STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FIRST HOSPITAL CORPORATION, )
)
Petitioner, )
)
vs. ) CASE NO. 84-3768RX
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
and )
)
CMSF, INC., d/b/a CHARTER )
GLADE HOSPITAL, )
)
Intervenor. )
)
FINAL ORDER
On April 3, May 1, and May 2, 1985, a formal hearing was held in this case at Tallahassee, Florida before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:
APPEARANCES
For Petitioner, John A. Radey, Esquire
First Hospital Elizabeth W. McArthur, Esquire Corporation: AURELL, FONS, RADEY & HINKLE
1000 Monroe-Park Tower
101 North Monroe Street Post Office Box 10154 Tallahassee, Florida 32302
and
Martin A. Donlan, Jr., Esquire CREWS HANCOCK & DUNN
700 Building - Suite 1015 700 East Main Street Richmond, Virginia 23219
For Respondent, John M. Carlson, Esquire Department of Assistant General Counsel Health and Department of Health and Rehabilitative Rehabilitative Services Services: 1/ 1323 Winewood Boulevard
Building One, Suite 407 Tallahassee, Florida 32301
For Intervenor, Chris H. Bentley, Esquire CMSF, d/b/a FULLER & JOHNSON, P.A.
Charter Glade 111 North Calhoun Street Hospital: Post Office Box 1739
Tallahassee, Florida 32302
and
William E. Hoffmann, Jr., Esquire James A. Dyer, Esquire
KING & SPALDING
2500 Trust Company Tower
25 Park Place
Atlanta, Georgia 30303 INTRODUCTION
This is an action pursuant to Section 120.56, Florida Statutes, wherein Petitioner seeks an administrative determination of the invalidity of Rules 10- 5.11(25) and 10 5.11(26), Florida Administrative Code. The subject rules are rules of the Florida Department of Health and Rehabilitative Services.
Subsequent to the hearing a transcript of the proceedings at hearing was filed with the Hearing Officer on June 6, 1985. Thereafter, following several extensions of time agreed to by all parties, 2/ the parties filed their proposed recommended orders on July 22 and 23, 1985. The proposed findings of fact contained in each party's posthearing submission have been carefully considered in the formulation of the Findings of Fact which follow. A specific ruling on each proposed finding of fact is set forth in the appendix to this Final Order. When necessary for clarity, further explication of the basis for making or rejecting certain proposed findings of fact is included in footnotes to the Findings of Fact which follow.
FINDINGS OF FACT
Based on the stipulations 3/ and admissions of the parties, the exhibits received in evidence, and the testimony of the witnesses at hearing, I make the following findings of fact:
FIRST HOSPITAL's address is the World Trade Center, Suite 870, Norfolk, Virginia 23510.
CHARTER GLADE HOSPITAL is a freestanding psychiatric hospital located in Fort Myers, Lee County, Florida. CHARTER GLADE has (80) licensed psychiatric beds, and twenty-four (24) licensed substance-abuse beds. The service area served by CHARTER GLADE includes Collier, Lee, and Charlotte Counties.
The address of HRS is 1317 Winewood Boulevard, Tallahassee, Florida 32301. HRS is responsible for the administration of the "Health Facilities and Health Services Planning Act," Section 381.493, et seq., Florida Statutes (the Act), and has implemented its provisions through the adoption of rules set forth in Chapter 10, Florida Administrative Code.
FIRST HOSPITAL applied to HRS for a certificate of need (CON) for the establishment of a freestanding specialty hospital in Naples, Florida. Pursuant to the Act, a CON is required before FIRST HOSPITAL can establish its specialty
hospital. FIRST HOSPITAL's application was denied by HRS. FIRST HOSPITAL appealed the denial of its application to the Division of Administrative Hearings, DOAH Case No. 84-1835. CHARTER GLADE has intervened in DOAH Case No. 84-1835.
In this proceeding, Petitioner has challenged the validity of Rule 10- 5.11(25) and (26), Florida Administrative Code, asserting that the rule is arbitrary and capricious and, therefore, invalid. By virtue of the fact that CHARTER GLADE is an existing facility located in the same service area in which Petitioner proposes to construct and operate its facility, and further by virtue of its participation in DOAH Case No. 84-1835, at least in part, on the basis of the provisions of Rule 10 15.11(25) and (26), Florida Administrative Code, CHARTER GLADE is substantially affected by the issues presented for determination in this cause and should be allowed to participate as a party.
The Act contemplates rule adoption by HRS of specialty bed-need methodologies for psychiatric services. See, e.g., Subsection 381.494(8)(g), Florida Statutes (1983). Toward this end, HRS has adopted Rules 10-5.11(25) and (26), Florida Administrative Code. Rule 10-5.11(25), cited as the basis for denying FIRST HOSPITAL's CON application, addresses need for short-term psychiatric beds; Rule 10-5.11(26) purports to address need for long-term psychiatric beds. FIRST HOSPITAL's substantial interest in establishing its proposed specialty hospital has been determined by both of these rules. In particular, Rule 10-5.11(25), Florida Administrative Code, was applied by HRS in the denial of FIRST HOSPITAL's CON application. In addition, FIRST HOSPITAL alleges that Rules 10-5.11(25) and (26) combined fail to assess the need for intermediate inpatient specialty psychiatric services, one of the types of psychiatric services proposed by FIRST HOSPITAL. FIRST HOSPITAL's CON application proposes intermediate inpatient specialty psychiatric services.
Rules 10-5.11(25) and (26), Florida Administrative Code, were adopted in early 1983. The adoption process began in the summer of 1982 when HRS assigned to one of its employees, Elfie Stamm, the task of developing a bed-need rule for psychiatric services. Ms. Stamm, at that time, was a planner in the Office of Comprehensive Health Planning of HRS. Ms. Stamm has been a planner with HRS for several years and had been responsible for the development of the State Health Plan and for the development of various rules used in the CON process. She had also been employed in the Mental Health Program Office of HRS, where her responsibilities included the development of a state plan with regard to alcoholism and mental health. She was also responsible for monitoring statewide mental health programs.
Upon being assigned the task of developing the subject rules, Ms. Stamm made a thorough review of all information available to HRS with regard to the number of existing psychiatric beds and programs throughout Florida. She also evaluated all available local health plans and spoke with various individuals who had been involved in health planning, particularly those with interest in mental health planning. Ms. Stamm surveyed the available literature on health planning emphasizing mental health planning and bed-need methodologies for psychiatric beds.
Ms. Stamm wrote the initial draft of Rule 10-5.11(25) based upon her collection and evaluation of data regarding existing and approved psychiatric beds in Florida and her review of literature, both Florida specific and
national. A primary feature of the drafts, as well as of the adopted version, of Rule 10-5.11(25) is a fixed bed-to-population ratio of .35/1000, meaning that normally there should be no more than .35 short-term psychiatric beds for each 1,000 persons.
Ms. Stamm was instructed to develop rules to assess the need for inpatient psychiatric services. As finally adopted, short-term care is defined in Rule 10-5.11(25) as care not exceeding three months and averaging a length of stay of 30 days or less for adults and 60 days or less for children and adolescents, and long-term care is defined in Rule 10-5.11(26) as care averaging a length of stay of 90 days. Neither rule defines the term "intermediate care."
The documents contained in HRS Composite Exhibit IX and reviewed by Ms. Stamm are a representative sample of the literature available in the field and the level of knowledge among health planners as of the date of the promulgation of the subject rules. The documents are a reasonable cross-section of the literature available in the area of psychiatric bed-need assessment. In terms of the literature that was available at the time of the rule adoption in the area of psychiatric bed-need assessment, there is nothing missing from these documents which would have been important to a health planner in developing a psychiatric bed-need methodology. There is discussion in those documents of all the basic methodologies for determining psychiatric bed need. After reviewing all of the available materials, the HRS established a range of from .35 to .37 beds per 1,000 population and from that point made a policy decision to establish a figure of .35 to use in the bed-need formula.
In promulgating the subject rules HRS invited and received comment from a broad cross-section of the public, with particular emphasis on those persons and organizations with special knowledge and interest in the provision of mental health services and the determination of psychiatric bed need. HRS conducted a workshop to which it invited a broad cross-section of individuals and organizations with particular knowledge about psychiatric bed need, including representatives of the Florida Hospital Association, Florida Psychiatric Association, Florida Council for Community Mental Health, Florida State Association of District Mental Health Boards, Florida League of Hospitals, Florida Association of Voluntary Hospitals, and the Florida Alcohol and Drug Abuse Association. The comments and results of the workshop were considered by Ms. Stamm and HRS in the promulgation of the subject rules.
In response to several requests, HRS conducted a public hearing in accordance with Section 120.54(3), Florida Statutes, to receive comments from interested persons on the subject rules. More than fifteen (15) people representing various hospitals and organizations concerned with psychiatric services entered appearances and made comments at the public hearing. In addition to the oral comment presented at the public hearing, various persons and organizations submitted numerous written comments expressing their opinion with regard to the proposed rules. The comments, both oral and written, were all considered by Ms. Stamm and HRS prior to the promulgation of the subject rules.
The process engaged in by HRS, primarily through Ms. Stamm, in the development of the subject rules was extensive and reasonably calculated to invite substantive public comment and to procure the knowledge on the part of HRS necessary to write workable and rational rules concerning psychiatric bed need. The knowledge acquired by HRS through this process with regard to the assessment of psychiatric bed-need methodologies was reasonably sufficient to
allow it to knowledgeably draft and promulgate the subject rules. Consideration of this substantive public comment led to several changes in the subject rules as originally drafted.
As originally promulgated, Rules 10-5.11(25) and (26) were challenged pursuant to Section 120.54, Florida Statutes, in various petitions filed with the Division of Administrative Hearings. In settling these proposed rule challenges, HRS modified the rules to provide for even greater flexibility in their application.
HRS Composite Exhibits I through XII constitute all written matters considered or produced by HRS in the rule adoption process with regard to the subject rules. All of those documents and papers have been maintained in the records of HRS since the promulgation of the subject rules.
The statutory criteria for reviewing CON applications are set out in Sections 381.494(6)(c) and (d), Florida Statutes. Rule 10-5.11, Florida Administrative Code, sets forth the rule criteria against which CON applications are evaluated. Subsections (1) through (12) and (25) of Rule 10-5.11 are the rule criteria against which applications for CONs for short-term hospital inpatient psychiatric services are to be evaluated. Subsections (1) through
and (26) of Rule 10-5.11 are rule criteria against which applications for CONs for long-term psychiatric services are to be evaluated.
Rule 10-5.11(25) sets forth certain criteria specifically for the evaluation of CON applications for short term hospital inpatient psychiatric services. Short-term services are in part defined as services averaging a length of stay of thirty (30) days or less for adults and a stay of sixty (60) days or less for children and adolescents under eighteen (18) years. Rule 10- 5.11(25) in its adopted form provides in relevant part as follows:
Short Term Hospital Inpatient Psychiatric Services.
Short term hospital inpatient psychiatric services means a category of services which provides a 24-hour a day therapeutic milieu for persons suffering from mental health problems which are so severe and acute that they need intensive, full-time care. Acute
psychiatric inpatient care is defined as a service not exceeding three months and averaging a length of stay of 30 days or less for adults and a stay of 60 days or less for children and adolescents
under 18 years.
Short term hospital inpatient psychiatric services may be provided in specifically designated beds in a hospital holding a general license, or in a facility holding a specialty hospital license.
Applications for proposed short term hospital inpatient psychiatric services will be reviewed according to relevant statutory and rule criteria. A favorable need determination for proposed general
acute care psychiatric inpatient services will not normally be given to an applicant unless a bed need exists according to paragraph (25)(d) of this rule. A favorable Certificate of Need determination may
be made when the criteria, other than as specified in (25)(d), as provided for in Section 381.494(6)(c), Florida Statutes, and paragraph (25)(e) of this rule, demonstrate need.
Bed allocations for acute care short term general psychiatric services shall
be based on the following standards:
A minimum of .15 beds per 1,000 population should be located in hospitals holding a general license to ensure access to needed services for persons with multiple health problems. These
beds shall be designated as short term inpatient hospital psychiatric beds.
.20 short term inpatient hospital beds per 1,000 population may be located in specialty hospitals, or hospitals holding
a general license. The distribution of these beds shall be based on local
need, cost effectiveness, and quality of care considerations.
The short term inpatient psychiatric bed need for a Department service
district five years into the future shall be calculated by subtracting the number of existing and approved beds from the number of beds calculated for year x based on a bed need ratio of .35 beds per 1,000 population projected for year and
based on latest mid-range projections published by the Bureau of Economic and Business Research at the University of Florida. These beds are allocated in addition to the total number of
general and acute care hospital beds allocated to each Department District established in Rule 10-5.11(23).
Occupancy Standards. New facilities must be able to project an average 70 percent occupancy rate for adult psychiatric beds and 60 percent for children and adolescent beds in the second year of operation, and must be able to
project an average 80 percent occupancy rate for adult beds and 70 percent for children and adolescent short term psychiatric inpatient hospital beds for the third year of operation.
No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average
annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and
children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department district is at or exceeds 70
percent for the preceding 12 2 month period.
Hospitals seeking additional short term inpatient psychiatric beds must show
evidence that the occupancy standard defined in paragraph six is met and that the number of designated short term psychiatric beds have had an occupancy rate of 75
percent or greater for the preceding year.
Unit size. In order to assure specialized staff and services at a reasonable cost, short term inpatient psychiatric hospital based services should have at least 15 designated beds. Applicants proposing to build a new but separate psychiatric acute care facility and intending to apply for a specialty hospital license should have a minimum of
50 beds.
Other standards and criteria to be considered in determining approval of a Certificate of Need application for short term hospital inpatient psychiatric beds are as follows:
. . . .
7. Access standard. Short term inpatient hospital psychiatric services should be available within a maximum travel time of
45 minutes under average travel conditions for at least 90 percent of the service area's population.
There are three basic types of methodologies generally accepted in the field of health planning as valid for determining the need for psychiatric hospital beds. The first type is a need-based methodology which evaluates the need for services. The second is a demand or utilization-based method, which utilizes current or projected utilization statistics for a particular service. The third is a fixed-ratio method which involves the use of a ratio, or rate, of service to population to determine projected need for that service in the future. All three of these methodologies are generally accepted and utilized by health planners throughout the United States. Each has its advantages and disadvantages, but all are valid. The fixed ratio methodology is that which HRS has employed in Rule 10 5.11(25).
The ratio of .35 beds per thousand population is a reasonable ratio with a rational basis in fact. It is not arbitrary and capricious as a measure of short-term psychiatric bed need. The National Institute of Mental Health
developed draft guidelines in the late 197Os suggesting a range of .15 beds to
.40 beds per thousand population as an appropriate fixed-bed ratio program for psychiatric short-term acute-care programs. At least four other states presently or in the past have utilized a fixed bed-need ratio in planning for health care needs. They are Massachusetts, Indiana, Michigan and Georgia. Some of those states used fixed-bed ratios less than .35 per thousand. Ms. Stamm, in developing this rule methodology for HRS, considered and balanced the different approaches relating to the establishment of need. One of her concerns on behalf of HRS, in developing the methodology was to strike a proper balance between need and demand since not everyone who needs psychiatric care will choose to seek that care or can afford to seek that care. In 1982, during the time of the rule adoption process, the ratio of existing short-term psychiatric beds per thousand population in Florida was .29 per thousand. Ms. Stamm selected .35 per thousand, in part, to allow for growth in the number of psychiatric beds for reasons other than just population growth. The current rate of existing licensed short-term psychiatric beds in Florida in 1985 is .28 beds per thousand. However, the ratio for currently existing short-term psychiatric beds, plus CON approved beds not yet licensed in 1985, is .39 beds per thousand. The fact that the existing and approved inventory of psychiatric beds is greater than the .35 ratio specified in the rule demonstrates that HRS has applied Rule 10-5.11(25) in a flexible manner as envisioned by the "not normally" language in the rule.
A theoretically ideal way to determine psychiatric bed need would be for HRS to go into each community and conduct epidemiological surveys to identify the people who actually need mental health care. While such a survey, properly conducted, might produce momentarily reliable date, it is not a realistic method for statewide planning purposes because of several problems attendant to such a methodology. Such a survey would be very expensive and very time-consuming and is not practical for use on a statewide basis in a state the size of Florida. Because of the time-consuming nature of such a methodology, if applied on a statewide basis, some of the data would be stale before all of the data was gathered. Further, the rapidly changing population in Florida would require that such a survey be continually updated.
The allocation of short-term beds between general and specialty hospitals set forth in subsections (d)1 and 2 of Rule 10-5.11(25) has a rational basis in fact and is not arbitrary. There are many patients who simultaneously need medical as well as psychiatric care. To have those patients located in a specialty hospital, away from a general hospital, would be inappropriate. There are also patients who have acute episodes of psychiatric illness and who need to be treated very rapidly. Because there are many more general hospitals than there are freestanding psychiatric specialty hospitals, it is appropriate to ensure that psychiatric beds are available to general hospitals to fill the particular episodic acute needs. Further, there are many patients in Florida who can afford health care only through Medicaid. Because Medicaid does not provide funding of mental health inpatient services in psychiatric specialty hospitals, it is appropriate to include in the methodology an incentive for the location of some psychiatric beds in general hospitals where psychiatric services can be funded by Medicaid.
The specific allocation of the .35 per thousand bed need ratio set forth in Rule 10-5.11(25)(d)(1) and (2) is that .15 beds per thousand "should" be associated with general hospitals and .20 beds per thousand "may" be associated with specialty hospitals. This allocation was designed to be flexible so that, in any given circumstance, an allocation other than the .15 and .20 guideline could be applied.
The occupancy rate standards set forth in Rule 10 5.11(25) specify that normally, additional beds should not be approved unless the average occupancy of all existing beds in a service district exceeds 75 percent for adults and 70 percent for children and adolescents. The occupancy rate standards set forth in Rule 10- 5.11(25) were not arrived at in an arbitrary fashion and are reasonable in themselves. The occupancy rates are designed to ensure that a reasonable number of beds in each facility are filled. Hospitals with a substantial number of empty beds are not cost effective. Therefore, it is reasonable to project occupancy rates in the range of those projected in the subject rule. Indeed, the occupancy rates in the rule are liberal in terms of minimum occupancy levels, compared with those in the past and those recommended by others in the industry.
With regard to the travel access standard in the rule, the Task Force for Institutional Care recommended a 60 minute travel standard for 90 percent of the population in the district. The 45 minute standard is reasonable. The rule does not exclude from within the travel standard area other facilities providing the same service.
At the time of the final hearing, there were sixty five (65) existing hospital facilities in Florida which had psychiatric bed services. Of those sixty-five (65) facilities, sixty-one (61), or 93 percent, had more than fifteen
(15) psychiatric beds, and fifty-five (55), or 84 percent, had more than twenty
(20) psychiatric beds.
In the exceptional event that the average occupancy rate for a particular district did not accurately reflect the availability of beds, the language of Rule 10-5.11(25)(d)5, which says that no additional beds shall "normally" be approved unless the occupancy rates are met is sufficiently flexible to account for the exceptionality.
The methodology set forth in Rule 10-5.11(25) is designed to identify and express a need for short-term psychiatric inpatient beds for the overall population of Florida. The rule was intended to be sufficiently flexible that, when balanced with the other criteria set forth in Rule 10-5.11(1) through (12), it would allow substantive input from the district and community levels with regard to the need for beds by subpopulation groups such as child, adolescent, adult, and geriatric.
The "national guidelines" referred to by Ms. Stamm were proposed hut never adopted. They recommended fixed bed ratios between .15/1000 and .40/1000. The guidelines were based on a 1978 survey by the National Institute of Mental Health (NIMH), which indicated that .15/1000 was the 25th percentile and
.40/1000 was the 75th percentile of 1978 existing short-term psychiatric beds nationwide. The NIMH report stated that selection of an appropriate ratio for a particular state depended on the development of the state's mental health system and recognized that special consideration was necessary for traditionally underserved groups such as children, adolescents, and geriatrics.
In the context of inpatient psychiatric care, there has been a trend over the last twenty years, and more particularly over the last five years, toward the development of specialty treatment programs, separately planned for children, adolescents, adults, and geriatrics. In recent years in Florida there has also been a trend toward the provision of alternatives to inpatient psychiatric services in facilities such as residential care.
In 1982, Ms. Stamm considered evidence that children, adolescents, and geriatrics were not being adequately served by Florida's mental health facilities. Nevertheless, she did not plan for these subgroups in the rule because in her judgment decisions about allocation of services to subpopulation groups were best made at the district level by the local health councils.
CONCLUSIONS OF LAW
Based on the foregoing findings of fact and on the applicable legal principles, I make the following conclusions of law.
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Sec. 120.56, Fla. Stat.
The Petitioner and the Intervenor have both demonstrated that they have substantial interests that are affected by the challenged rules and they have both, therefore, established their standing to bring and to participate in this proceeding.
HRS has been delegated authority by the Legislature to adopt rules concerning the issuance of CONs including CONs pertaining to psychiatric hospital units. Petitioner has raised no question with regard to HRS' authority to adopt such rules. Section 381.031(1)(g)11; 381.494(7) and (8); and 381.494(8)(b), Florida Statutes.
When an agency's interpretation of a statute has been promulgated in rulemaking proceedings, the validity of those rules must be upheld if they are reasonably related to the purposes of the legislation interpreted and they are not arbitrary and capricious. The burden is upon Petitioner in a rule challenge to show by a preponderance of the evidence that the rule or its requirements are arbitrary and capricious. Board of Medical Examiners v. Durrani, 455 So.2d 515 (Fla. 1st DCA 1984); Agrico Chemical Company v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978); Florida Beverage Corp. v. Wynne, 306 So.2d 200 (Fla. 1st DCA 1975).
More specifically, in Agrico Chemical Company, the Court held that:
A capricious action is one which is taken without thought or reason, or irrationally. An arbitrary decision is one not supported by facts or logic, or despotic.
Administrative discretion must be reasoned and based on competent substantial evidence. Competent substantial evidence has been described as such evidence as a reasonable person would accept as adequate to support a conclusion.
365 So.2d at 763.
It is a well-recognized general rule that agencies are to be accorded wide discretion in the exercise of their lawful rulemaking authority. Board of Medical Examiners v. Durrani, supra; Florida Commission On Human Relations v. Human Development Center 413 So.2d 1251 (Fla. 1st DCA 1982).
In this case, the Petitioner has failed in each instance to demonstrate by a preponderance of the evidence that Rules 10-5.11(25) and (26) are arbitrary or capricious or that the rules are not appropriate to, or otherwise not reasonably related to, the purpose of the enabling legislation.
The findings of fact establish that HRS did not act arbitrarily or capriciously in the adoption of Rules 10-5.11(25) and (26). Indeed, the evidence establishes that the agency went through a lengthy and substantive process, in direct compliance with the requirements of Section 120.54, Florida Statutes, for the adoption of rules. The evidence further establishes that there is a rational basis in fact for each element of the challenged rules alleged by Petitioner to be arbitrary and capricious.
Petitioner failed to meet its burden of proof to establish that the
.35 beds per thousand ratio is arbitrary and capricious as a measure of short- term psychiatric bed need. On this point, there was competent substantial evidence available to HRS and upon which it based the use of this ratio in the short term rule. Examples of the facts and logic which support the use of this ratio include (1) the NIMH draft guidelines; (2) the calculations made by Ms.
Stamm which showed that the existing ratio of short-term beds in 1982 was .29 beds per thousand; (3) the use of similar ratios in other states; and (4) Dr. Fagin's expert opinion that .35 beds per thousand is a reasonable ratio.
In addition, Petitioner failed to meet its burden of proof to establish that the short-term rule arbitrarily allocates the .35 beds per thousand ratio between general hospitals and freestanding hospitals. In this regard, there was competent substantial evidence available to HRS upon which it based this allocation. The specific facts supporting this allocation include HRS' concern that appropriate beds be available for Medicaid patients who are eligible for payments for psychiatric treatment in facilities licensed as general hospitals only. Further, there are many patients in need of simultaneous medical care and psychiatric care. Allocation of approximately 40 percent of needed beds to general hospitals under these circumstances was not irrational. This is especially true since the allocation specified in the rule is not mandatory. In a particular case when patients have ready access to general hospitals, or when few financial barriers to treatment are apparent, the evidence in this case established that the rule would permit allocations of beds between general and specialty hospitals to be adjusted.
Petitioner also failed to meet its burden of establishing that the occupancy rate standards set forth in the short-term rule are arbitrary because the rule does not take into account the unit size of a facility and because there is no verifiable reporting mechanism to determine facility occupancy rates. There was competent substantial evidence available to HRS upon which it based these standards. In particular, these rates are consistent with those adopted in other states, and expert opinion testimony established that they are reasonable.
The existence of small psychiatric units does not affect the rationality of the occupancy rate portion of the rule for three reasons. First, there are few small psychiatric units of fewer than 15 beds in existence in Florida. Second, the size of any particular unit does not matter since the occupancy standards are expressed in terms of average occupancy for all beds in the service district as a whole. Third, the rule expressly provides that when circumstances require, a CON may be approved even though the stated occupancy standards are not met.
Additionally, Petitioner failed to meet its burden of establishing that the geographic access standard set forth in the rule is arbitrary. Once again, there was competent substantial evidence available to HRS upon which it based these standards. The basis for this geographic access standard is HRS' desire to ensure that adequate psychiatric services are available to residents of each HRS service district. Accordingly, the access standard requires at a minimum that services be available to 90 percent of the district's population within 45 minutes driving time. If anything this geographic access standard would tend to operate to provide for more rather than for fewer beds in a particular district.
Petitioner alleges that Rule 10.5.11(25) is invalid in part because its methodology fails to assess the different needs for inpatient psychiatric services for children adolescents adults and geriatrics in a given district. Petitioner bases that allegation on the assertion that subsections 381.494(6)(c)8 and 381.494(6)(d)4, Florida Statutes, set forth such express criteria. However, a reading of subsections (c)8 and (d)4 does not reveal such a specific and express criterion.
Subsection 381.494(6)(c)8 states that one criterion to be considered in the granting of a CON is ". . . the extent to which the proposed services will be accessible to all residents of the service district." Subsection 381.494(6)(d)4 requires that HRS reference in its findings of fact the criterion "That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service." Neither of these statutory provisions specifically references the different needs of children, adolescents, adults, and geriatrics for inpatient psychiatric services in a given district. Rather, the statute speaks in broader terms, referencing, inferentially, all possible subgroups of patients. Similarly, the rule, as adopted by HRS speaks in those same broad terms rather than limiting itself to the four subgroups referred to by Petitioner.
There is nothing in Rule 10-5.11(25) which precludes HRS from considering the needs of any given subpopulation group on a case-by-case basis. The flexibility of the rule allows HRS to allocate need demonstrated by application of the .35 ratio to any subpopulation when the circumstances indicate that special programs should bed but are not, available. See Final Order of HRS in Charter Medical-Jacksonville, Inc. v. DHRS, DOAH Case No. 83-
335. Moreover, even when application of the .35 ratio shows a surplus of beds, the rule allows HRS to approve a CON if a given subpopulation group is experiencing particular problems.
Petitioner failed to meet its burden of establishing that Rule 10- 5.11(26) is arbitrary because the occupancy rate and geographic access standards are irrational. Petitioner failed to present any evidence to support these allegations. In any event, for many of the same reasons set forth above as to why Rule 10 5.11(25) is not arbitrary, the occupancy rate and geographic access standards in Rule 10- 5.11(26) are not arbitrary.
Petitioner alleges that both Rules 10-5.11(25) and (26) improperly create a presumption that a proposal is not needed unless the methodology in subsections (25) and (26) is satisfied. Petitioner, however, has ignored the reality that subsections (25) and (26) are not the only rule criteria set forth in Rule 10-5.11 by which CON applications for short-term and long-term
psychiatric beds are to be evaluated. Subsections (1) through (12) of Rule 10-
5.11 are additional criteria of essentially equal importance against which CON applications for . The short-term and long-term beds must be evaluated along with subsections (25) and (26).
Neither Rule 10-5.11(25) nor (26) creates an improper presumption that a proposal is not needed unless the methodology set forth specifically therein is satisfied. Both rules do state that approval "will not normally be given" unless the criteria set forth in subsections (25) and (26), respectively, are met. However, the rules, by their terms, also balance that requirement against the stated requirement that relevant CON applications ". . . . will be reviewed according to relevant statutory and rule criteria." Rule 10-5.11(25)(c) and Rule 10-5.11(26)(c), Florida Administrative Code. The balance to be drawn reflected by the foregoing provisions of the challenged rules simply reflects the balance required by the overlying statutes dealing with CONs. The First District Court of Appeal has recognized the validity of this balancing process involved in Rule 10-5.11. It has accepted the proposition that ". . . the appropriate weight to be given to each individual criterion [in Rule 10-5.11, F.
A. C.] is not fixed, but rather must vary on a case-by-case basis, depending upon the facts of each case." Collier Medical Centers Inc. v. Department of Health and Rehabilitative Services, et al. 462 So.2d 83, at 84 (Fla. 1st DCA 1985).
Further, the "not normally" language which is included in both of the rules under challenge here gives to these rules the same flexibility of operation and implementation that was recognized by the court in Humana Inc. v. Dept. of HRS, 469 So.2d 889 (Fla. 1st DCA 1985), in which the court stated at page 891: 4/
Rule 10-5.11(15)(f), by comparison, contains the proviso that the Department will not normally approve new labs unless additional need is indicated by the formula methodology contained in Rule 10-5.11(15). Thus, the numerical factor does not rigidly control the granting or withholding of approval.
As pointed out by the hearing officer, should the formula methology in Rule
10-5.11(15) result in an underestimation of the need for additional services in an area, the applicant has the opportunity
to demonstrate need by showing that existing facilities are unavailable or inaccessible, the quality of care in the service area is suffering from over utilization, or by providing other information to illustrate that the situation is not "normal" in the service area.
The Petitioner argues, in essence, that any such flexibility is illusory because HRS has rejected a flexible application of the rules when applying them in other cases and Petitioner fears that HRS may inflexibly apply these rules to Petitioner's application. That may well be true, but the fact
that a rule has been misapplied or may in the future be misapplied is not a basis for invalidation of the rule if such application is not required by the rule. In this regard the court in Hasper v. Dept. of Administration and Dept. of Labor and Employment Security, 459 So.2d 398 (1st DCA 1984), quoted with approval the following language from the hearing officer's order:
The fact that an agency may wrongfully or erroneously apply [the] 3 Rule . . . in any given situation does not invalidate the Rule. The challenged Rule certainly does not mandate an application contrary to or conflictive with the enabling legislation. The remedy for an erroneous application of [the] Rule . . . is a proceeding pursuant to Section 120.57, Florida Statutes. . . .
The Petitioner also contends that the challenged rules are deficient because they fail to ". . . address the need for intermediate psychiatric services, despite the fact that psychiatric services are most appropriately provided on a specialized basis for short-terms intermediates and long-term patients." The evidence presented by Petitioner fails to establish that the provision of "intermediate" psychiatric serviced is a significant health planning issue in the State of Florida. And in any event, even though "intermediate" services are not specifically addressed by the subject rules, the flexibility inherent in the rules is sufficient to accommodate any need for "intermediate" services which might be established in a case under Section 120.57(1), Florida Statutes. It should also be noted that "most appropriate" is not the standard by which rules are measured. Rather, as noted in State Department of HRS v. Framat Realty, Inc., 407 So.2d 238 (Fla. 1st DCA 1981):
When as here an agency has responded to rule-making incentives and has allowed affected parties to help shape the rules they know will regulate them in the future, the judiciary must not, and we shall not, overly restrict the range of an agency's interpretive powers. Permissible interpretations of a statute must and will be sustained, though other interpretations are possible and may even seem preferable according to some views. If the rule binds too tightly to suit them, the appellee developers have their proper remedy in the representative and politically responsive branches, the legislative or executive, but not in the judiciary, nor in Section 120.56 rule challenge proceedings before a hearing officer.
Petitioner, in its last allegation of invalidity, has alleged that "[t]he rules were not adopted in compliance with the procedural requirements of Section 120.54, Florida Statutes." The only alleged procedural shortcoming advanced by the Petitioner is '"that the basic records which were used to promulgate the various standards elicited in the methodology expressed in Rules
(25) and (26) were not maintained. . . ." It is not necessary to decide here the exact nature of any agency duty to keep rulemaking records because all significant written matters considered and produced by HRS in the rule adoption process regarding the subject rules appear to have been maintained somewhere in the records of HRS since the promulgation of the subject rules.
An ancillary matter which remains to be addressed is the Petitioner's motion for sanctions. The motion was filed as a result of the failure of the HRS to timely produce all documents requested by the Petitioner even after an order requiring production. Early in the course of the hearing the Hearing Officer orally denied the motion for sanctions on the record and advised the parties that the reason for the denial would be explicated in the Final Order. The explication follows. First, the failures of the HRS prior to the April 3, 1985, order do not come clearly within the provisions of the Rule 1.380 of the Florida Rules of Civil Procedure. A prerequisite to the imposition of sanctions under the first several lettered paragraphs of the cited rule requires a prior order compelling discovery. There was no such order in this case prior to April 3, 1985. Second, with regard to the careless compliance by the HRS with the order issued on April 3, 1985, it appears from the representations of counsel that the counsel for the Petitioner at least acquiesced in a departure by HRS from any strict compliance with that order. Further, the counsel for the Petitioner did not appear to have actively pursued compliance by HRS following the April 3, 2985, order. Third, the provisions of subparagraph (d) of Rule
1.380 of the Florida Rules of Civil Procedure are not applicable to the circumstances of this case because the HRS did respond to the request for production, albeit in an informal manner by incorporating its response to the request for production in its answers to the interrogatories served by the Petitioner. Fourth, pursuant to the Florida Constitution there can be no imposition of any administrative penalty except when the imposition of the administrative penalty is specifically authorized by law. See Art. I, Sec. 18, Fla. Const. The only statutory authority for hearing officers to impose sanctions against parties or their counsel for matters related to their conduct during the prehearing or hearing process is contained in Section 120.58(1)(b), Florida Statutes, which limits the circumstances under which sanctions may be imposed to the circumstances specifically authorized in the Florida Rules of Civil Procedure. Unlike a trial court judged who has the inherent authority to impose other sanctions and penalties by virtue of the nature of judicial office, the power of a hearing officer to impose sanctions is limited to those specifically granted by Section 120.58, Florida Statutes. 5/ Accordingly, even though the expense and inconvenience which was suffered by the Petitioner due to the careless manner in which the HRS went about maintaining and retrieving its files cries out for the imposition of some penalty both to recompense the Petitioner for its expense and inconvenience as well as to impress upon the HRS the need for more diligent compliance with both the Florida Public Records Act and the discovery process under the Florida Rules of Civil Procedure, the fact remains that the Florida Legislature does not appear to have seen fit to authorize the hearing officers of the Division of Administrative Hearings to take action to correct such irregularities unless they fall squarely within the circumstances under which sanctions are authorized by the discovery provisions of the Florida Rules of Civil Procedure. Fifth, it also appears that the counsel for the Petitioner did not pursue its rights as diligently as he might have. In this regard it should be noted that even though the HRS provided what it described as the totality of the documents which had been requested by the Petitioner, the Petitioner should have been on inquiry notice that there were
yet undiscovered documents, because the documentation which was furnished clearly indicated that other documents which had not been furnished had been relied upon by the functionaries of the HRS in the promulgation of the subject rule.
In brief summary: the process followed by HRS in adapting the subject rules invited and generated extensive public input from persons and organizations with knowledge of the mental health needs of the state. The process was a reasonable one, not done in an arbitrary and capricious fashion. The rules which resulted from that process are not by their terms arbitrary and capricious.
Petitioner has argued that the process by which the rules were adopted and the information relied on by HRS in adopting the rules could have been better. Petitioner has argued that the rules themselves are not the best rules that could be adopted. The process may or may not have been the best, and the rules themselves may or may not be the best rules that could have been adopted. That, however, is not the issue of this rule challenge. The issue is not whether the best rule has been adopted but, rather, whether the rules are within the scope of the agency's discretion to adopt rules.
The challenged rules in this cause are reasonably related to the purposes of the enabling legislation and are not arbitrary or capricious. They represent a valid implementation of an HRS policy choice regarding the manner in which CON applications for psychiatric beds will be evaluated.
In view of all of the foregoing, it is ORDERED:
That the Petitioner has failed to establish the invalidity of the rules challenged in its petition and that said petition is therefore DISMISSED.
DONE AND ORDERED this 24th day of October, 1985, at Tallahassee, Florida.
MICHAEL M. PARRISH, 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 24th day of October, 1985.
ENDNOTES
1/ Subsequent to the hearing John F. Gilroy, Esquire, was substituted as counsel for the Department of Health and Rehabilitative Services. Mr. Gilroy was not involved in the discovery phase of this proceeding.
2/ The parties also agreed to a waiver of the 30-day provisions in Section 120.56(2) and (3), Florida Statutes.
3/ The first six paragraphs of these Findings of Fact are based on a stipulation signed by all parties.
4/ Humana, Inc. v. Dept. of HRS, 469 So.2d 889 (Fla. 1st DCA 1985), takes pains to distinguish the decision in Dept. of HRS v. Johnson and Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984).
5/ Some of the differences between judicial powers and quasi judicial hearing officer powers were hammered home in Hillsborough County Hospital Authority v. Tampa Heart Institute, 472 So.2d 748 (Fla. 2d DCA 1985).
APPENDIX TO FINAL ORDER, CASE NO. 84-3768RX
Pursuant to the requirements of Section 120.59(2), Florida Statutes, the following are my specific rulings on the proposed findings of fact submitted by each of the parties to this case.
Rulings on Petitioner's proposed findings:
The substance of the following proposed findings of fact submitted by the Petitioner has been accepted and adopted into the findings of fact in this Final Order: Paragraphs 1, 2, 3, 4, 5, 6, 7, portions of 8 (other portions of 8 are irrelevant and unnecessary), portions of 9, 18, a small portion of 20, a small portion of 23, a portion of 26, a portion of 29, portions of 41, portions of 42.
The following proposed findings of fact submitted by the Petitioner are rejected on the grounds that they are irrelevant and unnecessary, that they are not in their entirety supported by persuasive competent substantial evidence, and that they are in numerous particulars argumentative rather than objective: Paragraphs 10, 11, 12, 13, 14, 15, 16, 17, 21, 22, portions of 23, 24, 40.
The following proposed findings of fact submitted by the Petitioner are rejected on the grounds that they are irrelevant and unnecessary: Paragraph 8 (in part), 19, 27, 28, most of 29, 31, 32, 33, 36, 37,38, and 39 (31, 32, 38,
and 39 are also contrary to greater weight of the evidence).
The following proposed findings of fact submitted by the Petitioner are rejected on the grounds that portions of them are not supported by persuasive competent substantial evidence and other portions of them are contrary to the greater weight of the evidence: Paragraph 9 (in part), part of 20 (part of 20 is also irrelevant and cumulative), 25, 26, 34, 35 (portions of 34 and 35 also constitute argument and commentary on the evidence rather than proposed findings), 42.
Paragraph 30 of the Petitioner's proposed findings of fact is rejected on the grounds that it is irrelevant, that it contains unnecessary details, and that it is more in the nature of argument or commentary on the evidence than a proposed finding of fact.
Portions of paragraph 41 of the Petitioner's proposed findings of fact are rejected on the grounds that they are contrary to the greater weight of the evidence.
Rulings on Respondent's proposed findings:
The substance of the following proposed findings of fact submitted by the Respondent has been accepted and adopted into the findings of fact in this Final Order: The four unnumbered paragraphs on page 2, the first two unnumbered paragraphs on page 3, and the three unnumbered paragraphs that begin on page 5.
[The immediately preceding page references are to the pages of the proposed findings of fact and conclusions of law submitted by HRS.]
The following proposed findings of fact submitted by the Respondent are rejected on the grounds that they are not supported by persuasive competent substantial evidence or that significant details incorporated in the proposed findings are inconsistent with the evidence: The last unnumbered paragraph on page 6.
The following proposed findings of fact submitted by the Respondent are rejected on the grounds that they are immaterial or irrelevant because they are cumulative: The third unnumbered full paragraph on page 3 and the first sentence of the first unnumbered paragraph that begins on page 4.
The following proposed findings of fact submitted by the Respondent are rejected on the grounds that they constitute argument, or commentary upon the state of the record or the quality of the evidence, or conclusions of law, and do not constitute proposed findings of fact: The unnumbered paragraph that begins at the bottom of page 3 and continues at the top of page 4, the first full unnumbered paragraph on page 4 (with the exception of its first sentence which is rejected for other reasons); the unnumbered paragraph that begins near the bottom of page 4 and continues at the top of page 5, and the first full unnumbered paragraph on page 6. (It should be noted that the findings of fact I have made include some of, or are consistent with some of, the factual material that is interspersed in these rejected proposed findings, but these rejected paragraphs contain so much that does not constitute findings of fact that it would be an endless task to attempt to sort the wheat from the chaff.)
Rulings on Intervenor's proposed findings:
The substance of the following proposed findings of fact submitted by the Intervenor has been accepted and adopted into the findings of fact in this Final Order: Paragraphs 1, 2, 3, 4, 5, the unnumbered paragraph between paragraphs 5
and 6, 6, 7, 8, 9, 11, 12, 13, 14, 15, portions of 16, 19, 20, 21, portions of
23, the unnumbered paragraph between paragraphs 23 and 24, portions of 27.
The following proposed findings of fact submitted by the Intervenor are rejected on the grounds that they constitute commentary on the state of the record or argument, or conclusions of law and are not proposed findings of fact: Paragraph 10, part of 16, 22, part of 23 (parts of 23 are also cumulative), part
of 24 (parts of 24 are also cumulative), 25, 26, the unnumbered paragraph
between paragraphs 26 and 27, part of 27, 28, 29, 30.
The following proposed findings of fact submitted by the Intervenor are rejected on the grounds that they are more in the nature of commentary or argument about the state of the record than proposed findings of fact and, in any event contain details which are unnecessary to the disposition of this case: The unnumbered paragraph following paragraph 16, the unnumbered paragraph beginning near the top of page 9 of Intervenor's proposed findings, and the unnumbered paragraph beginning near the bottom of page 9 of the Intervenor's proposed findings.
The following proposed findings of fact submitted by the Intervenor are rejected on the grounds that they are unnecessary and irrelevant: 17, 18.
By way of further clarification and explication of the basic upon which certain proposed findings were accepted or rejected, attention is directed to the fact that the record contains opposing expert opinions on several issues respecting the reasonableness of the subject rules and the reasonableness of the process by which the rules were formulated. In resolving such conflicts I have for the most part found the evidence in support of the reasonableness of the rules to be more persuasive. The record also contains factual information and expert opinions which I have rejected as irrelevant and unnecessary in the disposition of this rule challenge proceeding because they related primarily to
how the subject rules could or would be applied. While irrelevant to this proceeding, such evidence might well prove to be relevant in the related proceeding under Section 120.57 which addresses the Petitioner's application for a CON.
COPIES FURNISHED:
John F. Gilroy, Esquire Assistant General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301
John A. Radey Esquire Elizabeth W. McArthur, Esquire AURELL, FONS, RADEY & HINKLE
1000 Monroe-Park Tower
101 North Monroe Street Post Office Box 10154 Tallahassee, Florida 32302
Martin A. Donlan, Jr., Esquire CREWS HANCOCK & DUNN
700 Building - Suite 1015 700 East Main Street Richmond, Virginia 23219
Chris H. Bentley, Esquire FULLER & JOHNSON, P.A.
111 North Calhoun Street Post Office Box 1739 Tallahassee, Florida 32302
William E. Hoffman, Jr., Esquire James A. Dyer, Esquire
KING & SPALDING
2500 Trust Company Tower
25 Park Place
Atlanta, Georgia 30303
David Pingree, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
Steve Huss, Esquire General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
Liz Cloud, Chief
Bureau of Administrative Code 1802 The Capitol
Tallahassee, Florida 32301
Carroll Webb, Executive Director Administrative Procedures Committee
120 Holland Building Tallahassee, Florida 32301
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
| Issue Date | Proceedings |
|---|---|
| Oct. 24, 1985 | Final Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Oct. 24, 1985 | DOAH Final Order | HRS rules providing Certificate Of Need application evaluation criteria for short and long term hospital inpatient psychiatric services are not arbitrary or capricious |
