92-001490CON University Community Hospital vs. Agency For Health Care Administration Status: Closed Recommended Order on Friday, October 8, 1993.

Summary: Not normal circumstances for level II neonatal intensive care unit exist with providers at capacity but certificate of need denied due to lack of evidence of financial feasibility.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNIVERSITY COMMUNITY HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 92-1490

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, this case was heard by Eleanor M. Hunter, the Hearing

Officer designated by the Division of Administrative Hearings, from November 16-

20, 1992, in Tallahassee, Florida.

APPEARANCES

For Petitioner, Alan C. Sundberg, Esquire

University Community Cynthia S. Tunnicliff, Esquire

Hospital: W. Douglas Hall, Esquire

Carlton, Fields, Ward, Emmanuel,

Smith & Cutler, P.A.

First Florida Bank Building

Suite 500

Tallahassee, Florida 32302

For Respondent, Richard Patterson, Esquire

Agency for Health Agency for Health Care Administration

Care Administration: 325 John Knox Road

Atrium Building, Suite 101

Tallahassee, Florida 32303

STATEMENT OF THE ISSUES

Whether Certificate of Need Application Number 6785 should be approved for

the conversion of 10 acute care medical/surgical beds to a 10 bed Level II

neonatal intensive care unit at University Community Hospital.

PRELIMINARY STATEMENT

University Community Hospital ("UCH") in Tampa, Hillsborough County is the

applicant for a certificate of need ("CON") to convert 10 acute care

medical/surgical beds to a 10-bed neonatal intensive care unit. The letter of

intent and application were complete and timely filed with the Department of

Health and Rehabilitative Services ("HRS"), the agency which was responsible for

the administration of the CON laws prior to the establishment of the Agency for

Health Care Administration ("AHCA"). On January 17, 1992, HRS published its

intent to deny the UCH application for the reasons stated in the State Agency

Action Report. UCH filed a petition challenging the preliminary decision of

HRS, as did Lakeland Regional Medical Center and Winter Haven Hospital Inc.

Humana of Florida, Inc., d/b/a Humana Women's Hospital ("Humana") intervened in

the case in March 1992. In October 1992, Lakeland Regional filed a notice of

voluntary dismissal.

The formal hearing was held from November 16-20, 1992. At the formal

hearing, UCH presented the testimony of Keith Kanarek, M.D., expert in

pediatrics and neonatology; Thomas McKell, M.D., Medical Director at Tampa

General Hospital; Jeffrey L. Angel, M.D.; Sandra Williams, expert in health care

finance; Brigitte Shaw; Stanley Graven, M.D., expert in pediatrics and

neonatology; Bonnie Chez, expert in nursing administration, and Scott L. Hopes,

expert in public health, health care planning, epidemiology, biostatistics, and

hospital administration. UCH's Exhibits 1-5, 10-12, and 14-24 were received in

evidence.

Winter Haven presented the testimony of Gus G. Keriazes, Jr., expert in

health care planning; Philip Perry, expert in architecture; and Lance Anastasio.

Winter Haven's Exhibits 1-11 were received in evidence.

Humana presented the testimony of Howard E. Fagin, Ph.D., expert in health

care planning, public health, health care finance, and financial feasibility;

Bridgitte Shaw; Daniel Sullivan, expert in health care planning, health care

finance, and financial feasibility; Joe Delatorre; and Elizabeth Dudek, expert

in health care planning. Humana's Exhibits 1-14 were received in evidence.

AHCA's Exhibit 1 was received in evidence.

On January 22, 1993, Winter Haven filed its Notice of Voluntary Dismissal.

The transcript of the proceedings was filed with the Division of Administrative

Hearings on January 25, 1993. Proposed recommended orders were filed on

February 1, 1993. On March 17, 1993, Humana filed a notice of voluntary

withdrawal of its petition to intervene in this case, and a settlement

agreement. The undersigned erroneously assumed that the settlement included

AHCA and resolved all issues in this case, and entered an order closing the

file. In consideration of Petitioner's Motion for Rehearing indicating that the

issues in dispute between UCH and AHCA have not been resolved, the Order Closing

File is rescinded.

FINDINGS OF FACT

1. On August 9, 1991, HRS published a fixed need pool for Level II and III

Neonatal Intensive Care Services in the Florida Administrative Weekly, Volume

17, Number 32. For District 6, HRS published a "Preliminary Estimate of Bed

Need" for an additional 10 Level II Neonatal Intensive Care Unit (NICU) beds,

with an explanatory footnote which was as follows:

"Due to pending litigation regarding the

inventory of neonatal intensive care unit

beds, no fixed need projection is made."

2. The pending litigation was a challenge to the inclusion of 11 beds at

Winter Haven Hospital ("Winter Haven") on the inventory of existing Level II

NICUs. Following an amendment of the "grandfathering" rules, Winter Haven's

dispute with AHCA was settled. Winter Haven's 11 bed NICU is included on the

Level II inventory and its petition in this proceeding, which a Winter Haven

witness described as their "fall back position", has been voluntarily dismissed.

3. Humana of Florida, Inc., d/b/a Humana Women's Hospital Tampa ("Humana")

intervened in these proceedings. Subsequent to the hearing and filing of

proposed recommended orders, Humana entered its notice of voluntary withdrawal

of its petition on March 17, 1993.

4. AHCA is the state agency which administers CON laws, following transfer

of that responsibility from HRS. See, Chapter 92-33, Laws of Florida.

5. University Community Hospital ("UCH") is a 424 bed hospital in Tampa,

Hillsborough County, Florida, AHCA District 6, with services which include open

heart surgery, pediatric intensive care, and obstetrics.

6. UCH began obstetrics services on September 2, 1991. In its first full

year of operation, there were 1299 deliveries in its 31 bed obstetrics unit.

UCH projected that there would be 1500 to 1800 deliveries in its second year of

obstetrics services.

Numeric Need and Occupancy Levels

7. UCH filed its application to convert 10 acute care beds to establish a

10 bed Level II NICU on September 26, 1991, in response to HRS' August 9, 1991

publication of need. Total project cost was estimated at $765,000.

8. Although HRS described the District 6 publication as a "preliminary

estimate," there is no statutory or rule authority for the publication of any

numeric need number other than the fixed need.

9. By letter dated December 16, 1991, Tampa General Hospital ("Tampa

General") notified HRS that the utilization data for Tampa General, which was

used to calculate numeric need was incorrect.

10. Tampa General reported 11,112 Level II NICU patient days for 1987,

11,387 for 1988, and, initially, 10,770 for 1990. Tampa General also reported a

20 percent increase in births from 1988 to 1990, and a 117 percent utilization

increase in Level III NICU patient days. Tampa General's revised figures

distinguished between services provided in its special care nursery and those

provided in Level II NICU beds. The revised report divided the total 10,770

into 4,600 patient days in special care nursery beds and 6,170 in Level II NICU

beds, but does not specifically take into account the intensity of nursing care

or the severity of infants' conditions.

11. Using 6,170 patient days, rather than 10,770, AHCA recalculated

numeric need, determined that the numeric need was zero, and used zero need in

reviewing the District 6, Level II NICU applications filed in this batch. AHCA

did not publish the revised calculation of zero need. AHCA's policy is to not

recalculate a fixed need pool, unless there is time to republish before

applications are due. Nevertheless, AHCA takes the position that the need

publication in this case may be revised because it was preliminary.

12. Using the August bed need projection published by HRS, Level II NICU

beds were reporting 86.5 percent occupancy in the twelve month period ending six

months prior to the publication. If Tampa General's utilization rates are

decreased from 114.28 percent to 70.43 percent, revised district utilization

rates would decrease from 86.5 percent to 72.83 percent.

13. Staffing ratios and costs indicate that some neonates in the Tampa

General special care nursery received care consistent with Level II NICU

services. There is more credible evidence to support the data used by the

agency in its publication of need than there is to support its revised

determination of zero need.

Minimum 1,000 Births

14. Rule 10-5.042(6), Florida Administrative Code, is, in relevant part,

as follows:

Hospitals applying for Level II neonatal

intensive care services shall not normally be

approved unless the hospital had a minimum

service volume of 1,000 live births for the

most recent 12-month period ending 6 months

prior to the beginning date of the quarter of

the publication of the fixed need pool.

15. There is no dispute that UCH initiated obstetrics services in

September 1991, the same month in which it filed the CON application at issue

in this case. Because the August 9, 1991 publication was the time for

determination of need, then UCH does not meet the requirements of the rule.

Standards For Review

16. The publication of numeric need, minimum district occupancy levels,

and minimum birth volumes are factors which determine the standard for review of

CON applications.

17. Due to the lack of any statutory or rule authority for the publication

of preliminary estimates of numeric need, the nature and only possible effect of

the pending litigation, AHCA's untimely revision of the numeric need number, and

its failure to publish the revised number to allow a point-of-entry for

challenges to the revised numeric need number and occupancy level, UCH is not

required to demonstrate not normal circumstances. The failure to meet the

minimum birth volume rule does, however, necessitate a showing of not normal

circumstances for the approval of the UCH application.

18. UCH assesses that its birth volume, and the number of neonates at UCH

in need of Level II NICU care, the absence of available, accessible alternative

hospitals, and the standard of care in the district are not normal circumstances

which outweigh the minimum birth volume requirement.

Available Alternatives

19. Subsection 408.035(1)(b), Florida Statutes, also requires

consideration of the availability, quality of care, efficiency, appropriateness,

accessibility, extent of utilization, and adequacy of other Level II NICUs in

the district. AHCA asserts that its corrected data showing zero need is a major

indicator of available alternatives. As noted, however, UCH demonstrated the

unreliability of the corrected data. In addition, geographic, economic, and

other practical concerns may also affect accessibility.

20. The total District 6 inventory of Level II NICU beds with 1990

occupancy and patient days as published on August 9, 1991, is as follows:

Hospital Occupancy Patient Days

Humana - Brandon 108.82 1,986

Humana Woman's 72.35 3,961

Tampa General 114.28 10,011

Manatee Memorial 90.23 1,976

Lakeland Regional 75.50 4,409

Winter Haven 49.02 1,968

21. The inventory is accepted as valid for the same reasons that the

original publication of need is accepted as more reliable than the revised

estimates. See, Finding of Fact 13.

22. Tampa General's Level II and III nurseries are not available

alternatives, because they exceed 90 percent occupancy. See, Findings of Fact

10 and 13.

23. Humana Brandon is not an alternative with its Level II and III NICU

beds exceeding capacity.

24. Expert testimony on traffic practice and referral patterns support

UCH's assertion that facilities in Winter Haven or Lakeland are not viable

alternatives, although within the two hour travel time established by the rule

on geographic access. Normal referral patterns are from more rural to more

urban areas.

25. Humana Women's, which is seven miles from UCH and has a transfer

agreement with UCH, is the most geographically accessible, available

alternative. The parties disagree over whether Humana Women's is economically

accessible and has the capacity to serve most of the Level II neonates born at

UCH. Humana Women's increased its service to 10-11 percent Medicaid obstetrics

patients in 1991-1992, in contrast to UCH's level of 7 percent Medicaid

obstetrics patients, and therefore, is no longer economically inaccessible to

Medicaid patients. Humana Women's has 15 Level II NICU beds, which reported 72

percent occupancy in 1990.

26. The demographic characteristics of the UCH service area include 7.1

percent Medicaid eligible population, and overlaps with the service area of

Humana Women's. In addition, UCH and Humana Women's have overlapping medical

staffs. For these reasons, Humana Women's experiences provide the most reliable

indication of the accuracy of UCH's projections. At Humana Women's 7 percent of

neonates require Level II and III care. By contrast, Lakeland Regional Medical

Center experiences 12.7 percent neonates requiring NICU care, close to that

projected by UCH, however, 30 percent of Lakeland Regional's patients are in the

Medicaid payor category. The link between Medicaid and the greater need for

NICU care was established by expert testimony. On this basis, the expert

projections that 7 percent, not 10-15 percent, of UCH newborns will need Level

II NICU care is accepted as reasonable.

27. Average lengths of stay in Humana Women's Level II NICU beds were 6

to 7 days, not 10 days as projected by UCH. That data also supports AHCA's

expert's conclusion that the average length of stay in UCH's stabilization unit,

2.3 days, is not indicative of UCH's having provided Level II care to 160 to 170

neonates.

28. According to AHCA's expert planner, total capacity at Humana Brandon,

Humana Women's and Tampa General is 14,000 patient days. Using the inventory

published by the agency, those hospitals reported a total of 15,958 patient days

in 1990. Even assuming that UCH overestimated the number of neonates needing

NICU care, the capacity at accessible facilities within the district cannot

accommodate the additional patients, and constitutes a not normal circumstance

outweighing the minimum birth volume requirement.

29. The fact that UCH is the only obstetrics facility in Hillsborough

County without Level II and III NICU beds indicates that, if otherwise in

compliance with review criteria, UCH's application should be approved to meet

the need for additional Level II NICU beds.

30. UCH's expert also testified that the number of Level II NICU beds in

the Tampa area were disproportionately low compared to the population. Tampa has

3.2 Level II beds per thousand births in contrast to 7.6 in Lakeland, and 7.7 in

Winter Haven. Given the demographic differences among the hospitals' service

areas, the bed to population ratio was not shown to be meaningful as an

indication of Level II NICU need.

State and Local Health Plans

31. Subsection 408.035(1)(a), Florida Statutes requires an evaluation of

need in relation to applicable state and district health plans.

32. The 1989 Florida State Health Plan lists the following general

categories of preferences, most of which are applicable to any proposal to

transfer or convert acute care beds regardless of the proposed new service:

a) for conversion of acute care beds,

b) for providing indigent care,

c) for providing emergency services,

d) for teaching, research and referral

hospitals, and

e) for providing specialized services.

33. The District 6 plan issued in June 1990 by the Health Council of West

Central Florida includes only one applicable CON allocation factor, which is

related to the state health plan indigent care preferences and is as follows:

Preference shall be given to an applicant who

provides the department with documentation

that they provide, or propose to provide, a

disproportionate share of Medicaid and

charity care patient days in relation to

other hospitals in the subdistrict. The

charity care definition shall be consistent

with the definition used by the Health Care

Cost Containment Board as defined in Chapter

89-275, Laws of Florida.

34. The first group of preferences in the State Health Plan includes the

following:

Preference shall be given to a bed transfer

and conversion application in which the

applicant proposes a sizable reduction of

excess beds in the existing facility.

AHCA argues that the preference is not met. Because UCH has 404 licensed beds

with an average occupancy of about 50 percent, or 200 empty beds, AHCA states

that the conversion of only 10 medical-surgical beds to 10 Level II NICU beds is

not a sizable reduction of excess acute care beds. However, AHCA only projected

a need for an additional 10 NICU beds, which is the minimum size allowed by AHCA

rules. AHCA's position that no additional Level II beds are needed is

inconsistent with penalizing UCH for not proposing to convert more beds in this

application. Therefore, this preference must be deemed inapplicable to this

case. Similarly, given the size of the published need, the objective of

reaching 75 percent occupancy in five years is also inapplicable to this

application.

35. The second relevant group of preferences relates to whether the

conversion of beds will adversely impact disproportionate share providers. That

same issue is also addressed in the group of preferences related to indigent

care. AHCA argues that this preference is not met, because Tampa General, the

only disproportionate share provider in the District, would be adversely

affected. The evidence presented at hearing supports a conclusion to the

contrary, that Tampa General will not be affected adversely. UCH and Tampa

General have an agreement to cooperate in providing NICU services. UCH proposes

to assist Tampa General in the delivery of Level III NICU services, by transfers

of Level II neonates back to UCH as soon as possible. The fact that Tampa

General's Level III utilization has increased substantially, more than 100

percent since 1988, was not disputted. Tampa General's medical director's

testimony on the benefits to Tampa General of the agreement with UCH is

persuasive.

36. The next group of relevant preferences is entitled "Indigent care."

The only local health plan factor also favors applicants which will provide a

disproportionate share of Medicaid and charity care. UCH will not provide a

disproportionate share of its services to Medicaid and charity care patients.

The Level II NICU providers in District 6 average 40 percent Medicaid

participation, and UCH proposes 6 percent. UCH does not meet the

disproportionate share preferences in the state or local health plans.

37. The "emergency services" group of preferences apply to applicants who

(1)accept indigents for emergency care, (2)have a trauma center, (3) provide a

full range of emergency services, and (4) have not been fined for violating

emergency service statutes. UCH has an active emergency room, accommodating

45,000 visits in fiscal year 1991, and under expansion to increase its capacity

to 60,000 visits a year. UCH, in general, meets the preference for providers of

emergency room services.

38. UCH is not a teaching, research, or referral center, nor is its

proposed service unavailable within its service area. In response to this group

of preferences, UCH has also not demonstrated that patients are leaving the

state for this service, that any new physician specialities would be attracted

to the area, or that its proposal will expand medical research in Florida.

39. For the group of preferences for specialized services, UCH meets two

of three applicable preferences. One for proposing a conversion of

medical/surgical beds to NICU beds, another for proposing a commitment to serve

6 percent Medicaid and 5 percent charity care. In 1990, 41 percent of District

6 Level II NICU discharges were Medicaid patients. In 1990, Medicaid services

ranged from a high of 61.6 percent of total Medicaid provided by Tampa General

to a low of 2 percent by Humana Women's. UCH has shown its 6 percent Medicaid

commitment to be reasonable and attainable by demonstrating that 7.1 percent of

the population in its service area is Medicaid eligible. The actual Medicaid

percentage in the first year for obstetrics services was 7 percent, which

coincides with the percentage of Medicaid eligible persons living within the UCH

service area. UCH has not emphasized specialized services to substance abusers,

other than to have a referral network to community service agencies.

40. The review of UCH's application in relation to state and local health

plans results in the conclusion that the proposal is generally supported by

preferences for the conversion of excess acute care beds, for not adversely

impacting and potentially assisting Tampa General, for having emergency room

services, and for providing specialized services with an attainable relatively

low, Medicaid commitment. On the negative side are the preferences for

applicants serving a disproportionate share Medicaid and charity patients, for

teaching, research or referral centers, for services unique to the area, or for

specialized service to substance abusing pregnant or postpartum women. On

balance, the application of the state and local health plans does not suggest

strongly that the UCH application either should or should not be approved,

particularly in this case, where comparative review is impossible because UCH is

the sole remaining applicant.

Other Statutory Criteria

41. Subsection 408.035(1)(c), Florida Statutes, criteria are met by UCH.

UCH can provide good quality care in Level II NICU services. It is accredited

by the Joint Commission on Accreditation of Health Organizations and has the

ability to comply with rule requirements for equipment, staff and physical

facilities. UCH already has a board-certified neonatologist on staff.

42. Subsection 408.035(1)(e), favoring joint, cooperative or shared

operation of health care services is not a criterion met by the UCH proposal.

Although UCH suggests that its transfer agreement with Tampa General complies

with the statute and the evidence showed that the two hospitals will cooperate

in providing the separate services they each provide, but the transfer agreement

does not constitute cooperative operation of the service.

43. Subsection 408.035(1)(f), arguably is a basis for approval of the UCH

application, because Level II NICU equipment and services do not exist in the

adjoining area of east Pasco County. For District 5, which includes Pasco

County, zero need was published for the same batching cycle.

44. Subsection 408.035(1)(g) criterion, related to research and training

programs, is not met by the UCH application. UCH meets the criteria in

Subsection 408.035(1)(h), by having shown that it has the manpower, personnel

and funds to establish and operate a 10-bed Level II NICU.

45. UCH is able to renovate existing space and to acquire the equipment

required for the 10-bed NICU for approximately $765,000. AHCA does not dispute

UCH's assertion that it has adequate funds to finance this project and that

project costs are reasonable. Having already hired a neonatologist, and 6 to 7

of the 11 1/2 to 12 1/2 full time equivalent or FTE's required, UCH has, or can

recruit and hire, the necessary staff.

Financial Feasibility

46. Under Subsection 408.035(1)(i), the financial feasibility of a project

must be considered. UCH estimated that a Level II NICU will generate $290,000

in year one, and $336,000 in year two revenues. The projections were based on

providing Level II NICU services to 11 to 12 percent of newborns, or 2290

patient and 2670 patient days in years one and two, respectively. This

underlying assumption is rejected. See, Finding of Fact 26.

47. UCH's projection of a 10 day average length of stay in Level II NICU

beds is not supported by Humana Women's experience of 6 to 7 days. See, finding

of Fact 27.

48. From the testimony and assumptions, attached to UCH's projected

revenues and expenses, it is possible to determine that reduced total patient

revenues will result from lower than projected numbers of patients and days. It

is also apparent that deductions from revenue and some operating expenses will

also decrease. There is, however, no testimony from which the relative

proportions of adjustments to each item and the effect on charges for NICU

services be calculated. Nor is there testimony regarding any minimum

utilization necessary for the project to be financially feasible.

49. Therefore, UCH has failed to meet the burden of showing that the

proposed Level II NICU at UCH will be financially feasible.

50. On balance, but not excluding all the applicable criteria, the most

positive factors of the UCH proposal, the published need and potential benefits

to Tampa General, do not outweigh the most negative ones, the failure to

demonstrate financial feasibility and to make a more significant commitment

compared to the district demand for Medicaid in Level II NICU beds.

CONCLUSIONS OF LAW

51. The Division of Administrative Hearings has jurisdiction over this

proceeding pursuant to Subsection 408.039(5), Florida Statutes (1992 supp.).

52. The applicant bears the burden of proving entitlement to a certificate

of need based on a balanced consideration of the statutory and rule criteria.

Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative

Services, 475 So.2d 260 (Fla. 1st DCA 1985).

53. The standing of Humana Women's is not determined in this recommended

order due to the voluntary dismissal filed on March 17, 1993. This case is

distinguished from those in which an applicant files a post-hearing dismissal,

because Humana Women's intervened as an existing provider. See, e.g., South

Florida Baptist Hospital, Inc. v. Department of Health and Rehabilitative

Services, et al., 13 FALR 366 (Final Order 12/28/90).

54. AHCA adopted the expert testimony and standing objections of Humana

Women's. AHCA and Humana also jointly filed a Proposed Recommended Order.

Substantial argument was heard and standing objections raised to any data

regarding UCH's actual operations subsequent to the filing of its amendment. It

is AHCA's contention that the applicant must rely solely on the information

contained in the application. In a de novo proceeding, data which has become

available, solely due to the passage of time, and which either supports or

refutes statements and projections included within the original application is

admissible. Health Care and Retirement Corporation of America, etc. v.

Department of Health and Rehabilitative Services, 516 So.2d 292 (Fla. 1st DCA

1987).

55. Humana also filed a Motion For Summary Recommended Order based on the

doctrine of res judicata. Humana argues that this case is sufficiently similar

to and should be disposed of in accordance with University Community Hospital v.

Department of Health and Rehabilitative Services, et al., DOAH Case No. 91-5720

(F.O. 2/13/92). Due to numerous factual distinctions in two cases, ranging from

the differences in publications of numeric need to findings on the

reasonableness of the projected birth volumes, Humana's motion is denied. See,

Thompson v. Department of Environmental Regulation, 511 So.2d 989 (Fla. 1987).

56. Prior to final hearing, ruling was also reserved on UCH's Motion For

Partial Summary Recommended Order determining that AHCA could not revise its

need projections based upon data that became available after an application was

filed.

57. The disposition of the legal issues raised by UCH's motion and the

threshold legal issue which determines the standards for review of the UCH

application is whether or not the August 9, 1991 publication was a fixed need

pool for District 6. AHCA's position is that the "preliminary estimate" was not

a fixed need pool for the purposes of binding the agency, but that the

publication date was binding on the applicant for purposes of meeting the

minimum birth volume requirement. AHCA's rules and the evidence adduced at

hearing, are clear and controlling.

58. The rule requiring a fixed need pool publication is as follows:

(2) Fixed Need Pools.

(a) Publication of Fixed Need Pools. The

agency shall publish in the Florida

Administrative Weekly at least 15 days prior

to the letter of intent deadline for a

particular batching cycle the fixed need

pools for the applicable planning horizon

specified for each service in applicable

agency rules contained in 59C-1.031 to

59C-1.044, F.A.C. These batching cycle

specific fixed need pools shall not be

changed or adjusted in the future regardless

of any future changes in need methodologies,

population estimates, bed inventories, or

other factors which would lead to different

projections of need, if retroactively

applied. [Emphasis Added.]

Rule 59C-1.008(2)(a), Florida Administrative Code.

59. Rule 10-5.042(3)(b), Florida Administrative Code, specifies that Level

II and Level III NICU fixed need pools must be published twice a year. The

schedule for the applicable batching cycle is also established by AHCA rule, as

follows:

Hospitals and Other Projects

2nd Batching Cycle - 1991

Summary Need Projections Published

in F.A.W. 08-09-91

Letter of Intent Deadline 08-26-91

Application Deadline 09-26-91

Completeness Review Deadline 10-11-91

Applicant Omissions Deadline 11-08-91

Agency Initial Decision Deadline 01-08-92

Rule 59C-1.008(1)(1), Florida Administrative Code.

60. Based on the provisions of the AHCA's rules, the inevitable conclusion

is that the August 9, 1991 publication of the need for 10 Level II NICU beds in

District 6 was the fixed need pool publication required by AHCA rules. In

addition, Rule 59C-1.008(2)(a) prohibits AHCA from changing projections and

retroactively applying its new projection to the review of applications in that

cycle. AHCA's predecessor was not allowed to apply subsequent need projections

to applicants for beds in an earlier batching cycle in Gulf Court Nursing Center

v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA

1985).

61. The publication of need, the fact that UCH achieved the birth volumes

projected by the time of the hearing, and the fact that UCH was the only

obstetrics provider without a NICU in the district's largest county and,

therefore, the only logical provider of new NICU services, are not normal

circumstances established by UCH. Prior cases have described conditions which

demonstrate that a medical service is unavailable to those who need it as not

normal circumstances. See, e.g. Humana, Inc. v. Department of Health and

Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985).

62. Despite the findings of need and not normal circumstances, approval of

UCH's application cannot be recommended primarily due to UCH's failure to

establish financial feasibility. UCH has failed its burden of proving that UCH

can operate a profitable 10-bed Level II NICU.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the application of University Community Hospital for

Certificate of Need 6785 to convert 10 acute care beds to 10 Level II neonatal

intensive care beds be DENIED.

DONE AND ENTERED this 8th day of October, 1993, in Tallahassee, Leon

County, Florida.

___________________________

ELEANOR M. HUNTER

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 8th day of

October, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1490

To comply with the requirements of Section 120.59(2), Fla. Stat. (1991),

the following rulings are made on the parties' proposed findings of fact:

UNIVERSITY COMMUNITY HOSPITAL

1. Accepted in Findings of Fact 5 and 36.

2. Accepted in Finding of Fact 6.

3. Accepted in Finding of Fact 7.

4. Accepted in Finding of Fact 2.

5. Accepted in Finding of Fact 2.

6. Accepted in Finding of Fact 3.

7. Accepted in Findings of Fact 1 and 2.

8. Accepted in Finding of Fact 2.

9. Accepted in Finding of Fact 8.

10. Accepted in Findings of Fact 9 and 10.

11. Accepted in Finding of Fact 11.

12. Accepted in Finding of Fact 11.

13. Issue not reached.

14. Issue not reached.

15. Issue not reached.

16. Accepted in Findings of Fact 10 and 11.

17. Accepted in Finding of Fact 13.

18. Subordinate to Finding of Fact 13.

19. Accepted in Finding of Fact 10.

20. Subordinate to Finding of Fact 13.

21. Accepted in Findings of Facts 5 to 13.

22. Subordinate to Finding of Fact 13.

23. Subordinate to Finding of Fact 13.

24. Accepted in Finding of Fact 13.

25. Accepted in Findings of Fact 10 and 13.

26. Accepted in Finding of Fact 47.

27. First two sentences, Subordinate to Finding of Fact 6,

Last two sentences, Rejected in Finding of Fact 26.

28. Accepted in Finding of Fact 28.

29. Rejected in Findings of Fact 50 and 51.

30. Accepted in Finding of Fact 27.

31. Rejected.

32. Accepted in Finding of Fact 29.

33. Accepted in Finding of Fact 36.

34. Accepted in relevant part in Finding of Fact 34.

35. Subordinate to Finding of Fact 26.

36. Subordinate to Finding of Fact 26.

37. Conclusion rejected in Finding of Fact 30.

38. Rejected in Finding of Fact 41.

39. Rejected in Findings of Fact 50 and 51.

40. Accepted in relevant part in Finding of Fact 41.

41. Accepted in Finding of Fact 34.

42. Accepted in relevant part in Finding of Fact 38.

43. Accepted in Findings of Fact 20, 22, and 28.

44. Accepted in Finding of Fact 23.

45. Accepted in Finding of Fact 25.

46. Subordinate to Finding of Fact 25.

47. Accepted in Finding of Fact 24.

48. Accepted in Finding of Fact 29.

49. Accepted in Finding of Fact 34.

50. Accepted in Finding of Fact 47.

51. Accepted in Finding of Fact 47.

52. Accepted in Finding of Fact 47.

53. Rejected in Finding of Fact 48.

54. Rejected in Findings of Fact 50.

55. Rejected in Findings of Fact 48.

56. Subordinate to Finding of Fact 50.

57. Subordinate to Finding of Fact 50.

58. Unable to determine.

59. Unable to determine.

60. Accepted.

61. Unable to determine.

62. Rejected in Finding of Fact 45.

63. Accepted in Finding of Fact 47.

64. Accepted in Finding of Fact 47.

65. Accepted in Finding of Fact 47.

66. Accepted in Finding of Fact 47.

67. Accepted in Finding of Fact 47.

68. Accepted in Finding of Fact 47.

69. Accepted in Finding of Fact 28.

70. Issues not reached due to Humana's Voluntary Dismissal.

71. Issues not reached due to Humana's Voluntary Dismissal.

AGENCY FOR HEALTH CARE ADMINISTRATION

1. Accepted in Finding of Fact 5.

2. Accepted in Preliminary Statement.

3. Accepted in Preliminary Statement.

4. Subordinate to Finding of Fact 3.

5. Addressed in 25.

6. Addressed in 25.

7. Rejected in Finding of Fact 41.

8. Rejected in Finding of Fact 33.

9. Rejected in Finding of Fact 34.

10. Rejected, as no relevant.

11. Rejected in Finding of Fact 33.

12. Accepted in general in Finding of Fact 33.

13. Rejected in Finding of Fact 34.

14. Accepted in Finding of Fact 37.

15. Accepted in Finding of Fact 38

16. Accepted in Finding of Fact 35.

17. Rejected in Finding of Fact 28.

18. Rejected in Finding of Fact 17.

19. Accepted in Finding of Fact 9.

20. Accepted in Finding of Fact 11.

21. Rejected in Finding of Fact 17.

22. Rejected in Finding of Fact 17.

23. Rejected in Finding of Fact 17.

24. Rejected in Finding of Fact 24.

25. Accepted in Finding of Fact 24.

26. Accepted in Finding of Fact 25.

27. Accepted in Finding of Fact 25.

28. Accepted in Finding of Fact 29.

29. Accepted in Finding of Fact 29.

30. Accepted in Finding of Fact 29.

31. Rejected conclusion in Finding of Fact 28.

32. Accepted in Finding of Fact 28.

33. Accepted in Finding of Fact 14.

34. Subordinate to Finding of Fact 15.

35. Rejected, based on rule in Findings of Fact 14.

36. Accepted in Findings of Fact 17 and 18.

37. Subordinate to Finding of Fact 17.

38. Accepted in Finding of Fact 15.

39. Rejected conclusions in Finding of Fact 28.

40. Rejected in Finding of Fact 13.

41. Rejected in Finding of Fact 8.

42. Rejected in Finding of Fact 8.

43. Rejected in Finding of Fact 13.

44. Rejected in Finding of Fact 13.

45. Rejected in Finding of Fact 13.

46. Rejected in Finding of Fact 13.

47. Rejected in Findings of Fact 10 and 11.

48. Rejected in Finding of Fact 13.

49. Subordinate to Finding of Fact 26.

50. Subordinate to Finding of Fact 26.

51. Subordinate to Finding of Fact 26.

52. Subordinate to Finding of Fact 26.

53. Subordinate to Finding of Fact 26.

54. Rejected in Finding of Fact 28.

55. Issue not reached.

56. Rejected in Finding of Fact 30.

57. Accepted in Findings of Fact 26, 27, and 30.

58. Issue not reached.

59. Issue not reached.

60. Accepted in Findings of Fact 26 and 27.

61. Accepted in Findings of Fact 26 and 27.

62. Accepted in Findings of Fact 26 and 27.

63. Accepted in Findings of Fact 26 and 27.

64. Accepted in Findings of Fact 26 and 27.

65. Accepted in Findings of Fact 26 and 27.

66. Subordinate to Finding of Fact 47.

67. Accepted in Finding of Fact 26.

68. Subordinate to Findings of Fact 26 and 27.

69. Subordinate to Findings of Fact 26 and 27.

70. Subordinate to Findings of Fact 26 and 27.

71. Subordinate to Findings of Fact 26 and 27.

72. Subordinate to Findings of Fact 26 and 27.

73. Subordinate to Finding of Fact 28.

74. Subordinate to Finding of Fact 28.

75. Subordinate to Finding of Fact 28.

76. Subordinate to Finding of Fact 28.

77. Subordinate to Finding of Fact 28.

78. Subordinate to Finding of Fact 28.

79. Issue not reached.

80. Issue not reached.

81. Issue not reached.

82. Issue not reached.

83. Issue not reached.

84. Issue not reached.

85. Issue not reached.

85. Issue not reached.

86. Issue not reached.

87. Issue not reached.

88. Issue not reached.

89. Accepted in part in Finding of Fact 35.

90. Accepted in part in Finding of Fact 35.

91. Accepted in part in Finding of Fact 35.

92. Accepted in part in Finding of Fact 35.

93. Accepted in Finding of Fact 44.

94. Accepted in Finding of Fact 45.

95. Accepted in Finding of Fact 46.

96. Rejected in Finding of Fact 47.

97. Issue not reached.

98. Issue not reached.

99. Issue not reached.

100. Rejected in Finding of Fact 28.

101. Rejected in Finding of Fact 28.

102. Issue not reached due to Humana's voluntary dismissal,

and disposition of case.

103. Issue not reached due to Humana's voluntary dismissal,

and disposition of case.

104. Issue not reached due to Humana's voluntary dismissal,

and disposition of case.

105. Issue not reached due to Humana's voluntary dismissal,

and disposition of case.

COPIES FURNISHED:

Alan C. Sundberg, Esquire

Cynthia S. Tunnicliff, Esquire

W. Douglas Hall, Esquire

Carlton, Fields, Ward, Emmanuel,

Smith & Cutler, P.A.

First Florida Bank Building

Suite 500

Tallahassee, Florida 32302

Richard Patterson, Esquire

Agency for Health Care Administration

325 John Knox Road

Atrium Building, Suite 101

Tallahassee, Florida 32303

James C. Hauser, Esquire

Messer, Vickers, Caparello,

Madsen & Lewis, P.A.

701 First Florida Bank Building

Post Office Box 1876

Tallahassee, Florida 32302

Sam Power, Agency Clerk

Agency for Health Care Administration

The Atrium, Suite 301

325 John Knox Road

Tallahassee, Florida 32303

Harold D. Lewis, General Counsel

Agency for Health Care Administration

The Atrium, Suite 301

325 John Knox Road

Tallahassee, Florida 32303

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended

order. All agencies allow each party at least ten days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this recommended order. Any exceptions to this recommended order should be

filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

UNIVERSITY COMMUNITY HOSPITAL,

CASE NO. 92-1490 (CON 6785)

Petitioner, 94-0147 (CON 7423) *

93-6346 (CON 7349) *

vs. RENDITION: AHCA-94-19-S-CON

AGENCY FOR HEALTH

CARE ADMINISTRATION,

Respondent.

_______________________________/

* NOTE: The above-referenced DOAH Cases were dismissed without

a hearing and therefore are not available in ACCESS.

FINAL ORDER

In Case Number 92-1490 the parties executed a Stipulation and Settlement of

January 10, 1994, wherein the agency agreed to approve CON 6785 authorizing the

conversion of ten acute care beds to a ten bed Level II Neonatal Intensive Care

Unit. University Community Hospital agreed to dismiss both Case Number 93-6346

wherein it challenged the denial of CON 7349 to add ten skilled nursing home

beds and Case Number 94-0147 wherein it challenged the withdrawal of CON 7423

from batched review. The application for CON 7423 sought approval to convert

ten acute care beds to a ten bed Level II NICU Unit. University Community

Hospital also agreed to dismiss its rule challenge proceeding regarding Rule

59C-1.008(1)(i) and (j). The Stipulation and Settlement Agreement of January

10, 1994, is incorporated by reference.

Based on the foregoing, CON 6785 is approved subject to the terms and

conditions of the Stipulation and Settlement. CON 7349 is denied and CON 7423

is denied

DONE and ORDERED this 17th day of February, 1994, in Tallahassee, Florida.

_________________________

Douglas M. Cook, Director

Agency for Health Care

Administration

NOTICE OF RIGHT TO JUDICIAL REVIEW

PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL

REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE

GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE

COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE

DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING

FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR

WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY

RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE

ORDER TO BE REVIEWED.

COPIES FURNISHED:

Norm Stein, University

Community Hospital

3100 East Fletcher Avenue

Tampa, Florida 33613

Eleanor M. Hunter

Hearing Officer

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Alan C. Sundberg, Esquire

Cynthia S. Tunnicliff, Esquire

CARLTON, FIELDS, WARD, EMMANUEL,

SMITH & CUTLER, P. A.

Post Office Drawer 190

Tallahassee, Florida 32302

Dudley Griner

1007 Myers Park Drive

Tallahassee, Florida 32301

Elizabeth Dudek (AHCA/CON)

Alberta Granger (AHCA/CON)

Elfie Stamm (AHCA/CON)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been

furnished to the above named addresses by U.S. Mail this 17th day of February

1994.

________________________________

Robert L. Powell, Sr.

Agency Clerk

Department of Health and

Rehabilitative Services

Building E, Suite 200

1323 Winewood Blvd.

Tallahassee, Florida 32399-0700

[phone]

Attachment

STATE OF FLORIDA

AGENCY FOR HEALTH CAFE ADMINISTRATION

UNIVERSITY COMMUNITY HOSPITAL,

Petitioner,

CASE NO. 92-1490

vs. CON NO. 6785

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

__________________________________/

STIPULATION AND SETTLEMENT AGREEMENT

Petitioner, UNIVERSITY COMMUNITY HOSPITAL, and Respondent, AGENCY FOR

HEALTH CARE ADMINISTRATION, by and through the undersigned, and pursuant to

Section 120.57(3), Fla. Stat. (1993), hereby stipulate and agree as follows:

1. A weighing of all applicable statutory and rule review criteria reveals

that Petitioner's application for certificate of need (CON) number 6785 should

be granted.

2. Upon execution of this Stipulation and Settlement Agreement, Respondent

shall enter a Final Order issuing CON No. 6785 to Petitioner for the

establishment of a ten (10) bed Level II Neonatal Intensive Care Unit through

the conversion of ten (10) acute care beds to ten (10) Level II neonatal

intensive care beds, encompassing 1,377 GFT2, at a total project cost of

$749,308.

3. CON No. 6785 shall have the following conditions placed upon It: a

minimum of six percent (6) of total annual patient days of care will be

allocated to Medicaid patients and a minimum of five percent (5) of total annual

patient days of care will be allocated to charity care patients as that term is

defined by Respondent in Fla. Admin. Code Rule 59E-5.101(5)

4. Petitioner agrees to file a notice of voluntary dismissal of its

administrative proceeding in Division of Administrative Hearings (DOAH) Case No.

93-6346.

5. Petitioner also agrees to file a notice of voluntary dismissal of its

Section 120.57(1), Fla. Stat. (1993), administrative proceeding contesting

Respondent's withdrawal of Petitioners CON application number 7423 from review,

to withdraw its December 15, 1993, request for stay of the review cycle from

which CON No. 7423 was withdrawn, and to file a notice of voluntary dismissal of

its Section 120.56, Fla. Stat. (1993), rule challenge proceeding regarding Fla.

Admin. Code Rule 59C-1.008(1)(i) and (j)

6. The issuance date of CON No. 6785 shall be the date of issuance of the

Final Order in this case.

7. Each party shall bear its own attorney's fees and costs.

Dated this 10th day of January, 1994.

UNIVERSITY COMMUNITY AGENCY FOR HEALTH

HOSPITAL CARE ADMINISTRATION

By:______________________ By:_____________________________

Norm Stain James T. Howell, M.D., M.P.H.

University Community Agency for Health Care

Hospital Administration

3100 East Fletcher Ave. 325 John Knox Road

Tampa, Florida 33613 Tallahassee, Florida 32303

[phone] [phone]