03-001446F Health Care Center Of Naples, D/B/A The Aristocrat vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Friday, October 31, 2003.

Summary: Petitioner is not entitled to award of attorney`s fees and costs. The Agency for Health Care Administration established that it was substantially justified in citing the facility when it determined that the resident had significant weight loss.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH CARE CENTER OF NAPLES, )

d/b/a THE ARISTOCRAT, )

)

Petitioner, )

)

vs. ) Case No. 03 - 1446F

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was held in this case

on September 12, 2003, before Carolyn S. Holifield, a duly -

designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Michael S. Howard, Esquire

Thomas Caufman, Esquire

Gallagher & Howard, P.A.

Post Office Box 2722

Tampa, Florida 33602 - 2722

For Respondent: Gerald L. Pickett, Esquire

Agency for Health Care Administration

Sebring Bui lding, Suite 330K

525 Mirror Lake Drive, North

St. Petersburg, Florida 33701

STATEMENT OF THE ISSUE

Whether Petitioner is entitled to an award of attorney's

fees and costs pursuant to Section 57.111, Florida Statutes.

PRELIMINARY STATEMENT

On April 21, 2003, Petitioner, Health Care Center of

Naples, d/b/a The Aristocrat (Petitioner/Health Care Center of

Naples, Inc.) , filed a Petition for Award of Attorney's Fees and

Costs and two affidavits, the Affidavit of Derick Deeter and the

Affidavi t as to Attorney's Fees pursuant to Section 57.111 and

Subsection 120.569(2)(e), Florida Statutes. The Petition for

Award of Attorney's Fees and Costs requests attorney's fees and

costs incurred by Petitioner in litigating the case styled,

Health Case Cen ter of Naples d/b/a The Aristocrat v. Agency for

Health Care Administration , Case No. 02 - 0049 (DOAH February 21,

2003).

On May 13, 2003, Respondent, the Agency for Health Care

Administration (Agency), filed a response to the Petition for an

Award of Attor ney's Fees, which did not dispute that Petitioner

was the prevailing party for the purpose of Section 57.111,

Florida Statutes. However, in the response, Respondent

contended that Petitioner was not a "small business party" with

a net worth of less than $ 2,000,000 and that the Agency for

Health Care Administration was substantially justified in filing

a notice of intent to assign a conditional licensure status to

Petitioner.

Because of the disputed issues raised in the Petition for

Attorney's Fees and Cos ts and the Agency's response, by notice

issued May 5, 2003, the hearing in the matter was set for

June 6, 2003. On May 16, 2003, prior to the scheduled hearing

date, Petitioner filed an unopposed Motion for Continuance. In

an Order issued May 16, 2003, P etitioner's Motion for

Continuance was granted and the hearing was rescheduled for

July 8, 2003. Respondent filed an unopposed Motion for

Continuance on July 3, 2003. Pursuant to an Order issued

July 8, 2003, Respondent's Motion for Continuance was grant ed

and the hearing was rescheduled for September 12, 2003.

At the outset of the hearing, the undersigned granted the

Agency's request that the undersigned take official recognition

of the records, including the Transcript of the underlying case,

in DOAH C ase No. 02 - 0049, referenced above. Also, there were

three motions heard: the Agency's Motion for Continuance filed

September 11, 2003; the Agency's Motion to Compel Discovery

filed September 11, 2003; and Petitioner's Motion to Strike

Agency for Health C are Administration's Witnesses and Exhibits

(Motion to Strike) filed September 11, 2003. Petitioner

withdrew its Motion to Strike. After oral argument from

counsel, the undersigned denied the Agency's Motion to Compel

Discovery and the Agency's Motion fo r Continuance.

Prior to the evidentiary portion of the hearing, the

parties stipulated to certain facts that required no proof at

hearing. The parties also stipulated to the version of law that

was applicable to this proceeding. The stipulations are as

follows: (1) The formula for determining net worth is assets

minus liabilities; (2) Petitioner was the prevailing party in

DOAH Case No. 02 - 0049, AHCA Case No. 2001071241, AHCA Rendition

No. 03 - 0119 - FOF - OLC; (3) The Agency is the responsible entity

for re gulating nursing homes; (4) the Agency was not a minimal

party in the underlying proceeding; (5) the 2001 version of

Subsection 57.111(3), Florida Statutes, is the correct statute

under which to proceed (the maximum attorney fees permitted is

$15,000); and (6) the hourly attorney's rates of $125.00 and

$150.00 are reasonable.

At the final hearing, Petitioner presented the testimony of

Derek Deeter and offered and had two exhibits admitted into

evidence. The Agency presented the testimony of one witness,

A nn Sarantos, and offered no exhibits into evidence.

A Transcript of the proceeding was filed on

September 29, 2003. The Agency's Proposed Final Order was filed

on October 9, 2003, and Petitioner's Proposed Findings of Fact

and Conclusions of Law was fil ed on October 14, 2003. The

parties' post - hearing submittals have been carefully considered

in preparation of this Final Order.

Unless otherwise indicated, all statutory references in

this Final Order are to the 2001 version of the Florida

Statutes.

FINDI NGS OF FACT

Based on the oral and documentary evidence presented at

hearing and on the entire record of this proceeding, the

following Findings of Fact are made.

1. The Agency is authorized to license nursing home

facilities in the State of Florida and , pursuant to Chapter 400,

Part II, to evaluate nursing facilities and assign ratings.

2. The Agency conducted a survey of Petitioner's facility

from October 8 through 10, 2001. As a result of the survey, the

Agency cited Petitioner for "fail[ing] to ad equately assess and

develop a plan of care to maintain acceptable parameters for a

resident resulting in significant weight loss," and issued a

Notice of Intent to change its licensure status to conditional.

3. Petitioner timely challenged the conditiona l rating and

filed a Petition for Formal Hearing. Pursuant thereto, a formal

hearing was held on March 28 and 29, 2002.

4. The Recommended Order, which was issued on August 14,

2002, recommended that the Agency enter a final order issuing a

standard lic ensure rating to Petitioner and rescinding the

conditional licensure rating. On February 18, 2003, AHCA issued

a Final Order adopting the Findings of Fact and Conclusions of

Law in the Recommended Order, ordering that a standard licensure

rating be issued to replace the previously - issued conditional

licensure rating, and rescinding the conditional licensure

rating. As such, Petitioner was the prevailing party in the

underlying case, DOAH Case No. 02 - 0049, AHCA 2001 - 071241.

5. No appeal of the Final Orde r in the underlying

proceeding was filed.

6. On April 21, 2003, Petitioner filed a Petition for an

Award of Attorney's Fees and Costs (Petition) with supporting

affidavits.

7. In the Petition, Petitioner sought relief under both

the Florida Equal Acces s to Justice Act, Section 57.111, as well

as pursuant to Subsection 120.569(2)(e). The Agency opposed the

Petition.

8. Although Petitioner requested an award of attorney fees

under Subsection 120.569(2)(e), it presented no evidence that

the Agency had f iled any pleadings, motions, or other papers not

properly signed or that any were interposed for any improper

purpose. Accordingly, the undersigned will not consider an

award of attorney fee's under Subsection 120.569(2)(e), and the

focus of the evidence presented will be as to Section 57.111.

9. The parties stipulated as to the reasonableness and

amounts of the attorneys fees and costs. Reasonable attorney's

fees are $21,547.50. The reasonable amount of costs is

$4,183.82. The amount of attorney's fe es and costs that may be

awarded is limited to $15,000.00, based upon

Subsection 57.111(3)(d)(2), which the parties agree is

applicable to this proceeding.

10. The Health Care Center of Naples, Inc., is a

corporation with its principal office in Florida. At the time

the underlying action was initiated by the Agency in

October 2001, the Health Care Center of Naples, Inc., had a net

worth of not more than $2 million. The net worth of Health Care

Center of Naples, Inc., on October 31, 2001, was $158,048.65.

The net worth of Health Care Center of Naples, Inc., for

September 2001 was $190,829.22. The net worth of Health Care

Center of Naples, Inc., for November 2001 was $171,726.44.

11. The Administrative Complaint in the underlying

proceeding, DOAH Case No . 02 - 0049, alleged that Petitioner

failed to ensure that a resident maintained acceptable

parameters of nutritional status. The basis of this allegation

was the result of a survey which found that a resident had a

significant weight loss from the period b etween July 30, 2001,

to August 11, 2001. The Agency's Final Order, adopting the

Recommended Order in Case No. 02 - 0049, found that the patient's

weight loss was expected due to edema or third space fluid,

resulting from the patient's being over - dehydrated before her

recent surgery. Moreover, in the underlying proceeding, it was

found that in determining that the resident had a significant

weight loss, "the Agency surveyors based their calculations on

an inaccurate usual body weight for the resident." As a result

of these and other findings, the Agency's decision to change the

status of Petitioner's licensure rating to conditional was

rescinded.

12. Although the Agency did not prevail in the underlying

proceeding, the surveyors were substantially justifie d in citing

Petitioner for the alleged deficiency, and the Agency was

substantially justified in initiating the action. The Final

Order found that the usual body weight relied upon by the

surveyors in determining that the resident had a significant

weight loss was obtained from the records of Petitioner. Also,

the record in the underlying proceeding found that many of

Petitioner's staff members were concerned about the resident's

weight loss and did not consider that the weight loss was caused

by edema. Finally, there is no indication in the record that at

the time of the survey, Petitioner's staff gave the Agency

surveyors any reasonable explanation for the resident's alleged

significant weight loss.

13. The evidence, which was the basis of the findings in

the Final Order in the underlying proceeding, while available at

the time of the survey, was not discovered or known to the

surveyors and, to some extent, to Petitioner's staff.

CONCLUSIONS OF LAW

14. The Division of Administrative Hearings has

ju risdiction over the subject matter and parties to this

proceeding. Sections 57.111 and 120.57.

15. Attorney's fees and costs have been sought by

Petitioner in this matter pursuant to Section 57.111, the "Equal

Access to Justice Act."

16. The legislative intent for enacting the Equal Access

to Justice Act is provided in Subsection 57.111(2), which

provides the following:

(2) The Legislature finds that certain

persons may be deterred from seeking review

of, or defending against, unreasonable

governmental action because of the expense

of civil actions and administrative

proceedings. Because of the greater

resources of the state, the standard for an

award of attorney's fees and costs against

the state should be different from the

standard for an award again st a private

litigant. The purpose of this section is to

diminish the deterrent effect of seeking

review of, or defending against,

governmental action by providing in certain

situations an award of attorney's fees and

costs against the state.

17. In per tinent part, Subsection 57.111(4)(a) provides

the following:

(4)(a) Unless otherwise provided by law, an

award of attorney's fees and costs shall be

made to a prevailing small business party in

any adjudicatory proceeding or

administrative proceeding purs uant to

chapter 120 initiated by a state agency,

unless the actions of the agency were

substantially justified or special

circumstances exist which would make the

award unjust.

18. Subsection 57.111(3)(d)1.b. defines a small business

party, in pertinent part, as follows:

(d) The term "small business party" means:

* * *

b. A partnership or corporation, including

a professional practice, which has its

principal office in this state and has at

the time the action is initiated by a state

agency not more than 25 full - time employees

or a net worth of not more than $2 million;

or . . . .

19. Subsection 57.111(3)(c) defines a "prevailing small

business party" as follows:

(c) A small business party is a "prevailing

small business party" when:

1. A final judgment or order has been

entered in favor of the small business party

and such judgment or order has not been

reversed on appeal or the time for seeking

judicial review of the judgment or order has

expired;

2. A settlement has been obtained by t he

small business party which is favorable to

the small business party on the majority of

issues which such party raised during the

course of the proceeding; or

3. The state agency has sought a voluntary

dismissal of its complaint.

20. The Department does not dispute that Petitioner

prevailed in the underlying proceeding.

21. The term "substantially justified" is defined in

Subsection 57.111(3)(e) as follows:

(e) A proceeding is "substantially

justified" if it had a reasonable basis in

law and fact at the time it was initiated by

a state agency.

22. In proceedings to establish entitlement to an award of

attorney's fees and costs pursuant to Section 57.111, the

initial burden of proof is on the party requesting the award to

establish by a preponder ance of the evidence that it prevailed

in the underlying action and that it was a small business party

at the time the action was initiated. Once the party requesting

the award has met this burden, the burden shifts to the agency

to establish that it was substantially justified in initiating

the disciplinary action.

23. Petitioner proved that it is a small business party

within the meaning of Subsection 57.111(3)(d)1.b. Furthermore,

the parties stipulated that Petitioner is a prevailing party and

that th e underlying action was initiated by the Agency.

Therefore, Petitioner has met its burden of establishing that it

is a prevailing small business party.

24. Having established that Petitioner is a prevailing

small business party, the burden shifts to the Agency to show

that it was substantially justified in initiating the underlying

action.

25. The action of the Agency in the underlying cause was

based upon the information known to them at the time. None of

Petitioner's staff provided additional informat ion or

explanations regarding the reasons for the resident's alleged

significant weight loss. Had the explanations Petitioner

provided at the hearing in the underlying proceeding been

provided at the time of the survey, perhaps the matter would

have been resolved. It was reasonable that Agency surveyors

would be concerned when a resident of a nursing home facility

appeared to have an unexplained significant weight loss.

26. Considering the record in the underlying proceeding,

the Agency's actions were su bstantially justified.

ORDER

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is

ORDERED that the Health Care Center of Naples, d/b/a The

Aristocrat's Petition for Award of Attorney's Fees and Costs is

DENIED.

DONE AND ORDERED this 31st day of October, 2003, in

Tallahassee, Leon County, Florida.

S

CAROLYN S. HOLIFIELD

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32 399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 31st day of October, 2003.

COPIES FURNISHED :

Michael S. Howard, Esquire

Thomas Caufman, Esquir e

Gallagher & Howard, P.A.

Post Office Box 2722

Tampa, Florida 33602 - 2722

Gerald L. Pickett, Esquire

Agency for Health Care Administration

Sebring Building, Suite 330K

525 Mirror Lake Drive, North

St. Petersburg, Florida 33701

Lealand McCharen, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

Valda Clark Christian, General Counsel

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building, Suite 3431

Tallahassee, Florida 32308

NOTICE OF RIGHT TO JUDICIAL REVIEW

A 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 pro ceedings are commenced by

filing the original Notice of Appeal with the agency Clerk of

the Division of Administrative Hearings and a copy, accompanied

by filing fees prescribed by law, with the District Court of

Appeal, First District, or with the Distric t 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.