and 10-17.005 (originally published as 10-16.001, 10-16.005), Florida Administrative Code, constitute an invalid exercise of delegated legislative authority.
By petition filed with the Division of Administrative Hearings on December 1, 1983, petitioner Humhosco, Inc. d/b/a Humana Hospital Mandarin ("Humana") challenges the validity of respondent's ("HRS") Rules 10-17.001 and 10-17.005 (originally published as 10-16.001 and 10-16.005), Florida Administrative Code. These rules, which will be referred to as the Subdistrict Rule, allocate acute care beds among five subdistricts within HRS District IV for the purpose of evaluating applications for certificates of need under Section 381.493 through 381.499, Florida Statutes (1983)
The time limits of Section 120.56 were waived and hearing was set for February 27, 1984.
At hearing, Humana presented the testimony of Fred Huerkamp (by deposition), the Executive Director of the Local Health Council covering HRS District IV; Elfie Stamm, an HRS employee who prepared the economic impact statement; John Wilson, an HRS employee responsible for the preparation and publication of the rules; and Thomas W. Schultz, accepted as an expert in health care planning. Humana's Exhibit Nos. 1-10, 19-24, 30-34, 35B, and 36, were received into evidence.
HRS presented the testimony of Philip C. Rond, Administrator of the Office of Comprehensive Health Planning, accepted as an expert in health care planning. HRS's Exhibit Nos. 1-3 were received into evidence.
The parties filed legal memoranda and proposed findings of fact and conclusions of law by April 9, 1984. To the extent that their proposed findings of fact are not included in this order, they are rejected as not supported by competent substantial evidence, as irrelevant or unnecessary to resolution of the issues, or as constituting conclusions of law as opposed to findings of fact.
FINDINGS OF FACT I.
Humana is a corporation engaged in the business of constructing and operating hospitals in Florida. It has applied to HRS for a certificate of need to construct and operate a 100-bed acute care hospital to be located south of the St. Johns River in the area known as Mandarin, in Duval County, Florida. The challenged Subdistrict Rule places this area in Subdistrict 3 of HRS District IV.
Humana's (Mandarin) application for a certificate of need (CON) was denied by HRS on February 23, 1983, and Humana requested a formal Section 120.57(1), hearing. The case was then transferred to the Division of Administrative Hearings and assigned Case Number 83-934. The final hearing in that CON case began on September 6, 1983, and recessed on September 7, 1983. In the instant case--on Humana's request, and without objection by HRS--official recognition was given to the transcript of that hearing, as filed with the Division of Administrative Hearings.
Prior to the CON hearing in Case Number 83-934, on August 12, 1983, HRS published proposed Rules 10-16.001 and 10-16.005 ("Subdistrict Rule") at Volume 9, Number 32, pages 1952 through 1957, Florida Administrative Weekly. (Petitioner's Exhibit No. 1)
After the CON hearing recessed, and after a public hearing on the proposed Subdistrict Rule, HRS published changes to the rule on September 23, 1983, at Volume 9, No. 38, page 2475-2476, Florida Administrative Weekly. These changes were made in response to comments which HRS received at a public hearing held on the proposed rule. (Petitioner's Exhibit No. 2)
On September 26, 1983, HRS filed the Subdistrict Rule with the Department of State for adoption, effective October 16, 1983. (Petitioner's Exhibit No. 3)
Thereafter, the Bureau of Administrative Code, Department of State, informed HRS that since other rules were already numbered in Chapter 10-16, Florida Administrative Code, the Subdistrict Rule would be published in Chapter 10-17, Florida Administrative Code. (Petitioner'S Exhibit No. 28)
At the CON hearing, Humana attempted to introduce evidence which HRS challenged as inconsistent with Rule 10-5.11(23) the state-wide acute care bed- need rule, and the Subdistrict Rule--then a proposed rule not yet adopted by HRS. The presiding hearing officer, acknowledging the "proposed rule" status of the Subdistrict Rule, sustained HRS objections to the admission of evidence proposing a methodology, or subdistrict bed-need allocations, inconsistent with those contained in the (proposed) Subdistrict Rule. He did, however, rule that the two non-agency parties could offer evidence for the purpose of showing that HRS, or the local health council in conjunction with HRS, had developed bed-need formula or techniques for subdistricts beyond, or inconsistent with, the proposed Subdistrict Rule and the underlying local health council's district plan. (DOAH Case No. 83-934, pp. 220-221, Transcript of Hearing).
II.
The Rule Adoption Process
In response to Section 381.494(7)(b), Florida Statutes (1983), requiring local health councils to develop district plans using a "uniform methodology," HRS transmitted to the councils written guidelines for designating and allocating bed-need among various subdistricts. (Petitioner's Exhibit Dos. 9 and 10)
The statute does not express or imply that the word, "methodology" should be given a meaning other than that assigned by ordinary and common usage. Webster's Seventh New Collegiate Dictionary defines the term as: "a body of methods, rules and postulates; a particular procedure or set of procedures." A methodology is not necessarily a mathematical formula.
These guidelines, transmitted to the local health councils in early 1983, describe the relationship between HRS and the councils, the format and content elements of district health plans, and the requirements for stating district health care policies and priorities. Examples are provided. The guidelines require that local plans contain a district health profile--an overview of the area's population characteristics, community health status and prevailing health related attitudes and behaviors. Components are also required, including detailed information on the district's health care resource inventories, costs and utilization patterns, analysis of local services as well as recommendations and priorities for future health systems development. For at least three types of existing health care facilities--acute care hospitals, nursing homes, and psychiatric specialty hospitals information must be provided on current capacity, physical status, service areas, and recommendations for future developments. A time frame is imposed for accomplishing each phase of the plan development, with the final phase adoption of the local health plan--to be accomplished by December, 1983. Finally, the guidelines, at page 15, point out the statutory requirement that HRS adopt, by rule, those elements of the approved district plans necessary for review of applications for certificates of need:
Adoption Into Rules
Section 7(b) of Chapter 381.493 states that "Elements of an approved district plan necessary to the review of any certificate of need application shall be adopted by the Department as a part of its
rules." This should be kept in mind through- out the plan development process. Local policies and priorities are the items most pertinent to certificate of need review since information on bed need and capacity are either determined at the state level or must be updated to the time of certificate of
need application, review and appeal. There- fore, the local health council will be ex- pected to develop a separate submission
of their policies and priorities in the proper format for rule promulgation within thirty days of the adoption of the local health plan. State agency staff will assist in the development and refinement of these documents.
(Petitioner'S Exhibit No. 9)
HRS interpreted its responsibility under Section 381.494, as one of assuring that district health plans were consistent with the state-wide uniform bed-need methodology prescribed in Rule 10-5.11(23). Under subparagraph "d" of that rule, local health plans must designate subdistricts according to HRS guidelines. Subparagraph "e" requires that beds be allocated to designated subdistricts consistent with the total number of beds allocated to the district under the rule, and consistent with subparagraph "i," which contains geographic accessibility standards.
Rule 10-5.11(23)
* * * * *
Acute Care Service Subdistrict Designation. Acute care service sub- district designations shall be adopted, as necessary, by each Local Health Council as
an element of its local health plan according to guidelines developed by the State Health Planning Agency. Designations will become effective for the purposes of this rule upon the filing of the adopted local health plan acute care subdistricting elements with the Secretary of State.
Subdistrict Bed Allocations. Subdistrict bed allocations by type of service shall be made by the Local Health Councils consistent with the district total acute care bed allocation as determined by the methodology contained in paragraph (f) below, as well
as any adjustments to the allocation as determined by the provisions of paragraphs
and (h) below. Such allocations shall also be consistent with the provisions 9f paragraph (i) and the requirements of Section 381.494(7)(b) , Florida Statutes.
* * * * *
Geographic Accessibility Considerations.
Acute care hospital beds should be available and accessible within an automobile travel time of 30 minutes under average travel
conditions to at least 90 percent of the population residing in an urban area subdistrict.
Acute care hospital beds should be available and accessible within a maximum automobile travel time of 45 minutes under
average travel conditions to at least 90 percent of the population residing in a rural area sub- district.
The elements of the District IV health plan contained in the Sub- district Rule are consistent with the uniform methodology prescribed in Rule 10-5.11(23) and HRS guidelines.
In response to these guidelines, the District IV health council adopted and transmitted to HRS, on July 7, 1983, the acute care component of the district health plan. After the district council approved this component and allocated beds to the various subdistricts, HRS supplied updated population figures resulting in an increase in the total number of beds allocated to the district. The council's staff then adjusted the number of beds allocated to the subdistricts on a pro rata basis. These adjustments were consistent with the council's policy, as reflected by its approval of the acute care component. No evidence has been presented to show that the council's staff lacked authority to make these adjustments. (Petitioner's Exhibit No. 7)
In addition to allocating district wide bed-need among the subdistricts of District IV, the acute care component contains detailed information and analysis concerning acute care bed-need. This information is pertinent but not necessary to the review of CON applications in District IV. (Petitioner's Exhibit No 7)
The challenged Subdistrict Rule simply designates subdistricts and allocates bed-need among them; other data and analysis contained in the acute care component are not included. HRS, however, is now drafting an addition to the Subdistrict Rule (Section 10-17.005), titled "subsection (3), Acute Care Policies and Priorities," which incorporates additional portions of the district plan for use in reviewing CON applications in District IV. This draft rule allows exceptions based on local conditions:
When there are more than one widely separated hospital service areas located within a single subdistrict, such as St. Augustine in South Duval
Subdistrict 3, Bunnell and Daytona Beach in Subdistrict 4, and unforeseen growth, change and makeup of population, or other circumstances cause a significant increase
in the demand for inpatient care within one of the service areas, the State should make
exception to the District Health Plan when it is reasonable and logical to do so.
(Petitioner'S Exhibit No. 34) This provision was contained in the district plan at the time HRS adopted the Subdistrict Rule. (Petitioner'S Exhibit No. 7)
The Subdistrict Rule, with the exception of St. Lukes' Hospital, allocates beds among the subdistricts on the basis of the number of patient-days currently utilized by the hospitals in each subdistrict, projected for 1988.
St. Lukes' Hospital, now located on the north side of the St. John's River in Subdistrict 1, will move to the south side of the St. John's River in Subdistrict 3, the subdistrict where Humana seeks to build its Mandarin hospital. This move from north to south is accounted in the subdistrict allocation by assuming that 34 percent of the current (north) St. Lukes' Hospital patient-days will come with the hospital when it moves from Subdistrict
1 to Subdistrict 3, and that the remainder will come from Subdistrict 3 (south) patients. With 66 percent of St. Lukes' bed capacity allocated for Subdistrict 3, there will be no additional bed-need in that subdistrict for years.
HRS prepared an economic impact statement (EIS) in connection with its adoption of the subdistrict rules, including the Subdistrict Rule under challenge. The EIS addresses the agency's cost to implement the proposed rules, the cost or economic benefit to persons directly affected, and the affect on competition. The data and methods used in preparing the EIS are also briefly summarized.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. 120.56, Fla.Stat. (1983).
Humana is "substantially affected" by the Subdistrict Rule. See, 120.56(2), Fla.Stat. (1983). Its standing to challenge this rule is not contested by HRS.
Humana's sole contention in this case is that the Subdistrict Rule is facially invalid because it conflicts with a statute. No claim is made that the challenged rule is arbitrary, capricious, or irrational. As stated in Humana's post-hearing memoranda:
This is not a case challenging the rule based upon its arbitrary and capricious nature. In such cases, of course, Petitioners carry a very heavy burden in proving the absence of any evidence to support the logic of the rule. (case citation omitted)
Instead, it is a case essentially challenging the existence of statutory authority for the rule as promulgated and whether the rule is in conflict with the statutory authority cited by HRS in promulgating the rule.
Humana did not plead, did not present evidence to show, and made clear in its
post-hearing memorandum, that it was not contending the rule was either arbitrary, capricious, or irrational. (emphasis included)
(Humana's Post-Hearing Memorandum, p. 3; Reply Memorandum, p. 4.)
One challenging the facial validity of a rule must show that the agency's interpretation of the statute in its charge is clearly erroneous or unauthorized. King v. Seamon, 49 So.2d 859, 861 (Fla. 1952); Department of Revenue v. Skop, 383 So.2d 678 (Fla. 5th DCA 1980); ABC Liquors, Inc. v. Department of Business Regulation, 397 So.2d 696, 697 (Fla. 1st DCA 1981); Boca Raton Publishing Co. v. Department of Revenue, 413 So.2d 106 (Fla. 1st DCA 1982); North American Publications v. Department of Revenue, 436 So. 2d 954, 955 (Fla. 1st DCA 1983)
Rulemaking is a quasi-legislative function. Agrico Chemical Co. v. State, etc., 365 So.2d 759 (Fla. 1st DCA 1979). When exercising this power, agencies have wide discretion and their actions are entitled to judicial deference. Florida Commission on Human Relations v. Human Development Center,
413 So.2d, 1251, 1253-54 (Fla. 1st DCA 1982); Agrico Chemical Co., supra, at 762. When an agency committed with statutory authority to implement a statute construes the statute in a permissible way, that interpretation must be sustained though another may be possible or even, in the view of some, preferable. State Department of Health and Rehabilitative Services v. Framat Realty, Inc., 407 So.2d 238, 241-242 (Fla. 1st DCA 1981)
Humana argues numerous grounds in support of its contention that the Subdistrict Rule is facially invalid. For the reasons given below, each contention is rejected and Humana's petition is denied.
Conflict With Section 381.494(7)(b)1, Florida Statutes (1983).
Section 381.494(7), provides:
FUNCTIONS OF THE LOCAL HEALTH COUNCIL.--
The local health council may conduct
public hearings pursuant to subparagraph (6)(b)1.
The local health council shall:
Develop a district plan, using uniform methodology as set forth by the department, which will permit each local health council to develop goals and criteria based on its unique local health needs, such as the special health needs of rural areas an medically underserved communities. The district plan shall be submitted to the department and updated periodically and shall be in a form prescribed by the department. The elements of an approved district plan which are necessary to the
review of any certificate-of-need application shall be adopted by the department as a
part of its rules. The district plan shall include, but shall not be limited to:
The availability, quality of care, efficiency, appropriateness, accessibility,
extent of utilization, and adequacy of existing health care services and hospices in the district.
The availability and adequacy of other health care facilities and services and hospices in the district, such as outpatient care and ambulatory or home care services, which may serve as less costly alternatives to proposed or available health care facili- ties and services.
The probable economies and improvements in services that may be derived from operation of joint, cooperative, or shared health care. and health planning resources.
The need in the district for special equipment and services which are not reasonably and economically accessible in adjoining
areas.
The need for research and educational facilities, including, but not limited to, institutional and community training programs for health care practitioners and for doctors of osteopathy and medicine at the student, internship, and residency training levels.
Humana argues that the Subdistrict Rule conflicts with this statute because HRS has failed to provide a "uniform methodology" for the formulation of subdistrict rules and bed allocation. This is not an attack upon the facial validity of the Subdistrict Rule. Rather, it attacks the sufficiency of the "uniform methodology" provided by HRS to local health councils for development of their district health plans. But the Subdistrict Rule under challenge does nothing more than incorporate, without change, Portions of the District IV plan necessary for CON review. This rule is not, and does not purport to be, the "uniform methodology" which the statute requires be provided to district health councils. The argument, then, misses the target, and attacks something other than the Subdistrict Rule and is beyond the bounds of this proceeding.
Conflict With Section 381.494(7)(b)1, Because the Rule Omits Elements of the District Plan Necessary to the Review of CON Applications.
As shown above, Section 381.494(7)(b)1, requires HRS to adopt by rule those "elements of an approved district plan which are necessary to the review" of CON applications. Humana argues that there are additional elements of the District IV health plan which should be included in the Subdistrict Rule, elements which are necessary for CON review.
This, too, is not an attack on the facial validity of the Subdistrict Rule. Rather, it attacks HRS' decision to adopt some elements of the District IV plan, and omit others. It amounts to a claim that HRS' decision was arbitrary and capricious a claim which Humana contends it does not make. Even if the argument is entertained, it is unsupported by the evidence. Humana has not proved that the "missing" elements of the district plan are necessary or essential to the review of CON applications or that the omission of such elements is arbitrary and capricious.
Those elements of the district plan which are contained in the Subdistrict Rule do not facially conflict with Section 381.494(7)(b)1, they implement it. HRS intends to adopt additional elements of the District IV plan when they are submitted and evaluate The statute does not require HRS to adopt, simultaneously, all elements of the local plan deemed necessary for CON review. HRS construes the statute as granting it discretion to adopt elements seriatim, as they are submitted and reviewed. Humana has not shown that this construction is clearly erroneous or unauthorized.
Conflict with Section 381.494(6)(c), Which Contains Criteria for Evaluating CON Applications.
Humana, citing Department of Health and Rehabilitative Services v. Johnson and Johnson Home Health Care, Inc., So.2d 9 FLW 547 (Fla. 1st DCA 1984), argues that the Subdistrict Rule conflicts with Section 381.494(6)(c), which requires a balanced consideration of numerous statutory criteria. In Johnson, a rule was invalidated because it required denial of new CONS until all existing providers within the service area were serving a specified number of patients. The rule precluded a balanced consideration of all statutory criteria; it allowed HRS "to ignore some statutory criteria and emphasize others, contrary to the legislative purpose it is supposed to implement." Id.
Unlike in Johnson, the Subdistrict Rule does not preclude a balanced consideration of the statutory criteria contained in Section 381.494(6)(c). The Subdistrict Rule references HRS Rule 10-5.11(23)(b), which explicitly recognizes the applicability of all statutory criteria:
(b) Departmental Goals. The department will consider applications for acute care
hospital beds in context with all applicable statutory and rule criteria.* * * * A favorable certificate of need determination may be made when the criteria, other than
bed need, as provided in Chapter 381.494(6)(c), Florida Statutes, demonstrates need. An unfavorable certificate of need determination may be made when a calculated bed need exists but other criteria specified in Chapter 381.494(6)(c), Florida Statutes, are not met. (e.s.)
Thus, even if there is no numerical bed-need under the Subdistrict Rule, the application of Section 381.494(6)(c) criteria (other than bed-need) may justify the issuance of a CON. (Humana's own health care expert conceded that a CON may be issued even though the Subdistrict Rule shows no bed-need. [TR.- 238]) Hence, the Subdistrict Rule does not conflict with 381.494(6)(c).
Conflict with the Florida Constitution Because the Subdistrict Rule Gives HRS Unbridled Discretion to Determine What the Law Shall Be.
Humana argues that the Subdistrict Rule's use of the terms "normally" and "substantially" renders it invalid on constitutional grounds because unbridled discretion is vested in HRS.
Although a proposed rule may be administratively challenged on constitutional grounds, an adopted rule may not. Department of Environmental
Regulation v. Leon County, 344 So.2d 298 (Fla. 1st DCA 1977). The Subdistrict Rule, adopted when filed with the Department of State, Section 120.54(12), is now shielded from constitutional attack in an administrative pro- ceeding.
Humana cannot pierce this shield by arguing that a procedural error occurred during the adoption process.
Inconsistency Between the Subdistrict Rule and HRS Guidelines.
Humana argues that the Subdistrict Rule is invalid because the District IV health plan, which it incorporates, is inconsistent with the HRS guidelines or uniform methodology pro- vided the districts.
This, too, is not an attack on the facial validity of the rule, but rather an attack on HRS' approval of a plan which allegedly fails to conform with its uniform methodology. This is equivalent to a claim that HRS' approval of the District IV plan, insofar as it is incorporated in the Subdistrict Rule, is arbitrary and capricious. This claim has not been substantiated by the evidence. The uniform methodology provided district councils consisted of Rule 5.11(23) and the district plan guidelines, Local health councils were required to consider, among other things, characteristics of the population, level of care, and patient flow. Although Humana contends otherwise, these factors were adequately considered by the District IV plan by allocating beds based on historical utilization and projecting population growth, assuming constant patient flows. Humana also contends that the council staff's pro rata adjustments to the subdistrict bed allocations was unauthorized. This contention is rejected because the adjustments were consistent with the District IV council's policy, evinced by its adoption of the acute care component; and the staff's action has not been shown to be unauthorized.
The Subdistrict Rule Violates the Single Subject Rule, and Contains a Change Which is, in Fact, a New Proposed Rule.
Under Section 120.54(8), Florida Statutes (1983), each adopted rule may have but one subject. Humana contends that Subsections 10-16.001(3) and (4)--added during the rulemaking process in response to comments received at a public hearing on the proposed rule--impermissibly add a second suhject to Rule 10-16.001.
The heading of Rule 10-16.001 is titled "Definitions," Subsection (1), "Acronyms," and Subsection (2), "Other terms use within this rule." The newly added Subsection (3) is titled, "Use of Acute Care Subdistrict Designations and Bed Need Allocations," and Subsection (4) , "Use of Short Term Inpatient Psychiatric and Substance Abuse Subdistrict Designations and Bed Need Allocations." Subsections (3) and (4) explain and clarify the relationship between the proposed rule and the existing state-wide HRS bed-need Rule 10- 5.11(23). These subsections do not violate the single subject requirement since they logically fall in the scope of Rule 10-16.001, which describes the meaning and use of terms in Chapter 10-16, Florida Administrative Code.
Humana also argues that Subsections (3) and (4) are not changes to the proposed rule but, instead, constitute a new proposed rule. This argument is unpersuasive since Subsections (3) and (4) were added--in response to comments received at a public hearing--to clarify and explain the relationship betwen the proposed rule and existing HRS rules.
Whether these changes are technical or substantive is of no import. Both kinds of changes may be made to a proposed rule in response to comments received at a public hearing. See, 120.54(11)(a), (12)(b), Fla.Stat. (1983). Hence the addition of Subsections (3) and (4) do not violate the statute.
The Economic Impact Statement (EIS) Accompanying the Subdistrict Rule is Inadequate.
Humana asserts that the EIS accompanying the Subdistrict Rule is inadequate because it ignores the economic impact on District IV. The EIS, although deficient in not explicitly stating the lack of economic impact in District IV, is sufficient to meet the requirements of Section 120.54(2). See, Polk v. School Board, 373 So.2d 960, 962-963 (Fla. 2nd DCA 1979); Florida-Texas Freight v. Hawkins, 379 So.2d 944, 946 (Fla. 1979).
Failure by HRS to Give Notice to Classes of Persons to Whom the Proposed Rule is Directed.
Section 120.54(1)(a) requires agencies to, in addition to other public notice requirements pertaining to rule adoption, "give such notice as is prescribed by rule to those particular classes of persons to whom the intended action is directed." HRS Rule 10-2.12(1), requires advance notice be given to the particular classes of persons to whom a rule is directed by notifying either the individuals or the recognized association which substantially represents the affected class. Humana has not shown a violation of this rule, or any other public notice requirement of Section 120.54, Florida Statutes (1983).
