STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH CARE AND RETIREMENT )

CORPORATION OF AMERICA, )

)

Petitioner, )

)

vs. ) CASE NO. 83-1775

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) FLORIDA CONVALESCENT CENTERS, ) INC., )

)

Intervenor/Respondent. )

)

)

RECOMMENDED ORDER

This case was heard before the Division of Administrative Hearings by its designated Hearing Officer, Michael Pearce Dodson, on August 29, 1933, in Tallahassee, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Alfred W. Clark, Esquire

and Jean Laramore, Esquire LARAMORE AND CLARK, P.A.

325 North Calhoun Street Tallahassee, Florida 32301

For Respondent: James M. Barclay, Esquire

Department of Health and Rehabilitative Services

Building Two, Suite 256 1317 Winewood Boulevard

Tallahassee, Florida 32301

For Intervenor: Donna H. Stinson, Esquire

and Thomas A. Sheehan III, Esquire MOYLE JONES AND FLANIGAN, P.A.

Suite 858 Barnett Bank Building Tallahassee, Florida 32301

BACKGROUND

These proceedings began on May 20, 1983 when Health Care and Retirement Corporation of America (HCR) filed a Petition for Administrative Proceedings

with Respondent Department of Health and Rehabilitative Services (HRS) to request an administrative hearing on HCR's applications for certificates of need to construct nursing homes in Florida. On June 3, 1983 the case was forwarded to the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of a final hearing. That hearing was initially set for August 2, 1983 but the parties jointly requested a continuance which was granted. The final hearing was rescheduled for August 29, 1983.

Prior to that date HCR filed a companion case styled Health Care and Retirement Corporation of America v. Department of Health and Rehabilitative Services, Case No. 83-2259R to challenge the validity of Section 10-5.08(1)(b), Florida Administrative Code, as amended on July 29, 1982. Simultaneously with the filing of its Petition in Case No. 83-2259R HCR filed a Motion for Consolidation of this case with Case No. 83-2259R. The Motion was initially denied because the time periods for hearing a rule challenge case are significantly different from those for hearing a Section 120.57 case. On August 12, 1983 Florida Convalescent Centers, Inc. (FCC) filed a Petition to Intervene here which was granted on August 15, 1983.

On August 10, 1983 Petitioner filed another Motion for Consolidation of this case with Case No. 83-2259R. When counsel represented that both cases could be tried on August 15, 1983, the Motion was granted but was later reconsidered and vacated at instance of HRS. 1/

Petitioner offered the testimony of Mr. Paul Hronjak and offered exhibits 1-9 into evidence. Exhibits 1-7 and 9 were so received. Ruling on the

admissibility of exhibit 8 was reserved until this time, and that exhibit is now admitted. 2/ Respondent offered the testimony of Ms. Marjorie Turnbull. The Intervenor/Respondent offered the testimony of Mr. Autha Forehand. All parties have filed Proposed Recommended Orders containing proposed findings of fact.

They have each been given careful consideration here. To the extent that the proposed findings are not reflected in this Order, they are rejected as being either not supported by the weight of admissible evidence, or as being irrelevant to the issues determined here. 3/

FINDINGS OF FACT

1. Petitioner HCR operates nursing homes in Florida. On February 28, 1982 HCR filed letters of intent with the Department to submit applications for nursing home projects in Duval and Flagler counties. On March 10, 1983 HCR filed similar letters advising the Department that HCR intended to file applications for certificate of need for nursing homes to be located in Collier, Escambia, Broward, Lake, Citrus, Sarasota, Alachua, Pasco, Hillsborough, Pinellas, Brevard, Monroe, Palm Beach, St. Lucie, Indian River, Orange, Manatee, Volusia, Marion, Gadsden, Lee, Leon and Dade counties. Upon receipt of HCR's letters of Intent the Department sent to HCR and to each local health council

   4/ a letter acknowledging receipt of the letters of intent. The acknowledgment letters advised HCR of the schedule for review of certificate of need applications and provided Petitioner with the required application forms and instructions.

   
   

2. On April 14, 1983 HCR filed applications for certificates of need for those counties mentioned above. On the same date HCR filed copies of applications and letters of intent with all local health councils having jurisdiction for the above named counties.

3. On April 14, 1983 the Department returned HCR's applications because HCR had not filed by March 16, 1983 letters of intent with the local health councils respecting HCR's applications. The Department informed HCR that it could resubmit its applications for the next review cycle with the filing of the required notices of intent with both the department and the local health councils.

   
   

4. The effect of the Department's returning HCR's applications has been to exclude HCR from the April review cycle within which applications and certificates of need for nursing homes were considered. As a result HCR was prevented from developing nursing home projects for which approval may have been obtained. It is possible that HCR will anticipate a loss of revenue from its inability to compete for nursing home beds within the April review cycle.

   
   

5. Intervenor/Respondent FCC filed seventeen applications in the April 1983 review cycle for certificates of need to build nursing homes in Florida. FCC followed the procedures set out in Section 10-5.08(1)(b), Florida Administrative Code, including the requirement to timely file letters of intent with the local health councils. Its applications were therefore considered in the April 1983 review cycle.

   
   

6. On July 13, 1983, subsequent to the beginning of these proceedings, but prior to the final hearing, HCR filed additional applications for certificates of need to construct nursing homes in Florida. Three of these applications, those for Lee, Sarasota and Collier counties, were returned by HRS of July 27, 1983 for failure of the applicant to timely file letters of intent with the appropriate legal health councils.

   
   

7. During its 1983 session the Florida Legislature enacted Section 3 of Chapter 82-182, Laws of Florida (1982) which abolished the then existing health systems agencies and established in their place local health councils. In September 1982, after the new law took effect, Mr. Hronjak on behalf of Petitioner had a discussion with HRS about filing letters of intent with local health councils because even though they had been established effective July 29, 1982, they actually did not exist in September. The delay was due to the time required for local officials to appoint members of the local health councils. Mr. Hronjak was informed in his discussions that even though Chapter 82-182, Laws of Florida and the Department's recently amended rule found in Section 10- 5.08(1)(b), Florida Administrative Code, required the filing of letters of intent with the local health councils as a condition precedent to the later filing of applications for certificates of need, such letters need not be filed since there were not then in existence any councils to receive them.

   
   

8. Subsequent to Mr. Hronjak's conference with HRS the local health councils were duly constituted and by February 17, 1983, all the councils were under contract to HRS to perform the responsibilities given them by Section 381.494, Florida Statutes. After the councils began operation HRS did not publish any notice that it would begin enforcing the provisions of either Section 381.494 or its own rule requiring letters of intent to be filed.

   
   

9. Between the time of the conference with HRS in September 1982 and the filing of the applications for certificates of need in issue here, neither Mr. Hronjak nor anyone else on behalf of Petitioner inquired of HRS to determine whether the above mentioned provisions for filing letters of intent were being enforced. As a result and relying on the information received in September of 1982. Petitioner failed to timely file letters of intent with the appropriate local health councils.

10. Other applicants including Intervenor/Respondent did keep track of when the local councils came under contract and they therefore timely filed letters of intent in support of their later applications for certificates of need. When HRS in September 1982 told Petitioner that it was not required to file letters of intent HRS did not represent that applications for certificates of need filed subsequent to September 1982 would not require timely letters of intent.

    
    

11. The filing of a letter of intent with a local health care council is at best an insignificant step in the certificate of need process. Thirty days before an applicant can file a certificate of need application with HRS, it must first file a letter of intent with the local health care council and with HRS. The councils receive complete applications once they have been filed with the Department. The only purpose served by a letter of intent therefore is to provide a council 30 days advance notice of a later possible application. The council does nothing with the letter of intent during that 30-day interim period other than to keep it on file for possible inspection by the public. During the 30-day period, prior to applications being filed, the council has no function with respect to the proposed project.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case. Section 120.57(1), Florida Statutes (1981).

    
    

13. Section 381.494(5), Florida Statutes provides:

    
    

    NOTICE TO THE LOCAL HEALTH COUNCIL AND THE

    DEPARTMENT. -- The department, by rule, shall provide for applications to be submitted on a timetable or cycle basis; provide for review on a timely basis; and provide for all completed applications pertaining to similar types of services, facilities, or equipment affecting the same health service area to be considered in relation to each other no less often than four times a year. At least 30 days prior to filing an application, a letter of intent shall be submitted by the applicant to the local health council and the department respecting the development of a proposal subject to review.

    
    

    This requirement is further amplified by the Department's own rule appearing in Section 10-5.08(1)(b), Florida Administrative Code, which provides:

    
    

    Because letters of intent give applicants a right of entry into the Certificate of Need process, failure to file a timely letter of intent and to have it actually received by the Department and by the local health council at least 30 days prior to the filing of an application will prevent the Department from accepting an application. Failure to timely file a letter of intent or to timely file an

    application will cause a delay in a Certificate of Need project until the next available review cycle.

    
    

14. The 28 certificate of need applications in question here which were filed by HCR were not preceded by timely letters of intent to the local health councils. HCR's basic argument in support of having its applications considered is one of estoppel. There is no question that in appropriate circumstances the equitable doctrine of estoppel may be asserted against the state and its agencies such as HRS. The Florida Companies v. Orange County, Florida, 411 So.2d 1008, 1010 (Fla. 5th DCA 1982). The instances when that occurs however are rare and exceptional. Department of Revenue v. Anderson, 403 So.2d 397, 400 (Fla. 1981).

    
    

15. In order to establish estoppel a party must prove the following elements: (1) a representation as to a material fact that is contrary to a later asserted position, (2) reliance on that representation, and (3) a change in position detrimental to the party claiming estoppel caused by the representation and reliance thereon. Id. The reliance required by element two of the above test must be reasonable. As stated in 28 Am Jur.2d, Estoppel and Waiver, 80 (1966):

    
    

    One who claims the benefit of an estoppel on the ground that he has been mislead by the representations of another must not have been mislead through his own want of reasonable care and circumspection. A lack of diligence by a party claiming an estoppel is generally fatal. If the party conducts himself with careless indifference to means of information reasonably at hand, or ignores highly suspicious circumstances, he may not invoke the doctrine of estoppel. Good faith is generally regarded as required in the exercise of reasonable diligence to learn the truth, and accordingly, estoppel is denied where the party claiming it was put on inquiry as to the truth and had available means of ascertaining it at least where actual fraud has not been practices on the party claiming the estoppel.

    
    

16. When the foregoing principles are applied to the instant facts Petitioner's estoppel argument must fail. Both Section 381.494(5), Florida Statutes, and Section 10-5.08(1)(b), Florida Administrative Code, unequivocally require letters of intent to precede a valid application for a certificate of need. These requirements were suspended by HRS until the local health councils became effective. Under these circumstances Petitioner was negligent in relying on the information Mr. Hronjak acquired in the fall of 1982 when in the spring of 1983 Petitioner filed the applications in issue here. This is especially true since HRS did not represent to Mr. Hronjak anything about the requirement for letters of intent for the April 1983 batch applications. By not inquiring about those requirements Petitioner has failed to exercise the due diligence necessary to invoke the doctrine of estoppel here.

    
    

17. The evidence in this proceeding did demonstrate that the letters of intent received by local health councils are of insignificant value. The wisdom of the requirement that they must be filed is however, not subject to question

here as the filing requirement is established by the Legislature. Because the Department's own rule found in Section 10-5.08(1)(b), Florida Administrative Code enforcing that requirement is presumptively valid until declared otherwise the the rule must be applied. I therefore conclude that the Department of Health and Rehabilitative Services may not accept for review the 28 applications for certificates of need not preceded by timely letters of intent to the local health councils.

RECOMMENDATION

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

That the Department of Health and Rehabilitative services enter a Final Order denying review of the 28 certificate of need applications filed by Petitioner for the construction of nursing homes as more fully described in this Order.

DONE and RECOMMENDED this 12th day of January, 1984, in Tallahassee, Florida.

MICHAEL PEARCE DODSON

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 12 day of January, 1984.

ENDNOTES

1/ The Department did not agree with the earlier representation that both cases could be ready for trial on August 15, 1983. HRS was entitled to 14 days' notice prior to the final hearing in this case which had not been given.

2/ This determination is based on the reasoning set out in the Conclusions of Law in the companion Case No. 83-2559R.

3/ Sonny's Italian Restaurant v. Department of business Regulation, 414 So.2d 1157 (Fla. 3d DCA 1982); Sierra Club v. Orlando Utilities commission, 436 So.2d

383 (Fla. 5th DCA 1983).

4/ The courtesy copies of the acknowledgment letters were received by the local health councils on or before March 18, 1983.

COPIES FURNISHED:

Alfred W. Clark, Esquire and Jean Laramore, Esquire LARAMORE AND CLARK, P.A.

325 North Calhoun Street Tallahassee, Florida 32301

James M. Barclay, Esquire Department of Health and

Rehabilitative Services Building Two, Suite 256 1317 Winewood Boulevard

Tallahassee, Florida 32301

Donna H. Stinson, Esquire

and Thomas A. Sheehan III, Esquire MOYLE JONES AND FLANIGAN, P.A.

Suite 858 Barnett Bank Building Tallahassee, Florida 32301

Alicia Jacobs, Esquire General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

David H. Pingree, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA,

Petitioner,

vs. CASE NO. 83-1775

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent,

and

FLORIDA CONVALESCENT CENTERS, INC.,

Intervenor/Respondent.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. On January 12, 1984, the hearing officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.

1. PDCF - meaning HRS Office of Community Medical Facilities - filed Exceptions to the recommended Order. A copy of PDCF's Exceptions is attached hereto as Exhibit A.

   
   

2. HCR - meaning Health Care and Retirement Corporation of America - filed Exceptions to the Recommended Order. A copy of HCR's Exceptions is attached hereto as Exhibit B.

HRS STATEMENT AND RULING ON THE EXCEPTIONS

(AA) PDCF Exceptions (1) and (2) - The Exceptions are worthy corrections and accordingly, they are sustained.

(BB) HCR Exceptions (1) and (3) - The facts as found by the DOAH Hearing Officer (and as corrected by HRS Statement and Ruling on PDCF Exception (1)) are adopted by HRS. The additional facts suggested by HCR Exceptions (1), (2), and

(3) will not be included in the Final Order herein. The Hearing Officer's judgment is sustained The Exceptions are denied.

(BB) HCR Exceptions (4), (5), (6), (7), (8), and (9) - The Conclusions of Law stated in the Recommended Order (and as modified by HRS Statement and Ruling on PDCF Exception (2)) are correct. HCR's estoppel arguments must fail. The Exceptions are denied.

FINDINGS OF FACT

The Department hereby adopts the findings of fact made by the Hearing Officer but with the modifications set out and explained in HRS Statement and Ruling on PDCF Exception (1).

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the overall conclusion of law stated by the Hearing Officer. The correction explained in HRS Statement and Ruling on PDCF Exception (2) is incorporated into the Final Order herein.

It is ADJUDGED that HCR failed to file timely letter of intent with the local health councils at least 30 days prior to the filing applications for Certificate of Need, the result of which is nonacceptance of the applications by HRS.

ORDERED this 28th day of February, 1984, in Tallahassee, Florida.

DAVID H. PINGREE

Secretary

COPIES FURNISHED:

Alfred W. Clark, Esquire and Jean Laramore, Esquire Laramore and Clark, P.A.

325 North Calhoun Street Tallahassee, Florida 32301

James M. Barclay, Esquire Department of Health and

Rehabilitative Services 1321 Winewood Blvd.

Tallahassee, Florida 32301

Donna H. Stinson, Esquire and Thomas A. Sheehan, III, Esquire Moyle, Jones and Flanagan, P.A. The Perkins House, Suite 100

118 North Gadsden St. Tallahassee, Florida 32301

Michael Pearce Dodson, Hearing Officer Division of Administrative Hearings The Oakland Bldg.

2009 Apalachee Pkwy.

Tallahassee, Florida 32301

Harden King, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, Florida 32301

Eugene Nelson, Administrator HRS Certificate of Need Office 1321 Winewood Blvd.

Tallahassee, Florida 32301

Docket for Case No: 83-001775

Orders for Case No: 83-001775