15-002128 Agency For Health Care Administration vs. Tr And Snf, Inc., D/B/A The Nursing Center At University Village Status: Closed Recommended Order on Tuesday, May 31, 2016.

Summary: Although administrators changed, AHCA did not prove that it did not receive notice. SNF did not provide proof of financial ability until after Complaint. Stonewalled request. Revocation recommended.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Petitioner,

vs. Case No. 15 - 2128

TR AND SNF, INC., d/b/a THE

NURSING CENTER AT UNIVERSITY

VILLAGE,

Respondent,

and

DREW M. DILLWORTH,

Intervenor.

__________ _____________________/

RECOMMENDED ORDER

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

Division of Administrative Hearings, heard this case by video

teleconference at sites in Tampa and Tallahassee, Florida , on

December 8, 2015 .

APPEARANCES

For Petitioner: Thomas J. Walsh, II, Esquire

Agency for Health Care Administration

Suite 330

525 Mirror Lake Drive North

St. Petersburg, Florida 33701

For Respond ent: M. Stephen Turner, Esquire

John F. Loar, Esquire

Broad and Cassel

Suite 400

215 South Monroe Street

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE S

A. Did Respo ndent, TR & SNF, Inc. , d/b/a The Nursing

Center at University Village (TR & SNF), violate requirements to

demonstrate the financial ability to operate in accordance with

statutes and rules? If so, what penalty should be imposed?

(Count I)

B. Did TR & SN F violate requirements to report changes in

the administrator or manager of its licensed facility? If so,

what penalty should be imposed? (Count II)

C. Did TR & SNF, by committing the offenses charged in

Counts I and II, commit violations that support r evocation of

its nursing home license? (Count III)

PRELIMINARY STATEMENT

By three - count Administrative Complaint, dated March 11,

2015, Petitioner , Agency for Health Care Administration (Agency),

began proceedings to revoke the nursing home license of TR & SNF

and impose fines of $10,000. TR & SNF contested the action and ,

on April 1, 2015, requested a formal administrative hearing. On

April 17, 2015, the Agency referred the matter to the Division of

Administrative Hearings to conduct the requested heari ng. Drew

Dillworth, receiver for TR & SNF intervened. He later filed a

notice of withdrawal. But he never moved to withdraw. The

hearing was scheduled for July 1, 2015. The hearing was re -

scheduled three times to provide counsel time to conduct

discov ery and prepare for hearing.

The undersigned conducted the hearing on December 8, 2015.

The Agency presented the testimony of Bernard Hudson and

Katherine Benjamin. Agency Exhibits A through E and G were

admitted. TR & SNF presented testimony from John Bartle and Do ug

Klinowski. Its E xhibits 1 through 6 were admitted.

The proceedings were recorded and transcribed. At the

hearingÓs conclusion, the parties requested and were granted

additional time to file and serve proposed recommended orders.

Later th e parties moved to abate the proceedings until April 26,

201 5 , to conduct settlement discussions. That motion was denied.

But the deadline for filing proposed recommended orders was

extended until April 26, 2016, to provide a reasonable period

during whi ch the parties could conduct settlement discussions.

The parties timely filed their proposed recommended orders. They

have been considered in the preparation of this R ecommended

O rder.

FINDINGS OF FACT

I. The Parties

1. The Agency is the State regul atory authority responsible

for licensing nursing homes and enforcing applicable federal

regulations, state statutes , and rules governing skilled nursing

facilities pursuant to the Omnibus Reconciliation Act of 1987,

Title IV, Subtitle C (as amended), Chap ters 400, Part II, and

408, Part II, Florida Statutes, and Florida Administrative Code

Chapter 59A - 4 .

2. At all times material to this proceeding, TR & SNF was a

licensed nursing facility in Tampa, Florida , under the licensing

authority of the Agency. T R & SNF does business as The Nursing

Center at University Village. It is and was required to comply

with all applicable rules and statutes.

II. Reporting Changes in Management

3. The ownership, control, and management of TR & SNF are

intertwined with th at of a 446 - bed assisted living facility and

46 villas located on a campus with TR & SNF and the assisted

living facility. The aggregate is sometimes called University

Village and operated as a continuing care community . The

shifting roles of various lan dlords of the properties and the

management of them cloud the operations of TR & SNF and the

related facilities.

4. Westport Holdings, Tampa, LP, owns 446 assisted living

units. Westport Holdings Tampa, II, LP, owns 46 villas.

Westport Nursing, Tampa, LLC (Westport Nursing), owns the nursing

home. BVM University Village, LLC , owns 40 percent of Westport

Nursing. Compliance Concepts, LLC , is the managing member of BVM

University Village, LLC. Rebecca Bartl e , wife of John Bartl e , is

the sole member of Compliance Concepts, LLC, and the managing

member of BVM University Village, LLC.

5. TR & SNF leases the nursing home from Westport Nursing.

BVM guarantees about $25,000,000 of Westport NursingÓs debt.

6. John and Rebecca Bartle are key actors in all of these

various companies and shift in and out of roles. For example , a

March 15, 2015, letter from Mr. Bartle identified him as ÐJohn

Bartle, Board Member, TR & SNF, Inc., Tampa. Ñ The next day ,

Mr. Bartle sent the Agency an email identifying him as ÐD irector,

Senior Housing Division,Ñ with an Indiana address and the website

http://bvmmanagement.co m . The April 9, 2015, letter transmitting

a proof of financial ability filing identifies Mr. Bartle as

Board Chairma n, TR & SNF.

7. On July 1, 2014, BVM Management, Inc., TR & SNF, Inc. ,

and TALF, Inc. (the assisted living facility), signed a Corporate

Administration Agreement with BVM Management, Inc. The agreement

recites that TR & SNF and TALF, Inc. , acquired Univer sity Village

Inn and Health Center. It states that they wish ed to have BVM

Management, Inc., provide corporate governance functions and that

BVM Management ha d experienced personnel to provide the

governance functions.

8. The Agreement states that BVM Ma nagement shall provide

the following services to University Village Inn and Health

Center:

a. Coordination and formulation of strategic

plans and goals for the Owners, including

making recommendations to the Board of

Directors concerning changes in key

pe rsonnel, vendors, and appropriate plans of

action and responses to strategic

opportunities and changes in the senior care

industry;

b. Review and an analysis of financial and

operating information of each of the OwnersÓ

properties, including preparing a nd reviewing

financial statements, operating reports and

other financial data of each of the OwnersÓ

businesses;

c. Periodic meetings with each

representative Owner to review the

performance of each of the OwnersÓ

businesses, including financial and

ope rational status of each facility;

d. Visits to each facility on a regular

basis;

e. Periodic review of operations of each

facility, employee staffing and quality of

care and the maintenance and repair of each

facility and communicate with the Owners as

such observations are made regarding same;

f. Review all operating and capital budgets

proposed by Owners, discussing and

negotiating same and communicating with

Owners and others regarding same;

g. Reviewing periodic ÐStatement of

DeficienciesÑ and making recommendations for

any ÐPlan of CorrectionÑ to be filed with

state or federal agencies;

h. Monitoring and overseeing each OwnerÓ

compliance with covenants and financial

obligations as set forth in various loan

agreements;

i. Coordination and implementation of

consolidated programs involving each Owner

dealing with workmenÓs compensation, claims,

other insurance as required and assisting in

negotiation with current Collective

Bargaining Agreement (CBA);

j. Coordination of relationships with

l enders and lendersÓ agents that may request

information from time to time;

k. Assistance in the recruitment of key

employees of the Owners business;

l. Review of performance and outside

professionals on behalf of Owners, including

legal counsel, audi tors and insurance

consultants;

m. Review of performance of all duties of

Owners [sic] business in order to insure that

Owners are in compliance with all local,

state and federal regulations.

9. It also limits BVM ManagementÓs responsibilities. The

limits are:

The Parties agree that the responsibility for

the development, renovation, operation and

management of the day - to - day business of the

Owners is the responsibility of the Owners.

Owners have employed qualified personnel,

licensed in the state o f Florida, in order

for the OwnersÓ businesses to remain in

compliance with local, state, and federal

regulation.

10. The Agreement says that BMV Management will be paid for

its services. The Agreement does not say how much BMV Management

will be paid or how payment will be determined. Mr. Bartle

signed the agreement on behalf of TR & SNF.

11. The Agency contends that the terms of the agreement

effectively mean that officers and employees of BMV Management

including Mr. Bartle, Robert R inerd, Dana Huth, Jeffery Wendell,

and Sandy Guion provided management and supervision to TR & SNF.

The Agency argues that TR & SNF should therefore have reported

their involvement.

12. Karen Northover became the health facility

administrator for TR & SNF on October 27, 2014.

13. At some point in 2015, a company called NOVUM

contracted to provide TR & SNF administrative services. A NOVUM

partner, Janet Balsely, became the health facility administrator

f or TR & SNF.

14. The Agency contends that TR & SNF did not repo rt either

change in health facility administrators to it.

15. The Agency did not prove by clear and convincing

evidence that TR & SNF did not give notice of management by

Ms. Northover , Ms. Balsely , or the assorted BVM companies,

officers, and employee s . The closest it came was Mr. Hudson,

unit manager for the AgencyÓs l ong - term care unit since 2008.

When asked if he ever received notification from TR & SNF that it

had changed management he stated: ÐNo, I donÓt believe so.Ñ

(TR - 37, lines 8 - 12). Th e record does not show that Mr. Hudson

was the person who would receive notice or that he had reviewed

records and determined that there were no notifications.

16. The Agency contends, understandably, that Mr. BartleÓs

involvement and shifting, uncertain roles make him a manager

whose involvement should have been reported. The Agency failed

to provide clear and convincing evidence showing TR & SNF did not

advise the Agency that Mr. Bartle was a manager. The record on

this issue has the same failings as d escribed in paragraph 15.

17. Similarly the Agency did not offer evidence tending to

prove that TR & SNF had not reported employees or officers of BVM

Management as managers of TR & SNF.

18. The AgencyÓs proposed recommended order highlights this

failure of proof. Paragraphs 20 and 30 of the AgencyÓs p roposed

r ecommended o r der proposed finding that TR & SNF had not reported

to the Agency that it had contracted with a new management

company. The proposed findings do not cite to the record.

III. Proof of Financial Ability

19. In early February of 2015, FloridaÓs Office of

Insurance Regulation (Insurance Regulation) drew the AgencyÓs

attention to University Village and the health care facilities

that comprise it. Insurance Regulation employees told B ernard

Hudson, m anager of the AgencyÓs Long Term Care Unit , about

information they had that raised concerns about the financial

stability of TR & SNF. Mr. Hudson investigated the issue.

Later, Insurance Regulation provided a copy of its Initial Order

of Suspension in Case No. 168 - 243 - 15, issued February 13, 2015,

suspending the Certificate of Authority for Westport Holdings,

Tampa , LP , d/b/a University Village , to operate a c ontinuing care

community under c hapter 651, Florida Statutes. The suspension

ord er asserts that John Bartle exercised control over the

management and operations of University Village, that John Bartle

and Rebecca Bartle refused to allow investigators access to key

employees, that University Village (which includes TR & SNF) had

underf unded the required minimum financial reserves by $370 , 324,

and that University Village had unlawfully encumbered the

reserves that it did have.

20 . This was sufficient evidence of the financial

instability of TR & SNF to support a decision to request proo f of

financial ability.

2 1 . The Agency sent Katherine Benjamin to survey TR & SNF

on February 23, 2015. Ms. Benjamin conducted a thorough

investigation, reviewed financial records and other documents,

interviewed employees, inspected supplies, and interv iewed

employees. She returned with 87 pages of documents identified as

aged accounts payable.

22 . The Agency did not offer evidence about when, how, or

by whom these records were created , how current they were , the

source of the information in them or th e duties of the

individuals creating the records .

23 . Before the survey, on February 17, 2015, Mr. Hudson,

sent a certified letter addressed to the a dministrator of The

Nursing Center at University Village (TR & SNF). The letter

reminded TR & SNF of its duty to provide the Agency proof of

financial ability to operate at any time if there was evidence of

financial instability. The letter demanded that TR & SNF

complete and return a ÐProof of Financial Ability Form that

includes a balance sheet and income and expense statement for the

next 2 years of operation which provide evidence of having

sufficient assets, credit, and projected revenues to cover

liabilities and expenses.Ñ It directed TR & SNF to forward the

completed form no later than March 3, 2015.

24 . On March 3, 2015, Mr. Bartle sent Mr. Hudson a letter

on TR & SNF, Inc., stationery stonewalling the request. The

failure to comprehend that the Agency was different from the

Insurance Regulation, the dismissive tone, and the intransigence

of the let ter make quoting it instructive.

The Provider, The Nursing Center of

University Village, is in receipt of your

letter dated February 17, 2015. Please be

advised this Provider operates under Florida

Statute 651 [continuing care retirement

community regulat ion by the Office of

Insurance Regulation], and its certificate

holder number is 88104. Recent

communications with representatives of your

office have shown that there exists over

$5,900,000 in liquid reserves deposited in

institutions pursuant to Florida Statute 651

and related sections.

Additionally, representatives of AHCA

provided an on - site visit in December 2014,

alleging there were financial issues that

would provide some concern for AHCA, however,

those allegations were unsubstantiated and

result ed in Ðno findings.Ñ Your letter to

the Provider refers to Ða recent review of

documents provided to the agency warrants a

more thorough review of the facilityÓs

financial ability to continue operations.Ñ

In an effort to clarify the agencyÓs

concerns, pl ease provide copies of the

documents your agency believe are causing any

degree of concern. The residents at the

ProviderÓs location have not been deprived of

any service or product that is specified

under Florida statute 408.810(8). All

services, supplie s and other expenses

necessary to provide Ða basic level of

serviceÑ has [sic] been provided to all

residents of the Nursing Center at University

Village. In an effort to expeditiously

review Ðdocuments provided by the agencyÑ

please forward those documen ts to: Jeffrey

Wendel, Controller, and P.O. Box 501188,

Indianapolis, IN 46250.

If there are any further questions regarding

this certificate holder and the location of

its minimum liquidity reserve (MLR) please

direct those inquiries to Mr. Wendel as well.

Thank you for your concern, hopefully after

review of the certificate holderÓs

identification number your office will find

the liquidity to be sufficient.

25 . Mr. Bartle signed the letter ÐBoard Member, TR & SNF.Ñ

It shows copies to Jeffery Wen del, Controller, and Anna Small,

Esq uire . The letter does not request an extension of time to

supply the requested information.

2 6 . Mr. Bartle denies writing the letter and any knowledge

of it being sent.

27 . The next day Mr. Bartle sent Mr. Hudson an email saying

he had just learned of the March 3 letter. Mr. BartleÓs email

says he thinks a lawyer wrote it and someone, unknown to him,

signed and sent it because they thought Ðthat there was something

ÒurgentÓ about the March 3, 2015, date.Ñ TR & SNF did not

provide evidence showing who authored or signed the March 3

letter.

28 . The email goes on to say: ÐI did ÒnotÓ sign the

letter, and do not agree with some of the statements made in that

letter.Ñ This careful, conditioned statement leaves open th e

likelihood that Mr. Bartle approved the letter and agrees with

many of its statements.

29 . The email apologizes for the March 3 , 2015, letter and

states that Mr. Bartle had engaged an accounting firm to complete

the form and provide the requested docume nts. The letter does

not request an extension of time or say when TR & SNF would

provide the completed form. The last sentence of the letter

states: ÐI will confirm with you when CLA [the accounting firm]

can turn over the PFA [proof of financial abilit y] to your Agency

tomorrow.Ñ There is no evidence that Mr. Bartle fulfill ed that

pledge.

3 0 . The email identifies Mr. Bartle, as ÐDirector Senior

Housing Division.Ñ It has a website address of

http://bvmmanagement .com .

31 . The letter and the email reveal Mr. BartleÓs view that

deadlines established by regulatory authorities performing the

duties imposed on them for the protection of the public by the

L egislature are not significant. This disregard, if not disdai n,

for the statutes and rules governing nursing home services and

the enforcement of them is patent in the letter and e - mail,

Mr. BartleÓs dismissive testimony about the shifting

relationships of the various entities, his demeanor when

testifying, and his evasive manner of answering questions when

testifying. For these reasons, Mr. BartleÓs denial of the

March 3 letter and much of his uncorroborated testimony are not

accepted as credible.

32 . On March 11, 2015, the Agency issued its Administrative

Compl aint.

3 3 . On April 1, 2015, TR & SNF requested a formal

administrative hearing.

3 4 . TR & SNF submitted its proof of financial ability

sometime after April 9, 2015. By the time TR & SNF provided the

document, the Administrative Complaint had issued and TR & SNF

had requested a hearing to challenge it.

35 . On April 23, 2015, Everett Broussard of the Agency sent

Mr. Hudson an interoffice memorandum providing Ðstaff requests

[for] additional documentation and/or correction of errors and

omissions to the i nitial response (listed below).Ñ

3 6 . The memorandum does not identify Mr. BroussardÓs

position or provide any information about his qualifications to

conduct financial reviews. The Agency chose not to offer

testimony from Mr. Broussard or any other witn ess about an

analysis of the document provided by TR & SNF.

3 7 . The Agency did not seek further information from TR &

SNF.

CONCLUSIONS OF LAW

Jurisdiction and Burden of Proof

3 8 . DOAH has jurisdiction over the parties to and the

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

Fla. Stat (2015) 1/ .

39 . The Agency bears the burden of proving the allegations

of its Administrative Complaint. See Dep't of Banking & Fin.,

Div. of Sec . & Investor Prot. v. Osborne Stern & Co. , 670 So. 2d

932, 935 (Fla. 1996; Fla. Dep't of Transp. v. J.W.C. Co., Inc . ,

396 So. 2d 778, 788 (Fla. 1st DCA 1981). Since the Agency seeks

to impose fines and revoke a license , the Agency must prove its

allegations by clear and convincing evidence. Nair v. Dep Ó t of

Bus. & Pr of Ól Reg., Bd. of Med . , 654 So. 2d 205 (Fla. 1st DCA

1995).

Count I

40 . Count I of the Administrative Complaint charges that TR

& SNF violated section 408.810(8), Florida Statutes. It requires

a nursing home applicant to furnish satisfactory proof of

fin ancial ability to operate in accord with statutes and rules.

The statute says that the Agency shall establish standards for

this purpose including information about applicantÓs controlling

interests.

41 . Section 408.810(8) also says: ÐThe agency may req uire

a licensee to provide proof of financial ability to operate at

any time if there is evidence of financial instability,

including, but not limited to, unpaid expenses necessary for the

basic operations of the provider.Ñ

42 . Clear and c onvincing evi dence, in the form of the order

suspending the certificate for the continuing care community,

showed that the Agency had sufficient evidence of financial

instability to require proof of financial ability.

43 . Florida Administrative Code Rule 59A - 35.062( 7)

authorize the Agency to require a provide r to submit proof of

financial ability by completing and submitting a Proof of

Financial Ability Form, a balance sheet, and an income and

expense statement.

44 . TRF & SNF did not provide the requested proof. It did

not request an extension of time. It did not take the request or

the AgencyÓs authority to make it seriously until after the

Agency filed the Administrative Complaint.

45 . TR & SNF argues that the Agency did not permit a

reasonable period of time fo r it to gather and provide the

information. TR & SNF cites no authority for a Ðreasonable time

requirement , Ñ no authority stating what a reasonable time is , or

authority establishing how to determine what is a reasonable

time. TR & SNF also did not provi de persuasive evidence to

support this argument. There was no testimony from the

accounting firm about the time needed to prepare the proof of

financial ability and accompanying documents . Most importantly

Mr. BartleÓs communications of March 3 and March 4 demonstrate

that TR & SNF was avoiding providi ng the requested information. 2/

Count II

4 6 . Count II of the Administrative Complaint charges that

TR & SNF violated the requirement of Florida Administrative Code

Rule 59A - 35 .110 ( 1)(c) for a nursing home to report changes of

administrator or similar person responsible for the day to day

operation of the provider. During the relevant time period the

persons who served as administrator of TR & SNF changed more than

once. But the Agency offered no evidence that the changes were

not appropriately reported. Consequently , the Agency did not

prove the charges of Count II.

Count III

4 7 . The charges of Count III are derivative of the charges

of Counts I and II. Count II I rel ies upon section 408.815(1)(c),

whic h authorizes revoking a license for violation s of c hapter 408

or applicable rules. Proof of the charge in Count I amounts to

proof of the charges of Count III.

Penalty

48 . Section 400.121(1)(a) , Florida Statutes, allows the

Agency to revoke a license and impose an administrative fine not

to exceed $500.00 per violation per day for any vio lation of

chapter 408 , or applicable agency rules. The Agency has proven

by clear and convincing evidence that TR & SNF violated section

408.810(8) . There is no evidenc e supporting mitigation of the

possible penalties. The AgencyÓs proposed administrative fine of

$10,000.00 and revocation of the license of TR & SNF is

reasonable.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is rec ommended that the Agency enter a final order

imposing an administrative fine in the amount of $10,000 and

revoking the license of TR & SNF, Inc.

DONE AND ENTERED this 31st d ay of May , 2016 , 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 t he

Division of Administrative Hearings

this 31st day of May , 2016 .

ENDNOTE

1 / All citations to the Florida Statutes are to the 2015

edition.

2/ Only whether TR & SNF provided proof of financial abilit y is

an issue in this case. This R ecommended O rde r makes not findings

or conclusions on whether TR & SNF can prove it has the financial

ability to operate.

COPIES FURNISHED:

Thomas J. Walsh, II, Esquire

Agency for Health Care Administration

Suite 330

525 Mirror Lake Drive North

St. Petersburg, Florida 33701

(eServed)

Jay Adams, Esquire

Broad and Cassel

Suite 400

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

John F. Loar, Esquire

Broad and Cassel

Suite 400

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

M. Stephen Turne r, Esquire

Broad and Cassel

Suite 400

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Eric Silver

Stearns Weaver Miller Weissler

Alhadeff & Sitterson, P.A.

Suite 2200

150 West Flagler Street

Miami, Florida 33130

(eServed)

Richard J. Sho op, Agency Clerk

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

(eServ ed)

Stuart Williams, Gen eral Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days fro m 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.