STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PORT ORANGE GENERAL HOSPITAL, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 83-3105RX

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a final administrative hearing was held before William

1. Williams, Hearing Officer, Division of Administrative Hearings, on October 13, 1983, in Tallahassee, Florida. The issue for determination in this proceeding is whether Rule 10-5.08(1), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority.

   
   

   APPEARANCES

   
   

   For Petitioner: Robert A. Weiss, Esquire

2. Philip Blank, Esquire

241 East Virginia Street Tallahassee, Florida 32301

Ronald L. Book, Esquire

30th Floor, AmeriFirst Building One Southeast Third Avenue Miami, Florida 33131

For Respondent: Frank Olsavsky, Legal Intern

Department of Health and Rehabilitative Services

1317 Winewood Boulevard

Tallahassee, Florida 32301 INTRODUCTION

Pursuant to Section 120.56(1), Florida Statutes (1981), Petitioner, Port Orange General Hospital, Inc. ("Petitioner"), challenges Department of Health and Rehabilitative Services ("DHRS") Rule 10-5.08(1), Florida Administrative Code, as an invalid exercise of delegated legislative authority. Rule 10- 5.08(1) regulates the right of entry into the certificate of need process by requiring letters of intent be filed by applicants with DHRS and local health councils.

In support of its position of invalidity, Petitioner presented the testimony of Thomas F. Porter, the Medical Facilities Consulting Supervisor for DHRS; Thomas J. Konrad, former Administrator of the Office of Community Medical

Facilities, DHRS; and Earl Treadway, Vice President of Governmental Relations for the Florida Hospital Association.

Petitioner's Exhibits 1 through 4 were received into evidence.

DHRS presented the testimony of Eugene Nelson, present Administrator of the Office of Community Medical Facilities for DHRS.

DHRS's Exhibit 1 was received into evidence.

Subsequent to the hearing, all parties filed proposed findings of fact and conclusions of law. Each party's proposed findings of fact have been considered and, where appropriate, adopted in substance. Those findings not adopted are considered to be subordinate, cumulative, immaterial, unnecessary, or not supported by the evidence.

FINDINGS OF FACT

1. On July 18, 1983, Petitioner, under its former corporate name, Deltona General Hospital, Inc., filed, pursuant to Rule 10-5.08, Florida Administrative Code, a letter advising DHRS of its intention to file an application for a certificate of need to construct and operate a 100-bed acute-care hospital in Volusia County. The letter identifies the nature and scope of the project, the project location and the date upon which the application is to be filed.

   
   

2. On July 18, 1983, Petitioner advised the Health Planning Council of Northeast Florida of its intention to file an application for a certificate of need to construct and operate a 100-bed acute-care hospital in Volusia County. Oral notice was provided by Western Union Mailgram on July 18, 1983. Written confirmation of the mailgram was received by the Health Planning Council of Northeast Florida on July 20, 1983.

   
   

3. On July 18, 1983, Halifax Hospital Medical Center filed a competing letter of intent to establish a 100-bed acute-care general hospital in Volusia County.

   
   

4. On August 15, 1983, both Petitioner and Halifax Hospital Medical Center filed applications for a certificate of need to construct a 100-bed acute-care hospital in Volusia County.

   
   

5. On or about September 9, 1983, Petitioner was advised in a letter from Thomas F. Porter, Supervisor, Medical Facility Consultants, DHRS, that its August 15 application would not be reviewed in the August 15 acute-care batching cycle. DHRS rejected the application due to Petitioner's failure to file a written letter of intent with the local health council on or before July 18, 1983, predicting its decision on Rule 10-5.08(1)(b), Florida Administrative Code.

   
   

6. The application of Halifax Hospital Medical Center will be reviewed by DHRS in the August 15, 1983, batching cycle.

   
   

7. Committee Substitute for House Bill 700, effective July 1, 1983, and codified into law at Chapter 83-244, Laws of Florida, amended Section 381.494(5), Florida Statutes, to require DHRS to "provide a mechanism by which providers may enter a batching cycle to compete with all letters of intent filed."

8. DHRS has not, as of this date, developed a mechanism in compliance with this statutory amendment.

   
   

9. In 1982, Rule 10-5.08, Florida Administrative Code, provided, in pertinent part:

   
   

   1. In order that applications per- taining to similar types of services, facilities, or equipment affecting the same health service area may be considered in relation to each other for purposes of competitive review, letters of intent and applications shall be submitted to the appropriate

      HSA in the Department pursuant to dates prescribed and application schedules (attachments 1-9) developed under the following conditions:

      * * *

      (e) In cases where a letter of intent was filed within five working

      days of the letter of intent deadline, a grace period of ten days from the deadline date for receipt of letters of intent shall be established to pro- vide an opportunity for a competing applicant to file a letter of intent.

      
      

10. As amended on March 31, 1982, Rule 10-5.08(1)(b) provides, in pertinent part:

    
    

    At least 30 days prior to the filing of an application, a letter of intent respecting the development of a pro- posal must be actually received by the local health council and by the Department . . . 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 applica-

    tion. Failure to timely file a letter of intent or to timely file an appli- cation will cause a delay in a Certifi- cate of Need project until the next available review cycle.

    
    

11. Section 381.494(5), Florida Statutes, is cited in the Florida Administrative Code as the specific authority for Rule 10-5.08. In addition, Section 381.494(5), Florida Statutes, is cited as the law implemented by Rule 10-5.08.

12. During the 1983 Legislative Session, a number of groups and individuals recommended that Section 381.494(5), Florida Statutes, be amended to include a grace period provision. Both DHRS and the Florida Hospital Association supported the requested legislative amendment. The 1983 Legislature in fact amended Section 381.494(5), Florida Statutes, to require the Department to provide a "mechanism" by which providers may enter a batching cycle to compete with all letters of intent filed. Chapter 83-244, Laws of Florida. The amended statute became effective July 1, 1983.

    
    

13. DHRS has yet to initiate formal rule-making proceedings under Chapter 120, Florida Statutes, to amend the challenged rule. The amount of time required to develop and adopt an amended version of Rule 10-5.08, Florida Administrative Code, is uncertain.

    
    

14. Section 381.494(5), as amended, does not specifically require that DHRS promulgate or amend the challenged rule. The statute directs DHRS to provide a "mechanism" by which providers may enter a batching cycle to compete with all letters of intent filed.

    
    

15. The filing of a letter of intent with the local health councils serves an informational purpose. The letter of intent process gives notice to the community at large as to what particular applications may be submitted during the various batching cycles.

    
    

16. The filing of a letter of intent does not trigger any review process at the local level. The local health council does not participate in project review during the certificate of need process. The purpose of the letter of intent is simply to put other institutions or interested individuals in the area on notice of the potential for filing of an application at a later date.

    
    

17. The Halifax Hospital Medical Center certificate of need application is being reviewed in the August 15 batching cycle without reference to any other applications. If Petitioner's application is accepted, it will be reviewed competitively with the Halifax application.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding. Section 120.56, Florida Statutes.

    
    

19. Petitioner's sole argument for declaring the challenged rule invalid is that it conflicts with the 1983 amendment to Section 381.494(5), Florida Statutes, which requires DHRS to "provide a mechanism by which providers nay enter a batching cycle to compete with all letters of intent filed." Petitioner argues that DHRS has not instituted rule-making proceedings to amend the challenged rule to comply with the amended statute and that DHRS intends to apply the current rule until amendments become effective.

    
    

20. It is, of course, axiomatic that no agency has inherent rule-making authority. Section 120.54(14), Florida Statutes. An agency's authority to promulgate rules is limited to powers granted, either expressly or by necessary implication, by statute. St. Regis Paper Co. v. State, 237 So.2d 797 (Fla. 1st DCA 1970). Further, rules promulgated pursuant, to a legislative grant of authority must be consistent with that legislative grant and may not amend, add to, or repeal the provisions of a statute. Department of Health and Rehabilitative Services v Florida Psychiatric Society, 382 So.2d 1280 (Fla. 1st

DCA 1980). It is specifically concluded, as a matter of law, that Rule 10- 5.08(1), Florida Administrative Code, does not so conflict with the provisions of Section 381.494(5), Florida Statutes, as amended by the 1983 Legislature, as to render that rule invalid. Rather, in the absence of rule-making proceedings, DHRS is required to provide a "mechanism" by which health care providers may enter a batching cycle to compete with all other letters of intent filed for the same or similar services in the same geographical area. DHRS is not required by any provision of law to accomplish this legislatively mandated task by rule making, but instead is free to establish agency policy in this regard in the course of ad hoc adjudication pursuant to Section 120.57, Florida Statutes. In so doing, the agency must construe current Rule 10-5.08(1), Florida Administrative Code, in pari materia with Section 381.494(5), Florida Statutes, as amended. See Health Care and Retirement Corporation of America v. Department of Health and Rehabilitative Services, DOAH Case No. 83-2259R (October 31, 1983)

Based upon the foregoing Findings of Fact and Conclusions of Law, it is concluded that Petitioner has failed to establish the invalidity of the challenged rule and that the relief sought by Petitioner should be, and the same is hereby, denied.

DONE AND ORDERED this 14th day of November, 1983, in Tallahassee, Florida.

WILLIAM E. WILLIAMS

Hearing Officer

Division of Administrative Hearings Department of Administration

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 1983.

COPIES FURNISHED:

Robert A. Weiss, Esquire

F. Philip Blank, Esquire

241 East Virginia Street Tallahassee, Florida 32301

Ronald L. Book, Esquire

30th Floor, AmeriFirst Bldg. One S.E. Third Avenue

Miami, Florida 33131

Mr. Frank Olsavsky Department of Health and Rehabilitative Services 1317 Winewood Boulevard

Tallahassee, Florida 32301

Carroll Webb Executive Director

Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32301

Ms. Liz Cloud, Chief Administrative Code Bureau Department of State

1802 The Capitol

Tallahassee, Florida 32301

Docket for Case No: 83-003105RX

Orders for Case No: 83-003105RX