95-006028 Sunrise Community, Inc. vs. Agency For Health Care Administration Status: Closed Recommended Order on Thursday, July 11, 1996.

Summary: 93 Law allowed Petitioner to replace Intermediate Care Facility for the Mentally Retarded and Developmentally Disabled destroyed by hurriance; Recommended Order: no authority to up reimbursement rate by changing client mix; new rate for old mix.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUNRISE COMMUNITY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-6028

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

On March 14-15, 1996, a formal administrative hearing was held in this case

in Miami, Florida, before J. Lawrence Johnston, Hearing Officer, Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Steven M. Weinger, Esquire

Kurzban, Kurzban, and Weinger

2650 Southwest 27th Avenue

Miami, Florida 33133

For Respondent: Steven A. Grigas, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Building 3

Tallahassee, Florida 32308-5403

STATEMENT OF THE ISSUE

The issue in this case is what rate the Agency for Health Care

Administration (AHCA) should set for the 12-bed Intermediate Care Facility for

the Mentally Retarded and Developmentally Disabled (ICF/MR-DD) facility being

operated by the Petitioner, Sunrise Community, Inc. (Sunrise), at 1102 Krome

Avenue in Homestead, Florida.

PRELIMINARY STATEMENT

On July 31, 1995, Sunrise requested that AHCA approve a total-budgeted

interim rate of $525 per diem ($191,625 per year) per client for its 12-bed

ICF/MR-DD facility at 1102 Krome Avenue in Homestead, Florida. By letter dated

August 10, 1995, AHCA denied the request but invited Sunrise to provide

additional information. On September 12, 1995, Sunrise submitted a response

which maintained its original request but also submitted a revised "compromise"

request for a rate of $342 per diem ($124,830 per year) per client. By letter

dated November 8, 1995, AHCA denied both the original and the revised

"compromise" request and instead granted Sunrise an interim component rate of

$226 per diem ($82,490 per year) per client.

On December 4, 1995, Sunrise requested formal administrative proceedings.

The matter was referred to the Division of Administrative Hearings (DOAH) on

December 13, 1995. It was assigned to Hearing Officer Stuart M. Lerner and

scheduled for final hearing on April 25-26, 1996; however, AHCA's Motion for

Continuance was granted, and final hearing was continued to May 14-15, 1996. On

the day before the hearing was scheduled to begin, the case was reassigned to

the undersigned hearing officer.

At final hearing, Sunrise called three witnesses and had Petitioner's

Exhibits 1 through 13 and 15 through 17 admitted in evidence (9-11 over

objection) in its case-in-chief. (AHCA's objection that Petitioner's Exhibit 14

is irrelevant is sustained.) AHCA called five witnesses and had Respondent's

Exhibits 1 through 3 admitted in evidence. Sunrise recalled one witnesses and

called one additional witness in rebuttal.

After presentation of the evidence, AHCA ordered the preparation of a

transcript of the final hearing, and the parties were given ten days from the

filing of the transcript in which to file proposed recommended orders. The

transcript was filed on June 10, 1996.

Explicit rulings on the proposed findings of fact contained in the parties'

proposed recommended orders may be found in the Appendix to Recommended Order,

Case Number 95-6028.

FINDINGS OF FACT

1. The Petitioner, Sunrise Community, Inc. (Sunrise), operates many

Intermediate Care Facilities for the Mentally Retarded and Developmentally

Disabled (ICF/MR-DD's) in Florida and other states. (Three-fourths of them are

in Florida.) The aggregate of the operating budgets for these facilities is $35

million a year. Of this total, approximately 15 percent appears to be

attributable to administrative costs, including both local and central office

administration; in addition, there is return on proprietors' capital and

property costs.

A. The Replacement Facility

2. Sunrise operated a 12-bed ICF/MR-DD in Homestead, Florida, known as the

"Corry Group Home" for approximately eight years, until it was destroyed by

Hurricane Andrew. In response to the emergency, AHCA authorized Sunrise to move

the 12 clients temporarily to two 6-bed homes in Kendall, Florida.

3. AHCA did not allow Sunrise to base its Medicaid reimbursement for the

two 6-bed ICF/MR-DD homes in Kendall on the prospective rate that had been in

effect at the Corry Group Home; instead, AHCA required Sunrise to request a new,

total-budgeted interim rate for the Kendall facilities. Sunrise submitted a

budget that exceeded the $195 per diem cap that applied only to 6-bed

facilities. (A different, higher cap applied to other facilities.) With

inflationary adjustments, the cap increased to $216 by 1994.

4. Meanwhile, the Florida Legislature, through Senate Bill 1802 (1993),

directed AHCA's predecessor agency to "take all actions necessary to replace

[the Corry Group Home] or cause [it] to be replaced." Section 32, Chapter 93-

185, Laws of Florida (1993).

5. AHCA or its predecessor agency requested that the replacement facility

be configured as a 12-bed quadriplex of four three-bed units. This

configuration was consistent with the current thinking of the agency (as well as

professionals in the field) that smaller residential units affording more space

per resident were more therapeutic than large group homes. Sunrise concurred

and agreed to the configuration.

6. AHCA or its predecessor agency also requested that Sunrise not put the

replacement facility on the old Corry Group Home site. The old Corry Group Home

was located in an isolated rural area near Homestead, making it difficult for

residents to take advantage of job, social, recreational, cultural, religious,

transportation and daily living opportunities in Homestead. Sunrise concurred

and chose a site at 1102 Krome Avenue, a location in Homestead that affords the

residents all of those advantages.

7. When the new Krome Avenue facility approached readiness for occupancy,

Sunrise requested that AHCA approve a total-budgeted interim rate of $525 per

diem ($191,625 per year) per client. The request stated:

While trying to develop a cost structure for

this facility, we determined that we would

adopt the cost structure of a currently

operating State owned and operated ICF/DD

facility that is both larger than a 6-person

IDF/DD facility and also has residents of the

same Developmental/Institutional (7) level of care.

Included with the request was a FYE 6/30/94 cost report for the State's 40-bed

Tacachale VIII facility near Gainesville, Florida, with the cost figures reduced

proportionately to reflect a 12-bed facility.

8. Tacachale VIII is an ICF/MR-DD designed for the most difficult clients.

Clients housed in Tacachale VIII have extreme behavior problems, including a

propensity to injure themselves and others. The more difficult the clients, the

more expensive the care.

9. The clients in the old Corry Group Home were not as difficult to manage

as the Tacachale VIII clients; neither were the clients in the two 6-bed homes

homes in Kendall. (It is disputed as to how many of the 12 clients transferred

from the old Corry Group Home after Hurricane Andrew were still in the Kendall

homes. But regardless whether the clients were identical, their profiles were

substantially the same; they were not the kind of clients housed in Tacachale

VIII.) If permitted to base its rate for the Krome Avenue facility on much more

difficult clients than those previously served, Sunrise would be able to

significantly increase the revenues generated at the facility.

10. Under the Florida Title XIX Intermediate Care Facility for the

Mentally Retarded and Developmentally Disabled Reimbursement Plan, Version VI,

effective November 15, 1994, (the Reimbursement Plan), once a permanent rate is

established for a facility, it cannot be increased as a result of a change in

client mix. For that reason, Sunrise views the opening of the new Krome Avenue

facility as its window of opportunity to base its reimbursement rate for the

facility on Tacachale VIII-type clients.

B. Total-Budgeted or Component Interim Rate

11. According to Section IV.G. of the Reimbursement Plan, provisions for

interim changes in component reimbursement rates are not applicable to "new

providers' first year interim rates, which are addressed in sections H. and I.,

below." Sections H. and I. provide for interim rates for new providers based on

budgeted costs. The requirement to "submit documentation showing that the

changes made were necessary to meet existing state or federal requirements" is

in Section IV.G.2 of the Reimbursement Plan and applies only to interim changes

in component reimbursement rates.

12. Under the Reimbursement Plan, all interim rates are subject to

revision based on subsequent audited cost reports. If actual costs are lower

than projected, the provider must reimburse the interim overage, and a lower

permanent rate will be established based on the lower actual costs. However, if

actual costs are higher than projected, the lower budgeted rate would remain in

effect and become the permanent rate.

13. If the new Krome Avenue facility is not treated as a "new provider,"

its reimbursement rate would be based on the $216 6-bed cap for the two 6-bed

temporary homes in Kendall, subject to an interim $9 increase in the property

component, for an interim reimbursement rate of $226 per diem ($82,490 per year)

per client.

14. Based on the evidence, $525 per diem per client would be a reasonable

and necessary first year total-budgeted cost of serving 12 Tachachale VIII-type

clients at the new Krome Avenue facility. Per diem costs would be expected to

decline in the second and third years due to: (1) higher occupancy rates; (2)

lower staff turnover; and (3) increased efficiency of a more experienced and

better trained staff. The expected cost reductions would be reflected in the

Cost Reports for those years and would be incorporated into the permanent rate

established based on those cost reports.

15. Based on the evidence, $342 per diem ($124,830 per year) per client

would be a reasonable and necessary first year total-budgeted cost of serving at

the new Krome Avenue facility 12 clients similar to those previously served by

Sunrise at the old Corry Group Home and the two 6-bed homes in Kendall. The

$342 per diem reflects higher costs than in the Kendall homes due primarily to:

(1) higher rent and depreciation; (2) higher salary costs; and (3) increased

staffing needs due to the quadriplex configuration. As with the $525 budgeted

rate, the $342 budgeted rate would be expected to decline in the second and

third years.

16. Salary costs at the new Krome Avenue facility are expected to be

higher because the Homestead labor market is significantly different from the

labor market in Kendall. The labor pool in Homestead always has been smaller,

and the difference has become greater since Hurricane Andrew because the

Homestead Air Force Base has closed, eliminating from the labor pool the spouses

of service men and women stationed there. All staff from the Kendall homes were

offered jobs in the Krome Avenue facility but none accepted. Higher salaries

are expected to be required to attract qualified staff to work at the new Krome

Avenue facility.

17. The $342 per diem budget is derived in part from the Fiscal Year

Ending (FYE) 6/30/94 Cost Report for the two temporary 6-bed homes in Kendall.

No FYE 6/30/95 Cost Report was filed because the Kendall homes were closed

before the FYE 6/30/95 Cost Report was due.

18. It is found that the new Krome Avenue facility should be treated as a

"new provider" for purposes of establishing its interim rate.

19. The preceding finding is consistent with AHCA's past practice.

According to the evidence, AHCA or its predecessor agency always has established

a total-budgeted interim rate whenever a provider has changed the physical

location of its clients. AHCA also has established a total-budgeted interim

rate whenever new beds are added and whenever the ownership of a provider

changes.

20. The same legislation that directed AHCA's predecessor agency to

replace the old Corry Group Home also directed the replacement of two other

Sunrise ICF/MR-DD's called Ambrose and Naranja that also were severely damaged

by Hurricane Andrew. Under the authority of Senate Bill 1802 (1993), Sunrise

reconstructed Ambrose and Naranja on their old footprints, and AHCA authorized

Sunrise to temporarily move the clients during reconstruction. When

reconstruction was completed, AHCA established a total-budgeted interim rate for

both Ambrose and Naranja.

21. AHCA attempted to explain that the new Krome Avenue facility should be

treated differently because it was a "consolidation" from two locations to one.

That explanation is rejected.

22. Sunrise was entitled to rely on the terms of the Reimbursement Plan

and the past practice of AHCA and its predecessor agency under it. In reliance

on the past practice, Sunrise proceeded with the construction of the facility at

1102 Krome Avenue.

23. Finding 18, above, also is consistent with AHCA's treatment of the

Krome Avenue facilityeating the new Krome Avenue facility as a new

provider, AHCA did not allow Sunrise to be reimbursed for serving clients in the

new Krome Avenue facility until Sunrise obtained a separate license to operate

the newly constructed facility, enrolled it in the Medicaid reimbursement

system, and obtained a new provider agreement. (When Sunrise took those steps,

the Medicaid provider number assigned to the new facility apparently was the

same number assigned to the Old Corry Group Home and the two 6-bed temporary

homes in Kendall.)

CONCLUSIONS OF LAW

24. Florida Senate Bill 1802 (1993) directed AHCA's predecessor agency to

"take all actions necessary to replace [the Corry Group Home] or cause [it] to

be replaced." Section 32, Chapter 93-185, Laws of Florida (1993).

25. Without Senate Bill 1802 (1993), Sunrise would have had to obtain a

certificate of need to replace the old Corry Group Home. Cf. Section 408.045,

Fla. Stat. (1995).

26. If there had been no Hurricane Andrew, Sunrise would not have been

able to justify a request for a total-budgeted interim rate by changing the

client mix at the old Corry Group Home to resemble the Tacachale VIII clientele.

It is concluded that, when the Legislature authorized the replacement of the old

Corry Group Home outside the certificate of need process, it did not intend to

authorize Sunrise to change the client mix. AHCA is not estopped from taking

the position that Senate Bill 1802 only authorized Sunrise to replace the old

Corry Group Home, not to change the client mix.

27. AHCA's Reimbursement Plan is adopted and incorporated by reference in

F.A.C. Rule 59G-6.040. It has been found, and must be concluded, that the new

Krome Avenue ICF/MR-DD is a "new provider" under the Reimbursement Plan. As a

"new provider," it is entitled to a total-budgeted interim rate.

28. Under the federal Boren Amendment, 42 U.S.C. s. 1396a(a)(13)(A),

ICF/MR-DD reimbursement must be "reasonable and adequate to meet the costs which

must be incurred by efficiently and economically operated facilities . . .."

Under the Reimbursement Plan, a new provider is entitled to an interim rate,

based on a total budget, which is projected to be "reasonable and adequate."

29. As found, $342 per diem per client would be a reasonable and necessary

first year total-budgeted cost of serving at the new Krome Avenue facility 12

clients similar to those previously served by Sunrise at the old Corry Group

Home and the two 6-bed homes in Kendall. It is concluded that the interim rate

for the facility should be set at $342.

30. It having been found and concluded that Sunrise is entitled to a

total-budgeted interim rate, Sunrise's estoppel and other arguments are moot.

RECOMMENDATION

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

recommended that the Agency for Health Care Administration enter a final order

establishing the interim rate for Sunrise's new Krome Avenue ICF/MR-DD at $342

per diem ($124,830 per year) per client.

DONE and ENTERED this 11th day of July, 1996, in Tallahassee, Florida.

_____________________________________

J. LAWRENCE JOHNSTON, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 11th day of July, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-6028

To comply with the requirements of Section 120.59(2), Florida Statutes

(1995), the following rulings are made on the parties' proposed findings of

fact:

Petitioner's Proposed Findings of Fact.

A. General Findings

1.-.25. Cumulative. Duplicate Specific Findings.

B. Specific Findings

1. Leech

a.-o. Accepted and incorporated to the extent not subordinate or

unnecessary.

p. Accepted and incorporated. However, approximately 15 percent appears

to be attributable to administrative costs, including both local and central

office administration; in addition, there is return on proprietors' capital and

property costs.

q. Accepted and incorporated to the extent not subordinate or unnecessary.

r. First sentence, cumulative; second, accepted but irrelevant; third,

accepted and incorporated (Tacachale VIII); fourth, rejected as unintelligible;

last, accepted and incorporated.

s. Accepted and incorporated to the extent not subordinate or unnecessary.

2. Childs

a. First sentence, accepted but subordinate and unnecessary; rest,

accepted and incorporated to the extent not subordinate or unnecessary.

b. Rejected as not proven that it was not treated as a "replacement";

otherwise, accepted and incorporated.

c. Accepted but subordinate and unnecessary.

d. First two sentences, rejected that none of this was "relevant";

otherwise, accepted and incorporated.

e. First sentence, rejected as not proven that the license "does not

relate in any manner" to the Corry home; otherwise, accepted and incorporated.

f. First sentence, rejected as not proven that this specific advice was

given. Last sentence, rejected as not proven that "there was not any

relevance." Otherwise, accepted and incorporated to the extent not subordinate

or unnecessary.

g. Rejected as not proven that there "was no relevance whatsoever."

Otherwise, accepted and incorporated to the extent not subordinate or

unnecessary.

h. Accepted and incorporated to the extent not subordinate or unnecessary.

However, although "low," Sunrise proved that it was "reasonable and adequate."

i. Accepted but subordinate and unnecessary. (There has been no

significant change in the general profiles of the clients.)

j. Rejected as unintelligible.

k. Accepted and incorporated to the extent not subordinate or unnecessary.

(Although some may be "low," Sunrise proved that they were "reasonable and

adequate."

l. Accepted but subordinate and unnecessary.

m. Accepted and incorporated to the extent not subordinate or unnecessary.

(In other words, if Sunrise were authorized to change its client mix for the

replacement facility, it would have been able to claim an interim reimbursement

rate of $191,625 per year for each of the 12 clients served.)

n. Rejected as not proven. Proven that they are "reasonable and adequate"

for the first year of operation. Costs are expected to decline in subsequent

years.

o. First sentence, rejected as not proven in that it was both. Second

sentence, accepted and incorporated.

3. Weeks

a. Accepted but subordinate and unnecessary.

b. See 2.m., above.

c. Third sentence, rejected as incomplete and therefore unintelligible.

(Accepted and incorporated if the completed proposed finding would have said the

$342 per diem budget is "reasonable and adequate" for clients like those being

served.) Otherwise, accepted and incorporated to the extent not subordinate or

unnecessary.

d. Rejected as not proven as to the $525 budget, which essentially was the

Tacachale VIII budget reduced in proportion to the number of clients served.

Otherwise, accepted and incorporated to the extent not subordinate or

unnecessary.

e. Rejected as not proven that the Sunrise budget was "significantly more

generous." The cost of any additional nursing care was not quantified; and,

while the off-site day program that is considered mandatory for a provider like

Sunrise costs approximately $40 per day per client, the practical feasibility

(and cost-benefits) of such a program would be questionable for clients like

those at Tacachale VIII.

f. Accepted and incorporated.

g.-j. Accepted; subordinate to facts found.

k. Conclusion of law.

l. Rejected as not proven.

m. Accepted but unnecessary.

n. Rejected as not proven that the facts were "just like the Corry Group

Home." Otherwise, accepted but subordinate to facts found.

o. Accepted; subordinate to facts found.

p. First sentence, accepted but unnecessary; second, unintelligible.

q. Accepted; subordinate to facts found.

r. Accepted and incorporated.

s. Accepted; subordinate to facts found.

t. Rejected as not proven that AHCA did not request additional

information; otherwise, accepted and incorporated to the extent not subordinate

or unnecessary.

u. Cumulative.

v. Unintelligible.

w.-x. Cumulative.

y. First sentence, unintelligible; second, conclusion of law; rest,

accepted and incorporated to the extent not subordinate or unnecessary.

z. Accepted and incorporated.

aa. Rejected as not proven.

bb. Rejected as not proven as to the provider number; accepted and

incorporated as to the license.

cc. First sentence, unintelligible, subordinate and unnecessary; second,

cumulative.

dd. First sentence, accepted and incorporated; second, rejected as not

proven that it is "appropriate" for Sunrise to serve those clients at the new

Krome Avenue facility but otherwise accepted and incorporated; third, rejected

as not proven that they are the "easiest clients" but accepted and incorporated

as to the budget for them.

ee. Introductory clause, accepted and incorporated; conclusion, rejected

as not proven.

4. McCormick

a.-b. Accepted but subordinate and unnecessary.

5. Moore

a. First sentence, accepted but subordinate and unnecessary. Second,

unintelligible. (Accepted as to "direct care staff" but subordinate and

unnecessary.

b.-c. Rejected as not proven.

d. Rejected as not proven that all of them can, or that any of them can at

all times.

e.-h. Accepted but subordinate and unnecessary.

6. Burroughs

a.-c. Accepted but subordinate and unnecessary.

7. Hughes

a. First sentence, accepted but subordinate and unnecessary; rest,

conclusions of law.

b. Accepted but subordinate to facts found, and unnecessary.

c. Conclusion of law, subordinate and unnecessary.

d. Rejected as not proven.

e. Accepted and incorporated.

f. Accepted and incorporated. (In this context, "new provider" does not

mean a "replacement" under Senate Bill 1802.)

g. Subordinate and cumulative. ("Perspective" is a typo.)

h. Unintelligible.

i. Accepted but subordinate and unnecessary.

j.-k. Cumulative, subordinate and unnecessary.

l. Accepted and incorporated.

m. Accepted but subordinate and unnecessary.

n.-o. Cumulative, subordinate and unnecessary.

8. Allen

a. Accepted but subordinate and unnecessary.

b. Accepted; subordinate to facts found.

c. Accepted but subordinate and unnecessary.

d. Except to the extent conclusion of law, accepted but subordinate and

unnecessary.

e.-g. Accepted but subordinate and unnecessary.

h. Conclusion of law, subordinate and unnecessary.

i. Accepted but subordinate and unnecessary.

9. Lussier

a.-c. Accepted but subordinate and unnecessary.

10. Weeks Rebuttal

a. Last sentence, rejected as not proven; otherwise, accepted and

incorporated to the extent not subordinate or unnecessary.

b. Accepted and incorporated to the extent not subordinate or unnecessary.

c. Accepted and incorporated. ("Expect" is a typo.)

Respondent's Proposed Findings of Fact.

1. Accepted and incorporated.

2.-4. Conclusions of law.

5.-6. Accepted and incorporated.

7. Accepted. Sunrise's intent is subordinate and unnecessary; the rest is

incorporated.

8. Rejected as contrary to the greater weight of the evidence, but

irrelevant as there has been no significant change in the general profiles of

the clients.

9.-10. Accepted and incorporated.

11. Rejected as contrary to the greater weight of the evidence. Its

present status is the issue in this case; in addition, the basis of the current

payments is the 6-bed cap, adjusted for an increased property component.

12.-15. Accepted and incorporated. ("August 190" in 15 is a typo.)

16. Rejected as contrary to the greater weight of the evidence that it was

an "amended interim rate request." (Sunrise maintained the original request but

also submitted a revised "compromise" request.)

17. Accepted and incorporated.

18. To the extent not conclusion of law, rejected as contrary to the

greater weight of the evidence.

19. Accepted and incorporated.

20. Rejected as contrary to the greater weight of the evidence.

21. Accepted ("1996" is a typo) but subordinate and unnecessary.

22. First sentence, rejected as contrary to the greater weight of the

evidence; second, accepted but subordinate and unnecessary.

23. Accepted but subordinate and unnecessary.

24. Rejected as contrary to the greater weight of the evidence.

25. First and third sentence, rejected as contrary to the greater weight

of the evidence; second, accepted and incorporated. (As to the first, it was

invalid because it sought to base the rate on a different client mix.)

26. Testimony accepted as accurate, but rejected that it further supports

the finding. See 25., above.

27. Accepted and incorporated.

28. First sentence, accepted but subordinate to facts contrary to those

found (i.e., that it was not an interim change in component reimbursement rate

request.)

29. First and second sentences, rejected as contrary to the greater weight

of the evidence. (Sunrise is a new provider at the Krome Avenue facility, but

Senate Bill 1802 did not entitle it to a new rate based on a different client

mix.) Third sentence, rejected as being argument of counsel.

30. First sentence, rejected; second, accepted (in accordance with Senate

Bill 1802); rest, accepted but subordinate to facts found.

31.-32. Accepted and incorporated that the same Medicaid provider number

seems to apply to the Krome Avenue facility. But rejected as contrary to the

greater weight of the evidence that it should not be treated as a new provider

for purposes of establishing a reimbursement rate.

COPIES FURNISHED:

Steven M. Weinger, Esquire

Kurzban, Kurzban, and Weinger

2650 Southwest 27th Avenue

Miami, Florida 33133

Steven A. Grigas, Esquire

2727 Mahan Drive, Building 3

Tallahassee, Florida 32308-5403

Sam Power

Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive

Tallahassee, Florida 32308

Jerome W. Hoffman, Esquire

Agency for Health Care Administration

2727 Mahan Drive

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the Agency for Health Care

Administration written exceptions to this Recommended Order. All agencies allow

each party at least 10 days in which to submit written exceptions. Some

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

should consult with the Agency for Health Care Administration concerning its

rules on the deadline for filing exceptions to this Recommended Order.

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

SUNRISE COMMUNITY, INC.,

Petitioner,

vs. CASE NO.: 95-6028

RENDITION NO.: AHCA-96-1346-FOF-MDR

STATE OF FLORIDA, AGENCY FOR

HEALTH CARE ADMINISTRATION,

Respondent.

____________________________/

FINAL ORDER

PRELIMINARY STATEMENT

Sunrise owns and operates ICF/DD facilities. Three of its facilities were

severely damaged by Hurricane Andrew. At issue in this case is one of the three

facilities, the Corry Group Home; specifically, the Medicaid per diem rate to be

paid for each Medicaid resident of the facility built to replace Corry.

Sunrise's immediate response to the emergency was to move its Corry residents to

two six person facilities north of the disaster area. The agency's response to

the emergency relocation was to give Sunrise a new per diem rate based on a

budget (anticipated costs) for the emergency facilities rather than a rate based

on the cost experience at the Corry Home.

The Legislature authorized Sunrise to replace its three ICF/DD facilities

which were severely damaged by the hurricane. See Section 32 of Chapter 93-185,

Laws of Florida. The Corry Group Home, a 12 bed facility, was not restored;

instead, Sunrise built a new 12 bed facility on a new site on Krome Avenue.

This rate dispute arises from the agency's denying Sunrise's request for a rate

based on a budget, and instead approving a rate based on the cost experience at

the two emergency facilities with an upward adjustment only for increased

property costs at the new facility. The per diem rate sought by Sunrise is

$342; the rate initially approved by the agency is $225.88.

RULING ON EXCEPTIONS

Counsel excepts to the finding in paragraphs 3 and 13 that the per diem

rate approved for the two emergency facilities was subject to a dollar cap

applicable to 6 bed facilities. Several allusions to such a cap are found in

reviewing the testimony given at the final hearing, but a review of Petitioner's

composite exhibit 8 is more helpful in addressing the exception. Sunrise's

letter of December 9, 1992, to Medicaid notes that Sunrise was being reimbursed

at the rate for the destroyed Corry facility, $134.45, and urgently requested

that a 45.07 percent increase (an additional $60.60 for a total rate of $195.05)

be approved because Sunrise was incurring higher costs of care at the emergency

facilities. The agency's response was a letter of January 21, 1993, to Sunrise

approving the requested rate of $195.05. Neither letter indicated that the rate

was limited by a cap. The substantial increase requested by Sunrise was

approved. The exceptions are granted.

Counsel excepts to the findings in paragraphs 5 and 6 that AHCA or HRS

"requested" that the replacement facility be designed as a quadriplex (four

three-bed units) and that the new facility not be placed on the Corry site. The

exception is granted and the finding is modified as follows. Having reviewed

the record, it is clear that the decisions on site and design were Sunrise's.

The decision on design was made after discussions with staff at the agencies.

See the transcript of the final hearing at pages 34, 38, 39, 53, 468, and 469.

The enabling legislation provided that the department "shall authorize Sunrise

to build three twelve person ICF/DD facilities through private financing on

sites selected [by Sunrise]." [emphasis added]. Section 32 of Chapter 93-185,

Laws of Florida.

Counsel excepts to the hearing officer's comment in paragraph 9 that if

Sunrise served much more difficult residents than it previously served its

revenues would significantly increase. It should be noted that the hearing

officer found that the profile of the residents served after the hurricane did

not change. The challenged comment is supported by competent, substantial

evidence; thus, the exception is denied. Heifetz vs. Department of Business

Regulation, 475 So2d 1277, 1281 (Fla. 1st DCA 1985).

Counsel excepts to the conclusion of law in paragraph 10 that once a

permanent rate is established for a facility, it cannot be increased as a result

of a change in client mix. The exception is granted. If the state requires a

facility to serve a different profile of residents, the rate may be adjusted.

Counsel excepts to the finding in paragraphs 15 and 29 that Sunrise's

proposed per diem rate of $342 reflects a reasonable level of costs for the new

facility. Sunrise presented testimony regarding the reasonableness of the

proposed rate. This testimony was not contradicted. The agency's witness,

Frank Hughes, conceded the reasonableness of the $342 proposed rate for a new

provider. The challenged finding is supported by competent, substantial

evidence; therefore, the exception is denied. Likewise, the exception to the

finding in paragraph 16 that higher salary costs could be anticipated at the new

facility is denied.

Counsel excepts to the implication of paragraph 17 that no cost report was

required for fiscal year 1995 because the two emergency homes closed before the

due date of the cost report. The applicable plan, Respondent's Exhibit 2 does

not excuse the filing of a cost report under this circumstance. The exception

is granted.

Counsel excepts to the hearing officer's conclusion in paragraphs 18 and 27

that the new facility should be treated as a new provider for purposes of

establishing its per diem rate. I find no statute or rule to support the

treatment of the new facility differently from the other two facilities restored

by Sunrise pursuant to Section 32 of Chapter 93-185, Laws of Florida. I concur

with the hearing officer; thus, the exception is denied.

Counsel's exceptions regarding estoppel are not addressed as the hearing

officer's recommendations are not based on estoppel. See paragraph 30 of the

Recommended Order.

FINDINGS OF FACT

The agency hereby adopts and incorporates by reference the findings of fact

set forth in the Recommended Order excepts as modified by the rulings on the

exceptions.

CONCLUSIONS OF LAW

The agency hereby adopts and incorporates by reference the conclusions of

law set forth in the Recommended Order except as modified by the rulings on the

exceptions.

Based upon the foregoing, it is

ADJUDGED, that a per diem rate of $342 as recommended be established for

Sunrise's new Krome Avenue ICF/DD.

DONE and ORDERED this 1st day of December, 1996, in Tallahassee, Florida.

STATE OF FLORIDA, AGENCY FOR

HEALTH CARE ADMINISTRATION

____________________________

Douglas M. Cook, Director

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

REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH

THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED

BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE

AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS

SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE

OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

COPIES FURNISHED TO:

Steven Grigas, Esquire J. Lawrence Johnston

Senior Attorney, Agency for Hearing Officer

Health Care Administration The DeSoto Building

2727 Mahan Drive, Suite 3431 1230 Apalachee Parkway

Fort Knox Building III Tallahassee, Florida 32399-1550

Tallahassee, Florida 32308-5403

Steven M. Weinger, Esquire

Kurzban, Kurzban & Weinger, P. A.

2650 SW 27th Avenue, 2nd Floor

Miami, Florida 33133

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 2nd day of December,

1996.

________________________________

R. S. Power, Agency Clerk

State of Florida, Agency for

Health Care Administration

2727 Mahan Drive

Fort Knox 3, Suite 3431

Tallahassee, Florida 32308-5403

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