The Issue Whether Certificate of Need (CON) Application No. 10125, filed by Shands Jacksonville Medical Center, Inc. (Shands Jacksonville) to establish a new, 100-bed acute care hospital (Shands North) in Duval County, Agency for Health Care Administration (AHCA or Agency) acute care subdistrict 4-1, satisfies, on balance, the applicable statutory and rule review criteria.
Findings Of Fact The Parties The Applicant and Related Hospitals Shands Jacksonville is located in downtown Jacksonville, Duval County, AHCA Health Planning District 4, acute care subdistrict 1. Shands Jacksonville is licensed for 695 beds, including 548 acute care, 16 Level II NICU, 32 Level III NICU, 43 adult psychiatric, and 56 skilled nursing beds. Shands Jacksonville provides tertiary level services such as open heart surgery, and also operates a Level I trauma center. Shands Jacksonville is also an academic medical center, offering the third largest teaching hospital for residents in Florida, with more than 300 residents. Shands Jacksonville serves as a teaching campus for nurses, pharmacists and other health care professionals. Shands Jacksonville is a sister company of Shands Teaching Hospital and Clinic, Inc., located in Gainesville, Florida. The sole member of both companies is the University of Florida (U.F.). Shands Jacksonville was previously a subsidiary of Shands Teaching Hospital and reported to leaders of that organization. Recently, the corporate organization was changed in order to allow for market nimbleness, as Shands Jacksonville operates in a more competitive, urban environment. The change also created more local ties for Shands Jacksonville, with Jacksonville community leaders added to Shands Jacksonville's governing board. Shands Jacksonville is the primary safety net provider for all of Jacksonville and its surrounding counties. Shands Jacksonville provides far more charity and indigent care than all other hospitals in the region. Shands Jacksonville provided more than $62 million in unsponsored community benefits at cost in 2011, net of reimbursement from municipalities for indigent patients. Bad debt and charity represented 15.7 percent of Shands Jacksonville's gross revenue, which is higher than any provider or system in the district. HCA's Memorial Hospital Memorial Healthcare Group, Inc., d/b/a Memorial Hospital Jacksonville is a general acute care hospital located at 3625 University Boulevard South, Jacksonville, Duval County, AHCA Health Planning District 4. Memorial is licensed for 418 beds, including 381 acute care, 27 adult psychiatric, and 10 Level II NICU beds. AHCA AHCA is the state health planning agency and administers the CON program pursuant to the Health Facility and Services Development Act. §§ 408.031-.0455, Fla. Stat. Existing and Approved Area Hospitals In addition to Shands Jacksonville and Memorial, existing general acute care hospitals in Duval County include the following: Baptist Medical Center; Baptist Medical Center- Beaches; Baptist Medical Center-South; St. Vincent's Medical Center South; Mayo Clinic; St. Vincent's Medical Center, and St. Vincent's South. Although not located in Duval County, Orange Park Medical Center is an existing HCA-affiliated hospital located in adjacent Clay County. Baptist Medical Center-Nassau is located in adjacent Nassau County, within Subdistrict 4-1. There are two CON-approved, but not yet operational hospitals in the greater Jacksonville area; the 85-bed West Jacksonville Medical Center was approved in western Duval County, and is expected to open in late 2016. The second approved but not yet operational hospital is the 98-bed St. Vincent's Clay County Hospital located in northern Clay County, proximate to the Duval County line. That facility is currently under construction and is expected to open in 2014. The Proposal Shands Jacksonville seeks approval to establish a new 100-bed "satellite" general acute care hospital in northern Jacksonville to be known as Shands Jacksonville Medical Center North (Shands North). The proposed hospital is intended to offer basic non-tertiary acute care and obstetric (OB) hospital services. The medical staff will be comprised of Shands Jacksonville medical staff members, which includes U.F. faculty practice and community physicians engaged in private practice. Through establishment of the Shands North satellite, Shands Jacksonville hopes to improve its payor mix (and overall fiscal health), thereby enabling it to continue to serve as Jacksonville's safety net hospital. The new hospital would also improve patient access to health care for a segment of the Duval County population. Simultaneous with the licensure of the new satellite hospital, Shands Jacksonville will delicense 100 beds from its existing campus. Before filing its application with the Agency, Shands studied the market to make certain that the project was properly sized and would be successful. As summarized in the Agency's State Agency Action Report (SAAR), Shands justifies project approval based on five broad categories of need, with additional subcategories, and what the applicant calls additional important considerations, as follows: -an acute care hospital is needed in northern Jacksonville and will improve access to acute care and emergency department (ED) services; -Shands Jacksonville should receive approval to establish a northern Jacksonville satellite hospital; -Shands North will increase access to ED services, reduce time to treatment and relieve crowding at Shands Jacksonville’s ED; -creation of Shands North will add sorely needed jobs in the community; -Shands North would serve as an additional evacuation center for residents of Amelia Island and other coastal areas, and -additional important considerations, including enhancing the relationship between UF and Shands with the citizens of northeast Florida, promotion of excellence in patient care, continuation of community service and letters of support. (SAAR, pgs. 6, 7) The Proposed Site As the location for its new hospital, Shands Jacksonville purchased a site off of Interstate 95 near the Jacksonville International Airport and Port of St. Johns, and adjacent to the River City Marketplace, a major retail complex. These nearby developments are relevant to the hospital's location because employees tend to live near their place of work, and will seek hospital services there. The distances from the Shands North site to the closest hospitals are: Shands Jacksonville 10.3 miles; Baptist downtown 12.8 miles; St. Vincent's downtown 15.6 miles; and Memorial 16.6 miles. Northern Jacksonville is the only part of greater Jacksonville without an acute care hospital. There are no hospitals situate between downtown Jacksonville and Fernandina Beach. Shands North would be located in an area with an expected improvement in payor mix, fewer Medicaid patients, and more commercial and Medicare patients. A Phased Campus Concept Shands Jacksonville engaged Gresham Smith architects to examine what type of facility could be accommodated at the chosen location. Those architects initially suggested a 137-bed hospital, with room to expand to 300 acute care beds in the future. However, the plan was scaled down to 100 beds, though future expansion would remain an option. The construction phasing plan for the site contemplates a three-phase project: Phase 1 is the development of an outpatient campus; Phase 2 is a start-up hospital of approximately 100 beds; and Phase 3 is a fully developed campus with up to 300 hospital beds. Shands Jacksonville intends to proceed with Phase 1, the development of an outpatient campus, without regard to the timing or approval of the hospital CON application. Contemplated services within Phase 1 include diagnostic imaging, ambulatory surgery, an urgent care center or a freestanding emergency department, and a medical office building. As of hearing, development of a freestanding emergency department at the Shands North campus remained under active consideration. Phase 1 is intended to be completed and operational by the end of 2013. The medical office building will be approximately 60,000 square feet, and the ambulatory services center will be about 90,000 square feet. Instead of funding Phase 1 through debt or retained earnings, Shands Jacksonville is in discussions with potential third-party developers who would finance the construction and lease back the facilities to Shands Jacksonville. The-100 bed Shands North hospital is estimated to cost between $100 and $125 million. The Shands Jacksonville Board has not yet approved funding for the construction of the Shands North hospital. The recent economic downturn caused Shands Jacksonville to delay its plans for Shands North, as it waited for the economy to rebound. In the meantime, the area has received the necessary infrastructure to allow for rapid development once the economy rebounds. The Agency's Preliminary Review and Approval Jeff Gregg oversees the Florida Center for Health Information and Policy Analysis, which includes the certificate of need program administered by the Agency. Mr. Gregg was accepted as an expert in health planning, and testified at hearing regarding the Agency's review and preliminary approval of the Shands Jacksonville application. Mr. Gregg testified that the Agency's approval of the CON application would allow Shands Jacksonville to expand access, while simultaneously bolstering its function as one of the state's major safety net providers of indigent care: Q. Can you describe your understanding of the Shands project? A. I would describe this as an example of a case where a safety-net hospital is applying to add a satellite in a suburban market that they presume will provide them with a better payor mix. And in doing so it serves a two- prong purpose for them. One is to expand the access, but also to bolster their function as one of the state’s major safety-net providers of indigent care in an inner-city location by decompressing some of its functions, diverting emergency department utilization, allowing then to create more private rooms, which are now part of the building code for new hospital construction and definitely something that I think is generally regarded as a subject of consumer preference. So it is a combination of access improvement in an un-served suburban sector and an ability to improve a traditional indigent care function. Mr. Gregg also noted that the site chosen for Shands North is "close to the sole remaining sector of the suburban market that surrounds urban Jacksonville that is presently unserved." The project would improve access in an unserved suburban sector while simultaneously improving traditional indigent care functions for Shands Jacksonville, according to Mr. Gregg. In addition to the above reasons, the Agency also based its approval, in part, on the fact that Shands Jacksonville would serve as an additional evacuation center for residents of Amelia Island and other coastal areas. Mr. Gregg testified that, essentially, if an applicant submits a reasonable CON application for a new hospital, AHCA will approve it with minimal analysis and little or no critical review. This is because applications for new hospitals are rare since access to capital is tight, and the Agency does not receive applications for new hospitals that Mr. Gregg would consider frivolous. Physician Involvement Ninety percent of the patients treated at Shands Jacksonville have contact with a UF faculty physician. However, this statistic does not mean that each of those patients was referred by UF faculty physicians. In fact, currently, 86% of the admissions to the Shands downtown campus originate in the emergency department. Agency databases capture information regarding an "attending" and an "operating" physician. An attending physician is someone who is identified during the course of the stay, or even at the end of the course of the stay as the one primarily responsible for the patient's care while they are in the hospital. There is no designation for admitting physicians, just attending and operating physicians. Thus, there is no clear database which captures which physicians "refer" a patient to a given hospital. Primary care physicians generally do not attend hospital inpatients, largely because there is little physician reimbursement for hospital visits, and there is no reimbursement for the time spent travelling to and from the hospital. As a result, a growing trend in hospital care is to have patients' needs attended to by a "hospitalist." A hospitalist is a physician, usually a specialist in internal medicine, who cares for patients in the hospital but does not have a private outpatient practice. Several hospitalists work with Shands Jacksonville. Hospitalists are not part of the UF faculty practice, but rather are community physicians that specialize in treating patients while they are in the hospital. Shands Jacksonville has contracted with Cogent, a company which employs hospitalists who work as medical staff at Shands Jacksonville and see patients that are oftentimes referred from the emergency department. Thus, Cogent offers a continuum of care that works in conjunction with community physicians. Cogent is making efforts to work with area community physicians to foster referrals to Shands Jacksonville. During the second quarter of 2012, 64.4% of the patients at Shands Jacksonville were treated by UF faculty doctors. However, 7.5% of the Shands Jacksonville current admissions were treated by Cogent community physicians. Another 21% either came directly from primary physicians in the community or didn't have a UF association. As noted above, Shands Jacksonville receives a high percentage of admissions from UF-affiliated physicians. Shands North will need referrals from community physicians not currently practicing at Shands Jacksonville in order to be successful. Through Shands Jacksonville's and Cogent's ongoing efforts to foster relationships with community physicians Shands North can expect to receive some level of cooperation and referrals from community doctors within the proposed service area.2/ However, whether that level of support will be sufficient to achieve the Shands North projected utilization has not been established in this record. Statutory and Rule Review Criteria In 2008, the Florida Legislature significantly modified the application and review process for CON applications for general hospitals.3/ Specifically, the amendments to section 408.035, Florida Statutes, eliminated consideration of several CON review criteria that had previously been applicable to general hospital applications. Those criteria that no longer apply to such applications are: 408.035(1): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. (f) The immediate and long-term financial feasibility of the proposal. (h) The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. Following the 2008 amendments, the statutory CON review criteria that remain applicable to general hospital applications are: The need for the health care facilities and health services being proposed. The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. (e) The extent to which the proposed services will enhance access to health care for residents of the service district. (g) The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. (i) The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. Chapter 2008-29, Laws of Florida, also amended section 408.037, which specifies the required CON application content. The new section 408.037(2) is exclusively directed to applications for new general hospitals: (2) An application for a certificate of need for a general hospital must contain a detailed description of the proposed general hospital project and a statement of its purpose and the needs it will meet. The proposed project’s location, as well as its primary and secondary service areas, must be identified by zip code. Primary service area is defined as the zip codes from which the applicant projects that it will draw 75 percent of its discharges. Secondary service area is defined as the zip codes from which the applicant projects that it will draw its remaining discharges. If, subsequent to issuance of a final order approving the certificate of need, the proposed location of the general hospital changes or the primary service area materially changes, the agency shall revoke the certificate of need. However, if the agency determines that such changes are deemed to enhance access to hospital services in the service district, the agency may permit such changes to occur. A party participating in the administrative hearing regarding the issuance of the certificate of need for a general hospital has standing to participate in any subsequent proceeding regarding the revocation of the certificate of need for a hospital for which the location has changed or for which the primary service area has materially changed. In addition, the application for the certificate of need for a general hospital must include a statement of intent that, if approved by final order of the agency, the applicant shall within 120 days after issuance of the final order or, if there is an appeal of the final order, within 120 days after the issuance of the court’s mandate on appeal, furnish satisfactory proof of the applicant’s financial ability to operate. The agency shall establish documentation requirements, to be completed by each applicant, which show anticipated provider revenues and expenditures, the basis for financing the anticipated cash- flow requirements of the provider, and an applicant’s access to contingency financing. A party participating in the administrative hearing regarding the issuance of the certificate of need for a general hospital may provide written comments concerning the adequacy of the financial information provided, but such party does not have standing to participate in an administrative proceeding regarding proof of the applicant’s financial ability to operate. The agency may require a licensee to provide proof of financial ability to operate at any time if there is evidence of financial instability, including, but not limited to, unpaid expenses necessary for the basic operations of the provider. Section 408.035(1)(a): The need for the health care facilities and health services being proposed. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. The Agency does not have a need methodology for acute care hospitals or acute care beds. The former rule was repealed in 2005, following the Legislature's general deregulation of acute care bed additions in 2004. In general, existing acute care hospitals can add acute care beds without CON review after notification to the Agency. In light of the lack of a need methodology, the applicant is responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory and rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and Market conditions. Fla. Admin. Code R. 59C-1.008(2)(e)2.a.-d. In addition to the criteria set forth in section 408.035, Florida Statutes, Florida Administrative Code Rule 59C-1.030 identifies the criteria to be used in evaluating CON applications, including "health care access criteria": For a new general hospital as defined in section 395.002, F.S. and subparagraphs 59A-3.252(1)(a)1. and 3., F.A.C., the criteria for evaluation are those found in sections 408.035(2) and 408.037(2), F.S. Health Care Access Criteria. The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services. The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admissions policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority. In determining the extent to which a proposed service will be accessible, the following will be considered: The extent to which medically underserved individuals currently use the applicant’s services, as a proportion of the medically underserved population in the applicant’s proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant; The extent to which Medicare, Medicaid and medically indigent patients are served by the applicant; and The extent to which the applicant offers a range of means by which a person will have access to its services. In any case where it is determined that an approved project does not satisfy the criteria specified in paragraphs (a) through (d), the agency may, if it approves the application, impose the condition that the applicant must take affirmative steps to meet those criteria. In evaluating the accessibility of a proposed project, the accessibility of the current facility as a whole must be taken into consideration. If the proposed project is disapproved because it fails to meet the need and access criteria specified herein, the Department will so state in its written findings. The Service District and Subdistrict AHCA health planning District 4 consists of Baker, Nassau, Duval, Clay, St. Johns, Flagler, and Volusia Counties. For acute care beds, District 4 is further subdivided into five separate subdistricts. Acute care subdistricts are defined as "[a] group of counties, a county, or a portion of a county which forms a subdivision of a district." Fla. Admin. Code R. 59C- 2.100(1)(d). Shands Jacksonville intends to locate its new hospital within Subdistrict 4-1, which consists of Nassau County, and the northern portion of Duval County lying within ZIP codes 32202, 32206, 32208, 32209, 32218, 32219, 32220, 32226, and 32254. Fla. Admin. Code R. 59C-2.100(3)(g). There are currently two acute care hospitals located in Subdistrict 4-1; Shands Jacksonville, and Baptist Medical Center-Nassau. In CY 2010, these two facilities had a combined complement of 602 acute care beds, and operated at 64.99% and 58.75% occupancy, respectively. Projected Service Area The Shands North proposed primary service area ("PSA") consists of three residential zip codes: 32097 (Yulee); 32218 (Jacksonville); and 32226 (Jacksonville) and two zip codes that are post office boxes: 32041 and 32229. The Shands North PSA is expected to account for 75% of the admissions to the new hospital. The proposed secondary service area ("SSA") consists of three full zip codes: 32011 (Callahan); 32208 (Jacksonville); 32219 (Jacksonville); and, census tract 503.03 within zip code 32034 (Fernandina Beach -- this area is west of the Amelia River and excludes Amelia Island). The SSA is projected to produce the remaining 25% of the new hospital's admissions. Shands Jacksonville's expert in health planning testified that in identifying its service area Shands Jacksonville considered the location of roadways, travel patterns, distances from other providers and geographic features that might hinder transportation. Service Area Population Shands Jacksonville examined population statistics to determine demand for new services in the proposed location. When the application was written, Shands Jacksonville used 2011 Nielson-Claritas population estimates. This report estimated 2011 population, and predicted 2016 populations. Claritas predicted a 7.5% growth in population between 2011 and 2016 for the service area, while the rest of Duval and Nassau was only expected to grow by 5.2%. As of hearing, the Nielson-Claritas population estimates had been revised to reflect the results of the 2010 census. The new Claritas data restated 2012 population and created new 2017 estimates. In its application, Shands Jacksonville anticipated the PSA population to be 67,548 persons in 2017, the third year of the project. After the Claritas rebasing, the projections have increased to 75,189 adults, a growth rate of 11.3%. However, over the same period of time the secondary service area showed a reduction of approximately 1,000 adults (from 51,681 to 50,688) a decline of 1.9%. The portions of Duval and Nassau counties outside the Shands North PSA or SSA are not experiencing significant population growth. From 2012 to 2017 the adult population of those areas is only expected to increase by 2.2% (from 601,834 to 615,161), while the female population is actually expected to decline by 3.6% (from 173,004 to 166,811). Anticipated population growth within the Shands North PSA and SSA, in and of itself, will not have a major impact on the need for the proposed hospital. Most of the population in the Shands North PSA is concentrated in zip code 32218. The other two zip codes within the PSA are sparsely populated or closer to other facilities. Given those factors, it is unlikely that Shands North will be able to penetrate deeply into the smaller zip codes, 32097 and 32226 in order to obtain patients. The Shands North SSA also includes sparsely populated zip codes, with the exception of zip code 32208, which is very close to existing Shands Jacksonville. The residential development most proximate to the Shands North site is River City Marketplace, to the south, which is a mature development. There are large tracts of marshland to the east and north of the site, including Timucuan Preserve, which cannot be developed. With regard to the residential development east of I-95 that Shands North seeks to serve, Baptist-Nassau is more proximate to service area residents. In total, the population base within Shands North's proposed service area is relatively small, and scattered. Projected Utilization and Market Share The Shands Jacksonville application projects that in the third year of operation (2017) Shands North will capture a 45% market share of adult non-tertiary discharges in the proposed PSA, and 15% in the SSA. The application also projects that in the third year of operation Shands North will capture 45% of the OB discharges in the PSA, and 15% in the SSA. If Shands North is able to achieve its projected market shares it would represent a significant redistribution of patients from existing hospitals to the proposed new hospital, as discussed in greater detail below. Shands Jacksonville projected the same market shares for both non-tertiary and OB discharges in the PSA as follows: 2015 -- 22.5%; 2016 -- 33.7%; and 2017 -- 45%. Application of those market shares to Shands North's projected average length of stay (ALOS) results in the following non-tertiary Shands North PSA utilization projections for 2017: 3,841 discharges, and 19,589 patient days. The 2017 Shands North PSA OB utilization projection is 584 discharges and 1,635 patient days. Shands Jacksonville's 2017 SSA projected non-tertiary discharges based on a 15% market share are 1,280 discharges and 6,784 patient days. The 2017 SSA OB projection based on a 15% market share is 128 discharges with 358 patient days. The projected total service area utilization for Shands North in the third year of operation (2017) is: non- tertiary -- 5,121 discharges, 26,373 patient days, and average daily census (ADC) of 72.3 patients; and for OB -- 712 discharges, 1,993 patient days, and 5.4 ADC. Shands Jacksonville used an 80% occupancy standard to calculate a need for 90 acute care beds; and used a 70% occupancy standard to calculate a need for 8 OB beds, resulting in a projected need for 98 total hospital beds. All analysis and market share projections in the Shands Jacksonville application were presented at the PSA and SSA level. Therefore, Shands Jacksonville's historical market share and projected market share by zip code cannot be discerned from the CON application. During CY 2010, Shands Jacksonville's adult non- tertiary market share for the entirety of the Shands North PSA was 26.9%. During the same year, Shands Jacksonville's market share in the SSA was 29%, for a combined service area market share of 28.1%. Memorial's health planner, Dan Sullivan, examined historic market share in the proposed service area on a zip code basis. In 2010, Shands Jacksonville's market share in PSA zip code 32097 was 9%. The other PSA zip code 2010 market shares were: 32218 -- 32.4%; 32226 23.0%; 32041 -- 10.1%; and 32229 -- 33.3% (a P.O. Box with only 3 total discharges during CY 2010). Shands Jacksonville's 2010 zip code level market shares in the proposed SSA were: 32208 -- 42.5%; 32219 -- 31.6%; 32011 -- 21.2%; and 32034 -- 5.6%. On a zip code basis, Mr. Sullivan also examined the market shares of other hospitals drawing patients from the Shands North service area. The 2010 PSA market shares of other hospitals by zip code included: 32218 -- Baptist 24.8%, St. Vincent's 19.8%, Memorial 11.5%; 32226 -- Baptist 19.4%, St. Vincent's 18.4%, Memorial 16.9%; 32097 -- Baptist 22.6%, Baptist-Nassau 45.5% (Baptist combined 68.1%), St. Vincent's 9.1%, Memorial 5.2%. The 2010 market shares of other hospitals in the Shands North SSA included: 32208 -- Baptist 18.3%, St. Vincent's 23.5%, Memorial 9.5%; 32219 -- Baptist 19.6%, St. Vincent's 32.5%, Memorial 8.5%; 32011 -- Baptist 31.8%, Baptist-Nassau 9.6% (Baptist combined 41.4%), St. Vincent's 23.1 %, Memorial 4.5%. A zip code level review of 2010 OB market shares in the Shands North PSA and SSA reveals that Shands Jacksonville's current OB market shares are 25.6% for the total PSA and 27.6% for the total SSA. Existing hospital total PSA OB market shares are: Baptist 21.5% and Baptist-Nassau 11.6% (33.1% combined); St. Vincent's 15%; and Memorial 10.5%. The total SSA market shares are: Baptist 19.1% and Baptist-Nassau 16% (35.1% combined); St. Vincent's 14.1%; and Memorial 10.3%. The Shands Jacksonville application states that utilization for the proposed facility was based on existing Shands Jacksonville market share and market presence in the service area, as well as the absence of an acute care facility in the service area. Shands Jacksonville projects unreasonably large combined market shares for Shands Jacksonville and Shands North. In PSA zip code 32218, Shands Jacksonville has a 32.4% market share and projects a combined 50% market share for both hospitals by 2017. Shands North was projected to experience an absolute growth of 17.6% non-tertiary market share in zip code 32218 due to the redirection of patients from SJMC. There was no persuasive evidence presented at hearing to support these projections. In PSA zip code 32226, Shands Jacksonville has a 23% market share and projects a combined Shands Jacksonville/Shands North market share of 50% by 2017, even though 77% of the patients within 32226 are currently going to other hospitals. In PSA zip code 32097, Shands Jacksonville has only a 9% market share, yet projects a combined Shands Jacksonville/Shands North market share of 50% by 2017. Within the Shands North SSA, the market share assumption for zip code 32208 is reasonable, but the assumptions for zip codes 32219, 32011, and 32034 are not. Shands Jacksonville has 31.6% of the SSA zip code 32219 market, 21.2% in zip code 32011, and only 5.6% in zip code 32034. Although Shands Jacksonville currently has the largest composite market share in the PSA (26.9%) and the SSA (29%), it has not established itself as a dominant provider in the service area. Rather, in many of these zip codes, Shands Jacksonville is the closest hospital, yet many residents are still choosing to seek hospital services elsewhere. Shands Jacksonville's historic market share in the Shands North service area does not support the reasonableness of the projected 45% market share of adult non-tertiary discharges in the proposed PSA, or the projected 15% market share in the SSA. Geographic Access The Shands Jacksonville application asserts that approval of the proposed hospital in northern Jacksonville will improve access to needed health care services in the only portion of the greater Jacksonville area without those services. Specifically, the applicant asserts that access will be improved through the closer proximity and shorter travel times for service area residents comparable to access improvements for other facilities approved over the past decade.4/ (Joint Ex. 1, p. 4) While the CON application did include an estimate of mileage between existing area hospitals, it did not include a travel time study or other analysis to determine whether or to what extent residents of the proposed service area would realize any improvement in geographic access as a result of the new hospital. Nor did Shands Jacksonville offer evidence that residents of the service area could not access existing hospital services within a reasonable travel time. Memorial's health planner, Dan Sullivan, examined average drive times from the major population centers located within each PSA and SSA zip code. This data revealed that 11 minutes is the maximum improvement in average driving time any PSA resident would gain by accessing Shands North. For residents of the most distant PSA town, Yulee (zip code 32097), the Shands North site would be only three minutes closer than Baptist-Nassau. Nearly all of the population within zip code 32097 is contained in two census tracts, with approximately 60% of the zip code's population concentrated in a single census tract, the town of Yulee. Those residents are at least as close to Baptist-Nassau as to the Shands North proposed site. In PSA zip codes 32218 and 32226, there is an 11- minute travel time improvement to Shands North over Shands Jacksonville. The southern part of PSA zip code 32218, where Shands North would be located, is as close to Shands Jacksonville as it is to the proposed new hospital, While the proposed Shands North location would offer minor improvement in drive times for residents of PSA zip code 32218, the residents of that zip code, in comparison to the other PSA zip codes, currently have the best access to existing hospitals. The southern portion of this zip code is approximately equidistant between Shands Jacksonville and the Shands North site. Therefore, those residents would not experience any significant reduction in travel times. PSA zip code 32226 is located east of the proposed hospital site and not along the 1-95 corridor. The majority of these residents currently access hospitals in Jacksonville, including Baptist, St. Vincent's, and Memorial, because these facilities are easily reached by existing road systems. Thus, it is unlikely that a significant number of these residents would alter their historical service patterns to seek care at the new hospital. There is no travel time improvement for SSA zip code 32011. In SSA zip code 32034, it would be much quicker for service area residents to go to Baptist-Nassau than to Shands North. Census tract 503.03 (in zip code 32034) is located only a short distance across the Amelia River from Baptist-Nassau. SSA zip code 32011 is located primarily north and west of the proposed Shands North site. There are no major roads that would facilitate travel for residents of 32011 to Shands North. US Highway 1 runs north to south across the middle of the zip code, and, as reflected in historical market share data, the majority of residents travel south to Jacksonville to receive services at one of the downtown hospitals. For the residents of SSA zip codes 32208 and 32219 it would be quicker to go to Shands Jacksonville or Baptist Medical Center than to Shands North. SSA zip code 32208 borders the zip code where Shands Jacksonville is located and is much closer to the other downtown hospitals than it is to the Shands North location. SSA zip code 32219 is also located closer to Shands Jacksonville's existing campus than to the proposed Shands North location. It is unlikely that patients would travel north from Shands Jacksonville for less comprehensive services at Shands North. Given the location of population centers within the service area of the proposed hospital, and the locations of existing area hospitals, Shands North would offer only minimal, if any, improvements in travel time for the majority of the residents in the service area. Access to Emergency Services Shands Jacksonville's downtown campus has a large and very busy emergency department. It served 87,312 emergency patients in 2010. Shands Jacksonville is designated a Level 1 trauma center. The trauma area within the emergency department has been renovated and expanded but the non-trauma areas are difficult to renovate. According to Dr. David Vukich, Chief Medical Officer of Shands Jacksonville, the emergency department at Shands Jacksonville has both capacity and flow rate issues. Patients could be seen on a timelier basis if the proposed Shands North facility was available. Currently, average throughput of emergency department patients (from time of arrival until departure) is four to four and a-half hours. If the patient's condition is serious enough to warrant admission to the hospital, it may take 10 to 11 hours from presentation until an inpatient bed is available. While emergency department capacity problems have existed at Shands Jacksonville for a number of years, they are particularly pronounced during the winter with a seasonal influx of flu cases. Shands Jacksonville contends that service to emergency patients would be enhanced through approval of the new hospital. Specifically, Shands North would allow a redirection of many ER cases that otherwise come to Shands Jacksonville, thereby "decompressing" the downtown emergency department, and reducing waiting times. There were 75,670 total emergency visits by Shands North service area residents in 2010. 26.8% of those patients accessed those emergency services at Shands Jacksonville. The vast majority of the Shands North service area residents who accessed emergency services (86%) were not transported by EMS vehicle. In CY 2010, EMS transports for emergency services from the Shands North PSA totaled 5,540.5/ Of those, 2,807 (50.7%) were transported to Shands Jacksonville. During the same period, 75% of the Shands North residents who sought emergency department services at Shands Jacksonville travelled there via means other than EMS transport. Based upon its 45% PSA and 15% SSA market share assumptions and the historical use rate within the proposed service area, Shands Jacksonville projects that 25,006 Shands North emergency department visits will originate from the combined PSA and SSA in 2017. Of that number, Shands Jacksonville projects that the Shands North ED will redirect 11,889 emergency visits from Shands Jacksonville, thereby reducing the Shands Jacksonville emergency visit volume by 13.6%. Although Shands Jacksonville argues that decompression of its downtown emergency department strongly mitigates for CON approval, it failed to persuasively establish a need to expand its current capacity. No persuasive evidence was presented that ED patients were experiencing unreasonable wait times prior to being seen by an ED physician, or that patients at Shands Jacksonville were not timely receiving needed emergency services. For example, there was no evidence presented that the Shands Jacksonville emergency department has been placed on “Diversion Status” because it was at maximum capacity. And even had it been established that the "compressed" emergency department at Shands Jacksonville was inadequate to meet patient needs, there was no persuasive evidence that Shands Jacksonville could not expand capacity at the current downtown location. In addition, the contemplated development of outpatient services at the Shands North site, including an urgent care center or freestanding emergency department, would also serve to decompress the downtown location.6/ Such outpatient alternatives could treat many of the less intensive emergency patients that otherwise would have gone to Shands Jacksonville. Moreover, to whatever extent a Shands North emergency department would enhance access for area residents to emergency services; a freestanding emergency department could accomplish this objective. There is no credible evidence in this record that persons requiring emergency services in the proposed service area are not currently accessing those services in a timely manner. Rather, residents of the proposed service area have access to existing hospitals within reasonable geographic proximity. That circumstance is not likely to change in the foreseeable future, given the relatively modest projections of population growth within the service area. Economic Access Shands Jacksonville treats all patients regardless of their ability to pay, and is the provider of choice for indigent populations in the greater Jacksonville area. Shands Jacksonville is one of the largest safety net hospitals in the state. In 2010, Shands Jacksonville provided 24.6% of all bad debt and charity care and 25.3% of Medicaid services received by residents of District 4. There are limited options for those who cannot afford traditional insurance and do not qualify for Medicare. While the Medicaid Program provides funding for qualifying patients, Medicaid reimbursement to hospitals typically does not cover the full cost of providing care. Shands Jacksonville has faced seven decreases to its Medicaid funding in the last five years. In its most recent fiscal year, Shands Jacksonville's reimbursement was reduced by $10 million. The Medicaid program makes Low Income Pool (LIP) payments available for hospitals that provide a disproportionate share of their services to indigent patients. However, the amount of money that Shands Jacksonville receives from LIP funding has decreased over time. Shands Jacksonville also contracts with the City of Jacksonville to provide services to patients that have no other funding source. In 2012, the contract requires Shands Jacksonville to care for over 11,000 patients. Shands Jacksonville receives $23.7 million per year to care for these patients. The number of patients that Shands Jacksonville treats pursuant to the City of Jacksonville (City) contract has increased steadily, while the amount paid by the City has not increased in 10 years. Funding under the City contract falls far short of covering the cost of caring for all 11,000 patients who will be treated pursuant to the contract. Though Shands Jacksonville receives $23.7 million annually from the City, the costs of caring for covered patients ranges from $40 to 60 million per year. Reductions in reimbursement under Medicaid and the LIP program, coupled with inadequate funding under the City contract, have made it increasingly challenging for Shands Jacksonville to continue its mission as the area safety net provider. Many hospitals are able to offset losses incurred from treating Medicaid and indigent populations by attracting patients with better insurance, such as commercial insurance, managed care, or Medicare. However, Shands Jacksonville is not able to successfully cover losses on indigent patients by subsidizing that underfunded care with better reimbursement from traditional payors. There simply are not enough of those better paying funding sources to cover the losses incurred when treating so many uninsured and Medicaid patients. For Shands Jacksonville, location is also an issue. Shands Jacksonville is located in downtown Jacksonville, an area home to the highest concentration of indigent in Duval County. So long as Shands Jacksonville maintains all of its hospital beds and services in its current downtown location, it will continue to be fiscally challenged as the region's safety net provider. Shands Jacksonville's financial travails are not the result of inefficient operations. To the contrary, Shands Jacksonville is already operating as one of the most efficient hospitals in the country. University Healthcare Consortium recently ranked Shands Jacksonville as the fifth most efficient academic hospital in the nation for supply costs, and a top ten most efficient provider overall. With Shands Jacksonville already operating in a very efficient manner, the hospital must look elsewhere for solutions to its funding concerns. Shands Jacksonville could reduce the level of service it provides to those who are unable to pay, or alternatively, enhance its revenues by improving its payor mix. It is the latter solution Shands Jacksonville hopes to achieve by filing the Shands North application to expand into an area of the District with a more attractive payor mix. In its application, Shands Jacksonville did not project a payor mix and did not offer to condition the CON on a specific payor mix due to the uncertainties surrounding health care reform and the Medicaid payment system. However, in its response to Memorial's opposition letter, Shands Jacksonville projected that at Shands North, Medicaid would represent 18%, and self-pay and non-payment would represent 10.2% of total discharges in Year 3 of operation. The Shands North projections are slightly higher than the current levels of Medicaid (16.2%) and self-pay/no-pay (9.5%) discharges for residents of the service area. While the Shands North projections do not reflect significant increases in the levels of service to Medicaid and indigent patients in the proposed service area, they do reflect a more favorable payor mix as compared to the Shands Jacksonville downtown location. For example, the Shands North projected Medicaid volume is 18%, while the downtown hospital is projected to be 29.4%. Similarly, the Shands North location is expected to have a significantly higher mix of commercial insurance, at 22.6%, than the downtown hospital, at 9%. The levels of Medicare and "all other payors" are projected to be virtually identical at the two Shands Jacksonville locations. There was no persuasive evidence in this record that traditionally underserved patients (Medicaid and indigent) residing in the proposed service area are not currently able to access needed hospital services. Similarly, there was no evidence adduced at hearing that existing providers are denying access to hospital services based upon financial criteria. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. In addition to its arguments relating to enhancement of geographic, emergency and economic access, Shands Jacksonville contends that in order to maintain its' long-term viability as the safety net hospital in District 4, it needs an acute care presence beyond downtown Jacksonville. As previously noted, the downtown hospital has a relatively high percentage of indigent patients and governmental payors. Shands Jacksonville asserts that the approval of Shands North, with a higher mix of managed care, commercial, and Medicare patients would diversify and improve the overall payor mix of the organization. However, Shands Jacksonville's application did not include pro forma financial projections, or otherwise quantify the extent to which the improved payor mix would bolster the organization’s bottom-line financial performance or overall financial condition.7/ Nor was such testimony offered at the final hearing. As noted, in its written response to Memorial’s letter of opposition, Shands Jacksonville projected that 18% of Shands North’s discharges would be Medicaid, and 10.2% would be self-pay or no-pay. However, no financial information or schedules were included to demonstrate that with these relatively high levels of low-pay or no-pay patients the new facility would generate revenues in excess of expenses, and therefore make a positive contribution to Shands Jacksonville’s overall financial health.8/ In the absence of such evidence, there is no basis to determine the extent to which approval of the Shands North hospital would contribute to Shands Jacksonville's long term financial viability, if at all. Accordingly, this criterion does not weigh in favor of approval. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. There are a total of eight existing general acute care hospitals located in Duval County. In addition, Baptist Medical Center-Nassau is located in adjacent Nassau County, within Subdistrict 4-1. There are also two CON-approved, but not yet operational hospitals in the greater Jacksonville area. 107 As previously noted, for adult non-tertiary discharges in CY 2010, Shands Jacksonville had the highest reported market share (26.9%) from the PSA among other area hospitals, followed by Baptist Medical Center (23.6%); St. Vincents (17.8%); Memorial (11.2%); and Baptist-Nassau (8.9%). The remaining area hospitals each accounted for less than 4% of the PSA discharges. There is a competitive market for hospital services in the proposed service area. There is no persuasive evidence that approval of the project would likely make any significant inroads into the already competitive market in the greater Jacksonville area, and the proposed service area in particular, with Shands Jacksonville, Baptist, and St. Vincents being the dominant providers. Aside from offering a minor improvement in drive times for residents of PSA zip code 32218 to receive non- tertiary and OB services and some cost-savings, e.g., travel- related costs and time, there is no persuasive evidence that the project is likely to foster competition that promotes quality and cost-effectiveness. This criterion does not weigh in favor of application approval. Section 408.035(1)(i): The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. There is no question that Shands Jacksonville plays an important role as a safety net provider in the greater Jacksonville area. Shands Jacksonville provides more care to Medicaid and medically indigent patients than any other acute care hospital or hospital system in District 4. Shands Jacksonville provided 47.4% of its total patient days to Medicaid, Medicaid HMO and charity patients in CY 2010. By comparison, the other District 4 facilities provided on average only 18.6% of their patient days to those payor classes during CY 2010. Memorial challenged Shands Jacksonville's commitment to Medicaid and indigent patients within the proposed service area because the application did not offer specific conditions relating to the provision of services to those payor classes. However, given Shands Jacksonville's historic commitment to these populations, and its projected payor mix within the service area, Memorial's argument in this regard is rejected. The applicant complies with this criterion. Other Arguments for Approval Shands North as Evacuation Center As an additional basis for approval, Shands Jacksonville points out that Shands North would be located in a low priority evacuation zone, on high ground. As such, Shands North would serve as an additional evacuation center for residents of Amelia Island and other coastal areas. In addition, Shands North would be a valuable asset in the evacuation of inpatients from Baptist-Nassau and for special needs residents, such as persons dependent on electrical medical equipment. However, Shands did not offer documentation or evidence that demonstrated that coastal community residents had experienced any prior natural disasters or evacuation orders, or that there are currently inadequate accommodations for evacuees. More importantly, a hospital applicant's proposed service as an evacuation center is not contemplated by any of the CON review criteria, and therefore is not relevant. Job Creation Shands Jacksonville contends that another basis for approval is that the new Shands North hospital will create jobs during the construction phase and, once operational, long-term employment at the hospital. Although temporary construction jobs may occur during new hospital construction to some unknown extent, the same would be true of any health-care related or other building construction. Further, any new jobs associated with hospital operations would be very limited because Shands North patients would have been redirected from other existing hospitals and ostensibly some personnel at other hospitals, such as Memorial, would simply shift their employment to Shands North. Again, this argument for approval is not contemplated by any of the CON review criteria, and therefore is not entitled to any weight in the ultimate determination. Adverse Impact Impact from Lost Cases Memorial's planning expert analyzed the expected adverse impact on Memorial and other hospitals likely to result from development of Shands North under three different scenarios. The first approach utilized the patient shift from Shands Jacksonville to Shands North as assumed in the CON application. If realized, that scenario would result in a 2017 loss of 2,115 patients by Shands Jacksonville, 1,138 by Baptist, 953 by St. Vincent's, 491 by Memorial, and 589 by Baptist- Nassau. The second approach assumed that the impact on existing providers would be in proportion to the historical market shares of those providers in 2010. This appears to be the most realistic and likely of the three scenarios. This scenario results in a lesser impact on Shands Jacksonville and a somewhat greater impact on the other providers. The third scenario assumed that 75% of Shands Jacksonville's discharges from Scenario 2 shift to Shands North. This scenario would result in less impact on Shands Jacksonville and greater impact on the other providers. This is the least likely of the three scenarios. The following chart summarizes the potential impact on area hospitals (in lost discharges) under the three scenarios: Projected Adverse Impacts Scenario 1 of Shands North Scenario 2 in 2017 Scenario 3 Shands Jacksonville (2,115) (1,593) (865) Baptist (1,138) (1,320) (1,536) St. Vincent's (953) (1,057) (1,250) Memorial (491) (592) (681) Baptist-Nassau (589) (616) (745) (Memorial Exhibits 31-33) Scenario 1 would result in a $3.5 million annual contribution margin loss to Memorial: $2 million from OB and non-tertiary services; $1 million from outpatient services; and $430,000 from ED services. Scenario 2 would result in a $4.3 million annual total contribution margin loss, and Scenario 3 would result in a $4.9 million annual total contribution margin loss. As noted above, Scenario 2 is the most likely projection of lost volume at Memorial, but in any event, the range of potential lost contribution margin impacting Memorial is between $3.5 million and $4.9 million annually. In 2010, Memorial had an after-tax total margin of $50,191,932. Thus, a recurring financial loss within this projected range would represent a loss of between 7% and 10% of Memorial's net profit, and would constitute a material adverse financial impact. Adverse Impact on Staffing With the opening of three new hospitals, competition for nurses and other health professionals in the Jacksonville area is likely to increase significantly. Specifically, approval of three new hospitals in the market (the previously approved St. Vincent's Clay and HCA West Jacksonville, and the proposed Shands North), even with staggered openings, will create increased competition for nurses and other trained clinical staff. As a result, it will become increasingly difficult for both existing and new providers to attract and retain staff. Consistently hard to fill positions include experienced RNs, who are sought for all hospital departments, not just medical/surgical units. It is particularly difficult to find experienced nurses for high-intensity hospital services, such as critical care and the emergency department. Currently, Memorial has 51 RN vacancies, and Memorial's 12-month average vacancy rate for RNs is about 6.5%. Like Memorial, Shands Jacksonville also has openings for experienced RNs. The Shands Jacksonville application did not project the number of nurses or other personnel that would need to be hired to staff the new hospital. Memorial's witness on staffing issues, Steven Burgess, estimated that between 45-60% of new hospital positions are typically filled by RNs. According to Mr. Burgess, this equates to an estimated need for Shands North to hire between 150-170 new RNs. However, Mr. Burgess' estimate did not account for the fact that upon licensure of Shands North, 100 acute care beds at Shands Jacksonville would be de- licensed, and some of the nurses employed at the downtown location would likely be transferred to the new facility. Whatever the ultimate number of nurses and other personnel required to staff Shands North, because a significant number of Memorial's RNs and other staff live closer to Shands North, Memorial is likely to lose staff to the new hospital, and as a result, incur additional personnel costs. About 225 Memorial employees (15% of the total), including 75 RNs (11%), live closer to the proposed Shands North site than to Memorial. These individuals are most at risk of being lost to Shands North, since many would be attracted to a new hospital closer to their homes. Although it is not possible to quantify a specific dollar impact, Shands North recruiting efforts will likely drive up labor costs for Memorial and the other area hospitals, including increased retention bonuses, increased recruiting bonuses, hiring contract labor, and additional overtime. These costs will likely be compounded by the additional competition resulting from the opening of the two previously approved hospitals in the Jacksonville market.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying CON Application No. 10125. DONE AND ENTERED this 7th day of December, 2012, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 7th day of December, 2012.
The Issue Whether Anthony Wayne Blunt, a minor, suffered a "birth- related neurological injury," as defined by Section 766.302(2), Florida Statutes. If so, whether Petitioner's recovery, through settlement, with the participating physician bars her from recovery under the Florida Birth-Related Neurological Injury Compensation Plan.
Findings Of Fact Preliminary findings Petitioner, Jane Blunt, is the mother and natural guardian of Anthony Wayne Blunt, a minor. Anthony was born a live infant on September 24, 1997, at Tenet Healthcare Corporation, d/b/a North Bay Medical Center, a hospital located in New Port Richey, Florida, and his birth weight exceeded 2,500 grams. The physician providing obstetrical services at Anthony's birth was Melchiades J. Loman, M.D., who, at all times material hereto, was a "participating physician" in the Florida Birth-Related Neurological Injury Compensation Plan, as defined by Section 766.302(7), Florida Statutes. Coverage under the Plan Pertinent to this case, coverage is afforded by the Plan for infants who suffer a "birth-related neurological injury," defined as an "injury to the brain or spinal cord . . . caused by oxygen deprivation or mechanical injury occurring in the course of labor, delivery, or resuscitation in the immediate post- delivery period in a hospital, which renders the infant permanently and substantially mentally and physically impaired." Section 766.302(2), Florida Statutes. See also Section 766.309(1)(a), Florida Statutes. Anthony's presentation On March 20, 2002, following the filing of the claim for compensation, Anthony was examined by Michael S. Duchowny, M.D., a pediatric neurologist associated with Miami Children's Hospital, Miami, Florida. Dr. Duchowny reported the results of that neurological evaluation, as follows: PHYSICAL EXAMINATION reveals Anthony to be alert and impulsive. He weights 46 pounds and is 43 inches tall. The hair is blonde and of normal texture. The skin is warm and moist without cutaneous stigmata. There are no dysmorphic features. The head circumference measures 50.8 cm which falls within standard percentile. There are no cranial or facial anomalies or asymmetries. The neck is supple without masses, thyromegaly or adenopathy. The cardiovascular, respiratory and abdominal examinations are normal. Peripheral pulses are 2+ and symmetric. Anthony's NEUROLOGIC EXAMINATION reveals an impulsive behavioral style and short attention span. He is oppositional and the examination is completed with his mother providing restraint. He talked in completed sentences and clearly identified objects, colors and body parts. There is a slight lingual disarticulation. Cranial nerve examination reveals full visual fields to direct confrontation testing and normal ocular fundi. The pupils are 3 mm and briskly reactive to direct and consensually presented light. There are no funduscopic abnormalities. Facial movements are symmetric. The tongue and palate move well. The uvula is midline. Motor examination reveals an asymmetry of the upper extremities whereby there is a more downward slant to the right shoulder and a fixed contracture of the right upper extremity whereby Anthony is unable to fully extend the elbow. In contrast, he has good finger dexterity and well developed pincer grasp. He transfers readily between hands. Muscle bulk and tone appear symmetric. Anthony is however unable to fully extend the right arm above the shoulder and in fact cannot place the right arm in a complete horizontal position parallel to the left. The lower extremity's strength, bulk and tone are within normal limits. Deep tendon reflexes are 2+ in the lower extremities and 1+ in the upper extremities. Plantar responses are down- going. Station and gait are stable although there is diminished arm swing on the right side. Sensory examination is grossly intact to withdrawal of all extremities to touch. The neurovascular examination reveals no cervical, cranial or ocular bruits and no temperature or pulse asymmetries. In SUMMARY, Anthony's neurologic examination reveals findings referable to a mild right Erb's palsy and mild developmental delay. He additionally has short attention span and high activity level. I believe that the findings on examination suggest neither a substantial nor permanent impairment of mental or motor functioning. Following his examination, Dr. Duchowny had the opportunity to review Anthony's medical records, and on August 1, 2002, concluded that: [t]he medical records, together with the neurological evaluation do not suggest that Anthony has a permanent or substantial mental or physical impairment of the central nervous system acquired in the course of labor, delivery or resuscitation. Rather, Anthony has a mild right Erb's palsy and evidence of mild learning problems which are developmentally based. Further, in his deposition testimony (Respondent's Exhibit 1), Dr. Duchowny offered the following additional observations: Q. . . . Is it your opinion based upon . . . your evaluation of Anthony Blunt and by your review of the medical records that the only injury suffered by Anthony Blunt in the course of labor and delivery was the Erb's palsy injury? A. Yes. Q. And the reason that injury does not fit within the NICA Statute in your opinion is because it's located outside the central nervous system?[2] A. Yes. Q. Therefore, it wouldn't be considered an injury to the spinal cord? A. That's correct. Q. And there was no brain injury based on your review of the records and your evaluation of the child that was suffered in the course of labor and delivery? A. That's correct. * * * Q. Could you explain just briefly if it's not related to a birth injury what ADHD [Attention Deficit Hyperactivity Disorder] is related to or how it develop[ed]? A. It is related to slow maturation of the brain, it's a developmental disorder. Q. Does that slow maturation of the brain have anything to do in this instance with any type of injury to the brain during labor and delivery based upon your experience and review in this case? A. No. An Erb's palsy, such as that evidenced by Anthony, is a weakness of the upper extremity due to damage to the nerve roots of the upper brachial plexus, and does not involve the brain or spinal cord. Moreover, the impairment Anthony suffers is mild, as opposed to substantial, and there is no evidence of mental impairment. Consequently, while Anthony may have suffered a mechanical injury, permanent in nature (to his right brachial plexus) during the course of birth, he does not qualify for coverage under the Plan.3 Petitioner's settlement with the participating physician By the terms of their Pre-Hearing Stipulation, filed November 26, 2002, the parties agreed, as follows: 3. The underlying medical negligence lawsuit captioned Jane Lynn Blunt and Wayne A. Blunt, Individually and as parents and next of friends of Anthony W. Blunt, a minor, v. Melchiades J. Loman, M.D.; Loman & Loman, M.D., P.A., d/b/a Woman's Care Center Center; Lynda McKenry, CNM; Raul Montenegro, M.D.; St. Petersburg Maternal Fetal Medicine Associates, P.A.; Humana Medical Plan, Inc.; and Morton Plant Hospital Associates, Inc., d/b/a North Bay Hospital, Pinellas County Case No. 99-4566-CI-20, is premised upon injuries allegedly sustained by the Petitioner and Child during the birth of the Child. * * * 9. The Petitioner and Child recovered $270,000 (before attorney's fees) . . . [through settlement of] the lawsuit against Dr. Loman and Humana Medical Plan, Inc.
The Issue On February 23, 2010, Petitioners Angel Walker and James Prate, Sr., on behalf of and as parents and natural guardians of James Prate, Jr. (the child), filed a Petition (claim) with the Division of Administrative Hearings (DOAH) for compensation under the Florida Birth-Related Neurological Injury Compensation Plan (Plan), for injuries allegedly associated with James Prate, Jr.'s birth on July 14, 2007, at Shands Hospital at the University of Florida. DOAH served the Florida Birth-Related Neurological Injury Compensation Association (NICA) with a copy of the claim on February 25, 2010. Jill Roscoe, M.D., was named in the Petition as the physician providing obstetric services at the birth. Dr. Jill Roscoe Delker was served with a copy of the claim on July 9, 2010. Shands Hospital at the University of Florida was named in the Petition as the place (hospital) of birth/injury. The Petition was sent by certified mail from DOAH to Shands Hospital at the University of Florida, 1600 Southwest Archer Road, Gainesville, Florida 32610, on February 2, 2010 and on June 22, 2010. No person or hospital has moved to intervene herein. After several extensions in which to file the Response required by Section 766.305(4), Florida Statutes, NICA served, on August 18, 2010, a Motion for Summary Final Order, which was filed with DOAH the same day. That Motion for Summary Final Order is accepted as NICA's Response, required by statute, as well as for consideration here as a motion. NICA's Motion for Summary Final Order is supported by Exhibits A and B, copies of the medical records of Angel Walker (mother) and James Allen Prate, Jr., a/k/a Baby Boy Walker (child), respectively. Each set of medical records (Exhibits A and B) are accompanied by "Certificates of Authenticity" executed under oath by Rebecca Baker, the person responsible for maintaining and controlling said records on behalf of Shands at University of Florida. In their entirety, these "Certificates of Authenticity" meet the standards for affidavits in support of a motion for summary judgment as established by Florida Rules of Civil Procedure 1.510. (See, particularly, the Committee Notes and Authors' Comment). The predicate for the Motion for Summary Final Order is that James Prate, Jr., was a single gestation and at birth weighed less than the 2,500 grams required by statute as the threshold for a NICA claim/eligibility. The supporting medical records documenting NICA's position show, at Bates page number 000000024 of Exhibit A (Shands Hospital Operative Report for Angel Walker) that caesarean section surgery was performed on the mother on July 14, 2007, resulting in the birth of a single male infant weighing 2,463 grams. At Bates page number 000000003 of Exhibit B (Shands Hospital Coding Summary for "Walker, Boy/Angel") is a birth date of July 14, 2007, and a descriptive diagnosis of a "single liveborn" child. At Bates page number 000000005 of the same exhibit, a Shands Hospital Discharge Summary for "Walker, Boy/Angel," with mother "Angel Walker," and a birth date of July 14, 2007, reflects the birth weight as 2,463 grams. A similar notation, complete with the same names identifier of "Walker Boy/Angel," and same July 14, 2007 birth date appears at Bates page number 000000009 of the Shands Neonatology Delivery Note dated July 14, 2007, and again reflects a birth weight of 2,463 grams. Finally, part of Exhibit B, at Bates page number 000000043, is Shands' Newborn Identification of a male child weighing 2,463 grams born to mother Angel Walker, and showing "Designated Significant Other" to be "James Prate" on July 14, 2007. Petitioners did not file a timely response in opposition to NICA's Motion for Summary Final Order as provided- for in Florida Administrative Code Rules 28-106.103 and 28- 106.204, so on September 2, 2010, an Order to Show Cause provided: On August 18, 2010, Respondent served a Motion for Summary Final Order. To date, Petitioners have not responded to the motion. Fla. Admin. Code. R. 28-106.103 and 28-106.204(4). Nevertheless, and notwithstanding that they have been accorded the opportunity to do so, it is ORDERED that by September 21, 2010, Petitioners shall show good cause in writing, if any they can, why the relief requested by Respondent should not be granted. No timely response to the September 2, 2010, Order to Show Cause has been filed. Given the record, there is no dispute of material fact. Specifically, there is no dispute regarding James Prate, Jr.'s live birth on July 14, 2007, that he was the result of a single gestation, and that he weighed only 2,463 grams at birth.
The Issue The issue to be determined is whether Ivan suffered a birth-related neurological injury as that term is defined in section 766.302(2).
Findings Of Fact Ivan was born October 26, 2019, at Orange Park Medical Center in Orange Park, Florida. At birth, he weighed seven pounds, 11 ounces. Ivan’s mother died the following day. Donald Willis, M.D., is an expert in maternal-fetal medicine and is board-certified in obstetrics and gynecology and maternal-fetal medicine. Dr. Willis reviewed the medical records in this case and issued a report dated May 27, 2021. In his report, he noted that Ivan was delivered by emergency Cesarean section, during which a 30-percent placental abruption was noted. His report included the following information: The baby was depressed at birth. Apgar scores were 2/4/9. … The baby was flaccid, cyanotic and without respiratory effort at birth. Heart rate was 110 bpm. Bag and mask ventilation was given for 3 minutes, follow[ed] by CPAP. The baby was transferred to the NICU on CPAP for respiratory depression. Physical exam on admission to the NICU noted little spontaneous movements and flaccid tone. Hypoxic ischemic encephalopathy was suspected 1 Similarly, the Motion for Summary Final Order does not contain proposed findings of fact or proposed conclusions of law. In the future, it would be helpful if counsel would consider including those proposed findings you are asking the ALJ to find. and the baby transferred to Shand’s Hospital for possible cooling protocol. The baby arrived at Shand’s NICU on CPAP/ Neurologic exam was noted to be normal. The baby did not meet criteria for cooling protocol. Hospital course at Shand’s was uncomplicated. The baby was on room air by DOL 1. Sepsis w/o was negative. The baby was discharged home on DOL 5. Head imaging studies and/EEG’s were not [performed] during the newborn hospital stay. * * * There was an apparent obstetrical event (placental abruption) [that] resulted in some degree of oxygen deprivation to the baby during labor and delivery. However, it does not appear that the oxygen deprivation resulted in brain injury. Dr. Willis’s expert opinion is credited. Ivan was examined by Rash Sheth, a board-certified pediatric neurologist. After his evaluation, Dr. Sheth issued a report that contained the following: Motor examination revealed generalized normal muscle tone in all extremities in a symmetric distribution. There is full range of motion at all joints. There are no adventitious movements and no fasciculations or muscular atrophy. Ivan evidenced intact fine motor coordination characterized by individual finger movements with bimanual hand and finger cooperation. Objects were easily transferred between hands, and he grasped independently with either hand using his thumb and forefinger. Coordination and gait: He walked independently with good stability he was able to stoop and recover. His gait was normal based. There were no falls, and he had no tremors. Sensory examination is intact to withdrawal of all extremities to stimulation. Neurovascular examination reveals no cervical, cranial, or ocular breits and no temperature asymmetries. In SUMMARY, Ivan’s neurological evaluation demonstrates a normal neurological exam. His development is delayed in expressive language with better preserved receptive language. He does have some stereotypical behaviors which would require more detailed assessment for features of autism. Dr. Sheth concluded that “as of the time of this examination and evaluation Ivan’s case indicates that he does not suffer from either substantial mental or substantial physical impairment.” Dr. Sheth’s opinion is credited. Based on the evidence presented, Ivan does not suffer from a birth- related neurological injury.
Other Judicial Opinions Review of a final order of an administrative law judge shall be by appeal to the District Court of Appeal pursuant to section 766.311(1), Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of administrative appeal with the agency clerk of the Division of Administrative Hearings within 30 days of rendition of the order to be reviewed, and a copy, accompanied by filing fees prescribed by law, with the clerk of the appropriate District Court of Appeal. See § 766.311(1), Fla. Stat., and Fla. Birth-Related Neurological Injury Comp. Ass'n v. Carreras, 598 So. 2d 299 (Fla. 1st DCA 1992).
The Issue The issues to be determined are whether Eliana Ricketts (Eliana) suffered a birth-related neurological injury; and, if so, whether that injury renders the infant permanently and substantially mentally and physically impaired, as provided by section 766.302(2), Florida Statutes (2016).
Findings Of Fact Eliana was born on September 16, 2017, at Baptist Hospital, a licensed hospital in Jacksonville, Florida. Eliana was a child born of a single gestation, weighing 3,595 grams. NICA retained Donald C. Willis, M.D., an obstetrician specializing in maternal-fetal medicine, to review the medical records of Eliana and her mother, Michelle Ricketts. NICA asked Dr. Willis to provide an opinion as to whether there was a brain or spinal cord injury to Eliana, due to either oxygen deprivation or mechanical injury that occurred in the course of labor, delivery, or resuscitation in the immediate postdelivery period in the hospital. Dr. Willis authored a report to NICA on February 20, 2018, which is incorporated into his affidavit dated March 7, 2019. In his report, Dr. Willis stated in part: The mother, Michelle Ricketts [had] . . . no significant prenatal problems. She was admitted to the hospital at term in labor. Her cervix was dilated 4 cms on admission. The fetal heart rate (FHR) monitor tracing during labor was available for review. The baseline heart rate was normal at 140 bpm with normal variability. A decrease in FHR variability developed about 3 hours prior to delivery. Variable FHR decelerations started about 30 minutes prior to delivery. Cervical dilation was complete. Vacuum extractor was applied to assist vaginal delivery due to FHR decelerations and maternal fatigue. Delivery of the fetal head occurred after three pulls with one pop-off. Delivery was then complicated by a shoulder dystocia, lasting 4 minute 40 seconds. Birth weight was 3,595 grams. The newborn was depressed with Apgar scores of 3/5. Umbilical cord blood gas was not done. There was no respiratory effort at birth. Intubation was required and the baby transferred to the NICU. Chest X-Ray showed no infiltrates. Hypoxic ischemic encephalopathy (HIE) was suspected and head cooling protocol initiated. There was a large subgaleal hematoma. The scalp was boggy with swelling behind the ears. The subgaleal hemorrhage resulted in anemia with a Hct of 27% to 28%. Blood transfusion was required. DIC was also present. The platelet count dropped to 84,000 with fibrinogen levels of 166 to 110 and prolonged PT and PTT. Cryoprecipitate and platelet transfusions were given. Seizures began shortly after birth. Arterial blood gas (ABG) at one hour after birth had a pH of 7.23 and a base excess of -17. ABG 4 hours later had a pH of only 7.14 and a base excess remaining at -17. The initial EEG was abnormal, confirming seizure activity. Follow-up EEG on DOL [day of life] 3 was consistent with diffuse cerebral dysfunction. MRI on DOL 5 showed extensive bilateral infarctions, consistent with “significant anoxic injury” and extensive scalp swelling. * * * There was an obstetrical event that resulted in loss of oxygen to the baby’s brain during delivery and continuing into the immediate post delivery period. The oxygen deprivation resulted in brain injury. I am not able to comment about the severity of the injury. Eliana’s medical records were also reviewed by Laufey Sigurdardottir, M.D., a board-certified pediatric neurologist at Nemours Children’s Hospital. Dr. Sigurdardottir examined Eliana when she was just short of seven months old. Included in the records she reviewed were records of a neurological follow-up at four months with another neurologist, which state in part: [Four] month old girl with history of HIE and subsequent seizures that have since resolved. Overall, Eliana has tolerated Phenobarbital without side effects. Her most recent EEG (12/5/17) was normal. She has not had any clinical events concerning for seizures. She is currently on track with milestones (tracking, rolling, cooing, etc.) and physical exam is notable for the absence of any focal features and normal tone. She previously tested out of ‘Early Steps’ as there were no motor concerns from that perspective. As a result of her own examination of the infant, Dr. Sigurdardottir found Eliana upon examination to be alert, interactive, with what appeared to be normal development. She also found that she had a strong grasp with both hands bilaterally, and had normal response on vertical and horizontal suspension. She stated in summary: Patient is a 6 month old with history of Brachial plexus injury during complicated vaginal delivery as well as hypoxic ischemic event, resulting in a moderate to severe hypoxic ischemic encephalopathy. She had refractory neonatal seizures, evidence of acute ischemic injury on brain MRI and abnormal neurological exam in neonatal period. She has developed acquired microcephaly but has made remarkable neurologic recovery and is close to being age appropriate for her motor milestones at this time. Dr. Sigurdardottir opined that while Eliana did suffer a neurological injury to the brain due to oxygen deprivation during labor and delivery, she did not find permanent and substantial delays in motor and mental abilities, and, at the time of the examination, did not fulfill the criteria of having permanent and substantial mental and physical impairment. The opinions of Drs. Willis and Sigurdardottir, which are unrebutted, are credited. It is found that Eliana suffered from oxygen deprivation during delivery and into the immediate postdelivery period, which caused a brain injury. While Dr. Willis determined that there was a brain injury at birth, he did not comment on the severity of the injury. Dr. Sigurdardottir, however, opined, and it is found, that the injury did not result in a permanent and substantial physical and mental impairment.
