Findings Of Fact The PROVIDER received the Final Audit Report that gave notice of PROVIDER'S right to an administrative hearing regarding the alleged Medicaid overpayment. The PROVIDER filed a petition requesting an administrative hearing, and then caused that petition to be WITHDRAWN and the administrative hearing case to be CLOSED. PROVIDER chose not to dispute the facts set forth in the Final Audit Report dated August 15, 2013. The facts alleged in the FAR are hereby deemed admitted, including the total amount of $14,569.69, which includes a fine sanction of $2,419.26. The Agency hereby adopts the facts as set forth in the FAR including the amount of $14,569.69 which is now due and owing, from PROVIDER to the Agency.
Conclusions THIS CAUSE came before me for issuance of a Final Order on a Final Audit Report (“FAR”) dated August 15, 2013 (C.1. No. 13-1386-000). By the Final Audit Report, the Agency for Health Care Administration (“AHCA” or “Agency”), informed the Respondent, Amwill Assisted Living, Inc., (hereinafter “PROVIDER’), that the Agency was seeking to recover Medicaid overpayments in the amount of $12,096.28, and impose a fine sanction of $2,419.26 pursuant to Sections 409.913(15), (16), and (17), Florida Statutes, and Rule 59G- 9.070(7)(e), Florida Administrative Code, and costs of $54.15 for a total amount of $14,569.69. The Final Audit Report provided full disclosure and notice to the PROVIDER of procedures for requesting an administrative hearing to contest the alleged overpayment. The PROVIDER filed a petition with the Agency requesting a formal administrative hearing on or about September 5, 2013. The Agency forwarded PROVIDER'S hearing request to the Division of Administrative Hearings (Division) for a formal administrative hearing. The Division scheduled a formal hearing for November 22, 2013. On November 12, 2013, the PROVIDER filed a Motion with the Administrative Law Judge, requesting AHCA vs. Amwill Assisted Living, Inc. (AHCA C.I, No.: 13-1386-000) Final Order Page 1 of 4 Filed January 2, 2014 10:59 AM Division of Administrative Hearings withdrawal of their Petition for Formal Hearing, and the Administrative Law Judge issued an Order Closing File on November 12, 2013, relinquishing jurisdiction of the case to the Agency.
Findings Of Fact At the outset, it should be noted that the record in this proceeding is much less remarkable for its content than for what it fails to contain. The dispute between Petitioner and Respondent appears to revolve around Petitioner's objections to Respondent's disallowance of certain claimed items of operational costs and expense in the operation of Petitioner's nursing home. Respondent's disallowance was apparently based upon an audit of Petitioner's books, none of which were introduced into evidence, conducted by a private accounting firm, no representative of which was called to testify at the final hearing, which accounting firm submitted to Respondent a report, which was neither offered nor received into evidence. The only "pleading" on file in this cause is a letter dated March 20, 1978, from the office of Petitioner's certified public accountant, which letter is not signed by any individual, but simply bears the imprimatur of that firm. This letter details certain "specific areas of disagreement" and requests a formal administrative hearing thereon. Nowhere in this letter are the specific reasons for disagreement detailed. Respondent chose not to file any pleadings in response to the aforementioned letter. Because of the lack of detail in the "pleadings", the Hearing Officer, by Order dated April 25, 1979, required counsel for Petitioner and Respondent to meet together no later than fifteen days prior to the date of final hearing in this cause, which at that time had been set for July 10, 1979, to prepare a prehearing stipulation. The Order required the prehearing stipulation to be filed no later than ten (10) days prior to the date set for final hearing, and further required that the prehearing stipulation contain: a concise statement of the nature of the controversy; a brief, general statement of each party's position; a list of all exhibits, which shall be prenumbered, to be offered at the hearing, noting any objections thereto, and the grounds for each objection; a list of the names and addresses of all witnesses intended to be called at the hearing by each party. Expert witnesses shall be so designated. a concise statement of those facts which are admitted and will require no proof at hearing, together with any reservations directed to such admission; a concise statement of those issues of law on which there is agreement; a concise statement of those issues of fact which remain to be litigated; a concise statement of those issues of law which remain for determination by the Hearing Officer; a concise statement of any disagreement as to the application of the rules of evidence; a list of all motions or other matters which require action by the Hearing Officer; the signature of counsel for all parties. At the time of convening the final hearing in this proceeding on July 10, 1979, counsel for Petitioner and Respondent had failed to confer and prepare the prehearing stipulation required by the Hearing Officer's Order of April 25, 1979. As a result, the Hearing Officer agreed to proceed with the taking of testimony, subject to counsel for Petitioner and Respondent complying with the requirements of the prehearing order within seven (7) days from conclusion of the final hearing. On July 19, 1979, counsel for Petitioner and Respondent filed a Joint Stipulation, in two parts, which contained, in part, the following pertinent information: The nature of the controversy concerns itself with the claim of the [Petitioner] for the year ending March 31, 1976, as more fully set forth in the "adjustments to Statement of Cost of Operations" audit by Elmer Fox, Westheimer & Co., dated June 17, 1977, with particular reference to the following items: (1) Excess depreciation claimed on building through providers' use of original cost before adjustment for reduced basis from forgiveness of indebtedness ($ 6,912) (2) Excess depreciation erroneously calculated ($ 6,619) (3) The return on equity erroneously calculated ($30,873) (4) Owner/Administrator compensation ($ 5,287) In the prehearing stipulation, counsel for Petitioner and Respondent also agreed that a total of $13,513, covering insurance expense, housekeeping services and expenses for unallocatable income should be allowable to Petitioner for operational expenses. In addition, the following facts were stipulated to by counsel for Petitioner and Respondent: 3. (a) Petitioner, Sweeting Nursing Home is a facility located in Broward County, Florida, accepting Medicaid Nursing Home patients. Respondent, the Department of Health and Rehabilitative Services, is a department of the State of Florida charged by law with administrating [sic] the Medicaid program which includes auditing all nursing homes accepting Medicaid patients. At the request of the Department of Health and Rehabilitative Services, Elmer fox, Westheimer, & Co., an accounting firm in Broward County, did a fiscal year end audit of Sweeting Nursing Home for the period of March 31, 1975 to March 31, 1976. The audit report dated June 17, 1977, was forwarded to the Department of Health and Rehabilitative Services with certain recommended disallowances which included the following items: Depreciation $13,531.00 Return on Equity 30,873.00 Owner's compensation disallowance 5,287.00 After reviewing the Fox, Westheimer audit, the Department of Health and Rehabilitative Services' Audit, Evaluation and Review Unit initially notified the Sweeting Nursing Home that it had been overpaid the sum of $97,324.00, which sum was later reduced by stipulations between the parties. The nursing home requested certain adjustments and a reduction of the amount of overpayment. However, the Department disallowed the adjustments requested by letter addressed to Irving Lambert [sic] dated March 13, 1978, and Sweeting Nursing Home requested an Administrative Hearing. The Department of Health and Rehabilitative Services approved the FYE Audit Report, with disallowances, and takes the position that Sweeting Nursing Home is not entitled to the adjustments claimed by the nursing home in the areas enumerated in Paragraph (a). No exhibits to be offered. * * * Both parties admit that the audit was made by Elmer Fox, Westheimer, and Co. Both parties agree that the Department of Health and Rehabilitative Services had a legal right to audit Sweeting Nursing Home for Medicaid purposes. Further, that Fox, Westheimer, & Co., performed the audit in a manner perscribed [sic] by law. There are two issues of fact which remain to be litigated: Depreciation - "Did the Department of Health and Rehabilitative Services' validly disallow the Nursing Home's class depreciation on certain equipment, i.e., was the method used by Sweeting in depreciating certain equipment acceptable and consistent with the Medicaid HIM Manual?" "Was the Department of Health and Rehabilitative Services correct in disallowing the owner's compensation claimed by Sweeting Nursing Home?" The principal issue of law involved herein is the determination of "What is historical cost?" Historical cost touches on both item (1) of Paragraph (a), Depreciation and item (2) of Paragraph (a), Return on Equity. "May a Nursing Home, for Medicaid purposes, use an amount as historical costs of a facility, when such amount, subsequent to the original purchase, was reduced substantially by a forgiveness of an indebtedness agreement?" The Department of Health and Rehabilitative Services takes the position that the historical cost was $817,654.00 minus the $276,577.00 forgiveness of the indebtedness or actual historical cost of $541,077.00 Despite the above-mentioned provisions of the prehearing stipulation that no exhibits were to be offered, counsel for Petitioner in another section of the prehearing stipulation, which, as previously noted, was filed seven (7) days after the conclusion of the final hearing, indicated that: Petitioner relies upon as its principal exhibit the Medicare Provider Manual, HIM-15, together with all reports submitted to the Florida Department of Helath [sic] and Rehabilitative Services heretofore and objects to the introduction of the Elmer Fox audit dated June 17, 1977, since no testimony was presented with respect to said audit. Petitioner's objection in the prehearing stipulation to the introduction of the audit report was, in fact, moot, since the report was not offered into evidence at the final hearing by counsel for Respondent. In addition, neither counsel for Petitioner nor counsel for Respondent requested that the Hearing Officer take official notice of, nor did they attempt to introduce into evidence, either the Medicare Provider Manual, HIM-15; any rules or regulations of the State of Florida Department of Health and Rehabilitative Services; any applicable depreciation guidelines adopted by the American Hospital Association; or any depreciation guidelines promulgated by the Internal Revenue Service. In fact, no documents of any kind were offered for inclusion in the record in this proceeding by either Petitioner or Respondent. As indicated in the prehearing stipulation, there are four areas of disagreement between Petitioner and Respondent: the amount claimed as depreciation on Petitioner's building; the amount of depreciation claimed on certain items of equipment; the amount claimed as return on equity; and owner/administrator compensation. Although the record reflects that Petitioner used an original cost figure of $817,654.00 in calculating depreciation on its building, and that Respondent's auditors apparently used $541,077.00, there are no facts of record to substantiate the use of either amount. These same figures were apparently also used in calculating Petitioner's "return on equity", again with no factual justification for their use. Likewise, there is no competent evidence to demonstrate the manner in which Petitioner calculated depreciation on its equipment, or even the specific items of equipment on which such depreciation is claimed. Finally, although the record demonstrates that Petitioner's owner/administrator was paid $10,000 as salary for the fiscal year in question, and that he spent 25 percent to 30 percent of his time involved in the administrative functioning of the facility, there are no facts in this record on which to base a determination of the reasonableness of that salary or the owner's entitlement thereto. There is, in short, neither any competent evidence in this record concerning the methodology employed by Petitioner in computing the allowances to which it deems itself entitled, nor any reliable explanation of Respondent's rationale for disallowing those claims. To further complicate matters, the failure of both Petitioner and Respondent to introduce into evidence, or to request official notice of applicable governmental rules, regulations and guidelines against which to measure their respective claims, renders any meaningful resolution of their dispute impossible on this record.
The Issue Whether Petitioner, the Agency for Health Care Administration (AHCA or Agency), proved that Respondents, Life Care Centers of America, Inc., d/b/a Life Care Center of Port St. Lucie, and other Life Care facilities in Winter Haven, Ocala, Orlando, and Citrus County, were not in compliance with the Medicaid-patient-days condition stated on the face of the Certificates of Need (CON) for each facility for calendar year 2006, and, if not in compliance, whether the Agency may impose administrative fines in the amount sought in the first amended administrative complaints.
Findings Of Fact The Parties The Agency for Health Care Administration is the state agency responsible for licensing and regulating nursing home facilities such as Respondents under Chapter 400, Part II, Florida Statutes, and issuing CONs under Chapter 408, Florida Statutes. Respondents are community/skilled nursing home facilities that have CONs issued pursuant to Chapter 408, Florida Statutes. Each facility is located in the geographical area indicated by its name, e.g., Life Care Center of Port St. Lucie is located in Port St. Lucie, Florida, and in an AHCA health service planning district (District) and subdistrict. Life Care Center of Port St. Lucie, a 123-bed facility, is located in District 9, Subdistrict 5; Life Care Centers of America, Inc., d/b/a Life Care Center of Winter Haven, a 177-bed facility, is located in District 6, Subdistrict 5; Life Care Centers of America, Inc., d/b/a Life Care Center of Ocala, a 120-bed facility, is located in District 3, Subdistrict 4; Life Care Centers of America, Inc., d/b/a Life Care Center of Orlando, a 120-bed facility, is located in District 7, Subdistrict 2; and Life Care Centers of America, Inc., d/b/a Life Care Center of Citrus County, a 120-bed facility, is located in District 3, Subdistrict 5. § 408.032(5), Fla. Stat.; Fla. Admin. Code R. 59C-2.200. The CONs; Medicaid Conditions; Dual Eligibility The starting point of this story begins with the CONs that are effective for calendar year 2006 for each Respondent and the Medicaid-patient-days condition stated on each CON.2 The Agency conditioned the issuance of the CONs based upon statements of intent expressed by Respondents in the CON applications. § 408.040(1)(a), Fla. Stat. The primary purpose of requiring the CON Medicaid- patient-days condition is to ensure access for Medicaid-eligible or funded residents. T 499-500.3 When the CONs were issued, either through a transfer or as an initial CON, Respondents committed to provide a certain level of Medicaid patient days. The required Medicaid percentage of patient days for each Respondent is set forth in the table under Finding of Fact 36. Agency Exhibits 1 through 11 and 13 show how Life Care Centers of America, Inc., characterized the agreed to number/percentage of Medicaid patient days in various CON application documents; verbalization of same; and the manner in which its facilities would account on Schedule 7 or 10, e.g., of the CON application, for projected revenue by payor source, including, but not limited to, Medicaid. See Fla. Admin. Code R. 59C-1.008(1)(f) (adoption of Agency forms); T 161. (Payor and payer are used throughout this record and in context have the same meaning.) Agency Exhibit 4 contains excerpts from a 120-bed new freestanding nursing home in Marion County, Florida, submitted in 1995 on behalf of Life Care Centers of America, Inc. T 49. The conditions page states that the applicant agreed to provide "66% of patient days to Medicaid clients." The following page states in part: "Condition C2: A minimum percentage of proposed project for Medicaid eligible patients at stabilized occupancy." Under "Measurement and Conformance," it is stated: "Actual payor mix experience following project licensure and fill-up; annual reporting requirements." Id. at 3; T 49-50. (Another excerpt states: "Condition C2: Percentage of patient days for Medicaid beneficiaries." PE 13 at 4.) Schedule 10 provides projected operating revenue for year two ending December 31, 1996. Medicaid patient days are stated (26,981) as well as a percentage (66.0%) of patient days. Id. at 5. (In other excerpts, similar material appears in Schedule 7.) The Schedule 10 Notes and Assumptions pages devote a paragraph to Medicaid. Id. at 7. See T 165-67. None of the excerpts from Agency Exhibits 1 through 11 and 13 expressly refer to providing services to "dual eligible" patients. The schedules do not have a specific line item for entry of this information, although Schedule 7 has a category "Other Revenue," PE 1 at 4, which the Agency suggests could have been used to identify that revenue source. T 163. The Agency considers Agency Exhibits 1 through 11 and 13 as proof that Respondents understood and agreed to provide a minimum percentage of patient days to residents whose care was paid for by Medicaid, a payor source. Thus, according to the Agency, only patient days that are provided to patients when Medicaid is the sole source of reimbursement are counted when determining compliance with the Medicaid condition. (According to the Agency, the statement "'Medicaid patient days' is defined, for purposes of CON condition compliance, as the 'patient days reimbursed by Medicaid,'" see PE 41 at paragraph 15.b., and is derived from Respondents' Schedule 7 indicating what the Respondents "expect their payers to be, and that is in rule." T 931.) Agency Exhibits 21, 22, and 24 through 26 are the CONs at issue in this proceeding and, with some minor variations, state: A minimum of [ ] percent of the [ ] bed facility's total annual patient days shall be provided to Medicaid patients. Medicare is a program of health insurance and benefits authorized and administered under Title XX of the Social Security Act. Medicaid is a program of health insurance and benefits authorized and administered under Title XIX of the Social Security Act. "Nursing facilities may obtain reimbursement for services provided to recipients privately or through long term care insurance. There are also specific situations when Medicare will be the payer. Medicaid is always the payer of last resort." RE 46 at 2-2. A person who is eligible for care under Medicare is not necessarily Medicaid-eligible. The person must meet eligibility factors to qualify. However, a person may be qualified as Medicare and Medicaid-eligible. A Medicaid-eligible patient may stay at a nursing home one day or more. Not infrequently, such a patient is more or less permanent resident. Generally, if a nursing home patient achieves the status of a Medicaid patient on day one of the stay, the patient's status as a Medicaid patient continues throughout the stay at the nursing home, unless the patient loses that status either through an ineligibility determination or for some other reason. See T 393.4 Stated otherwise, Medicaid-eligible nursing home patients do not lose their status as Medicaid-eligible patients when the nursing home is reimbursed in whole or in part by Medicare. According to the Florida Medicaid Nursing Facility Services Coverage and Limitations Handbook (Handbook), published by the Agency, a "recipient" "is used to describe an individual who is eligible for Medicaid." RE 46 at ii. "If Medicare Part A covers the recipient, Medicare will reimburse the facility for the entire cost of the care provided for the first twenty (20) days the resident is in the facility following an acute care hospitalization. During the period of time between the twenty-first and one-hundredth days, the resident will incur a charge for coinsurance." RE 46 at 2-2. "Medicaid will cover the amount of the coinsurance if the recipient is eligible for Medicaid" under certain circumstances. Id. "When a recipient is Medicare and Medicaid-eligible and is in the Medicare coinsurance period (21 through 100 days of Medicare coverage), Medicaid pays the Medicare coinsurance amount for the recipient. The amount paid by Medicaid is the lesser of the Medicare rate or the Medicaid per diem rate minus the patient responsibility. Medicaid does not pay for a Medicare HMO recipient during the coinsurance period." RE 46 at 3-2. See also id. at "Qualified Medicare Beneficiary." If the Medicaid patient either enters the nursing home after a three-day or longer hospitalization stay or is a resident of the nursing home and then is hospitalized for this length of time, the resident's care will be reimbursed by Medicare (assuming he or she is enrolled in the program) for up to 20 days upon returning to the nursing home. Medicare may continue to reimburse, typically 80%, (subject to Medicaid's payment of any coinsurance, typically 20%) the nursing home for the patient's care thereafter up to a maximum of 80 additional days, depending on the patient's continuing qualification to receive services paid by Medicare. See generally T 549-54, 663-65, 835-36. In 2006, Medicare was the primary payer and Medicaid covered co-pays and deductibles only. Medicaid could have potentially paid for co-insurance or cross-over. Cross-over means if the patient has Medicare, then Medicaid would be potentially the secondary payer of the cross-over or co-insurance. Generally days 21 through 100 are the cross-over days. See generally T 387-93, 551, 663-65. Subsection 408.040(1)(b), Florida Statutes, states: (b) The agency may consider, in addition to the other criteria specified in s. 408.035, a statement of intent by the applicant that a specified percentage of the annual patient days at the facility will be utilized by patients eligible for care under Title XIX of the Social Security Act. Any certificate of need issued to a nursing home in reliance upon an applicant's statements that a specified percentage of annual patient days will be utilized by residents eligible for care under Title XIX of the Social Security Act must include a statement that such certification is a condition of issuance of the certificate of need. The certificate- of-need program shall notify the Medicaid program office and the Department of Elderly Affairs when it imposes conditions as authorized in this paragraph in an area in which a community diversion pilot project is implemented. (emphasis added). Subsection 408.040(1)(d), Florida Statutes, states: (d) If a nursing home is located in a county in which a long-term care community diversion pilot project has been implemented under s. 403.705 or in a county in which an integrated, fixed-payment delivery system [program] for Medicaid recipients who are 60 years of age or older [or dually eligible for Medicare and Medicaid] has been implemented under s. 409.912(5), the nursing home may request a reduction in the percentage of annual patient days used by residents who are eligible for care under Title XIX of the Social Security Act, which is a condition of the nursing home's certificate of need. The agency shall automatically grant the nursing home's request if the reduction is not more than 15 percent of the nursing home's annual Medicaid-patient-days condition. A nursing home may submit only one request every 2 years for an automatic reduction. A requesting nursing home must notify the agency in writing at least 60 days in advance of its intent to reduce its annual Medicaid-patient-days condition by not more than 15 percent. The agency must acknowledge the request in writing and must change its records to reflect the revised certificate-of-need condition. This paragraph expires June 30, 2011. (emphasis added). The language in brackets was inserted in 2007. "[P]rogram" was inserted for "system" and the remaining language in brackets was new. Ch. 2007-82, § 2 at 1051, Laws of Fla. The amendments to Subsection 408.040(1)(d) were made at the same time that amendments were made to Section 408.912, adding, in part, "program" and deleting "system," and adding "or dually eligible for Medicare and Medicaid" to Subsection 408.912(5). Id., § 1 at 1048. The Agency interprets "utilized by patients eligible for care under Title XIX of the Social Security Act" to mean residents whose care is paid for solely by Medicaid. If the nursing home is reimbursed in whole or in part by Medicare for services to a resident Medicaid patient, e.g., during the one to 100-day period referred to above, the Agency does not count any days of treatment as a Medicaid patient day for the purpose of satisfying the Medicaid-patient-days condition. Conversely, Respondents count all residents who are eligible for Medicaid, regardless of who pays for the resident's care.5 The Agency conditions the approval of a CON based on the applicant's commitment to provide services to the medically indigent, here Medicaid patients. There is no indication that the patients referred to as "dual eligible" by Respondents were not, in fact, Medicaid patients during calendar year 2006, notwithstanding the nature of the facilities reimbursement. Respondents supplied the Agency with data counting traditional Medicaid days, hospice Medicaid days, and the days for "dual eligible" residents, separately stated. The Agency does not take issue with Respondents' reported number of "dual eligible," Medicaid-eligible patient days, only that they should not be counted toward meeting the CON condition. Based upon the persuasive evidence, it is determined that the Agency's interpretation to exclude the reported "dual eligible" Medicaid patient days from consideration for meeting the CON condition is not reasonable. The Annual Compliance Reports; Reporting of Patient Data to the Agency Respondents are required to provide annual compliance reports to the Agency that contain required information, including but not limited to "[i]f applicable, the reason or reasons, with supporting data, why the [CON] holder was unable to meet the conditions set forth on the face of the [CON]." Fla. Admin. Code R. 59C-1.013(4)(a)7. All nursing homes report occupancy data to the local health councils (LHC), with some data reported to the Agency. See PE 14. The LHCs supply the Agency with data concerning the total occupancy of each facility in patient days as well as the number of days reimbursed by Medicaid. Id. This data is compiled into the Florida Nursing Home Utilization by District and Subdistrict Guide (NH Guide). PE 14 (calendar year 2006). If data received from the LHC indicates that a facility is not in compliance with the CON Medicaid-patient-days condition, the Agency will send a letter to the facility requesting additional information. The Agency sent each Respondent a letter requesting additional information for calendar year 2006. See, e.g., RE 1. Consistent with this reporting requirement, on February 25, 2008, counsel filed a formal report for each Respondent. Four of the Respondents, except Life Care Center of Ocala, submitted a detailed booklet setting forth the reason why it was unable to meet the CON Medicaid-patient-days condition. In each formal report except one (Ocala), Respondents' counsel concluded that each facility appeared to strictly not meet the CON Medicaid-patient-days condition, but additional documentation and discussion was provided to the Agency to support a finding by the Agency that the facility was in substantial compliance with these conditions. (With respect to Life Care Center of Ocala, it was suggested that this facility was in full compliance with the Medicaid-patient-days condition.) Except as otherwise stated herein,6 the parties agree (see, e.g., T 155, PHS at 20) with the following data: A B B A C B + C A Life Care Total Patient Days Medicaid Patient Days % "Dual Eligible" % CON Minimum Cond. Port St. Lucie 42,162 16,978 40.27% 1,429 43.66% 47.00% Winter Haven 60,817 29,580 48.64% 5,914 58.36% 60.60% Ocala 40,888 10,725 26.23% 5,387 39.41% 33.00% Orlando 40,468 9,093 22.47% 2,781 29.34% 31.19% Citrus Cty 40,846 14,559 35.64% 3,064 43.14% 45.64% Without consideration of "dual eligible" patient days, five facilities are allegedly non-compliant as follows: Port St. Lucie -- 6.73 %; Winter Haven -- 11.96%; Ocala -- 6.77%; Orlando -- 8.72%; and Citrus County -- 10.00%. RE 41; JPHS at 5-6; Agency's Pre-Hearing Statement at 7. If "dual eligible" patient days are considered, four out of five facilities remain allegedly non-compliant, but to a lesser degree: Port St. Lucie -- 3.34%; Winter Haven -- 2.24%; Orlando -- 1.85%; and Citrus County -- 2.50%. Ocala is compliant by 6.41%. See RE 3, 41; T 817; Agency's Pre-Hearing Statement at 8. The Administrative Complaints This proceeding initially involved consideration of six (now five) separate administrative complaints alleging that each Respondent did not comply with the Medicaid-patient-days condition set forth in each CON for calendar year 2006. Each administrative complaint is based on the information contained in and the Agency's analysis of the formal reports submitted on behalf of each Respondent.7 The Agency does not dispute the facts and figures set forth in the formal reports, although it disagrees with Respondents' contention of compliance with the Medicaid-patient- days condition and whether "dual-eligible" patients may be considered for compliance purposes. Each administrative complaint states, in part, that "[t]his is an action to impose administrative fines in the amount of . . . against Respondent, pursuant to Section 408.040, Florida Statutes, and Florida Administrative Code Rules 59C- 1.013 and 59C-1.021." The Agency has the statutory authority to impose fines up to $1,000 per day for noncompliance, taking into account as mitigation the degree of noncompliance.8 Prior to filing its first amended administrative complaints on October 28, 2009, when a CON holder was determined to be in noncompliance, the Agency made an individualized determination as to whether and how much to fine the CON holder. RE 44 at 3; T 115-16. The Agency created a chart that is completed as an analytical tool. Next, the Agency considered the individual situation of the CON holder, "including but not limited to" a number of factors, such as the "degree of noncompliance, absolutely and in comparison to others within the sub-district"; whether the "[f]acility is not at 85% occupancy"; whether the "[f]acility has not been operational for at least 18 months or first reached 85% occupancy during the reporting year"; whether the "[f]acility can demonstrate operational losses through financial statements and or audit"; whether the "[f]acility has a sister facility (facility owned by the same entity) in the same sub-district that either has no Medicaid condition or has met its Medicaid condition and has additional Medicaid Total Annual Patient-Days to donate to its sister facility"; "[p]rovision of patient care to Hospice Medicaid patients"; "[p]rovision of care to Charity/Indigent patients (days or cash)"; whether the "[f]acility is within 1% or less of its condition"; whether "[p]rovision of Medicaid for facility exceeds that of the sub-district"; and "[a]ny other factors that a CON holder may present that could impact against fines are considered." RE 44. These are a common list of factors that have been considered (not in isolation) by Agency management, if brought to their attention by the facility in assessing whether a fine should be imposed. RE 44; T 206-213, 215-216, 221, 279-80, 352- 56, 373, 483, 927-30, 947-49. See also Fla. Admin. Code R. 59C- 1.013(4)(a)7; Findings of Fact 73 through 83. "All things [were] considered prior to determining the fine, including [the Agency] gave [nursing homes] the 75 percent [for diversion programs] off." T 365. On a rare occasion, the Agency did not fine a noncompliant nursing home because the nursing home was closed during a portion of the year. T 267-68.9 With the filing of the third amended administrative complaints, none of these factors is considered in determining the fine. T 931, 949. The Agency proposed to fine each Respondent as follows: Port St. Lucie -- $13,085; Winter Haven -- $18,022; Ocala -- $18,724; Orlando -- $25,540; and Citrus County -- $19,992. The Agency explained how these fines were calculated, including the mitigation factors considered regarding the degree of noncompliance. RE 26; T 225-30. Respondents' Exhibit 26 consists of the forms (Excel spreadsheets) used by the Agency to determine noncompliance matters in calendar year 2006. The Agency started applying the Excel spreadsheets in approximately 2004 or 2005 in condition compliance cases. T 223, 250-51. For example, for Port St. Lucie, the maximum fine under the statutory framework is $365,000 ($1,000 per day times 365 days). The "applicable fine" was calculated to be $52,341, which is the maximum fine times the percent difference or $365,000 times 14.34%. Then the applicable fine was reduced by 75% to $13,085 ($52,341 times 25%), which is the fine sought in the administrative complaint. RE 26 at 5; see also T 252, 292-97. The 25% factor was applied in each case to reflect consideration of pilot diversion programs in each county where the Respondents are located. T 268, 295. Each Respondent was treated the same. See RE 26.10 Since approximately 2006 and 2007 and prior to the filing of the Agency's third amended administrative complaints in October of 2009, the Agency routinely applied the 25% diversion factor (a 75% deduction). T 294, 338-39. With the filing of the third amended administrative complaints, prior to calculating the fine, the Agency still considers the circumstances of each nursing home and the reasons why they were unable to meet the Medicaid-patient-days condition. "But in terms of the degree [the nursing home is] out of compliance, [the Agency is] using the statute based on the days that [the nursing home is] out of compliance and" the penalty is based on that calculation. T 366-68, 374. See also T 349-50, 357, 363-65. The Third Amended Petitions for Formal Administrative Hearing and the First Amended Administrative Complaints On October 2, 2009, Respondents filed a motion and revised motion to amend their second amended petitions and also filed their third amended petitions challenging the administrative complaints filed by the Agency. (The revised motion was granted over the Agency's objection.) Respondents dispute that they failed to meet the respective Medicaid-patient-days conditions; dispute that the Agency appropriately considered the degree of alleged noncompliance; dispute how the Agency determined the number of residents eligible pursuant to Title XIX of the Social Security Act and Section 408.040, Florida Statutes, claiming that "dual eligible" residents should be counted for purposes of compliance; and further claim that the Agency is improperly relying on six alleged statements as unadopted rules. See PE 41. On October 14, 2009, the Agency filed a motion requesting leave to amend its administrative complaints. (The motion was granted over Respondents' objection.) In its motion, the Agency voiced its disagreement with Respondents' challenge to the alleged statements as unadopted rules and stated: "While the Agency disagrees that the alleged statements are rules, the Agency has determined that in the present proceeding, it will explicitly not rely on the alleged statements, but will explicitly only rely on the Agency's statutory authority conferred by" Subsection 408.040(1)(e), Florida Statutes, and that "the Agency has amended the administrative complaints as to each respondent based on the admissions by each respondent and based upon the authority and language of" Subsection 408.040(1)(e). The Agency incorporated by reference the exhibits (including, but not limited to, the formal reports submitted by Respondents) attached to the original administrative complaints.11 On October 28, 2009, the Agency filed first amended administrative complaints against each Respondent. Most notably, the Agency deleted reference to Florida Administrative Code Rules 59C-1.013 and 59C-1.021, cited in the administrative complaints, and proceeded, consistent with the Agency motion requesting leave to amend, to rely solely on Subsection 408.040(1)(e), as authority to impose the fines requested. The proposed fines are based solely on the Agency's determination that each Respondent is not in compliance with the applicable Medicaid-patient-days condition and based on its view that the degree of noncompliance means the result of the mathematical calculation of the difference between the conditioned level of compliance and the reported level of compliance. No consideration was given to any other factors such as the prior proposed reduction in fines (in the original administrative complaints) in light of the pilot diversion programs (the 25% factor). Stated otherwise, the Agency applied the new proposed rule, see Finding of Fact 63, as the sole criterion for determining as mitigation the degree of noncompliance. T 219, 492. The Agency will no longer consider the mitigating factors considered by the Agency in the past. This led the Agency to proceed to rule development. T 494-95. The Agency explained how it calculated the amended fines. Agency Exhibits 27 and 28 and 30 through 32 are the calculation sheets used by the Agency to determine the fines for the first amended administrative complaints. T 151, 274-79. Based on each Respondents' formal report of compliance (without regard to "dual eligible" Medicaid patient days), except for "dual eligible" Medicaid patient days reported by a Respondent, the Agency considered all traditional Medicaid patient days, including Medicaid hospice days12 and charity days. T 152, 201-03. The Agency imposed a fine of $1,000 per day for each day in which Respondents were not in compliance. T 150-57, 272-79. The degree of noncompliance per month in calendar year 2006 was taken into consideration by calculating the percentage of noncompliance. For January 2006, Port St. Lucie was required to provide 1,688 Medicaid patient days (47% times 3,592) and actually provided 1,506 traditional Medicaid patient days, which was then divided by the required number of Medicaid patient days (1,506/1,688) to equal 89.22% of the 31 days in January that were met or 27.66 days or 3.34 unmet days. The resulting fine for January was $3,342 or $1,000 per day times 3.34. These calculations were performed for each month with the actual fine requested in the first amended administrative complaint at $52,024, T 152-153, PE 27, which is the fine for the number of days out of compliance. T 279, 494. (Mr. McLemore thought the Agency would not fine a nursing home out of compliance for two days. T 278.) The new formula is based on statutory-based days out of compliance, resulting in higher fines rather than taking 75% off the top reflected in the administrative complaints. T 274, 297. The Agency performed the same calculations for each Respondent. PE 27-28 and 30-32. T 156-57. The Agency has attempted to codify its decision to change the manner in which the fines are calculated in the first amended administrative complaints by publishing a Notice of Development of Rulemaking and proposing to amend Rule 56C- 1.021(3)(a), Certificate of Need Penalties, as follows: "Facilities failing to comply with any conditions . . . will be assessed a fine, not to exceed $1,000 per failure day. In assessing the penalty the agency shall take into account the degree of noncompliance. The degree of noncompliance means the result of the mathematical calculation of the difference between the conditioned level of compliance and the reported level of compliance." (emphasis in original). Aside from this notice, there is no evidence that the Agency has proceeded further to adopt the proposed rule. According to the Agency, it would be "completely impractical" to promulgate a rule listing all the conditions that would mitigate noncompliance. T 924-26, 940. The proposed fines were increased above the fines requested in the administrative complaints as follows: Port St. Lucie -- $13,085 to $52,024; Winter Haven -- $18,022 to $71,642; Ocala -- $18,724 to $74,830; Orlando -- $25,540 to $103,132; and Citrus County -- $19,992 to $79,409. The Amount of the Fine Using the Agency's Methodology It is determined that the fines should be calculated for each Respondent by including the stipulated number of "dual eligible" Medicaid patient days, arriving at a dollar figure and then subtracting 75%.13 The Agency used a methodology to calculate the fines in the original administrative complaints. That methodology is applied herein. See RE 26. Port St. Lucie The difference between the minimum CON condition percentage (47%) and the actual Medicaid percentage (43.66%) is 3.34%, which is then divided by 47% and yields 0.0710638 times $365,000, which yields $25,938. Twenty-five percent of $25,938 yields a total fine of $6,485 (25% fine for pilot diversion program or 75% fine reduction), without consideration of any other factors discussed below. Compare with RE 26 at 5. Winter Haven The difference between the minimum CON condition percentage (60.60%) and the actual Medicaid percentage (58.36%) is 2.24%, which is then divided by 60.60% and yields 0.0369636 times $365,000, which yields $13,492. Twenty-five percent of $13,492 yields a total fine of $3,373 (25% fine for pilot diversion program or 75% fine reduction), without consideration of any other factors discussed below. Compare with RE 26 at 11. Orlando The difference between the minimum CON condition percentage (31.19%) and the actual Medicaid percentage (29.34%) is 1.85%, which is then divided by 31.19% and yields 0.0593 times $365,000, which yields $21,645. Twenty-five percent of $21,645 yields a total fine of $5,411 (25% fine for pilot diversion program or 75% fine reduction), without consideration of any other factors discussed below. Compare with RE 26 at 9. Citrus County The difference between the minimum CON condition percentage (45.64%) and the actual Medicaid percentage (43.14%) is 2.50%, which is then divided by 45.64% and yields 0.0547765 times $365,000, which yields $19,993. Twenty-five percent of $19,993 yields a total fine of $4,998 (25% fine for pilot diversion program or 75% fine reduction), without consideration of any other factors discussed below. Compare with RE 26 at 3. Ocala No fines should be imposed on the Ocala facility as it exceeded the Medicaid condition for calendar year 2006. Consideration of Reasons Why Respondent Nursing Homes Were Unable to Meet CON Medicaid-Patient-Days Conditions and the Amount of the Fine Considering Other Factors Prior to filing its first amended administrative complaints and its Notice of Development of Rulemaking, the Agency considered several factors when deciding whether a nursing home complied or was unable to comply with a Medicaid condition, and whether a fine was appropriate under the circumstances for noncompliance. See generally Finding of Fact 44 for some of the compliance factors. Respondents offered testimony that they used their best efforts to meet the Medicaid-patient-days conditions, including the relative demand levels for Medicaid services in the areas served of Respondents, income levels of seniors, and other reasons. See generally T 547-48, 557, 826, 829, 852, and 876; RE 4-7. Respondents suggested that the existence of various State diversion and transition programs in the counties where they are located should also be considered in mitigation. See generally T 694-95. The nursing home diversion program operated in 26 counties in Florida in 2006, and Respondents are located in five of those counties. (Potential nursing home patients are diverted to other health care settings under this and other similar programs.) Generally, these diversion programs have been successful in diverting Medicaid-eligible residents from nursing homes. To some extent, these diversion programs have impacted Respondent nursing homes. T 534. Respondents also provided other factors in support of noncompliance with the Medicaid-patient-days conditions such as Medicaid utilization, which may be affected by the moratorium (with some exceptions) on new CONs for nursing homes, the existence of other community-based facilities, the effects of various diversion programs, the income level of various population centers where some of the Respondents are located, high Medicare admissions, declining Medicaid demand, and the relative age of Respondent facilities. Respondents also provided evidence of their marketing efforts. See PE 15-16, 18- 20; RE 4-7; T 535-36, 540-44, 556-57, 560-61, 570-71, 627-30, 638, 671-72, 711-23, 728-32, 846-47, 849, 858-60, 875-77. See also PE 39 at 3-4, regarding reported impacts of the moratorium. But see endnote 7. The Agency considered a nursing home's occupancy when it considered mitigation. T 266-67, 484-85.14 Respondents also suggest that the Agency has applied other factors either to forgo action against a nursing home facility by waiving a fine or by reducing a fine contrary to the Agency's treatment of Respondents. See, e g., Respondents' Proposed Recommended Order at 36-44. For example, in the past, the Agency has reduced or eliminated a calculated fine for a nursing home if it was less than one percent out of compliance. See RE 44 and 45; T 206. There have been instances when the Agency has not taken action against a nursing home that had missed the Medicaid condition by five percent or less. RE 24 at 19-28; RE 45 at 61-66. (Here, after calculating the fines using the Agency's pre-first amended administrative complaint methodology and including consideration of "dual eligible" patients, see Findings of Fact 68 through 72, none of the Respondents missed their Medicaid-patient-days conditions by more than four percent.) Conversely, the Agency provided evidence that each Respondent provided Medicaid patient days on a percentage basis below the average for other nursing homes in their respective subdistricts. However, the Agency has not used the comparison to impose a fine on a nursing home. T 259-65; see also RE 26 at 2, middle calculations. None of the Respondents is located in the same subdistrict with another Life Care facility which exceeds its Medicaid-patient-days condition. None of the Respondents (except Ocala that exceeded its Medicaid-patient- days condition) was within one percent of the Medicaid-patient- days conditions, even considering the "dual eligible" patient days. None of the Respondents reported experiencing an operational loss. (According to the Agency, these factors were not always applied in every noncompliance case. T 927-39.) The Agency also offered evidence that nursing home facilities within a five-mile radius of, e.g., the Respondent Ocala facility in Marion County, had a higher percentage of their days provided to Medicaid patients than the Ocala facility, T 910-11. See also T 908-15. The Agency also offered evidence that the percentage of Medicaid patient days/census provided by Respondents has reduced between 2000 and 2006. T 891-908. Based in part on the foregoing, Respondents suggest that no fines should be imposed, whereas the Agency suggests that fines should be imposed. No party has cited to any Medicaid condition fine case that was resolved after an evidentiary hearing and the entry of a recommended order and a final order. Rather, the examples of alleged inconsistent Agency action appear to have been resolved by settlements. It is difficult to apply the factors considered in this subsection of the Recommended Order in an objective fashion so as to determine, with any reliability and predictability, whether and to what extent Respondents should be further relieved of meeting the Medicaid-patient-days conditions.15 On a final note, the Agency abruptly (toward the end of the discovery portion of this proceeding) changed its policy regarding, in part, the method of determining the fines for noncompliance. The Agency did not adopt a rule codifying the change in policy despite opportunities to do so in the past and did not persuasively explain the reasons for departing from its policy, which pre-dated the filing of the first amended administrative complaints.
Recommendation Based upon the foregoing, it is recommended that the Agency enter a final order imposing the following fines: Port St. Lucie -- $6,485; Winter Haven -- $3,373; Orlando -- $5,411; and Citrus County -- $4,998. No fines should be imposed on the Ocala facility as it exceeded the Medicaid-patient-days condition. DONE AND ENTERED this 15th day of March, 2010, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS 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 15th day of March, 2010.
The Issue The issue in this case is whether the Respondent properly excluded coverage for care provided in the Petitioner's home to Thomas Nathan Roberts, the Petitioner's adult child, based upon the custodial care and disabilities exclusions of the State Group Health Insurance Plan?
Findings Of Fact Thomas Nathan Roberts, son of Lois T. Arnold, Petitioner in this cause, was born in Starke, Bradford County, Florida, on October 10, 1967. Late Filed Exhibits. Lois T. Arnold is an employee of the state, and applied for coverage of her son, Thomas Nathan Roberts, on or before August 27, 1997. The Division of State Group Insurance (DSGI) notified Mrs. Arnold on or about August 27, 1997, that Thomas Nathan Roberts (hereafter Thomas) "may continue to be carried as a dependent as long as you continue your coverage." See Petitioner’s Exhibit 2. On or about May 12, 1999, Blue Cross and Blue Shield, as agent for the state’s health insurance program, determined that it would not pay for nursing care for Thomas, although it acknowledged coverage of Thomas for other services. See Joint Exhibit 1. Energizer Power Systems memorialized in a letter dated September 16, 1999, that in April of 1999, it had received notice from Blue Cross and Blue Shield of Florida, the administrator of Energizer’s health insurance program, that Thomas was very close to the million dollar lifetime benefit limit of its medical plan. The letter also stated that effective May 1, 1999, Energizer removed Thomas as a dependent on the health insurance plan of Hiram Arnold, Thomas's stepfather. See Late Filed Exhibit. The break in Thomas’s medical coverage was not for a period greater than 63 days. Thomas’s primary care physician for a number of years has been Eloise Harman, M.D., Chief of the Division of Pulmonary Medicine and Professor of Medicine at the University of Florida. She offered her observations regarding Thomas’s condition by letters in 1997 and 1999, and in her deposition taken with regard to these proceedings. She found that Thomas has far advanced muscular dystrophy that has left him a quadriplegic and ventilator dependent. He requires continuous evaluation and assessment of his vital signs, cardiac and pulmonary status, ventilator, and skin integrity. He has a tracheotomy that requires suctioning and care together with nebulizer treatments to break up and remove secretions within his lungs. He has steel rods in his spine which makes turning and moving him extremely delicate. In Dr. Harman’s opinion Thomas requires total care and skilled nursing care, and the level of care is continuous because of the severity of his condition. She would provide more than 120 hours of skilled care weekly. Medically Necessary is defined by the benefit document "means the service received (that is) required to identify or treat Illness, Injury or Mental or Nervous Disorder which a Physician has diagnosed or reasonably suspects. The service must (1) be consistent with the symptom, diagnosis, and treatment of the patient’s Condition, (2) be in accordance with standards of good medical practice, (3) be required for reasons other than convenience of the patient or his/her Physician, (4) be approved by the appropriate medical body or board for the Illness or injury in question, and (5) be the most appropriate, efficient and economical medical supply, service, or level of care which can be safely provided." (Emphasis supplied.) Skilled Nursing Care means care which is furnished by, or under the direct supervision of, licensed Registered Nurses (under the general direction of the Physician) to achieve the medically desired result and to ensure the Participant’s safety. Skilled Nursing Care may also be the rendering of direct care, when the ability to provide the service requires specialized (professional) training; or observation and assessment of the Participant’s medical needs; or supervisions of a medical treatment plan involving multiple services where specialized health care knowledge must be applied in order to attain the desired results. Registered Nurse and Licensed Practical Nurse means a person duly licensed as such by the state in which such person is engaged in the practice of nursing. Custodial Care is care which does not require Skilled Nursing Care or rehabilitation services and is designed solely to assist the Participant with the activities of daily living, such as help in walking, getting in and out of bed, bathing, dressing, eating, and taking medicine. Thomas is ventilator dependent. His muscles have deteriorated to the extent that he cannot breath on his own. He receives his air from a mechanical ventilator through a hose attached to a cannula inserted in a hole in his throat (Tracheotomy). If the ventilator stops, if the hose pops off, or if any portion of the mechanical or biological airway becomes stopped up, Thomas dies unless someone intervenes within a minutes or two. An enlarged heart and coronary problems complicate Thomas’s health, and he has suffered some congestive heart problems. Thomas also has trouble swallowing because of the loss of muscle function in his throat. His food must be pureed, and, of course, special care must be taken because of his tracheotomy. Although preparing his food and feeding him is not strictly a skilled nursing function, any blockage of his airway would be an immediate life-threatening event. He would not be able to help himself, and the person feeding him would have to be qualified to open up the airway. Moving Thomas is complicated by the insertion of steel rods in his back, and his overall fragility. Extreme care must be used in moving him, and because he has feeling in his extremities, he must be moved frequently to relieve the pain. What would be a custodial activity for a more robust patient, is a skilled activity for Thomas. This pattern of special care applies to all of the care rendered for Thomas because of the special care which must be exercised due to his condition, and the frequency with which it must be rendered. Some of the services provided to Thomas are not skilled nursing services; however, it would be impractical to have the custodial services be provided by a non-nurse when a nurse must be present to provide the observation, assessment, and care which he otherwise requires. It is more cost effective to have all services performed by the skilled practitioner. Thomas has been receiving 120 hours of care per week for several years. This care is rendered in 8-hour shifts by registered nurses and licensed practical nurses with special training in the care of ventilator patients. The care provided by the licensed practical nurses is under the supervision of registered nurses, and otherwise meets the latter portion of the definition of "skilled nursing care" contained in the benefit document. Mrs. Arnold has not sought more hours of care for Thomas because the other hours of the week she is home and available to provide care to him having been trained to render the care necessary to sustain him. She has limited the nursing care requested to reduce the costs of his care and extend the period of his coverage. Dr. Walter A. Hollinger, the Respondent’s expert, offered his opinion regarding the amount of skilled nursing care Thomas requires. His opinion was based upon review of the benefit document and the records of the home health care agency for a three-month period. Dr. Hollinger did not dispute that Thomas needs skilled nursing care. The focus of his opinion related to how much skilled nursing care Thomas required. In his opinion, 120 hours of skilled nursing care was excessive based upon the stability of the patient’s condition. Dr. Harman's view is more persuasive based upon her longer period of observation and involvement with the patient.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the DSGI approve 120 hours per week of skilled nursing care for Thomas Nathan Roberts commencing May 1, 1999. DONE AND ENTERED this 22nd day of November, 1999, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 22nd day of November, 1999. COPIES FURNISHED: Lois T. Arnold Route 4, Box 2610 Lake Butler, Florida 32054 Cindy Horne, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Thomas D. McGurk, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Paul A. Rowell, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
