Conclusions Having reviewed the Administrative Complaint dated September 27, 2010, attached hereto and incorporated herein (Ex. 1), and all other matters of record, the Agency for Health Care Administration (“Agency”) has entered into a Settlement Agreement (Ex. 2) with the parties to these proceedings, and being well advised in the premises, finds and concludes as follows: ORDERED: 1. The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. 2. The Respondent shall pay, within thirty (30) days of the date of rendition of this Order, an administrative fine of one thousand dollars ($1,000.00) and a survey fee of five hundred dollars ($500.00) for a total of one thousand five hundred dollars ($1,500.00) to the Agency. 1 Filed January 14, 2011 QJ Division of Administrative Hearings 3. Checks should be made payable to the “Agency for Health Care Administration.” The check, along with a reference to this case number, should be sent directly to: Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS #14 Tallahassee, Florida 32308 4. Unpaid amounts pursuant to this Order will be subject to statutory interest and may be collected by all methods legally available. 5. Each party shall bear its own costs and attorney’s fees. 6. The Respondent’s petition for formal administrative proceedings is hereby withdrawn. 7. The above-styled case is hereby closed. DONE and ORDERED this |) day of es , 2019, in Tallahassee, Leon County, Florida. {, Interim Secretary alth Care Administration A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW OF PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: John D. Ellis, Esq. Attorney for Respondent Balmy Beach Retirement Home, Inc. P.O. Box 1161 Orlando, Florida 32801 James H. Harris, Assistant General Counsel Agency for Health Care Admin. Office of the General Counsel 525 Mirror Lake Drive North, #330D (U.S. Mail) St. Petersburg, Florida 33701 Interoffice Mail) Jan Mills Agency for Health Care Admin. - Agency for Health Care Admin. 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS #14 Tallahassee, Florida 32308 Bruce McKibben Administrative Law Judge Division of Administrative Hearings The Desoto building 1230 Apalahcee Parkway Tallahassee, Florida 32399-3060 (Electronic Mail) Perce ne Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the above-named person(s) and entities by U.S. Mail, or the sa method designated, on this the IZ day of Richard Shoop, Agency Clerk ey Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 412-3630
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: In the latter part of April, 1976, petitioner Ambulatory Surgical Center of West Palm Beach (hereinafter referred to as ASC) submitted its capital expenditure proposal to construct a freestanding ambulatory surgical center in West Palm Beach. The concept of ambulatory surgical care is approximately six or seven years old. It allows the patient to have surgery performed under general anesthesia in one day at an approximate savings of fifty percent. The patient goes to the facility the day before surgery, goes through laboratory tests, meets the anesthesiologist or other medical staff members, fills out insurance and other forms and then returns home. The next day, the surgical procedure is performed and the patient then goes home accompanied by a member of his family or a friend. The advantages of the system include more precise scheduling and less anxiety and stress for the patient. The petitioner's proposal is to occupy some 9,000 square feet on the first floor of a 33,000 square foot three story medical office building. Also to be located-on the first floor is a 1,000 square foot pharmacy, a 1,000 square foot restaurant and a 500 square foot clinical laboratory. The facility will encompass dressing rooms with lockers, five operating rooms -- one of which is to be used exclusively for dental surgery under general anesthesia -- and sixteen or seventeen recovery beds. ASC will have the same life support equipment and facilities as exist at a general hospital. Any doctor who is licensed by the State of Florida and on the staff of another hospital will be permitted to use the ASC facility. Petitioner's facility will accept all patients for treatment whether they be reimbursed by Medicare, Medicaid or other sources available at the state or county level. Some one hundred and twenty different surgical procedures are proposed to be offered at the ASC facility. Some fifty physicians in Palm Beach County were sent a questionnaire by one of the organizers of petitioner. The thirty-seven responses received indicated a weekly utilization rate of approximately sixty surgical procedures by the end of the fourth quarter of operation of petitioner's facility. On June 24, 1976, the Health Facilities Committee of the area Health Planning Council, Inc. (HPC) met to consider the petitioner's certificate of need request. By a vote of six to four, with one abstention, a motion to approve the facility failed. On the same date, the Board of Directors of the HPC voted nine to seven, with one abstention, to recommend approval of petitioner's proposal. The Board considered the fact that outpatient surgery departments were being planned for existing hospitals in the area and heard comments from proponents and opponents of the application. The Board further considered the factors supporting approval as set forth in the staff project review. These include: "1. Such a facility has the potential of lowering to a great extent the cost of patient health care by avoiding unnecessary hospital confinement; Such a service, both in terms of cost savings and utilization, have been endorsed by the HPC in its document entitled Acute Care General Hospitals, Long Range Growth Position Statement and Recommendations. In effect, this proposed service will provide a cost effective component to the area's existing health care system; Based on the manpower requirements, both from the standpoint of parti- cipating physicians and support per- sonnel, there appears to be both sufficient and appropriate manpower available to effectively operate the proposed services; and Based on a sample utilization survey, it appears that the proposed ASC will serve a population group large enough to provide a reasonable utilization level. At the same time, it is expected that this population group will be basically separate and distinct from the population group expected to be served by the OSD at the Palm Beach-Martin - County Medical Center." (Exhibit No. 11) Although Good Samaritan Hospital had been considering doing so since June of 1975, it actually opened its outpatient surgical department in early August of 1976. Being a hospital based facility, no certificate of need was required. The State Hospital Advisory Committee met on August 10, 1976, to consider petitioner's application. This Committee heard discussion from and directed questions to both the applicant and the intervenor-opponent. Letters from physicians in support of and in opposition to the application were considered. This committee, by a vote of five to zero with one abstention, voted to recommend that the application be denied. (Exhibit 6) By letter dated August 12, 1976, respondent notified petitioner that its capital expenditure proposal was not favorably considered for the following reasons: "1. Your proposed ambulatory surgical facility would be a duplication of facilities and services which are available in Good Samaritan Hospital which is within a block or two of the site of your facility. In addition, St. Nary's Hospital, approximately three (3) miles from your site, has ambulatory surgery capability. The charges you propose for surgical procedures are comparable to those of Good Samaritan Hospital, therefore, cost containment is not a real factor in this case. The fact that Medicaid virtually has eliminated the provision for paying for elective surgery for persons qualifying for care under this program. Under such restrictions, it appears that your proposed facility would not be necessary in terms of providing services to such persons. Petitioner was advised of its right to appeal this decision and petitioner timely requested a hearing on the matter. At its regular meeting on August 26, 1976, the Board of Directors of the HPC voted, by a vote of twenty-one of the twenty-two Board members present, to support petitioner's appeal. There are presently some 700 physicians in Palm Beach County. Some 265 of these doctors are on the staff of Good Samaritan Hospital, which is located on the same block as petitioner's proposed facility. Physicians not staffed at Good Samaritan are able to refer their patients for treatment by physicians staffed there. Good Samaritan has no black doctors on its staff, no podiatrists and no osteopaths. The only dentists allowed staffing privileges are those having two years of post graduate training. Good Samaritan, while it does some charity work, does not participate in the Medicare or Medicaid program, nor does it have any contract with the county to provide services for the indigent. It does have an emergency contract with Medicare. The actual amount of charity work performed is somewhat in dispute. While a figure in excess of $900,000.00 was given by the Administrator of Good Samaritan, it appears that a portion of this amount was uncollected bills. Approximately twenty percent of the procedures offered by Good Samaritan in its outpatient surgery department overlap with the procedures proposed to be offered by ASC. The patient costs of these procedures are substantially similar to those proposed by ASC. While the intervenor has had an outpatient clinic for some time now, it first began to offer general anesthetic surgical procedures on an outpatient basis in early August of 1976. Good Samaritan is currently performing about thirty such procedures per month, or six per week. While the intervenor's operating room is equipped to handle dental services under general anesthesia, it does not contain a dental chair. The evidence regarding other existing ambulatory or outpatient surgical centers or departments in the immediate area of petitioner's proposed facility is somewhat in dispute. While two hospital-based facilities, each twenty miles away, do exist, it is not clear whether St. Mary's Hospital located some three or four miles from petitioner and the intervenor actually has such a separate facility. It is clear that St. Mary's has the capabilities for such a facility. The Palm Beach County Social Services Department provides services for indigent persons in the county through the use of ad valorem tax monies. About ninety percent of the services performed are in the medical field. During the last fiscal year, the county's hospitalization budget for indigents was approximately $1,790,000.00. Amounts paid from September of 1975 through August of 1976 for short term hospitalizations were in excess of $19,400.00 for a total of 158 hospital days. (Exhibit No. 15) All of such procedures performed might have been done in an ambulatory facility. Substantially all of the procedures to be offered by ASC are performed for indigents in Palm Beach County if it is deemed necessary for the client. If the patient were able to undergo surgery and go home in the same day, the hospital per diem charge, which averages $160.00 per day, would be eliminated. The Director of the County Social Services is supporting petitioner's application for the reason that while a similar facility exists nearby -- Good Samaritan Hospital, such facility is not accessible for the indigent client. Dr. C.L. Brumback, Director of the Palm Beach County Health Department, affirmed that procedures to be offered by ASC could be provided to eligible county patients with payment available through the County Social Service Department or the County Health Department. (Exhibit No. 2). The issue of Medicaid reimbursement to an ambulatory surgical facility was somewhat in dispute during the earlier public hearings on petitioner's application. It appears that such reimbursement is presently limited to those services actually provided by a physician. The legislature decides on the services to be provided by line item appropriations, and presently physician service is a listed item while free standing outpatient clinics are not listed. The Florida Department of Health and Rehabilitative Serviced has expressed an interest in having ambulatory surgical care with adequate regulations and their legislative budget request for next year will reflect this interest. (Exhibit No. 3).
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the determination of the Office of Community Medical Facilities to deny the petitioner's application for a certificate of need be REVERSED. Respectfully submitted and entered this 16th day of November, 1976, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: John H. French, Jr. P.O. Box 1752 Tallahassee, Florida 32302 Jon C. Moyle 707 North Flagler Drive West Palm Beach, Florida Eric J. Haugdahl 1323 Winewood Boulevard Room 406 Tallahassee, Florida 32301 Harold D. Lewis 203 West College Avenue Tallahassee, Florida
The Issue Whether Petitioner's application for a Certificate of Need for a 50-bed addition to the Ormond Beach Hospital should be approved, pursuant to Chapter 381, Florida Statutes. This case involves petitioner's application for a certificate of need to expand, renovate, and consolidate ancillary service areas, and a 50-bed addition to its hospital. Respondent approved the application and issued a certificate of need for all aspects of the project except the 50-bed addition which it found would be inconsistent with the current health systems plan of Health Systems Agency of Northeast Florida, Inc., and because it determined that there was not a need for the additional beds in Volusia County. Petitioner filed its request for a Chapter 120 hearing. Thereafter, Intervenor Daytona Beach General Hospital, Inc., an orthopedic hospital located in Daytona Beach, petitioned for and was granted intervention in the proceeding over the objection of petitioner. During the course of the extensive hearing in this case, 15 witnesses testified in behalf of Petitioner, two were called by respondent, and four by the Intervenor. Eighty-seven exhibits were admitted in evidence. Exhibit 68 was withdrawn by stipulation of the parties.
Findings Of Fact Petitioner is a licensed 81-bed non-profit osteopathic general acute care hospital located at 264 South Atlantic Avenue, Ormond Beach, Florida. It is located on a site of approximately 4.6 acres bordered by Highway A1A on the east and Ormond Parkway on the north. The hospital plant consists of three buildings which have been joined together. One is a one-story dietary building that was originally a restaurant. A two-story building was built in 1970, and a one-story structure was built in 1954 and added to in 1960 and 1967. Other buildings owned by the hospital are adjacent residential homes on the premises which are used for storage, laundry, and other purposes. (Testimony of Hull, Exhibits 1-2, 13, 30, 59, 70) By a series of letters commencing on January 25, 1979, Petitioner advised Respondent's Office of Community Medical Facilities and the Health Systems Agency of Northeast Florida Area 3, Inc. (HSA) of its intent to expand and modernize its hospital and increase bed capacity. The last letter of intent was dated July 24, 1979. On September 21, 1979, Petitioner submitted its Certificate of Need Project Review Application to Respondent which included a request to increase the hospital's bed capacity from 81 to 161 beds. By letter of September 25, 1979, Respondent requested further information and, on December 11, 1979, Petitioner complied with the request and revised its application to seek only 50 additional beds. The proposed expansion and modernization plan included construction of a two-story addition to provide approximately 39,500 additional square feet, and renovation of approximately 22,000 square feet. Completion of the project would raise the hospital's total square footage of 39,350 to approximately 79,000 square feet. Incident to its request for additional beds, Petitioner proposes to initiate a 6-bed obstetrical unit at the hospital. (Exhibits 1-2, 7, 45-48) Petitioner's application was considered by various components of the HSA in January 1980, which resulted in a report and recommendations on the application which was filed with Respondent on February 25, 1980. During the course of the HSA's consideration of Petitioner's application at its several levels, representatives of Petitioner and the Intervenor appeared at the various meetings and presented their respective views regarding the application. The HSA report recommended approval of Petitioner's application for the renovation of its existing facilities and ancillary services, and approval of 44 additional beds. It further recommended that the state should take actions necessary to delicense a like number of beds within Petitioner's service area. The recommendation of 44 instead of 50 beds resulted from a finding that the proposed 6-bed obstetrical unit was not needed in the community in view of the probability that osteopathic physicians would likely be granted obstetric privileges in the future at allopathic facilities as a result of the enactment of legislation prohibiting the discrimination by particular provider professions against osteopathic physicians. The HSA found that although "Goal" DTS 1 in its Health Service Plan (HSP) which is used as a "guide" for health planning called for less than 4.3 acute care hospital beds per 1000 population with an overall average annual occupancy rate of at least 80 percent by 1984 in Health Service Area 3, it could approve additional beds for opening prior to 1984 if "extraordinary circumstances" exist as identified in "Goal" EA 2. It further found that Area 3 then had 5255 civilian acute care hospital beds, or a rate of 5.4 beds per 1000 population, with an average occupancy of 61 percent, and that, therefore, approval of additional beds, without cause, would be contrary to "Goal" DTS 1. However, the agency determined that extraordinary circumstances existed in Petitioner's case due to the fact that it had been operating for the past several years at an average occupancy of near or above 90 percent and that within its service area there existed in excess of 200 licensed medical surgical beds which were not staffed or used. The HSA therefore concluded that the situation denied ready access to acute care facilities to the citizens residing in Petitioner's service area. The HSA also considered that approval of the project would improve the effective and geographic distribution of beds and patient and physician accessibility in Volusia County because it was the only hospital located on the beach peninsula. It further found that the great number of elderly patients living in Volusia County and seasonal population fluctuations due to large numbers of tourists living in the area could be denied access to inpatient facilities if the project was not approved. As other extenuating factors, the HSA report stated that Petitioner had been granted prior certificates of need to expand its bed capacity, but that they had expired prior to implementation, that its inpatient facilities were antiquated, that denial of the beds would serve to deny access to patients of osteopathic facilities, and that federal law (PL 96-79) recognized that the need for additional or expanded osteopathic facilities should be determined on the basis of the need for and availability in the community for such services and facilities. (Testimony of Floyd, Hull, Exhibits 4, 8-12, 14, 59) By letter of March 28, 1980, Respondent's Administrator, Office of Community Medical Facilities, informed Petitioner that its application for certificate of need to expand, renovate and consolidate ancillary service areas at a total project cost of four million dollars was approved, and Certificate of Need Number 1236 was attached. The letter further advised petitioner that the proposed 50-bed addition was denied as being inconsistent with the current Health Systems Plan of the HSA, that there was not a need for the additional 50 beds in Volusia County as evidenced by facts contained in an attached State Agency Action Report, and that the extraordinary circumstances upon which the HSA recommended approval were not valid as evidenced by the same report. However, the referenced report was not submitted in evidence at the hearing, nor was any testimony adduced as to the rationale for the agency decision. By letter of May 28, 1980, Petitioner requested Respondent to increase the amount of the issued certificate of need to ten million dollars due to anticipated additional costs of construction and, by letter of July 24, 1980, Respondent advised Petitioner that the "cost over-run" had been approved and an amended copy of the Certificate of Need Number 1236 reflecting the additional cost was attached. (Testimony of Hull, Exhibits 57-58) Volusia County has eight hospitals of which six are allopathic and two are osteopathic. There are five hospitals in the Daytona Beach/Ormond Beach "coastal area" of the county which include Petitioner, Intervenor Daytona Beach General Hospital, Inc. (osteopathic), Ormond Beach Memorial Hospital, Daytona Community Hospital, and Halifax Hospital Medical Center. Two other hospitals in the county are Fish Memorial and West Volusia located in Deland. The remaining hospital is Fish Memorial at New Smyrna Beach. Petitioner is the only hospital on the beach peninsula which is connected to the mainland by several drawbridges. Daytona Beach General Hospital and Ormond Beach Memorial Hospital are located on the mainland in the northern "coastal area" several miles in distance from Petitioner. The remaining two hospitals in the area are within an average of 30 minutes driving time from Petitioner except during the peak tourist season of February to July each year, or when undue delays are experienced at the drawbridges. The HSA recognizes Petitioner's health service area to be Volusia County. In June 1979, the eight hospitals in Volusia County had a total of 1675 licensed beds, of which 1395 were open and staffed for use. Of the 378 osteopathic beds, only 178 were open and staffed. Occupancy of the licensed beds during the period July 1978 to June 1979 ranged from a low of 13.8 percent for Daytona Beach General Hospital to a high of 92 percent for Petitioner. The average occupancy of all licensed hospital beds was 51.2 percent. For the month of July, 1980, 1418 beds were open and staffed with 65.2 percent occupancy. Fish Memorial Hospital of New Smyrna Beach has a certificate of need for an additional 45 beds. In June 1979, all of Petitioner's licensed beds were staffed, but only 97 of Daytona Beach General Hospital's 297 licensed beds were staffed and available for use. Its patient population, however, has increased during the past year. In July 1978, Volusia County had a population of approximately 230,000 and therefore had about 7 acute care beds per 1,000 population. The 1980 preliminary census figures for the county showed the population to be 249,434 and it is projected that the final census figures will increase from one to two percent which would place the county population at between 252,000 and 254,000. If the higher figure is utilized, the bed ratio for the county at the present time would still be over 6 beds per 1,000 population. It is projected that the population of Volusia County will increase to 275,900 by 1984. If the current 1675 licensed beds remain the same, there would then be approximately 6 beds per 1,000 population. Approximately 25 percent of the Volusia County population consists of individuals who are 65 years of age or older whereas only some 9 percent of the population in the other six counties in HSA Area 3 are in that category. Although the HSA's plan arrived at its goal of 4.3 beds per 1,000 population for Area 3 in accordance with federal guidelines which allowed for adjustments in areas with referral hospitals, high tourism rates, and areas with greater than 12 percent of the population being 65 years of age or older, no further adjustment was made for Volusia County in spite of the fact that the Area 3 rate of about 13 percent of elderly population is about half that of the county. Further, the seasonal fluctuation as a result of tourists was not quantified on the basis of available statistics. However, in its justification for the 4.3 beds goal, the HSP makes note of the fact that Volusia County has 22 percent more patients per day during the high tourist months than during the lowest occupancy months of he year. On an average day in 1979, 73,000 tourists were in Volusia County which equated to approximately an additional 30 percent of the county population of 240,421. During the year 1979-80, about 22 percent of Petitioner's patients were residents of places other than Volusia County. However, there are no available statistics on the numbers of such persons who were inpatients. Most of the tourists seek only outpatient treatment for sunburn and minor injuries, although some undergo surgery during the months they are visiting the coastal area. (Testimony of Schwartz, Floyd, Smith, Hull, Clapper, Exhibits 3, 5-6, 18-26, 29, 51) Petitioner's application reflected that its 81 licensed beds were then utilized as medical/surgical (69 beds), intensive care (6 beds), and pediatrics (6 beds). The proposed additional 50 patient beds would be utilized as medical/surgical (29), intensive care (6), progressive care (4), pediatrics (3), obstetrical (6), and isolation (2). However, subsequent to filing its application, Petitioner discontinued its pediatric ward, and created 3 additional medical/surgical beds from the 6 former pediatric beds. (Testimony of Hull, Exhibit 2) The need for six additional intensive care beds and the initiation of a four-bed progressive care unit is to eliminate the past practice of prematurely transferring intensive care patients to other patient beds due to an insufficient number of intensive care beds. Such transfers required the conversion of semi-private into private rooms with additional equipment and nursing care which also reduced the total number of available beds within the hospital. Transfers of this nature were made extensively during the past fiscal year. (Testimony of Hull, Schwartz, Nargelovic, D'Assaro, Exhibit 2) The request in the application for two beds to serve as isolation rooms is based upon the fact that petitioner does not maintain any such rooms at the present time and it requires them to meet acceptable standards of health care. Currently, when isolation is necessary, a semi-private room is converted for the single patient requiring isolation, thus reducing the number of available beds. (Testimony of Schwartz, Hull, Nargelovic, Exhibit 2) Petitioner's request to establish a six-bed obstetrical unit is based upon its claim that such a unit is necessary to properly provide patients of osteopathic physicians with such a service and to provide full health care services which would not only attract new physicians to the hospital, but also enable Petitioner to conduct an intern training program. In addition, Petitioner is of the opinion that such a unit is necessary to provide service to patients living on the peninsula because the closest hospital providing obstetrical care is Halifax Hospital which is located on the mainland. The other obstetrical units are located at Fish Memorial Hospital at New Smyrna Beach and West Volusia Hospital at Deland which are some thirty miles away and do not conduct approved intern or residence programs for osteopathy. Halifax Hospital restricts staff privileges to those physicians who have met American Medical Association criteria and, therefore, osteopathic physicians generally are not eligible to utilize the obstetrical unit there. The HSA found that Petitioner projected 375 deliveries in its proposed obstetrics department during the third year of operation. The agency's HSP goal DTS 4.2 provides that no additional obstetrical departments should be approved in Volusia County until each existing department in the county is performing at least 1,000 deliveries annually. Only Halifax Hospital exceeds the 1,000 annual delivery standard. The HSA disapproved the requested obstetrical beds based upon its view that obstetrical beds at Halifax Hospital would eventually become available for use by osteopathic physicians. (Testimony of Schwartz, Hull, Rees, Exhibit 2-3, 6, 14, 54-55) Petitioner primarily bases its request for the additional 29 medical/surgical beds on the fact that it is the only hospital on the peninsula, has extreme seasonal demands placed on it by tourist population, and that the hospital census has been over 92 percent average occupancy during the past fiscal year. At times, the hospital has been filled to capacity, and has found it necessary to use "hall beds" to meet the need for emergency admissions. The crowded conditions have necessitated frequent delays in patient admissions or the referral of patients to other hospitals. A patient occupancy rate averaging 80-85 percent is normally acceptable, but Petitioner experiences a certain amount of inefficiency and lessened quality of care when over 80 percent of its beds are occupied. This is reflected in the difficulty of staffing and providing support services, and possible premature patient discharge. (Testimony of Schwartz, Hull, D'Assaro, Draper, Mason, Shoemaker, Exhibits 2, 51, 69) Although approximately 80 percent of Petitioner's patients reside in the coastal area of Volusia County, only some 29 percent reside in the northeastern part of the county where Petitioner's hospital is located. Petitioner currently has 27 osteopathic physicians on its staff, 18 of whom admit their patients principally to Ormond Beach Hospital and 7 admit there exclusively. Nineteen of the osteopathic physicians have staff privileges at other hospitals. Twenty-four allopathic physicians have staff privileges at Ormond Beach Hospital, but most are specialty consultants who admit less than one percent of Petitioner's patients. (Testimony of Schwartz, Floyd, Hull, D'Assaro, Exhibits 16-17, 60, 67) The quality of care provided patients at Ormond Beach Hospital is excellent, particularly in view of the antiquated physical plant and prevailing crowded conditions. These problems have led to the existence of a number of existing beds which do not conform to state fire, safety and other standards. It is planned that the majority of the existing beds will be located in a new building to provide room in the present buildings for expansion of ancillary and support facilities. The hospital is accredited by the American Osteopathic Association and by the Joint Commission on Accreditation of Hospitals. Accreditation by the Joint Commission indicates that a hospital provides an excellent standard of Health care. (Testimony of Draper, Boxx, Hull, Wisely, Mason, Shoemaker, D. Smith, Exhibits 1-2, 28-42, 49-50, 71-77) Petitioner is an osteopathic hospital whose Board of Directors is composed of osteopathic physicians. There are no physical differences between allopathic and osteopathic hospitals with the minor exception that the latter utilizes a table for manipulative therapy for some 20 to 30 percent of the patients. The primary difference between the two concepts is philosophical in nature. Osteopathy emphasizes a "wholistic" approach to medicine which stresses the importance of the musculoskeletal structure and manipulative therapy in the maintenance and restoration of health. It is family practice-oriented with about 75 percent of osteopathic physicians engaged in general practice rather than specialty medicine. Emphasis is placed upon personal attention by the physician to the patient. These factors produce a certain amount of patient preference for treatment in an osteopathic facility. (Testimony of Floyd, Schwartz, Wisely, Hull, Mason, Shoemaker, D. Smith, D'Assaro, Exhibit 78) Although the bylaws of two of the three allopathic hospitals located in the coastal area of Volusia County have recently been amended to permit osteopathic physicians to obtain staff privileges, certain vestiges of prior discrimination still exist due to the fact that hospital control is exercised by allopathic physicians, and that board certification is required which excludes many osteopathic physicians. The third hospital, Halifax, requires board certification in an American Medical Association approved specialty or residence program. As a consequence, only one osteopathic physician is on its staff. (Testimony of Draper, Hull, Porth, Helker, Rees, D. Smith, Exhibits 54, 63, 66) Daytona Beach General Hospital, Inc. is the other osteopathic hospital in the area which is located on the mainland several miles away from Ormond Beach Hospital. It has 297 licensed beds, but only 107 were staffed and open for use in July 1980. Its rate of occupancy in June 1979 was 13.8 percent of the licensed beds. The hospital has experienced past difficulties due to a substandard physical plant and inadequate staffing in certain areas. Although many osteopathic physicians decline to admit patients to the hospital, they generally agree that the standard of care is adequate, except for critical care cases. The hospital has sought in the past to attract additional patients by accepting staff applications from qualified area physicians. Daytona Beach General is accredited by The American Osteopathic Association and has pending an application for accreditation by the Joint Commission on Accreditation of Hospitals. (Testimony of Draper, Wisely, Boxx, Hull, D. Smith, Clapper, Solomon, Exhibits 27, 29-80) Petitioner has exerted efforts to acquire licensed hospital beds from other area hospitals to alleviate its shortage, but has been unsuccessful. Hospitals are reluctant to give up licensed beds even though they are not currently being utilized because they normally anticipate a need for them in future years. Although Daytona Beach General Hospital has been the subject of negotiations for sale with various entities, including Petitioner, in recent years, they have not been successful. None of the hospitals, including Petitioner, desires to share space in other hospitals due to the resulting lack of control over operations and procedures. Petitioner held a certificate of need for 84 beds in 1976 which it was forced to relinquish when it received a certificate of need for the proposed purchase of Daytona Beach General Hospital. (Testimony of Boxx, Hull, Porth, Hilker, Clapper, Rees, Draper, Exhibits 15, 28, 21-37, 43-44, 55-56) It is estimated that the renovation and expansion of Ormond Beach Hospital will take from 18 to 24 months to complete. Approval of additional beds will result in dividing construction expenses among a greater number of patients, thus lowering costs of health care. On the other hand, without the addition of hospital beds, an increase in patient costs is to be expected. The addition of new beds will be a positive factor in Petitioner's recruitment of osteopathic physicians to the area and in initiating an intern training program. It should also serve to increase Petitioner's competitive position among other area hospitals and provide a better quality of care for its patients. (Testimony of Draper, Boxx, Hull, D. Smith, Clapper)
Recommendation That the application of Petitioner for a certificate of need for a 50 acute-care bed addition to its facility be approved in part for 38 additional acute-care beds. DONE and ENTERED this 6th day of April, 1981, in Tallahassee, Florida. THOMAS C. OLDHAM 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 6th day of April, 1981. COPIES FURNISHED: Eric J. Haugdahl, Esquire Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301 Bernard H. Dempsey, Jr., Karen L. Goldsmith, Esquires Suite 610 Eola Office Center 605 East Robinson Street Orlando, Florida 32801 L. LaRue Williams, and Glenn R. Padgett, Esquires Kinsay, Vincent, Pyle, Williams and Tumbleson 52 South Peninsula Drive Daytona Beach, Florida 32018 Honorable Alvin Taylor Secretary, Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301 =================================================================
Findings Of Fact The proposed dialysis clinic 1/ would be located in West Boca Raton near "Century Village," a large condominium complex serving mainly the retired and elderly. The clinic would be owned and controlled by Neil Schneider, M.D., a nephrologist. The application is opposed by two nearby clinics which are owned and controlled by Ashok Patel, M.D., also a nephrologist. The "Service Area" at issue was disputed by the parties. HRS District 9 encompasses Palm Beach, Indian River, Okeechobee, Martin and St. Lucie Counties. Although this district has not been subdivided by either the local health council or HRS, a smaller "Service Area" must be defined for purposes of these proceedings. Kidney dialysis patients are required to visit their dialysis facility three times each week for approximately four hours per treatment. Most patients are in poor health and unable to drive (or even be transported by others) for long periods. Thus, accessibility of the dialysis clinic is an important consideration in this health care field. Either Palm Beach County or a South Palm Beach County "cachment" area 2/ constitutes an appropriate service area for purposes of this proceeding. Patients can drive from most locations in the county to existing dialysis clinics in 45 minutes or less. As noted above, however, much shorter driving times are desirable for these patients. The HRS witness, who was qualified as an expert in health care planning, calculated a county-wide need for four additional kidney dialysis stations. She based her calculations on the mathematical formula set forth in Rule 10-5.11(18)(a), F.A.C., using information from "Network 19" quarterly report's 3/ and average patient census data for calendar year 1984. The Network 19 representative, who was similarly qualified, calculated a need for five additional kidney dialysis stations in the proposed South Palm Beach County sub-area. His input consisted of the latest Network 19 patient data and projections for mid-1986. Petitioners attacked the designation of a sub-area for this proceeding as well as the patient and general population estimates utilized. The identification of a sub-area is reasonable in this situation given the relative immobility of these patients. However, the sub-area need calculations should be cross checked and confirmed by county-wide figures. Given the similarity of conclusions, a number of four to five is found to be an appropriate "hard number" starting point in this proceeding. Rule 10-5.11(18)(a), F.A.C. provides that "the base period. . . is one year from the date that the application is deemed complete by. . .[HRS]. Petitioners argue that the application was complete several years ago, and that it is improper to consider 1986 population data. This argument is rejected, however, as it is inconsistent with HRS practice and with common sense. Because of the years which CON cases often spend in processing, litigation and facility construction, one year from the date of final hearing has been recognized as the most appropriate period for these determinations. Petitioners identified some relatively minor errors in input data and calculations. These errors would not, however, significantly change the so called "hard numbers" stated above. Both the Applicant and Petitioners presented additional expert testimony of health care consultants. Not surprisingly, their conclusions tended to reduce the need on one hand (Petitioners) and increase it on the other (Applicant). Although their testimony is incorporated in those considerations discussed below, it is rejected as to modification of the data utilized and generated by the HRS and Network 19 witnesses. The strongest argument favoring grant of the application concerns Petitioners' restrictive policies. This argument was well supported by the testimony of area nephrologists who have practiced in or attempted to utilize Dr. Patel's clinics, by the testimony of former employee, by patients of Dr. Patel's clinics and by documents setting forth these policies. One nephrologist (Dr. Krause) was refused admission to Petitioners' staff because he was not admitted to the staff of the local community hospital. However, that hospital also had a closed staff policy which, in "Catch 22" fashion, seriously limited this nephrologist's ability to practice his specialty. Petitioners argue that such hospital staff privileges are needed so that the nephrologist can follow his patient to the hospital in the event of emergency. This argument ignores the nephrologist's responsibility for his patients, and is not a proper basis for denial of staff privileges. Additionally, Petitioners denied staff privileges altogether to another nephrologist (Dr. Sonneborn) when he set up his practice in Boca Raton in 1976, on the claim that the Boca Raton facility was a closed unit. Here, it should be noted that Petitioners' two dialysis clinics are the only units in the South Palm Beach area. Because of patient immobility, this has resulted in something of a monopoly. Without staff privileges at a convenient dialysis clinic, Dr. Sonneborn was literally unable to practice nephrology, and turned these patients over to Dr. Patel. Area nephrologists also complained of being required to sign a contract with Petitioners as a condition of gaining staff privileges at either of Dr. Patel's clinics. Although such a contract is not customarily required, this in itself was not shown to be a restrictive measure. However, some of the conditions of the contract were, indeed, restrictive. For example, the contract required that only bona fide residents of Palm Beach County under the care of local physicians could be admitted. This effectively excluded seasonal and transient patients (except when Petitioners found it convenient to waive the restriction). Petitioners also refuse to admit new "hepatitis positive" dialysis patients to either facility. Many dialysis patients acquire hepatitis or show hepatitis positive on their blood tests. Special handling of such patients is required, but to exclude them altogether is in the words of one such patient- witness "mean-spirited" (TR 738). The Applicant (Dr. Schneider), on the other hand, has a reputation at his existing clinics for accepting transients and hepatitis positive patients. The Applicant proposes to continue such policy at the proposed clinic if the C.O.N. is granted. However, the initial operating instructions prepared for this proposed clinic appear to prohibit hepatitis patients. Therefore, any C.O.N. issued as a result of this proceeding should require acceptance of hepatitis positive patients. Patients without coinsurance have also been refused by Petitioners. This is the patient who has only the 80 percent Medicare cost coverage and lacks the insurance or private resources to pay the remaining 20 percent of the clinic dialysis charge. In fairness however, Petitioners have occasionally taken "undesirable" patients such as indigents without basic Medicare coverage and prisoners. The quality of care at Petitioners' facilities is generally satisfactory. There was a large turnover in staff nurses about two years ago, and more recently, some inadequacies in supplies. Although these problems have apparently been corrected, the lack of "crash carts" for emergency treatment of patients who experience cardiac arrest is a significant and continuing deficiency. Petitioners' contention that nearby hospital paramedics can be called on in cardiac arrest situations is not an adequate response. In fact, one patient died in Petitioners' clinic from cardiac arrest. This patient's chance of surviving would have been greater had such emergency facilities been available. The proposed seven station facility was shown to be financially feasible. Even with as few as four stations, the unit was expected to be profitable by its second year of operation. Petitioners question the patient acquisition assumptions of the proposal and may well be correct that these are overly optimistic. However, Dr. Schneider has extensive experience in operating other South Florida clinics profitably, and has more than adequate personal financial resources to see the new facility through its initial loss period. The rate set by Medicare is $122 per patient treatment in South Palm Beach County. This provides a steady, predictable and secure source of revenue to the dialysis clinic. Thus, financial feasibility in this health care specialty is a near certainty, particularly in a high growth area such as South Palm Beach County. It should also be noted that the opening of the proposed clinic will have no impact on health care costs, since these costs are effectively controlled by Medicare. The Applicant seeks additional stations for hemo dialysis training and CAPD training. While these are worthwhile goals, it was not shown that a real need for such special stations exists in this area. Neither is there any medical school connection which would support additional stations. The Applicant also seeks to justify additional stations on the basis of hepatitis treatment which requires isolation, and an allowance for the large number of tourists and transients present during the winter months. These visitors were not included in the statistics which support the four to five stations discussed previously. Petitioners argue that their existing South Palm Beach County Clinics are under-utilized and that they will be injured if this application is granted. As of March 31, 1985, these facilities had utilization rates of only 54 percent (Boca Raton) and 72 percent (Delray). Although these units remain profitable, this is significantly below the 80 percent "optimum," or industry utilization standard. Additionally, there are three kidney dialysis centers in North Palm Beach County whose utilization rates are in excess of 100 percent. Although Petitioners, because of their restrictive policies, may be partially responsible for their low utilization rates, county-wide utilization figures do, in fact, indicate a greater need for additional facilities in North Palm Beach County than in the Applicant's proposed sub-area. However, there was no evidence that any of the existing facilities are seeking to expand so as to meet additional Palm Beach County dialysis needs. Therefore, the "unmet" need for additional stations must be considered as available for award to this Applicant.
Recommendation From the foregoing it is RECOMMENDED that HRS issue a Certificate of Need to the West Boca Raton Artificial Kidney Center authorizing the opening of a five-station kidney dialysis clinic on or after July 1, 1986, with the specific requirement that this clinic accept hepatitis and hepatitis positive patients, and that it agree to add no new stations without HRS approval prior to July 1, 1988. DONE and ENTERED this 18th day of September, 1985 in Tallahassee, Florida. R. T. CARPENTER, 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 18th day of September, 1985.
The Issue The issue is whether Respondent's tentative decision to attempt to negotiate with Intervenor a contract for services as a construction manager at risk is contrary to statutes, rules, policies, or the request for qualifications, in violation of Section 120.57(3)(f), Florida Statutes.
Findings Of Fact In 2001, Respondent began to investigate various options for the construction of Jensen Beach High School and reconstruction of Port Salerno Elementary School. The recent, sudden departure of Respondent's Director of Facilities and several of his employees left Respondent with few employees sufficiently experienced to deal with a general contractor constructing substantial projects, such as the construction of these two schools. Respondent thus considered the use of a construction manager and construction manager at risk (CMAR) contract. Under these types of contracts, Respondent would hire a construction manager to serve as its representative in entering into contracts with subcontractors and suppliers. Although not relevant to this case, the CMAR contract imposes upon the construction manager greater risks for increased construction costs. Initially, Superintendent Wilcox and School Board Attorney Griffin investigated the CMAR form of contract. After they had decided to recommend the use of a CMAR, on January 14, 2002, Respondent hired Rodger Osborne as the new Director of Facilities, and Mr. Osborne assumed from them the primary responsibility for investigating and later implementing the CMAR procurement in this case. Immediately prior to his employment with Respondent, Mr. Osborne had been the Director of Maintenance and Operations for the Charlotte County School District. In this capacity, Mr. Osborne managed construction, maintenance, and operations for the school district. Among his duties was the procurement of construction contracts. The Charlotte County School District has used the CMAR form of contract seven or eight times. Managing the process, Mr. Osborne borrowed provisions and procedures from various sources, including state statutes and provisions used by Sarasota County. Four days after Mr. Osborne began employment with Respondent, Mr. Griffin submitted a memorandum to the Martin County School Board in which he recommended that it approve the use of a CMAR for the construction of Jensen Beach High School and Port Salerno Elementary School. Eight days after Mr. Osborne began employment with Respondent, the Martin County School Board approved Mr. Griffin's recommendation and authorized Respondent to advertise for applicants to serve as the CMAR for these projects. Mr. Osborne's first task as Director of Facilities was to prepare the legal advertisement. On January 28, 2002--two weeks after Mr. Osborne had started working for Respondent--a local newspaper published the first of three legal advertisements for submittals from interested parties. The advertisement states: MARTIN COUNTY PUBLIC SCHOOLS will select a qualified Construction Manager at Risk under the Consultants' Competitive Negotiation Act to provide preconstruction and construction services for the Port Salerno Elementary Replacement School and Jensen Beach High School. The School District will award both projects to a single Construction Manager at Risk. Firms interested in being considered are requested to submit a letter of interest, resumes of key personnel who would be used on the project, proof of professional liability insurability as required by Martin County Public Schools and a copy of Florida Registration Certification. Each applicant must submit a completed Professional Qualification Supplement (PQS). Copies of the PQS Format and project information are available through the Facilities Department by calling [telephone number omitted]. All data must be current as of date of submission and received no later than 4 P.M. February 15, 2002. Submissions to be received by: Director of Facilities Martin County Public Schools 500 East Ocean Stuart, Fl. 34994 Anticipated award date is, March 19, 2002, with work to begin immediately. Estimated construction cost of $43,500,000. In accordance with School Board Rule 6Gx43-8.01, the Professional Services Selection Committee will rank the top three (3) firms and submit the ranking of firms to the Superintendent and School Board. MARTIN COUNTY PUBLIC SCHOOLS Dr. Sara Wilcox, Superintendent Fifteen potential applicants timely submitted responses to the advertisement. Mr. Osborne supplied each of these applicants a package consisting of another copy of the advertisement and "Guidelines for Selection of Construction Manager at Risk for Martin County Schools" (Guidelines). The Guidelines state: Complete all items of the Professional Qualifications Statement (PQS) for Construction Manager at Risk. Submit not less than three copies of the PQS along with any supporting information to Director of Facilities, Martin County Public Schools, 500 East Ocean, Stuart, Fl 34994. SHORT LIST Within approximately seven (7) days after the submission date of 4 P.M. February 15, 2002, for the purpose of reducing the number of applicants qualifying for interviews to no more than six (6), a short list committee will be formed. The Short List Committee will include one School Board Member, one Superintendent's designee, one representative from Operation Services, one Program Staff Member, the Director of Facilities and Supervisor of Construction. The Director of Facilities will serve as chairperson. The following criteria and point values will be used to determine a number rating for each applicant: Letter of Interest 0 points [PQS] 0 points Certified Minority Business 5 points Location 1-5 points Current Work Load 0-10 points Capability 0-10 points Professional Accomplishments 0-10 points Up to six (6) firms with the highest rankings will be interviewed by the Professional Services Selection (Ranking) Committee. The package supplied to potential applicants contained blank scoring sheets with specific points assigned to different factual scenarios. The package also contained a fact sheet describing each of the schools to be constructed and a set of forms seeking specific information; the forms were part of the Professional Qualification Statement for Construction Manager At Risk (PQS). PQS Paragraph E states: RELATED EXPERIENCE List the three (3) projects in the last five (5) years for which your firm has provided/is providing construction management and/or general contracting services which are most similar in scope to this project. In determining which projects are more related, consider: related size and complexity; how many members of the proposed team worked on the listed project; and how recently the project was completed. List the projects in priority order, with the most related project listed first. The PQS form provides one box that asks for specific information about the three listed projects, such as the size, type of construction, and construction cost. The PQS form supplies another box for a "detailed description of projects." PQS Paragraph F requires the disclosure, for each of the three projects, the owner budget, final budget, schedule status, and impact of firm on the final results. PQS Paragraph G states: PROPOSED TEAM Describe your proposed organization structure for this program indicating key personnel and their relationship to this project and other team members. Give brief resumes of key persons to be assigned to the program. The PQS form provides one box for office staff and one box for onsite staff. Each box asks for specific information about the listed key personnel, such as the percentage of time they will be assigned fulltime to the subject projects; their experience in terms of "types of projects, size of projects, [and] project responsibilities"; and "other experience and qualifications relevant to this project." Mentioned in the legal advertisement, although not included in the package, Respondent's Rule 6Gx43-8.01 provides: FACILITIES AND OPERATIONS 6Gx43-8.01 Professional Services Professional Service Contracts between the Board and architects, engineers and surveyors shall follow the following procedures if the basic construction cost for the project is estimated to be greater than $120,000 or if the fee for professional service for planning or study is estimated to exceed $8,500 (except valid emergencies so certified by the Superintendent of Schools): Publicly announce each project indicating: general project description how interested parties can apply Certify firms or individuals wishing to provide professional services while considering: General Services Administration Forms 254 and 255. Past performance Willingness to meet requirements of: time budget availability--planning-- construction ability to furnish required service Firm's workload in relation to job under construction. Volume of work previously awarded to the firm. A committee, comprised of the Superintendent of Schools and/or his/her designee, appropriate staff members, and an annually appointed School Board Members [sic] shall recommend to the School Board a minimum of three (3) "certified" firms or individuals which shall be recommended in order of preference 1, 2, and 3, with the object of effecting an equitable distribution of contracts, providing the selection of the most highly qualified firm is not violated. The School Board, or its designee, shall negotiate a contract with the most qualified firm for professional services at compensation which the School Board, or its designee, determines if fair, competitive, and reasonable. In making such determination, a detailed analysis of the cost of professional services shall be conducted in addition to considering the scope and complexity of the services required for the project. Should the School Board, or its designee, be unable to negotiate a satisfactory contract with the firm considered to be the most qualified at a price the School Board, or its designee, determines to be fair, competitive and reasonable, negotiation with that firm shall be formally terminated. Negotiations shall then be undertaken with the second most qualified firm. Failing accord with the second most qualified firm, negotiations shall be undertaken with the third most qualified firm. If unable to negotiate with any of the selected firms, three more firms shall be selected in the order of preference and negotiations will be continued until an agreement is reached. For professional services when the basic construction cost for the project is estimated to be less than $120,000 or planning or study fees estimated to be less than $8,500, the procedure shall be as follows: Follow steps B, C, and D outlined under preceding 1 for purpose of selecting the agency best to accomplish the project. The use of a continuing contract may be approved provided the following provisions are met. A continuing contract is for professional services for projects in which construction costs do not exceed $500,000; or for study activity, the fee for which professional service does not exceed $25,000; or for work of a specified nature as outlined in the contract required by the School Board, or its designee. The contract requires no time limitation but shall provide a termination clause. Footnote: All professional firms are encourage [sic] to submit their statements of qualifications and performance data using Govt. Service Adm. Forms 254 and 255. The submission will be valid for one year beginning July 1. A reminder for this purpose will be made in the form of an annual public announcement. Superintendent Wilcox selected a Short List Committee, whose task was to score the submittals and, based on these scores, select the five applicants that would make presentations to the Professional Services Selection Committee. The Short List Committee comprised Mr. Osborne, chair; Bob Sanborn, Supervisor of Operations; Darrel Miller, Director of Educational Technology; Dr. David Anderson, School Board chair; Tracey Miller, principal of Port Salerno Elementary School; and John Dilworth, Supervisor of Construction. The Short List Committee met on February 21, 2002. After examining the submittals of the applicants in response to the Guidelines, the Short List Committee scored the submittal of each applicant. The highest-ranking applicant received 185 points. Intervenor was ranked third with 160 points, and Petitioner was ranked fourth with 158 points. The Short List Committee selected five applicants to make presentations to the Professional Services Selection Committee. By letter dated February 22, 2002, Mr. Osborne supplied each of the five short-listed applicants with a document entitled, "Interview and Selection for Construction Manager At Risk" (Selection Criteria). The Selection Criteria states that the Professional Services Selection Committee will use the following criteria to "reduc[e] the number of qualified applicants to three . . .": 1. Letter of Interest 0 points 2. Professional Qualification Supplement forms 0 points 3. Certified minority business 5 points 4. Location 0-5 points 5. Current work load 0-10 points 6. Capability 0-10 points 7. Professional accomplishments 0-10 points 8. Schedule & budget 0-10 points 9. Approach and methods 0-10 points 10. Understanding of project 0-10 points 11. Previous work for MCSD 0-10 points 12. Progressive use of technology 0-10 points 13. Warranty period 0-10 points 14. Construction administration 0-10 points The Selection Criteria states: "The Professional Services Selection Committee will present to the Superintendent for approval and presentation to the Board a ranked list of the top three qualifying firms." Separate pages of the Selection Criteria detail the scoring guidelines for each of the scored criteria. For example, the Selection Criteria states under Professional Services Evaluation: "Current and past records of those projects successfully completed which are similar in scope to project(s) under consideration. References listed and check [sic]. Review PQS form." Ratings of 9 and 10 are for "extremely qualified for project"; ratings of 7 and 8 are for "very qualified for project"; ratings of 5 and 6 are for "qualified--experienced with project type"; ratings of 2, 3, and 4 are for "not very qualified--questionable abilities for project"; and ratings of 0 and 1 are for "unqualified--no experience with project type." After sending the February 22 letter, Mr. Osborne called each of the applicants to confirm that each had received the letter. During these conversations, Mr. Osborne informed each applicant that only the applicant ranked first by the Professional Services Selection Committee would make a presentation to the School Board. As Mr. Osborne understood the selection process, the Board would have the final decision whether to accept the top-ranked applicant. If it did so, the School Board would then try to negotiate a CMAR contract with the top-ranked applicant. If the parties could not reach an agreement, the School Board could then try to negotiate a contract with the applicant ranked second by the Professional Services Selection Committee. Superintendent Wilcox, with Mr. Osborne's assistance, selected the Professional Services Selection Committee. The Professional Services Selection Committee comprised Leighton O'Connor, Executive Director of Operations Services and immediate supervisor of Mr. Osborne; Hank Salzler, Assistant Superintendent and designee of Superintendent Wilcox; Ms. Miller; Mr. Dilworth; Dr. Anderson; and Mr. Osborne. On March 5, 2002, Mr. Osborne informed the members of the Professional Services Selection Committee that they would rank the applicants and the top-ranked applicant would make a presentation to the School Board. No member of the committee voiced an objection to the process. After Mr. Osborne had addressed the Professional Services Selection Committee, the representatives of the five short-listed applicants made their presentations. Based on these presentations and the earlier submittals, the Professional Services Selection Committee, on March 5, 2002, ranked Petitioner first with 513 points and Intervenor second with 487 points. Immediately after the meeting of the Professional Services Selection Committee, Assistant Superintendent Salzler visited Superintendent Wilcox and told her that Mr. Osborne had told the committee members that only the top-ranked applicant would make a presentation to the School Board. For professional services contracts, the top three-ranked applicants customarily made presentations to the Board, which would then select the applicant that the Board felt was most qualified. Superintendent Wilcox had thought that the same process would apply to the selection of the applicant with which to negotiate the CMAR contract. Superintendent Wilcox immediately visited Mr. Osborne and informed him that the School Board would want the top three applicants to make presentations. Mr. Osborne replied that he had told the applicants that only the top-ranked applicant would make a presentation to the Board. Superintendent Wilcox told him to telephone the top three applicants and tell them that all of them would be making presentations to the Board, so that the Board could make the final ranking. Later the same day, Mr. Osborne telephoned the top three applicants and informed them of the new procedure. Dr. Anderson had had to leave the meeting of the Professional Services Selection Committee before it was finished, so, later the same day, he telephoned Mr. O'Connor to learn the results of the voting. Mr. O'Connor informed Dr. Anderson of the three top-ranked applicants and expressed his opinion that the key criterion was not the general ranking that resulted from the guidelines and criteria that Mr. Osborne had developed, but the quality of the personnel who would manage the actual construction. Acknowledging that the School Board would not have adequate time to view the applicants' presentations and evaluate their submittals, Mr. O'Connor asked Dr. Anderson if Mr. O'Connor should undertake an analysis for use by the School Board. Dr. Anderson agreed that such an analysis would be helpful and asked him to prepare one. Mr. O'Connor prepared a 24-page document entitled "Construction Manger [sic] at Risk Finalist Comparisons" (O'Connor Finalist Comparisons). Mr. O'Connor provided the O'Connor Finalist Comparisons to each School Board member prior to the March 19 meeting. The O'Connor Finalist Comparisons introduces a new element to the procurement criteria--cost. The document advises the School Board members that the "number of team members and percentage of time devoted to the project may impact the cost of services." The document also relates, in an unspecified manner, "pre-construction services" to "cost saving alternative." The O'Connor Finalist Comparisons emphasizes some published selection criteria at the expense of others--without regard to their relative point value. Admittedly reflecting only Mr. O'Connor's opinion, the O'Connor Finalist Comparisons states that the "key consideration [sic] for this project" are "pre-construction services," "onsite construction service," and "experiences of assigned project staff." The document adds: "Our architect indicated that the Project Superintendent was the most important team member." The O'Connor Finalist Comparisons analyzes the proposals of the three applicants in terms of two criteria-- "credentials" and experience of selected members of the onsite project team in school construction. The emphasis upon school--construction experience also reflects Mr. O'Connor's opinion--this time clearly without the smallest support in the Guidelines or Selection Criteria, which ask for experience of similar scope, not merely school-construction experience. For Intervenor and Petitioner, the O'Connor Finalist Comparisons compares two employees per job site. For the high school, Intervenor's two employees have handled six school- construction projects, and their credentials consist of one bachelor's of arts degree in business administration. For the elementary school, Intervenor's two employees have handled 12 school-construction projects, and their credentials consist of one of them holding a bachelor's of science degree and master's degree in civil engineering. For the high school, Petitioner's two employees have handled one school, and their credentials consist of one bachelor's of science degree in business administration. For the elementary school, Petitioner's two employees have handled 11 school-construction projects, and their credentials consist of no four-year degrees. In this part of his analysis, Mr. O'Connor does not disclose his rationale for excluding from his analysis other key team members assigned 100 percent to the school projects, such as the two assistant project superintendents for the Jensen Beach High School project. These two persons have handled a total of seven school-construction projects. Interestingly, Mr. O'Connor included a third member of the third applicant's high-school team, and this person was an assistant superintendent. Mr. O'Connor fails to explain why he omitted analysis of project engineers assigned fulltime to the sites. From his charts, Intervenor did not assign such a person to either site, Petitioner assigned one to the elementary school and two to the high school, and the third applicant assigned one to each site. Petitioner's project engineer for the elementary school has handled two school-construction projects, and the sole person identified by name as a project engineer for the high school has handled one school-construction project. Again without explanation, Mr. O'Connor identifies Petitioner's project manager for the high school as someone other than the person whom Petitioner named in its proposal. The person identified by Mr. O'Connor has handled only one school-construction project. Although it is possible that Petitioner had had to change assigned personnel in the month since it first named its anticipated key personnel, nothing in the record indicates that such a change in personnel actually took place. Sometime after March 5, Superintendent Wilcox, Dr. Anderson, and Mr. Osborne informed each of the top three applicants that each of them would make a 20-minute presentation to the School Board and that the Board would use the Selection Criteria for ranking the applicants. On March 19, 2002, at a regularly scheduled School Board meeting, each of the top three applicants made its 20-minute presentation, interrupted by few, if any, questions from Board members. Petitioner's presentation covered the 14 criteria stated in the Selection Criteria. Petitioner complains that its presentation occurred at the end of the evening, long after the presentations of Intervenor and the third applicant, but this occurrence did not confer competitive advantage or disadvantage. Equally without meaning is the contention of Respondent and Intervenor that Petitioner never objected to any change in the procurement criteria. Nothing in the record suggests that Petitioner was ever aware, prior to the March 19 meeting, of the O'Connor Finalist Comparisons. Nothing in the record suggests that Respondent gave Petitioner a point of entry to challenge the changes that Respondent made during the course of this procurement. At no time during the March 19 meeting did anyone present the School Board with the rankings of the Professional Services Selection Committee. At no time during the March 19 meeting did anyone move that the School Board try to negotiate a contract with Petitioner. At the end of the meeting, without any public discussion, each School Board member voted his or her first, second, and third preference. Intervenor received three first-place votes, one second-place vote, and one third-place vote. Petitioner received two first-place votes and three second-place votes. Dr. Anderson, who ranked Intervenor first, announced that the vote was a tie, but that Intervenor should be declared the winner because it received more first-place votes. In response, another Board member moved to rank Intervenor first, Petitioner second, and the third applicant third and authorize Respondent to commence negotiations with Intervenor. The School Board unanimously passed the motion. The procurement documents are unambiguous, although they are less then comprehensive in their treatment of the procurement procedure. Rule 6Gx43-8.01.c provides that a committee shall recommend, in order of preference, three applicants to the School Board, which shall negotiate a contract with the most "qualified" applicant. The legal advertisement states only that the Professional Services Selection Committee shall rank the top three applicants and submit them to the Superintendent and School Board. The Selection Criteria states that the Professional Services Selection Committee will present to the Superintendent for approval and presentation to the School Board a ranked list of the top three "qualifying" applicants. Citing past practices--although none involves the procurement of a CMAR--Intervenor and Respondent contend that the School Board was authorized to re-rank the applicants and begin negotiations with any of the three applicants submitted to the Board. Citing the reference in the Selection Criteria that the Professional Services Selection Committee ranks the top three "qualifying" applicants and the language in the other documents requiring the School Board to negotiate first with the most "qualified" applicant, Petitioner contends that the Board has no right to change the ranking of the Professional Services Selection Committee, but must deal first with the top-ranked applicant. Due to the interpretation of Mr. Osborne, Respondent's interpretation of its rules and procurement documents is clearly erroneous and arbitrary. Until the telephone calls from Mr. Osborne to the applicants on March 5 after Superintendent Wilcox told Mr. Osborne that all three top-ranked applicants would make presentations to the Board, the applicants perceived correctly that Mr. Osborne was in charge of implementing the procedures for this procurement. And, from the start through his meeting with Superintendent Wilcox on March 5, Mr. Osborne consistently understood that the Professional Services Selection Committee would rank the top three applicants, and a committee member or the Superintendent would present to the School Board only the top-ranked applicant, which would then make a presentation to the Board. As Mr. Osborne envisioned the process, the Board could reject the top-ranked applicant and proceed to the second- ranked applicant, although this was unlikely, but the Board could not re-rank the top three applicants, without ever formally rejecting the applicant ranked first by the Professional Services Selection Committee. Mr. Osborne consistently communicated his understanding of the procurement process to the applicants. Mr. Osborne's understanding of the procurement process is the correct interpretation of the procurement documents. Among other things, Mr. Osborne's interpretation of the procurement documents lends meaning to the task of the Professional Services Selection Committee in ranking the top three applicants. Under Respondent's interpretation, the Professional Services Selection Committee performs a useless act when, in addition to naming the top three applicants, it ranks them. Respondent's departure from this procedure at the moment of decision clearly violates the standards governing this procurement. Exacerbating the situation is the O'Connor Finalist Comparisons. This document distorts the Selection Criteria by omitting many criteria, reassigning weights among other criteria, and adding two criteria--cost and school-construction experience. This document distorts Petitioner's qualifications by its arbitrary selection of personnel for comparison purposes. Presumably, Respondent and Intervenor resist the inference that the O'Connor Finalist Comparisons influenced any of the School Board members. The administrative law judge infers that the document influenced one or more members; given the close outcome of the vote, the administrative law judge infers that the document was a material factor in the selection of Intervenor. These inferences are supported by numerous facts, including the following. The School Board chair, Dr. Anderson, endorsed the preparation of the document. Dr. Anderson preferred Intervenor over Petitioner. The O'Connor Finalist Comparisons appears to be the only document presented to School Board members that was not part of the formal procurement process. The School Board members did not extensively discuss at the meeting the merits of the three applicants before voting. Petitioner tried to elicit testimony from the School Board members, but at Respondent's request, the administrative law judge entered a prehearing order denying Petitioner the opportunity to compel testimony from any of them except Dr. Anderson, who had served on the Professional Services Selection Committee. The inference of materiality is eased by the magnitude of the distortions contained in the O'Connor Finalist Comparisons as to the Selection Criteria and Petitioner's qualifications and the closeness of the Board vote; the extensive distortion contained in the O'Connor Finalist Comparisons means that it was material if it had even the slightest influence on one of the School Board members. Under these facts, Petitioner proved that Respondent's selection of Intervenor was contrary to Respondent's rule, Respondent's policies (as stated by Mr. Osborne), and the other procurement documents. Under these facts, Petitioner proved that the deviations from Respondent's rule, Respondent's policies, and the other procurement documents rendered the selection of Intervenor clearly erroneous, contrary to competition, and arbitrary. As a remedy, Petitioner contends that Respondent should commence negotiations with Petitioner. However, by the time Respondent issues a final order, six months will have passed since each applicant submitted a proposal. The ability of applicants to meet various criteria, such as the availability of key personnel, may have changed dramatically. Also, contrary to Petitioner's contention, this procurement is not fundamentally flawed due to bad faith or favoritism. The change in procurement procedures was indisputably due to an innocent, mutual mistake among Respondent's employees. The newly hired Mr. Osborne intended to handle the procurement his way, and Dr. Anderson, Superintendent Wilcox, and District staff intended Mr. Osborne to handle the procurement their way. Nothing in the record suggests that the O'Connor Finalist Comparisons is anything more than Mr. O'Connor, as Mr. Osborne's supervisor, injecting himself into a process that was not going as smoothly as Mr. O'Connor would have liked. Relying on the advice of an architect, Mr. O'Connor belatedly rewrote the procurement criteria to emphasize school-construction experience and cost; it is easy to indulge the presumption that Mr. O'Connor was motivated by a desire to help Respondent, not an applicant. Absent other evidence in the record, Mr. O'Connor's distortion of Petitioner's qualifications, which was not of the same magnitude as his distortion of the procurement criteria themselves, may presumably be attributed to haste or carelessness, rather than favoritism toward Intervenor.
Recommendation It is RECOMMENDED that the Martin County School Board enter a final order setting aside the proposed decision to enter into negotiations with Intervenor to provide services as a construction manager at risk in the construction of the Jensen Beach High School and Port Salerno Elementary Replacement School and restart the procurement process, if Respondent still seeks to proceed with these projects under this construction method through a competitive procurement. DONE AND ENTERED this 28th day of June, 2002, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 28th day of June, 2002. COPIES FURNISHED: Dr. Sara Wilcox, Superintendent Martin County School Board 500 East Ocean Boulevard Stuart, Florida 34994-2578 Honorable Charlie Crist Commissioner of Education Department of Education The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400 Gary M. Dunkel, Esquire Susan Fleischner Kornspan, Esquire Greenburg Traurig, P.A. 777 South Flagler Drive, Suite 300 East West Palm Beach, Florida 33401 Douglas G. Griffin, Esquire School Board of Martin County 500 East Ocean Boulevard Stuart, Florida 34994 Joseph Ianno, Jr., Esquire Michael Winston, Esquire Carlton Fields, P.A. Post Office Box 150 West Palm Beach, Florida 33402-0150
