14-001367CON Hernando-Pasco Hospice, Inc. vs. Hospice Of Citrus County, Inc., D/B/A Hospice Of Citrus And The Nature Coast, And Agency For Health Care Administration Status: Closed Recommended Order on Friday, May 8, 2015.

Summary: Minors' need for CMS services that only hospices can provide established special circumstances showing need. Hospice didn't prove reasonable utilization projections and financial feasibility. Failure outweighed need. Denial recommended.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HERNANDO - PASCO HOSPICE, INC.,

Petitioner,

vs. Case No. 14 - 1367CON

HOSPICE OF CITRUS COUNTY, INC.,

d/b/a HOSPICE OF CITRUS AND THE

NATURE COAST, AND AGENCY FOR

HEALTH CARE ADMINISTRATION,

Respondents.

_______________________________/

RECOMMENDED ORDER

Administrative Law Judge John D. C. Newton, II, of the

Division of Administrative Hearings (DOAH), heard this case, as

noticed, on July 21 through 24, 2014, in Tallahassee, Florida.

APPEARANCES

For Petitioner, Hernando - Pasco Hospice, Inc., (Herando -

Pasco):

R. Terry Rigsby, Esquire

Brian A. Newman, Esquire

Pennington P.A.

215 South Monroe Street, Suite 200

Post Office Box 10095

Tallahassee, Florida 32301

For Respondent, Agency for Health Care Administration

(Agency):

Lorraine M. Novak, Esquire

Agency for Health Care Administration

Fort Knox Building III, Mail Stop 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308

For Respondent, Hospice of Citrus County (Nature Coast):

Susan L. St. John, Esquire

St. John Law Firm, P.L.

Post Office Box 13545

Tallahassee, Florida 32317 - 3545

STATEMENT OF THE ISSUES

A. Did Nature Coast demonstrate special circumstances to

justify approval of its Certificate of Need (CON) application to

establish a n ew hospice program in Service Area 3D, Hernando

County, in the absence of published numeric need?

B. If Nature Coast demonstrated special circumstances to

justify approval, does Nature Coast's proposal satisfy the

requirements of Florida Administrative Co de Rule 59C - 1.0355, and

section 408.035, Florida Statutes (2014)? 1/

PRELIMINARY STATEMENT

On September 27, 2013, the Agency published a zero fixed

need pool for hospices in Hernando County, for the applicable

planning horizon. On November 13, 2013, Nature Coast filed its

CON Application No. 10204 seeking to establish a new hospice

program in H ernando County. The application relied upon the

theory that "special circumstances," as provided in r ule 59C -

1.0355(4)(d), supported approval of a program, in the absence of

fixed need. The factors relied upon were an underserved need for

pediatric palli ative care in Hernando County with a related need

for services through Children's Medical Services Partners in

Care/Together for Kids program (PIC:TFK) and a lack of access to

hospice care for rural residents.

AHCA preliminarily granted the application in its State

Agency Action Report (SAAR) issued February 14, 2014. Hernando -

Pasco filed a petition challenging the granting of Nature Coast's

CON application. On March 24, 2014, AHCA referred the petition

to DOAH. On April 7, 2014, DOAH set the matter for final hearing

to be held July 21 through 25, 2014, dates suggested by all

parties in their Joint Response to Initial Order.

On May 20, 2014, Nature Coast filed a Motion for Continuance

of the hearing until December 2014, based upon the assertion that

its health planning witness, Kathy Platt, was "unavailable during

the scheduled final hearing dates due to a final hearing for a

certificate of need matter in Georgia." Ms. Platt was also the

CON application's primary author. The undersigned denied the

moti on because the motion did not identify the Georgia case,

state when the Georgia hearing was scheduled, or describe any

efforts to resolve the asserted schedule conflict. Fla. Admin

Code R. 28 - 106.210 (requiring good cause for a continuance). The

order de nying the motion, however, allowed presentation of the

witness's testimony out of order or by deposition. Nature Coast

chose to engage another expert. The final hearing convened as

scheduled.

Nature Coast presented the testimony of Marylin Bloom;

Jenni fer Lawson; Linda Martin, R. N.; Suzanne Worsham; Bonnie

Saylor; David Levitt; and Armand E. Balsano. Nature Coast

Exhibits 1 through 24, 27 through 29, 31, 34 through 60, 64

through 67, 75, 76, 78 through 80, and 117 through 122 were

admitted into evidence.

The Agency presented the testimony of Jeffrey N. Gregg by

deposition transcript, admitted as Agency Exhibit 2. The Agency

also entered Exhibit 1, the State Agency Action Report, into

evidence.

Hernando - Pasco present ed the testimony of Thomas Bar b; Laura

Finch; Jaysen Roa; Rose Milks; David McGrew, M.D.; Sharon Gordon -

Girvin; and Darryl Weiner. Hernando - Pasco Exhibits 1 through 8,

10 through 20, 22, 24 through 26, 33 through 40, and 43 through

67 were admitted into evidence.

The Transcript of the proceedings was filed August 18, 2014.

On the motion of the parties the date for filing proposed

recommended orders was twice extended, until October 2, 2014.

Nature Coast and the Agency timely filed a Joint Proposed

Recommended Order. Hernando - Pasco t imely filed its Proposed

Recommended Order. The proposed recommended orders have been

considered in preparation of this Recommended Order.

FINDINGS OF FACT

I. The Parties

A. The Agency

1. The Agency is the single state agency responsible for

the administration of Florida's CON Program. § 408.031, Fla.

Stat.

2. The Agency is designated both "as the state health

planning agency for purposes of federal law . . . [and as] the

single state agency to issue, revoke, or deny certificates of

need . . . in accordance with present and future federal and

state statutes." § 408.034(1), Fla. Stat.

B. Nature Coast

3. Nature Coast is a non - profit, charitable organization

that provides hospice services in Service Areas 3A and 3C.

Citrus County makes up Serv ice Area 3C. Service Area 3A consists

of 11 counties in north central Florida stretching all the way to

the Georgia border. They are: Alachua, Bradford, Columbia,

Dixie, Gilchrist, Hamilton, Lafayette, Levy, Putnam, Suwanee, and

Union Counties.

4. Nature Coast provides hospice services, medical,

psychological, spiritual, and social support to people with

terminal illness at the end of life. It provides grief services

to families and survivors during hospice care and for at least 13

months after wards. Nature Coast also provides grief counseling

services to anyone in its area who has experienced the death of

someone close to them. Grief counseling can be individualized,

group, by telephone, or mail support and is provided for as long

as needed. Nature Coast also offers social support services to

individuals to re - integrate them back into society.

5. Nature Coast utilizes its hospice house, nursing homes

with inpatient contracts, the hospice unit at a hospital, or

continuous care at a patient's home when a patient's symptoms are

out of control or there is not adequate care given at home. It

also provides respite care.

6. Nature Coast operates seven thrift and gift shops. In

addition to raising money, the shops offer employees, volunteers,

and shoppers a place to talk about hospice. The shops are also

an avenue for grief support. They offer a place for caregivers

who would like to help out a chance to give back.

7. Nature Coast offers numerous community programs,

including youth programs, ber eavement programs, education, and

outreach.

8. All Nature Coast employees and contracted staff must

meet required training and education standards. They must have

demonstrated competencies, evaluations, and training. Employees

and contracted staff alike can be reprimanded, written up, and

retrained if they are not performing as expected by Nature Coast.

9. Nature Coast operates a 16 - bed inpatient facility in

Lecanto, Citrus County, Florida. Nature Coast sometimes uses

these beds as residential beds. N ature Coast also operates an

inpatient unit at Citrus Memorial Hospital. Nature Coast has

eight satellite offices located throughout Service Areas 3A and

3C. It has approximately 475 employees, about 200 staff working

as needed, about 200 contract staff, and 600 volunteers.

10. Nature Coast serves patients in home, any facility

setting, or inpatient facility. Home could be a patient's home,

a caregiver's home, a group home, an ARC residential facility, or

a tent in a backyard. Nature Coast also serves homeless persons

wherever they choose to be served. Nature Coast will assist a

homeless person with finding a residence, if asked.

11. Nature Coast has been Joint Commission accredited since

2007. The Joint Commission audits Nature Coast. The Commiss ion

has never found Nature Coast out of compliance with quality of

care or Medicare Conditions of Participation.

12. The Hospice Provider Family Survey rating for Nature

Coast is five stars. According to the Department of Elder

Affairs ("DOEA") Hospice O utcomes Measures Report for calendar

year 2012, Nature Coast exceeded the state average for outcomes.

13. Nature Coast is accredited by the Jewish Institute and

also provides specialized services for veterans.

14. Nature Coast has specialized services f or pediatric

patients and provides services to children enrolled in the

Children's Medical Services (CMS) PIC:TFK program.

15. Nature Coast took over the PIC:TFK program in the CMS -

Alachua service district, at the request of CMS, because the

existing prov ider abandoned the program due to cost and required

labor. In 2009, federal laws changed, allowing the PIC:TFK

program to go statewide. This allowed Nature Coast to provide

PIC:TFK services in all 11 counties of Service Area 3A.

16. In 2010, Nature Coas t became a PIC:TFK provider in

Citrus County, which is included in the CMS - Ocala service

district. At the request of CMS - Ocala, Nature Coast began

serving a few PIC:TFK patients in Hernando County in 2012.

Nature Coast incorrectly believed that, similar to the operation

of its agreement with CMS - Alachua, which allowed Nature Coast to

serve multiple counties, its agreement with CMS - Ocala allowed it

to serve PIC:TFK patients in Hernando County.

17. Nature Coast provides quality care to its patients. If

Na ture Coast begins operation in Hernando County, it will provide

quality care to the patients served there.

C. Hernando - Pasco

18. Hernando - Pasco began operating in Pasco and Hernando

counties in 1984. It currently serves Citrus, Pasco and Hernando

coun ties. Hernando - Pasco operates three care centers in Pasco

County. Hernando County's care center was once located in the

city limits of Brooksville. But Hernando - Pasco relocated it

towards the Suncoast Parkway nearer the center of the population.

The car e centers are inpatient units, built similar to a nursing

home.

19. Hernando - Pasco serves everyone who is appropriate for

hospice. It serves patients wherever they may live, i.e., homes,

nursing homes, ALFs, rural areas. It provides interpreters for

non - English speaking and deaf patients and families.

20. Hernando - Pasco provides a full range of core services

including nursing, social work, physician, dietary counseling,

bereavement counseling, and spiritual counseling. It provides

inpatient care to qua lified patients. Hernando - Pasco provides

bereavement counselors for adults and children.

21. Hernando - Pasco also offers non - core services, such as,

physical and occupational therapy, aide services, home aide

services, voluntee rs, medical supplies, and sh ort - term inpatient

care. It also has comfort touch, compassionate paws pet therapy,

music therapy, and its Legacy Program. And its Children's

Assistance Program (CAP) provides community support and both

anticipatory grief and bereavement counseling for c hildren. The

CAP program holds two types of children's camps every year, which

provide therapeutic activities.

22. Hernando - Pasco has its own pharmacy, durable medical

equipment company, and home health agency. It also has a

foundation, which is a separ ate not - for - profit entity.

23. Hernando - Pasco relies on charitable gifts in order to

maintain the unreimbursed programs for the community.

Approximately 85 percent of the charitable gifts it receives come

in the form of memorials, honorariums , and beques ts.

24. In conjunction with the Veterans Administration and the

National Hospice and Palliative Care Organization, Hernando - Pasco

operates a program to honor veterans called "We Honor Veterans."

25. Like Nature Coast, Hernando - Pasco provides its patients

quality care. Operation of a new hospice in Hernando County by

Nature Coast will not impair Herando - Pasco's ability to provide

quality care.

II. Overview of Hospice Services

26. Florida law requires a hospice program to provide a

continuum of hospice services and supportive care for terminally

ill patients and their families. § 400.609, Fla. Stat. The core

hospice services required by Medicare Conditions of Participation

include physician, nursing, bereavement, spiritual and social

services.

27. "H ospice care" consists of comprehensive care and

services that are not curative in nature, but are provided to

persons who are dying. It is defined by proximity to death.

28. A patient must meet certain state and federal criteria

to be admitted to hospice. Florida law defines a terminally - ill

patient as a person having a medical prognosis of 12 months or

less life expectancy. §§ 400.601(3), (7) and (10), Fla. Stat.

29. The Medicare hospice benefit requires terminally ill

patients to have a life e xpectancy prognosis of six months or

less. Like Florida law, the Medicare benefit excludes patients

seeking curative treatments from hospice eligibility.

30. Hospice care is provided pursuant to a plan of care

developed by an interdisciplinary team consi sting of physicians,

nurses, home health aides, social workers, bereavement

counselors, spiritual care counselors, chaplains and others.

31. There are four levels of service in hospice care:

routine home care, general inpatient care, continuous care, and

respite care. To qualify for hospice care one must be certified

by two physicians as having a terminal illness with less than a

six - month prognosis.

32. Routine home care, provided where the patient resides,

is the predominant form of hospice care.

33. The symptoms managed in general inpatient and in

continuous care are the same. But the settings in which patients

receive services are different. General in - patient care is

provided in either a hospital setting, a dedicated nursing unit,

or in a freestan ding hospice inpatient facility. For patients

wishing to remain in a home setting such as their home or an

assisted living facility (ALF), continuous care is an option to

avoid being moved to an inpatient setting.

34. Hospices provide continuous care, so metimes called

"crisis care," in the home or in any setting where the patient

resides, including nursing homes and ALFs. Continuous care is

provided for short durations when symptoms become so severe that

around - the - clock care is necessary for pain and sy mptom

management.

35. Respite care is for caregiver relief. It allows

patients to stay in an inpatient setting for brief periods in

order to provide caregivers a break.

36. A hospice cannot provide inpatient care or continuous

care simply because a pati ent's family wants to receive the

service. State and federal law mandate placing a patient in the

correct care setting, with approval by a physician and the

interdisciplinary team.

37. Medicare is the largest payor for hospice services.

Other payors incl ude Medicaid, private insurance, managed care

plans, and other government payors. Hospices provide some

uncompensated care as charity.

38. A specific philosophy drives hospice care.

Consequently, state and federal law require hospice providers to

employ all core staff except in times of peak patient loads or in

extraordinary circumstances. §400.609(1), Fla. Stat.

39. Hospice programs are required by law to accept all

patients regardless of ability to pay. §400.6095(1), Fla. Stat.

III. The Nature Coas t Proposal

40. Nature Coast proposes to establish a new hospice

program in Hernando County.

41. It will provide the same types of services in Hernando

County that it has in Citrus County. It also proposes to

specifically focus on the county's rural popu lation, care to

persons residing in nursing home and ALF facilities, and to

people less than 18 years of age. In its application, its

evidence, and the Joint Proposed Recommended Order, Nature Coast

identified the special circumstances supporting approval of its

application despite the absence of a calculated need as "lack of

service to children enrolled in the PIC:TFK program and rural

patients not being served at home." (Joint PRO at ¶ 49) Nature

Coast and the Agency also emphasize that since Hernando - Pasco is

the sole provider in the county, Nature Coast's hospice would

provide choice and competition to Hernando County residents.

42. The residents include non - hospice patients enrolled in

PIK:TIF which will be discussed in more detail later. Nature

Co ast will also meet other needs of the Hernando County community

as they are identified.

43. Nature Coast would operate its proposed program as a

satellite out of Nature Coast's Lecanto home office in Citrus

County. If approved, Nature Coast would offer t he same services

that Hernando - Pasco currently provides in Hernando County,

participate in PIC:TKF, and emphasize services to patients under

the age of 18.

44. Nature Coast will be able to use its existing

infrastructure to support the new hospice program . Additionally,

it will be able to share staffing from nearby offices such as

those in Inverness and Homosassa.

45. Nature Coast has not chosen the location for its

Hernando offices. It has looked at leasing space in the central

eastern portion of Herna ndo County, near the intersection of

Highways 41 and 50 in Brooksville. The Agency and Nature Coast

do not propose a location as a CON condition.

46. Nature Coast plans to conduct only one fundraising

event in Hernando County. That is its holiday season Tree of

Remembrance.

47. Nature Coast will not solicit donations from families

of Hernando County patients. It is typical, however, for friends

and family of patients to contribute to a hospice, if pleased

with the care provided. Consequently, it is re asonable to infer

that a family using Nature Coast for its hospice needs would be

unlikely to make a donation or memorial gift to Hernando - Pasco

and vice versa.

48. Nature Coast will meet the needs of low income patients

and residents through its Indigent /Charity Care Policy.

49. The Agency and Nature Coast propose to condition

approval of the CON application on the following: (a) Nature

Coast will participate in the PIC:TFK program for Hernando County

patients and the provision of hospice services to PI C:TFK

patients that become hospice eligible; (b) Nature Coast will

provide community outreach and education and grief support

programs; and (c) Nature Coast will offer alternative therapies

to patients, that may include massage therapy, music therapy,

play therapy and holistic (non - drug) therapy.

50. State and federal law require hospice programs to

provide services to anyone eligible who requests them.

Therefore, the Agency will not place conditions on the program to

provide legally required services.

51 . There is nothing especially remarkable or unusual about

Nature Coast's proposed conditions.

52. There is also nothing special or unique about Nature

Coast's volunteer program or materials. Every hospice is

required by federal law to have a volunteer p rogram.

IV. Overview of Partners - in - Care:Together - for - Kids

53. PIC:TFK is a 1915(b) Medicaid waiver program operated

under the authority of Children's Medical Services, Florida's

Title V Program for Children with Special Health Care Needs.

Funding is through Medicaid, Florida Kid Care, Title XIX (Pedi -

Care), and some private insurance. Some children are uninsured.

Eligible families have either Medicaid or Title XIX and are on

the lower income scale. Children who receive PIC:TFK services

are very, ve ry sick. Their parents are often social - economically

challenged.

54. The federal government created the PIC:TFK program

several years ago. It is designed to extend the normal life

expectancy for children in hopes doctors and families would refer

childre n and a relationship would be established. Then if a

child becomes hospice appropriate, it would be easier for doctors

and families to segue from curative care to hospice care.

55. Only hospices can be a PIC:TFK partner or provider.

56. Referrals for PI C:TFK come from CMS nurses' caseloads.

Each CMS nurse serves between 200 - 300 patients. CMS Care

coordinators identify eligible children and enroll them in

PIC:TFK. Once enrolled a child receives home and community - based

palliative services provided by h ospice staff specially trained

in pediatric palliative care. These services are based on the

1 6

individual child and family's care plan, which is regularly

assessed and updated.

57. A child must have a life - limiting illness to enroll in

PIC:TFK. Children ÏÏ birth through age 21 ÏÏ enrolled with

Children's Medical Services may qualify for PIC:TFK at any stage

of their life - limiting illness.

58. The primary physician must attest to the life - limiting

illness in writing. Life - limiting diagnoses include, but are n ot

limited to: cancer, cerebral palsy, cystic fibrosis, traumatic

brain injuries, severe motor vehicle accidents, and chromosomal

abnormalities.

59. Children and their families can receive palliative care

such as pain management, symptom management, pati ent and family

counseling, expressive therapies, including play, music or art

therapy, psychosocial and spiritual therapy, respite care,

volunteer services and bereavement, including anticipatory grief

services, concurrently with curative treatment through the

PIC:TFK program.

60. PIC:TFK is a psychological - social program. It provides

understanding of medications, complexity of issues, and helps

with the grieving process. PIC:TFK gives parents a person to

talk to who understands the unique challenges and sorrow of a

mortally ill child.

61. Under PIC:TFK, the hospice physician is charged with

contacting and staying in touch with the primary care physician.

The primary care physician is the gate keeper and is responsible

for following a child enrolled in PIC:TFK: prescribing

medications, ordering durable medical equipment, ordering home

care. The primary care physician will receive copies of all

correspondence, updated plans of care, admitting plans of care,

and discharge from PIC:TFK.

62. CMS nurses le t families know about PIC:TFK services

offered by a hospice. A service isn't offered unless agreed to

by CMS.

63. The PIC:TFK provider goes into the child's home,

assesses the child's needs, and guides the family toward

appropriate services and resources . The PIC:TFK provider can

provide respite care to the family, and can offer nursing care,

social workers, in - home medical support for pain management and

symptom management, in - home personal care, and in - home spiritual

care.

64. PIC:TFK patients are a subset of patients that could

become hospice patients.

V. Fixed Need Pool

65. The Agency's r ule 59C - 1.0355 establishes a hospice

numeric need formula for publication of a Fixed Need Pool (FNP)

for each hospice Service Area in each CON batching cycle.

6 6. The formula takes into account historic and projected

deaths in each service area for a particular planning horizon, as

well as the historic and projected number of hospice admissions

within the service area in four specific categories of patients:

ca ncer age 65 and over; noncancer age 65 and over; cancer under

age 65; and noncancer under age 65.

67. Under the numeric need formula, if the number of

projected admissions to hospice in the planning year using a

statewide average penetration rate applie d to the four specific

patient categories is at least 350 more than the current number

of hospice admissions in the service area, there is a numeric

need for another hospice provider in the service area.

68. In the batch here, there was not a numeric ne ed. The

formula projected 254 additional hospice admissions in Hernando

County in the October 2013 projections governing this batch.

After Nature Coast submitted its application, that number

declined to 155.

69. However, Hernando County's population i s growing,

including its elderly and pediatric populations.

VI. Special Circumstances

70. Since the Agency did not project a need for a new

hospice, Nature Coast relied on the argument that special

circumstances supported approving its application. Rul e 59C -

1.0355(4)(d) establishes the standards for a special circumstance

need.

71. It provides:

(d) Approval Under Special Circumstances.

In the absence of numeric need identified in

paragraph (4)(a), the applicant must

demonstrate that circumstances exist to

justify the approval of a new hospice.

Evidence submitted by the applicant must

document one or more of the following:

1. That a specific terminally ill population

is not being served.

2. That a county or counties within the

service area of a licensed hospice program

are not being served.

72. There are no counties within Nature Coast's proposed

service area that are not being served by a hospice.

73. Consequently Treasure Coast and the Agency must prove

that a specific terminally ill popul ation is not being served.

The population that they contend is not being served are eligible

PIC:TFK patients and terminally ill patients under the age of 18.

74. The parties and witnesses presented different data and

theories about terminally ill pati ents under 18 in need of

hospice services. The data and theories agree that the number of

these patients is small, by any measure. The data and theories

presented as evidence are simply inconclusive about whether the

absence of reported hospice utilizati on by young patients in

Hernando County is because the patients are not being served or

because there have not been any patients in recent years.

75. The data is clear, however, that residents of Hernando

County include some undetermined and small number of terminally

ill patients under the age of 18 and patients under the age of 18

who may become terminally ill. The admission by Herando - Pasco in

2011 of four patients under the age of 18 and in 2013 of seven

patients under the age of 18 shows that. The fact that Hernando -

Pasco admitted no patients under the age of 18 in 2013

exemplifies the unpredictable nature of these admissions.

76. The record is also clear that Hernando County, at the

time that the Agency issued its decision, did not have a PIC:TFK

provider and that only hospices may be providers. After the

decision on June 14, 2014, Hernando - Pasco entered a PIC:TFK

agreement with CMS.

77. The Agency, applying its expertise and in fulfillment

of its legislative charge to administer the CON prog ram and

conduct health care planning for the state, has concluded that

terminally ill patients under the age of 18 and patients under

the age of 18 who may become terminally ill should have access to

PIC:TIF services. Approval of Nature Coast's CON applic ation

will provide that service to the population of Hernando County.

In fact, it is reasonable to infer that preliminary approval of

the application motivated to Hernando - Pasco to contract with CMS.

78. The Agency and Nature Coast maintain, albeit half -

heartedly, that the rural population of Hernando County does not

have access to hospice services. The credible persuasive

evidence does not demonstrate that an identifiable rural

population of Hernando County lacks access to hospice services.

VII. Othe r Applicable Disputed Criteria

A. Section 408.035(1)(b), Florida Statutes Ï

availability, quality of care, accessibility and extent

of utilization

79. Hernando - Pasco provides high quality of hospice care to

Hernando County residents. Its services are accessible and

adequately utilized.

80. It s eeks to serve everyone that is appropriate for

hospice care, including but not limited to: patients who are

homeless; children; persons with HIV, AIDS, Alzheimer's or

dementia; minority and ethnic groups; an d persons residing in

rural Hernando County.

81. It also offers staff and volunteers who speak languages

other than English, when needed, to assist patients and their

families.

82. The hospice service penetration rate for Hernando - Pasco

County is 65 pe rcent, just below the state average of 66 percent.

83. Credible persuasive evidence did not establish that

Hernando - Pasco has refused services to eligible patients.

B. Section 408.035(1)(c) Ï The ability of the

applicant to provide quality of care and the

applicant's record of providing quality of care.

84. The weight of the credible, persuasive evidence,

including the private accreditations of Nature Coast and its

ratings, establish a record of providing quality care and that it

would provide qualit y care in Hernando County.

85. This is despite the fact that in 2012 an Agency survey

identified six patients who did not meet the criteria for hospice

care or criticisms in that survey of Nature Coast providing

services, mostly PIC:TFK services, to resi dents of Hernando

County. In addition, since PIC:TFK services are not available in

Hernando County, approval of this application will alleviate that

problem.

86. It is also despite the fact that in 2013 Nature Coast

spent approximately 12 percent of its labor expenses on contract

staff. That fact may be a licensure or reimbursement issue. But

the record does not establish that it affects the quality of care

Nature Coast provides.

C. Section 408.035(1)(d), Florida Statutes Ï

availability of resources, including health personnel,

management personnel and funds for project

accomplishment and operation

87. Nature Coast will be able to recruit and employ the

health and management personnel for its project. The fact that

it bases its projections upon its actual experience in the

adjoining area is more persuasive than criticisms that its

proposed salaries are lower than those paid by Hernando - Pasco.

88. Additionally the ability to share support, resources,

and infrastructure from Nature Coast's existing operations

provides it the resources and flexibility to adjust to

fluctuations or shortfalls in utilization or income. The

existing infrastructure can support the additional team required

by opening the proposed Hernando County Hospice.

89. This is in a ddition to the flexibility and benefits

provided by the fact that providing hospice services does not

require large capital commitments and that most of its costs are

therefore variable costs. One example of this is that staffing

is incremental, increasin g or decreasing, according to the demand

created by utilization.

90. The estimated project costs of $1,059,000 are

reasonable. Nature Coast could fund the costs from existing

liquid assets. It also has the working capital needed available.

91. The ap plication did not disclose the now completed

closing on an $800,000 office building in Palatka or a $1.2

million building project underway when the application was filed.

The persuasive competent evidence proves that despite the absence

of that informatio n from the presentation in the application,

Nature Coast will none - the - less have access to the resources

necessary to establish the project. The credible, persuasive

evidence also proves that the smaller expense was not in the

period covered by the applic ation and the majority of the bigger

amount had been expended before submission of the application.

92. In March 2014, the Office of the Inspector General

served Nature Coast with a subpoena, seeking certain documents

for the period 2009 through 2013. In response, Nature Coast

turned over 188,000 pages of medical records. Being subject to a

lengthy federal investigation is unpredictable and may be both

time consuming and costly. As a result of the ongoing

investigation, Nature Coast recently prudentl y established a $2.5

million line of credit to cover possible costs of repayment and

fines. There is no way at this point to reasonably project the

timing or the impact of fines or repayments, if any, resulting

from the investigation. Consequently not in cluding them in the

financial projections for the first two years of operation was

reasonable.

93. The weight of the credible persuasive evidence

established that Nature Coast has access to sufficient resources,

including health personnel and funds, for accomplishing and

operating the proposed Hernando County hospice.

D. Section 408.035(1)(e), Florida Statutes Ï extent to

which the proposed services will enhance access to

health care for residents of the service district

94. As discussed above, Nature Coast's proposed hospice

will enhance access to PIK:TIF services. And it will enhance

those patients' access to continuity of care in the event that

they need hospice services. Nature Coast will enhance choice for

hospice patients; but it will not enhan ce access to hospice

services.

E. Section 408.035(1)(f), Florida Statutes Ï immediate

and long - term financial feasibility

(i) Immediate Financial Feasibility

95. Findings of Fact 88 through 93 address the issue of

immediate or short - term financial feasibility. Nature Coast

established by competent substantial evidence that it is

financially feasible in the short - term.

(ii) Long - term Financial Feasibility

96. An applicant's pro forma financial projections are

primarily determined by estimating the revenues and expenses

associated with the projected utilization (in patient days), by

payor source, for years one and two. Nature Coast's projection

is unreason ably optimistic. It is not likely to capture the 243

and 413 admissions projected respectively for years one and two.

Several factors support this finding including Nature Coasts

start up experience in other markets, the lack of a basis for the

size of i ts market share projections, and the absence from the

record of a credible basis for the utilization projections.

97. Also, in order to meet Nature Coast's projected

admissions in year one, it will have to match the highest market

share penetration of the 18 startups in the past 10 years, and in

the second year will have to surpass the highest market share

penetration rate of that same group. There is no evidence

suggesting why that would happen.

98. The record does not establish a credible "break ev en"

point for the proposal that would allow an evaluation of whether

or at what point the project would be feasible with lower,

realistic utilization projections.

99. Revenue and cost projections are based upon

utilization. Without credible utilizatio n projections, the

record d oes not establish that the long - term financial

projections are reasonable.

F. Section 408.035(1)(g) Florida Statutes Ï extent to which

the proposal will foster competition that promotes quality

and cost effectiveness

100. T he addition of any provider will foster competition.

But, with the exception of PIK:TFK services, there is nothing

about Nature Coast's proposal that would foster competition other

than as a new provider always would.

VII I . Standing

101. The Agency an d Nature Coast include an argument in

their Proposed Recommended Order that Hernando - Pasco does not

have standing to bring this proceeding. The parties did not

identify s tanding as an issue in the Pre - h earing Stipulation or

at any time in this proceeding. It is waived and may not be

raised at this late date.

CONCLUSIONS OF LAW

A. Jurisdiction

102. DOAH has jurisdiction over the parties to and the

subject matter of this proceeding. §§ 120.569, 120.57(1), and

408.039(5).

B. Burden of Proof

103. As the applicant, Nature Coast bears the burden of

proving entitlement to a CON by the preponderance of the

evidence. Boca Raton Artificial Kidney Ctr., Inc. v. Dep't of

HRS , 475 So. 2d 260 (Fla . 1st DCA 1985); § 120.57(1)(j).

C. Balancing of Criteria

104. T he award of a CON to an applicant must be based on a

balanced consideration of all applicable and statutory rule

criteria. Balsam v. Dep't of HRS , 486 So. 2d 1341 (Fla. 1st DCA

1986). "[T]he appropriate weight to be given to each individual

criterion is not fixed, but, rather must vary on a case - by - case

basis, depending upon the facts of each case." Collier Med.

Ctr., Inc. v. Dep't of HRS , 462 So. 2d 83, 84 (Fla. 1st DCA

1985).

105. An administrative hearing involving disputed issues of

material fact is a de novo proceeding, in which the

Administrative Law Judge independently evaluates the evidence

presented. Fla. Dep't of Transp. v. J.W.C. Co., Inc. , 396 So. 2d

778, 787 (Fla. 1st DCA 1981); § 120.57(1), Fla. Stat. (2011).

AHCA's preliminary decisions on CON applications, including its

findings in the SAAR, are not entitled to a presumption of

correctness. Id.

106. The Agency's fixed need pool was zero. This means

that Natur e Coast's CON will not be approved, unless it

establishes "special circumstances" that support approval despite

the absence of published need. Fla. Admin. Code R. 59C -

1.0355(4)(b), (c), and (d).

E. Special Circumstance s

107. Rule 59C - 1.0355(4)(d) is t he "special circumstances"

provision. It provides:

Approval Under Special Circumstances. In the

absence of numeric need identified in

paragraph (4)(a), the applicant must

demonstrate that circumstances exist to

justify the approval of a new hospice.

Evidence submitted by the applicant must

document one or more of the following:

1. That a specific terminally ill population

is not being served.

2. That a county or counties within the

service area of a licensed hospice program

are not being served.

108. The findings of fact establish that patients under the

age of 18, including some number of terminally ill patients, in

Hernando County are not receiving PIC:TFK services. The Agency

maintains that the reference to population "not being served"

inclu des a population that is not receiving a service that can

only be provided by a hospice. The Agency's interpretation of

its rule has not been shown unreasonable and therefore merits

deference. Verizon Fla., Inc. v. Jacobs , 810 So. 2d 906, 908

(Fla. 2002) ; Fla. Wildlife Fed'n v. Collier Cnty. , 819 So. 2d 200

(Fla. 1st DCA 2002); D.A.B. Constructors, Inc. v. State of Fla.

Dep't of Transp. , 656 So. 2d 940 (Fla. 1st DCA 1995). It is also

supported by the fact that only hospice providers can provide

PIC:TFK s ervices which would make them a service of a hospice.

F. Weighing Other Criteria

109. The absence of credible utilization projections

fatally flaws consideration of two critical criteria. Without

credible ut ilization projections, the long - term financial

reasonableness was not established. Without credible utilization

projections, the staffing projections cannot be meaningfully

evaluated. These two projections are central to determining if

the project should be approved. Since the record does not

estab lish them, this failure outweighs the benefit of providing

PIC:TFK services.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of

law, it is RECOMMENDED that the Agency for Health Care

Administration issue a Final Order denying Certi ficate of Need

Application Number 10204 of Hospice of Nature Coast County, Inc.,

d/b/a Hospice of Nature Coast and the Nature Coast.

DONE AND ENTERED this 24th day of December, 2014, in

Tallahassee, Leon County, Florida.

S

JOHN D. C. NEWTON, II

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 24th day of December, 2014.

ENDNOTE

1/ All citations to Florida Statutes are to the 2014 edition

unless otherwise noted.

COPIES FURNISHED:

Lorraine M. Novak, Esquire

Agency for Health Care Administration

Fort Knox Building III, Mail Stop 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308

(eServed)

Susan L. St. John, Esquire

St. John Law Firm, P.L.

Post Office Box 13545

Tallahassee, Florida 32317 - 3545

(eServed)

Brian A. Newman, Esquire

Pennington, P.A .

215 S outh Monroe Street, Suite 200

Post Office Box 10095

Tallahassee, Florida 32302 - 2095

(eServed)

R. Terry Rigsby, Esquire

Pennington, P.A.

215 S outh Monroe Street, Suite 200

Post Office Box 10095

Tallahassee, Florida 32302

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Stuart Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

(eServed)

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.