STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN RE: THE EXTENSION OF THE LEMON )

BAY HOSPITAL'S CERTIFICATE OF ) CASE NO. 75-1753 NEED BY THE BUREAU OF COMMUNITY )

MEDICAL FACILITIES, )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Bearing Officer, G. Steven Pfeiffer, held a public hearing in this case on December 17, 1975, in Tallahassee, Florida. The following appearances were entered: William L. Boyd, Mahoney, Hadlow, Chambers & Adams, Tallahassee, Florida, for the Petitioners, Health Facilities Research, Inc., and City of North Port, Florida; and Douglas E Whitney, Tallahassee, Florida, for the Respondent, Department of Health and Rehabilitative Services, Bureau of Community Medical Facilities.

On or about September 5, 1975, the Southwest Florida Comprehensive Health Planning Council, Inc., filed a "Petition for a Hearing Pursuant to Florida administrative Code". On or about September 16, 1975, Health Facilities Research, Inc. and the City of North Port ("Petitioners" hereafter) filed a "Petition for a Hearing Pursuant to Florida Statutes 120.57". On October 6, 1975, the Department of Health and Rehabilitative Services, Bureau of Community Medical Facilities ("Respondent" hereafter) forwarded both petitions to the Division of Administrative Hearings, and simultaneously filed an Answer to each petition. Various motions were filed, and orders were entered thereon on November 14, 1975, and December 22, 1975. A Motion to Consolidate the two cases was filed, and was denied on December 17, 1975. The case initiated by the Southwest Florida Comprehensive Health Planning Council, Inc. has been given Division of Administrative Hearings Case No. 75-2086.

The Petitioners alleged in their petition that the Respondent improperly granted a six-month extension of a certificate of need that had previously been issued to a proposed hospital known as Lemon Bay Hospital. The final hearing was scheduled to be conducted on December 17, 1975 by notice dated November 21, 1975. The petition filed by the Petitioners, the Answer filed by the Respondent, and the Notice of Bearing were received in evidence at the hearing respectively as Hearing Officers Exhibits 1, 2, and 3. Petitioners called the following witnesses: Art Forehand, the Chief of the Respondent, Bureau of Community Medical Facilities, Department of Health and Rehabilitative Services; and Allen M. Mullaney, a member of the Board of Directors of Petitioner, Health Facilities Research, Inc. Petitioners' Exhibits 1 - 16 were offered into evidence and were received. The Respondent called as its only witness Ray Chamlis, a Medcal Facilities Specialist employed by the Respondent. Agency's Exhibits 1 and.2 were offered into evidence and were received.

Post hearing Memoranda of Law have been filed by Petitioners and Respondent.

FINDINGS OF FACT

1. Some time prior to July 1, 1973, and apparently during the latter part of April, 1973, an application was filed by Lemon Bay Hospital, Inc. with Respondent for a certificate of need to construct a hospital in the Englewood area of Sarasota County, Florida. The name given the proposed hospital was Lemon Bay Hospital. The state law respecting certificates of need did not become effective until July 1, 1973. (See: Florida Statutes 391.493, et seq.). The application was filed in accordance with the Federal Certificate of Need Law, Public Law 92-603, and at the time that the application was filed, Respondent was administering only the Federal Statute. Rules and Regulations regarding procedures for issuance of certificates of need were not formally promulgated until August 17, 1974. (See: Florida Administrative Code, Chapter 101). On November 5, 1973, the Respondent advised Lemon Bay Hospital, Inc. that the West Central Florida Comprehensive Health Planning Council (now the Southwest Florida Comprehensive Health Planning Council) had recommended that a certificate of need be issued. At that time Respondent did not consider applications for certificate of need to be completed until proof of ability to finance the project, including, if necessary, irrevocable loan commitments, were submitted by the applicant. As of November 5, 1973 the Respondent permitted applicants for certificate of need an additional ninety (90) days in order to secure financing. The Respondent granted such an ex- tension to Lemon Bay Hospital, Inc., and indicated in correspondence that no other applications for review of proposed facilities in the area of the proposed Lemon Bay Hospital would be submitted by the Respondent to the local planning council before the expiration of the ninety day period. (See: Petitioners' Exhibit 1). An additional extension of time was granted to Lemon Bay Hospital, Inc., and the applicant was permitted to have until July 1, 1974, to secure adequate funding. No new applications for similar construction in the area of the Lemon Bay Hospital would have been considered by the Respondent during that period. (See: Petitioners' Exhibit 6). Information sufficient to satisfy the Respondent as to the financial ability of the applicant was received on June 17, 1974. (See: Petitioners' Exhibit 8). Then, and not before, the Respondent considered the Lemon Bay Hospital application complete. A certificate of need was issued on July 9, 1974. The certificate was for a six-month period, and by its terms terminated on January 9, 1975. (See: Petitioners' Exhibit 7). In January, 1975, the certificate was extended for an additional six-month period. Respondent had no discretion to deny this six-month extension. With the extension, the certificate of need for the proposed Lemon Day Hospital would have terminated on July 8, 1975.

   
   

2. On approximately May 23, 1975, the Petitioner, Health Facilities Research, Inc., filed an application for certificate of need with the Respondent. Petitioner plans to construct a hospital facility in the City of North Port, Florida, and is seeking a certificate of need in connection with that project. The hospital proposed by the Petitioners would be located approximately twenty miles by automobile from the Lemon Bay facility. A major criteria which is applied in determining whether a certificate of need should be granted is the availability of other facilities in the general area of a proposed facility. [See: Florida Statutes sec. 391.494(5)(c)] . Whether the certificate of need requested by Petitioner will be granted is likely to be effected by the existence vel non of the Lemon Pay Hospital. If the Lemon Bay Hospital is constructed, the likelihood for the certificate of need for the Petitioners' hospital being granted would be decreased. If the Lemon Bay Hospital is not constructed, the likelihood for the certificate of need for the Petitioners' hospital being granted would be increased. Although either

   hospital could be constructed with or without a certificate of need, it is much less likely that either would be constructed without a certificate of need.

   
   

3. The Petitioner, City of North Port, is a municipality which would be served by both the Lemon Bay Hospital and by the facility proposed by the Petitioners.

   
   

4. On June 20, 1975, Lemon Bay Hospital, Inc. requested an additional six- month extension of the certificate of need. (See: Agency Exhibit 1). Upon receipt of the request, Respondent communicated with the area wide planning council, the Southwest Florida Comprehensive Health Planning Council, Inc. soliciting its comments and recommendations. (See: Petitioner's Exhibit 10). Respondent outlined the following criteria to be considered: whether a site had been secured; whether firm financing had been secured; whether construction plans and specifications had been prepared; whether it could reasonably be expected that a general construction contract will be signed within the requested additional six months; and any other documentation by the applicant indicating sincere efforts toward placing the project under construction. A committee of the area wide planning council, the Sarasota County Comprehensive Health Planning Council Facilities Committee wet on June 30, 1975 and recommended that the extension be approved. Another committee, the Sarasota Comprehensive Planning Executive Committee, met on July 10, 1975, and recommended that the extension be approved.

   
   

5. A special executive committee of the area wide planning council met on July 17, 1975, and recommended that the extension request be denied. The area wide council indicated that firm financing had not been secured, that construction plans and specifications had not been adequately presented, and that it was not likely that a construction contract would be signed within the additional six months. (See: Petitioners' Exhibit 11).

   
   

6. Respondent was not satisfied with the amount of information provided by the area wide council, and was aware that there were strong differences of opinion among members of the council. The Respondent requested that additional information be provided by the applicant, and this information was received under cover of a letter dated July 25, 1975. (See: Petitioners' Exhibit 13). Lemon Bay Hospital, Inc. had been frustrated in securing a site for its proposed hospital on account of the bankruptcy of the seller. Nonetheless, the site had been secured. Firm financial arrangements had not yet been completed for the project; however, arrangements for selling tax free bonds had been made, and Sarasota County had resolved to serve as an Internal Revenue Service bond sponsor in order to permit the sale of bonds. Considerable monies had been spent in securing architectural plans, and although no final plans were submitted, it is apparent that negotiations were well under way. No general construction contract had been issued; however, in view of the monies that had already been expended by the applicant, and the applicant's assurance, it was reasonable to conclude that the construction contract would be signed within the additional six months requested. Lemon Bay Hospital, Inc. had expended time, effort, and money in attempting to construct the Lemon Bay Hospital. There is reason to believe that the applicant could have moved more rapidly in securing financing and signing a construction project; however, it is apparent that attention had been given these things. On August 5, 1975, the Respondent granted the requested extension. With this action the certificate of need would expire on January 8, 1976.

7. The petition herein was filed with the Respondent on or about September 16, 1975, more than one month after the extension of the certificate of need was retroactively granted by the Respondent.

   
   

   CONCLUSIONS OF LAW

   
   

8. Action was taken by the Respondent on the application for extention of the certificate of need, which had been requested by Lemon Bay Hospital, Inc. prior to the time that the petition was filed in this case. The petition was filed in accordance with Florida Statutes Section 120.57, which provides in pertinent part:

   
   

   "The provisions of this section shall apply in all proceedings in which the substantial interest of a party are determined by an agency."

   
   

9. The term "party" is defined in Section 120.52(10) in pertinent part as follows:

   
   

   "(a) Specifically named persons whose substantial interest are being determined in the proceeding.

   (b) Any other person who, as a matter of constitutional right, provision of statute, or provision of agency regulation is entitled to participate in whole

   or in part in the proceeding, or whose sub- stantial interest will he affected by proposed agency action, and who makes an appearance as a party:"

   
   

   The Petitioners are "persons" as defined in the act whose substantial interests are affected by the extension of the certificate of need for the Lemon Bay Hospital project. However, the Petitioners' substantial interests had already been determined prior to the time that they filed their petition. Petitioners are not, therefore, persons whose substantial interest "will be affected by proposed agency action", but rather persons whose substantial interests have already been determined by agency action. Formal proceedings under Florida Statutes Section 120.57 were inappropriately sought, and should not have been conducted. In view of the fact that evidence has been taken in this case, and in the Interest of economy of time, it 15 appropriate that this order be concluded as If final agency action had not already occurred.

   
   

10. Before issuing or denying a certificate of need, the Respondent is required to review the application, and to consider advisory recommendations of the area wide planning council. Florida Statutes Section 381.494(6)(d). Florida Statutes Section 381.494(6)(g) provides in part as follows:

    
    

    "Approval [of an application for certificate of need] shall terminate one year after the date of such approval for a hospital ... unless the applicant has commenced construction or is diligently pursuing same to completion or unless the approval is extended by the bureau [Respondent in this case] for an additional period of up to six months, upon showing of good cause for the extension."

    
    

    Nothing in the statute provides that the area wide planning council is to have any role in determining whether a six-month extension should be granted. The

    Respondent's rules, which were not in effect when the original certificate of need was granted to Lemon Bay Hospital, Inc. but were in effect when the six- month extension was sought, quote the provisions of Section 381.494(6)(g) and provide in addition [Florida Administrative Code Chapter 101-2.08(2)]:

    
    

    "The comments of the area wide health planning council will be solicited and taken into consideration in any extension beyond one (1) year."

    
    

    Petitioners contend that before Respondent can overrule a recommendation of an area wide planning council respecting an extension of time, the Respondent must negotiate with the council. In support of this contention Petitioners cite the respondent's rules (Florida Administrative Code, Chapter 101-1.03 D5) , which provide in pertinent part as follows:

    
    

    "Recommendations made by area wide health planning councils will not be overridden lightly in the event of a disagreement between the council and the DPA [Respondent in this case]. Before acting contrary to the recommendations of a council, the DPA will

    negotiate with the council and give them an opportunity to present their arguments."

    
    

    This rule applies to applications for certificate of need, and not to the six- month extension involved in this case. In the instant matter the Respondent was required only by its own rules to solicit the comment of the area wide health planning council, and it did so. Nothing in the statute, nor in tie Respondent rules in any way bind the Respondent to any recommendations made by the area wide planning council.

    
    

11. Nothing in Florida Statues Section 381.494, nor in the Respondent's rules expands upon the standard of good cause for granting an extension set out in Florida Statute Section 381.494 (8)(g) , and in Ch. 10I-2.08(2) , F.A.C. The Respondent had before it evidence from which it could conclude that Lemon Bay Hospital, Inc. would have its project under construction, or would be diligently pursuing the same to completion before the expiration of the additional six month period requested.

    
    

12. Additional points raised by Petitioners in support of their claims have been considered and found to be without legal merit.

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

That the petition filed by Health Facilities Research, Inc. and the city of North Port be dismissed on the grounds that the petition was filed subsequent to the time that final agency action was rendered; or alternatively that the action taken by the Respondent in granting the application for six months extension of time made by Lemon Bay Hospital, Inc. be affirmed.

RECOMMENDED this 7th day of February, 1976 in Tallahassee, Florida.

G. STEVEN PFEIFFER, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

William L. Boyd, Esquire Mahoney, Hadlow, Chambers & Adams Post Office Box 5617 Tallahassee, Florida 32301

Douglas E. Whitney, Esquire Department of Health and

Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida

D. Dean Barnard, Esquire Barnard, Hendry & Amason 845 College Parkway

Fort Myers, Florida 33901

Docket for Case No: 75-001753

Orders for Case No: 75-001753