92-005479 Ann Storck Center, Inc. vs. Department Of Health And Rehabilitative Services Status: Closed Recommended Order on Friday, April 16, 1993.

Summary: Department's neg audit adjustments to medicaid cost report disallowed for failure to comply with its own rate plan for reimbursing costs adequately.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ANN STORCK CENTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-5479

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned

Hearing Officer of the Division of Administrative Hearings, on February 4, 1993,

in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Steven M. Weinger, Esquire

Kurzban, Kurzban & Weinger, P.A.

2650 Southwest 27th Avenue, Second Floor

Miami, Florida 33133

For Respondent: Karel Baarslag, Esquire

HRS Medicaid Office

Building Six, Room 234

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

STATEMENT OF THE ISSUE

The issue presented is whether Respondent's audit adjustments to

Petitioner's June 30, 1990, cost report are proper.

PRELIMINARY STATEMENT

By letter dated June 12, 1992, the Department of Health and Rehabilitative

Services notified itself that, pursuant to a desk audit, it was disallowing

certain costs contained in the cost report for the Pembroke Pines Cluster

facility for the fiscal year ending June 30, 1990, that the audit adjustments

made had changed the facility's Medicaid reimbursement per diem rate, and that

the Department could request a formal hearing if the Department disagreed with

any of the audit adjustments made by the Department. A copy of that letter was

also sent to Petitioner, the operator of the Pembroke Pines cluster facility,

and Petitioner timely requested a formal hearing regarding those audit

adjustments. This cause was thereafter transferred by the Department to the

Division of Administrative Hearings for the conduct of a formal proceeding.

Petitioner presented the testimony of Kurt Hoppe, Jacob C. Richter, James

G. Weeks, and James McGuire. Joyce Barrington testified on behalf of the

Respondent, the Department of Health and Rehabilitative Services. Additionally,

Petitioner's Exhibits numbered 1-7 and Respondent's Exhibits numbered 1-4 were

admitted in evidence.

Both parties submitted post-hearing proposed findings of fact in the form

of proposed recommended orders. A specific ruling on each proposed finding of

fact can be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Petitioner Ann Storck Center, Inc., is a non-profit agency with a

volunteer Board of Directors which began in 1956 when Ann Storck opened her

first group home in Broward County to assist children with mental retardation.

Petitioner serves children and young adults with developmental disabilities by

providing preschool, developmental training, prevocational training, and

residential services in several intermediate care facilities for the mentally

retarded (ICF/MR).

2. The individuals served by Petitioner at the Pembroke Pines cluster are

within the severe to profound range of mental retardation and have significant

secondary disabilities, such as cerebral palsy, autism, and epilepsy. There are

24 medically fragile and developmentally disabled individuals at the Pembroke

Pines cluster facility. Several of them are tube fed and have significant

seizure problems or renal problems.

3. Other than reimbursement under the Medicaid laws and other funds from

government agencies, Petitioner obtains its funds from charitable endeavors such

as the operation of a thrift shop six days per week, every week for the past

seventeen years, together with numerous other fund raising efforts.

Petitioner's budget for providing services to individuals with developmental

disabilities is $300,000 to $400,000 in excess of the Medicaid and other

government funding which is provided each year.

4. In the fiscal year ending June 30, 1990, which is the subject of the

cost report and desk audit involved in this proceeding, Petitioner had a deficit

of almost $120,000 dollars at the Pembroke Pines cluster. Petitioner does not

have cash reserves. If, in addition to that deficit, Petitioner is required to

pay back money to the Department and have a reduced Medicaid reimbursement rate

at the present time, Petitioner cannot survive the consequences.

5. Although Petitioner is the provider of all ICF/MR services at the

Pembroke Pines cluster facility, the Department holds the Medicaid provider

number. Medicaid cost reports are filed by Petitioner every year, using the

Department's provider number. In those cost reports, Petitioner includes cost

figures provided to it by the Department for the Department's costs related to

the Pembroke Pines cluster facility.

6. The same certified public accountant has been filing the Medicaid cost

reports for the Pembroke Pines facility on Petitioner's behalf since 1984.

Although he performs the facility's monthly accountings and performs an annual

audit, that C.P.A. is not in a position to verify the figures provided to

Petitioner by the Department. Accordingly, each year's cost report contains a

disclaimer letter from him, and the Department has never raised any concerns

regarding that letter.

7. Each year's cost report has been completed in accordance with the

Department's directions to Petitioner. Specifically, Petitioner includes all

costs of rendering ICF/MR services at the Pembroke Pines cluster. The

Department then uses each June 30 cost report to obtain Medicaid funds from the

federal government. Those funds have been paid to the Department and not to

Petitioner since the Department considers itself to be the provider of ICF/MR

services at the Pembroke Pines cluster.

8. Prior to 1991, the Department did not reimburse Petitioner pursuant to

the Medicaid cost reports filed by Petitioner representing the actual costs

which Petitioner had expended in providing ICF/MR services. Rather, the

Department established Petitioner's Medicaid per diem reimbursement rate

pursuant to a fixed rate contract. By doing so, the Department reimbursed

Petitioner for services rendered at a rate less than Petitioner's actual costs

and less than the money the Department received from the federal government

utilizing Petitioner's cost report. The Department retained those additional

monies.

9. Although audit reports were drafted by the Department as far back as

1987 and as far back as for the fiscal 1985 cost report for the Pembroke Pines

cluster, the Department held back those audit reports until June of 1991 because

the Department had not established procedures for conducting audits of the

cluster facilities and had not trained staff to perform those audits until that

time. The Department's policies on how to process desk audits, even when

finalized in 1991, were never published as a rule, were not generally made

available to persons other than the Department employees who attended the

training meetings, and were not explained during the final hearing in this

cause.

10. In 1989, Petitioner, other providers of ICF/MR services, and a trade

association representing ICF/MR providers filed a lawsuit against the Department

and against two Department officials in the United States District Court for the

Southern District of Florida, alleging that the manner in which the Department

reimbursed providers of ICF/MR services did not comply with federal law. On

June 17, 1991, the United States Magistrate Judge issued a report recommending

that a preliminary injunction be entered against the Department. Based on that

Report, oral argument, and an independent review of the file, the United States

District Judge entered an Order Granting Preliminary Injunction on September 13,

1991.

11. The 17-page Order Granting Preliminary Injunction was both mandatory

and prohibitory. It was held that the Department's method of reimbursing

operators of cluster facilities such as Petitioner pursuant to a fixed-rate

contract rather than pursuant to a reimbursement plan for providers of ICF/MR

services violated Title 42 U.S.C. Section 1396(a)(13), known as the Boren

Amendment to the Medicaid Act. Pursuant to the Boren Amendment, the Department

was required to have established reimbursement rates which are "reasonable and

adequate to meet the costs which must be incurred by efficiently and

economically operated facilities in order to provide care and services in

conformity with applicable state and federal laws, regulations, and quality and

safety standards." The federal court ordered the Department to cease

reimbursing its cluster providers pursuant to a fixed-rate contract and ordered

the Department to formulate a new reimbursement plan which complied with the

substantive requirements of the Boren Amendment. The federal court ordered the

Department to file its new plan by October 4, 1991, with the rates of

reimbursement established under that plan to be retroactive to September 4,

1991. The court specifically held that the Department's argument that it was

the provider of ICF/MR services because it held the provider number was ". .

.false to the point of absurdity. . . ." The Department responded with an

amended reimbursement plan for providers of ICF/MR services effective July 1,

1991.

12. Medicaid is a prospective cost reimbursement system. The reimbursement

rate is set prospectively based upon historic data. In Florida there are two

rate semesters each year. Therefore, April 1, 1991, would be the first rate

period affected by the Department's audit of the Pembroke Pines cluster cost

report for the fiscal year ending June 30, 1990.

13. The Department began its calculations relative to its audit of the

Pembroke Pines cost report in approximately February of 1991. The calculations

were not completed until June of 1992. The Department's June 12, 1992, letter

memorializing the results of the Department's desk audit notified the Department

and Petitioner as to the per diem reimbursement rate for the Prembroke Pines

cluster facility effective with the April 1, 1991, rate semester; with a

recalculation effective July 1, 1991, (the effective date of the new

reimbursement plan ordered by the federal court); and with a recalculated rate

effective September 1, 1991 (for some unexplained reason).

14. When those rates were calculated and disclosed pursuant to the June 12,

1992, letter some nine months after the federal judge had rejected the

Department's position that the Department was the provider of ICF/MR services

because it held the provider number, the calculations were done and the

reimbursement rate was established as though the Department was the provider of

ICF/MR services at the Pembroke Pines cluster. In conjunction with the

Department continuing to maintain that position in spite of the federal

injunction against it, the audit letter explaining the audit adjustments and

establishing the new reimbursement rates was sent by the Department's

Tallahassee office to the Department's Fort Lauderdale office.

15. When the Department's Residential Services Director for District 10

received the audit letter, he contacted the Tallahassee office of the

Department. He requested, as he had done on a number of occasions previously,

that Petitioner be reimbursed for excess costs above what the Department was

allowing or that Petitioner receive an interim rate increase. That renewed

request was denied by the Tallahassee office. The Residential Services Director

was aware that Petitioner had been losing money operating the Pembroke Pines

facility, that Petitioner was not being reimbursed for expenditures above the

amount paid under the old fixed-rate contract system, and that Petitioner

supplemented its reimbursement from the Department through fund raising

activities by necessity. Since he, as part of his duties, attended admission

and discharge meetings, attended licensure surveys, and had been involved with

physical plant repairs and maintenance to the Pembroke Pines facility since

1987, he was familiar with the excellent survey reports which Petitioner

receives regarding its operation of the facility, was familiar with Petitioner's

excellent quality of care, and with Petitioner's efficient manner of providing

services.

16. The desk audit contained one positive adjustment. It increased

Petitioner's operating expenses by $29,841. The reason for that positive

adjustment was that the Department had provided to Petitioner an incorrect

figure for the Department's costs related to the facility during the fiscal year

ending June 30, 1990. That positive adjustment is a correct figure and

increases the total allowable operating expenses for the Pembroke Pines cluster

facility for the fiscal year to $1,619,888.

17. Each cost item within the total allowable operating expenses of

$1,619,888 is a reasonable, necessary, and ordinary cost incurred and expended

for the operation of the Pembroke Pines cluster facility in an efficient and

economical manner.

18. The audit letter contained 9 negative adjustments for a total negative

adjustment of $50,979. Each of those 9 negative adjustments is incorrect and is

without basis. Each negative adjustment simply reduces the total cost in that

particular category by an arbitrary percentage, and none of those negative

adjustments is in accordance with the reimbursement plan governing providers of

ICF/MR services.

19. The erroneous negative adjustments made during the desk audit of the

June 30, 1990, cost report resulted in a Medicaid reimbursement per diem rate of

$184.91 for the rate period effective April 1, 1991, for level 8 and level 9

patients, which are the most severely disabled patients and are the only types

of patients who receive ICF/MR services at the Pembroke Pines cluster facility.

That per diem rate is incorrect. The correct Medicaid reimbursement per diem

rate based upon proper auditing procedures and based upon the reimbursement rate

plan is $191.36. Those proper auditing procedures include, for example, using

the reimbursement plan in effect at the time the rates are to be calculated,

something not done by the Department which used the reimbursement plan effective

July 1, 1991, to compute the rates effective April 1, 1991.

20. The errors made in the desk audit of the June 30, 1990, cost report are

still causing Petitioner to be underpaid for its ICF/MR services. The June 30,

1990, cost report determines the base rate, for example, for the October 1,

1992, rate semester, during which semester the final hearing in this cause was

conducted. The Department has been reimbursing Petitioner during the October 1,

1992, rate semester using a per diem rate of $212.05 rather than the correct

figure of $216.12 per day per patient.

21. The erroneous negative adjustments made during the desk audit were

caused by the Department's use of the fixed-price contract rather than the

ICF/MR rate plan to establish Petitioner's reimbursement rate. The desk audit

report itself refers to the 9 negative adjustments as being contract

adjustments. Further, the person who performed the audit testified at the final

hearing that although all of the expenses would have been allowed under the

published rate plan, without the negative adjustments, the audit was performed

pursuant to instructions given to her by other Department employees to make

adjustments pursuant to the fixed-rate contract because the per diem rate was to

be established based on the Department's total costs as a District.

CONCLUSIONS OF LAW

22. By letter written to itself on June 12, 1992, with a copy to

Petitioner, the Department advised its Residential Services Director as to the

results of the Department's desk audit of the Pembroke Pines cluster facility's

cost report for the fiscal year ending June 30, 1990. That letter specifically

advised both the Department's Residential Services Director and Petitioner that

the recipients of the letter had a right to a formal hearing pursuant to Section

120.57, Florida Statutes. Petitioner timely requested a formal hearing by

filing with the Department a Petition Initiating Formal Proceedings. On

September 3, 1992, the Department transmitted that Petition to the Division of

Administrative Hearings pursuant to a Notice which requested the Division to

assign the request for a formal hearing to a Hearing Officer to conduct

necessary proceedings and to submit a Recommended Order. As the scheduled

formal hearing approached, the Department filed a series of motions to obtain

cancellation of the formal hearing, arguing that since both the Division of

Administrative Hearings and the United States District Court for the Southern

District of Florida have jurisdiction over this matter, then the administrative

proceeding should be stayed. The Department's position was rejected. In its

proposed recommended order filed May 5, 1993, the Department alleges for the

first time that the Division of Administrative Hearings lacks jurisdiction over

the subject matter due to the prior commencement of a federal lawsuit between

the same parties involving the same issues.

23. Despite its allegation that the federal litigation and this proceeding

involve the same issues, the Department has not shown that to be so. The status

of the federal litigation has not been disclosed in the record in this cause.

Similarly, the issues still pending in that litigation have not been disclosed

in the record in this cause. The sprinkling of allegations concerning the

subject matter of the federal litigation indicates that it may be a civil rights

action seeking damages from the Department and certain of its key officials for

willful and knowing violations of federal law and of the Petitioner's rights.

Those issues are not involved in this proceeding. This proceeding only involves

a determination as to whether the Department's desk audit of one specific cost

report resulted in appropriate audit adjustments. The Department has not argued

and has not proven that the limited issue involved in this administrative

proceeding is or could be involved in the federal litigation. In short, the

Department's argument requires a factual basis, and the Department has failed to

establish one. Accordingly, the Division of Administrative Hearings has

jurisdiction over the parties hereto and the subject matter hereof. Section

120.57(1), Florida Statutes.

24. The parties agree that the Boren Amendment to the Medicaid Act requires

the Department to establish a plan offering reimbursement for the provision of

services in an ICF/MR facility and that the rates established pursuant to that

rate plan must be reasonable and adequate to meet the costs incurred by

efficiently and economically operated facilities. The desk audit adjustments

the Department made to the Pembroke Pines cluster facility's June 30, 1990, cost

report do not comply with the requirements of federal law and do not comply with

the requirements of the Department's own rate reimbursement plan.

25. All witnesses in this proceeding testified that the cost report

contained only costs which were reasonable and necessary for the provision of

services, that all reported costs were incurred and expended, that there are no

regulations or public documents explaining how the audit adjustments were made,

and that all of Petitioner's expenses would have been allowed under the

Department's published rate plan. The evidence is uncontroverted that the

negative audit adjustments were made pursuant to a fixed-rate contract and not

pursuant to the reimbursement rate plan and are, therefore, not in compliance

with federal law. Lastly, the evidence is uncontroverted that the Department

continues to reimburse Petitioner pursuant to a fixed-rate contract and that the

negative audit adjustments were simply arbitrary percentage adjustments to align

the Pembroke Pines facility's total allowable operating expenses with the

contract rate.

26. In its proposed recommended order the Department takes out of context

one answer of the C.P.A. who has prepared the cost reports for the Pembroke

Pines cluster facility since 1984 and now argues that Petitioner is being paid

"the full Medicaid rate." The witness' testimony was that the Department was

not making proper payments to Petitioner, that the cost reports were properly

completed and submitted, and that the Department's negative audit adjustments

were indefensible. What the witness did testify to was that Petitioner received

the full Medicaid rate in the Order entered by the federal judge, not that

Petitioner has ever received from the Department the actual money that would

result in Petitioner receiving the full Medicaid rate.

27. The burden of proof in this proceeding was on Petitioner, and the

evidence is overwhelming that Petitioner has met that burden. Petitioner has

shown that the costs contained in the cost report in question were reasonable,

ordinary, and necessary and that the Department has failed to reimburse

Petitioner for those costs pursuant to a rate which is reasonable and adequate

to meet those costs. No evidence was offered that Petitioner was not operating

the Pembroke Pines cluster facility in an efficient and economical manner. The

Department's only explanation of its negative audit adjustments was that the

person who performed the audit did so pursuant to instructions from other

Department employees, which instructions were not elucidated on the record in

this proceeding. Further, the Department's auditor testified that she was not

giving an opinion that the Department's desk audit complied with the law or that

she even knew what the law required.

28. On the other hand, the positive audit adjustment of $29,841 is

appropriate. The uncontroverted evidence is that that audit adjustment was

based upon the Department providing to Petitioner erroneous information as to

the Department's costs. That audit adjustment corrects the total allowable

operating expenses for the fiscal year. The correct figure is $1,619,888.

Based upon that corrected figure, the proper per diem rate for Petitioner's

level 8 and level 9 services at the Pembroke Pines cluster facility for the

April 1, 1991, rate semester is $191.36 per patient per day and for the October

1, 1992, rate semester is $216.12 per patient per day.

29. Petitioner's argument that equitable estoppel applies in this

proceeding is without merit. Petitioner has not proven as the threshold element

the representation of the Department upon which it relied. Similarly, the

Department's arguments regarding a target rate are without merit since neither

party offered any evidence as to Petitioner's target rate.

30. Petitioner requests that this Recommended Order also contain

instructions to the Department to pay Petitioner all monies which the Department

has wrongfully withheld over the years. It is clear that such has occurred.

However, the scope of this proceeding is limited to the propriety of the

Department's desk audit of the Pembroke Pines cluster facility's cost report for

the fiscal year ending June 30, 1990. The Department's correspondence setting

forth the adjustments to be made to the cost report and establishing the

reimbursement rate commencing with the April 1, 1991, rate semester is the

preliminary agency action which was challenged in this proceeding and for which

a formal hearing was sought.

31. The base rate established in the 1990 cost report for the Pembroke

Pines cluster facility reveals that Petitioner has been underpaid by the

Department, and the Department's suggestion that Petitioner may owe monies to

the Department is without merit. Determining the underpayment based upon the

correct per diem rates established in this Recommended Order is simply a

mathematical calculation which can be performed by the parties hereto.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered:

1. Finding the positive audit adjustment to have been properly made;

2. Finding the negative audit adjustments to have been improperly made;

3. Determining the total allowable operating expenses for the Pembroke

Pines cluster facility for the fiscal year ending June 30, 1990, to be

$1,619,888;

4. Establishing the reimbursement rate for the facility's level 8 and

level 9 care for the April 1, 1991, rate semester to be $191.36 per patient per

day;

5. Establishing the reimbursement rate for the facility's level 8 and

level 9 care for the October 1, 1992, rate semester to be $216.12; and

6. Recalculating the reimbursement rate for the other rate semesters

subsequent to April 1, 1991, in accordance with this Recommended Order.

DONE and ENTERED this 16th day of April, 1993, at Tallahassee, Florida.

___________________________________

LINDA M. RIGOT

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of April, 1993.

APPENDIX TO RECOMMENDED ORDER

1. Petitioner's proposed findings of fact numbered A, C, D, F-O, Q, R, T-

W, Y-AH, AK, AN, AQ, AR, AT-AW, AZ, BC-BE, BG-BI, BM, BP-BS, BU-BX, BZ, CA, CC-

CF, CH-CJ, CM-CO, CQ, and CS-DA have been adopted either verbatim or in

substance in this Recommended Order.

2. Petitioner's proposed findings of fact numbered B, E, P, S, X, AM, AO,

AS, AX, BF, BJ, BL, BO, BY, CG, CK, CL, CR, and DC-DE have been rejected as not

constituting findings of fact but rather as constituting argument of counsel,

conclusions of law, or recitation of the testimony.

3. Petitioner's proposed findings of fact numbered AY, BA, BB, and CP have

been rejected as not being supported by the weight of the competent evidence in

this cause.

4. Petitioner's proposed findings of fact numbered AI, AJ, BN, BT, and DB

have been rejected as being irrelevant to the issues under consideration in this

cause.

5. Petitioner's proposed findings of fact numbered AL, AP, BK, and CB have

been rejected as being subordinate to the issues herein.

6. Respondent's proposed findings of fact numbered 1, 10, and 13 have been

adopted either verbatim or in substance in this Recommended Order.

7. Respondent's proposed findings of fact numbered 2, 9, and 11 have been

rejected as not being supported by the weight of the competent evidence in this

cause.

8. Respondent's proposed findings of fact numbered 3-5, 12, 14-20, 24, and

25 have been rejected as being subordinate to the issues herein.

9. Respondent's proposed finding of fact numbered 6 has been rejected as

being irrelevant to the issues under consideration in this cause.

10. Respondent's proposed findings of fact numbered 7, 8, and 21-23 have

been rejected as not constituting findings of fact but rather as constituting

argument of counsel, conclusions of law, or recitation of the testimony.

COPIES FURNISHED:

Steven M. Weinger, Esquire

Kurzban, Kurzban & Weinger, P.A.

Second Floor

2650 Southwest 27th Avenue

Miami, Florida 33133

Karel Baarslag, Esquire

HRS Medicaid Office

Building Six, Room 234

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

Robert L. Powell, Agency Clerk

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

ANN STORCK CENTER, INC.,

Petitioner,

CASE NO.: 92-5479

vs. RENDITION NO.: HRS-92-244-FOF-MDC

DEPARTMENT OF HEALTH AND

REHABILITATIVE SERVICES,

Respondent.

___________________________/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency

order. The Hearing Officer assigned by the Division of Administrative Hearings

(DOAH) in the above-styled case submitted a Recommended Order to the Department

of Health and Rehabilitative Services (HRS). The Recommended Order entered

April 16, 1993, by Hearing Officer Linda M. Rigot is incorporated by reference.

RULINGS ON EXCEPTIONS

Counsel for the department filed 6 exceptions to the findings of fact, 4 to

the conclusions of law, and 4 to the appendix. Counsel first excepts to finding

of fact 7. The exception is granted only for the last sentence of the finding

of fact, and only to the extent the Hearing Officer means in the last sentence

that the actual checks which should go to Ann Storck from Consultec continue to

be paid instead to the department. There is no evidence in the record that

checks do not now go directly from Consultec to Petitioner, rather than through

the department.

Exception 2 excepts to finding of fact 9. The exception takes the quoted

language out of context. There is competent substantial evidence to support the

finding, which addresses the lack of policies on processing desk audits for cost

reports for cost reporting periods dating back to 1985, while the quoted

language is part of testimony which attempts to distinguish a desk audit from a

field audit. The exception is denied.

Exception 3 disagrees with finding of fact 14 because "Joyce Barrington

testified that the contract adjustments are made to determine what is to be paid

to the vendor on pages 69-70." A review of the entire record discloses that

finding of fact 14 is supported by competent, substantial evidence in the

record. I cannot reweigh the evidence. The exception is denied. 1/

Exception 4 asserts that there is no competent substantial evidence in the

record to support the following finding of fact:

"Each cost item within the total allowable

operating expenses of $1,619,888.00 is a

reasonable, necessary, and ordinary cost

incurred and expended for the operation

of the Pembroke Pines cluster facility in

an efficient and economical manner."

Counsel urges that there is no testimony by any witness that the costs were

expended in an "efficient and economical manner." Here HRS' witness have

admitted that the costs were "reasonable and necessary." In this context a

finding that the costs were expended in an "efficient and economical manner" is

a permissible inference by the Hearing Officer where HRS concedes that the costs

expended were "reasonable and necessary." The exception is denied.

Exception 5 takes exception to finding of fact 18 which finds that each of

the negative adjustments to the cost report reduces the total cost in that

particular category by an arbitrary percentage, and none of the negative

adjustments are in accordance with the reimbursement plan governing provider of

ICF/MR services. Counsel offers portions of Joyce Barrington's testimony as

support. My review of the entire record discloses evidence to support the

finding of fact despite the testimony relied upon by counsel to support his

exception. Weighing of conflicting evidence is the bailiwick of the Hearing

Officer. The exception is denied.

Exception 6 takes the position that the Hearing Officer's finding in the

last sentence of finding of fact 19 is improper. She found that the proper

procedure would have been to use the reimbursement rate plan in effect on April

1, 1991, but that HRS instead used the July 1, 1991 reimbursement rate plan to

compute the rates effective April 1, 1991. My review of the entire record

reveals that there is competent substantial record evidence to support the

finding excepted to. The exception is denied.

Turning now to the exceptions to the Hearing Officer's conclusions of law,

counsel first excepts to the conclusion in paragraph 22 that the department

alleges lack of DOAH jurisdiction for the first time in its proposed recommended

order. The exception does not refute the conclusion of law and is accordingly

denied.

Counsel also excepts to the conclusions in numbered paragraph 23 of the

Recommended Order that the department did not make a sufficient showing in this

cause that the instant proceeding involves the same issues as the pending

federal litigation between the same parties; and that the status of said federal

litigation has not been adequately disclosed herein; and that the issues still

pending in the federal case have not been disclosed in the record herein; and

that for all that has been shown, the federal case could be a civil rights

action seeking damages from the department and certain of its key officials for

the violation of petitioner's rights. In support of the exception, counsel

states that a Motion for Stay was filed herein, which was denied by the Hearing

Officer and upheld on appeal by the Florida First District Court of Appeal.

Attached to the Motion for Stay were pleadings and orders filed in the federal

litigation. These have been previously ruled on by the Hearing Officer and the

First DCA as insufficient to support a conclusion that DOAH must grant a stay of

this proceeding.

Merely pointing out at this juncture the pleadings and orders already

deemed legally insufficient to support a stay without any other legal

justification for a finding that DOAH lacks jurisdiction in insufficient.

Neither the Motion for Stay, the Motion for Civil Contempt and Sanctions, nor

the Amended Complaint were submitted as exhibits in this case. Counsel does not

explain the reasons why his mere reference to pleadings and orders already

deemed insufficient by the First DCA should be sufficient for a finding of lack

of jurisdiction in DOAH at this time. Counsel did not renew his Motion for Stay,

already denied by the Hearing Officer (with the denial upheld by the First DCA),

at the formal hearing. Counsel points out no reasons to expect the department

to reverse the appeals court. The exception is denied.

Lack of subject matter jurisdiction may be raised at this time. To the

extent the last paragraph of HRS' exception number 1 to the Hearing Officer's

conclusions of law may rise to the level of a Motion to Dismiss for lack of

subject matter jurisdiction, said motion is denied.

Counsel next excepts to that portion of conclusion of law number 25 which

concludes that the negative audit adjustments were made pursuant to a fixed-rate

contract and not pursuant to the reimbursement rate plan and are therefore not

in compliance with federal law; and that this impropriety continues. The

Hearing Officer's conclusion that a fixed rate contract was used instead of the

proper reimbursement rate is correct. The exception is denied.

The exception to conclusion of law numbered 26 is denied because it merely

disagrees with the conclusion without an explanation of why the conclusion is

erroneous. The Hearing Officer concludes that counsel has taken the testimony

out of context. The exception merely quotes relevant portions of the testimony

in a conclusory manner.

The first exception to the appendix is denied. The weighing of the

evidence is exclusively the province of the Hearing Officer.

In his second exception to the appendix, counsel excepts to the Hearing

Officer's ruling that his proposed findings of fact 3-5, 12, 14-20, 24 and 25

are subordinate. He merely asserts, without explaining, that his proposed

findings were relevant and should have been accepted. Without further specific

explanation, I cannot try to guess why he disagrees that said proposed findings

were subordinate. The exception is denied.

In the third exception to the appendix counsel for the department disagrees

that his proposed finding of fact numbered 6 is irrelevant. Counsel merely

states "[i]t is relevant to show how monies are paid to providers." This is an

insufficient legal reason to grant the exception, therefore it is denied.

Finally, counsel for the department excepts to paragraph 10 of the appendix

in which the Hearing Officer rejected proposed findings 7, 8, and 21-23 as not

constituting findings of fact but rather as constituting argument of counsel,

conclusions of law, or recitation of the testimony. The Hearing Officer is

correct. The exhibits speak for themselves. Dr. Weeks's testimony is contained

in the transcript of hearing. It was not error for the Hearing Officer to

reject the proposed findings of fact.

FINDINGS OF FACT

The department hereby adopts and incorporates by reference the findings of

fact set forth in the Recommended Order except where inconsistent with the above

rulings on exceptions.

CONCLUSIONS OF LAW

The department hereby adopts and incorporates by reference the conclusions

of law set forth in the Recommended Order.

Based upon the foregoing, it is

ADJUDGED, that

1. The positive audit adjustment has been properly made;

2. The negative audit adjustments have been improperly made;

3. The total allowable operating expenses for the Pembroke Pines cluster

facility for the fiscal year ending June 30, 1990, is $1,619,888.00;

4. The reimbursement rate for the facility's level 8 and level 9 care for

the April 1, 1991, rate semester should be $191.36 per patient per day;

5. The reimbursement rate for the facility's level 8 and level 9 care for

the October 1, 1992, rate semester should be $216.12; and

6. The reimbursement rate for the other rate semesters subsequent to April

1, 1991, shall be recalculated in accordance with the Recommended Order.

DONE and ORDERED this 14th day of June, 1993, in Tallahassee, Florida.

Buddy MacKay

Acting Secretary

Department of Health and

Rehabilitative Services

___________________________________

Deputy Secretary for Human Services

ENDNOTE

1/ Counsel's quoted testimony of Joyce Barrington states in part that "...in

comparing the cost for it or doing the cost report for this cluster facility,

when we get ready to set their rate, because HRS is the provider, then the total

dollar amount of money that was paid by HRS would be what we were looking at in

trying to decide what the rate would be calculated on.

COPIES FURNISHED:

Linda M. Rigot

Hearing Officer

DOAH, The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Steven M. Weinger, Esquire

KURZBAN, KURZBAN & WEINGER, P.A.

Second Floor

2650 Southwest 27th Avenue

Miami, Florida 33133

Karel Baarslag, Esquire

HRS Medicaid Office

Building 6, Room 234

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

Carlton D. Snipes, Administrator (PDPAC)

Medicaid Cost Reimbursement

1317 Winewood Boulevard

Building 6, Room 230

Tallahassee, Florida 332399-0700

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above named

people by U.S. Mail this 18th day of June, 1993.

_______________________________

Robert L. Powell, Sr.

Agency Clerk

Assistant General Counsel

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Building One, Room 407

Tallahassee, Florida 32399-0700

[phone]

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL

REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH

THE AGENCY CLERK OF HRS, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED

BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE

AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS

SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF

APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.