08-001699 Advanced Rehabilitation And Health Center vs. Agency For Health Care Administration
 Status: Closed
Recommended Order on Monday, February 23, 2009.


View Dockets  
Summary: Petitioners did not meet their burden of proof. The Agency`s actions were proper and correct. No estoppel applies to the facts of this case.

1BAYSIDE REHABILITATION AND )

5HEALTH CENTER, )

8)

9Petitioner, )

11)

12vs. ) Case No. 08-1695

17)

18AGENCY FOR HEALTH CARE )

23ADMINISTRATION, )

25)

26Respondent. )

28)

29SHORE ACRES REHABILITATION AND )

34HEALTH CENTER, )

37)

38Petitioner, )

40)

41vs. ) Case No. 08-1697

46)

47AGENCY FOR HEALTH CARE )

52ADMINISTRATION, )

54)

55Respondent. )

57)

58PALMETTO REHABILITATION AND )

62HEALTH CENTER, )

65)

66Petitioner, )

68)

69vs. ) Case No. 08-1698

74)

75AGENCY FOR HEALTH CARE )

80ADMINISTRATION, )

82)

83Respondent. )

85)

86ADVANCED REHABILITATION AND )

90HEALTH CENTER, )

93)

94Petitioner, )

96)

97vs. ) Case No. 08-1699

102)

103AGENCY FOR HEALTH CARE )

108ADMINISTRATION, )

110)

111Respondent. )

113)

114WOODBRIDGE REHABILITATION AND )

118HEALTH CENTER, )

121)

122Petitioner, )

124)

125vs. ) Case No. 08-1700

130)

131AGENCY FOR HEALTH CARE )

136ADMINISTRATION, )

138)

139Respondent. )

141)

142NORTH LAKE REHABILITATION AND )

147HEALTH CENTER, )

150)

151Petitioner, )

153)

154vs. ) Case No. 08-3155

159)

160AGENCY FOR HEALTH CARE )

165ADMINISTRATION, )

167)

168Respondent. )

170)

171RECOMMENDED ORDER

173Pursuant to notice, a final hearing was conducted in this

183case on November 19, 2008, in Tallahassee, Florida, before

192Administrative Law Judge R. Bruce McKibben of the Division of

202Administrative Hearings.

204APPEARANCES

205For Petitioners: Peter A. Lewis, Esquire

211Law Offices of Peter A. Lewis, P.L.

2182931 Kerry Forest Parkway, Suite 202

224Tallahassee, Florida 32309-6883

227For Respondent: Debora E. Fridie, Esquire

233Agency for Health Care Administration

238Fort Knox Building III, Mail Station 3

2452727 Mahan Drive, Suite 3431

250Tallahassee, Florida 32308

253STATEMENT OF THE ISSUES

257The issues in this case are whether Respondent applied the

267proper reimbursement principles to Petitioners' initial Medicaid

274rate setting, and whether elements of detrimental reliance exist

283so as to require Respondent to establish a particular initial

293rate for Petitioners' facilities.

297PRELIMINARY STATEMENT

299In September 2007, each of the Petitioners filed an

308application with the Agency for Health Care Administration

316("AHCA" or "the Agency") seeking a Change of Licensed Operator

328for a long-term health care facility. Each of the Petitioners

338also filed an application to be part of the Medicaid program in

350order to receive Medicaid reimbursement for services provided to

359its eligible residents. During the licensure application

366process, each Petitioner submitted, as part of its application,

375a Proof of Financial Ability ("PFA") document intending to prove

387its ability to operate the subject facility. AHCA reviewed and

397approved the PFA for each Petitioner, i.e., deeming each

406applicant financially sound.

409Each of the Petitioners' applications for inclusion in the

418Medicaid program for reimbursement purposes was also approved.

426Those applications resulted in the issuance of a Medicaid

435provider number for each facility.

440Subsequent to receiving its license to operate and its

449Medicaid provider number, each Petitioner received from AHCA a

458notice of the interim Medicaid rate assigned to the facility for

469reimbursement purposes. The interim Medicaid rates were, in

477each Petitioner's case, less than the Medicaid rate projected in

487the PFA filed as part of the licensure application. Petitioners

497believe the Medicaid rate set by AHCA was incorrect and contrary

508to provisions of the Florida Title XIX Long-Term Care

517Reimbursement Plan (the "Plan").

522Petitioners also believe that AHCA had represented that a

531higher interim Medicaid rate would be issued, that each

540Petitioner relied upon that representation to its detriment, and

549that AHCA should be estopped from subsequently assigning a

558different interim Medicaid rate.

562Petitioners timely filed Amended Requests for

568Administrative Hearings with AHCA, which were then forwarded to

577the Division of Administrative Hearings ("DOAH") on April 7,

5882008, consolidated, and assigned to the undersigned. At the

597final hearing, Petitioners called two witnesses: Stanley W.

"605Sandy" Swindling, shareholder with Moore Stephens Lovelace,

612P.A., a healthcare accounting firm; and Laura Wilson,

620shareholder with Moore Stephens Lovelace, P.A. Petitioners

627offered one independent exhibit which was accepted into

635evidence; Petitioners also adopted each of Respondent's 31 pre-

644marked exhibits as joint exhibits, all of which were accepted

654into evidence. Respondent presented the testimony of four

662witnesses: Ryan Fitch, regulatory analyst supervisor for AHCA's

670Financial Analysis Unit, Bureau of Health Facility Regulation;

678J. Ross Nobles, Medicaid cost reimbursement planning

685administrator at AHCA's Medicaid Program Analysis Office; Wesley

693Hagler, regulatory analyst supervisor for AHCA's Medicaid

700Program Analysis Office; and Tzvi Bogomilsky, representative of

708Petitioners' long-term care facilities. Respondent's 31

714pre-marked exhibits were adopted by Petitioners as joint

722exhibits and admitted into evidence.

727The undersigned granted an unopposed Motion for Official

735Recognition on September 12, 2008, as to the following:

744and (f); 1396r(a); 42 C.F.R. Sections 447.250 through 447.280

753and 431.108; Chapter 2007-72, Laws of Florida; Sections 409.901,

762409.902, and 409.908 and Subsection 409.905(8), Florida Statutes

770(2007); Florida Administrative Code Rules 59G-4.200 and 6.010;

778Florida Medicaid Nursing Facility Services, Coverage and

785Limitations Handbook; Florida Title XIX Long-Term Care

792Reimbursement Plan, Version XXXII; and the Provider

799Reimbursement Manual, CMS Publication 15-1.

804The parties advised the undersigned that a transcript of

813the final hearing would be ordered. Parties were given ten days

824from the date the transcript was filed at DOAH to submit

835proposed recommended orders. The Transcript was filed at DOAH

844on December 5, 2008. Subsequently, the parties filed a joint

854motion seeking additional time to file their proposed

862recommended orders and requesting that the 40-page limit for

871proposed recommended orders be waived. An Order was entered

880giving the parties until January 16, 2009, to file their

890proposed recommended orders; the page limit for the orders was

900extended to not more than 50 pages. Each party timely submitted

911a proposed recommended order, and they were given due

920consideration in the preparation of this Recommended Order.

928FINDINGS OF FACT

9311. There are nine Petitioners in this case. Each of them

942is a long-term health care facility (nursing home) operated

951under independent and separate legal entities, but, generally,

959under the umbrella of a single owner, Tzvi "Steve" Bogomilsky.

969The issues in this case are essentially the same for all nine

981Petitioners, but the specific monetary impact on each Petitioner

990may differ. For purposes of addressing the issues at final

1000hearing, only one of the Petitioners, Madison Pointe

1008Rehabilitation and Health Center (Madison Pointe), was

1015discussed, but the pertinent facts are relevant to each of the

1026other Petitioners as well.

10302. Each of the Petitioners has standing in this case. The

1041Amended Petition for Formal Administrative Hearing filed by each

1050Petitioner was timely and satisfied minimum requirements.

10573. In September 2008, Bogomilsky caused to be filed with

1067AHCA a Change of Licensed Operator ("CHOP") application for

1078Madison Pointe. 1 The purpose of that application was to allow a

1090new entity owned by Bogomilsky to become the authorized licensee

1100of that facility. Part and parcel of the CHOP application was a

1112Form 1332, PFA. The PFA sets forth projected revenues,

1121expenses, costs and charges anticipated for the facility in its

1131first year of operation by the new operator. The PFA also

1142contained projected (or budgeted) balance sheets and a projected

1151Medicaid cost report for the facility.

11574. AHCA is the state agency responsible for licensing

1166nursing homes in this state. AHCA also is responsible for

1176managing the federal Medicaid program within this state.

1184Further, AHCA monitors nursing homes within the state for

1193compliance with state and federal regulations, both operating

1201and financial in nature.

12055. The AHCA Division of Health Quality Assurance, Bureau

1214of Long-Term Care Services, Long-Term Care Unit ("Long-Term Care

1224Unit") is responsible for reviewing and approving CHOP

1233applications and issuance of an operating license to the new

1243licensee. The AHCA Division of Health Quality Assurance, Bureau

1252of Health Facility Regulation, Financial Analysis Unit

1259("Financial Analysis Unit") is responsible for reviewing the PFA

1270contained in the CHOP application and determining an applicant's

1279financial ability to operate a facility in accordance with the

1289applicable statutes and rules. Neither the Long-Term Care Unit

1298nor the Financial Analysis Unit is a part of the Florida

1309Medicaid Program.

13116. Madison Pointe also chose to submit a Medicaid provider

1321application to the Medicaid program fiscal agent to enroll as a

1332Medicaid provider and to be eligible for Medicaid reimbursement.

1341(Participation by nursing homes in the Medicaid program is

1350voluntary.) The Medicaid provider application was reviewed by

1358the Medicaid Program Analysis Office (MPA) which, pursuant to

1367its normal practices, reviewed the application and set an

1376interim per diem rate for reimbursement. Interim rate-setting

1384is dependent upon legislative direction provided in the General

1393Appropriations Act and also in the Title XIX Long-Term Care

1403Reimbursement Plan (the Plan). The Plan is created by the

1413federal Centers for Medicare and Medicaid Services (CMS). CMS

1422(formerly known as the Health Care Financing Administration) is

1431a federal agency within the Department of Health and Human

1441Services. CMS is responsible for administering the Medicare and

1450Medicaid programs, utilizing state agencies for assistance when

1458appropriate.

14597. In its PFA filed with the Financial Analysis Unit,

1469Madison Pointe proposed an interim Medicaid rate of $203.50 per

1479patient day (ppd) as part of its budgeted revenues. The

1489projected interim rate was based on Madison Pointe's expected

1498occupancy rate, projected expenses, and allowable costs. The

1506projected rate was higher than the previous owner's actual rate

1516in large part based on Madison Pointe's anticipation of pending

1526legislative action concerning Medicaid reimbursement issues.

1532That is, Madison Pointe projected higher spending and allowable

1541costs based on expected increases proposed in the upcoming

1550legislative session.

1552Legislative Changes to the Medicaid Reimbursement System

15598. During the 2007 Florida Legislative Session, the

1567Legislature addressed the status of Medicaid reimbursement for

1575long-term care facilities. During that session, the Legislature

1583enacted the 2007 Appropriations Act, Chapter 2007-72, Laws of

1592Florida.

15939. The industry proposed, and the Legislature seemed to

1602accept, that it was necessary to rebase nursing homes in the

1613Medicaid program. Rebasing is a method employed by the Agency

1623periodically to calibrate the target rate system and adjust

1632Medicaid rates (pursuant to the amount of funds allowed by the

1643Legislature) to reflect more realistic allowable expenditures by

1651providers. Rebasing had previously occurred in 1992 and 2002.

1660The rebasing would result in a "step-up" in the Medicaid rate

1671for providers.

167310. In response to a stated need for rebasing, the 2007

1684Legislature earmarked funds to address Medicaid reimbursement.

1691The Legislature passed Senate Bill 2800, which included

1699provisions for modifying the Plan as follows:

1706• To establish a target rate class ceiling

1714floor equal to 90 percent of the cost-

1722based class ceiling.

1725• To establish an individual provider-

1731specific target floor equal to 75

1737percent of the cost-based class ceiling.

1743• To modify the inflation multiplier to

1750equal 2.0 times inflation for the

1756individual provider-specific target.

1759(The inflation multiplier for the target

1765rate class ceiling shall remain at 1.4

1772times inflation.)

1774• To modify the calculation of the change

1782of ownership target to equal the

1788previous provider's operating and

1792indirect patient care cost per diem

1798(excluding incentives), plus 50 percent

1803of the difference between the previous

1809providers' per diem (excluding

1813incentives) and the effect class ceiling

1819and use an inflation multiplier of 2.0

1826times inflation.

182811. The Plan was modified in accordance with this

1837legislation with an effective date of July 1, 2007. Four

1847relevant sentences from the modified Plan are relevant to this

1857proceeding, to wit:

1860[1] For a new provider with no cost history

1869resulting from a change of ownership or

1876operator, where the previous provider

1881participated in the Medicaid program, the

1887interim operating and patient care per diems

1894shall be the lesser of: the class

1901reimbursement ceiling based on Section V of

1908this Plan, the budgeted per diems approved

1915by AHCA based on Section III of this Plan,

1924or the previous providers' operating and

1930patient care cost per diem (excluding

1936incentives), plus 50% of the difference

1942between the previous providers' per diem

1948(excluding incentives) and the class

1953ceiling.

1954[2] The above new provider ceilings, based

1961on the district average per diem or the

1969previous providers' per diem, shall apply to

1976all new providers with a Medicaid

1982certification effective on or after July 1,

19891991.

1990[3] The new provider reimbursement

1995limitation above, based on the district

2001average per diem or the previous providers'

2008per diem, which affects providers already in

2015the Medicaid program, shall not apply to

2022these same providers beginning with the rate

2029semester in which the target reimbursement

2035provision in Section V.B.16. of this plan

2042does not apply.

2045[4] This new provider reimbursement

2050limitation shall apply to new providers

2056entering the Medicaid program, even if the

2063new provider enters the program during a

2070rate semester in which Section V.B.16 of

2077this plan does not apply.

2082[The above cited sentences will be referred

2089to herein as Plan Sentence 1, Plan

2096Sentence 2, etc.]

2099Madison Pointe's Projected Medicaid Rate

210412. Relying on the proposed legislation, including the

2112proposed rebasing and step-up in rate, Madison Pointe projected

2121an interim Medicaid rate of $203.50 ppd for its initial year of

2133operation. Madison Pointe's new projected rate assumed a

2141rebasing by the Legislature to eliminate existing targets,

2149thereby, allowing more reimbursable costs. Although no

2156legislation had been passed at that time, Madison Pointe's

2165consultants made calculations and projections as to how the

2174rebasing would likely affect Petitioners. Those projections

2181were the basis for the $203.50 ppd interim rate. The projected

2192rate with limitations applied (i.e., if Madison Pointe did not

2202anticipate rebasing or believe the Plan revisions applied) would

2211have been $194.26.

221413. The PFA portion of Madison Pointe's CHOP application

2223was submitted to AHCA containing the $203.50 ppd interim rate.

223314. The Financial Analysis Unit, as stated, is responsible

2242for, inter alia, reviewing PFAs submitted as part of a CHOP

2253application. In the present case, Ryan Fitch was the person

2263within the Financial Analysis Unit assigned responsibility for

2271reviewing Madison Pointe's PFA. Fitch testified that the

2279purpose of his review was to determine whether the applicant had

2290projected sufficient monetary resources to successfully operate

2297the facility. This would include a contingency fund (equal to

2307one month's anticipated expenses) available to the applicant and

2316reasonable projections of cost and expenses versus anticipated

2324revenues. 2

232615. Upon his initial review of the Madison Pointe PFA,

2336Fitch determined that the projected Medicaid interim rate was

2345considerably higher than the previous operator's actual rate.

2353This raised a red flag and prompted Fitch to question the

2364propriety of the proposed rate. In his omissions letter to the

2375applicant, Fitch wrote (as the fourth bullet point of the

2385letter), "The projected Medicaid rate appears to be high

2394relative to the current per diem rate and the rate realized in

24062006 cost reports (which includes ancillaries and is net of

2416contractual adjustments). Please explain or revise the

2423projections."

242416. In response to the omissions letter, Laura Wilson, a

2434health care accountant working for Madison Pointe, sent Fitch an

2444email on June 27, 2008. The subject line of the email says,

"2456FW: Omissions Letter for 11 CHOW applications." 3 Then the email

2467addressed several items from the omissions letter, including a

2476response to the fourth bullet point which says:

2484Item #4 - Effective July 1, 2007, it is

2493anticipated that AHCA will be rebasing

2499Medicaid rates (the money made available

2505through elimination of some of Medicaid's

2511participation in covering Medicare Part A

2517bad debts). Based on discussions with AHCA

2524and the two Associations (FHCA & FAHSA),

2531there is absolute confidence that this

2537rebasing will occur. The rebasing is

2543expected to increase the Medicaid rates at

2550all of the facilities based on the current

2558operator's spending levels. As there is no

2565definitive methodology yet developed, the

2570rebased rates in the projections have been

2577calculated based on the historical

2582methodologies that were used in the 2 most

2590recent rebasings (1992 and 2002). The rates

2597also include the reestablishment of the 50%

2604step-up that is also anticipated to begin

2611again. The rebasing will serve to increase

2618reimbursement and cover costs which were

2624previously limited by ceilings. As noted in

2631Note 6 of the financials, if something

2638occurs which prevents the rebasing,

2643Management will be reducing expenditures to

2649align them with the available reimbursement.

265517. It is clear Madison Pointe's projected Medicaid rate

2664was based upon proposed legislative actions which would result

2673in changes to the Plan. It is also clear that should those

2685changes not occur, Madison Pointe was going to be able to

2696address the shortfall by way of reduced expenditures. Each of

2706those facts was relevant to the financial viability of Madison

2716Pointe's proposed operations.

271918. Madison Pointe's financial condition was approved by

2727Fitch based upon his review of the PFA and the responses to his

2740questions. Madison Pointe became the new licensed operator of

2749the facility. That is, the Long-Term Care Unit deemed the

2759application to have met all requirements, including financial

2767ability to operate, and issued a license to the applicant.

277719. Subsequently, MPA provided to Madison Pointe its

2785interim Medicaid rate. MPA advised Madison Pointe that its rate

2795would be $194.55 ppd, some $8.95 ppd less than Madison Pointe

2806had projected in its PFA (but slightly more than Madison Pointe

2817would have projected with the 50 percent limitation from Plan

2827Sentence 1 in effect, i.e., $194.26). The PFA projected 25,135

2838annual Medicaid patient days, which multiplied by $8.95, would

2847equate to a reduction in revenues of approximately $225,000 for

2858the first year of operation. 4

286420. MPA assigned Madison Pointe's interim Medicaid rate by

2873applying the provisions of the Plan as it existed as of the date

2886Madison Pointe's new operating license was issued, i.e.,

2894September 1, 2007. Specifically, MPA limited Madison Pointe's

2902per diem to 50 percent of the difference between the previous

2913provider's per diem and the applicable ceilings, as dictated by

2923the changes to the Plan. ( See Plan Sentence 1 set forth above.)

293621. Madison Pointe's projected Medicaid rate in the PFA

2945had not taken any such limitations into account because of

2955Madison Pointe's interpretation of the Plan provisions.

2962Specifically, that Plan Sentence 3 applies to Madison Pointe

2971and, therefore, exempts Madison Pointe from the new provider

2980limitation set forth in Plan Sentences 1 and 2. However,

2990Madison Pointe was not "already in the Medicaid program" as of

3001July 1, 2007, as called for in Plan Sentence 3. Rather, Madison

3013Pointe's commencement date in the Medicaid program was

3021September 1, 2007.

302422. Plan Sentence 1 is applicable to a "new provider with

3035no cost history resulting from a change of ownership or

3045operator, where the previous operator participated in the

3053Medicaid program." Madison Pointe falls within that definition.

3061Thus, Madison Pointe's interim operating and patient care per

3070diems would be the lesser of: (1) The class reimbursement

3080ceiling based on Section V of the Plan; (2) The budgeted per

3092diems approved by AHCA based on Section III of the Plan; or

3104(3) The previous provider's operating and patient care cost per

3114diem (excluding incentives), plus 50 percent of the difference

3123between the previous provider's per diem and the class ceiling.

313323. Based upon the language of Plan Sentence 1, MPA

3143approved an interim operating and patient care per diem of

3153$194.55 for Madison Pointe.

315724. Plan Sentence 2 is applicable to Madison Pointe,

3166because it applies to all new providers with a Medicaid

3176certification effective after July 1, 1991. Madison Pointe's

3184certification was effective September 1, 2007.

319025. Plan Sentence 3 is the primary point of contention

3200between the parties. AHCA correctly contends that Plan

3208Sentence 3 is not applicable to Petitioner, because it addresses

3218rebasing that occurred on July 1, 2007, i.e., prior to Madison

3229Pointe coming into the Medicaid system. The language of Plan

3239Sentence 3 is clear and unambiguous that it applies to

"3249providers already in the Medicaid program."

325526. Plan Sentence 4 is applicable to Madison Pointe, which

3265entered the system during a rate semester, in which no other

3276provider had a new provider limitation because of the rebasing.

3286Again, the language is unambiguous that "[t]his new provider

3295reimbursement limitation shall apply to new providers entering

3303the Medicaid program. . . ." Madison Pointe is a new provider

3315entering the program.

3318Detrimental Reliance and Estoppel

332227. Madison Pointe submitted its CHOP application to the

3331Long-Term Care Unit of AHCA for approval. That office has the

3342clear responsibility for reviewing and approving (or denying)

3350CHOP applications for nursing homes.

335528. The Long-Term Care Unit requires, as part of the CHOP

3366application, submission of the PFA which sets forth certain

3375financial information used to determine whether the applicant

3383has the financial resources to operate the nursing home for

3393which it is applying. The Long-Term Care Unit has another

3403office within AHCA, the Financial Analysis Unit, to review

3412the PFA.

341429. The Financial Analysis Unit is found within the Bureau

3424of Health Facility Regulation. That Bureau is responsible for

3433certificates of need and other issues, but has no authority

3443concerning the issuance, or not, of a nursing home license. Nor

3454does the Financial Analysis Unit have any authority to set an

3465interim Medicaid rate. Rather, the Financial Analysis Unit

3473employs certain individuals who have the skills and training

3482necessary to review financial documents and determine an

3490applicant's financial ability to operate.

349530. A nursing home licensee must obtain Medicaid

3503certification if it wishes to participate in the program.

3512Madison Pointe applied for Medicaid certification, filing its

3520application with a Medicaid intermediary which works for CMS.

3529The issuance of a Medicaid certification is separate and

3538distinct from the issuance of a license to operate.

354731. When Madison Pointe submitted its PFA for review, it

3557was aware that an office other than the Long-Term Care Unit

3568would be reviewing the PFA. Madison Pointe believed the two

3578offices within AHCA would communicate with one another, however.

3587But even if the offices communicated with one another, there is

3598no evidence that the Financial Analysis Unit has authority to

3608approve or disapprove a CHOP application. That unit's sole

3617purpose is to review the PFA and make a finding regarding

3628financial ability to operate.

363232. Likewise, MPA--which determines the interim Medicaid

3639rate for a newly licensed operator--operates independently of

3647the Long-Term Care Unit or the Financial Analysis Unit. While

3657contained within the umbrella of AHCA, each office has separate

3667and distinct duties and responsibilities.

367233. There is no competent evidence that an applicant for a

3683nursing home license can rely upon its budgeted interim rate--as

3693proposed by the applicant and approved as reasonable by MPA--as

3703the ultimate interim rate set by the Medicaid Program Analysis

3713Office. At no point in time did Fitch tell Madison Pointe that

3725a rate of $203.50 ppd would be assigned. Rather, he said that

3737the rate seemed high; Madison Pointe responded that it could

"3747eliminate expenditures to align them with the available

3755reimbursement."

375634. The interim rate proposed by the applicant is an

3766estimate made upon its own determination of possible facts and

3776anticipated operating experience. The interim rate assigned by

3784MPA is calculated based on the applicant's projections as

3793affected by provisions in the Plan.

379935. Furthermore, it is clear that Madison Pointe was on

3809notice that its proposed interim rate seemed excessive. In

3818response to that notice, Madison Pointe did not reduce the

3828projected rate, but agreed that spending would be curtailed if a

3839lower interim rate was assigned. There was, in short, no

3849reliance by Madison Pointe on Fitch's approval of the PFA as a

3861de facto approval of the proposed interim rate.

386936. MPA never made a representation to Madison Pointe as

3879to the interim rate it would receive until after the license was

3891approved. There was, therefore, no subsequent representation

3898made to Madison Pointe that was contrary to a previous

3908statement.

390937. The Financial Analysis Unit's approval of the PFA was

3919done with a clear and unequivocal concern about the propriety of

3930the rate as stated. The approval was finalized only after a

3941representation by Madison Pointe that it would reduce

3949expenditures if a lower rate was imposed. Thus, Madison Pointe

3959did not change its position based on any representation made by

3970AHCA.

3971CONCLUSIONS OF LAW

397438. The Division of Administrative Hearings has

3981jurisdiction over the parties to and the subject matter of this

3992proceeding pursuant to Section 120.569 and Subsection 120.57(1),

4000Florida Statutes (2008). Unless otherwise stated herein, all

4008references to Florida Statutes shall be to the 2007 version.

401839. The burden of proof in this case is on Petitioners, as

4030they are the parties asserting the affirmative of the issue.

4040Department of Banking and Finance, Division of Securities and

4049Investor Protection v. Osbourne Stern & Co. , 670 So. 2d 932, 934

4061(Fla. 1996); see also Young v. Department of Community Affairs ,

4071625 So. 2d 831 (Fla. 1993). Further, the parties in this case

4083have stipulated that Petitioners bear the burden of proof.

409240. Chapter 408, Part II (Sections 408.801 through

4100408.832), Florida Statutes, the "Health Care Licensing

4107Procedures Act," applies to all providers required to be

4116licensed by AHCA, including "nursing homes, as provided under

4125part II of chapter 400."

413041. AHCA is the agency which regulates nursing homes in

4140this state. §§ 400.021(2) and 408.803(1), Fla. Stat. It is

4150unlawful to operate a nursing home without applying to AHCA for

4161This also applies when a nursing home has a new owner or

4173operator as a result of a change of ownership. §§ 408.806 and

4185408.807, Fla. Stat.

418842. Section 408.806, Florida Statutes, sets forth the

4196nursing home license application process, including a 60-day

4204deadline for AHCA to receive a nursing home licensure

4213application from an applicant in a change of ownership.

4222§§ 408.806(2)(b) and 408.807(2), Fla. Stat. See also

4230Subsections 408.807(1), Florida Statutes, requiring the

4236transferor to notify the Agency in writing at least 60 days in

4248advance of a nursing home change of ownership. Petitioners

4257timely and properly filed their CHOP applications.

426443. Florida Administrative Code Rule 59A-4.103 sets forth

4272the administrative rule requirements for an initial, renewal, or

4281change of ownership license to operate a nursing home facility

4291and incorporates by reference into rule nursing home licensure

4300forms. Petitioners complied with these rule requirements.

430744. Pursuant to Subsection 408.810(8), Florida Statutes,

4314an applicant for a nursing home license based on a change of

4326ownership must furnish "satisfactory proof of the applicant's

4334financial ability to operate." That statutory subsection also

4342requires the Agency to establish standards and documentation

4350requirements in determining the financial ability of nursing

4358home applicants to operate.

436245. AHCA, therefore, has by rule mandated that an

4371applicant for change of ownership must provide a projected

4380balance sheet, projected statement of monthly revenues and

4388expenses (including projected occupancy), projected statement of

4395monthly cash flows, a summary of significant projection

4403assumptions, transaction costs, sources of funds and a projected

4412Medicaid cost report for the first year of operation.

4421Petitioners submitted all required information for the

4428applications at issue.

443146. Petitioners also submitted applications to enter the

4439Medicaid program. The Medicaid program is the federal-state

4447medical assistance program authorized by Title XIX of the

4456Federal Social Security Act, pursuant to which the State of

4466Florida provides medical goods and services to eligible indigent

4475recipients. 42 U.S.C. § 1396a, et. seq. ; 42 C.F.R. Parts 400

4486and 430 through 447; and § 409.901(14), Fla. Stat. AHCA is the

4498single state agency that administers the Medicaid program.

4506§§ 409.901(2), (14), and (15); and 409.902, Fla. Stat.

451547. The statutory authority for the Florida Medicaid

4523Program is found in Sections 409.901 through 409.920, Florida

4532Statutes. Florida Administrative Code Chapter 59G contains the

4540applicable administrative rules regulating the Florida Medicaid

4547Program.

454848. AHCA may make payments for covered Medicaid goods and

4558services only to an individual or entity with a Medicaid

4568provider agreement in effect with AHCA. § 409.907, Fla. Stat.

4578Each of the Petitioners obtained the requisite Medicaid provider

4587agreement.

458849. Because the Agency reimburses licensed Medicaid

4595nursing homes by a prospective payment methodology, each

4603Petitioner had to submit a proposed or projected Medicaid rate

4613based on its overall financial projections. The proposed rates

4622were included in Petitioners' PFA submissions to AHCA. The

4631rates were higher than AHCA would have anticipated for

4640Petitioners.

464150. Pursuant to Subsection 409.908(2)(b), Florida

4647Statutes, "[s]ubject to any limitations or directions provided

4655for in the General Appropriations Act, the agency shall

4664establish and implement a Florida Title XIX Long-Term Care

4673Reimbursement Plan (Medicaid) for nursing home care. . . ."

4683Using the terms and provisions of that Plan, AHCA projected

4693Medicaid rates for Petitioners that included limitations.

4700AHCA's projections were based on its interpretation of the Plan.

471051. It has been a maxim of Florida law that an agency's

4722interpretation of its own statutes, rules, and policies is given

4732great deference. "[A] reviewing court must defer to an agency's

4742interpretation of an operable statute as long as that

4751interpretation is consistent with legislative intent and is

4759supported by substantial, competent evidence." Floridian

4765Community Bank, Inc. v. Office of Financial Regulation, Division

4774of Financial Institutions , 989 So. 2d 1231, 1233 (Fla. 4th DCA

47852008). "An agency's interpretation of the statute that it is

4795charged with enforcing is entitled to great deference." Verizon

4804Florida, Inc. v. Jacobs , 810 So. 2d 906, 908 (Fla. 2002). See

4816also Creative Choice XXV, Ltd. v. Florida Housing Finance Corp. ,

4826991 So. 2d 899, 901 (Fla. 1st DCA 2008); and Floridian Community

4838Bank , 989 So. 2d at 1233.

484452. See also Brown v. Florida Commission on Ethics , 969

4854So. 2d 553, 557 (Fla. 1st DCA 2007), which holds in pertinent

4866part:

4867A more specific principle in the case law

4875requires the appellate courts to show

4881greater deference to an administrative

4886agency if the agency has interpreted a

4893statute within its jurisdiction. In such a

4900case, the interpretation may have been based

4907on a history that is best known by the

4916agency or special expertise the agency has

4923in applying the statute. To account for

4930these factors, the courts have held that an

4938agency decision construing a statute within

4944its substantive jurisdiction should not be

4950reversed unless it is clearly erroneous

4956(citations omitted).

495853. "Furthermore, it is a well-established maxim that an

4967agency's interpretation of its own rules and regulations is

4976entitled to considerable deference." Colonnade Medical Center

4983v. AHCA , 847 So. 2d 540, 542 (Fla. 4th DCA 2003).

499454. AHCA has provided competent and substantial evidence

5002in this matter to support its interpretation of the Plan and its

5014rules incorporating the plan. That interpretation is given

5022great deference. There is no basis in law or in the record to

5035reject the Agency's interpretation as applied to the facts of

5045this case.

504755. Further, Petitioners have not established any

5054competent support for the proposition that approval of a PFA for

5065licensure purposes (which includes a projected Medicaid per diem

5074rate) establishes a final Medicaid reimbursement rate for

5082Medicaid purposes. Although there is some overlap,

5089determination of financial ability for purposes of a CHOP

5098application is not tantamount to establishing a Medicaid rate

5107under the terms and provisions of the Plan.

511556. The elements of equitable estoppel are: (1) A

5124representation as to a material fact that is contrary to a later

5136asserted position; (2) Reliance on that representation; and

5144(3) A change in position detrimental to the party claiming

5154estoppel, caused by the representation and reliance thereon.

5162Council Brothers, Inc. v. City of Tallahassee, 634 So. 2d 264

5173(Fla. 1st DCA 1994). Equitable estoppel will apply against a

5183governmental entity only in rare instances and under exceptional

5192circumstances. Id.

519457. It is clear that in the instant case, Petitioners

5204submitted a PFA as part of their CHOP applications which

5214included a projected Medicaid reimbursement rate. However, the

5222projected rate was not acceptable to the Financial Analysis Unit

5232as stated. It was only when Petitioners agreed that the

5242projected rate was indeed higher than expected and that they

5252would reduce expenditures if the final rate was lower, did AHCA

5263approve the PFA. There was, therefore, no "representation" on

5272the part of AHCA that the projected rate was acceptable.

528258. When, thereafter, MPA calculated a rate that was lower

5292than Petitioners had projected, the assignment of that rate was

5302not contrary to any prior representation by MPA. In fact, the

5313lower rate assigned by MPA confirmed the concerns of the

5323Financial Analysis Unit stated in its omissions letter to

5332Petitioners.

533359. There being no change in position by AHCA, there is no

5345basis for Petitioners' claim of detrimental reliance.

5352RECOMMENDATION

5353Based on the foregoing Findings of Fact and Conclusions of

5363Law, it is

5366RECOMMENDED that a final order be entered by Respondent,

5375Agency for Health Care Administration, approving the Medicaid

5383interim per diem rates established by AHCA and dismissing each

5393of the Amended Petitions for Formal Administrative Hearing.

5401DONE AND ENTERED this 23rd day of February, 2009, in

5411Tallahassee, Leon County, Florida.

5415R. BRUCE MCKIBBEN

5418Administrative Law Judge

5421Division of Administrative Hearings

5425The DeSoto Building

54281230 Apalachee Parkway

5431Tallahassee, Florida 32399-3060

5434(850) 488-9675

5436Fax Filing (850) 921-6847

5440www.doah.state.fl.us

5441Filed with the Clerk of the

5447Division of Administrative Hearings

5451this 23rd day of February, 2009.

5457ENDNOTES

54581/ As set forth above, an application was filed for each of the

5471nine facilities, but only Madison Pointe's application will be

5480discussed.

54812/ Where, as in the current case, there are a group of related

5494facilities reviewed at one time, Fitch will ascertain whether

5503the group as a whole is financially viable rather than just any

5515one of the facilities. For purposes of this case, Madison

5525Pointe's financial ability is addressed individually as

5532representative of the group.

55363/ "CHOW" is an acronym for Change of Ownership and is used to

5549describe both changes of owners and changes of operators. It is

5560synonymous to CHOP.

55634/ The actual loss per year for each of the Petitioners

5574facilities would obviously be different, but each expected a

5583significant negative impact.

5586COPIES FURNISHED :

5589Holly Benson, Secretary

5592Agency for Health Care Administration

5597Fort Knox Building III

56012727 Mahan Drive, Suite 3116

5606Tallahassee, Florida 32308

5609Justin Senior, Acting General Counsel

5614Agency for Health Care Administration

5619Fort Knox Building III, Mail Stop 3

56262727 Mahan Drive, Suite 3431

5631Tallahassee, Florida 32308

5634Richard J. Shoop, Agency Clerk

5639Agency for Health Care Administration

5644Fort Knox Building III

56482727 Mahan Drive, Mail Station 3

5654Tallahassee, Florida 32308

5657Debora E. Fridie, Esquire

5661Agency for Health Care Administration

5666Fort Knox Building III, Mail Station 3

56732727 Mahan Drive, Suite 3431

5678Tallahassee, Florida 32308

5681Peter A. Lewis, Esquire

5685Law Offices of Peter A. Lewis, P.L.

56922931 Kerry Forest Parkway, Suite 202

5698Tallahassee, Florida 32309-6883

5701NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

5707All parties have the right to submit written exceptions within

571715 days from the date of this Recommended Order. Any exceptions

5728to this Recommended Order should be filed with the agency that

5739will issue the Final Order in this case.

Select the PDF icon to view the document.
PDF
Date
Proceedings
PDF:
Date: 04/22/2009
Proceedings: Petitioner`s Exceptions to Recommended Order filed.
PDF:
Date: 04/22/2009
Proceedings: (Agency) Final Order filed.
PDF:
Date: 04/15/2009
Proceedings: Agency Final Order
PDF:
Date: 02/23/2009
Proceedings: Recommended Order
PDF:
Date: 02/23/2009
Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
PDF:
Date: 02/23/2009
Proceedings: Recommended Order (hearing held November 19, 2008). CASE CLOSED.
PDF:
Date: 01/16/2009
Proceedings: Petitioner`s Proposed Recommended Order filed.
PDF:
Date: 01/16/2009
Proceedings: Petitioners` Proposed Recommended Order filed.
PDF:
Date: 01/16/2009
Proceedings: Agency`s Proposed Recommended Order filed.
PDF:
Date: 12/15/2008
Proceedings: Notice of Address Change (filed by Peter Lewis) filed.
PDF:
Date: 12/10/2008
Proceedings: Order Granting Extension of Time and Establishing Page Limit (proposed recommended orders to be filed by January 16, 2009).
PDF:
Date: 12/09/2008
Proceedings: Parties` Joint and Agreed Motion for Enlargement of Time to File Proposed Recommended Orders and for Waiver of Page Limit filed.
Date: 12/05/2008
Proceedings: Transcript of Proceedings (Volumes I&II) filed.
PDF:
Date: 11/24/2008
Proceedings: Final Hearing Exhibit Lists filed.
Date: 11/19/2008
Proceedings: CASE STATUS: Hearing Held.
PDF:
Date: 11/18/2008
Proceedings: Agency`s Notice of Filing Errata Sheet filed.
PDF:
Date: 11/17/2008
Proceedings: Agency`s Memorandum of Law filed.
PDF:
Date: 11/14/2008
Proceedings: Joint Prehearing Stipulation filed.
PDF:
Date: 11/10/2008
Proceedings: Order Granting Extension of Time (prehearing stipulation to be filed by November 14, 2008).
PDF:
Date: 11/07/2008
Proceedings: Joint Motion for Extension of Time to File Prehearing Stipulation filed.
PDF:
Date: 11/04/2008
Proceedings: Agency`s Witness List filed.
PDF:
Date: 11/04/2008
Proceedings: Agency`s Exhibit List filed.
PDF:
Date: 11/03/2008
Proceedings: Exhibit List of Petitioners filed.
PDF:
Date: 11/03/2008
Proceedings: Exhibit List of Petitioners filed.
PDF:
Date: 11/03/2008
Proceedings: Witness List of Petitioners filed.
PDF:
Date: 10/31/2008
Proceedings: Agency`s Response to Petitioners` Notices of Deposition Duces Tecum filed.
PDF:
Date: 10/29/2008
Proceedings: Agency`s Second Amended Notice of Depositions Duces Tecum filed.
PDF:
Date: 10/28/2008
Proceedings: Notice of Deposition Duces Tecum (W. Hagler) filed.
PDF:
Date: 10/28/2008
Proceedings: Notice of Deposition Duces Tecum (J. Nobles) filed.
PDF:
Date: 10/28/2008
Proceedings: Petitioners` Notice of Compliance with Respondent`s Request for Production of Documents filed.
PDF:
Date: 10/28/2008
Proceedings: Petitioner`s Notice of Service of Answers to Interrogatories and Expert Interrogatories Propounded by Respondent filed.
PDF:
Date: 10/27/2008
Proceedings: Amended Notice of Hearing (hearing set for November 19 and 20, 2008; 9:00 a.m.; Tallahassee, FL; amended as to additional consolidated case).
PDF:
Date: 10/27/2008
Proceedings: Agency`s Notice of Deposition filed.
PDF:
Date: 10/24/2008
Proceedings: Agency`s Amended Notice of Deposition Duces Tecum filed.
PDF:
Date: 09/24/2008
Proceedings: Agency`s Notice of Deposition Duces Tecum filed.
PDF:
Date: 09/12/2008
Proceedings: Agency`s Motion for Official Recognition of Statutes, Regulations, and Rules filed.
PDF:
Date: 08/21/2008
Proceedings: Notice of Unavailability of AHCA Counsel filed.
PDF:
Date: 08/04/2008
Proceedings: Second Order of Consolidation (DOAH Case No. 08-3155 was added to the consolidated batch).
PDF:
Date: 07/31/2008
Proceedings: Agency`s Notice of Service of First Interrogatories and First Expert Interrogatories to Petitioners filed.
PDF:
Date: 07/31/2008
Proceedings: Agency`s First Request for Production of Documents to Petitioners filed.
PDF:
Date: 07/29/2008
Proceedings: Order of Pre-hearing Instructions.
PDF:
Date: 07/29/2008
Proceedings: Notice of Hearing (hearing set for November 19 and 20, 2008; 9:00 a.m.; Tallahassee, FL).
PDF:
Date: 07/25/2008
Proceedings: Parties` Joint Status Report filed.
PDF:
Date: 07/09/2008
Proceedings: Parties` Second Joint Motion to Consolidate filed.
PDF:
Date: 07/08/2008
Proceedings: Order Continuing Case in Abeyance (parties to advise status by August 8, 2008).
PDF:
Date: 06/30/2008
Proceedings: Parties` Third Joint Motion to Hold Cases in Abeyance filed.
PDF:
Date: 06/06/2008
Proceedings: Order Continuing Case in Abeyance (parties to advise status by July 7, 2008).
PDF:
Date: 05/27/2008
Proceedings: Parties` Second Joint Motion to Hold Cases in Abeyance filed.
PDF:
Date: 04/15/2008
Proceedings: Order Placing Case in Abeyance (parties to advise status by May 30, 2008).
PDF:
Date: 04/15/2008
Proceedings: Order of Consolidation (DOAH Case Nos. 08-1691, 08-1692, 08-1694, 08-1695, 08-1697, 08-1698, 08-1699 and 08-1700).
PDF:
Date: 04/11/2008
Proceedings: Parties` Amended Joint Motion to Hold Cases in Abeyance (with signature and certificate of service date) filed.
PDF:
Date: 04/11/2008
Proceedings: Parties` Joint Motion to Hold Cases in Abeyance (without signature and certificate of service date) filed.
PDF:
Date: 04/11/2008
Proceedings: Parties` Joint Motion for Consolidation filed.
PDF:
Date: 04/08/2008
Proceedings: Initial Order.
PDF:
Date: 04/07/2008
Proceedings: Non-Related Party Change of Operator filed.
PDF:
Date: 04/07/2008
Proceedings: Petition for Formal Administrative Hearing filed.
PDF:
Date: 04/07/2008
Proceedings: Order of Dismissal without Prejudice Pursuant to Section 120.569(2)(c), Florida Statutes, to Allow for Amendment and Resubmission of Petition filed.
PDF:
Date: 04/07/2008
Proceedings: Amended Petition for Formal Administrative Hearing filed.
PDF:
Date: 04/07/2008
Proceedings: Notice (of Agency referral) filed.

Case Information

Judge:
R. BRUCE MCKIBBEN
Date Filed:
04/07/2008
Date Assignment:
04/15/2008
Last Docket Entry:
04/22/2009
Location:
Tallahassee, Florida
District:
Northern
Agency:
ADOPTED IN TOTO
 

Counsels

Related DOAH Cases(s) (6):

Related Florida Statute(s) (14):

Related Florida Rule(s) (2):