STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STEVE S. SPECTOR, M.D., P.A., )

)

Petitioner, )

)

vs. )

) CASE NO. 84-1937

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondents, )

and )

)

VISUAL HEALTH AND SURGICAL ) CENTER OF THE PALM BEACHES, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

This case was heard by R. L. Caleen, Jr., Hearing Officer with the Division of Administrative Hearings on August 16, 1985 in West Palm Beach Florida. The parties were represented by counsel.

APPEARANCES

For Petitioner: Eric B. Tilton, Esquire

104 South Monroe Street Tallahassee, Florida 32301

For Respondent: Theodore E. Mack, Esquire

1323 Winewood Boulevard

Tallahassee, Florida 32301

For Intervenor: William B. Wiley, Esquire

Post Office Box 2174 Tallahassee, Florida 32316

ISSUE

Whether Petitioner is entitled to a Certificate of Need ("CON") authorizing establishment of an (ophthalmological) ambulatory surgical center in Palm Beach County, Florida. Subordinate issues are:

1. Whether the proposed facility satisfies the CON criteria of Sections 381.494-499, Florida Statutes, as implemented by Respondent, Department of Health and Rehabilitative Services ("HRS) rule and non-rule policy;

   
   

2. Whether the proposed facility will result in unnecessary duplication of services, underutilization of existing services and increased health care costs to the community;

3. Whether adequate resources are available for the construction and operation of the proposed facility; and

   
   

4. Whether the proposed facility is financially feasible.

BACKGROUND

On May 9, 1984, Steve S. Spector, M.D., P.A. ("Petitioner"), petitioned for a formal hearing to challenge HRS April 20, 1984 notice of intent to deny his application for a CON to establish an ophthalmological ambulatory surgical center in Palm Beach County, Florida. On May 24, 1984, HRS forwarded this case to the Division of Administrative Hearings for assignment of a hearing officer to conduct the requested hearing.

Hearing was thereafter set for August 8, 1984 then continued twice, on Petitioner's unopposed motion, and reset for August 16, 1985.

On September 27, 1984, Surgical Services of Boca Raton, Inc., was allowed to intervene but on June 4, 1985, it withdrew as a party.

On August 5, 1985, Visual Health and Surgical Center of the Palm Beaches, Inc., petitioned to intervene, which petition was subsequently granted.

Prior to hearing, the parties filed a joint prehearing stipulation indicating that HRS now intended to grant Petitioner's CON application, not deny it as initially proposed. HRS and Petitioner generally agreed that the application met all criteria for issuance, indicating an HRS non-rule policy relating to how applications from unlicensed surgical centers should be treated under the CON law. Intervenor asserted otherwise.

At hearing, Petitioner testified on his own behalf and presented the testimony of Ames Bennet, an architect; and Reid Jaffe, a medical facilities consultant with HRS' Office of Community Medical Facilities. (HRS adopted Mr. Jaffe's testimony as its own.) Intervenor presented the testimony of Michael L. Schwartz, a qualified health care planner.

Petitioner and HRS's Exhibit Nos. 8, 10, 16, 18, 21, 24 and 25, were received in evidence, as were Intervenor's Exhibit Nos. 1, 2, 4a, 4b, 5 and 6. Official recognition of 42 C.F.R. was requested and given without objection.

The transcript of hearing was filed on September 23, 1985. The parties filed their proposed findings of fact on October 21, 1985. Subsequently, Intervenor filed a "Motion to Stay Issuance of Recommended Order;" a "Request for Oral Argument," later withdrawn; a "Request for Hearing Officer to Take official Recognition"; and a "Notice of Supplemental Authority." Petitioner filed a "Response to Motion to Stay and Attempt to supplement the Record." Rulings on the parties' proposed findings and Intervenor's post-hearing motion and request are contained in the attached Appendix.

Based on the evidence adduced at hearings the following facts are determined:

FINDINGS OF FACT

I.

1. Petitioner, Steve S. Spector, M.D., is a licensed physician and board certified ophthalmologist who provides outpatient ophthalmological services, including eye surgery, at his offices known as the "Presidential Surgical Center" at 1501 Presidential Way in West Palm Beach, Florida. He has performed outpatient ophthalmology surgery since coming to West Palm Beach in 1979, he has practiced at his current location for the past four or five years. Although his ophthalmological practice is organized as a professional association, he individually owns the building in which it is located.

   
   

2. In December 1983, Petitioner applied for a CON authorizing the establishment of an ambulatory surgical center at his existing offices where he and his employees provide outpatient ophthalmological services, including eye surgery. In his application, Petitioner indicated that his "existing ambulatory surgical center," which has provided "ophthalmological surgical care" for hundreds of patients over the last five years, includes approximately 2,500 square feet including operating rooms, examining rooms, and treatment rooms. Services were provided to patients under local anesthesia who did not require inpatient hospital care. Since he operates an existing surgical center, he indicated that the project cost would be $0.00. If granted a CON, he does not intend to expand his practice into fields other than ophthalmological treatment and surgery. (Intervenor's Ex. 2)

   
   

3. By State Agency Action Report dated April 20, 1984, HRS preliminarily denied Petitioner's applications stating:

   
   

   There is sufficient capacity in existing and approved facilities to meet the outpatient surgical needs of the Palm Beach County population, based on projections in the analysis. Ophthalmological procedures, in addition to the applicant facility, will be approved by previously approved ambulatory surgical centers.

   
   

   (Intervenor's Ex. 2 [SAAR cover letter])

   
   

   II.

   
   

4. In reviewing CON applications for "preexisting" ambulatory surgical facilities, HRS applies criteria found in Sections 381.493-499, Florida Statutes, and Chapter 10-5, Florida Administrative Coded as well as criteria expressed in non-rule policy memoranda. HRS has two non-rule policy statements which it seeks to apply to Petitioner's application, and through which Petitioner asserts entitlement to a CON. These policy statements were promulgated by two HRS memoranda:

   
   

   The issue of how to deal with 'preexisting' unlicensed ambulatory surgery providers was also discussed. It was decided that if an applicant can demonstrate that it has been providing ambulatory surgical services historically in a facility which meets, or for a minor capital expenditure, could meet licensing requirements and that the provision of such services has been done profitably,

   this type of applicant should receive special consideration in CON reviews. However, in such cases, it will be necessary for the CON architect to verify that the existing facility meets, or almost meets, licensure requirements, and for the CON accountant to verify that the operation has been historically profitable. (e.s.)

   
   

   (HRS Memorandum dated February 21, 1985, Petitioner's Ex. 25A)

   
   

   * * *

   If 'preexisting' clinics which have been performing surgical procedures similar to those proposed to be performed in the applicant's facility, seek licensure as ambulatory surgical facilities, they must document that the facility has been operating profitably and has performed a sufficient number of procedures to exceed the calculated break even level of operation. Special consideration will be given to approval of the project, after assuring that all other appropriate criteria are satisfied. An architectural review will be conducted to verify that the existing facility meets, or will be capable of meeting, licensure requirements. (e.s.)

   
   

   (HRS-PDCF Policy Memorandum No. 7 dated June 6, 1985, Petitioner's Ex.25B)

   
   

5. In reviewing CON applications, no criteria are ignored though the weight to be given each will vary depending on the facts and circumstances of each case. 1/

   
   

   III.

   
   

6. Drawings and design plans for Petitioner's proposed ambulatory surgical center (preliminarily approved as meeting licensure standards) show that it will contain 5,050 square feet, more than doubling the existing footage.

   Petitioner's architect estimates that the capital costs of necessary improvements to the existing facility will be between $257,000 and $258,000, plus a 7 percent architect's fee. (On his application, Petitioner estimated capital costs of "zero.") No significant costs for new medical equipment is expected. (The existing facilities already have two fully equipped operating rooms--to be used by the proposed surgical center.) The project will also entail other costs, including attorney's fees and accountant's fees, for which no estimates are provided. All capital costs would be personally financed by Steve S. Spector, M.D., or by a loan from his Professional Association.

   
   

7. In his CON application, Petitioner did not submit a Table 25 related to total project costs, a Table 11 relating to staffing of his facility, or an updated pro forma of income and expenses for the first two years of operation of his proposed facility. No audited financial statements were included with the application or later offered into evidence. No application fee was, or has been, submitted consistent with a proposed capital expenditure of more than

   $257,000. (Petitioner's Ex. 8)

8. Petitioner's ophthalmological outpatient practice has been a profitable one. In 1984, he received a salary (from Steve S. Spector, P.A., his professional association) of $289,000. In additions his compensation included insurance, an automobiles a convention and seminar allowance, and participation in a profit sharing plan. At the end of the fiscal year, he also received what he describes as a "nice bonus." (TR-33)

   
   

9. In fiscal year 1984, Petitioner's "Presidential Surgical Center" had gross revenues of $762,404.92, with net earnings of $346,366. In 1985, it had gross revenues of $1,051,362.32 and net earnings of $313,362. In 1985, it purchased a YAG laser for research and surgery, at a cost of $100,000.

   
   

10. Currently, Petitioner performs eye surgery, such as cataracts and lens implants, at his offices two days each week between the hours of 8:30 a.m. and 4:00 p.m. He performs no surgery on Saturday. He intends to adhere to this surgery schedule if he is issued a CON.

    
    

11. During calendar year 1983, Petitioner's surgical center performed 300 surgical procedures. During 1984, it performed 90 100 procedures per month. During the six months preceding August 16, 1985, his facility performed 760 procedures. On an annualized basis, this would total 1520 procedures a year.

    
    

12. If Petitioner is granted a CON, it is reasonably expected that the number of surgical procedures will increase, with a resulting increase in patient revenues. He actively markets his surgical services by yellow pages, lectures and educational and radio programs. The West Palm Beach area is experiencing rapid population growth. By contract, he is the sole provider of ophthalmological services to International Medical Corp., Inc. a health maintenance organization with a membership of between 25-30,000 people in Palm Beach County; he is the exclusive provider of ophthalmological laser work and evaluation for employees of Pratt and Whitney Aircraft Corporation; and he is the exclusive provider to 5,000 members of American Medical another health maintenance organization. By contract, he also provides ophthalmological services to the 6,000 members of a preferred provider organization in Palm Beach County. He normally has a two to three month backlog of patients awaiting ophthalmological surgery.

    
    

13. Approximately 85 percent of Petitioner's patients are covered by the federal Medicare program, and he accepts Medicare assignment for professional fees. He currently charges all his patients both a facility fee of $300 (to cover equipment, supplies, and personnel costs) and a professional fee. Since his facility is not CON-licensed, Medicare does not pay the facility fee and pays only 80 percent of the professional fee established for the particular surgical procedure involved. The $300 facility fee and the remaining 20 percent of the professional fees are currently paid by the Medicare patient, or the patient's coinsurer.

    
    

14. If Petitioner is granted a CON and becomes an HRS licensed ambulatory surgical center, Medicare will pay the facility fee in full and the remaining 20 percent of the professional fee. Those charges, now borne directly by Medicare patients or their coinsurers, will be borne by the federal Medicare program. As correctly noted in Petitioner's counsel's letter to HRS dated September 25, 1984, concerning the proposed project, its "approval will simply shift the costs

    of these services from the patients to the Federal Government." (Intervenor's Ex. 2) The overall fee Petitioner receives from a Medicare patient would not be affected by licensure, although with the elimination of any charges to Medicare patients it can be reasonably anticipated that the number of such patients will increase.

    
    

    IV.

    
    

15. In April 1984, HRS--ostensibly applying the licensing criteria of Sections 381.493-499, Florida statutes, and Chapter 10-5, Florida Administrative Code--denied Petitioner's application for a CON, concluding that his proposed ambulatory surgical center was not needed since there "is sufficient capacity in existing and approved facilities to meet the outpatient surgical needs of the Palm Beach County population." (Intervenor's Ex. 4b) This conclusion was based on an analysis which projected population and the existing outpatient surgical utilization rate in Palm Beach County in 1986 (two years after the expected completion of Petitioner's project), then compared the projected number of outpatient surgical procedures to the number which could be accommodated by existing and approved (but not yet operational) facilities. Using this mathematical methodology, HRS determined that the proposed facility was not needed by the population to be served and that existing and approved facilities providing like services were adequate. (See, Intervenor's Ex. 4b; Section 381.494(b)(c)(2), 4., Fla. Stat.)

    
    

16. Shortly before final hearings HRS changed its position on Petitioner's application and now--under asserted non-rule policies--seeks to approve it.

    This change in position is attributable solely to the non-rule policies expressed in two internal memoranda; the relevant CON criteria found in Section 381.494, Florida Statutes, and Chapter 10-5, Florida Administrative Code, have remained the same throughout. Though it now proposes to grant the CON, HRS maintains its earlier view that there are sufficient surgical facilities in Palm Beach County to meet projected outpatient surgical needs (TR. p. 148)--a position shared by the Intervenor and uncontested by the Petitioner.

    
    

17. There are currently five freestanding ambulatory surgery facilities in Palm Beach County--one existing (Intervenor's) and four CON-approved but not yet operating. With a total of 19 operating rooms, they have a (growth) capacity to accommodate 38,646 outpatient procedures. In Palm Beach County there are also

    12 existing acute care hospitals with 81 operating rooms and an available (growth) capacity for 40,755 outpatient procedures. In addition two acute care facilities, Palms West and West Boca are CON approved; each has four approved operating rooms and an available (growth) capacity of 4,800 outpatient procedures. The grand total of operating rooms in Palm Beach County is 112. They have available capacity to accommodate 93,801 outpatient procedures. The current system is operating at only 37 percent of capacity (TR 305; Intervenor Ex. 1) Intervenor, the only currently operating licensed ambulatory surgical facility in the county is operating at only 24.6 percent of its capacity.

    
    

18. In evaluating Petitioner's application (and those similarly situated) HRS seeks to deviate from its normal practice (of focusing on the adequacy and sufficiency of like and similar existing and approved facilities which render services similar to those proposed) 2/ and grant "special" or "exceptional" treatment based on Petitioner's status as an existing provider of surgical services in an office setting. The basis for this special treatment is the emerging non-rule policy found in the HRS memoranda (paragraph 4, infra) as explicated by a qualified HRS health care planner:

    [The policy] recognizes that someone who is in business, has a rather mature practice, has a facility which meets or can fairly readily meet at a relatively low expense licensure standards, it would be unrational or irrational to say that this person who is already making a profit will not be able to make a profit.

    
    

    It also recognizes that various insurance companies and other third-party payers, including the Federal Government, are pushing many procedures to be performed on an outpatient basis rather than on an inpatient basis and specifically in non-hospital based freestanding ambulatory surgical facilities and they have established various financial incentives to have, both for the patient and for the physicians, to have those surgeries

    or other procedures performed on an outpatient basis in a freestanding facility

    because it believes--particularly the Federal Government believes that over the long haul with the large number of patients for which it pays reimbursement it is far cheaper to do it that way. (TR-146-147)

    
    

19. Petitioner's only plausible claim to a CON arises under HRS' putative non-rule policy giving special treatment to conversion of existing outpatient surgical facilities in physician's offices to CON licensed ambulatory surgical facilities. He asks for special or exceptional treatment under this HRS policy. He has not shown that his application satisfies the CON criteria of Section 384.494(6)(c), Florida Statutes, or Chapter 10-5, Florida Administrative Code. He has not shown entitlement to a CON under the state or district health plane (Section 381.494(6)(c)1.); or that there are any deficiencies in the adequacy, availability, quality of care, efficiency, appropriateness, and accessibility in existing and approved outpatient surgical facilities in Palm Beach County (Section 381.494(6)(c)2.,4.). Neither has he shown any special need for the facility such as for research, educational, or competitive purposes. Section 381.494(6)(c)7., 12. 3/

    
    

20. [When, as here, an agency elects to apply emerging policy not incorporated in its regularly adopted rules, "adjudication, via Section 120.57, provides the appropriate [and seemingly only] method of relief.... [T]he agency may be required to defend its policy, to present evidence and expose its reasons for discretionary action, Department of Administration v. Harvey, 356 So.2d 323,

    326 (Fla. 1st DCA 1977). As stated in Barker v. Board of Medical Examiners, 428 So.2d 720, 722 (Fla. 1st DCA 1983).

    
    

    There are, however, costs exacted upon an agency which avoids the rulemaking procedure provided by Section 120.57, chief among those being that the agency may be required repeatedly to defend its non-rule policy decisions in each case.

    In Florida Medical Center v. Department of Health and Rehabilitative Services,

    463 So.2d 380, 382 (Fla. 1st DCA 1985), the court reversed an HRS decision which denied a CON because that decision was based on a non-rule policy which HRS did not establish and reasonably justify (at hearing) by expert testimony, documentary opinion or other evidence appropriate to the nature of the issues involved.

    
    

21. Here, the non-rule policy which HRS seeks to apply and on which Petitioner's application depends, was not adequately explained or reasonably justified at hearing. The factual premises of the policy were not established; neither was the rationality of the policy choices underlying it. HRS offered no factual studies or analyses to support it. It has performed no studies relating to the impact of such a policy on existing or approved ambulatory surgical centers. HRS' expert health care planner was unaware of any studies undertaken to suggest that the policy will foster cost containment; indeed, he was unaware of any documentation--anywhere--which would support the policy which HRS seeks to apply here.

    
    

22. The non-rule policy at issue would permit any physician who profitably performs surgical procedures in his office to effectively circumvent the strictures of CON licensing. A physician could simply buy land and construct a building, buy the necessary equipment, and open an office surgical practice. Thereafter--assuming he exceeded a "break even" level of operation and could meet licensing requirements without spending more than $714,000--he would be entitled to a CON for an ambulatory surgical facility regardless of the "need" for such a facility in the area to be served, regardless of whether existing ambulatory surgical facilities were fully utilized, and regardless of whether they would be adversely affected by the new licensee. With CON-licensure the physician could recover the cost of his facility through the Medicare facility charge, fully reimbursable. 4/ The policy opens a "back-door" to obtaining a CON, a method by which physicians with office practices can procure preferential treatment and avoid the central question of CON licensing--whether the proposed health care facility is needed. The doorway, once opened, is a wide one. Telephone book listings show that there are approximately 100 doctors in Palm Beach County who, like Petitioner, perform outpatient surgery in an office setting.

    
    

23. This putative non-rule policy to the extent as it was explained and defended at hearing, is flawed and a poor substitute for the normal "need" analysis applied to CON applications. Under the policy, an applicant can make a capital expenditure of up to $713,999 to renovate and expand his office surgical facilities without any determination as to whether such an expenditure is justified or needed by the community. (Yet HRS applies a "need" analysis to capital expenditures of similar or lesser magnitude such as for CT scanners, digital radiography units, and cath labs.) This approach ignores a primary purpose of the CON law--to promote the coordination of capital expenditures for health care facilities. 5/ And it enables HRS' to avoid its statutory duty to review the availability, quality of care, efficiency appropriateness, accessibility, extent of utilization, and adequacy of like health care services in an area before granting or denying a CON. 6/

    
    

24. It fails to recognize the general principle that the cost of health care rises when a facility is underutilized, and that per unit costs tend to decrease as use approaches optimum capacity levels. For example, "Alternacare" is a CON approved ambulatory surgical facility located approximately two miles from Petitioner's offices, yet he has not applied for surgical privileges there. If he performed his procedures in that facility, it would be better utilized and

    operated more efficiently from a cost standpoint; and his Medicare patients would not have to bear a facility fee--Medicare would pay it in full. The economic impact of the policy on existing ambulatory surgical centers, such as Intervenor's, has not been taken into account. If an applicants such as Petitioner, is granted a CON, he would draw an indeterminate number of patients who would otherwise have gone to existing ambulatory surgical centers (such as Intervenor's) in order to obtain full medicare reimbursement of their costs. To the extent this occurs, existing facilities (such an Intervenor's) would be adversely impacted by the granting of the CON.

    
    

25. The policy also does not take into account the additional costs which it imposes on the community by way of increased government subsidy of health care, a subsidy ultimately borne by the taxpayers and tee community-at-large. There is no evidence that the cost implications of this policy on Medicare have been assessed, or even considered. A primary purpose of the CON law is containment of health care costs to a community. In health care planning, the community includes persons who pay taxes to support the Medicare system. The effect of the policy would be to shift the cost of facility fees, heretofore paid by the relatively few who receive the services and who choose to utilize an unlicensed surgical facility, to the community-at large through the tax-based Medicare system. Yet the justification for and magnitude of this cost-shifting, acknowledged to be the driving force behind Petitioner's application, has not been articulated or, on this record, fairly considered.

    
    

    VI.

    
    

26. Since HRS' non-rule policy has not been adequately articulated and justified by evidence suitable to the issues, it has no record basis and cannot be used to grant Petitioner's application. Petitioner's application must, therefore, be denied, since he has failed to prove "need" for his proposed facility in the context of the availability, accessibility, efficiency, quality of care, utilization, and adequacy of like existing and approved health care services in the service area. The evidence convincingly establishes that there is excess licensed ambulatory surgical capacity in Palm Beach County in the form of existing and approved facilities. The capital expenditures for these existing and approved facilities have already been allocated to the community through CON licensing and Medicare reimbursement. As such, their enhanced utilization is a less costly and more efficient alternative to approving Petitioner's application, which would impose additional community health care costs of at least $275,000 and an increase in tax supported Medicare expenditures, the extent of which is unknown.

    
    

    CONCLUSIONS OF LAW

    
    

27. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Intervenor has standing since it would be substantially affected by the issuance of a CON to Petitioner. Sections 120.52(11) and 120.57(1), Florida Statutes (1983).

    
    

28. An applicant for a CON has the burden of proving it meets the statutory and rule criteria for issuance found in Section 381.494(6)(c), Florida Statutes, and Chapter 10-5, Florida Administrative Code Boca Raton Artificial Kidney Center v. HRS, supra. In addition, if HRS seeks to apply a non-rule 'e- merging' policy to the application it must articulate and prove the factual premises of the policy, including the underlying policy choices involved. See, Florida Medical Center v. HRS, supra; Florida Cities v. Florida Public Service Commission, 384 So.2d 1280 (Fla. 1st DCA 1980); Anheuser-Busch v. Department of

    Business Regulation, 393 So.2d 1177 (Fla. 1st DCA 1981); McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977). This is the real cost or burden imposed on an agency which adopts and seeks to apply policy without first complying with the rulemaking procedures of Section 120.54. See, Barker v. Board of Medical Examiners, supra. When the burden is not met by the agency, the contested non-rule policy cannot be applied to the case at hand.

    Any other result would allow agencies to neglect their rulemaking powers yet insulate their non-rule submerged policies from challenge and scrutiny by those most directly affected.

    
    

29. Here, the non-rule policy while HRS seeks to apply to Petitioner's application (and under which Petitioner seeks a CON) has not been satisfactorily explained or reasonably justified by evidence appropriate to the issue. It therefore cannot be applied to Petitioner's application.

    
    

30. Further, Petitioner has failed to show that his application meets the pertinent licensing criteria of Section 381.494(6)(c) Florida Statutes, (1983). In particular, need for his proposed ambulatory surgical center has not been shown when considered in light of the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like existing and approved health care services in the area. Section 381.494(6)(c)2., Fla. Stat. (1983). See, Home Health Professional Services, Inc. v. HRS, supra. Neither has he shown that the failure to satisfy these critical criteria is outweighed by the application of other criteria of Section 381.494(6)(c), Florida Statutes, (1983). His application must, therefore, be denied. In light of this conclusions it is unnecessary to decide if the numerous omissions in the application, such as the required pro forma and the application fee, are sufficient--in themselves--to warrant denial.

RECOMMENDATION

Based on the foegoing it is RECOMMENDED:

That Petitioner's application for a CON authorizing establishment of an ambulatory surgical facility at his offices in Palm Beach County, Florida, be DENIED.

DONE and ORDERED this 15th day of January, 1986, in Tallahassee Florida.

R. L. CALEEN, JR. 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 15th day of January, 1986.

ENDNOTES

1/ Johnson and Johnson v. Department of Health and Rehabilitative Services, 447 So.2d 361 (Fla. 1st DCA 1984).

2/ This general approach is used in evaluating CONS for nursing home beds, acute care beds, C.T. scanners, cath labs, and nuclear magnetic resonance units.

3/ The opinion testimony of Ried Jaffe, to the effect that the application satisfies all statutory CON criteria, is rejected as conclusory and as unsupported by a sufficient factual predicate.

4/ Mr. Jaffe, HRS' expert, acknowledged a physician could circumvent the CON law this way. His response to this possibility was to suggest that such a physician should "go back to school for ethnics." (TR 160)

5/ See, Boca Raton Artificial Kidney Center v. HRS, 475 So.2d 260 (Fla. 1st DCA 1985)

6/ See, Home Health Professional Services, Inc. v. HRS, 463 So.2d 345 (Fla. 1st DCA 1985).

APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-1937

I. PROPOSED FINDINGS OF FACT JOINTLY SUBMITTED BY PETITIONER AND HRS

(Numbering corresponds to numbering used in proposed findings.)

1. Preliminary findings:

   1-4. Approved.

   
   

2. On issue of compliance with applicable criteria: 1-7. Approved.

   8. Approved, with caveat that this is subject to supplying an adequate record basis for the policy at hearing.

   9-13 Approved.

   1. Approved but no presumption of correctness attaches to HRS earlier or more recent evaluation of the application. See, Boca Raton, supra.

   2. Approved.

   3. Approved but modified to more accurately reflect that HRS takes HMO's into account, but this factor was not used or relied on (in connection with the non-rule policy or standing alone) as the basis for granting Petitioner's application.

   4. Approved.

   18-32. Approved, in the sense that an HRS expert witness at hearing offered conclusions as to compliance with each statutory criteria; rejected, in that his conclusions (except for those concerning quality of care, financial feasibility, the inapplicability of some criteria, and the cost advantages of modifying an existing facility instead of constructing a new one) are rejected as unsubstantiated by the facts.

   
   

3. On the Issue of Need: 1-8. Approved.

   1. Approved.

   2. Modified to reflect that this is one estimate among several offered by experts.

   3. Rejected as unsupported by the credible evidence of record.

   4. Approved.

   5. Approved.

   6. First sentence, approved, in that this is the stated "attempt" of HRS' challenged non-rule policy. Second sentence, rejected as unsupported by the credible evidence; the profitable performance of outpatient surgery at a physician's office does logically compel a conclusion that his office should be licensed as an ambulatory surgical facility.

   
   

4. On the issue of adequate resources:

   1-8. Approved.

   
   

5. On the issue of financial feasibility:

1-19 Approved.

20. Rejected as argumentative.

1. RULINGS ON INTERVENOR'S PROPOSED FINDINGS

   
   

   1-4. Approved.

   5. Approved except for reference to equipment costs, of which there will be none.

   9-16 Approved.

   17. Such broad-brush incorporation of all facts asserted in argument is not susceptible to explicit rulings.

   
   

2. RULINGS ON POST-HEARING MOTIONS.

1. Intervenor's "Motion to Stay Issuance of Recommended Order" is denied.

2. Intervenor's "Request for Hearing Officer to Take Official Recognition" of the Final Order of Hearing Officer Robert T. Benton II, in consolidated DOAH Case Nos. 85-2962R, 85-2963R and 85-3193R (attached to a "Notice of Supplemental Authority" dated November 1, 1985) is granted. The order is made a part of the record of this proceeding. A final order entered by another hearing officer of the Division of Administrative Hearings the authenticity of which is not in question, is an appropriate document to be accorded official recognition. See, Health Quest Realty XII v. HRS, 10 FLW 1729 (Fla. 1st DCA July 16, 1985, pet. for reh. pending).

COPIES FURNISHED:

Eric B. Tilton, Esquire

104 S. Monroe St. Tallahassee, Florida 32301

Theodore E. Mack, Esquire 1323 Winewood Blvd.

Tallahassee Florida 32301

William B. Wiley, Esquire Post Office Box 2174 Tallahassee, Florida 32316

Docket for Case No: 84-001937

Orders for Case No: 84-001937