Findings Of Fact In its 1969 legislative session, the Florida Legislature enacted Section 409.266, Florida Statutes, entitled "Medical Assistance for the Needy," providing the original state legislative basis and authority for Florida's entry into the Medicaid program. Section 409.266(2), Florida Statutes, as enacted, authorized the Florida Department of Social Services or any other department that the Governor might designate to: Enter into such agreement with other state agencies or any agency of the federal government and accept such duties with respect to social welfare or public aid as may be necessary to implement the provisions of subsection (1) and to qualify for federal aid including compliance with provisions of Public Law 86-778 and the "Social Security Amendments of 1965" [estab- lishing Title XIX of the Social Security Act] Section 409.266(3), Florida Statutes, as enacted, stated that: The Department is authorized and directed to prepare and operate a program and budget in order to implement and comply with the provisions of public law 86-778 and the "Social Security Amendments of 1965." No provisions of Florida law other than Section 409.266, Florida Statutes, as enacted, authorized any agency to perform any function specifically to implement the Medicaid program. The State of Florida formally commenced participation in the Medicaid program effective January 1, 1970. At all times pertinent to this controversy, respondent, Florida Department of Health and Rehabilitative Services or its predecessor agencies (referred to as "HRS"), has been and continues to be the "State Agency" identified in 42 U.S.C. Section 1396a(a)(5), and charged under Section 409.266, Florida Statutes, as amended, with the formulation of a State Plan for Medical Assistance ("State Plan"), 42 U.S.C. Section 1396a, and with the ongoing responsibility for the administration of the Medicaid program in the State of Florida. Since Florida's entry into the Medicaid program in 1970, HRS has been authorized essentially to "[e]nter into such agreements with appropriate agents, other State agencies, or any agency of the Federal Government and accept such duties in respect to social welfare or public aid as may be necessary or needed to implement the provisions of Title XIX of the Social Security Act pertaining to medical assistance." Section 409.266(2)(a), Fla. Stat., as amended. HRS has never been authorized to enter into any agreements, accept any duties, or perform any functions with respect to the Medicaid program that are in contravention of or not authorized by Title XIX of the Social Security Act and implementing federal regulations and requirements. As a prerequisite for Florida's entry into the Medicaid program, HRS prepared and filed with the United States Department of Health, Education, and Welfare ("HEW") a State Plan, pursuant to Title XIX of the Social Security Act, and pursuant to its delegated legislative authority set forth in Section 409.266(2)(a), Florida Statutes. (In May, 1980, HEW was redesignated the United States Department of Health and Human Services, but for purposes of this action both shall be referred to as HEW.) C.W. Hollingsworth was the HRS official who had the responsibility for supervising the preparation, the filing, and for obtaining the approval of HEW of Florida's initial State Plan. Florida's initial State Plan was approved by HEW effective January 1, 1970. At the time that Florida received approval of its initial State Plan, Title XIX of the Social Security Act required state plans to provide for the payment of the reasonable cost of inpatient hospital services. At the time that Florida received approval of its initial State Plan, HEW regulations governing reimbursement for inpatient hospital services under Medicaid required the State Plan to provide for reimbursement of Medicaid inpatient hospital services furnished by those hospitals also participating in the Medicare program, applying the same standards, cost reimbursement principles, and methods of cost apportionment used in computing reimbursement to such hospitals under Medicare. 45 C.F.R. Section 250.30(a), and (b), 34 Fed. Reg. 1244 (January 25, 1969). At the time that Florida entered the Medicaid program, Medicare cost reimbursement principles in effect governing reimbursement for the cost of inpatient hospital services required payment of a participating hospital's actual and reasonable costs of providing such services to Medicare beneficiaries, and, moreover, that such payment be made on the basis of the hospital's current costs rather than upon the costs of a prior period or upon a fixed negotiated rate. 42 U.S.C. Section 1395x(v)(1)(A); 20 C.F.R. Sections 405.451(c)(2), 405.402(a) [later renumbered 42 C.F.R. Section 405.451(c)(2) and Section 405.402(a)]. Such Medicare principles and standards also provided for interim payments to be made to the hospital during its fiscal year. At the conclusions of the subject fiscal year, the hospital was required to file a cost report wherein the hospital included all of its costs of providing covered inpatient services to Medicare beneficiaries. A settlement or "retroactive adjustment" process then was required to reconcile the amount of interim payments received by the hospital during the fiscal period with its allowable costs incurred during that period. If the hospital had been overpaid during the year, it was required to refund the amount of that overpayment to the Medicare program. Conversely, if the hospital had been underpaid during the year, the Medicare program was required to make an additional payment to the hospital, retroactively, in the amount of the underpayment. 20 C.F.R. Sections 405.402(b)(2), 405.451(b)(2). Essentially the same Medicare principles and standards governing reimbursement of inpatient hospital services described in the two preceding paragraphs have been in effect at all times pertinent to this controversy. 42 C.F.R. Section 405.401, et seq. Florida's approved State Plan as of January 1, 1970, governing reimbursement of inpatient hospital services under the Medicaid program, committed HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. The only versions of Florida's State Plan provisions that have been approved by HEW and that have governed HRS's reimbursement of inpatient hospital services prior to July 1, 1981, each commit HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. Attached as an appendix to the recommended order is the form agreement drafted with the supervision of C.W. Hollingsworth, which has been in use from January 1, 1970, until July 1, 1981. From the inception of the Florida Medicaid program, and as a prerequisite for participation therein, a hospital has been required to execute a copy of the form agreement. A hospital may not participate in the Medicaid program without having executed such an agreement, nor may it propose any amendments thereto. The intent and effect of the form agreement is to require HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. The form agreement requires HRS to compute a percentage allowance in lieu of the retroactive adjustments ("percentage allowances") in determining the rates that hospitals will be paid for providing inpatient hospital services to Medicaid patients. The form agreement requires HRS to compute a new percentage allowance each year based on hospital cost trends. The meanings of the terms "allowance in lieu of retroactive adjustments" in all pertinent state plans and "percentage allowance for the year in lieu of retroactive payment adjustment" contained in the form agreement are identical. In drafting the form agreement HRS intended that the "percentage allowance for the year in lieu of retroactive payment adjustment" be set at a level sufficient to ensure that hospitals participating in the Medicaid program would be reimbursed their "reasonable costs" of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. At all times pertinent to this controversy, participating hospitals, like petitioner, have been reimbursed by HRS for inpatient hospital services provided to Medicaid patients in the following manner: Within ninety (90) days following the close of its fiscal year, the partici- pating hospital files a Form 2551 or 2552 Annual Statement of Reimbursable Costs, as applicable, with both Blue Cross of Florida, Inc., the major fiscal intermediary respon- sible for the administration of Part A of the federal Medicare program in the State of Florida, and with HRS. This document, also referred to as a "cost report" details various hospital and financial statistical data relating to the patient care activities engaged in by the hospital during the sub- ject fiscal period. Upon receipt of the participating hospital's cost report for a fiscal period, HRS makes an initial determination based upon Medicare cost reimbursement principles and standards of the hospital's total allow- able inpatient costs, charges, and total patient days during the subject fiscal period, and then determines an inpatient per diem reimbursement rate for the period. To the inpatient per diem reimburse- ment rate is then added a percentage allow- ance in lieu of making any further retroactive corrective adjustments in reimbursement which might have been due the hospital applicable to the reporting period. The adjusted inpa- tient per diem reimbursement rate is applied prospectively, and remains in effect until further adjustments in the rate are required. If HRS determines that total inpa- tient Medicaid reimbursement to a partici- pating hospital during a fiscal period exceeds the hospital's allowable and rea- sonable costs of rendering such covered inpatient services applying Medicare cost reimbursement principles and standards, then the hospital is required to remit to HRS the amount of such overpayment. If, however, HRS determines that the total inpatient Medicaid reimbursement received by a participating hospital is less than the hospital's actual and reason- able costs of rendering such covered inpa- tient services to Medicaid patients during the period applying Medicare cost reimburse- ment principles and standards, no further retroactive corrective adjustments are made; provided, however, that should an overpayment occur in a fiscal period, it may be offset and applied retroactively against an under- payment to the participating hospital which occurred during the next preceding fiscal period only. HRS has used the following "percentage allowances" in determining Medicaid reimbursement rates for inpatient hospital services: a. January 1, 1970 - June 30, 1972 . . . 12 percent July 1, 1972 - approximately March 30, 1976 . . . . . . . . . . 9 percent Approximately March 31, 1976 - June 30, 1981 . . . . . . . . . . . 6 percent Since at least January 1, 1976, HRS has not recomputed the "percentage allowance" on an annual basis. Since at least January 1, 1976, HRS has not based the "percentage allowance" that it has applied in determining Medicaid inpatient hospital reimbursement rates upon hospital cost trends. HRS has used no technical methodology based upon hospital cost trends to develop any of the "percentage allowances." At least since January 1, 1974, HRS's "percentage allowances" have been less than the corresponding average annual increases in the costs incurred by Florida hospitals of providing inpatient hospital services. Prior to March 30, 1976, all of HRS's published regulations addressing reimbursement of participating hospitals for their costs of providing inpatient hospital services to Medicaid patients required HRS to reimburse such hospitals in accordance with Medicare cost reimbursement principles and standards. In certain internal documents, Petitioner's Exhibits P-44 and P-12, HRS states that the average costs of providing inpatient hospital services in the State of Florida rose at least 18 percent during calendar year 1975. In November, 1975, the Secretary of HRS was informed by HRS officials that HRS faced a projected budgetary deficit for its fiscal year ended June 30, 1976. A decision memorandum presented options to the HRS Secretary for reducing the projected deficit. Among such options presented to and approved by the HRS Secretary was to reduce the "percentage allowance" from 9 percent to 6 percent. The reduction of the "percentage allowance" by HRS from 9 percent to 6 percent was effected in response to HRS's projected deficit, and was not based upon an analysis of hospital cost trends. HRS incorporated the 6 percent "percentage allowance" into its administrative rules which were published on March 30, 1976. In response to objections raised by the Florida Hospital Association to the reduction in the percentage allowance by HRS from 9 percent to 6 percent, HRS officials reexamined that reduction. During HRS's reexamination of its previous "percentage allowance" reduction, HRS was aware of and acknowledged the fact that Florida hospital costs were increasing at an average annual rate in excess of both the earlier 9 percent and the resulting 6 percent "percentage allowance." In a memorandum dated September 13, 1976, from HRS official Charles Hall to the Secretary of HRS, Petitioner's Exhibit P-45, Charles Hall informed the Secretary that the methods and standards then used by HRS to reimburse participating hospitals for their costs of providing inpatient hospital services to Medicaid patients was out of compliance with federal requirements. Charles Hall further informed the Secretary that the reason HRS had not theretofore been cited by HEW for noncompliance was the manner in which the Florida State Plan had been drafted, i.e., that the State Plan required HRS to reimburse hospitals under Medicaid for the reasonable costs that they would have been reimbursed applying Medicare cost reimbursement principles and standards. In a letter dated September 20, 1976, Petitioner's Exhibit P-31, HEW informed HRS that HEW had received a complaint from the Florida Hospital Association that the methods HRS was actually using to reimburse hospitals for the costs of providing inpatient hospital services to Medicaid patients were in violation of Federal Regulation 45 C.F.R. Section 250.30(a). A proposed amendment to Florida's State Plan submitted by HRS to HEW in November, 1976, Petitioner's Exhibit P-49, if approved, would have allowed HRS to reimburse hospitals for the cost of providing inpatient hospital services to Medicaid patients under methods differing from Medicare cost reimbursement principles and standards (an "alternative plan"). "Alternative plans" have been permitted under applicable federal regulations since October 21, 1974. A state participating in the Medicaid program may elect to establish an "alternative plan, but may not implement such "alternative plan" without the prior written approval of HEW. Florida has not had in effect an "alternative plan" of reimbursing participating hospitals for their costs of providing inpatient hospital services to Medicaid patients that was formally approved by HEW at any time prior to July 1, 1981. By letter dated January 7, 1977, Petitioner's Exhibit P-32, HEW notified HRS that it had formally cited HRS for noncompliance with federal regulations governing reimbursement of inpatient hospital services under Medicaid. HRS acknowledged their noncompliance and between November, 1976, and October 30, 1977, HRS attempted to revise its proposed "alternative plan" on at least two occasions in an attempt to obtain HEW approval. In October, 1977, HRS withdrew its proposed "alternative plan" then pending with HEW. HRS then contracted with an outside consultant, Alexander Grant & Company, to assist in the formulation of a new "alternative plan" proposal. In January, 1978, Alexander Grant & Company delivered its draft of an "alternative plan" to HRS. In October, 1978, HRS submitted a draft "alternative plan" to HEW for review and comment, and HEW expected HRS to submit a formal "alternative plan" proposal to HEW for its approval by November 1, 1978. HRS did not submit the formal "alternative plan" proposal to HEW until August 12, 1980. In a letter dated February 21, 1979, from Richard Morris, HEW Regional Medicaid Director, Region IV, to United States Senator Richard Stone of Florida, Mr. Morris advised Senator Stone: For more than two years the Florida Medicaid Program has not met Federal Requirements for inpatient hospital services reimbursement. Their payment methodology under-reimburses certain hospitals year after year. The pros- pective interim per diem rate paid by Florida to hospitals includes a percentage allowance to cover increased costs during the forthcom- ing year that is consistently less than increased costs in some hospitals. If the payments are less than costs, the difference is not reimbursed. This results in underpay- ments. We have worked closely with Florida to develop an acceptable alternative system that would meet Federal requirements. To date, Florida has not implemented such a system despite having received informal HEW agreement on a draft plan developed more than a year ago. It is our understanding that this alternative plan is not a high priority item at this time. We will continue to work with HRS staff to secure Florida compliance re- garding this requirement. Petitioner's Exhibit P-46. Since August 12, 1980, HRS has submitted to HEW for its approval at least four more versions of an "alternative plan." Petitioner's Exhibits P-120, P-121, P-123, and P-152. Each of these versions was approved by the Secretary of HRS, and HRS believes each to comply with applicable Florida law. Mr. Erwin Bodo, Ph.D., was and is the HRS official responsible for the development and drafting of Exhibits P-120, P-121, P-123, and P-152. In June, 1981, HEW approved an "alternative plan" for the State of Florida (Exhibit P-152), and such "alternative plan" was implemented effective July 1, 1981. Until July 1, 1981, HRS continued to use the 6 percent "percentage allowance" to compute inpatient hospital reimbursement under Medicaid. Even after its repeal, Rule 10C-7.39(6), Florida Administrative Code, is applied by respondent in calculating reimbursement for Medicaid services provided between March 30, 1976, and July 1, 1981. From November 20, 1976, until July 1, 1981--the period in which HRS was attempting to secure HEW approval for an alternative plan--HRS was aware that the costs of inpatient hospital se vices were increasing at an average annual rate in excess of the 6 percent "percentage allowance." From September 1, 1976, through July 1, 1981, HRS has been out of compliance with its a proved State Plan provisions, and HEW regulations governing reimbursement for inpatient hospital services under Medicaid because HRS's methods for reimbursing hospitals for the cost of providing those services to Medicaid patients have resulted in a substantial number of hospitals-- including petitioner--being reimbursed at a lower rate than the hospitals would have been reimbursed applying Medicare cost reimbursement principles and standards. Since the quarter ending December 31, 1976, until July 1, 1981, HEW has formally cited HRS as being in contravention of its approved State Plan provisions, and HEW (now HHS) regulations, governing reimbursement for inpatient hospital services under Medicaid because HRS's methods for reimbursing hospitals for the cost of providing those services to Medicaid patients have resulted in a substantial number of hospitals--including petitioner--being reimbursed at a lower rate than the hospitals would have been reimbursed applying Medicare cost reimbursement principles and standards. PAN AMERICAN HOSPITAL CORPORATION Petitioner, Pan American Hospital Corporation, is a not-for-profit corporation, duly organized and existing under the laws of the State of Florida. Petitioner is a tax-exempt organization as determined by the Internal Revenue Service pursuant to Section 501(c)(3) of the Internal Revenue Code of 1954, as amended. At all times pertinent to this controversy, petitioner has operated and continues to operate a duly licensed 146-bed, short-term acute care general hospital, located at 5959 Northwest Seventh Street, Miami, Florida 33126. At all times pertinent to this controversy, petitioner has been and continues to be a duly certified provider of inpatient hospital services, eligible to participate in the Florida Medicaid program since January 27, 1974. The appendix to this recommended order is a true and correct copy of the "Participation Agreement" entered into between petitioner and HRS, whereunder, inter alia, petitioner became eligible to receive payment from HRS for covered inpatient hospital services provided to Medicaid patients. At all times pertinent to this controversy, petitioner has been a certified "provider of services" participating in the Medicare program. During the fiscal periods in dispute in this action, petitioner did provide covered inpatient hospital services to Medicaid patients, and became eligible for payment by HRS of its reasonable costs of providing such services, determined in accordance with Medicare cost reimbursement principles and standards. With respect to each of the fiscal periods in dispute in this action, petitioner timely filed all cost reports and other financial data with HRS or its contracting agents, including Blue Cross of Florida, Inc., to enable HRS to determine petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients. During each of the fiscal periods in dispute in this action, to reimburse petitioner for its reasonable costs of providing covered inpatient hospital services to Medicaid patients, determined in accordance with applicable Medicare cost reimbursement principles and standards. Such costs incurred by petitioner were reasonable, necessary, related to patient care, and less than customary charges within the meaning of those Medicare principles and standards. With respect to each of the fiscal periods in dispute, HRS and/or its contracting agent, Blue Cross of Florida, Inc., reviewed and audited the cost reports filed by petitioner, and as a result of such review and audits set or adjusted, as applicable, the Medicaid inpatient per diem reimbursement rate at which petitioner would be paid during the next succeeding fiscal period or until that rate was again adjusted. On May 3, 1976, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1975, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period in respect to those services. During its fiscal year ended March 31, 1975, petitioner received $86,469 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On February 14, 1979, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1976, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1976, petitioner received $199,328 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On September 29, 1978, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1977, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1977, petitioner received $6,083 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On March 13, 1980, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1978, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1978, petitioner received $178,506 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On June 30, 1981, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1979, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1979, petitioner received $302,347 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On or about June 30, 1981, the audit of petitioner's Medicaid cost report for the period ending March 31, 1980, was concluded. A formal Notice of Program Reimbursement had not been issued at the time of the hearing. MOTION TO DISMISS DENIED Respondent contends that these proceedings should be summarily concluded "for failure to join an indispensable party," viz., the Federal Government, because it "is Respondent's intention, should any liability result from this action, to make a claim for federal financial participation as to approximately fifty-nine percent of such liability . . . [See generally] 42 U.S.C. Section 1320b-2(a)(2)." Motion to Dismiss, p. 2. This contention must fail for several reasons. Neither the Division of Administrative Hearings nor the Department of Health and Rehabilitative Services has the power or means to bring an unwilling party into a proceeding instituted pursuant to Section 120.57, Florida Statutes (1979). At most, "the presiding officer may, upon motion of a party, or upon his own initiative enter an order requiring that the absent person be notified of the proceeding and be given an opportunity to be joined as a party of record." Rule 28-5.107, Florida Administrative Code. There exists no administrative writ for joining a non-petitioning party in a substantial interest proceeding in the way judicial process can join a party within a court's jurisdiction in a pending judicial proceeding. The two cases respondent cites in support of its motion, Bannon v. Trammell, 118 So. 167 (Fla. 1928), and Heisler v. Florida Mortgage Title and Bonding Co., 142 So.2d 242 (Fla. 1932), are inapposite, because both cases involve judicial, not administrative proceedings. HRS does not really seek joinder of the United States Department of Health and Human Services; instead, HRS argues that the petition should be dismissed and the controversy relegated to federal court because it "believes that the Secretary [of the United States Department of Health and Human Services] will not succumb voluntarily to the jurisdiction of the Division of Administrative Hearings." 2/ Motion to Dismiss, p. 3. Participation by the Department of Health and Human Services in the present proceedings would have been welcomed, as the Hearing Officer indicated at the prehearing conference, but neither the Department itself nor either of the parties requested such participation. In any event, petitioner is seeking additional reimbursement from respondent HRS, not from any federal agency. Medicaid providers like petitioner do not receive any funds directly from the Department of Health and Human Services. Since "[t]he contracts involved are clearly between the hospitals and [H]RS [, n]o third party requirement appears," Montana Deaconess Hospital v. Department of Social and Rehabilitation Services, 538 P.2d 1021, 1024 (Mont. 1975), and the Department of Health and Human Services is not an indispensable party to administrative proceedings arising out of contracts between HRS and Medicaid providers. HRS protests that it might find itself making additional reimbursement to petitioner, yet be deprived of the federal component of such expenditures. See 42 U.S.C. Section 1396b. This prospect is an unlikely one in view of the fact that the Department of Health, Education, and Welfare has repeatedly cited HRS for noncompliance because of under-reimbursements to Medicaid providers. If the Federal Government fails to contribute to any additional reimbursement, it would not be for want of a forum in which HRS could present its claim. There are administrative mechanisms within the Department of Health and Human Services, including its Grant Appeals Board. See 42 U.S.C. Section 1116(d). After exhaustion of administrative remedies, HRS would have access to the courts, if necessary. See Georgia v. Califano, 446 F. Supp. 404 (N.D. Ga. 1977). There is no danger that HRS will be deprived of an opportunity to litigate any question about federal contribution because the United States Department of Health and Human Services is not a party to the present proceedings. MOTION FOR PARTIAL SUMMARY JUDGMENT Petitioner's motion for partial summary judgment was amended ore tenus at the final hearing to delete "and FYE March 31, 1981," on page 1 of the motion, after leave to amend was granted, without objection by respondent. As a technical matter, the motion is a misnomer, since substantial interest proceedings before the Division of Administrative Hearings eventuate in recommended orders, not judgments. But, petitioner's contention that there is no genuine issue as to any material fact is well founded. The parties have so stipulated. (T. 70; Mr. Weiss's letter of November 12, 1981.) At the time the petition was filed, the parties contemplated numerous factual disputes which, however, had all been resolved by the time of final hearing through the commendable efforts of counsel. In the absence of a disputed issue of material fact, the Administrative Procedure Act provides for informal proceedings pursuant to Section 120.57(2), Florida Statutes (1979), "[u]nless otherwise agreed." Section 120.57, Florida Statutes (1979). On December 7, 1981, the parties filed their Stipulation and Agreement to proceed pursuant to Section 120.57(1), Florida Statutes (1979), notwithstanding the absence of any factual dispute. DISPUTE COGNIZABLE In the present case, as in Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), there "can be no doubt that the Department's contract . . . calls for agency action which potentially affects . . . substantial interests," 363 So.2d at 812, of the petitioning contractor. Cf. Solar Energy Control, Inc. v. State Department of Health and Rehabilitative Services, 377 So.2d 746 (Fla 1st DCA 1979) (reh. den. 1980) (disappointed bidder substantially affected). See Section 120.52(10)(a), Florida Statutes (1979). In Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), the petitioner sought "additional money and construction time under its contract," 363 So.2d at 813, with a state agency. The court found "no difficulty . . . with sovereign immunity," 363 So.2d at 813, and held that a contractor with a state agency could invoke the Administrative Procedure Act in order to enforce its contract, even though the contract purported to establish another method for settling the contract dispute. A clause in the contract at issue in the Graham Contracting case contemplated agency action outside the parameters of Chapter 120, Florida Statutes, in resolving certain disputes under the contract. In contrast, each of the successive contracts on which petitioner predicates its claim in the present case contains the following provision: "The hospital agrees to comply with the rules, policies, and procedures required by [HRS's] Division of Family Services for this program." Among the rules thus incorporated by reference into the contracts between petitioner and respondent is Rule 10C-7.35, Florida Administrative Code, which provides: An official representative of a facility participating in Medicaid, . . . or . . . representative, may appeal Medicaid Program policy, procedure, or administrative rulings whenever the provider feels there has been an unfair, illegal or inappropriate action by the Department affecting them or their facility. (1) Provider Appeals The Administrative Procedures [sic] Act, Chapter 120 F.S., provides for provider appeals and hearings, which are conducted by the Division of Administrative Hearings in the Department of Administration. The spe- cific rule relative to the appeal and hearing process is Chapter 28-3 [sic] of the Florida Administrative Rules. . . Since, by reference to Rule 10C-7.35, Florida Administrative Code, the contract in the present case incorporates Chapter 120, Florida Statutes, the applicability of the Administrative Procedure Act is even clearer here than in the Graham Contracting case. THE MERITS The parties have stipulated that petitioner has been reimbursed by respondent less than its reasonable costs of providing covered inpatient hospital services over the time period in question. Under-reimbursement of this kind is not authorized by Section 409.266, Florida Statutes, which incorporates the federal statutory requirement that hospitals which, like petitioner, provide Medicaid services be reimbursed by respondent for reasonable costs incurred, in accordance with an approved State Plan, and not some lesser amount. 42 U.S.C. Section 1396a(a)(13)(B), Pub. L. 89-97, Section 121(a) redesignated 42 U.S.C. Section 1396a(a)(13)(D), Pub. L. 90-248, Section 224(a). All Florida "State Plan provisions . . . approved by HEW and . . . govern[ing] HRS's reimbursement of inpatient hospital services prior to July 1, 1981, commit HRS to reimburse hospitals [like petitioner] that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards." Prehearing Stipulation, Paragraph 19. The record is clear. Respondent consistently reimbursed petitioner less than its reasonable costs of providing inpatient hospital services in order to cut its own expenses and in doing so jeopardized the entire Medicaid program. This cannot be condoned, even though respondent acted under color of law, viz., Rule 10C-7.39(6), Florida Administrative Code [now repealed and declared invalid; see Pan American Hospital Corporation v. Department of Health and Rehabilitative Services, No. 81-1480R (DOAH; December 4, 1981)], and even though a lack of money or, at least, an apparent shortage was the reason for respondent's parsimony. The question remains, however, whether this dereliction on respondent's part should inure to the benefit of petitioner; and the answer turns on the construction of the agreement between the parties attached as an appendix to this order. Petitioner argues cogently that public policy has clearly been enunciated by statute to be full reimbursement for costs reasonably incurred by Medicaid providers in furnishing covered services. There can be no clearer expression of public policy than a statute duly enacted; and the reasons behind the full reimbursement policy are themselves compelling: to deal fairly with the providers, not only for fairness sake, but also to assure their participation in the program, and to remove any temptation to give indigent patients substandard care, inter alia. But, there is surely an overriding public policy requiring that a contractor with state government who voluntarily agrees to forego a claim against the public fisc be held to that agreement in administrative proceedings like these. The form agreement between petitioner and respondent, which they renewed annually, states: "It is understood that reimbursement will be made on the basis of an interim payment plan in the form of a per diem cost rate, plus a percentage allowance for the year in lieu of retroactive payment adjustment. However, . . . in the event the hospital did not receive its audited reasonable costs in the year prior to the current year then the hospital may deduct from the refund the prior year deficiency." (Emphasis supplied.) The agreement thus contemplated under-reimbursement and specified the method for recoupment, if there was to be any. Any "retroactive payment adjustment," as the result of administrative proceedings or otherwise, is specifically ruled out. Elsewhere in the parties' agreement is found this language: [T]he fiscal responsibility of [respondent's] Division of Family Services is subjected [sic] to the appropriation and availability of funds to the Medicaid program . . . by the state legislature every year." The terms of the agreement make clear that under-reimbursement is not in itself a breach. Respondent's failure to compute annually a "new percentage . . . based on hospital cost trends" was attributable to a shortage of funds; and the agreement provided that respondent's "fiscal responsibility" was subject to just such a shortage. In sum, provisions of the agreement petitioner voluntarily entered into with respondent operate in much the same way as a liquidated damages clause and preclude the relief petitioner seeks. Petitioner's invocation of the parol evidence rule is unavailing. Even if the stipulated facts outside the four corners of the form agreement are looked to, the course of dealing between these parties buttresses the construction outlined above. The fact that respondent may have settled a case it litigated against another hospital in some other way, as asserted by petitioner, is technically irrelevant.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny the prayer of the petitioner for additional reimbursement. DONE AND ENTERED this 10th day of December, 1981, in Tallahassee, Florida. ROBERT T. BENTON II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of December, 1981.
Conclusions THIS CAUSE comes before the State of Florida, Agency for Health Care Administration (“the Agency") concerning the preliminary approval of Certificate of Need (“CON”) Application No. 10199 submitted by Select Specialty Hospital-Daytona Beach, Inc., (“Select-Daytona”), to establish a 34-bed Long Term Acute Care Hospital (“LTCH”) in District 4. 1. The Agency preliminarily approved Application No. 10199 submitted by Select- Daytona to establish a 34-bed LTCH in District 4. 2. In response to the Agency’s decision, Kindred Hospitals East, LLC (“Kindred”) filed a petition for formal hearing, challenging the preliminary approval. The matter was referred to the Division of Administrative Hearings (“DOAH”) where it was assigned Case No. 14-0121CON for hearing. Select-Daytona filed a Motion to Intervene in the DOAH and the case was styled with Select-Daytona being treated as an intervenor. Filed March 17, 2014 2:04 PM Division of Administrative Hearings 3. Subsequently, Kindred filed a corrected notice of voluntary dismissal of its petition in the DOAH, which closed the case. It is therefore ORDERED: 4. The preliminary approval of CON No. 10199 is upheld and will be issued subject to the conditions noted in the State Agency Action Report. ORDERED in Tallahassee, Florida, on this IE day of far ch. Elizabeth Dudelj, Secretary Agency for Health Care Administration 2014,
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules, The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct copy of this Final Order was served on the below- —_— named persons by the method designated on this SL ‘a day of LS ere 4 , 2014. Shoop, Agency Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308 (850) 412-3630 Facilities Intake Unit Agency for Health Care Administration (Electronic Mail) Lorraine M. Novak, Esquire Office of the General Counsel Agency for Health Care Administration (Electronic Mail) R. Bruce McKibben Administrative Law Judge Division of Administrative Hearings www.doah.state. fl.us M. Christopher Bryant, Esquire Oertel, Fernandez, Cole cbryant@ohfe.com amooney@ohfc.com (Electronic Mail) (Electronic Mail) Michael J. Glazer, Esquire James McLemore, Supervisor Ausley and McMullen Certificate of Need Unit mglazer@ausley.com Agency for Health Care Administration (Electronic Mail) (Electronic Mail)
The Issue The issue for determination in this proceeding is whether NME Hospitals, Inc., d/b/a Hollywood Medical Center (HMC), is entitled to a certificate of need to convert 30 existing medical-surgical beds to 30 short term psychiatric beds at its hospital located in Hollywood, Florida.
Findings Of Fact Background Information Hollywood Medical Center (HMC) is owned and managed by its parent company, NME Hospitals, Inc. NME Hospitals, Inc., is a wholly owned subsidiary of National Medical Enterprises, Inc. (NME), a Nevada corporation headquartered in California. HMC is a 334-bed acute care hospital located in Hollywood, Florida. HMC is a full service hospital with an emergency room, a nine-suite operating unit, an intensive care unit, a coronary care unit, a 40-bed telemetry unit, a progressive care unit, and a dedicated oncology unit. HMC has a medical staff of more than 400 physicians with virtually every medical specialty represented, including psychiatrists. In addition, it is accredited by the Joint Commission on Accreditation of Healthcare Organizations. Hollywood is in the southern portion of Broward County, which is the only county in HRS Service District 10. The primary service area of HMC is the southern portion of Broward County, generally described as between State load 84 on the north and the Broward/Dade County line on the south. HMC is located in a peaceful and serene residential area. A high percentage of elderly people reside in condominiums which surround the hospital. One of the largest condominium developments in South Broward County is located within walking distance of HMC. Almost all of the programs at HMC are geared toward elderly patients; HMC does not even offer pediatric or obstetrical services. In September 1988, HMC filed a CON application to convert 30 of its existing medical-surgical beds to short term psychiatric beds. The proposal calls for the conversion of existing space on the sixth floor of the hospital. The total project cost is $864,545.00. HMC's application was comparatively reviewed by HRS with an application by the South Broward Hospital District d/b/a Memorial Hospital ("Memorial") to add 30 additional short term psychiatric beds to its facility which is also located in Hollywood, Florida. In its State Agency Action Report ("SAAR"), HRS preliminarily denied both applications. Both HMC and Memorial filed Petitions for Formal Administrative Hearings challenging their respective denials. These Petitions were referred to the Division of Administrative Hearings and consolidated by Order dated March 28, 1989. On August 17, 1989, Memorial voluntarily dismissed its petition for Formal Administrative Hearing. HMC's Proposal The elderly have unique psychiatric as well as medical needs. For example, the elderly have a much higher incidence of medically related nervous system disorders. In addition, the elderly experience certain psychiatric syndromes such as bipolar and manic depressive disorders and organic brain syndrome much more commonly than the rest of the population. Many of the elderly with psychiatric disorders have concomitant physical or medical problems such as cerebral vascular problems, arteriosclerosis, pulmonary problems, arthritic problems, physical disabilities, and mental impairments caused by senile dementia. The availability of medical treatment is a significant consideration in the selection of the appropriate treatment setting of elderly psychiatric patients who also suffer from one or more physical or medical problems. HMC believes there is a need for additional short term psychiatric services in its service area. In keeping with its goal of being a full service hospital capable of providing a full continuum of care to the patients in its service area, HMC seeks to fill this perceived need by offering such services at its own facility. The need perceived by HMC was based in large part on in-house physicians informing HMC's hospital administration that the physicians felt there was a need for such services. In its application, HMC proposes a separate geri- psychiatric unit with programs focused on the specific needs of geriatric psychiatric patients with multi-medical problems. The principal difference between such a specialized unit and an ordinary psychiatric unit is in the nature of the staffing and the training given to staff. Staff in a geri-psychiatric unit need to be prepared to address more multi-medical problems than are customarily encountered in a general psychiatric unit. Rather than proposing to add new beds to the facility, HMC decided it would be much more economical and cost efficient to convert some of its existing and unused medical- surgical beds to short term psychiatric beds. In this regard, a high percentage of HMC's licensed medical-surgical beds are empty, with the facility experiencing an average daily census of only 110 patients in its 334 licensed beds. Findings Regarding Section 381.705(1)(a), F.S. Section 381.705(1)(a), Florida Statutes, requires HRS to review applications for CONs in relation to the applicable district plan and state health plan. The State Health Plan in effect at the time HMC's application was filed (and as of the date of final hearing) was published in 1985 and established goals for 1987. Because the planning horizon applicable to HMC's application is 1993, the goals of the applicable State Health Plan are not particularly relevant to HMC's application. HMC's application is consistent with several of the goals contained in the Local Health Plan. Specifically, the Local Health Plan identifies the elderly as an under-served group and encourages the conversion of under-utilized medical-surgical beds to other needed services. HMC's application is consistent with these goals because it proposes the conversion of under- utilized medical- surgical beds to a geri-psychiatric unit. In this regard, according to HRS' acute care bed need methodology, in 1993 District 10 will have over 1,200 excess medical-surgical beds. HMC's application is not consistent with that portion of the Local Health Plan which states that planning should be on a district-wide basis. Findings Regarding Sections 381.705(1)(b) and (2)(d), F.S. Existing Providers Section 381.705(1)(b), Florida Statutes, requires HMC's application to be reviewed against the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services in the service district of the applicant. In this regard, there are eight existing providers of short term psychiatric services in Broward County. Four of these providers are free-standing psychiatric hospitals. They are: Coral Ridge Psychiatric Hospital ("Coral Ridge"), CPC Fort Lauderdale Hospital, The Retreat, and Hollywood Pavilion Psychiatric Hospital ("Hollywood Pavilion"). Coral Ridge and CPC Fort Lauderdale Hospital are located north of State Road 84 in northern Broward County. The Retreat is located in western Broward County, south of State Road 84 Hollywood Pavilion is located in southern Broward County, across the street from the applicant, HMC. The existing acute care hospitals in Broward County that have psychiatric units are: Broward General Medical Center ("Broward General") , Florida Medical Center, Imperial Point Hospital, and Memorial Hospital. Broward General, Florida Medical Center, and Imperial Point Hospital are all located north of State Road 84. Memorial Hospital is located in southern Broward County, about a half mile from HMC. The existing providers of short term psychiatric services in Broward County have a total of 507 existing short term psychiatric beds, distributed as follows: South Broward Memorial Hospital 74 Hollywood Pavilion 46 The Retreat 80 (of which 24 are geriatric) North Broward Coral Ridge 74 Fla. Medical Center 74 (of which 10 are geriatric) CPC Ft. Lauderdale 64 Broward General 48 Imperial Point 47 (of which 8 are geriatric) The utilization or occupancy rates (expressed in percentages) for the seven Broward County providers of short term psychiatric services which were in operation during 1987 and 1988 were as follows: Facility Cal. Yr. 7/87 thru Cal. Yr. 1987 6/88 1988 Private Facilities Fla. Medical Center 57.3 63.0 67.3 CPC Ft. Lauderdale 42.2 43.5 52.0 Coral Ridge 19.9 20.8 [unk.] Hollywood Pavilion 34.0 61.7 59.2 Average pvt. utilization 38.4 47.3 [unk.] Public Facilities Broward General 94.0 88.9 86.3 Imperial Point 91.0 92.7 92.4 Memorial 91.8 91.7 94.8 Average pub. utilization 92.3 91.1 91.2 Average of all 7 21. On May 9, 1986, the 62.3 Florida 66.0 Psychiatric [unk.] Center, d/b/a The Retreat, was issued a certificate of need to construct a 100-bed facility in Broward County consisting of 80 short term psychiatric beds and 20 short term substance abuse beds. The 80 psychiatric beds were divided into 40 geriatric beds, 15 adolescent beds, and 25 adult beds. The Retreat began operation in late September of 1988. By mid-March of 1989, the Retreat was requesting that HRS grant it a modification of its certificate of need to reduce the number of geriatric beds from 40 to 24 and to redesignate the remaining 16 beds for short term psychiatric services for children under the age of 12. The Retreat's request to reduce the number of geriatric beds appears to have been motivated in large part by the fact that the occupancy rate for those beds from October 1988 through March 1989 never exceeded one percent, even though the Retreat's pro forma had projected 70 percent occupancy after six months of operation. During the same six-month period in which the Retreat achieved only one percent occupancy in its geriatric psychiatric unit, it achieved occupancy rates of 77 percent in its adolescent unit and 86 percent in its adult unit. The Retreat is a private facility. For some elderly psychiatric patients it is advantageous to provide in-patient psychiatric care in an acute care facility rather than in a free- standing facility. This is because many geriatric patients have a variety of, or multiple levels of, health care needs. An acute care facility that offers psychiatric services can take higher acute types of psychiatric patients because it has the resources, support, and back-up should a patient become medically unstable. In this regard, geriatric psychiatric patients often do not have a pure psychiatric illness. Rather, their psychiatric condition is often accompanied by a medical condition requiring medical coverage. These considerations are addressed in HRS' need determination rule. North/South Division HRS recognizes that there tends to be a north/south division in Broward County with respect to the delivery of acute care health services. In this regard, HRS acknowledges that individuals in South Broward County who are in need of acute care services will generally not travel to acute care hospitals located in north Broward County and vice versa. Broward County has been divided into two political taxing subdivisions, the North Broward Hospital District and the South Broward Hospital District, for purposes of providing tax revenues for the provision of health care services to the indigent. Memorial is the only district hospital located in the South Broward Hospital District. Memorial has a rule requiring physicians on staff at Memorial to both reside within the boundaries of the South Broward Hospital District and to have their offices located within said district. As a general rule, psychiatric patients residing south of State Road 84 tend to stay in southern Broward County for purposes of obtaining psychiatric services and psychiatric patients residing north of that line tend to stay in northern Broward County for purposes of obtaining psychiatric services. This appears to be due in large part to the fact that psychiatrists tend to obtain staff privileges and practice only at hospitals in southern Broward County or northern Broward County, but not both. If a physician is not on the staff of a facility, he or she cannot admit a patient to that facility. Therefore, the numerous psychiatrists who reside in southern Broward County and who are only on the staff of facilities located in southern Broward County generally cannot admit their patients to facilities located in northern Broward County. Unavailability of beds at Memorial and Hollywood Pavilion South of State Road 84 there are three available alternatives for inpatient psychiatric care for the elderly residents of southern Broward County; The Retreat, Hollywood Pavilion, and the 74-bed short term psychiatric unit at Memorial Hospital. Hollywood Pavilion and Memorial Hospital accept geriatric psychiatric patients, but neither has a designated geri-psychiatric unit. The Retreat started operations with a 40- bed geri-psychiatric unit, which has since been reduced to a 24- bed unit. The 74 psychiatric beds at Memorial are, for all practical purposes, operating at full capacity. Memorial has maintained waiting lists for its psychiatric unit for the last seven or eight years and the number of people on the waiting lists has been increasing. The 46 psychiatric beds at Hollywood Pavilion, which is located across the street from Memorial, have recently been operating at about sixty percent of capacity. It is often clinically desirable to treat geriatric psychiatric patients on a different unit from younger psychiatric patients. This consideration is reflected in the fact that The Retreat was originally approved for three distinct units, adolescent, adult, and geriatric, and has more recently been permitted to redesignate a unit of beds for short term psychiatric services for children under the age of 12. The 24- bed geriatric psychiatric unit at The Retreat has recently been operating at about two percent of capacity. Findings Regarding Section 381.705(1)(d), F.S. Section 381.705(1)(d), Florida Statutes, requires consideration of the availability and adequacy of other health care services such as outpatient care and ambulatory or home care services which may serve as alternatives for the services proposed by the applicant. On this issue, there was no real dispute that outpatient care and ambulatory or home care services were not viable alternatives for persons in need of short term inpatient psychiatric services. Findings regarding Section 381.705(1)(i), F.S. As noted above, HRS stipulated that if HMC's project was approved and met the occupancy projections contained in its application it would be financially feasible. The financial break-even point for the 30 psychiatric beds proposed by HMC is an average daily census of only 9 patients, which would constitute 30 percent occupancy. The psychiatric unit at HMC would be managed by a professional psychiatric management company, Psychiatric Management Services. Psychiatric Management Services is a company that specializes in the management of psychiatric units in acute care hospitals. It has already developed psychiatric programs for geriatric patients that would be utilized at HMC. In addition, Psychiatric Management Services has a large variety of programs, services and specialists available to assist HMC in establishing the proposed unit. Through Psychiatric Management Services, the proposed unit will have access to a wide variety of services, including but not limited to, marketing, community liaison development, sophisticated policies and procedures manuals, accreditation services, licensure, staffing and community education seminars. Approval of HMC's application would also give HMC an opportunity to attempt to broaden its base of business and thereby possibly increase the overall profitability of the hospital. This would, if successful, help relieve the cost pressures from the acute care side of the hospital and potentially lower future increases in acute care patient charges. Moreover, by expanding the services offered at HMC, approval of HMC's applications would allow HMC to compete more effectively for health maintenance organizations (HMOs) and preferred provider organizations (PPOs) agreements. Currently, HMC is precluded from competing for some HMOs and PPOs such as SIGNA and Health Options because HMC does not offer a full array of services. Approval of HMC's application would also have the effect of adding 30 more beds to the existing pool of under- utilized short term psychiatric beds in Broward County. Findings regarding Section 381.705(1)(n), F.S. In its application, HMC projects a higher Medicaid utilization rate in its psychiatric unit than for its hospital overall because Medicaid services can only be provided to psychiatric patients in an acute care hospital setting and the psychiatric beds at Memorial, the only acute care facility in South Broward County presently authorized to provide psychiatric services, are full. In this regard, HMC has a Medicaid contract with the State of Florida. It is reasonable to anticipate that HMC would encourage Medicaid business at its facility and achieve the Medicaid projection contained in its application because HMC receives more from the State of Florida under its Medicaid contract than it would from an HMO or PPO. It is HMC's policy to treat all patients, regardless of their ability to pay. If HMC's application is approved, this policy would apply to psychiatric patients admitted to the hospital. During the first six months of 1988, 2.2 percent of HMC's patient days were provided to indigents. HMC currently averages 60 to 70 percent Medicare utilization. For its proposed geri-psychiatric unit, HMC projects 70 percent Medicare utilization. Given that the proposed unit would be geared toward the elderly, it is reasonable to project that 70 percent of HMC's geri-psychiatric utilization would be Medicare patients, regardless of what the total utilization rate might be. Findings regarding Section 381.705(2)(a), F.S. The design of HMC's proposed geri-psychiatric unit conforms to the requirements contained in Chapter 10D-28, Florida Administrative Code. As noted above, HRS stipulated that the costs and proposed methods of construction are reasonable. The psychiatric unit at HMC would occupy existing space on the sixth floor of the hospital. The renovations can be made quickly and at substantially less expense than the cost of new construction. Nevertheless, a less costly, more efficient, and more appropriate alternative would be to make greater use of existing under- utilized short term psychiatric beds in Broward County, particularly the beds in the privately owned facilities, which are Florida Medical Center, CPC Ft. Lauderdale, Coral Ridge, Hollywood Pavilion, and the Retreat. Findings regarding Section 381.705(2)(b), F.S. To the extent the three publicly owned providers of short term psychiatric services are being operated at or near their optimal capacity, they are being used in an appropriate and efficient manner. To the extent some of such facilities, like Memorial Hospital, appear to be operating above their optimal capacity, some inefficiencies necessarily result. Similarly, inefficiencies necessarily result from the substantial under- utilization of beds in privately owned short term psychiatric units. Approval of a new psychiatric unit at an existing acute care hospital in southern Broward County might help alleviate the waiting list and over crowding at Memorial, but it would do so at the expense of adding to the inefficiencies that result from current under-utilization of other existing facilities. Further, in light of recent utilization trends in Broward County, if short term psychiatric beds were to be added in Broward County, it would appear to be more appropriate to add them at publicly owned facilities. Findings regarding Rule 1O-5.O11(1)(o)3 and 4, F.A.C. Rule 10-5.011(1)(o), Florida Administrative Code, provides that a CON application for short term psychiatric beds will "not normally" be approved unless need is indicated in accordance with the mathematical need formula contained in the short term psychiatric rule. That rule allocates .35 beds per 1,000 population based on a five-year planning horizon. Since the application was submitted in 1988, the five-year planning horizon requires that HMC's application be reviewed against the need projected for 1993. The parties agreed that the numerical bed need methodology projects a gross bed need for 458 short term psychiatric beds in Broward County in 1993. However, the parties disagreed on the inventory of beds that should be subtracted from this figure. The inventory of 507 existing and approved short term psychiatric beds relied upon by HRS includes the 74 beds at Coral Ridge Hospital. The beds at Coral Ridge are licensed as short term psychiatric beds. The average length of stay of psychiatric patients at Coral Ridge has usually been in excess of 30 days, but substantially less than 90 days. The average length of stay at Coral Ridge does not appear to result from treatment of adolescent patients. Subpart 4a of Rule 10-5.011(1)(o) provides that a minimum of .15 beds per 1,000 population shall be in hospitals holding a general license and Subpart 4b provides that .20 beds per thousand may be in specialty hospitals. The .15 standard is currently met in Broward County. The short term psychiatric rule requires applicants to be able to project occupancy rates of 70 percent for adults in the second year of operation and 80 percent for adults by the third year of operation. In light of the utilization rates of existing privately owned providers of short term psychiatric services, and especially in light of the most recent utilization rates in the geriatric psychiatric unit at The Retreat, it is unlikely that HMC would achieve these occupancy rates. The short term psychiatric bed need rule also considers the occupancy of existing psychiatric beds. In this regard, HRS agreed that a 70 percent occupancy figure was the appropriate figure to be applied in this case. As noted in paragraph 20 of these findings of fact, during the twelve-month period prior to submission of HMC's application, the average occupancy of short term psychiatric beds in Broward County was only 66 percent. Subpart 4g of Rule 10-5.011(1)(o) provides that short term inpatient psychiatric hospital based services should have at least 15 designated beds. By proposing to convert 30 beds, HMC's application meets this criterion of the Rule. Findings regarding Rule 1O-5.O11(1)(o), F.A.C. Regarding Subpart 5e of Rule 10-5.011(1)(o), Florida Administrative Code, an important component of the proposed psychiatric unit would be the community education and outreach services described in HMC's application. These services, which would be provided at no cost to local residents, are representative of HMC's commitment to developing a cooperative relationship with existing providers. As an existing hospital, HMC has already established linkages with numerous health care providers. If its application were to be approved, HMC would expand its existing network to include community mental health centers and other local providers of mental health services.
Recommendation For all of the foregoing reasons, it is RECOMMENDED: That the application by NME Hospitals, Inc., d/b/a Hollywood Medical Center, to convert 30 medical-surgical beds to 30 short term psychiatric beds be DENIED. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22nd day of November 1989. MICHAEL M. PARRISH 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 Divisions of Administrative Hearings this 22nd day of November 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 89-1369 The following are my specific rulings on all findings of fact proposed by both parties. Findings proposed by Petitioner: Paragraphs 1 and 2: Accepted. Paragraph 3: Rejected as not supported by persuasive competent substantial evidence and as, in any event, unnecessary. Paragraphs 4, 5, 6, 7, 8, 9 and 10: Accepted. Paragraphs 11 and 12: Accepted in substance. Paragraphs 13, 14, and 15: Accepted. Paragraph 16: Rejected as unnecessary and as not fully consistent with the greater weight of the evidence. Paragraphs 17 and 18: Accepted. Paragraph 19: First sentence accepted. Last sentence rejected as constituting argument rather than findings of fact. Paragraph 20: Rejected as constituting a proposed conclusion of law rather than a proposed finding of fact. Paragraphs 21, 22, and 23: Accepted in substance. Paragraph 24: Rejected as not supported by persuasive competent substantial evidence. Although there is expert witness testimony in the record to the effect proposed in paragraph 24, I do not find that testimony to be persuasive. Specifically, I am not persuaded that the relationship between a patient and the patient's regular medical doctor is more severely impacted in a freestanding psychiatric facility than in a psychiatric facility located in an acute care facility. There are advantages and disadvantages to both types of psychiatric facilities. Paragraph 25: Rejected as repetitious. Paragraph 26: Rejected as subordinate and unnecessary details. Also, see comments above regarding paragraph 24. Paragraph 27: Rejected as constituting argument or proposed conclusions of law, rather than proposed findings of fact. Paragraph 28: Accepted. Paragraph 29: Rejected as constituting subordinate and unnecessary details. Paragraph 30: Accepted. Paragraph 31: First sentence rejected as constituting a broader statement than is supported by the competent substantial evidence. The remainder of this paragraph is accepted in substance. Paragraphs 32 and 33: Rejected as constituting subordinate and unnecessary details. Paragraph 34: Accepted. Paragraph 35: Rejected as irrelevant and as based on unpersuasive evidence. Although there is testimony to the effect that the considerations recited are significant considerations, it appears from the totality of the evidence that considerations of treating physician convenience (or efficiency) and where the treating physician has admitting privileges, are the primary determinants of patient placement. Paragraph 36: Rejected because this is a conclusion that does not necessarily follow from the evidence. [See Transcript, page 263, lines 5 to 10.] Paragraph 37: Rejected as not supported by persuasive competent substantial evidence. Although the record does contain opinion testimony to the general effect proposed here, the scope of that opinion testimony is more narrow than the fact proposed in paragraph 37. The testimony would support a finding that the Retreat is inconveniently located for some South Broward psychiatrists. Paragraph 38: First sentence rejected as not supported by persuasive competent substantial evidence. Second sentence rejected as contrary to the greater weight of the evidence. Paragraph 39: Accepted in substance. Paragraph 40: All but last sentence accepted in substance. Last sentence rejected as subordinate and unnecessary details. Paragraph 41: Rejected as quotation of testimony rather than proposed finding of fact. Also rejected as subordinate and unnecessary details. Paragraphs 42, 43 and 44: Rejected as subordinate and unnecessary details. Paragraph 45: First two sentences accepted. The remainder of this paragraph is rejected as not supported by competent substantial evidence. Although statements in the transcript, in depositions, and in affidavits contain opinions that Hollywood Pavilion offers quality of care that is "unacceptable" or "substandard," none of those opinions includes any factual basis for the opinion. (Ironically, the record contains more information about shortcomings in the psychiatric unit at Memorial Hospital; the unit with the highest occupancy rate and, therefore, presumably the most popular.) Paragraph 46: Rejected as not supported by persuasive competent substantial evidence. See comments above regarding paragraph 45. Paragraphs 47, 48, 49, 50, 51 and 52: Rejected as subordinate and unnecessary details. Paragraphs 53 and 54: Accepted. Paragraph 55: Rejected as irrelevant and unnecessary details, not all of which are fully supported by the evidence. For example, while the last sentence of paragraph 55 is sometimes true, it is not always true because if it were always true there would be precious little need for free standing psychiatric facilities. Paragraphs 56 and 57: Accepted. Paragraph 58: Accepted in substance with many subordinate and unnecessary details omitted. Paragraph 59: All but last sentence accepted. Last sentence rejected as contrary to the greater weight of the evidence. Paragraph 60: First sentence rejected as subordinate and unnecessary. Remainder of paragraph rejected as contrary to the greater weight of the evidence. Paragraph 61: Rejected as irrelevant and as not supported by persuasive competent substantial evidence. The testimony on this subject was too vague and generalized to form a basis for meaningful fact finding relevant to any issue in this case. Paragraphs 62 and 63: Accepted in substance. Paragraph 64: Rejected as contrary to the greater weight of the evidence. Paragraphs 65, 66, 67 and 68: Accepted. Paragraph 69: Accepted in substance. Paragraph 70: First two sentences accepted in substance. Last two sentences rejected as irrelevant as well as subordinate and unnecessary details. Paragraph 71: Rejected as contrary to the greater weight of the evidence. Paragraph 72: First sentence rejected as over broad and, therefore, not supported by competent substantial evidence. Also rejected as containing a conclusion not warranted by the evidence. Paragraph 73: Accepted. Paragraph 74: All but last sentence accepted. Last sentence rejected as constituting incomplete summary of rule definition. Paragraph 75: Accepted in substance. Paragraph 76: Rejected as constituting argument or conclusions of law rather than proposed findings of fact. Paragraph 77: Rejected as contrary to the greater weight of the evidence. Paragraph 78: Rejected as irrelevant in view of conclusion that the beds at Coral Ridge should be included in the inventory. Paragraph 79: Rejected as contrary to the greater weight of the evidence. Second sentence also rejected as constituting argument, rather than proposed findings of fact. Paragraph 80: Rejected as irrelevant, except for proposed findings regarding occupancy at The Retreat. Paragraph 81: Accepted. Paragraph 82: First sentence accepted. Last sentence rejected as contrary to the greater weight of the evidence. Paragraph 83: First two sentences accepted. Last sentence rejected as irrelevant because there is no demonstrated reason to exclude Coral Ridge. Paragraph 84: Accepted in substance. Paragraph 85: Rejected as not supported by competent substantial evidence. Paragraph 86: Rejected as contrary to the greater weight of the evidence. Paragraph 87: Accepted. Paragraph 88: Rejected as repetitious. Further, last sentence is not fully consistent with the greater weight of the evidence. Paragraphs 89 and 90: Accepted. Paragraph 91: Rejected as constituting a conclusion of law rather than a proposed finding of fact. Paragraphs 92 and 93: Rejected as constituting argument about the sufficiency of the evidence, rather than proposed findings of fact. Findings proposed by Respondent: Paragraphs 1, 2 and 3: Rejected as constituting subordinate procedural details which have been addressed in the Preliminary Statement. Paragraph 4: First two sentences accepted. The remainder is rejected as subordinate and unnecessary details. Paragraph 5: Rejected as constituting subordinate and unnecessary details or constituting argument and proposed conclusions of law. Paragraph 6: Rejected as constituting primarily argument and proposed ultimate conclusions rather than proposed findings of fact. Paragraph 7: First two lines of first sentence accepted. Remainder of first sentence rejected as argument. Second sentence rejected as irrelevant in view of HRS agreement that 70 percent occupancy was the appropriate standard. Third sentence accepted. Fourth sentence rejected as irrelevant. Fifth and sixth sentences rejected as argument. Paragraph 8: First and last sentences rejected as argument. Remainder rejected as subordinate and unnecessary details. Paragraph 9: First two sentences rejected as argument. Third and fourth sentences rejected as subordinate and unnecessary. Fifth and sixth sentences rejected as argument and comment on the testimony. Seventh, eight, and ninth sentences rejected as subordinate and unnecessary. Tenth sentence accepted in substance. Eleventh and twelfth sentences rejected as commentary on the evidence. Last sentence rejected as argument or ultimate conclusion. Paragraphs 10 and 11: Rejected as constituting primarily argument rather than proposed findings of fact. Paragraph 12: Rejected as constituting conclusion of law rather than proposed findings of fact. Paragraph 13 and the unnumbered paragraph following paragraph 13: Rejected as constituting discussion of the issues rather than proposed findings of fact. Paragraph 14: First two sentences rejected as discussion of issues, rather than proposed findings of fact. The remainder of this paragraph is accepted in substance, but with many unnecessary details omitted. Paragraph 15 and the unnumbered paragraph following paragraph 15: Rejected as constituting discussion of the issues, rather than proposed findings of fact. Paragraph 16 and 17: Accepted in substance with many unnecessary details omitted. Paragraph 18: First two sentences accepted in substance. The remainder of this paragraph is rejected as constituting discussion of issues or conclusions of law. Paragraph 19: Accepted in substance with many unnecessary details omitted. Paragraph 20: Rejected as constituting an amalgamation of conclusions of law, discussions of the issues, and argument. COPIES FURNISHED: C. Gary Williams, Esquire Stephen C. Emmanuel, Esquire Ausley, McMullen, McGehee, Carothers & Proctor 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Deanna Eftoda Department of Health and Rehabilitative Services 2727 Mahan Drive Suite 103 Fort Knox Executive Center Tallahassee, Florida 32308 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Conclusions THIS CAUSE came on for consideration before the Agency for Health Care Administration (“the Agency”), which finds and concludes as follows: 1. The Agency issued the Petitioner (“the Applicant”) the attached Notice of Intent to Deny the Application for Renewal and to Withdraw the Application from Further Review (Ex. 1). The parties entered into the attached Settlement Agreement (Ex. 2), which is adopted and incorporated by reference. 2. The parties shall comply with the terms of the Settlement Agreement. If the Agency has not already completed its review of the application, it shall resume its review of the application. The Applicant shall pay the Agency an administrative fee of $500.00 within 30 days of the entry of this Final Order. A check made payable to the “Agency for Health Care Administration” containing the AHCA number(s) should be sent to: Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS# 14 Tallahassee, Florida 32308 3. Any requests for an administrative hearing are withdrawn. The parties shall bear their own costs and attorney’s fees. This matter is closed. DONE and ORDERED in Tallahassee, Florida, on this day of Sacha _)10. Agency for Hgalth Care Administration 1 Filed March 31, 2010 12:15 PM Division of Administrative Hearings.
Other Judicial Opinions A party that is adversely affected by this Final Order is entitled to seek judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the below- named persons/entities by the method designated on this 27 day of A hla , 2010. Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone (850) 922-5873 Jan Mills Pat Caufman Facilities Intake Unit Field Office Manager Agency for Health Care Administration Agency for Health Care Administration (Interoffice Mail) (Interoffice Mail) Finance and Accounting Revenue Management Unit Agency for Health Care Administration (Interoffice Mail) Thomas F. Asbury, Esq. Office of the General Counsel Agency for Health Care Administration (Interoffice Mail) Eduardo R. Latour-Elizalde, Esq. Latour & Associates, PA 135 East Lemon Street Tarpon Springs, FL 34689-3619 (U.S. Mail) Administrative Law Judge Div. of Admin. Hearings (Interoffice Mail) Roger Bell Health Care Clinic Unit Agency for Health Care Administration (nteroffice Mail)
Findings Of Fact The Agency hereby adopts the findings of fact set forth in the Recommended Order.
Conclusions This case was referred to the Division of Administrative Hearings (‘DOAH”) where the assigned Administrative Law Judge (“ALJ”), David M. Maloney, conducted a formal administrative hearing. At issue in this proceeding is whether the Agency for Health Care Administration (“Agency”) should approve the certification of need (“CON”) applications of Miami Jewish Home and Hospital for the Aged, Inc. (“Miami Jewish Home”) to establish a 30- bed hospital within a hospital on its existing campus, and Kindred Hospitals East, LLC (“Kindred”), Promise Healthcare of Florida XI, Inc. (“Promise”) and Select Specialty Hospital- Dade, Inc. (“Select-Dade™) to establish 60-bed free-standing long-term care hospitals in Miami- Dade County, Agency Acute Care District 11. The Recommended Order dated May 17, 2007, is attached to this final order and incorporated herein by reference.
