Findings Of Fact The Department of Health and Rehabilitative Services ("DHRS") administers Florida's Medicaid program and licenses nursing homes to participate in the program. Florida's Medicaid program operates pursuant to the Florida Title XIX Long-Term Care Reimbursement Plan ("Plan"). The Plan expressly incorporates numerous Medicare statutes and other provisions. Medicare reimbursement principles, set forth in the Medicare Provider Reimbursement Manual ("HIM-15"), are applicable to this case. The Plan governs reimbursement for nursing homes participating in Florida's Medicaid program. Participating nursing homes are required to submit cost reports to the DHRS, which audits the reports to assure that such costs are allowable under Medicaid program regulations. Beverly submits such reports on behalf of Suwanee to the DHRS. Prior to August 1, 1986, the Beverly California Corporation ("Beverly") owned and operated Suwanee Health Care Center ("Suwanee"). Suwanee is licensed to participate in the Florida Medicaid program. Suwanee was constructed in 1983 and was financed through the sale of bonds. In 1985, Beverly organized a real estate investment trust ("REIT"), Beverly Investment Properties, Inc. 2/ An REIT raises capital funds through the sale of stock and pays dividends to shareholders. The payment of dividends constitutes the shareholder return on the invested funds. At all times relevant to this proceeding, the REIT, created to provide capital financing for long term health care facilities, constituted a valid real estate investment trust. The REIT purchased the Suwanee facility using funds raised from investors through the sale of stock, and to whom the REIT paid dividends. At the time the REIT was organized in 1985, Beverly owned 5% of the REIT's stock (although at the time of hearing, it held two and one-half percent of the stock). Five of the nine directors and officers of the REIT were associated with Beverly3. The REIT was advised by Beverly Advisors. LTD., a wholly owned subsidiary of Beverly. 3/ On August 1, 1986, Beverly sold Suwanee to the REIT. 4/ On the same date, Beverly leased Suwanee back from the REIT. The sale and leaseback transaction extinguished Beverly's debt on the property. The lease has a fixed term of 14 years with an optional extension for an additional 40 years. Monthly payments are set forth in the lease and escalate over time. The REIT assumed the debt at the time of the sale. The bonds securing the debt were defeased on August 26, 1986. Beverly properly provided notice to the DHRS prior to the execution of the transaction and reported the sale-leaseback arrangement as a related party transaction. The DHRS indicated that no certificate of need or change in licensure was required. On the cost report submitted by Beverly for Suwanee's annual reporting period ending June 30, 1987, Beverly included one month of actual interest and eleven months of "imputed" interest. Beverly based the imputed interest calculation on dividends paid to REIT investors for the period subsequent to the August 1st sale and leaseback. Prior to the sale and leaseback transaction, Beverly received reimbursement from the Florida Medicaid program for property costs related to the Suwanee facility. Such costs included depreciation on the building and equipment, interest expense on the debt incurred to finance the building and equipment, insurance costs and property taxes. In preparing the Suwanee facility's fiscal 1987 cost report, Beverly determined that it should report the lesser of either the property costs prior to the sale and leaseback, or the property costs to the REIT. The costs to the REIT included the cost of dividends paid to investors. The REIT costs were lower that Suwanee's previous property costs. Beverly included the REIT costs on Suwanee's fiscal 1987 cost report. 5/ The initial program audit for the Suwanee fiscal 1987 cost report was performed by Peat Marwick, which provided to Beverly a summary of proposed audit adjustments prior to the audit exit conference. The audit adjustment which is the subject of this case was neither identified in the summary nor discussed at the Peat Marwick-Beverly exit conference. When the DHRS reviewed the Suwanee cost report audit, the DHRS determined that the imputed interest should be disallowed because Beverly's debt on the Suwanee facility had been extinguished by the sale of the property to the REIT. The DHRS determined that Beverly's equity position related to the "debt- free" facilities should be correspondingly increased. The result of the DHRS adjustment is a reduction in Beverly's property cost basis of more than $242,000. The evidence establishes that, under applicable reimbursement principles, DHRS appropriately disallowed the imputed interest reported by Beverly and appropriately increased Beverly's equity position in the Suwanee facilities.
Recommendation Based on the foregoing, it is hereby recommended that the Department of health and Rehabilitative Services enter a Final Order dismissing the Petition of Beverly California Corporation filed in this case. RECOMMENDED this 17th day of May, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of May, 1991.
The Issue This is a proceeding pursuant to Section 440.13(1)(m), Florida Statutes, concerning a determination as to whether a specific surgical procedure is of an experimental, investigative, or research nature.
Findings Of Fact As conceded by Petitioner's counsel in his opening remarks, the substantive issue in this case ("whether the proposed thoroscopic disc removal procedure recommended by Dr. Reuter is experimental, investigative, or of a research nature") has already been decided by a Judge of Compensation Claims in a proceeding to which the Petitioner and the employer/carrier were parties. The decision of the Judge of Compensation Claims was adverse to the Petitioner. The Petitioner appealed that decision. The First District Court of Appeal affirmed the decision of the Judge of Compensation Claims.5
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Agency for Health Care Administration issue a Final Order dismissing the petition in this case on the grounds that the issues raised are moot by reason of the final decision by the Judge of Compensation Claims, and that further litigation of those issues is barred by res judicata or collateral estoppel. DONE AND ENTERED this 1st day of June, 1999, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 1999.
Findings Of Fact The Petitioner, Sunrise Community, Inc. (Sunrise), operates many Intermediate Care Facilities for the Mentally Retarded and Developmentally Disabled (ICF/MR-DD's) in Florida and other states. (Three-fourths of them are in Florida.) The aggregate of the operating budgets for these facilities is $35 million a year. Of this total, approximately 15 percent appears to be attributable to administrative costs, including both local and central office administration; in addition, there is return on proprietors' capital and property costs. The Replacement Facility Sunrise operated a 12-bed ICF/MR-DD in Homestead, Florida, known as the "Corry Group Home" for approximately eight years, until it was destroyed by Hurricane Andrew. In response to the emergency, AHCA authorized Sunrise to move the 12 clients temporarily to two 6-bed homes in Kendall, Florida. AHCA did not allow Sunrise to base its Medicaid reimbursement for the two 6-bed ICF/MR-DD homes in Kendall on the prospective rate that had been in effect at the Corry Group Home; instead, AHCA required Sunrise to request a new, total-budgeted interim rate for the Kendall facilities. Sunrise submitted a budget that exceeded the $195 per diem cap that applied only to 6-bed facilities. (A different, higher cap applied to other facilities.) With inflationary adjustments, the cap increased to $216 by 1994. Meanwhile, the Florida Legislature, through Senate Bill 1802 (1993), directed AHCA's predecessor agency to "take all actions necessary to replace [the Corry Group Home] or cause [it] to be replaced." Section 32, Chapter 93- 185, Laws of Florida (1993). AHCA or its predecessor agency requested that the replacement facility be configured as a 12-bed quadriplex of four three-bed units. This configuration was consistent with the current thinking of the agency (as well as professionals in the field) that smaller residential units affording more space per resident were more therapeutic than large group homes. Sunrise concurred and agreed to the configuration. AHCA or its predecessor agency also requested that Sunrise not put the replacement facility on the old Corry Group Home site. The old Corry Group Home was located in an isolated rural area near Homestead, making it difficult for residents to take advantage of job, social, recreational, cultural, religious, transportation and daily living opportunities in Homestead. Sunrise concurred and chose a site at 1102 Krome Avenue, a location in Homestead that affords the residents all of those advantages. When the new Krome Avenue facility approached readiness for occupancy, Sunrise requested that AHCA approve a total-budgeted interim rate of $525 per diem ($191,625 per year) per client. The request stated: While trying to develop a cost structure for this facility, we determined that we would adopt the cost structure of a currently operating State owned and operated ICF/DD facility that is both larger than a 6-person IDF/DD facility and also has residents of the same Developmental/Institutional (7) level of care. Included with the request was a FYE 6/30/94 cost report for the State's 40-bed Tacachale VIII facility near Gainesville, Florida, with the cost figures reduced proportionately to reflect a 12-bed facility. Tacachale VIII is an ICF/MR-DD designed for the most difficult clients. Clients housed in Tacachale VIII have extreme behavior problems, including a propensity to injure themselves and others. The more difficult the clients, the more expensive the care. The clients in the old Corry Group Home were not as difficult to manage as the Tacachale VIII clients; neither were the clients in the two 6-bed homes homes in Kendall. (It is disputed as to how many of the 12 clients transferred from the old Corry Group Home after Hurricane Andrew were still in the Kendall homes. But regardless whether the clients were identical, their profiles were substantially the same; they were not the kind of clients housed in Tacachale VIII.) If permitted to base its rate for the Krome Avenue facility on much more difficult clients than those previously served, Sunrise would be able to significantly increase the revenues generated at the facility. Under the Florida Title XIX Intermediate Care Facility for the Mentally Retarded and Developmentally Disabled Reimbursement Plan, Version VI, effective November 15, 1994, (the Reimbursement Plan), once a permanent rate is established for a facility, it cannot be increased as a result of a change in client mix. For that reason, Sunrise views the opening of the new Krome Avenue facility as its window of opportunity to base its reimbursement rate for the facility on Tacachale VIII-type clients. Total-Budgeted or Component Interim Rate According to Section IV.G. of the Reimbursement Plan, provisions for interim changes in component reimbursement rates are not applicable to "new providers' first year interim rates, which are addressed in sections H. and I., below." Sections H. and I. provide for interim rates for new providers based on budgeted costs. The requirement to "submit documentation showing that the changes made were necessary to meet existing state or federal requirements" is in Section IV.G.2 of the Reimbursement Plan and applies only to interim changes in component reimbursement rates. Under the Reimbursement Plan, all interim rates are subject to revision based on subsequent audited cost reports. If actual costs are lower than projected, the provider must reimburse the interim overage, and a lower permanent rate will be established based on the lower actual costs. However, if actual costs are higher than projected, the lower budgeted rate would remain in effect and become the permanent rate. If the new Krome Avenue facility is not treated as a "new provider," its reimbursement rate would be based on the $216 6-bed cap for the two 6-bed temporary homes in Kendall, subject to an interim $9 increase in the property component, for an interim reimbursement rate of $226 per diem ($82,490 per year) per client. Based on the evidence, $525 per diem per client would be a reasonable and necessary first year total-budgeted cost of serving 12 Tachachale VIII-type clients at the new Krome Avenue facility. Per diem costs would be expected to decline in the second and third years due to: (1) higher occupancy rates; (2) lower staff turnover; and (3) increased efficiency of a more experienced and better trained staff. The expected cost reductions would be reflected in the Cost Reports for those years and would be incorporated into the permanent rate established based on those cost reports. Based on the evidence, $342 per diem ($124,830 per year) per client would be a reasonable and necessary first year total-budgeted cost of serving at the new Krome Avenue facility 12 clients similar to those previously served by Sunrise at the old Corry Group Home and the two 6-bed homes in Kendall. The $342 per diem reflects higher costs than in the Kendall homes due primarily to: (1) higher rent and depreciation; (2) higher salary costs; and (3) increased staffing needs due to the quadriplex configuration. As with the $525 budgeted rate, the $342 budgeted rate would be expected to decline in the second and third years. Salary costs at the new Krome Avenue facility are expected to be higher because the Homestead labor market is significantly different from the labor market in Kendall. The labor pool in Homestead always has been smaller, and the difference has become greater since Hurricane Andrew because the Homestead Air Force Base has closed, eliminating from the labor pool the spouses of service men and women stationed there. All staff from the Kendall homes were offered jobs in the Krome Avenue facility but none accepted. Higher salaries are expected to be required to attract qualified staff to work at the new Krome Avenue facility. The $342 per diem budget is derived in part from the Fiscal Year Ending (FYE) 6/30/94 Cost Report for the two temporary 6-bed homes in Kendall. No FYE 6/30/95 Cost Report was filed because the Kendall homes were closed before the FYE 6/30/95 Cost Report was due. It is found that the new Krome Avenue facility should be treated as a "new provider" for purposes of establishing its interim rate. The preceding finding is consistent with AHCA's past practice. According to the evidence, AHCA or its predecessor agency always has established a total-budgeted interim rate whenever a provider has changed the physical location of its clients. AHCA also has established a total-budgeted interim rate whenever new beds are added and whenever the ownership of a provider changes. The same legislation that directed AHCA's predecessor agency to replace the old Corry Group Home also directed the replacement of two other Sunrise ICF/MR-DD's called Ambrose and Naranja that also were severely damaged by Hurricane Andrew. Under the authority of Senate Bill 1802 (1993), Sunrise reconstructed Ambrose and Naranja on their old footprints, and AHCA authorized Sunrise to temporarily move the clients during reconstruction. When reconstruction was completed, AHCA established a total-budgeted interim rate for both Ambrose and Naranja. AHCA attempted to explain that the new Krome Avenue facility should be treated differently because it was a "consolidation" from two locations to one. That explanation is rejected. Sunrise was entitled to rely on the terms of the Reimbursement Plan and the past practice of AHCA and its predecessor agency under it. In reliance on the past practice, Sunrise proceeded with the construction of the facility at 1102 Krome Avenue. Finding 18, above, also is consistent with AHCA's treatment of the Krome Avenue facility. Treating the new Krome Avenue facility as a new provider, AHCA did not allow Sunrise to be reimbursed for serving clients in the new Krome Avenue facility until Sunrise obtained a separate license to operate the newly constructed facility, enrolled it in the Medicaid reimbursement system, and obtained a new provider agreement. (When Sunrise took those steps, the Medicaid provider number assigned to the new facility apparently was the same number assigned to the Old Corry Group Home and the two 6-bed temporary homes in Kendall.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a final order establishing the interim rate for Sunrise's new Krome Avenue ICF/MR-DD at $342 per diem ($124,830 per year) per client. DONE and ENTERED this 11th day of July, 1996, in Tallahassee, Florida. J. LAWRENCE JOHNSTON, 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 11th day of July, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-6028 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. General Findings 1.-.25. Cumulative. Duplicate Specific Findings. Specific Findings Leech a.-o. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. However, approximately 15 percent appears to be attributable to administrative costs, including both local and central office administration; in addition, there is return on proprietors' capital and property costs. Accepted and incorporated to the extent not subordinate or unnecessary. First sentence, cumulative; second, accepted but irrelevant; third, accepted and incorporated (Tacachale VIII); fourth, rejected as unintelligible; last, accepted and incorporated. Accepted and incorporated to the extent not subordinate or unnecessary. Childs First sentence, accepted but subordinate and unnecessary; rest, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that it was not treated as a "replacement"; otherwise, accepted and incorporated. Accepted but subordinate and unnecessary. First two sentences, rejected that none of this was "relevant"; otherwise, accepted and incorporated. First sentence, rejected as not proven that the license "does not relate in any manner" to the Corry home; otherwise, accepted and incorporated. First sentence, rejected as not proven that this specific advice was given. Last sentence, rejected as not proven that "there was not any relevance." Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that there "was no relevance whatsoever." Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. However, although "low," Sunrise proved that it was "reasonable and adequate." Accepted but subordinate and unnecessary. (There has been no significant change in the general profiles of the clients.) Rejected as unintelligible. Accepted and incorporated to the extent not subordinate or unnecessary. (Although some may be "low," Sunrise proved that they were "reasonable and adequate." Accepted but subordinate and unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. (In other words, if Sunrise were authorized to change its client mix for the replacement facility, it would have been able to claim an interim reimbursement rate of $191,625 per year for each of the 12 clients served.) Rejected as not proven. Proven that they are "reasonable and adequate" for the first year of operation. Costs are expected to decline in subsequent years. First sentence, rejected as not proven in that it was both. Second sentence, accepted and incorporated. Weeks Accepted but subordinate and unnecessary. See 2.m., above. Third sentence, rejected as incomplete and therefore unintelligible. (Accepted and incorporated if the completed proposed finding would have said the $342 per diem budget is "reasonable and adequate" for clients like those being served.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven as to the $525 budget, which essentially was the Tacachale VIII budget reduced in proportion to the number of clients served. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that the Sunrise budget was "significantly more generous." The cost of any additional nursing care was not quantified; and, while the off-site day program that is considered mandatory for a provider like Sunrise costs approximately $40 per day per client, the practical feasibility (and cost-benefits) of such a program would be questionable for clients like those at Tacachale VIII. Accepted and incorporated. g.-j. Accepted; subordinate to facts found. Conclusion of law. Rejected as not proven. Accepted but unnecessary. Rejected as not proven that the facts were "just like the Corry Group Home." Otherwise, accepted but subordinate to facts found. Accepted; subordinate to facts found. First sentence, accepted but unnecessary; second, unintelligible. Accepted; subordinate to facts found. Accepted and incorporated. Accepted; subordinate to facts found. Rejected as not proven that AHCA did not request additional information; otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Cumulative. Unintelligible. w.-x. Cumulative. First sentence, unintelligible; second, conclusion of law; rest, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. aa. Rejected as not proven. bb. Rejected as not proven as to the provider number; accepted and incorporated as to the license. cc. First sentence, unintelligible, subordinate and unnecessary; second, cumulative. dd. First sentence, accepted and incorporated; second, rejected as not proven that it is "appropriate" for Sunrise to serve those clients at the new Krome Avenue facility but otherwise accepted and incorporated; third, rejected as not proven that they are the "easiest clients" but accepted and incorporated as to the budget for them. ee. Introductory clause, accepted and incorporated; conclusion, rejected as not proven. McCormick a.-b. Accepted but subordinate and unnecessary. Moore a. First sentence, accepted but subordinate and unnecessary. Second, unintelligible. (Accepted as to "direct care staff" but subordinate and unnecessary. b.-c. Rejected as not proven. d. Rejected as not proven that all of them can, or that any of them can at all times. e.-h. Accepted but subordinate and unnecessary. Burroughs a.-c. Accepted but subordinate and unnecessary. Hughes First sentence, accepted but subordinate and unnecessary; rest, conclusions of law. Accepted but subordinate to facts found, and unnecessary. Conclusion of law, subordinate and unnecessary. Rejected as not proven. Accepted and incorporated. Accepted and incorporated. (In this context, "new provider" does not mean a "replacement" under Senate Bill 1802.) Subordinate and cumulative. ("Perspective" is a typo.) Unintelligible. Accepted but subordinate and unnecessary. j.-k. Cumulative, subordinate and unnecessary. Accepted and incorporated. Accepted but subordinate and unnecessary. n.-o. Cumulative, subordinate and unnecessary. Allen Accepted but subordinate and unnecessary. Accepted; subordinate to facts found. Accepted but subordinate and unnecessary. Except to the extent conclusion of law, accepted but subordinate and unnecessary. e.-g. Accepted but subordinate and unnecessary. Conclusion of law, subordinate and unnecessary. Accepted but subordinate and unnecessary. Lussier a.-c. Accepted but subordinate and unnecessary. Weeks Rebuttal Last sentence, rejected as not proven; otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. ("Expect" is a typo.) Respondent's Proposed Findings of Fact. 1. Accepted and incorporated. 2.-4. Conclusions of law. 5.-6. Accepted and incorporated. Accepted. Sunrise's intent is subordinate and unnecessary; the rest is incorporated. Rejected as contrary to the greater weight of the evidence, but irrelevant as there has been no significant change in the general profiles of the clients. 9.-10. Accepted and incorporated. 11. Rejected as contrary to the greater weight of the evidence. Its present status is the issue in this case; in addition, the basis of the current payments is the 6-bed cap, adjusted for an increased property component. 12.-15. Accepted and incorporated. ("August 190" in 15 is a typo.) Rejected as contrary to the greater weight of the evidence that it was an "amended interim rate request." (Sunrise maintained the original request but also submitted a revised "compromise" request.) Accepted and incorporated. To the extent not conclusion of law, rejected as contrary to the greater weight of the evidence. Accepted and incorporated. Rejected as contrary to the greater weight of the evidence. Accepted ("1996" is a typo) but subordinate and unnecessary. First sentence, rejected as contrary to the greater weight of the evidence; second, accepted but subordinate and unnecessary. Accepted but subordinate and unnecessary. Rejected as contrary to the greater weight of the evidence. First and third sentence, rejected as contrary to the greater weight of the evidence; second, accepted and incorporated. (As to the first, it was invalid because it sought to base the rate on a different client mix.) Testimony accepted as accurate, but rejected that it further supports the finding. See 25., above. Accepted and incorporated. First sentence, accepted but subordinate to facts contrary to those found (i.e., that it was not an interim change in component reimbursement rate request.) First and second sentences, rejected as contrary to the greater weight of the evidence. (Sunrise is a new provider at the Krome Avenue facility, but Senate Bill 1802 did not entitle it to a new rate based on a different client mix.) Third sentence, rejected as being argument of counsel. First sentence, rejected; second, accepted (in accordance with Senate Bill 1802); rest, accepted but subordinate to facts found. 31.-32. Accepted and incorporated that the same Medicaid provider number seems to apply to the Krome Avenue facility. But rejected as contrary to the greater weight of the evidence that it should not be treated as a new provider for purposes of establishing a reimbursement rate. COPIES FURNISHED: Steven M. Weinger, Esquire Kurzban, Kurzban, and Weinger 2650 Southwest 27th Avenue Miami, Florida 33133 Steven A. Grigas, Esquire 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308-5403 Sam Power Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Jerome W. Hoffman, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by Respondent dismissing its claim against Petitioner for recaptured depreciation. DONE and ENTERED this 19th day of August, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER 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 19th day of August, 1982.
