South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
First American Home Care of South Carolina, Inc. vs. SCDHEC et al.

AGENCY:
South Carolina Department of Health and Environmental Control

PARTIES:
Petitioner:
First American Home Care of South Carolina, Inc.

Respondent:
South Carolina Department of Health and Environmental Control and Mediforce Home Health Agency (Richland County)
 
DOCKET NUMBER:
95-ALJ-07-0478-CC

APPEARANCES:
W. Thomas Lavender, Jr., Esquire

Cynthia B. Hutto, Esquire

Attorneys for Petitioner

Cheryl H. Bullard, Esquire

Attorney for Respondent South Carolina Department

of Health and Environmental Control

Michael A. Molony, Esquire

Attorney for Respondent Mediforce Home Health Agency
 

ORDERS:

ORDER AND DECISION

This matter comes before me pursuant to S.C. Code Ann. §§ 44-7-110 et seq. (Supp. 1995), upon Petitions for Administrative Review and Requests for Contested Case Hearing filed by Professional Home Nursing, Inc. ("PHN"), Home Health of South Carolina, Inc. ("Home Health") and First American of South Carolina, Inc. ("First American"), regarding the proposed decision of the South Carolina Department of Health and Environmental Control ("DHEC" or "Department") to award a Certificate of Need ("CON") to Mediforce Home Health Agency ("Mediforce") for a home health agency in Richland County, South Carolina, and to deny all other competing applications. PHN and Home Health subsequently withdrew their petitions. A hearing was held on March 11, 1996. Based upon the following findings and conclusions, approval of the Mediforce application is granted for the provision of home health services in Richland County, and the application of First American is denied.

STATEMENT OF THE CASE

Originally, seven applicants, including Petitioner First American and Respondent Mediforce, filed applications with DHEC for one home health agency CON available in Richland County under the 1994 State Health Plan. After staff review of the applications, DHEC conducted public hearings and project review and determined that the Mediforce application most fully complied with the requirements, goals and purposes of the CON statutes, the State Health Plan, Project Review Criteria, and Regulation 61-15.

On June 23, 1995, DHEC notified all applicants of its proposed decision to grant the CON to Mediforce and to deny all other competing applications. Three of the unsuccessful competing applicants sought review of the proposed decision. On July 7, 1995, Home Health and PHN filed their Request for Contested Case/Adjudicatory Hearing. On July 10, 1995, First American filed its Petition for Administrative Review, and the case was transmitted to the Administrative Law Judge Division for a hearing. Prior to adjudication, PHN and Home Health consented to dismissal of their Petitions, and Orders of Dismissal were entered for each. The two competing applications of Mediforce and First American remain the subject of this proceeding.

ISSUES

The issues presented for determination are as follows:

A. Must the State Health Plan be promulgated as a regulation to be applied in the CON application review process?

B. Which, if any, of the two remaining competing applicants should be granted a CON to establish a home health agency in Richland County?



DISCUSSION

A. Applicability of the 1994 South Carolina Health Plan

First American contests the authority and applicability of the State Health Plan, asserting that the standards set forth in the Plan are not provided for by CON regulations, were not promulgated in accordance with the South Carolina Administrative Procedures Act, and are therefore unenforceable. First American contends that it is error to consider or give weight to matters outside the specific review criteria contained in the CON Act and 24A S.C. Code Ann. Regs. 61-15 (Supp. 1995). Specifically, First American objects to consideration of letters from physicians and discharge planners in Richland County, as described in the "standards" contained in Item 3, Page II-123 of the 1994 South Carolina Health Plan (the "State Plan Standards"). First American's challenge is without merit.

The State Health Plan is created pursuant to S.C. Code Ann. § 44-7-180 (Supp. 1995), which provides, inter alia :

(B) With the advice of the health planning committee, the department shall prepare a State Health Plan for use in the administration of the Certificate of Need Program provided in this article. The plan at a minimum must include:
    . . . (2) projections of need for additional health care . . . services . . . ;
(3) standards for . . . specified health services . . . ; and
(4) a general statement as to the project review criteria considered most important in evaluating certificate of need applications for each type of . . . service . . . .
The State Health Plan must address and include projections and standards for specified health services . . . which have the potential to substantially impact health care cost and accessibility. Nothing in this provision shall be construed as requiring the department to approve any project which is inconsistent with the State Health Plan.

Section 44-7-180(C) sets forth the requirements for approval of the plan and adoption by the Board, and also sets forth the revision process. It provides as follows:

Upon approval by the health planning committee, the State Health Plan must be submitted at least once every two years to the Board for final revision and adoption. Once adopted by the board, the plan may later be revised through the same planning and approval process. The department shall adopt by regulation a procedure to allow public review and comment, including regional public hearings, before adoption or revision of the plan.

S.C. Code Ann. § 44-7-210(C) (Supp. 1995) provides that:

The department may not issue a Certificate of Need unless an application complies with the State Health Plan, Project Review Criteria, and other regulations. Based on project review criteria and other regulations, which must be identified by the department, the department may refuse to issue a Certificate of Need even if an application complies with the State Health Plan. In the case of competing applications, the department shall award a Certificate of Need, if appropriate, on the basis of which, if any, most fully complies with the requirements, goals and purposes of this article and the State Health Plan, Project Review Criteria, and the regulations adopted by the department.

24A S.C. Code Ann. Regs. 61-15, Section 106 further details the procedure for public review and comment.

24A S.C. Code Ann. Regs. 61-15, Chapter 8, Section 802(1) provides that "a proposal shall not be approved unless it is in compliance with the State Health Plan." 21A S.C. Code Ann. Regs. 61-15, Chapter 8, Section 801(3) provides that "a project does not have to satisfy every criterion in order to be approved, but no project may be approved unless it is consistent with the State Health Plan."

First American has not alleged any failure by DHEC or the health planning committee to comply with the statutory requirements for development or amendment of the 1994 State Health Plan. No issue was raised as to lack of adherence to applicable statutes and regulations, nor to the lack of public participation or input in the development of the 1994 State Health Plan.





B. Issuance/Denial of the CON

According to the 1994 State Health Plan, Richland County is below the state average in persons served per thousand population and could support an additional home health agency. Seven (7) applicants sought the one (1) available CON for Richland County. After DHEC's proposed decision to issue the CON to Mediforce, only PHN, First American, and Home Health sought administrative review of the decision. Subsequently, PHN and Home Health withdrew their applications, leaving First American as the sole unsuccessful applicant contesting the issuance of the CON to Mediforce.

S.C. Code Ann. § 44-7-210(A) (Supp. 1995) provides that the department shall determine the relative importance of the project review criteria for this project and shall notify the applicant of this determination. The applicant then has thirty days from the date of this notice to present any additional information. The review period for a completed application is sixty days from the date of notification of affected persons, or up to sixty days from the date that applicants are notified of the relative importance of project review criteria provided for in this section, whichever is longer.

The Department notified Mediforce, as well as the other applicants, by letter dated April 7, 1995, of the following:

In accordance with Section 304 of Regulation No. 61-15, Certification of Need for Health Facilities and Services, the following project review criteria are considered more important in the review of this application. These criteria are ranked according to their relative importance with the most important being listed first. All other relevant criteria will be given equal importance.
1. Need (compliance with the State Health Plan) - 1
2. Acceptability - 4a
3. Distribution (Accessibility) - 3b, f, g
Medically Underserved Groups - 31a, d
4. Record of the Applicant - 13a, d
5. Projected Revenues - 6a
6. Net Income - 9
Financial Feasibility - 15
(See ALJ Ex. #3-A, pp. 734-735).

According to the testimony, DHEC reviewed each of the applications submitted for the Certificate of Need in Richland County utilizing the above-named criteria. The primary criteria, as cited above, were need and compliance with the State Health Plan. The 1994 South Carolina Health Plan, on page II-123, Paragraph 4, identified the need for one additional agency to serve the home health needs of the citizens of Richland County as follows:

The attached table indicates the counties where an additional home health agency could be approved or an existing home health agency expanded. This table is based on the number of persons served per thousand population and the number of visits per thousand population. Counties that are below the state average in either category could accommodate an additional agency in order to assist the residents of the county in receiving services. Only counties which are below the state average in either category will be approved for an additional service. NO ADDITIONAL AGENCY WILL BE APPROVED IN THESE COUNTIES UNTIL THE APPROVED AGENCIES HAVE BEEN LICENSED AND A YEAR OF UTILIZATION DATA ARE AVAILABLE AND HAS BEEN INCORPORATED INTO THE METHODOLOGY.
(See Respondent's Ex. #2, p. II-123).

1. Approval of the Mediforce Application

By letter dated July 23, 1995, DHEC issued its proposed decision to issue a home health CON to Mediforce for Richland County, stating the following reasons:

1. The proposed project is consistent with the 1994 South Carolina Health Plan in that there is sufficient documentation from physicians and hospital discharge planners indicating the number of Richland County patients they will refer to the proposed agency.
2. The proposed project best meets the criteria for home health agencies as outlined in the 1994 South Carolina Health Plan, as it has acceptable letters of support from as many Richland County physicians as any of the other competing Certificate of Need applications for home health services in Richland County. Local physicians and discharge planner letters are given priority in the review because the geographical area of a county is the service area indicated in the State Health Plan from which such letters should originate. In addition, Mediforce has significantly more letters of support from physicians in other counties which are adjacent to Richland County which meet the criteria in the State Health Plan than other competing Certificate of Need applications for home health services in Richland County.
(See ALJ Ex. #3-A, p. 812, 813).

First American received a similar letter notifying it of the Department's decision to approve the application of Mediforce and the denial of First American's application. (See ALJ Ex. #2, pp. 500, 501). The primary difference between the competing applications is the extent of support from the community, including physicians and hospital discharge planners located in the proposed service area. Particularly significant are the letters of support from physicians with patient populations from medically underserved areas within Richland County. (See ALJ Ex.

#3-A, pp. 812, 813 and 24A S.C. Code Ann. Regs. 61-15, §§ 802 (3)(b), (3)(f), (31)(a), and (31)(b) (Supp. 1995); 24A S.C. Code Ann. Regs. 61-15, § 802 (4)(a) provides that a CON applicant should have the support of "affected persons," including local providers and the target population. The 1994 South Carolina Health Plan, at pages II-123 through II-125, Paragraph 3, further defines those standards:

There should be documentation from physicians and hospital discharge planners in the proposed service area indicating the number of patients that they currently refer to home health agencies and the number of additional patients that they will refer to the proposed agency. If there are problems with the existing agencies serving the area, they must be stated in the letters.

The Mediforce project has substantial support. Its application contains two letters of political support, 24 letters from Richland County physicians which meet the criteria in the State Health Plan and who would refer patients to Mediforce, and eight letters of support from other areas of the State. (See ALJ Ex. #2, p. 493). In contrast, the First American application contains 14 letters of community support from Richland County, but contains no letters which meet the standards in the State Health Plan.

While First American presented testimony that Mediforce's budget assumptions and projections contain errors and that Mediforce's financial projections are not feasible, the errors are not substantial. Undisputed expert witness testimony was presented that the project was financially feasible under generally accepted accounting principles or Medicare Cost Reporting Guidelines. (See TR. Vol. 1, p. 59, ll. 4-16).

2. Denial of First American's Application

In the case of competing applications, the applicant which most fully complies with the requirements, goals, and purposes of the State Certification of Need and Health Facility Licensure Act, the State Health Plan, Project Review Criteria, and DHEC regulations, must be issued the CON. By letter dated June 23, 1995, DHEC notified First American of its decision to deny First American's application and to approve Mediforce's application based on the following reasons:

1. The [First American] project is not consistent with the 1994 South Carolina Health Plan in that there is not sufficient documentation from physicians and hospital discharge planners indicating the number of Richland County patients they will refer to the proposed agency.
2. The need can best be served by a competing applicant, Mediforce, for the following reasons:
a. Mediforce has been found to be consistent with the "Criteria for Project Review". The applicant has identified four (4) underserved areas in Richland County. Those areas are Eau Claire, Greenview, Waverly and Lower Richland. Fourteen letters from physicians contained in the application support the applicant by stating that their patients are located in an underserved area. Mediforce is the only applicant that has identified a group or area that contains underserved patients.
b. Mediforce is consistent with the 1994 South Carolina Health Plan. The application contains 50 letters of support. These include 24 letters from Richland County physicians, 24 of which would refer patients, 7 letters from elected officials, 9 letters from members of the Richland County community and 8 letters from other areas of the State. A competing application from Home Health of South Carolina, Inc. contains more letters of support from physicians and community members in Richland County. However, since Mediforce has identified these underserved areas within Richland County and physician's letters support the fact that these areas are underserved, Section 802 of Regulation No. 61-15, (3) b, f and (31) a, b, supports approval of Mediforce over other applicants.
(See ALJ Ex. #2, pp. 499, 500).

First American attempted to prove its case through two witnesses, Mediforce witness Cindy Clark and DHEC witness Jim Langston, focusing on the proforma, financial and budget assumptions in the Mediforce application. (See ALJ Ex. #3-A, pp. 582-585). Mediforce's expert witness, Cindy Clark, was cross-examined extensively on the effect of Medicare cost reporting guidelines on the proforma budget assumptions and financial statements. TR. Vol. 1, pp. 65-68. She admitted that she was not an expert on Medicare cost reimbursement, but defended the proforma budget assumptions and financial statements throughout her testimony. TR. Vol. 1, p. 86, 1. 8-11; TR. Vol. 1, p. 61, l. 13 through p. 82, l. 14. Ms. Clark also clarified that physical therapy costs, while not itemized, are included in total contract costs as found on p. 582 of the Certificate of Need Application. TR. Vol. 1, p. 68, l. 19-25. Ms. Clark testified that the omission was a typographical error and does not affect the contract services entries as found on p. 502 of the Certificate of Need Application. TR. Vol. 1, p. 69, l. 25. The typographical error was corrected and entered into evidence at the hearing. See Exhibit #3, Vol. 1, p. 83, ll. 14-15. Additionally, Mediforce offered testimony of expert witness Gary Carpenter, who testified in extensive detail regarding the Medicare cost reimbursement and guidelines vis-a-vis proforma budget projections and assumptions. His deposition was taken, de bene esse, and entered into the record in these proceedings. TR. Vol. 1, p. 59, ll. 112-113. Both Clark and Carpenter were convincing and credible in their testimony. First American presented no expert or lay witness testimony.

DHEC witness Jim Langston testified as to the Department's characterization and computation of "support letters" contained in the applications. Vol. 1, p. 38, l. 1 - p. 42, l. 20. He was questioned with respect to DHEC's procedure regarding acceptance of letters of support after an application has been deemed complete. First American submitted no letters that were in compliance with the criteria for project review or the State Health Plan. TR. Vol. 1, p. 43, l. 6. Langston testified that it was the department's policy to accept documents up until the time the department makes a decision on a CON application. TR. Vol. 1, p. 43, ll. 13-16.

According to Langston, it was important to DHEC that the support letters submitted by Mediforce contained 18 letters from physicians indicating they would refer patients from medically underserved areas in Richland County. TR. Vol. 1, p. 56, ll. 3-8. Mediforce witnesses Lynn Bailey and Valerie Aiken testified that the Mediforce application was specifically directed to medically underserved areas as defined in Regulation 6115, § 802 (3)(b). TR. Vol. 1, p. 109, l. 14- p. 110, l. 24; TR. Vol. 1, p. 134, ll. 16-19.

First American's application is not consistent with the standards set forth in the 1994 State Health Plan section for home health agencies. In disregard of Standard 3, at II-123, it does not include evidence of support from area physicians and discharge planners. Contrary to Standard 6, at p. II-123, First American's track record as a provider is also inadequate. First American President, Jack Mills, and the parent corporation of the applicant have been convicted of numerous counts of Medicare and mail fraud. (See Respondent's Ex. #9). First American has appealed these convictions (Petitioner's Ex. #4) but the parent corporation has also filed for bankruptcy protection. First American presented no testimony as to how its application most fully complies with the requirements, goals and purposes of the law, the State Health Plan, the Project Review Criteria, and the regulations adopted by the Department.

FINDINGS OF FACT

Based upon the evidence and record before this Court, I make the following findings of fact:

  1. This matter comes before the Court pursuant to a Request for Contested Case/Adjudicatory Hearing filed by PHN and Petition for Administrative Review filed by First American with regard to a decision of the Department to approve the application of Mediforce for a Certificate of Need in Richland County and to deny the application of First American.
  2. Notice of the date, time, place and nature of the hearings held in this matter were timely given to all parties.
  3. First American Home Care of South Carolina, Inc. is a wholly-owned subsidiary of First American Health Care of Georgia, Inc.
  4. First American is the nation's largest privately owned home health agency with over 400 locations in 21 states.
  5. First American does not currently operate an agency in South Carolina.
  6. Professional Management and Healthcare Services, Inc., d/b/a Mediforce is a South Carolina corporation.
  7. Mediforce's principals, Charles and Valerie Aiken, operate a medical staffing agency in Richland County, providing certain home health services under a special Medicaid Waiver. TR. Vol. 1, p. 133, ll. 10-19.
  8. DHEC is an agency of the State of South Carolina, charged, inter alia, with the administration and implementation of the CON review procedure.
  9. There are currently eight (8) licensed home health agencies operating in Richland County.
  10. The 1994 South Carolina Health Plan identified Richland County as one of 13 counties in which an additional home health agency CON could be approved.
  11. During February and March, 1995, seven (7) agencies, including First American, filed applications with the Department for a Certificate of Need for a home health agency in Richland County, South Carolina.
  12. On April 7, 1995, the Department deemed the competing CON applications complete, and notified the competing applicants pursuant to 24A S.C. Code Ann. Regs. 61-15 § 304 (Supp. 1995) that the applicants had thirty (30) days to provide the Department with any additional information.
  13. The Department accepted all additional information submitted by applicants beyond the thirty-day period, up until the date of its proposed staff decision.
  14. All applicants were notified of the project review criteria, with the Department listing in the order of importance, the project review criteria it considered most significant in evaluating the applications.
  15. The Department accepted letters of support from physicians in the service.
  16. The Department reviewed the applications of First American and Home Health in a manner consistent with other applications for a Certificate of Need for home health agencies which the Department receives.
  17. On June, 23, 1995, the Department issued a proposed staff decision approving Mediforce's application and denying all other competing applications for Richland County.
  18. First American sought administrative review of DHEC's proposed decision to approve the application of Mediforce and deny the application of First American.
  19. Mediforce's proforma budget assumptions and financial statements are substantially correct, although physical therapy costs were not itemized in the contract costs on p. 582 of the Certificate of Need Application but are included in the total contract costs. TR. Vol. 1, p. 68, l. 19-25.
  20. The mistake was a typographical error not affecting the contract services totals on p. 502 of the Certificate of Need Application, and was corrected and entered as evidence at the hearing. See Exhibit #3, Vol. 1, p. 83, ll. 14-15.
  21. The Mediforce application has numerous letters of support, including two letters of political support, 24 letters from Richland County physicians indicating a commitment to refer patients to Mediforce, and 8 letters of support from other areas of the state. (SeeALJ Ex. #2, p. 493).
  22. Fourteen letters from physicians contained in the Mediforce application support the applicant by stating that their patients are located in an underserved area.
  23. The Mediforce application specifically identifies certain medically underserved areas in Richland County as targeted areas for its potential patient base. TR. Vol. 1, p. 109, l. 14 - p. 110, l. 24; TR. Vol. 1, p. 134, ll. 16-19. Those areas are Eau Claire, Greenview, Waverly and Lower Richland.
  24. Mediforce is the only applicant that has identified a group or area that contains underserved patients.
  25. The First American application contains 14 letters of community support from Richland County but no letters which indicate support from physicians and discharge planners to the extent of being a commitment to refer home health patients to First American if its application is approved.
  26. On February 4, 1996, First American Health Care of Georgia, Inc. and its principal, Robert J. "Jack" Mills, were convicted in United States District Court, Southern District of Georgia, Criminal Actions 295-042-05 and 295-042-01, of seventy-nine (79) criminal counts involving a Medicare fraud scheme, including charges of conspiracy, mail fraud, Medicare kickbacks, false statements, tampering with a witness, and money laundering. (Respondent's Exhibit #9).
  27. Those convictions are currently on appeal.
  28. First American Health Care of Georgia, Inc., and its subsidiaries filed for Chapter 11 Bankruptcy protection in United States Bankruptcy Court, Southern District of Georgia, Case No. 96-20188, on February 22, 1996.


CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact, I conclude as a matter of law:

  1. The Administrative Law Judge Division has jurisdiction over this matter and is authorized to hear this contested case pursuant to S.C. Const. art. I, § 22; Chapter 23 of Title 1 of the 1976 Code, as amended; and S.C. Code Ann. § 44-7-210(D) (Supp. 1995).
  2. First American is a "competing applicant" and "affected person" with standing to request a contested case hearing and administrative review of the Department's proposed decision to approve Mediforce's CON application to provide home health services in Richland County. S.C. Code Ann. § 44-7-130 (Supp. 1995); 24A S. C. Code Ann. Regs. 61-15 § 103(1) and (6) (Supp. 1995).
  3. First American timely filed a Petition for Administrative Review. S.C. Code Ann.§ 44-7-210(D) (Supp. 1995); 24A S.C. Code Ann. Regs. 61-15 (Supp. 1995).
  4. As a state-wide administrative tribunal authorized to take evidence and determine contested case hearings, the Administrative Law Judge Division is the fact finder in this matter for purposes of judicial review. Lindsey v. S.C. Tax Comm'n, 320 S.C. 504, 397 S.E.2d 95 (1990).
  5. First American has the burden of proof to establish by a preponderance of the evidence that Mediforce's CON application to provide home health services in Richland County should be denied and First American's application should be approved. S.C. Code Ann. §§ 44-7-110 through 340 (Supp. 1995); 24A S.C. Code Ann. Regs. 61-15, § 403(1) (Supp. 1995); National Health Corp. V. S.C. Dep't of Health and Environmental Control, 298 S.C. 373, 380 S.E.2d 841 (1989).
  6. The preponderance of the evidence means evidence which is of greater weight, or is more convincing than that offered in opposition to it. Black's Law Dictionary 1182 (6th ed. 1990).
  7. S.C. Code Ann. §§ 44-7-110, et seq. (Supp. 1995), the State Certification of Need and Health Facility Licensure Act, grants DHEC the authority to administer the State's CON program.
  8. The CON program is administered under the guidelines of 24A S.C. Code Ann. Regs. 61-15 (Supp. 1995).
  9. A Certificate of Need must not be awarded to an applicant unless the application complies with the State Health Plan, Project Review Criteria, and other regulations. Based on project review criteria and other regulations, which must be identified by the Department, a Certificate of Need may be denied even if an application complies with the State Health Plan. S.C. Code Ann. § 44-7-210 (Supp. 1995); 24A S.C. Code Ann. Regs. 61-15, § 802(1) (Supp. 1995).
  10. All CON applications must be consistent with the State Health Plan in effect at the time of application. 24A S.C. Code Ann. Regs. 61-15, § 504 (Supp. 1995).
  11. All CON applications for Richland County home health services were accepted and considered under the 1994 State Health Plan.
  12. The 1994 State Health Plan indicates that a sufficient need exists to allow for approval of one new home health agency in Richland County.
  13. In the case of competing applications, a Certificate of Need must be issued, if appropriate, on the basis of which application, if any, most fully complies with the requirements, goals, and purposes of the State Health Plan, Project Review Criteria, and Department regulations. S.C. Code Ann. § 44-7-210 (Supp. 1995); 24A S.C. Code Ann. Regs. 61-15, § 802(1) (Supp. 1995).
  14. Upon determination by the Department that a CON application is complete for purposes of Department review, the Department must notify each applicant of the relative importance of the project review criteria to be used in reviewing the application. 24A S.C. Code Ann. Regs. 61-15, § 304 (Supp. 1995).
  15. The competing CON applications in this case are subject to the following project review criteria considered in the review process, ranked according to their relative importance:
(1) Need, compliance with the State Health Plan -(identified in S.C. Code Ann. Regs. 61-15, § 802(1)
(2) Acceptability - (identified in S.C. Code Regs. 61-15, § 802(4a)
(3) Distribution, accessibility - (identified in S.C. Code Ann. Regs. 61-15, § 802(3b), (3f), (3g) Medically Underserved Groups - (identified in S.C. Code Ann. Regs. 61-15, § 802(31a), (31d)
(4) Record of the Applicant - (identified in S.C. Code Ann. Regs. 61-15, § 802(13a), (13d)
(5) Projected Revenues - (identified in S.C. Code Ann. Regs. 61-15, § 802(6a)
(6) Net Income - (identified in S.C. Code Ann. Regs. 61-15, § 802(9) Financial Feasibility - (identified in S.C. Code Regs. 61-15, § 802(15)
24A S.C. Code Ann. Regs. 61-15, § 304 (Supp. 1995).
  1. Once an applicant receives notice that its application is complete for purposes of review, it has a minimum of 30 days to submit additional information, but DHEC may continue to accept and consider material up until the date of its decision. 24A S.C. Code Ann. Regs. 61-15, § 304 (Supp. 1995).
  2. The CON application review process is not complete until a final decision is rendered. The Department's proposed decision is not final until the completion of either staff reconsideration or contested case proceedings. 24A S.C. Code Ann. Regs. 61-15, §§ 307 and 308(2) (Supp. 1995); S.C. Code Ann. § 44-7-210(E) (Supp. 1995).
  3. Amendment to a CON application by an applicant during the review process is allowed if the amendment is not substantial and does not constitute a new application. 24A S.C. Code Ann. Regs. 61-15, § 310 (Supp. 1995).
  4. The clerical amendment proposed by Mediforce to its proforma budget assumptions and financial statements relative to total costs is not substantial enough to constitute a new application, but rather is a minor amendment to its original application.
  5. 24A S.C. Code Ann. Regs. 61-15, § 801(3) (Supp. 1995) provides that "a project does not have to satisfy every criterion in order to be approved, but no project may be approved unless it is in compliance with the State Health Plan."
  6. The Department acted in accordance with applicable statutory and regulatory requirements of the CON review process.

22. Of the remaining applications before this tribunal, only Mediforce's CON application complies with the 1994 State Health Plan.

23. Standard 3 of the 1994 State Health Plan of the home health agency section, at p. II-123, provides that there should be documentation from physicians and hospital discharge planners in the proposed service area indicating the number of patients that they currently refer to home health agencies and the number of additional patients that they will refer to the proposed agency.

24. Mediforce's application complies with the 1994 State Health Plan in that it contains numerous letters of support, including 24 letters from Richland County physicians which indicate a commitment to refer home health patients to the proposed agency as required by Standard 3 of the Home Health Agency section of the 1994 State Health Plan.

25. First American's CON application does not comply with the 1994 State Health Plan in that it contains no letters of support from physicians or discharge planners which indicate a commitment to refer home health patients to the proposed agency as required by Standard 3 of the Home Health Agency section of the 1994 State Health Plan.

26. Standard 6 of the Home Health Agency section of the 1994 State Health Plan, at p. II-123, provides that an applicant should have a track record demonstrating a commitment to quality services, evidenced by an absence of prosecution, loss of license, consent order, or abandonment of patients in other business operations.

27. While the convictions against First American and its principals are on appeal, (Petitioner's Exhibit #4), the convictions are admissible pursuant to Rule 609 of South Carolina Rules of Evidence.

28. First American's CON application does not comply with the 1994 State Health Plan in that the applicant's principal and parent corporation have been convicted of numerous counts of Medicaid and mail fraud, indicating a negative track record and compliance history in other business operations, in contradiction of Standard 6 of the Home Health Agency section of the 1994 State Health Plan.

29. First American's application does not meet the requirements of 24A S.C. Code Ann. Regs. 61-15, § 802 (13)(d) (Supp. 1995), in that the applicant has a poor record of cooperation and compliance with Federal regulatory programs, as evidenced by the numerous criminal convictions relating to Medicare fraud.

30. First American does not sufficiently meet the cumulative criteria set forth in the 1994 S.C. State Health Plan for issuance of a CON for a home health agency. 24A S.C. Code Ann. Regs. 61-15, § 801(3).

31. Mediforce's application specifically addresses providing home health services to medically underserved groups as defined in Regs. 61-15, Section 802, et. seq.

32. Mediforce's application best meets the standards and criteria identified by the DHEC staff as being the most important during the review process.

33. Mediforce best meets the criteria set forth in the 1994 State Health Plan and S.C. Code Ann. Regs. 61-15, § 802 for issuance of a CON to operate a home health agency in Richland County.

34. Any issues raised in the proceedings or hearing of this case not addressed in this Order, including Mediforce's Motion to Dismiss and Motion For Costs, are deemed denied. ALJD Rule 29(B).

ORDER

IT IS HEREBY ORDERED that the South Carolina Department of Health and Environmental Control grant the Certificate of Need applied for by Mediforce to establish a home

health agency in Richland County and deny the application of First American Home Care of South Carolina, Inc.

AND IT IS SO ORDERED.



_______________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE



Columbia, South Carolina

June 27, 1996


Brown Bldg.

 

 

 

 

 

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