18-000073CON Encompass Health Rehabilitation Hospital Of Escambia County, Llc vs. Agency For Health Care Administration Status: Closed Recommended Order on Thursday, January 31, 2019.

Summary: Petitioner failed to prove "special circumstances" necessary for approval of its CON application for a new 50-bed comprehensive medical rehabilitation freestanding hospital in service District 1, when there was a fixed need pool of zero.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ENCOMPASS HEALTH REHABILITATION

HOSPITAL OF ESCAMBIA COUNTY,

LLC,

Petitioner,

vs. Case No. 18 - 0073CON

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent,

and

WEST FLORIDA REGIONAL MEDICAL

CENTER; FORT WALTON BEACH

MEDICAL CENTER ("NORTHWEST

FLORIDA"); AND FORT WALTON BEACH

MEDICAL CENTER ("FORT WALTON

BEACH"),

Intervenors.

_______________________________/

RECOMMENDED ORDER

An administrative hearing was held in this case on July 16

through 18, 24, 26, 30 , and 31 , and August 1, 2018, in

Tallahassee, Florida, before James H. Peterson, III,

Administrative Law Judge with the Division of Administrative

Hearing s (DOAH).

APPEARANCES

For Encompass Health Rehabilitation Hospital of Escambia

County, LLC:

Seann M. Frazier , Esquire

Marc Ito , Esquire

Parker , Hudson , Rainer & Dobbs, LLP

215 South Monroe Street, Suite 750

Tallahassee, Florida 32301

For the Agency for Health Care Administration :

Lindsey L. Miller - Hailey , Esquire

Richard Joseph Saliba , Esquire

Elina Valentine, Esquire

Kevin Michael Marker, Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 7

Tallahassee, Florida 32308

For West Flori da Regional Medical Center ; Fort Walton Beach

Medical Center ( Ð Northwest Florida Ñ ); and Fort W alton Beach

Medical Center ( Ð Fort Walton Beach Ñ ) :

Stephen A. Ecenia , Esquire

Craig D. Miller , Esquire

Rutledge Ecenia , P.A.

119 South Monroe Street, Suite 202

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether, on balance, Certificate of Need ( CON) Application

No. 10945 submitted by Encompass Health Rehabilitation Hos pital

of Escambia County, LLC ( Encompass or Petitioner ) to establish a

50 - bed comprehensive medical rehabilitation hospital in Service

District 1 satisfies the applicable statutory and rule criteria

and should be a pproved or denied .

PRELIMINARY STATEMENT

Encompass filed CON Application No. 10495 to establish a new

50 - bed comprehensive medical rehabilitation ( CMR) freestanding

hospital in Pensacola, Florida, proposed to be located in

Escambia County, Agency for Health Care Administration ( AHCA or

the Agency) Service District 1. The Agency preliminarily denied

EncompassÓs CON application on December 4, 2017.

On December 21, 2017, Encompass timely filed a petition

challenging the Agency's preliminary denial of EncompassÓs

CMR hospital. EncompassÓs petition sought formal proceedings

pursuant to the Health Facilities and Serv ices Development Act,

s ections 408.031 - 408.035, Florida Statutes . 1/ The Agency

referred EncompassÓs petition to the Division of A dministrative

Hearings on January 5, 2018 .

On January 9, 2018, West Florida Regional Medical Center,

Inc. , d/b/a West Florida Hospital (West Florida) ; Fort Walton

Beach Medical Center, Inc. , d/b/a The Rehabilitation Institute

of Northwest Florida ; and Fort Walton Beach Medical Cen ter

( Fort Walton Beach) (collectively, the Intervenors ) filed a

motion to intervene , which was granted by O rder entered

January 10, 2018.

The final hearing was held on July 16 through 18, 24, 26,

30 , and 31 , and August 1, 2018 . During the course of the

proceeding, the court denied West Florida's Motion in Limine to

exclude documents related to a sta ffing analysis prepared by

Mary Ellen Hatch. The court also denied AHCA's Amended Motion in

Limine to exclude testimony and evidenc e derived from the

Agency's discharge database for the year ending October 1, 2016.

At the final hearing, Encompass presented the testimony of

Linda Wilder, who was accepted as an expert in healthcare

administration and CMR hospital development ; Lori Beda rd,

accepted as an expert in physical therapy and rehabil itation

hospital administration; Cheryl Miller, accepted as an expert in

occupational therapy and therapy management ; Mary Ellen Hatch,

accepted as an expe rt in healthcare administration; Fred C.

Fre derick, accepted as an expert in healthcare architecture;

Phillip Loggins, accepted as an expert in quality assurance and

risk management ; Tom Davidson, accepted as an expert in

healthcare finance; and Sharon Gordon - Girvin, accepted as an

expert in healthcare planning. Encompass Exhibits P - 1 through

P - 4, P - 6 through P - 9, P - 11, P - 12, P - 14, P - 15, P - 17, P - 20 through

P - 27, P - 30, P - 34, P - 35, P - 37 through P - 41, P - 42 ( Bates Nos. 1977 -

19 84 and 2042 - 2043 o nly ) , P - 43, P - 50, P - 51, P - 52, P - 69, and P - 75

were admitted into evidence.

The Agency presented the testimony of Marisol Fitch. The

Ag ency's sole exhibit, Exhibit R - 2, was admitted into evidence.

The Intervenors presented the testimony of Johnny Harrison,

accepted as an expert in CMR administration ; Carlton Ulmer,

accepted as an expert in hospital administration ; Todd Jackson,

accepted as an expe rt in healthcare administration; Rebecca Jone s,

accepted as an expert in CMR administration; Glennal Verbois,

M.D., accepted as an expert in CMR; Daniel Sullivan, accepted as

an expert in health planning and finance ; and Darryl Weiner,

accepted as an expert in healthcare finance. Intervenors'

Exhibits I - 1 ( pages 4 through 35 ) , I - 2 through I - 6, I - 8, I - 9,

I - 11, I - 13, I - 15, I - 16, I - 20, I - 21, I - 23, I - 24 ( pages 2058

through 2063 ) , I - 36, I - 44 ( Bates Nos. 1727 through 1770 ) , I - 45

( Bates Nos. 1570 through 1604 ) , I - 46 ( Bates Nos. 1485 through

1569 ) , I - 47 (Dr. Verbois CV) , and I - 48 were admitted into

evidence.

The parties jointly offer ed into evidence Exhibits numbered

J - 1 through J - 3 , which were admitted .

The proceedings were recorded, and a transcript was ordered.

The T ranscript , consisting of 10 volumes was filed on August 21,

2018. By agreement, t he parties were given until October 5 ,

2018, to submit their proposed recommended orders. By Order

Granting Extension of Time requested in a joint motion, t he due

date for submitting proposed recommended orders was extended

until October 19, 2018 . Therea fter, t he parties timely submitted

Proposed Recommended Orders , as well as a Joint Preliminary

Statement and agreed outline, all of which have been considered

and utilized in preparing this Recommended Order.

FINDINGS OF FACT

I. Overview

A. CMR Services

1. CMR Inpatient Services is defined as:

An organized program of integrated intensive

care services provided by a coordinated

multidisciplinary team to patients with

severe physical disabilities, such as

stroke; spinal cord injury; congenital

deformity, amputation, major multiple

trauma, fracture of femur (hip fracture);

brain injury, polyarthritis, including

rheumatoid arthritis; neurological

disorders, including multiple sclerosis,

motor neuron diseases, polyn europathy,

muscular dystrophy, an d ParkinsonÓs disease;

and burns.

See Fla. Admin. Code R. 59C - 1.039(2)(d).

2. The Florida L egislature has also determined CMR to be a

tertiary health service. A Ðtertiary health serviceÑ means:

[A] health service which, due to its high

level of intensity, complexity, specialized

or limited applicability, and cost, should

be limited to, and concentrated in, a

limited number of hospitals to ensure the

quality, availability, and cost -

effectiveness of such service. Examples of

such service include, but are not limited

to, pediatric cardiac catheterization,

pediatric open - heart surgery, organ

transplantation, neonatal intensive care

units, comprehensive rehabilitation, and

medical or surgical services w hich are

experimental or developmental in nature to

the extent that the provision of such

services is not yet contemplated within the

commonly accepted course of diagnosis or

treatment for the condition addressed by a

given service.

See § 408.032(17), Fla. Stat.

3. CMR services are a defined benefit of the Medicare

program. Federal regulations define the type of patients that

are appropriate for hospital - based rehabilitation, as opposed to

rehabilitation offered in less intense settings, such as nursing

homes.

4. CMR services are designed to take car e of patients

recovering from acute episode s such as a severe illness, spinal

cord injury, trauma injury, brain injury (both traumatic and

non - traumatic), stroke, amputation, and the like , all of which

limit certain of the patientÓs functions for normal life.

5. A CMR facility is required to provide intensive therapy

on a consistent basis. A physician is on call 24 hours a day,

seven days a week , coupled with 24 - hour nursing coverage. The

patient must be seen three times a week by a physician.

6. The types of patients eligible to receive CMR services

are heavily regulated. The federal Center for M edicare and

Medicaid Services ( CMS) establishes the admission requirements

for CMR faci lities and patients. CMS maintains 13 diagnoses to

determine which patients are appropriate for receiving CMR

Services (the CMS 13). The CMS 13 includes a determination that

the patient is able to participate in a minimum of three hours

o f therapy a day, five days a week. The therapy includes a

combination of physical, occupational , and/or speech therapies .

The C MS 13 criteria for admission have become much more

stringent over time.

7. Whether a patient meets the CMS 13 is a decision within

th e profe ssional judgment of the medical d irector of the CMR

facility. A CMR facility is re quired to attest to CMS that

60 percent of the CMR f acilit yÓs patients fall within the

13 diagnoses for CMS.

B. EncompassÓs Proposal Î The CON Application

8. Encompass Ós CON application proposes the construct ion

and operat ion of a 50 - bed freestanding rehabilitation hospital

in Escambia County , conditioned on the provision of service to

Medicaid and indigent population s , and on providing the latest

state - of - the - art rehabil itation equipment . Escambia County is

in AHCA Service District 1 , which includes Escambia, Okaloosa,

Santa Rosa and Walton Counties. See § 408.032(5), Fla. Stat.

9. There is no published need for additional CMR beds in

District 1. Therefore , in an a ttempt to justify its proposal in

the absence of a published numeric need , Encompass argues that

Ðnot normalÑ circumstances indicate a need for a CMR hospital

consisting of 50 beds. EncompassÓs determination of need is

premised upon its own, and its consultantsÓ, examination of the

elderly population, total population, utilization of existing

providers, and available CMR beds, as well as upon EncompassÓs

experience in other markets.

10. Pres ently, within District 1, there are two existing

CMR facilities, West Florida, located in Pensacola, Escambia

County; and Fort Walton Beach, located in Destin, Okaloosa

County. Between the two providers, there are 78 licensed CMR

beds available: West Flo rida has 58 licensed beds and Fort

Walton Beach has 20 licensed beds. An additional 10 beds are in

the process of opening at Fort Walton Beach.

11. Both West Florida and Fort Walton Beach submitted

written statements of opposition to the requested CON a nd

presented testimony at the public hearing in opposition to the

project. Following review and analysis of EncompassÓs CON

Application, AHCA preliminarily denied the application and

determined that, Ð[b]ased on the application, not normal

circumstances were not established to outweigh the abse nce of

published numeric need.Ñ AHCA recommended denial of the

EncompassÓs CON Application in its State Agency Action

Report ( SAAR ) .

II. The Parties

A. Encompass Health Rehabilitation Hospital of Escambia

County, LLC

12. Encompass, the applicant, is a limited liability

company formed solely for purposes of applying for a CON .

Encompass is a wholly owned subsidiary of Encompass Health

Corporation.

13. EncompassÓs parent corporation, Encompass Health

Corporation was formerly known as HealthSouth Corporation, a

CMR provider with facilities in Florida. In the CON Application

and in the course of this proceeding, Encompass, as the

applicant for the CON, utilizes and relies on data from i ts

parent corporation Encompass Health , f/k/a HealthSouth. During

the course of the proceedings, the parties tended to refer to

the applicant interchangeably as Encompass and HealthSouth. For

identification purposes in this Recommended Order, ÐEncompassÑ

shall refer to the LLC applicant, and the parent corporation

shall be referred to as ÐEncompass Health Corporation.Ñ

14. Encompass Health Corporation is a leading CMR provider

that operates 127 CMR hospitals throughout the United States a nd

Puerto Rico. Encompass Health Corporation has significant

experience in developing and opening new CMR hospitals and has

opened or expanded several hospitals in Florida and other states

in recent years.

B. AHCA

15. AHCA is the state agency charged with administering

the CON p rogram. AHCAÓs determination of Ð no need Ñ in

District 1 was made using a rule - based f ormula to determine when

new CMR beds are needed. AHCAÓs rule also recognizes that

Ðspecial circumstancesÑ m ay justify approval of additional CMR

hospitals, even in the absence of numeric need.

C. West Florida and For t Walton Beach

16. West Florida and Fort Walton Beach both operate

existi ng CMR units within District 1 . Both are also part of the

Hospital Corporation of AmericaÓ s (HCA) North Florida Division.

HCA is the second largest provider of hospital - based acute

rehabilitation services in the United States.

17. West Florida op erates a 58 - bed CMR unit within its

acute care hospital in Pensacola located in northeast Escambia

County. West FloridaÓs acute care hospital has expanded its

services to include a freestanding emergency room in Perdido Bay

and expanded pediatric services.

18. West Florida acc epts patients from a number of

different hospitals in District 1 including facilities

affiliated with the Sacred Heart and Baptist Hospital systems in

the greater Pensacola area, as well as other hospitals. The

facilities associated with Sacred Heart and Baptist Hospital are

also trauma centers , which serve as a significant referral

course for West Florida. West Florida also receives acute care

patients discharged from West Florida in need of CMR services .

19. West Florida currently has approximately 19 full - time

nurses. Ten of those RNs are Certifie d Rehabilitation Nurses,

and nine are working to become certified.

20. Fort Walton Beach operates a 20 - bed freestanding CMR

unit in Destin, Okaloosa County , within District 1. Pursuant to

AHCAÓs rules, since Fort Walton operated at 80 - percent occupancy

for more than 12 consecutive months, it applied to AHCA for

approval of 10 additional beds. AHCA granted approval for the

additional beds , which were set to open in August 2018. The Fort

Walton Beach CMR facility is affiliated with Fort Walton Beach

Medical Center (Medical Center) located in Fort Walton Beach.

21. The Medical Center has 237 licensed beds and operates a

Level II Trauma Center. For calendar year 2017, the Medical

Center had approximat ely 13,600 inpatient admissions; 55,000

outpatien t visits; and about 66,000 ER visits. At the same time,

Fort Walton Beach CMR Facility had 402 admissions. The Medical

Center provides a diverse range o f service lines , including

cardiovascular; ortho - neuro services, which include orthopedics

and spine procedures; stroke; neurological interventions and

emergency services. The Medical Center provides both

administrative and capital support to Fort Walton Beach.

22. Fort Walton BeachÓs nur sing staff consists of 25 RNs,

two of which are certified rehabilitation nurses, and three of

which are ce rtified nursing assistants .

III. Fixed Need Pool

23. In accordance with Florida Administrative Code Rule

59C - 1.039(5), twice a year AHCA calculates and publishes a

numeric need for additional CMR beds in each of Florida's eleven

dist ricts. In determining fixed need for each district, the

formula in the rule considers, among other factors, the number

of current CMR beds, historical utilization of CMR services and

population growth. R ather than setting a targe t or using

statewide use rates, t he formula carries local CMR use ra tes

forward in its calculations. Unique factors in each district,

such as demographics, cultural influences , and physician

referral patterns , result in a wide variation in CMR service

utilization between the districts , which influence s the results

of AHCAÓs calculations.

24. For the 2017 batching cycle, application of t he

Agency's formula determined that District 1 had an excess

capacity of CMR beds, and that no additional beds were needed in

District 1 for the January 2023 planning horizon. AHCA

published the results, but no challenge w as filed to the

published fixed need pool.

IV. Statutory and Rule Review Criteria

25. Section 408.036(1)(f) designates CMR services as a

tertiary healthcare service subject to the requirements of CON

review.

26. The CON review criteria applic able to this case are

found in s ections 408.035(1)(a) - (i), 408.037, 408.039 , and in

r ules 59C - 1.008, 59C - 1.030 , and 59C - 1.039.

A. Statutory Criteria

1. Section 408.035(1)(a) Î The need for the healthcare

facilities and health services proposed.

27. In calculating a zero need under applicable rule

methodology, AHCA projected a total need for 56 CMR beds for

District 1Ós year 2023 horizon . The overall utilization rate

for CMR services in District 1 at the time Encompass submitte d

its CON Applica tion was 57.3 percent. Currently, there are

88 licensed beds in District 1, 58 at West Florida , and 20 at

Fort Walton Beach, with an additional 10 beds approved at Fort

Walton Beach. On a percentage basis, there are approximately

40 percent more CMR beds in District 1 than the projected need

for year 2023.

28. Instead of challenging AHCAÓs published need of zero,

Encompass submitted its CON Application for the construction of a

50 - bed CMR hospital in District 1 by asserting that the presence

of Ðnot normalÑ circumstances established need for its proposed

hospital.

29. In support of its argument that Ðnot normalÑ

circumstances demonstrate need, EncompassÓs CON application

asserts a) lack of access , and b) lack of choice, for CMR

services in District 1. Regarding lack of access , Enco mpass

contends that a ) lower CMR bed supply inhibits access ; b ) when

CMR bed supply expands, CMR admissions increase; and c ) referral

patterns demonstrate limited access to existing CMR beds. At

hear ing, all parties presented evidence and testimony of their

respective health planners to address whether the above - listed

factors claimed by Encompass support a finding of Ðnot normalÑ

circumstances. Each of the above - listed factors is addressed

under sep arate headings, below.

a. Lack of Access

i. Whether Lower CM R Bed Supply Inhibits Access

30. Encompass argues that Di strict 1 has less access to

CMR care because, when compared to other districts, District 1

has fewer CMR beds per capita . This argument, however, fails to

take into account the difference s in CMR services demand ed and

utilized among districts. D emand is often unique to each

district. When the data regarding beds per capita is considered,

with the understanding that demand and utilization vary from

district to district, the data demonstrates that District 1 is

not out of the ordinary.

31. The data for District 1, whether for the population as

a whole , or for the population of 65 or older , which uses more

CMR services, reflects that the ratio in District 1 is higher

than some districts and lower than others. When looking at the

65 age bracket , District 1 has a ratio of 0.66 CMR beds to every

1,000 persons, compar ed to the state average of 0 .70. Moreover ,

the average for Florida is inflated due to high ratios in some

counties around the state, such as Broward County.

32. Although the need for CMR services is reviewed on a

district - wide basis, Encompass proposes to operate its facility

in Escambia County. Escambia County has a ratio of 1.12 CMR beds

to every 1,000 persons age 65 years and older. Adding the 50 CMR

beds requested by Encompass to the existing beds in Escambia

Co unty would result in a ratio of two beds for every thousand in

population , which is 2.4 times higher than the state average.

These ratios do not support a finding that there is in adequate

access for CMR services in District 1 , and do not demonstrate

need .

ii) W hether W hen CMR Bed Supply E xpands,

CMR Admissions I ncrease

a ) HealthSouthÓs examples

33. Encompass urges that increasing the number of available

CMR beds will increase CMR utilization in District 1 . In

support, Encompass presen ted the testimony of its health care

planning expert, Ms. Gordo n - Girvin , who presented evidence of

HealthSouth Ós experience in other areas of Florida , such as Ocala

and Altamonte Springs .

34. On the other hand , the IntervenorsÓ expert in health

planning and finance, Mr. Sullivan, opined that the answer to low

utilization is not to add additional beds . He explained that,

while new healthcare facilities m a y re sult in additional

utilization, th at increase can often be explained by aggressive

marketing . Mr. Sullivan also noted that the resulting increased

utilization of CMR beds over SNF beds does not necessarily mean

that those patients are receiving the most appropriate care for

their needs. Mr. Sullivan a lso noted possible detrimental

effects to the healthcare delivery system posed by unnecessary

utilization of the more expensive CMR services when lower cost

SNF services would be more appropriate. Mr. SullivanÓs opinions

on this issue are credited.

35. With respect to Ms. Gordon - GirvinÓs calculations

regarding the increases in usage experience d at HealthSouthÓs

facilities in Ocala and Altamonte Springs, Mr. Sullivan

explained, and Ms. Gordon - Girvin acknowledged, that while that

may be true for those facilities, those projects were

signific antly different than EncompassÓ s prop osal for District 1.

In Ocala and Altamonte Springs , HealthSouth placed a facility in

a market where there was relatively high utilization of existing

providers, o r an absence of available beds. In contrast,

District 1 Ós utilization of CMR services is relatively low.

b) Stagnant Use in District 1

36. The 78 existing beds in District 1, with a current

overall utilization rate of 57.3 percent , have not been highly

utilized for quite some time. Encompass argues that the

utilization rate is artificially low because West Florida denies

admission for CMR services to otherwise eligible patients because

of medical complexity, physician shortages, and nurse shortages.

Encompass argues that the denied admissions to West Florida are

Ðnot normalÑ ci rcumstances that justify EncompassÓ s proposed

project.

37. According to data compiled by Ms. Gordon - Girvin from

admission logs for West Florida, in year 2015, West Florida

denied admission to 199 potent ial CMR patients. Of those

199 denials, the logs indicate that 116 were denied because of

lack of staff, 76 because of medical complexity, seven for lack

of bed availability, and one because the admission would have

violated the 60/40 rule which requires that at least 60 percent

of pati ents fall into particular diagnosis categories.

38. For year 2016, the West Florida logs indicate that

216 patients were denied CMR admission; 48 due to lack of staff,

144 because of medical complexity, and 24 for physician choice.

39. At hearing, West Florida adequately addressed its

historical admission denials to overcome the implication that

there is lack of access or Ðnot normalÑ circumstances in

District 1. It was shown that, even though there may have been a

logged ÐdenialÑ of admission for one da y, there were instances of

other admissions at West Florida that same day. In addition, the

data was insufficient to demonstrate that any of the denied

patients did not receive CMR services in District 1 or elsewhere.

The evidence does not otherwise support a finding that West

Florida artificially capped admissions at its CMR facility.

40. In 2015 and 2016, HCAÓs data collection system utilized

by West Florida to document admission denials was not as accurate

as its current system , and had limited documenting options . As a

result, some of the referrals documented as denied admissions

were actually postponed admissions for a day or two. HCA has

recently developed a much more robust reporting system , which is

used by West Florida and Fort Walton Beach . The new reporting

system shows that in 2017, only approximately 50 patients were

denied because of staffing.

41. While there were a number of admissions denied by West

Florida in 2015 and 2016 because of lack of staff , those numbers,

when compared to the overall daily census for those years, were

not significant enough to demonstrate Ðnot normalÑ circumstances .

Even if they were, the evidence did not show that such

constraints exis t today.

42. West Florida is now appropriately staffed with

physician s and nurs es . West Florida employs an inpatient

rehabilitation administrator, a director of therapy, a director

of nursing, and a director of therapists who manage therapy for

inpatient rehabilitation, acute care , and outpatient therapy.

Mr. Ulmer as the CEO for West Florida als o makes rounds on the

CMR unit. West Florida currently staffs two physicians including

its medical d irector, Dr. Verbois and a mid - level provider to

assist Dr. Verbois.

43. At the time of the hearing, West Florida was in the

process of recruiting another physician. West Florida also

expects to begin a graduate medical education program in the

summer of 2019, and it is expected that the program director for

that program and its residents would also be located at West

Florida. It is expected that the program director would spend

approximately 50 percent of his or her time in clinica l work.

44. West Florida , as typical in the industry, is staffed to

meet the expected average daily c ensus . I t has developed a float

pool of approximately 18 full - time nurses who have been trained

to be able to cover for other nurses who may be out for whatever

reason. The float nurses assist at West Florida when there is a

need for additional coverage. West Florida has also brought in

additional travel nurses. In addition , West Florida has an

internal escalation process in place to review the cases and

ensure the patients get the best care possible.

45. W ith respect to denied admissions at West Florida based

on medical complexity , the evidence was insufficient to show that

the denials support a finding of Ðnot normalÑ circum stances. The

evidence was also inadequate to support a finding that

EncompassÓ s program, if approved, would be able to accept the

denied patients or would increase access for those patients.

46. Medicare has stringent guidelines for CMR admissions.

Accordingly, West Florida does not admit patients that require

certain services due to the medical complexity of the patient ,

especially when the facility does not offer additional services

necessitated by the medical complexity of the patient.

47. Whether a patient is appropriate for care in a

particular CMR facility is based on the independent professional

judgment of the evaluating physic ian. If a patientÓs condition

is too medically complex such that the patient requires a level

of care not provided at the CMR facility, that CMR facility would

not be able to admit the patient .

48. There is nothing Ðnot normalÑ about a rehabilitation

facility , at one time or another , deny ing admission to patients

who are too m edically complex.

49. Dr. Verbois , a p hysiatrist with years of CMR

experience , who has been the medical director for West Florida

for 18 years , credibly explained her role in reviewing referrals

against the CMS criteria for admission . A t West Florida ,

Dr. Verbois uses her professional medical judgment to determine

the me dical complexity of the patient .

50. Examples of patients that may be denied admission due

to the patientÓs medical complexity include patients that are not

stable and not able to withstand the intense therapy , such as

severe burn patients; patients who are being monitored by

telemetry; venti lator dependent patients; patients who are hooked

to a wall suction; patients with trach eotomy s ize of 8 or

greater; as well as p atients who are newly placed on a parenteral

nutrition through a central line ( total parenteral nutrition or

TPN). In addition , patient s with a Ðtotal assistÑ functional

independence measure are potentially too medically complex ,

depending on their specific circumstances.

51. Encompass asserts that HealthSouth has a history of

accepting medically complex patients as evidence that its

proposed facility in Pensacola would be able to accept the

patients denied by West Florida due to the ir medical complexity.

Ms. Lori Bedard, regional vice president of o perations for

Encompass Health for the southeast region, testified as to the

experience with HealthSouth accepting high acuity patients

including TPN patients, trach eotomy patients, as well as total

assist patients. As an example of a mea sure of the high acuity

patient s accepted by HealthSouth, Ms. Bedard cited that the

HealthSout h Spring Hill facility has a case mix index ( CMI )

of 1.3. T he higher the CMI value, the hig her the

complexity accepted.

52. While a CMI of 1.3 for HealthSouthÓs Spring Hill

facility is high, the CMI for West Florida is higher at 1.6.

Further, although Ms. Bedard testified generally that HealthSouth

takes TPN, trach e otomy patients , and total assist patients, with

the exception of the trach eotomy patients, Ms. Bedard did not

testify or otherwise address whether HealthSouth accepts all of

those types of patients , and she did not testify that Encompass

would be able to take all of those types of patients . Encompass

did not otherwise explain how it intends to accept the type of

patient s deemed by West Florida as medically too complex.

53. According to D r. Verbois, West Florida accepts certain

types of TP N patients as well as certain types of total assist

patients. In Dr. Verbois Ós opinion, which is credited, Encompass

would not be able to take the type of patient s West Florida

denie s as too medically complex because those patie nts simply do

not meet the CMS c riteria for admission.

54. In sum, EncompassÓ s reliance on 2015 and 2016 data

reflecting a relatively small number of patients not admitted to

West Florida does not demonstrate Ðnot normalÑ circumstances,

does not represent the experience at West FloridaÓs CMR unit

today , and does not demonstrate need in District 1 for additional

CMR beds. Rather, the evidence show s , and it is found, that

there is no need to increase the number of beds. The addition of

10 new beds at Fort Walton Beach further supports this finding .

c) R atio between CMR beds and SNF beds

55. SNFs, commonly known as nursing homes, serve

post - acute patients but do not offer the same intensive

rehabilitation offered in a CMR facility . SNFs typically serve a

lower acuity patient population than CMRs . Stays in SNF

facilities are typically longer than in a CMR facility. Not

every patient that benefits from a SNF woul d be appropriate for

treatment in a CMR facility.

56. Encompass asserts that there is an institutional bias

for placing patients in nursing homes versus CMR facilities

within District 1. A ccording to a ratio analysis presented in

the application and ex plained at the hearing by Ms. Gorden -

Girvin, when the ratio of the number of CMR beds as compared to

SNF beds increases, the number of hospi tal discharges to CMS

increases.

57. Ms. Gordon - Girvin determined that in District 1 there

is a ratio of seven discharges to SNFs for every one discharge to

a CMR , as compared to a five - to - one statewide average. According

to Ms. Gorden - Girvin, this ratio indicates a demand in District 1

for more CMR services. The methodology utilized for Ms. Gorden -

GirvinÓs ratio analysis is not a standard health - planning tool

for calculating or otherwise demonstrating nee d for CMR services.

58. Looking at the utilization numbers for SNF facilities

versus CMR facilities in District 1 does not demonstrate need or

Ðnot normal Ñ circumstances for additional CMR beds or the

presence of any barriers to access. The data utilized by

Ms. Gordon - Girvin to derive the ratio only showed the recommended

discharge and did not indicate why the patient may have been

recommended for a SNF instead of a CMR. The evidence was

otherwise insufficient to show a causal link between the number

of SNF beds and CMR beds and a lack of access to CMR beds. There

are several plausible explanations for the larger utilization of

SNF facilities , inclu ding that there may simply be a greater need

for SNF facilities in District 1.

59. As SNFs and CMRs generally serve different populations,

the relevance of a comparative ratio between the two in an

attempt to justify need is minimal . Instead of looking at the

ratio of discharges to the two different types of facilities, t he

proper ratio to be examined relative to need is District 1Ós

population to the number of CMR beds , and the proposed location

for the requested project. As previo usly noted, while the need

for CMR services is reviewed on a district - wide basis , Escambia

County, where Encompass proposes to locate the project, has a

ratio of 1.12 CMR beds to every 1,000 persons age 65 years and

older. Adding another 50 CMR beds propo sed by Encompass would

result an inventory of two beds for every thousand in population ,

which is 2.4 times higher than the state average. Existing

ratios indicate adequate access for CMR services in District 1.

iii) Whether Referral Patterns Demonstrate Limited

Access to Existing CMR B eds

60. In addition to other arguments raised by Encompass

regarding access, a chart contained in EncompassÓs CON

application indicates that only five patients were transferred

from West FloridaÓs acute care unit ; virtually no patients were

transferred from other acu te care hospitals in District 1; and

8,155 patients were transferred from clinics and physicianÓs

offices. T he information contained in the CON Application on

this point is in error and is , therefore , unpersuasive on the

issue of access . Rather, a significant majority of CMR patient

referrals in District 1 come from acute care hospitals, other

than the facilities affiliated with the CMR units themselves.

The three main referral centers for West Florid a are the large

health providers in Escambia County including Baptist Hospital,

Sa cred Heart, and West Florida. Fort Walton Beach receives a

significant number of referrals from Sacred Heart of the Emerald

Coast, an acute care hospital, other facilities i n Bay and

Escambia counties , and the Fort Walton Beach Medical Center. In

2017, Fort Walton Beach received 50 referrals from the Pensacola

area and accepted approximately 20 to 23 of the referred

patients.

61. The evidence does not support a finding that there is

lack of access for CMR services in District 1.

b. Lack of Choice

62. In support of its claim that there is a lack of

choice, Encompass maintains that low numbers of CMR beds

relative to SNF beds , coupled with HCAÓs two facilities having

all of the CMR beds in District 1 , limits choice, and suppress es

market entry. Encompass as serts tha t additional CMR beds are

needed to increase competition and provide choice. However,

unlike some other types of healthcare services, CMR services are

tertiary services , which , by definition , should be concentrated

in a limited number of facilities to ensure quality,

availability, and cost - effectiveness. See § 408.032(17),

Fla. Stat. (quoted above). L ack of competition for CMR services

in District 1 does not support a finding of Ðnot normalÑ

circumstances or otherwise demonstrate need for EncompassÓs

proposal .

2. Section 408.035(1)( b) Î The availability, quality of

care, accessibility, and extent of utilization of

existing healthcare facilities and health services

in the service district of the applicant.

63. C onsistent with the finding that there is no need for

the 50 - bed facili ty in Escambia County proposed by Encompass ,

t he existing CMR services provided by West Florida and Fort

Walton Beach in District 1 are accessible and available . The

evidence did not otherwise demonstrate that an award of a CON to

Encompass would improve availability or accessibility to quality

CMR services in District 1.

64. Of f urther note , Encompass includes in its application

utilization projections based on a hypothetical , which reduces

the ratio of SNF to CMR cases from 7:1 to 6:1, rather than

directly projecting future CMR demand. Based on this

hypothetical ratio, Encompass proj ects that CMR cases in

District 1 will increase from 977 in 2016 to 2,541 in 20 23 for a

total increase of 160 percent , even though the population growth

in this area is only 1.3 percent annually. These are projections

that do not accurately reflect utilization and are

unrealistically overstated.

3. Section 408.035(1)(c) Î The ability of the

appl icant to provide quality of care and the

applicantÓs record of providing quality care .

65. EncompassÓs CO N application accurately describes

quality measures that would be utilized by Encompass if its

CON application was approved , including quality metric reports

that would track lengths of stay, discharges , and patient

improvements . The reports would also track accreditation and

regulatory compliance.

66. Regarding accreditation, the evidence indicate s that ,

while one of Encompass HealthÓs facilities in Florida is

accredited by the Commission on Accreditation of Rehabilitation

Facilities (CARF), E ncompass Health has focus ed on obtain ing

accreditation for its facilities from the Joint Commission o n

Accreditation of Health Care Organizations (the Joint

Commission) .

67. On the other hand, both West Florida and Fort Walton

Beach have accreditation from CARF , described by the

Intervenor s Ó expert in CMR administration as intensive and

specific to the o perations of rehabilitation hospital s and

programs related to rehabilitative care. There is no indication

that Encompass would seek CARF certification if its program were

approved. In fact, Encompass makes no commitment to seek any

particular accreditation in its application . However, all of

Encompass Health Ós Florida faci lities are accredited by the

Joint Commission, with some holding Joint Commission

certifications for various s pecialty treatment programs.

68. An a ctual commitment by Encompass to seek

accreditation from the Joint Commission or pursue certifications

from CARF would have made a stronger showing . Nevertheless , the

strength of Encompass HealthÓs programs and systems available to

Encompass , together with Encompass HealthÓs history of quality

care, was sufficient to support a finding that, if approved,

Encompass would have the ability to provide quality CMR

services.

4. Section 408.035(1)(d) Î The availability of

resource s, including health and management

personnel, for project accomplishment and operation.

69. The parties stipulated that Encompass has the funds

necessary for capital and operating expenditures for its

proposed hospital. Currently, however, Encompass does not have

any employees dedicated to staff the proposed facility. While

Encompass has a track record of recruiting and retaining

rehabilitation liaisons, therapists, nurses, and doctors of

physical medicine (physiatry), e xisting providers in District 1

have experienced difficulty in recruiting physicians and nurses

to staff the ir CMR facilities . If approved, Encompass would

face the same challenges in recruiting professional staff .

70. I n addition to West Florida and Fort Walton Beach,

District 1 currently has at least two major health systems,

Sacred Heart and Baptist, along with numero us SNF facilities.

Recently, a new SNF facility opened near West Florida , resulting

in two nurses leaving West Florida to work at the new facility.

71. The ability to recruit professional staff is

negatively impacted by the fact that the area is not a major

destination with large airports . In addition, District 1 has a

large population of military families that tend to move

frequently , lead ing to more frequent turnover of professional

staff than in areas not as affected by military transfers.

72. Although EncompassÓs application has a plan outlining

recruiting , the plan does not specifically address rec ruiting

difficulties in the Pensacola area. Approval of the application

would place further demand on an already limited supply of

healthcare staff.

5. Section 408.035(1)(e) Î The extent to which the

proposed services will enhance access to healthcare

for residents of the service district.

73. In addition to the access issues related to need

already addresse d, r ule 59C - 1.039 (6) provides that geographical

access for CMR services Ð should be available within a maximum

ground travel time of 2 hours under average travel conditions

for at least 90 percent of the districtÓs total population. Ñ

Current access to existing providers under this standard is

sufficient.

74. Moreover, a n award of the CON to Encompass will not

improve clinical or programmatic access since Encompass does not

propose services that are not currently offered in the District

at West Florida and Fort Walton Beach. Encompass did not

identify any specific subgroup of services that patients are

otherwise not able to access from a clin ical standpoint.

75. Furthermore, b ased on the condition in EncompassÓ s

application to serve only 2.25 percent of Medicaid, charity

care , and self - pay , coupled with the fact that Encompass Ós

facilities (or HealthSouth as a whole) do not serve a high

percentage of Medicaid or self - pay patients, Encompass will not

enhance access to care for indigent or Medicaid patients as it

w ill focus on serving the better paying patients (i.e., Medicare

and commercially insured patients).

76. In sum, the evidence did not show that approval of

EncompassÓs application would improve CMR service access for

residents in District 1.

6. Section 408.035(1)(f) Î The long - term financial

feasibility of the proposal.

77. The parties stipulated that Encompass has the funds

necessary to fund the construction and opening of its proposed

facility, but did not stipulate to the long - term financial

feasibility of the project. Long - term financial feasibility is

demonstrated by showing a prof it during the projection peri od,

based on reasonable and defensible assumptions and data sources.

For this project, Encompass used a three - year time period for

its projections.

78. In criticizing EncompassÓs projections as

unreasonable, the Intervenor s Ó healthcare finance expert pointed

out that EncompassÓ s projections were based on Encompass

HealthÓs Ocala facility , which is a different operation than the

proposal ; were not reviewed with Encompass to match its

expectations for the facility; used a full first - year example

instead of a start - up year ; and did not coordinate staffing

requirements with EncompassÓ s expectations for staffing the

proposed operations . These criticisms are legitimate.

79. The lack of communication between the experts hired to

prepare the application and those who would be responsible for

EncompassÓs operations was apparent. While all agreed that

Encompass Health Ós facilities in Florida all experience

profitability in their second year of operation, that is not

sufficient to show long - term financial feasibi lity of the

proposed facility.

80. In addition, while , because of inflated cost

projections, it appears that funds would be available to pay for

staffing expected by those who would actually run the facility ,

even though much different from staffing proposed in the

application , the changes between the application and what is

expected cannot be ignored. Considering the disconnects between

the application and actual expectations , it is concluded that

the application financial projections are not based on

reasonable and defensible assumptions and data sources so as to

provide a reliable basis for determining long - term financial

feasib ility of the project.

7. Section 408.035(1)(g) Î The extent to which the

proposa l will foster competition that promotes

quality and cost - effectiveness.

81. Under this statutory criterion, the consideration is

whether there is a need for greater competition to stimulate and

promote quality and cost - effectiveness. Considering the fact

that District 1Ós utilization of existing CMR beds is relatively

low a t 57.3 percent , it is apparent that the Encompas s project

will not promote cost - effectiveness , but rather would promote

unnecessary duplication of services.

82. I nstead of promoting or enhancing quality, approval of

the project would add additional pressure s on limited staffing

resources in District 1 necessary to maintain current staffing

and qual ity . The evidence was otherwise insufficient to show

that additional competition would stimulate quality or cos t -

efficiency.

8 . 408.035(1)(h) - The costs and methods of the

proposed construction, including the costs and

methods of energy provision and the availability of

alternative, less costly, or more effective methods

of construction.

83. Encompass has not chosen a location for its proposed

facility within Escambia County nor does it have a letter of

intent in place to purchase a particular parcel. However, the

architect that designed the proposed facility and testified

regarding estimates of project costs, Fred Frederick , provided

undisputed, credible testimony that Encompass can construct its

proposed facility up to code and at the costs estimated in the

CON a pplication.

84. The number of square feet for the proposed project

reflected in the application is consistent with the floor plan

Encompass submitted with the application. The estimated cost of

$284 per square foot is adequate even if construction does not

begin for approximately one year. A 7.9 - acre lot is large

enough to accommodate the 50 - bed de sign Mr. Frederick created

and EncompassÓs estimated purch ase price of $3 mil lion for

7.9 acres is reasonable.

85. T he cost estimates for environmental impact, site

survey, site preparation, water , sewer , utility, landscaping,

sidewalks and road s , materials , and testing are reasonable and

in line with other Encompass Health projects. The architectural

fee of $1.3 million, construction supervision of $300,000, other

contingencies of $1.15 million, and $3.45 million for equipment

reflected on Schedule 1 are reasonable.

86. In sum, all of EncompassÓ s project costs were

rea sonably estimated and accurate.

9. Section 408.035(1)(i) Î The ApplicantÓs past and

proposed provisions of healthcare services to

Medicaid patients and the medically indigent.

87. EncompassÓs application includes a condition that

states: ÐMedicaid, Medicaid Managed Care, Charity Care and Self

Pay patients w ill represent a minimum of 2.25 percent of patient

days.Ñ Provision of CMR services to only 2.25 percent of

services to the self - pay, charity care, and Medicaid population

falls well b elow the other existing p roviders in the area. For

example, Fort Walton Beach provides 16 percent and West Florida

provides 12.4 percent of its services to self - pay, charity care ,

and Medicaid patient s.

88. In addition, f or the past four years, Encompass

Health Ós hospitals in Florida combined have provided only

2.8 percent of services to self - pay, charity care , and Medicaid.

This is on the low end of the aver age for the state .

89. These service levels are not favorable to the

application.

B. Rule Review Criteria

90. Rules 59C - 1.008, 59C - 1.030, and 59C - 1.039 govern

review of CMR CON applications. The provisions of the rules are

generally addressed above as to each of the statutory criteria.

91. In addition, Encompass asserts entitlement to the

application of the rule preference in r ule 59C - 1.039(5)(f)2.,

relative to the p rovision of service to Medicaid - eligible

persons. The CON application proposes to minimally serve

Medicaid patients, although, as previously indicated,

EncompassÓs proposed service levels to self - pay, charity care ,

and Medicaid patients are low when compared to the levels of

those populations currently served by the Intervenors.

V. Adverse Impact

92. In addition to the adverse impact upon recruiting

previously discussed, West Florida and Fort Walton Beach

provided expert testimony credibly demonstrating the material

adverse financial impact that approval of EncompassÓs CON

application would have on existing providers .

93. Given current CMR utilization levels, the addition of

another 50 CMR beds in Escambia County would create an

oversupply , negatively impacting the existing providers by

reducing the number of referrals . As previously noted,

EncompassÓs application contains util ization projections that

assume dramatic growth in CMR utilization , which are

unreasonably overstated . CMR utilization in District 1 is

likely to be far slower , and EncompassÓ s patients would likely

come primarily from existing providers .

94. The Intervenor s Ó expert in health planning and

finance , Daniel Sullivan , calculated the number of patients that

West Florida and Fort Walton Beach would lose to Encompass

should the application be approved under three different

scenarios . The calculations were on a District - wide basi s, as

were the Encompass utilization projections. If Encompass had

done their projections on a county basis, the impact on West

Florida would be much greater .

95. If EncompassÓ s project ion to serve 1,095 patients in

2023 were accurate, Encompass would need to capture 102 percent

of the current market of CMR patients in District 1. S cenario

one assumes that 100 percent of these 1,095 cases come from

existing providers ; s cenario two assumes 75 percent of the

1,095; and scenario three assumes tha t only 50 percent of the

1,095 cases come from existing providers. Even under the most

conservative 50 - percent estimate, West Florida would lose

322 discharges and F ort Walton Beach would lose 174 dis charges.

This represents half of each facilityÓs current volumes and

would cause a significant adverse impact on both West Florida

and Fort Walton Beach.

96. Any of the three scenarios represents a substantial

adverse impact on West Florida and Fort Walton Beach Ós programs.

The most conservative 50 - percent loss under scenario three

results in a contribution margin loss of $4.9 million for West

Florida and of $2.0 million for Fort Walton Beach. Such losses

would be significant and material , both financially and

operationally , to the survival of the West Florida and Fort

W alton Beach program s.

97. Moreover, i f the Encompass application is approved,

West Florida and Fort Walton Beach will be forced to bear a

disproportionate share of the lower - paying patient populat ion

(i.e., Medicaid, self - pay). EncompassÓs proposal to serve

2.25 percent of the Medicaid population does not increase

financial accessibility and would have a negative effect on

financial access to CMR services by prohibiting the existing

providers from operating at the same level as the y have

historically, further discouraging the facilities from adding

new services and equipment.

98. EncompassÓ s CON application should not be approved.

CONCLUSIONS OF LAW

99. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter in this case.

See §§ 120.569, 120.57(1) and 408.039(5), Fla. Stat.

100. For an existing healthcare facility to have standing

to intervene in a CON proceeding, it must show that it will be

Ðsubstantially affectedÑ by approval of the CON application at

issue. See § 408.039(5)(c), Fla. Stat. In order for a party to

be substantially affected by the outcome of a proceeding, a

party must show: (1) i njury in fact of sufficient immediacy,

and (2) that the personÓs substantial injury is of a type or

nature , which the proceeding is designed to protest. Agrico

Chem. Co. v. DepÓt of Envtl. Reg. , 406 So. 2d 478 (Fla. 2d

DCA 1981).

101. The Intervenors established that if EncompassÓs CON

Application were approved , there would be adverse impact in the

form of significant income losses to both West Florida and Fort

Walton Beach. Additionally, West Florida demonstrated that

approval of a new 50 - bed CMR unit in Pensacola would have an

adverse effect on West FloridaÓs ability to retain and attract

staff necessary to continue operating and growing its facility

in an already difficult recruiting market.

102. The adverse impacts to the Intervenors, as discussed

in the Findings of Fact, above, is of the type or nature of

injury against which this proceeding is designed to protect, and

is clearly substantial enough to establish West Florida and Fort

Walton BeachÓs standing in this proceeding.

103. As the applicant for a CON, Petitioner bears t he

burden of proving, by the preponderance of the evidence,

entitlement to the CON. See Boca Raton Kidney Ctr., Inc. v.

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

Fla. Stat.

104. The standard of review is de novo . See Fla. DepÓt

of Transp. v. J.W.C. Co., Inc. , 396 So. 2d 778, 787 (Fla. 1st

DCA 1981); § 120.57(1), Fla. Stat. AHCAÓs preliminary

determinations on the CON Appli cations, including its

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

correctness. Id .

105. The award of a CON must be based on a balanced

consideration of all applicable statutory and rule criteria.

Balsam v. DepÓt of HRS , 486 So. 2d 1341 (Fla. 1st DCA 1986).

Ð[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 on the facts of each case.Ñ See Collier Med.

C tr., Inc. v. DepÓt of HRS , 462 So. 2d 83, 84 (Fla. 1st DCA

1986); see, e.g. , Morton F. Plant Hosp. Ass Ó n, Inc. v. DepÓt of

HRS , 491 So. 2d 586, 589 (Fla. 1st DCA 1986) (quoting North Ridge

GenÓl Hosp., Inc. v. NME Hosp. , Inc. , 478 So. 2d 1138, 1139

(Fla. 1st DCA 1985)).

106. The applicable CO N review criteria are found in

s ections 408.035(1)(a) - (1)(i), 408.037, and 408.039 ; and r ules

59C - 1.008, 59C - 1.030, and 59C - 1.039.

107. Pursuant to the rule methodology set forth in

rule 59C - 1.039(5), AHCA published a fixed need pool of zero for

CMR beds in District 1. AHCAÓs publ ished need of zero creates a

rebuttable presumption. See, e.g. , Humhosco, Inc. v. DepÓt

of HRS , 476 So. 2d 258, 261 (Fla. 1st DCA 1985); Hum ana, Inc. v.

DepÓt of HRS , 469 So. 2d 889, 891 (Fla. 1st DCA 1985) (Ð[S]hould

the formula methodology in Rule 10 - 5.11(15) result in an

underestimation of the need for additional services in an area,

the applicant has the oppor tunity to demonstrate need by . . .

provid ing other information to illustrate that the situation is

not ÐnormalÑ in the service area.Ñ); see Fla. Admin. Code

R. 59C - 1.039(5)(d).

108. Encompass bore the burden to rebut the presumption of

zero need by demonstrating the existence of Ðnot normalÑ

circumstances. The greater weight of the evidence demonstrates

that District 1 as a whole has a relatively low utilization rate

and that the two existing facilities, West Florida and Fort

Walton Beach, do not operate at full capacity. Although

Encompass presented arguments that West Florida and Fort Walton

Beach have denied admission to some patient s for various

reasons, Encompass failed to demonstrate that notwithstanding

those denied admissions, West Florida and Fort Walton Beach

would have operated at a substantially higher capacity.

Instead, the evidence demonstrates that for the past several

ye ars, West Florida and Fort Walton Beach have a relatively low

utilization rate.

109. At hearing, Encompass demonstrated that West Florida

denied admissions to some patients based on staffing levels , as

well as the complexity of the patient ; and, based on that,

argued this resulted in skewing AHCAÓs need calculation.

Encompass, however, did no t challenge the published fixed need

pool. EncompassÓs argument on this point was an attempt to

demonstrate Ðnot normalÑ circumstances to support need despite

its failure to challenge the fixed need pool calculation. By

not challenging the fixed need pool calculation, Encompass

waived its right to argue that AHCA Ós determination of zero need

was flawed.

110. For all of the reasons set forth in the Findings of

Fa ct, Encompass failed to rebut the presumption of zero need.

111. Rule 59C - 1.039(5)(f)2. provides for a preference to

be given to a CON Application for proposing to serve the

Medicaid population. The rule states:

Priority Consideration for Comprehensive

Medical Rehabilitation Impatient Services

Applicants. In weighing and balancing

statutory and rule review criteria, the

Agency will give priority consideration to:

* * *

2. An applicant proposing to serve

Medicaid - eligible persons.

In light of the fact that the percentage of patients to be

served by Encompass is well below the range of the current

providers , coupled with the fact that such a low percentage

allows Encompass to choose higher paying patients , which would

lead to a negat ive impact on the Medicaid patient population,

there is no compelling evidence to support according additional

weight regarding this factor. Moreover, because the applicant

failed to demonstrate need, the application of this preference

is moot.

112. The parties stipulated that Encompass has sufficient

funds for capital and operating e xpenditures in compliance with

s ection 408.035(1)(d) and that EncompassÓ s application is

financially feasible in the short term.

113. However, t he revised staffing plan pr epared and

submitted by Encompass constitutes an improper amendment to

EncompassÓs CON Application. Staffing resources are a critical

component of a CON application. See § 408.035(1)( d), Fla. Stat.

(including in the CON review criteria the Ðavailability of

resources, including health personnel, management personnel, and

funds for capital and operating expenditures, for project

accomplishment and operationÑ). The introduction of eviden ce

related to revisions to the staffing resource information

submitted in the CON Application and reviewed by AHCA

constitutes a substantial change to EncompassÓs CON Application.

The revised staffing plan is not simply a correction of

typographical error s or correction of mathematical calculations,

but instead constitute s a substantial revision to the proposed

staffing structure and number of each type of staff members.

The revisions substantially change the nature and scope of the

staffing plan original ly proposed in the CON Application such

that the revised staffing plan constitutes an improper amendment

to EncompassÓs CON Application. It is well settled that

substantial changes to a CON application are not permitted

during the course of the administrative hearing , as any such

change constitutes an impermissible amendment to the CON

application. See Manor Care, Inc. v. DepÓt of HRS , 558 So. 2d

26, 28 - 29 (Fla. 1st DCA 1989); Gulf Court Nurs ing Ctr. v. DepÓt

of HRS , 483 So. 2d 700, 707 (Fla. 1st DCA 1986); see also All

Eighth Fla. Living Options, LLC v. Ag. for Health Care Admin. ,

Case No. 15 - 1897CON (Fla. DOAH Feb. 22, 2016; Fla. AHCA Apr. 13,

2016); NME Hosp., Inc., d/b/a West Boca Med. Ctr. v. DepÓt of

HRS , Case No. 90 - 7037 (Fla. DOAH Feb. 25, 1992; Fla. DHRS

April 8, 1992); Fla. Admin. Code R. 59C - 1.010(3)(b)

(Ð[s]ubsequent to an application being deemed complete or

withdrawn by the Agency, no further a pplication information or

amendment will be accepted by the Agency.Ñ).

114. Considering all of the evidence, review of criteria ,

and applicable law, Encompass did not prove that its CON

Application meets the applicable statutory and rule criteria.

115. In view of the evidence, a balanced consideration of

all applicable statutory and rule criteria compels the

conclusion that EncompassÓs CON Application should be denied.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law it is, RECOMMENDED that the Agency for Health Care

Administration enter a final order denying CON Application

Number 10495 filed by Encompass.

DONE AND ENTERED this 31st day of January , 201 9 , in

Tallahassee, Leon County, Florida.

S

JAMES H. PETERSON, III

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.u s

Filed with the Clerk of the

Division of Administrative Hearings

this 31st day of January , 2019 .

ENDNOTE

1 / Unless otherwise noted, all citations to the Florida Statutes

and Florida Administrative Code are to current versions.

COPIES FURNISHED :

Seann M. Frazier, Esquire

Marc Ito, Esquire

Parker, Hudson, Rainer & Dobbs, LLP

Suite 750

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Lindsey L. Miller - Hailey, Esquire

Richard Joseph Saliba, Esquire

Kevin Michael Marker, Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 7

Tallahassee, Florida 32308

(eServed)

Elina Valentine, Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 7

Tallahassee, Florida 32308

Stephen A. Ecenia, Esquire

Craig D. Miller, Esquire

Rutledge Ecenia, P.A.

Suite 202

119 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Stefan Grow, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Mary C. Mayhew, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

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(eServed)

Shena Grantham, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Thomas M. Hoeler, Esquire

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 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.