 4801 is the correct number of licensed beds in the district (LB). 2327 is the correct number of licensed beds in the subdistrict, Orange County (LBD). 460 is the correct number of approved beds. POPULATION DATA RELEASE DATES For determination of the population factors, POPA, POPB, POBC and POPD, the parties utilized the official estimates and projections adopted by the Office of the Governor. That data is updated periodically by the Office of the Governor and the rule does not prescribe the applicable release date for those projections and estimates. HRS utilizes the data available at the time of the application review (July 1986). HRS presented no testimony supporting this practice; its witness, Dennis Halfhill, was specifically not offered for health planning expertise. (Transcript, p. 119) Donald I. Craig, Forum's witness, was qualified, without objection, as an expert in health care planning and nursing home development. (Transcript, p. 12) Dr. Elton Scott, Skilled Health's witness, was qualified, without objection, as an expert in health care economics, utilization and need analysis, and health care finance and reimbursement. (Transcript, p. 51). Both witnesses testified convincingly that the more recently released data is more accurate and, therefore, more appropriate. At the time of hearing, the official estimates and projections from July 1987 were the most recent available data. THE "BASE PERIOD" - CURRENT POPULATION The current population comprising the factors POPD and POPD in the rule is the population at the time of the application, July 1986, according to HRS' utilization of the methodology. Forum, however, selected January 1986 as the base period because it is a midpoint date for the period for which occupancy data is considered. Forum also argues that January 1986 is the base utilized by HRS' Office of Health Planning and Development in its semiannual nursing home census report and bed need allocations for the July 1986 review cycle. (HRS composite exhibit #1) No testimony or evidence was produced by HRS to explain why its Office of Health Planning and Development uses a different base for "current" population than its CON review office. However, a plain reading of the rule governing CON review supports the establishment of July 1986 as the base period. The rule uses the term, "current population," for the factors POBC and POPD. At the time of the application, "current" is July 1986. "Current" could be theoretically a later period at various relevant points in the process, i.e., date of the state agency action report or date of the hearing, but nothing in the text of the rule suggests that "current" really means a date earlier than the application batching cycle date. Moreover, the establishment of a base period six months prior to the application date violates the 3-year horizon concept inherent in the need methodology. The effect of the establishment of a January 1986 base period is to create a 3 1/2 year planning horizon. After rejecting Forum's proposed January 1986 base period, and accepting Forum's July 1987 release date, I found that the record of the proceeding did not include July 1987 data for July 1986 population. For that reason, the record was reopened for the limited purpose of receiving the data. HRS responded to the order reopening the record with the requested data and with an objection to its admissibility based on relevance, arguing, as it did at hearing, that the relevant release date for July 1986 population is July 1986. Both Forum and Skilled Health responded with stipulations that the data provided by HRS was, in fact, the requested data. However, Forum also objected to the admission of the data, as there was no testimony at final hearing supporting its use. There was, as found in paragraph 9, above, testimony supporting the use of July 1987 data. THE CALCULATION OF OCCUPANCY RATE The relevant occupancy period is October 1985, through March 1986. See Rule 10-5.011(i)(k)2.d., F.A.C., paragraph 5, above. HRS, in its calculation of need according to the rule methodology, used an occupancy rate of 86.6 percent, a slightly higher rate than the 86.2 percent used in its state agency action report. The higher rate was explained by HRS' witness as based upon the inclusion of beds of three nursing homes that had previously been considered sheltered nursing homes. The applicants, Forum and Skilled Health, in their proposed recommended orders, suggest the appropriate rate should be 90.03 percent. Both of their witnesses testified that the HRS rate was artificially depressed due to the opening of a new nursing home, Quality Health of Orange County, in October 1985. Initially, as expected, its occupancy was low, but by November 1986, the home was over 90 percent. Both applicants advocate assigning Quality Health an occupancy of 90 percent for the relevant period because if it had been only approved, but not opened, the methodology would have considered it to have an occupancy rate of 90 percent. See Rule 10-5.011(1)(k)2.i, Florida Administrative Code. The parties also argue that the home's rapid fill to over 90 percent also justifies ascribing a 90 percent rate for the October through March period. The plain language of the rule does not allow for such creative manipulation of the formula. OR is the average occupancy rate for all licensed community nursing homes within the subdistrict, for the relevant period, based on data from HRS' Office of Health Planning or its contractor. That data provides an average occupancy rate of 30.83 percent for Quality Health from October 1985 through March 1986. FINDINGS SUMMARIZED IN AN APPLICATION OF THE RULE METHODOLOGY The findings described above result in the following: Nursing Home Bed Need for District 7, Orange County Application Date: July 1986 Horizon Date: July 1989 Current population: July 1986 Office of Governor, Official population estimates and projections: July 1987 Occupancy Rate, October 1985 through March 1986: 86.6 percent BA = LB/(POPC + (6xPOPD)) = 4801/(106976 + (6x65450)) = 4801/499676 = .0096082 BB = 6xBA = .0576492 Allocation = (POPA x BA) + (POPB x BB) = 126200 x .0096082 + 80951 x .0576492 = 1212.55 + 4666.76 5879.31 Subdistrict Allocation: A x (LBD/LB) x (OR/.9) = 5879.31 x (2327/4801) x (.866/.9) = 5879.31 x .484690 x .962222 = 2741.99 or 2742 Subdistrict Allocation: 2742 Licensed Beds: - 2327 90 percent of 460 beds 415 approved: - 414 Orange County bed need: 1 18. Neither applicant presented evidence of the applicability of the poverty adjustment ratio in Rule 10-5.011(1)(k)2.3., Florida Administrative Code. Nor did the applicants present any evidence of special circumstances justifying the approval of beds as provided in Rule 10-5.011(1)(k)2.j., Florida Administrative Code. There being insufficient need for additional nursing homes in Orange County, it is unnecessary to determine an apportionment of beds between the applicants.
Recommendation Based on the foregoing, it is RECOMMENDED that the applications for certificates of need by Forum Group, Inc. and Skilled Health Facilities, Ltd., be DENIED. DONE AND RECOMMENDED this 11th day of March, 1988, in Tallahassee, Leon County, Florida. MARY CLARK 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 11th day of March, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-0688, 87-0689 The following constitute my specific rulings on the findings of fact proposed by the parties: Petitioner, Forum Groups 1. Adopted in paragraph 2. 3. Adopted in paragraph 1. 4.-9. Rejected as unnecessary. 10.-11. Adopted in paragraph 3. Rejected as unnecessary. Adopted in paragraph 1. 14.-15. Rejected as unnecessary. 16. Adopted in paragraph 1. 17.-18. Adopted in paragraph 5. Adopted in paragraph 6. Adopted in paragraph 4. Adopted in paragraph 6. Adopted in part in paragraph 7. The method of calculating occupancy is defined. Rejected as inconsistent with the rule. Those figures relate to population as of January 1986. Adopted in paragraph 17. Adopted in paragraph 9. The characterization of the testimony is adopted in paragraph 10. The conclusion IS rejected, see paragraph 23, above. Adopted in paragraph 15. Rejected as contrary to the rule. See paragraph 16. Rejected as unnecessary. Adopted in paragraph 8. Rejected as unnecessary and contrary to the evidence. See paragraph 14. Rejected as contrary to the rule and to the evidence in this case. 33.-52. Rejected as unnecessary. Petitioner, Skilled Health Facilities, Ltd. Adopted in paragraph 1. Adopted in statement of issues. Adopted in paragraph 5. Adopted in part in paragraph 7. The finding with regard to OR is rejected as contrary to the rule. Adopted in paragraph 6. Rejected as unnecessary. Rejected as contrary to the rule and to the evidence. Adopted in substance in paragraph 14. 9.-11. Adopted in part in paragraph 15 (as to the position of the parties), otherwise rejected as argument and as contrary to the rule. Adopted in substance in paragraphs 7. and 9. Adopted in substance in paragraph 8. Adopted in paragraph 9. Rejected as argument. Rejected as contrary to the rule. While not expressly stated, the values proposed for POBC and POPD are "current" population as of January 1986. This is the wrong base. See paragraphs 10.-12. Rejected as to the occupancy rate, otherwise adopted in paragraph 7. 18.-21. Rejected as an inappropriate application of the methodology. 22.-24. Rejected as unnecessary. Respondent, HRS Adopted in paragraph 1, and the background statement. Adopted in the statement of issue. Adopted in paragraph 5. Adopted in the statement of issue. Rejected as an inappropriate application of the methodology. Adopted in paragraph 6 and paragraph 14. Rejected as unsupported by the evidence, except as to the description of HRS' application of the methodology. Adopted in substance in paragraph 6. Adopted in substance in paragraph's 14 and 16. 10.-11. Adopted in paragraph 18. 12.-13. Rejected as unnecessary. COPIES FURNISHED: R. Terry Rigsby, Esquire Post Office Box 11188 Tallahassee, Florida 32302 Chris H. Bentley, Esquire 2455 Blairstone Pines Drive Tallahassee, Florida 32301 Richard A. Patterson, Esquire 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 S. Power, Esquire Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 =================================================================
The Issue The issue presented is whether Respondent committed the offenses alleged in the administrative complaint, and, if so, what penalty should be imposed.
Findings Of Fact At all time material hereto, Respondent, Robert Norman Doolan, was and is currently licensed by Petitioner, Department of Insurance, as a health insurance agent. Respondent was and is licensed to represent National States Life Insurance Company. Each of the counts charged against Respondent by Petitioner relate to alleged misrepresentations made by Respondent concerning National States policies. Respondent is an aggressive, successful salesman and is highly motivated to sell as many National States policies on an annual basis as possible. He receives a 45% commission of paid annual premiums on policies sold for National States as well as a company bonus. The bonus is computed weekly conditioned on total business written. Respondent consistently received the maximum weekly bonus possible. On or around December 9, 1988, Respondent sold a nursing home insurance Policy to Mrs. Irene Koenig. Mrs. Koenig is an alert and pleasant lady who suffers from Parkinson's disease. Mrs. Koenig is eighty years old. On the day of the hearing, Mrs. Koenig was affected by her illness but requested to go forward with her testimony and was deemed competent to testify. She offered that her condition on the day of the hearing was worse that it was on the day of Respondent's visit. Mrs. Koenig's contact with Respondent began sometime around December 9, 1988 when Respondent contacted Mrs. Koenig, by telephone, and told her he would be in the neighborhood and would like to talk with her about insurance. According to Respondent, he called Mrs. Koenig in response to a mail advertisement which Mrs. Koenig had completed indicating that she was interested in talking with someone about insurance. Mrs. Koenig was interested in obtaining insurance for home health care and invited Respondent into her home. During Respondent's visit, he talked to Mrs. Koenig for over two hours attempting to sell her a Policy. Mrs. Koenig explained to Respondent that she was interested in home health care coverage and informed him that she suffered from Parkinson's disease, a heart disease and had undergone a mastectomy. Mrs. Koenig was not feeling well and wanted Respondent to leave, although she did not ask him to do so. Instead, she Purchased the policy offered by Respondent to get him to leave. Respondent completed the application for the policy but failed to note that Mrs. Koenig suffered from Parkinson's disease. The National State's underwriting guidelines would have prohibited the issuance of this policy if Respondent had informed *he company that Mrs. Koenig had the disease. Respondent, however, testified that Mrs. Koenig did not tell him about her Parkinson's disease. He went further to say that if he had known of Mrs. Koenig's condition, he would have placed her with another company, American Integrity, since he was aware that National States did not want insureds with Parkinson's disease. At the time, Respondent was licensed to represent American Integrity. Respondent also said that the commission from American Integrity was a "little better" than National States but after going through the National States' application with Mrs. Koenig, he felt that National States offered a better program. Although the commission may have been more on the sale of an American Integrity policy, evidence of the difference between the bonus policy offered by the two companies was not presented. Absent further competent substantial proof that Mrs. Koenig did not tell Respondent about her disease, and of how the bonus policy may have affected the sale, and given the demeanor of the witnesses, Mrs. Koenig's testimony concerning her conversation with Respondent about her Parkinson's disease is deemed credible. The National States policy was approved and mailed to Mrs. Koenig. When Mrs. Koenig received the policy she asked a friend to review it. Her friend told Mrs. Koenig that Parkinson's disease was not mentioned in the insurance papers. Mrs. Koenig then asked her friend to write a letter to the company cancelling the policy. Mrs. Koenig cannot write for the period of time necessary to draft a letter due to her illness. National States cancelled her policy and refunded her premium. On or about August 24, 1988, Respondent visited the home of Robert P. and Dorothy T. Perry for the purpose of discussing coverage for nursing home care coverage. Mr. Perry is seventy-two years old, and Mrs. Perry is seventy- one. Respondent had previously sold the Perry's a medicare supplement policy. After several visits, Respondent was successful in selling the Perry's two nursing home plan policies. The policies are written on National States and cover nursing home care as well as home nursing care. They pay $80 per day for skilled and intermediate nursing care for a maximum of twenty-four months. The home health care benefit is $40 per day for a maximum of 100 visits per year. The policies also have a rider which pays $20 a day for up to 30 days in any one year. Petitioner alleged that Mr. Perry was under the impression that the policies provided coverage at $100 per day for two years. The policy which Respondent sold to the Perry's did not include coverage to that amount. At the hearing, Mr. Perry could not recall having made that determination. He also testified that he does not retain matters relating to insurance policies well. A letter from Mr. Perry to National States dated January 17, 1989 indicates that Mr. Perry remembered that Respondent had made such representation. The letter was received into evidence without objection. Mr. Doolan testified that he did not tell the Perry's that the policies paid $100 a day for anything. Even though Mr. Perry's letter seems to indicate that Respondent represented the $100 per day coverage, it is clear that Mr. Perry may be confused about the actual coverage of the policies and of the representations made to him by Respondent. Thus, Respondent's testimony about the representations concerning the coverage amounts is deemed credible. Mr. Perry also claimed that Respondent assured him that Respondent would take care of cancelling the policy after Mr. Perry decided not to keep it. In fact, after receiving the policy and within the ten day "free look" cancellation period provided by the policy, Mr. Perry initiated a meeting with his financial advisors, himself and Respondent to go over the policy. At the meeting, it was recommended to Mr. Perry by his financial advisors that he not take the policy. Immediately after the meeting Mr. Perry spoke to Respondent and told Respondent that he wanted to cancel the policy. Respondent assured Mr. Perry that Respondent would handle the cancellation, and that Mr. Perry would receive a return of his full premium since the cancellation would occur within the ten day period. Mr. Perry recalls that Respondent told him that he was going to Chicago but would return in time to cancel his policy. Respondent did not go to Chicago and did not cancel the policy. Respondent was born in Chicago and had discussed the town with Mr. Perry. Mr. Perry may have been confused about Respondent's destination when he left the meeting. When Mr. Perry noticed that the ten day period was running and Respondent had not cancelled the policy, Mr. Perry attempted to contact Respondent. Unfortunately, he was using an incorrect telephone number. Respondent had given Mr. Perry his home telephone number, but Mr. Perry could not find it at the time he was trying to reach him. Respondent stated that he never told Mr. Perry that he would cancel the policy for him. Instead, Respondent asserted that he told Mr. Perry to contact the company directly by using the self-addressed envelope with which Respondent had supplied Mr. Perry. According to Respondent, his custom is to advise all of his clients about the ten day period and to contact the company directly if they chose to cancel the policy within the ten day period. Although this may be Respondent's normal procedure, Mr. Perry does not recall Respondent instructing him on how to contact the company. Instead, Mr. Perry remembers that Respondent assured him that Respondent would cancel the policy. Considering the demeanor of the witnesses, Mr. Perry's testimony concerning Respondent's assurance that Respondent would handle the cancellation is deemed credible. When Respondent failed to contact Mr. Perry about cancelling the policy, Mr. Perry, on October 20, 1988, returned the policy to National States. The ten day period had expired, and Mr. Perry did not receive a return of premium. In 1988, John F. Spence purchased health insurance from Respondent written by National States. The coverage included two policies, a medicare supplement policy and a hospital indemnity policy. Mr. Spence is 92 years old. While discussing both plans with Mr. Spence, Respondent twice offered a rider to Mr. Spence which would cover dental, vision and hearing. Mr. Spence was interested in the rider, because he had ordered new hearing aids and had hoped to obtain coverage for the cost of his hearing aids. Respondent had told Mr. Spence that the rider would cover up to $500 for hearing aids, although Mr. Spence did not tell Respondent he already had hearing aids and had ordered replacements. However, Mr. Spence rejected the rider on both occasions and was not covered for the hearing aids. Although Mr. Spence testified that Respondent had led him to believe that his hearing aids would be covered under his policies, the demeanor of Mr. Spence and Respondent's testimony at the hearing indicate that Mr. Spence did not recall that he had rejected the hearing aid coverage when he denied the rider. Mr. Spence sought reimbursement for his hearing aids, but his claim was denied. It was Respondent's policy to give each of his clients an outline of the coverage they had purchased. He did so in each of the above incidents. Even though Respondent documented his actions, each of these clients trusted Respondent to provide the insurance protection which they requested. As to Mrs. Koenig, it is clear that Respondent knowingly failed to provide her with a policy which would cover claims relating to Parkinson's disease. As to Mr. Perry, the proof also clearly demonstrated that Respondent, in his fiduciary capacity, failed to honor Mr. Perry's trust when he did not cancel the policy within the ten day period although Mr. Perry was relying on him to do so. Mr. Spence, however, declined the coverage for the hearing aids, and Respondent was under no obligation to Mr. Spence to assist him with his claim concerning the hearing aides. On one previous occasion, a complaint has been filed against Respondent, but he was not found guilty of the allegations therein. The evidence is not clear as to whether the complaint was civil or administrative in nature.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance enter a final order which finds that Respondent committed the multiple violations of the Florida Insurance Code as set forth in the Conclusions of Law portion of this Recommended Order and suspends Respondent's health insurance agent's license for a period of six months. DONE AND ENTERED this 9 day of April, 1990, in Tallahassee, Leon County, Florida. JANE C. HAYMAN Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9 day of April, 1990. APPENDIX The following rulings are made on the proposed findings of fact submitted by Petitioner by paragraph within the Findings of Fact section of this Recommended Order: The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 1. The proposed findings of fact in paragraph 2 are adopted in material part by paragraphs 1 and 2. The proposed findings of fact in paragraph 3 are adopted in material part by paragraphs 3, 4, 5, 6, 7, 8 and 19,; and, in part, rejected as not supported by competent substantial evidence and argumentative. The proposed findings of fact in paragraph 4 are adopted in material part by paragraphs 16, 17, 18 and 19; and, in part, rejected as not supported by competent substantial evidence and argumentative. The proposed findings of fact in paragraph 5 are adopted in material part by paragraphs 11, 12, 13, 14, 15 and 19 and, in part, rejected as not supported by competent substantial evidence and argumentative. The following rulings are made on the proposed findings of fact submitted by Respondent: The proposed findings of fact in paragraph 1 are adopted in material part in paragraphs 11 and 15. The proposed findings of fact in paragraph 2 are adopted in material part in paragraphs 10, 12 and 13. The proposed findings of fact in paragraph 3 are adopted in material part in paragraph 12. The proposed findings of fact in paragraph 4 are adopted in material part in paragraph 12. The proposed findings of fact in paragraph 5 are adopted in material part in paragraph 12. The proposed findings of fact in paragraph 6 are adopted in material part in paragraphs 13 and 14. The proposed findings of fact in paragraph 7 are adopted in material part as subordinate to paragraphs 13 and 14. The proposed findings of fact in paragraph 8 are adopted as subordinate to paragraphs 13,14 and 19. The proposed findings of fact in paragraph 9 is rejected as not supported by competent substantial evidence and the demeanor of the witnesses. The proposed findings of fact in paragraph 10 are adopted in material part in paragraphs 3, and 7, and, in part, rejected as not supported by competent substantial evidence. The proposed findings of fact in paragraph 11 are adopted in material part in paragraph 5. The proposed findings of fact in paragraph 12 are adopted in material part in paragraph 10, and in part rejected as argumentative. The proposed findings of fact in paragraph 13 are adopted in material part in paragraph 7, and, in part, rejected as not Supported by competent substantial evidence. The Proposed findings of fact in paragraph 14 are adopted in material part in paragraphs 3-10, and rejected, in part, as not Supported by competent substantial evidence, argumentative and the demeanor of the witnesses. The proposed findings of fact in paragraph 15 are rejected as not Supported by competent substantial evidence and the demeanor of the witnesses. The proposed finding of fact in paragraph 16 is rejected as a preliminary matter. The proposed finding of fact in paragraph 17 is adopted in material part in paragraphs 16 - 19. The proposed finding of fact in paragraph 17 is adopted in material part in Paragraphs 16 - 19. The proposed finding of fact in paragraph 18 is adopted in material part in paragraph 17. The proposed findings of fact in paragraph 20 are adopted in Paragraphs 17 and 18. The proposed findings of fact in paragraph 21 are adopted as subordinate to Paragraphs 17 and 18. The Proposed finding of fact in Paragraph 22 is adopted in Paragraph 16-19 of the Recommended Order. Copies furnished: Roy H. Schmidt, Esquire Department of Insurance Office of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Irving Lesnick, Esquire 7521 West Palmetto Road Boca Raton, Florida 33433 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell General Counsel Department of Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact Veazey's Restorium was operated in Tampa for many years as a skilled- care 72-bed nursing home by George Veazey, Jr. and his wife, Fairolene Veazey, as owners. During the years here involved, Respondents contracted with the Social and Economic Services program office to provide services as a skilled nursing home. The Florida Medicaid Program permits payment for services performed based upon a recognized maximum or reasonable costs plus 6 percent, whichever is lower. The charges here disputed are directly related to the computation of patient costs authorized to be paid to Respondent for Medicaid patients. In 1972, Raymond Kernon and his wife, Jacqueline, bought into the business and Mrs. Kernon, a professional registered nurse, took over as Director of Nursing at the facility. A new nursing home was constructed containing 120 beds and the patients were moved to the new facility in August, 1973. In 1976 the Kernons purchased the Veazeys' interest in the nursing home and changed the name to Kernon's Su Casa. The land on which the new facility is built is owned by Ve-Ker, a corporation whose stock is owned by the owners of the nursing home. No specific testimony was submitted regarding the land ownership except that of Mrs. Kernon, who testified she and her husband owned the Ve-Ker corporation. It appears from the corporate name that the Veazeys originally were shareholders of the corporation, but no evidence on this was presented. It was not contested that common ownership of the land and the nursing home existed. During 1972 Raymond Veazey, the brother of George L. Veazey, Jr., was the administrator of the nursing home. In 1973 George Louis Veazey, III, the son of the owners, was administrator. George L. Veazey, Jr. was in charge of the kitchen prior to the hiring of a dietician subsequent to fiscal year 1973. During this period he made up menus and bought groceries, laundry and medical supplies. He ran errands for patients, carried them for doctor's visits, shopping, and acted as general handyman while not occupied in the kitchen. He had no job title in 1972 but in 1973 his title was Kitchen Supervisor. Prior to his departure in 1976, he acted as a general handyman and performed numerous tasks, the principal one being purchasing agent. Upon his departure no one was hired to replace him. No testimony was presented regarding the duties performed by Raymond Veazey or George Louis Veazey, III, while they were assigned as administrator. This is significant only to show that if they performed as full-time administrators and did not have time to perform the duties for which George L. Veazey, Jr. was paid, the latter's work was necessary and beneficial. In 1972 George L. Veazey, Jr. was in charge of the kitchen and purchased supplies for the home, George L. Veazey, III, was assistant administrator and Raymond Veazey was the administrator. By allowing only the salary for one administrator to perform all of these functions in a 72-bed nursing home, Petitioner disallowed $10,954 of the total salary expense for these three people. In addition, Petitioner disallowed $5,300 of the salary paid to Fairolene Veazey. Mrs. Veazey's testimony respecting her duties, which was submitted by affidavit after the hearing concluded, shows that many of the functions she performed were necessary and proper and that the disallowance of more than $3,000 of her total salary was not appropriate. Other items disallowed by Petitioner in the audit included: $1,525 in telephone directory advertisement. No evidence was presented to rebut Petitioner's testimony that the purpose of this advertising was to entice patrons to the nursing home; Cost of officers' life insurance policy where the provider was the beneficiary. No evidence was presented to rebut the testimony that the provider was a direct beneficiary of this policy or policies. Cost of an administrator's license in the amount of $87. No evidence was presented to show a need for more than one administrator at a 72- bed facility. Rent in the amount of $86,640 apparently allocated but never paid to the Ve-Ker corporation. No evidence was submitted that this rent was actually paid, or that the Ve-Ker corporation was not owned by the same shareholders that owned the nursing home. Similarly, with respect to the 1973 audit, the $1,644 for directory advertising and rent expense in the amount of $87,360 were disallowed for the same reasons as these items were disallowed in 1972 and no evidence was presented to show this disallowance to be in error. Salaries in 1973 for owners was again reduced to the maximum salary for one full-time administrator and the maximum salary for a full-time director of nursing. This reduced the salaries to $21,004 in administration from more than $50,000 paid to owners, George Veazey, Jr., George Veazey, III, Jacqueline Kernon, Fairolene Veazey, Ramond Kernon and Ray Estes, son-in-law of Kernon. No evidence was presented indicating that George L. Veazey, III, was fully occupied as administrator and could not have performed some of those services which his father actually performed and for which compensation was disallowed. Similarly no evidence was presented that Kernon or his son-in-law provided services beneficial to the patients. Evidence presented would indicate that no salary was approved for anyone other than the Administrator and Director of Nursing. Fifty percent of the salaries claimed for those other owners should be allowed. Fairolene Veazey obviously performed some beneficial function other than as housekeeper for which compensation could and should be authorized. George Veazey, Jr. was performing an essential function in 1973 for which he is entitled to compensation. Although his position as Kitchen Supervisor was not filled when his services were terminated in 1976, George Veazey, Jr. obviously performed many functions related to patient care. The fact that his specific position was not filled after his departure is not sufficient, standing alone, to say he did not perform essential services related to patient care. Many businesses learn they can do without the services of a particular employee after he leaves, whereas that was not believed true before his departure. The fact this employee was an owner does not change the concept. Fifty percent of Veazey's disallowed salary should be restored. With respect to those items disallowed on the 1976 audit, all of Respondents' evidence was directed at owners' compensation and no evidence was presented by Respondents to rebut Petitioner`s witnesses who stated the following expenses are not allowed because not patient-related: Forgiveness of a note receivable from George Veazey, Jr. in the amount of $28,774 in connection with Provider's purchase of Treasury stock. Professional fees incurred by Provider in connection with buy-out agreement with George L. Veazey, Jr. in the amount of $2,150. Interest paid to Randolph Kernon of $1,475. Offset of undocumented miscellaneous revenue against general and administrative expenses in amount of $1,215. Legal expenses in the amount of $330. Interest expense on loan from former shareholder in the sum of $4,414. Provider. Sales tax totaling $2,747 by Ve-Ker on rents collected by Employee benefits on disallowed salary. This item covers several owners' salaries which were disallowed. No evidence was presented to show any basis for benefits if the salary to which the benefit is pertinent is removed. Mrs. Jacqueline Kernon during the periods in question performed her duties as Director of Nursing, but also exercised additional supervisory duties in her role as owner. These duties consisted of being on call every weekend, remaining at the nursing home late every evening, visiting the nursing home on weekends, paying extra attention to the personal needs of the patients, spending 70 to 80 hours per week at the nursing home, and generally operating the nursing home efficiently and effectively. The work over and above that normally expected of a Director of Nursing should be compensated at 25 percent of the salary allowed her for Director of Nursing. This finding is based partially on the fact that the patient per-day cost at this nursing home is substantially lower than the costs in other comparable nursing homes in Florida.
Findings Of Fact The Parties. The Petitioner in case number 91-4632, Brighton Hall Co. (hereinafter referred to as "Brighton"), is a general partnership. Prior to March 6, 1990, Brighton owned and operated West Bay Nursing Center (hereinafter referred to as "West Bay"), a 120-bed nursing home in Oldsmar, Florida. The Petitioner in case number 91-4634, Shive Nursing Centers, Inc. (hereinafter referred to as "Shive Nursing"), is a corporation. Prior to March 6, 1990, Shive Nursing owned and operated Sunset Point Nursing Center (hereinafter referred to as "Sunset Point"), a 120-bed nursing home located in Clearwater, Florida. The Petitioner in case numbers 91-4635 and 91-4636, GHF, Inc. (hereinafter referred to as "GHF"), is a corporation. Prior to March 6, 1990, GHF owned and operated Oakhurst Manor Nursing Center (hereinafter referred to as "Oakhurst") and Orchard Ridge Nursing Center (hereinafter referred to as "Orchard Ridge"), two 120-bed nursing homes located in Ocala and New Port Richey, Florida, respectively. The Petitioner in case number 4637, Springwood Nursing Center, Ltd. (hereinafter referred to as "Springwood"), is a Florida limited partnership. Prior to March 6, 1990, Springwood owned and operated Springwood Nursing Center, a 120-bed nursing home located in Sarasota, Florida. All of the Petitioners owned and operated nursing homes which participated in the Florida Medicaid program, provided services to Medicaid patients and received reimbursement for Medicaid services from the Respondent. The Respondent in these cases, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department"), is the state agency charged with administering the Florida Medicaid program. The Florida Medicaid Program. The Florida Medicaid program is a program for the reimbursement of the costs of providing medical care to certain patients in Florida. The State of Florida enters into contracts with nursing homes for the treatment of Medicaid patients. Nursing homes agree to provide medical care and the State of Florida agrees to reimburse the nursing homes on a per diem basis for those services. One of the components of costs which are considered in determining the Medicaid per diem rate is the property cost component. Included within the property cost component is a reimbursement for depreciation expense. Generally, depreciation is the allocation of the cost of certain assets over the useful life of those assets. For example, if an asset cost $100,000.00 and it will be useful for 10 years, it is reasonable to assume that 10% of its cost, or $10,000.00, will be attributable to each year of the asset's useful life. Only assets considered to have a limited useful life are considered depreciable. For Medicaid purposes, those assets generally include tangible assets, such as buildings, equipment and furnishings. Land is not a depreciable asset. Medicaid recognizes that assets with a limited useful life which are used in providing medical services constitute part of the costs which should be reimbursed to providers of Medicaid services. Therefore, depreciation expense is included as part of the property component of the Medicaid per diem reimbursement rate. Sale of the Nursing Home Facilities. When a change of ownership of a nursing home facility which has participated in the Florida Medicaid program takes place, the nursing home terminates its participation in the Medicaid program. Any amounts which were paid for depreciation to the former owner of a nursing home may be recovered (hereinafter referred to as "depreciation recapture"). Depreciation recapture may occur to the extent that there is a gain realized by the former owner of the nursing home facility on the sale of the facility's depreciable assets. There is a gain realized on the sale of depreciable assets when the amount received for a depreciable asset exceeds the net book value (cost less accumulated depreciation) of the asset. To the extent that a gain is realized on the sale of a depreciable asset, the owner may be receiving a reimbursement for amounts the Medicaid program has already paid the owner for depreciation. On or about November 29, 1989, Brighton, Shive Nursing and GHF entered into an Asset Purchase Agreement with Krupp I, Inc., a Massachusetts corporation, for the sale of West Bay, Sunset Point, Oakhurst and Orchard Ridge. On or about November 29, 1989, Springwood entered into an Asset Purchase Agreement with Krupp Yield Plus Limited Partnership, a Massachusetts limited partnership, for the sale of Springwood Nursing Center. The sale of the five nursing home facilities was part of the sale of nine facilities by the principal owner of the facilities. The November 29, 1989, Asset Purchase Agreements referenced in findings of fact 22 and 23 (hereinafter referred to as the "Asset Purchase Agreements"), included as an attachment a schedule titled the "Purchase Price Allocation" allocating the purchase price to the assets of each nursing home facility sold. The total purchase price of $42,239,650.00 was allocated on the Purchase Price Allocation among the nine nursing homes and the corporate offices which were the subject of the sale. The purchase price allocated to each nursing home facility was further allocated on the Purchase Price Allocation to the various assets of each facility, including land (a non-depreciable asset), buildings and improvements, furniture, fixtures and equipment, computer software, supplies and inventory, certificate of need, patient lists, covenant not to compete, assembled work force, favorable lease and enterprise/going concern. The closing of the Asset Purchase Agreements took place on March 6, 1990. The Department's Treatment of the Sale of the Nursing Home Facilities. When the Department was informed of the sale of the five nursing home facilities at issue in this proceeding, the Department made a determination of whether depreciation recapture was due on the sale. The Department, in determining the amount of gain on the sale, utilized the amounts allocated to the various depreciable assets of each nursing home facility on the Purchase Price Allocation as the amount realized for those assets. The amount realized for depreciable assets reported by the Petitioners less the net book value for the depreciable assets was determined to be the gain realized on the sale of the Petitioners' nursing homes facilities. This gain, which was less than the depreciation of the depreciable assets, was determined to be the amount subject to depreciation recapture. After calculating the amount of depreciation recapture for each facility, the Department notified each Petitioner by letter that depreciation recapture was due in the following amounts: Date of Letter Petitioner Recapture June 25, 1991 Brighton $175,627.00 June 5, 1991 Shive Nursing 94,631.00 June 15, 1991 GHF (Oakhurst) 278,169.00 June 14, 1991 GHF (Orchard) 115,492.00 June 7, 1991 Springwood 231,320.00 On July 5, 1991, the Petitioners challenged the Department's proposed action. Following discussions with Department officials by a representative of the Petitioners, the Department amended the amount of depreciation recapture on October 10, 1991, by reducing the amount of recapture for the following Petitioners: Petitioner Recapture Reduction Brighton $3,485.00 Shive Nursing 69,370.00 GHF (Orchard) 36.00 The parties stipulated that these proceedings would take into account these amended amounts and a Motion for Leave to Amend Letter Requesting Depreciation Recapture was granted by Order entered October 23, 1991. The Manner in Which the Department Determined the Amount of Depreciation Recapture. Rule 10C-7.0482, Florida Administrative Code, provides the framework for the operation of the Medicaid program in Florida. This Rule specifically incorporates Florida Title XIX Long-Term Care Reimbursement Plan, Version IV, as a part of the Rule. The manner in which depreciation recapture is determined by the Department is governed by Section III.H.1. of Florida Title XIX Long-Term Care Reimbursement Plan, Version IV (hereinafter referred to as "Title XIX"), which provides, in pertinent part: Recapture of depreciation resulting from sale of assets. The sale of depreciable assets, or substantial portion thereof, at a price in excess of the cost of the property as reduced by accumulated depreciation, resulting in a gain on sale, and calculated in accordance with Medicare (Title XVIII) Principles of Reimbursement, indicates the fact that depreciation used for the purpose of computing allowable costs was greater than the actual economic depreciation. . . . The gross recapture amount shall be the lesser of the actual gain on the sale allocated to the periods during which depreciation was paid or the accumulated depreciation after the effective date of January 1, 1972 and prior to the implementation of payments based on FRVS to the facility. . . . [Emphasis added]. The terms "Medicare (Title XVIII) Principles of Reimbursement", are defined in Section IX of Title XIX as "Health Insurance for the Aged, Blind or Disabled (Medicare), as provided in the Social Security Act (42 U.S.C. 1395- 1395pp)." Medicare (Title XVIII) Principles of Reimbursement, do not contain specific provisions governing how gain on a sale of depreciable assets is to be calculated. The federal regulations to implement Medicare (Title XVIII), however, including the following: (iv) If a provider sells more than one asset for a lump sum sales price, the gain or loss on the sale of each depreciable asset must be determined by allocating the lump sum sales price among all the assets sold, in accordance with the fair market value of each asset as it was used by the provider at the time of sale. If the buyer and seller cannot agree on an allocation of the sales price, or if they do agree but there is insufficient documentation of the current fair market value of each asset, the intermediary for the selling provider will require an expert to establish the fair market value of each asset and will make an allocation of the sales price in accordance with the appraisal. 42 C.F.R. 413.134(f)(2)(iv). The Department of Health and Human Services, the agency responsible for administering the federal Medicaid program, has also promulgated a Provider Reimbursement Manual for guidance in the federal Medicare reimbursement program. Of pertinence to this proceeding is Chapter One, Section 104.14.B, which contains language similar to the provisions of 42 C.F.R. 413.134(f)(2)(iv), quoted in finding of fact 38. The terms "fair market value" are defined in Medicare (Title XVIII), as follows: Fair market value is the price that the asset would bring by bona fide bargaining between well-informed buyers and sellers at the date of acquisition. Usually the fair market value is the price that bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquisition. 42 U.S.C. 413.134(b)(2). The federal regulations implementing Medicare (Title XVIII), and the Provider Reimbursement Manual are not specifically incorporated by reference in the Department's rules or in Title XIX. As a matter of policy, the Department relies upon the federal regulations and the Provider Reimbursement Manual in determining the amount of gain on the sale of depreciable assets. To the extent that an issue involving depreciation recapture is not resolved by the foregoing rules and policies, the Department relies on Generally Accepted Accounting Principles. These policies are reasonable. The Department, in applying 42 C.F.R. 413.134(f)(2)(iv), treats a written allocation of the sales price between a buyer and a seller included in a sales and purchase agreement as sufficient documentation of the fair market value of each asset sold. Absent other evidence which would cause some question about the reasonableness of relying upon such an allocation, this policy is reasonable. Absent such contrary evidence, there is no reason why the Department should not assume that the parties to a sales and purchase agreement have reached an arms length agreement as to the fair market value of the assets being sold and that a schedule or other document setting out the agreement of the parties is sufficient documentation of that agreement. In this case, the Department has utilized a written allocation of the sales price (the Purchase Price Allocation) to determine gain on the sales at issue despite other documentation indicating that the allocated amounts may not constitute fair market value and raising a question as to whether the Purchase Price Allocation is sufficient documentation. It may be reasonable for the Department to conclude that a sale of assets does not involve "insufficient documentation" if the only evidence of the allocation of the sales price to the assets being sold is a written allocation of the sales price included as part of the sales and purchase agreement. But where other documentation of the fair market value of the assets is provided to the Department which is inconsistent with the written allocation included in the sales and purchase agreement, it is unreasonable for the Department to ignore that additional evidence. Absent a specific rule to the contrary, if other documentation is provided to the Department that calls into question the accuracy of a written allocation of the sales price, the Department should review and consider that documentation in determining whether the written allocation alone constitutes "insufficient documentation". In this case, the Department reasonably relied upon the Purchase Price Allocation originally provided to it to determine the amount of depreciation recapture. It was not reasonable, however, for the Department to ignore appraisals of the depreciable assets at issue performed on behalf of the Petitioners or to ignore other information concerning industry averages for new nursing home equipment in Florida on a per bed basis once this information was provided to the Department. Information Provided by the Petitioners. The Petitioners do not dispute that the Department is entitled to depreciation recapture on the sale of the facilities at issue in this proceeding. They dispute the amount of depreciation recapture, however. During the hearing of these cases, evidence was presented concerning industry averages for new nursing home equipment in Florida: generally, a Florida nursing home facility can be equipped with new equipment for $1,500.00 to $3,500.00 per bed. The cost of equipping the nursing home facilities at issue in these cases with used equipment based upon the allocation of values included in the Purchase Price Allocation is between $8,000.00 and $10,000.00. During 1988 and early 1989, prior to the time that the Asset Purchase Agreements were entered into, Craig Smith, appraised twelve nursing home facilities, including the nursing home facilities at issue in this proceeding. Mr. Smith holds a M.A.I. (Member Appraisal Institute) designation. The appraisals conducted by Mr. Smith were provided to the Department's Office of Licensure and Certification as required by Rule 10D- 29.103, Florida Administrative Code. The appraisals were provided by the purchasers of the nursing home facilities as part of the process of obtaining a license from the Department to operate the nursing homes facilities. The Department did not, however, rely upon or take into account the appraisals in determining the amount of depreciation recapture even though they were provided to the office responsible for making that determination. The Department, for purposes of determining the amount of recapture relied only on the Asset Purchase Agreement. The disparity between the amounts allocated to the depreciable assets of the nursing home facilities in the Purchase Price Allocation and the appraised values is significant. Based upon the weight of the evidence, the appraisals conducted by Mr. Smith and his determination of the fair market value of the depreciable assets of the nursing home facilities at issue in this proceeding are more reflective of the fair market value of those assets. The Petitioners presented evidence as to the amount of depreciation recapture which should be paid to the Department based upon the appraised value of the assets at issue in this proceeding. These amounts were not refuted by the Department. The amount of depreciation recapture the Department may reasonably receive from the Petitioners, based upon appraised fair market value, is as follows: Petitioner Recapture Brighton $ 95,915.00 Shive Nursing 27,502.00 GHF (Oakhurst) 229,222.00 GHF (Orchard) 78,141.00 Springwood 161,762.00 The Treatment of the Purchaser of Nursing Home Facilities. Prior to the change of ownership of a nursing home facility in Florida which intends to continue participating in the Medicaid program, the new owner must file an application with the Department's Office of Licensure and Certification for approval of the change and issuance of a license to operate the facility. Among the things to be reported by the new owner, is a fair market value appraisal of the nursing homes assets conducted by an appraisal expert. This requirement is specified, however, by the specific provisions of Rule 10D- 29.103(7)(i)9.b., Florida Administrative Code. This Rule does not specifically apply to the determination of depreciation recapture. The amount (known as "basis") which may be used by the new owner in the determination of the amount of depreciation expense entering into the new owner's per diem reimbursement rate is determined by a comparison of the fair market value appraisal required by Rule 10D-29.103(7)(i)9.b., Florida Administrative Code, the sales contract price and the cost of the facility for the owner of the facility on July 18, 1984. The manner utilized by the Department in its determination of depreciation recapture on the sale of a nursing home facility and the determination of the basis for the assets of the same facility for the new owner pursuant to Rule 10D-29.103, Florida Administrative Code, can result in the use of different amounts as the amount paid for those assets. In light of the conclusion concerning the invalidity of the Department's policy in these cases, it is not necessary to determine whether the Department's difference in treatment of the Petitioners and the buyers of the Petitioners' nursing homes was improper.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department requiring the Petitioners to pay to the Department the amounts set our in finding of fact 55 as depreciation recapture owed as a result of the sale of depreciable assets utilized by the Petitioners in the Florida Medicaid program. DONE and ENTERED this 20th day of February, 1992, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of February, 1992. APPENDIX Case Number 91-4632 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1-2, 9 and hereby accepted. 2 3-4, 9 and hereby accepted. 3 5-6, 9 and hereby accepted. 4 7-9 and hereby accepted. 5 10 and hereby accepted. 6 11-12 and hereby accepted. 7 See 13-14. 8-11 Not relevant. 12 35. 13 15-16. 14 13-14 and 16. 15 18-19. 16 56 and hereby accepted. 17 57. 18 58. 19 19. 20 20-21. 21 36. 22 Hereby accepted. 23 Not relevant. 24 See 36-41. 25 See 38-39. 26 41. 27 42. 28 22-25. 29 50 and hereby accepted. 30 25. 31 26-28. 32 Not relevant. 33 Not supported by the weight of the evidence. 34-35 Not relevant. 36-37 51. 38 32. 39 34 and hereby accepted. 40 34. 41 33. 42 42-44. 43 38-39. 44 40. 45 42-43. The last sentence is not relevant to this proceeding. 46 43. 47 52 48-51 Not relevant to this proceeding. 52-54 See 42-47. 55 49 and 51. 56 Not supported by the weight of the evidence. 57 49 and 52. 58 See 42-47. 59 Hereby accepted. 60 42-47 and 54-55. 61 Not supported by the weight of the evidence. 62 See 42-47 and 54-55. 63 Not relevant to this proceeding. 64-65 54-55. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1-2, 5-8, 14-16 Summary of some of the rulings during the final hearing. Facts which primarily relate to credibility or weight of the evidence. 3 9. 4 48. 9 30-31 and 43-44. 10-13 See 43 and 45-47. 17-19 See 30-31 and 43-44. 20 32. 21 30-32. 22 42. 23 38. 24 Hereby accepted. 25-26 See 43 and 45-52. 27 30-31. 28 43. 29 Not relevant to this proceeding. COPIES FURNISHED: William B. Wiley, Esquire Darrell White, Esquire 600 First Florida Bank Building Tallahassee, Florida 32301 Gordon B. Scott, Esquire Department of Health and Rehabilitative Services 1317 Winewood Boulevard Building 6, Room 230 Tallahassee, Florida 32399-0700 Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact The facts here involved are not in dispute. Prior to May 1977 Krestview Nursing Home was operated by the Wilson management group (Wilson) and provided nursing home care to Medicaid patient's. The property comprising Krestview Nursing Home is owned by G & J Investments Corp. (G & J), a wholly owned subsidiary of Suburban Nursing Home Consultants (Suburban). Suburban also owns all of the stock of B & K Investments, Inc. Gerald D. Keller at all times here relevant was President of Suburban and G & J Investments. He and his family apparently own most, if not all, of the stock of Suburban. Prior to May 1977, the facility comprising Krestview Nursing Home was leased to Wilson. In early May 1977 Wilson was in dire financial straits, criminal charges were pending against Wilson, and the closure of Krestview and two other homes managed by Wilson was imminent. In hopes of avoiding the problems likely to result from closing these homes, the Department of HRS contacted Mr. Keller to ask if he could locate a qualified operator to take over the operation of the nursing homes. When a qualified operator could not be found on such short notice, Keller was asked by HRS if he would operate these homes until a qualified operator could be located. One primary consideration in this request is the high mortality rate expected when large numbers of elderly patients have to be relocated. Keller, through his corporate organizations, had a corporation, B & K Investments, Inc., which had a current state registration, federal tax number, and could from a corporate standpoint. Qualified personnel to operate this home was available and employed. An agreement between HRS and B & K, admitted into evidence as Exhibit 1, provided that B & K would have no liabilities for the debts or obligations which arose during the time its predecessor provider operated the facility. Wilson's lease was terminated and a new lease was entered into between G & J and B & K whereby B & K agreed to pay rent upon the same terms previously existing with Wilson, Wilson's lease (Exhibit 2) was a net, net lease whereby the lessee paid all taxes and insurance premiums on the real and personal property involved. Krestview was operated by B & K for approximately four months, from May 5, 1977 until August 31, 1977, before Keller was successful in finding a new provider to take over the operation of the nursing home. A lease upon the same terms as Exhibits 2 and 3 was executed with the new provider. B & K's fiscal year ended May 31, 1977, just 26 days after B & K, took over operations. Because of this, HRS allowed B & K to submit its annual report for the 13-month period from May 5, 1977 until May 31, 1978. Upon taking over operation of the nursing home B & K found the taxes unpaid and overdue for 1976. These taxes were paid by B & K, and in November 1977 the taxes for 1977 were paid. At this time B & K was no longer the provider. Both of these payments were included in the costs for the nursing home during the 13-month period ending May 31, 1978 and this constituted one of the issues in dispute. The other disputed issue is the rent paid by B & K to a related corporation, G & J, during the four months that B & K operated Krestview.
Conclusions The Division of Administrative Hearings has jurisdiction over the parties and subject matter of these proceedings. With respect to the taxes for 1976 which B & K paid during the period B & K was operating the premises as provider, it is to be noted that these taxes accrued during the occupancy of the premises by B & K's predecessor provider, Wilson. Under the terms of the agreement (Exhibit 1), B & K, as a provider, had no liability for this obligation. That obligation, like any other debt which accrued during the Wilson administration, was the sole obligation of Wilson. Pursuant to the lease agreement the lessee agrees to pay property taxes while lessee is in possession of the premises. Although the lease agreement does not specify that the taxes be prorated for the first year of the lease (Exhibit 2), there is nothing in the lease to indicate a departure from the normal rule of proration of taxes when the payment of taxes is the obligation of the party in possession. Although B & K paid these taxes for 1976 while in possession of the premises, there was no requirement that it do so. Had B & K not paid the taxes, that burden would have fallen on the owner, G & J. Had no tenant taken over the facility, G & J would have been required to pay the 1976 taxes or have the problem of redeeming the tax certificate after the tax sale. Here B & K, with respect to the 1976 property taxes, is in exactly the same position as would be a provider unrelated to G & J--it has no liability for the payment of these taxes. Had B & K been independent of G & J it is unlikely that these taxes would have appeared on the cost report. The payment of taxes would be appropriate only for the fiscal year 1977, as this obligation for 1976 accrued before B & K became the provider. Although there is a question of when the taxes for 1977 accrued, these taxes became due and payable 1 November 1977. Florida Statutes Section 197.012 (1977). At this time B & K was no longer the provider. However, the lease provided for the tenant to pay taxes and this then became an obligation of the provider. It would be equitable to allow all of the taxes for 1977 be charged to the provider. II. With respect to the payment of rent to a related party, Respondent, in its brief, and at the hearing, agreed there is a prohibition against such rental payments in HIM 15. While the rationale of the rule against such payments is to prevent "sweetheart" agreements which could greatly increase the costs of service, the rule does not disappear simply because that rationale is not present in a particular case. Here it is clear that the lease and rental payments for the premises occupied by the provider was the same for the related provider, B & K, as it was for the unrelated providers which preceded and followed B & K. The rule proscribes the payment of rent to a related corporation and this rule was not abrogated when HRS requested Keller to temporarily take over the role as provider until another provider could be found. While, under the circumstances of this case, the equities are with allowing the provider to charge the rent paid to a related company as a legitimate cost for reimbursement purposes, the rule says this cannot be done. HIM 15 requires the provider, when related to the lessor, to charge off only the actual costs of the facility. These costs are comprised of taxes, depreciation, repairs, insurance, etc. While here the owner (B & J) may not receive the same return on the property it received from those providers not related to it because of low depreciation allowable or for other reason, this too does not provide a basis for ignoring the rule. The validity of the rule has not been questioned, nor has a legal basis been offered for not following this rule. Such a rule is a valid exercise of delegated legislative authority. Fairfax Hospital Association, Inc. v. Califano, 558 F2d 602 (CA 4, 1978). Even when, as here, the equities are with the related owner of the property to allow him to collect and have the rent collected charged by the provider as a reimbursable expense, the rule does not provide for this flexibility and the rule is binding upon HRS. From the foregoing it is concluded that the property taxes for the year 1976 were not a proper expense for B & K Investments, Inc. while it was serving as provider in 1977. It is further concluded that HIM 15 precludes allowing rental payments to a related company as an expense chargeable to the provider despite the equities here existing. It is therefore RECOMMENDED that the desk audit denying the charges for rent in 1976 be upheld. It is further RECOMMENDED that the desk audit denying the payment of rent to a related company be upheld. Entered this 27th day of November, 1979. K. N. AYERS Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Leonard J. Helfand, Esquire DHRS District XI Counsel Room 1040, 401 N. W. 2nd Avenue Miami, Florida 33128 R. Stuart Huff, Esquire 1200 First Federal Building One Southeast 3rd Avenue Miami, Florida 33131
The Issue The ultimate issue is whether proposed Rules 10-5.002, 10-5.0025, 10-5.003, 10-5.004, 10-5.005, 10-5.008, 10-5.0085, 10-5.010, 10-5.0105, 10-5.020, and 10- 5.024, published in Volume 16, Number 13, Florida Administrative Weekly, are invalid exercises of delegated legislative authority.
Findings Of Fact 10-5.002(1) Proposed Rule 10-5.002(1) defines the term "acquisition" to mean "the act of possessing or controlling, in any manner or by any means, a health care facility, major medical equipment, an institutional health service or medical office building as one's own." The proposed rule is HRS's attempt to clarify the term's meaning as used in Section 381.706, Florida Statutes. It is based on dictionary definitions, primarily, Webster's Dictionary, Ninth Edition, but also Black's Law Dictionary. Armond Balsano, an expert in health planning, did not believe the definition to be reasonable and thought it was unclear, ambiguous, and open ended. However his opinion in this regard was not persuasive. Proposed Rule 10-5.002(1) is reasonable and sufficiently clear to withstand this challenge. 10-5.002(13) and 10-5.008(2)(d)--Skilled Nursing Issues Proposed Rule 10-5.002(13) defines "community nursing home beds" as relevant to this proceeding to include "acute care beds licensed pursuant to Chapter 395, Part I, F.S., but designated as skilled nursing beds, which are reviewable pursuant to Rule 10-5.011(1)(k) [the nursing home bed need methodology]." Proposed Rule 10-5.008(2)(d) relates to fixed need pools and states: (d) Skilled Nursing Units in Hospitals. Beds in skilled nursing units which are a distinct part of a hospital will be counted in the nursing home bed inventory, even though they retain their licensure as acute care beds. Essentially, proposed Rule 10-5.008(2)(d) requires that skilled nursing beds in a distinct unit in a hospital be categorized as hospital "general" beds on the hospital license, but that they be carried at the same time on the inventory of community nursing home beds for purposes of projecting need under "pool" projections utilized by HRS for evaluating need for new beds. Proposed Rule 10-5.008(2)(d) attempts to codify what has been HRS's policy. This rule proposes that licensed acute care beds, which form a distinct part of a hospital-based skilled nursing unit, be counted in the nursing home bed inventory to project future need with respect to the nursing home bed need formula. Thus, these beds will no longer be counted or used in the acute care bed need formula to project the acute care bed need. From a health planning standpoint, several reasons exist for and against the inclusion of these hospital-based skilled nursing units within the nursing home bed inventory. A hospital cannot use its acute care beds as skilled nursing beds without a certificate of need. However, pursuant to this rule, to obtain these distinct unit beds a hospital is forced to compete with nursing home applicants for those beds. Skilled nursing beds in hospitals are "general" beds set up in a special category for which there is no specialty hospital bed methodology. Applications are reviewed under the nursing home bed methodology. A skilled nursing unit in a hospital is a unit, certified under the Health Care Finance Administration program, to identify a distinct part of the hospital as being a service in which there is 24-hour nursing with an RN nurse on the day shift. There also must be skilled nursing multi-disciplinary treatments and therapy services provided. The Health Care Finance Administration categorizes such beds as hospital beds, a distinct part of a hospital. Skilled nursing facility (SNF) beds in a hospital are used to treat acutely ill patients with an average length of stay of 20 days, who are different from the extended care patients found in community nursing homes, who have lengths of stay of one year or longer. Hospital skilled nursing patients are overwhelmingly Medicare patients, whereas community nursing home patients are overwhelmingly Medicaid patients. In Florida, Medicaid does not reimburse for care provided in the hospital-based skilled nursing unit. Hospital-based skilled nursing units are reimbursed by the Health Care Financing Administration (HCFA) on a cost-based method. This system of reimbursement is also used with respect to non-hospital-based skilled nursing facilities. Furthermore, this means that hospital-based units are no longer reimbursed under the DRG (Diagnosis Related Groups) system. Medicare limits the patient benefit period to 100 days, regardless of the patient setting. Except for hospitals having higher allowable costs, federal guidelines do not differentiate between hospital and non-hospital-based skilled nursing units. The level of staffing is higher in a hospital nursing unit than in any community nursing home. Specialized equipment and services are offered in the hospital skilled nursing unit which are not offered in the community nursing homes. There are different conceptual approaches to care in the skilled nursing unit in a hospital as compared to those provided in community nursing facilities. Acutely ill patients on intravenous feeding or hyperalimentation, and those with multiple diagnoses require the hospital level nursing care. These units are not intended to provide residential care. Hospital beds are licensed under Rule 10D-28, whereas nursing home beds are licensed under Rule 10D-29, Florida Administrative Code. Although the proposed rule requires skilled nursing beds in distinct units of hospitals to be comparatively and competitively reviewed with community nursing home applications, the two types of beds are not comparable. This creates an unfair comparison. As a matter of good health planning, these skilled units in hospitals should be reviewed differently and separately from regular community nursing home beds. By their nature, SNF beds in distinct units in hospitals are in fact "hospital" beds under Chapter 395 and not nursing home beds under Chapter 400, Florida Statutes. Hospital-based skilled nursing units are not considered special care units as defined in Rule 10D-28, Florida Administrative Code. Specifically, special care units deal with very specialized intensive care settings. However, pursuant to some federal guidelines and state licensing requirements, a skilled nursing unit is considered a custodial type setting. For example, special care units are surveyed about once every two years and skilled nursing facilities once every year. However, failure to conduct a survey is not a determinative factor for special care units continuing under the Medicaid/Medicare programs. Skilled nursing units are not as fortunate. In fact, failure to survey a skilled nursing unit leads to the expiration of its enrollment in the Medicaid/Medicare programs. Section 395.003(4), Florida Statutes, defines the various types of hospital beds and states that beds not covered under any specialty bed need methodology, which a skilled nursing unit is not, shall be considered general beds. This is why these hospital-based skilled nursing units are licensed as general acute care beds. The proposed rule amendments also present logistical problems. Hospitals and nursing homes are licensed under different chapters of the Florida Statues and the Florida Administrative Code, and those standards do not match. Their projects are in different planning cycles. HRS intends that hospitals apply for skilled nursing units on the nursing home application currently in use, but admits that the application does not really fit this type of project. The proposed rule amendments regarding skilled nursing units will be costly and burdensome. Although skilled nursing units offer valuable services and few currently exist, under the nursing home need rule it will be difficult to prove need for these projects. A hospital desiring to establish one will likely find itself having either to challenge the fixed need pool for nursing home beds or litigate the almost inevitable denial of its application for lack of need. Either course of action would involve time and expense over and above those usually encountered in the CON process, particularly because such an application would likely draw the opposition of existing nursing homes, even though their services are not really comparable. The proposed rule amendments do not comport with the basic health planning policy of reducing over-bedding by encouraging conversion to other services. It is unlikely a hospital could get a skilled nursing unit by showing a numeric need under the nursing home need methodology, and any attempt to show exceptional circumstances would be hampered by the lack of utilization data. Such beneficial conversions will probably also be chilled by the difficulty in converting a skilled nursing unit back to general acute care use, should it not be successful. Given the extreme acute care over-bedding which exists throughout the state, it is not anticipated that there will be any need for additional acute care beds for the foreseeable future. Since a skilled nursing unit would not be counted in the acute care bed inventory, the reconversion to acute care use would have to undergo CON review and would almost certainly be denied. 10-5.002(52) Proposed Rule 10-5.002(52) defines refinancing costs, which Rule 10- 5.004(2)(c) states are subject to expedited review under Section 381.706(2). The purpose of this definition is to provide guidance to applicants by identifying examples that are often encountered in either bond refunding or refinancing. The definition is straightforward in nature and encompasses the elements common in refinancing. Mr. Balsano, testifying for Adventist, readily acknowledged the preciseness of this definition, but faulted the definition for its absence of any discussion as to the potential benefit of refinancing. However, Mr. Balsano's concerns were misplaced. Distinctions exist between the benefits of refinancing and the meaning of refinancing. Indeed, the benefits of refinancing go to the merit of whether or not the certificate of need should be granted. Since every applicant is required to address the review criteria found in Section 381.705, Florida Statutes, the proper forum for addressing the benefits of refinancing is in the CON application itself. Proposed Rule 10- 5.002(52) is simply a definition. 10-5.004(2)(g)--Projects Subject to Expedited Review: Capital Expenditure Projects This proposed rule allows applicants who propose a capital expenditure project to improve, repair, or correct their existing facility to apply for a certificate of need on an expedited basis. This proposed rule is conducive to encouraging existing facilities to make needed improvements by seeking approval of the expenditure expeditiously and without the delays associated with batching cycles. It is important for a provider to make and complete corrections or improvements quickly in order to minimize the disruption of patient care. Some of the more common capital expenditures include expansion of emergency departments or emergency rooms and the renovation or expansion of other patient care areas. An application to relocate a hospital is also considered a capital expenditure. Under extreme circumstances of pervasive physical plant deficiencies, coupled with a lack of practical renovation options to overcome plant deficiencies, an existing health care facility might apply for a replacement facility. Only when such replacement facility would (1) involve no new beds or changed bed use (e.g., from general acute care to comprehensive medical rehabilitation beds), (2) involve no substantial change in services, and (3) involve no substantial change in service area would HRS consider such an application to be solely reviewable as a capital expenditure and thus entitled to expedited review under the proposed rule. HRS reviews replacement facility applications by carefully assessing the applicants' claims of pervasive physical plant problems. HRS sends a team of experts, including architects, to the existing facilities to independently judge whether the physical plant is in such a condition as would warrant replacement and whether renovations could serve as a practical alternative from a physical standpoint. HRS also performs an economic assessment to compare the alternatives of replacement versus renovation in order to determine the most cost-effective alternative. Replacement facility applications typically involve a determination not of whether dollars will be spent, but rather, how they are best spent--by replacement or by renovation. As such, HRS helps to contain health care costs without participation by competitors in these institution- specific decisions. Pursuant to Section 381.709(5)(b), Florida Statutes, competitors do not have standing to challenge a proposed capital expenditure and, therefore, there is no adequate reason to defer review of these projects until a future application cycle. Further, when a capital expenditure approval is sought to replace or relocate an existing facility, no one other than the applicant/existing facility can apply to spend or make those expenditures. An unrelated entity cannot compete to replace another entity's existing facility. Conducting a comparative review with respect to a capital expenditure project for the replacement of a hospital is illogical, unworkable, and futile. 10.5.008(1)(c)3 and 10-5.008(3)(b)--Capitalized Costs Proposed Rule 10-5.008(1)(c) requires that a letter of intent describe the proposal with specificity. Subsection (1)(c)3 sets forth the following requirement: 3. A proposed capital expenditure must be rounded to the nearest dollar . . . . If no capital expenditure is proposed, the applicant must so indicate. If the actual capital expenditure has already been incurred, either wholly or in part, and the project will account for such expenditures as capitalized costs, regardless of the purpose, then the total capital expenditure of the project shall be indicated. As related to this same subject, proposed Rule 10-5.008(3)(b) states: (b) Capital expenditures incurred for projects not originally subject to Certificate of Need review must be identified as a proposed expenditure when such expenditure will be capitalized in a project for which a Certificate of Need is required. HRS asserts that this proposed rule codifies HRS's existing policy and that the purpose of this provision is to develop consistency in how applicants treat an already incurred capital expenditure. It is also allegedly intended that this proposed rule give uniformity concerning how project costs are calculated and allocated. For example, if an applicant is going to convert space from one use to another, the value of the space must be included in the applicant's capital expenditure estimate. While Ms. Gordon-Girvin, HRS's health planning expert, opined that this proposed rule is consistent with current practices in the health care market place concerning how capital expenditures are treated and that it forms a common basis of comparison for comparing the applicants' treatment of capitalized costs, the greater weight of the credible evidence does not support these opinions. Actually, the effect of these proposed rules is that a certificate of need applicant, who has previously made capital expenditures and later pursues a certificate of need project utilizing such prior capitalized costs, must identify and include those prior capital expenditures as a portion of the certificate of need project, even though no actual incremental funds will be necessary or spent in connection with the project. One of the problems with proposed Rules 10-5.008(1)(c)3 and (3)(b) is that they both ignore a distinction between fixed costs and variable costs which is fundamental to a financial evaluation of any project. Specifically, it is inappropriate to require an applicant who will have no incremental costs in implementing a project to allocate a portion of prior capital expenditures, where such an application is measured against a competing application in which the entire outlay for capital costs will be necessary. This distorts the evaluation due to inappropriately comparing prior fixed costs to future variable costs. An example of the illogical result of the proposed rules provides guidance. If a hospital has already spent one million dollars to add a CON- exempt outpatient cardiac cath lab, and later seeks to establish an inpatient cardiac cath program, under these proposed provisions, that hospital would have to represent a cost of one million dollars in its application to convert the outpatient cardiac cath lab to an inpatient project. From a health planning and financial standpoint, this is inappropriate. Having to include capital costs which have already been incurred and viewing those costs in the context of the decision to approve or reject a CON project is misleading. Ultimately, the purpose and objective of the CON process is to minimize duplication of health care resources. The proposed rules work in conflict with that goal. Conversion of underutilized resources to resources that could be more beneficially utilized is a policy that is encouraged by HRS. This policy is encouraged in the various need methodologies. One of the reasons to encourage a conversion is that often zero dollars are involved to convert a project from one CON-approved use to another CON-approved use. Proposed Rules 10-5.008(1)(c)3 and (3)(b) would eliminate consideration of the minimal cost involved in a conversion project and are therefore unreasonable. Moreover, the proposed rules could end up creating excess resources in the system simply because they would eliminate the preference for conversion as opposed to new construction. With respect to allocating prior capital expenditures, the proposed rules, as alleged by HRS, are intended to codify existing HRS policy as well as provide uniformity to the process of ascertaining project costs. These proposed rules do neither. In point of fact, HRS has accepted, within the last three years, conversion projects indicating a zero project cost in the application. The proposed rules are thus inconsistent with current HRS policy of accepting and evaluating these applications and are contrary to HRS's stated intention in this proceeding. However, with respect to providing uniformity to the process of ascertaining project costs, the proposed rules provide no methodology by which prior capital cost allocations are to be determined. Indeed, there is no uniformity proposed regarding how a health care facility or applicant accounts for capital expenditures. Generally, a capital expenditure is one that is "material" and the useful life of the item capitalized exceeds one year. What is material to one applicant may be entirely different from that which would be material to another applicant. Thus, the uniformity of presentation of prior capitalized costs contained in CON applications submitted to HRS for review will not and cannot exist as envisioned by HRS in its proposed rules. 10-5.005(2)(e) Proposed Rule 10-5.005 relates to exemption from CON review and Subsection (2)(e) states as follows: (e) Failure to initiate the exemption within twelve months after it appears in the Florida Administrative Weekly will result in the notice of exemption being void. The alleged basis for this proposed rule is to protect those persons pursuing an exemption by ensuring that they are still eligible for it under the same facts and circumstances. Additionally, HRS has encountered problems in the past when entities have received a determination of exemption for a project but have failed to implement the project. In one case, HRS gave a nursing home an exemption to replace a facility on site. After discharging the patients, the nursing home took no further action. However, these beds are still licensed and are included in the bed inventory. Such a situation artificially suppresses the need for nursing home beds in that district for the planning horizon. The proposed rule is an attempted response to this problem. The laws implemented by the proposed rules are Section 381.706 and 381.713(1). Pursuant to these sections, HRS must grant an exemption if the applicant meets the statutory definitions. Further, if a project is exempt, it is not subject to review. Exemption requests may be made at any time and are not subject to batching requirements. Once a project is deemed to be exempt and not subject to review, HRS ceases to have jurisdiction over the project and HRS, accordingly, has no jurisdiction to void an exemption. 10-5.008(2)(f) Proposed Rule 10-5.008(2)(f) establishes a procedure for HRS and applicants to follow when a departmental need methodology does not exist for a proposed project. The proposed rule attempts to clarify for applicants how best to present themselves when applying for a project for which no methodology has been adopted in an existing rule. This is particularly useful to applicants in addressing the need component required by statute. Policy utilized but not yet adopted by HRS will be provided to applicants in addressing the need component required by statute; however, applicants are not bound by that policy and may tender their need calculations. This proposed rule gives credence to the fact that there may be different methodologies and allows applicants the opportunity to make all the necessary arguments to demonstrate the nature and extent of entitlement to a certificate of need. 10-5.0085(4) Proposed Rule 10-5.008(4) describes shared service arrangements and delineates the procedures applicants must follow to initiate or terminate a shared service. The part of the proposed rule challenged by FHA and the area on which it focused concerned the termination of a shared service arrangement. Proposed Rule 10-5.008(4) provides in pertinent part: (4)(a) The following factors are considered when reviewing applications for shared services where none of the applicants are currently authorized to provide the service: * * * Any of the parties providing a shared service may seek to dissolve the arrangement. This action is subject to review as a termination of service. If termination is approved by the department, all parties to the original shared service give up their rights to provide the service. Parties seeking to provide the service independently in the future must submit applications in the next applicable review cycle and compete for the service with all other applicants. * * * 6.b. The following factors are considered when reviewing applications for shared services when one of the applicants has the service: * * * e. Dissolution of a shared services contract is subject to review as a termination of service. * * * If termination is approved, the entity(ies) authorized to provide the service prior to the contract retains the right to continue the service. All other parties to the contract who seek to provide the service in their own right must request the service as a new health service and are subject to full Certificate of Need review as a new health service. (Emphasis added) The basis for requiring CON review for a termination of a shared service as delineated above is found in Section 381.706(2)(e), Florida Statutes (1989). If a shared service arrangement terminates, the party who originally had the service would retain the service. This is reasonable because the entity would have already been granted a certificate of need for the service, singularly offered. The party would be placed back in the same situation it was in prior to the shared service. Conversely, in situations where neither party originally had the service, the remaining parties would have to apply for the service in a batched review. This, too, is reasonable in that the service would no longer be shared and the ability to provide it singularly would be evaluated anew. Here, the party would also be placed back in the same situation it was in prior to the shared service. Additionally, a shared service arrangement (and approval of it) is based on certain benefits present within that arrangement. Upon termination the same benefits may not be present. The identity of the parties and their relationships to each other will have changed. Review at this point provides an applicant the opportunity to compete again to establish the service in its own right under a different set of circumstances, and it allows other providers to compete either for the service in their own right or through another shared arrangement. Such a policy is prudent because the very reason for the shared service was to produce benefits that were not otherwise obtainable singularly. Indeed, even FHA's own witness, Mr. Bebee, acknowledged that certain advantages to a shared services arrangement might not be present when such an arrangement terminates. 10-5.010(2) Proposed Rule 10-5.010(2) concerns what local health plan is to be used and addressed in a CON application, and it provides as follows: The applicable local health plan is the most current plan adopted by the appropriate local health council and which has been accepted and approved in writing by the Department at the time letters of intent are due or, if not accepted by the Department, as reviewed and commented on by the Department. The agency will provide to all prospective applicants those items of the local health plan which must be addressed in the application. HRS asserts that the purpose of this amendment to existing Rule 10- 5.010 is to assist applicants by identifying various components of the plan to which they should address their application and thereby maximize their time and effort and, ultimately, their chances for approval and that this proposed rule codifies current departmental practice of providing those items of the local health plan which must be addressed by the applicant. Contrary to HRS's assertion that this proposed rule is clarifying in nature, the rule in fact goes far beyond those parameters. "Reviewed and commented on by the Department" means that the local health council's adopted plan has been reviewed for consistency with existing need methodologies and has been commented on by HRS. HRS maintains that "commented on" does not mean verbal comments. The proposed rule does not, however, specify that only written comments were intended. Indeed, HRS admitted that the way the rule is drafted it takes into account oral as well as written comments. Statutorily, HRS is required to adopt as a rule the local health plans or portions thereof to be used in the CON review regulatory process. Local health plans generally contain allocation factors, preferences, and policies with respect to the particular district. Within the last several months, HRS has sought to adopt as a rule preferences and policies set forth in the various local health plans around the state of Florida. HRS withdrew those proposed rules. Proposed Rule 10-5.010(2) does not make reference to or account for the fact that the local health plans must be adopted as rules by HRS. HRS cannot circumvent statutory requirements by proposing that an applicant address "approved plans," nor can it require an applicant to address local health plans with which HRS is not in full agreement with the local health council as to whether the plan is consistent with statutory guidelines. Indeed, where HRS and the local health council are in disagreement, an applicant is pulled between HRS and the local council. This proposed rule allows HRS to simply reject the expressed wants of the local health council and to insert its own comments and views, thereby inserting itself into a province exclusively reserved to the local health councils. 10-5.020 Proposed Rule 10-5.020 involves addition of one sentence to the existing rule. The added language provides that HRS will issue a license to the CON holder in accordance with the CON and will not issue a license for fewer beds than the total on the CON. The proposed addition to this rule addresses a problem currently facing the Department, and it reflects a change in agency policy for HRS. Basically, the added language clarifies for an applicant or certificate of need holder that the Office of Licensure and Certification shall only issue a license consistent with the terms of the certificate of need. The proposed rule addition conforms to several health planning goals. First, it requires the implementation of a project in accordance with the certificate of need. Second, the language addresses HRS's current problem of need suppression by industry members. Third, it seeks to ensure uniform development of services. This proposed rule does not penalize hospitals who want to do phase-in type projects. On the contrary, the language seeks to ensure that needed beds and services will be implemented in the horizon year in accordance with the application and entitlement demonstrated by the applicant. Economic Impact Statement The Summary of the Estimate of the Economic Impact states in relevant part: The proposed amendments are expected to have no adverse impact either on existing and new applicants for certificate of need, or on small and minority businesses . . . . The Economic Impact Statement (EIS) addresses the cost to the agency of implementing the proposed rules, an estimate of the cost to persons directly affected by the proposed rules, an estimate of the impact of the proposed action on competition, a statement of the date and method used in making those estimates, and an analysis of the impact on small businesses as defined in the Florida Small and Minority Business Assistance Act of 1985. Specifically, the EIS states that the proposed rules "will have a minimal economic impact on current or future certificate of need applicants and the public at large." There is no competent, substantial evidence to establish with specificity the existence of any defects in the EIS which impaired the fairness of the rulemaking proceeding or the correctness of the agency actions related to the EIS.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is ORDERED: 1. Proposed Rules 10-5.002(1) and (52), 10-5.004(2)(g), 10-5.008(2)(f), 10-5.0085(4), and 10-5.020 are valid. 2. Proposed Rules 10-5.002(13); 10-5.008(1)(c)3, (2)(d), and (3)(b); 10- 5.005(2)(e); and 10-5.010(2) are invalid exercises of delegated legislative authority. DONE and ORDERED this 10th day of October, 1990, in Tallahassee, Florida. DIANE K. KIESLING, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of October, 1990. APPENDIX TO THE FINAL ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in these cases. Specific Rulings on Proposed Findings of Fact Submitted by Petitioners Venice Hospital and Adventist Each of the following proposed findings of fact is adopted in substance as modified in the Final Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 4(3); 5(5); 6(6); 10(14); 12(15 and 16); 15-17(25-27); and 19(28). Proposed findings of fact 1, 3, 7-9, 11, 13, 18, 21, 22, 24, and 25 are subordinate to the facts actually found in this Final Order. Proposed finding of fact 2 is unnecessary. Proposed findings of fact 14, 20, 23, and 26 are unsupported by the credible, competent, and substantial evidence. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner FHA Each of the following proposed findings of fact is adopted in substance as modified in the Final Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 4(7); 5(10); 6(11); 8-12(12- 16); and 13-17(19-23). Proposed findings of fact 2, 3, 18, 19, and 21-24 are subordinate to the facts actually found in this Final Order Proposed finding of fact 7 is unnecessary. Proposed finding of fact 20 is unsupported by the credible, competent, substantial evidence. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Humana Each of the following proposed findings of fact is adopted in substance as modified in the Final Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 6(34, 35, and 38). Proposed findings of fact 2, 5, and 7-13 are subordinate to the facts actually found in this Final Order. Proposed findings of fact 1, 3, 4, and 14-19 are unnecessary. Specific Rulings on Proposed Findings of Fact Submitted by Petitioners NME and PIA Each of the following proposed findings of fact is adopted in substance as modified in the Final Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 2(34, 35, and 38); 3-6(39- 42); 8(53); and 9(54 and 55). Proposed findings of fact 1 and 7 are subordinate to the facts actually found in this Final Order. Proposed findings of fact 10 and 11 are irrelevant because these Petitioners dismissed their challenge to the EIS in the Stipulation of the parties admitted as Joint Exhibit 2. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Sarasota Proposed findings of fact 1-4, 6, 7, and 13 are subordinate to the facts actually found in this Final Order. Proposed finding of fact 5 is unnecessary. Proposed findings of fact 17, 18, and 20 are unsupported by the credible, competent, and substantial evidence. Proposed findings of fact 8-12, 14-16, and 19 are irrelevant. Specific Rulings on Proposed Findings of Fact Submitted by Respondent HRS Each of the following proposed findings of fact is adopted in substance as modified in the Final Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1 and 2); 2(28); 3(46); 4(47-49); 5(51); 7(29); 8(32 and 33); 9(33); 11(8); 13(17); 14(18); 15(23); 16(23 and 24); 17(36); 19(37); 21(57); and 22(58). Proposed findings of fact unnumbered paragraph re: 10-5.005(2)(e); 10; 12; 18; 20; and unnumbered paragraph re: Economic Impact Statement are subordinate to the facts actually found in this Final Order. Proposed findings of fact 1A and 6 are unnecessary. Specific Rulings on Proposed Findings of Fact Submitted by Intervenor HCA DOCTORS Each of the following proposed findings of fact is adopted in substance as modified in the Final Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 6(30) and 7(31). Proposed findings of fact 2-5 are subordinate to the facts actually found in this Final Order. Proposed findings of fact 1 and 9-11 are unnecessary. Proposed findings of fact 8 is irrelevant. *NOTE: THIS RECOMMENDED ORDER'S EXHIBIT "A" [RULE 10-5.002, 10-5.004(2), 10-5.005(2), 10-2.008(1)(n), 10-5.008(5)(h), 10-5.010(2), 10-5.020] IS AVAILABLE FOR REVIEW IN THE DIVISION'S CLERK'S OFFICE. COPIES FURNISHED: Jeffery A. Boone, Attorney at Law Robert P. Mudge, Attorney at Law 1001 Avenida del Circo Post Office Box 1596 Venice, FL 34284 Kenneth F. Hoffman, Attorney at Law 2700 Blair Stone Road Post Office Box 6507 Tallahassee, FL 32314-6507 James C. Hauser, Attorney at Law 204-B South Monroe Street Tallahassee, FL 32301 C. Gary Williams, Attorney at Law Stephen C. Emmanuel, Attorney at Law Post Office Box 391 Tallahassee, FL 32302 Theodore C. Eastmoore, Attorney at Law 1550 Ringling Boulevard Post Office Box 3258 Sarasota, FL 34230 Robert A. Weiss, Attorney at Law John M. Knight, Attorney at Law The Perkins House, Suite 101 118 North Gadsden Street Tallahassee, FL 32301 Thomas R. Cooper, Attorney at Law Edward G. Labrador, Attorney at Law Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, FL 32399-0700 John Radey, Attorney at Law Elizabeth W. McArthur, Attorney at Law Suite 1000, Monroe-Park Tower 101 North Monroe Street Post Office Drawer 11307 Tallahassee, Florida 32302 Donna H. Stinson 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 Linda K. Harris Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Liz Cloud, Chief Bureau of Administrative Code Room 1802, The Capitol Tallahassee, Florida 32399-0250 Carroll Webb, Executive Director Administrative Procedures Committee Room 120, Holland Building Tallahassee, Florida 32399-1300
