Conclusions Having reviewed the four Notices of Intent to Deny Application issued May 13-18, 2010, attached hereto and incorporated herein (Ex. 1, 2, 3, and 4), and all other matters of record, the Agency for Health Care Administration (“Agency”) has entered into a Settlement Agreement (Ex. 5) with the other party to these proceedings, and being otherwise well-advised in the premises, finds and concludes as follows: ORDERED: 1. The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. 2. The Petitioner shall remit to the Agency, within thirty (30) days of the entry of a Final Order adopting this agreement, an administrative fee in the sum of thirty thousand dollars ($30,000.00) to resolve the Agency's allegations of unlicensed activity, in the interest of expediently resolving these matters and in recognition of the expense and uncertainty of litigation. 3. Checks should be made payable to the “Agency for Health Care Administration.” The check, along with a reference to this case number, should be sent directly to: Filed January 10, 2012 1:47 PM Division of Administrative Hearings Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS# 14 Tallahassee, Florida 32308 4. Unpaid amounts pursuant to this Order will be subject to statutory interest and may be collected by all methods legally available. 5. Any requests for an administrative hearing are withdrawn.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 this [0 day of ~ Bettie: ; 20/2, in Tallahassee, Leon County, Florida. — Ds we { izabeth Dudek, retary fey ir wacked 0. th€are Administration A PARTY WHO JS 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. Copies furnished to: Lance P. Cohen, Esquire Warren J. Bird, Asst. General Counsel Cohen & Thurston, P.A. Office of the General Counsel 1723 Blanding Boulevard, Suite # 102 Agency for Health Care Administration Jacksonville, Florida 32310 2727 Mahan Drive, Bldg #3, MS #3 (U. S. Mail) Tallahassee, Florida 32308 (Interoffice Mail) Jan Mills Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Roger Bell Health Care Clinic Unit Manager Agency for Health Care Administration 2727 Mahan Drive, MS #53 Tallahassee, Florida 32308 (Interoffice Mail) Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS# 14 Tallahassee, Florida 32308 (Interoffice Mail) Suzanne F. Hood Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399 (U.S. Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the oa above-named person(s) and entities by U.S. Mail, or the method designated, on this the 10 day of aaa » 2012" Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 412-3630 Certified Article Number , ?bbO 390) Y5778 8971 SEMDERS RECORD i", Certified Article Number (?160 3901 9846 7935 1337 SENDERS RECORD One Nofice $1149/1° CHARLIE CRIST FIORDAAGENCY FOR HEATH CARE ADMINS TRATION Better Health Care for ail Floridians THOMAS W. ARNOLD GOVERNOR SECRETARY May 12, 2010 Physicians Medical Centers - Jax Inc File Number: 8428 1680 Dunn Ave Case #: 2010004935 Ste 39 Jacksonville, FL 32218 F INTENT TO DENY APP TION It Is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 1680 DUNN AVE, STE 39, JACKSONVILLE, FL, 32218, be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes. You were notified by correspondence dated April 9, 2010 to provide further Information addressing identified apparent errors or omissions within twenty-one days (21) from the receipt of the Agency's correspondence. Our records indicate you received this correspondence by certified mail on April 15, 2010. The outstanding issues remaining are: A copy of the closing documents, stock or similar certificates signed and dated by both the buyer and seller is required, In addition, the Agency received information that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). EXPLANATION OF RIGH Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. ce: Agency Clerk, Mail Stop 3 ; Legal Intake Unit, Mall Stop 3. EXHIBIT 14 Visit AHCA online at http://ahca.myflorida.com 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 " Certified Article Number , 7260 3901 9648 57748 8995 SENDERS RECORD FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION CHARLIE CRIST THOMAS W. ARNOLD GOVERNOR Better Health Care for all Floridians SECRETARY May 12, 2010 Physicians Medical Centers - Jax Inc File Number: 8430 9826 San Jose Blvd Case #: 2010004881 Jacksonville, FL 32257 .. : NOTICE OF INTENT TO DENY APPLICATION It is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 9826 San Jose Bivd, Jacksonville, FL, 32257, be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes. You were notified by correspondence dated March 27, 2010 to provide further information addressing identified apparent errors or omissions within twenty- one days (21) from the receipt of the Agency's correspondence. Our records indicate you received this correspondence by certified mail on April 8, 2010, The outstanding issues remaining are: Subpart 1.B, Name-of.Applicant: The name of the applicant must be the corporation or legal entity as it is registered with. the Division of Corporations, it must also match-the FEIN indicated in section 1.C. This subpart was submitted as a response to the omissions, but the. applicant's name indicated does not match the FEIN# listed in section 1.C. of the application. : As this facility did a change of ownership, provide a copy of the closing documents signed and dated by both the buyer (new owner) and seller (previous owner). Acceptable documentation may include any one of the following: Copy of final sale/transfer documents showing date of final transfer and signatures of buyer(s) and seller(s), or a signed, written statement from an attorney, on letterhead, that confirms sale/transfer completion and provides the date of final action. : In addition, the Agency received information that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). TION OF HT! Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing, In order to obtain a formal proceeding before -the Division of Administrative Hearings under Section 120,57(1), F.S., your request for an administrative hearing-must conform to the - requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. ; : : Visit AHCA online at http://ahca.myflorida,com 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 EXHIBIT 2 Physicians Medical Centers -. . Inc Page 2 : May 12, 2010 SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 Te thictee-Va thet [9 Number fd60 3901 9848 7495 a2, SENDERS RECORD FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION CHARLIE CRIST THOMAS W. ARNOLD GOVERNOR Better Health Care for all Floridians SECRETARY May 13, 2010 Physicians Medical Centers - Jax Inc File #8427 5960 Beach Blvd : Case #2010004956 Ste3 ; Jacksonville, FL 32207 NOTICE OF INTENT TQ DENY APPLICATION It is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 5960 Beach Bivd., Ste 3, Jacksonville, FL, 32207, be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes. You were notified by correspondence dated April 7, 2010 to provide further information addressing identified apparent errors or omissions within twenty- one days (21) from the receipt of the Agency's correspondence. Our records indicate you received this correspondence by certified mail on Apri! 9, 2010. The outstanding issues remaining are: As this facility did a change of ownership, provide a copy of the closing documents signed and dated by both the buyer (new owner) and seller (previous owner). Acceptable documentation may include any one of the following: Copy of final sale/transfer documents showing date of final transfer and signatures of buyer(s) and seller(s), or a signed, written statement from an attorney, on letterhéad, that confirms sale/transfer completion and provides the date of final action. ; In addition, the Agency received information that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). EXPLANATION OF RIGHTS Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. EXHIBIT 3 Visit AHCA online at http://ahca.myflorida.com 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 Physicians Medical Centers - Jax Page 2 May 13, 2010 SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Health Cae Clinic Unit ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 RTE ecm 3901 94a 7935 yy74 SENDERS RECORD FLORIDA AGENCY TOR HEALTH CARE ADMINISTRATION oe ERNGS Better Health Care for all Floridians THOMAS W. ARNOLD May 18, 2010 CERTIFIED MAIL / RETURN RECEIPT REQUESTED File Number: 8429 Physicians Medical Centers - Jax, Inc 2020 Kingsley Ave Case #: 2010005135 Suite A Orange Park, FL 32073 NOTICE OF INTENT TO DENY APPLICATION It is the decision of this Agency that the application for certificate of exemption from health care clinic licensure for Physicians Medical Centers - Jax Inc, located at 2020 Kingsley Avenue, Suite A, Orange Park, Florida, 32073 be DENIED. The specific basis for this determination is based on the fact that: Requested information was not complete or timely received by the Agency pursuant to Section 408.806(3)(b), Florida Statutes, You were notified by correspondence dated April 9, 2010 to provide further information addressing identified apparent errors or omissions within twenty-one days (21) from the receipt of the Agency’s correspondence, Our records indicate you received this correspondence by certified mail on April 12, 2010, The outstanding issues remaining are: Evidence of Ownership — Information received by the Agency states that Victoria Critzer is the owner of Physicians Medical Centers-Jax Inc. Provide the following documentation as evidence of ownership: * A copy of the final closing documents such as a bill of sale or stock purchase agreement. signed and dated by both the buyer and seller including the effective date sale or transfer. The closing documents should contain the signature of Gordon Garver DC, previous owner of Physicians Medical Center-Jax Inc and Joseph Thomas MD, new owner of Physicians Medical Center-Jax Inc. ¢ A copy of the cancelled and reissued stock certificates transferring shared to Joseph Thomas MD. ¢ Acopy of the lease agreement that includes the name(s) of the owner(s). e Acopy of the business tax receipt that includes the name of the corporation and owner. In addition, the Agency received information indicating that the facility does not meet exemption requirements as it is not wholly owned by a Florida licensed health care practitioner, pursuant to Section 400.9905(4)(g). EXHIBIT 2727 Mahan Drive,MS-53 Tallahassee, Florida 32308 Visit AHCA online at http://ahca.myflorida.com . Physicians Medical Centers - Ja... .nc Page 2 May 18, 2010 EXPLANATION OF RIGHTS Pursuant to Section 120,569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S. your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. ey SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS, For questions regarding this notice, please contact Ruby Schmigel, Health Services & Facilities Consultant with the Health Care Clinic Unit at (850) 412-4413. oger Bgl, Mandger Health Care Clinic Unit ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS PHYSICIANS MEDICAL CENTERS-JAX, INC., Petitioner, DOAH Case Nos. 10-3202, 10-3203, 10-3204 and 10-3205 vs. AHCA CASE Nos.: 2010004881, 2010004956 AGENCY FOR HEALTH CARE 2010004935 and 2010005135, ADMINISTRATION, Respondent. / SETTLEMENT AGREEMENT Respondent, State of Florida, Agency for Health Care Administration (hereinafter the “Agency”), through its undersigned representatives, and Petitioner, Physicians Medical Centers- Jax, Inc. (hereinafter “Petitioner”), pursuant to Section 120.57(4), Florida Statutes, each individually, a “party,” collectively as “parties,” hereby enter into this Settlement Agreement (“Agreement”) and agree as follows: WHEREAS, the Petitioner applied for four certificates of exemption from licensure pursuant to Section 400.9935(6), Florida Statutes and Chapter 59A-33, Florida Administrative Code; and WHEREAS, Victoria Critzer has applied for four initial health care clinic licenses, expressly intending to purchase the interest of Dr. Joseph Thomas in Petitioner upon issuance by the Agency of those licenses; and WHEREAS, the Agency has jurisdiction of the license and exemption applications described in the foregoing paragraphs, by virtue of being the regulatory and licensing authority over the said licenses and exemptions; and EXHIBIT 5 WHEREAS, the Agency served the Petitioner with four Notices of Intent to Deny Application on or about May 13, 2010, notifying the Petitioner of the Agency’s intent to deny the certificates of exemption for the reasons stated thereon, in Agency cases numbered 2010004881, 2010004956, 2010004935 and 2010005135; and WHEREAS, Petitioner timely requested a formal hearing pursuant to Section 120.57(2), Florida Statutes, and in response to said request the matters were forwarded to the Division of Administrative Hearings (DOAH), and were designated as cases numbered 10-3202, 10-3203, 10-3204 and 10-3205 in that tribunal; and subsequently the parties agreed to, and did abate those cases in DOAH, for the purpose of discussing settlement; and WHEREAS, the Agency alleges, and Petitioner denies, that during the period of processing of the aforementioned applications, Petitioner operated one or more unlicensed health care clinics in violation of Florida law as to which no formal administrative, civil or criminal action has thus far been brought; and WHEREAS, the parties have agreed that a fair, efficient, and cost effective resolution of this dispute would avoid the expenditure of substantial sums to litigate the dispute; and WHEREAS, the parties stipulate to the adequacy of consideration exchanged; and WHEREAS, the parties have negotiated in good faith and agreed that the best interest of all the parties will be served by a settlement of these proceedings; and NOW THEREFORE, in consideration of the mutual promises and recitals herein, the parties intending to be legally bound, agree as follows: 1. All recitals are true and correct and are expressly incorporated herein. 2. Both parties agree that the “whereas” clauses incorporated herein are binding findings of the parties. 3. Joseph Thomas, M.D. hereby acknowledges, affirms and certifies that, at the time this agreement is executed by him, he is the sole owner of the Florida corporation Physicians Medical Center-Jax, Inc. 4, Victoria Critzer hereby acknowledges, affirms and certifies that, at the time this agreement is executed by her, she is the sole owner of the Florida corporation Physicians Medical Center, Inc. 5. Upon full execution of this Agreement, Petitioner agrees to waive any and all proceedings and appeals to which it may be entitled including, but not limited to, an informal proceeding under Subsection 120.57(2), a formal proceeding under Subsection 120.57(1), appeals under Section 120.68, Florida Statutes; and declaratory and all writs of relief in any court or quasi-court (DOAH) of competent jurisdiction; and further agrees to waive compliance with the form of the Final Order (findings of fact and conclusions of law) to which it may be entitled. Provided, however, that no Agreement herein, shall be deemed a waiver by either party of its right to judicial enforcement of this Agreement. 6. Upon full execution of this Agreement, the parties agree to the following: a. Petitioner's four (4) applications for exemption from licensure are hereby withdrawn, and Petitioner expressly waives its right to challenge or appeal, or both, in DOAH or elsewhere, the denial by the Agency of the exemptions. b. The Agency will resume processing the four initial licensure applications submitted by Victoria Critzer as intended future 100% owner of Physicians Medical Centers-Jax, Inc., now pending, and if the applications are complete and the applicant qualified under applicable law, the Agency will issue the licenses upon full payment by Petitioner of an agreed upon sum, as set forth below, to resolve the Agency's claim of unlicensed activity against Physicians Medical Center, Inc. Ms. Critzer agrees to use reasonable diligence to timely remedy any omissions from the applications cited by the Agency, to make the facilities available as required by law for all inspections required in connection with the licensure of the facilities, and to otherwise comply with all requirements of the application process, and all statutes and administrative rules thereunto appertaining, including background screening as may be applicable. c. The Agency agrees to use all reasonable diligence to process the initial license applications, and to issue the initial licenses as expeditiously as reasonably possible, provided that Ms. Critzer timely complies with all reasonable requests for additional information to which the Agency is entitled as a component of the application and licensure process, and provided that Victoria Critzer, and the applications she presented, are qualified for the licenses under all applicable statutes and administrative rules. d. Victoria Critzer will maintain the health care clinic license #HCC6732 currently held by Physicians Medical Center Inc. (PMC), for purposes of billing health care services provided solely at the licensed location, 9826 San Jose Boulevard, Suite B, Jacksonville, Florida. Whereas, Ms. Critzer, through counsel, has advised the Agency of a change of address for the license from 9826 San Jose Boulevard, to 9826 San Jose Boulevard, Suite B, PMC will submit a change of address application to the Agency together with the appropriate fee, within 10 days of execution of this agreement, and prior to resumption by the Agency of processing of the subject licensure applications. The license will be maintained 7. under a different federal employer identification number from any other licenses issued to Victoria Critzer or any entity in which she has a controlling interest. A separate health care clinic license must be obtained for any other location at which any health care services will be provided and third-party reimbursement sought for on behalf of Physicians Medical Centers Inc. e. Physicians Medical Centers, Inc. agrees to pay the sum of thirty thousand and no/100s dollars ($30,000.00) to the Agency, to resolve the Agency's allegations of unlicensed activity, in the interest of expediently resolving these matters and in recognition of the expense and uncertainty of litigation. The sum will be paid in lump sum at the time that the initial licenses referenced in paragraph b., above, are issued, or within 30 days following rendition of a Final Order by the Agency that incorporates this Agreement, whichever occurs first. f. Nothing in this Agreement shall prohibit the Agency from denying Petitioner’s application for licensure based upon any statutory and/or regulatory provision, including, but not limited to, the failure of Petitioner to satisfactorily complete a survey reflecting compliance with all statutory and rule provisions as required by law. By executing this Agreement, the Petitioner neither admits nor denies the allegations raised in the Notices of Intent to Deny referenced herein. 8. Upon full execution of this Agreement, the Agency shall enter a Final Order adopting and incorporating this Agreement in its entirety, and closing the above-styled case(s). The cases resident in DOAH, referenced above as DOAH cases numbered 10-3202, 10-3203, 10- 3204 and 10-3205, are currently closed by Order entered in that tribunal on October 7, 2010. The parties hereby further agree that those cases shall remain closed permanently, and each party hereby waives its right to seek to have any of those cases re-opened. 9. Each party shall bear its own costs and attorney’s fees. 10. This Agreement shall become effective on the date upon which it is fully executed by all the parties. 11. The Petitioner for itself and for its related or resulting organizations, its successors or transferees, attorneys, heirs, and executors or administrators, does hereby discharge the Agency and its agents, representatives, and attorneys of all claims, demands, actions, causes of action, suits, damages, losses, and expenses, of any and every nature whatsoever, arising out of or in any way related to this matter and the Agency’s actions, including, but not limited to, any claims that were or may be asserted in any federal or state court or administrative forum, including any claims arising out of this Agreement, by or on behalf of the Petitioner or related or resulting organizations. 12. This Agreement is binding upon all parties herein and those identified as a party, or a beneficiary, of the provisions of this Agreement, and each signatory acknowledges same and the adequacy of consideration therefor. 13. In the event that Petitioner is or was a Medicaid provider, this settlement does not prevent the Agency from seeking Medicaid overpayments or from imposing any sanctions pursuant to Rule 59G-9.070, Florida Administrative Code. This Agreement does not prohibit the Agency from taking action regarding Petitioner’s Medicaid provider status, conditions, requirements or contract. 14. The undersigned have read and understand this Agreement and have authority to bind their respective principals to it. Both parties have been represented by counsel in the negotiation and execution of this Agreement. The Petitioner fully understands that counsel for the Agency represents solely the Agency and Agency counsel has not provided legal advice to or influenced the Petitioner in its decision to enter into this Agreement. 15. This Agreement contains the entire understandings and Agreements of the parties. 16. | This Agreement supersedes any prior oral or written Agreements between the parties. This Agreement may not be amended except in writing. Any attempted assignment of this Agreement shall be void. 17. Venue for any action brought to interpret, challenge or enforce the terms of this Agreement or the Final Order entered pursuant hereto shall lie solely in the Circuit Court in Leon County, Florida. 18. ‘Ifa court of competent jurisdiction finds any part of this Agreement to be void, voidable, or unenforceable, then the remainder of the contract shall remain in full force and effect. 19. All parties agree that a facsimile signature suffices fe 20. The following representatives and beneficiaries hereby ae duly S. to enter into this Agreement. Molly McKéns eputy Secretary {_ panes P. Céhen, Esquire Health Quality ance Cohen & Thurston, P.A. Agency for Health Care Administration 1723 Blanding Boulevard, Suite 102 2727 Mahan Drive, Bldg #3 Jacksonville, Florida 32310 Tallahassee, Florida 32308 Counsel to Petitioner DATED: (frolir DATED: 1-1 U~ aye William R. Roberts Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308 DATED: /7 [(3l 4 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308 DATED: Uf (5) WH Physicians Medical Centers-Jax, Inc. 9826 San Jose Boulevard Jacksonville, Florida 32257 patep: _})-14~!/ ~~ x. 1 _f- Victoria Critzer as president, sole director and 100% Owner Physicians Medical Center, Inc. 9826-B San Jose Boulevard Jacksonville, Florida 32257 DATED: _|1- (4-//
Other Judicial Opinions A party who is adversely affected by this final order is entitled to judicial review pursuant to Sections 120.68 and 766.311, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original of a notice of appeal with the Agency Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the appropriate District Court of Appeal. See Section 766.311, Florida Statutes, and Florida Birth-Related Neurological Injury Compensation Association v. Carreras, 598 So. 2d 299 (Fla. 1st DCA 1992). The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
Conclusions THIS CAUSE comes before the AGENCY FOR HEALTH CARE ADMINISTRATION (the "Agency") concerning the Administrative Complaints for LIFE CARE CENTER OF SARASOTA, CON 7904, LIFE CARE CENTER OF ORANGE PARK, CON 7737, LIFE CARE CENTER OF NEW PORT RICHEY, CON 8813, LIFE CARE CENTER OF PORT ST. LUCIE, CON 8975, LIFE CARE CENTER OF OCALA, CON 7923 AND LIFE CARE CENTER OF MELBOURNE, CON 3828 collectively known as Life Care Centers of America (hereinafter "Life Care") which the Agency filed the Administrative Complaints for Life Care's failure to comply with Medicaid conditions placed on the CONs. Composite Exhibit 1. The parties have since entered into a Settlement Agreement. Exhibit 2. It is ORDERED that: The findings of fact and conclusions of law set forth in the Administrative Complaint are adopted and incorporated by reference into this Final Order. The Settlement Agreement is attached hereto and made a part hereof. The parties are directed to comply with the terms of the Settlement Agreement upon payment of any fines. The Respondent shall pay the Agency a total of $5,780.00 within 30 days of the date of this Final Order. The total amount is divided among the cases as such: Case Number 2008013528 - $323.00 Case Number 2008013522 - $663.00 Case Number 2009000372 - $1,663.00 Case Number 2009000369 - $1,530.00 Case Number 2009000371 - $1,365.00 Case Number 2008013532 - $236.00 A check made payable to the "Agency for Health Care Administration" and containing the AHCA ten-digit case numbers should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 14 Tallahassee, Florida 32308 The above-styled cases are hereby closed. DONE AND ORDERED this Z--1 day of 011, in Tallahassee, Florida. Elizab Agen tion
Other Judicial Opinions A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW, WHICH SHALL BE INSTITUTED BY FILING THE ORIGINAL NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A COPY ALONG WITH THE FILING FEE 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 PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF THE RENDITION OF THE ORDER TO BE REVIEWED. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order has been furnished by U.S. or interoffice mail to the persons named below on this '/,:r: day of RICHARD J. SHOOP, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308 (850) 412-3630 COPIES FURNISHED TO: Charles A. Stampelos Administrative Law Judge Division of Administrative Hearings (Electronic Mail) Jay Adams, Esquire Broad and Cassel 215 South Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302 Attorney for Life Care Centers of America (U. S. Mail) James H. Harris, Esquire Office of the General Counsel Agency for Health Care Administration (Interoffice Mail) Richard Joseph Saliba, Esquire Office of the General Counsel Agency for Health Care Administration (Interoffice Mail) Jan Mills Facilities Intake Unit Agency for Health Care Administration (Interoffice Mail) Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration (Interoffice Mail) MAR-17-2009 10:39 AGENCY HEALTH CARE ADMIN Mar 17 2009 10=25 850 921 0158 P.08 STATE OF PLORXDA
The Issue Whether the Division of Administrative Hearings (DOAH) has jurisdiction to conduct a formal hearing under the provisions of Sections 120.569 and 120.57(1), Florida Statutes, if the Florida Commission on Human Relations (FCHR) does not make a "cause" or "no cause" determination, as provided in Section 760.11(3), Florida Statutes, but rather issues a Notice of Dismissal, pursuant to Section 760.11(8), Florida Statutes. Whether DOAH has jurisdiction to conduct a formal hearing under the provisions of Sections 120.569 and 120.57(1), Florida Statutes, if the Petition for Relief was not timely filed pursuant to Section 760.11(6), Florida Statutes. Whether DOAH has jurisdiction to conduct a formal hearing under the provisions of Sections 120.569 and 120.57(1), Florida Statutes, if Petitioner fails to name Respondent in the Petition for Relief filed with the FCHR, as required by Section 760.11(1), Florida Statutes.
Recommendation Based on the foregoing facts and conclusions of law, it is RECOMMENDED that a final order be entered dismissing with prejudice the Petition of Manuel Pedraza in DOAH Case No. 02-0237, and FCHR Case No. 99-0849, for failure to timely file his Petition for Relief and for failure to properly name Respondent in the Petition. DONE AND ENTERED this 21st day of June, 2002, in Tallahassee, Leon County, Florida. ___________________________________ DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of June, 2002. COPIES FURNISHED: Susan K. W. Erlenbach, Esquire Erlenbach Law Offices, P.A. 2532 Garden Street Titusville, Florida 32796 W. Russell Hamilton, III, Esquire Morgan, Lewis & Bockius, LLP 5300 First Union Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2339 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue Whether Petitioner is entitled to change from individual to family coverage under the State of Florida Employees' Group Insurance Plan more that thirty-one calendar days after the birth of her son and outside the open enrollment period.
Findings Of Fact Petitioner was employed by Department of Health and Rehabilitative Services (HRS) District IV in 1986. For the past 18 months she has worked in her present position with HRS District IV in Deland, Florida. She presently resides with her husband in Deltona, Florida. HRS District IV personnel office is located at 5920 Arlington Expressway in Jacksonville, Florida. Linda Boutwell is employed as the Insurance Coordinator for HRS District IV. Petitioner gave birth to a son on January 6, 1990. On January 8, 1990, Petitioner called Linda Boutwell concerning the addition of her son to her State Health Insurance which would require a change from individual to family coverage. Mrs. Boutwell advised Petitioner that she could change from individual coverage to family coverage, but that the child would not be covered until the form was returned and approved. Boutwell indicated she would send her the necessary paperwork to add her son as a dependent. Mrs. Boutwell prepared and mailed the paperwork on January 8, 1990. It was received by Petitioner on January 10, 1990. Although Petitioner received the required enrollment papers on January 10, 1990, she did not return them to her personnel office. Petitioner states she did not return the papers to her personnel office because she understood from conversation with Linda Boutwell that her son's hospital bills would not be paid by the State Plan, since the child was not enrolled in the State Plan prior to that date. Instead, Petitioner elected to enroll in family coverage under her husband's employer's carrier. On March 15, 1990, Petitioner again called Linda Boutwell to request her son to be added to her insurance. Boutwell explained that Petitioner's request could not be honored since the request was beyond 31 days of the birth of the child. Therefore, Petitioner had to wait until the annual open enrollment period to obtain insurance coverage for the child. Petitioner's March 15, 1990 request was prompted by her discovery that the hospital bill related to the birth of her son was covered under the State Plan, even though she had not yet converted to the family coverage provision of the State Plan. Petitioner never asked Boutwell whether her individual hospital bill was covered or not. Petitioner's conclusion that her son's hospital birth would not be covered was based partly on the statement of a close friend who called Petitioner on January 7, 1990, to warn her to "expect problems" with her State Plan coverage. Petitioner has received a copy of the Amended State of Florida Employees Group Health Self Insurance Plan, Benefit Document, dated July 1, 1988. However, she did not examine it during the period January-March, 1990. Section II of the Employees Group Health Self Insurance Plan states in pertinent part: II. Covered Hospital and Other Facility Services: The following services shall be covered when ordered by a physician and are medically necessary for the treatment of an insured as a result of a covered accident or illness. Inpatient hospital services under Subsections A., B., and H., are in connection with the pregnancy of only the employee . . . shall also include nursery charges of the child during the hospital stay of the mother. Petitioner does not offer any credible explanation why she did not convert to family coverage prior to or at the time of the birth of her son or during the 1989 open enrollment period which occurred during Petitioner's seventh month of pregnancy.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the petition be DENIED. DONE AND ENTERED this 26th day of October, 1990, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 26th day of October, 1990. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner did not file proposed findings of fact. Respondent's proposed findings of fact. Accepted in substance: paragraphs 1 through 11. COPIES FURNISHED: Susan Millard, pro se 2391 Montano Street Deltona, FL 32725 Augustus D. Aikens, Jr., Esquire General Counsel Department of Administration 435 Carlton Building Tallahassee, FL 32399-1550 Aletta Shutes Secretary Department of Administration 435 Carlton Building Tallahassee, FL 32399-1550
The Issue Whether Rule 64B8-9.009(6)(b)1.a., Florida Administrative Code, is an invalid exercise of delegated legislative authority pursuant to Section 120.52(8), Florida Statutes.
Findings Of Fact Stipulated Facts Section 458.331(1)(v), Florida Statutes, authorizes the Board to adopt rules establishing the standards of practice and care for particular physician practice settings. The Board is the agency that adopted Rule 64B8-9.009, Florida Administrative Code, regarding standards of care for office surgery. Petitioner, Victor Ortiz, is a Certified Registered Nurse Anesthetist (CRNA), and is licensed by the Board of Nursing pursuant to Chapter 464, Florida Statutes. Mr. Ortiz is not a member of the Florida Association of Nurse Anesthetists or the Florida Nurses Association. Mr. Ortiz provides anesthesia care to patients in various settings under the supervision of physicians licensed pursuant to Chapters 458 and 459, Florida Statutes. Among other functions, Mr. Ortiz orders preanesthetic medications; administers regional, spinal, and general anesthesia under protocol and the supervision of a physician; provides life support functions; and monitors patient condition during surgery and in the recovery room. Prior to April 15, 2002, the effective date of Rule 64B8-9.009(6)(b)1.a., Florida Administrative Code (the Rule), Mr. Ortiz administered anesthesia under the supervision of operating physicians for all types of office surgeries, including surgical procedures classified by the Board of Medicine as "level III." Mr. Ortiz provided anesthesia services to patients in level III office surgeries under the supervision of M.D. or D.O. operating physicians four or five days per week on average. The Rule requires that if the anesthesia provider is a CRNA, there must be a licensed M.D. or D.O. anesthesiologist, other than the surgeon, to provide direct supervision of the administration and maintenance of the anesthesia in level III office surgeries. Since the adoption of the Rule, the physicians for whom Mr. Ortiz previously provided anesthesia services will no longer employ him for level III office surgeries because they believe that it is unnecessary and cost-prohibitive to pay Mr. Ortiz to provide the actual anesthesia services and an anesthesiologist to directly supervise him. Consequently, Mr. Ortiz' revenues have been reduced and his office practice has been substantially and adversely affected.
The Issue Whether the Certificate of Need (CON) applications filed by Central Florida Regional Hospital, Inc. d/b/a Central Florida Regional Hospital (Central Florida) (CON Application No. 9805) and Oviedo HMA, Inc. (Oviedo HMA) (CON Application No. 9807P) for a new, 60-bed acute care hospital in Seminole County, Agency for Health Care Administration (Agency or AHCA) acute care subdistrict 7-4, satisfy, on balance, the applicable statutory and rule review criteria sufficiently to warrant approval; and, if so, which of the two applications best meets the applicable statutory and rule review criteria for approval.
Findings Of Fact The Parties The Agency AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Section 408.034(1), Florida Statutes.2 Oviedo HMA Oviedo HMA, Inc. is a start-up subsidiary of Health Management Associates, Inc. (HMA), a national for-profit hospital chain, headquartered in Naples, Florida. Oviedo HMA was formed for the sole purpose of constructing, owning, and operating a hospital in the Oviedo area. HMA traditionally develops hospitals in non-urban markets. It describes itself as a "turnaround specialist for non-urban hospitals," that "acquires and then revitalizes hospitals in growing communities with [population of] 30,000 to 400,000 that have a clear demographic need." HMA focuses on smaller-type hospitals ranging in bed size from 50 to 200 beds. HMA's ownership of hospitals has grown from 16 in 1993 to 59 hospitals in 2005. HMA owns and operates approximately 16 hospitals in Florida, all of which have come under HMA's ownership and operation by acquisition. HMA has not yet opened and constructed a new acute care hospital in Florida. HMA is building a new hospital in Collier County and has recently completed a replacement hospital in Brooksville, Florida. HMA anticipates acquiring an 80 percent interest in St. Cloud Hospital (owned by ORHS) in the greater Orlando area, with ORHS retaining a 20 percent interest. This transaction had not closed as of the final hearing. HMA owned and operated hospitals nationwide are accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and provide high quality of care to their patients. HMA has experienced financial growth in recent years; growing from approximately $250 million in net revenue in 1993 to over $3.6 billion in 2005, and growing from approximately $12 million in net income in 1993 to approximately $350 million in 2005. Its financial strength among for-profit hospitals is strong. For HMA, company-wide, over 15.4 percent of gross revenues were attributable to Medicaid in fiscal year (FY) 2005, with an additional 4.5 percent in charity care. In Florida, 9.7 percent of gross revenues of HMA were attributable to Medicaid (over $324 million) in 2005, with an additional 4.4 percent in charity care (over $147 million). In the SAAR, AHCA conditioned its approval of Oviedo HMA's project with the condition that Oviedo HMA provide "[a] minimum of 7.1 percent of the total annual patient days in the 60-bed facility . . . to Medicaid patients" and "[a] minimum of 2.9 percent of the 60-bed facility's gross revenues . . . to charity patients." OV 99 at 52. AHCA should impose these conditions if the project is approved. Oviedo HMA has committed to provide obstetrical services. In order to perfect its CON application, Oviedo HMA is relying heavily on Orlando Regional Healthcare System, Inc. (ORHS), a Florida not-for-profit corporation that owns and operates health care facilities in Orange, Seminole, Lake, and Osceola Counties. HMA would not pursue the project without a collaborative clinical and financial arrangement with ORHS. Following the filing of Oviedo HMA's letter of intent, on October 20, 2004, representatives of HMA, Inc. and ORHS, Inc., signed a letter of intent "relating to the possible formation of a joint venture or other business relationship" for the construction of a new hospital in Oviedo." Thereafter, HMA and ORHS agreed in principle that if the CON application were approved and the hospital project proceeded forward, 20 percent of the stock of Oviedo HMA will be owned by ORHS or one of its affiliates. (Stated otherwise, ORHS will contribute 20 percent of the project cost.) Losses and profits will be shared in accordance with percentages of stock ownership. Any written agreement between Oviedo HMA and ORHS is expected to be modeled after the ORHS/HMA St. Cloud Hospital agreement. See Finding of Fact 6. It is anticipated that any such agreement will contain, in part, buy-out and non-compete provisions.3 The entity that files a CON application must be the same entity that licenses and operates the CON approved project, here a hospital. OV 69 at 9-10.4 According to Mr. Gregg, "as of the [legislative] changes of 2004, if a change of ownership occurs, then that new owner acquires the certificates [sic] of need that were [sic] associated with the provider being purchased." Id. at 10. See generally § 408.036(2)(a), Fla. Stat.; Ch. 2004-383, § 6, Laws of Fla. The proposed stock purchase by ORHS does not affect the corporate status of Oviedo HMA, Inc., the applicant/entity.5 The situation would be different if the applicant/entity changed. The persuasive evidence indicates that Oviedo HMA, Inc. will own and operate the new hospital. ORHS has sufficient funds and is committed to expend between $15 and $20 million toward the Oviedo HMA hospital project, but is not willing to finance the entire cost of the project. This is one reason why ORHS did not pursue a CON application for a similar project as it had done in a prior batching cycle. The ORHS hospitals/health care facilities provide high quality of care to their patients. ORHS uses an enterprise-wide health information system which is complemented by other systems. ORHS physicians can access patient clinical information at an ORHS facility or remotely. PACS is a picture, archiving, and communications system. PACS provides the user with the ability to view images digitally, e.g., X-rays can be transmitted electronically and can be viewed remotely. With the design and structural cabling system in place, the PACS system can be used by the Oviedo HMA hospital and OHRS. The anticipated collaboration between the entity systems will afford the ability to tie the computer systems together. This system is available among collaborative hospitals and by credentialed staff who are given access to the system.6 Generally, physicians who do not have privileges at an ORHS facility would not be able to access the information unless given permission, which is not done on a standard basis. Hospital facilities with a "business relationship" with ORHS facilities can access the information. However, federal confidentiality requirements must be followed. Unaffiliated hospitals, such as CFRH, could be provided access to the information. See Endnote 6. Central Florida Central Florida Regional Hospital, Inc. (Central Florida), a for-profit corporation, is an applicant in this proceeding and will own the new hospital proposed in its CON application. If approved, the new hospital will have a separate management team charged with running the day-to-day operations of the new hospital. Central Florida is an indirect wholly-owned subsidiary of HCA Inc. (Health Corporation of America), a national for- profit corporation with hospitals distributed throughout the United States, including the State of Florida, and abroad. HCA's health care services include physician practices, ambulatory surgical centers, community hospitals, and large tertiary referral centers. Central Florida owns and operates Central Florida Regional Hospital (CFRH), a general acute care hospital with 226 licensed beds, consisting of 208 acute care beds and 18 skilled nursing unit beds (a separate unit within the hospital). CFRH is located at 1401 West Seminole Boulevard, Sanford, Florida, and is accredited by the JCAHO. Osceola Regional Medical Center, in Osceola County, Florida, is also an HCA facility in District 7. Central Florida will transfer (and delicense) 60 acute care licensed beds from CFRH to effectuate the CON application. CFRH asserts that it can maintain an appropriate census with the remaining bed complement. If the reduced bed complement is insufficient in number, CFRH can add new acute care beds without obtaining a CON. Ch. 2004-383, § 6, Laws of Fla., amending Section 408.036(1)(a) and (d), Florida Statutes (2003). CFRH's geographic service area is predominantly north Seminole County and west Volusia County. CFRH provides inpatient and outpatient services, including obstetrics, and has the only adult open-heart surgery and interventional cardiology program in Seminole County. CFRH's OB department averages 80 to 100 OB deliveries a month. CFRH does not operate a Level 2 or Level 3 Neonatal Intensive Care Unit (NICU). Orlando Regional Medical Center and Florida Hospital operate these units. CFRH has a history of providing health care services to Medicaid patient and indigent patients. CFRH expects to implement otolaryngology services, as well as a neurosurgery program that will include state-of-the- art "cyberknife" technology, a surgical tool that can also be used in cancer and tumor treatment in areas of the body other than the brain. (CFRH has not offered neurosurgery for some time, but signed a contract with a neurosurgeon that starts March 1, 2006, and is recruiting for a second neurosurgeon.) The hospital will be offering a 64-slice CAT scanner, which is a state-of-the-art imaging system. It is used for ruling out the necessity of a cardiac intervention procedure. CFRH has two OB/GYN physicians in Oviedo who are employed by the hospital. One works part-time. CFRH is recruiting for additional OB physicians for CFRH. CFRH has a reputation for providing high quality of care to its patients. This includes but is not limited to CFRH's cardiovascular and interventional programs. (For calendar year 2004, there were 300 open heart surgery discharges from CFRH. In 2004, CFRH ranked 40 out of 73 Florida hospitals with interventional cardiology programs in the number of open heart surgery discharges.) CFRH uses an electronic medical administration record (eMAR) system, which increases patient safety. Each patient's arm band is coded and can be scanned for, in part, drug compatibility. Nurses are alerted if there are any abnormalities. This particular system is unique to HCA hospitals. CFRH also uses a PACS system to transmit images to other facilities. Central Florida enjoys an excellent reputation as a corporate citizen in the Sanford community and Seminole County generally. Central Florida makes annual monetary contributions to a number of local organizations, including, for example, Seminole Community College for the purpose of expanding their nursing program. ORHS and Florida Hospital also contribute to this project. On September 7, 2004, the City of Oviedo issued a letter of support of Central Florida's application "for a 60 bed satellite facility in Oviedo, Florida."7 On November, 15, 2005, The Greater Oviedo Chamber of Commerce passed a resolution favoring Central Florida's application over Oviedo HMA's application. Until Central Florida filed its CON application, Central Florida had not begun to aggressively consider a greater presence in the Oviedo area. Central Florida expects to recruit in the area (and build a medical office) if its CON application is approved. CFRH has approximately 164 doctors on staff with active privileges (or active provisional) and requires its physicians to be board certified in order to be a part of the medical staff, unless the physician provides a specialty service for a limited period of time. CFRH will support the new hospital and provide any necessary training. CFRH expects to be the referral hospital for the new hospital, as opposed to a Florida Hospital or ORHS facility. Health Services in Orange and Seminole Counties Within District 7 Agency health planning service District 7 consists of Brevard, Orange, Osceola, and Seminole Counties. § 408.032(5), Fla. Stat. For acute care beds, each of the four counties is treated as a separate "subdistrict" by AHCA. Fla. Admin. Code R. 59C-2.100(3)(g). Both applications were filed to construct a new, acute care hospital in Seminole County, subdistrict 7-4. Specifically, each application proposes a new, 60-bed hospital in Oviedo, in Seminole County. At present, Seminole County has three acute care hospitals: CFRH is located in Sanford, near the Volusia County line in north Seminole County; Florida Hospital-Altamonte, located in Altamonte Springs, in south Seminole County to the west of Oviedo; and ORHS South Seminole Hospital, also located in south Seminole County to the west of Oviedo. For the period January, 2003, through December, 2003, CFRH reported 55.82 percent occupancy in its 208 acute care beds. By comparison, Florida Hospital-Altamonte reported 72.40 percent occupancy in its 258 acute care beds and ORHS South Seminole Hospital reported 53.80 percent occupancy in its 126 acute care beds. See CF 12 at Table 1-20. Florida Hospital-Altamonte and ORHS South Seminole Hospital are each a part of large hospital organizations that collectively dominate the market for hospital services in Seminole County and District 7. Both applicants propose to address the maldistribution of existing licensed acute care beds in Seminole County, with the greater need for acute care beds in south Seminole County. There are approximately 2,470 acute care beds in Orange County and approximately 600 acute care beds in Seminole County. Adventist Health System/Sunbelt, Inc., owns and operates seven general acute care hospitals under the "Florida Hospital" name in the greater Orlando area: Florida Hospital- Altamonte (258 acute care beds) in Seminole County; Florida Hospital-Orlando (702 acute care beds), Florida Hospital-East Orlando (144 acute care beds), Winter Park Memorial Hospital,8 and Florida Hospital-Apopka (50 acute care beds) in Orange County; and Florida Hospital-Celebration and Florida Hospital- Kissimmee in Osceola County. See Orlando Regional Healthcare System, Inc. vs. Agency for Health Care Administration, Case Nos. 02-0448CON and 02-0449CON, 24 FALR 714, 720 (DOAH November 18, 2002; AHCA December 31, 2002). In 2001, Florida Hospital and ORHS filed competing CON applications to build a 60-bed hospital in Oviedo, and each was preliminarily denied by AHCA. Both organizations challenged AHCA's determination, and, following an administrative hearing, AHCA awarded the CON to Florida Hospital. See Orlando Regional Healthcare System, Inc., supra. However, Florida Hospital never implemented its proposal, and the CON lapsed. ORHS is a large tertiary health care system in the greater Orlando area comprised of several health care facilities and one additional facility which will be opening this year, the Winnie Palmer Hospital for Women and Babies (Winnie Palmer), a 273-bed facility. It is anticipated that obstetrical and women services and infant care will relocate from the Arnold Palmer Hospital for Children and Women (Arnold Palmer) to Winnie Palmer in May 2006. ORHS and Florida Hospital offer outstanding cardiovascular services. (For calendar year 2004, Florida Hospital-Orlando and Orlando Regional Medical Center had 1,759 and 898 open heart surgery discharges, respectively, and rank one and four, respectively, among open heart surgery providers statewide.) ORHS owns and operates several general acute care hospitals in the greater Orlando area. South Seminole Hospital in Longwood, Seminole County, is a 206-bed hospital with approximately 126 acute care beds, and 80 psychiatric beds in a detached facility. Several ORHS facilities are located in Orange County. Orlando Regional Medical Center (ORMC), located in downtown Orlando, is a 600-bed general acute care hospital that provides tertiary care services and serves as a teaching hospital. ORMC is the only Level 1 trauma center in the greater Orlando area. M.D. Anderson Cancer Center is physically attached to ORMC and functions as the medical-surgical and radiation/oncology program for ORMC. Arnold Palmer is a 275-bed specialty hospital that provides subspecialty pediatric care, neonatology, and obstetrics. A $50 million construction project is underway. Lucerne Hospital is a 275-bed general acute care hospital, a few miles away from ORMC. Sand Lake Hospital is a 150-bed general acute care hospital (located near Disney). ORHS previously owned St. Cloud Hospital in Osceola County, but sold an 80 percent interest in St. Cloud to HMA in November, 2005. See Findings of Fact 6 and 13. South Lake Hospital is a smaller, 100-bed general acute care hospital located in Lake County, Florida, that is digitally linked to ORMC. ORHS owns a 50 percent interest in and manages this hospital. The South Lake Hospital District owns the remaining interest. ORHS has approximately 40 physicians who practice or have offices within the Oviedo market. CFRH has one full-time physician practicing within the area. See Finding of Fact 30. Approximately 1,700 physicians have privileges at ORHS facilities. If the Oviedo HMA project is approved, ORHS expects to regain tertiary care referrals now lost to the Florida Hospital system. Florida Hospital and ORHS healthcare facilities dominate the market for hospital services in Orange and Seminole Counties. The Oviedo area: demographics, utilization of existing providers, and applicant service area and occupancy projections The City of Oviedo is located in south Seminole County, east of Longwood (where South Seminole Hospital is located) and Altamonte Springs (where Florida Hospital-Altamonte is located), and approximately 10 to 15 miles from downtown Orlando. The City of Oviedo is included within zip codes 32765 and 32766, although there are other adjacent zip codes to the northeast 32732 (Geneva) and to the west 32708 (Winter Springs). See CF 80. The Oviedo area is growing. In 2004, the total population for the four zip codes was 106,789 and projected to increase 12.6 percent (to 120,227) by 2009. (The population is projected to increase 9.3 percent statewide and 11.2 percent in Seminole County by 2009.) The population in zip code 32765 was 49,985 in 2004, projected to grow to 57,742 in 2009, or 15.9 percent. In zip code 32766, the population was 9,068 in 2004, projected to grow to 11,302 in 2009, or 24.6 percent. Population in the Winter Springs and Geneva areas are projected to increase 7.1 percent and 8.5 percent, respectively, by 2009. The Oviedo area is described as "a young, family oriented suburb of Orlando" or more generally as a suburban community. The parties have stipulated to the need for a new, 60- bed acute care hospital in Oviedo. Oviedo HMA proposes to serve a four zip code area, i.e., zip codes 32765, 32766, 32708, and 32732 and projected that 95 percent of its utilization will come from within these zip codes. OV 27. Oviedo HMA projects occupancy levels to be 57.9 and 75 percent for Years 1 and 2, respectively. (Central Florida's expert opined that Oviedo HMA's occupancy levels for Years 1 and 2 would be 54 and 60 percent, respectively. CF 25-15.) Oviedo HMA's projected occupancy levels for Year 2 may be optimistic for a start-up hospital, but nevertheless appear achievable, in part, in light of the collaborative arrangement. Oviedo HMA excluded from its market area, zip code 32773 because of its proximity to CFRH and zip code 32792 because of its proximity to Florida Hospital-Winter Park Memorial Hospital in Orange County. The southernmost zip codes, 32817, 32826, and 32820 (east of zip code 32792) were excluded because of current patient travel patterns. At present, the Oviedo area is served almost exclusively by either Florida Hospital or ORHS. Oviedo area residents are out-migrating to Orange County for obstetrical and emergency room services. (For calendar year 2003, approximately 44 percent of Seminole County residents received acute care services outside of Seminole County.) Florida Hospital and ORHS serve the majority of the out-migrating residents. In 2004, for the four zip codes of Oviedo HMA's proposed service area (32765, 32766, 32708, and 32732), Florida Hospital facilities had a combined 61.7 percent non-tertiary market share, and ORHS facilities had a combined 30.9 percent non-tertiary market share. Winter Park Memorial Hospital provided the most non-tertiary discharges (1,771 or 20.7 percent), followed by Florida Hospital-Orlando (1,647 or 19.2 percent), Florida Hospital-Altamonte (1,335 or 15.6 percent), and South Seminole Hospital (1,183 or 13.8 percent). CFRH accounted for 309 or 3.6 percent of the discharges. CF 25-6 and 25-9. In 2004, Florida Hospital facilities had a combined 18,701 or 54.1 percent of the "non-tertiary" discharges of patients residing in Seminole County, and ORHS facilities had a combined 9,473 or 27.4 percent of such discharges. By comparison, CFRH had 5,131 or 14.8 percent of such discharges. CFRH 25-2 and 25-3. Central Florida proposes to serve a ten zip code service area. Central Florida's primary service area consists of four zip codes in Seminole County, 32765 (Oviedo), 32766 (Oviedo), 32708 (Winter Springs), 32773, just south of CFRH and northeast of ORHS South Seminole Hospital, and zip code 32792 in Orange County. (Other cases from Seminole County are also included.) OV 23 and 26; CF 12, Table 1-15, at 1-25. Central Florida's secondary service area consists of two Seminole County zip codes 32707, south of zip code 32708 and just east of Florida Hospital-Altamonte, and zip code 32732 (Geneva and in the northeastern portion of Seminole County, and Orange County (bordering Seminole County to the north) zip codes 32817, 32826, and 32820, running west to east from zip code 32792. (Other cases from Orange County are also included.) Id. In five zip codes (out of ten) of Central Florida's proposed primary service area (32708, 32765, 32766, 32773, and 32792, which includes Winter Park Memorial Hospital on the western edge), see OV 27 and CF 12 at 1-28, in 2004, Florida Hospital facilities had a combined 63.9 percent non-tertiary market share and ORHS facilities had a combined 25.0 percent non-tertiary market share. Winter Park provided the most non- tertiary discharges (4,037 or 26.7 percent), followed by Florida Hospital-Orlando (2,961 or 19.6 percent), Florida Hospital- Altamonte (1,938 or 12.8 percent), and ORHS South Seminole Hospital (1,619 or 10.7 percent). CFRH's market share was 9.2 percent or 1,389 discharges. CF 25-7, 25-8, and 25-11. For Years 1 (2008) and 2 (2009), Central Florida projects that it will receive approximately 83 percent of its total cases from its primary service area, including cases from other Seminole County zip codes, of which approximately 75 percent are expected from the five zip codes, and approximately 17 percent from its secondary service area. CF 12 at Table 1- 15. Central Florida's projected occupancy levels for Years 1 and 2 were approximately 60 and 63 percent, respectively, and approximately 75 percent by Year 5 (2012). CF 12, Tables 1-15 and 1-16 at 1-25, 1-26, and 1-28; CF 42. Central Florida also provided adjusted numbers (downward) for Years 1 and 2 to account for the start-up phases of opening the new hospital, which yielded projected occupancy levels of approximately 45 and 55 percent, respectively. Central Florida's revenue projections were based on these adjusted occupancy levels. Central Florida also projected 66.4 percent occupancy for Year 3. Id. See also CF 12, Schedules 5 and 7A and CF 42. (Oviedo HMA's expert projected 61 percent occupancy for Year 5 for Central Florida.) Central Florida's projected occupancy levels for Year 5 appear reasonable. If Oviedo HMA's CON application is approved, the market share for Oviedo HMA's primary service area for the new Oviedo HMA hospital, in conjunction with ORHS facilities for 2009 (Year 2), is projected to be approximately 50 to 54 percent, with Florida Hospital facilities market share reduced to approximately 41 to 45 percent.9 For 2009 (Year 2), if Central Florida's CON application is approved and the five zip codes are used to determine market share, the market shares for Florida Hospital, ORHS, CFRH, Central Florida/Oviedo, and other facilities are projected to be 55.5 percent, 21.4 percent, 6.6 percent, 13.5 percent, and 3.0 percent, respectively. CF 25-13. The Proposals and applicants' commitment Central Florida's proposal Central Florida proposes to build a new, 60-bed hospital in Oviedo (on a purchased site) through the transfer (and delicensure) of 60 acute care beds from its existing hospital. The proposed hospital is modeled after and is an enlarged version of West Marion Community Hospital, a licensed and operational HCA facility in Ocala, Florida. The proposed hospital is made up of 173,335 gross square feet, with a projected construction cost of $36,400,350 or $210 per gross square foot. The total project cost is $93,630,559. The licensed bed complement includes 48 general medical-surgical beds and 12 Intensive Care Unit (ICU) beds. An obstetrics unit comprised of six labor-delivery-recovery (LDR) rooms will be located on the second floor (LDRs are not licensed beds). The twelve medical-surgical beds adjacent to the LDR rooms are "swing" beds that may be used for either general medical-surgical patients or as post-partum beds, as the need may require. All patient rooms in Central Florida's proposed hospital will be private rooms. In addition to general medical services and obstetrics, the services to be provided by the hospital will include emergency services, imaging, diagnostic cardiac catheterization, mammography, radiology, ultrasound, nuclear medicine, bone density imaging, surgery (including general and orthopedic surgery), and endoscopy. The design accommodates horizontal expansion of departments on the first floor by using "soft space," and the addition of 12 beds on both the second and third floors. The hospital can also be expanded vertically. A medical office building is planned to be phased in during construction. As a condition of its CON, Central Florida agreed to provide 7.8 percent of total patient days to Medicaid patients and 1.74 percent of total patient days to charity patients. Central Florida intends to provide OB services, but not as a condition of approval. Central Florida's proposal has the support of its parent organization, HCA Inc. The project involves a capital expenditure of greater than $10 million and is subject to formal approval by HCA following the award of the CON. However, Chuck Hall, President of HCA's North Florida Division, stated that HCA's senior management understands the Central Florida proposal, and Central Florida can be confident of approval. Oviedo HMA contends that Central Florida did not address in its CON application the impacts (loss of cases or cannibalization) to CFRH if Central Florida's CON application is approved. There is evidence that the loss of 60 beds could require CFRH to add back beds or run in excess of capacity and that the loss of cases, such as OB cases, could have an impact on CFRH. During the hearing, Central Florida persuasively proved that, if its CON application is approved, the overall impact on CFRH would be minimal.10 Oviedo HMA's proposal Oviedo HMA proposes to build a new, 60-bed acute care hospital in Oviedo. The project involves 133,081 square feet at a construction cost of $26,616,200, or $200 per gross square foot. The total project cost is $62,734,334. HMA is committed to fund the project, even if it is as high as $82 million, so long as ORHS provides its financial and collaborative commitment as reflected herein. Oviedo HMA proposes to offer a full range of primary and secondary non-tertiary hospital services, such as medical- surgical care, emergency room case, ambulatory surgical care, cardiac catheterization laboratory services, outpatient services, etc., and expressly agrees to "provide Obstetrical Services." The floor plan for the hospital is taken from the replacement facility for Heart of Florida Regional Medical Center in Haines City, Florida, which HMA constructed in 1997. The design includes 47 medical-surgical beds, eight ICU beds, and five dedicated post-partum beds. The hospital will also have four LDR beds. The project includes 12 emergency treatment rooms and two non-licensed observation beds. All patient rooms will be private rooms. The hospital is designed to be expanded horizontally (for example, expanding the Emergency Department), and to be expanded vertically from three to five floors. While disputed by Central Florida, the proposed hospital, with surface parking, can be constructed on 15 to 20 acres, which can also accommodate future expansion. Additional acreage may be needed to accommodate a full build-out of a five- story hospital and additional surface parking. There are currently no plans for a medical office building on-site and additional acreage would be needed. Oviedo HMA did not propose a specific provision of health care services to Medicaid patients and the medically indigent. Rather, Oviedo HMA "commits to accept all Medicaid and Indigent [sic] patients that are clinically appropriate for services offered by Oviedo HMA, Inc." Oviedo HMA's proposal does not enjoy the unconditional support of its parent organization. Rather, the proposal is contingent upon a collaborative effort between Oviedo HMA and ORHS, whereby ORHS has agreed to contribute 20 percent of the project cost of Oviedo HMA's proposal and, in turn, receives 20 percent of the profits of the proposed hospital. HMA formed the belief that the Oviedo market cannot be penetrated by a hospital provider not affiliated with either Florida Hospital or ORHS, and HMA would not attempt to enter the Oviedo market on its own. Each applicant's experts found flaws with the competing applicant's plans for their respective hospitals. Each of the flaws can be remedied prior to construction. Land for the proposals Central Florida In June 2005, Central Florida purchased approximately 27 acres for its proposed hospital, at a cost of $7,864,439, within the $8.2 million budgeted for land in its CON application. The site comprises seven contiguous parcels centrally located in the Oviedo area (within zip code 32765), situated between State Road 417 and State Road 426 and between Red Bug Lake Road and Oviedo Marketplace Boulevard (south-to- north). Four of the seven parcels are currently within the City of Oviedo and Central Florida has requested the City of Oviedo to annex the remaining parcels. The proposed site is approximately ten miles from CFRH. While the subject of some criticism by Oviedo HMA, the site does not pose any significant road access issues which can not be reasonably cured. An amendment to the City of Oviedo's comprehensive plan is required before the site can be developed for hospital use. Central Florida filed its application in October, 2005, and a decision is expected in August or September, 2006. Having a hospital on the site proposed by Central Florida would provide the residents of the Oviedo area with a centrally located hospital site. Central Florida's budget for land costs and site preparation are reasonable. Oveido HMA Oviedo HMA budgeted $5.5 million for the acquisition of the hospital site in the Oviedo area. $3.4 million has been allocated for site development. Oviedo HMA does not anticipate purchasing any land for the project unless its CON application is approved. Oviedo HMA's experts reviewed several sites, which may be potentially suitable for the hospital. See OV 17A and 17-1 through 17-10. Mr. Harling, an expert in civil engineering and commercial site development, and Mr. Axel, an expert in commercial real estate sales, were quite familiar with the real estate market and development potential (for the proposed Oviedo HMA hospital) of several parcels in the Oviedo area. They did not perform a formal feasibility study or an estimate of the probable cost of site development for the sites. Mr. Harling was aware of the nature of the project, a 60-bed hospital, and some details regarding the parcels he examined, such as the existence of utilities and drainage outfall systems, but was not aware of the square footage of the proposed hospital and had not reviewed a site or floor plan. Despite challenges for the development of specific sites, such as the existence of wetland areas, and challenges in purchasing a site within the budgeted amount, based upon his review of the sites and assumptions regarding, in part, the amount of impervious coverage required, he opined that one or more of the parcels was suitable for the planned hospital and that $170,000 per acre for 20 acres was reasonable. The uncertainty regarding the location of the hospital site raises some concerns given Oviedo HMA's primary service area. A new hospital centrally located within the Oviedo area would be optimal to meet the needs of those residents. There was persuasive evidence that Oviedo HMA will be able to purchase a suitable hospital site at the cost reflected in the CON application. However, there are reasonable concerns whether a 15 to 20-acre site can accommodate a fully-expanded hospital with five floors, a medical office building, and any required additional parking. (Oviedo HMA does not have plans to build a medical office building on the 15 to 20-acre site. Such a building would require additional acreage.) Central Florida's proposal receives an edge here because it has already purchased a site which is centrally located for a hospital to serve the Oviedo area. Section 408.035(1), Florida Statutes - The need for the health services being proposed The parties stipulated to the need for a new, 60-bed acute care hospital in Oviedo, Seminole County, Florida, AHCA District 7, subdistrict 7-4. Section 408.035(2), Florida Statutes - The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant Quality health care services proposed by the applicants are available to the residents of District 7, Seminole County, and in particular, the Oviedo area. As noted herein, the health care market in Orange and Seminole Counties is dominated by Florida Hospital and ORHS. The utilization of existing facilities in Seminole County is acceptable notwithstanding the maldistribution of acute care beds in Seminole County. Seminole County residents will continue to outmigrate from Seminole County to Orange County for tertiary care services if Oviedo HMA's project is approved. This outmigration may continue even if Central Florida's project is approved, although some curtailment would be expected in time. Neither applicant is favored by this criterion. Section 408.035(3), Florida Statutes - The ability of the applicant to provide quality of care and the applicant's record of providing quality of care Central Florida (specifically CFRH) has a history of providing high quality of care to its patients. CFRH has received awards for its health care services. Central Florida has the ability to provide quality of care should its project be approved. HMA hospitals have also been honored with several awards and recognitions for quality of care. Oviedo HMA, by virtue of its affiliation with HMA-affiliated hospitals and collaboration with ORHS, has the ability to provide high quality of care should its project be approved. Oviedo HMA proposes to develop its hospital through a clinical and financial collaborative effort with ORHS using ORHS as a tertiary care referral partner and incorporating ORHS' resources in developing a quality program. Both applicants expect that any patients needing tertiary care will be sent to ORHS (for Oviedo HMA hospital patients) or to CFRH (for Central Florida patients). It is anticipated that if certain tertiary care services are not offered at CFRH, Central Florida hospital patients would be referred to Florida Hospital or ORHS. The Oviedo HMA/ORHS collaborative effort offers advantages over the Central Florida/CFRH (or elsewhere) referral network. There is some evidence that hospital transfers within affiliated systems may be quicker and easier than from competing systems. Another advantage is the ability of using an integrated IT system among ORHS affiliated hospitals. It is often cumbersome for non-affiliated hospitals to exchange patient data electronically. Conversely, the transfer of patient information to and from CFRH and the new Central Florida hospital, if approved, will facilitate patient care between these hospitals. Certain tertiary services offered by and through ORHS may afford Oviedo residents a greater range of services than those offered by CFRH. This criterion favors Oviedo HMA in light of its collaborative arrangement with ORHS. Section 408.935(4), Florida Statutes - The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation The parties stipulated that the applicants have sufficient funds available for capital and operating expenses, for project accomplishment and operation. Central Florida questioned the reasonableness of Oviedo HMA's land cost projection. The parties also stipulated that the applicants' proposed staffing is adequate and that the proposed average annual salaries are reasonable for their respective hospitals. Oviedo HMA questions whether Central Florida's CON application failed to include the appropriate Schedule 6, whereas Central Florida reserved the right to question whether Oviedo HMA accurately reflected proposed staffing expenses in Schedule 8A. The ability of each applicant to attract the necessary medical and clinical staff necessary to implement their respective hospitals is also is dispute. Both applicants have the ability to recruit and retain nursing and other related medical personnel, including physicians. Oviedo HMA has an edge in recruitment of physicians and nurses by virtue of its collaboration with ORHS and given existing physician referral patterns. Central Florida has identified a need to recruit additional physicians in several practice areas, although they appear to have been recently successful in recruiting physicians for specialty services such as neurosurgery. Both applicants can appropriately manage and operate their respective hospitals. Central Florida's proposed hospital will have its own management team and will be administered separate and apart from CFRH. Oviedo HMA will also operate the proposed hospital notwithstanding the intended collaboration with ORHS. Oviedo HMA's projected land cost is reasonable. Also, Central Florida's Schedule 6 and Oviedo HMA's Schedule 8A are appropriate. By stipulation, the applicants have the ability to fund their respective projects and their construction and equipment costs are reasonable. This criterion is neutral except for Central Florida's purchase of a centrally located site. See Finding of Fact 173. Section 408.035(5), Florida Statutes - The extent to which the proposed services will enhance access to health care for residents of the service district The parties stipulated that the hospitals proposed by the applicants will enhance health care for residents of the Oviedo area. At issue was which hospital project will better enhance such access. Both applicants proposed similar health care services, which are needed in the Oviedo community. As noted elsewhere in this Recommended Order, approval of the Central Florida proposal would afford patients and physicians with another choice of health care provider. It is expected that patients receiving health care services at a Central Florida hospital in Oviedo will be able to access certain tertiary care services (such as open heart surgery) at CFRH, and other tertiary care facilities. On the other hand, the Oviedo HMA proposal does not afford another choice to patients and physicians in the area in any meaningful way, given the current market share of ORHS in the Oviedo area and the expected collaborative effort. This negative is out-weighed by the prospect that patients accessing an Oviedo HMA hospital would be expected to access a full array of tertiary care services at ORHS facilities given the collaborative nature of the relationship. Both proposals would enhance access to health care for residents of the Oviedo area. But the Oviedo HMA project has a significant comparative edge, and it is this edge which ultimately favors approval of the Oviedo HMA project when all statutory and rule criteria are considered. Section 408.035(6), Florida Statutes - The immediate and long-term financial feasibility of the proposals Immediate or Short-term financial feasibility 129. Generally, immediate or short-term financial feasibility refers to the ability of the applicants to fund construction and start up of the proposed project. Each applicant has this ability. Long-term financial feasibility Long-term financial feasibility refers to the ability of the project to break even or show a profit within a reasonable period in the future. There is no AHCA rule that states profitability must be shown within a specific period of years. Generally, applicants project financial feasibility within two years of operation. This may be due, in part, because AHCA requires detailed financial projections, including a statement of the projected revenue and expenses for the first two years of operation after completion of the proposed project. See § 408.037(1)(b)3., Fla. Stat. CON applicants define their financial projections within these general parameters. Where there are two or more competing applicants and one demonstrates financial feasibility within two years and the others do not demonstrate financial feasibility until subsequent years, the competitive advantage often goes to the applicant showing a profit in year two, although AHCA has approved CON applications which projected profitability in later years. OV 69 at 34; CF 84 at 25. The financial projections of each applicant were based upon the hospital utilization projections discussed previously. To the extent the utilization projections were overstated, this would of course effect the financial projections. Each applicant presented evidence to demonstrate the reasonableness of their own financial projections, and offered criticism of the financial projections of the other applicant. A. Oviedo HMA Projections Oviedo HMA projects that it will achieve a net profit in Year 1 of operation of $82,000 (after taxes) and a net profit in Year 2 of $2.4 million (after taxes). The payor mix assumptions in Schedule 7A were derived from existing (historical) discharges generated from the zip codes in the primary service area. Oviedo HMA used three HMA hospitals in Florida, i.e., Brooksville Regional Hospital, Pasco Regional Medical Center (120-bed, excluding newborn nursery, hospital), and Sebastian Hospital, as proxy or target hospitals for the basis of the expense projections in the financial pro formas. (Brooksville and Spring Hill report on a consolidated basis.) Fiscal year 2003 financial data on these proxy hospitals was taken from AHCA Prior Year Actual Reports. See Ov 38. This was the most recent data available to Oviedo HMA's expert at the time the financial portions of the CON application were prepared. These reports are a detailed source of data submitted to AHCA and certified as accurate.11 Each of the three hospitals was profitable for the reporting fiscal year. A hospital's occupancy refers to the average head county divided by the number of days. Average daily census refers to the average number of patients in the facility over the year on average, generally a year. The projected occupancy for the Oviedo facility is 57.9 percent in Year 1 (2008) and 75.1 percent in Year 2 (2009). The average occupancy for the three proxy hospitals was between 55 and 59 percent. Central Florida's expert estimated occupancy levels (for the Oviedo HMA project) of 54 and 69 percent for Years 1 and 2. Compare OV 12, Schedule 5 - Projected Utilization Assumptions with CFRH 25-15. (In Year 2, the occupancy for the Oviedo HMA hospital is projected to be higher than the three proxy hospitals.)12 Central Florida criticized the use of the three proxy hospitals as not appropriate, in part, because one of the hospitals did not include a cardiac catheterization lab, and another did not have an OB program, which are services that will be available at the Oviedo HMA hospital. However, the evidence demonstrates that the three proxy hospitals were reasonable, as these hospitals included one hospital (Pasco Regional Medical Center) which was at the highest end of HMA's cost experience, and two hospitals that were in the middle of HMA's overall cost experience. It does not appear that HMA attempted to choose hospitals with lower- cost experience in an effort to overstate the expected profits. Use of "proxy hospitals" for cost experience is a common methodology, and the hospitals selected appear reasonable. Central Florida also claimed that Oviedo HMA's projected costs were understated because there was not a specific allocation for "fringe benefits" (estimated at 22 percent of salaries) added to the salary costs extrapolated from the FTE and salary projections in Schedule 6.13 Oviedo HMA's financial planner agreed that the financial model he utilized did not make a "straight line" mapping of the Schedule 6 FTEs and salary projections into Schedule 8A statement of expenses. However, an accounting of all salary and wages, as well as fringe benefits, was included in Oviedo HMA's Schedule 8A, based on the actual experience of the three proxy hospitals as reflected in the Prior Year Actual Reports. Each of the proxy hospitals is required to report all of its hospital costs, including salaries and fringe benefits, in the Prior Year Actual Reports, and all costs from these proxy hospitals were included in Oviedo HMA's financial model. Although the Prior Year Actual Reports do not have a specific "fringe benefits" line item, these expenses are included in the reports either under the columns for "salary and wages" or for "other" expenses. All of the costs were carried over into the financial model. The applicant also conducted a reasonableness test when the financial model and Schedule 8A were prepared, by comparing the total salaries and wages from the three proxy hospitals ($15.7 million) versus the extrapolation of total salary and wages from Schedule 6 ($15 million). The amount allocated in the model and placed on Schedule 8A for salaries and wages was more than sufficient to cover all salaries and wages on Schedule 6. Additional allocation for fringe benefits was included within the "other" cost centers in the Prior Year Actual Reports which also carried over to Schedule 8A. Oviedo HMA's expert also conducted a series of other "sensitivity analysis" verifying that the costs included on Schedule 8A for salaries and wages and fringe benefits, and other expenses were reasonable. Central Florida criticized the "sensitivity analysis" claiming one year of inflation for expenses was omitted in the analysis. However, even if accepted as true, applying an inflation adjustment of 3.5 percent for one additional year of expenses, does not materially change any of the sensitivity analysis, because revenues would also have to be inflated forward for the additional year. Further, Oviedo HMA's Schedule 8A included $15.7 million for salary and wage expenses, and included additional costs for fringe benefits in other line items. Central Florida also criticized Oviedo HMA for not including any interest expense to account for financing the proposed project. However, no interest is anticipated, as the project will be funded by the parent company through cash on hand and operating cash flow without borrowing; the company does not charge interest to its affiliates (even though for tax accounting and external audit reports it may impute interest to the affiliates). Moreover, to the extent any interest would be hypothetically imputed to the project as overall corporate overhead, it is captured in the financial pro formas through the management fee which was allocated as an expense in the pro formas. Moreover, even if Central Florida's claims of over $1 million in omitted expenses are accepted as valid, the project is likely to show a profit in the second year of operation. In sum, the financial model utilized by Oviedo HMA was a reasonable approach to financial forecasting. Given the Oviedo HMA's occupancy projections, the hospital is likely to be financially feasible in the long-term and likely show a profit by the second year of operation. B. Central Florida's Projections The revenues and expenses projected for the proposed hospital are based on the experience of CFRH's existing facility, with adjustments made to reflect the service lines and payor mix of the proposed hospital. Based on this record, in the past, it appears that CON applicants for a new hospital generally have projected financial feasibility by the first two or three years of operation. This does not necessarily mean that they have been successful at achieving these projections, only that the projections have been made. Central Florida projected that the proposed hospital, before taxes, will have net income losses before taxes of: $8,978,068 in Year 1; $6,641,454 in Year 2; $3,318,963 in Year 3; and $1,140,062 in Year 4 of operation. In Year 5, Central Florida projects a profit (net income before taxes) of $1,970,340 and a profit (net income after taxes) of $1,162,501 at 75 percent occupancy. CF 12 at Table 8A-2. (Central Florida projected profitable years (Years 1 through 5) on an EBDITA (earnings before depreciation, interest, taxes, and amortization) basis. Id.) Despite the projected losses for the first four years of operation of the project, HCA, by its representatives, considers the project to be financially feasible in the long- term and is committed to the project. The assumptions made for the revenue and expense projections are reasonable, notwithstanding criticisms by Oviedo HMA which have been considered. It is concluded that Central Florida's proposed hospital is likely to be financially feasible in the long-term and by Year 5.14 This criterion is neutral. Section 408.035(7), Florida Statutes - The extent that the proposal will foster competition that promotes quality and cost- effectiveness The greater Orlando area is a competitive market. Nevertheless, Mr. Gregg, for AHCA, stated that he would want to see more diversity in the greater Orlando market. ORHS and Florida Hospital are large health care provider systems. Notwithstanding the potential improvement of the delivery of health care services to the residents of the Oviedo area, the net impact of a 60-bed acute care hospital is going to be minimal when compared to these systems. Currently ORHS, Florida Hospital, and to a much lesser extent CFRH compete for patients from the Oviedo area. ORHS and Florida Hospital are the dominant providers. If Oviedo HMA were sponsoring the project alone, it could be said that approval of its project would bring a new provider to the market. However, this is not the case. Notwithstanding the day-to-day management of the new hospital by Oviedo HMA, the expected collaborative arrangement between Oviedo HMA and ORHS, discussed in Oviedo HMA's CON application and presented as a significant feature at the final hearing, negates the suggestion that Oviedo HMA will be a new provider. This is especially so given the expected referrals to ORHS. Central Florida argues that its proposal would release the strangle-hold of Florida Hospital and ORHS on the greater Orlando area, including the Oviedo area. The presence of Central Florida would give the Oviedo area residents (and physicians) another choice for acute care related health care services and, in time, could be expected to cause a re-direction of patients needing certain tertiary care services away from ORHS and Florida Hospital, to CFRH. Nevertheless, the applicable statutory review criteria specifically states that it applies to competition that promotes "quality" and "cost effectiveness." ORHS and Florida Hospital provide high quality of care. No persuasive evidence was presented that either Oviedo HMA's or Central Florida's proposal will foster competition that will promote quality of care to any significant degree. As to cost-effectiveness, while there is an argument that having additional choices will enhance cost-effectiveness, it was not demonstrated by either applicant in this case. There was no persuasive analysis offered of the current costs of healthcare in the Oviedo area and what impact, if any, the addition of Oviedo HMA or Central Florida would have on those costs. The best that can be said about enhancement in competition is that another provider might have some impact on managed care rates. Without specific detailed analysis, this evidence can be given very little weight. Also, there is insufficient evidence to say which applicant would more likely impact managed care rates. In light of the statutory criterion, Central Florida and Oviedo HMA did not demonstrate that their proposals should be given any advantage under this criterion. Section 408.035(8), Florida Statutes - The costs and methods of proposed construction, including the costs and construction of energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that each party meets this criterion and that costs are not in dispute in this proceeding. However, each party reserved the right to argue their design was better and the impact of cost on financial feasibility. Central Florida also reserved the right to argue that its proposal should be more favorably reviewed comparatively because it has purchased land in the Oviedo area and because Oviedo HMA cannot purchase enough land in the Oviedo area at the price reflected in the CON Application. Both applicants project reasonable costs and methods of construction and satisfy this criterion. Regarding this criterion, despite some criticism, Central Florida should receive an edge because it has purchased a desirable site, which is centrally located in the Oviedo area. Section 408.035(9), Florida Statutes: Applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent The parties stipulated that HMA's Florida hospitals and Central Florida have historically provided significant health care services to Medicaid patients and the medically indigent. Central Florida proposes to provide 7.8 percent of total patient days to Medicaid patients and 1.74 percent of total patient days to charity patients, as a condition of its CON. By comparison, Oviedo HMA did not propose a specific percentage of patient days dedicated to Medicaid or charity patients. Rather, Oviedo HMA commits to accept all Medicaid and indigent patients that are clinically appropriate for services offered by Oviedo HMA. Central Florida should receive a comparative edge regarding this criterion. Section 408.035(10), Florida Statutes - The applicant's designation as a Gold Seal Program nursing facility pursuant to Section 400.235, Florida Statutes, when the applicant is requesting additional nursing home beds at that facility The parties stipulated that this criterion is not applicable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order approving Oviedo HMA, Inc.'s CON application No. 9807P and denying Central Florida Regional Hospital, Inc. d/b/a Central Florida Regional Hospital's CON application No. 9805. DONE AND ENTERED this 23rd day of August, 2006, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of August, 2006.
