The Issue Based upon the Prehearing Stipulation filed by the parties, the issues to be resolved are as follows: Whether Respondent DHRS, which acknowledged on August 15, 1984, that Petitioner was currently in compliance with Sections 381.493 - 381.497, Fla. Stat., and which has subsequently cooperated with Petitioner in Petitioner's efforts to complete CON Project 2323 by transferring CON 2323 from Christian Hospital, Inc. to New Christian Hospital, Inc., via CON Action No. 3639 and by assisting Petitioner in completing refinancing of CON Project 2323, is estopped from declaring on July 8, 1985, that the Petitioner's CON 2323 is null and void. Whether DHRS may revoke the CON of a CON holder that has commenced construction, subsequently lost financing through circumstances beyond its control, and has made a good faith effort to reacquire said lost financing and to meet all project timetables as set forth in its CON. Whether DHRS impermissibly conducted a "review" outside the scope provided for in Rule 10-5.04(11), F.A.C. for CON Project 3933, a cost overrun not caused by a change in services or scope otherwise reviewable. Whether Petitioner's CON Application 3933 for a cost overrun met all requirements for approval. Whether Petitioner's CON Application 3933 should have been approved by DHRS, as are nearly all other similar expedited applications for CON review of cost overruns.
Findings Of Fact Prehearing Stipulation Fact: Christian Hospital, Inc. ("CHI"), on August, 1982, filed an application for a Certificate of Need ("CON") with the State of Florida, Department of Health and Rehabilitative Services, Office of Community Medical Facilities ("DHRS"), to build a 150 bed acute care hospital in Model City, Dade County, Florida. On November 28, 1982, DHRS denied OON application 2250 by CHI to construct a 150 bed acute care hospital. CHI filed a Petition for Formal Administrative proceedings pursuant to Section 120.57(1)(b), Fla. Stat. The case was assigned Division of Administrative Hearings Case #82-3420. The parties entered into a Stipulation. . . on December 13, 1982 (the "Stipulation") in order to amicably resolve case #82-3420. Prehearing Stipulation Fact: CON 2323 . . . was issued on December 16, 1982. This certificate of need was originally issued to Christian Hospital, Inc. (hereinafter referred to as "Christian"), pursuant to a Stipulation agreement entered into by the parties on December 13, 1982 (hereinafter referred to as the "December 13, 1982 Stipulation"). In the December 13, 1982 Stipulation, the parties agreed to the following: The Respondent agreed to issue a certificate of need to Christian to construct a 150-bed acute care hospital in Model City, Dade County, Florida, at a cost of $17,372,113.00; and Christian agreed to: Firmly secure project financing no later than March 31, 1983; Firmly secure a site for the hospital no later than April 13, 1983; Resolve foundation plan review comments and secure approval of final construction documents by the Respondent's Office of Licensure and Certification no later than July 31, 1983; Submit approved construction documents to general contractors for bids no later than August 15, 1983; Execute a building construction contract no later than April 20, 1983; Secure a building permit approving the use of approved construction documents no later than May 12, 1983; Commence construction of the building (in addition to foundation construction) before May 12, 1983; Complete construction by July 15, 1985; and Have the facility available for occupancy and ready for use no later than August 1, 1985. Christian failed to comply with most, if not all, of the dates. set out above. Despite this fact, the Respondent took no action. against Christian or the Petitioner for a failure to comply with. the December 13, 1982 Stipulation until July 8, 1985. The scope of the December 13, 1982 Stipulation is unusual Christian was given only 5 months to commence construction instead of 12 months which is the normal period allowed for construction commencement. The terms "commencing construction were defined in the December 13, 1982 Stipulation as follows: Commencing Construction means the commencement of and continuous activities beyond site preparation associated with erecting or modifying a health care facility and shall include all of the following: (a) procurement of a building permit applying the use of Department approved (including "foundation only" approved) construction documents, (b) proof of an executed owner - contractor agreement or an irrevocable or binding forced account, (c) completion of sufficient work to warrant a contractor's initial progress payment as certified by an architect, and (d) actual undertaking of foundation forming, steel installation and concrete placing. The December 13, 1982 Stipulation also contained the following: Time is of the essence as to the fulfilling of the condition [sic] of this stipulation. Failure of the holder of the Certificate of Need to timely fulfill each and every condition in this agreement shall automatically result in the certificate becoming null, void and of no effect as of the date the conditions were to occur. Proof that each and every one of the conditions contained in this agreement have been met, shall be made by actual receipt of documentor's evidence at the Department of Health and Rehabilitative Services, Office of the Deputy Assistant Secretary for Health Planning and Development, no later than 5:00 p.m. on the fifth working day following the date of the condition. Prehearing Stipulation Fact: On June 2, 1983, CHI had not yet commenced construction on CON project 2323. George A. Simpson, M.D., Chairman of CHI, sent Thomas J. Konrad, then Administrator of the Office of Community Medical Facilities of DHRS, a letter requesting modification of CON 2323 pursuant to Section 381.494(8)(g) Fla. Stat and Rules 10-5.10(5)(f) and 10-5.13(6), F.A.C . . . . Prehearing Stipulation Fact: On June 15, 1983, Thomas J. Konrad issued Amended CON 2323 to Christian Hospital, Inc. Amended CON 2323 required that construction commence on December 15,1983 . . . . The second sentence of the above stipulated fact is incorrect. December 15, 1383 was the date of termination of amended (certificate of need 2323. Amended certificate of need 2323 actually required that construction commence "no later than December 10, 1983." Amended certificate of need 2323 was issued with the following specific pertinent conditions: *Christian Hospital, Inc., referred to hereafter as CHI, shall present evidence of site control no later than July 30, 1983, which shall secure the availability of the land at the time-of closing. *CHI shall firmly secure the financing no later than September 30, 1983. *CHI shall obtain a firm construction and design bid from a general contractor which shall include the design, construction documents, and construction of the hospital facilities and a binding contract shall be executed no later than October 30, 1983. *CHI shall secure a building permit, applying the use of approved construction documents, no later than December 1, 1983. *CHI shall obtain approval of the foundation design (first stage) of the construction and shall submit final construction documents no later than December 1, 1983. *CHI shall commence construction no later than December 10, 1983. *CHI shall complete facility construction no later than November 10, 1985. *CHI shall have the facility available for occupancy and ready for use no later than January 15, 1986. The Petitioner, in requesting this amended certificate of need, and the Respondent, in issuing the amended certificate of need, did not treat their actions as amending the December 13, 1982 Stipulation. The amended certificate of need included language almost identical to the 1anguage contained in the December 13, 1982 Stipulation quoted in Finding of Fact 5. The definition of the terms "commencing construction" contained in the December 13, 1982 Stipulation was not, however, included in the amended certificate of need. Prehearing Stipulation Fact: Buchanan and Company provided Ms. Marjorie R. Turnbull, then Deputy Assistant Secretary for Health Planning and Development of DHRS, a letter on February 23, 1983, stating that it would underwrite a proposed Twenty-One Million Dollar ($21,000,000) City of Miami Health Facility Authority revenue bond issue. . . . Prehearing Stipulation Fact: On September 12, 1983, the City of Miami Health Facility Authority resolved to approve a Memorandum of Agreement between the Authority and CHI for the issuance of revenue bonds totaling Ten Million Dollars ($10,000,000). . . . Additionally, George Simpson, Chairman of the Board of Christian Hospital and President of New First Horizans, Inc. had entered into a Contract for Sale of Land for private Development with Metropolitan Dade County on January 22, 1981. Prehearing Stipulation Fact: On September 12, 1983, Buchanan and Company sent George Simpson, M.D., a letter indicating its intention to underwrite a proposed revenue bond issue of approximately Fifteen Million Dollars ($15,000,000) to be issued by the City of Miami Health Facilities f Authority. . . . On September 22, 1983, Christian was awarded an Urban Development Action Grant (hereinafter referred to as an "UDAG")in the amount of $3,000,000.00. The UDAG was awarded by the United States Department of Housing and Urban Development(hereinafter referred to as "HUD"). Prehearing Stipulation Fact: On November 4, 1983, Nathaniel M. Ward, then Medical Facilities Consultant Supervisor of DHRS, advised Marjorie R. Turnbull that CON 2323 should receive a new project timetable . . . . Prehearing Stipulation Fact: Subsequently, CHI encountered difficulties in meeting the commencement of construction deadline set forth in amended CON 2323 and requested a CON six month validity extension pursuant to Section 381.494(8)(f), Fla. Stat. and Rule 10-5.13(4) on November 28, 1983 . . . . Prehearing Stipulation Fact: On December 12, 1983, Marjorie R. Turnbull advised Representative Claude Pepper that CON 2323 had been extended for six months until June 15, 1984 . . . . Prehearing Stipulation Fact: On December 12, 1983, Mr. W. Eugene Nelson, then Administrator of DHRS Office of Community Medical Facilities, sent Dr. Simpson correspondence granting a six month extension of CON 2323 The extension letter stated that the new termination date was June 15, 1984. The extension letter further advised that CON 2323 would terminate under provisions of Florida law in the event that construction had not commenced by or before June 15, 1984. Mr. Nelson's letter contained the following definition of the terms "commence construction": initiation of activities beyond site preparation associated with erecting or modifying a health care facility, including . . . . The Respondent, in approving the June 15, 1984 commence construction date, did not treat the extension as an amendment to the December 13, 1982 Stipulation. Instead, the Respondent treated Christian's request as a request to extend the date it was required to commence construction pursuant to Section 381.494(8)(f)1, Florida Statutes. The Respondent also informed Christian that "[i]n the event construction has not commenced by or before June 15, 1984, the certificate of need will terminate under provisions of Florida law." [Emphasis added]. The Respondent did not refer to the December 13, 1982 Stipulation. In February of 1984, representatives of the Respondent (met with representatives of Christian, the local health council, HUD and the City of Miami. The purpose of the meeting was to determine what progress Christian was making toward commencing construction and to determine ways in which the Respondent could assist Christian in commencing construction by June 15, 1984. Prehearing Stipulation Fact: On March 22, 1984, Nathaniel M. Ward sent Dr. Simpson correspondence indicating that Plaintiff must commence construction as defined by statute . . . . Prehearing Stipulation Fact: On June 5, 1984, Plaintiff obtained Permit #84- 4246 from the City of Miami in order to commence construction (foundation only) of CON project 2323 . . . . Plaintiff also entered into a Hold Harmless Agreement with Dade County on June 5, 1984 . . . . On June 8, 1984, Plaintiff entered into a construction agreement with McDevitt & Street Company for construction of CON project 2323 Prehearing Stipulation Fact: On June 6, 1984, Lee F. Lasris, Esquire, counsel for Plaintiff, requested that Mr. Wayne McDaniel be present at the CON 2323 construction site for commencement of construction on June 12, 1984 . . . . At the invitation of Christian, Mr. Wayne McDaniel, Supervisor of the Monitoring Section of the Office of Community Medical Facilities of the Respondent, traveled to Miami and visited the proposed site of the new hospital on June 12, 1984. Based upon what Mr. McDaniel witnessed at the site on June 12, 1984, Mr. McDaniel recommended to Mr. Nelson, his supervisor at the time, that the Respondent conclude that Christian had not commenced construction. Despite Mr. McDaniel's recommendation, the Respondent ultimately determined that the Petitioner had in fact timely commenced construction and so informed Christian. On June 15, 1984, Christian's UDAG for $3,000,000.00 was rescinded by HUD because of the failure of the City of Miami to respond to a letter from HUD. In July of 1984, Christian notified the Respondent of the loss of the UDAG. Because of the loss of the UDAG, Christian requested that the Respondent inform Christian as to whether its certificate of need was still valid. By letter dated August 15, 1984, the Respondent informed Christian that its certificate of need was currently in compliance with Sections 381.493- 381.497,Florida Statutes. The Respondent also stated in the August 15,1984 letter that the confirmation could be provided to federal officials. Subsequent to August 15, 1984, when the Respondent informed Christian that it had a valid certificate of need, Christian or the Petitioner took the following actions in an effort to complete the project: On November 11, 1984, Christian obtained a revised Memorandum of Agreement from the City of Miami Health Facilities Authority. This agreement essentially provided that if certain conditions, including proof of financial feasibility, were met by Christian the Authority would consider issuing $15,000,000.00 in bonds for the construction of the proposed hospital. The Authority has not agreed that it will issue bonds for the project. Even if the Petitioner is awarded a UDAG it is possible that the Authority wi11 not agree to issue bonds; On November 26, 1984, Christian obtained a resolution from the City of Miami. The resolution provided that the City of Miami would provide $300,000.00 working capital for the construction of the proposed hospital if a UDAG was obtained; On December 4, 1984, the Petitioner obtained an Agreement for Deed wherein Dade County agreed to convey land for the construction of the proposed hospital to the Petitioner if it maintained its certificate of need and obtained bond financing from the City of Miami within one year; On December 17, 1984, the Petitioner entered into an Agreement for Management Services with NNIE Hospital, Inc. NME has also agreed to guarantee a working capital loan of approximately $800,000.00; The Petitioner obtained an Internal Revenue Service tax exemption determination letter dated December 20, 1984; On January 11, 1985, Petitioner entered into two agreements with L. F. Rothschild, Unterberg, Towbon. In one agreement, L. F. Rothschild, Unterberg, Towbon gave a "firm private commitment" to underwrite tax exempt bonds of at least $15,000,000.00 and in the other it gave a "firm private commitment" to arrange additional financing in the amount of $7,000,000.00; On March 15, 1985, Petitioner entered into a contract with Walk Jones & Francis Mah, Inc., for new architectural plans; On April 10, 1985, the Petitioner obtained a financial feasibility study of the proposed hospital from Amherst Associates, Inc. On April 22, 1985, the Petitioner obtained a resolution from the City of Miami Zoning Board allowing a special exception for the construction of the proposed hospital on the land provided for the hospital by Dade County; and On May 1, 1985, the Petitioner entered into a Construction Manager Agreement with Stolte, Inc. Following the loss of the UDAG, unsuccessful efforts were made to get the UDAG reinstated. A decision was made to attempt to transfer the certificate of need to a new corporation in order to enhance the ability to obtain financing. Therefore, the Petitioner, a Florida corporation, was formed. The City of Miami filed a new UDAG application for$3,000,000.00 on behalf of the Petitioner in the November, 1984UDAG review cycle. This was the earliest cycle after the loss of the UDAG for which a new application could be filed. Funds for applicants in this cycle were to be awarded in January of1985. In December of 1984, representatives of HUD recommended that Petitioner seek Federal Housing Authority "242" mortgage Insurance (hereinafter referred to as "FHA 242 Insurance") for the bonds to be issued in conjunction with the project. In order to seek FHA 242 Insurance, the UDAG application had to be rolled over to the May of 1985 UDAG review cycle. On November 29, 1984, Christian filed an application for expedited certificate of need review with the Respondent. The application sought approval of a transfer of the certificate of need from Christian to the Petitioner. In a letter dated December 14, 1984, the Respondent requested certain omitted information necessary to complete the Respondent's review of the application. Among other things, the Respondent requested the following: Please complete the timetable projections on Page 4 of your application, as the original application for Certificate of Need Number 2323 provides 1982 dates for all steps through completion of construction, and the most recent amendment provides 1983 dates for these same steps. On January 9, 1985, the Respondent provided the requested information. In pertinent part, the Respondent indicated it would be offering services in "July 1986." The UDAG application filed by the Petitioner in the November review cycle was rolled over to the next review cycle-- May of 1985. The roll over was necessitated in order to allow time for modifications of the proposal. On February 14, 1985, the Respondent was requested to confirm the validity of certificate of need 2323. In response to this request, the Respondent provided an executed Certificate of Need for Health Facility and Assurance of Enforcement of State Standards form (HUD form 2576) indicating that a certificate of need had been issued to the Petitioner. The space on the form for the number of months the certificate of need was in effect was left blank and the termination date on the form was listed as "June 15, 1984." Sometime during the early part of 1985, the Respondent was asked by federal officials to indicate whether the dates established for completion of construction of the proposed hospital (November 11, 1985) and for availability for occupancy and use (January 1, 1986) included in the amended certificate of need could be amended to provide sufficient time for the completion of the project. These dates, which were established in the June 15, 1983 amended certificate of need, had never been modified by the parties. The Respondent refused to give such assurances. On April 11, 1985, the Respondent issued certificate of need 3639 approving the transfer of the certificate of need from Christian to the Petitioner. The letter from the Respondent to the Petitioner approving the transfer specifically provided that"[o]nly ownership title is affected by this amendment, all other elements and timeframes related to the hospital project are unaffected." [Emphasis added]. The date suggested by Petitioner for offering services -- July of 1986 (see Finding of Fact 28)was not approved by the Respondent. It generally takes eighteen to twenty-four months to complete the construction of a hospital of the type the Petitioner's certificate of need authorized. Between June 12, 1984, and July 8, 1985, there was very little construction on the proposed hospital. On June 12, 1984the construction activities consisted of the placing of two concrete pads approximately three feet square and eighteen inches deep on top of an asphalt parking lot. Concrete was then poured into the boxes. The only activities associated with the construction of the hospital after June 12, 1984 consisted of the erection of a chain-link fence around the property and the placing of a trailer on the property. As of July 8, 1985, it was not possible for the Petitioner to complete construction of the hospital by November 10, 1985 or for the hospital to be available for occupancy and use by January 15, 1986. Christian and the Petitioner could not complete construction of the hospital because of the loss of the UDAG on June 15, 1984. Once construction on a project has commenced, the Respondent recognizes that events may occur which necessitate a cessation of construction. It is the policy of the Respondent to allow certificate of need holders that have commenced construction an opportunity to resume and complete construction if an event occurs which stops construction. On August 13, 1985, HUD advised the Petitioner that its application for FHA 242 Insurance was complete except for the Respondent's approval of its certificate of need. If the certificate of need is restored to the Petitioner, it is possible that the FHA 242 Insurance may be approved. It is also possible that with a valid certificate of need and approval of the FHA 242 Insurance that the UDAG are approved it is possible that the City of Miami Health Facilities Authority may approve bond financing of the project. On April 12, 1985, the Petitioner sought an expedited certificate of need review of a cost over-run on its project. The amount of the over-run was approximately $10,425,787.00. The total cost of the project was raised to in excess of $27,000,000.00. On July 8, 1985, the Respondent sent an Administrative Complaint to the Petitioner indicated that certificate of need 2323 was considered null and void for failure to comply with the December 13, 1982 Stipulation. On or about July 22, 1985, the Petitioner filed a Voluntary Petition under Title 11, Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court in and for the South District of Florida. On July 25, 1985, the Petitioner was advised that its UDAG application had been rolled over to the September, 1985, review cycle. On August 7, 1985, the Respondent denied the Petitioner's application, certificate of need 3933, for a cost over-run. The denial was based upon the fact that the Petitioner's certificate of need had been declared null and void on July 8, 1985. In support of the application for a cost over-run, the Petitioner indicated that the additional costs were attributable to inflation, additional construction costs, medical equipment, financing charges and professional fees. The rate of inflation since 1982 has been relatively 1ow. Additional professional fees were incurred by Christian and the Petitioner after the UDAG was rescinded. The proposed hospital will be financially feasible if the cost over-run is approved. The total cost of the project, including the cost over-run, would be reasonable.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Administrative Complaint be withdrawn and that the Petitioner be given a reasonable period of time to continue its good faith efforts to resecure financing and to complete its project. It is further RECOMMENDED: That Certificate of need 3933 be denied. DONE and ENTERED this 5th day of December, 1985, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 5th day of December, 1985. APPENDIX The parties have submitted proposed findings of fact. It has been noted below which proposed findings of feet have been generally accepted and the paragraph number(s) in the Recommended Order where they were accepted. Those proposed findings of fact which have been rejected and the reason for their rejection has also been noted. Paragraph numbers in the Recommended Order are referred to as "RO _." Petitioner's Proposed Findings of Fact: Paragraph 1: RO 1. Paragraph 2: RO 2. Paragraph 3: RO 6. Paragraph 4: RO 9. Paragraph 5: RO 10. Paragraph 6: RO 11. Paragraph 7: RO 12. Paragraph 8: RO 13. Paragraph 9: RO 14. Paragraph 10: RO 15. Paragraph 11: RO 16. Paragraph 12: RO 18. Paragraph 13: RO 19. Paragraph 14: RO 19. Paragraph 15: RO 20 and 21. Paragraph 16: RO 22 and 36. Paragraph 17: RO 23. Paragraph 18, Page 5: RO 24 and 27. Paragraph 18, Page 6: RO 28. Paragraph 19: RO 30. Paragraph 20: RO 31. Paragraph 21: RO 32. Paragraph 22: RO 39 and 44. Paragraph 23: RO 40. Although the Respondent did declare certificate of need 2323 null and void, the evidence does not support a finding of fact that the Respondent "reversed itself." Paragraph 24: RO 41. Paragraph 25: RO 42. Paragraph 26: RO 43. Paragraph 27: RO 38. Respondent's Proposed Findings of Fact: Paragraph 1: RO 26, 28 and 32. Paragraph 2: RO 2, 3, 4 and 5. Paragraph 3: RO 3. The last sentence of this proposed finding of fact is not relevant. Paragraph 4: RO 7 and 8. The amendments mentioned in this proposed finding of fact were changed by a request for, and the granting of, an amended certificate of need, not by "request and agreement." Paragraph 5: RO 16. The last sentence of this proposed finding of fact is not relevant. Paragraph 6: RO 17. Paragraph 7, Page 5: RO 20, 21 and 34. Paragraph 7, Page 6: RO 22 and 23. Paragraph 8: RO 27. Paragraph 9: RO 31. To the extent this proposed finding of fact discusses Mr. Nelson's testimony, no finding of fact is made. Mr. Nelson's testimony concerning an "understanding" does not support a finding of fact that the construction completion date and the occupancy date established for the project on June 15, 1983 did not apply. Paragraph 10: RO 30 and 31. The evidence supports a finding that federal officials sought a representation from the Respondent that the construction completion date would be extended. The evidence does not support a finding that the Petitioner or Christian sought such a representation. Paragraph 11: RO 10, 24, 27 and 39. Paragraph 12: RO 40. Paragraph 13: RO 24 and 46. Paragraph 14: RO 41. Paragraph 15: RO 39, 43 and 44. COPIES FURNISHED: Gary C. Matzner, Esquire Frank R. Olsavsky, Esquire HAYT, HAYT & LANDAU Suite 1200, Datran Center 9100 South Dadeland Blvd. Miami, Florida 33156 John F. Gilroy, Esquire Assistant General Counsel Department of Health and Rehabilitation Services Building One, Suite 407 1323 Winewood Boulevard Tallahassee, Florida 32301 David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue The issues to be resolved in this proceeding concern whether the Correctional Privatization Commission (Commission) correctly evaluated, tabulated and ranked the scores of the proposals for designing, financing, acquiring, leasing, constructing and operating a 600-bed secure civil confinement and treatment facility for sexually violent predators. Embodied within this general issue are questions concerning: Whether the proposal submitted by the Petitioner, Liberty-Clark, L.L.C. (Petitioner Liberty-Clark) is materially responsive to the RFP; Whether the Commission's treatment of the alternate design costs of Liberty-Clark is clearly erroneous, contrary to competition, arbitrary or capricious; Whether the Commission's interpretation of the cost- scoring provisions of the RFP is clearly erroneous, contrary to competition, arbitrary or capricious; Whether the Commission's interpretation of the insurance requirements of the RFP is clearly erroneous, contrary to competition, arbitrary or capricious; and Whether the Commission's scoring of the implementation schedule of the intervenor, Atlantic Shores Healthcare Inc., (ASH) is clearly erroneous, contrary to competition, arbitrary or capricious.
Findings Of Fact The Petitioner, Liberty-Clark is a limited liability company formed by Liberty Behavioral Health Corporation and Clark Construction Group, Inc. The Respondent, the Correctional Privatization Commission (Commission or CPC) is a state agency charged under Chapter 957, Florida Statutes, with the purpose of entering into contracts for the designing, financing, acquiring, leasing, construction and operation of private correctional facilities. See Section 957.03, Florida Statutes (2000). The Intervenor, Atlantic Shores Healthcare, Inc. (ASH) is a Florida corporation and wholly-owned subsidiary of Wackenhut Corrections Corporation. In 1998 the Florida Legislature enacted the Involuntary Civil Commitment of Sexually Violent Predators Act, also known as the Jimmy Ryce Act. The Act became effective January 1, 1999, and is codified at Sections 394.910 through 394.931, Florida Statutes (2000). Sexually violent predators (SVP's) are individuals who have been convicted of a sexually violent offense and who suffer from a mental abnormality or personality disorder that makes them likely to engage in acts of sexual violence if not confined in a secure facility. Section 394.912, Florida Statutes (2000). A detainee who has been convicted of a sexually violent offense is entitled to a trial, after completion of his or her criminal sentence, to determine whether he or she meets the criteria for long-term commitment under this Act. SVP's who have been committed remain in this program indefinitely, until a court determines that they no longer meet the criteria for commitment. The Act directs the Department of Children and Family Services (Department) to implement the sexually violent program for the assessment, evaluation, custody and treatment of individuals detained pursuant to the Act. The Department is responsible for all costs incurred in performing its responsibilities under the Act. Section 394.929, Florida Statutes (2000). The Act recognizes that the extant civil commitment and treatment procedures under the Baker Act are inadequate to address the public risks SVP's pose. The Department currently houses approximately 350 SVP's at a facility in Arcadia, Florida, in DeSoto County. That facility has been operated by Liberty Behavioral Health Corporation for the last two and one-half years. Liberty Behavioral Health Corporation is a member of the Liberty-Clark, L.L.C., and was designated as the proposed operating entity in the Liberty-Clark proposal. The current SVP facility was converted into an SVP facility based upon the design of Strollo Architects, Inc. Strollo Architects, Inc., produced the schematic concept design submitted by Liberty-Clark in response to this RFP. Request for Proposal On November 3, 2000, the Commission issued a Request for Proposals (RFP) for the designing, financing, acquiring, leasing, construction and operating of a new 600-bed secure civil confinement and treatment facility for sexually violent predators. The RFP was issued by the Commission in consultation with the Department. The RFP requests proposals for the 600-bed facility to be located on approximately 125 acres of state land in DeSoto County, Florida. The project is a specialized treatment facility with high security requirements for a sex offender population. The RFP identifies the design challenge of providing a secure environment which promotes safety of staff and residents without negatively impacting treatment programs. It is the intent of the Commission that the RFP invite innovation and not require the use of prototype designs. The proposers were asked to submit conceptual/schematic design drawings. The RFP requires that the facility design meet the following Codes: The Life Safety Code, the Florida Building Code, Chapter 59A-3, Florida Administrative Code, applicable to psychiatric hospitals, the Uniform Fire Safety Standards, the State Plumbing Code, the Handicap Accessibility Guidelines, the Florida Energy Efficient Code for Building Construction, the Florida Energy Conservation Standards and Threshold Building Structural Inspection. The RFP also requested an alternative design which would meet all of these codes except Chapter 59A-3, Florida Administrative Code, relating to psychiatric hospitals. The RFP states that the Chapter 59A-3 compliant facility should be designed using the standards for psychiatric hospitals as a base line, but that the Department may permit or require modifications to adapt the design to meet the specific needs of an SVP facility. The RFP also states that specifications prefaced with the word "should" or "may" reflect recommendations that the Commission or Department believe will contribute to an effective proposal but which are not binding on the proposers. The RFP also states that room and unit designs must be consistent with Rule 59A-3.081, Florida Administrative Code, but that unit design may vary in accordance with its intended use. The RFP identified the Office of the State Fire Marshall, as the office with jurisdiction to determine whether the facility meets Uniform Fire Safety Standards. The RFP contemplates review of design plans for the successful composer as follows: Design development documents must be provided within 60 days of award posting. The Department shall then have 30 days to review the advanced schematic design and require modifications thereto. Fifty-percent of construction documents must be provided within 50 days of approval of the design development documents. The Department then has another 30 days to review these drawings and require modifications. One-hundred percent of construction documents must be provided within 50 days of approval of the fifty-percent of construction documents. The Department then has another 30 days to review these drawings and will require further modifications. The RFP provides that the Commission or Department may waive minor irregularities in proposals where it is in the best interests of the state to do so. Minor irregularities are those which will not have a significant adverse effect on overall competition, cost and performance. The Commission and Department reserve the right to negotiate adjustments in any and all elements of what proposers submit in their proposals, so long as such adjustments do not have the effect of increasing the total compensation paid over the total proposed compensation set forth in the submitted proposals. Four entities responded to the RFP. The companies submitting proposals were Atlantic Shores HealthCare, Inc.; Liberty-Clark L.L.C.; Cornell Companies; and Corrections Service Corporation. Evaluation and Scoring of Proposals Proposals were evaluated and points awarded based upon the following seven criteria: Section 3 - Qualifications and Experience - Section 4 150 points. - Physical Plant Design and Section 5 Construction - 200 points - Treatment program - Section 6 200 points - Facility Management - Section 7 100 points - Staffing and Security - Section 8 130 points - Implementation Schedule - Section 9 20 points - Cost and Financial Proposal - 200 points The maximum points possible thus were 1000 points. The costs bid for both construction and operation of the facility make up only fifteen-percent or (150 points) of the total possible highest points available. The cost evaluator for the Commission averaged the operating and construction costs for the compliant and alternative designs. The evaluation and scoring of such Sections 3-9 were to be completed by a team of people. Each team member independently evaluated the materials and awarded scores for the applicable evaluation criterion. The assignment of evaluators was based upon the expertise of the evaluator. No communication was to be allowed between evaluators during the scoring process. After scoring was completed, the evaluator was to submit his or her scores to the procurement manager of the Commission at a debriefing session. A score of zero to be given to any proposer for any category for which it had no apparent capability or any section of the RFP which a proposer ignored. The procurement manager was to total the scores received for each section and divide the total by the number of group or team members assigned to that section, in order to obtain an average score per proposal for that category. Sections 3-8, of the proposals submitted, were scored independently by the evaluators. Thereafter, the evaluators for Sections 3-8 met with personnel of the Commission's office at a debriefing session. The evaluators' scores were discussed and some were changed after discussion. Section 9 of the proposals, the costs and financial proposals, were to be scored after the scores for the other sections had been received and evaluated according to the terms of Section 13 of the RFP. This section was scored by Marianne Edmonds of Marianne Edmonds, Inc. She was the only evaluator for this section of the RFP. She evaluated the proposals based upon their operating and construction costs, their financial statements, financing plan and proof of insurance. Ms. Edmonds did not receive financial statements from the Cornell Companies. Thereafter she contacted the Commission and told the relevant personnel that she had not received Cornell Company's financial statements. The Commission found the financial statements and provided them to her. Cornell had submitted its financial statements in a manila envelope with the RFP. The envelope, however, was not attached to Cornell's Section 9 notebook (Section 9 proposal) and it was not labeled Section 9. Ms. Edmonds revised Cornell's score to reflect an additional 5 points for Cornell after the Commission provided her with the financial statements. The Commission did not make any direct determination as to responsiveness, but rather, scored the various proposals. According to the RFP Section 13.1, page 77, proposals considered non-responsive by the Commission were ineligible for evaluation. Both Liberty-Clark and ASH were evaluated by the Commission's team of evaluators as were the other two above-named proposers. The Department, not the Commission, will determine the final award. The Secretary of the Department will determine the final award after reviewing the Commission's rankings and the proposals. According to the RFP, Section 13, page 76, the Department will take into consideration the costs of the proposals and the evaluation criteria set forth in the RFP. After the Commission's scoring was announced Liberty- Clark timely filed a Notice of Protest, followed by a formal written protest and Petition for Hearing. In its Petition it cited numerous errors in score tabulation, inappropriate application of the cost formula provided by the RFP and the failure to award it full point credit for providing proof of insurance. Responsiveness ASH alleged in its Petition to Intervene that Liberty- Clark's proposal was non-responsive because its Agency for Health Care Administration (AHCA) compliant or psychiatric hospital "design" did not incorporate elevators and other allegedly required elements and failed to identify certain required details in its drawings as shown by the list of items depicted on pages 11 and 12, of the Intervenor's Proposed Recommended Order. ASH had identified Richard C. Rosenvold during discovery as an expert witness to offer an opinion that Liberty-Clark's hospital compliant design did not meet the AHCA rule applicable to construction of psychiatric hospitals, Rule 59A-3.081, Florida Administrative Code. Mr. Rosenvold is an architect certified by the National Council of Architectural Registration for approximately 40 years and worked as an architect for the AHCA from 1971 until 1993. He and his section were responsible for reviewing health care facility plans for compliance with the AHCA rules. He was not called as a witness at hearing by ASH, but rather his deposition was entered into evidence by Liberty-Clark during its case-in-chief. He explained, during his deposition, that there are generally three phases of architectural drawings reviewed by AHCA for a particular project. The first phase is the schematic or concept design drawing. These drawings are a small-scale representation of what is intended to be built and are not detailed and cannot be used for construction specifications or as "as built" plans. Schematic drawings are reviewed by AHCA and commented on regarding code and rule deficiencies in response to the design architect. The drawing is then revised and re- submitted to AHCA for approval. Once the schematic design is approved the architect submits drawings for the next phase, the preliminary design phase. These drawings are far more detailed than the schematic drawings but still cannot be used for construction specifications. Again the drawings are reviewed but for code and rule compliance by AHCA and comments on the deficiencies are made to the drafting architect. The preliminary drawings are then revised to cure those deficiencies and resubmitted for approval. Once the preliminary drawings are approved, the architect next submits construction drawings for approval. Again AHCA comments on deficiencies and these deficiencies are addressed through the provision of the design drawings until approval from AHCA is obtained. Mr. Rosenvold found deficiencies with Liberty-Clark's schematic/conceptual drawings but testified, as well, that there were no deficiencies he observed that cannot be resolved through the typical design revision-planning process, before the final "as-built" plans are arrived upon. ASH alleged in its Petition to Intervene that Liberty- Clark's design was non-responsive because it failed to incorporate elevators and other requirements for licensure of psychiatric hospitals in its hospital-compliant design, in accordance with Rule 59A-3.081, Florida Administrative Code. Mr. Rosenvold testified in his deposition, admitted into evidence by Liberty-Clark, that the design did not meet Rule 59A- 3.081(37), Florida Administrative Code, because there were no elevators in areas of the design that were multi-level. He also testified that the multi-level area on ASH's design also violated that same rule. Rule 59A-3.081(30)(n), Florida Administrative Code, states that: "Multi-storied psychiatric hospitals shall have elevators." Rule 59A-3.081(37), Florida Administrative Code, states that: "All hospitals where either patient beds or a critical care service facility such as operating, delivery, diagnostic, recreation, patient dining or therapy rooms are located on more than one floor, shall have electric or electro- hydraulic elevators . . .". The terms "multi-story" or "floor" are not defined by Rule 59A, Florida Administrative Code. Liberty-Clark presented the expert testimony of Jim Strollo at the hearing. He is an architect licensed in Florida, Virginia and Alabama and by the National Council of Architectural and Restoration Boards. He is the president of Strollo Architects, Inc., who produced the schematic/conceptual drawings that Liberty-Clark submitted with its proposal. He explained that the terms "multi-story" and "multi-level" have different meanings to architects and contractors. He stated that Liberty- Clark's design, which is a multi-level design as pertinent hereto (as well as ASH's compliant design) can be considered a one-story structure according to the Life Safety Code handbook in the annotation section at A-14-2.41 of that handbook. Mr. Strollo therefore believed that elevators were not required by the AHCA rules because their design was not multi-story. If, however, AHCA and the Department insisted that elevators are required for the design they could easily be added, according to Mr. Strollo, in both the Liberty-Clark and the ASH designs. Mr. Strollo, like Mr. Rosenvold, agreed that design modifications such as this commonly occur during the design approval process, with various code officials, before final construction plans are created. ASH presented the testimony of Carlos Valdes-Fauli, an architect employed by Wackenhut Correctional Corporation. He testified that both ASH's and Liberty-Clark's multi-level designs did not entirely meet AHCA's standards and that neither proposal was one-hundred-percent AHCA compliant as to the requirements referenced in the above-cited rule for licensed psychiatric hospitals. It is also true that, although the RFP states that AHCA's standards for psychiatric hospitals are to be used, this appears to be a basic requirement and the overall import of the RFP shows that the Department intends that the use of the resultant facility, and therefore its design, might differ somewhat from that of a traditional psychiatric hospital. Mr. Valdes-Fauli, for instance, testified that Section 4.9 of the RFP implied that AHCA standards for psychiatric hospitals would not entirely apply to the high risk unit because of the increased security needs attendant to that unit and that therefore the high risk unit design did not necessarily have to meet the AHCA psychiatric hospital standards. Section 4.9 of the RFP concerning the high risk unit, states that this unit should be designed to house residents who are either considered escape risks or who have committed serious violations of resident conduct standards. Although the high risk unit is intended to be the housing area with the highest level of security, other areas of the facility must also meet heightened security standards. RFP, Section 4.9, page 38. The standards in the RFP, Section 4.7, for intermediate units states that the proposer should consider the need for "heightened security" within that unit. Thus, both the intermediate and high-risk units are required by Section 4.7 of the RFP to have "line of sight" coverage or visibility from a secure central room. Mr. Strollo explained that various modifications to Liberty-Clark's design could be made to clear any objections posed by the AHCA rules such as designation of more nurses' stations, revisions of the infirmary area, etc. He testified that Liberty-Clark has enough square footage in its design to accommodate many revisions that might be requested by code officials, AHCA, or the Department. Moreover, while many of the purported deficiencies or alterations listed on pages 11 and 12 of the Proposed Recommended Order of the Intervenor, might need to be made in order to strictly comply with a licensed psychiatric hospital design, according to the above-referenced rule, it cannot be found, based on the evidence and the terms of the RFP, considered as a whole, that the Commission upon issuing the RFP, intended for the requirements for a psychiatric hospital to be strictly adhered to. ASH's compliant design would also have to be modified somewhat to conform to requirements for adequate areas of refuge from fire, to add perimeter guard towers and to provide a second means of egress. Its design did not comply with AHCA Rule 59A- 3.081(3)(a)1, for instance, which requires a minimum of three feet between the bed and side wall in patient rooms. ASH's rooms would have to be re-configured to accommodate this rule so that adequate distance would be present on both sides of residential beds, if the AHCA standards for psychiatric hospitals are thus to be adhered to. Although the RFP states that AHCA standards are to be used at least as a base-line, it is clear that the Department intends to use this facility, and therefore the design, somewhat differently than would be the case with a traditional psychiatric hospital. It is not clear from the RFP, however, to what extent the design is intended to and will ultimately differ from a traditional hospital design. Liberty-Clark received the highest evaluation score for residential areas of the physical plant design. This criterion evaluated how well the schematic design conformed with the design specification set forth in Sections 4.5 through 4.9 (the trustee, intermediate, reception/detainee, high risk, and special needs resident units). Liberty-Clark received an average score of 4.5 of a possible 5 points. ASH received a 4.0 in this section. Accordingly, it is apparent that the independent Commission design evaluators believe that Liberty-Clark's design best achieved the RFP objectives as to the residential unit design. ASH also alleges that Liberty-Clark's compliant hospital design is non-responsive because the residential areas of the design did not meet Chapter 12, of the 1994 edition of the Life Safety Code, the portion of the Life Safety Code applicable to hospitals. Liberty-Clark's residential housing units were not designed to meet Chapter 12 but rather Chapter 14 of the Life Safety Code. That Chapter is applicable to detention and correctional occupancies. Mr. Strollo's testimony shows that the office of the State Fire Marshall will apply Chapter 14 of the State Fire Code to the residential units and the Liberty-Clark design because the State Fire Marshall considers the facility to be more of a civil confinement facility than a true hospital. The RFP designates the State Fire Marshall as the official with jurisdiction to determine compliance with the Life Safety Code. Mr. Strollo explained that the Fire Marshall was correct in applying Chapter 14 instead of Chapter 12 (the Chapter applicable to hospitals) because a confined population has different needs than hospital patients do in an emergency situation. The security features necessary to house the SVP population differ from the housing needs of patients in a traditional psychiatric hospital. The differences in the needs of the SVP and traditional Baker Act patients are set forth in Section 394.910, Florida Statutes (2001), where it states in pertinent part: The existing involuntary commitment procedures under the Baker Act for the treatment and care of mentally ill persons are inadequate to address the risk these sexually violent predators pose to society. The Legislature further finds that the prognosis for rehabilitating sexually violent predators in a prison setting is poor, the treatment needs of this population are very long term, and the treatment modalities for this population are very different from the traditional treatment modalities for people appropriate for commitment under the Baker Act. The RFP thus states that the office of the State Fire Marshall is the agency with jurisdiction to review the facility for compliance with the Life Safety Code. Moreover, the RFP does not state that Chapter 12 of the Life Safety Code, rather than Chapter 14, should govern the design of the residential units. Even if the Department or the State Fire Marshall later held that Chapter 12 of the Life Safety Code was applicable to residential areas of the facility, the design changes could be made to the schematic drawings that would conform the residential areas to Chapter 12 which actually might result in a savings in construction costs to Liberty-Clark. Mr. Rosenvold, as well, testified that there were no Life Safety Code violations in Liberty-Clark's design that could not be cured through normal design alterations. Finally, it should be pointed out that the Commission, in evaluating the proposals, did not determine that either Liberty-Clark or ASH's proposals were so non-responsive as to be materially deficient and therefore, appropriate for disqualification. Even CSC's proposal, which omitted one section on its costs entirely, was not disqualified. Accordingly, any deficiencies with Liberty-Clark's or ASH's schematic designs do not rise to such a level of materiality under all of the circumstances of the RFP, as to render either proposal non- responsive. Financial Statements Section 13.9 of the RFP requires the submission of audited financial statements prepared in accordance with generally accepted accounting principals for the previous five years. The RFP further states that only the financial statements of the company that will be operating the facility will be evaluated. The Liberty-Clark proposal contains five years of audited financial statements for Liberty Behavioral Health, Inc., the operating company and Clark Construction, the construction company. Liberty-Clark's proposal is responsive to the RFP because it includes five years of audited financial statements for Liberty Behavioral Health, Inc., the company that will actually operate the facility should Liberty-Clark receive the contract. That is sufficient compliance with the relevant provisions of the RFP and shows sufficient assurance of financial resources to the agency to find the Liberty-Clark proposal responsive in this regard. The Score Stipulated Errors: The Commission acknowledges and the parties agree, that the scores posted for all four proposals are erroneous in part. Errors made in CSC's and Cornell's proposals did not affect their third and fourth ranking and therefore are not addressed here. However, when Liberty-Clark's scores for facility management were recorded on the final spreadsheet the scores for two particular items were incorrectly recorded as 3.33, rather than 4.33. Due to the weighting of scores, the correction of these errors resulted in an additional seven points for Liberty-Clark. This change is undisputed. Secondly, ASH's final score, according to the Commission, for implementation which was supposed to reflect the average of the scores assigned by the four evaluators who scored that Section, was incorrectly recorded as 1, rather than as 1.25. Again, due to the weighting assigned to this Section the correction of this error alone adds one additional point to ASH's score. Thus with these corrections alone, without considering the findings made infra., concerning the implementation schedules, the scores assigned to ASH and Liberty-Clark, apart from their scores for costs, at this point would be 737.52 and 705.30, respectively. The two other errors admitted to by the Commission both relate to scoring of costs. The ASH cost information reviewed by the Commission's cost evaluator, Marianne Edmonds, was erroneous. Ms. Edmonds based her calculations upon the Form A contained in the copy of ASH's proposal provided to her by the Commission. However, the original and five of the six copies of the ASH proposal that were maintained in the Commission's offices reflected higher costs. In addition, the Form B in all of ASH's proposals, which provided the itemized costs supposedly then presented in summary form on Form A, is consistent with the higher summary costs reflected on all Form A's, other than the one received by Ms. Edmonds for evaluation. The evidence adduced at the hearing provides no explanation of why a single copy of ASH's proposal contained erroneous lower costs information. However, the parties' reached a stipulation that the higher costs included in the other six copies of the proposal are correct. The calculation of ASH's cost scores using these higher costs does not change the ranking of the proposals in any event. Consequently, correction of this error adversely affects ASH's numerical score but does not impact the overall ranking. The final error relating to the scoring involved the application of the cost scoring formula. The RFP establishes the following formula for computing cost scores: 15 - [Evaluating Bid - Base Cost) x 15] Base Cost Where: Evaluating Bid = the combined per diem construction and operating cost of the proposal being evaluated. Base Cost = the lowest per diem construction and operating cost proposed. The hospital and non-hospital designs submitted by each proposer were to be evaluated using the same criteria. RFP Section J-1, Addendum 2, Answers at 11 (#8). Thus, it was necessary for Ms. Edmonds to separately apply this formula to each set of costs included in a proposer's cost and financial proposal, Book 9, and then average the two scores. Since the RFP further stated that the maximum possible score for cost was 150 points, the points derived from this calculation were then to be multiplied by a weight factor of 10 in order to ascertain a proposer's final score. In her calculation of each of the four proposals' scores, Ms. Edmonds inadvertently substituted the "evaluating bid" as the divisor in this formula, rather than the "base cost." See Stipulation at E16; T197. This calculation error was consistently made in her scoring of all four proposals. Liberty-Clark's Cost Score ASH maintains that Liberty-Clark's proposal materially deviates from the RFP and should have been rejected from consideration all together. However, even if it were responsive, ASH contends that its proposal should not be awarded the highest ranking. When the error by Ms. Edmonds, involving substituting the "evaluating bid" as the divisor in the formula rather than the "base cost" is corrected, Liberty-Clark's unweighted score for its hospital-compliant design is 5.13. However, because it failed to include the costs for its non-hospital design in its costs proposal in Section 9, as required by the RFP, Ms. Edmonds gave Liberty-Clark a score for the alternative design of 0 since she did not have the cost information to evaluate. That left Liberty-Clark, at that point, with a combined, weighted cost score of 25.65. (5.13+0)÷2[x10=25.65]. In this connection, the RFP provided that proposals were to be submitted in nine separate sections, with each section in clearly labeled packages (notebooks). The sections were to be separated as follows: Section 1: Mandatory Requirements. Section 2: Executive Summary. Section 3: Qualifications and experience. Section 4: Physical plant design and construction. Section 5: Treatment Program. Section 6: Facility Management. Section 7: Staffing and security. Section 8: Implementation schedule. Section 9: Cost and Financial Proposal. J-1 at 75 (Section 13.0). The RFP stated that: [t]he proposal shall be submitted by section with each section in separate, clearly identified packages with the dated to be opened and the proposer name printed on the package. There shall be seven (7) copies of each section, and each section shall be packed separately. . . . . . . . It is the proposers' responsibility to ensure that the required information is submitted in the correct sections and that there are seven (7) separately packaged and identified copies of each section for distribution to the evaluators. J-1 at 73 (Section 12.0). Failure to comply with all mandatory requirements may render a proposal non- responsive and ineligible for further evaluation. Compliance with these criteria is considered to be the minimum level of acceptable responsiveness; therefore, no points will be awarded for completing all mandatory requirements. The mandatory requirements are: . . . 3. Was the proposal submitted in the separate sections as specified in Section 12.0 of this RFP? Id. at 77 (Section 13.1)(underlining in original). These instructions were again emphasized with further explanation in Addendum 2 to the RFP, where potential proposers were informed that "an evaluator will only receive that section of the proposal that he or she is evaluating". This requirement was imposed to ensure that evaluators only reviewed the materials relevant to the area they were to evaluate and to prevent any unfairness that might otherwise occur. With respect to the non-hospital design, the RFP instructed proposers to "detail in all sections the design changes attributable to this alternative plan. All forms (i.e.: Forms A, B, D, E, F, and G) shall be included in the appropriate sections for the alternate plan". J-1 at 34 (Section 4.1). Forms A and B relate to costs. In response to questions received by a potential proposer, the Commission reiterated that each section would be separately evaluated. See J-1 at Addendum 2 (CiviGenics Questions #1 and 26, Commission Answers at 11 and 13). Notwithstanding these instructions, Liberty-Clark did not include its cost information regarding its non-hospital design in Section 9 of its proposal. Rather, it placed that information in Section 4, entitled Physical Plant Design and Construction, based upon the mistaken belief that the non- hospital design would only be evaluated on a "pass/fail" basis. Liberty-Clark assumed that its non-hospital design costs would not be factored into its score. Since Ms. Edmonds was only assigned to score and evaluate Section 9 of each proposal, she did not receive Liberty- Clark's non-hospital costs. Ms. Edmonds also found that the Section 9 submitted by CSC did not include any non-hospital costs. In fact, CSC did not submit a non-hospital design proposal at all. She consulted with the Commission's procurement manager, Mark Hodges, when she discovered these omissions and advised him of her intent to award both proposers no points for their non-hospital design. She also noted that the materials initially sent to her did not include financial statements for Cornell. However, those materials were merely in a separate, clearly labeled folder and had been inadvertently omitted by an employee of the Commission. The materials were supplied to her and she evaluated them in considering Cornell's proposal. In any event she decided to award both CSC and Liberty-Clark no points for their non-hospital design and that remains the Commission's position. Thus, if that decision is adhered to, Liberty-Clark's total, unweighted cost score-calculated by averaging the 5.1347 unweighted points for its hospital design with the zero received for its non-hospital design is 2.565. Once multiplied by the weighting factor of 10, Liberty-Clark's final cost score is 25.65 points, if its non-hospital cost proposal receives no points. The Commission had informed potential proposers that both the hospital and non-hospital design would be scored, with the same criteria being applied to both. See the RFP at J-1, Addendum 2, at CiviGenics questions 7 and 8, Commission Answers numbers 7 and 8 at 11. Thus, in the scoring of costs, Ms. Edmonds separately calculated the costs scores for ASH's hospital and non-hospital designs and then averaged those individual scores in order to determine the proposal's unweighted cost score. Liberty-Clark contends that its non-hospital cost must be included in the calculation of its score. It argued in its Petition that the costs should have been placed in the design section of its proposal. The provisions of the RFP referenced above and discussed above, however, do not support that contention. Thereafter, Liberty-Clark has contended that because its non-hospital costs were included within the four corners of its proposal, albeit not in the Section 9 Cost and Financial Portion, then the Commission had a duty to find and extract that information for purposes of scoring the involved costs. There is no question that Liberty-Clark submitted its alternate design Form A and B as to alternate design and prices in its proposal, it just did it in Section 4 rather than Section 9, apparently through a mistaken impression as to the RFP requirements. Even if mistaken, Liberty-Clark's placement of its alternative design in Form A and B with associated costs in Section 4 rather than Section 9, contrary to the exact requirements of the RFP, is of no material consequence in these proceedings. Using Liberty-Clark's non-hospital or alternate costs in the weighing and scoring process would accord it no additional favorable treatment or advantage over the other bidders whose non-hospital or alternative design costs were weighed and counted in the scoring and evaluation process. The record shows no evidence which would establish that Liberty-Clark would receive a competitive advantage or that other proposers would be competitively disadvantaged by Liberty-Clark's placement of its alternate design and costs in Section 4 rather than in Section 9. The alleged error is at most a minor irregularity because it has no significant adverse effect on overall competition, costs or performance. The fact of its inclusion in the proposal and the agency scoring and evaluating its costs, in spite of the fact that they were in Section 4 rather than Section 9, would afford Liberty-Clark no treatment more favorable than other proposers who happened to file their alternative design costs in the precise category called for by the RFP. Indeed, the only advantage gained by Liberty-Clark by counting its alternative design costs, although filed in a different section of the RFP, is whatever reasonable advantage is afforded it in the evaluation-scoring process by the fact that its alternative design costs are the lowest. This, however, would be the result of the manner in which it prepared, filed and arrived at its proposal and not due to any special favored treatment by the agency in considering its alternative design costs. If the agency did not consider these costs in the scoring and evaluation process, merely as a result of this non-material deviation from the RFP which has no real competitive effect in and of itself, the agency would be arbitrarily failing to consider Liberty- Clark's alternative design costs, which are the lowest such costs. The agency should consider them so as to adequately protect the public interest in securing the lowest possible costs for suitable procurement of goods, plant and services.1 Thus, if the Commission were to factor in Liberty- Clark's misfiled, non-hospital cost proposal, Liberty-Clark's cost would be the lowest of the non-hospital cost proposed. Thus, Liberty-Clark's unweighted, non-hospital cost score would be 15. When averaged with its hospital cost score and multiplied by the weighting factor, this would give Liberty-Clark a total costscore of 100.67. As found below, however, this cost score when added to Liberty-Clark's other scores would still leave Liberty-Clark a second-ranked proposer. ASH's Cost Score ASH received a score of zero for its hospital design costs. ASH's hospital costs were more than twice that of the base bid (CSC's costs), therefore, under the formula, a negative number resulted. The Commission, instead of entering a negative 1.50 for the hospital design cost category for ASH, determined that the score should not be below zero and accorded ASH a zero for this category. Liberty-Clark, however, contends that ASH's unweighted score for hospital design cost should be a negative 1.50 (below zero). Liberty-Clark contends that this negative number, when added to the score of 14.17 for ASH's non-hospital costs results in 12.67. Dividing that number by 2, gives an average score of 6.34. That must then be multiplied by the weighting factor of 10 to determine ASH's total points to be 63.4 for the cost evaluation section, according to Liberty-Clark. The Commission, through its evaluator, elected not to use the cost formula to derive a negative number for either the hospital or non-hospital costs. Mr. Hodges, the Executive Director of the Commission and the Procurement Manager under the RFP, drafted the cost formula. He never intended for the formula to result in a negative number and this formula had been used in previous RFPs by the Commission and had never before resulted in a negative number. Although the RFP did not specifically state that the cost formula should not result in a negative number, it did not need to. Since the cost evaluation was 15% of the total 1000 points to be awarded, and since 150 points were expressly stated as the maximum points allowed in this section, then zero is obviously the lowest number allowed to ensure that no proposer will receive more than a 15% benefit or disadvantage from this section. Each section of the RFP was given its own percentage value, meaning that the value to be awarded a proposer was between zero and the upper limit identified by that percentage. No other section in the RFP allowed for a score less than zero. Both the cost evaluator and procurement manager agree that the cost scores for the hospital and non-hospital designs were to be weighted equally, particularly since it is not known whether the Commission or the Department will desire a hospital or non-hospital design in the final analysis. Liberty-Clark's accounting expert witness agreed that the hospital and non- hospital sections should have equal weighting. This equal weighting means that the maximum number of points the proposer can obtain for the hospital costs section of its proposal is 7 1/2% of the total points (75 points). Likewise, the maximum number of points a proposer can receive for the non-hospital cost section of its proposal is 7 1/2% of the total points (75 points). The maximum spread of points for costs between the highest and lowest proposer for each of the two design sections, therefore, must be 7 1/2% or 75 points. Unless the cost evaluator adjusts a negative number to zero at the time the formula calculates a negative number and scores the proposer with zero points for that design, then a score for one design can actually take away from points scored on the other design. In other words, if either the hospital or non- hospital proposal were given a negative cost score, that negative score would actually deduct from the score awarded for the other design when the two scores were averaged by the cost evaluator. This is precisely the result that would occur if Liberty-Clark's proposed evaluation of ASH costs were performed. Allowing a negative number thus would have the effect of giving one design more weight than the other design, which is contrary to the terms of the RFP. Allowing a negative number would thus create an unfair result. When the cost evaluator calculated the scores that were posted by the Commission, the possibility of deriving a negative number was not an issue because she used an incorrect denominator for all four vendors. The issue of a negative number only arises when a proposer's costs are more than twice as high as the base costs to be used in the denominator. When the cost evaluator discovered her inadvertent error after the Commission had ranked the proposals, she informally re-calculated the costs using the proper denominator in the formula. It was at this time that the issue of the negative number arose. At this time, the only proposer potentially receiving a negative number by use of the cost formula was Cornell, one of the four vendors. The cost evaluator then spoke to the procurement manager and told him that application of the cost formula to Cornell scores should be adjusted to zero, as opposed to preserving a negative number. She determined that a negative number was not contemplated by the RFP and that nowhere else in the entire RFP was a section given less than zero points. She also determined that use of a negative number simply was not logical. Given the 15% point spread in this section of the RFP, awarding a score of zero to 15 for a maximum of 150 points when multiplied by 10, was consistent with the RFP. The cost evaluator determined and the procurement manager concurred, that she should adjust Cornell's scores to zero at the time they become negative, instead of allowing a negative number. After the decision had been made by a cost evaluator and agreed to by the procurement manager under the RFP that any re-calculation of Cornell's costs should not include a negative number and instead be adjusted to zero, it was discovered that cost information contained in Form A of the ASH proposal reviewed by the cost evaluator was incorrect. Prior to that time, the cost information reviewed by the cost evaluator for ASH had not resulted in a negative number. However, the correct ASH costs contained in Form A in its original proposal, and in all other copies, contained the higher costs that were ultimately stipulated by all parties as being the appropriate costs to use as the ASH per diem costs, as found above. When the cost evaluator, for informational purposes, calculated the cost formula using the higher stipulated ASH costs, the issue of a negative number once again occurred as the ASH hospital costs were more than twice the "base bid" being used. When this issue involving ASH arose, the cost evaluator and procurement manager had already determined that the formula should not be used to reach a negative number, but instead should be adjusted to zero. Thus the lowest score ASH should receive for its hospital design costs was zero, resulting in zero points for that design. The cost evaluator and the procurement manager, who drafted the cost formula, agree that whenever the costs used in the cost formula can potentially result in a negative number, the negative number must be adjusted to zero. This protects the percentage spread for each section that was provided by the RFP. Furthermore, it prevents one section from deducting points from another section. It also ensures that each design- hospital and non-hospital - is weighted equally as intended in the RFP. Finally, it ensures that a vendor who submits high cost information is not penalized more than a vendor, such as CSC, who failed to submit any cost information for a non-hospital design and received zero points. Liberty-Clark's expert witness acknowledged that at some point a negative number must be adjusted to zero. He agreed that the RFP did not contemplate negative points. Originally, he determined that the negative number should not be adjusted to zero until after the cost evaluation section had been added to the financial statement/insurance section and the financing plan section of Section 9. However, he acknowledged at hearing that it was erroneous to treat the formula this way, as he acknowledged it unfairly allowed the cost section to take away points earned in other sections contained within Section 9. The Liberty-Clark witness at the hearing did not adjust the ASH hospital cost negative number to zero and the negative number in averaging the scores. However, unless a negative number is adjusted to zero, once it potentially occurs, the score for one section, whether it be the hospital or non-hospital proposal section, will deduct points from the other design section. A negative score creates an unfair and unintended result that is contrary to the RFP. The cost evaluator further testified that even if Liberty-Clark's non-hospital costs are evaluated, even though they were not properly included in Section 9 of its proposal (see above Findings and discussion), then she would score ASH with a zero for the hospital section (as opposed to the negative 1.50 advocated by Liberty-Clark). This, when averaged with the non- hospital score, will result in a score of 7.087. This is then multiplied by 10 to provide ASH with a score of 70.87 points for the ASH cost section. The Commission's decision to replace any negative value with a zero as soon as the negative number appears has not been shown to be clearly erroneous. It would not cause an anti- competitive result, unfairly favoring one vendor and is rational and logical. It is thus not arbitrary or capricious and should be accepted. Liberty-Clark has disputed the Commission's scoring of ASH's non-hospital design costs which hinges upon whether ASH's costs of $220.71 or Liberty-Clark's costs of $209.20 (per diem) should be used as the Base Costs for purposes of the formula. ASH maintains that since Liberty-Clark's proposal is non- responsive, because its non-hospital costs were not filed in Section 9 of the RFP but in Section 4 instead, that they are not eligible for award, therefore, the lowest non-hospital costs to be used as the Base Costs would be ASH's. This would result in an unweighted score for ASH of 15 for its non-hospital design which, when averaged with its zero for hospital design and multiplied by the weighting factor of 10, would give ASH a total weighted cost score for its proposal of 75.00. As found above, however, it is appropriate that the Commission evaluate the non-hospital costs submitted by Liberty- Clark. If Liberty-Clark's non-hospital costs are factored into the scoring and used as the Base Cost, as indicated by the evaluator witness for the Commission, ASH's unweighted, non- hospital score would be 14.1747. Once that is averaged with ASH's hospital score of zero and then weighted by the factor of 10, ASH would have the combined weighted cost score of 70.87. The Insurance Requirement The Commission deducted 2 points from Liberty-Clark's proposal for purported failure to provide adequate proof of its ability to obtain insurance. The selected proposer for the contract will be responsible for obtaining comprehensive insurance coverage for general liability, automobile and workers compensation. The proposers responding to the RFP were not required to actually purchase coverage but were required to show the ability to do so if selected. Liberty-Clark presented the testimony of Herbert Cutler to establish its ability to provide insurance for the project. Mr. Cutler has a major in insurance and a degree in business administration and has worked in the insurance industry since 1962. He has worked as an insurance broker since 1971. His primary professional responsibilities have involved obtaining and binding insurance for commercial customers and then managing the accounts. He has experience in procuring comprehensive insurance for the operation of health care facilities. He also has experience in procuring comprehensive insurance for construction projects. He was qualified as an expert on the subject of insurance procurement and management of commercial insurance accounts. Mr. Cutler was retained to acquire all necessary insurance coverages for Liberty-Clark in the event that it was the selected proposer for the contract. In furtherance of this task, he reviewed all of the insurance requirements for the project and contacted insurance carriers regarding the procurement of insurance. He determined that he would be in a position to bind all coverages as required in the RFP, for Liberty-Clark. As proof of Liberty-Clark's ability to obtain insurance for the project, its proposal contained a letter signed by Mr. Cutler stating that he would be in a position to bind all coverages as required for the RFP on behalf of Liberty-Clark. The proposal also contains a Certificate of Insurance on behalf of Clark Construction, indicating that applicable insurance was in place at the time the Certificate was issued. ASH submitted a letter from an insurance broker, as proof of insurability, stating that all of the coverage required by the RFP was available to ASH. Attached to the letter is a "Specimen Certificate of Insurance," which apparently indicates the insurance in force for ASH on the date the specimen certificate was issued, February 14, 2001. The specimen certificate also reflects that the referenced coverage expired on July 1, 2001. The certificate does not contain any evidence that the referenced coverages were renewed at expiration or replaced by another insurance policy. There is no other evidence in the record of ASH's ability to obtain insurance for construction and operation of the subject facility provided for in the RFP. Proposer CSC and Cornell also submitted letters from insurance brokers stating the ability to obtain the required insurance along with sample certificates of insurance indicating insurance presently in place. Similar to the certificate submitted by ASH, the CSC and Cornell certificates do not evidence an ability to obtain insurance beyond the referenced expiration dates. The sample certificates of insurance provide the only distinction between Liberty-Clark's proof of ability to obtain insurance and the other proposers. These certificates of insurance, however, merely provide a snapshot view of insurance presently in place as of the dates of the certificate and show nothing about insurance to be in place in the future. They provide no competent evidence of ability to obtain insurance in the future for the construction and operation of the subject facility. Thus, for purposes of establishing the ability to obtain insurance as required by the RFP the documentation of ASH, CSC, Cornell and Liberty-Clark are substantially equivalent. The documentation submitted by Liberty-Clark is not more or less reliable evidence of insurability than that submitted by the other proposes. Accordingly, each proposer is entitled to an equal amount of credit for submitting proof of ability to obtain insurance under RFP Section 13.9, and no point deduction should be ascribed to Liberty-Clark. Thus it should receive the full 5 points in showing ability to obtain insurance. Implementation Schedules ASH contends that the Liberty-Clark implementation schedule is not responsive in its proposal as to Section 8 of the RFP because it makes its proposed implementation schedule and its willingness to undertake the contract contingent upon a financial commitment from the Commission to reimburse it for design costs, regardless of whether the construction continues beyond the design stage or not. It cites the proposed project schedule summary submitted by Liberty-Clark which identifies an "agency commitment for design costs" as being an event that must occur on the same day of the contract award posting-months prior to the execution of the contract. ASH, on the other hand, contends that rather than conditioning timely completion of construction upon a commitment to reimbursement of design costs, that ASH merely "recommended that contract execution and project funding be completed prior to any major design/development milestones being completed." ASH contends that by purportedly requiring the Commission to guarantee payment for design costs Liberty-Clark avoided the necessity of self-funding these costs and the risk that they might never be reimbursed. ASH argues that other proposers who did not make implementation of the contract contingent upon such guarantees enjoyed no such alleged competitive advantage. It does not appear, however, that the language cited by ASH, from Liberty-Clark's proposal, clearly means an actual binding commitment by the agency to pay design costs whether construction continues or not. The proposal language states that "since design is critical to the schedule and involves significant up-front costs, we anticipate early release and assurances from the Department that Liberty-Clark will be reimbursed for the design costs incurred, regardless of whether the construction continues or not." The above-quoted language, especially the use of the word "anticipate" would not seem to amount to a mandatory contingency upon Liberty-Clark's entering into a contractual relationship with the state. In fact, it logically and reasonably would seem to be no more of a binding contingency than the recommendation language submitted by ASH. See J-3, book 8 at Tab A and Tab B. This has not been shown by any persuasive, preponderant evidence to be a material deviation from the relevant terms of the RFP as to Section 8, and the agency and its evaluators did not find it so because there was no explicit or implicit decision made that Liberty-Clark was non- responsive as to this portion of the RFP. The proposer's commitments to design and build the proposed facility are described, in part, in the implementation schedules submitted with their proposals as Form F. The Commission's evaluators for this section, Section 8, of the RFP, awarded ASH an average unweighted score of 1.25 out of a possible 5 for its proposed implementation schedule. They awarded Liberty-Clark an unweighted score of 3.75. Once the weighting was applied these scores were converted to 5.0 and 15.0 respectively. No testimony was offered by the Commission or any party, explaining this differential. According to the Procurement Manager, Mr. Hodges, the evaluators for this section of the RFP were to have based their scores on each proposer's Form F, entitled "Bid for the Sexually Violent Predator Treatment Facility; Proposed Implementation Schedule." In fact, the RFP describes the evaluators' responsibilities with respect to this section as follows: Evaluators' consideration of this section of the proposals will be guided by the criteria set forth below. How well does the proposal demonstrate the proposer's commitment to design-build the proposed facility within . . . [24] months of contract execution (RFP Form F; RFP Sections 3.3 - 3.4)? Consider: Does the proposed time schedule Form F bring the facility to occupancy within the required time period? Does the proposed time schedule include adequate time for review, comment and approval by the Department as per RFP Section 3.3? Is the proposed time schedule realistic given the size and complexity of the project? J-1 at 105 (Section 13.8). See J-1 at Addendum 2, Answers at 3 (#20) and 11-12 (#12). In comparing the Form F submitted by ASH to that submitted by Liberty-Clark, Mr. Hodges was able to discern no difference in the merits of the two proposed schedules. Both proposed to perform some tasks before a contract is executed; both proposed to complete the project within 24 months after a contract is executed. Indeed, ASH's Form F indicates a proposed completion in just under 21 months after the contract is executed for its hospital design and 18 1/2 months for its non-hospital design. Liberty-Clark's Form F indicates a proposed completion in 24 months for both design alternatives. Thus there is no evidence in the record that establishes any significant distinction between the Liberty-Clark and ASH implementation schedules that would provide any basis for a differential in their scores. Absent some factual basis for the scoring differential it would be both arbitrary and capricious for the Commission to elect to award ASH a lower score for implementation than the score awarded to Liberty-Clark. Therefore, ASH's implementation schedule weighted score must be changed from 5 to 15. Accordingly, in consideration of the above Findings of Fact, if Liberty-Clark's cost information for its non-hospital design is considered by the Commission (with concomitant use of its lower cost as the Base Cost in the subject formula); when Liberty-Clark's computational errors are corrected; when the proper denominator in the formula is used; the higher stipulated ASH costs are used in the cost formula; and the two-point reduction in the score for proof of insurance coverage is added back in for Liberty-Clark, the rankings originally posted by the Commission do not change, although the scores are altered. The appropriate scoring, based upon the preponderant evidence of record, culminating in the above Findings of Fact is determined to be as follows: ASH: 818.39 LIBERTY-CLARK: 807.97 Thus the rankings remain as follows, from highest to lowest: ASH, Liberty-Clark, CSC and Cornell.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record and the pleadings and arguments of the parties, it is RECOMMENDED: That a Final Order be entered finding that the Petitioner has failed to establish that the decision to award ASH the highest ranking in its response to the Request for Proposals, was contrary to the governing statutes, the Commission's rules or policies, or the RFP specifications; that the scoring be corrected as delineated herein, and that the formal protest be dismissed. DONE AND ENTERED this 14th day of August, 2001, in Tallahassee, Leon County, Florida. MICHAEL RUFF 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 14th day of August, 2001.
Conclusions / 204 NAY 28 A Th 20 C.I. NO: 13-0805-000 PROVIDER NO.: 087528700 NPI NO.: 1598876088 LICENSE NO.: 5033096 DOAH CASE NO.: 13-1574MPI RENDITION NO.: AHGA- /¢ - 0472 -S-MDO THE PARTIES resolved all disputed issues and executed a Settlement Agreement. The parties are directed to comply with the terms of the attached Settlement Agreement (Attachment A). Based on the foregoing, this file is CLOSED. ZA DONE AND ORDERED on this y, Y day of 7 Yap , 2014, in Tallahassee, Florida. ELIZABETH DUDEK, Cfo Agency for Health Care Administration Filed May 30, 2014 12:47 PM Division of Administrative Hearings 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 was furnished by U.S. or interoffice mail to the persons named below on this ws; day of Lae 52014. Agency for Health Care Administration 2727 Mahan Drive, MS #3 Tallahassee, FL 32308 (850) 412-3630 Copies furnished to: David W. Nam, Esq. Agency for Health Care Administration (Interoffice Mail) Karl David Acuff, Esquire Law Offices of Karl David Acuff, P.A. 1615 Village Square Boulevard, Suite 2 Tallahassee, Florida 32309-2770 (U.S. Mail) Richard Zenuch, Chief, MPI (Email Transmission) Finance and Accounting Agency for Health Care Administration (Interoffice Mail) Health Quality Assurance Page 2 of 2
Findings Of Fact Status of the case South Broward Hospital District (SBHD) is a special taxing district created in 1947 by a special act of the Florida Legislature to provide health services to the residents of South Broward County and surrounding areas. SBHD is a designated disproportionate share provider of medical services to the indigent, and currently operates two Class I General Hospitals in Broward County, to wit: Memorial Hospital, located in Hollywood, and Memorial Hospital West, located in Pembroke Pines. Pertinent to this case, SBHD was authorized to establish Memorial Hospital West by Certificate of Need (CON) number 4019 issued by the Department of Health and Rehabilitative Services (the predecessor to respondent, Agency for Health Care Administration) on December 21, 1988. The certificate's project description read as follows: Construction of a new 100 bed satellite hospital facility, which will be composed of 92 medical surgical and 8 intensive care beds, in southwestern Broward County, HRS District 10, via the transfer of 100 beds from an existing facility, Memorial Hospital, Hollywood, and retiring an additional 25 medical/surgical beds from the existing facility upon the opening of the satellite facility . . . . By letter of June 3, 1992, respondent forwarded to SBHD License No. 3288, effective May 12, 1992, which authorized it to operate Memorial Hospital West as a Class I General hospital with 100 acute care beds. Contemporaneously, respondent forwarded to SBHD License No. 3289, effective May 12, 1992, which reduced Memorial Hospital's licensed acute care beds to 489, "reflecting the transfer of 100 acute beds to Memorial Hospital West, and the delicensure of 25 additional acute care beds," "[p]ursuant to Certificate of Need Number 4019." SBHD filed a timely petition challenging the respondent's issuance of License No. 3289, and, more particularly, the provision in such license reflecting "the delicensure of 25 additional acute care beds." It was SBHD's position that the provision of CON 4019 which required the retirement of the additional 25 beds upon the opening of Memorial Hospital West was invalid or, alternatively, that the CON should be modified to delete such requirement. Respondent disagreed with SBHD's assertion that the provision of the CON requiring retirement of the additional 25 beds was invalid and contended that SBHD's request for modification could not be accommodated under the modification provisions of Rule 59C-1.019, Florida Administrative Code, but required certificate of need review. Accordingly, these formal proceedings to review, de novo, the agency's decision were commenced at SBHD's request. The quest for CON 4019 The quest by SBHD to construct a satellite hospital in southwest Broward County had its genesis in January 1984 when the Department of Health and Rehabilitative Services (HRS) evidenced its intention to deny SBHD's application for CON 2834 and SBHD requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. That matter was referred to the Division of Administrative Hearings (DOAH) for the assignment of a Hearing Officer and designated DOAH Case No. 84-0235. Thereafter, in 1985, SBHD filed another application with HRS, designated as CON application No. 4019, for authorization to develop and operate a 100-bed satellite hospital in southwest Broward County by transferring 100 beds from Memorial Hospital. After HRS's initial denial of that application, SBHD requested a formal hearing and the matter was referred to DOAH. That case was assigned DOAH Case No. 85-3940, and was consolidated with the other application of SBHD, DOAH Case No. 84-0235. On April 11, 1986, SBHD updated its two applications to construct the satellite hospital, by proposing to transfer 100 beds from Memorial Hospital to the new facility, which would be composed of 92 medical/surgical beds and 8 intensive care beds. Subsequently, SBHD agreed to the retirement of 25 additional medical/surgical beds from Memorial Hospital upon the opening of its satellite facility, HRS agreed to support such project, and SBHD's application was duly updated. Accordingly, when the final hearing was held in DOAH Case Nos. 84-0235 and 85-3940 on September 12-16, 1986, October 22, 1986, and December 1, 1986, the issue was: . . . whether South Broward Hospital District's (District) application for a certificate of need to build and operate a satellite facility in southwest Broward County by transferring 100 beds and retiring 25 medical/surgical beds from its existing facility should be granted. On August 4, 1987 a recommended order was rendered in DOAH Case Nos. 84-0235 and 85-3940, which recommended that SBHD's application be denied. While recommending denial, such order ultimately metamorphosed into a final order, discussed infra, granting SBHD's application, and adopting a number of the findings of fact set forth in the recommended order. Those findings adopted included the recognition of the agency's evolving policy relating to bed transfers and relocation, as well as its consideration of a reduction of excess capacity within the district as affecting its decision to support such transfer. Specifically, the order noted: The Department has formulated a draft policy with respect to standards for evaluating applications to transfer beds or convert facilities. This policy was first written on August 7, 1986, and is based on the agency's prior experience in health planning. The Department's general policy for transfers and conversions is to try to "work off" any overbedding in a service district when approving transfers by requiring bed retirement as a condition to the approval of transfers. This strategy is the Department's attempt to reduce the excess of licensed and approved medical/surgical beds. The Department does not believe it possesses statutory authority to delicense acute care beds or retire acute care beds. Voluntary reduction of surplus beds in conjunction with applications to transfer beds or convert facilities provides one means for reduction of the number of beds in a service district. While the hearing officer observed that the agency did not believe it possessed the statutory authority to require the retirement or delicensure of acute care beds as a precondition for approval of a CON application, such observation, considering other findings of the hearing officer and the proof in this case, does not suggest that a proposed reduction in beds was not a legitimate factor for the agency to consider when evaluating an application and deciding whether it does or does not, on balance, satisfy relevant statutory and rule criteria. 1/ Indeed, one criteria to be considered in evaluating a CON application is its consistency with the State and Local Health Plan. At the time SBHD's application was reviewed, the State Health Plan set an appropriate ratio of medical/surgical beds to the population as a ratio of 4.11 to 1,000. Broward County (District X) was significantly overbedded at the time, with a medical/surgical bed ratio of approximately 5.1 to 1,000 and the Local Health Plan encouraged a reduction of licensed beds to achieve a ratio of 4.5 to 1,000 by 1988. Moreover, a proposed reduction in beds could also influence other criteria, such as, access, efficiency, and utilization. Following rendition of the recommended order on August 4, 1987, SBHD's pursuit of CON 4019 to final order took a tortuous route. In this regard, a final order of the agency dated August 18, 1988 observed: A prior invalid order of October 7, 1987, was vacated by order of February 29, 1988. After the order of February 29 was submitted to the First District Court of Appeal pursuant to relinquishment of its jurisdiction, the appeal of the final order was dismissed. Petitioner [SBHD] then moved for entry of a new final order. By order of June 27, 1988, the case was then remanded to the Division of Administrative Hearings for reevaluation of the merits of the application and additional findings based on the existing record, consistent with the rulings on exceptions by the Department contained in the Order of Remand. The Division of Administrative Hearings, by order of July 26, 1988, declined remand and ordered that the record be returned to the Department for entry of final order. The order then proceeded to adopt, except as specifically noted, the findings of fact and conclusions of law set forth in the recommended order, and granted SBHD's application for CON 4019. SBHD's pursuit of its CON had not, however, met fruition. The final order of August 18, 1988, "was quashed on procedural grounds by the First District Court of Appeal in an Order dated September 15, 1988". Subsequently, by "order dated December 13, 1988, the District Court dismissed [the case] on the basis of a voluntary dismissal by the parties". The agency then observed that "it is now time for the disposition of the application for CON 4019." Accordingly, by final order rendered December 21, 1988, the agency resolved: . . . I conclude that CON 4019 should be approved for the reasons set forth in the Order rendered August 18, 1988. Therefore, the Order rendered August 18, 1988, is incorporated by reference. Based on the foregoing, it is ADJUDGED that the application of South Broward Hospital District for certificate of need number 4019 to construct a satellite facility in south- western Broward County be APPROVED. Consistent with that final order, CON 4019, dated December 29, 1988, with an issue date of December 21, 1988, was granted to SBHD. As heretofore noted, the certificate, consistent with SBHD's updated application, included the requirement that an additional 25 medical/surgical beds would be retired at Memorial Hospital upon the opening of Memorial Hospital West. The validity of the provision of CON 4019 requiring retirement of 25 medical/surgical beds. Here, SBHD has challenged the propriety of respondent's delicensure of 25 medical/surgical beds at Memorial Hospital based on the contention that the provision of CON 4019, which provided for the retirement of 25 medical/surgical beds upon the opening of Memorial Hospital West, was invalid. SBHD's contention, as well as the proof offered to support it, is unpersuasive. In support of its contention, SBHD offered proof a hearing that it was HRS that initiated the proposal to retire beds, and that HRS did not have the unilateral authority to "require" the retirement or delicensure of beds as a prerequisite or condition for approval of a CON application. 2/ Accepting that HRS initiated the dialogue, as well as the fact that HRS could not unilaterally require SBHD to retire beds, does not, however, compel the conclusion that the provision for the retirement of beds was invalid. To the contrary, as heretofore discussed, overbedding in District X was of legitimate concern to HRS, a reduction of beds was an appropriate consideration in the course of CON review, and SBHD elected to update/amend its application to include such a reduction and thereby garner HRS support in the face of opposition from other competitors. Accordingly, that HRS could not "require" SBHD to retire beds is irrelevant. SBHD updated/amended its application and affirmatively proposed, as part of its project, a reduction of beds. Such reduction was an integral part of the project reviewed and ultimately approved, and was a factor appropriately considered by the agency in evaluating the application. Finally, to support its contention that the provision of CON 4019 requiring the retirement of 25 beds was invalid, SBHD suggests, essentially, that the update/amendment of its application to include such a proposal was inappropriate or contrary to law. Such contention, as well as the proof offered to support it, is likewise unpersuasive. Rather, the credible proof demonstrates that, at all times material to the subject application, HRS had no policy and there existed no rule or statute, that precluded an update or an amendment to an application for a CON during the course of an administrative proceeding. Accordingly, the amendment by SBHD of its application to include a provision for the retirement of 25 medical/surgical beds was not improper, and such provision can hardly be characterized as invalid. 3/ The request to modify CON 4019 to delete the requirement that 25 medical/surgical beds be retired. Accepting the validity of the provision of CON 4019 requiring the retirement of 25 medical/surgical beds, and therefore the propriety of the agency's decision to delicense those beds, SBHD has requested that the CON be modified to delete such requirement due to changed circumstances since its issuance. The agency opposes SBHD's request, contending that the change in bed capacity requires CON review. Pertinent to this case, Rule 59C-1.019, Florida Administrative Code, establishes the procedure and the circumstances under which a certificate of need holder may seek a "modification" of a certificate of need. For purposes of the rule, "modification" is defined as: . . . an alteration to an issued, valid certificate of need or to the condition or conditions on the face of a certificate of need for which a license has been issued, where such an alteration does not result in a project subject to review as specified in . . . subsection 408.036(1) . . . Florida Statutes. Rule 59C-1.019(1), Florida Administrative Code. Subsection 408.036(1), Florida Statutes, provides in pertinent part: . . . all health-care-related projects, as described in paragraphs (a)-(n), are subject to review and must file an application for a certificate of need with the department. The department is exclusively responsible for determining whether a health-care- related project is subject to review under ss. 381.701-381.715. * * * (e) Any change in licensed bed capacity. In this case, the agency contends that the CON cannot be modified to delete the 25-bed retirement provision because such alteration would result in a "change in licensed bed capacity," and therefore a project subject to CON review. Contrasted with the agency's position, SBHD contends that it timely challenged the agency's decision to delicense the 25 beds, based on its contention that the provision requiring the retirement of beds was invalid, and "there can be no actual change in licensed bed capacity at Memorial Hospital prior to final resolution of . . . this proceeding." [SBHD proposed recommended order, at p.17]. As stated by SBHD, Rather than seeking to change its licensed bed capacity, SBHD is opposing a change in its licensed bed capacity in order to maintain the status quo. [SBHD proposed recommended order, at p. 17]. Considering the provisions of law and analysis, as discussed in the conclusions of law infra, it is concluded that the agency's position is founded upon a reasonable interpretation of law and is, therefor, accorded deference. 4/
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered dismissing SBHD's protest to the delicensure of 25 acute care beds at Memorial Hospital, and denying SBHD's request to modify certificate of need number 4019 to delete the requirement that 25 acute care beds be retired. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 23rd day of September 1994. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of September 1994.
Conclusions Having reviewed the Statement of Deficiencies, and all other matters of record, the A Health Care Administration finds and concludes as follows: gency for 1. The Agency has jurisdiction over the above-named Petitioner pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Statement of Deficiencies to the Respondent. (Ex. 1) 3. The Petitioner requested a formal hearing to challenge the Agency’s findings. 4. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Petitioner’s petition for a formal administrative hearing is withdrawn. ORDERED at Tallahassee, Florida, on this LF day of Lhae Filed May 20, 2014 11:29 AM Division of Administrative Hearings NOTICE OF RIGHT TO JUDICIAL REVIEW. A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct Bey ot this Final Order was served on the below-named persons by the method designated on this ay of LD? a , 2014. Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Lourdes A. Naranjo, Senior Attorney Office of the General Counsel Agency for Health Care Administration (Electronic Mail) Thomas W. Caufman, Esq. Quintairos, Prieto, Wood & Boyer, P.A. 4905 West Laurel Street Tampa, Florida 33607 (U.S. Mail) Edward T. Bauer Administrative Law Judge Division of Administrative Hearings (Electronic Mail) PRINTED: 11/21/2013 FORMAPPROVED (3) DATE SURVEY COMPLETED (X2) MULTIPLE CONSTRUCTION A. BUILDING: (X1) PROVIDER/SUPPLIER/CLIA IDENTIFICATION NUMBER: STATEMENT OF DEFICIENCIES AND PLAN OF CORRECTION B. WING AL11953616 05/16/2013 STREET ADDRESS, CITY, STATE, ZIP CODE 2480 NORTH PARK ROAD HOLLYWOOD, FL 33021 NAME OF PROVIDER OR SUPPLIER FIVE STAR PREMIER RESIDENCES OF HOLLY (X4) ID SUMMARY STATEMENT OF DEFICIENCIES 1D PROVIDER'S PLAN OF CORRECTION (x8) PREFIX (EACH DEFICIENCY MUST BE PRECEDED BY FULL PREFIX (EACH CORRECTIVE ACTION SHOULD BE COMPLETE REGULATORY OR LSC IDENTIFYING INFORMATION) TAG CROSS-REFERENCED TO THE APPROPRIATE DATE DEFICIENCY) Initial Comments Surveyor: 28825 An Assisted Living Facility Complaint inspection survey CCR# 2013002354 was conducted on 05/16/2013. The Five Star Premier Residences of Hollywood Assisted Living Facility had no deficiencies found at the time of the visit related to this allegation. Deficient practice was identified at the time of the survey unrelated to the complaint. , 58A-5.023(3) FAC Physical Plant - Safe Living Environ/Other (3) OTHER REQUIREMENTS. (a) All facilities must: 1. Provide a safe living environment pursuant to Section 429.28(1)(a), F.S.; and 2. Must be maintained free of hazards; and 3. Must ensure that all existing architectural, mechanical, electrical and structural systems and appurtenances are maintained in good working order. (b) Pursuant to Section 429.27, F.S., residents shall be given the option of using their own belongings as space permits. When the facility supplies the furnishings, each resident bedroom or sleeping area must have at least the following furnishings: 1. Aclean, comfortable bed with a mattress no less than 36 inches wide and 72 inches long, with the top surface of the mattress a comfortable height to ensure easy access by the resident; 2. Acioset or wardrobe space for hanging clothes; ; 3. Adresser, chest or other furniture designed for storage of personal effects; 4. Atable, bedside lamp or floor lamp, and waste basket; and 5. Acomfortable chair, if requested. AHCA Form 3020-0001 LABORATORY DIRECTOR'S OR PROVIDER/SUPPLIER REPRESENTATIVE'S SIGNATURE TITLE (X6) DATE STATE FORM se09 8GJI11 If continuation sheet 1 of 4 EXHIBIT 1 PRINTED: 11/21/2013 FORMAPPROVED Agency for Health Care Administration STATEMENT OF DEFICIENCIES (Xt) PROVIDER/SUPPLIER/CLIA AND PLAN OF CORRECTION IDENTIFICATION NUMBER: (Xa) DATE SURVEY (X2) MULTIPLE CONSTRUCTION COMPLETED A. BUILDING: B. WING AL11953616 05/16/2013 STREET ADDRESS, CITY, STATE, ZIP CODE 2480 NORTH PARK ROAD HOLLYWOOD, FL 33021 NAME OF PROVIDER OR SUPPLIER FIVE STAR PREMIER RESIDENCES OF HOLLY (x4) iD SUMMARY STATEMENT OF DEFICIENCIES 1 PROVIDER'S PLAN OF CORRECTION (x5) PREFIX (EACH DEFICIENCY MUST BE PRECEDED BY FULL PREFIX (EACH CORRECTIVE ACTION SHOULD BE COMPLETE REGULATORY OR LSC IDENTIFYING INFORMATION) CROSS-REFERENCED TO THE APPROPRIATE DATE DEFICIENCY) Continued From page 1 (c) The facility must maintain master or duplicate keys to resident bedrooms to be used in the event of an emergency. (d) Residents who use portable bedside commodes must be provided with privacy during use. (e) Facilities must make available linens and personal laundry services for residents who require such services. Linens provided by a facility shall be free of tears, stains and not be threadbare. This Statute or Rule is not met as evidenced by: Surveyor: 28825 Based on observation, interview and record review, the facility failed to provide a safe environment, free from hazards. As evidenced by facility failure to prevent resident access to construction areas on the facility grounds. The findings include: During a tour of the facility on 5/16/2013 at approximately 12:00 PM with the Administrator and Corporate Attorney, residents were observed ambulating with rolling walkers throughout the facility and going outside to the front of the building. The complex was undergoing renovation. Multiple buildings were covered with scaffolding engulfing them completely. The demolition construction on the buildings was very loud and construction vehicles were coming and going throughout the facility parking lots and the facility entrance. Construction debris was noted in AHCA Form 3020-0001 STATE FORM 6000 8GJit1 If continuation sheet 2 of 4 PRINTED: 11/21/2013 FORMAPPROVED (X3) DATE SURVEY COMPLETED (X2) MULTIPLE CONSTRUCTION A. BUILDING: {X1) PROVIDER/SUPPLIERICLIA IDENTIFICATION NUMBER: STATEMENT OF DEFICIENCIES AND PLAN OF CORRECTION B. WING 05/16/2013 AL11953616 STREET ADDRESS, CITY, STATE, ZIP CODE 2480 NORTH PARK ROAD FIVi E IVE STAR PREMIER RESIDENCES OF HOLLY HOLLYWOOD, FL 33024 NAME OF PROVIDER OR SUPPLIER (X4) 1D SUMMARY STATEMENT OF DEFICIENCIES 1D PROVIDER'S PLAN OF CORRECTION (x5) PREFIX (EACH DEFICIENCY MUST BE PRECEDED BY FULL PREFIX (EACH CORRECTIVE ACTION SHOULD BE COMPLETE TAG REGULATORY OR LSC IDENTIFYING INFORMATION) TAG CROSS-REFERENCED TO THE APPROPRIATE DATE DEFICIENCY) Continued From page 2 the parking lots. During the tour inside the facility, the main resident elevators were observed. During an interview with the Administrator at 12:40 PM on 05/16/13, she stated the facility had put up an enclosure fence for safety, which prevents resident access to the lakes edge. She stated that due to the renovation construction, the benches along the sidewalk had been removed. The surveyor observed scaffolding on the entire building next to the lake enclosed area. A white metal fence was observed to enclose the lake walkway and building frontage. Key pad access was noted on the outside entrance gates coming into/out of this gated area. The Administrator stated that the residents would need to know the pass code to enter or leave this enclosed area when outside the building. She stated that due to the renovation, residents should not have access to the construction area due to safety concerns. On 5/16/2013 at approximately 3:30 PM the surveyor observed that a section of the metal fence enclosure around the lake walkway, (next to the front parking lot) was missing. The keypad and gate remained intact but the lake area had open access due to the missing fence section. An interview was conducted with the Administrator and Executive Director on 05/16/13 at 3:40 PM, inquiring about the enclosed lake front area. They stated the fenced enclosure provided safety for the residents. The Administrator, Executive Director, Regional Director of Operations and surveyor observed the section of the fence that had been removed. The Executive Director stated she was not aware that the fencing had been removed and immediately went to speak with the construction foreman. She stated that the area was a construction site and AHCA Form 3020-0001 STATE FORM 6899 8Guit1 If continuation sheet 3 of 4 PRINTED: 11/21/2013 FORMAPPROVED Agency for Health Care Administration STATEMENT OF DEFICIENCIES (X1) PROVIDER/SUPPLIER/CLIA (X2) MULTIPLE CONSTRUCTION AND PLAN OF CORRECTION IDENTIFICATION NUMBER: A. BUILDING: (X3) DATE SURVEY COMPLETED AL11953616 B. WING 05/16/2013 NAME OF PROVIDER OR SUPPLIER STREET ADDRESS, CITY, STATE, ZIP CODE 2480 NORTH PARK ROAD FIVE STAR PREMIER RESIDENCES OF HOLLY HOLLYWOOD, FL 33024 (X4) ID SUMMARY STATEMENT OF DEFICIENCIES PROVIDER'S PLAN OF CORRECTION (x5) PREFIX {EACH DEFICIENCY MUST BE PRECEDED BY FULL (EACH CORRECTIVE ACTION SHOULD BE COMPLETE DATE TAG REGULATORY OR LSC IDENTIFYING INFORMATION) CROSS-REFERENCED TO THE APPROPRIATE DEFICIENCY) Continued From page 3 should be closed off to prevent injury. The ground surrounding the open section of fence, was observed to be uneven, rocks and construction debris littered the pathway. Due to the fence removal, the enclosure did not provide protection for the vulnerable elderly residents since access could be achieved to both the lakes edge and construction site. Class Ill AHCA Form 3020-0001 STATE FORM 6808 8GJi11 If continuation sheet 4 of 4
