STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PALMS RESIDENTIAL TREATMENT ) CENTER, INC., d/b/a MANATEE PALMS ) RESIDENTIAL TREATMENT CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 87-4731

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

MANATEE HOSPITALS AND HEALTH )

SYSTEMS, INC. d/b/a MANATEE ) MEMORIAL HOSPITAL, and FLORIDA ) RESIDENTIAL TREATMENT CENTERS, INC.,)

)

Intervenors. )

)

RECOMMENDED ORDER

The final hearing in this cause was held in Bradenton, Florida, on May 24- 25, 1988, and in Tallahassee, Florida, on June 7-9, 1988, before Donald D. Conn, Hearing Officer, Division of Administrative Hearings. The parties were represented as follows:

Petitioner: Michael J. Glazer, Esquire

R. Stan Peeler, Esquire Post Office Box 391 Tallahassee, Florida 32302

and

John T. Brennan, Jr., Esquire

900 - 17th Street, North West, Suite 600 Washington, D.C. 20006

Respondent: Stephen M. Presnell, Esquire

215 North Monroe Street Post Office Box 82 Tallahassee, Florida 32302

Intervenors: Jean Laramore, Esquire

Post Office Box 11068 Tallahassee, Florida 32301 (Manatee Memorial Hospital)

Michael J. Cherniga, Esquire Post Office Drawer 1838 Tallahassee, Florida 32303

(Florida Residential Treatment Centers)

The issue in this case is whether the Department of Health and Rehabilitative Services (Department) should issue certificate of need (CON) 5148 for specialty hospital licensure as an intensive residential treatment program (IRTP) to Palms Residential Treatment Center, Inc., d/b/a Manatee Palms Residential Treatment Center (Manatee Palms). The Department preliminarily denied Manatee Palms' application for CON 5148, and Manatee Palms has sought review of that decision. Intervenors Manatee Hospitals and Health Systems, Inc., d/b/a Manatee Memorial Hospital (MMH), and Florida Residential Treatment Centers, Inc. (FRTC) oppose the issuance of this CON.

At the hearing, Manatee Palms called thirteen witnesses and introduced twenty-eight exhibits. The Department called one witness, and introduced two exhibits. MMH called six witnesses and introduced two exhibits. The transcript of the hearing was filed on August 23, 1988, and the parties were thereafter allowed to file proposed recommended orders, including proposed findings of fact, by September 2, 1988. The Appendix to this Recommended Order contains a ruling on each proposed finding of fact filed by the parties.

PROCEDURAL MATTERS

FRTC filed a Motion to Intervene on December 29, 1987, which was initially denied by Order entered on January 13, 1988. Thereafter, on April 6, 1988, FRTC renewed its Motion to Intervene since a Final Order awarding CON 4825 to FRTC had been issued on February 15, 1988. As a result of that Final Order, FRTC maintained that it had become an "existing health care facility" with an "established program" which would be substantially affected by an award of the CON in this case. A hearing to present argument on the Amended Motion To Intervene was held on May 2, 1988, and the Department did not oppose intervention during that hearing. An Order allowing intervention by FRTC was entered on May 3, 1988. At the commencement of the final hearing on May 24, 1988, the Department expressed its opposition to the intervention of FRTC for the first time. However, FRTC was allowed to remain in this proceeding as an intervenor since the Department's objection thereto for the first time at the commencement of the final hearing was untimely, and the Order of May 3, 1988 was not reconsidered.

Manatee Palms filed a Motion To Compel on May 20, 1988, which was taken up at the start of the hearing on May 24, 1988. The Motion sought to compel the discovery of several personnel files of MMH witnesses who are employed at MMH. The Motion To Compel was denied as untimely filed since the discovery deadline had already passed when the motion was filed, and also since there had been no showing that the discovery being requested could reasonably be expected to lead to discoverable evidence.

Finally, on September 19, 1988, Manatee Palms filed a Notice of Supplemental Authority by which is seeks to rely upon a Final Order of the Department entered on April 4, 1988, in La Amistad Foundation v. Department of Health and Rehabilitative Services, DOAH Case No. 84-2005. This Notice was filed over three months after the conclusion of the final hearing in this case, and also more than two weeks after the parties filed their proposed recommended orders and memoranda. FRTC opposes this late filed Notice, and requests that it be stricken or not considered. Although the Final Order in the cited case was available prior to the final hearing in this case, Manatee Palms has offered no explanation as to why this could not have been presented at hearing, or in the parties' proposed recommended orders. Manatee Palms has simply failed to raise this additional, available authority in a timely fashion, an and by so doing

would prejudice the rights of the other parties to respond is this material were to be considered. Therefore, this Notice of Supplemental Authority is stricken and has not been considered.

FINDINGS OF FACT

The Parties

1. Manatee Palms is an existing 60 bed residential treatment center located in Bradenton, Manatee County, Florida, which opened on January 12, 1987. It is a wholly owned subsidiary of PIA Psychiatric Hospitals, Inc., which owns or operates 51 psychiatric hospitals and three residential treatment centers throughout the United States.

   
   

2. The Department is the state agency with the authority and responsibility to consider CON applications.

   
   

3. MMH is an existing acute care hospital with a 25 bed short-term psychiatric unit which consists of approximately ten adolescent beds. It is the Manatee County contract provider of in-patient psychiatric services to the medically indigent, and provides approximately 91% of the indigent care in manatee County. MMH does not have, and has never sought, a CON as an IRTP, but does have earlier batched applications pending for additional short an d long term psychiatric beds. Its average length of stay is 35-40 days, and its utilization rate is approaching 100%. MMH provides services similar or identical to those offered or proposed by Manatee Palms and FRTC, and its program also utilizes a "Levels System", as does the program at Manatee Palms and the one to be offered at FRTC.

   
   

4. FRTC is a wholly owned subsidiary of Charter Medical Corporation, which received a CON through Final Order of the Department on February 15, 1988, for a

   60 bed intensive residential treatment facility located in Bradenton, Manatee County, Florida. The facility is currently under construction, and is projected to begin operations in March, 1990.

   
   

   The Application and the Project

   
   

5. Manatee Palms is licensed as a child caring facility and holds a license entitling it to various services relating to alcohol and substance abuse to adolescents between the ages of 8 and 18. The facility is JCAH accredited as a residential treatment center.

   
   

6. In April, 1987, Manatee Palms filed CON application number 5148 with the Department. It seeks to obtain specialty hospital licensure as an IRTP for its existing facility, and must receive a CON before it can be so licensed.

   
   

7. The Department reviewed Manatee Palms' application and preliminarily denied CON 5148. Manatee Palms timely sought review of the Department's preliminary decision, and requested this formal hearing. By Order entered on May 3, 1988. leave to intervene was granted to MMH and FRTC. At hearing, relevant information that updates a CON application, and is the result of extrinsic circumstances beyond the applicant's control, is admissible, according to the Department's expert in CON review, Liz Dudek.

   
   

8. The existing facility which is the subject of these proceedings is divided into two 30-bed wings based upon two separate clinical programs provided at the facility. One 30-bed unit is the psychiatric unit where a program for

   patients suffering only from psychiatric illnesses reside and are treated. The other unit is for dual diagnosis patients suffering from both psychiatric and substance abuse disorders.

   
   

9. The primary service area for Manatee Palms includes Manatee, Sarasota, Pinellas, Hillsborough, Pasco, Polk, Hardee, Highlands, Charlotte, Lee, Collier and Orange Counties, with the secondary service area covering all eleven service districts of the Department, as well as out-of-state. Approximately 25% of the patients at Manatee Palms are from District VI.

   
   

10. The facility encompasses 23,500 gross square feet, and contains classrooms, bedrooms, activity rooms, a dining facility and fully equipped kitchen, pharmacy, offices, a medical examining room, timeout rooms, and a service wing. The outside area covers 15 acres and consists of a swimming pool, ball field and a ROPES course, which is also available for non-residents in the community.

    
    

11. A fully accredited school is operated at the facility, and some of the residents also attend a public high school which is located across the street. Classes are taught by EH and SED instructors provided by the Manatee County School Board. The facility supplies an aide for each class.

    
    

12. The treatment program at Manatee Palms includes: comprehensive and individualized treatment; individualized, group and family therapy; the fully accredited school program; psychological testing and evaluation; creative and expressive arts; occupational and recreational therapy; alcohol and substance abuse education and counseling; vocational counseling; language, speech and hearing therapy; and structured after care. Therapy is provided in both a group and individualized setting, in accordance with an individual treatment plan for the resident which is developed by his treatment team. Additional services are provided to residents through contracts with outside physicians. A Levels System is followed which allows each resident to move up the Levels and gain increased privileges as the resident improves his behavior.

    
    

13. Manatee Palms is extensively involved with the community through clinical workshops, the District VI Severely Emotionally Disturbed Network, Advisory Councils, counseling sessions for adolescents who are not in need of psychiatric care but are in need of counseling, and drug screening services which are provided at no charge.

    
    

14. The facility's stated goal is to provide services that will enable program participants to return to their communities under less restrictive treatment requirements as soon as possible. The average length of stay is approximately 61 days in the dual diagnosis unit, and approximately 147 days in the psychiatric unit. Combining both units, the average length of stay at the facility is approximately 120 days.

    
    

15. Admissions are accepted from mental health and social service agencies, schools, hospitals, and private practitioners. Patients are admitted upon the order of a psychiatrist/physician. Manatee Palms has three psychiatrists on staff and other non-psychiatric physicians providing services at the facility, include family physicians, a podiatrist, gynecologist, optometrist, podiatrist, as well as several dentists. The clinical staff to patient ration is approximately 1.25 to 1.0, and the overall staff to patient ratio is 1.8 to 1.0.

16. The facility experienced an 86.8% occupancy from its opening in January, 1987, through April 30, 1988. At the time of its omissions response in June, 1987, its occupancy was 85.5%. Occupancy for 1989 is projected to be 89- 90%. Approximately 25% of the patients treated at Manatee Palms reside within District VI, while the rest reside in other Districts, or out of state.

    
    

17. Manatee Palms has a contract with the Department to treat "chronically disturbed" adolescents, who have long term problems and have been treated in multiple settings before their admission to Manatee Palms. These patients generally require a longer average length of stay, and although they comprises half of all admissions in 1987, they now represent about 35% of the patients at Manatee Palms. The facility is committed to serving the same number of patients under its contract with the Department for the next two year, even with a CON.

    
    

18. The gross charge per patient day at Manatee Palms is $255.00, which includes room, board and nursing, and ancillary charges are about $12.00 per day. The average gross patient charge per admission is $45,000. Rates for patients admitted under the contract for services with the Department are reduced to $185.00 per day, including ancillary charges, and this is below actual costs.

    
    

19. Payor classes include insurance patients, private pay patients, and patients admitted under the contract with the Department. The number of insurance companies providing reimbursement for private pay patients has substantially increased since 1987, and there are approximately 40 insurance companies that have provided coverage for patients at Manatee Palms.

    
    

    Non-Rule Policy for IRTP

    
    

20. The Department has no rule governing the approval of IRTP applications for a CON. Since February, 1987, the Department followed a non-rule policy which presumed there is a need for at least one licensed IRTP of reasonable size in each Departmental service district, and which did not consider the existence of unlicensed residential treatment beds in a district in determining if the presumed need had been met. Nothing in the record of this proceeding serves to explicate any rational basis for this non-rule policy based upon health planning concerns, considerations, or any other factors. The stated non-rule policy, therefore, provides no guidance for review of the application at issue in this case.

    
    

21. FRTC received a Final Order of the Department in February, 1988, granting it a CON for a new IRTP to be located in Manatee County. Therefore, Manatee Palms is seeking licensure for the second IRTP in District VI. It is, however, an existing facility which does not seek to add new beds or provide new services at its facility, but seeks to change the status of its existing beds to "hospital" beds through licensure. In order to be licensed as a "specialty hospital", a facility must first receive a CON. The stated non-rule policy of the Department provides no guidance for review of the application at issue in this case, since even had it been explicated on the record of this proceeding, it does not apply to the review of a second IRTP application in a service district.

    
    

    Need and Consistency with State and Local Health Plans

    
    

22. The Florida State Health Plan sets forth several relevant goals, including: encouraging the availability of the least restrictive treatment setting for all residents in need of mental health services; developing a

    continuum of services for mental health and substance abuse treatment, and a complete range of public mental health services in each service district; promoting third party reimbursement for non-hospital settings; and developing a network of residential treatment settings for severely emotionally disturbed children.

    
    

23. The District VI Local Health Plan also encourages the use of the least restrictive and most cost effective treatment settings. No specific goals are identified in the Local Plan for residential treatment programs.

    
    

24. The Manatee Palms application is consistent with these relevant portions of the State and Local Health Plans. It would increase access for patients with a dual diagnosis of both psychiatric and substance abuse problems, and would thereby encourage treatment in a facility with a shorter average length of stay than an acute inpatient hospital. It provides a less costly alternative to hospitalization. Manatee Palms accepts patients through a service contract with the Department, and thereby assists the development of a complete range of public mental health services. Insofar as approval of this application will increase the level of commercial insurance reimbursement for services at Manatee Palms, it will thereby improve the financial viability of the facility, and allow it to continue to serve patients under its contract with the Department, which currently does not allow for the recovery of actual costs associated with those services. Approval of this application will insure that Manatee Palms, which accepts publicly financed patients, will be able to compete on an equal basis with FRTC, which has made no commitment to serve patients under a service agreement with the Department.

    
    

25. A numeric need methodology for IRTPs is not set forth by rule or incipient policy of the Department. For this reason, Manatee Palms presented three analyses to establish the need for this facility.

    
    

    First, competent substantial evidence was presented that referral sources and other knowledgeable individuals in the community believe that Manatee Palms does fill an existing gap in services by providing long-term psychiatric and substance abuse services locally to adolescents who require this level of treatment, and that the facility has a very good reputation in the community, with extensive involvement in the community.

    
    

    Second, a bed-to-population ratio analysis was performed, and established that if Manatee Palms' application is approved, the ratio of beds to population would be .32 beds per thousand for the 0-17 age group in District VI, even allowing for the already approved FRTC beds. This ratio analysis was adopted by the Department in its Final Order issued in February, 1988, granting FRTC a CON for an IRTP in Manatee County, and in that case 1991 population projections were used by the Department. Since this application was filed later than the FRTC application, 1992 population projections have been used to arrive at the .32 beds per population ratio. Thus, the same five year population projection has been used in this case, for purposes of this bed-to-population ratio analysis, as was applied by the Department in the FRTC case. This would be well within the range of bed-to-population ratios for areas with the existing IRTPs which is from .07 to 1.33 beds per thousand population for ages 0-17. This ratio analysis was adopted by the Department as a method to establish need in IRTP cases subsequent to the Manatee Palms application being deemed complete. The utilization and adoption of this methodology in the FRTC case was not within the control of Manatee Palms, and there was no way this could have been foreseen when it filed this application. It is, therefore, appropriate and necessary for

    Manatee Palms to address, and rely upon, this subsequently adopted methodology at hearing, although it was not addressed in its application.

    
    

    Third, the services which are offered at Manatee Palms were distinguished from those to be offered at FRTC to establish that a different type of patient would be treated FRTC than is currently treated at Manatee Palms, and that, therefore, existing occupancy rates would not be reduced at Manatee Palms due to the FRTC facility. Specifically, it was shown that the proposed average length of stay at FRTC would be three times longer than the actual average length of stay at Manatee Palms, and FRTC does not propose to serve substance abuse patients or provide services to publicly financed patients under a contract with the Department, both of which comprise a significant portion of Manatee Palms' patient census. Manatee Palms could not have addressed the FRTC facility when its application was filed since the FRTC CON was not issued until February, 1988. It is, therefore, appropriate for this to be addressed for the first time at hearing since it is a fact not under the control of Manatee Palms which has developed subsequent to this application being deemed complete.

    
    

26. The need for this facility is also evidenced by the rapid increase in actual utilization rates since it opened in January, 1987, and by testimony from local support witnesses from the school system and local law enforcement.

    
    

27. Since the primary and secondary service areas of Manatee Palms extend beyond District VI to include the entire state, as well as service to out-of- state residents, the fact that FRTC will serve primarily the residents of Manatee County will not substantially reduce the need which Manatee Palms is meeting in its existing services area.

    
    

    Accessibility to All Residents

    
    

28. The clear purpose of this application is to enable Manatee Palms, an existing facility, to become licensed as a hospital under Section 395.002, Florida Statutes, and thereby enable it to be called a "hospital". If a facility is licensed as a hospital, it has a significant advantage for reimbursement from third parties who more readily reimburse for care in a licensed facility than in an unlicensed residential treatment center.

    Therefore, accessibility is increased for those children and adolescents in need of treatment whose families have insurance coverage, since it is more likely that payments under such third party coverage will be made at an IRTP licensed as a "hospital" than otherwise.

    
    

29. Since it has already been in operation for a year and a half, and has developed an excellent reputation in the community and among insurance carriers, the number of insurance companies willing to reimburse for services at Manatee Palms has increased over that time to approximately 40, and by early 1988, almost 52% of Manatee Palms' patients had commercial insurance coverage. There is evidence, however, that additional carriers would be willing to reimburse for services at this facility if it were to be licensed.

    
    

30. An increase in the number of third party carriers willing to reimburse for treatment at Manatee Palms will promote and improve the financial viability and stability of the facility, and result in an increased number of Florida residents receiving treatment at the facility, with a similar reduction in out- of-state patients being treated at Manatee Palms. This, in turn, will inure to the benefit of publicly financed patients served at this facility under its contract with the Department by assuring the continued operation of the facility. As a result, this application increases accessibility to treatment

    for such patients, particularly since the facility has committed to serve the same number of these patients for the next two years, even with a CON.

    
    

    Quality of Care

    
    

31. The applicant has clearly demonstrated that it has been providing quality care in its existing facility, and that it will continue to do so if it receives the CON, and is licensed as a "specialty hospital". In fact, licensure will require the applicant to meet more stringent standards than those under which it is currently operating.

    
    

32. Manatee Palms performs extensive pre-admission screenings, and develops treatment plans for each patient early in their course of treatment. The patient's treatment team continues to monitor progress under the treatment plan, and to make revisions in the plan, when necessary. Treatment is provided seven days a week, and includes an extensive educational component. Family involvement in treatment is maximized, and discharge planning begins upon admission. The goal of treatment is return of the resident to the community as quickly as possible.

    
    

    Availability and Adequacy of Alternatives

    
    

33. The approval of this application would increase the availability and accessibility of residential treatment services to patients with dual diagnoses, publicly financed patients, and those who may be treated in a shorter period of time. Although a CON for FRTC has already been approved, that facility will not serve the same types of patients as are presently served at Manatee Palms, as previously noted above. The average length of stay at FRTC will be one year, while at Manatee Palms it is 120 days. Additionally, the service area of FRTC will comprise District VI, while Manatee Palms has a far broader service area.

    
    

34. Manatee Palms is an existing facility serving patients in need of the treatment rendered. It is meeting an existing need which cannot be met through other existing or approved facilities.

    
    

    Availability of Resources

    
    

35. Since Manatee Palms is an existing facility which has been in operation since January, 1987, and has achieved an excellent reputation in the community, as well as almost 87% occupancy, there is no question that it has sufficient available resources, including health manpower and management personnel, to continue its operation. The applicant proposes no additional beds or services with this application.

    
    

    Services Accessible In Adjoining Areas

    
    

36. There are no licensed IRTPs in adjoining Districts V or VIII. Manatee Palms has served patients from these adjoining areas, as well as from throughout the state. There are no viable options in adjoining districts for District VI residents in need of the types of services Manatee Palms renders. The granting of this CON, and subsequent licensure, will improve Manatee Palms' ability to continue to render these services.

    
    

    Financial Feasibility

    
    

37. David J. Rabb, an expert in the financial feasibility of medical facilities, prepared pro formas for 1989 and 1990 based upon the issuance of

    this CON, which show net revenues of $80,000 in 1989 and $106,000 in 1990. This represents a fair after tax profit each year, and establishes the financial feasibility of the project. These pro formas represent updates of pro formas contained in the application, and are admissible in this de novo hearing since they are based upon actual operating experience which was not available when this application was filed, and reflect economic conditions and rates of inflation not within the control of the applicant.

    
    

38. Reasonable assumptions were used by Rabb in preparing his pro formas. He assumed 89.6% occupancy in 1989 and 90% in 1990. Patient revenues were reasonably projected at $286 in 1989 and $303 in 1990. Utilization by payor class was projected for 1989 to be: 52% commercial payor, 34% HRS patients, 7% Blue Cross, 4% Champus, 2% out-of-state, and 1% self pay. For 1990, it was assumed the facility would no longer serve out-of-state patients, and therefore the commercial pay patients were increased to 54% in 1990, out-of-state patients were eliminated, and all other payor classes remained the same. Rabb's expense projections for 1989 and 1990 were also reasonable.

    
    

39. Based upon a study performed by Rabb of the impact of licensure upon the financial position of Manatee Palms, it is established that hospital licensure would improve the financial position of the facility. Jay Cushman, who was presented by MMH and was accepted as an expert in health planning and financial feasibility, concurred that licensure will enhance commercial pay patients beyond the level possible without licensure, and that this in turn will improve the financial viability of the facility. Liz Dudek, the Department's health facilities consultants' supervisor and an expert in health planning, confirmed that it is the Department's position that licensure as an IRTP increases accessibility to patients because of the increased likelihood of insurance reimbursement.

    
    

    Impact on Costs and Competition

    
    

40. Competition among health care facilities serves to enhance quality of care and to assure cost effectiveness in the delivery of services. Since FRTC has already received a CON as the first IRTP to seek licensure in District VI, granting this application will allow Manatee Palms to compete equally with FRTC by also being able to obtain a licensure as a "specialty hospital". This should have a positive effect on the quality of care and cost effectiveness of both facilities.

    
    

41. Since no new construction or services are to be offered at Manatee Palms as a result of this application, and since it has an established room rate structure which is already in place, and which was used for projections in the pro formas, the approval of this application will have a minimal, if any, impact on any increased costs for the delivery of health care.

    
    

42. It was not established by competent substantial evidence that either MMH and FRTC would be injured or negatively impacted by the approval of this application.

    
    

43. Actual patient days and average daily census at MMH's adolescent unit have gone up since Manatee Palms opened. MMH maintains, however, that since its patient mix has changed during this time to reflect a decrease in commercial pay patients and an increase in Medicaid patients, it is being adversely affected, despite the increase in gross patient numbers. However, the increase in Medicaid patients which MMH has experienced cannot be attributed to Manatee Palms. MMH is the only Medicaid approved hospital in the area, and Manatee

    Palms will not be able to accept Medicaid patients, with or without a CON and licensure. Therefore, approval of this CON will have no effect upon the level of Medicaid admissions experienced at MMH.

    
    

44. There is evidence that the decrease in commercial pay patients at MMH is due to physician admitting practices, rather than the opening of Manatee Palms. Specifically, Dr. Howard Goldman, is on staff of both MMH and Sarasota Palms, but not Manatee Palms. Dr. Goldman has been admitting most of his commercial pay patients to Sarasota Palms and Medicaid patients to MMH.

    
    

45. MMH presented the testimony of Jay Cushman, who was accepted as an expert in health planning and financial feasibility, concerning the impact which approval of this application would have on MMH. Cushman estimated that MMH will loose a total of ten patients, or 1.2 patients per day, if Manatee Palms receives a CON, and he further stated that other patients would not be available to fill this gap. At the same time, however, he testified that MMH is presently seeking a CON for additional psychiatric beds, even though it was fully aware of FRTC and Manatee Palms' applications when its application was filed. MMH's application is for six short term adolescent beds, ten long term, and eleven substance abuse beds. Despite being fully aware of FRTC and Manatee Palms, Cushman supported MMH's application for 27 new beds, and yet testified in this proceeding that no patients would be available to make up for patients MMH might lose to Manatee Palms. Due to this obvious and unexplained contradiction, Cushman's testimony is discredited, and his credibility impaired. Accordingly, this testimony has been given little weight.

    
    

46. On the basis of Cushman's analysis, Eric Long, an expert in hospital finance, estimated the financial impact to MMH of this patient loss projected by Cushman. Since the Cushman testimony has been given little weight, Long's impact analysis is also discredited. Long simply took Cushman's figures of patient loss and translated them into a dollar impact, but made no independent analysis of patient loss. Since his starting point was faulty, his analysis is faulty.

    
    

47. FRTC did not show any adverse impact on its facility as a result of CON approval and licensure of Manatee Palms. Because of the difference in the services to be provided, the average length of stay, and service areas of the two facilities, FRTC and Manatee Palms are not in direct competition for every patient. To the extent there is competition, however, this should have a positive effect on the delivery services in District VI.

    
    

    Services To Indigents

    
    

48. Manatee Palms is not eligible to accept Medicaid patients, but it does serve the medically indigent through a service contract with the Department. Licensure will enhance the applicant's ability to continue to serve the medically indigent under this contract with the Department.

    
    

49. Although the percentage of HRS patients at Manatee Palms has decreased in 1988, there is no evidence that Manatee Palms has every turned an HRS patient away in favor of a commercial pay patient. While occupancy has been almost 87%, there are still beds available at Manatee Palms, and therefore, there has been no need to turn any patients away since beds are available.

    
    

50. The facility is dedicated to continue its current level of commitment to serve publicly financed patients under a service contract with the Department for the next two years if this CON is approved.

    CONCLUSIONS OF LAW

    
    

51. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this cause. Section 120.57(1), Florida Statutes. MMH and FRTC have established a requisite basis for standing consistent with the previous Order granting leave to intervene entered herein on May 3, 1988.

    
    

52. In this proceeding, Manatee Palms seeks to be licensed as a specialty hospital pursuant to Sections 395.002(8) and 395.003(2)(e) and (f), Florida Statutes, and such licensure cannot be obtained without it first being granted a CON. Section 381.704(2), Florida Statutes. The applicant bears the ultimate burden of demonstrating its entitlement to a CON. Florida Department of Transportation v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

53. Since this is a de novo proceeding, it is the position of the parties at the time of hearing that is relevant in determining whether the applicant has met its burden. Therefore, evidence offered to update and to make minor revisions in the application, but which does not amend the application, is relevant and has been considered. McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977); Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1986); Florida Health Facilities Corp. v. Department of Health and Rehabilitative Services, Case No. 87-503; Opinion filed January 20, 1988, Fla. 1st DCA. The Department has construed and applied its "no amendment" rule many times in Final Orders. Health Care and Retirement Corp. of American v. Department of Health and Rehabilitative Services, 8 FALR at 4651; Manor Care, Inc., v. Department of health and Rehabilitative Services, 9 FALR at 2141-2142; Hialeah Hospital, Inc. v. Department of Health and Rehabilitative Services, 9 FALR at 2366. From these cases, it is evident that updated information submitted by an applicant at a Section 120.57 hearing is admissible if it results from events and developments outside the control of the applicant. Inflation and economic factors existing at the time of hearing, for example, cannot be foreseen with certainty when a CON application is filed, and these are certainly matters outside the control of the applicant. Therefore, updates presented at hearing which account for actual rates of inflation and current economic conditions, as well as revisions to application tables and pro formas which necessarily result therefrom, have been admitted and considered.

    
    

54. In determining if there is a need for the proposed facility, a balanced consideration of all statutory and rule criteria must be made. Department of Health and Rehabilitative Services v. Johnson & Johnson, 447 So.2d

    361 (Fla. 1st DCA 1984); Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985). The weight given to each individual criteria is not fixed, but varies depending on the facts of each case. North Ridge General Hospital, Inc., v. NME Hospitals, 478 So.2d 1138 (Fla. 1st DCA 1985); Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

    
    

55. The fact that no rule exists setting forth a need methodology in IRTP cases must be addressed in order to determine which criteria must be applied in performing the required balanced consideration, and also whether such consideration can be given at all, absent a rule. While the existence of non- rule policy has been recognized, it must be clearly explicated by the agency or party seeking to rely thereon. McDonald v. Department of Banking and Finance,

    346 So.2d 569 (Fla. 1st DCA 1977); Florida Medical Center v. Department of Health and Rehabilitative Services, 463 So.2d 380 (Fla. 1st DCA 1985). This is

    a heavy burden, and the non-rule policy does not have the presumption of validity which is afforded formally promulgated agency rules. Barker v. Board of Medical Examiners, 428 So.2d 720 (Fla. 1st DCA 1983). The non-existence of a need methodology rule is not fatal to an application for a CON if incipient,

    non-rule policy can be sufficiently explicated at hearing. In this case, like that in Upjohn Healthcare Services, Inc. v. Department of Health and Rehabilitative Services, 496 So.2d 147 (Fla. 1st DCA 1986), the Department did not offer evidence and expert testimony at hearing to elucidate the non-rule policy it maintained was applicable here, and therefore the Department's non- rule policy cannot be relied upon or considered in determining if this application should be approved. Florida Medical Center, Id; Anheuser Busch v. Department of Business Regulation, 393 So.2d 1177 (Fla. 1st DCA 1981).

    
    

56. We now turn to the statutory criteria found at Section 381.705(1), Florida Statutes, to determine whether Manatee Palms has established its entitlement to the CON it seeks. Upon review, it is concluded that Manatee Palms has met its burden of proof, and is therefore entitled to approval of the CON which is here at issue. It has established that sufficient manpower and personnel are available to continue to staff its existing facility, that no new construction or programs will result from approval of this application, that its financial position will be improved if this CON is granted, that it will continue to provide quality care, that the project is consistent with State and Local Health Plans, and that there exists a need for a second licensed IRTP in District VI.

    
    

57. Specifically, Manatee Palms' application satisfies Section 381.705(1)(a), Florida Statutes, which requires analysis of need for the project in relation to the Local and State Health Plans. The application does satisfy these plans because it provides services which are less restrictive and less costly than in-patient hospitalization in an acute care facility, promotes a complete range of public mental health services through the facility's service contract with the Department, promotes third-party reimbursement for a non- hospital setting, assists in providing a coordinated continuum of care for patients in need of mental health and substance abuse services, and reduces the need for patients to obtain treatment out-of-state. The applicant has shown that the ratio of licensed IRTP beds to population in District VI will be within the range of bed ratios existing in other parts of the State where licensed IRTPs are located, even taking into account the FRTC facility. There is a high level of support for this application in the community.

    
    

58. Section 381.705(1)(b) requires assessing the project against the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services, while Section 381.705(1)(c) focuses on the ability of the applicant to provide quality care. Section 381.705(1)(d) requires examination of existing alternatives to the IRTP. Manatee Palms has established that it will continue to provide quality care and adequate staffing for patients at its facility. It is an existing facility with an outstanding reputation in the community, and is JCAH accredited as a residential treatment center. Adequate alternatives to this facility have not been shown to exist within District VI, as evidenced by the fact that current occupancy rates are already approaching 90%. Manatee Palms' facility will be more accessible to patients with insurance coverage due to its status as a specialty hospital and resulting ready acceptance for reimbursement purposes. This will insure that the facility can continue to accept publicly financed patients at less than actual costs, as it has committed to do for the next two years.

59. Section 381.705(1)(h) can be broken down into two distinct subparts relevant to this application. First, it requires assessment of availability of resources, including manpower and funds, to start up and operate. Manatee Palms' application satisfies this component since it is an existing facility. Additionally, the updated pro formas do adequately demonstrate sufficient revenues to cover reasonably anticipated operating expenditures, and do establish the profitability of the facility in 1989 and 1990 with a CON.

    Second, this Section encourages accessibility of the proposed services to all residents of the service district. The proposal satisfies this criteria because the IRTP would be no less accessible, in terms of geographic, financial, and service considerations, than any other hospital or licensed residential treatment facility within the District. In fact, as previously noted, its accessibility for patients with insurance coverage will likely increase due to approval of this application since it will then be able to establish itself as a "specialty hospital" and insurance reimbursement is more likely at such a facility than at an unlicensed residential treatment center.

    
    

60. Section 381.705(1)(i) requires that the applicant demonstrate immediate and long-term financial feasibility of the proposal. The proposal meets this criteria, because it has been established that the IRTP would be profitable in 1989 and 1990, based upon the reasonable and appropriate assumptions upon which its updated pro forma presented at hearing is based.

    
    

61. An examination of the impact of the project on the cost of providing the services to be offered by the applicant, and corresponding consideration of "the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness" is required by Section 381.705(1)(1). The project can reasonably to expected to attract patients with insurance coverage who would otherwise go to existing facilities for care. Approval of this application will foster competition since this will be the second licensed IRTP in District VI.

    Although Manatee Palms, MMH and FRTC will not compete for all patients, the competition that does result will enhance quality of care and help to assure cost effectiveness at these facilities, and than, in turn, will outweigh any minimal impact on FRTC and MMH which may result from approval of this CON.

    There are no new construction costs associated with this application, and no new beds or programs will be added. Therefore, this application will have a minimal, if any, impact on any increased health care costs.

    
    

62. Section 381.705(2) is inapplicable in this proceeding since the criteria contained therein apply only to cases of capital expenditure proposals. This application contains no such proposal because we are dealing with a facility that has been in existence and in operation since January, 1987, and which seeks to add no new beds or programs.

RECOMMENDATION

Based upon the foregoing, it is recommended that the Department enter a Final Order approving Manatee Palms' application for CON 5148.

DONE and ENTERED this 29th day of September, 1988, in Tallahassee, Florida.

DONALD D. CONN, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 1988.

APPENDIX

(DOAH Case Number 87-4731)

For purposes of this Appendix, the following abbreviations shall be used: "A" means Adopted, "R" means Rejected, and "fof" means finding of fact contained in this recommended order.

50. R as simply a statement of position and argument on the evidence rather than a fof.

51. A fof 30, 39.

52-53. R as unnecessary. 54-56. A fof 33, 34.

1. R as a conclusion of law and not a fof.

2. A fof 31.

3. R as not based upon competent substantial evidence.

competent substantial evidence.

19. A in part fof 20, but otherwise R as a conclusion of law rather than a fof.

20. R fof 24, 25, 30, 39, 48.

1. A fof 20.

2. R as unnecessary and irrelevant.

3. R fof 25.

4. R as unnecessary and irrelevant.

25. A fof 9, 16.

1. A in part in fof 4, but otherwise R as irrelevant.

2. R fof 7.

3. A fof 7.

4. R as a conclusion of law rather than a fof.

Rulings on MMH's Proposed Findings of Fact:

1. A fof 1.

2. A fof 4.

3. A fof 3.

4. A fof 2.

5. A fof 1.

6. A fof 5.

7-8. A fof 6.

1. A fof 16.

2. R as unnecessary and irrelevant.

3. A fof 7.

4. R as unnecessary and irrelevant.

5. A fof 7.

6. A fof 8.

7. A fof 10.

32-34. R as a conclusion of law rather than a fof.

35. R as simply a statement of position and not a fof. 36-37. A fof 20.

1. A and R in part fof 21.

2. R fof 21.

3. R fof 25.

4. A in part fof 17, but otherwise R fof 17, 30, 50.

5. R as simply a statement of position and not a fof.

6. A fof 25.

44. R fof 25, 26.

1. R fof 20.

2. A fof 25.

3. A fof 27.

4. R as a conclusion of law and not a fof, and otherwise without citation to the record.

5. R fof 25, and as argument on the evidence without citation to the record rather than a fof.

6. R as simply an excerpt of testimony and not a fof. 51-52. A and R in part in fof 25.

53. R as argument on the evidence without citation to the record rather than a fof.

54-55. R fof 28, 29, and otherwise as irrelevant.

56. A fof 22, 24.

1. A fof 22.

2. R fof 22. 59-60. R fof 24.

61. R fof 23, 24.

62-63. A in part fof 16, but otherwise R fof 25, 26, 28, 29.

64. R fof 30, 48, 50.

65. R as simply a statement of position and not a fof.

66. R fofo 30, 50.

1. R as irrelevant and not based on competent substantial evidence.

2. A and R fof 27.

3. R as simply a statement of position and not a fof. 70. R fof 30, 50.

71. A fof 18, 30, but R fof 30, 50.

1. A and R fof 30, 48.

2. R as a conclusion of law and not a fof.

3. A fof 9, 16, but R fof 25-29.

75-80. R fof 31, 32, 35, and otherwise as irrelevant and not based on competent substantial evidence.

1. A fof 37.

2. R as simply a statement of procedural matters and not a fof.

83-85. A and R fof 37, and otherwise R as irrelevant.

1. R fof 37.

2. R as irrelevant.

3. R as simply a statement of position and not a fof.

4. A fof 3.

5. R fof 45.

6. R fof 44.

7. R fof 46.

93-94. R as irrelevant and not based on competent substantial evidence.

Rulings on FRTC's Proposed Findings of Fact:

1-4. R as unnecessary preliminary matters.

25. R fof 28, 30, 48.

26. A fof 19, 29.

27-28. A fof 38.

1. A fof 29.

2. R as irrelevant and as argument on the evidence rather than a fof.

3. R fof 49 and as not based on competent substantial evidence.

4. A in part fof 29, but otherwise R fof 28, 39.

5. R as irrelevant and unnecessary.

6. R fof 28, 39, and otherwise as irrelevant and unnecessary.

7. R fof 49.

8. A fof 38.

37-38. R fof 33, 34.

39-40. R fof 25, 27, 33.

41. R fof 25, 27, 33, 34.

1. A in part fof 20, but otherwise R as simply an argument on the evidence and not a fof.

2. R fof 20, 21, and as not based on competent substantial evidence.

44-45. A in part fof 33, but R fof 34 and as irrelevant and unnecesasary.

46. A fof 25, 33.

1. A in part fof 25, 33, but otherwise R as argument on the evidence and not a fof.

2. R as speculative and not based on competent substantial evidence.

3. A fof 17, 30, but otherwise R as unsupported argument on the evidence and not a fof.

4. R as speculative and not based on competent substantial evidence.

51. R fof 40, 47.

52. R as unnecessary and cumulative.

COPIES FURNISHED:

Michael J. Cherniga, Esquire

P. O. Drawer 1838 Tallahassee, Florida 32302

Michael J. Glazer, Esquire

R. Stan Peeler, Esquire

P. O. Box 391

Tallahassee, Florida 32302

John T. Brennan, Jr., Esquire 900-17th Street, N.W.

Suite 600

Washington, D. C. 20006

Jean Laramore, Esquire

P. O. Box 11068 Tallahassee, Florida 32301

Stephen M. Presnell, Esquire

1. O. Box 82

   Tallahassee, Florida 32302

   
   

   Gregory L. Coler Secretary

   Department of Health and Rehabilitative Services

   1323 Winewood Boulevard

   Tallahassee, Florida 32399-0700

   
   

   John Miller, Esquire General Counsel Department of Health and

   Rehabilitative Services 1323 Winewood Boulevard

   Tallahassee, Florida 32399-0700

   
   

   Sam Power, HRS Clerk Department of Health and

   Rehabilitative Services 1323 Winewood Bouelvard

   Tallahassee, Florida 32399-0700

   
   

   =================================================================

   AGENCY FINAL ORDER

   =================================================================

   
   

   STATE OF FLORIDA

   DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

   
   

   
   

   PALMS RESIDENTIAL TREATMENT CENTER, INC., d/b/a MANATEE PALMS RESIDENTIAL TREATMENT CENTER,

   
   

   Petitioner,

   CASE NO.: 87-4731

   vs. FPSS NO.: 5148

   
   

   DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

   Respondent.

   and

   
   

   MANATEE HOSPITALS & HEALTH SYSTEMS INC., d/b/a MANATEE MEMORIAL HOSP. and FLORIDA RESIDENTIAL TREATMENT CENTERS, INC.,

   
   

   Intervenors.

   /

   
   

   FINAL ORDER

   
   

   This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.

   
   

   RULING ON EXCEPTIONS FILED BY THE DEPARTMENT

   
   

   1. HRS excepts to finding of fact number 24. The Hearing Officer's findings of fact are entitled to the same weight as the verdict of a jury. Gruan vs. State, 379 So2d 1313 (Fla. 2nd DCA 1980). It is the Hearing Officer's function to resolve conflicts in the evidence, judge the credibility of witnesses, draw permissible inferences from the evidence, and make findings of fact; and the agency may not reject a finding unless there is no competent, substantial evidence from which the finding could reasonably be inferred. Heifetz vs. Department of Business Regulation, 475 So2d 1277 at 1281 (Fla. 1st DCA 1985). The exception is denied as the finding is supported by competent, substantial evidence.

      
      

   2. HRS excepts to finding of fact number 25 regarding evidence of numeric need presented by Manatee Palms. Where no need methodology is promulgated by rule, the Hearing Officer may consider evidence of the kind presented by Manatee Palms which is relevant to the original application. The absence of such evidence in the application goes to its weight, not its admissibility. The exception is denied. This ruling does not constitute an adoption of a need methodology by the department.

      
      

   3. HRS excepts to finding of fact number 26 wherein the Hearing Officer finds that Manatee Palms' rapid increase in utilization is circumstantial evidence from which need can be inferred. The department has no authority to reweigh the evidence. The exception is denied.

      
      

   4. HRS excepts to finding of fact number 30. Again, counsel objects to evidentiary inferences drawn by the Hearing Officer. The exception is denied.

      
      

   5. HRS excepts to finding of fact number 33. The finding is supported by Competent, substantial evidence; therefore, the exception is denied.

      
      

   6. HRS excepts to finding of fact number 36. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

   7. HRS excepts to finding of fact number 37 regarding evidence of financial feasibility based upon actual operating experience of Manatee Palms between the time the CON application was filed and the final 120.57 hearing.

      The correct answer is easily seen if one assumes a worst case hypothetical of an applicant that is solvent at the time of filing, but insolvent at the time of the final hearing. Clearly, such evidence is relevant to assertions of financial feasibility made in the application and should be considered. Such evidence does not constitute an amendment of the application. The exception is denied.

      
      

   8. HRS excepts to finding of fact number 38. The exception is denied for the reasons given in the ruling on exception number 7.

      
      

   9. HRS excepts to finding of fact number 48. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

      
      

   10. HRS excepts to finding of fact number 50. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

CONCLUSIONS OF LAW

1. HRS excepts to the conclusion of law that FRTC had standing. Section 381.709(5)(b), Florida Statutes (1987) provides in pertinent part:

NOTE: PAGE 4 OF ORIGINAL FINAL ORDER NOT AVAILABLE

the finding of fact. Counsel also objects on the grounds that the evidence was not included in the original application. While an applicant may not amend its application, it may at a 120.57 hearing adduce evidence in support of its proposal. The 120.57 hearing provision was designed to give affected parties an opportunity to change the agency's mind. Boca Raton Artificial Kidney Center vs. HRS, 475 So2d 260 (Fla. 1st DCA 1985), Capeletti Brothers vs. State, 432 So2d 1359, 1363 (Fla. 1st DCA 1983). The exception is denied.

1. HRS excepts to the conclusion regarding accessibility set forth at the top of page 27. The conclusion is a finding of fact which is supported by competent, substantial evidence; therefore, the exception is denied.

   
   

2. Counsel reiterates his exception to evidence of financial feasibility previously stated in exception number 7 to the findings of fact. The exception is denied.

RULING ON EXCEPTIONS FILED BY

FLORIDA RESIDENTIAL TREATMENT CENTER, INC. (FRTC)

The exceptions filed by FRTC are not addressed because FRTC lacked party standing.

RULING ON EXCEPTIONS FILED BY

MANATEE HOSPITALS AND HEALTH SYSTEMS, INC. (MMH)

1. MMH excepts to the Hearing Officer's finding that the department has no policy providing guidance for review of the application at issue in this case. HRS' policy position was set forth in the testimony of Elizabeth Dudek. The exception is granted.

NOTE: PAGE 6 OF ORIGINAL FINAL ORDER NOT AVAILABLE

1. MMH further takes exception to the finding in paragraph 25 that the utilization of this methodology for the first time at the administrative hearing was proper. The exception is denied for the reasons given in the ruling on the department's exception number 4.

   
   

2. MMH excepts to the third analysis stated in paragraph 25 of the Recommended Order. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

   
   

3. MMH excepts to the finding in paragraph 26 that the need for this facility is evidenced by the rapid increase in actual utilization rates since opening in January, 1987. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

   
   

4. MMH excepts to the finding that the opening of the FRTC facility will not substantially reduce the need which Manatee Palms is meeting in its existing service area. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

   
   

5. MMH takes exception to the finding that the approval of this application will inure to the benefit of publicly financed patients served at Manatee Palms. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

   
   

6. MMH excepts to the finding in paragraph 37 that the applicant has established financial feasibility of the project. The exception is denied for the reasons given in the ruling on the department's exception number 7.

NOTE: PAGE 8 IS MISSING

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the rulings on the exceptions.

Based upon the foregoing, it is

ADJUDGED, that Palms Residential Treatment Center, Inc.'s application for CON number 5148 be approved.

DONE and ORDERED this 28th day of November, 1988, in Tallahassee, Florida.

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

by Assistant Secretary for Programs

COPIES FURNISHED:

Michael J. Cherniga, Esquire ROBERTS, BAGGETT, LaFACE &

RICHARD

101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301

John T. Brennan, Jr., Esquire 900 - 17th Street, NW

Suite 600

Washington, DC 20006

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

================================================================= DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

FLORIDA RESIDENTIAL TREATMENT NOT FINAL UNTIL TIME EXPIRES TO CENTERS, INC., FILE MOTION FOR REHEARING AND

DISPOSITION THEREOF IF FILED.

Appellant,

CASE NO. 88-3238

vs. DOAH CASE NO. 87-4731

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and

PALMS RESIDENTIAL TREATMENT

CENTER, INC. d/b/a MANATEE PALMS RESIDENTIAL TREATMENT CENTERS,

Appellee.

/ Opinion filed November 14, 1989.

An Appeal from an order of the Department of Health and Rehabilitative Services.

Michael J. Cherniga, of Roberts, Baggett, Laface & Richard, Tallahassee, for Appellant.

Michael J. Glazer and Stephen C. Emmanuel, of Ausley, McMullen, McGehee, Carothers & Proctor, Tallahassee, for Appellee Palms Residential Treatment Center, Inc.

Guyte P. McCord, III, of Macfarlane, Ferguson, Allison & Kelly, Tallahassee, for Appellee Department of Health and Rehabilitative Services.

ERVIN, J.

Appellant, Florida Residential Treatment Centers, Inc., appeals from a final order rendered by the Department of Health and Rehabilitative Services (HRS), which determined that appellant lacked standing to intervene in a formal administrative hearing initiated by appellee Residential Treatment Center, Inc., d/b/a Manatee Palms Residential Treatment Center. We reverse and remand with directions for HRS to rule on appellant's exceptions.

In this case HRS erroneously concluded that Section 381.709(5)(b), Florida Statutes (1987), barred appellant, which held a preliminarily approved certificate of need (CON) but had not yet constructed its own facilities, from intervening, because it lacked standing. Before October 1, 1987, the effective date of section 381.709(5)(b), holders of CONs authorizing construction were accorded standing to intervene in proceedings concerning facilities offering similar services, even though they had not completed construction and opened their doors for business. See Psychiatric Insts. of Am., Inc. v. Department of Health & Rehab. Servs., 491 So.2d 1199 (Fla. 1st DCA 1986); St. Francis Parkside Lodge of Tampa Bay v. Department of Health & Rehab. Servs., 486 So.2d 32 (Fla.

1st DCA 1986). Because appellant held an approved CON before the passage of section 381.709(5)(b), which restricted standing, appellant's standing to intervene was not affected by the new statute.

Due to HRS's erroneous conclusion that appellant lacked standing, it failed to rule upon appellant's exceptions to the recommended order. This was error.

Florida Administrative Code Rule 28-5.405(3) requires the agency to make explicit rulings on each exception made by a party. Remand is therefore necessary to allow HRS to rule upon appellant's exceptions.

REVERSED AND REMANDED. JOANOS AND BARFIELD, JJ., CONCUR.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

PALMS RESIDENTIAL TREATMENT CENTER, INC. d/b/a MANATEE PALMS RESIDENTIAL TREATMENT CENTER,

Petitioner,

vs. CASE NO.: 87-4731

CON NO.: 5148

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent,

and

MANATEE HOSPITAL & HEALTH SYSTEMS, INC. d/b/a MANATEE MEMORIAL HOSPITAL and FLORIDA RESIDENTIAL TREATMENT CENTERS, INC.,

Intervenors.

/

CORRECTED FINAL ORDER

The Final Order rendered November 29, 1988, was appealed to the First District Court of Appeal where it was assigned DCA Number 88-3238. In a decision filed November 14, 1989, the Court held that the department erred in concluding that Florida Residential Treatment Centers, Inc. (FRTC) lacked standing. The Court remanded with directions that the department rule on FRTC's exceptions.

FRTC excepts in whole or in part to findings of fact 9, 17, 20, 21, 24, 25,

26, 27, 30, 33, 36, 40, 41, 42, 47, and 48. At this level of review the department has no authority to reweigh the evidence. The Hearing Officer's findings of fact are entitled to the same weight as the verdict of a jury. Gruman vs. State, 379 So2d 1313 (Fla. 2nd DCA 1980). It is the Hearing Officer's function to resolve conflicts in the evidence, judge the credibility of witnesses, draw permissible inferences from the evidence, and make findings of fact; and the agency may not reject a finding unless there is no competent, substantial evidence from which the finding could reasonably be inferred.

Heifetz vs. Department of Business Regulation, 475 So2d 1277 at 1281 (Fla. 1st DCA 1985). The challenged findings are supported by competent, substantial evidence; thus, the exceptions are denied.

FRTC excepts to the Recommended Order to the extent that the Hearing Officer did not incorporate the findings of fact proposed by FRTC. The Hearing Officer properly ruled on each of FRTC's proposed findings. See Island Harbor Beach Club vs. Department of Natural Resources, 476 So2d 1350 (Fla. 1st DCA 1985). The exceptions are denied.

FRTC excepts to the Hearing Officer's conclusions on page 24 and 25 concerning non-rule policy. I find no basis for faulting the Hearing Officer's conclusions of law; therefore, the exception is denied.

FRTC excepts to the Hearing Officer's conclusions that the Manatee Palm's proposal complies with the statutory and rule criteria. I concur with the Hearing Officer's conclusions. The exceptions are denied.

Finally, FRTC requests in the alternative that approval of the Manatee Palm's application be conditioned by a requirement that not more than 27.3 percent of its patients be residents of District VI. I found no basis in law for such a requirement. The request is denied.

The department adopts and incorporates by reference the Final Order rendered in this cause on November 29, 1988.

Based upon the foregoing, it is

ADJUDGED, that Palms Residential Treatment Center, Inc.'s application for CON 5148 be APPROVED.

DONE and ORDERED this 21st day of February, 1990, in Tallahassee, Florida.

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

by Deputy Secretary for Operations

COPIES FURNISHED:

Michael J. Cherniga, Esquire ROBERTS, BAGGETT, LaFACE &

RICHARD

101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301

John T. Brennan, Jr., Esquire 900 - 17th Street, Northwest Suite 600

Washington, DC 20006

Stephen M. Presnell, Esquire

215 North Monroe Street Post Office Box 82 Tallahassee, Florida 32302

Jean Laramore, Esquire JEAN LARAMORE, P. A.

7007 McBride Pointe

Tallahassee, Florida 32312

Michael J. Glazer, Esquire

R. Stan Peeler, Esquire AUSLEY, McMULLEN, McGEHEE,

CAROTHERS & PROCTOR

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302

Donald D. Conn Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 23rd day of February, 1990.

R. S. Power, Agency Clerk Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700 904/488-2381

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 87-004731

Orders for Case No: 87-004731