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HEALTH QUEST CORPORATION (SARASOTA COUNTY) vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES AND TRECOR, INC., D/B/A BURZENSKI NURSING HOME, 88-001945 (1988)

Division of Administrative Hearings, Florida Number: 88-001945 Latest Update: Mar. 14, 1989

The Issue Whether a certificate of need for an additional 60 nursing home beds to be located in Sarasota County, Florida, in July, 1990, should be granted to any of the four competing certificate of need applicants in these proceedings?

Florida Laws (1) 120.57

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DEPARTMENT OF HEALTH, BOARD OF NURSING HOME ADMINISTRATORS vs EUGENIA DEPONTE, 00-002927PL (2000)

Division of Administrative Hearings, Florida Filed:West Palm Beach, Florida Jul. 17, 2000 Number: 00-002927PL Latest Update: Jul. 06, 2004

The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated May 28, 2000, and, if so, the penalty that should be imposed.

Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency charged with regulating nursing home administrators licensed by the Board of Nursing Home Administrators to practice in Florida. Chapters 455 and 468, Florida Statutes (1997). AHCA is the state agency charged with licensing and regulating nursing homes in Florida. Chapter 400, Florida Statutes (1997). Among its duties, AHCA is required to inspect nursing homes every 15 months "to determine compliance by the licensee with statutes, and with rules promulgated under the provisions of those statutes, governing minimum standards of construction, quality and adequacy of care, and rights of residents." Section 400.19(2), Florida Statutes (1997). Recertification surveys are conducted each 9-to-15 months, are unannounced, and are conducted for both federal certification and Florida nursing home rating and licensure purposes. The surveys are conducted by a team of surveyors each of whom must pass an examination entitled the Surveyor's Minimum Qualification Test before being allowed to participate as an independent member of a survey team. At all times material to this proceeding, Ms. DePonte was a Florida-licensed nursing home administrator, having been licensed in Florida for a period in excess of 28 years. Ms. DePonte's license has never been suspended, revoked, or otherwise sanctioned. Ms. DePonte was employed as the Executive Director/Administrator of Darcy Hall of Life Care ("Darcy Hall") in West Palm Beach, Florida, from July 1989 until September 4, 1998. Darcy Hall is a 220-bed nursing home that was built in 1960 as a 160-bed nursing home; 60 beds were added in 1972, making Darcy Hall one of the oldest and largest nursing homes in Palm Beach County, Florida. Darcy Hall received superior ratings from AHCA for six of the nine years Ms. DePonte was the Executive Director/Administrator, and Darcy Hall received a deficiency-free recertification survey in 1996, during Ms. DePonte's tenure. From July 20 through 24, 1998, an unannounced recertification survey was conducted at Darcy Hall. The survey team identified a number of deficiencies, which deficiencies were itemized in the survey report, commonly referred to as a "Form 2567."4 In an action unrelated to the present proceeding, Darcy Hall challenged the results of the survey, and that challenge was resolved through a settlement agreement.5 The following were observed by the surveyors who inspected Darcy Hall during the July 1998 recertification survey: Call lights were "out of reach" of several residents when the rooms in one wing of the facility were inspected in the pre-dawn hours of July 23, 1998. A totally dependent middle-aged person with multiple schlerosis could not use the pneumatic call light she had been given, because it was not in her hand but was close to her arm, where she was unable to reach it. The nurses' station was located too far away from the resident's room for the resident to be heard at the station if she needed help. An elderly female resident was sitting in a wheelchair outside the facility, about one-half hour after lunch. The resident was in the garden area, close to the nurse's station. The resident, who could understand but not express herself, had lost control of her bladder. A totally dependent resident whose nose was draining was sitting in a wheelchair, with the call light, tissues, and water out of reach. An elderly resident was wearing clothing with what appeared to be burn marks from a cigarette on the front. Dust had accumulated on the filter of an oxygen concentrator. Ceiling tiles were missing from several areas in the facility; some of the rooms contained chipped furniture; a baseboard under an air conditioner was loose; a ceiling tile in a bathroom had a brownish stain; and dust had accumulated in the corners of a bathroom. A geri-chair6 had peeling tape and a black-brown stain on the seat, which the surveyor attributed to a resident becoming incontinent at some point. Approximately 50 ants were found in and around an empty juice cup sitting on a bedside table. Two treatment carts were stained with dried liquid and had an accumulation of debris in the crevices. Hand cranks were protruding from the foot of several beds. Prescription medications were found in the bedside table of one resident; zinc oxide was found on the top of the bedside table of another resident; and a bottle of Caladryl was found on top of the bedside table of a third resident. No physician's orders for these medications were found in the residents' clinical records. A cup left sitting on a bedside table in a room whose residents were cognitively impaired contained a white, thick, creamy ointment. A supply room containing pump sets with pins, syringes, tubing, catheter tips, and special nutritional supplements was found unlocked at approximately 9:00 a.m. on July 22, 1998. During a two-hour period one morning, a nurse dispensed medications to residents by opening the medication and putting the medicine in her bare hands before placing it into a cup and handing it to the resident. The temperature in the medication storage refrigerator was six degrees below the minimum acceptable temperature. The staff member washing pots in the facility's three pot sink obtained from the chemical storeroom a gallon jug of what he thought was dish sanitizer; the chemical was actually Sysco Fry and Grill Cleaner. The fry and grill cleaner was used in the sink in place of sanitizer from 9:00 a.m. on July 22, 1998, until approximately 1:00 p.m. that day, when the error was discovered by a surveyor. All of the pots, pans, and cooking and storage wares were re-washed and sanitized. The residents were monitored for 24 hours, and only one resident had intestinal distress, the source of which was undetermined. During the time that all of the pots and pans were being re-washed and sanitized, a cook washed a pot so that she could begin cooking the soup for the evening meal. She failed to sanitize the pot. Cold food on the tray line in the dining room was not maintained at 41 degrees Fahrenheit or below; applesauce was at 51 degrees, pear halves were at 66.2 degrees, whole milk was at 55.5 degrees, chocolate milk was at 42.8 degrees, and cranberry juice was at 55.2 degrees. All of the items noted in paragraph 7 were identified in the Form 2567 as Class III deficiencies, except for the deficiencies cited regarding the incontinent resident who was sitting outside in the garden area after lunch and the resident who was wearing clothing with cigarette burns on the front, which were designated Class II deficiencies. A Class II deficiency is one that the agency determines has "a direct or immediate relationship to the health, safety, or security of the nursing home facility residents." Section 400.23(9)(b), Florida Statutes (1997). A Class III deficiency is one that the agency determines has "an indirect or potential relationship to the health, safety, or security of the nursing home facility residents." Section 400.23(9)(b), Florida Statutes (1997). As the Executive Director/Administrator of Darcy Hall, Ms. DePonte was responsible for overseeing all operations of the facility, for hiring and firing employees, and for ensuring compliance with all government regulations. At the time of the survey, Darcy Hall employed a dietician, a dietary technician, and a certified dietary manager on staff, who were responsible for running the dietary department. A trained head of maintenance and environmental services, who supervised several full-time employees, and a head of housekeeping services were on staff. Darcy Hall employed two social workers, who were supervised by a director of social services. Darcy Hall was also staffed with a full complement of trained registered nurses, licensed nurses, and certified nurse assistants, who were supervised by a Director of Nursing and Assistant Director of Nursing. It was Ms. DePonte's practice at Darcy Hall not to use nurses provided on a temporary basis by a registry, and all of the nurses employed at Darcy Hall during her time there were employees of the facility. Darcy Hall had written policies and procedures governing the operation of the facility, which were kept both in Ms. DePonte's office and at each unit on the floor. Darcy Hall employed a full-time in-service training coordinator, and Ms. DePonte arranged for outside consultants to conduct in-service training seminars for the staff. Ms. DePonte also made sure that the staff was apprised of any changes in state law and regulations. In-service training was also scheduled whenever Ms. DePonte became aware of an on-going problem. Ms. DePonte personally monitored the facility regularly. Each morning, the first thing she did was visit each nurses' station to determine the staffing levels for the day. She stopped and spoke with residents and family members in the hall, and she entered some of the residents' rooms. She spoke daily with the professional staff of the dietary department and checked with housekeeping and maintenance to make sure there was adequate staff. She also would let the maintenance department know of any problems she found during her morning rounds and would follow up each day to make sure the problems had been corrected. Each afternoon, around 3:30 p.m. or 4:00 p.m., after the change of shift, Ms. DePonte would again visit each nurses' station to follow-up on any issues that had arisen during the day. In addition to personally monitoring the floor twice each day, Ms. DePonte assigned responsibility for monitoring a particular area of the facility to each department head. The department heads were expected to go through their assigned areas at least twice a day to make sure, among other things, that the residents' needs were being met, that call bells were answered timely, that call bells were within reach of residents, and that bed cranks were underneath the beds. Any maintenance problems were also noted. Any problems observed by the department heads were to be reported. Ms. DePonte's policy was to see that problems were addressed within 24 hours. It was the policy at Darcy Hall to discipline staff members who were observed violating an established policy or procedure in accordance with the three-point disciplinary program in place at Darcy Hall. Ms. DePonte had in place at Darcy Hall policies and procedures implementing the requirement that call lights be accessible to residents. The policy required that call lights be positioned within reach of the residents when they were in bed, and the staff was trained to place the call light in accordance with the policy. In addition, Ms. DePonte had every wheelchair equipped with a bell so that the resident could ring the bell if the resident needed help and the call light was out of reach, and there were call lights in all of the residents' bathrooms. As Ms. DePonte made her rounds, she would check the rooms of certain residents to make sure their call lights were accessible. It is not, however, possible to ensure that call lights are within arm's reach of each resident at all times. Ms. DePonte had in place policies and procedures at Darcy Hall regarding the need for staff to recognize and respect the dignity of its residents. Staff training was on-going, and the staff were continually made aware of the residents' rights. Darcy Hall had in place policies and procedures regarding the placement of hand cranks for the residents' beds that required that the staff put away any bed crank they saw sticking out from a bed. Protruding hand cranks were on-going problems because often residents and/or family members would adjust the beds and fail to remove the cranks and place them under the beds. A cleaning schedule was in place for oxygen concentrators and other equipment used in the facility, and cleaning was to be done on a routine basis. Darcy Hall had an on-going program to replace old and worn materials and equipment. Some of the equipment was stained but this did not mean the equipment was not clean. Pursuant to the policy and procedure in place at Darcy Hall during Ms. DePonte's tenure as administrator, nurses were not allowed to dispense medications by placing the pills into their bare hands prior to giving them to residents. Much of the chipped furniture noted in the Form 2567 was furniture belonging to the residents and not furniture owned by Darcy Hall. Because Darcy Hall is an older facility, much needed to be done to maintain the facility. The number of ceiling tiles that were stained constituted a very small percentage of the total number of ceiling tiles in the facility, and ceiling tiles were missing in some places because a new roof was being installed. The baseboard that was coming apart from the wall was located behind an air conditioning unit that was being repaired at the time of the survey. Replacement of ceiling tiles and baseboards was on-going at Darcy Hall. Darcy Hall had a regular extermination service and, if insects were found in the facility, the exterminator would be called immediately and would take care of the problem. The deficiencies identified in the Form 2567 prepared after the July 1998 recertification survey were corrected by September 1, 1998, the time specified by AHCA in the Form 2567. Ms. DePonte left Darcy Hall on September 4, 1998, to take a job as administrator at another nursing home. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that the "deficiencies" at Darcy Hall identified by its witnesses in this proceeding were attributable to the negligence, incompetence, or misconduct of Ms. DePonte.7 The position reiterated by the Department's witnesses is that a nursing home administrator is strictly liable for all deficiencies cited on a Form 2567 and that her license is subject to discipline simply because deficiencies were found. The Department has failed to present evidence to establish with the requisite degree of certainty any lack of competence, misconduct, or act or omission on Ms. DePonte's part that caused the deficiencies. Indeed, the Department did not controvert the evidence presented by Ms. DePonte that there were policies and procedures governing the day-to-day operation of Darcy Hall in place, that in-service training was provided to the staff with respect to the policies and procedures on a regular and an as- needed basis, or that Ms. DePonte and her department heads regularly monitored the performance of the staff and their adherence to the policies and procedures.

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health, Board of Nursing Home Administrators, enter a final order dismissing the Administrative Complaint against Eugenia DePonte. DONE AND ENTERED this 30th day of November, 2000, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO 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 30th day of November, 2000.

Florida Laws (8) 120.569, 120.57, 20.43, 400.19, 400.23, 415.102, 468.1655, 468.1755

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A PROFESSIONAL NURSE, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 88-004043F (1988)

Division of Administrative Hearings, Florida Number: 88-004043F Latest Update: Jan. 09, 1989

The Issue The issue is whether A Professional Nurse, Inc., is entitled to an award of attorney's fees and costs under the Equal Access to Justice Act, Section 57.111, Florida Statutes, for fees and costs incurred in a prior formal proceeding in which A Professional Nurse, Inc., sought a certificate of need to become a Medicare certified home health agency and prevailed.

Florida Laws (4) 120.54, 120.57, 120.68, 57.111

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J. G. AND S. K. G. vs DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 90-004691F (1990)

Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Jul. 27, 1990 Number: 90-004691F Latest Update: Jan. 15, 1991

The Issue The parties have stipulated that Petitioner is a "prevailing small business party" as defined in Section 57.111, F.S., and that the attorney fees requested are reasonable, up to the $15,000.00 statutory limit. The issue remaining for resolution is whether the expungement proceeding had a "reasonable basis in law and fact at the time it was initiated by [the] state agency", as provided in Section 57.111, F.S.

Findings Of Fact The following findings are adduced from the record, consisting of the transcript and exhibits in cases number 89-4151C/89-6087C, from the stipulations of the parties, and from the final order of the agency adopting the recommended order of Hearing Officer, K.N. Ayers, dated March 20, 1990. Petitioners are sole proprietors of Forest Haven, an unincorporated adult congregate living facility (ACLF) licensed by the State of Florida pursuant to Chapter 400, Part II, F.S., and located at 8207 Forest City Road, Orlando, Florida. Petitioners and Forest Haven have their principal office in Orlando, Florida and are domiciled in Orlando, Florida. They have less than 25 full-time employees and a net worth of less than $2 million. On March 17, 1989, a Department of Health and Rehabilitative Services (HRS) survey team visited Forest Haven to conduct an annual survey of the facility. The survey team was comprised of 10 persons, enlarged due to a training exercise. Several of the team members were registered nurses; several members were Office of Licensure and Certification supervisors. During the course of the visit and observations of the residents, members of the team determined that eight residents required a higher level of care than could be provided at the ACLF. As found in the recommended order adopted by the agency, the basis for this determination was, As to T.M., age 81, the need for a restraining vest, and the existence of bruises and gashes on the face and head; As to H.L., age 89, the presence of a foley catheter, total disorientation, low weight and poor skin turgor (brittle skin); As to F.W., age 72, the presence of a foley catheter, observation of fresh blood in the catheter bag, and low body weight; As to M.B., age 81, incontinence and nonambulatory status; As to R.T., age 84, a foley catheter and contraction of both legs; As to L.O., age 94, edema of lower extremities, contracture of both knees, low body weight, skin tear on left buttocks, and possible bed sore on right buttocks; As to P.B., age 88, incontinence, low body weight, and inability to transfer from wheelchair to bed without assistance; and As to F.H., age 89, one-half inch bed sore on coccyx, pitting edema of legs, incontinence and somewhat confused state. An adult protective services investigator was summoned, as well as law enforcement personnel, and the above residents were removed from the facility on an emergency basis and were placed in a nursing home. They were evaluated at the nursing home the following day by Carolyn Lyons, a Registered Nurse Specialist with HRS, who found that intermediate or skilled nursing home services were required. A ninth resident, C.K., was evaluated by a medical review team nurse and an adult protective services worker at the ACLF on March 20, 1989, and was removed from the facility and placed in a nursing home the same day. C.K., age 89, was found to be confused, incontinent, with bruises, a swollen foot, non- ambulatory, and with a red rash on the trunk of her body. HRS obtained orders from the Circuit Court to provide protective services for seven of the above-mentioned residents. Of the remaining two, one was competent to consent to the nursing home placement and another was returned to his own home by relatives. On March 22, 1989, HRS Protective Services worker, Annette Hair, classified the report in her investigation as "confirmed" medical neglect by S.G. and J.G. of the eight residents who had been removed from the ACLF. She relied on her own observations of the individuals, on the medical assessments performed by the survey team nurses at the ACLF, and the subsequent assessment of Carolyn Lyons, the HRS staff person responsible for making an evaluation of the level of care required for medicaid nursing home placement. The narrative "investigative conclusion" of Ms. Hair's report provides, in pertinent part: * * * Based on the facts obtained during the course of this investigation this case is being classified as CONFIRMED. In accordance with F.S. Section 415.102(4) it is clearly estab- lished that [S. and J.G.] were the caregivers of the eight alleged victims of this report as they had been entrusted with the care of said individuals. The allegation of neglect is verified for each of the eight alleged victims in that [S. and J.G.] failed to provide the care and service necessary to maintain the physical and mental health of an aged person that a prudent person would deem essential for the well-being of an aged person (F.S. Section 415.102(13)). Specifically each of the eight alleged victims has a medical condition which required twenty-four hour skilled nursing care and supervision which the caregivers, [S. and J.G.] failed to provide for said individuals. Five of the eight alleged victims, [H.L., L.O., T.M., F.H. and P.B.] had Scabies (a highly contagious disease caused by parasitic mites that burrow under the skin. This disease is associated with unsanitary conditions and causes a painful itch). [S. and J.G.] failed to provide the supervision necessary to detect this disease and in so doing jeopardized the health and well-being of the other residents in the facility. [H.L.] in addition to having Scabies, was semi-comatose, had bed sores on her buttocks and pelvic area and had a foley catheter. [T.M.] had open lacerations on her face, was extremely mentally confused and was known to wander and fall which required her to be physically restrained. [L.O.] had two open skin areas and Edema. [M.B.] has an excoriated area on her buttocks, Edema of the feet, and her right knee was swollen. [R.T.] had a cough of unknown origin, contraction of both legs, and an in-dwelling catheter. [F.W.] had an in-dwelling catheter which was draining bloody urine and appeared malnourished. [P.B.] appeared malnourished and was incontinent of both bowels and bladder, was extremely confused, and had an open draining wound. [F.H.] had bed sores, and Pitting Edema in addition to Scabies. [S. and J.G.], in addition to being negligent for failing to provide the care and services necessary to maintain the physical and mental health of the alleged victims, were in direct violation of F.S. Section 400.426(1) as they did not perform their responsibility of determining the appropriateness of residence of said individuals in their facility. (Petitioner's exhibit 2, in cases number 89-4151C/89-6087C) On April 4, 1989, HRS Protective Services worker, Kathleen C. Schirhman, classified the report in her investigation as "confirmed" medical neglect by S.G. and J.G. She relied on her own assessment of the resident, and on the medical assessments by Nurse Lyons, and by medical staff at the receiving nursing home, including a physician, Dr. Parsons. The narrative "investigative conclusion" of Ms. Schirhman's report provides: Based upon the facts obtained during the course of this investigation, both alle- gations of medical neglect and other neglect were determined to be verified, and the case is being classified as CONFIRMED. [J.G. and S.G.] assumed the responsibility of care for [C.K.] and, therefore, became her caregivers. They did not provide the care and services necessary to maintain the physical and mental health of [C.K.] that a prudent person would deem essential for her well-being. She required medical services and nursing supervision in a skilled nursing facility. Pursuant to F.S. 400.426 "the owner or Admini- strator of a facility is responsible for determining the appropriateness of admission of an individual to the facility and for deter- mining the continued appropriateness of resi- dence of an individual in the facility." The assessment by the CARES nurse determined that [C.K.] was being medically neglected, because she required 24 hour nursing care, which she was not receiving. She had Scabies, for which she was not being treated. The CARES nurse believed that the alleged victim was at risk and requiring immediate nursing home placement. Allegation of "other neglect" was added to the original report. [C.K.] was being neglected, because she was a total transfer patient, who required restraints, which were not used and cannot be used in an ACLF. Furthermore, the potential for harm to her was great: She was blind, confused, and unable to self-preserve. (Petitioner's exhibit number 1 in cases number 89-4151C/89-6087C) S.G. and J.G. requested expungement of the reports but the request was denied on July 10, 1989. Thereafter, through counsel, they made a timely request for a formal evidentiary hearing. The hearing was conducted on February 14 and 15, 1990, by DOAH Hearing Officer, K.N. Ayers. Depositions of David J. Parsons, M.D. and Gideon Lewis, M.D. were filed after the hearing, by leave of the Hearing Officer. In his recommended order issued on March 20, 1990, Hearing Officer Ayers found that the HRS investigators did not contact the physicians who had signed the admissions forms when each of the residents at issue had been admitted to the ACLF. Nor did the HRS staff obtain records from the home health agency which, at the treating physicians' direction, was providing, or had provided, home health care to most of the residents at Forest Haven. Skin lesions (decubitus) and scabies were found to be frequently present in nursing home and ACLF residents. Edema and underweight conditions are also common in these residents. Dr. Lewis, the treating physician for most of the residents at Forest Haven, had ordered the vest restraint for T.M.'s protection. He had also written to HRS about a year prior to the survey, recommending that efforts be made to relocate H.L. to a skilled nursing facility. The recommended order found that no evidence of exploitation or neglect, other than medical neglect, was presented at the hearing. The order also found that evidence of medical neglect by S.G. and J.G. was not presented, but rather, "[t]o the contrary, the evidence was unrebutted that Respondents [Petitioners in this proceeding] promptly reported to the resident's physician all changes in the resident's physical condition." The agency's final order was filed on May 29, 1990, adopting the findings of fact and conclusions of law recommended by Hearing Officer Ayers, and granting J.G. and S.G.'s requests for expungement. The Final Order addressed the department's exceptions to the recommended order, as follows: RULING ON EXCEPTIONS FILED BY THE DEPARTMENT The dispositive issue is whether retention of a resident (or residents) in an ACLF whose medical condition is more serious than the established criteria for residence in an ACLF (see Section 10A-5.0181, Florida Administra- tive Code for the criteria) constitutes per se neglect under Chapter 415. Inappropriate retention of a resident may constitute grounds for disciplinary sanctions under the licensure rules, but it does not automatically consti- tute abuse under Chapter 415. See State vs. E. N. G., Case Number 89-3306C (HRS 2/13/90). The evidence of medical neglect was based on the inappropriate retention of certain resi- dents. The Hearing Officer's finding that these residents were not medically neglected is based on competent, substantial evidence; therefore, the department is obligated to accept this finding. Johnson vs. Department of Professional Regulation, 456 So2d 939 (Fla. 1st DCA 1981), B. B. vs. Department of Health and Rehabilitative Services, 542 So2d 1362 (Fla. 3rd DCA 1989). In pursuing expungement, Petitioners incurred fees, costs and interest in the total amount of $22,772.49. The amount of interest included in that total is $1,000.91. As stipulated, the fees, up to the $15,000.00 statutory maximum, are reasonable.

Florida Laws (6) 120.68, 415.102, 415.103, 415.104, 415.107, 57.111

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BEVERLY ENTERPRISES-FLORIDA, INC., D/B/A BEVERLY GULF COAST-FLORIDA, INC. vs WILDWOOD HEALTHCARE, INC.; BEVERLY ENTERPRISES-FLORIDA, INC., D/B/A BEVERLY GULF COAST, 94-002452CON (1994)

Division of Administrative Hearings, Florida Filed:Tallahassee, Florida May 03, 1994 Number: 94-002452CON Latest Update: Sep. 15, 1995

Findings Of Fact The Agency For Health Care Administration ("AHCA") is the state agency responsible for the administration of certificate of need ("CON") laws. In this case, AHCA projected a need for an additional 295 community nursing home beds in District 3 for the July 1996 planning horizon, and reviewed the applications submitted in response to the published need. A numeric need for 186 beds remains. CON applications are evaluated according to applicable statutory and rule criteria and, as required by Section 408.035(1)(a), Florida Statutes, the preferences and factors in the state and local health plans. The applicable state plan is Toward A Healthier Future - The 1993 State Health Plan. The applicable local health plan is the District Three Health Plan for 1992, with 1993 Allocation Factors, prepared by the North Central Florida Health Planning Council in Gainesville. AHCA has not promulgated a rule subdividing District 3. However, the local planning council has divided the sixteen counties into nursing home planning areas, as follows: Columbia, Hamilton, Suwannee, Bradford, Union and Lafayette Counties; Alachua, Dixie, Gilchrist, and Levy Counties; Putnam County; Marion County; Citrus County; Hernando County; Lake and Sumter Counties. In this case, one applicant, Dixie Health Care Center, L.P., ("Dixie") proposes to locate in Dixie County in planning area 2 or (b). Hilliard HealthCare, Inc., ("Hilliard"), Unicare Health Facilities, Inc., ("Unicare"), Life Care Centers of America, Inc., ("Life Care") and Beverly Enterprises- Florida, Inc., ("Beverly") propose to construct nursing homes in planning area 7 or (g). Within planning area 7, Hilliard would build a nursing home in Sumter County, while Unicare, Life Care, and Beverly would build in Lake County. The total population in planning area 2 is approximately 230,000, and in planning area 7, approximately 180,000. More relevant to a determination of need for a nursing home, the population age 65 and over in planning area 2 is approximately 25,000, as compared to 49,000 in planning area 7. Within planning area 2, the projected Dixie County population over 65 in the year 2000 is 2,211, while the Sumter County projection is 9,824 residents. The actual 1994 population age 75 and over was 644 in Dixie, and 3,296 in Sumter County, and over 20,000 in Lake County. Currently, there are 1,238 licensed and approved beds in planning area 2, and 1,391 in planning area 7. For planning area 2, which includes Dixie County, there are 22 people age 65 and over for each nursing home bed. In planning area 7, the ratio is 41.1 to one. If 120 beds are added in Lake County, the comparable county ratio will decrease from 41.4 to 37.6 persons 65 and over to a bed. The addition of 60 beds in Sumter County will result in a decline in the county from 39.5 to ratio of 30.7 to 1. The district-wide ratio for District 3 is 34.5 persons 65 and over for every nursing home bed. The local planning council has compared the relative need for nursing home beds by planning area, according to a Planning Area Nursing Home Bed Allocation Matrix ("PANHAM"). Using a comparison of the percent of population age 75 and over to the percent of district beds in each planning area, the local health council describes planning area 7 as high need/moderate occupancy. It is ranked the planning area of greatest need for this CON application cycle. Planning area 2 is described as an area of low need/high occupancy. It also ranked as an area of priority in this cycle, although lower than planning area 7. The local health council has adopted three factors for use in making more specific determinations of locations which will best meet unmet needs within a planning area. Ranked in order of priority, the factors are: the absence of nursing homes in the same county, a location more than 20 miles or 25 minutes drive from any other nursing home, and an area in which nursing homes within a 20 mile radius exceeded 90 percent occupancy for the most recent twelve months or 95 percent for the most recent six months. There is no evidence that construction of new nursing home beds is not needed or that the need is based on any inefficiency or quality of care problems in existing nursing homes. Consideration of the availability, utilization, and adequacy of other nursing homes and alternative health care providers in the district is also mandated by statute. See, e.g. Subsections 408.035(1)(b), (1)(d), (2)(a), (2)(b), (2)(c), and (2)(d), Florida Statutes. In this group of applicants, only Dixie is favored by the first local health council factor for proposing to locate in a county in which there are no existing or approved nursing homes. Dixie does not meet the preference for a location more than 20 miles or a 25 minute drive from the closest nursing home. Dixie's expert witness who believed the drive took more than 25 minutes lacked direct knowledge of the road conditions. By contrast, the deposition testimony of the administrator of Tri-County Nursing Home established that the drive from Tri-County to Cross City takes about 15 minutes, most of it on a four lane highway, U.S. 27. Tri-County in Wilcox near Fanning Springs, and Medic-Ayers in Trenton are both within 20 miles or 25 minutes drive of the proposed Dixie site. Their occupancy rates for the first six months of 1993 were 94.41 percent and 95.85 percent, respectively, or an average of 95.13 percent. Therefore, Dixie is extremely close to meeting the local allocation factor related to existing nursing home occupancies in excess of 95 percent for the January-June 1993. By contrast, there are 12 existing and approved nursing homes in Lake County, and one in Sumter County. Occupancy rates in Lake County averaged 91.7 percent, but the facility in Sumter County reported 99.13 percent occupancy in the 1992-1993 reporting period. Applicants in Lake and Sumter Counties are not favored for proposing locations in counties without nursing homes, or for locations more than 20 miles or 25 minutes drive from existing nursing homes. Lake County applicants also do not meet the preference for an area defined by a 20-mile radius in which average occupancy rates exceeded 95 percent for the most recent six months or 90 percent for the most recent 12 months. The Sumter County applicant, Hilliard, does meet the occupancy requirement for a location in which nursing homes within a 20 mile radius exceeded 90 percent occupancy for the most recent twelve months. Because the state rule methodology results in a positive need calculation, the local health council factor related to special circumstances in the absence of numeric need is inapplicable to this case. Dixie Health Care Center, L.P., Cross City, Dixie County Dixie is seeking AHCA's issuance of CON 7492 to construct a 60-bed nursing home in Cross City, Dixie County, which is in planning area 2. If issued a CON, Dixie offers to be bound by the following conditions: to construct the nursing home on a specific site in Cross City; to provide 80 percent of its total resident days to Medicaid-reimbursed residents by the second year, with all beds certified for Medicaid and 9 beds certified for Medicare reimbursement; to provide rehabilitative, respite, and adult day care, with transportation for some day care participants; and not to deny HIV+ admissions. At the time that Dixie filed the letter of intent for the 60-bed project in Dixie County, it also submitted three others for contiguous areas of District 3. Thus, four legal notices, for projects in Alachua, Gilchrist, Levy and Dixie Counties were submitted by fax and then by mail to the Gainesville Sun newspaper for publication. All four legal notices, when published, referred to Levy County, as the proposed location of the nursing home. The proof of publication sent by the newspaper to the applicant and included in the CON application states that the notice published was for Dixie County, although the notice itself states that the project will be in Levy County. Dixie's health care planning expert requested the publication of a corrected notice, but there is no evidence that one ever appeared in the newspaper. AHCA accepts CON applications, despite publication errors, if the error is made by a newspaper, not by the applicant. Dixie is a partnership formed to file the application for CON 7492. The project will be funded by Smith/Packett Med-Com, Inc. Smith/Packett is owned by James R. Smith, who with Herbert H. Frazier, is a general partner in Dixie Health Care Center, Limited Partnership. Herbert Frazier is an employee of a Florida licensed general contractor, MB Conn Construction, and president of its Frazier Division which oversees the construction of nursing homes. Separately, the two general partners in Dixie own over 20 nursing homes, and jointly own one in Virginia and one in North Carolina. The partners owned, but, in February 1994, sold a Lake City nursing home. The estimated total project cost is approximately $3,000,000, of which the general partners will provide $250,000 in cash for project development costs and initial cash flow requirements, as noted in the application in the schedule 3 assumptions. Dixie included in its application a letter of interest in financing the project from Colonial Bank, Alabama. Dixie has a contract to purchase a two acre site for the project for $33,000. As previously noted, Dixie meets the highest priority local allocation factor for proposing to locate in a county which has no nursing homes, and is close to the factor for over 95 percent average occupancy rates in the nearest nursing homes. Dixie is also favored by the local plan for proposing to construct at least 60 beds, for improving access within the planning area, and for proposing respite care, adult day care, and rehabilitative therapies. Dixie meets state health plan preferences for proposing the following: to locate in a subdistrict with over 90 percent occupancy (93.42 percent for plan- ning area 2); to serve 80 percent Medicaid, which is in excess of the subdistrict average of 79.37 percent in the first six months of 1993, for specialized services to AIDS, Alzheimers' and mentally ill patients, to provide a continuum of services including long term, respite, and adult day care; to construct a well-designed facility to maximize resident comfort and quality or care, which is a reasonable size and meets all licensure requirements; to provide rehabilitative and restorative therapies, to establish a Medicaid reimbursement rate of $91.75 in year one and $94.65 in year two, as compared to the projected subdistrict high of $92.83 in 1995 and $96.54 in 1996 (using an annual 4 percent inflation rate from the January 1994 rate); * * * to offer multi-disciplinary services to residents, with the various therapist, social workers, and counselors; to document protection for residents rights and privacy, and to establish resident's councils, quality assurance and discharge planning programs, as SunQuest and all other nursing homes operating in Florida must do by state laws; to operate with lower administrative costs and higher patient care costs than the average in the district ($21.61 and $51.33 respectively in year two (1996), in contrast to $22.02 and $41.62 in 1992 for the respective average district per diem costs); Questions were raised about Dixie's compliance with state factors (8) for providing superior resident care in existing facilities, and (9) for staffing ratios which exceed minimum state requirements and are appropriate for proposed special services. The proposal is substantially based on the assumption that the applicant will contract with SunQuest for management services. Although the application refers to a management contract with SunQuest, no contract has been executed, which is not unusual prior to the issuance of a CON. At the final hearing, however, Dixie contended that SunQuest is only one of the candidates for a management contract, while conceding that the management policies and procedures in its application are those of SunQuest. In fact, the Dixie application states in response to state allocation factor (9) that SunQuest will be the management company. SunQuest manages 10 and leases an additional 10 long term care facilities in the United States, two in Florida. One of the Florida nursing homes, Bayshore Convalescent Center in North Miami Beach, has a superior license. SunQuest also manages the Lake City Extended Care Center, which was built by the company which employs Mr. Frazier, began accepting residents in December 1993, and was sold by the Dixie general partners in approximately February 1994. The original holder of the Lake City CON became unable to develop the proposal and contacted Mr. Smith and Mr. Frazier just prior to the expiration of the CON. They acquired the CON, financed, designed, and constructed the nursing home. Lake City currently operates with a conditional license, as a result of medical record-keeping deficiencies. The testimony, by Dixie's corporate representative, that SunQuest is merely one management company candidate along with Senior Care Properties, is inconsistent with the totality of the proposal, which renders significantly less reliable the program descriptions in the original application. Dixie's intent to provide van transportation for adult day care participants was also questioned, due to the absence of any provision for the service in the financial schedules to the application. The financial feasibility of Dixie's proposal is also a matter at issue. Although Dixie has a contract to purchase a two acre site, the architect who designed the facility testified he had constructed a 120-bed two-story nursing home on less than two acres, but that two and a half to three acres are generally needed to construct a 60-bed facility. Dixie projected a net loss of $201,813 in the first year of operation and a net profit of $55,123 by the end of the second year. The general partners have committed to provide $250,000 to cover the first year negative cash flow. However, the average annual salaries projected when multiplied by number of full time equivalent ("F.T.E.") positions listed on schedule 6 of its application exceeds salaries listed in the projected income and expenses on schedule 11 by approximately $219,866 in year one and $51,694 in year two. Including the underestimate of related benefits, the loss expected in the second year is $8,759. Dixie maintains that the staffing on schedule 6 cannot be compared to the pro forma, because the staffing and related expenses in the pro forma will increase over the first year as the census increases, while the staffing schedule is a snapshot at the end of the first year. The same is not true for the second year, since the facility is projected to be full after 8 months. Dixie's expert on finance described the second year discrepancy between a $50,000 profit and an $8,700 loss as insignificant in determining the financial viability of a $2 million project which, taking into consideration depreciation, amortization, and noncash related items, still results in a positive cash flow. Dixie's financial feasibility also depends on its reaching 96 percent occupancy by the fourth quarter of the first year. One witness for Dixie has achieved 93 percent occupancy in similar facilities in a county he deemed comparable, but has operated his facilities since 1989. Dixie also has to contend with competition for residents and staff from a relatively new facility within 20 miles and a 25 minute drive, Tri-County Nursing Home. Tri-County Nursing Home in Gilchrist County opened in May 1992, close to the Gilchrist- Dixie line, serving residents of Levy, Gilchrist and Dixie Counties. Approximately 30 of its 60 beds are occupied by Dixie County residents, all of whom rely on Medicaid reimbursement. Tri-County is also establishing a 25 person adult day care, having completed the required state inspection and awaiting the issuance of its license. After 8 months of operation, 51 of the 60 beds were filled. In June of 1993, Tri-County was full, with 98 percent occupancy. Approximately 40 percent of Tri-County's staff resides in Dixie County. There was testimony that 41 registered nurses reside in Dixie County, but with no information concerning their distribution within the county, current employment, or ages, their availability to work at a new nursing home could not be evaluated. In Gilchrist County, the ratio of persons 65 and over to nursing home beds is 8.7 to 1, in contrast to 31.46 for Levy County, and 34.5 for the district. The data supports the conclusion that Tri-County relies on service to Dixie County residents, clearly has an insufficient population base within Gilchrist County to fill its beds, and even when combined with Levy County is below the district ratio of 34.5 persons over 65 per nursing home bed. AHCA's expert in health planning and nursing home financial feasibility testified that Tri-County has had financial difficulties. On balance, Dixie has failed to demonstrate that it has estimated reasonable land requirements and costs, and that it can meet the required occupancy and staffing levels to survive financially, without adversely affecting Tri-County. Hilliard Healthcare, Inc., Bushnell, Sumter County Hilliard is the applicant for CON 7485 to construct a 60-bed nursing home in Bushnell, Sumter County, which is in planning area 7. Hilliard's CON, if issued, will commit to construction of Osprey Point Nursing Center on a specific five acre site on State Road 475, and to the establishment of a 10-bed Medicare unit, and a 20-bed secure Alzheimers' unit, with all beds Medicare and Medicaid certified. Hilliard commits to providing 64 percent of total resident days for Medicaid. The total estimated project cost is $2,650,000, funded by $650,000 cash from stockholders and $2,000,000 in loans from Bankers First. Hilliard, formed in 1987, currently owns a superior licensed 120-bed facility in Nassau County, having completed a 60-bed expansion in September 1994. The Nassau County nursing home is managed by Health Care Managers ("HCM"), which is owned by Steven Sell, Hilliard's president and founder. Mr. Sell, in partnership with three others, first acquired a 55-bed facility in Jacksonville in 1984, expanded it to 120 beds in 1988, and sold it in 1994 for a profit of approximately $2.5 million. In 1991, Hilliard's president also received a CON to construct a 60-bed nursing home in Clay County, which was sold without a profit, but at a break-even point, while it was under construction. HCM is the intended manager of the Bushnell facility, if the CON is approved. Hilliard submitted a notice of its intent to file a CON application to the Sumter County Times newspaper for publication. The notice, published in November of 1993, stated erroneously that the application would be filed on December 1, 1992, rather than December 1, 1993. Hilliard's president testified that he knows for a fact that he submitted the notice with the correct date, but no document in evidence establishes what Hilliard submitted to the Sumter County Times. Hilliard's proposal does not meet the local health council factors for a location in a county without nursing homes, nor is Bushnell more than a 20 mile radius or 25 minute drive from existing nursing homes. It does merit consideration under the factor which relates to the occupancy of nursing homes within a 20 mile radius, all of which exceeded 90 percent from July 1992 - June 1993, ranging from 90.89 to 99.13 percent. The highest rate was at WeCare, the only other nursing home in Sumter County, which is located in Wildwood, in the northern area of Sumter County. WeCare has two fifteen-bed Alzheimers' units, and unchallenged CON approval to add 30 beds. The approval of the 30 additional beds at WeCare raises the bed to population ratio of Sumter County from 20.2 to 23.5 per 1000, in contrast to the current Lake County ratios of 22.4. With the approval of 60 beds at Hilliard and another 120 beds in Lake County, the ratios are increased to 30.2 in Sumter and 24.7 in Lake County. After approval of WeCare's addition, the need in Sumter County has been decreased. Hilliard, by its proposal to serve central and southern sections of Sumter County, would improve access within the planning area. The occupancy rate for Medicare patients at WeCare was 1.1 percent. Hilliard contends that the relatively low percentage of Medicare services indicates a need for short-term, post-hospitalization rehabilitation services, as proposed in its 10-bed Medicare unit. Hilliard demonstrated that average lengths of hospital stays for Sumter County residents for certain procedures exceed national Medicare reimbursement averages, but there was no comparison to average lengths of stay within the district or the state. Other local health council allocation factors which apply to and favor Hilliard's proposal are those for: establishing a facility of at least 60 beds, improving access within a planning area with over 80 percent occupancy, and serving Alzheimers' and dementia patients. Hilliard's proposal meets state preferences for: locating in a subdistrict exceeding 90 percent occupancy (95.42 percent for planning area 7); * * * providing specialized services to Alzheimers' residents; offering respite care (although limited to hospice services); designing a comfortable facility, with short corridor segments, relatively large therapy areas, and a separate enclosed courtyard for the Alzheimers' unit; proposing occupational, speech and physical therapies, particularly to enhance the functioning of Alzheimers' residents; setting Medicaid rates of $101.90 for 1996 and $104.13 for 1998, in contrast to the highest rates projected for the same time, $107.89 and $113.28, respectively (using 5 percent inflation); providing superior resident care at its existing Nassau County Nursing home; proposing staffing ratios in excess of minimum state requirements, with reasonable salaries; including multi-disciplinary staff, including occupational, speech, and physical therapists, as well as nurses and an activities director; protecting residents' rights and privacy, and developing quality assurance and discharge planning programs; and proposing lower administrative costs ($26.35) with higher patient care costs ($64.30) than the district average of $26.63 and $54.67, respectively (1977 projection with 5 percent inflation). Hilliard does not meet state preference 2 for service to Medicaid proportionate to the subdistrict average, which is 69.95 percent, in contrast to Hilliard's proposed commitment of 64 percent. Under the preference, Hilliard's proposal to emphasize Medicare reimbursed therapies does not relieve it of the obligation to serve a proportionate share of Medicaid. Hilliard's proposal does not meet the specific exceptions allowed in preference 2 for applicants proposing to serve particular ethnic or cultural groups, and those developing multi-level care systems. Hilliard has a commitment letter from Banker's First to provide a $2 million loan for a fee of 1 1/2 to 2 percent of the principal loan amount, or $30,000 to $40,000. In schedule 1 of the application Hilliard's estimate of closing costs in $10,000, with $4,120 in legal fees. Dixie's expert claimed that the closing cost was inconsistent with the Banker's First letter and unreasonably low. By contrast for a $3 million loan, Dixie estimated $10,000 for loan closing costs, $30,000 for legal fees, $10,000 for recording fees and taxes, and $60,000 in loan origination fees. Dixie's expert apparently overlooked an additional $20,000 in origination fees, which was included on Hilliard's schedule 1. Hilliard projects a loss of $177,000 in year one, and income from nursing home operations of $114,690 in year two. In the first year, a loan of $271,660 is expected to cover the losses in year one. In the second year, a pay off of $154,940 on the loan is expected. The financial ability of Hilliard's shareholders to provide the initial $650,000 equity contribution and $271,660 to cover first year losses was questioned. Hilliard's president noted that the shareholders previously raised in excess of $600,000 to develop the Nassau County facility and have received $2.5 million in profits from the sale of the Jacksonville nursing home. Personal financial statements of three of the six stockholders were included in Hilliard's application. The personal financial statements were incomplete, omitting referenced attachments. The statements were also inaccurate or inconsistent, with missing liabilities, discrepancies regarding property values, and including the total value of some property which was not owned by the shareholders individually. Nevertheless, the statements do, according to Dixie's expert, show that the shareholders could provide over $900,000 in capital needed for Hilliard to be financially feasible, although that would take virtually all of the liquid assets, unless they assumed some additional individual debts. On balance, Hilliard has shown that Sumter County is more likely than not in need of additional Medicare-reimbursed subacute services, and that its proposal is financially feasible based on the shareholders' history of being able to raise capital for similar development projects. Lake County Applicants Three applicants in this batch seek to construct new 115 or 120-bed nursing homes in Lake County. Given the remaining numeric need for 186 beds, only one of the applicants can be approved. See, Beverly Enterprises-Florida, Inc., et al. v. AHCA, et al., DOAH Case No. 92-6656 (F.O. 10/17/94). In addition, the District 3 Allocation Factors Report Preferences includes the following guideline: To the extent possible, all planning areas ranked in one of the four categories of priority established in subparagraph d above should be approved to add some new beds. Unicare Health Facilities, Inc., Lady Lake, Lake County Unicare Health Facilities, Inc. ("Unicare") is an applicant for a CON to construct a 120-bed nursing home or to receive a partial award to construct a 115-bed community nursing home in the town of Lady Lake, in northwest Lake County. Unicare proposes to have its CON conditioned on the establishment of a 20-bed Alzheimers' and related dementia unit, an adult day care to accommodate an additional 20 Alzheimers' sufferers for half day care, and on providing 73 percent of total resident days to Medicaid residents. Unicare also plans to include a 10-bed subacute unit, and to offer rehabilitative therapies, respite and hospice care. The total size of the building is 58,700 square feet. Unicare is a subsidiary of United Health, Inc., which is committed to finance the project by providing an equity contribution of 60 percent and drawing on its available line of credit for the remaining 40 percent of the total projected cost of $5,754,983. Unicare owns and operates 45 nursing homes in 7 states, has been in business for 28 years and in Florida since 1982, and currently owns and operates 13 Florida nursing homes. Life Care Centers of America Life Care Centers of America, Inc. ("Life Care") proposes to establish a 120-bed community nursing home of 53,175 square feet, in west central Lake County, in the areas of Lady Lake, Tavares, or Leesburg, for a total project cost of $5,906,000. Life Care's CON, if issued, will include its commitment to provide 73 percent of total resident days to Medicaid residents, to establish a 20-bed Alzheimers/dementia unit, to offer adult day care services, and to include a 20-bed sub-acute unit. Life Care is a privately held company operating 150 nursing homes in 27 states. Life Care owns two and operates three other nursing homes in Florida. Life Care proposes to fund the Lake County nursing home from $206,000 cash-on-hand and $5,700,000 in financing from a non-related company. With its application, Life Care submitted letters of interest from potential lenders with interest rates ranging from 9 to 12 percent, and a 25 year amortization schedule. In reviewing other Life Care applications, AHCA has considered and rejected as incomplete a list of capital projects identical to that included in this Lake County application. Specifically, Life Care listed projects by county name, although the total amount of capital obligations, according to AHCA, was significantly underestimated. Life Care submitted, at hearing, its exhibit 6, a stipulation to certain facts and, through the testimony of its Vice President for Development, established that the facts related to the schedule 2 issues in this case are identical to those considered in Life Care Centers of America, Inc. v. Agency For Health Care Administration, DOAH Case No. 94-2409 (F.O. 10/24/94), which is pending on appeal in the district court. Beverly Enterprises Beverly Enterprises-Florida, Inc. ("Beverly") is a wholly owned subsidiary of Beverly Corporation-California, a subsidiary of Beverly Enterprises, Inc. Beverly proposes to construct a 120-bed community nursing home in Lady Lake or Leesburg, in Lake County, with a commitment to provide 73 percent of total annual resident days for Medicaid, to establish a 20-bed Medicare-certified subacute unit with 4 beds for ventilator-dependent patients, an 18-bed Alzheimers' wing, an adult day care for 8 clients, respite care, and to accept and care for residents who are HIV positive, or have mental health disorders. Beverly also will commit to donate $10,000 for gerontological research. Beverly Enterprises companies operate 720 nursing homes, 70 in Florida. Of the 70, 41 are operated by the applicant. Beverly's proposal to establish Lake Beverly Terrace has a total project cost of $5,421,372, for 48,969 square feet. Existing Nursing Home and Alternatives - Sections 408.035(1)(b), and (2), Florida Statutes. As of January 1994, there were 460 nursing home beds in Leesburg, 142 in Clermont, 236 in Mount Dora and 377 in Eustis. All of the facilities, exceeded the average Lake County occupancy of approximately 92 percent in 1992- 1993, except two, Waterman Hospital Extended Care Center in Eustis and Edgewater in Mount Dora. All of the parties agreed that additional subacute and Alzheimers' beds, and adult day care spaces are needed in Lake County. Local and State Health Plans - Sections 408.035(1)(a), Florida Statutes. Unicare, Life Care, and Beverly propose to locate in Lake County, within planning area 7 for Lake/Sumter Counties. The planning area has a higher priority need ranking than planning area 2, as determined by the local health plan council. Local allocation factors 1 - 5 apply equally, or are inapplicable to the three proposals. There are existing nursing homes in the county, which are within 20 miles or 25 minutes all of the proposed locations, and which exceeded 90 percent occupancy. Unicare distinguishes its proposal based on its intention to locate in the town of Lady Lake, rather than further contributing to the concentration of nursing homes in Leesburg. Lady Lake was, in 1990, the third largest municipality in Lake County, and projected to be the largest in 2000. The 1990- 2000 projected growth rate is over 100 percent, in contrast to 13 percent for Leesburg, 50 percent for Tavares, and 37 percent for the entire county. Lady Lake was also mentioned in the Life Care and Beverly applications as a possible location for their facility, along with other towns in Lake County. Beverly's Vice President has investigated the cost of sites only in Leesburg, Fruitland Park, and Eustis, but concedes that Leesburg is a desirable location due to its proximity to the hospital. Without a CON condition, which AHCA could impose, all three applicants could locate anywhere within Lake County. Although Lady Lake is only 8 miles from Leesburg, Unicare's proposal, all other factors being equal, would be favored as more consistent with local allocation factor 6, which discourages the concentration of nursing homes in one community within a multi- county planning area. The final local allocation factor, 7 (as related to Alzheimers' and adult day care), as well as state health plan factors 3 (as related to Alzheimers') and 4 (as related to adult day care), and subsection 408.035(1)(o), Florida Statutes, favor applicants proposing specialized care or therapies to meet the needs of community and nursing home residents suffering from Alzheimers' and related forms of dementia. Unicare's 20-bed Alzheimers' unit and programs, and half day adult day care for 20 additional Alzheimers' sufferers are consistent with the specialized services that are needed. Life Care also proposes, as conditions for its CON, that it will establish a 20-bed Alzheimers/dementia unit and an adult day care center to accommodate 10 participants a day, between 7:00 a.m. and 6:00 p.m. Beverly proposes to provide services in an 18-bed Alzheimers' wing, and an 8-person adult day care program. State health plan allocation factors met by all of the Lake County applicants include the following: locating in a subdistrict exceeding 90 percent occupancy (approximately 92 percent for planning area 7 for January-June 1993); see, also Subsection 408.035(1)(b), (d), and (2) (a) - (d); proposing to serve 73 percent Medicaid- reimbursed residents in comparison to the subdistrict average of 72.65 percent in the first six month of 1993; and * * * (11) documenting measures and procedures to protect resident's rights and privacy, and the use of resident councils, quality assurance and discharge planning programs. The Lake County applicants' proposals differ more when compared in accordance with state health plan factors and related statutory criteria, for: services to AIDS residents and the mentally ill; respite care, adult day care, and other services in a continuum of care (Sections 408.035(1)(o), F.S.); facilities with designs which maximize residents' comfort and the quality of care, and the costs and methods of construction (Sections 408.035(l)(m), F.S.); innovative therapeutic programs to enhance mental and physical functioning; charges which do not exceed the highest Medicaid per diem rate in the subdistrict (Sections 408.035(2)(e), F.S.); a record of providing superior care in existing nursing homes (Sections 408.035)(1)(c), F.S.); staffing in excess of minimum requirements, with the highest ratio of registered and licensed practical nurses to residents (Sections 408.035)(1)(h), F.S. - availability of staff and personnel); use of professionals from a variety of disciplines; and * * * (12) administrative cost which are lower patient care costs which are higher than the district average. State health plan preference 3 is given to applicants for care to AIDS residents and the mentally ill, and state health plan 4, in part, applies to respite care. Beverly points to its increase in service to HIV positive patients from 39 patients for 124 patient days in 1993 to 3500 patient days in 1994. Unicare also has served AIDS residents. All of the Lake County applicants plan to offer respite care. Beverly offers a wider array of specialized services. By providing a range of levels of care to inpatients and outpatients, including adult day care and respite care, the applicants also, in part, meet the criterion of subsection 408.035(1)(o), Florida Statutes. Nursing homes with more features to enhance resident comfort and quality of care are given state health plan preference 5. Unicare's 58,720 square foot plan, includes semi-private patient rooms designed for the placement of the heads of residents' beds on opposite walls, each side with a window, rather than the alignment of beds next to each other, typical of semi-private hospital rooms. The plan includes indoor wandering space for Alzheimers' residents in a loop around an activity and recreation area, separated by a 3 to 4 foot wall. The Alzheimers' unit has a separate dining room with access to a secured courtyard, which, in turn, connects with the day care center. AHCA's architectural report notes that the construction cost of $60 per gross square foot is below the median cost projection, because Unicare will use a design/build contract. The design/build contract provides for one contractor to provide all of the services, including architectural and design, engineering and construction management, which saves time and money. Unicare's contractor, KM Development Corporation, has been in business since 1977, and has renovated and enlarged Unicare's facilities in Florida without cost overruns, and has done residential construction in the state. Unicare's design, based on the AHCA architectural review and the contractor's testimony, meets requirements for licensure and safety, and is a one-hour fire safety protected structure with a stucco finish, and brick and wood trim. Although skeptical and concerned that the design/build contract can be manipulated to cut corners to stay within budget, AHCA's expert in architecture testified that it is possible for Unicare to build the facility at the projected cost, but he would expect a cost over- run. Life Care's 53,175 square foot building will cost $75 a square foot. AHCA's architects described it as wings organized around a central courtyard, providing good visual control of short corridors. Life Care's design also includes a gift shop, library, and ice cream parlor. A separate wing for Alzheimers residents is adjacent to the adult day care center, with a separate dining room and courtyard. The institutional effect of corridors is decreased by using recessed entrances and doors to residents' rooms. There were no concerns expressed by architectural experts with the appropriateness of the design for the functions in each wing, the adequacy of the project cost, or the safety of the structure. Beverly's construction cost per gross square feet, listed as $63 on line I in response to question 4A was challenged as too low by Life Care's experts. Beverly's construction cost plus a 10 percent contingency or $70 a square foot for 48,969 square feet is considered reasonable by AHCA, although that eliminates the availability of the contingency for unknown conditions on an unselected site. Beverly's design is organized generally around a core area of courtyards with therapy space in the center. Beverly's Alzheimers' unit has a separate courtyard which allows wandering residents to exit a door near one end of the corridor and return by a door near the opposite end. AHCA's architectural review concludes that Beverly's design meets licensure and safety requirements. In general, Unicare's design better meets the preference for enhancing resident comfort and quality of care with rooms over 30 percent larger than required, four outside landscaped areas, physical therapy rooms, and three staff lounges, and an in-service training area, but its cost may be underestimated. Life Care's design is second in terms of accommodating program needs with space arrangements. Adult day care clients with Alzheimers, for example, are located adjacent to the area for Alzheimers residents' programs and activities. Life Care's projected construction costs are also the highest. Innovative therapeutic programs effective in enhancing physical and mental functions are favored in state health plan preference 6. Unicare will provide physical, occupational, and speech therapy and has developed special programs to serve Alzheimers's and related dementia residents and day care clients. Life Care and Beverly will offer IV therapy, wound care, and ventilator and respiratory therapy in addition to other therapies offered by Unicare. Beverly's therapy programs are more innovative and intense, based on the staffing and level of detail provided in describing the proposed services. Preference 7 is given for proposed charges not exceeding the highest Medicaid per diem in the subdistrict. Unicare proposes a Medicaid per diem rate for $86.57 for 120 beds in the second year while at least one provider in the subdistrict for 1997 will be charging $95.27. Unicare computed projected future rates by using 9.1 percent inflation of the Medicaid rate at one facility, which is not necessarily the highest existing provider, which results in a $98.44 rate. Unicare criticized Beverly's use of a 5 percent inflation rate of the highest current provider resulting in a projected rate of $99.47. The highest Medicaid rate in the district, inflated forward to 1997, was $99.31 at the time the application was submitted, so that Beverly's proposed charge of $99.00 is lower, as is Life Care's projected $97.11 and Unicare's $86.57. Preference 8 and subsection 408.035(1)(c) require a comparison of the applicants' records in terms of the quality of care provided in their existing nursing homes, as indicated partly by licensure ratings over the last 36 months. During that time, Unicare's 13 nursing homes have had 468 months of operation at approximately 63 percent superior, 29 percent standard, and 9 percent conditional. Beverly has had a total of 976 months of operations, 67 percent superior, 25 percent standard, and 7 percent conditional. Beverly has also paid a fine to the State of Oregon to settle claims related to patient care problems. The two Florida nursing homes owned by Life Care are rated standard, one in Citrus County opened in November, 1994 and is not yet eligible for a superior license. The other, in Altamonte Springs has been in operation for over 36 months, 29 of those with a superior licensure rating. The three applicants generally have operated and have the capacity to continue to operate superior facilities. Preference 9, on proposed staffing ratios and preference 10 related to the use of varied professional staff are also indications of the quality of care. AHCA requires one registered nurse on the day shift and none on the night shift in a 120-bed nursing home. All of the applicants exceed the minimum. The number of nursing hours per patient day will be 3.2 at Unicare, 3.35 at Life Care, and 3.85 at Beverly. One of four registered nurses on the day shift at Beverly will always be in the subacute unit. However, the ratio outside the unit, for the remaining 100 residents, still exceeds the minimum and meets the preference requirements. All three companies have existing Florida facilities available to provide training and, if needed, transfers of experienced staff to a new nursing home. They currently use and are proposing to continue to use professional staff from a variety of disciplines to meet residents' and clients' needs. Average administrative costs in the district, inflated forward, will be $24.58 and average patient care costs will be $49.49. The applicants report their comparable projections on Schedule 11. Unicare's projected costs are $27.80 and $50.59, respectively. Life Care's costs are $24.84 and $65.94, respectively. Beverly's are $24.44 and $62.30, respectively. With erroneously omitted laundry costs added to administrative costs, Beverly's administrative costs increase to $26.52. All three applicants propose higher administrative costs than the district average, but Life Care's are the lowest. All three have higher than average patient care costs, with Life Care favored as the highest. The following subsections of the CON statutory review criteria do not apply, in this case, to distinguishing among the Lake County applicants: - availability or adequacy of alternatives, such as outpatient care or home care; - economics of joint or shared resources; - need for equipment or services not accessible in adjoining areas; * * * - special needs of health maintenance organizations; - needs of entities which provide substantial services beyond the district; and - impacts on costs and effects of competition. Subsection 408.035(1)(g) - research and educational facilities needs Unicare and Life Care have established foundations to foster education and research in gerontology and health care. Beverly will commit, as a condition for the issuance of its CON, to providing a $10,000 research grant for a gerontological studies to Florida State University. All three companies assist in providing clinical experiences for nursing and therapy students in technical schools, community colleges, and universities, and benefit by recruiting employees from the programs. Subsection 408.035(1)(h) - availability of funds to establish and operate project, and Subsection 408.045(1)(i) - immediate and long-term financial feasibility Unicare has $5 million in available cash and a $30 million line of credit. Unicare, using costs from other facilities adjusted to take into consideration geographical differences, projects a net loss of $250,672 in the first year and a profit of $50,482 in the second year. Unicare failed to include $3,000 in housekeeping equipment in its projected expenses, but can more than cover that omission with a $75,000 contingency. Life Care had a net worth of $50 million in 1993. For calendar year 1992, its audited financial statement shows over $10 million in net earnings and $4.5 million in cash on hand. Life Care projects a net loss of $548,190 in year one and a net profit of $236,022 in year two. Beverly has access to over $200 million for project development, combining its cash, cash equivalents, commercial paper and lines of credit. Beverly projects a pre-tax loss of $314,000 in the first year and a net profit of $214,000 in the second year. Beverly's figures were questioned based on its use of the experience of a Tampa area facility to determine some costs and expenses, its assumption that Medicare will be 13 percent of its patient mix, and its projected lengths of stay and revenues from Medicare. Beverly's use of unit-costs from existing facilities with modifications to fit the specific proposal is reasonable. Although the district Medicare rate is 5.7 percent and Lake County's is 6.1 percent, Beverly's higher proportion of Medicare is consistent with the level of subacute services it proposes in 20 of its 120 beds. After the maximum of 100 days of Medicare coverage, Beverly will have weaned or will transfer ventilator patients who do not have private insurance. Subsection 408.035(1)(n) - past and proposed Medicaid participation Unicare has no nursing homes with CON conditions requiring a specified level of Medicaid participation, having purchased older, existing facilities in Florida. Nevertheless, eleven of its thirteen facilities exceed the Medicaid average in their respective subdistricts. For the first six months of 1993, Life Care's Medicaid resident days were 78 percent in Altamonte Springs (with no CON condition), 70 percent in Punta Gorda, 88 percent and 68 percent, respectively, in the two West Palm Beach nursing homes. Beverly's percent of patient days for Medicaid increased 63.3 percent to 66.8 percent from 1993 to 1994 for facilities in Florida. Beverly paid a $1500 fine to the state for falling below its Medicaid commitment in one of 17 state facilities with such conditions, Coral Trace in Lee County. AHCA agreed to reduce the Coral Trace medicaid condition from 78 percent to 53.3 percent to reflect the subdistrict average. In 1994, at Coral Trace, 49.5 percent of total patient days were Medicaid. All three Lake County applicants have demonstrated strong compliance with Medicaid participation criterion. Comparison of Lake County Applicants On balance, the Lake County applications are all more in compliance than not with statutory review criteria, with varying strengths and weaknesses. They are financially sound, experienced nursing home owners and operators. Unicare will improve access within the planning area. The demographic data on the municipality of Lady Lake shows significant growth. Unicare also will build a better designed and larger facility, and will focus its programs on meeting the needs of Alzheimers' residents and day care participants. Unicare's weaknesses are AHCA's architect's expectation that it will experience cost- overruns and the absence of ventilator services. Unicare relies on its actual experience with Florida construction projects to support the reasonableness of its projections. Unicare also projects the lowest Medicaid per diem rate. Life Care proposes to offer a wider range of specialized programs and therapies than Unicare, a design second to Unicare's in terms of size and residential amenities. Life Care's project costs are the highest of the Lake County applicants, but Life Care, when operational, will have the highest proportion of its costs applied to patient care. Beverly offers a range of programs comparable to those offered by Life Care, with greater emphasis on subacute care, and less emphasis than Unicare on Alzheimers' services. Beverly will build the smallest nursing home at the lowest cost, but is highest in projected Medicaid per diem rate. Unicare is recommended for CON approval due to its superior design, and superior Alzheimers' and day care services, and proposed location. Because the proposed location is a factor in Unicare's favor, it is recommended that Unicare's CON be conditioned on its obtaining a site in Lady Lake. Absent Unicare's agreement to a condition on location, Beverly is recommended for approval based primarily on its lower project cost, scope and intensity of subacute of services, and higher staffing levels.

Florida Laws (8) 120.57, 408.031, 408.035, 408.037, 408.039, 408.040, 408.045, 95.13 Florida Administrative Code (1) 59C-1.008

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FIRST AMERICAN CORPORATION, D/B/A SPRING HILL HEALTH vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 84-002206 (1984)

Division of Administrative Hearings, Florida Number: 84-002206 Latest Update: Apr. 01, 1985

The Issue The issue presented for determination herein is whether or not F.A.C. Health Care, Inc., d/b/a Spring Hill Health Facility (Petitioner) is entitled to a Certificate of Need to establish a 60-bed nursing home to serve Hernando County.

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that: The application of First American Corporation d/b/a Spring Hill Health Facility for establishment of a 60-bed nursing home facility in Hernando County, Florida, be DENIED. RECOMMENDED this 14th day of February, 1985, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 1985.

Florida Laws (1) 120.57

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SEBRINA CAMERON, N.H.A. vs DEPARTMENT OF HEALTH, BOARD OF NURSING HOME ADMINISTRATORS, 21-001349F (2021)

Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Apr. 20, 2021 Number: 21-001349F Latest Update: Jan. 24, 2025

The Issue The issue is whether Respondent, Department of Health, Board of Nursing Home Administrators (the “Department”), was “substantially justified” under section 57.111(3)(e), Florida Statutes,1 in initiating the underlying action against the nursing home administrator license of Petitioner, Sebrina Cameron, N.H.A. (“Petitioner” or “Ms. Cameron”).

Florida Laws (10) 120.569, 120.68, 400.011, 400.021, 400.141, 468.1655, 468.1685, 468.1755, 57.105, 57.111 Florida Administrative Code (3) 59A-4.103, 59A-4.1075, 59A-4.108 DOAH Case (4) 2020-12066, 20-3025PL, 20-3026PL, 21-1349F

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AGENCY FOR HEALTH CARE ADMINISTRATION vs WEST BROWARD REFERRAL AND NURSES AGENCY, INC., 19-005214 (2019)

Division of Administrative Hearings, Florida Filed:Lauderdale Lakes, Florida Sep. 30, 2019 Number: 19-005214 Latest Update: Jan. 24, 2025

Florida Laws (3) 408.804, 408.812, 408.814

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HOSPITAL CORPORATION OF LAKE WORTH vs DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 91-002128 (1991)

Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Apr. 03, 1991 Number: 91-002128 Latest Update: Jan. 28, 1992

Recommendation Based upon the foregoing Findings of Facts and Conclusions of Law, it is recommended that Respondent should enter a final order accepting Petitioner's letter of intent to file a CON application for a hospital-based skilled nursing unit to be reviewed in the appropriate hospital batching cycle. RECOMMENDED this 21st day of November, 1991, in Tallahassee, Leon County, Florida. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of November, 1991.

Florida Laws (4) 120.54, 120.56, 120.57, 120.68

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MERIDIAN, INC.; MERIDIAN NURSING CENTERS, INC.; AND MANATEE MERIDIAN LIMITED PARTNERSHIP vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 86-000063 (1986)

Division of Administrative Hearings, Florida Number: 86-000063 Latest Update: May 12, 1987

Florida Laws (1) 7.36

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