Tag Archives: Nursing Home

Update on Return of Nursing Home CON in Florida

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The deadline is looming to challenge AHCA’s preliminary Decisions. March 16, 2015, is the final day for competing CON Applicants to file challenges to AHCA’s State Agency Action Reports (“SAAR”). Existing Providers wanting full party status to challenge preliminary decisions should also file challenges by March 16, 2015. AHCA’s preliminary decisions that are not challenged by March 16, 2015, will become final and the preliminary approved Applicants will be issued CONs.

If a challenge is filed by a substantially affected party demonstrating that there are material disputed issues of fact, the matter will be referred to the Division of Administrative Hearings (“DOAH”) and assigned to an Administrative Law Judge (“ALJ”) for a quasi-judicial proceeding (“Final Hearing”). At the Final Hearing, AHCA’s preliminary decision is not entitled to any deference. The Applicants have the burden of proving the information contained in their CON Applications, and the Florida Evidence Code is applicable, with limited exceptions such as a more lenient rule on admissibility of hearsay evidence. For more information on the DOAH Final Hearing process, see our newsletter published February 11, 2015, posted at: http://smithlawtlh.com/update-on-return-of-nursing-home-con-in-florida/.

DISTRICTS RIPE FOR CHALLENGES

At this point, any area where there is a pending CON approval is an opportunity for a legal challenge. Basis for challenges are unlimited and can include any combination of factors, such as a better fit for the market, technical flaws in a CON Application, under or over filling the gap in need demonstrated by the fixed need publication, etc.

The chart below indicates sub-districts where AHCA’s preliminary approvals were less than the published fixed need determinations, which is one basis to argue a different provider or combination of providers might be a better fit.

Sub-district Deficit/Surplus
1-1 40 Bed Surplus
3-2 60 Bed Surplus
4-4 47 Bed Surplus
5-2 56 Bed Surplus
7-4 78 Bed Surplus
8-5 40 Bed Surplus

WHO CAN CHALLENGE

Existing Providers in the same district or competing CON Applicants in the same sub-district can challenge the preliminary decisions. Once challenged, an approved CON Applicant should challenge the other CON Applicants in their sub-district within 10 days of the Notice of Litigation being filed in the Florida Administrative Register, or they could be left merely defending their approval without being able to raise flaws in competitors’ CON Applications.

UNCERTAIN APPLICANTS AND PROVIDERS SHOULD CHALLENGE

With March 16, 2015, rapidly approaching, many CON Applicants and Existing Providers may not have had the opportunity to fully comprehend the potential implications of AHCA’s preliminary decisions. If you are in this position, it is best to go ahead and file a challenge. A challenge can always be dismissed if you decide not to proceed, but if you miss the opportunity to challenge, you may have missed the only window of opportunity.

In some instances, denied CON Applicants have been able to reach settlements that resulted in their approval in addition to the approval of the preliminarily approved Applicant. In other instances, denied CON Applicants have been able to recoup some of their costs through settlements.

Existing Providers may have enhanced reasons to participate in challenges to avoid settlements that allow multiple approvals of preliminarily denied Applicants in addition to preliminarily approved Applicants. While this potential is always present in CON cases, it seems particularly likely in this batching cycle because there are so many potential sub-districts that may have litigation, several sub-districts have more fixed need for beds than have been preliminarily approved, and the Legislature has predetermined a limited window for the total number of beds that will be approved statewide before the moratorium is reactivated, and this number may be reached before need is triggered in the specific sub-district at issue in the future.

Further, a recent circuit court case provides additional reasons why Existing Providers should stay engaged in the process. In that case, a preliminarily denied CON Applicant challenged its denial. There was no competing CON Applicant. AHCA settled and approved the CON, including giving the CON Applicant several years beyond the time where the CON should have expired to begin construction. Several years later, when the project was about to commence construction, the Existing Provider tried to challenge the CON arguing it should have expired 18 months after it was issued, instead of several years after it was issued. The circuit court held the Existing Provider waived its rights to challenge by not filing a challenge within 21 days, even though the Existing Provider had no reason to assume AHCA would have extended the CON for several years beyond the statutory validity period. This case stands for the position that if an Existing Provider fails to challenge a CON, it could be strapped with far reaching consequences.

CONCLUSION

March 16, 2015, is an important deadline to file challenges to AHCA’s preliminary approvals. Failure to timely file a challenge could waive your rights to any future challenges, even if the litigation ultimately results in settlements that go beyond expectations.

Geoffrey D. Smith is a shareholder in the law firm of Smith & Associates, and has practiced in the area of health care law and CON regulation for over 20 years.

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Update on Return of Nursing Home CON in Florida

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AHCA announced the preliminary winners and losers in the first nursing home CON batching cycle since the Legislature lifted the moratorium in 2014. The State Agency Action Reports (“SAARs”) released on February 20 had a few surprises, but perhaps the biggest surprise is not contained within the decisions on the 102 completed CON Applications, but instead in the significant number of areas that are still left with unmet need.

While most of the talk surround nursing home CON Applications filed in this batching cycle has been about the large number of CON Applications filed, perhaps the more interesting story is that in 9 sub-districts, where there was a combined published fixed need of 365 beds, no one applied. In 13 other sub-districts, AHCA’s preliminary decisions awarded less beds than the fixed need determination calculated despite having CON Applications that would have met the need, for a combined deficit of 443 beds. For example, in Lee County, sub-district 8-5, there was fixed need for 40 beds, yet AHCA denied the only CON Application filed in that sub-district, leaving the 40 bed fixed need determination unmet.

This article focuses on the fixed need determinations by sub-district and the net surplus or deficit that would be created if AHCA’s preliminary determinations stand. Note, however, that AHCA’s preliminary determinations may be overturned by legal challenges filed before March 16, 2015, so these numbers are subject to and will almost definitely change significantly before all of the legal challenges are completed. For a more detailed discussion on the legal challenge process and timeline, see our newsletter dated February 11, 2015.

SUB-DISTRICTS WITH FIXED NEED WITHOUT A CON APPLICANT

No one applied for a nursing home CON in 9 sub-districts where there was published fixed need in the Second Batching Cycle for Other Beds and Programs 2014. The chart below shows the sub-district, counties, and fixed need that was not applied for by any nursing home provider.

Sub-district Counties Unmet Need
2-1 Gadsden, Holmes, Jackson, and Washington 56
2-3 Calhoun, Franklin, Gulf, Liberty, and Wakulla 14
3-1 Columbia, Hamilton, and Suwannee 99
3-3 Putnam 43
5-1 Pasco 67
6-4 Highlands 25
9-1 Indian River 18
9-2 Martin 37
9-3 Okeechobee 6

While it is too late for anyone to apply for a CON in these sub-districts in this batching cycle, it is extremely likely that similar fixed need will be published for these sub-districts in the next batching cycle on April 3, 2015.

SUB-DISTRICTS WHERE NEED IS GREATER THAN AHCA AWARDS

In 13 sub-districts, AHCA preliminarily awarded CONs for less beds than the current projected need. The chart below provides the sub-district, counties, and deficit between the fixed need calculations and preliminary awards.

Sub-district Counties Unmet Need
1-1 Escambia and Santa Rosa 40
3-2 Alachua, Bradford, Dixie, Gilchrist, Lafayette, Levy and Union 60
3-5 Citrus 43
3-6 Hernando 16
3-7 Lake and Sumter 25
4-3 St. Johns and south-eastern Duval 47
5-2 Pinellas 56
7-2 Orange 18
7-3 Osceola 10
7-4 Seminole 78
8-1 Charlotte 3
8-2 Collier 7
8-5 Lee 40

Any Applicant that filed a CON in the current batching cycle has the right to challenge their denial or the approval of another CON in the same sub-district prior to March 16, 2015.

SUB-DISTRICTS WHERE AHCA AWARDS EXCEEDED FIXED NEED

There were 4 sub-districts where AHCA awarded more beds than the fixed need publications showed were needed. The chart below shows the sub-district, counties, and surplus of beds over the published fixed need.

Sub-district Counties Surplus Beds
2-2 Bay 14
3-4 Marion 12
4-2 Baker, Clay, and southwestern Duval 47
6-5 Polk 51

Any Applicant that filed a CON in the current batching cycle has the right to challenge their denial or the approval of another CON Application filed in the same sub-district prior to March 16, 2015.

RIGHTS OF EXISTING PROVIDERS

Existing providers in the same district that will be substantially affected by the approval of a competing proposed facility or program can initiate or intervene in a challenge pursuant to Fla. Stat. §408.039(5)(c) (2014). Thus, by way of example, an existing provider in sub-district 6-3 can challenge a preliminary approval of a proposed provider in sub-district 6-5 because they are both in district 6. This is different from competing Applicants that must be filing in the same sub-district to prove standing. Existing providers may also intervene in legal proceedings challenging preliminary approvals after March 16, 2015, however, they do so subject to the standing of the other parties to the proceeding, as discussed in our prior newsletter on February 11, 2015. Thus, existing providers that wait until after March 16, 2015, do so at the risk that no one else challenges the preliminary approval.

AREAS RIPE FOR CHALLENGES

At this point, any area where there is a pending CON approval is an opportunity for a legal challenge. Basis for challenges are unlimited and can include any combination of factors, such as a better fit for the market, technical flaws in an application, under or over filling the gap in need demonstrated by the fixed need publication, etc. There are literally countless basis for challenging a preliminary CON approval. Notably, final hearings are de novo proceedings, meaning AHCA’s preliminary decision is not given any weight or presumption of correctness.

Without a full detailed review of all of the competing Applications within a sub-district, it’s difficult to make any specific conclusions about where successful opportunities for challenges could be found. That said, there are some sub-districts that seem to stand out in a macro-analysis shown in the chart below.

Sub-district Deficit/Surplus Reason
1-1 40 Bed Surplus Other Applicant met the published need
3-2 60 Bed Surplus Other Applicants met the published need
4-4 47 Bed Surplus Other Applicants met the published need
5-2 56 Bed Surplus Denied 56 bed Applicant
7-4 78 Bed Surplus Other Applicants met the published need
8-5 40 Bed Surplus Denied 31 bed Applicant

If these preliminary approvals are not challenged, they become final approvals and CONs will be awarded in these sub-districts.

Thus, if you are uncertain about whether you want to challenge a denial or someone else’s approval, it’s best to go ahead and file a challenge. A challenge can always be dismissed if you decide not to proceed, but if you miss the opportunity to challenge, then you may have missed the window of opportunity. That said, we have conservatively used March 16, 2015, as the deadline to file challenges throughout this article. However, there are certain facts and subsequent notice that have occurred in this batching cycle that might extend the period of time to file such challenges. Thus, if you have not decided to file a challenge until after March 16, 2015, and are just now reading this article and thinking you are too late, please contact us to discuss whether there may be additional ways to challenge a preliminary denial or approval.

CONCLUSION

February 20, 2015, held a few surprises for the bountiful field of CON Applicants, particularly that there is still a significant amount of unmet need where either no one applied for a CON or where AHCA did not award the beds to the full amount projected by the need formula. It will be interesting to see on April 3, 2015, whether AHCA again publishes similar need for these unclaimed areas, and if so, whether any CON Applicants will jump into the arena to compete for these unclaimed areas. There are also many areas of the State that are potentially subject to legal challenges to AHCA’s preliminary approvals. It will be interesting to see how many of AHCA’s preliminary decisions ultimately remain after these legal challenges are completed.

Geoffrey D. Smith is a shareholder in the law firm of Smith & Associates, and has practiced in the area of health care law and CON regulation for over 20 years.

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Smith & Associates Lobby for ALF Changes

Watch Smith & Associates’ attorneys Geoff Smith and Susan Smith lobby the Florida Legislature for changes in the Nursing Home CON laws here. (Smith & Associates start at the 1:39 mark).

Currently, the CON rules, as they are applied to Nursing Homes, allow for one nursing home to obtain and hold a monopoly in a district. This leads to fewer options for nursing home patients. Smith & Associates is lobbying the Florida Legislature to change this law to protect nursing home patients.

Early Effects of the New CON Laws

We posted before about how the lifting of the moratorium CON Regulations for Nursing Homes would alter the nursing home regulation landscape. Now that the law has been passed and the moratorium actually lifted, the effects are beginning to be felt. Recently, AHCA posted its list of applicants for the “1st Other Beds & Programs Batching Cycle of 2014.” The list can be found here.

What is readily apparent is that the existing providers are getting in early to raise the bar before competitors have a chance to enter the market now that the CON moratorium has been lifted. If you are a nursing home provider and you need help navigating these new laws, we can help. Contact us here for a free consultation.