Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part Il, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $2,500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed February 23, 2015 2:41 PM Division of Administrative Hearings 3. Conditional licensure status is imposed on the Respondent beginning on May 15, 2014 and ending on June 15, 2014. ORDERED at Tallahassee, Florida, on this I day of Boren, , 2015. NOTICE OF RIGHT TO JUDICIAL REVIEW. A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct of this Final Order was served on the below-named persons by the method designated on this Veen } Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting | Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) John E. Bradley Brian Kelly, Esquire Office of the General Counsel Law Offices of Brian Kelly, PC Agency for Health Care Administration 7316 Wisconsin Avenue, Suite 200 (Electronic Mail) Bethesda, Maryland 20814 (U.S. Mail)
Conclusions THIS CAUSE came on for consideration before the Agency for Health Care Administration (“the Agency’’), which finds and concludes as follows: 1. The Agency issued the Petitioner (“the Applicant”) the attached Second Amended Notice of Intent to Deny (Ex. 1). Case No. 2013008639. In addition, the Agency has an open case number 2013011466 for an administrative fine in the sum of $500.00. The parties entered into the attached Settlement Agreement (Ex. 2), which is adopted and incorporated by reference. 2. The parties shall comply with the terms of the Settlement Agreement. 3. The Second Amended Notice of Intent to Deny is withdrawn. 4. The Applicant shall pay the Agency ten thousand dollars ($10,000.00) by March 2, 2015, with the license being surrendered if the payment is late or missed. Payment made on March 3, 2015 or thereafter, shall be deemed late or missed. A check made payable to the “Agency for Health Care Administration” containing the AHCA number(s) should be sent to: Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS# 14 Tallahassee, Florida 32308 5. The Agency will issue a standard license for the facility effective upon the completed execution of this Settlement Agreement. Unless surrendered, the license will be valid until the survey cycle of May, 2015. The Agency will conduct the facility’s biennial survey before the expiration of the May 2015 license and within the Agency’s timeframes as defined by protocol. The Agency will then complete annual surveys of the facility from that date through the next survey cycle expiration in May, Filed October 16, 2014 3:45 PM Division of Adminlstrative Hearings 2017. If there are any Class 1, Class 2 or uncorrected 3 or 4 deficiencies during any survey cycle, or before May, 2017, the facility agrees to relinquish its license. If there are any complaints which result in a Class 1, Class 2 or uncorrected 3 or 4 deficiencies during this time frame, the facility agrees to relinquish its license. 6. Any requests for an administrative hearing are withdrawn. The parties shall bear their own costs and attorney’s fees. This matter is closed. ORDERED in Tallahassee, Florida, on this Lraay of S—pteba , 2014. NOTICE OF RIGHT TO JUDICIAL REVIEW. A party that is adversely affected by this Final Order is entitled to seek judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this>Final Order oe below- named persons/entities by the method designated on this lay of , 2014. Richard Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone (850) 412-3630 Jan Mills Catherine Anne Avery, Unit Manager Facilities Intake Unit Licensure Unit Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) Finance and Accounting Revenue Management Unit Agency for Health Care Administration (Electronic Mail) Harold Williams, Field Office Manager Local Field Office Agency for Health Care Administration (Electronic Mail) Deborah E. Leoci, Senior Attorney Office of the General Counsel Agency for Health Care Administration (Electronic Mail) Jay Adams, Attorney for Petitioner Broad and Cassel 215 South Monroe Street, Suite 400 Tallahassee, Florida 32302 (U.S. Mail)
The Issue The issues are (a) whether petitioners' budget letters for fiscal year 1991-1992 should be accepted by respondent, and (b) whether the agency has utilized a non-rule policy in rejecting the letters, and if so, whether the policy has been adequately explained and justified.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioners are hospitals subject to the regulatory jurisdiction of respondent, Health Care Cost Containment Board (Board). As such, they are required to annually file their projected budgets with the Board for review and approval. This controversy relates to petitioners' fiscal year 1991-1992 budgets (1992 budget) and whether such filings conformed with the Board's requirements and should have been accepted. Budget letters for the fiscal year 1992 were filed by petitioners with the Board in May 1991. After the documents were reviewed by the Board's staff, on June 21, 1991, the Board issued virtually identical proposed agency action to each hospital advising the hospital that its budget letter was "nonconforming for the following reason: The hospital's maximum GRAA should be $ , instead of $ , ", with the appropriate dollar amounts inserted in the blanks. The letter went on to advise the hospital that it should resubmit a corrected budget document and until it did so, its submission would be considered incomplete. As provided for by agency rule, the hospitals then filed general and specific objections to this preliminary determination. After such objections were reviewed by the Board and presumably found to be without merit, petitioners requested a formal hearing to contest the proposed agency action. The Parties Petitioners are fourteen hospitals located throughout the State of Florida. Intervenor, Florida League of Hospitals, Inc., is a non-profit organization which is organized and maintained for the benefit of the proprietary hospitals which comprise its membership. The Board is a state agency charged with the responsibility of annually reviewing hospital budgets to insure that a hospital's charges do not exceed certain established thresholds. This is accomplished by an annual review of the budgets of all regulated hospitals. Intervenor, Citizens of the State of Florida, is represented by the Office of the Public Counsel. That office is charged with the responsibility of representing the citizens in all proceedings before the Board. The parties have stipulated that petitioners and the two intervenors have standing to initiate or participate in this proceeding. The Review Process As noted above, budgets must be filed on an annual basis at least ninety days prior to the beginning of a hospital's fiscal year. In these cases, all petitioners have fiscal years ending on August 31 and thus their budgets are due no later than June 1 of each year. There are two types of budget filings authorized by law. First, a hospital may file what is known as a budget letter, which is a one-page submission on a form provided by the Board. In the letter, the hospitals are required to acknowledge and certify to certain information contained in Subsection 407.50(2), Florida Statutes (1989). Secondly, a hospital may file a detailed budget which is more complicated than the budget letter and requires the completion of a twenty-seven page form. In a detailed filing, a hospital must provide, at a minimum, detailed information regarding the hospital's unit and hospital statistics, related party transactions, patient rates and discount policies, explanation of increases in revenue and expense, and prospective payment arrangements. The detailed budget filing is obviously a more expensive, complicated and time-consuming process than is the filing of a budget letter. It should be noted here that the current filing process was created by the legislature in 1988 when substantial amendments to the law were enacted. Those amendments provided, inter alia, that budget letters could be used for the first time beginning with fiscal year 1990. Prior to that time, all hospitals filed detailed budgets. Given the technical language which governs the Board's budget review process, a brief discussion regarding that process is appropriate. In very broad terms, the Board's principal function is to ensure that the revenues (charges) received by a hospital are not excessive or unreasonable. It performs this function by reviewing the budgets of each hospital during the annual budget review process. As is relevant to this controversy, the Board uses two major financial indicators in the review process. They are the gross revenues per adjusted admission and the maximum allowable rate of return, also known in regulatory parlance as the "GRAA" and "MARI", respectively. 1/ In order to measure the reasonableness of a hospital's charges, the Board requires each hospital to calculate a GRAA, which is the result of dividing the gross operating revenues of the hospital during a fiscal year by adjusted admissions. This financial indicator is basically a measure of revenue per case after adjusting for outpatient admissions and represents an average of all gross revenues per case. Except when authorized by the Board, a hospital may not increase its charges (GRAA) from one year to the next by more than its maximum allowable rate of increase. This percentage limitation, more commonly known as the MARI, is calculated pursuant to a statutorily defined formula. It is important to note that a budget letter is used when a hospital does not intend to increase its charges by more than the percentage amount specified in its approved MARI. Thus, in return for the hospital agreeing to operate within its MARI during the next fiscal year, the Board allows the hospital to have its budget approved through the less complicated budget letter process. Conversely, when a hospital intends to increase its charges from one fiscal year to the next by a greater percentage amount, it is obliged to file a detailed budget and subject itself to this more time-consuming process. In each budget letter filing, a "base GRAA" must be calculated. After that calculation is made, the base GRAA is then inflated by the hospital's MARI plus one, which produces what is known as the "budget letter GRAA". Thus, where a base GRAA is $10,000 and the MARI is 10%, the budget letter GRAA is $11,000, which is derived by multiplying the base GRAA ($10,000) by one plus the MARI (1 plus .10%, or 1.10). The budget letter GRAA represents the maximum projected gross revenues per adjusted admission the hospital can receive during the next fiscal year without having to justify the excess charges to the Board. The principal point of contention in these cases is the appropriate manner in which the base GRAA for each of petitioners' budget letters should be calculated. This in turn bears directly on the issue of whether petitioners are eligible to file a budget letter. There is no dispute as to the appropriate MARI, and the parties have agreed that the dollar figures and percentages applicable under each party's proposed calculations are accurately reflected in joint composite exhibit 1 received in evidence. Calculation of the Base GRAA Petitioners and supporting intervenor contend that the appropriate base GRAA should be calculated so as to most accurately reflect the GRAA from the previous fiscal year. In this vein, they have proposed three methodologies which are described on page 2 of joint composite exhibit 1 and are also discussed in greater detail in a subsequent portion of these findings. Petitioners cite the language in Subsection 407.50(2)(a), Florida Statutes (1989) as the authority for these approaches. On the other hand, the Board and its supporting intervenor assert that the GRAA base must be calculated by using the methodology identified as alternative 5 on page two of joint exhibit 1 and also described in Subsection 407.50(3), Florida Statutes (1989). In every case, this produced a smaller base GRAA than was proposed by petitioners, and unless they accede to the Board's calculation, they will be required to file detailed budgets. Like the petitioners, the Board and supporting intervenor also rely upon the language in Section 407.50, Florida Statutes (1989) as authority for their position. Even so, petitioners contend that respondent's methodology is actually a rule, not duly promulgated, and thus it must be justified and explained in this proceeding as is required of any non-rule policy. In a separate final order issued this same date in Case Nos. 91-4762R through 91- 4776R, the undersigned has determined that the methodology is in fact a policy having all of the attributes of a rule and thus it must be defended and explicated in a section 120.57(1) proceeding. Pursuant to a statutory amendment enacted in 1988, existing subsection 407.50(1) provided a so-called phase-in period for calculating a budget letter GRAA in fiscal years 1990 and 1991, and the manner for doing so was spelled out rather clearly in the law. The problem here lies in the fact that other provisions within section 407.50, which are not as clear as subsection 407.50(1), govern the filing of budget letters for fiscal year 1992 and beyond. The problem was recognized by the Board as early as July 1988 when its general counsel prepared a memorandum for Board members which compared the then existing law with amendments just adopted by the 1988 legislature. At that time, the Board was advised that for fiscal year 1992 and beyond, the base GRAA would be calculated in a manner generally consistent with the methodology proposed by the Board in these cases. This memorandum was placed in what is known as the "Board Book", a compilation of all documents considered by the Board at its meetings, and copies of the memorandum were later distributed to virtually all regulated hospitals in the State. The memorandum read in pertinent part as follows: For FY 1992 and beyond, will be determined as in following 1992 example. Base for 1992 budget will be 1990 actual GRAA unless 1990 actual GRAA exceeded 1989 actual GRAA by more than Board-approved MARI, 1991 base will be 1989 actual GRAA inflated by Board-approved rate of increase for 1990. In addition, at a technical advisory panel meeting held on November 7, 1990, hospital representatives were advised that while subsection 407.50(1) provided a phase-in period with a specified procedure for calculating a budget letter GRAA, the Board staff was in the process of developing a calculation of budget letter GRAA for fiscal year 1992 and beyond. Testimony at hearing established that the Board staff conveyed a description of the methodology to hospital representatives at that time. These actions suggested that the Board intended for the base GRAA for fiscal year 1992 to be calculated differently than the methodology used during the phase-in period. Not surprisingly, there is no agency precedent on this matter since these cases represent the first occasion on which 1992 budget letters were filed and reviewed. As noted earlier, a budget letter is appropriate when a hospital does not seek a rate of increase in GRAA in excess of the MARI for the hospital's next fiscal year. Whether the rate of increase in the GRAA is of such magnitude as to require detailed review is directly dependent on the manner in which the base GRAA is calculated, and this issue lies at the heart of the dispute. This is because the Board uses the results of the calculation (base GRAA x applicable rate of return) solely for the purpose of creating a so-called threshold GRAA, which if exceeded by the hospital's requested GRAA, triggers the need for detailed review. Thus, the calculation simply provides the Board with a means for determining whether the proposed increase in the GRAA falls within budget letter guidelines. 2/ In every case here, petitioners' GRAA exceeded the Board's threshold GRAA so as to trigger the need for a detailed budget. The Board's calculation of the base is done in a manner consistent with subsection 407.50(3). That subsection reads in pertinent part as follows: In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited actual experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission from the year before the prior year, increased by the applicable rate of increase for the prior year, and then inflated by the applicable rate of increase for the current year. Thus, the methodology requires that the prior year audited actual experience be used as the starting point unless such charges exceeded the applicable (approved) rate of increase. Although the parties agree that 1991 actual data would be the most desirable to use, that data is unavailable. Therefore, fiscal year 1990 results of operation, which are the most current audited actual experience, must necessarily constitute "the prior year audited actual experience" within the meaning of the statute. To determine whether the 1990 actual experience exceeded the applicable rate of increase, the Board measured the increase in the actual GRAA from 1989 to 1990. If the actual rate of increase did not exceed the approved rate of increase, the Board took the 1990 actual GRAA, inflated that amount by the applicable rate of increase for the current year (1991), and used the resulting number as the base GRAA. Conversely, if the 1990 actual GRAA exceeded the 1989 approved GRAA by more than the authorized rate, the Board used the 1989 actual GRAA (the gross revenues from the year before the prior year) inflated by the 1990 MARI, as further increased by the applicable rate of increase for the current year (1991) to produce the GRAA base. The Board has used the above described methodology for several reasons. First, it found nothing in subsection 407.50(2) which calculated a base for budget letter submissions. Indeed, the word "base" is found only in subsections 407.50(1) and (3), and by its own terms the former subsection does not apply to 1992 budget letter filings. Thus, the Board calculated the base in accordance with the method prescribed in subsection (3). Second, prior to the change in the law in 1988, the budget review process was "budget-based" in contrast to the present process which is tied to actual rates of increase. In other words, under the "old" process, the Board compared a budget under review with a prior budget number while the "new" process compares the budget under review with prior actual numbers. The Board's methodology is consistent with this philosophy and ties the base measurement to actual experience rather than estimated or budget figures. Third, for budget years 1990 and 1991, hospitals did not incur a penalty for exceeding their GRAA. The Board now intends to impose a penalty should this threshold be exceeded by hospitals in 1992 budget year and beyond. The Board's methodology is obviously geared toward this type of review process. Fourth, if a hospital's actual charges are less than its budgeted GRAA, by increasing the budgeted GRAA by the MARI as petitioners propose, a hospital's actual rate of increase would be greater than the MARI. Under the Board's methodology, a hospital would be required to justify such an increase. Similarly, if the Board's methodology was not used, a hospital could file a budget letter certifying a maximum GRAA which exceeds the threshold GRAA under subsection 407.50(3), thereby circumventing the detailed review process. Such a result should be avoided since to do otherwise would create an internal conflict within the terms of section 407.50 and would be contrary to the Board's mission under the law, as expressed in subsection 407.003(3)(a), which is to "contain hospital charges that exceed certain thresholds". Finally, Board experience shows that it is not unusual for a hospital to have a wide variance between actual experience and budget. Indeed, as many as one half of all hospitals have a marked variation between actual results and budget projections. Because of this, the Board methodology is a reasonable way in which to take these variances into account in the budget review process. Collectively, these considerations support a finding that, while not perfect or ideal in every respect, the Board methodology is logical, reasonable and appropriate. Petitioners have lodged several objections to the methodology. First, they point out that seven of the fourteen petitioners went through detailed budget review during their last budget filing and were required to justify all matters in their 1991 budgets. Thus, they contend that if they do not agree with the Board imposed budget letter GRAA, they must undergo detailed review a second time for some items that were already reviewed and approved in the prior budget year. However, the greater part of the review here will be of new projections for 1992 which were not included in the 1991 budget. Therefore, there will be little, if any, redundancy in the process. Moreover, detailed review is called for whenever a hospital seeks a rate of increase greater than its MARI even if this occurs in consecutive budget years. Secondly, petitioners contend that two hospitals were penalized by the use of the methodology simply because they had less charges than were budgeted. In other words, when actual results of operations became available, two hospitals learned that their actual charges were less than their budgeted charges. 3/ This resulted in at least one hospital receiving a smaller budget letter GRAA in 1992 than it had in 1991. Petitioners characterize this as a "perverse incentive" since the Board's methodology seemingly encourages a hospital to increase its charges to the budgeted level to avoid having its charges reduced in future years. However, the legislature recognized this anomaly by providing that if a hospital's GRAA increased at a rate of increase lower than its MARI, it would receive "banked" percentage points which it could carry forward in the form of credits to subsequent budget years. In these cases, no hospital elected to use banked credits. Then, too, if a hospital desires a greater rate of increase (and concomitant larger GRAA), it has the statutory mechanism to justify that increase through the detailed budget review process. Similarly, for those hospitals that exceed their budget, and under the Board's methodology are faced with a future reduction in revenue caps, they need only justify those excess charges in the detailed review process in order to avoid this dilemna. Petitioners also criticize the methodology because it does not consider the budget GRAA from the previous fiscal year even though a hospital has already gained approval to operate at the prior year budget level. However, this argument fails to recognize that the use of actual data over budget data is preferred since budgets are merely projections that are often times not attained. Petitioners next point out that the current detailed budget review scheme now codified in Chapter 10N-5, Florida Administrative Code, was not adopted until after subsection 407.50(3) became law in 1988. Thus, they suggest that the word "base" in subsection (3) represents a statutory directive to use a GRAA base specific to detailed budget review. However, the rules in question implement subsections 407.05(6) and 407.50(6) rather than subsection 407.50(3), and the challenged base GRAA calculation is not used during that subsequent detailed budget review process. In other words, even though subsection (3) pertains generally to detailed budget review and provides a calculation of a "base", the Board has opted to use a different methodology found in chapter 10N- 5 in the detailed review process. Although the legislature amended the law in both 1989 and 1991, it chose not to disturb this process or otherwise limit the Board's authority to continue to apply those rules. Therefore, the Board's rejection of petitioners' interpretation is found to be persuasive. Finally, it should be recognized that fiscal years 1990 - 1992 are so-called transition years after the major substantive changes in the law in 1988 and it is not unexpected to have some unusual cases arise. While petitioners have cited a few such cases occurring in budget year 1992, the appropriate remedy is to explain and justify these abnormalities through the detailed review process. Accordingly, these criticisms are found to be without merit. Alternative Proposals Petitioners have proposed three alternative methodologies to calculate the base. They are identified as alternatives 2, 3 and 4 on page 2 of joint composite exhibit 1. 4/ Petitioners assert their alternatives most accurately reflect the GRAA from the previous fiscal year and thus are in compliance with the language in subsection 407.50(2)(a) that requires a hospital to acknowledge its applicable rate of increase in its GRAA "from the previous fiscal year". Accordingly, in formulating their methodologies, petitioners have relied heavily on the words "previous fiscal year" and in some form or fashion have tied all of their calculations to the year 1991. Under petitioners' proposal, a hospital could presumably choose from one of the three alternatives depending on which one was best suited to that hospital's financial circumstances. Petitioners have first proposed to calculate the base by taking the 1990 actual GRAA and inflating it by the 1991 MARI. They contend that this alternative is reasonable because it uses the most recent actual data (1990) as well as reliable numbers (1991 MARI). While this methodology is the same as the Board's methodology for those hospitals whose 1990 actual GRAA did not exceed their 1990 budget GRAA, petitioners do not propose to use it in that manner. Rather, they intend to use it to calculate the base GRAA for two hospitals whose 1990 actual results exceeded budget projections. By doing so, however, those hospitals would be allowed to circumvent the otherwise required detailed review process. Secondly, petitioners suggest that the 1991 budget GRAA be used as the base for calculating a 1992 budget GRAA. This methodology was apparently designed for seven hospitals which underwent detailed budget review during the last fiscal year. Petitioners contend this formula is reasonable because the 1991 budget GRAA has already been approved by the Board, and the seven hospitals had extensive review of last year's budgets. Even so, there is nothing that prohibits detailed review, if warranted, in consecutive budget years, and in any event, actual data is generally preferred over budget projections. Lastly, petitioners propose that the same methodology described in subsection 407.50(1) and used for budget years 1990 and 1991 be used again on the theory that if it was reasonable in those years, it is still reasonable to use now. This methodology calls for the higher of fiscal year 1990 actual GRAA inflated by the 1991 MARI or 1991 budget GRAA to be used as the 1992 base GRAA. Pursuant to the methodology, five hospitals have used the 1991 budget letter GRAA as their 1992 base GRAA. However, by its own terms the methodology used in subsection 407.50(1) is specifically limited to budget years 1990 and 1991, and the law contemplates a change in the calculation of the base in all subsequent budget years. Moreover, the use of actual versus projected numbers is to be favored. In short, then, while the three methods arguably have some beneficial features, they still do not have all of the favorable attributes found in the Board's methodology.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by the Board confirming that petitioners' budget letters should be rejected as being non-conforming. DONE and ORDERED this 16th day of October, 1991, at Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of October, 1991.
Findings Of Fact On May 25, 1979 NFRH requested a binding letter of determination of a Development of Regional Impact status for a proposed 97-bed addition to the hospital at Gainesville, Florida (Exhibit 1). In this request NFRH suggested that the 97-bed addition was exempted by Section 380.06(15), Florida Statutes, from the other provisions of Section 380.06 and included evidence to show that NFRH was constructed prior to 1973 and had thereby obtained a vested status. Petitioner sought to intervene in that proceeding and requested a formal hearing before the BLID issued. This was denied by Respondent. In response to NFRH request for this binding letter of interpretation, Respondent, on 22 June 1979, issued the letter in the format of a final order as prescribed by Section 120.59, Florida Statutes, containing findings of fact, conclusions of law and an order that the proposed addition of 97 beds to NFRH at Gainesville did not have to comply with the review requirements of Section 380.06, Florida Statutes, applicable to developments of regional impact. Petitioner has appealed the issuance of this final order to the district court of appeal. This action to challenge the BLID as a rule was then filed.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $9,000.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed December 26, 2012 3:52 PM Division of Administrative Hearings 3. The six-month survey cycle is imposed and conditional licensure status is imposed beginning on 9/19/2011 and ending on 10/06/2011. ORDERED at Tallahassee, Florida, on this al day of Decente — , 2012.
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE 1 CERTIFY that a true and correct copy of this Final Order was served on the below-named persons by the method designated on this sh ay of , 2012. Richard Shoop, Agency k Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit | (Electronic Mail) (Electronic Mail) Tria Lawton-Russell Jonathan S. Grout, Esq. Office of the General Counsel Attorney for Respondent Agency for Health Care Administration Post Office Box 2011 (Electronic Mail) Winter Park, FL 32790 (U.S. Mail) Cathy M. Sellers Administrative Law Judge Division of Administrative Hearings | Electronic Mail)
Conclusions Having reviewed the Amended Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Amended Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $1,500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 Filed October 16, 2014 3:44 PM Division of Admin\strative Hearings ORDERED at Tallahassee, Florida, on this 22 day of Kpfubee , 2014. (ne fel retary vare Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE 1 CERTIFY that a true and correct co f this Final Order was served_on the below-named persons by the method designated on this Ee of KM » 2014. Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) John E Bradley Ted Mack Office of the General Counsel Counsel for Petitioner Agency for Health Care Administration Powell and Mack (Electronic Mail) 3700 Bellwood Drive Tallahassee, Florida 32303 (U.S. Mail)
The Issue The issue is whether the methodology employed by respondent in calculating petitioners' budget letter gross revenues per adjusted admission is a rule, not duly promulgated, and thus is an illegal exercise of delegated legislative authority.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: A. Parties Petitioners, Easte Point Hospital, Inc. and others, are fourteen hospitals in the State of Florida who are subject to the regulatory jurisdiction of respondent, Health Care Cost Containment Board (Board). Petitioner, Florida League of Hospitals, Inc., is a nonprofit organization which is organized and maintained for the benefit of the proprietary hospitals which comprise its membership. The Board is a state agency charged with the responsibility of annually reviewing hospital budgets to insure that a hospital's charges do not exceed certain established thresholds. Intervenor, Citizens of the State of Florida, is represented by the Office of the Public Counsel. That office has the duty of representing citizens in all proceedings before the Board. Events Leading to the Filing of the Rule Challenges Petitioners are required to annually file their projected budgets with the Board for its review and approval. This controversy pertains to the filing of budgets for fiscal year 1992. There are two types of budget filings authorized by law. First, a hospital may file what is known as a budget letter, which is a one- page submission on a form provided by the Board. In preparing such a letter, the hospitals are required to provide information regarding their gross revenues per adjusted admission (GRAA) and maximum allowable rate of increase (MARI), two financial indicators that are used by the Board in measuring the reasonableness of a hospital's charges. A budget letter is to be filed whenever a hospital does not intend to increase its charges (GRAA) in the next fiscal year by more than the percentage amount specified in its approved MARI. Secondly, a hospital may file a detailed budget which is much more complicated than the budget letter and requires the completion of a twenty-seven page form. The preparation of a detailed budget is obviously more time- consuming and expensive than a budget letter and requires the hospital to justify its entire budget. The detailed budget is to be filed whenever a hospital intends to increase its charges (GRAA) from one fiscal year to the next by a greater percentage amount than is specified in the MARI. These cases deal with the legitimacy of a methodology used by the Board in determining whether a hospital is eligible to file a budget letter. In this proceeding, each of the fourteen hospitals filed budget letters with the Board in May 1991. After the budget documents were reviewed by the Board's staff, on June 21, 1991, the Board issued virtually identical proposed agency action to each hospital advising the hospital that its budget letter was "nonconforming for the following reason: The hospital's maximum GRAA should be $ , instead of $ , ", with the appropriate dollar amounts inserted in the blanks. The letter went on to advise each hospital that it should resubmit a corrected budget document and until it did so, its submission would be considered incomplete. The effect of the Board's action was to reduce each hospital's budget letter GRAA and the amount of revenues (charges) it could receive in the next fiscal year unless it agreed to file a detailed budget. The hospitals are accordingly affected by the proposed agency action and thus have standing to being this action. Likewise, since the methodology employed by the Board in rejecting the budget letters affects all members of the Florida League of Hospitals, Inc. who file budget letters, that organization also has standing to participate. The parties have further stipulated to the standing of intervenor, Citizens of the State of Florida. Although the proposed agency action does not show the methodology used by the Board in reaching its conclusion that the "maximum GRAA" was overstated, the record reveals that the Board utilized a certain methodology to calculate the "base GRAA", the first calculation in the budget letter review process. /2 This methodology is described in the second sentence of Subsection 407.50(3), Florida Statutes (1989) as follows: In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission from the year before the prior year, and then inflated by the applicable rate of increase for the current year. Petitioners concede that the methodology used by the Board tracks the language in the above statute verbatim. However, they contend that, when the language in subsection 407.50(2)(a) is considered, it becomes apparent that the use of this methodology is the review of budget letters is not clearly called for, and thus the methodology is a policy having all of the attributes of a rule which has not been adopted pursuant to chapter 120. Conversely, respondent and intervenor claim the methodology is not a policy but simply an interpretation of the controlling statute. Is the Methodology a Rule? By virtue of rather extensive amendments to the law in 1988, budget letters were first authorized for use by hospitals beginning with budget years 1990 and 1991. Prior to that time, all hospitals filed detailed budgets. There was no quarrel over the manner in which hospitals performed their calculations in the first two budget letter filings since subsection 407.50(1) clearly specified the methodology for making all calculations during the first two years. This controversy arises because all subsequent filings of budget letters are controlled by language found in other portions of section 407.50. The relevant portions of that statute read as follows: (a) Except for hospitals filing a budget pursuant to subsection (3), each hospital, at least 90 days prior to the commencement of its next fiscal year, shall file with he board a certified statement, hereafter known as the "budget letter", acknowledging its applicable maximum allowable rate of increase in gross revenue per adjusted admission from the previous fiscal year as calculated pursuant to s. 407.002(17) and its maximum projected gross revenue per adjusted admission for the next fiscal year, and shall affirm that the hospital shall not exceed such applicable maximum allowable rate of increase. . . * * * At least 90 days prior to the beginning of its fiscal year, each hospital requesting a rate of increase in gross revenue per adjusted admission in excess of the maximum allowable rate of increase for the hospital's next fiscal year, shall be subject to detailed budget review and shall file its projected budget with the board for approval. In determining the base, the hospital's prior year audited actual experience shall be used unless the hospital's prior year audited actual experience exceeded the applicable rate of increase in which case the base shall be the gross revenue per adjusted admission from the year before the prior year, increased by the then applicable rate of increase for the current year. * * * A reading of the above statute indicates that subsection 407.50(2) (a) prescribes the form and manner for a budget letter submission. The submission consists primarily of a certified statement by the hospital acknowledging "its applicable maximum allowable rate of increase in gross revenue per adjusted admission from the previous fiscal year as calculated pursuant to s. 407.0C2(17) and its maximum projected gross revenue per adjusted admission for tie next fiscal year, and shall affirm that the hospital shall not exceed such applicable maximum allowable rate of increase. At the same time, subsection 407.50(2) (a) provides that its provisions shall apply to all hospitals "except those filing a (detailed) budget pursuant to subsection (3)". However, the subsection does not prescribe the manner in which the budget letter's base GRAA should be calculated. On the other hand, subsection 407.50(3) appears, at least facially, to impose certain requirements upon detailed budget filings, including the time requirements for filing a detailed budget, who must file one, and the manner in which to calculate the "base". Thus, a literal reading of the statute could lead the reader to reasonably conclude that, while subsection 407.50(2) (a) does not prescribe the manner in which the base GRAA should be calculated for purposes of a budget letter submission, the same judgment can be reached with respect to subsection 407.50(3). In other words, an affected person would not necessarily know from a reading of the law that the base GRAA for a budget letter submission filed under subsection (2) (a) would be calculated using a methodology found in subsection (3). Accordingly, it is found that the methodology used by the Board in calculating the budget letter GPAA is not a statutory interpretation but instead is a policy. While respondent and intervenor presented evidence to justify and explain the rationale for calculating the budget letter base GRAA in this manner, this evidence is more relevant in the companion section 120.57(1) cases. The methodology employed by the Board is one of general applicability since it applies to all hospitals who file budget letters in fiscal year 1992 and beyond. It is applied uniformly without discretion by agency personnel to all hospitals, requires compliance and has the direct and consistent effect of law. The policy has not been adopted as a rule.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $1,875.00 in administrative fines. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed August 10, 2012 12:59 PM Division of Administrative Hearings 3. Conditional licensure status is imposed on the Respondent beginning on January 9, 2012, and ending on January 25, 2012. ORDERED at Tallahassee, Florida, on this_2_ day of Arsieay 2012.
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct_copy of this Final ’ rder was served on the below-named persons by the method designated on this Pie day of Sezer , 2012. Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Thomas J. Walsh II R. Davis Thomas, Jr. Office of the General Counsel Respondent’s Qualified Representative Agency for Health Care Administration 2 North Polafox Street (Electronic Mail) Pensacola, Florida 32502 (U.S. Mail) Diane Cleavinger Administrative Law Judge Division of Administrative Hearings (Electronic Mail)
The Issue Whether Petitioners, as members of the Florida Patient's Compensation Fund, are liable for additional assessments for Fund Years 1980-81 and 1981-82, as set forth in the Notice of Assessment filed on April 22, 1985. This proceeding arose as a result of petitions filed by two groups of hospitals contesting a Notice of Assessment issued by the Department of Insurance on April 22, 1985, based upon the certification by the Board of Governors of the Florida Patient's Compensation Fund to the Insurance Commissioner of a deficiency in the amount of money available to pay claims for the 1980-81 and 1981-82 fiscal Fund years. The proposed assessment seeks payment of the alleged deficiency in the total amount of $40,480,556.00 from health care providers who were members of the Fund during the Fund years in question, pursuant to Section 768.54, Florida Statutes. By Order, dated June 11, 1985, the two cases were consolidated into one proceeding, and the Florida Patient's Compensation Fund was granted intervention. Petitioners originally consisted of Southeast Volusia Hospital District and 58 other hospitals (Case No. 85-1650), and Tallahassee Memorial Regional Medical Center and 39 other hospitals (Case No. 85-1664). However, prior to final hearing, a majority of the hospitals from both groups voluntarily dismissed or otherwise withdrew their claims for relief in the proceeding. By Notice of Joinder, dated July 30, 1985, American Hospital, Northridge General Hospital and Pan American Hospital abandoned their claims in Case No. 85- 1650 and adopted the Amended Petition in Case No. 85-1664. As a result, the only remaining party of record in Case No. 85-1650 was St. Petersburg Osteopathic Hospital, Inc. which by Order, dated August 13, 1985, was ordered to show cause why it should not be dismissed as a party for failing to advise the Hearing Officer as to its status pursuant to Order dated July 12, 1985. No response to the Order to Show Cause having been received, it will be recommended herein that St. Petersburg osteopathic Hospital Inc. be dismissed as a party in Case No. 85-1650. Further, inasmuch as there are no longer any parties to that case, it will also be recommended for dismissal herein. By Prehearing Conference Order, dated July 11, 1985, Case No. 85-1664 was restyled to reflect Petitioners as Duval County Hospital Authority, et al. The parties remaining in Case No. 85-1664 at time of hearing were American Hospital of Miami, Inc., Duval County Hospital Authority, Gateway Community Hospital, Hialeah Hospital, Northshore Medical Center, Inc., Northridge General Hospital, Inc., Pan American Hospital, and St. Joseph's Hospital. By Prehearing Orders, dated July 11 and July 29, 1985, it was determined that questions concerning the setting or adequacy of base fees or additional fees, the statutory "cap" on physician assessments! the statutory cumulative "cap" on maintenance of the Fund per fiscal year, and the effect of payment limitations placed on the Fund by statute, were not properly at issue in this proceeding. However, one issue presented in the Amended Petition in Case No. 85-1664 as to whether the Fund has statutory authority to estimate reserves as a basis for an assessment was deemed to be an issue within the scope of this proceeding. The parties entered into a Prehearing Stipulation (Joint Exhibit 1), which included certain factual matters, subject to relevance, and the unresolved question of law as to whether the Fund and Department may include reserves on known claims other than those resolved by settlement or verdict in calculating the amount needed for assessments. At the final hearing, the parties stipulated that the Fund certification includes full credit for all previously noticed assessments, whether collected or not. They further stipulated as to the expertise of Charles Portero in claims handling and reserving practices. The parties also stipulated that there was no issue of fact as to the reasonableness of any individual claim reserve existing as of January 31, 1985, or included in the certification, except as to the Von Stetina claim. Testimony of Charles Portero concerning the Von Stetina claim was made confidential and the transcript of such testimony was extracted and submitted under seal pursuant to order of* *NOTE: Page 4 of the Recommended Order is omitted from the document on file with DOAH and, therefore, is not included in this research database. amount of the projected excess or insufficiency to the Insurance Commissioner with a request that he levy an assessment against Fund participants for that fiscal year. Petitioner hospitals were members of the Fund during one or more of Fund years 1980-81 and 1981-82 Each month, the Administrative Manager of the Fund follows a prescribed procedure to determine if an assessment is required for a particular Fund year, utilizing what is termed a "retrospective rating plan." The plan provides that assessments will not be levied in any year until the cash available for paying claims in that membership year is down to 50 percent of the loss and expense reserves for all known losses. It further provides that the amount should be sufficient to create enough cash flow to pay known reserved claims for the year showing such deficit. In reviewing the Fund's monthly financial report of January 1, 1985, it was determined that a sufficient deficit existed to warrant the levy of an assessment. Thereafter, an outside audit of the Fund accounts was conducted and presented to the Fund Board for Certification. On March 25, 1985, the Florida Patient's Compensation Fund certified a deficiency to the Department in the following amounts: 1980-81 Membership Year $14,866,718.00 1981-82 Membership Year 25,613,838.00 TOTAL $40,480,556.00 This certification was authorized by the Board of Governors of the Florida Compensation Fund on March 19, 1985. An audit substantiating the need for the assessment was performed by Catledge, Sanders and Sanders, certified public accountants. On April 22, 1985, the Department of Insurance issued a Notice of Assessment for Fund years 1980-81 and 1981-82. Notice was published in Volume II, No. 8 at page 1907 of the Florida Administrative Weekly on May 3, 1985. The Notice of Assessment announced the Department's intent to levy and authorize the Fund to collect an assessment in the amount certified by the Fund ($40,480,556.00). The Notice of Assessment further provided that the assessment be divided among the various classes of health care providers for each year as follows: (i) Physicians and Surgeons 1980-81 1981-8 Class 1 0 0 Class 2 0 0 Class 3 0 0 (ii) Hospitals $14,754,672 $25,388,773 (iii) HMO 35,621 161,102 Ambulatory Surgical Centers 76,425 63,963 Professional Associations 0 0 The Department computed the portion of the assessments to be paid by the different classes of health care providers for all years in question based upon the "indicated rate method," modified to all5w for the statutory proscription against assessing certain health care providers more than "an amount equal to the fees originally paid by such health care provider." This is the same method utilized in five previous assessment proceedings and specifically approved by the Florida Supreme Court in Department of Insurance v. Southeast Volusia Hospital District, 438 So. 2d 815, 821 (Fla. 1983). The appropriateness of the procedure has not been placed at issue in this proceeding. The amounts of the assessments sought by the Fund, and described in the Notice of Assessment, were calculated by the Fund by using the following formula: Total fees paid for the Fund year + Investment Income attributable to the Fund year + Amounts previously noticed as assessments Expenses allocated to that Fund year Amount paid on claims for that Fund year Amount reserved for all known claims for that Fund year The Fund used the same procedure calculating the amount of this assessment as it used in the first five assessments. The Department used the same procedure and methodology (indicated rate method) in allocating the assessment among the various classes as it used in the first five assessments. The amount of the assessment is based on the amount needed to pay known claims. This amount needed to pay known claims includes the amount reserved as the estimated loss and expense payments. The Fund follows standard industry reserving practices, as modified in several respects by its particular needs and procedures. Each claim is assigned to a claims supervisor who obtains information concerning the claims incident from the primary insurance carrier. The initial reserve on a claim is based on a variety of factors, including the type of injury, potential damages, liability considerations, geographic location, and the particular attorney for the claimant. After a determination that a reserve is needed on the file, the claims supervisor makes an initial determination of the amount which is referred to the claims manager for approval. Final approval of the posted reserve lies in the hands of the Claims Committee of the Fund. The figure is usually fixed at a sum for which it is believed that the claim could be settled and the potential liability arising from a jury verdict. The necessity of obtaining approval of the Claims Committee for the initial reserve and any subsequent changes creates a certain amount of delay in obtaining such decisions. Changes may be effected in the reserve when injuries are found to be greater than anticipated, or because of the discovery of additional facts affecting potential liability. It is not unusual for a particular claim to be submitted three or four times to the Claims Committee before it is settled.
Findings Of Fact The following Findings of Fact are based on the evidence presented at the hearing: The parties stipulated to the reasonableness of all established claim reserves reflected in the current assessment sought by the Fund. However, Petitioners questioned the reasonableness of the Fund reserve on the Von Stetina claim which had been included in a previous assessment. Although it is questionable as to whether the adequacy of such a prior reserve should be addressed in a proceeding contesting a subsequent assessment, it is clear that the determination of a deficit necessarily involves deductions or credits for prior reserves in determining a current deficit. In any event, the Von Stetina reserve was established according to the standards practices of the Fund, and no evidence was presented by Petitioners to show that it was unreasonable or otherwise incorrect either on January 31, 1985, when it was determined that a sufficient deficit existed to warrant the levy of an assessment, or at the present time. The Von Stetina case is presently pending in the judicial process and, accordingly, there is no basis at the present time to reduce the previously established reserve. (Stipulation, Testimony of Portero) As heretofore found, the Fund includes a "claim" as a basis for an assessment as soon as a reserve for the claim is established. Petitioners presented the testimony of an accountant who expressed the opinion that the term "claim" as used in pertinent statutes should be restricted to final judgments or settlements against a health care provider in excess of the provider's primary coverage. This "cash basis" methodology would require the entry of a final judgment or settlement before the claim could be considered in determining whether a deficit exists for any particular Fund year. On the other hand, expert testimony from the Fund's Claims Manager shows that the definition of "claim" as used by the Fund is basically in accordance with the generally accepted meaning and usage of that term by the insurance industry. The reserving practices of the Fund are found to constitute a reasonable basis for arriving at the projected amounts required to meet the claims made against the Fund account for a particular fiscal year. (Testimony of Cherry,Portero) It is further found that the present assessment was prepared in accordance with standard procedures, that the amounts proposed to be levied as an assessment for each Fund year in question represent a deficiency in the Fund account for such years, and that the proposed allocations of such amounts among the specified health care providers are appropriate. (Respondent's Exhibits 1-7, Joint Exhibit 1- Stipulation, Testimony of Portero)
Recommendation In view of the foregoing, it is RECOMMENDED that a final order be issued by the Department of Insurance dismissing Case No. 85-1650, and levying assessments in accordance with the Notice of Assessment, dated April 22, 1985, for the Fund years specified therein. DONE and ENTERED this 15th day of October, 1985, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1985. APPENDIX PETITIONERS' PROPOSED FINDINGS OF FACT Paragraphs 1-7: Adopted by Stipulation (Joint Exhibit 1) in Findings of Fact 1-3, 5, 8. Paragraphs 8-10: These are conclusions of law and are therefore rejected as not being Proposed Findings of Fact. See Conclusions of Law in Recommended Order. Paragraph 11: Rejected as unsupported by the evidence. See Finding of Fact 10. Paragraph 12: Adopted in Finding of Fact 8. Paragraph 13: First sentence rejected as unsupported by evidence. Remainder adopted in Finding of Fact 10. Paragraph 14: Rejected as unsupported by the Evidence. (Confidential Portion) Paragraphs 1-6: Irrelevant and unnecessary except as set forth in Findings of Fact 9. RESPONDENT'S PROPOSED FINDINGS OF FACT Paragraphs 1, 3-10: Adopted in Findings of Fact 1-8. Paragraph 2: Rejected as Conclusion of Law rather than Finding of Fact. Paragraphs 11 & 12: Substantially adopted in Findings of Fact 9 Copies furnished: Honorable William Gunter Insurance Commissioner The Capitol Tallahassee, Florida 32301 William C. Owen and W. Douglas Hall, Esquires Carlton, Fields, Ward, Emmanuel, Smith, and Cutler Post Office Drawer 190 Tallahassee, Florida 32301 David A. Yon, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Clay McGonagill 241 East Virginia Street Tallahassee, Florida 32301 St. Petersburg Osteopathic Hospital, Inc. 401 15th Street, North St. Petersburg, Florida Information Copy to Neil H. Butler, Cathi C. O'Halloran and Ben Wilkinson, Esquires, Pennington, Wilkinson, Dunlap, Butler & Gautier Post Office Box 13527 Tallahassee, Florida 32317-3527
