/

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NME HOSPITALS, INC., d/b/a ) SEVEN RIVERS COMMUNITY HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 84-0881

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, ) and PUTNAM COMMUNITY HOSPITAL, )

)

Respondent. )

)

RECOMMENDED ORDER

This cause cane on before the undersigned upon a motion to dismiss amended petition for formal administrative hearing being filed by respondent, Putnam Community Hospital, wherein it seeks an order dismissing the amended petition of NME Hospitals, Inc., d/b/a Seven Rivers Community Hospital. At issue is whether petitioner has standing to contest the issuance of a certificate of need of Putnam by respondent, Department of Health and Rehabilitative Services.

For purposes of ruling on the motion to dismiss, the following well-pleaded facts of petitioner's amended petition are accepted as true:

FINDINGS OF FACT

1. Respondent, Putnam Community Hospital (Putnam) filed an application for a certificate of need (CON) , with respondent, Department of Health and Rehabilitative Services (HRS) , seeking to add fifty acute care beds, a CT scanner replacement, a DVI addition and ancillary expansions to its facility in Palatka, Florida. As is pertinent here, respondent HRS ultimately issued its proposed agency action on January 11, 1984 authorizing Putnam to add twenty-one additional acute care beds.

   
   

2. Petitioner, NME Hospitals, Inc., d/b/a Seven Rivers Community Hospital (Seven Rivers) , also filed an application with HRS at or about the same time seeking authority to add thirty-one medical/surgical (acute care) beds to its existing seventy-five bed facility in Crystal River, Florida. The application was denied in toto by HRS on January 11, 1984.

   
   

3. On February 24, i984, Seven Rivers filed a petition for formal administrative hearing and motion to consolidate wherein it requested a formal hearing to contest the issuance of a CON to Putnam, and to consolidate its own application for a CON in Case No. 84-0890 with that of Putnam in a comparative hearing. 1/ The first petition was dismissed without prejudice on May 4, 1984

   because Seven Rivers had failed to demonstrate that its substantial interests were affected by the proposed agency action concerning Putnam. Thereafter, Seven Rivers filed an amended petition on May 21, 1984. On June 14, Putnam filed a motion to dismiss amended petition which is the subject of this recommended order.

   
   

4. In its amended petition, Seven Rivers alleges its substantial interests are affected by Putnam's application because both applications were considered "(i)n the name batching cycle", "both are located in HRS District 3", "that the award of 21 beds to Putnam. .. reduced the inventory of beds needed in the district", and accordingly "the granting of the Putnam application will preclude or diminish the ability of Seven Rivers to obtain approval of its application". There are no allegations that the two facilities compete in any sense of the word, or that patients may choose one over the other, or that Putnam's facility will adversely impact on Seven Rivers' patient revenues, utilization of beds, quality of care, or any of the other criteria which HRS must consider in evaluating the application. 2/

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to

   
   

   Subsection 120.57(1), Florida Statutes.

   
   

6. Pertinent statutory provisions and rules make clear that in order to request a Section 120.57(1) hearing, a person must demonstrate that his substantial interests are affected by the proposed agency action. Subsections 120.52(10)(b), 120.57(1) and 381.494(8)(e) , Florida Statutes; Rule 10-5.12(1), 10-5.10(8), Florida Administrative Code.

   
   

7. Because the term "substantial interests is not defined by rule or statute, it is necessary to resort to the bipartite standing test adopted by the Courts to determine if Seven Rivers had alleged sufficient facts to demonstrate standing. Under this test, a person must show (a) that he will suffer injury in fact which is of sufficient immediacy to entitle him to a 120.57(1) hearing, and

   (b) that his substantial injury is of a type or nature which the proceeding is designed to protect. Agrico Chemical Company v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 2nd DCA 1981); City of Panama City v. Board of Trustees of Internal Improvement Fund, 418 So.2d 1132 (Fla. 1st DCA 1982). The latter cart of the test is more commonly known and referred to as the "zone of interest" test.

   
   

8. According to this test, Seven Rivers must allege a sufficient factual basis to demonstrate "injury in fact", economic or otherwise, and that the interest sought to be protected is arguably within the zone of interest to be protected or regulated by the statute in question.

   
   

9. In its amended petition, Seven Rivers alleges its own application may be denied unless It can contest the award of beds to Putnam. This allegation, if true, appears to satisfy the "injury in fact" requirement of standing. 3/

   
   

10. Satisfaction of the "zone of interest" test is not so easy. While a claim of economic injury is sufficient to meet the "injury in fact" requirement, it is insufficient to meet the zone of interest test unless the certification statute itself contemplates consideration of such interests, or unless standing is conferred by rule or statute, or based upon constitutional grounds. Florida

    -)Medical Association v. Department of Professional Regulation, 426 So.2d 1112 (Fla. 1st DCA 1983); Shared Services Inc. , v. Department of Health and Rehabilitative Services, 426 So.2d 56 (Fla. 1st DCA 1983)

    
    

11. Here Seven Rivers has based its claim of standing on economic considerations alone, that being the possible denial of its certificate of need if the application of Putnam is granted. This is evidenced by allegations that "HRS denied (its) application for 31 beds...in light of the award by HRS of 21 beds to Putnam", that "the Putnam application will preclude or diminish the ability of Seven Rivers to obtain approval of its application", and that "the application of Seven Rivers was denied, at least in part,.. after the decision to award 21 beds to Putnam." However, it has failed to cite any rule or statute which indicates that a potential denial of an application occasioned by the granting of another is within the zone of interest protected by Chapter 381. Notwithstanding this omission, the undersigned has reviewed the pertinent rules and statutes to determine whether such provisions do in fact exist.

    
    

12. The rules in Chapter 10-5 pertaining to the issuance of CON's merely track the statutory language. Therefore, it is 7 necessary only to review Chapter 381 itself. Section 381.494 is most pertinent for it contains the criteria against which applications must be granted. Paragraph (6)(c) enumerates the thirteen criteria which must be considered by HRS in the certification process. While these criteria include such considerations as "quality of care," "efficiency," "extent of utilization," "availability of services," "cost of construction," "alternative uses," "competition," and the like, there is no language which purports to protect a facility from the potential economic injury alleged by Seven Rivers.

    
    

13. In summary, petitioner has alleged it will suffer economic injury, namely, a possible denial of its application' unless it can protest the application of another facility some 100 miles away. This type of injury is not a matter of statutory concern and does not fall within the zone of interest protected by Chapter 381. There being insufficient allegations to confer standing, it is concluded the amended petition must fail, and the motion to dismiss granted. Because Seven Rivers has unsuccessfully attempted to perfect standing twice, the-dismissal should be with prejudice. All-Risk Corporation of Florida et al v. Department of Labor and Employment Security, 413 So.2d 1200 (Fla. 1st DCA 1982).

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the amended petition for formal administrative hearing

filed on behalf of petitioner be DISMISSED, with prejudice.

DONE and ENTERED this 22nd day of June, 1984, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 22nd day of June, 1984.

ENDNOTES

1/ Seven Rivers has also filed a motion to consolidate the case at bar with Case No. 84-0891 which involves a similar application by Citrus

Memorial Hospital.

2/ District 3 is made up of some sixteen counties. Because of its geographic size, the district is subdivided ito a number of subdistricts.

3/ Putnam's argument that Seven Rivers' application was denied because of factors other than Putnam's application and that Putnam's application accordingly had no bearing on HRS's decision to-grant or deny the application of Seven Rivers, is well-taken to a certain point. However, the reasons given by HRS for denying Seven Rivers' application were preliminary in nature, and may be expanded or narrowed at a later time if timely notice is given. In other words, the 120.57(1) hearing is de novo in nature, and while the issues are now precisely drawn, they may chance prior to the final hearing.

COPIES FURNISHED:

C. Gary Williams, Esquire Michael J. Glazer, Esquire Post Office Box 391 Tallahassee, Florida 32302

Thomas A. Sheehan, 111, Esquire Post Office Box 3888

West Palm Beach, Florida 33492

Douglas L. Mannheimer, Esquire Post Office Drawer 11300 Tallahassee, Florida 32302-3300

Docket for Case No: 84-000881

Orders for Case No: 84-000881