The Issue The issue for consideration in this case is whether the Department’s termination of its lease of the Petitioner’s property located at 36555 U.S. Highway 19 North, in Palm Harbor, Florida was proper and consistent with the terms of the lease
Findings Of Fact At all times pertinent to the issues herein, the Department of Health and Rehabilitation Services, (now the Department of Children and Families), (Department), through its District V offices, (District), was the state agency responsible for the provision and administration of aging and adult services and adult payments in certain state programs for the elderly, and others, in the geographical area of the state known as District V, which includes Pinellas and Pasco Counties. On or about June 1990, the Department entered into a lease agreement with Petitioner, Joseph DiGerlando, for 5,723 square feet of office space in a building owned by Petitioner and located at 36555 U.S. Highway 19 North in Palm Harbor, Florida. The term of the least was ten years. It commenced on July 13, 1990, and expired on July 12, 2000. The leased space was to be used by staff of the Economic Services and Adult Payments programs from whose funds the lease payments were to be made. Paragraph XVIII of the lease, entitled Availability of Funds, provides: “the obligations of the Lessee under this lease agreement are subject to the availability of funds lawfully appropriated annually for its purposed by the legislature if the State of Florida and/or the availability of funds through contract or grant programs. The terms of the addendum to the lease provide that the rental cost per square foot for the first year of the least is $13.50, and the cost increases each year throughout the term of the least until the last year thereof when it reaches $22.81 per square foot. Rent payments became due and were paid each year subsequent to the initiation of the lease according to the above provision. However, the general Appropriations Act passed by the Florida Legislature for fiscal year 1996-1997 reduced the Department’s budget by $27,127,606 and cut 400 full time positions from the Department’s employment rolls. When these reductions were apportioned within the Department, a reduction of 300 positions and of $9,243,900 was allocated to the statewide budget for Economic Services and Adult Payments. Of the dollar amount reduced, 50% constituted general revenue funds and 50% constituted trust funds. This statewide reduction resulted in the reduction of the salary and expense budget for District V by $1,263,333 and the elimination of 41 personnel positions. The language contained in the 1996-1997 General Appropriations Act and Summary Statement of Intent which brought about the funds reduction responsible for the termination, authorized the Department to allocate the reduction consistent with statute, but mandated that “adjustments related to the distribution shall recognize efficient and effective management, and shall minimize disruption of services to clients. In short, the Department was to evaluate its operation and make choices which were consistent both with sound economic management, but which also generated as little disruption to the provision of services to the Department’s clients as was possible. Consistent with the instructions received by it, the Department prepared a budget amendment utilizing the legislatively-mandated methodology for reduction reallocation. This amendment sub submitted for review tot he Governor's Office of Planning and Budgeting; sent for the fourteen-day legislative review; and scheduled for presentation tot he Administrative Commission at its July 23, 1996 meeting. The Administration Commission approved the Department's budget amendment and it was signed off on by the Governor's Planning and Budgeting office the day it was presented, July 23, 1996. No written objections to the budget amendment were entered during the fourteen-day review and it was subsequently implemented within the Department and reflected on the approved operating budget for each program. Based on the amended operating budget for Economic Services, meetings were held to identify and evaluate any possible surpluses or deficits within each program under the management of Economic Services. A spending plan meeting was held in September 1996 at which it was determined that District V's Economic Services program was projecting a deficit of $221.305.00 of which $161,280.00 was directly related to the 41 positions cut as the District's portion of the overall 300 positions cut from Economic Services statewide by the legislature. The balance of the deficit figure resulted from other funding reductions imposed by the legislature. The previous year, 1995-1996, District V's Economic Services budget was reduced by only $7,988, significantly less than the cut mandated by the legislature for 1996-1997. At that same September 1996 spending plan meeting, the District's Adult Payments budget was projected to experience a deficit of $52,333.00. When the combined deficit for the Economic Services and Adult Payments programs was considered, it became necessary to examine what options were available to compensate for the shortfall. One of the options considered included an examination of property leases to which the District was committed. Included among these was the instant lease of Petitioner's Palm Harbor property. Other options included a diversion of funds from one account to another, but this option was limited because of the reduction in salary funds available due to the position cuts mandated by the legislature. The District's budgetary flexibility for fiscal year 1996-1997 was even more restricted as a result of legislative budget reductions in other programs within the Department such as children and families, alcohol, drug abuse, and mental health and developmental services. To even further complicate matters, the Department was split into two agencies with the creation of the Department of Health. When the Department needs office or program space, agency policy has been to lease it in the geographic area where the service will be performed for the majority of the clients receiving it. When the Palm Harbor service center was opened in 1990, the Department had sufficient funds to support the expansion to that area. The closure of that site was the result of a management decision taken to reduce the deficit in the Economic Services and Adult Payments programs caused by the legislative cuts in the Department's funding and staffing. 13 That decision was consistent with the language contained in the appropriations bill. since that service center serviced the smallest percentage of the Department's clients (3.6%) yet had the highest lease rate in Pinellas County, especially in light of the fact that the clients served there could receive services, with a minimum of disruption, from nearby service centers operated by District V in Clearwater and New Port Richey. Lease terminations were not the only actions taken to reduce expenditures, however. Other cost savings measures were adopted by the District to reduce the deficit. These included a freeze on hiring to fill vacant positions, a reduction in contracted security guard services, cancellation of training programs contracted to private providers, a reduction in personnel travel and a reduction in the purchase of supplies and equipment replacement. Supplies and equipment were moved about within the District from areas of surplus to areas of need. Consistent with the deficit reductions efforts described and the agency policy deemed pertinent to the situation, by letter dated October 21, 1996, the Department terminated its lease of Petitioner's Palm Harbor property effective December 12, 1996. Petitioner points out that the monthly rental payment for the property for the period from July 13, 1996 to July 12, 1997 is $9,132.95 and, therefore, the total rental due on the property from the date of termination, December 12, 1996, to the end of the 1996-1997 fiscal year, June 30, 1997, is slightly in excess of $60,000.00. For the 1996-1997 fiscal year, the legislature appropriated approximately $145,000,000.00 for District V. The 1996-1997 General Appropriations Acts and Summary Statement of Intent appropriates $53,807,327.00 for expenses for Economic Services and $5,193,156.00 for Adult Payments expenses. The lease payments on the Petitioner's property were treated by District as expenses to the Economic Services and Adult Payments programs. Petitioner also argues that the Department could point to no law, statute or other legislative act which prohibits the Department from spending appropriated funds to pay the rental costs of this lease or on any other expenditure category which would include this lease. He urges that even after the Department's allocation by district of the expense funds for Economic Services and Adult Payments, the expense budget for this district in those programs amounted to $2,809,267.00 and $427,091.00, respectively. This, he claims is more than enough to pay the rent on his lease. The 1996-1997 appropriations act specifically provided that reductions be targeted to administrative rather than client services. The leased space in issue here was used to provide client services in the two major programs discussed here. Lease payments for a service center are generally considered program costs, not administrative costs, and, Petitioner alleges, not the type of expense to which the legislature intended these reductions to apply. The Department chose the split between salary and other expenses in reaction to the mandated 400 personnel and the $27 million reductions. Whether a reduction in budgeted expense costs would affect lease costs was left up to each District. Florida law permits Department District Administrators to transfer up to 10% of the total District budget with approval of the Department Secretary. Petitioner asserts there were sufficient funds in the Economic Services and Adult Payments programs for 1996-1997 to pay for the instant lease if the District Administrator had chosen to do so. The salaries and benefits expense budgeted for District V by the Department pertaining to the Economic Services and Adult payments programs was more than $12 million and more than $2 million respectively
Recommendation Based on the foregoing Finding of Fact and Conclusions of Law, it is recommended that the Department of Children and Familes enter a final order dismissing Petitioner's protest of its action terminating the lease of his property in Palm Harbor. DONE and ENTERED this 14th day of March, 1997, in Tallahassee, Florida ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 1997 COPIES FURNISHED: Nelson D. Blank, Esquire Rachelle Desvaux-Bedke, Esquire Trenam, Kemker, Scharf, Barkin, Frye, O’Neill & Mullis, P.A. 2700 Barnett Place 101 East Kennedy Boulevard Tampa, Florida 33601-1102 Frank H. Nagatani, Esquire Kathleen R. Harvey, Esquire Department of Health and Rehabilitative Services 11351 Ulmerton Road, Suite 100 Largo, Florida 33778-1630 Gregory Venz Agency Clerk Department of Children and Families 1317 Winewood Boulevard Tallahassee, Florida 32399-700 Richard A. Doran General Counsel Department of Children and Families Building 2, Room 204 1317 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Whether the Agency for Health Care Administration's ("AHCA" or "the agency") Medicaid lien of $267,072.91 should be reimbursed in full from the $1 million settlement recovered by Petitioner or whether Petitioner proved that a lesser amount should be paid under section 409.910(17)(b), Florida Statutes.
Findings Of Fact Based on the stipulation between the parties (paragraphs 1 through 13 below), the evidence presented, and the record as a whole, the undersigned makes the following Findings of Fact: On January 13, 2016, Mr. Jay Hosek was operating his 1999 Chevy Trailblazer northbound on U.S. Highway 1, near mile marker 56, in Monroe County. At that same time and place, his vehicle was struck by a southbound tractor trailer. Hosek suffered catastrophic physical injuries, including permanent brain damage. Hosek is now unable to walk, stand, eat, toilet, or care for himself in any manner. Hosek's medical care related to the injury was paid by Medicaid, Medicare, and United Healthcare ("UHC"). Medicaid provided $267,072.91 in benefits, Medicare provided $93,952.97 in benefits and UHC provided $65,778.54 in benefits. Accordingly, Hosek's entire claim for past medical expenses was in the amount of $426,804.42. Jirina Hosek was appointed Hosek's legal guardian. As legal guardian, Jirina Hosek brought a personal injury lawsuit against the driver and owner of the tractor trailer that struck Hosek ("defendants") to recover all of Hosek's damages associated with his injuries. The defendants maintained only a $1 million insurance policy and had no other collectable assets. Hosek's personal injury action against the defendants was settled for the available insurance policy limits, resulting in a lump sum unallocated settlement of $1 million. Due to Hosek's incompetence, court approval of the settlement was required and the court approved the settlement by Order of October 5, 2018. During the pendency of Hosek's personal injury action, AHCA was notified of the action and AHCA asserted a $267,072.91 Medicaid lien against Hosek's cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Hosek's action against the defendants. By letter, AHCA was notified of Hosek's settlement. AHCA has not filed a motion to set aside, void, or otherwise dispute Hosek's settlement. The Medicaid program through AHCA spent $267,072.91 on behalf of Hosek, all of which represents expenditures paid for Hosek's past medical expenses. Application of the formula at section 409.910(11)(f) to Hosek's $1 million settlement requires payment to AHCA of the full $267,072.91 Medicaid lien. Petitioner has deposited AHCA's full Medicaid lien amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights, and this constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). While driving his vehicle northbound, Hosek drifted into oncoming traffic, crossed over the center line, and struck a southbound vehicle in its lane head on. Petitioner had an indisputable and extremely high degree of comparative negligence in causing this tragic vehicle accident. Petitioner presented the testimony of Brett Rosen ("Rosen"), Esquire, a Florida attorney with 12 years' experience in personal injury law. His practice includes catastrophic and wrongful death cases. Rosen is board-certified in civil trial by the Florida Bar. He is a member of several trial attorney associations. Rosen represented Hosek and his family in the personal injury case. As a routine part of his practice, Rosen makes assessments regarding the value of damages his injured client(s) suffered. He stays abreast of personal injury jury verdicts by reviewing jury verdict reports and searching verdicts on Westlaw. Rosen regularly reads the Daily Business Review containing local verdicts and subscribes to the "Law 360," which allows him to review verdicts throughout the country. Rosen was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency. Rosen testified that Hosek's case was a difficult case for his client from a liability perspective, since all the witnesses blamed Hosek for the crash and the police report was not favorable to him. In his professional opinion, had Hosek gone to trial, the jury could have attributed a substantial amount of comparative negligence to him based upon the facts of the case. There was also a high possibility that Hosek might not receive any money at all, since Hosek's comparative negligence in the accident was very high. Rosen explained the seriousness of Hosek's injuries, stating that Hosek may have fallen asleep while driving and his car veered over and crossed the centerline. It hit an oncoming commercial truck, which caused his vehicle to flip resulting in severe injuries to him. Rosen testified that Hosek is unable to communicate since he received catastrophic brain injury from the accident and is unable to care for himself. Rosen provided an opinion concerning the value of Hosek's damages. He testified that the case was worth $10 million, and that this amount is a very conservative valuation of Hosek's personal injuries. He also generalized that based on his training and experience, Hosek's damages could range anywhere from $10 to $30 million at trial. He testified that Hosek would need future medical care for the rest of his life. This future medical care has a significant value ranging from $15 to $25 million.1/ Rosen testified that he reviewed other cases and talked to experts in similar cases involving catastrophic injuries. After addressing various ranges of damages, Rosen clarified that the present value of Hosek's damages in this case was more than $10 million dollars. Although he did not state specific amounts, he felt that Hosek's noneconomic damages would have a significant value in addition to his economic damages.2/ Rosen believed that a jury would have returned or assigned a value to the damages of over $10 million. He testified that his valuation of the case only included the potential damages. He did not take into account Hosek's "substantial amount" of comparative negligence and liability.3/ Despite doing so in other personal injury cases, Rosen did not conduct a mock trial in an effort to better assess or determine the damages in Hosek's case. Rosen testified that Hosek sued the truck driver, Alonzo, and Alonzo's employer. He further testified that Hosek was compensated for his damages under the insurance policy carried by the truck driver and his company and settled for the policy limits of $1 million dollars representing 10 percent of the potential total value of his claim. Rosen did not obtain or use a life care plan for Hosek, nor did he consider one in determining his valuation of damages for Hosek's case. Rosen did not provide any specific numbers or valuation concerning Hosek's noneconomic damages. Instead, he provided a broad damage range that he said he "would give the jury" or "be giving them a range of $50 Million for past and future."4/ Rosen testified that he relied on several specific factors in making the valuation of Hosek's case. The most important factor for him was to determine what his client was "going through" and experience his client's "living conditions."5/ Secondly, he considers the client's medical treatment and analyzes the client's medical records. Based on these main factors, he can determine or figure out what the client's future medical care will "look like."6/ Petitioner also presented the testimony of R. Vinson Barrett ("Barrett"), Esquire, a Tallahassee trial attorney. Barrett has more than 40 years' experience in civil litigation. His practice is dedicated to plaintiff's personal injury, as well as medical malpractice and medical products liability. Barrett was previously qualified as an expert in federal court concerning the value of the wrongful death of an elderly person. This testimony was used primarily for tax purposes at that trial. Barrett has been accepted as an expert at DOAH in Medicaid lien cases in excess of 15 times and has provided testimony regarding the value of damages and the allocation of past medical expenses. Barrett has handled cases involving catastrophic brain injuries. He stays abreast of local and state jury verdicts. Barrett has also reviewed several life care plans and economic reports in catastrophic personal injury cases. He routinely makes assessments concerning the value of damages suffered by parties who have received personal injuries. Barrett determines the value of these damages based primarily on his experience and frequent review of jury verdicts. Barrett was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency.7/ Barrett testified that Hosek had a catastrophic brain injury with broken facial bones and pneumothoraxes, all sustained during an extremely violent head-on collision with a commercial truck. This assessment was based on the case exhibits and the "fairly limited medical records" he reviewed. He believed that Hosek would need extensive and expensive medical care for the rest of his life. However, no details were offered by Barrett.8/ Barrett provided an opinion concerning the value of Hosek's damages. This was based on his training and experience. Barrett did not provide a firm number for Hosek's damages. Instead, he offered a nonspecific and broad range of damages. Barrett testified that Hosek's damages "probably" have a value in the range of $25 to $50 million, and the range of Hosek's future medical care would be $10 to $20 million. However, he felt that $10 million was a "very, very, very conservative" estimate of damages, primarily because he felt that future medical expenses would be so high. Barrett stated that Hosek's economic damages would have a significant value exceeding $10 million and that Hosek's noneconomic damages would have an additional value exceeding $10 million. Barrett acknowledged that he did not consider or take into account Hosek's "huge comparative negligence" in estimating the total value of the case. Instead, he only considered the amount(s) that would be awarded for damages. He testified that Petitioner's degree of comparative negligence would reduce each element of damages he was awarded. As a result of Hosek's very significant comparative negligence, Barrett testified that a trial would have likely resulted in a "complete defense verdict" against Hosek or with only minor negligence attributed to the truck driver or his company. Barrett felt that a jury in Hosek's case would not have awarded Hosek "more than one million dollars or so." Barrett explained that in a trial for personal injuries that each element of damages awarded by the jury to the plaintiff on the verdict form is reduced by the percentage of the plaintiff's comparative negligence. Barrett also explained that when the jury verdict assigns ten percent of the negligence to the defendant and 90 percent of the negligence to the plaintiff, then the defendant is liable for paying only ten percent of each element of the damages awarded to the plaintiff. Barrett testified that he does not believe that the $1 million settlement fully compensated Hosek for his injuries and that a potential award of $10 million would be a conservative value of Hosek's claim. While both experts provided broad and nonspecific ranges for the value of Hosek's claims, they both summed up their testimony by concluding that $10 million was a very conservative estimate of Hosek's total claim. AHCA did not call any witnesses. The agency presented Exhibit 1, entitled "Provider Processing System Report." This report outlined all the hospital and medical payments that AHCA made on Hosek's behalf, totaling $267,072.91. On the issue of damages, the experts did not provide any details concerning several of Petitioner's claims, including the amount of past medical expenses, loss of earning capacity, or damages for pain and suffering. The burden was on Petitioner to provide persuasive evidence to prove that the "proportionality test" it relied on to present its challenge to the agency's lien under section 409.910(17)(b) was a reliable and competent method to establish what amount of his tort settlement recovery was fairly allocable to past medical expenses. In this case, the undersigned finds that Petitioner failed to carry this burden.9/ There was no credible evidence presented by Petitioner to prove or persuasively explain a logical correlation between the proposed total value of Petitioner's personal injury claim and the amount of the settlement agreement fairly allocable to past medical expenses. Without this proof the proportionality test was not proven to be credible or accurate in this case, and Petitioner did not carry his burden. There was a reasonable basis in the record to reject or question the evidence presented by Petitioner's experts. Their testimony was sufficiently contradicted and impeached during cross-examination and other questioning. Even if the experts' testimony had not been contradicted, the "proportionality test" proposed by Petitioner was not proven to be a reliable or accurate method to carry Petitioner's burden under section 409.910(17)(b). To reiterate, there was no persuasive evidence presented by Petitioner to prove that (1) a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by the agency, or (2) that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
Conclusions Having reviewed the Notice of Intent to Deem Application Incomplete and Withdrawn from Further Review dated March 13, 2013 (Ex. 1), and the Administrative Law Judge’s Order Granting Respondent’s Motion to Relinquish Jurisdiction and Dismiss Case As Moot (Ex. 2), the Agency for Health Care Administration finds concludes as follows: 1. The license of the Licensee/Transferor, License Number 5799, was revoked by Final Order dated March 8, 2013. 2. The change of ownership application filed by the Petitioner/Transferee is moot because the Licensee no longer has a license. 3. The Petitioner’s change of ownership application is therefore withdrawn from further review in accordance with the Administrative Law Judge’s order. ORDERED in Tallahassee, Florida, on this 23 day of _ Marly , 2014. Sel retary th-Care Administration
Other Judicial Opinions A party that is adversely affected by this Final Order is entitled to seek judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. Filed March 31, 2014 3:56 PM Division of Administative Hearings CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy offhis Final Order was served on the below- named persons/entities by the method designated on this .$/-day of Space , 2014. Richard J. Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone (850) 412-3630 Jan Mills Shaddrick Haston, Unit Manager Facilities Intake Unit Licensure Unit Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) John E. Bradley, Assistant General Counsel Arlene Mayo-Davis, Field Office Manager Office of the General Counsel Local Field Office Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) Honorable June C. McKinney Administrative Law Judge Division of Administrative Hearings (Electronic Filing) Bernard P. Coniff, Esquire Counsel for Special Care, Inc. 760 Ponce De Leon, Suite. 101 Coral Gables, Florida 33134 (U.S. Mail) HORIDA AGENCY FOR HEALTH CARE ADMINSTRATION Pa RICK SCOTT ELIZABETH DUDEK GOVERNOR Better Health Care for all Floridians SECRETARY 1c, (OP 2% March 13, 2013 my wk eS CERTIFIED MAIL Bernard P. Coniff, Esq. Wilfred Braceras Special Care, Inc. 760 Ponce De Leon, Ste. 101 Coral Gables, Florida 33134 cense Number: 5799 Po} 300 LE 2°) Fy Certified Article Number 756 9008 9111 6923 4301 SENDERS RECORD NOTICE OF INTENT TO DEEM APPLICATION INCOMPLETE AND ENE EY DERM APPLICATION INCOMPLETE AND WITHDRAWN FROM FURTHER REVIEW Dear Sir/s: Your change of ownership (CHOW) application for a license is deemed incomplete and withdrawn from further consideration pursuant to Section 408.806(3)(b), Florida Statutes (F.S.), which states that “Requested information omitted from an application for licensure, license renewal, or change of ownership, other than an inspection, must be filed with the agency within 21 days after the agency’s request for omitted information or the application shall be deemed incomplete and shall be withdrawn from further consideration and the fees shall be forfeited’. You were notified by correspondence dated 01/18/2013 to provide further information addressing identified apparent errors or omissions within twenty-one days from the receipt of the Agency’s correspondence. Our records indicate you received this correspondence by certified mail on 01/24/2013. The requested information was reviewed by the Agency. However, your application is deemed incomplete and withdrawn from further consideration, The outstanding issues remaining for licensure are: Proof of Financial Ability To Operate Conclusion: The applicant has not met the following Statutory filing requirements for proof of financial ability to operate: ¢ The applicant failed to provide independent evidence that the funds necessary for startup costs, working capital, and contingency financing exist and will be available as needed as required under Section 408.810(8), Florida Statutes. Analysis: Staff reviewed the documents submitted by the applicant to demonstrate proof of financial ability to operate. Due to errors and omissions in the filing, staff is unable to evaluate the applicant’s financial ability to operate. Proof of Funding: The applicant did not provide adequate proof of ability to fund start-up costs, working capital, and required contingency funding as required by Section 408.810(8), Florida Statutes. : The inter-office omissions letter dated January 18, 2013, raised the following issues: 2727 Mahan Drive,MS#30 Tallahassee, Florida 32308 Visit AHCA online at ahca.myflorida.com CYHIBIT 1 Mr. Braceras * BOYNTON BEACH ASSIS. LIVING FACILITY Page 2 03/13/2013 CHOW Purchase Price The applicant did not indicate the purchase price on Schedule 1. In addition, the applicant did not provide documentation of the purchase (purchase agreement, bill of sale, etc.) and did not provide proof of available funding to complete the purchase transaction. Please provide supporting documentation indicating the availability of funds to complete the purchase. Proof may include account statements of the purchaser prior to purchase. If the purchase has already been completed (an executed bill of sale exists) please provide documentation of the transfer of funds including canceled checks, and or electronic funds transfer receipts. if the applicant borrowed any of the funds for the purchase from an institution or individual, please disclose the amount borrowed, the identity of the lender, and documentation supporting the loan. While the applicant did indicate a purchase price of $30,000, it again did not provide proof of CHOW price, potentially significantly understating its. funding requirement. Working Capital, and Contingency Financing Working capital as defined on Schedule 1 as the largest cumulative cash need from year one or two, from Schedule 7, Projected Cash Flow Statement, Line 21 of the application. In its application, the agency listed its largest cumulative cash need as $0. However, the correct figure, according to the applicants’ Schedule 7, as filed, is $62,182. In addition to providing funding for start-up costs and working capital requirement, all applicants are required by law to provide for contingency financing. Contingency financing as defined in Section 400.471(2}(e), Florida Statutes, and applies to all agency licensure and requires an applicant’s access to contingency financing in addition to funding anticipated cash flows. The purpose of contingency financing is to provide funding for unanticipated, extraordinary occurrences that the applicant cannot project. The contingency financing should cover at least one-month’s average operating expense over the first year of operations. This funding should be in addition to the funding for working capital and Start-up cost on Schedule 1. On Schedule 1, the applicant calculated its contingency funding requirement as $0. However, based on the financial projections in the application, the total annual operating expense in year one is $1,240,565; therefore, one month’s average operating expense would be $103,380. Note: the amounts above are based on the application as filed. The amounts may change due to the financial and application omissions in this notice. Together, the combined total working capital, and contingency funding requirement for the applicant is $165,562, as filed. In its initial application, the applicant did not complete the working capital or contingency funding components of the minimum funding requirement calculation. The only amount listed were pre- opening costs of $66,375. In its response to omissions, the applicant included those omitted items and adjusted pre-opening costs, which appears to have incorrectly contained the purchase price instead of it being listed separately. Because the applicant did not provide any documentation proving the purchase had been completed, and confirming the purchase price, the purchase price must be added to the minimum funding requirement. Mr. Braceras BOYNTON BEACH ASSIS. .O LIVING FACILITY Page 3 03/13/2013 As a result, the minimum funding requirement, as filed in its omission response, is $213,965 ($60,000 purchase price + $50,780 working capital + $103,185 contingency funding). Insufficient Proof of Funding The applicant did not indicate any source of funds on Schedule 1, and did not provide any supporting documentation as evidence that any required financing exist and are available for immediate use, as directed in the instructions to Schedule 1. Failure to provide proof of ability to fund the minimum funding requirement will result in denial of the application. Pursuant to Schedule 1 instructions, please provide independent, certifiable documentation of the existence and availability of these funds, Examples of documents that support funding include: * copies of current bank statements for accounts owned by the proposed agency, * letters of commitment from a bank or other independent lending source, * or a copy of a line of credit agreement indicating credit line and available credit and any restrictions, * parent company audited financial statements (Note: unaudited financial statements will not be considered as proof of funding ability). In addition, if submitting more than one document as Support for funding, attach a Separate schedule that clearly lists each item, including: Name of the financial institution Cutoff (balance) date Last four digits of the account/identification number Ending balance For a line of credit, along with the above, provide total credit line and available credit Note: any parent company or personal funds pledged to the applicant must meet the above criteria and the owner of the funds must provide a binding letter of financial commitment pledging the funds to the applicant. Note: already paid pre-opening costs being claimed must be supported by paid invoices, receipts, etc. All receipts must be accompanied by a separate schedule prepared in an orderly fashion that recaps the nature of the expenditure, amount, and that ultimately ties to the amount claimed as pre-paid expense on Schedule 1. Receipts received alone, without an orderly analysis attached will not be considered as @ source of funding. As its source of funds the applicant provided bank statements proving $143,760 (one statement indicating $4,916, and the second indicating a balance of $138,844). In addition, the applicant included a copy of a check in the amount of $30,000. Staff is unsure of the nature and relevance of the check as no explanation was given for it. However, the funding shortfall is $70,205 and even if the $30,000 check were proof of some prepaid costs, the minimum funding requirement would still be under funded by $40,205. : Since the proven funding is less than the required funding the applicant has not met the provisions of Section 408.810(8), Florida Statutes, and has not proven the financial ability to operate. Mr. Braceras BOYNTON BEACH ASSIS._D LIVING FACILITY Page 4 03/13/2013 Residential Group Care Inspection Report (DOH Form 4029 Please provide a copy of this report from your county health department. The report must be satisfactory and have a current date. EXPLANATION OF RIGHTS Pursuant to Section 120.569, ES, you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28- 106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Sincerely, Shaddrick Haston, Manage) Assisted Living Unit SH/Pottere ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS SPECIAL CARE, INC., Petitioner, vs. Case No. 13-1450 AGENCY FOR HEALTH CARE ADMINISTRATION, Respondent. ORDER GRANTING RESPONDENT’S MOTION TO RELINQUISH JUR[ISDIC]TION AND DISMISS CASE AS MOOT Respondent's Motion to Relinquish Jurfisdic]tion and Dismiss Case as Moot ("Motion") came before the undersigned on June 10, 2013, in which the Agency for Health Care Administration ("Respondent" or “ACHA") asserted that there are no disputed material facts before the undersigned in this matter. ACHA contends that license number 5799, which Special Care, Inc.,*/ is seeking with its change of ownership application, has been revoked by final agency action. Respondent further contends that since license number 5799 ceases to exist, all collateral matters regarding the license are moot, including sufficiency of an application for Petitioner, which is the issue before the undersigned. On June 17, 2013, Special Care, Inc. filed Petitioner's Objection to Respondent's Motion to Relinquish Jurisdiction and Dismiss Case as Moot ("Response"). In the Response, Petitioner did not dispute the material facts of Respondent's Motion stated in paragraphs two through six. Petitioner only alleged duress by Respondent as the reason for Petitioner's submission of a change of ownership application instead of an initial licensure application. After careful consideration of the pleadings, and there being no disputed issues of material fact to be resolved by the Division of Administrative Hearings since Petitioner's change of ownership application is moot because license number 5799 does not exist, it is, therefore, EXHIBIT 2 ORDERED that: 1. The Motion is granted. 2. The final hearing scheduled for July 10, 2013, is canceled. 3. Jurisdiction is relinquished to the Agency for Health Care Administration for entry of a final order. The file of the Division of Administrative Hearings is closed. DONE AND ORDERED this 19th day of June, 2013, in Tallahassee, Leon County, Florida. COHN, JUNE C. McKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 2013.
The Issue Whether accounting fees charged in connection with petitioner's rate increase application should be included as rate case expense; and Whether anticipated accounting fees for "pass-through" rate increase requests should be included in annual operating expenses.
Findings Of Fact Accounting Fees as Part of Rate Case Expense At issue was whether Atlantis had substantiated the accounting fees it sought to include as rate case expense. Without objection, Atlantis agreed to submit a late-filed exhibit (P-2) itemizing the accounting tasks performed, the time required, and the fees charged. After reviewing that exhibit, the Commission agreed that the accounting fees were justified and should be included in rate case expenses. Consequently, operating expenses included in the Commission's proposed agency decision 2/ should be increased $2,659 for both water and sewer systems; this represents actual rate case expenses of $15,954 amortized over three years, allocated equally to each system. ($15,954/3 = $5,318/2 = $2,659.) (Testimony of Mitchell, Deterding; Commission's Recommended Order; P-2, R-1.) II. Accounting Fees for Projected "Pass-Through" Rate Increase Requests Atlantis is a small private utility providing water and sewer service to customers located in the City of Atlantis, Palm Beach County, Florida. On December 31, 1980, it had 893 residential- and 65 general-service water customers; 877 residential- and 28 general-service sewer customers. (Commission Order No. 10445.) The City of Lake Worth pumps Atlantis sewage effluent to the West Palm Beach regional sewer plant for treatment and disposal. The regional plant imposes a treatment charge which Lake Worth passes on to Atlantis. Twice a year the regional plant has increased its treatment charge to Lake Worth which, in turn, has passed on the increased costs to Atlantis. Such increases may be recovered by filing a "pass-through" rate increase request with the Commission. (Testimony of Mitchell, Deterding.) In the past, Atlantis employed a certified public accountant to assist in preparing "pass-through" rate increase requests. The accountant charged approximately $900 per "pass-through" request. He worked 25-30 hours per request at $36 per hour. Much of his time was spent preparing a billing analysis-- showing the number of bills rendered, cumulative gallons consumed, cumulative bills, and a consolidated factor. (Testimony of Mitchell, Neville.) Atlantis wishes to continue retaining the accountant for this purpose in the future by including $1,800 in operating expenses in anticipation of biannual "pass-through" rate increase requests. It contends that such an accounting expense is reasonable and necessary because of its limited staff: one full-time bookkeeper who handles billing and one part-time accountant who supervises daily office procedures and bookkeeping routines. The Commission contends that this anticipated accounting expense is unnecessary--that a "pass- through" rate increase request and the necessary documentation could easily be prepared by the staff bookkeeper. (Testimony of Mitchell, Neville, Deterding.) There is conflicting expert testimony on whether the preparation of such "pass-through" rate increase requests require the supervision and assistance of a certified public accountant. Phillip Mitchell, the accountant who performed this service for Atlantis in the past, testified that it is necessary; Floyd Deterding, the Commission's accountant, testified that it was not. Mr. Deterding's opinion is accepted as persuasive. Don Neville, the accountant who manages the daily affairs of Atlantis, testified that it would be much "easier" having Mr. Mitchell assist in preparing the "pass-through" requests; but he admitted that he thought the bookkeeper was competent enough to perform the work if Mr. Mitchell was unavailable. (Tr. 30.) Furthermore, a billing analysis (containing a consolidated factor and consumption by customer groups) is not a requirement for filing a "pass-through" request. The only items required are: A schedule of monthly charges for sewage treatment from governmental authority. A schedule of monthly gallons of purchased sewage treatment. A schedule of sewage treatment sold (billings to customers in gallons) by month. A schedule of the proposed rates which will pass the increased costs through, showing calculations thereof. A[n] affirmation from an officer that the increase will not cause the util- ity to overearn. A copy of the notice of the increase to customers. A certified copy of the letter, Order or Ordinance setting out the increased charges from the governmental authority. Finally, Mr. Mitchell was not a disinterested witness since--as the outside accountant--he stood to gain from including the $1,800 accounting fee in annual operating expenses. (Testimony of Neville, Deterding, Mitchell.)
Recommendation Based on the foregoing, it is RECOMMENDED: That the application of Atlantis to increase its water and sewer rates be granted, consistent with the Commission's proposed agency action dated December 9, 1981, and this recommended order. DONE AND RECOMMENDED this 2nd day of July, 1982, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of July, 1982.
Findings Of Fact In April of 1977, Respondent contracted to purchase approximately four and one-half acres of land in Pinellas County, Florida on which it sought to develop a 120-bed nursing home. In May, 1977, Respondent filed an application for a Certificate of Need pursuant to the provisions of Section 381.494, Florida Statutes. The certificate was issued on August 8, 1977 by Petitioner to Respondent for the proposed 120-bed nursing home. The certificate provided on its face that it would terminate on August 8, 1978, " . . . with renewal possible only if applicant clearly demonstrates positive construction efforts." In addition, a cover letter forwarded to Respondent by Petitioner with the certificate indicated that the termination date " . . . is extendable provided you can demonstrate as of that date, positive action toward project accomplishment." Prior to receiving the certificate, Respondent retained an architect to prepare plans and specifications for the nursing home, and had made preliminary efforts to obtain financing for the construction of the facility. After issuance of the certificate, Respondent and his architect met with Petitioner's architect to submit schematic drawings for review. Respondent's schematic drawings were approved by Petitioner on August 31, 1977. When Respondent's initial efforts to obtain financing failed, further financing was sought unsuccessfully in Indiana and in Pinellas County, Florida. Respondent's efforts to obtain financing on its own continued to be unsuccessful. As a result, Respondent retained a mortgage broker to attempt to locate an institution to advance the money to construct the project. Public financing through the sale of municipal bonds was attempted, but failed when the City Commission of Safety Harbor, Florida voted against the bond proposal. Subsequently, in June of 1978, after some nine months of continuous attempts to locate an institution to finance construction of the facility, Respondent secured a loan commitment for the project at a cost to Respondent of $13,000. After obtaining the loan commitment, Respondent contacted its architect and requested that he proceed with preparation of plans and specifications for the preliminary and final stages of the project. The architect had ceased his efforts in this direction on Respondent's instructions after approval of the schematic drawings in August of 1977, because it was felt that further efforts in this regard would be imprudent in the absence of a commitment for financing construction of the project. When Respondent's architect attempted to contact the architect for Petitioner to set up a meeting on June 24, 1978, he discovered that Petitioner's architect would not be available for consultation until the following month. When a meeting was finally arranged for July 24, 1978, Petitioner's architect insisted on certain time-consuming changes in the schematic drawings. However, Respondent's architect indicated that had Petitioner's architect advised him on July 24, 1978 that the final plans were required to be filed by August 8, 1978, he could have accomplished the preparation of those plans and specifications by that date. In any event, the changes in the plans and specifications required by Petitioner's architect as a result of the July, 1978 meeting were completed and submitted to Petitioner on the day prior to hearing in this cause, well after the certificate expired on August 8, 1978. These plans contain much of the data customarily found in final construction plans, but Petitioner obviously had not had sufficient time to conduct an in-depth review of those plans prior to the hearing. In any event, Respondent's architect indicated that final construction plans could be completed in no more than two weeks, and that actual construction could begin within two to three days from Petitioner's approval of final construction plans. By letter dated August 4, 1978, Petitioner advised Respondent that its certificate would expire on August 8, 1978 and that a six-month extension might be granted if requested, and if the following four criteria had been met: "1. If applicable, has a site been firmly secured? Has firm financing been secured? Have final construction plans and speci- fications for the project been submitted for review by the Bureau of Health Facilities? Can it reasonably be expected that the project can be under construction within the requested additional time?" Respondent, through its President, testified that it had never been advised by Petitioner that all four of these criteria would have to be met in order to obtain a six-month extension of the certificate. In fact, Respondent apparently relied on the wording in the certificate itself that an extension would be possible " . . . only if applicant clearly demonstrates positive construction efforts . . .", and the language of the covering letter from the Administrator of the Office of Community Medical Facilities which indicated that the expiration date of the certificate would be extendable upon a showing of " . . . positive action toward project accomplishment." By letter dated August 4, 1978, to the Director of the Office of Community Medical Facilities, Respondent requested an extension of its certificate. As grounds for this extension, Respondent advised Petitioner that its earlier unsuccessful attempts to obtain financing had caused inordinate delay in preparing to begin construction of the facility. In fact, in Petitioner's six-month review of the status of Respondent's certificate, Respondent informed Petitioner on March 20, 1978, that it had been unable to procure permanent financing. Subsequently, on June 6, 1978, Respondent informed Petitioner that it had obtained the necessary financing, and furnished a copy of the commitment letter from the Community Bank of Seminole, Florida, to Petitioner. As further justification for an extension of its certificate, Respondent advised Petitioner that as a result of a change in criteria by the City of Clearwater, Florida, an impact study which it was required to submit to the city had to be revised, thereby causing a delay in rezoning the property which it had acquired for construction of the facility a Respondent further advised Petitioner in its August 4, 1978 letter that its working drawings for the facility were fifty percent complete, and that it expected to begin construction by November 1, 1978. Petitioner contends that Respondent's certificate should be revoked, and that the requested extension should not be granted because Respondent has not firmly secured a site for the facility; has not secured firm financing; has not submitted final construction plans and specifications for review; and that, as a result, it cannot reasonably be expected that the project can be under construction within the requested additional time. Respondent's contract to purchase the land on which the facility is to be constructed contains a provision that the purchase of the property must be concluded on or before October 15, 1977. This provision of the contract was not performed by October 15, 1977. However, testimony established that Respondent and the sellers of the property have continued through the present time a joint effort to obtain rezoning of the land to allow construction of the facility. Consequently, the parties have apparently, as between themselves, agreed not to consider the October 15, 1977, closing date binding. The land purchase contract also contains a contingency which would relieve Respondent from its obligation to purchase the property should it be unable to obtain a rezoning of the parcel to an RM-28 zoning classification. Although evidence introduced at the hearing indicates that the local government might not be agreeable to rezoning the property to RM-28, there is nothing in the record to indicate that the facility might not be constructed on the property should it be rezoned to a different classification. Further, the contingency in the contract for rezoning to RM-28 was obviously intended for the benefit of Respondent, and Respondent would, therefore, be free to waive that requirement should the facility be allowed to be constructed on the property in a different zoning classification. Although final construction plans have admittedly not been filed with Petitioner for review, the evidence is uncontradicted that this failure was due to a combination of the Respondent's inability to obtain financing, and Petitioner's architect's unavailability to consult with Respondent's architect following issuance of the loan commitment. In addition, evidence of record is also uncontradicted to the effect that final construction plans could be submitted within two weeks after granting of an extension of the certificate, and that construction on the project could commence within two to three days after approval of the final plans and specifications. Respondent's mortgage loan commitment contains requirements that necessary rezoning of the property be obtained by September 1, 1978, and that the commitment in its entirety expires on September 15, 1978. However, Respondent's Predisent testified that he had obtained a 60-day extension of this commitment. In any event it appears that the loan commitment was in existence and effective as of the date of the expiration of the certificate and the date on which Petitioner issued its Administrative Complaint.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a Final Order be entered by the State of Florida, Department of Health and Rehabilitative Services, denying the relief sought in the Administrative Complaint against Respondent, Shive Nursing Centers of Florida, Inc., and that Respondent's certificate be extended by the Department for a period of 6 months from the date of final agency action in this cause. RECOMMENDED this 14th day of December, 1978, in Tallahassee, Florida. WILLIAM E. WILLIAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building MAILING ADDRESS: Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Steven W. Huss, Esquire Building 1, Room 310 1323 Winewood Boulevard Tallahassee, Florida 32301 John T. Blakeley, Esquire 911 Chestnut Street Post Office Box 1368 Clearwater, Florida 33517
Findings Of Fact On May 30, 2008, FEC entered an Order of Probable Cause charging Respondent with the following violations: Count 1: On or about January 10, 2007, Respondent violated Section 106.07(1), Florida Statutes, when he failed to file with the filing office his 2006 Q4 CTR due on that date, listing all contributions received and all expenditures made, by or on behalf of the candidate. Count 2: On or about May 7, 2007, Respondent violated Section 106.141(1), Florida Statutes, by failing to properly dispose of surplus campaign funds within 90 days after he was eliminated and to file a report reflecting the disposition of those funds, when Respondent failed to qualify between January 30, 2007 and February 6, 2007, and failed to dispose of funds in his campaign account and file a report reflecting the disposition of the funds on or before May 7, 2007. On or about December 16, 2008, Respondent was personally served with the Order of Probable Cause by process server. Because Respondent neither elected to have a formal or informal hearing conducted before FEC nor elected to resolve the complaint by consent order within 30 days after the date of the filing of FEC's allegations, on January 30, 2009, FEC referred the case to the Division of Administrative Hearings (DOAH), pursuant to Section 106.25(5), Florida Statutes (2007). The case was filed at DOAH on February 2, 2009. On February 6, 2009, Petitioner filed and served its First Requests for Admission upon Respondent. Respondent had 35 days, including time for mailing, to either admit or deny each of the Requests for Admission. Rule 1.370(a), Florida Rules of Civil Procedure provides: Each matter of which an admission is requested shall be separately set forth. The matter is admitted unless the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter within 30 days after service of the request . . Thirty-five days from February 6, 2009, was March 13, 2009. Respondent failed to file a response to FEC's Requests for Admission by March 13, 2009. Additionally, Rule 1.370(b), Florida Rules of Civil Procedure, provides: Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. On March 17, 2009, Petitioner filed its Motion for Summary Final Order, based on the unanswered Requests for Admission, and, therefore, based upon the conclusively established admissions of fact. Respondent filed no response in opposition to the Motion for Summary Final Order, as permitted by Florida Administrative Code Rule 28-106.204. On April 3, 2009, an Order to Show Cause was entered, requiring Respondent to show cause by April 10, 2009, why a Summary Final Order should not be entered against Respondent. Respondent did not file any response. The April 3, 2009, Order to Show Cause gave Respondent a final opportunity to dispute any or all facts, to set aside the Requests for Admission, or to otherwise show cause why the Motion for Summary Final Order should not be granted. Respondent has not shown good cause. Respondent's failure to provide a written answer or objection to FEC's Requests for Admission conclusively establishes the following determinative facts, which prove the charges herein:1/ Respondent signed a Statement of Candidate form for Jacksonville City Council, District 7, on June 8, 2005. Respondent filed an Appointment of Campaign Treasurer and Designation of Campaign Depository for Candidates (DS-DE-9) on or about June 8, 2005, designating himself as the treasurer of his campaign. Respondent did not file his 2006 Q4 Campaign Treasurer's report by January 10, 2007. Respondent received a Memorandum from Beth Fleet, Director of Candidate Administration, dated January 12, 2007, notifying him that he failed to file his 2006 Q4 Campaign Treasurer's Report that was due on January 10, 2007. Respondent received an April 27, 2007, Memorandum from Jerry Holland, Duval County Supervisor of Elections, notifying Respondent that he failed to file his 2006 Q4 Campaign Treasurer's Report that was due on January 10, 2007. Respondent's failure to file his 2006 Q4 Campaign Treasurer's Report is a violation of Section 106.07(1), Florida Statutes. Respondent's Termination Report (TR) was due on May 7, 2007. Respondent received a letter dated April 27, 2007, from Jerry Holland, Duval County Supervisor of Elections, notifying him that his TR was due on May 7, 2007. Respondent did not file his TR with the Duval County Supervisor of Elections by May 7, 2007. Respondent's failure to file his TR by May 7, 2007, is a violation of Section 106.141(1), Florida Statutes.
Findings Of Fact In 1975 the Florida Legislature passed the Medical Malpractice Reform Act, Chapter 75-9, Laws of Florida, now codified in Chapter 768, Florida Statutes. Part of this legislative package included the creation of the Fund. This legislation was passed in response to a medical malpractice insurance crisis which arose when the primary underwriter for the Florida Medical Association sought to stop issuing medical malpractice policies in Florida, thus making it difficult, if not impossible, for physicians or hospitals to obtain medical malpractice insurance coverage at reasonable rates. As a result of this problem, many physicians began to practice defensive medicine, curtail or abandon their practices or practice without coverage of any kind. The Fund is a private not-for-profit organization, participation in which is totally voluntary for its member-health care providers. Insofar as Petitioners are concerned, membership in the Fund is but one of several options available to provide legally required evidence of financial responsibility in order to obtain licensure as a hospital facility in Florida. Physicians, hospitals, health maintenance organizations and ambulatory surgical centers who become members of the Fund must maintain at least $100,000 in primary professional liability insurance. Membership in the Fund grants to each participant a limitation of liability above the $100,000 in primary coverage. To the extent that any settlement or judgment exceeds the primary coverage of the participant, it is paid by the Fund without limitation. The Fund is operated subject to the supervision and approval of a board of governors whose membership is required by law to consist of representatives of the insurance industry, the legal and medical professions, physicians' insurers, hospitals, hospitals' insurers and the general public. The Department is charged by statute with certain regulatory functions concerning the Fund. As the law existed in 1980 a base fee for Fund membership was set by statute at $500 for physicians, after an initial $1,000 enrollment fee for the first year of participation, and at $300 per bed for hospital members. The statute required the Department to set additional fees based upon the classifications of health care providers contained in the statute. In the event that base fees are insufficient to pay all claims asserted against the Fund for a given fund year, the Department is empowered, upon request of the Board of Governors of the Fund, to order assessments against Fund participants to meet any such deficiency. Under the original legislation, all classes of health care providers could be assessed unlimited amounts to make up any deficiencies. As a result of legislative amendments which became effective July 1, 1976, the amount which participants, other than hospitals, could be assessed was limited to the amount each Fund member had paid to join the Fund for that particular coverage year. 1976 legislative amendments also required that each fiscal year of the Fund, which runs from July 1 through June 30, be operated independently of preceding fiscal years, and further required that occurrences giving rise to claims in a particular fund year be paid only from fees or investment income on those fees collected for that particular year. Thus, it is entirely possible for the Fund to experience deficits in a given year, and yet hold surplus funds for other years. On March 14, 1983, the Department of Insurance issued a "Notice of Assessment for 1980-81 Fiscal Fund Year" (hereinafter called the "Notice of Assessment). (exh. 20) Notice of this Notice of Assessment was published in the Florida Administrative Weekly, March 25, 1983, Vol. 9, no. 12. The Notice of Assessment announced that the Insurance Commissioner intended to levy and authorize the Fund to collect an assessment in the amount of $23,684,511 from those health care providers that were members of the Fund in fund year 1980-81 (exh. 20). Each of the hospitals named as Petitioners in the Petition for Administrative Proceedings in Case Dos. 83-1067 and 83-1068 were members of the Florida Patient's Compensation Fund during the fund year 1980-1981. (exh. 40; P.H.S. V 1) The chart below contains the following information concerning fund year 1980-81: the amount of the total proposed assessment described in the Notice of Assessment (dated March 14, 1983); the amount of the losses experienced by doctors and hospitals, respectively; the amount of the fees originally paid by doctors and hospitals; and the amount of the proposed assessments for doctors and hospitals; 1980-1981 Fund Year - Total Assessment $23,684,511 DOCTORS HOSPITALS Losses $19,086,800 Losses $29,798,500 Fees Paid 4,299,117 Fees Paid 6,015,827 Assessments 4,322,233 Assessments 18,734,918 (P.H.S. V 9) The Department computed the portion of the assessment to be paid by the different classes of health care providers for the 1980-1981 fund year based upon an "indicated rate method." This method is represented by the following formula: The Department started with the actuarially indicated rate for each class of health care provider as described in the October, 1981 Actuarial Report prepared by Tillinghast, Nelson, et al. This is called the "indicated rate by class." The Department then applied the following formula for each class: Indicated Rate by Class x No. of Members in the Class = Total indicated fees by Class Total Indicated Fees by Class divided by total Indicated Fees for ALL Classes = Percentage of Indicated Fee by Class Percentage of Indicated Fee by Class x Total Expected Loss for ALL Classes = Expected Loss by Class (Expected loss is ALL losses for the fund year including claims previously paid, reserves established on claims asserted and IBNR [incurred but not reported].) (P.H.S. V 12) The "indicated rate method" for allocating assessments among the various classes of health care providers was selected by the Department as the method which most fairly reflected the classifications prescribed in Section 768.54(3)(c), Florida Statutes. The record in this proceeding establishes that this method is the most feasible mechanism for fairly reflecting classifications established by statute, and, at the same time, providing immediate funds necessary to meet all claims against the Fund. (P.H.S. V 13) The difference between the results derived by the "indicated rate method" and the amounts reflected in the Notice of Assessment is due to the application of the statutory cap on assessments against physician members, as applied by the Department of Insurance. (P.H.S. V 14) Exhibit #17 shows (a) the calculations utilized by the Department in spreading the assessments for the 1980-81 fund year, (b) the amount each class would have paid under the "indicated rate method" for the fund year 1980-81 and (c) the amount actually described in the 1980-81 Notice of Assessment of the Department of Insurance. The Notices of Assessment issued by the Department of Insurance for fund years 1980-1981 allocated the "excess assessments" (which could not be applied to physician members because the 768.54(3)(c)'s limitation on the amount physicians could be assessed) among the other classes of health care providers based upon their percentage of "expected losses." (P.H.S. V 16) The amounts of the assessments sought by the Fund, and described in the Notices of Assessment, were calculated by the Fund by using the following formula: Total fees paid during the Fund Year + Investment Income attributable to the Fund Year Expenses allocated to that Fund Year Amount paid on claims for that Fund Year Amount reserved for all known claims for that Fund Year. (P.H.S. V 17) The fees ordered by the Department of Insurance and collected by the Fund plus the interest income generated by such fees for fund year 1980-81 are inadequate to cover claims against the Fund for that year. (P.H.S. V 19) Petitioners, for purposes of this proceeding, do not contest: (a) the method by which the Fund establishes reserves; (b) the amount of the reserves established for any individual claim file; or (c) the amount of the total deficit described in the Notices of Assessment dated March 14, 1983 for fund year 1980-1981. Nonetheless, Petitioners do not concede that the Fund needs all of the money described in the Notice of Assessment dated March 14, 1983 at this time. (P.H.S. V 33,34) The record in this cause establishes that as of March 14, 1983, there existed a deficiency in the Fund's account for the 1980-1981 fund year of at least $23,684,511 for the payment of settlements, final judgments and reserves on existing and known claims. Approximately $19,405.00 of this deficit is directly attributable to one judgment - Von Stetina v. Florida Medical Center. This was a malpractice judgment against a hospital which has been affirmed on appeal by the First District Court. An appeal has been filed in the Florida Supreme Court. (exh. nos. 1, 2, 18, 19, 26, 27 and 38) In view of the statutory cap on the amounts that may be assessed against physician members of the Fund, the foregoing dollar amounts for assessments for the 1980-81 fund year, and the manner in which they are proposed to be allocated among the remaining classes of health care providers are appropriate. The original fees for the 1980-1981 fund year were set in June of 1980. The Fund by letter dated April 21, 1980 requested that the Department approve an increase in membership fees for physicians and surgeons in the amount of twenty-five (25) percent and a redefinition of rate classes that would move eighteen (18) percent of the physicians and surgeons from Class 3 to Class 2. The Department published notice in the Florida Administrative Weekly and notified interested parties on its mailing lists that a public hearing was to be held on June 2, 1980. This hearing was held pursuant to 627.351, 768.54, and Chapter 120, Florida Statutes. The purpose of the hearing was identified as "to afford the Fund an opportunity to present evidence and agreement in support of its filing and, further, to afford any affected person an opportunity to present evidence and argument relating to the filing." A hearing was in fact held on June 2, 1980. The Fund presented evidence and argument in support of its request for twenty-five (25) percent increase in fees. No parties argued or presented evidence contending that the fees should have been higher. Subsequent to the hearing, the Department notified the Fund by letter dated June 12, 1980 that its request was approved. Acting on the Department's approval, the Fund sent all prospective members of the Fund for the 1980-81 year membership forms. These forms notified each health care provider what the fees for membership for all health care providers would be. In order to join the Fund each health care provider was required to fill out and sign these forms, thereby agreeing to pay the membership fees and any future assessments which might be levied. Both Petitioners and Respondent have submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that those proposed findings of fact are not included in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues involved in this cause, or as not having been supported by evidence of record.
