The Issue The issue is whether Respondent is sleeping in class and failing to supervise his students, so as to violate the prohibitions against misconduct in office and incompetence, as provided by Florida Administrative Code Rule 6A-5.056.
Findings Of Fact Respondent has been employed by Petitioner as a classroom teacher for 12 years, all at Cypress Bay High School. During his teaching career, he has taught physical and earth science, except, on occasion, when he has been assigned to teach biology. He has earned exclusively satisfactory marks on each of his annual evaluations, including his most current evaluation. On the evening of April 8, Respondent and his wife were up all night with their special-needs daughter. The next morning, Respondent reported to work punctually and taught his first period course. Respondent was exhausted from lack of sleep the previous night. While seated in his chair between classes, he lifted his eyes toward the heavens, emitted a quiet sigh, and prayed silently for the strength to get through the day at work. His head tilted back and his eyes closed, Respondent was lost in prayer as the students filtered into the classroom.1/ Although in a deeply relaxed state, Respondent could hear the students taking their seats and preparing for class to start. Stirring slightly at the bell signifying the start of class, Respondent emerged from his prayerful reverie after no more than two minutes into second period; he was in this state for no more than four minutes immediately prior to the bell. On these facts, it is impossible to infer from the evidence that Respondent was sleeping at the start of class. He was disengaged, though, so, as he began instruction, he appropriately apologized for his inattention for what was no more than the first couple of minutes of class and explained that he and his wife had had a rough night with a sick child. At all material times, the white board at the front of the classroom was full of written material, and the students had bellwork to perform at the start of every class. There were no behavioral problems during the time that Respondent had failed to give the class his undivided attention, and his inattentiveness did not affect learning that day.
Recommendation It is RECOMMENDED that Petitioner enter a final order dismissing the Administrative Complaint. DONE AND ENTERED this 13th day of January, 2014, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of January, 2014.
The Issue Which of three competing applicants for a certificate of need to construct a nursing home in health planning District 4, Subdistrict 3, best meets the statutory and rule criteria for approval.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the department of state government which administers the certificate of need (CON) program for health care facilities and services in Florida, pursuant to Section 408.034, Florida Statutes. For the planning horizon beginning July 2001, AHCA published a numeric need for an additional 121 community nursing beds in nursing home planning District 4, Subdistrict 3, for southeast Duval and St. Johns Counties. Sawgrass Care Centers, Inc. (Sawgrass), Woodlands Extended Care, Inc. (Woodlands), and National Healthcare Corporation (NHC) are competing, mutually exclusive applicants for a CON to construct a 120-bed nursing home in District 4, Subdistrict 3. After reviewing the applications, AHCA preliminarily approved the issuance of CON No. 9125 to NHC. In the Prehearing Stipulation, filed on November 2, 1999, the parties agreed that the following criteria are either not applicable or are not in dispute: Subsections 408.035(1)(d), (e), (f), (g), (j), and (k), and Subsections 408.035(2)(a), (b), (c), and (d), Florida Statutes; Rule 59C- 1.036, Florida Administrative Code; and allocation factors 1, 3, 4, and 9 of the local health plan. During the final hearing, the parties also stipulated that all letters of intent were legally sufficient. The issues requiring resolution in this proceeding, the parties agreed, are: Subsections 408.035(1)(a), (b), (c), (h), (i), (l), (m), (n), and (o); and Subsection 408.035(2)(e), Florida Statutes; allocation factors 2, 5, 6, 7, and 8 of the local health plan; and Section 408.037, Florida Statutes. Sawgrass is the applicant for CON No. 9126 to construct a 120-bed nursing home in northern St. Johns County for approximately $3,967,000 in construction costs for a 56,800 square-foot building. The total project will cost approximately $6.4 million. Mr. S. W. Creekmore, Jr., who is the sole shareholder and president of Sawgrass, has been in the nursing home business over 30 years. Currently, Mr. Creekmore owns and operates between 30 and 40 nursing homes in Arkansas, California, Missouri, New York, Tennessee, Texas, and Nevada. Sawgrass is currently constructing Sawgrass Care Center of North Duval, an 84-bed addition to a 60-bed facility in Duval County. If CON No. 9126 is issued to Sawgrass, it will be on condition that Sawgrass: locate the 120-bed nursing home in northern St. Johns County within zip codes 32082, 32092, 32095, and 32259, in District 4, Subdistrict 3; provide a minimum of 63.51 percent total annual patient days to Medicaid patients; establish a 20-bed Alzheimer's care unit, a 20-bed Medicare unit, hospice services and respite care; admit AIDS patients; and construct the facility according to the schematic drawings. Sawgrass contends that its application should be approved primarily because of its proposed location in northern St. Johns County. An increase of beds in St. Johns County will correct what Sawgrass' expert health planner described as a maldistribution of nursing home beds within the district. Sawgrass also presented evidence questioning the financial feasibility of NHC's proposal. Woodlands is the applicant for CON No. 9123 to construct a 120-bed nursing home in southeast Duval County for approximately $5.2 million in construction costs for 53,155 gross square feet, and $7.9 million in total project costs. Woodlands currently operates Woodlands Terrace Extended Care Center (Woodlands-Deland), a 120-bed nursing home located in Deland, Florida. Woodlands is owned by Mr. Morris Esformes, who also owns EMI Enterprises, Inc. (EMI), a nursing home management company, with its headquarters in Illinois. EMI manages almost 3,000 nursing home beds in Missouri, Illinois, and Florida, including Woodlands-Deland. EMI provides bookkeeping, payroll, purchasing, insurance and other contract negotiation services for the nursing homes it manages. If its CON application is approved, Woodlands is committed to constructing the facility in southeast Duval County, to serving 63.01 percent Medicaid, 1 percent AIDS, and .5 percent indigent care, and to establishing units of 24 beds for subacute care and 20 beds for Alzheimer's care. Woodlands contends that existing nursing home occupancy levels support its decision to build and to condition its CON on a location in southeast Duval County. Woodlands presented evidence intended to demonstrate that the design of its Alzheimer's unit, and its proposed staffing levels are superior to those of NHC. Woodlands also maintained that its estimated construction cost is more reasonable and its design preferable to that of Sawgrass. Woodlands presented evidence to support the accuracy of Schedule 2 of its application and of its projected financing costs. NHC, the applicant for CON No. 9125, started in 1971, with fourteen nursing homes. Currently, NHC owns or manages approximately 100 facilities in nine states, 42 of those in Florida. Ten of the 42 Florida facilities are also owned by NHC. The new facility, NHC HealthCare, St. Augustine, will cost approximately $6.7 million to construct the building with 63,104 gross square feet, and $10.2 million in total project costs. NHC's CON would be issued on condition that NHC (1) provide 63.05 percent of total facility patient days to Medicaid at stabilized occupancy; (2) establish, as special programs, a 16-bed subacute unit and a 30-bed Alzheimer's/Dementia unit, provide adult day care through an existing provider, and offer respite and HIV/AIDS care. In addition, NHC commits to selecting a highly accessible site within one mile of a major artery or within three blocks of a bus stop. Although NHC presented evidence that St. Johns County is the preferable location for a new nursing home, it is not willing to have a condition on the county in which it will build as a condition for the CON. NHC, through the testimony of its assistant vice president for health planning, specifically reserved the right to locate anywhere within the subdistrict so long as the location complies with the local health plan description of a highly accessible site. NHC contends that approval of its CON will bring possibly the first and, among the competing applicants, the largest Alzheimer's unit to St. Johns County. NHC also challenged the financial feasibility of the Sawgrass and Woodlands proposals. 408.035(1)(a) - need for the facility and services proposed in relation to the district plan At issue in this proceeding, from the district health plan for District 4, are the following preferences or allocation factors: 2) For urban areas, applicants who will locate in an area highly accessible in terms of public and private transportation - within one mile from a major artery or within three blocks from a bus stop. Applicants who include in their CON application specific plans detailing how they intend to address the mental health needs of their clients, including having a provider skilled in the recognition and treatment of mental health problems. Applicants who document that their project addresses an unmet need for the nursing home placement of persons with a specific debilitating illness. Applicant must document that a need exists. (In November 1992, hospital discharge planners reported having difficulty placing ventilator and tracheotomy patients). Applicants who have JCAHO accreditation and superior ratings from AHCA in existing facilities. Applicants who propose to locate in a county or defined subcounty area within a subdistrict (such as north, southwest or southeast Duval; east or west Volusia) with a licensed bed occupancy rate of at least 91 percent for the most recent six-month period (January-June or July-December) prior to the start of the current CON review cycle and no additional beds are approved. Sawgrass described the area of St. Johns County in which it will locate as not urban and concluded, therefore, that allocation factor two is inapplicable to the Sawgrass application. Woodlands, which proposed locating in southeast Duval County, identified three alternative sites, all within a mile of major county, state, or interstate roads and highways, and within three blocks of public bus stops. Woodlands is not, however, committed to selecting any of those three sites. NHC's CON would include compliance with preference two as a condition for approval. If it chooses to locate in St. Johns County, NHC cannot comply with the alternative of locating within three blocks of a bus stop because there is no public transportation system in St. Johns County, but NHC can meet the preference by choosing a site in the County which is near a major artery. The three applicants included, in their CON applications, letters from mental health services providers who are willing to enter into agreements to care for residents of the facilities. While an expert witness raised an issue regarding the dates of the supporting letters, which are 1998 and early 1999 for Sawgrass, early in 1999 for Woodlands and, by contrast, late 1997 for NHC, there is no evidence that the services proposed are not still available. Overlapping to some extent with allocation factor five, for providing mental health services, is six, for meeting unmet needs of persons with specific debilitating illnesses, such as Alzheimer's/Dementia. The proposed 20-bed units dedicated to Alzheimer's/Dementia care at Sawgrass and Woodlands, and 30-bed unit at NHC comply with the that factor. Sawgrass and NHC, based on their evaluations of the subdistrict, particularly of St. Johns County, noted an absence of Alzheimer's care in a dedicated unit. There was credible evidence, however, that 40 residents have been placed in a locked 60-bed dedicated dementia unit, established at a facility called Bayview in St. Johns County, subsequent to the filing of these CON applications. There was also evidence that an estimated 50 percent of all nursing home residents suffer from some form of dementia. Ratings by AHCA and the Joint Commission on Accreditation of Health Organizations (JCAHO), are not yet available for the 84-bed Sawgrass facility in Duval County, because it is still under construction. Sawgrass relied on the experience of its principal, Mr. Creekmore, and of Mr. Donald Fike, the president and owner of RFMS, a corporation which manages nursing homes in Florida, Nevada and Illinois. RFMS has an agreement with Mr. Creekmore to manage Sawgrass. Mr. Creekmore, who resides in St. Johns County, owns facilities in Tennessee, California, New York, Nevada, Arkansas, Texas, and Missouri, none of which has had a license revoked or suspended or been in receivership within 36 months prior to the hearing. Currently, RFMS manages and Mr. Fike has a controlling interest in partnerships that own two nursing homes in Florida, 120-bed Surrey Place of Ocala (Surrey Place), which also has 36 assisted living units, and Hawthorne Care Center of Brandon (Brandon) with 90 existing beds, 30 approved beds, and 64 assisted living units which are under construction. An additional facility managed by RFMS and owned by Mr. Fike is under construction in Lakeland. RFMS' employees at its corporate headquarters in Galesburg, Illinois, provide management, budgetary, accounting, and recruiting services. RFMS has never managed a facility for Sawgrass or Mr. Creekmore, but its two Florida facilities, Surrey Place and Brandon, were rated superior until the state eliminated superior licenses on July 1, 1999. Woodlands operates one Florida facility, Woodlands- Deland, which had been rated superior as long as it was eligible for that designation. Woodlands-Deland is not JCAHO-accredited. Woodlands relied on the experience of its owner, Mr. Esformes, and his management company, EMI. Mr. Esformes has been in the nursing home business for approximately 30 years. No specific information on the ratings of the facilities owned by Mr. Esformes or managed by EMI was provided. Of the 42 Florida nursing homes operated by NHC, ten are also owned by NHC. Three of the ten were rated superior, one was not yet eligible, and one was also JCAHO-accredited at the time the CON application was submitted. By February 1999, five of the ten NHC owned and operated facilities in Florida were rated superior. Twenty-eight of the 32 NHC-operated Florida nursing homes were rated superior. From January through June 1998, the average occupancy was 90.84 percent in the subdistrict, 91.3 percent for southeast Duval County, and 89.36 percent for northern St. Johns County. Woodlands is committed to establishing its facility in southeast Duval County, Sawgrass is committed to the northern four zip codes in St. Johns County, and NHC is not committed to either but, in general, supported the need for a nursing home in St. Johns County. Subsequent data on occupancy shows consistency with past levels. In the second six months of 1998, the occupancy levels in nursing homes in St. Johns County was 88 percent, and in southeast Duval, 93 percent. From January through June 1999, St. Johns was 89 percent and southeast Duval was 92.8 percent occupied. Suggesting that occupancy percentages are not the sole indicators of the availability of beds, a health planning expert for Sawgrass noted that significantly more empty beds are available in southeast Duval County as compared to St. Johns County due to the larger total number of beds in the Duval area. Three CONs were issued in 1998 and 1999 to Vantage Health Care Corporation, which was identified as a Beverly Corporation, the first one for 60 beds in St. Johns County, a second one to add 56 beds to the first CON with Duval/St. Johns as the county on the face of the CON, and the third to add four skilled nursing beds to the first two CONs, or a total of 120 beds all together. Although, counties are indicated on each CON, none is specifically conditioned on a particular location within the subdistrict. AHCA lists the Vantage beds in its inventory for St. Johns County, which is supported by the testimony of the Executive Director of the Health Planning Council of Northeast Florida and by the most restrictive location on the face of the first 60-bed CON. Although of questionable value due to the arbitrariness of using zip codes for health planning purposes and due to the relatively minor, 2 percent difference in occupancy rates, preference eight favors a proposal to locate in southeast Duval County. More important in determining the preference for a southeast Duval location is the prior approval of 120 beds for St. Johns County, even though Vantage could build its facility in southern St. Johns County. 408.035(1)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of existing facilities and services in the district In addition to the comparison of occupancy levels in St. Johns and Duval Counties, other factors affecting the availability and utilization of nursing beds have been considered. The total population 65 and over in Duval county was 79,986 as compared to 17,294 for St. Johns County in 1995. Population growth, however, has been and is projected to be greater in St. Johns than in Duval County. From 1998 to 2003, the population 65 years and older is expected to increase from 36,988 to 39,790, or 7.5 percent, in southeast Duval County, and from 8,506 to 9,922, or 17 percent, in the northern four zip codes in St. Johns County. Despite the fact that St. Johns is relatively sparsely populated currently, the data supports a conclusion that the trend from 1990 to 1995, when the over 65 population increased by 12 percent in Duval County and by 26.3 percent in St. Johns County, is continuing. The lower occupancy in St. Johns County was attributed, in part, to two facilities with occupancy rates consistently in the 87 to 88 range which occupy over 30 year-old concrete block buildings with survey problems. Although, in 1998, all of the facilities in St. Johns County were rated superior. Another explanation was the fact that one 57-bed facility, in northern St. Johns County, reserves five beds for residents of its retirement community. A second nursing home, near Ponte Vedra Beach in St. Johns County, is also a sheltered facility, which is limited to residents of the retirement community. Migration patterns, in a study done around 1996, showed significantly more St. Johns County residents placed in Duval County facilities than Duval County residents in St. Johns County facilities. Bed-to-population ratios in St. Johns and southeast Duval Counties are also factors which may indicate the relative availability and accessibility of nursing home services. The health planning experts for Sawgrass and NHC determined that a maldistribution of beds is indicated by the bed-to-population ratio, showing that St. Johns County is underserved as compared to the rest of the district. NHC's health planner testified that, for every one thousand people over the age of 65, there are 32 beds in St. Johns County as compared to 42 beds in Duval County. Sawgrass' health planner noted that 72 percent of the beds but only 66 percent of the district population is located in southeast Duval County, while four percent of the beds and 15 percent of the population are in northern St. Johns County. The discrepancy in bed-to-population ratio is more significant, according to the experts for Sawgrass and NHC, than the two percent difference in occupancy levels between the two areas of the subdistricts. Bed-to-population ratio analyses, however, assume uniform need which is not necessarily valid due to demographic variances in the population. The bed-to-population analysis also assumed that what was, at the time, 116 approved beds for Vantage would be constructed in southern St. Johns County. Considering the Vantage CONs together, the more reasonable conclusion is that Vantage could build the new nursing home anywhere in the County. Woodlands' proposed location was criticized by the health planner for NHC as contributing to a clustering of facilities in Duval County. As a part of that cluster, Woodlands might not greatly enhance accessibility although it does meet the local health plan preferences related to accessibility and occupancy. In addition, NHC argued, that the area is growing in young families not older people due in part to its proximity to Mayport Naval Station, and as indicated by the construction of three new elementary schools in the last six years. Accessibility and availability to specialty programs was another consideration evaluated by the health care planners. There is a need for more complex subacute care in nursing homes. The evidence indicated that Alzheimer's care in a dedicated unit was available in St. Johns County at the time of hearing although it had not been at the time the applications were filed. See also Finding of Fact 18. 408.035(1)(c) - history of providing and ability to provide quality of care As a legal entity, the applicant Sawgrass has no history of providing nursing home care in Florida. Sawgrass, however, through the experiences of Mr. Creekmore and Mr. Fike, has established that the owner and operator have histories of providing high quality of care. Based on the descriptions of operational styles and the policies of RFMS, Mr. Fike's management company, Sawgrass demonstrated the ability to provide a high quality of care if its CON application is approved. See Findings of Fact 20. Woodlands, as to a legal entity operating in Florida, has a limited but excellent history, with a superior rating at Woodlands-Deland beginning in 1997. Woodlands asserted, but without specific information on their other facilities, that its principal, Mr. Esformes, and his management company, EMI, have the ability to provide a high quality of care if CON 9123 is approved. See Findings of Fact 21. NHC has a more inconsistent but improving history, based on licensure, of providing quality of care in its Florida facilities. It is the only applicant with JCAHO accreditation but in only one of its ten Florida nursing homes. NHC has significantly more experience operating nursing homes than either of the other two applicants. See Findings of Fact 22. To determine quality of care, an additional factor urged for consideration is staffing, which overlaps with the following critera: 408.035(1)(h) - availability of resources, including health personnel, management personnel On Schedule 6, the table in the CON application which shows staffing patterns, NHC showed a total of 11.2 full-time equivalent (FTE) registered nurses (RNs). On Schedule 8, which listed the projected income and expenses for the proposal, NHC allocated RN salaries for 7.0 FTEs. NHC's 7.0 FTEs for RNs providing direct patient care is comparable to 5.6 for Sawgrass, and 8.4 for Woodlands. The comparison is valid because NHC included administrative as well as direct care positions in the total of 11.2 FTEs for RNs, including unit directors or managers and an assistant director of nursing. An NHC witness conceded that the RNs in these positions do not, as a routine responsibility, provide direct care. NHC also included a central supply clerk and nursing secretary in the FTEs for nurses aides or CNAs. NHC's regional administrator for Florida, Tennessee and Kentucky testified that staff in these positions also do not, as a routine, provide direct care to patients. NHC included one FTE for a medical director on Schedule 6, but indicated, at hearing, that the position is not full time. When the administrative positions are excluded, NHC's total direct hours of care per patient day (ppd) is approximately 3.18 hours, not 3.29 as described in the CON, as compared to 3.39 for Woodlands, and 3.29 for Sawgrass. When broken down based on the type of nurse providing the care, NHC's 3.18 total hours combines 2.38 hours by certified nurse assistants (CNAs) and 0.8 by licensed nurses (RNs and LPNs). Woodland's total of 3.39, combines 2.32 hours by CNAs and 1.07 hours by licensed nurses. For the Alzheimer's unit, NHC, in the CON application, erroneously described its proposal as providing 5.0 hours of care per resident day, but that was corrected at hearing by NHC's expert in health care financial feasibility and reduced to 2.58 hours. Woodlands provided at its current facility and proposed to provide at a new one approximately 3.9 hours ppd in the Alzheimer's unit. The staffing levels proposed by Sawgrass, NHC, and Woodlands all exceed the minimum state requirements of .06 ppd for licensed staff and 1.7 ppd for CNA, or 2.3 hours ppd total. Direct care staff at NHC perform some functions which would be performed by different personnel in the other two proposals. These duties include evening housekeeping, setting up and cleaning dining tables in the Alzheimer's unit, and answering evening telephone calls. Another indication of the demands on staff time is reflected in NHC's proposal to employ 7 FTEs in housekeeping for a 63,000 square foot building, as contrasted to Woodlands' use of 8 FTEs in its housekeeping department for 53,000 square feet. The staff at Woodlands will provide more direct resident care by higher level staff and reasonably, therefore, presumptively a higher quality of care than Sawgrass or NHC. NHC asserted that it can attract and retain quality staff by paying higher salaries. Using NHC's salary levels, NHC's expert determined that Sawgrass and Woodlands underestimated salary expenses by $573,000 and $522,000 respectively. NHC's total for projected salaries is $2,864,000, as compared to $2,386,653 for Woodlands and $2,318,119 for Sawgrass, although NHC will have seven fewer FTEs than Woodlands and six more than Sawgrass. NHC's comparison used 1998 average salaries, inflated forward, from Palm Gardens of Jacksonville (Palm Gardens), a facility managed by NHC for the owner, Florida Convalescent Centers (FCC). The average salary, for example for nurses, including administrators, such as the assistant director of nursing and Alzheimer's director, was applied to each nurse's position proposed by Woodlands and Sawgrass. NHC's methodology, particularly without any comparison of patient mix and acuity at Palm Gardens to that projected by the applicants, and the use of five percent annual inflation as compared to an actual annual inflation rate of three percent, when two statistical outliers are excluded, renders the analysis unreliable. The testimony of NHC's witness that the opening of new centers forces salaries to go up also indicates that the salary comparison includes some factor over and above actual inflation. 408.035(1)(h) - funds for capital and operating expenses, for project accomplishment and operation; 408.037(1)(a)1. - listing of all capital projects; and 408.035(1)(i) - immediate and long term financial feasibility The ability of Sawgrass to fund and finance the project was, in part, established by the deposition testimony of Jackie Garrett, Vice President, for Commercial Lending, First National Bank, Fort Smith, Arkansas, who is accepted as an expert in banking and finance as well as a fact witness. Having been involved for 30 years in financing projects for the Sawgrass owner, Mr. Creekmore, Ms. Garrett, in her letter of December 28, 1998, and in her testimony expressed the interest of the Bank in financing the Sawgrass project. Ms. Garrett also confirmed the possibility of financing up to 100 percent of the cost at better than an 8 percent fixed rate, as well as providing working capital as long as the loan is guaranteed by Mr. Creekmore. Ms. Garrett's letter to Mr. Creekmore offering to work out any contingencies with him and the inclusion of his personal financial statement in the application, lead to a reasonable conclusion that he can and will guarantee the financing for Sawgrass. Although a specific letter of commitment or the testimony of Mr. Creekmore could have provided a clearer commitment on his part, the documents in the application are sufficient to establish the short-term financial feasibility of Sawgrass. The accuracy of Schedule 2 of the Sawgrass CON application was questioned because it does not include an assisted living facility (ALF) for Duval County, which was proposed for construction on the campus with the nursing home. A financial expert for Sawgrass testified that the ALF is no longer planned, although AHCA was led to believe, in the prior nursing home CON, that an ALF would be built in conjunction with the nursing home. Comparing the historical payer mix and occupancy rates from similar facilities in the service area to staffing, salaries, and other fixed and variable expenses, the financial expert for Sawgrass demonstrated that the project is also financially feasible in the long term. To develop Woodlands-Deland, the general partner, Mr. Esformes, obtained financing primarily from AmSouth Bank in Orlando. The AmSouth loan was guaranteed by Mr. Esformes, who proposes similarly to finance the new Woodlands facility. In a letter dated December 30, 1998, and in her deposition testimony of October 26, 1999, an AmSouth assistant vice president indicates the availability of a loan to cover 75 to 85 percent of the total project cost. On behalf of EMI Enterprises, Inc., Mr. Esformes committed to funding the equity and working capital required from funds which are on deposit. AmSouth's lending limit for a borrower with Mr. Esformes' assigned risk rating is $15 million. NHC argued that Woodlands is not financially feasible in the short term because Mr. Esformes cannot borrow $8 million given his outstanding debt of $12,669,382. That position erroneously ignores the testimony of the bank officer when she stated that such projects, with liquidation of the property as a secondary source of repayment, can be treated separately, not grouped together and not aggregated to come to the $15 million total. She specifically considered Woodlands-Deland, saying, "And his other loan with the Deland property would be isolated for the same reason." See Deposition of Melissa Ann Ledbetter, October 26, 1999, page 11. In addition to the letter from AmSouth Bank, Woodlands presented a letter from and the testimony of Mr. Esformes on his commitment to the project. The evidence showed that Mr. Esformes has sufficient funds available to honor that commitment. Woodlands' proposal is, therefore, financially feasible in the short term. Woodland's long-term financial position was criticized based on Woodlands-Deland's not having achieved the utilization projected as quickly as projected. Utilization goals were adversely affected by the opening or expansion of other nursing homes at approximately the same time in the Deland area, an undesirable consequence which the District 4 health plan seeks to avoid. At the time of the hearing, Woodlands had a 1999 year-to-date profit of $106,000. Considering projected revenues and expenses, based on actual reimbursement rates at Woodlands- Deland, which are extremely high for Medicare, Woodlands' proposal is expected to be profitable in the long term. An expert for Sawgrass questioned NHC's short-term financial feasibility based on the sufficiency, commitment dates and changing investment policies of its funding sources. Schedule 2 of the NHC application lists total capital projects exceeding $436.6 million with approximately $397 million in "funds assured but not in hand and funds currently being sought." The application also includes letters of commitment establishing lines of credit from related companies National Health Investors, Inc. (NHI) for $260 million, and National Health Realty, Inc. (NHR) for $200 million. The letters are expressly valid through December 31, 1999, although what Sawgrass' expert estimated as the 12-month construction period for this project would begin approximately May 1, 2000, to end when operations commence on May 1, 2001. In addition, an examination of documents filed with the Securities and Exchange Commission (SEC) by NHI and NHR, according to the expert for Sawgrass, shows declining available funds and changing company objectives. As real estate investment trust (REIT) companies, NHI and NHR identify their typical financing arrangements mortgages and lease-back agreements, but do not specifically mention the extending of lines of credit. The SEC documents also indicate that NHI had approximately $136.9 million, available to fund health care real estate projects as of December 1998, not $260 million as committed for the line of credit to NHC. By June 1999, the SEC disclosures report a decrease to approximately $15.3 million available to fund health care real estate projects, of which approximately $12 million was available for the next 12 months. NHR's disclosures also indicate that the company will maintain its existing portfolio, not expand further. NHC's net income after taxes decreased from $23.7 million in 1997, to $8.2 million in 1998, adversely affected by declining Medicare reimbursements and increased taxes. The decline in profit from $37 million in 1997 to the projected $14 million for 1999 resulted largely from the expiration, on December 31, 1997, of special tax benefits for corporations. SEC disclosures indicate possible additional declines due to lawsuits over management contracts and a former employee, "whistle-blower" action, neither of which had been finalized at the time of the hearing. NHC's plan to reduce its taxes included the transfer of assets to NHI and NHR. NHC has also off-set losses by providing some therapies in-house and by group purchasing of pharmacy entical and medical supplies. In response to the loss of management agreements with FCC, NHC has successfully secured other management contracts and has eliminated certain regional positions. Reserves of approximately $31 million have been set aside for potential liability resulting from pending litigation, with FCC and in the former employee's qui tam action related to Medicare costs. Despite the efforts of NHC to adjust to changes in its financial position, the termination dates in the NHR and NHI letters of credit are troubling. The position of NHC, as investment advisor to NHI and NHR, and the ability of their Boards of Directors to change investment policies, without stockholder approval, suggests the likelihood of their funding the NHC project, if approved. Stronger support for a determination that at least NHR continues to be a source of funds for NHC comes from the deposition testimony of NHR's Senior Vice President, who signed the NHR line of credit letter. He noted that any projects submitted by NHC in the past have been approved by NHR and thinks it unquestionable that NHC would obtain financing for this project. That testimony rises to the level of the letters of interest by lending institutions submitted on behalf of the other applicants and establishes the short-term financial feasibility of the NHC proposal. NHC projected a net operating profit of $57,000 in year two which, with depreciation of about $350,000, results in a cash flow in excess of $400,000. NHC's proposal is financially feasible in the long term. 408.035(1)(l) - impact on costs; and 408.035(1)(m) - costs and methods of construction The estimated construction cost for Sawgrass is $70 a square foot for a 56,800 square foot building. By comparison NHC's estimated construction cost is $106 a square foot for the nursing home and a separate storage/maintenance building, totaling 63,104 square feet. Woodlands' 53,000 square foot facility will cost an estimated $98 a square foot. Sawgrass' construction costs were considered unreasonably low by some expert. The construction costs were developed by an expert in construction supervision and costs, who works for Medical Holdings Limited, another company which is owned by the Sawgrass President, Mr. Creekmore. The architects for the project work for another related wholly owned subsidiary of Medical Holdings Limited, Healthcare Builders, Incorporated (Healthcare Builders). Healthcare Builders is also owned by and only builds facilities for Mr. Creekmore. The estimated cost, $70 per square foot, is based on the use of local materials and subcontractors and excludes any profit, which alone would add from 8 to 10 percent to the cost. All of the salaries for the supervisors of the project, the general construction superintendent, the regular superintendent, and bookkeeper are paid by Healthcare Builders and excluded from constructions costs. Only one Sawgrass project, over the past 15 years, has required an application for a cost overrun. On this basis, Sawgrass established the reasonableness of the costs for its company. NHC's building is the largest and most expensive, with 71 resident rooms and 9-foot wide corridors, as compared to 66 rooms and 8-foot wide corridors for Woodlands and Sawgrass. NHC has 22 private rooms, but Woodlands and Sawgrass have 12 private rooms in each of their designs. NHC's private rooms range in size from 196.8 to 277 net square feet, as compared to 220 net square feet for Sawgrass, and 194 net square feet for Woodlands. Semiprivate rooms range in size from 196 to 246.7 net square feet for NHC, 198 to 218 for Woodlands, and 220 for Sawgrass. All three exceed the state minimums of 100 square feet for private rooms, and 160 square feet for semiprivate rooms. The schematics for NHC and Woodlands demonstrate more concern for safe outside spaces, with two separate enclosed courtyards, one designated for wandering which is typical of Alzheimer's residents. Woodlands' design also provides for two separate entrances, one for the main facility and one for the subacute unit. The subacute entrance is particularly desirable because the busier pattern of visitors is more akin to that in a hospital setting. NHC has 57 rooms with showers in the bathrooms, as compared to 53 for Woodlands and 18 for Sawgrass. The experts debated the benefits of privacy and the enhanced dignity and the reality that safety necessitates, for many, assistance in bathing. On the one extreme, NHC has unnecessarily included showers on the Alzheimer's unit for residents who are least likely to use them safely and most likely to need assistance, but Sawgrass has so few that the use of central bathing facilities will be necessary for most of its residents and will not enhance their privacy and dignity. Woodlands' design for the purposes intended, is the most reasonable, and its type of construction is the highest rated of the three. Despite the differences in size and construction costs, all three applicants propose relatively similar charges in a very narrow range of lows for Sawgrass and highs for NHC, from $105 to $115 a day for semiprivate rooms to $120 to $130 for private rooms. Reimbursement rates, primarily from Medicare, differ based on differences in acuity levels. 408.035 (1)(n) - past and proposed Medicaid and indigent care Sawgrass has received one CON in Florida with a Medicaid commitment of 87.4 percent of total resident days. Other CON applications prepared for Mr. Creekmore have offered to meet or exceed the prevailing community Medicaid occupancy levels. Woodlands committed to providing a minimum of 63.01 percent Medicaid and 0.5 percent indigent resident days. Woodlands has reached 63 percent but not its committed level of 66 percent Medicaid in its Deland facility, although it expected to do so when final data at full occupancy becomes available for 1999. NHC's proposal includes the provision of 63.05 percent of total resident days to Medicare. AHCA has determined that NHC is not in compliance with its Medicaid commitment in two of its facilities, located in Daytona and on Merritt Island, but due to its extensive operations in Florida, NHC provides substantial Medicaid care. 408.035(1)(o) - continuum of care in multilevel system All three of the applicants plan to offer Alzheimer's hospice, respite and subacute care. Sawgrass included a 60-unit ALF on its schematic design and on its Schedule 2 for a cost of $4 million. The ALF will be connected to the nursing home by a covered entrance. Sawgrass also planned but is not constructing an ALF with its Duval County project. See Finding of Fact 45. Woodlands stated its intention to build an ALF on the same campus with the proposed nursing home in a misleading narrative on page 114 of the application, but did not include it as part of the project in either the schematics or on Schedule 2 of the CON application. At the hearing, Woodlands' witness conceded that an ALF would not be built, if at all, for several years until the nursing home proves to be financially viable and then, by a separate corporation. In addition to the services provided by the other applicants, NHC plans to offer adult day care through existing providers. Only Sawgrass meets the criterion for proposing a multilevel system of care, based on the assumption that it will build the ALF as planned. 408.035(2)(e) - consisting with plans of other state agencies responsible for providing or financing long term care All three proposals are consistent with the policies of other responsible state agencies, including the Department of Elder Affairs. Summary Comparison of Applications This case is difficult, in part, because there is not a great difference among the applicants based on any one of the criteria. In terms of location, southeast Duval has a slight advantage due to its larger population, occupancy levels, and the approved CON for St. Johns County. Woodlands promises to provide a higher quality of care than NHC and Sawgrass based on proposed staffing, but has only operated one other Florida facility, albeit a superior one. Woodlands provided less detailed information on its owner's and manager's operations of out-of-state facilities. All three applicants have what appear to be at this relatively early stage of the process, reliable funding sources and plans to operate profitably. Woodlands' construction cost and design are the most reasonable for the purposes intended, although no appreciable differences in patient room charges were demonstrated. Based on past history and current proposals, all of the applicants will provide adequate and appropriate levels of Medicaid care. Only Woodlands will also provide a small percentage of indigent care. Sawgrass, by offering to construct an ALF in conjunction with nursing home and by designating a funding source to do so, offers the greatest continuum of care in a multilevel setting. On balance, the application submitted by Woodlands is superior.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order of the Agency for Health Care Administration issue CON No. 9123 to Woodlands Extended Care, Inc. to construct a 120-bed nursing home in southeast Duval County on the conditions set forth in the application and in Findings of Fact 10 of this Recommended Order; and deny CON No. 9125 to National Healthcare Corporation, and CON No. 9126 to Sawgrass Care Center, Inc. DONE AND ENTERED this 14th day of August, 2000, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER 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 14th day of August, 2000. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Richard Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Robert D. Newell, Jr., Esquire Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Gerald B. Sternstein, Esquire Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A. 314 North Calhoun Street Tallahassee, Florida 32301-7606 Theodore E. Mack, Esquire Powell & Mack 803 North Calhoun Street Tallahassee, Florida 32303
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Health Quest Corporation Health Quest Corporation has been in operation for approximately 20 years and currently operates 11 nursing centers in the States of Indiana, Illinois and Florida. Its three existing Florida facilities are located in Jacksonville, Boca Raton and Sarasota. It also has nursing centers under construction in Winter Park, Kendall and Sunrise, Florida, as well as four more in Indiana. Health Quest has a Certificate of Need to build a new 180-bed nursing center in Sarasota County, and that project is currently under development. Health Quest also holds Certificates of Need for nursing centers in Pembroke Pines, Duval County and Safety Harbor. The Safety Harbor approved Certificate of Need for 120 beds is in Pinellas County. Due to a revision of its development plans for Florida, Health Quest now plans to transfer or sell its CONs and sites in Pembroke Pines, Duval County and Safety Harbor. Whereas the company had formerly planned to build seven new Florida facilities simultaneously, it has now decided to build only four facilities in each generation of Florida projects. The decision to trim its development schedule is based upon Health Quest's reluctance to temporarily expand its present staff of management personnel and its refusal to compromise its quality standards for the sake of developing a larger quantity of new facilities. It is contemplated that the proposed facility in Pinellas County would be built after the completion of its nursing and retirement centers in Winter Park and Sunrise. The Letter of Intent filed with HRS noticed Health Quest's intent to request a Certificate of Need for 120 community nursing home beds in Pinellas County. However, the actual application filed with HRS, and the project being pursued in this proceeding, is for a 180-bed nursing center. HRS accepted the 180-bed application, and no party has demonstrated prejudice from the discrepancy between Health Quest's Letter of Intent and its application. The nursing center is proposed for the northern area of Pinellas County and is to be integrated with a 124-apartment assisted living residence. The nursing center will contain a specialized 60-bed unit for the care of residents suffering from organic brain syndrome, which includes Alzheimer's disease and related dementias. Health Quest currently operates organic brain syndrome units at two of its Indiana nursing centers. In this unit, Health Quest proposes a nursing staff ratio of 3.5 hours per patient day. A non-supervisory nursing staff ratio of approximately 3.0 hours per patient day is proposed for the remaining 120 beds. Its proposed staffing is sufficient to provide 24-hour registered nursing coverage on each of the three proposed nursing units, and its staffing level is slightly higher than that proposed by the other applicants in this proceeding. Health Quest intends to offer sub-acute care, including hyperalimentation and intravenous treatment, respite care and vacation care and, possibly, adult day care. Therapy treatment, including physical, occupational, speech, audiology and psychosocial, will be provided through an affiliate of the Health Quest Corporation, known as Achievement Rehabilitation Corporation. Health Quest maintains a quality assurance program based on a system of peer review. Its Jacksonville and Boca Raton nursing centers hold superior licenses. Its Sarasota nursing center is not yet eligible for a superior license because it has only been open since November of 1986. It also offers orientation and staff training programs and participates in education programs in conjunction with local schools of nursing. As did many of the applicants in this proceeding, Health Quest updated its application at the hearing. The updates were based upon a survey of existing facilities in Pinellas County, which survey was not completed at the time its application was reviewed; additional beds having been approved in Pinellas County as a result of a Settlement Agreement executed subsequent to the review date of this batching cycle; the effects of inflation; and the passage of time. Also, Health Quest determined subsequent to the filing of its application to build all its resident rooms at 216 net square feet, rather than some at 216 and others at 200. Its architectural and engineering fees were increased to reflect the fact that it now contracts out more of its design tasks than it did at the time the original application was reviewed. Its equipment costs were updated because it was decided that the original estimate was unrealistically low. Health Quest estimates the total costs of the nursing home center to be $5,546,812. Health Quest did not include a set of floorplans with its application, nor did it offer any at the hearing. The one-story design of its proposed nursing center is described in narrative form in Section III.G. of its application and the tables in the application form requesting the square footage of certain areas were completed. HRS did not request floorplans or any kind of schematic drawings in its notification of omissions, and HRS deemed the Health Quest application complete. While the application form contains a space for the inclusion of "schematic/diagrammatic drawings," and it is common practice to include such drawings with a Certificate of Need application, neither the statutes governing application content nor HRS's rules specifically require the submission of floorplans or drawings. Health Quest plans a facility with 71,142 total square feet, at a cost of $30,816 per bed and a total of 395 square feet per bed. With the exception of VHA/Oxford, Health Quest projects the lowest cost per bed. The patient rooms will each encompass 216 square feet, thereby exceeding the minimum requirements for room sizes. The facility will have 18 single rooms and 81 semi-private rooms. The reasonableness of the Health Quest project completion schedule is questionable inasmuch as Table 26 calls for a one-month period from the time it contracts with an architect to HRS approval of final plans for licensure purposes. Health Quest projects that 30 percent of its patient days will be Medicaid, that 4.1 percent will be Medicare and that 65.9 percent will be private pay. The Medicaid projection is comparable to that experienced at its Jacksonville nursing home facility, but much higher than that experienced at its Boca Raton and Sarasota facilities. The total project cost of $5.5 million is comparable to other similar- sized nursing hones. While Health Quest's financial analysis and feasibility expert testified as to the reasonableness of Health Quest's pro formas, which show the project as breaking even at 54 percent occupancy at the beginning of the second year of operation, this witness had not conducted an independent analysis of the individual items upon which the pro formas were based. Instead, he relied upon the contents of the application and its updates, neither of which were prepared by him. The witness had not reviewed the 1987 or 1988 quarterly audited financial statements of Health Quest. The data reviewed was for the year ending March 31, 1986. The witness did not know whether Health Quest had money in hand to make the 10 percent equity contribution, nor whether it had $5 million assured but not in hand for conventional financing for this project. It is therefore difficult to assess the short and long-term financial feasibility of the project proposed by Health Quest. Florida Country Place Limited Partnership Florida Country Place Limited Partnership is a foreign limited partnership authorized to do business in Florida. The general partners are Scott Phillips and Kim Phillips and the limited partner is the Jack E. Phillips Trust. The managing entity will be Phillips Florida Healthcare, Inc., a foreign corporation authorized to do business in Florida. The principals of Country Place have been involved in designing, constructing and operating nursing homes, apartment complexes and other health related facilities for over 15 years. The family now owns and operates three multilevel delivery of care facilities such as the one proposed herein. These include a 170-bed facility in Cuyahoga Falls, Ohio, a 109-bed facility in Wickliffe, Ohio, and a 103-bed facility in Clearwater, Florida. The long range plans of Country Place are to develop homes in clusters, currently concentrating on the central west coast area of Florida, and eventually to develop a southern headquarters. It has previously been granted Certificates of Need in Lee County and Polk County and has been recommended by HRS for a Certificate of Need in Hillsborough County. The current proposal is for the construction of a 30-bed nursing unit, consisting of 14 new community nursing home beds and the transfer of 16 existing beds, as part of a 120-unit continuum of care facility for the elderly. The facility would also contain 60 independent living apartments and 30 adult congregate living units. The 16-bed transfer from Florida Country Place's existing facility in Pinellas County would allow the conversion of triple- occupancy rooms to double occupancy, thus enhancing the living environment for the residents of that facility. The site and design of the existing facility, known as Country Place of Clearwater (and formerly known as Druid Hills), renders it impossible to eliminate the 3-bed wards through new construction of replacement bed space. While the owner of the existing nursing home in Clearwater did not join in the application filed with HRS for the current proposal, one of the general partners of both the transferor facility and the applicant is authorized by the transferor to seek the proposed transfer. HRS never sought additional or clarifying information about the transfer proposal in its omissions request, and its authorized representative deemed the application complete. Florida Country Place made some revisions in its application at the time of the hearing. The changes included a reduction in the common area space in its facility design, changes resulting from an inflation adjustment and a change in the way the common costs and expenses among the three components of the project were allocated in order to conform to HRS's allocation methodology, which was first revealed in the State Agency Action Report. Florida Country Place proposes a three-story facility designed with a residential appearance to implement the philosophy of deinstitutionalization. There are many support services and activities areas, and the exterior amenities include a pond, an exercise course, a sitting deck and a putting green. The center core is designed to encourage interaction among the residents of all the different levels of care. The 30-bed size is designed to enable more personalized care and a more family- type personal concept. The 3-story design has as its purpose minimizing the amount of travel distance for the resident at the farthest unit to the amenities of the center core and its services. The first floor will consist of independent living apartments and the second floor will be adult congregate living units and the laundry. The 30-bed nursing unit is on the smallest floor, the third and top floor, so that travel distance to the central core is the shortest while still providing the nursing home residents with the greatest amount of privacy and quiet time. The plans for the nursing home include semi-private rooms with a permanent partial partition separating the two beds so as to effectively create two private rooms. Each resident will have his or her own thermostat, window, storage space, television and telephone accommodation. The total project cost allocated to the nursing home component of the project is $1,605,113, or $53,504 per bed. This cost per bed is far greater than the other applicants propose, as is the square feet per bed of 603. Even with the higher cost per bed, construction and development costs are reasonable. Some economies of scale will be realized through the sharing of administration, common areas, maintenance and the kitchen and laundry. The design of the entire facility will conform with state regulations for mixed use facilities and will utilize energy conservation measures. Services and programs, in addition to the continuum of care concept proposed for this facility, include adult day care, respite care, intensive rehabilitative services, community involvement, care for Alzheimer's patients and subacute care. Ease of movement through the facility from less to more intensive levels of care, and vice versa, is anticipated. Numerous physical and recreational activities will be offered. The proposed staffing levels exceed the minimum required. Florida Country Place encourages the hiring of elderly workers in every area of their nursing home facilities, and it has an active recruitment program to attract sufficient qualified staff. The projected salaries are reasonable. The proposed facility will be available for pharmacology and nurse training. Florida Country Place has not yet selected a site for its proposed facility, but desires to locate in north Pinellas County, wish Dunedin or Palm Harbor being the target area. It proposes to provide 45 percent of its patient days to Medicaid patients. The principals' Ohio nursing home facilities do not participate in Medicaid because they believe that the reimbursement mechanism is unfair and would require a reduction in services to avoid an economic burden on private pay patients. The per diem charges proposed are at the high end of the scale of reasonableness. Private pay patient charges will be individualized based upon need and level of care required, and the charges will be revised on an ongoing basis. The proposed nursing home project can be successfully financed, and the required equity contribution is available. While the total project will have a loss in it second year of operation, it will be profitable thereafter. The nursing home component will be viable in its first year and thereafter. During 1986 and 1987, the existing Clearwater facility (formerly Druid Hills) was experiencing low occupancy, in part because of the three-bed wards and in part because of the negative reputation of the previous ownership. A public relations marketing program was instituted, and the census increased from 70 percent to 90 percent in the early part of 1988. An in-house survey revealed that key personnel were not keeping staff recruitment and development in step with the rapid census growth. At about the same time, a new staff development coordinator and new nursing staff were hired. During the training of new personnel, the HRS audit team arrived for the annual survey. The facility did not have adequate trained staff to handle the increased census and, on May 20, 1988, HRS imposed a moratorium on new admissions. At the time of the hearing, Country Place had recruited new staff for that facility, believed it was now ready to accept new admissions and had requested a resurvey by HRS. There is a structural deficiency at the existing Clearwater facility, which was built in the early 1960s and purchased by the Phillips in the early 1980s. This deficiency is currently undergoing repair, and review for a superior rating will be requested after completion of the repairs. The Forum Group, Inc. The Forum Group, Inc. is a national, publicly held company which started in 1981 and currently owns, develops and operates sixteen retirement living centers and twenty freestanding nursing homes in a number of states. Forum has sold or transferred many of its acute care, psychiatric and smaller nursing home facilities so that it can concentrate on the retirement living center concept. It currently has only one other operating facility in Florida. This facility is Park Summit, which consists of 200 independent living apartments and 35 nursing home beds. Park Summit currently has a standard rating and has only two Medicaid-approved beds. The Park Summit facility is not typical of the facility proposed for Pinellas County in that it contains no adult congregate living facility units. Some of Forum's facilities in other states hold superior license ratings, and it has never had a license denied, revoked or suspended. The 120-bed nursing home facility proposed by Forum for Pinellas County will be part of a total retirement living center containing two other levels of care--assisted living (or adult congregate living facility units) and independent apartment units. There will be 30 assisted living units and 120 to 150 independent apartment units. While a specific site has not yet been selected for the project, Forum is focusing its attention on the eastern portion of Pinellas County. The total cost of the nursing home component of Forum's proposed retirement living center is estimated to be $5,053,301. This figure is the highest for those applicants proposing 120-bed nursing homes, but is consistent with similar projects recently developed by Forum. Forum is a solvent company and has the financial resources to finance the construction and initial operation of the proposed facility. While the price of Forum stock has declined in the past year, this does not affect the intrinsic value of the company, whose cash alone exceeds its liabilities and which has a 3 to 1 ratio of assets to liabilities. The revenues and expenses projected by Forum are reasonable and are based upon Forum's corporate experience. Forum projects a positive net income in its second year of operation and thereafter, and has demonstrated the financial feasibility of the project on both a short-term and long-term basis. Forum's nursing home project will encompass approximately 49,000 square feet, with a cost per bed of $42,111. Its proposed estimate of equipment and construction costs are reasonable and consistent with other Forum projects. By combining the nursing home project with the remainder of the proposed retirement living center, Forum will realize some operating efficiencies and economies through the use of common heating and cooling, kitchens, laundry and maintenance. Forum provided single-line drawings with its original application, indicating the general arrangement of spaces for the proposed nursing home facility. While the corridor length in the drawings did exceed state requirements, a slight modification to the configuration can be made to cure this problem without exceeding the estimated project cost by more than ten percent and without exceeding the proposed total square footage of the project. Forum's project will involve a two-story structure, will be finally designed to comply with all licensure requirements and will not create a safety hazard for patients. Forum may ultimately utilize an architectural plan different than the single-line drawings submitted with its application. The project would have energy conservation features such as heavy roof insulation, double glazed insulated windows and heat pumps. Forum projects a utilization of 28.5 percent Medicaid patient days, which is the lowest projection of all applicants. It projects a utilization of 66.7 percent private pay patient days, with private room rates being $110.00 per day and semi-private room rates being $85.00 per day. Its proposed design contemplates about 40 private rooms. Contrary to a statement in Forum's application, Forum no longer maintains a separate fund for indigent care. Its projected patient charges for Medicaid and Medicare are somewhat low, inasmuch as there have been increases since January of 1987. An update to account for this would create an increase in the total revenues projected by Forum. Forum's proposed staffing and salaries are consistent with Forum's other facilities, and are comparable to those proposed by the other applicants. Forum has a quality assurance program with written standards for monitoring resident care. It has a staff training program, with pre-service and in-service training, and utilizes a prescreening procedure to assure it hires competent, trained staff. Twenty-four hour coverage by registered nurses and licensed practical nurses will be provided. Forum's solution to the nursing shortage is to pay higher wages with greater benefits, to provide higher quality surroundings and to utilize re-entry nurses. In the event of a nursing deficit, Forum would utilize as a source of staffing the personnel available from the home health care that will be provided to the apartment residents of the retirement living facility. Forum will offer all services required under skilled and intermediate care, as well as respite care. Forum makes its facilities available to educational institutions for community training programs. Pinellas Healthcare, Ltd./Convalescent Services, Inc. Pinellas Healthcare, Ltd. (PHL) is a Georgia Limited partnership owned by Stiles A. Kellett, Jr. and Samuel B. Kellett. Although PHL will own the proposed facility, it will be managed and operated by Convalescent Services, Inc. (CSI). CSI is also 100 percent owned by Stiles A. Kellett, Jr. and Samuel B. Kellett. CSI was formed in 1978 for the purpose of operating extended care facilities, including nursing homes and retirement centers. It currently operates 21 nursing homes and 3 retirement centers located in 7 states. Six of the nursing homes, including one 120-bed facility in Pinellas County, and two of the retirement centers (adult congregate living facilities) are located in Florida. It also has another Certificate of Need approval to establish 120 community nursing home beds in Pinellas County. It is the Company's plan to gear its growth toward those markets where CSI already operates facilities or has a management network in place, thus allowing CSI to provide high quality care both more effectively and more efficiently than if development took place in new markets without existing resources. After receipt of its initial Certificate of Need application, HRS notified CSI that certain elements had been omitted from the proposal, and requested CSI to provide the number of registered nurses per shift and the patient bill of rights. In response thereto, CSI submitted another entire application which varied, in some respects, from the initial application filed. The revisions involved a reduction in the square footage of the proposed facility and an increase in the project costs associated with financing. HRS accepted the revised application and deemed the application complete. There was no evidence adduced to demonstrate that the revisions resulted from a review of the applications submitted by the other parties in this proceeding. The project proposed herein is a free-standing 120-bed nursing facility in Pinellas County. A site has not yet been selected. A utilization of 45 percent Medicaid, 4 percent Medicare and 51 percent private pay is anticipated. These projections are based upon a review of historical occupancy data in Pinellas County as well as CSI's own experience in Pinellas County and at its other existing facilities. Medicaid utilization within its existing certified nursing home beds currently averages approximately 40 percent of all patient days. The nursing home would offer a comprehensive range of services, including subacute, skilled and intermediate care; respite care; hospice care; special services for patients with Alzheimer's and related disorders; physical, speech, occupational and recreational therapy; social services; case management services and counseling services. The charge for respite care will be the same as for regular admissions. CSI does not intend to segregate its Alzheimer's patients in a separate and distinct unit, and is of the philosophy that such patients do better in an integrated environment whereby the more alert patients tend to prevent the Alzheimer's sufferers from deteriorating as quickly. A "wander guard" system will be installed to monitor the Alzheimer's patients. CSI has developed a manual containing standards of nursing care for Alzheimer's patients, and its nursing personnel will be specially trained to provide services to such patients. Due to its management of an existing facility in Pinellas County, CSI has existing agreements with the providers of services and transfer agreements with area hospitals. CSI has existing affiliations with the Pinellas County School Board and St. Petersburg Junior College, and intends to enter into educational relationships with these and other institutions to ensure the continuing education of its own staff and to serve as a clinical training ground for faculty and students. CSI intends to implement numerous activity programs especially tailored to the needs of the individual residents, to encourage volunteer participation and to engage its nursing home residents in various community service projects. The proposed nursing home facility would be comprised of twelve single-bed rooms and 54 two-bed rooms. The nursing home would consist of 37,700 total gross square feet, and the total facility gross square feet per bed will be 314 feet. The one-bed rooms would consist of 159 net square feet and the double bed rooms would consist of 191 net square feet. The most energy efficient equipment available will b installed in the facility. The total project cost is estimated to be $3,900,000, or $32,500 per bed. The projected costs for construction, professional services, equipment and site preparation are consistent with its past experience. CSI's quality assurance program includes the employment of a nursing services coordinator responsible for ensuring the quality of care provided at its facilities, a quality assurance manual which contains standards covering all departments within each facility, a resident care plan, resident counsels and pre-service and in-service training for nursing personnel. Of the 21 nursing homes currently managed by CSI, 17 are located in states which utilize a superior rating system. Of those facilities eligible to receive superior licenses, CSI maintains superior ratings in over 80 percent of its beds. Only one of its 6 Florida nursing homes is eligible for a licensure rating, and that facility currently holds a standard rating. Several deficiencies have been cited against the Centerville Care Center in Tallahassee. In March 1988, HRS imposed a moratorium on admissions to that facility, partly because the minimum standards for nursing staff were not being met. That moratorium on admissions was administratively challenged by CSI and had not been finally resolved as of the time of the hearing. CSI's nursing staff proposal in the instant proceeding is on the low range of all the applicants, though the numbers and classifications of positions meet or exceed state licensing requirements. The tables in the application, as revised, were updated at the hearing to account for "skyrocketing" nursing salaries and recent salary changes in the marketplace (which also necessitated an adjustment in the Medicaid and Medicare rates), inflation, and a new Medicaid payment system adopted on January 1, 1988. The pro formas project a loss during the first year of operation and a profit during the second year of operation with a 95 percent occupancy rate. The project is to be financed through a 25 percent equity contribution provided by the general partners and a 75 percent commercial financing arrangement for a period of 30 years. This proposed method of financing is consistent with past CSI experience in Florida and elsewhere. The Kelletts have a $40 million renewable credit facility through a series of banks, with $13-$14 million currently available. The Mediplex Group, Inc. The Mediplex Group, Inc. was formed about 25 years ago, and is now, since April of 1986, a wholly-owned subsidiary of Avon Products, Inc. Avon is a multi-million dollar national corporation which had $73.8 million cash on hand as of December 31, 1987. The Board of Directors of Avon has approved the instant proposed project and Avon will provide the long-term financing for this project. The applicant, through Mediplex, has the funds available to make the 10 percent equity contribution for the proposed project. Mediplex currently has approximately 18 to 22 projects in various stages of development and construction, which represent approximately $125 million. It has never defaulted or become delinquent on payments due on any of the loans associated with these projects. The applicant, Florida Convalescent Associates of Pinellas County, is a partnership of Mediplex Management of Pinellas County, Inc., which is a wholly-owned subsidiary of The Mediplex Group, Inc. The Mediplex Group will develop and manage the facility on behalf of the partnership. Mediplex currently manages one other nursing home facility in Florida -- Manatee Springs in Bradenton. Mediplex now seeks a Certificate of Need for a 120-bed nursing home facility to be located in northern Pinellas county. It intends to offer a continuum of care, and will include respite care and adult day care among its services. It will accept Alzheimer's patients and integrate them into the system with other patients. A "wander guard" system will be utilized to protect such patients and other dementia patients from wandering. There will be no subacute care unit, per se. The facility proposed by Mediplex contains 44,722 total square feet and 369 square feet per bed. There will be 8 private rooms and 56 semi-private rooms, several multi-use rooms and two dining rooms. There will be two central bathing areas in each nursing unit. The design of the facility incorporates energy saving features. The schematic floorplans do not show toilet facilities in the kitchen, and do not indicate a quiet lounge, sunroom or chapel as represented in the Certificate of Need application. The total cost of the proposed project is estimated to be $4,550,879, or $37,924 per bed. The Mediplex philosophy of care is to bring each patient up to his or her maximum level of participation, and to accomplish this through a continuum of care policy. Each Mediplex facility must comply with policy standards which comport with the highest minimum standards of the states in which Mediplex facilities exist. Mediplex employs a national director of quality assurance who is responsible for overseeing the operations of the various facilities, as well as the quality of care offered. When new facilities are opened, key employees of other Mediplex facilities go to the new facility to assist in orientation. There will be an infection control program at the facility, and it will be Mediplex's policy to always have a registered nurse on duty in the building. Mediplex will attempt to involve residents in community activities. The hiring and training of appropriate employees will be emphasized. Recognizing that there is a shortage of nurses, Mediplex has, in the past, successfully recruited nurses from Ireland and England. An HRS survey of Mediplex's Manatee Springs nursing home facility in Bradenton, Florida, conducted in March, 1987, resulted in a finding that 6 licensing standards had not been met. This facility currently holds a standard rating. Several of its facilities in Massachusetts and Connecticut have been cited for deficiencies relating to patient care and proper infection control techniques. The proposed facility will provide 52 percent of its patient days for Medicaid residents, and has a policy of accepting any resident regardless of the source of payment. The total staff per patient day proposed by Mediplex is higher than that proposed by the other applicants. While the salaries listed in the application were consistent with Mediplex current policies, no witness called by Mediplex was familiar with salaries in Pinellas County, and thus their reasonableness was not established. A pro forma statement of revenues and expenses for the first year of operation of the proposed facility has never been submitted by Mediplex, though there was testimony that Mediplex would suffer a loss of approximately $300,000 after its first year of operation. Section 381.494(4)(e), Florida Statutes, in effect at the time the current applications were filed (as well as the current Section 381.707(2)(c)) requires a statement of the projected revenues and expenses for the first two years of operation after completion of the proposed project. The pro formas submitted by Mediplex encompass years two and three of operation, and appear to be stated in terms of current dollars. In preparing the pro formas, Mediplex relied on the average of all Mediplex Group facilities companywide, and not upon information relevant to either Pinellas County or Florida. Although Medicaid and Medicare per diems are computed by different reimbursement methodologies, Mediplex's second year per diem for Medicare and Medicaid are projected as identical. The inflation assumptions appearing on the updated pro formas were not established or substantiated. In summary, while Mediplex established that its financial projections were consistent with its experience in constructing and operating other nursing home facilities around the country, it did not establish that the projections were reasonable for a facility to be opened in Pinellas County in the year 1990. Manor Care of Florida, Inc. Manor Care of Florida, Inc., is a wholly-owned subsidiary of Manor HealthCare Corporation, a publicly held corporation which owns and operates about 150 nursing homes in 26 or 27 states. Manor HealthCare Corporation is the fifth largest nursing home provider in the country, and has been in business for approximately 30 years. Manor Care owns and operates nine nursing homes and three adult congregate living facilities in Florida. It currently has a 120-bed nursing home in Pinellas County, as well as approval for 60 more beds. Three of its Florida nursing homes opened within the last three years were built without a cost overrun, are operating profitably and are superior rated. Manor Care has never sold a Certificate of Need or a nursing home in Florida. Each of its five Certificates of Need received since 1981 has been timely implemented. In order to have greater control over operations, Manor Care owns and manages all its Florida nursing home facilities. Manor Care now proposes to establish a 120-bed nursing home in Northern Pinellas County at a total project cost of $4,821,150. A five acre parcel of band in Palm Harbour, just east of Highway 19, has been purchased for this purpose. The initial design of the facility was revised to reflect HRS's preliminary intention to grant a certificate of Need to Manor Care upon the condition that there be no 3-bed rooms and to comply with some of the comments contained in the HRS architectural report which accompanied the State Agency Action Report. The present facility design contains one story with four wings all connected to a common area. There will be two nurses stations, with 60-beds each. The central area of the facility contains the administrative area, the dining room, kitchen, laundry and facility support area. The facility will have 30 private rooms and 45 semi-private rooms, and will contain 46,850 gross square feet, and 390 square feet per bed. The total cost per bed is $46,850. One of the four wings will house a separate and distinct 30-bed area specially designed for Alzheimer's patients. That area will be divisioned off from the rest of the facility by double doors, and will have its own separate dining room, activity area and outdoor garden area. This design will allow patients to wander within a restricted area and reduce concern over patients leaving the facility. Manor Care has been developing dedicated Alzheimer's units within its nursing homes around the country for the past two and a half years, and currently operates 16 Alzheimer's units. Its program is geared toward treating middle stage Alzheimer's disease, which is characterized by combative behavior, incontinence, gait disturbances and eating problems. The goal of Manor Care's program is to provide a comforting environment in which residents and families can cope with the mental and physical deterioration associated with the disease. The Manor Care Alzheimer's program emphasizes five components of care: environment, specialized staffing and training (with a higher nurse to resident ratio than the rest of the facility), programming, specialized medical services through the use of consultants, and family support. The A.D.R.D.A. (Alzheimer's Disease and Related Disorders Association) has officially recognized that the most appropriate treatment and care of Alzheimer's patients is accomplished in a dedicated and separate unit. In addition to its Alzheimer's program, Manor Care intends to offer programs in the areas of respite care (a short-term nursing home stay designed to give the caregiver a rest), chaplaincy (whereby chaplains from all different faiths are recruited to serve as liaisons for the religious and spiritual needs of the residents), and an "In Touch Program" to help patients and families upon admission into the nursing home. It also provides a comprehensive corporate- wide quality assurance program which audits the services provided at all Manor Care nursing homes and provides follow-up and education for staff. The inter- disciplinary quality assurance team is comprised of professionals in nursing, rehabilitative therapy, activities, dietary and environmental services. Annual unannounced assessments are conducted in every Manor Care nursing home and action plans are developed and implemented. In addition, each facility conducts ongoing self-assessments. Manor Care uses a corporate quality assurance manual which contains standards based on federal regulations and the most stringent state regulations in the country. It provides mandatory in-service training for staff and emphasizes promotion within the company. Manor Care has a regional office in Orlando to serve its Florida nursing homes, and a regional nurse works with the Florida directors of nursing and nursing departments and acts as a quality assurance liaison to conduct mini-quality assurance reviews upon visits to the facilities. Manor Care will provide 46 percent of its patient days to Medicaid patients. Its proposed patient charges are reasonable, as is its projections for utilization. Its projected expenses are based upon actual experience at its existing Dunedin facility, and are reasonable. Discounts from retail purchasing are realized by Manor Care through volume purchasing. It is projected that the proposed facility would incur a first year loss of $305,500 and a second year profit of $89,000. The project will be funded by working capital and senior subordinated notes. The funds for the project are currently available. The project is financially feasible in both the short and long-term. Health Care and Retirement of America HCR currently owns and operates 127 nursing home facilities containing 16,000 beds in 19 different states. It has designed and built over 200 nursing homes and related health care facilities, along with 10 nursing home facilities in Florida, with 6 more in various stages of design and construction. HCR's current proposal consists of a 60-bed addition to its existing Pasadena Manor 126-bed nursing home located in southwestern Pinellas County, which is within the area designated by the local health council as the East Subdivision. Pasadena Manor, consisting of approximately 34,280 gross square feet, has been rated by HRS as a superior nursing home for several years and had no deficiencies on its most recent licensure survey. The 60-bed addition will be a two-story structure connected to the existing building by a corridor. It will have 30 beds on each floor, two nurses' stations, two dining rooms, two multi-purpose rooms, two physical therapy areas and the standard functional elements required to meet licensure standards. The first floor will have a 15-bed dedicated Alzheimer's Disease wing, as well as space for adult day care. The second floor will have 30 beds, including a dedicated 10 to 15-bed subacute unit. The subacute care provided will include high tech services and ventilator care, I-V therapy, pulmonary aids, tube feeding and hyperalimentation. Due to the impacts of the federal DRG (diagnostically related group) system which encourages hospitals to discharge patients earlier, there is a need for nursing home beds and services available to patients requiring subacute care. The 60-bed addition will contain 4 private rooms and 28 semi-private rooms. Respite care will also be offered when beds are available. Adult day care and respite care provide alternatives to institutional long-term care in a nursing home. Such services aid in preventing premature nursing home admissions and promote cost containment. There is no known nursing home in Pinellas County which provides a distinct and separate care unit for patients suffering from Alzheimer's Disease and related disorders. Alzheimer's Disease is a brain disorder that results in gradual memory loss and, as memory loss progresses, the need for ever-increasing personal care is required. Victims encounter more serious physical problems and exhibit symptoms such as wandering, significant weight loss, clumsiness, incontinence and antisocial behavior. Intense medical attention is required in the last stages of the disease. Historically, Alzheimer's patients have been mixed with other patients nursing homes, often disrupting other patients and presenting problems of control for the staff. Because of behavior problems, some nursing homes avoid admitting Alzheimer patients and others control problem behavior with sedation and physical restraint. A separate Alzheimer's care unit enables the nursing home to utilize special techniques to manage the patient and allows the patient to maintain his cognitive capabilities for as long as possible without restraint and sedation. A separate unit provides a smaller, safer, specially designed area with specially trained staff to address the unique needs of the Alzheimer's Disease and related disorders victim. The proposed Alzheimer's special care unit will incorporate special design features, patient activities and programs and higher staffing levels to meet the unique needs of the patients. The architectural design of the addition will accommodate the tendency of Alzheimer's victims to wander and will prevent inadvertent exit from the nursing home. HCR facilities, including Pasadena Manor, are subject to extensive quality assurance standards and guidelines utilized to cover all areas of operation and patient care. The level of staffing proposed for the 60-bed addition exceeds state licensure requirements, and the staffing is designed to accommodate the needs of the skilled and intermediate care patients, as well as the special needs of the Alzheimer's and subacute patients. The projected salaries and benefits are reasonable. HCR's projections of a payor mix of 45 percent Medicaid, 51 percent private pay and 4 percent Medicare are reasonable. Its fill-up and occupancy projections and its projections of revenues and expenses are also reasonable. The total project cost for the 60-bed addition to Pasadena Manor is estimated to be $2,054,000. The components making up the total are reasonable and consistent with HCR's prior experience. The entire addition, including the 2,000 square feet adult day care center, consists of approximately 24,000 square feet, providing 367 square feet per bed. Construction of an addition is more efficient and cost effective than construction of a new, free-standing facility because it will not be necessary to duplicate ancillary spaces, such as laundry and administrative areas. The current operations of Pasadena Manor will benefit from improvements in services, special programs and the high level of staffing. HCR has available the financial resources necessary to accomplish the 60-bed addition to Pasadena Manor. If HCR does not finance the project internally, it has the ability to obtain financing from a commercial lender. Its pro formas for the proposed project are reasonable and are indicative of the financial feasibility of the project both immediately and in the long term. While the addition itself would show a loss the first year of operation, the total facility would show a profit the first year. The addition would show a second year profit, as would the entire Pasadena Manor facility. VHA/Oxford Senior Living Ventures The applicant is VHA/Oxford Senior Living Ventures, d/b/a Oxford- Pinellas Nursing Associates. The joint venture partners of VHA/Oxford are VHA Development Company and Oxford Development Enterprises, Inc. No copy of the joint venture agreement between these two entities was produced at the hearing, though it is apparently a 50-50 joint venture. Oxford's parent company is Oxford Development Corporation, a national real estate services company. Oxford Development Enterprises, Inc., with offices in Maitland, Florida, has developed about 2,000 apartment units and two senior living communities in Florida. VHA Development Company is one of the many subsidiaries of VHA Enterprises, Inc. VHA Enterprises also has a consulting company, a behavioral medical care company involved in substance abuse and psychiatric care, an ambulatory services company and a long term care company (VHA Long Term Care) that develops and manages nursing homes. The parent company, VHA, Inc. (Voluntary Hospitals of America) is a for-profit cooperative owned by the VHA shareholder hospitals. There are approximately 900 hospitals nationally affiliated with VHA. The applicant VHA/Oxford proposes a 120-bed nursing home in southeastern Pinellas County in affiliation with an acute care hospital, Bayfront Medical Center, which is a VHA affiliate. The proposal contemplates that the applicant VHA/Oxford will hold the real estate and lease the nursing home to Bayfront. The only revenues to be received by the joint venture would be the lease payments. Bayfront would, according to the application, engage VHA Long Term Care to manage the facility on the hospital's behalf. Although witnesses employed by VHA Long Term Care testified that the proposed facility would be managed by VHA Long Term Care on behalf of the hospital sponsor, witnesses testifying on behalf of the applicant, the joint venture, expressed some confusion as to whether the day-to-day operation of the nursing home would be the responsibility of the leasing hospital or VHA Long Term Care. VHA Long Term Care does have a quality assurance program and a staff training program that it implements at all nursing homes managed by it. At the time of the hearing, no formal relationship between Bayfront Medical Center and the applicant was established and no lease agreement with Bayfront had been prepared. Bayfront has, however, "expressed an interest in" having a relationship with a nursing home because they are having difficulty in placing patients. Some 600 to 800 patients a year discharged from Bayfront, a 518-bed acute care hospital, are discharged to nursing homes. Approximately 47 to 50 percent of the total Medicaid patients in southeast Pinellas County are treated at Bayfront Medical Center. The advantages of operating a nursing home in conjunction with a hospital include the quick and cost-effective availability of ancillary services, such as physical therapy, speech therapy, occupational therapy, respiratory therapy and other services, as well as the ability to care for patients who require a heavier degree of care. As recognized by other applicants, VHA Long Term Care recognizes that the acuity level of patients has increased as a result of DRGs. The applicant proposes to designate 30 of its 120 beds for skilled nursing care. The present proposal by VHA/Oxford contemplates, in its first phase, to establish 30 skilled beds and 90 intermediate-level care beds within the nursing home component of the project. The second phase of the project would add independent and assisted living units to the project. While VHA/Oxford states that its proposed nursing home facility would include 12 private rooms and 54 semi-private rooms, the drawings submitted in support of its application provide for only 12 private rooms and 50 semi-private rooms, thus accommodating only 112 patients. The drawings also fail to show a toilet facility in the kitchen and showers near the nurses' stations. Four of the patient rooms do not have the twenty-foot vista required by applicable regulations. The floor plan for the nursing home is square, with an enclosed courtyard, and includes two patient care units. It will have 41,380 gross square feet, or 345 square feet per bed. The total cost of the project is estimated to be $3,579,680 or $29,830 per bed. The proposed nursing home would include traditional nursing home care, physical therapy, occupational therapy and respite care. While it will accept Alzheimer's patients, its approach is to "mainstream" (or not segregate) such patients, so that the more alert patients in the facility will assume some responsibility for the confused patients and, hopefully, slow their deterioration. It is difficult to assess the financial feasibility of the proposed project. While many of its projected revenues and expenses are similar to those of the other applicants, the witnesses called upon to establish the reasonableness of the financial projections were not familiar with nursing staff salaries in Pinellas County or with current Florida Medicaid or Medicare reimbursement. The applicant proposes that over 54 percent of its patient days will be attributable to Medicaid patients. Updated Tables 7 and 8 suffer from internal inconsistencies with regard to Medicaid and Medicare charges and revenues. There was confusion as to which years the pro formas were based upon. There appears to be an inadequate number of registered nurses available to provide 24-hour nursing coverage. The opinions offered by the applicant were based upon many unsubstantiated assumptions, such as a leasing arrangement with Bayfront Medical Center, the validity of room rates, and staffing salaries. The total project costs are considerably less than the other applicants proposing 120-bed facilities. In addition, this joint venture has never financed any project. The VHA subsidiary responsible for financing its half of the project does not have any lines of credit and has never itself financed a project. Oxford Development Corporation is experiencing some financial problems, and is presently undergoing a restructuring. The President of the VHA joint venture is not familiar with Oxford's financial statements. The applicant projects no preopening expenses in its total project cost. In any event, if the assumptions made are valid, the applicant projects a first year loss of 142,714 and a second year profit of $241,967. At the time of the hearing in this proceeding, VHA/Oxford Senior Living Venture had a preliminary approval from HRS for a 120-bed nursing home facility in Hillsborough county. This proposed facility was almost identical to the facility proposed for Pinellas County. The Senior Development Manager for Oxford Development and a member of the executive committee of the joint venture testified that the Hillsborough County Certificate of Need had not been offered for sale. When confronted with a letter written by him to National Facilities Corporation stating that "VHA/Oxford has made the decision to seek a purchaser for the [Hillsborough County] CON," the witness attempted to explain the discrepancy by stating that he was offering to sell only a completed and licensed facility. This testimony is not credible. The letter, received into evidence as CSI's Exhibit 18, clearly proposes that VHA/Oxford would transfer the CON, if awarded, at the earliest possible date following final award and certification and would seek, as compensation therefore, $400,000. It defies logic to assume that a completed and licensed facility would be sold for $400,000. The letter also offered to allow the purchaser to be in control of the appeal process. Department of Health and Rehabilitative Services Other than its counsel, no representatives from HRS attended the three and a half week-long hearing except for the time during which the two HRS witnesses provided testimony. The opinions offered by HRS's one expert health care planner were based upon the information available to him on June 18, 1987, the date upon which the State Agency Action Report (SAAR) was signed. This report encompassed a comparative review of 12 applications submitted in January of 1987 for community nursing home beds in Pinellas County and announced HRS's intent to grant four of the applications. HRS admits that the report contains errors regarding the services to be provided by some of the applicants, the licensed beds counted and the occupancy rates utilized in the need methodology, and the number of new beds sought by one applicant. At the time of the initial agency review (the SAAR) and at the time of the hearing, HRS was of the opinion that all the applicants were in substantial compliance with the State Health Plan, the District Health Plan and the applicable statutory and regulatory criteria for review of Certificate of Need applications. It was determined that all the applicants in this proceeding would increase availability and access to the services being proposed, would improve the quality of care, efficiency, appropriateness and adequacy of nursing home services in the area, would promote access to underserved groups, would provide quality care, would have sufficient manpower and financial resources to accomplish and operate the project, proposed reasonable costs and methods of construction, and would be financially feasible in the short and long-term. However, since HRS calculated the need for new nursing home beds in Pinellas County to be substantially less than the total number of beds for which these applicants were seeking, HRS proposed to grant only the Certificate of Need applications submitted by HCR (for 58 of the 60 beds), Mediplex (120 beds), Manor Care (120 beds) and VHA/Oxford (120 beds). These applicants were chosen because they were deemed the best overall, offering the most services and programs for patients and their projects were within the parameters of size and cost that HRS felt would be most suitable. In addition, at the time of initial review HRS was sensitive to criticism that only existing Florida entities were receiving Certificates of Need from HRS. Consequently, additional consideration was given to those applicants who had not previously done business in Florida and whose proposals were worthy. Throughout the hearing, counsel for HRS objected to evidence from any of the applicants regarding updates to their applications as they were deemed complete by HRS prior to its initial review. It was the position of the HRS counsel that the only appropriate evidence of changed conditions after the date the application was deemed complete are those changes which relate to or result from extrinsic circumstances beyond the control of the applicant, such as inflation add other current circumstances external to the application. The majority of the "updated" material offered by the applicants at the hearing did result from the effects of inflation, the passage of time between the application preparation and the dates of the final hearing, changes in the marketplace regarding nursing salaries, changes in the Medicaid and Medicare reimbursement system and typographical errors in the application. Some changes in design were offered as a result of the applicants' experience with other construction projects and in order to comply with licensing regulations. There were also some changes which resulted from better information having been secured through market surveys conducted after the applications were deemed complete. None of the applicants attempted to change their planning horizon, the number of beds proposed, the proposed location of the facility or the services to be offered. As noted above, HRS's position at the time of the hearing was the same as it was at the time of the initial review and does not take into account any information not available at the time of initial review. It was the opinion of HRS's expert in health planning as it relates to Certificate of Need review that if the initial agency review (SAAR) contained errors, at least with respect to a listing of the services or programs intended to be offered by the various applicants, this would be minimal and its initial decision would not be in error. HRS did not object to evidence concerning Manor Care's redesign of its facility because HRS had conditioned its initial approval upon two-bed rooms rather than three-bed rooms. The Need for Nursing Home Beds in Pinellas County No documentation of need other than that established by the numeric need methodology set forth in Rule 10-5.011(1)(k)(1), Florida Administrative Code, was offered by any applicant. HRS normally will not approve applications for new or additional community nursing home beds in a service district if approval would cause the number of beds in that district to exceed the number calculated by use of the rule methodology. It is the appropriate application of the formula, along with the issue of the applicability of Florida Statutes, Section 381.713(4), which produced a range of expert opinion regarding the number of beds needed in Pinellas County. The range was from a low of 440 beds to a high of 860 beds needed in Pinellas County for the planning horizon of January, 1990. In its application of the numeric need formula, HRS initially determined a need for 434 new beds. Shortly before the hearing, HRS changed its opinion and found a need for 391 beds. At the hearing, HRS found a need For 440 beds. The various changes resulted from an adjustment in the number of licensed beds to include sheltered beds which were converted to community beds by Chapter 651, Florida Statutes, and to exclude beds in a Christian Science facility, and a revision of the occupancy rate utilized in the formula. The evidence supports the HRS final revisions of these two components of the formula, and establishes that the overall number of beds needed in Pinellas County for January of 1990 is 8,292. From this figure, the number of licensed beds and 90 percent of the number of approved beds must be subtracted in order to determine the net bed need. The evidence establishes that, as of December 1, 1986, there were 7,394 licensed beds in Pinellas County. The dispute in this proceeding concerns the appropriate number of approved beds to be counted. Rule 10-5.011(1)(k), Florida Administrative Code, is silent as to the cutoff date for counting approved beds. HRS interprets the rule to use the date that the supervisor signs the State Agency Action Report as the cutoff date for counting the number of approved beds. In counting approved beds, HRS included an approved Certificate of Need for 60 beds granted to Careage (CON No. 4691). Based upon the testimony of HRS's expert health planner as to the definition of an "approved" bed, the 60 beds awarded to Careage should not have been counted as approved beds. The witness stated that in order for approved but unlicensed beds to be included in the bed need calculation, the Certificate of Need authorizing such beds must have been "received" at the time that the supervisor signed off on the State Agency Action Report. "Approved" beds to be counted were further described as those "which have been issued their Certificate of Need," those "which have received initial approval," those for which HRS "has entered into stipulated agreements," and those "which have final orders." The series of events regarding Careage's CON Number 4691 are as follows: In the January 23, 1987, edition of the Florida Administrative Weekly, HRS published notice that on January 7, 1987, it had made a decision to grant a Certificate of Need to Careage to construct a 60-bed nursing home in Pinellas County. The evidence demonstrates that the "decision to grant" was simply a tentative or proposed decision, and that such a decision was internally reviewed by HRS subsequent to January 7, 1987. Indeed, the CON to Careage was not "issued" until July 30, 1987. The State Agency Action Report stating the basis for the approval of CON 4691 was not issued until August of 1987, and the CON was not actually transmitted to Careage until September of 1987. It is the practice of HRS, as apparently required by Rule 10-5.010, Florida Administrative Code, to provide its notice of intent to issue or deny a Certificate of Need through the vehicle of the State Agency Action Report. Thus, Careage had not "received initial approval," and the Careage 60-bed Certificate of Need was not received, issued, the subject of a stipulated settlement or a final order as of the date the State Agency Action Report was prepared in this proceeding, which was June 18, 1987. The 60 beds awarded to Carriage should not have been included in the inventory of "approved" beds with respect to the January, 1987, batching cycle. Certificates of Need Numbers 2379, 2976 and 2978, each for 120-bed nursing home facilities in Pinellas County, were issued by HRS prior to February 14, 1986. Each of the three CON holders had expended at least $50,000 in reliance upon their CONs prior to June 16, 1987. A petition challenging the validity of CONs 2379, 2976 and 2978 was filed with HRS on June 16, 1987. None of the beds authorized by such CONs were licensed as of June 17, 1987. According to Section 381.713(4), Florida Statutes (1987), these 360 beds should not have been considered or utilized in the determination of need or included in the inventory of approved nursing home beds by HRS. HRS's rationale for including the 360 beds as "approved" beds was that the petition challenging their validity was not "effective" for purposes of Section 381.713(4) because it was dismissed by HRS as being untimely and was never referred to the Division of Administrative Hearings. This interpretation of the statute was not sufficiently explicated by HRS at the hearing. It is clear from a reading of the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA, 1986), and subsequent cases holding that later-batched applicants should have availed themselves of the proper remedy of challenging previously-issued CONS belatedly, as well as the language of Section 381.713(4), that the "initiation of proceedings" referred to in the new statute was intended to refer to petitions which HRS viewed as "untimely." Another reason for excluding the beds approved by CONS 2379, 2976 and 2978 from the inventory of approved beds for this batching cycle is the stipulation by HRS in Hillhaven, et al. v. DHRS, (DOAH Case No. 86-0132) that once Section 381.713(4) is applied in a given subdistrict, it must be similarly applied in every review cycle in that subdistrict up through and including the January, 1987, review cycle. This recognition has been applied by HRS in at least two other cases -- Forum Group , Inc. v. DHRS (DOAH Case No. 87-0722) and Manor Care, Inc., et al. v. DHRS (DOAH Case No. 87-3471). In order to accept the testimony presented by HRS that Section 381.713(4) has never been applied in Pinellas County, one would have to assume that HRS grants Certificates of Need in a vacuum and without reference to the bed need calculation rule. Without unduly lengthening this Recommended Order by a discussion of the events which led to a settlement in the case of Imperial Palms Apartments, et al. v. DHRS (DOAH Case No. 85-2639), it is found that HRS's settlement of that case was in fact based upon the recognition that Section 381.713(4) required exclusion of CONS 2379, 2976 and 2978 for purposes of need calculations under Rule 10- 5.011(1)(k), Florida Administrative Code. (For an accurate discussion of the facts involved in the Imperial Palms proceeding, see the Recommended Order entered on October 18, 1988, by Hearing Officer Linda M. Rigot in Health Quest Corporation, d/b/a Regents Park of Dade County v. DHRS, DOAH Case No. 86-1351.) Having once applied Section 381.713(4) to Pinellas County, HRS is bound to apply it in this January, 1987, review cycle. Accordingly, the 360 beds must be excluded from the inventory of approved beds. The number of additional community nursing home beds needed in Pinellas County for the planning horizon of January, 1990, is 818. This figure is derived by an acceptance of HRS's calculation of bed need under the formula up to the calculation of the appropriate number of "approved" beds. The Careage CON (60 beds) and CONs No. 2379, 2976 and 2978 (360 beds) should be excluded from the inventory of approved beds, leaving 78 beds to be counted as approved. After adding the number of licensed beds and 90 percent of the number of approved beds existing in Pinellas County, and subtracting that number from the total bed need in the County, there is a net need for 818 beds.
Recommendation Based upon the Findings of Fact and Conclusions of Law recited herein, it is RECOMMENDED that Certificates of Need for the establishment of community nursing home beds in Pinellas County be GRANTED to HCR for 60 beds, Manor Care for 120 beds, Forum for 120 beds, Florida Country Place for 14 new beds and 16 transfer beds, CSI for 120 beds, Mediplex for 120 beds, and Health Quest for 180 beds. It is further RECOMMENDED that the application of VHA/Oxford for 120 beds be DENIED. Respectfully submitted and entered this 3rd day of November, 1988, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of November, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3447, 87-3448, 87-3449, 87-3453, 87-3455, 87-3456, 87-3463, and 87-3465 The proposed findings of fact submitted by each of the parties have been carefully considered and are accepted, incorporated and/or summarized in this Recommended Order, with the following exceptions: Health Quest 63. Rejected insofar as the evidence demonstrates that Health Quest is selling or transfering 3 of its Florida nursing home CONs. Rejected as to individual line items. Rejected factually as unsupported by competent, substantial evidence (but see Conclusions of law regarding financial feasibility.) 140. Rejected as contrary to the greater weight of the evidence. 149. Second sentence rejected as unsupported by the evidence. All but first sentence rejected as improper factual findings. Last sentence rejected as unsupported by competent, substantial evidence. 162. Last sentence rejected as argumentative. 176. Second sentence rejected as unsupported by competent, substantial evidence. Figure $3(0,000 rejected as unsupported by the evidence. Rejected. See Conclusions of Law. Florida Country Place 51. Rejected as to range of need. See Finding of Fact 68. 58. Rejected as an improper factual finding. Forum 20. Rejected. See Finding of Fact 73. CSI 19(i) Accepted, with the exception of CSI's Tallahassee facility. 47. The words "do better" rejected as unsupported by the greater weight of the evidence. 120. As noted in Finding of Fact 57, there was some discrepancy in the testimony as to which entity would manage the day-to-day operations of the facility. Mediplex 7. Second sentence rejected as unsubstantiated by competent evidence. See Findings of Fact 41 and 42. 11. Rejected. See Finding of Fact 42. 13, 18, and 21 - 23. Rejected. See Findings of Fact 41 and 42. 43. Accepted, except with regard to toilet facilities in kitchen. 63. Rejected as unsupported by substantial competent evidence. 71. Last sentence rejected as unsupported by the evidence. Partially rejected. See discussion in Conclusions of Law regarding preliminary plans or drawings. Rejected as contrary to the evidence. 97. Rejected as contrary to the evidence. Manor Care 129 - 131. Rejected. See Findings of Fact 68 - 73. HCR 4 and 9. Rejected as to the number of beds awarded to Careage; contrary to the evidence. VHA/Oxford 12. Figure of 860 rejected. See Finding of Fact 73. 14 and 42. As noted in Finding of Fact 57, there was some discrepancy in the testimony as to which entity would manage the day-to-day operations of the facility. 30. The number of private rooms on the floor-plan is rejected as contrary to the evidence. 50. Rejected as not supported by competent substantial evidence. 56. Rejected. The testimony demonstrates 600 to 800 patients. 59. Rejected. The evidence demonstrates that the total project cost is $3,579,680. 63 - 66. Rejected as not sufficiently established by the evidence of record. 73. Rejected if the statements are intended to apply to salaries in Pinellas County. 76 and 78. Last sentences rejected as unsupported by competent substantial evidence 81. Accepted only if other assumptions in pro formas are reasonable. 87. Rejected as an improper factual finding. 90. The words "tremendous" and "terrible hindrance" are rejected as unsupported by competent substantial evidence. First sentence rejected as unsupported by the evidence. Rejected insofar as it is intended to imply that review of other applications did occur. HRS 6 - 9. Rejected. See Findings of Fact 68 - 73. Rejected insofar as it purports to state anything other than HRS's position in this proceeding. (the first 14) Factually accepted, but irrelevant to the application at issue. 15 - 38. The changes stated are factually accepted; however, see Finding of Fact 66 and discussion of "updates" in Conclusions of Law. COPIES FURNISHED: Gregory Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 R. S. Powers, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Steven W. Huss, Esquire 1017 Thomasville Road, Suite C Tallahassee, Florida 32303 Douglas L. Mannheimer, Esquire Sandra P. Stockwell, Esquire 820 East Park Avenue, Bldg. F Tallahassee, Florida 32301 R. Terry Rigsby, Esquire J. David Holder, Esquire 325 John Knox Road Suite C-135 Tallahassee, Florida 32303 W. David Watkins, Esquire Harold F. X. Purnell, Esquire Post Office Box 6507 Tallahassee, Florida 32314 Karen L. Goldsmith, Esquire Jonathan S. Grout, Esquire Post Office Box 10651 Tallahassee, Florida 32302 James C. Hauser, Esquire Joy Heath Thomas, Esquire 215 South Monroe Street Suite 701 Tallahassee, Florida 32301 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302 Paul Amundsen, Esquire Guy Collier, Esquire Byron E. Mathews, Esquire Vicki Kaufman, Esquire 700 Brickell Avenue Miami, Florida 33131-2802 Edgar Lee Elzie, Esquire 215 South Monroe Street Suite 804 Tallahassee, Florida 32301
Findings Of Fact During the months of June and July, 1987, Respondent Convalescent Services of Venice, Inc., operated Pinebrook Place Health Care Center in Venice, Florida. On or about June 19, 1987, Rev. Spittal, then the licensed Administrator of the facility, submitted his emergency resignation in order to assume administration of another facility to which he was obligated to give guidance. He immediately notified the Regional Director of the Respondent corporation, Mr. Rick Winkler, who was himself a licensed health care administrator in Florida. As Regional Director, with the responsibility for supervising five nursing homes and one retirement center, Mr. Winkler had his office in the Pinebrook Place facility. Mr. Winkler's license was physically located at Respondent corporation's other facility, Lakeside Nursing Home in Naples, Florida. Mr. Winkler had been the Administrator of that facility prior to becoming Regional Director, and because the incumbent administrator, Ms. Harnish, was newly licensed, and because an administrator in training, Ms. Cox, was undergoing training at that facility, he left his license at the Lakeside facility when he moved to Pinebrook to become Regional Director. Upon the departure of Rev. Spittal, Mr. Winkler immediately assumed administration of the Pinebrook facility, fulfilling all the functions of the administrator and advising the staff that he had done so. In addition, he immediately entered into a contract with Ms. Joyce A. Coleman, a licensed nursing home administrator, to assume the position of Administrator of Pinebrook Place effective July 13, 1987. Thereafter, between Rev. Spittal's departure on June 19 and Ms. Coleman's arrival on July 13, 1987, Mr. Winkler was the Administrator of Pinebrook Place Health Care Center. A licensed assistant administrator was not employed at Pinebrook during that period. On June 30, 1987, Mr. Dowless, an investigator for HRS Office of Licensure and Certification, pursuant to a report filed by a discharged former employee at Pinebrook, visited the facility to determine if the allegation made that Pinebrook was operating without a licensed administrator was true. That day in question, Mr. Winkler was absent from the facility attending the opening of the Respondent corporation's newest facility. When Mr. Dowless arrived he spoke with the acting Administrator In Charge, the chief nurse to whom Mr. Winkler supposedly gave a letter of authority in writing to assume supervision in his absence, and after an inspection of the facility, concluded that the Respondent corporation was in violation of the law. This was because Mr. Winkler, though a licensed nursing home administrator, had his license physically located at Lakeside and he failed to have an Assistant Administrator under his supervision at the Pinebrook facility. This information was telephonically reported to Mr. Winkler who called Mr. Dowless by telephone later that day. The discussion was somewhat heated. Because he was unable to convince Mr. Dowless of the fact that he was the administrator at that facility, Mr. Winkler placed a telephone call to Mr. Richard Reysen, a Deputy Director of the Office of Licensure and Certification. During this conversation, Mr. Winkler explained his licensure situation and was led to believe that the situation was acceptable so long as he would have his license physically removed from Lakeside to Pinebrook. He did this and took no further action. Considering the matter closed, he was somewhat surprised when a citation was subsequently issued by Petitioner levying a fine of $1300. The fine was $100 per day for each day of the alleged violation.
Recommendation Based on the foregoing findings of fact and conclusions of laws it is therefore: RECOMMENDED that the Administrative Complaint filed in this case against the Respondent, Convalescent Services of Venice, Inc. d/b/a Pinebrook Place Health Care Center be DISMISSED. RECOMMENDED in Tallahassee this 16th day of June, 1988. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 FILED with the Clerk of the Division of Administrative Hearings this 16th day of June, 1988. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. By the Petitioner 1 - 2. Accepted. Accepted and incorporated herein. Irrelevant. Respondent is not cited for this alleged violation. Accepted and incorporated herein. 6 - 10. Accepted and incorporated herein. 11. Irrelevant. 12 - 13. Accepted and incorporated herein. By the Respondent Accepted and incorporated herein. Accepted and incorporated herein. Accepted and Incorporated herein. 4 - 5. Accepted and incorporated herein. Accepted and incorporated herein. Rejected as a synopsis of testimony, not a finding of fact. Irrelevant. COPIES FURNISHED: ANTHONY DELUCCIA, ESQUIRE DISTRICT VIII LEGAL COUNSEL P. O. BOX 06085, SUITE 110 FT. MYERS, FLORIDA 33906 R. BRUCE MCKIBBEN, JR., ESQUIRE P. O. BOX 10651 TALLAHASSEE, FLORIDA 32302 GREGORY L. COLER, SECRETARY DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES 1323 WINEWOOD BOULEVARD TALLAHASSEE, FLORIDA 32399-0700 R. S. POWER, AGENCY CLERK DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES 1323 WINEWOOD BOULEVARD TALLAHASSEE, FLORIDA 32399-0700
The Issue The issues presented concern the question of the Petitioner's entitlement to amend its license to expand its geographic service area to include Hillsborough and Manatee Counties with a base of operation being its existing offices in Pinellas County.
Findings Of Fact Petitioner is a home health care provider in Florida. Subsequent to April 30, 1976, it applied for and was granted a statement of need to serve patients in Pinellas County, Florida. Statement of Need No. 450 was issued on July 13, 1976. At that time, Global was not requesting opportunities to offer service for patients in other counties within the district, those outlying counties being Pasco, Hillsborough and Manatee. Consequently, the focus of the review related to Pinellas County, notwithstanding the fact that the reviewing agency, Florida West Coast Health Planning Council, Inc. had as its responsibility consideration of health care needs in the aforementioned four counties. Although the license that was granted to the Petitioner as a result of the Statement of Need did not on its face limit the geographic area of service, the license opportunity only pertained to Pinellas County. The license from the Respondent for the Pinellas service was issued in September 1976, following the grant of the Statement of Need by the local HSA. Petitioner's Exhibits No. 22 and No. 41, admitted into evidence describe this Statement of Need review process and evidence the fact that the review only encompassed Pinellas County. In 1977, Petitioner indicated to the Respondent that it had an interest in serving patients in Pasco County, on the basis of a perceived need for home health care services for those patients. At about this time, Petitioner also expressed an interest in serving patients in Hillsborough and Manatee counties. (The Petitioner did not provide home health services in Manatee and Hillsborough Counties prior to April 30, 1976, nor did it have a Medicare Provider Number issued by the United States Department of Health and Human Services, formerly Health, Education and Welfare, prior to that date). Out of this process litigation occurred and in the course of the conflict, the request to serve patients in Hillsborough and Manatee Counties was dropped. The effect of the Petitioner's dismissal of its request to operate in Manatee and Hillsborough Counties did not foreclose future efforts to expand its service to Hillsborough and Manatee patients based upon the outcome of the 1977-78 proceeding nor did that proceeding establish the right of the Petitioner to serve the Hillsborough and Manatee patients. The outcome of the litigation was an expansion of the Petitioner's license opportunity to include patients in Pasco County, without the necessity to obtain a Certificate of Need to operate in Pasco County. The expansion of services into Pasco County was not in keeping with the Statement of Need which had been issued for Pinellas County. The reason for granting the license in Pasco County was premised upon the Petitioner's reliance on specific permission which had been given by the Respondent to the Petitioner to operate in Pasco County, which permission was later disclaimed and finally reinstated by a formal Section 120.57(1), Florida Statutes, hearing. In essence, the license was afforded Petitioner upon the theory of equitable estoppel. Intervenor's composite Exhibit No. 2, admitted into evidence contains the Recommended Order and Final Order related to the Pasco County expansion of services. Subsequent to the expansion referred to in the previous paragraph, Global requested recognition of two subunits to be placed in Pasco County. One was to be located in the New Port Richey/Port Richey area and the other was to be located in the Zephyrhills/Dade City area. The application may be found as Respondent's exhibit No. 2, admitted into evidence. This expansion was the subject of Certificate of Need review both at the local level by the Florida Gulf Health Systems Agency and by the Respondent in its office of Community Medical Facilities. The State Agency Action Report related to this application may be found as Respondent's Exhibit No. 4, admitted into evidence and contains review comments for all four counties in the related health service area, namely Pinellas, Pasco, Manatee and Hillsborough; however, the primary emphasis of the project review pertained to Pasco and Pinellas Counties. Following review, proposed agency action in the way of the issuance of a Certificate of Need was to the effect that the two subunits should be granted Certificate of Need No. 2072. A copy of that proposed agency action (certificate) may be found as Respondent's Exhibit No. 5, admitted into evidence. This proposed agency action granting a Certificate of Need for two subunits was challenged by the present Intervenor leading to a joint stipulation for settlement between the present parties to this action related to the Pasco County subunits. A copy of the joint stipulation may be found in Petitioner's Exhibit No. 25. That joint stipulation was accepted by the Secretary of the Department of Health and Rehabilitative Services through the entry of a final order on April 25, 1983, and per the order the Petitioner was left with one subunit, Certificate of Need No. 2072 for a Zephyrhills office in Pasco County. The subunit Certificate of Need did not contemplate service expansion into Manatee and and Hillsborough Counties from the remaining office. Independent of Petitioner's efforts to seek the subunit recognition, it determined to expand its service area into Hillsborough and Manatee Counties. In particular, these plans began to take shape in late 1982. The intended expansion does not entail the establishment of any offices or other plant, separate and apart from those in Pinellas and Pasco Counties as recognized with the issuance of the initial Statement of Need 450 and the Certificate of Need 2072, respectively. It is intended that Global provide the services in Hillsborough and Manatee Counties from its existing offices in Pinellas County. In the present hearing, the Petitioner has not indicated an intention to use the Pasco/Zephyrhills offices as the base of its operations in Hillsborough and Manatee Counties. Petitioner holds the opinion that the expansion into Hillsborough and Manatee Counties from its Pinellas County parent home health agency offices would not require Certificate of Need review. Consequently, it believes that it would be entitled to make that expansion simply by complying with other license requirements related to such expansion. In the alternative, Global urges that should a Certificate of Need be necessary before the expansion of service into the new counties, review has been performed upon the occasion of the issuance of the Statement of Need 450 and/or the issuance of the Certificate of Need No. 2072 for the subunit in Pasco County. Global also believes it is entitled to an amendment of its license allowing the expansion based upon its impression that similar permission has been granted other home health providers. After requesting provision of appropriate forms to accomplish the amendment to its license to allow expansion of services into Hillsborough and Manatee, there followed a series of letters between the parties, to include preliminary comments by the Respondent's staff members, some favorable to Petitioner's position, leading to an April 29, 1983, letter from Jay Kassack, Director, Office of Licensure and Certification, found as Petitioner's Exhibit No. 26, which advised the Petitioner that it was denied its expansion of service based upon failure to show evidence of compliance with Certificate of Need requirements set forth in Chapter 381, Florida Statutes, and Rule 10-5, Florida Administrative Code, and a subsequent letter of May 6, 1983, from Thomas J. Konrad, Administrator, Community Medical Facilities, Office of Health Planning and Development, found as Petitioner's Exhibit No. 29, which also denied the request for expansion based upon the inability to utilize the Statement of Need as a basis for expansion into Hillsborough and Manatee Counties, in that criteria of need had not been applied to Hillsborough and Manatee Counties by the Health Systems Agency when it reviewed and issued the 1976 Statement of Need. In the face of the denial of its request for licensure, the Petitioner sought and was provided this formal hearing. Based upon the belief that the necessary permission would be given to expand its service area into Hillsborough and Manatee Counties but prior to final decision by the agency on that request, Petitioner hired six additional nurses and began the development of training aids and other related matters dealing with the expansion of its service area at a cost of approximately $60,000. Those nurses could not be used to attend other patients already being served by the Petitioner. The agency had not promised that the license request would be granted and Global's understanding of the opportunities afforded by its existing license and Statement of Need and Certificate of Need recognition, together with the history of other applicants making similar requests for expansion did not entitle the Petitioner to undertake this development of services and expect to be granted permission to expand upon a theory of estoppel. In pursuing its hiring practices prior to the opportunity for the agency to speak finally to the request for expansion, Global did so at its own risk and did so not based upon sufficiently specific facts from the Department related to this application request to cause a change in its position after relying on those representations. The impetus for changing its position was provided by the applicant premised upon its presumptions related to the agency's response to the request for expansion, without allowing the agency the opportunity to review and announce its decision in this case. This circumstance is as contrasted with the 1977-78 case in which Global was allowed to expand its operations into Pasco County based upon the agency's initial action of condoning operations in Pasco County and then attempting to retract that permission. On this occasion, the agency has never countenanced the expansion of services into Manatee and Hillsborough Counties. From Respondent's point of view, the license denial is premised upon the use of an item referred to as "home health agency review matrix," a copy of which is found as Petitioner's Exhibit No. 1, admitted into evidence. In particular, reference is made to that portion related to expansion of a service area based upon the use of a Statement of Need. The language of that section says, "HSA Statement of Need remains valid. May expand HHA only in those counties in which criteria of need were applied by HSA." In essence, as indicated in the May 6, 1983, correspondence from Konrad, Petitioner's Exhibit No. 29, the Department was of the opinion that the criteria of need and the recognition of Petitioner by issuance of a Statement of Need No. 450, pertained only to Pinellas County. That perception is correct. A review of the record submitted to include the exhibits and testimony leads to the conclusion the criteria of need were not applied to examine counties other than Pinellas County when the Statement of Need was issued to the Petitioner. Therefore, according to the Department, Petitioner may not expand into Hillsborough and Manatee Counties without further Certificate of Need review related to Hillsborough and Manatee Counties. The Department began to use the matrix in March 1983 in its efforts to create an overview of its responsibilities in considering Certificates of Need and licensure related to home health care agencies. At the time of the final hearing in the instant case, the matrix served as a guide for considering requests to establish new home health agencies, to expand service areas and to establish subunits, depending upon the prior history of the home health agency as being "grandfathered" as a holder of a Medicare Provider Number from HEW prior to April 30, 1976; the holder of Statement of Need issued between 1975 and July 1977 or the holder of a Certificate of Need. The matrix assumes that the expansion of service area is an event requiring Certificate of Need review unless in the Statement of Need situation, as described, review criteria of need have been applied in the area where the home health agency intends its expansion. By contrast, in the instance of the grant of an original Certificate of Need for a new home health agency, there is a presumption that review has been made in all counties prior to the issuance of the Certificate of Need, therefore expansion may be made from that original facility into counties within that service area without the necessity of seeking a further Certificate of Need before offering services in outlying counties within the service area which were not being served before. The matrix makes no specific provision for the expansion of services from a subunit such as the Pasco County subunit held by the Petitioner. That question is not at issue in that the Petitioner does not seek expansion from its Pasco County subunit, so it is not necessary to address whether such expansion is allowed in keeping with the recognition of the subunit. The four county review involved in that recognition and grant of Certificate of Need and amended license, may not serve the secondary purpose of substituting for the criteria of need review contemplated in the Statement of Need process wherein criteria of need had to be examined in the subject counties in order to allow an expansion without the benefit of a Certificate of Need. Recognition of a subunit by the grant of a Certificate of Need is acceptance of a home health agency's base of operation through a semiautonomous entity and each successive subunit, according to the matrix, must undergo Certificate of Need review. Having refused to allow the recognition by issuance of a Certificate of Need for one subunit to form the basis for recognizing an additional subunit in the same county, notwithstanding the area wide review of criteria of need involved with the initial subunit, as expressed in the matrix, it follows that the subunit recognition of the Petitioner's Pasco County Operation not only may not form the basis of expansion, even if offered for that purpose, but may not serve to establish substituted data related to criteria of need in Hillsborough and Manatee Counties that was not forthcoming in the original review for the facility in Pinellas County at the time of the issuance of the Statement of Need. Assuming that the expansion of service from the original home health agency facility in Pinellas County as recognized through the Statement of Need process, without the establishment of a new home health agency, or subunit or fixed plant, by providing home health services in the residence of the patients in Hillsborough and Manatee Counties as delivered by employees of the petitioner is an activity which must undergo Certificate of Need review, the Department's utilization of the matrix to insure that a project undergo examination through the use of criteria of need is reasonable. Recognition of this treatment of the issue of review takes into account the distinction between the presumptions related to the review process in the Certificate of Need analysis by the Department in which full service area review for all counties is contemplated as contrasted with the possibility that the Statement of Need process by the local Health Planning Agency may have been accomplished on less than a full service area review, as was the situation with Global. Given this distinction, the matrix is not found to be at odds with the Legal Opinion 82-2, authored by Staff Attorney, James M. Barclay, dated March 9, 1982, in which significance is placed upon the fact that in the Certificate of Need review process health service area wide review is made and therefore expansion within the service area from the original facility is acceptable given the area wide review related to the proposed home health agency. The memorandum and matrix pertaining to Certificates of Need are consistent. A copy of the memorandum is found as Petitioner's Exhibit No. 3, admitted into evidence. The memorandum does not, from a review of its language and statement of applicable statutes and rules, address the Statement of Need circumstance. Petitioner has alluded to the agency's alleged inconsistent treatment of its request for expansion and amendment to its license allowing services to be offered in Manatee and Hillsborough Counties from its Pinellas County facility, compared to other home health agencies. Materials related to those other requests may be found in Petitioner's Exhibit Nos. 34-39, 41 and 42, admitted into evidence. All of those requests by home health agencies are consistent with the present denial, with the exception of Roberts Nursing. This consistency pertains to the fact that certain expansions were allowed due to special circumstances such as the need to provide service to patients in DeSoto County based upon the abandonment of patients by an ongoing health care provider, special circumstances related to certain counties in North Florida that were being served by Georgia health care providers and the fact that expansion in some instances was based upon the existence of a Certificate of Need as opposed to Statement of Need. The Roberts' situation is either the product of a mistake or is contrary to the present process of analysis of requests for expansions on the basis of Statements of Need. Petitioner has not shown that the expansion without Certificate of Need made by Roberts was pursuant to a contrary policy choice that was applied to Petitioner. On the other hand, there is some testimony that the Roberts' situation was possibly allowed based upon the belief that Roberts was expanded on the basis of a Certificate of Need as opposed to a Statement of Need, when in fact Roberts, like Global, held only a Statement of Need. Whatever the explanation, the treatment of the Roberts' request does not cause the grant of a license to Petitioner. One of the other home health care providers who sought expansion opportunities as found in Petitioner's Exhibit No. 38, admitted into evidence, was Independent Home Health Services, Inc., which was denied its opportunity based upon the agency's assertion that the Statement of Need originally granted that provider only looked at need for Pinellas County and expansion into Pasco County would require a Certificate of Need. Finally, Global has not asserted its entitlement to licensure based upon proof that it has satisfactorily addressed the criteria of need dealing with home health care offered in Hillsborough and Manatee Counties as such, related to a presentation separate and apart from the review process that may have been pursued prior to the present controversy. If it is the intention of the Petitioner to seek a license based upon satisfactorily addressing criteria of need, in substance, related to the offering of services in Hillsborough and Manatee Counties, that showing has not been successfully made on this occasion.
The Issue The issue presented in this case is whether the Respondent was asleep while on duty on one occasion and was on duty after having consumed alcoholic beverages on another occasion, both constituting a violation of Section 464.21(1)(b), Florida Statutes.
Findings Of Fact Notice as required by Section 120.57, Florida Statutes, was provided Barbara Marston Kirby. Barbara Marston Kirby is a registered nurse holding license no. 02192- 2 issued by the Florida State Board of Nursing. On or about January 18, 1978, Barbara Marston Kirby was employed at Bayou Manor Nursing Home, St. Petersburg, Florida. At that time she was observed by the nursing supervisor for some " 30 minutes in the patient dining room at approximately 5:00 on the morning of the 18th. Kirby was seated with a bath blanket wrapped around her shoulders and with her feet in another chair. Based on her observation her supervisor concluded that she was sleeping soundly. Sleeping while on duty was strictly prohibited at the nursing home. On October 5, 1977, Barbara Marston Kirby was employed as a private duty nurse at Centro Espanol Memorial Hospital, Tampa, Florida. On that evening she was a private duty nurse for Mrs. Elsie Penn. Kirby had the smell of alcohol on her breath when she reported to work and this was noticed by one of the employees of Centro Espanol Hospital. She was subsequently observed by her patient's daughter, Mrs. Callie Penn Brown, who also smelled alcohol on her breath. Carol Balizet, a registered nurse of eleven-years experience and Joan Pasquale, a registered nurse with twenty-eight years experience, both stated that it is not prevailing nursing practice and falls below the minimum standards of acceptable nursing practice for a nurse to report for duty with alcohol on her breath.
Recommendation Based upon the foregoing findings of fact and conclusions of law the Hearing Officer recommends to the Florida State Board of Nursing that the license of Barbara Marston Kirby as a registered nurse be suspended for a period of one year. DONE AND ORDERED this 21st day of July, 1978, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Julius Finegold, Esquire 1107 Blackstone Building Jacksonville, Florida 32202 Barbara Marston Kirby, R.N. 904 Joe Street, Parkwood Acres New Port Richey, Florida 33552 Geraldine B. Johnson, R.N. Investigation and Licensing Coordinator Board of Nursing 6501 Arlington Expressway, Bldg. B Jacksonville, Florida 32211
