vs. ) CASE NO. 83-1026
Respondent. )
vs. ) CASE NO. 83-1027
Respondent. )
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on August 30, 1983, in Tallahassee, Florida. The issue for determination in these proceedings is whether petitioner is entitled to a six-month extension on the termination dates of its Certificates of Need to construct 120-bed nursing homes in Pinellas and Pasco Counties.
325 N. Calhoun Street Tallahassee, Florida 32301
For Respondent: Claire D. Dryfuss & Jay Adams
In support of its position that petitioner is entitled to extensions of the Certificates of Need to construct nursing homes in Pinellas and Pasco Counties, petitioner presented the testimony of twelve witnesses and its Exhibits 1 through 28 were received into evidence. Testifying on behalf of the petitioner at the hearing were John DeVaul, petitioner's Manager of Acquisitions; Stephan H. J. Pricker, petitioner's Director of Design; Paul Sieben, petitioner's Vice President of Construction; Nathanial Ward, a Medical Facilities Consultant Supervisor with the respondent Department of Health and Rehabilitative Services (HRS); Paul Hronjak, petitioner's Project Planner; Thomas J. Konrad, the former Administrator of respondent's Office of Community Medical Facilities; and La Donna Cody. Testifying by way of deposition were Joseph G. Alcure, Jr., Ira Wagner and Richard Charles Rosenvold, Medical Facility Architects with the respondent's Office of Licensure and Certification, and John Von Gunter and Craig Rader, private architectural consultants to the Office of Licensure and Certification.
Respondent presented the testimony of Thomas J. Konrad and its Exhibits A and B were received into evidence. Subsequent to the hearing counsel for the parties submitted proposed findings of fact and proposed conclusions of law for consideration by the undersigned. To the extent that the parties' proposed findings of fact are not included in this Recommended Order, they are rejected as being either not supported by competent substantial evidence adduced at the hearing, irrelevant or immaterial to the issues in dispute or as constituting conclusions of law as opposed to findings of fact.
Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the stipulation of facts, the following relevant facts are found:
Petitioner Health Care and Retirement Corporation America (HCR) is an Ohio corporation that operates nursing homes in five states and in Florida. On March 23, 1982, petitioner was granted a Certificate of Need to construct a 120-bed nursing in Pinellas County. she expiration date on that Certificate as March 22, 1983. On March 18, 1982, petitioner was granted a Certificate of
Need to construct a 120-bed nursing home in Pasco county, with an expiration date of march 17, 1983.
Petitioner was issued a Certificate of Need on October 27, 1981, width an expiration date of October 26, 1982, for nursing home facility in Palm Beach County. Having experienced difficulties in the acquisition of a site for the project, petitioner requested, by letter dated October 8, 1982, an extension of the termination date of the Certificate of Need, and provided HRS with an explanation of the site selection difficulties, a notarized option to purchase property, a financial commitment letter and advised HRS that it had a meeting with the State architect from respondent's Office of licensure and Certification (OLC) on November 8, 1982. Petitioner was aware from its experience with Palm Beach County project of the busy schedule of HRS's OLC early as October 8, 1982. Although the preliminary architectural plans for the Palm Beach County project had not been submitted to the OLC as of the date of the original termination of the Certificate of Need, HRS granted petitioner a six-month extension of its Certificate of Need for that project. As of the date of the hearing in this proceeding, construction on the Palm Beach County project had not begun.
Representatives from petitioner had a meeting with OLC officials on February 21, 1983, to review plans for another facility located in Port Charlotte. It was during that meeting that appointments were made for the review and approval of the preliminary plans for the Pasco and Pinellas County projects. The meeting date set for the review of the Pasco County project was March 22, 1983. The meeting date set for the Pinellas County project review was March 29, 1983. As of February 21st, petitioner had not yet prepared the plans for these projects because it was heavily involved in other projects. It was anticipated that the plans for the Pasco County project could be completed in two weeks because it would utilize the Company prototype plan. Preparation of the plans for the Pinellas County project was expected to take longer (from two to six months) because of site conditions and configurations.
By letters dated February 17, 1983, and February 22, 1983, respondent's Medical Facilities Consultant Supervisor, Nathaniel Ward, advised the petitioner's Project Planner that 11 months had passed on its two Certificates of Need for nursing homes in Pasco and Pinellas Counties. Those letters further advised petitioner that a status report was due and that the Certificates could be extended for an additional period of up to six months upon the showing of good cause by the applicant for the extension. The rule containing the method and criteria for submitting a request for an extension for good cause was fully set forth in the respondent's letter to petitioner, and petitioner was
advised that failure to commence construction or to secure a Lime extension by the termination dates of the Certificates of Need would be cause for HRS to declare the Certificates null and void.
By letter to HRS dated March 2, 1983, petitioner requested a six-month extension on its Pasco County Certificate of Need. The letter noted that extreme difficulties in locating a site for the project had been encountered and that petitioner had now selected a site and had received assurances from the underwriter and county officials regarding financing. Respondent HRS, making reference to its prior letter of February 17, 1983, requested petitioner, by letter dated March 4, 1983, to furnish the required documentation for considering an extension. On March 17, 1983, La Donna Cody, a member of the law firm representing petitioner, brought some documents to Nathanial Ward's HRS office in Tallahassee. These documents included an "Option to Purchase" certain land in Pasco County, said option to be exercised on or before April 17, 1993. The option was dated March 17, 1983, was purportedly signed by the seller of the property, bore no witnesses and was not notarized. The preliminary plans for the Pasco County project were also delivered to Mr. Ward on March 17, 1983. Mr. Ward informed petitioner's representative that he was not the proper person with whom to file the plans and that the plans had to be filed with the HRS Office of Licensure and Certification in Jacksonville. He informed Ms. Cody that he would wait until the next day, March 18th, to make his decision regarding the extension request and would first call the Jacksonville OLC office to determine if the plans had been filed. Mr. Ward was also delivered a letter dated March 1, 1983 from Raymond, James and Associates, Inc. stating that they would be pleased to act as underwriter for the Pasco County nursing home facility and anticipated no difficulty placing this issue.
Mr. Ward advised the petitioner by letter dated March 18, 1983, that its request for a six-month validity extension on its Pasco County Certificate of Need was denied in that good cause for an extension was not found to exist. Petitioner was requested to return the original certificate, which was then null and void.
The bases for Mr. Ward's decision were that the Option to Purchase, containing no witnesses and no notarization, was not satisfactory; the commitment regarding financing, containing no terms, conditions or acceptances, was not sufficient and the plans had not been submitted to the OLC in Jacksonville.
Petitioner also requested a six-month extension on the Pinellas County Certificate of Need. By letter dated March 1, 1983, again citing site acquisition problems as the reason for the requested extension, petitioner informed respondent that it had now acquired the property and had applied for annexation, zoning and land use plan changes. Petitioner further informed HRS that
the meeting with the OLC on its preliminary plans was scheduled for March 29, 1983, and that petitioner would accomplish the submission of final plans by April 6th. Finally, petitioner in formed respondent that it had received an inducement resolution from the City of Safety Harbor for tax exempt bond financing and that its underwriter had assured petitioner that "bond financing will be as smooth as it usually is on our projects." Attached to the letter requesting a six-month extension were copies of the Options to Purchase, effective for a period of sin months. There was no evidence that the options had been exercised by the petitioner.
By letter dated March 23, 1953, HRS notified petitioner that its Certificate of Need for the Pinellas County nursing home project had expired on March 22, 1983, and was null and void. Mr. Ward informed petitioner that its extension request was denied for failure to show good cause for the extension. The bases for this decision were that the plans for the Pinellas County project had not been filed with the OLC, that the inducement resolution from the City of Safety Harbor was not considered a firm financing commitment and that the options to purchase containing conditions with regard to annexation by the City and rezoning, did not illustrate a firmly secured site.
The respondent's rules require requests for extensions of Certificate of Need validity periods to be submitted along with supporting documentation not later than 15 days prior to the Certificate of Need termination date. The respondent HRS considers this time frame to be met if the letter, with supporting documentation, requesting the extension is dated 15 days prior to the termination date and the Department has notice that an extension is being requested within that time period. While the rule requires documentation of the submission of final construction plans for review by the OLC, it has been the policy of respondent to accept the submission of preliminary plans as meeting the criteria for an extension if the plans were submitted prior to the expiration date of the original Certificate of Need.
It is the responsibility of three employees of the respondent's OLC, as well as three or four private consultants under contract with HRS, to review the schematics, preliminary plans and final construction plans for health care facilities.
The manner in which this is routinely done is for the applicant to notify the OLC of their readiness for review and then the OLC schedules a meeting between its architects and the applicant's architects and engineers on the first available Monday or Tuesday in Jacksonville. It generally takes about a month to secure a meeting date from the time the request for a meeting is made.
Applicants are discouraged by the OLC from sending in their plans prior to the date arranged for the meeting, but instead are
encouraged to have their architects and engineers bring the plans to the meeting. The actual review of the plans occurs during the meeting between HRS officials and representatives of the applicant. The review of plans for a nursing home normally takes from three to six hours.
CONCLUSIONS OF LAW
The applicable statutory and regulatory provisions with regard to the expiration date of a Certificate of Need and requests for extensions thereof are found in Section 381.494(8)(f), Florida Statutes (1982 supp.), and Rule 10-5.13(4), Florida Administrative Code. The statute provides that, for projects involving construction, a Certificate of Need terminates one year after the date of issuance unless the applicant has commenced construction or unless the validity time period is extended by HRS "for an additional period of up to six months, upon showing of good cause by the applicant for the extension." Section 381.494 (8)(f) Florida Statutes (1982 Supp.). In implementation of this statutory language, HRS has promulgated Rule 10-5.13(4) , Florida Administrative Code, reading as follows:
(4) An applicant desiring a 6 month validity extension to a Certificate of Need shall submit such request to the department, in writing not later than
15 days prior to the certificate ter- mination date providing documentation of good cause upon which such request is based. Good cause by the applicant in support of a request for a validity time period extension is documentation that each of the following has been satisfied:
If applicable, a site has been firmly secured, and
Project financing has been firmly secured, and
For projects involving con- struction, final construction plans
for the proposed project have been sub- mitted for review by the Office of Licensure and Certification of the department unless the applicant can document that the submission of such final construction plans for review was precluded by circumstances beyond his control...
It is the petitioner's contention in these proceedings that it satisfied the three requirements for obtaining extensions for its projects in Pasco and Pinellas Counties, and that the denials of these requests for extensions were inconsistent with past agency practice. Petitioner alleges that it was precluded by HRS employees from filing their preliminary plans for these projects prior to the expiration dates of their Certificates of Need, and that petitioner relied to its detriment on the prior action of HRS in granting an extension on petitioner's Palm Beach County project without the necessity of filing plans.
It is clear from the language contained in the statute and rule quoted above that the applicant bears the burden of proof to demonstrate by adequate documentation that there is good cause for an extension of the termination date of its Certificate of Need. In order to receive an extension, the applicant must illustrate by documentation that a site has been "firmly" secured, that project financing has been "firmly" secured and that construction plans have been "submitted" for review by the HRS Office of Licensure and Certification, unless submission was "precluded" by circumstances beyond the applicant's control. Each of these conditions must be satisfied before the Department is authorized to grant an extension, and the time for meeting each condition is prior to the expiration date of the original certificate of Need.
The evidence in this case demonstrates that, with regard to both the Pasco County and the Pinellas County projects, petitioner did not have firmly secured sites, documentation regarding the terms and conditions of financing were not provided to HRS and plans for the projects had not been submitted to HRS's Office of licensure and Certification. The three paragraph document regarding the site for the Pasco County project entitled "Option to Purchase," which was dated and submitted to HRS on the day upon which the Certificate of Need was to expire and which contained no witnesses, no notarization and did not even identify the grantor or signator of the Option, was not sufficient to demonstrate that petitioner had a firmly secured site for its project. The Options to Purchase property in Pinellas County contained conditions with regard to rezoning and annexation to occur within six months. While this factor alone may not have been sufficient ground to deny a requested extension, the absence of documentation regarding firm financial arrangements for the project and the failure to have submitted plans to the OLC, justify a conclusion that petitioner failed to provide good cause for an extension.
The almost identical letters from the proposed underwriter did not identify the terms of the financial
commitment, and were not, by themselves, adequate to demonstrate that project financing had been firmly secured.
As to the submission of plans to the OLC, petitioner was fully aware from its experience with its Palm Beach County project as early as October of 1982 that scheduling difficulties might be experienced in setting up a meeting for the review of its plans. In spite of this, petitioner waited until February 21, 1983, close to one month prior to the expiration dates on its Certificates, to request a meeting for the review of plans. Even at that late date, the plans were not ready for review. Instructions from the OLC that the plans need not be sent in to that Office prior to the scheduled meeting date did not relieve the applicant of complying with the terms of its Certificates of Need or the law governing “he granting of extensions. Petitioner was specifically informed by letter one month prior to the expiration dates on both projects that plans must be submitted to the OLC prior to a request for an extension. In addition, prior to the expiration dates, petitioner was specifically informed by Mr. Ward that, before making his decision with respect to an extension on the Pasco County project, he would call the OLC to ascertain if the plans had been submitted. For one reason or another, petitioner still chose not to place its Pasco County plans on file with the OLC. Though petitioner had a scheduled meeting with the OLC on the exact date of the expiration of its CON on the Pinellas County project, it chose to utilize this date for the review of its plans for the Pasco County project. Given the specific instructions for requests for extensions provided in Mr. Ward's letter, as well as his verbal communications to petitioner's representative on March 17, 1983, it can only be assumed that the Pinellas County project plans were not ready for review by the expiration date of the Certificate of Need for that project.
Petitioner's contentions of estoppel due to the practice of the OLC in discouraging the filing of plans prior to the scheduled meeting and the prior actions of HRS in granting the Palm Beach County project an extension in the absence of a prior submission of plans are not persuasive. An applicant is charged with compliance with the criteria and conditions for a license. There was no evidence that the OLC prohibited or precluded the filing of plans with that Office prior to a scheduled meeting. At best, the evidence only establishes that the plans would not be reviewed or approved prior to the meeting. Rule 10-5.13(4)(c), Florida Administrative Code does not require the prior review or approval of plans. It requires only that the plans be "submitted" to the OLC. The fact that HRS may have granted an extension for another project where plans had not been submitted does not justify an extension where all three requirements for an extension have not been met. A deviation from the rule by HRS in one instances does not justify further deviations, especially where an
applicant is specifically and repeatedly informed that the Rule's requirements must be met.
In conclusion, it is determined that petitioner has failed to sustain its burden of proof that, prior to the expiration dates of its Certificates of Need, there was good cause for a six-month validity extension to the Certificates of deed granted for nursing homes in Pinellas and Pasco Counties.
Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that petitioner's requests for six-month extensions of its Certificates of Need to construct 120- bed nursing homes in Pasco County and Pinellas County be DENIED, and that said Certificates be declared null and void.
Respectfully submitted and entered this 8th day of December, in Tallahassee, Florida.
DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 8th day of December, 1983.
325 N. Calhoun Street Tallahassee, Florida 32301
Claire D. Dryfuss & Jay Adams Assistants General Counsel 1323 Winewood Blvd., Suite 406
1323 Winewood Blvd.
