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
The Issue The issue is whether Petitioner should terminate the existing individual plan of employment ("IPE") that was developed pursuant to Section 413.30, Florida Statutes (2001), because the existing IPE is no longer viable. (All chapter and section references are to Florida Statutes (2001) unless otherwise stated.)
Findings Of Fact Respondent has been a client of Petitioner for many years and has received thousands of dollars in benefits from Petitioner in accordance with an existing IPE. The existing IPE provides that Respondent's employment goal is for self- employment as an administrator of a beauty academy in the Orlando metropolitan area. Sometime prior to March 30, 2000, the parties entered into mediation to resolve certain differences between them. On March 30, 2000, the parties executed a Mediation Agreement. The Mediation Agreement required Respondent's business plan to include expenses described as the cost of accreditation and the cost of financial aid software. It also required the Small Business Development Center ("SBDC") at the University of Central Florida to evaluate Respondent's business plan. Petitioner agreed to pay the expenses of accreditation and financial aid software if the SBDC found that the business plan is viable. In relevant part, the Mediation Agreement provided: If the business plan . . . is found by SBDC to be viable and the business plan includes the 2 expenses referred to . . . above, VR agrees to provide theses expenses as part of its services in the IPE. Respondent's Exhibit A On April 4, 2000, the SBDC issued a written evaluation of Respondent's business plan. The parties agree that the business plan evaluated by SBDC includes the requisite expenses. At the hearing, Petitioner claimed that Respondent did not satisfy the relevant requirement in the Mediation Agreement for a finding by SBDC that the business plan is viable, in part, because the written evaluation does not use the term "viable." Petitioner cited no statute, rule, or judicial decision that establishes a technical definition for the term "viable." In the absence of a technical definition, the term should be interpreted according to its common and ordinary meaning. The American Heritage Dictionary of the English Language, at 1915, (4th Ed. Houghton Mifflin Co. New York 2000), defines the term "viable" to mean, "Capable of success or continuing effectiveness; practicable. . . . See synonyms at possible." The written evaluation issued from SBDC to Petitioner's consultant found that Respondent's business plan is viable. In relevant part, the written evaluation finds: . . . this business plan has been very carefully researched and written. It is a thorough description of Sandra's business concept. If implemented as described, this document should serve as tool (sic) to help insure her business success. I would like to add that this plan is more comprehensive than any that I have ever evaluated for Vocational Rehab clients. Respondent's Exhibit A. Petitioner designated the SBDC as Petitioner's agent for the evaluation of Respondent's business plan. SBDC issued the written evaluation to Petitioner's consultant and provided copies to Respondent and others. Petitioner is bound by the findings of SBDC as Petitioner's designated agent. The parties did not agree in the Mediation Agreement that SBDC would, as a condition of Petitioner's obligation to pay expenses, find that Respondent's business would be viable. Rather, the parties agreed, as a condition of funding, to a finding by SBDC that the business plan is viable. Respondent satisfied that express condition of funding. Petitioner knew, or should have known, that SBDC would not make a finding that the proposed business would be viable. In relevant part, the written evaluation issued to Petitioner's consultant stated: As I am sure you know the ability to prepare a "good" business plan does not necessarily mean that someone will or will not be successful. The SBDC, therefore, will not pass judgment on the feasibility or likelihood of success of any business. We limit our remarks to a critique of the plan itself as a written document only. Id. After SBDC issued the written evaluation, Petitioner executed the existing IPE. By letter dated May 23, 2000, Petitioner provided Respondent with a copy of the IPE. In relevant part, the IPE provides that Petitioner will pay for the costs of accreditation and software that were conditioned on the written evaluation from SBDC. The IPE further provides that Petitioner will pay for specific services for counseling and guidance, physical restoration by physicians of Respondent's choice, mental restoration by providers of Respondent's choice, miscellaneous training required for accreditation, maintenance, and transportation. In addition, the IPE provides that Petitioner will pay for other goods and services associated with the new business including auditing expenses, licensing expenses, advertising, a video camera and tripod, video tapes, work clothing, rent in the amount of $16,119, the cost of staff development, office supplies, janitorial services, utilities of $4,400, and a computer workstation. After May 23, 2000, the parties amended the IPE approximately four times to include additional expenses not included in the original IPE. The additional expenses included the cost of beauty equipment and legal fees. Between May 23, 2000, and June 1, 2001, Petitioner disputed some of the expenses submitted by Respondent. When Respondent requested that Petitioner pay a security deposit equal to three months rent for office space for the new business, Petitioner denied the request on the grounds that a security deposit is not rent and that the IPE obligates Petitioner to pay only rent. The proposed landlord refused to register as vendor with Petitioner. A real estate broker agreed to act as the conduit-vendor for the security deposit and rent. However, Petitioner's consultant refused to proceed with the arrangement without approval from his Tallahassee office. The security deposit was rent within the meaning of the IPE. Payment of the security deposit would not have increased the total amount paid as rent but would have come from the monies already allocated to rent. The delay in obtaining approval for the security deposit caused Respondent to lose her option to lease the original office space. Respondent located a second site for the new business, but the new site requires some renovation before it will be suitable for opening. Petitioner refuses to pay the renovation expense on the grounds that such expenses are not rent. On June 6, 2001, Petitioner retained the services of a specialist to provide a market analysis to determine whether the proposed business, as opposed to the business plan, is viable. The specialist issued a written market analysis on June 27, 2001. By letter dated July 23, 2001, Petitioner's consultant advised Respondent that her IPE was no longer viable (the "termination letter"). In relevant part, the letter stated: I have decided that there is no likelihood that your planned services relating to your self-employment as the administrator of a beauty academy will lead to your employment in that capacity. This decision is made for a number of reasons but I shall take the opportunity to list some of them below; 1)the loss of your previously anticipated referrals. . ., 2)my reluctance to provide payment(s) for the required (3 months) security deposit on your intended commercial lease, 3)the continuing unwillingness of [an organization designated as NACCAS] to certify your academy, 4)my belief that you can not qualify as a financial aid approved facility without certification. . . 5)the apparent lack of sponsoring . . . sources 6)my unwillingness to sponsor repairs for your intended place of business, 7)tuition costs higher than those at public institutions in the community and 8)current market analysis suggesting that additional cosmetology/beauty schools in the metro Orlando area would have a difficult time obtaining profitability. (emphasis supplied) Petitioner's Exhibit 1. The preponderance of evidence does not support the findings in grounds 1) and 5) in the termination letter. Respondent testified that she had commitments for referrals and sponsors and provided written statements from approximately 13 sources that supplemented and explained her testimony. The sources of referral and sponsorship include the Sanctuary of Praise Ministries, The Bridge, two radio stations, the NAACP, and the Central Florida Advocate. Grounds 2) and 6) of the termination letter pertain to the security deposit and renovation expenses. A security deposit equal to three months rent is "rent" covered by the IPE. Renovation expenses are not rent but would not increase the total rent in the IPE because the current space is less expensive than the original space. Grounds 3) and 4) in the termination letter are only temporary. The certifying organization is the National Accrediting Commission of Cosmetology Arts and Sciences (the "NACCAS"). After November 15, 2001, Respondent will be eligible to apply for accreditation from the NACCAS and, once obtained, will be eligible for financial aid for her students. The preponderance of evidence does not support a finding pertaining to ground 7) in the termination letter. The parties submitted conflicting evidence on this issue. Ground 8) is a mixed question of fact and law. Petitioner failed to show that there is "no likelihood" that Respondent will achieve her goal of self-employment as an administrator of a beauty academy.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order finding that there is some likelihood that the IPE will lead to Respondent's self-employment as an administrator of a beauty academy; and requiring Petitioner to continue the IPE toward that goal. DONE and ENTERED this 31st day of October, 2001, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 31st day of October 2001. COPIES FURNISHED: James A. Robinson, General Counsel Department of Education The Capitol, Suite 1701 Tallahassee, Florida 32399-0400 Carl F. Miller, Jr., Director Division of Vocational Rehabilitation Department of Education 2002 Old St. Augustine Road Building A Tallahassee, Florida 32301-4862 Joseph L. Shields, Esquire Department of Education Division of Vocational Rehabilitation Services 2002 Old St. Augustine Road Building A, Room 343 Tallahassee, Florida 32301-4862 Sandra Lewis 3813 Columbia Street Orlando, Florida 32811
The Issue The threshold issue in this case is whether the decisions giving rise to the dispute, which concern the allocation and disbursement of funds appropriated to Respondent by the legislature and thus involve the preparation or modification of the agency's budget, are subject to quasi-judicial adjudication under the Administrative Procedure Act. If the Division of Administrative Hearings were possessed of subject matter jurisdiction, then the issues would be whether Respondent is estopped from implementing its intended decisions to "de- obligate" itself from preliminary commitments to provide low- interest loans to several projects approved for funding under the Community Workforce Housing Innovation Pilot Program; and whether such intended decisions would constitute breaches of contract or otherwise be erroneous, arbitrary, capricious, or abuses of the agency's discretion.
Findings Of Fact Petitioners Pasco CWHIP Partners, LLC ("Pasco Partners"); Legacy Pointe, Inc. ("Legacy"); Villa Capri, Inc. ("Villa Capri"); Prime Homebuilders ("Prime"); and MDG Capital Corporation ("MDG") (collectively, "Petitioners"), are Florida corporations authorized to do business in Florida. Each is a developer whose business activities include building affordable housing. The Florida Housing Finance Corporation ("FHFC") is a public corporation organized under Chapter 420, Florida Statutes, to implement and administer various affordable housing programs, including the Community Workforce Housing Innovation Pilot Program ("CWHIP"). The Florida Legislature created CWHIP in 2006 to subsidize the cost of housing for lower income workers performing "essential services." Under CWHIP, FHFC is authorized to lend up to $5 million to a developer for the construction or rehabilitation of housing in an eligible area for essential services personnel. Because construction costs for workforce housing developments typically exceed $5 million, developers usually must obtain additional funding from sources other than CWHIP to cover their remaining development costs. In 2007, the legislature appropriated $62.4 million for CWHIP and authorized FHFC to allocate these funds on a competitive basis to "public-private" partnerships seeking to build affordable housing for essential services personnel.1 On December 31, 2007, FHFC began soliciting applications for participation in CWHIP. Petitioners submitted their respective applications to FHFC on or around January 29, 2008. FHFC reviewed the applications and graded each of them on a point scale under which a maximum of 200 points per application were available; preliminary scores and comments were released on March 4, 2008. FHFC thereafter provided applicants the opportunity to cure any deficiencies in their applications and thereby improve their scores. Petitioners submitted revised applications on or around April 18, 2008. FHFC evaluated the revised applications and determined each applicant's final score. The applications were then ranked, from highest to lowest score. The top-ranked applicant was first in line to be offered the chance to take out a CWHIP loan, followed by the others in descending order to the extent of available funds. Applicants who ranked below the cut-off for potential funding were placed on a wait list. If, as sometimes happens, an applicant in line for funding were to withdraw from CWHIP or fail for some other reason to complete the process leading to the disbursement of loan proceeds, the highest-ranked applicant on the wait list would "move up" to the "funded list." FHFC issued the final scores and ranking of applicants in early May 2006. Petitioners each had a project that made the cut for potential CWHIP funding.2 Some developers challenged the scoring of applications, and the ensuing administrative proceedings slowed the award process. This administrative litigation ended on or around November 6, 2008, after the parties agreed upon a settlement of the dispute. On or about November 12, 2008, FHFC issued preliminary commitment letters offering low-interest CWHIP loans to Pasco Partners, Legacy, Villa Capri, Prime (for its Village at Portofino Meadows project), and MDG. Each preliminary commitment was contingent upon: Borrower and Development meeting all requirements of Rule Chapter 67-58, FAC, and all other applicable state and FHFC requirements; and A positive credit underwriting recommendation; and Final approval of the credit underwriting report by the Florida Housing Board of Directors. These commitment letters constituted the necessary approval for each of the Petitioners to move forward in credit underwriting, which is the process whereby underwriters whom FHFC retains under contract verify the accuracy of the information contained in an applicant's application and examine such materials as market studies, engineering reports, business records, and pro forma financial statements to determine the project's likelihood of success. Once a credit underwriter completes his analysis of an applicant's project, the underwriter submits a draft report and recommendation to FHFC, which, in turn, forwards a copy of the draft report and recommendation to the applicant. Both the applicant and FHFC then have an opportunity to submit comments regarding the draft report and recommendation to the credit underwriter. After that, the credit underwriter revises the draft if he is so inclined and issues a final report and recommendation to FHFC. Upon receipt of the credit underwriter's final report and recommendation, FHFC forwards the document to its Board of Directors for approval. Of the approximately 1,200 projects that have undergone credit underwriting for the purpose of receiving funding through FHFC, all but a few have received a favorable recommendation from the underwriter and ultimately been approved for funding. Occasionally a developer will withdraw its application if problems arise during underwriting, but even this is, historically speaking, a relatively uncommon outcome. Thus, upon receiving their respective preliminary commitment letters, Petitioners could reasonably anticipate, based on FHFC's past performance, that their projects, in the end, would receive CWHIP financing, notwithstanding the contingencies that remained to be satisfied. There is no persuasive evidence, however, that FHFC promised Petitioners, as they allege, either that the credit underwriting process would never be interrupted, or that CWHIP financing would necessarily be available for those developers whose projects successfully completed underwriting. While Petitioners, respectively, expended money and time as credit underwriting proceeded, the reasonable inference, which the undersigned draws, is that they incurred such costs, not in reliance upon any false promises or material misrepresentations allegedly made by FHFC, but rather because a favorable credit underwriting recommendation was a necessary (though not sufficient) condition of being awarded a firm loan commitment. On January 15, 2009, the Florida Legislature, meeting in Special Session, enacted legislation designed to close a revenue shortfall in the budget for the 2008-2009 fiscal year. Among the cuts that the legislature made to balance the budget was the following: The unexpended balance of funds appropriated by the Legislature to the Florida Housing Finance Corporation in the amount of $190,000,000 shall be returned to the State treasury for deposit into the General Revenue Fund before June 1, 2009. In order to implement this section, and to the maximum extent feasible, the Florida Housing Finance Corporation shall first reduce unexpended funds allocated by the corporation that increase new housing construction. 2009 Fla. Laws ch. 2009-1 § 47. Because the legislature chose not to make targeted cuts affecting specific programs, it fell to FHFC would to decide which individual projects would lose funding, and which would not. The legislative mandate created a constant-sum situation concerning FHFC's budget, meaning that, regardless of how FHFC decided to reallocate the funds which remained at its disposal, all of the cuts to individual programs needed to total $190 million in the aggregate. Thus, deeper cuts to Program A would leave more money for other programs, while sparing Program B would require greater losses for other programs. In light of this situation, FHFC could not make a decision regarding one program, such as CWHIP, without considering the effect of that decision on all the other programs in FHFC's portfolio: a cut (or not) here affected what could be done there. The legislative de-appropriation of funds then in FHFC's hands required, in short, that FHFC modify its entire budget to account for the loss. To enable FHFC to return $190 million to the state treasury, the legislature directed that FHFC adopt emergency rules pursuant to the following grant of authority: In order to ensure that the funds transferred by [special appropriations legislation] are available, the Florida Housing Finance Corporation shall adopt emergency rules pursuant to s. 120.54, Florida Statutes. The Legislature finds that emergency rules adopted pursuant to this section meet the health, safety, and welfare requirements of s. 120.54(4), Florida Statutes. The Legislature finds that such emergency rulemaking power is necessitated by the immediate danger to the preservation of the rights and welfare of the people and is immediately necessary in order to implement the action of the Legislature to address the revenue shortfall of the 2008-2009 fiscal year. Therefore, in adopting such emergency rules, the corporation need not publish the facts, reasons, and findings required by s. 120.54(4)(a)3., Florida Statutes. Emergency rules adopted under this section are exempt from s. 120.54(4)(c), Florida Statutes, and shall remain in effect for 180 days. 2009 Fla. Laws ch. 2009-2 § 12. The governor signed the special appropriations bills into law on January 27, 2009. At that time, FHFC began the process of promulgating emergency rules. FHFC also informed its underwriters that FHFC's board would not consider any credit underwriting reports at its March 2009 board meeting. Although FHFC did not instruct the underwriters to stop evaluating Petitioners' projects, the looming reductions in allocations, coupled with the board's decision to suspend the review of credit reports, effectively (and not surprisingly) brought credit underwriting to a standstill. Petitioners contend that FHFC deliberately intervened in the credit underwriting process for the purpose of preventing Petitioners from satisfying the conditions of their preliminary commitment letters, so that their projects, lacking firm loan commitments, would be low-hanging fruit when the time came for picking the deals that would not receive funding due to FHFC's obligation to return $190 million to the state treasury. The evidence, however, does not support a finding to this effect. The decision of FHFC's board to postpone the review of new credit underwriting reports while emergency rules for drastically reducing allocations were being drafted was not intended, the undersigned infers, to prejudice Petitioners, but to preserve the status quo ante pending the modification of FHFC's budget in accordance with the legislative mandate. Indeed, given that FHFC faced the imminent prospect of involuntarily relinquishing approximately 40 percent of the funds then available for allocation to the various programs under FHFC's jurisdiction, it would have been imprudent to proceed at full speed with credit underwriting for projects in the pipeline, as if nothing had changed. At its March 13, 2009, meeting, FHFC's board adopted Emergency Rules 67ER09-1 through 67ER09-5, Florida Administrative Code (the "Emergency Rules"), whose stated purpose was "to establish procedures by which [FHFC would] de- obligate the unexpended balance of funds [previously] appropriated by the Legislature " As used in the Emergency Rules, the term "unexpended" referred, among other things, to funds previously awarded that, "as of January 27, 2009, [had] not been previously withdrawn or de-obligated . . . and [for which] the Applicant [did] not have a Valid Firm Commitment and loan closing [had] not yet occurred." See Fla. Admin. Code R. 67ER09-2(29). The term "Valid Firm Commitment" was defined in the Emergency Rules to mean: a commitment issued by the [FHFC] to an Applicant following the Board's approval of the credit underwriting report for the Applicant's proposed Development which has been accepted by the Applicant and subsequent to such acceptance there have been no material, adverse changes in the financing, condition, structure or ownership of the Applicant or the proposed Development, or in any information provided to the [FHFC] or its Credit Underwriter with respect to the Applicant or the proposed Development. See Fla. Admin. Code R. 67ER09-2(33). There is no dispute concerning that fact that, as of January 27, 2009, none of the Petitioners had received a valid firm commitment or closed a loan transaction. There is, accordingly, no dispute regarding the fact that the funds which FHFC had committed preliminarily to lend Petitioners in connection with their respective developments constituted "unexpended" funds under the pertinent (and undisputed) provisions of the Emergency Rules, which were quoted above. In the Emergency Rules, FHFC set forth its decisions regarding the reallocation of funds at its disposal. Pertinent to this case are the following provisions: To facilitate the transfer and return of the appropriated funding, as required by [the special appropriations bills], the [FHFC] shall: * * * Return $190,000,000 to the Treasury of the State of Florida, as required by [law]. . . . The [FHFC] shall de-obligate Unexpended Funding from the following Corporation programs, in the following order, until such dollar amount is reached: All Developments awarded CWHIP Program funding, except for [a few projects not at issue here.] * * * See Fla. Admin. Code R. 67ER09-3. On April 24, 2009, FHFC gave written notice to each of the Petitioners that FHFC was "de-obligating" itself from the preliminary commitments that had been made concerning their respective CWHIP developments. On or about June 1, 2009, FHFC returned the de- appropriated funds, a sum of $190 million, to the state treasury. As a result of the required modification of FHFC's budget, 47 deals lost funding, including 16 CWHIP developments to which $83.6 million had been preliminarily committed for new housing construction.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that FHFC enter a Final Order dismissing these consolidated cases for lack of jurisdiction. DONE AND ENTERED this 18th day of February, 2010, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 18th day of February, 2010.
Findings Of Fact The Petitioner operates a 121-bed skilled nursing facility in Sarasota, Florida. The Petitioner serves as a provider of nursing care facilities under the Medicaid and Medicare Programs which are operated in part by the Department. For its fiscal year ending March 31, 1976, the Petitioner submitted to the Department a statement of cost of operations. It claimed an allowable depreciation expense of $42,563, of which $25,480 was attributable to building depreciation. The Petitioner's statement of cost of operations was audited by the accounting firm of Coopers & Lybrand on behalf of the Department. The accounting firm concluded that Petitioner should be allowed building depreciation only in the amount of $12,500. Petitioner computed its $25,480 building depreciation by taking its original purchase price ($764,400) and dividing it by a useful life of thirty years. It appears that the Petitioner purchased the facility in an arms length transaction and that the $764,400 purchase price reflects the fair-market value of the property at the time of the purchase. The accounting firm used a much lower figure to represent the fair-market value; however, it is not apparent from the audit or the worksheets, or from any other evidence in the record what the reason for the lower figure might have been. There was conflicting testimony with respect to the reproduction costs of the buildings at the time that Petitioner purchased them. While the testimony was conflicting, the only competent evidence as to the reproduction costs was the testimony of Herbert Fink, who was accepted at the hearing as an expert witness competent to render opinions with respect to reproduction costs of commercial properties. Using accepted appraising techniques, Mr. Fink determined the reproduction cost of the buildings on the purchase date to have been $582,730. That figure is found to be the appropriate valuation. Although the Petitioner utilized a thirty-year useful life in determining the appropriate amount of depreciation, Petitioner conceded at the hearing, and it is otherwise apparent that the useful life should be calculated as 36.75 years. 6. for the The Department allowed building depreciation in the amount of Petitioner for each audit year prior to the fiscal year ending $25,480 March 31, 1977. 7.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is, hereby RECOMMENDED: That a final order be entered finding that the Petitioner should be allowed depreciation for its building computed by dividing the reproduction costs of the building ($582,730) by the useful life of the building (36.75 years). This amount is less than the amount that was actually claimed by the Petitioner and the Petitioner should reimburse the Department for the difference in a mutually acceptable manner of payment. Recommended this 7th day of December, 1979, in Tallahassee, Florida. G. STEVEN PFEIFFER Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of December, 1979. COPIES FURNISHED: Kenneth A. Behar, Esquire BEHAR & KALMAN 11 Beacon Street Boston, Massachussettes 02108 Anthony DeLuccia, Jr., Esquire District VII Department of Health and Rehabilitative Services Post Office Box 2258 Ft. Myers, Florida 33902
The Issue Whether the Respondent, Sevalp Corporation, committed an unlawful act of discrimination as alleged by the Petitioner.
Findings Of Fact The Petitioner contacted the Respondent regarding the possible rental of an apartment on or about February 5, 2004. At that time, according to the Petitioner, she was approximately 8.5 months pregnant. Whether or not the Petitioner’s pregnancy was obvious is unknown. Petitioner claims her state was self-evident. Mr. Intriago claims he did not notice that she was pregnant. Mr. Intriago is the apartment manager for the buildings owned by the Respondent at 915 Palermo Avenue, Miami, Florida. It is undisputed that Mr. Intriago showed the Petitioner an apartment at the cited address and that Petitioner expressed an interest in leasing the unit. The Petitioner did not, however, fill out an application for the apartment, did not pay a deposit to hold the apartment, and did not have approval from the Respondent to rent the apartment. The Petitioner believes that the Respondent violated Florida law by refusing to rent to a pregnant female. The Respondent did not have an application from the Petitioner to consider. Had the Petitioner filled out an application, however, the Respondent would have rejected the Petitioner as a tenant based upon a history of misadventures with the Petitioner. The Respondent accepts applications from all ethnic and familial groups. The complex Petitioner desired does have family residents. It is not a “singles only” or a “no children” complex. The primary reason the Respondent would not rent to Petitioner (had she filed an application and paid the deposit) is that the Petitioner had broken a lease with the Respondent in the past. Additionally, the Petitioner on yet a second unit had failed to take occupancy when she was supposed to causing the Respondent to lose rental income. In addition to the foregoing, on at least one occasion in their prior business dealings the Petitioner gave the Respondent an insufficient funds check.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing the Petitioner’s claim. S DONE AND ENTERED this 2nd day of December, 2004, in Tallahassee, Leon County, Florida. ___________________________________ J. D. PARRISH 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 2nd day of December, 2004. COPIES FURNISHED: Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Celeste Montalvo 2851 Southwest 38th Avenue Miami, Florida 33134 Arthur Ross Sevalp Corporation 923 Catalonia Avenue Coral Gables, Florida 33143
The Issue Whether the Petitioner's 1987 budget for its fiscal year beginning July 1, 1986 and ending June 30, 1987 should be approved pursuant to Sections 395.509(2), (5), and (7), Florida Statutes (1985)?
Findings Of Fact The Parties. The following findings of fact were contained in the Joint Prehearing Stipulation: The Petitioner's name and address are Doctors Memorial Hospital, 401 E. Byrd Avenue, Bonifay, Florida 32425. Doctors Memorial is located and operating in Holmes County. Doctors Memorial is owned by National Healthcare of Holmes County, Inc. The name and address of the agency affected are the Hospital Cost Containment Board, Executive Office of the Governor, State of Florida, Woodcrest Office Park, Building L, Suite 101, 325 John Knox Road, Tallahassee, Florida 32303. The HCCB I.D. number of Doctors Memorial is 10-0078. Doctors Memorial has standing in these matters based on the facts alleged in its petitions. The Petitioner is the only hospital located in Holmes County, Florida. The Petitioner was previously owned by the Holmes County Hospital Authority. The Petitioner was acquired by its present owner in November of 1984. The Petitioner is an investor-owned hospital. The Petitioner's fiscal year begins on July 1 of each year and ends on June 30 of the following year. Hospital Groupings. There are approximately 217 general acute care hospitals in Florida. Those hospitals are grouped into 10 general hospital groups, including one for teaching hospitals, for purposes of determining whether a hospital's budget is subject to further review. The Petitioner has been placed in the Respondent's Group 1, which consists of 17 hospitals, most of which are located in North Florida and the Panhandle. The average gross revenue per adjusted admission (hereinafter referred to as the "GRAA") of the hospitals in Group 1 has been considerably lower than the average GRAA of all other Florida hospitals. All of the hospitals in Group 1 have a fiscal year beginning October 1 of each year except the Petitioner. Therefore, except for the Petitioner, the 1987 fiscal year of all of the hospitals in Group 1 begins October 1, 1986. The "150-day letter". The Petitioner received a "150-day letter" prior to the preparation of its 1987 budget. The information contained in the 150-day letter was based upon data as of January 31, 1986. The 150-day letter indicated that the 50th percentile GRAA of the most recently approved budgets of Group 1 hospitals was $2,518.00. It was indicated in the 150-day letter that the upper 20th percentile GRAA of the most recently approved budgets of Group 1 hospitals was $3,390.00. It was indicated in the 150-day letter that the maximum allowable rate of increase (hereinafter referred to as the "MARI") for 1987 was 7.2 percent. The MARI consists of the National Hospital Input Price Index (hereinafter referred to as the "NHIPI") of 3.7 percent and "plus points" of 3.5 percent. The Petitioner's 1987 Budget. The following finding of fact was contained in the Joint Prehearing Stipulation: On or about March 27, 1986, Doctors Memorial submitted to the HCCB its projected 1987 fiscal year budget. Doctors Memorial's 1987 fiscal year begins on July 1, 1986, and runs through June 30, 1987. The Petitioner budgeted GRAA for 1987 of $3,009.00. This amount is 39.8 percent greater than its approved 1986 budgeted GRAA of $2,151.44. The Petitioner's 1987 budget also included the following pertinent amounts: net revenue per adjusted admission (hereinafter referred to as "NRAA") of $2,025.00, total gross revenue of $4,397,436.00, total net revenue of $2,959,958.00 and operating revenue of $149,188.00. Gross revenue represents the amount patients are charged. Net revenue represents the amount of patient charges actually collected less certain write- offs or deductions. Determination of Whether the Petitioner's Budget was Subject to Review. The Petitioner's 1987 budgeted GRAA ranks between the 50th and the upper 20th percentile GRAA for Group 1 hospitals. The Petitioner's rate of increase in its 1987 budgeted GRAA over its approved 1986 budgeted GRAA of 39.8 percent is in excess of the MARI of 7.2 percent for 1987. Based upon these facts, the Petitioner's 1987 budget was not subject to automatic approval by the Respondent. The Respondent's Preliminary Findings and Recommendations. The following finding of fact was contained in the Joint Prehearing Stipulation: On May 16, 1986, Doctors Memorial received the Staff analysis and preliminary findings and recommendations relative to its 1987 fiscal year budget. Doctors Memorial was advised that the Staff would recommend to the HCCB that Doctors Memorial's budgeted gross revenue per adjusted admission and net operating revenue per adjusted admission for fiscal 1987 be adjusted downward for reasons set forth in the Staff analysis. Doctors Memorial timely filed its petition challenging Staff's recommendations on May 30, 1986. The Respondent preliminarily recommended that the Petitioner's GRAA be reduced by $599.00 from $3,009.00 to $2,410.00 and that the Petitioner's NRAA be reduced by $406.00 from $2,025.00 to $1,619.00. The amount of GRAA approved by the Respondent included the Petitioner's 1986 approved GRAA of $2,151.00, $80.00 attributable to inflation and $179.00 attributable to an increase in the average length of stay (hereinafter referred to as the "ALOS") at the Petitioner. The recommendation of the Respondent with regard to the reduction in GRAA would allow the Petitioner an increase of 12.04 percent in GRAA for 1987 over the Petitioner's 1986 budgeted GRAA. If no other adjustments are made in the Petitioner's 1987 budget, the proposed reduction in GRAA and NRAA will result in a total reduction of $875,139.00 of total gross revenue from $4,397,436.00 to $3,522,297.00 and a total reduction of $593,166.00 of total net revenue from $2,959,958.00 to $2,366,792.00. This would result in an operating loss of $443,978.00. In its preliminary findings and recommendations the Respondent indicated that it was concerned by the fact that the Petitioner's 1987 budgeted increase in GRAA exceeded the MARI and that most of the projected 38 percent increase in operating expenses per adjusted admissions over 1986 budget was attributable to increases in salaries and benefits. The Respondent also indicated the following policy applied in its preliminary findings and recommendations: Current agency policy states that hospital's [sic] exceeding the MARI can only increase gross revenue per adjusted admission to the National Hospital Input Price Index (NHIP) of 3.7 percent without further justification. Any increase in excess of the NHIPI must be sufficiently justified and quantified to staff. This policy was set out in memoranda to all financial analysis personnel of the Respondent from Mr. John Pattillo Chief Financial Analyst of the Respondent, dated May 16, 1986 and June 19, 1986. Section 395.509(5), Florida Statutes (1985)-- Is the Petitioner's Rate of Increase in its GRAA Just, Reasonable and Not Excessive? On May 30, 1986, the Petitioner submitted Objections to the Respondent's preliminary findings and recommendations in an effort to support its increase in its GRAA. The increase in the Petitioner's 1987 budgeted GRAA includes an across-the-board patient rate increase of 6.8 percent. The Petitioner has not increased its patient rate since October of 1984. The balance of the increase in the Petitioner's 1987 GRAA is attributable to the following facts. The NHIPI is a average rate of inflation for hospitals in the United States. It represents the additional costs of providing services by hospitals in the Country caused by inflation. The NHIPI of 3.7 percent should be allowed in determining the Petitioner's GRAA rate of increase for 1987. This would result in an increase in the Petitioner's GRAA for 1987 over its approved 1986 budgeted GRAA of $80.00 ($2,151.00 1986 GRAA x 3.7 percent NHIPI = $80.00). In determining what GRAA rate of increase should be approved it is reasonable to also take into account an inflation rate which takes into account Florida's unique characteristics compared to the rest of the country. In Florida, there are more elderly, Medicare patients are much older on average, there is an impact on health care costs from seasonality, there is a migrant labor force, Medicaid coverage is poor, the cost of living is higher than in most southern states and there are a large number of standard metropolitan statistical areas (areas with a city with a population or a county with a central city, with a population greater than 50,000 people). The rate of inflation unique to Florida is not capable of quantification absent evidence on a case by case basis. Other than the fact that the Petitioner's Medicare and Medicaid coverage is higher than most other areas of the State of Florida, the characteristics unique to Florida which affect inflation do not apply in this case. The Petitioner has budgeted Medicaid utilization of 10.7 percent (in the upper 20th percentile of the State where the average is only 3.9 percent), Medicare utilization of 65 percent (in the upper 20th percentile of Group 1 hospitals) and uncompensated indigent care of 11.1 percent (above the 50th percentile of the State 50th percentile of 6.2 percent). These figures represent an extremely high percentage of patients who do not pay full charges (almost 87 percent). The Respondent recognizes that hospitals with Medicaid utilization in the upper 20th percentile statewide may tend to have a higher GRAA than similar hospitals. The Respondent did not, however, take this consideration into account in reviewing the Petitioner's budget for 1987. Using an appropriate method of quantifying the effect of Medicaid on the Petitioner's GRAA, the Petitioner proved that its high Medicaid utilization would justify an additional 198.64 of GRAA for 1987. Using appropriate methods of quantifying the effect of Medicare and indigent care on the Petitioner's GRAA, the Petitioner proved that it was justified in including an additional $32.39 of GRAA attributable to Medicare and an additional $96.77 of GRAA attributable to indigent care. In 1986 the Petitioner budgeted $29,421.00 for insurance expense. In 1987 the Petitioner budgeted $77,000.00 for insurance. The Petitioner cannot control the amount of its insurance expense. In Order for the Petitioner to recoup the additional cost of insurance the Petitioner must increase its net revenue in an amount equal to the increase in its insurance costs and its gross revenue in an even greater amount. Based upon the Respondent's own method of increasing GRAA on account of the increase in insurance costs, the additional GRAA attributable to the increase would be $48.38. Taking into account the effect of Medicare and Medicaid on the difference in gross revenues and net revenues, the Petitioner would be justified in increasing its GRAA from 1986 to 1987 by $162.83 on account of the increase in insurance costs. Beginning in the second calendar quarter of 1986, the Petitioner added physician specialists from its courtesy staff to active staff. Physicians added include a cardiologist in January of 1986, an orthopedic surgeon, a urologist, a general surgeon, a thoracic and vascular surgeon and a specialist in internal medicine. Several of these physicians moved their practices from Washington County Hospital, which has been experiencing financial difficulties. The addition of physician specialists can have a significant impact on the intensity of services offered at a hospital and its GRAA. This is especially true at a hospital as small as the Petitioner. For example, the addition of the cardiologist at the Petitioner in January of 1986, resulted in six to seven patients a day on average at the Petitioner. The addition of the thoracic surgeon, the cardiovascular surgeon, the orthopedic surgeon and the cardiologist could have the effect of increasing GRAA by $121.31 due to the increase in intensity of services caused by their addition. The Respondent did not allow any increase in the Petitioner's GRAA on account of the addition of physicians to the Petitioner's staff or the impact of their addition on the intensity of services at the Petitioner. The only rationale offered by the Respondent for not taking these facts into account was based upon speculation by Mr. Pierce that the added physicians might resolve their reasons for leaving Washington County Hospital and leave the Petitioner's staff. The fact that the Petitioner added a family practitioner and a GYN and general surgeon since April of 1986 and an internist in July of 1986 supports a conclusion that it does not appear that the added physicians will be leaving the Petitioner any time in the near future. In its 1987 budget the Petitioner projected an increase in its ALOS of 5.5 days. This amounts to an increase of 0.7 days over the 1986 budgeted ALOS of the Petitioner of 4.8 days. The Petitioner's budgeted ALOS for 1987 was based upon the actual ALOS of the Petitioner from July of 1985 to February of 1986 of 5.57 days. More recent data through May of 1986 proves that the actual ALOS for 1986 is 5.57 days. It is doubtful that this ALOS for the first 11 months of 1986 will change substantially during the last month of the Petitioner's 1986 fiscal year. The Respondent allowed an increase in the Petitioner's GRAA based upon the impact of an increase in its ALOS of 0.35 days. Initially, however, the Respondent's analyst who reviewed the Petitioner's budget had recommended approval of the 0.7 day increase contained in the Petitioner's budget. This recommendation was not accepted because of the Respondent's policy of limiting the rate of increase in a hospital's GRAA to the NHIPI. The Respondent ultimately allowed an increase in the Petitioner's GRAA based upon the impact of an increase in its ALOS of 0.35 days. This increase amounted to an additional $179.00 of GRAA. The increase in GRAA approved by the Respondent attributable to an increase of 0.35 days ALOS was based upon the actual ALOS of the Petitioner for the first 6 months of the 1986 fiscal year. No greater increase was allowed because the Respondent was concerned that the ALOS for the entire 1986 fiscal year might fluctuate because of seasonality. Based upon the actual ALOS of the Petitioner through May of 1986, the budgeted ALOS increase of 0.7 days and a total budgeted ALOS of 5.5 days for 1987 is reliable and should be accepted. An ALOS of 5.5 days justifies an increase in the Petitioner's 1986 GRAA of $36O.00. The methodology utilized by the Petitioner in arriving at this amount is reasonable. The Petitioner budgeted a 6 percent increase in salaries per manhour over that level of salaries existing at the time the 1987 budget was prepared (March of 1986). This increase includes a 5 percent merit salary raise which the Petitioner normally gives to its employees on their anniversary dates and a 1 percent increase attributable to merit raises between March of 1986 and the end of the 1986 fiscal year. The additional increase in salary and benefit costs budgeted for 1987 over 1986 is attributable to the fact that the current owner of the Petitioner has replaced non-technical employees such as aides and orderlies with more skilled personnel such as registered nurses. Also, the Petitioner's increase in census and budgeted admissions and the fact that those increases have resulted in the need for more skilled personnel has caused the increase in salary and benefits costs. The Petitioner's total average salaries, benefits and manhours are very reasonable when compared with hospitals located in surrounding counties. The Petitioner's total salaries per FTE and the total benefits per FTE are below the 50th percentile of hospitals in surrounding counties. The Petitioner's total manhours also are below the 50th percentile for hospitals in Group 1. It is unreasonable for the Respondent to expect the Petitioner to reduce its salary and benefit costs in the amount recommended by the Respondent. The Petitioner would very likely lose employees which would affect the Petitioner's ability to provide quality services. The salary and benefits budgeted by the Petitioner for 1987 are reasonable. The Petitioner has projected a 5 percent operating margin in its 1987 budget. This operating margin is reasonable. This would result in total operating revenue over expenses of $149,188.00 and an after-tax profit of $81,561.00. If the Respondent's recommended GRAA and NRAA were proper and no other changes were made to the Petitioner's budget, the Petitioner's operating margin would be a minus 18.8 percent. The Respondent recommended that the Petitioner reduce salary and benefits expenses in the 1987 budget by $432,544.00 to the Petitioner's 1986 level of salary and benefits. This reduction, which is unreasonable, would result in an operating margin of 0.3 percent and an operating profit of $7,850.00 before taxes. The evidence does not support a finding of fact that the Respondent's recommendation is reasonable. An operating margin of 5 percent is substantially less than the average operating margin for other investor-owned hospitals in the State of 13.3 percent. In reviewing hospital budgets, the Respondent generally compares the operating margin of the hospital subject to review with similar hospitals in Florida. The Respondent did not do so in this case. The recommendations of the Respondent would adversely affect the Petitioner's ability to earn a reasonable rate of return. The recommendations of the Respondent could drastically hinder the Petitioner's ability to efficiently operate. The Petitioner's budgeted 1987 expenses are reasonable. In 1985 the Petitioner reported a budgeted GRAA of $2,234.66. The Petitioner's audited actual 1985 GRAA was $2,467.69. The Petitioner's actual experience with regard to GRAA in 1985 was 10.4 percent greater than its budgeted GRAA. In 1985 the Petitioner reported a budgeted NRAA of $1,392.39. The Petitioner's audited actual 1985 NRAA was $1,899.48. The Petitioner's actual experience with regard to NRAA in 1985 was 36.4 percent greater than its budgeted NRAA. In 1986 the Petitioner reported a budgeted GRAA of $2,151.44. The Petitioner's audited actual 1986 GRAA was $2,865.92. The Petitioner's actual experience with regard to GRAA in 1986 was 33.2 percent greater than its budgeted GRAA. In 1986 the Petitioner reported a budgeted NRAA of $1,454.70. The Petitioner's actual experience with regard to NRAA in 1986 was 36.4 percent greater than its budgeted NRAA. The Petitioner's 1987 budgeted GRAA ranks 8th out of the 17 hospitals in Group 1, only 1 ranking higher than the 50th percentile hospital. This comparison is based upon the 1986 budgeted GRAA of the hospitals in Group 1 as of January 31, 1986, fiscal year adjusted. The Petitioner's 1986 budget was low when compared with other Group 1 hospitals. Its GRAA ranked 12th and its NRAA ranked 14th out of 17 hospitals. These rankings were below the 50th percentile. The Petitioner's budgeted GRAA and GRAA for 1986 were, however, considerably lower than its actual 1986 GRAA and NRAA as discussed supra. Based upon the foregoing, it is concluded that the Petitioner's rate of increase in its 1987 budgeted GRAA over its approved 1986 budgeted GRAA is just, reasonable and not excessive. The Petitioner has proved that in addition to its 1986 budgeted GRAA of $2,151.00, it is entitled to GRAA in 1987 for additional physicians it has added to its staff ($121.00), inflation ($80.00), its increased ALOS ($360.00), its high rate of Medicare use ($32.00), its high rate of Medicaid use ($199.00), its high rate of indigent care use ($97.00), and to cover the increase in its insurance costs ($163.00). The Petitioner has also proved that it is entitled to a reasonable rate of return. The Petitioner has justified an amount of 1987 budgeted GRAA in excess of the $3,009.00 of GRAA included in its 1987 budget.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner's 1987 fiscal year budget filed with the Respondent be approved as submitted. DONE and ENTERED this 25th day of July, 1986, in Tallahassee, Florida. LARRY J. SARTIN 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 25th day of July, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2111H The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they were accepted. Those proposed findings of fact which have been rejected and the reasons for their rejection have also been noted. Paragraph numbers in the Recommended Order are referred to as "RO ." Petitioner's Proposed Findings of Fact Paragraph Number: Accepted in RO 1 and 2. Accepted in RO 1, 3 and 4. Accepted in RO 13-15. Accepted in RO 6-8. The first sentence of this proposed finding of fact is accepted in RO 9 and 10. The remainder of this proposed finding of fact is rejected as not relevant. The percentiles of Group 1 hospitals for GRAA relevant to this proceeding are those as of 150 days prior to the beginning of the Petitioner's fiscal year. The first sentence of this proposed finding of fact is accepted in RO The second sentence is rejected because only the percentiles of Group 1 hospitals for GRAA 150 days prior to the beginning of the Petitioner's fiscal year are relevant. The last sentence is accepted in RO 17. The first three sentences of this proposed finding of fact are accepted in RO 12 and 14 except that the portion of the second sentence to the effect that hospitals between the 50th and 80th percentile GRAA are automatically entitled to an increase in their GRAA equal to the MARI is rejected as contrary to the law. The next to the last sentence of this proposed finding of fact is rejected as irrelevant. The last sentence is accepted in RO 65 and 66. Accepted in RO 28 and 29. Except for the amount of total gross revenue, this proposed finding of fact is accepted in RO 15, 16, 20, 21 and 24. The correct amount of total gross revenue is $4,397,436.00, not $4,907,436.00 as suggested by this proposed finding of fact. The first sentence of this proposed finding of fact is accepted in RO The second sentence is accepted in RO 59. The remainder of the proposed finding of fact is rejected as irrelevant. There is no requirement in the law that the Respondent suggest how the Petitioner should adjust its budget to reflect a recommendation from the Respondent as to what its budgeted GRAA should be. Accepted in RO 27. This proposed finding of fact is rejected as not relevant. Section 395.509(4), Florida Statutes (1985), provides that hospitals are to be grouped to "assist" in making determinations under Section 395.509(5), Florida Statutes (1985). This does not preclude a hospital subject to review under Section 395.509(5), from making comparisons with other groups of hospitals such as those throughout the State or in neighboring counties. The Petitioner, however, failed to prove that such comparisons are relevant in this proceeding. The first two sentences of this proposed finding of fact are accepted in RO 67. The last sentence is rejected for the same reasons paragraph 12 was rejected. Accepted in RO 68. 15-18. These proposed findings of fact are rejected for the same reasons paragraph 12 was rejected. Accepted in RO 52 and 53. Accepted in RO 54. Accepted in RO 55, 56 and 59. Accepted in RO 41-44. The first sentence of this proposed finding of fact is rejected as not relevant. The rest of the proposed finding of fact is accepted in RO 41 and 42. Accepted in RO 43. Accepted in RO 44. Accepted in RO 45 and 46. Accepted in RO 47 and 48. Accepted in RO 49 and 50. This proposed finding of fact is rejected. This proposed finding of fact is essentially argument as to what constitutes competent substantial evidence in this proceeding. Accepted in RO 50 and 51. This proposed finding of fact is rejected. This proposed finding of fact is essentially argument as to whether certain testimony should be accepted in support of a finding of fact. (page 13): Accepted in RO 57. Except for the last sentence, this proposed finding of fact is accepted in RO 57 and 60. The last sentence is rejected. The Petitioner's 1986 GRAA already includes a reasonable rate of return which is in turn included in its 1987 budgeted GRAA. It would not be proper to include an additional amount of profit in determining whether its projected rate of increase in its GRAA for 1987 is just, reasonable and not excessive. Accepted in RO 60. Accepted in RO 61. Accepted in RO 61. This proposed finding of fact is rejected. It is not relevant to this proceeding because each case must be judged on its own merits. Accepted in RO 34. Accepted in RO 35 and 36. Accepted in RO 37. 40-42. These proposed findings of fact are rejected as essentially argument concerning the weight to be given to certain evidence. Accepted in RO 38. Accepted in RO 39. Accepted in RO 40. Accepted in RO 40. 47 and 49. The proposed findings of fact contained in these paragraphs deal primarily with the rule challenge brought by the Petitioner in D0AH Case No. 86-2014R. Therefore, most of these proposed findings of fact are not relevant to this proceeding. The first sentence in paragraph 49 has been accepted in RO 22 and 30. See also RO 26 and 31-33. 48. This proposed finding of fact is rejected as not supported by the weight of the evidence. See RO 31-33. 50. Most of these proposed findings of fact are accepted in RO 30, 36, 37, 40, 43, 51, 69 and 70. The proposed findings of fact contained in this paragraph which are inconsistent with those RO paragraphs are rejected as not supported by the weight of the evidence. 51 and 52. This proposed finding of fact is rejected as not relevant and not supported by the weight of the evidence. The evidence does not prove that what the Respondent has done in budget amendment cases is applicable to a budget review case or that what the Respondent has done in other cases is equally applicable in this case. This proposed finding of fact is rejected as not relevant. This proposed finding of fact is rejected as not relevant. Accepted in RO 1. Respondent's Proposed Findings of Fact Paragraph Number: The first sentence of this proposed finding of fact is accepted in RO 3 and 13. The last sentence is rejected as a statement of law. Accepted in RO 12, 14, 23, 28 and 29. The first sentence of this proposed finding of fact is rejected as a statement of law. Except for the last sentence, the remainder of this proposed finding of fact is accepted in RO 63-66. The last sentence is rejected as argument. The first two sentences of this proposed finding of fact are accepted in RO 45 and 46. The remainder of this proposed finding of fact is rejected as not relevant. The first two sentences of this proposed finding of fact are rejected as statements of law. The remainder of the proposed finding of fact are accepted in RO 26, 31 and 33. Except for the last sentence this proposed finding of fact is accepted in RO 41 and 44. The last sentence is rejected as unsupported by the weight of the evidence. The first two sentences of this proposed finding of fact are rejected as not relevant and contrary to the law. The third sentence is hereby accepted. The fourth through sixth sentences are rejected as statements of the law and argument. The rest of the proposed finding of fact is hereby accepted. This proposed finding of fact is rejected as argument. There is absolutely no requirement that a witness who otherwise has knowledge of the finances of a hospital must present documentary evidence to support and substantiate his or her testimony. If the Respondent has any doubts as to the truth of the Petitioner's witnesses, it had ample opportunity prior to the final hearing to discover evidence which would disapprove the evidence presented by the Petitioner's witnesses or to present other testimony to refute the testimony of the Petitioner's witnesses. The testimony of the Petitioner's witnesses constitutes competent substantial evidence of a kind which is always presented and acceptable in administrative proceedings. This proposed finding of fact is rejected as unsupported by the weight of the evidence. Although there was some evidence to support this proposed finding of fact, that evidence was to sketchy and unpersuasive to overcome the evidence concerning the Petitioner's methods of computing a just, reasonable and not excessive 1987 GRAA. COPIES FURNISHED: John H. Parker, Jr., Esquire Parker, Hudson, Rainer & Dobbs 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House, Suite 101 118 North Gadsden Tallahassee, Florida 32301 Curtis A. Billingsley, Esquire Assistant General Counsel Hospital Cost Containment Board Woodcrest Office Park Building L, Suite 101 325 John Knox Road Tallahassee, Florida 32303 James J. Bracher Executive Director Hospital Cost Containment Board Woodcrest Office Park Building L, Suite 101 325 John Knox Road Tallahassee, Florida 32303 =================================================================
