STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MEDIPLEX, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 82-736

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

This cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings, on March 22-24, May 2-5, and May 10, 1983, in Orlando and Tallahassee, Florida.

APPEARANCES

For Petitioner: E. G. Boone, Esquire

P. Joseph Wright, Esquire 1001 Avenida del Circo Venice, Florida 34284

For Respondent: James M. Barclay, Esquire

Department of Health and Rehabilitative Services

1317 Winewood Boulevard

Tallahassee, Florida 32301

This cause concerns the revocation of a Certificate of Need issued to Mediplex, Inc. by HRS because of Mediplex, Inc.'s alleged failure to timely commence construction of a 180-bed nursing home known as Park Lake Health Care Center in Winter Park, Florida, as "commencement of construction" is defined in the authority cited below. Mediplex, Inc. was issued Certificate of Need No.

1286 authorizing construction of the nursing home on June 26, 1980. Because of delays in getting construction started, it requested and was granted a six month extension for Certificate of Need No. 1286, such that it had a total of eighteen months in which to commence construction, with the termination date for the certificate being December 25, 1981. On January 21, 1982, HRS notified Mediplex, Inc. by letter that Certificate of Need No. 1286 had lapsed and was no longer valid due to alleged violation of the provisions of Section 391.494(8)(f), Florida Statutes (Supp. 1982), and Rule 10-5.13(1), Florida Administrative Code.

At the hearing Mediplex presented 19 witnesses end offered, and had admitted, 37 exhibits. Mediplex, Inc.'s Exhibits 3, 7, 12, 13, 14, 20, 30, 33,

34, 46, 47, 48, 50 and 51 were not admitted. The Department of Health and Rehabilitative Services (HRS) offered and had admitted Exhibits A through F. The Department presented no witnesses of its own.

At the conclusion of the proceeding, at the parties' request, a transcript of the proceeding was filed end the parties requested an extended brief schedule, simultaneously waiving the thirty-day requirement contained in Rule 28-5.402, Florida Administrative Code. Proposed findings of fact end conclusions of law were ultimately submitted on July 15, 1983.

All proposed findings of fact and conclusions of law and supporting arguments of the parties have been considered. To the extent that the proposed findings end conclusions submitted by the parties, and the arguments made by them, are in accordance with the findings, conclusions end views stated herein, they have been accepted. To the extent that such proposed findings and conclusions of the parties and such arguments made are inconsistent therewith, they have been rejected. Certain proposed findings and conclusions have been omitted as not relevant or as not necessary to a proper determination of material issues presented end delineated herein. To the extent that the testimony of various witnesses is not in accord with the findings herein, it is not credited.

The issue concerns whether Mediplex met the time-table for development of its project specified in its application and provided for in Section 381.494(S)(f), Florida Statutes (Supp. 1982); and, inherent in that general consideration: (1) whether it made a good faith effort to meet that timetable of eighteen months (as extended by HRS); and (2) whether the Department has a valid, incipient, non-rule policy defining the term "commence construction" as found in the above subsection or defining the term "under construction" as found in Rule 10-5.13(1), Florida Administrative Code, as "physical and continuous construction beyond site preparation." 1/ Corollarily, Mediplex, Inc. has raised the issue of whether at the end of its eighteen month certificate of need validity period it has been treated in a different manner by the Department than the Department's customary practice has been toward other certificate of need holders similarly situated who have reached the and of their eighteen month certificate of need validity period.

FINDINGS OF FACT

1. Mediplex, Inc. was issued a Certificate of Need (CON No. 1286 for the construction of a 180-bed nursing home to be known as Park Lake Health Care Center in Orange County, Florida, on June 26, 1980. After being unable to obtain a title to a site for the project, to finalize financing plans, and due to delays in obtaining final, approved architectural plans (approved by the Plans and Construction Section of HRS), but making a good faith demonstration that all these efforts to commence construction were wall in progress, Mediplex obtained a six-month extension for its certificate from the Department such that the termination date for CON No. 1286, as extended, became December 25, 1981. Shortly before that day, on December 2, 1981, HRS informed Mediplex by letter that it was in imminent danger of termination of its CON, to which Mediplex responded by filing with HRS, the next day, an executed construction contract providing for construction of the subject nursing home. On January 21, 1982, however, HRS ultimately informed Mediplex, by letter, that CON No. 1286 was considered by it to be null and void for alleged violation of the provisions of Section 351.494(8)(f), Florida Statutes (Supp. 1982).

   
   

2. This project arose in approximately November, 1979, when representatives of Mediplex contacted Steven Bechtel, an attorney, regarding acquisition of land in Orange County, Florida, for purposes of construction of a nursing home. Key concerns in acquiring a proper site were size of the site,

   zoning, and availability of utilities, including sewer service. The situation involving land acquisition was complicated by moratoriums emplaced by the Federal Environmental Protection Agency and the State Department of Environmental Regulation in May, 1980, with regard to connections to the Orange County Sand Lake Road sewer treatment plant end the City of Orlando's Sand Lake Road treatment plant. On September 12, 1980, however (its CON having been issued June 26, 1980), Mediplex entered into a contract for purchase on a parcel of lend adjacent to the city limits of Orlando, know as the "Fernandez parcel." That conveyance never closed, however, since Mediplex could not obtain sewer service and concomitant annexation by the City of Orlando for that parcel.

   
   

3. On January 13, 1981, Mediplex, Inc. obtained a contract for purchase on a parcel of land within the city limits of Orlando, known as the "Repco parcel." The Repco parcel was properly zoned for a nursing home, but needed a "conditional use permit" in order to allow construction of a nursing home. Again, Park Lake Health Care Center could not be built on the Repco parcel because of moratoriums on sewer connections. An additional reason for the inability to construct on the Fernandez and Repco parcels was the reluctance exhibited by the Orange County Revenue Bond Authority and the City of Orlando to issue industrial revenue bonds to finance construction of the nursing home, which was the type of financial arrangement the applicant originally intended and has pursued throughout its efforts to license, construct end operate this project.

   
   

4. During the summer of 1981, Mediplex searched for a third parcel of land which would be appropriate for the facility in the city limits of Winter Park, Florida, since its sewage treatment plant was not subject to moratoriums placed on other sewage treatment plants in Orange County. Thus it was, that on September 2, 1981, a contract was obtained on the "Derby parcel." The Winter Park City Council annexed and properly zoned the Derby parcel for use as a nursing home on September 22, 1981. The conveyance to Mediplex, Inc. of the Darby parcel, pursuant to that real estate sales contract, was ultimately accomplished on December 23, 1981. The Park Lake Health Care Center ultimately was built on the Derby parcel.

   
   

   FINANCING TIMETABLE

   
   

5. Mediplex, Inc., M. G. Lewis and Company, Inc., a bond underwriting firm and Attorney Bechtel began endeavoring in November of 1979 to arrange for bond financing for the Park Lake Health Care Center project. The Orange County industrial development authority denied Mediplex, Inc.'s request for issuance of industrial revenue bonds for the project in March of 1981. Mediplex's efforts to obtain similar approval from the City of Orlando through the summer of 1981 failed. The City of Winter Park ultimately resolved to issue industrial revenue bonds for the project with the bond issue being approved on October 27, 1981. The bond validation hearing was held in the circuit court on November 20, 1981, and approved and the end of the bond challenge period elapsed on December 21, 1981. The industrial revenue bond issued was in the amount of $3,800,000. Interest began to accrue on those bonds on December 1, 1981. A Preliminary Official Statement was mailed to dealers for the securities on December 3, 1981.

   M. G. Lewis and Company, Inc., the co-underwriters, began marketing the bonds at that time. A Bond Purchase Agreement was executed between the City of Winter Park, as the issuing body and the bond underwriters, on December 22, 1981. Upon the execution of that Bond Purchase Agreement, M. G. Lewis and Company, Inc. thus committed itself to purchase the bonds. The ultimate bond closing date was January 5, 1982. The bond sale closing was originally scheduled to occur before December 25, 1981. The reel estate transaction closing for the Derby parcel and

   the bond sale closing were to be conducted contemporaneously, however, the bond underwriters requested that the closing be rescheduled until a time after January 1, 1982, due to the market effects of government regulations which took effect on January 1, 1982, end which spawned a flood of housing bond issues on the bond market in December, 1981, because of bond marketers seeking to avoid the disadvantages of the changing government regulations. Thus, December, 1981, was not a propitious time to market the bonds end the closing was set for January 5, 1982. If the bonds had not been sold prior to closing, then the underwriters would have become interim purchasers. The proceeds from the sale of the bonds were dispersed to Mediplex, Inc.

   
   

   CONSTRUCTION TIMETABLE

   
   

6. On July 31, 1981, construction documents submitted by Mediplex for the Park Lake Health Care Center were approved subject to certain responses required of Mediplex by the Department in the form of addenda or "change orders." Mediplex filed its response to those comments or requests for addenda to the plans end construction documents on October 13, 1981. On December 7, 1981, the Department advised Mediplex that the revised construction plans end documents had been approved. Approximately one week later, M. C. of Florida, Inc. (M.C.) a construction contracting company, received the signed end sealed, and HRS approved, architectural plans from Mediplex's architect.

   
   

7. The general contractors for the project were M. C. as well as Gulf Constructors International, Inc. (GCI). These two firms were engaged in a joint venture to build the facility since M.C. did not have a sufficient performance bond line to cover the entire $1,850,000 construction cost involved. M. C. bad been initially contacted regarding the possibility of constructing the facility in July or August of 1981. By September, 1981, Mediplex, Inc. had verbally assured M.C. that it could build the project provided it could adhere to Mediplex's budget price. In September, 1981, GCI became the joint venturer on the construction project with M.C. In October, 1951, the two firms submitted a written proposal for the construction contract for the facility to Mediplex. In November, 1981, M.C. received results of surveys and soil tests conducted by Jemmal and Associates. Mr. James Ross was started on the M.C. payroll as supervisor for the Mediplex project on November 18, 1981. On December 1, 1981, a construction contract was entered into between Park Lake Health Care Center (Mediplex) and M. C. and GCI authorizing construction of the nursing home facility for a contract price of $1,850,000. The contract provided for financial penalties for the contractors in the event the nursing home was not substantially completed within 425 days from the date of the issuance of the Notice to Proceed. Mr. John Black executed the contract on behalf of Park Lake Health Care Center, Inc., a wholly-owned subsidiary of Mediplex, Inc. Mr. Black was also President of Mediplex, Inc.

   
   

8. The Notice to Proceed was issued to the contractors, effective December 23, 1981. The document provided that the facility must be substantially complete by February 21, 1983. The construction contract as well as the Notice to Proceed were furnished to HRS under letter from Mr. Barry Vickory of Mediplex to Mr. Net Ward of HRS, dated December 20, 1981.

   
   

   PERMITTING CHRONOLOGY

   
   

9. Mr. Duane Moffit, the Secretary/Treasurer of M.O., delivered the approved construction plans and documents for the nursing home to the Orange County Health Department for their review on December 15, 1981. The construction plans and documents were approved by the Orange County Health

   Department as of December 17, 1981. The project manager for GCI, Mr. William Edwards, was then instructed to take the construction plans and documents and deliver them for review to the City of Winter Park Fire Marshal. The Fire Marshal for the city did not complete his review of the documents until January 8, 1982.

   
   

10. On January 5,1982, the project manager, Mr. Edwards, was informed for the first time by the Winter Park Building Department that a tree removal permit would be required. The Winter Park Parks Department had final approval regarding which trees could be removed from the building site. The tree removal permit was not finally obtained end approved until January 21, 1982.

    
    

11. In the meantime, Mediplex, Inc. and the City of Winter Park, in December and January, 1981 and 1982, became embroiled in a dispute over the amount of sewer and water "impact fees" to be paid for the Park Lake project. Mediplex, Inc. was to pay for the cost of extending water and sewer service to the property end for hooking up thereto. This dispute delayed the issuance of the water end sewer (and building) permits from the City of Winter Park, the charges for which could have been approximately $15,000 if issued before December 31, 1981. Mediplex, Inc. ultimately, however, had to pay impact fees for water end sewer service hookup of approximately $48,000 before the building permit could be issued. The impact fees were paid on February 2, 1982, and the building permit was issued on February 4, 1982, by the City of Winter Park. There was no impediment to issuance of the building permit and the related approval of water and sewer hookups in December, 1981, save the dispute regarding the $48,000 amount required for fees by the City of Winter Park.

    
    

12. The contractors had arranged to have Mr. George Nash begin clearing the nursing home site on December 21, 1981. Because of the delays in obtaining the necessary permits, the site clearing was not started in 1981. Because of the necessity to obtain the tree removal permit, which was not obtained until January 21, 1982, site clearing had to be delayed until January 22, 1982. After the Park Lake site had been cleared, it was found that soil compaction was required due to the sandy condition of the soil. Following soil compaction construction commenced and continued on schedule and the nursing home was completed before the deadline established in the construction contract.

    
    

    EXISTENCE OF INCIPIENT NON-RULE POLICY

    
    

13. Ray Chamlis was employed by the Office of Community Medical Facilities (OCMF) for approximately ten and one-half years, leaving that office in July, 1981. He held positions of Medical Facilities Consultant, Medical Facilities Specialist, and Medical Facilities Consultant Supervisor during his tenure with that office. Mr. Chamlis was personally responsible for monitoring construction progress and schedules of CON holders and personally drafted Rule 10-5.02(21), Florida Administrative Code, adopted in June, 1979, as part of an effort for the OCMF to more closely monitor compliance with the eighteen month construction deadline enunciated in the authority cited below. That rule provided: "Construction" means the commencement of and continuous activities beyond site preparation normally associated with erecting, altering or modifying a health care facility That rule was challenged and was ultimately invalidated by a DOAH Hearing Officer whose order was upheld by the First District Court of Appeal in Westchester General Hospital v. State of Florida, Department of Health and Rehabilitative Services, 417 So.2d 261 (Fla. 1st DCA 1982).

    
    

14. Mr. Gary Clark was Deputy Assistant Secretary for Health Planning for HRS from September, 1980, through June, 1982, and was responsible for all health

    planning end certificate of need matters and decisions within HRS at that time, with authority to make some decisions delegated to Mr. Thomas Konrad, including the authority to decide whether to revoke the instant certificate of need. Mr. Clark established that in instances were a CON holder did not have actual "out of the ground construction" at the end of eighteen months, that the policy was to "follow the rules," but he admitted there were a number of cases in which the Department "worked with" various applicants. "Worked with" refers to instances where HRS forebore from enforcing the eighteen month statutory time limit (after legitimate six month extensions), thus allowing additional time for CON holders to achieve construction starts. Mr. Clark could not recall such instances "aside from the Bonita Springs case, but was of the belief that HRS did so forebear because, as he stated, "we work with anybody." Mr. Thomas J. Konrad, Administrator of Community Medical Facilities since early 1981, described as HRS policy that "under construction" means digging the "footers," pouring concrete, and having concrete and steel foundations visible above ground. The reason for this definition is that the Department wants to ensure that certificate holders do not simply clear the building site with bulldozers before the end of an eighteen month period and on the strength of that, assert that their projects are "under construction." If concrete and steel foundation is visible above ground, then HRS claims that to be a reliable indicator that various building, sewer and zoning permits have been obtained pursuant to a construction contract. The Department, however, will alternatively accept letters, pictures or affidavits as proof of the initiation of construction (unless a later inspection proves otherwise), and has tended in the past to rely on such evidence and verbal assurances in its determination that a project is or is not under construction.

    
    

15. The Department departed from the above-claimed "non-rule policy" in a substantial number of cases involving different certificate of need holders, some of which are described as follows:

    
    

    1. Primary Emergency Care Center at Bonita Springs, Florida - CON No. 1337 - In this instance, the Department instigated action to revoke a CON for failure to be under physical, continuous construction "beyond site preparation" on February 27, 1952, the end of the eighteen month period. The Department later changed its position and informed the CON holder that the attempted revocation would be rescinded due to unusual delays occasioned by zoning matters together with delays attendant to earth compaction problems. The Department ultimately acceded to the completion of the Project under the original CON.

       
       

    2. The Shives Nursing Home in Sarasota County was issued a CON and the end of the eighteen month period, as legitimately extended, was June 12, 1981. The project was not under construction on that date, but HRS took no revocation action. That facility was allowed to be constructed and is presently operating. This position was taken by the Department after its employee, Mr. Oscar Laurene, had personally observed the facility not to be "under construction" at the end of eighteen months vis-a-vis the Department's putative definition of that term described above.

       
       

    3. Reach Out Associates, Inc. - CON No. 1313 - This facility was not under construction under the HRS definition described above on February 5, 1982, the end of its eighteen month period. The day before, the CON holder obtained a temporary restraining order from a Circuit Court to prevent the revoking or terminating of its certificate. On February 5, the CON holder had not closed its property transactions, sold its bonds, filed its construction plans with HRS, nor poured its foundation. The temporary restraining order was voluntarily dismissed on March 23, 1982. By April 7, 1952, the CON holder had still not

       poured its foundation. The project was ultimately allowed to be built, however, and the original CON was retained.

       
       

    4. Manor Care Nusing Home, Sarasota County - This facility did not commence construction until two months after the expiration of the eighteen month authorized period to commence construction which failure was personally observed by Mr. Laurene, who communicated that information to HRS in Tallahassee. The facility was allowed to continue in construction and the CON remains in effect.

       
       

    5. Bishop Court Nursing Home, Polk County - CON No. 1482 - The eighteen month CON period expired September 3, 1982, for this facility. Mr. Richard Morrison, a nursing home administrator in Brooksville, Florida, personally observed the site on September 4 and 5, 1982. No "physical and continuance construction beyond site preparation" was underway. Trees had been uprooted and survey stakes laid out, but no trenches had been dug and no concrete or steel was emerging from the ground, in accordance with HRS's professed "policy" in this regard. He informed Mr. Laurene, Mr. Laurene informed HRS. On the basis of a letter and a telephone call from the CON holder assuring that the project commenced timely construction, HRS forebore revocation of the CON, determining that the project was indeed under construction as of September 3, 1982.

       
       

16. The same situations occurred in the case of Venice Pavillion North, a nursing home addition; Care Management of Monroe County - CON No. 1309; Key West

    - CON No. 1318; Florida Club Care Center Limited - CON No. 1397; and others.

    
    

17. Mr. Terry H. Taylor was qualified end accepted as an expert in the area of building construction. Mr. Taylor is President of T. H. Taylor, Inc., a general contracting firm domiciled in Montgomery, Alabama. He is a civil engineer and has engaged in the construction business for approximately 20 years, primarily in institutional, commercial end industrial construction. He is presently engaged in the construction of six nursing home projects in Florida. The typical nursing home project in Mr. Taylor's experience involves a construction expenditure of the magnitude of approximately 51,700,000. Approximately $1,200,000 of that amount would typically be committed to the project within a very short time after the execution of the construction contract. It is the custom in the construction industry to view a project as being "under construction" when the general contractor has a contractual commitment to commence the project. The recognized industry standard of being "under construction" is the point of the execution of the construction contract and financial commitment between the owner and the builder, such that the general contractor can legally enter contracts with subcontractors for various phases of the job and order materials. It is standard business practice of Beverly Enterprises itself (the present owner of the subject project) to treat the execution of the construction contract as the key committing event in determining that a project has commenced construction, since, at that point in time, it segregates and places the construction funds in its "construction in progress account". In following this customer business practice, Beverly Enterprises has had licensed, constructed and now operates 42 nursing homes in Florida alone and has 9 nursing home projects presently under construction. The espoused policy of HRS in considering construction to have commenced when a concrete and steel foundation is observable above-ground on a job site and not when just mere site preparation has occurred, has not been uniformly enforced and in a substantial number of cases, including those delineated above, HRS has forborne from so strictly enforcing the eighteen month CON construction

    commencement period, opting instead to accept a CON holder's good faith effort at commencing construction within that time period.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1981).

    
    

19. Section 381.494(5)(f), Florida Statutes (Supp. 1982), provides as follows:

    
    

    A certificate of need shall terminate 1 year after the date of issuance unless the applicant has commenced construction (emphasis added), if the project provides construction, or has incurred an enforceable capital expenditure commitment for a project not involving construction or unless the certificate of need validity period is extended by the department for an additional period of up to 6 months, upon showing of good cause by the applicant for the extension. The department shall monitor the progress of the holder of the certificate

    of need in meeting the timetable for project development specified in the application and may revoke the certificate of need, if the holder of the certificate of need is not meeting such timetable and

    is not making a good faith effort to meet it.

    
    

20. Rule 10D-5.02(21), Florida Administrative Code, defined construction as "the commencement of and continuous activities beyond site preparation normally associated with erecting, altering or modifying a health care facility pursuant to construction plans end documents approved by the Department." That rule was invalidated by order of a Hearing Officer and affirmed by the First District Court of Appeal in Westchester General Hospital v. State of Florida, Department of Health and Rehabilitative Services, 417 So.2d 261 (Fla. 1st DCA 1982). In the face of the invalidity of that rule defining commencement of construction, the Department attempted to establish a valid, incipient, non-rule policy defining "commence construction" as "physical and continuous construction beyond site preparation" within (as pertinent hereto) eighteen months, as delineated in the above Findings of Fact. As found above, a number of witnesses from the Department asserted that it has been the Department's policy that the eighteen month construction period was enforced in a manner substantially similar to the definition provided in the now invalid rule. The preponderant evidence adduced, however, is not supportive of that assertion, does not provide an adequate record foundation so that it may be concluded that the Department has proven that it practices and exercises a valid, incipient, non-rule policy to that effect, and countervailing evidence and arguments were presented to refute that alleged non-rule policy. McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977).

    
    

21. It was shown, for instance, by experts in the construction industry that the construction industry's custom and usage defines "construction" as commencing with the execution of a binding construction contract and arrangement

    of a firm financial commitment between owner and builder, which occurred in this case on approximately December 2, 1981, before the December 25, 1981, termination date of the eighteen month CON validity period, and that notice of proceeding in furtherance of a binding construction contract is another strong and well-accepted indicia of commencement of construction on a given project, which notice was issued on December 23, 1981. The preponderant evidence and the AT Findings of Fact above, establish that a firm commitment to construct the project existed long prior to December 25, 1981, by such factors as the arrangement of bond financing, the submission of the final revised construction plans and architectural documents to HRS in October, 1981; the applications for appropriate permits; the bond validation occurring on November 20, 1981; the land closing on December 21, 1981; and the final agreement for bond purchase being executed between the City of Winter Park and the bond underwriters on December 22, 1981. Further, a number of the crucial delays in obtaining appropriate permitting were shown not to be the fault of this CON holder. The permits could not be applied for from the City of Winter Park, for example, until the construction plans and architectural documents were finally approved by HRS, which did not occur until December 7, 1981, although they had been submitted to HRS in October, 1981. Thus, by mid-December, 1981, Mediplex had done what it needed to do to seek its building permits and the delays that required it to wait until that time to file for building, water and sewer, and other permits (and to wait until February, 1982, for their receipt) were not entirely the delays of Mediplex itself. All of this demonstrates that substantially all of the indicia of the "commencement of construction" as that concept is defined by generally accepted custom and usage in the construction industry, and established by these expert witnesses, occurred prior to December 25, 1981, and that Mediplex made a substantial and good faith effort to meet its December 25, 1981, deadline. The putative "policy" espoused by HRS in this proceeding, strictly enforcing the eighteen month period if concrete and steel was not protruding from the surface of the job site before that time, is belied by this evidence of the industry-wide interpretation of what truly constitutes "commencement of construction" on such a project and by unrefuted evidence that Mediplex has been subjected to strict enforcement of the eighteen month CON validity period in this case when in other cases, such as the Bonita Springs case alluded to above (and others), a facility was built with a valid certificate of need which was never revoked and which construction commenced substantially after the construction can be deemed to have commenced in the instant case. In short, in the Bonita Springs case and in the other instances delineated in the above Findings of Fact involving other CON holders, the policy espoused in this record by HRS has not been proven to be uniformly or consistently enforced and practiced at all, such that it can be deemed a valid, incipient, non-rule policy. Instead, the Department has generally followed a practice of forebearance from enforcing the eighteen month standard when a CON holder has demonstrated a good faith effort to commence a project during, or even after the time limit, as Mediplex has clearly demonstrated in this instance. Thus, in the absence of a duly promulgated rule allowing it, the attempted strict enforcement of the time limit against Mediplex must fail in view of its "good faith effort" and the above statutory standard. Anheuser- Busch, Inc., v. Department of Business Regulation, 393 So.2d 1177 (Fla. 1st DCA 1981); North Miami General Hospital, Inc. v. Office of Community Medical Facilities, Department of Health and Rehabilitative Services, 355 So.2d 1272 (Fla. 1st DCA 1978).

    
    

22. Further, with regard to the above statutory standard itself regarding the requirement that the Department monitor progress of the holder of the CON and providing for revocation of the CON if the holder " . . . is not meeting such timetable and is not making 'a good faith effort' to meet it," it must be

    pointed out that Mediplex, Inc. has clearly made a good faith effort to meet its construction commitment vis-a-vis its eighteen month approved CON validity period in this case. As delineated in the above Findings of Fact, Mediplex began fairly promptly after its CON approval on June 26, 1980, with attempting to arrange industrial revenue bond financing with Orange County and the City of Orlando, which effort ultimately failed, as did its effort to secure two other project sites which efforts failed due to regulatory disputes involving zoning and water and sewer utilities service. These and other efforts to finance and commence construction of the project thus were underway early in the CON licensing period and the fact that all such development efforts were not immediately and timely successful was not due to lack of early and diligent effort by Mediplex. The preponderant evidence in the record clearly establishes that Mediplex did not simply wait until December to commence efforts at showing HRS that it had started construction, but rather that those efforts had been ongoing for a substantial number of months and that the final critical indicia of commencing construction of the project such as execution of the contract, notice of commencement, filing for the building permit, closing of the real estate conveyance, and the execution of the bond sale agreement were really the culmination of its efforts to commence construction and get the project underway in a valid exercise of its authority under its certificate, rather than feeble first attempts to convince HRS that it was commencing construction at the eleventh hour. Indeed the only impediments to construction remaining outstanding after December 29, 1981, were the delayed permits; delays largely the fault of the City of Winter Park.

    
    

23. In summary it has been demonstrated by a preponderance of evidence in this record that Mediplex, Inc. has largely actually met its timetable for commencing construction of this project, and that to the extent it has not, the delays were largely the fault of regulatory authorities. Further, even to the extent that such timetable has not been met for purposes of the above statute, in effect at the time of this hearing, Mediplex, Inc. certainly has established that a good faith effort was made to meet that timetable such that the statute had been satisfied. There has been demonstrated no incipient, valid, non-rule Department policy defining "commencement of construction" which, in the face of the statutory standard, the Hearing Officer could deem that Mediplex has flouted. Thus, the Certificate of Need No. 1286 must be concluded to remain in full force and effect.

    
    

    RECOMMENDATION

    
    

24. Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence in the record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, hereby

RECOMMENDED that a Final Order be entered by the Department of Health and Rehabilitative Services providing that Certificate of Need No. 1286 for a 180- bed nursing home in Orange County, Florida, remains valid and in full force and effect.

DONE and ENTERED this 30th day of September, 1983, in Tallahassee, Florida.

P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 30th day of September, 1983.

COPIES FURNISHED:

E.G. Boone, Esquire

1. Joseph Wright, Esquire 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 34284

   
   

   James M. Barclay, Esquire Department of Health and

   Rehabilitative Services 1317 Winewood Blvd.

   Tallahassee, Florida 32301

   
   

   David H. Pingree, Secretary Department of Health and

   Rehabilitative Services 1323 Winewood Blvd.

   Tallahassee, Florida 32301

   
   

   ================================================================= DEPARTMENT'S EXCEPTIONS TO RECOMMENDED ORDER

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

   
   

   STATE OF FLORIDA

   DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

   
   

   MEDIPLEX, INC.,

   
   

   Petitioner,

   
   

   vs. CASE NO.: 82-736

   
   

   DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

   
   

   Respondent.

   /

   
   

   DEPARTMENT'S EXCEPTIONS TO RECOMMENDED ORDER

   
   

   The Department takes exceptions to the Recommended Order as follows:

   
   

   1. On Page 10, the policy described has been replaced with a statutory definition which is found at subsection (3)(u) of Section 381.493, F.S., 1983. Further, the "proofs" of initiation of construction do not apply in light of the foregoing statutory definition.

      
      

   2. In paragraph numbered 2 on page 11, the Hearing Officer incorrectly classed Oscar Laurene as a Department "employee". He is not.

      
      

   3. For exception to the "industry standard" set forth at the top of page 13, see exception numbered 1.

      
      

   4. For the policy set forth in the first full paragraph on page 13, see exception numbered 2.

      
      

   5. Subsection (8)(f) of Section 381.494, F.S., set forth on pages 13 and 14, has been legislatively expanded by the adoption of subsection (3)(u) of Section 381.493, F.S.

      
      

   6. At the end of the last full paragraphs on page 14 and 16, there should be added a sentence to the effect that a new definition of commencement of construction has been set forth in subsection (3)(u) of Section 381.493, F.S.

      
      

   7. The last sentence in the paragraph at the top of page 18 should read as follows: "While there has been demonstrated no incipient policy at the time of the hearing, there now exists a statutory standard which, if applied to Mediplex, would have warranted revocation.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that these exceptions have been filed with the Department and a copy furnished by regular U.S. mail to E. G. Boone, Esquire, Post Office Box 1596, Venice, Florida 34284, this 20th day of October, 1983.

James M. Barclay Attorney

Office of Health Planning and Development

Department of Health and Rehabilitative Services

1317 Winewood Boulevard

Building 2, Suite 256

Tallahassee, Florida 32301 904/487-2513

Docket for Case No: 82-000736

Orders for Case No: 82-000736