00-000471CON Wellington Regional Medical Center, Inc., D/B/A Wellington Regional Medical Center vs. Agency For Health Care Administration Status: Closed Recommended Order on Friday, August 25, 2000.

Summary: Petitioners failed to prove ordinance prohibiting use of residential property for short-term tourist rentals inconsistent with principles for guiding development applicable to the Key West area of critical concern.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WELLINGTON REGIONAL MEDICAL )

CENTER, INC., d/b/a WELLINGTON )

REGIONAL MEDICAL CENTER, )

)

Petitioner, )

)

vs. ) Case No. 00-0471

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative

Hearings, by its duly-designated Administrative Law Judge,

Eleanor M. Hunter, held a formal hearing in the above-styled

case on June 22 and 23, 2000, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Robert D. Newell, Jr., Esquire

Newell, Terry & Rigsby, P.A.

817 North Gadsden Street

Tallahassee, Florida 32303-6313

For Respondent: Mark S. Thomas, Esquire

Richard A. Patterson, Esquire

Agency for Health Care Administration

2727 Mahan Drive

Building 3, Suite 3431

Tallahassee, Florida 32308-5403

STATEMENT OF THE ISSUE

The issue is whether the Petitioner, Wellington Regional

Medical Center, Inc., meets the criteria for approval of CON

application number 9253 to convert 16 substance abuse beds to a

seven-bed or ten-bed Level II neonatal intensive care unit.

PRELIMINARY STATEMENT

Wellington Regional Medical Center, Inc. (Wellington or

WRMC) is the applicant for certificate of need (CON) Number

9253, for authorization to convert 16 substance abuse beds to a

ten-bed Level II neonatal intensive care unit (NICU). The

application included a partial request to convert 16 substance

abuse beds to seven Level II NICU beds. The Agency for Health

Care Administration (AHCA) denied the CON application in

December 1999. Wellington filed a Petition for Formal

Administrative Hearing in January 2000.

Although the hearing was scheduled to last from June 21-23,

2000, after a consolidated case was settled, the hearing did not

start until June 22 and was concluded on June 23, 2000.

At the final hearing, Wellington presented the testimony of

Kevin DiLallo, an expert in hospital administration;

Karen Wolchuck-Sher, an expert in health planning; and

Thomas Davidson, an expert in health care planning and health

care financing. By filing their depositions, Wellington also

presented the testimony of William Casale, M.D., an expert in

obstetrics and gynecology; Steven J. Fern, M.D., an expert in

obstetrics and gynecology; Lesly Desrouleaux, M.D., an expert in

obstetrics and gynecology; and Dave Owens, R.N., an expert of

obstetrical nursing. At the final hearing, Wellington's

Exhibits numbered 1A-H, 2A-G, 3, 4, and 6 were received into

evidence. Wellington's Exhibit 5 for official recognition of SB

591 was received, with reservations, and withdrawn by Wellington

after the hearing. WRMC's Notice of Filing Exhibits 8-11 was

filed on July 5, 2000, and the exhibits are received in evidence

without objections.

AHCA presented the testimony of Karen Rivera, an expert in

CON review, and Jeffrey N. Gregg, an expert in health planning.

AHCA's Exhibits numbered 1-4 were received into evidence.

In the Pretrial Stipulation, filed on June 19, 2000, the

parties agreed that Florida Administrative Code Rules 59C-

1.042(3), (4), (5) - except to the extent that a seven-bed unit

would not satisfy the minimum unit size of ten beds, (7), (8) -

except to the extent that a medical director and respiratory

therapists are not shown on Schedule 6, (9), (11), and (13) are

not at issue or have been met by the applicant. The parties

also stipulated that Subsections 408.035(1)(a), (c), (g), (h),

(i) except to the extent that projected utilization is not

achieved; and (j), (l), (m), and (n), Florida Statutes, are not

applicable or have been satisfied by the applicant.

Rules 59C-1.042(6) and 59C-1.030(2), Florida Administrative

Code, are at issue. Subsections 408.035(1)(b), (d), (e), (f),

(i) to extent projected utilization can be achieved, (o), and

(2), Florida Statutes, are also at issue in this proceeding.

FINDINGS OF FACT

1. The Agency for Health Care Administration (AHCA)

administers the certificate of need (CON) program for health

care facilities and services in the state of Florida.

2. Wellington Regional Medical Center, Inc. (Wellington or

WRMC) is a 120-bed community-based hospital, with 104 acute care

and 16 substance beds. In September 1999, Wellington applied

for CON Number 9253 to convert the 16 substance abuse beds into

a ten-bed Level II neonatal intensive care unit (NICU).

Currently, Wellington transfers newborns requiring Level II care

to St. Mary's Hospital, in West Palm Beach, approximately 45

minutes away. The St. Mary's transport team can arrive as

quickly as 20 to 30 minutes, but has taken up to four hours to

pick up the babies.

3. AHCA reviewed and denied Wellington's application,

based on an absence of need in District 9 under criteria

applicable to both normal and not normal circumstances, and the

absence of any demonstrated problems for patients in getting

access to Level II NICU care. For the January 2002 planning

horizon used for applications which were, like Wellington's,

filed in September 1999, AHCA published a numerical need for

zero additional Level II NICU beds in AHCA District 9. The

methodology used by AHCA to calculate numeric need, factoring in

the existing inventory of 70 licensed and 20 approved beds, and

applying the objective for 80 percent district-wide occupancy,

resulted in a numeric need for a negative 32 beds. In other

words, in District 9, there is a surplus of 32 Level II NICU

beds, based on the formula established in AHCA's rules. The

NICU II occupancy rate for 1998 was approximately 66 percent in

District 9.

4. In the absence of numerical need, Wellington applied

for CON approval based on not normal circumstances, and contends

it met, on balance, the requirements of the applicable criteria.

59C-1.042(6) - birth volume

5. In Rule 59C-1.042(6), Florida Administrative Code, a

not normal circumstance based on minimum birth volume is set

forth, in pertinent 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.

6. For this application cycle, the fixed need pool was

published in July 1999; therefore, calendar year 1998 is the

time period for determining birth volume.

7. In 1998, there were 909 live births at Wellington. In

1999, live births at Wellington increased to 1,101, and, in the

12 months prior to the hearing, to 1,152. AHCA permits

applicants to use the most recent data in cases involving not

normal circumstances. Currently, approximately 100 live births

a month occur at Wellington, which justifies the projection of

1,238 total live births for the year 2000.

8. The current level of live births achieved at

Wellington, over 1,000, is equaled or exceeded at fewer than 70

of over 200 hospitals in Florida. For the period ending June

30, 1999, 53 of the 70 hospitals also exceeded 1,200 live

births. Of the 53 hospitals with over 1,200 live births

annually, 48 had Level II NICUs. Six hospitals in Florida range

between 1,200 and 1,499 live births a year; five have Level II

NICU.

59C-1.042(5) - minimum ten-bed unit size

9. AHCA's CON reviewer testified that she believed that

AHCA had only deviated from the ten-bed minimum unit once, for

CON Number 9243 to North Collier Hospital, a Medicaid

disproportionate share hospital with over 2,000 live births.

She also testified that, even though the applicant showed the

required occupancy level in fewer than ten beds, CON approval

for a ten-bed unit was awarded to Boca Raton Community Hospital

(Boca Raton), in part, based on its large number of live births.

By contrast, according to the chart on page 19 in AHCA's Exhibit

2, four of the seven Level II NICU providers in District 9

operated fewer than 10 beds at the time Wellington's application

was approved. Apparently, unlike in the case of the Boca Raton

application, AHCA held Wellington to the requirement of showing

that it could reach 80 percent occupancy in the beds, although

AHCA's expert health planner testified that the standard was a

"benchmark," not an absolute bar to approval.

10. In general, 1.1 Level II NICU patient days result from

each live birth. The ratio of 1.1 to 1, when applied to

80 percent occupancy in a ten-bed unit, results in a

mathematical necessity for 2,920 patient days a year, or a

project volume of at least 2,654 live births a year. The use of

the 80 percent district-wide occupancy standard for normal

circumstances as a facility-specific standard for not normal

circumstances is unreasonable and conflicts with the minimum

volume requirement of 1,000 live births in Rule 59C-1.042(6).

AHCA's application of the 80 percent occupancy requirement to

Wellington is inappropriate and inconsistent with the agency's

prior action. For example, in this case, arguably the failure

to meet the normal standard for district occupancy might justify

requiring a higher than normal facility standard, but AHCA has

not done so with any apparent consistency. Only four out of 57

Level II providers in Florida exceed 2,654, the number of live

births necessary to achieve the equivalent of 80 percent

occupancy in a ten-bed NICU, three of those exceed 3,000 live

births a year, and the fourth is in the range between 2,500 to

2,999 live births a year. Applying the 80 percent test with a

1.1 to 1 ratio to project Level II patient days, the six most

recently approved Level II NICU applicants fall short, with

projected occupancies ranging from 30 to 40 percent.

59C-1.042(8) - quality of care staffing standards

11. Wellington provides obstetrical services in its

Department of Maternal Health, also called the Center for Family

Beginnings. Seven dedicated beds are used for labor, delivery,

recovery, and postpartum care in that Department, with the

frequent need to use overflow beds. Despite the screening of

mothers prior to delivery to eliminate those whose babies are

likely to need Level II or higher care, at least 25 percent of

all expected normal deliveries develop into high risk problems.

Wellington is already equipped to handle these unexpected, high

risk babies, as it must do prior to transferring them.

Wellington also provides follow-up care to high risk babies as a

result of their agreement with St. Mary's to allow "back

transferring" of stabilized babies.

12. Wellington has a neonatologist-perinatologist on call

24 hours a day. It has neonatal intensive care nurses with

Level II and Level III experience on staff 24 hours a day.

13. AHCA questioned the adequacy of the staffing proposed

in the CON application because a medical director and

respiratory therapists are not explicitly listed on Schedule 6.

The medical director will be the same neonatologist-

perinatologist who is currently on staff and who will continue

to receive professional fees for services, but will not be a

hospital employee. That arrangement is explained in the notes

to Schedule 6. Similarly, the category "Other Ancillary,"

Wellington explained in the assumptions to Schedule 6, includes

two full-time equivalent staff positions for respiratory

therapists.

14. Wellington has on staff two perinatologists, who are

doctors specializing in high risk maternal-fetal medical care.

One of them moved to Wellington when another NICU program in the

County was closed. See Findings of Fact 26.

59C-1.030(2) - health care access criteria

15. Rule 59C-1.030(2), Florida Administrative Code,

requires consideration of criteria related to the need for the

services proposed and the expected accessibility of the services

for residents of the district. The criteria largely overlap

with those in Subsections 408.035(1)(b), (d), and (f), and (2),

Florida Statutes, which are also related to need and access.

See Findings of Fact 20-25 below.

16. In addition to more general need and access issues,

the rule requires considerations of access for low income,

minorities, and other medically underserved patients, including

those receiving Federal financial assistance, Medicare,

Medicaid, and indigent persons. The parties stipulated that

related criteria in Subsection 408.035(1)(n) - evaluating the

applicant's past and proposed Medicaid service - is met or not

at issue, based on Wellington's commitment to provide 30 percent

Medicaid in the NICU, and historical provision of 32.4 percent

Medicaid in the obstetrics unit. By stipulating that the

criteria are not at issue or are met in Subsection 408.035(1)(a)

- need related to district health plan - the parties necessarily

agreed that the local health plan requirement for a commitment

to provide at least 30 percent Medicaid/Indigent patient days

was met, and so, therefore, is the income accessibility concern

of the Rule.

17. Wellington addressed the Rule criterion for minority

access to NICU services. The only Haitian doctor specializing

in obstetrics and gynecology (OB/GYN) in Palm Beach County, who

speaks fluent Spanish as well as Creole, delivers 99 percent of

his patients' babies at Wellington. From 60 to 80 percent of

his patients come from Lake Worth, most of whom are Haitians and

Hispanics, including Gualemalans and Mexicans.

18. Another OB/GYN group of four doctors, with privileges

at four different hospitals, delivers 30 to 40 babies a month at

Wellington, based on their preference for the care provided at

Wellington.

19. The only OB/GYN group in Palm Beach County, which has

two affiliated perinatologists, both of whom are on staff at

Wellington, serves large numbers of patients from Clewiston,

Belle Glade, Pahokee, and Okeechobee. These areas are low

income, farming communities located, in driving time, from 45

minutes to 1 1/2 hours west of Wellington. Even when predicted

to have high risk births, mothers from the low income areas who

are told to go to St. Mary's Hospital because it has a Level II

NICU are approximately 70 percent non-compliant. St. Mary's is

an additional 45-minute drive east of Wellington.

408.035(1)(b) - availability, quality of care, efficiency,

appropriateness, accessibility, extent of utilization, and

adequacy of like and existing facilities and services;

(d) - availability and adequacy of alternatives, such as

outpatient or home care; (e) - economics of joint, cooperative,

or shared resources; (f) - need for services not reasonably and

economically accessible in adjoining areas; and

408.035(2)(a), (b) and (c) - less costly, more efficient

or more appropriate alternatives, such as existing inpatient

facilities, sharing arrangements; and (d) - serious problems

for patients to obtain care without proposed service.

20. In addition to the absence of numeric need under

normal circumstances, and the absence of the requisite birth

volume which results from the imposition of the district

occupancy standard to the hospital, AHCA also determined that

Wellington failed to show any problems with patient access to

like and existing facilities.

21. Currently, there are 70 licensed and 20 approved Level

II NICU beds in District 9. Overall, the occupancy rate for the

District is approximately 66 percent. In addition, existing

Level II NICU providers are located within two hours driving

time for all residents of the district, as required for NICU

which is classified as a tertiary service.

22. Seven hospitals in District 9 provided Level II NICU

care in 1998 to 1999. These included Lawnwood Regional Medical

Center (Lawnwood) in St. Lucie County, Martin Memorial Medical

Center (Martin Memorial) in Martin County, and Palm Beach

Gardens Medical Center (Palm Beach Gardens) in Palm Beach

County, West Boca Raton Hospital (West Boca), St. Mary's

Hospital (St. Mary's), Good Samaritan Hospital (Good Samaritan),

and Bethesda Memorial Hospital (Bethesda). In addition to the

licensed beds, 20 approved beds had been allocated as follows:

four for Good Samaritan, ten for Boca Raton Community Hospital,

and six for West Boca.

23. All of the existing Level II providers are located in

eastern Palm Beach County along the Interstate 95 corridor. The

population of Palm Beach County is migrating west.

24. The Wellington community is experiencing significant

growth. One indication is approval for the opening of five new

schools in Wellington, three elementary, one middle, and a high

school approximately 3 miles from the hospital. The number of

new residential housing starts in Wellington has increased from

4,332 in 1990 to 6,012 in 1999. The housing starts in

Wellington's primary service area represent over 48 percent of

the total for Palm Beach County. Approximately 35,000 of the

80,000 women in Palm Beach County aged 35 to 44, who are more

likely to have high risk pregnancies, live in the Wellington

service area.

25. Births at the three obstetrics providers in western

Palm Beach County have increased from 1,441 in 1995 to 2,580 in

1999, including an approximately 200 percent increase at

Wellington, from 345 in 1995 to 1,057 in 1999 (for the 12 months

ending in August).

26. Prior to October 1, 1999, the two closest hospitals to

Wellington with Level II NICU services were Good Samaritan, with

seven existing and four approved beds, and St. Mary's, with 22

beds. After Good Samaritan closed its obstetrics and NICU

services, the two closest Level II NICU providers to Wellington

are St. Mary's and West Boca, with nine licensed and six

approved beds. For the 12-month period from July 1998 to June

1999, there were 3,832 NICU II patient days, or 149.98 percent

occupancy in the seven operational beds at Good Samaritan; 5,743

patient days, or 71.52 percent in 22 beds at St. Mary's; and

3,210 patient days or 97.72 percent in the nine licensed beds at

West Boca. With the closing of Good Samaritan, patients who

were using its seven beds were assumed mostly likely to go to

St. Mary's, which is owned by the same parent company. AHCA

calculated a blended occupancy rate of 84.05 percent for St.

Mary's with the addition of nine Good Samaritan beds (seven

operational and two of four approved) to its existing 22 beds.

27. Despite the high occupancy in the nearest facilities,

the others in the District were relatively low for the same

period of time: 39.15 percent in ten Level II NICU beds at

Lawnwood, 8.38 percent in five beds at Martin Memorial, 19.23

percent in five beds at Palm Beach Gardens, and 50.46 percent in

12 beds at Bethesda.

( i) - immediate or long-term financial feasibility,

as related to utilization

28. AHCA rejected Wellington's projection of the volume of

babies it would receive as Level II transfers from Glades

General Hospital and Palms West Hospital. For the year ending

August 1999, there were 737 live births at Glades General and

786 at Palms West. From that, Wellington projected 797 births

at Glades General and 850 at Palms West in 2002. From that,

Wellington expects to receive 231 transfers from Glades General

and 197 from Palms West. The projections are based on

historical birth to patient day ratios for the County,

reasonable projections of volume, and reasonable market share

assumptions.

29. AHCA accepted Wellington's projections of its internal

birth volume, which was 1,714 live births by January 31, 2000,

resulting in a range between 1,192 and 1,834 Level II days.

Based on the reasonableness of the expected transfers and the

undisputed reasonableness of internal birth projections,

Wellington demonstrated that it will achieve 73.5 percent

occupancy in a ten-bed unit, or 75.2 percent in a seven-bed

unit, by January 2003.

30. As a result of reasonable utilization projections, as

otherwise stipulated by the parties, the project is financially

feasible.

Factual Summary

31. In general, Wellington demonstrated that the number of

live births at Wellington, the closing of the nearest Level II

provider, occupancy levels at nearby providers, the distances to

other existing providers, particularly from various western

areas of its service area, and the demographic and growth

patterns within the County are not normal circumstances for the

approval of its proposal.

32. On balance, Wellington meets the criteria for approval

for approval of CON Number 9253, to convert 16 substance abuse

beds to a ten-bed Level II NICU.

CONCLUSIONS OF LAW

33. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. Sections 120.569, 120.57(1), and 120.60(5),

Florida Statutes.

34. CON applicants have the burden of proving that their

applications meet the statutory and rule criteria for approval.

Boca Raton Artificial Kidney v. Department of Health and

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

The award of a CON must be based upon a balanced consideration

of the criteria. Department of Health and Rehabilitative

Services v. Johnson Home Health Care, Inc. , 447 So. 2d 361 (Fla.

1st DCA 1984); Balsam v. Department of Health and Rehabilitative

Services , 486 So. 2d 1341 (Fla. 1st DCA 1988).

35. Due to the absence of numeric need under Rule 59C-

1.042, Florida Administrative Code, Wellington must demonstrate

"not normal circumstances" for the approval of its CON

application.

36. Wellington demonstrated not normal circumstances, as

follows:

(a) The closing of the nearest Level II

NICU which was experiencing 149 percent

occupancy;

(b) the distance to the closest remaining

provider, St. Mary's, particularly from

western portions of the service area and its

expected blended occupancy rate of over 80

percent occupancy;

(c) the poverty levels and rate of non-

compliance for patients referred to St.

Mary's from the western area communities;

(d) the substantial growth in population,

the demographics, and the increase in births

in western Palm Beach County hospitals,

especially at Wellington; and

(e) the movement of specialists in

obstetrics, neonatology and perinatology

into the Wellington service area as result

of the closing of Good Samaritan's program

and the migration of the population.

37. In addition to establishing not normal circumstances,

Wellington met the criteria for quality of care by proposing

appropriate adequate staffing, as required by Rule 59C-1.042(8),

Florida Administrative Code.

38. Existing providers which are geographically accessible

from the community around Wellington are over-utilized. They

are geographically inaccessible to the medically indigent and

traditionally underserved, low income, minorities in the western

areas of the Wellington service area. Section 408.035(1)(b) and

408.035(2)(a), (b), and (d), Florida Statutes; and Rule 59C-

1.030(2), Florida Administrative Code.

39. There is no evidence that alternatives to inpatient

Level II NICU care are available. Section 408.035(1)(d),

Florida Statutes.

40. There is no evidence of possible improvements in

service, from any available operation or modernization of joint

or shared health care resources. AHCA alluded to St. Mary's and

Good Samaritan as a consolidated alternative, but their high

blended occupancy rate does not indicate much available

capacity. Section 408.035(1)(e) and (2)(c), Florida Statutes.

41. There is no evidence of any special equipment or

services that are economically accessible in adjoining districts

that meet the Level II NICU services proposed. Section

408.035(1)(f), Florida Statutes.

42. Wellington's proposal is financially feasible, based

on the reasonableness of its projected utilization in a ten-bed

unit. Subsection 408.035(1)(i), Florida Statutes; and Rule 59C-

1.042(5), Florida Administrative Code. The evidence did not

indicate that the project enhances the continuum of care in a

multilevel health care system. Subsection 408.035(1)(o),

Florida Statutes. Having demonstrated not normal circumstances,

by either stipulation or based on the evidence, Wellington met

all of the criteria for issuance of the CON for a ten-bed Level

II NICU, except for not enhancing care within multilevel health

care system. Therefore, on balance, Wellington demonstrated

entitlement to CON Number 9253.

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 issuing Certificate of Need Number 9253 to

Wellington Regional Medical Center, Inc., to convert 16

substance abuse beds to 10 Level II neonatal intensive care

beds.

DONE AND ENTERED this 25th day of August, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

ELEANOR M. HUNTER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 25th day of August, 2000.

COPIES FURNISHED:

Sam Power, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Julie Gallagher, General Counsel

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Mark S. Thomas, Esquire

Richard A. Patterson, Esquire

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Robert D. Newell, Jr., Esquire

Newell, Terry & Rigsby, P.A.

817 North Gadsden Street

Tallahassee, Florida 32303-6313

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.