vs. ) CASE NO. 88-5848
Intervenor. )
This cause came on for consideration pursuant to a sua sponte Order entered March 20, 1989 and the respective memoranda filed in response thereto. The controlling facts in this cause are not in dispute and it may be resolved upon the pleadings.
For Health Steven W. Huss, Esquire Quest et al: 1017-C Thomasville Road
For HRS: Stephen M. Presnell, Esquire MacFarlane, Ferguson, Allison & Kelly Post Office Box 82
For Arbor Care: Chris H. Bentley, Esquire
and John L. Wharton, Esquire Rose, Sundstrom & Bentley 2548 Blairstone Pines Drive Tallahassee, Florida 32301
On September 29, 1988, HRS published its July 1991 Planning Horizon Florida Community Nursing Home Bed Need Projections ("the Original Bed Need Projections"). According to the Original Bed Need Projections, there is a need for 86 additional beds in HRS District 4, Subdistrict 3 (i.e., St. Johns County
and southeast Duval County, hereafter, "Subdistrict 3"), a need for 187 additional nursing beds in Orange County, and a need for 35 additional nursing beds in Palm Beach County.
On October 7, 1988, HRS published notice of the Original Bed Need Projections in the Florida Administrative Weekly ("FAW"), Vol. 14, No. 40, pages 3838-3839.
On October 19, 1988, HRS published a memorandum and attached errata sheet ("the Errata Memorandum") detailing certain errors in the Original Bed Need Projections. The Errata Memorandum notes that the errors which had been discovered up to that time do not affect the number of additional beds that are projected to be needed by the Original Bed Need Projections.
On October 24, 1988, Health Quest filed three petitions:
A "Petition for Formal Hearing" was filed with HRS. Health Quest served an "Amendment to the Petition for Formal Hearing," correcting wordprocessing errors in the original Petition, on November 10, 1988, which "Amendment to the Petition for Formal Hearing" was forwarded by HRS to the Division of Administrative Hearings (DOAH) on November 28, 1988 simultaneously with the original "Petition for Formal Hearing", and these pleadings together are here considered as
the "120.57 Petition." They/it was assigned DOAH Case No. 88-5848 and are the basis for the instant proceeding.
A Petition for Determination of Invalidity
of Rule 10-5.008 (2)(a) F.A.C., the fixed need rule, pursuant to Section 120.56, F.S. ("the 120.56 Rule Challenge"), was filed with DOAH and was subsequently assigned DOAH Case No. 88-5228R; and
A Petition for Determination of Invalidity of Non-Rule Policy, referencing the same fixed need rule, pursuant to Sections 120.54 and 120.56, F.S. ("the NonRule Policy Challenge"), was filed with DOAH and subsequently assigned DOAH Case No. 88-5230R.
Each of the three petitions challenged HRS' determination that additional nursing beds were needed in Subdistrict 3, Orange County, and in Palm Beach County. The petitions also note that Petitioner Health Quest owns and operates nursing homes in Subdistrict 3, Orange County, and Palm Beach County.
On October 31, 1988, HRS published its Revised July 1991 Planning Horizon Florida Community Nursing Bed Need Projections ("the Revised Bed Need Projections"). In contrast with both HRS' Original Bed Need Projections and its Errata Memorandum, the Revised Bed Need Projections change the number of additional beds that are needed for Orange County and Palm Beach County. Specifically, the Revised Bed Need Projections decrease the number of beds that are needed in Orange County from 187 to )15, and increase the number of beds that are needed in Palm Beach County from 35 to 62.
On November 4, 1988, HRS published a Notice of Correction to Nursing Home Fixed Pools ("the Correction Notice") in the FAW, Vol. 14, No. 44, page 4404. The Correction Notice altered the number of additional beds that are
needed for Orange County and Palm Beach County "based on recalculations of net need," as described above in paragraph 6.
On November 14, 1988, Health Quest and HRS executed a Stipulation and Agreement ("the Stipulation"). The Stipulation states that HRS acknowledges Health Quest's standing to contest the Original Bed Need Projections, as corrected pursuant to the Revised Bed Need Projections. HRS therefore agreed to refer the 120.57 Petition (this instant case) to DOAH. In reliance on such acknowledgment and agreement, Health Quest voluntarily dismissed both the Rule Challenge (DOAH Case No. 88-5228R) and the Non-Rule Policy Challenge (DOAH Case No. 88-5230R). See Finding of Fact 4, above.
The undersigned hearing officer scheduled the instant case (the 120.57 Petition) for final formal hearing at a date stipulated by Health Quest and HRS; however, subsequent to the filing of unilateral prehearing statements by the parties, the undersigned cancelled the formal hearing and by Order of March 20, 1989, required memoranda of law upon the issues discussed in the following Conclusions of Law.
Prior to the date for filing such memoranda, Arbor Health Care Company was granted Intervenor status by a March 23, 1989 Order, upon the basis that it had received written notice on March 14, 1989 that HRS intended to issue CON No. 5785, effective March 10, 1989 to Arbor for construction of an 86-bed nursing home to be located in St. John's County, Florida. Arbor had applied for the CON on or before November 23, 1988 in response to the Summary Bed Need Projections published in FAW by HRS on October 7, 1988.
CONCLUSIONS OF LAW
The predicate of Health Quest's Petition in this instant proceeding is that HRS has incorrectly determined that there is a need for additional nursing beds in Subdistrict 3, Orange County, and in Palm Beach County and that because Health Quest is an existing provider of nursing beds in those geographical HRS district designations, Health Quest will be substantially affected by the agency's mathematical or formulaic error because the inherent result of that alleged mathematical or formulaic error will be that unnecessary beds will ultimately be approved.
HRS, while contending that its published numbers are valid, supports Health Quest's standing and right to proceed to formal hearing in this instant proceeding pursuant to Section 120.57(1) F.S. upon two premises:
First, HRS supports Health Quest's right to bring this action because of the terms of the stipulation that HRS entered into with Health Quest resulting in the dismissal of the rule challenges (DOAH Case Nos. 88-5228R and 88-5230R).
Second, HRS supports Health Quest's standing because it is HRS' policy that the fixed need pool may no longer be challenged or amended at Section 120.57(1), F.S. hearings on petitions regarding applications for certificates of need.
Upon these premises, HRS concludes that its publication of the fixed need pool affects the substantial interest of existing and potential providers and therefore all existing and potential providers in a geographical district must be afforded the opportunity to challenge the publication number as a "disputed issue of material fact." Indeed, to this end, HRS has recently begun
to so advise the public in conjunction with every subsequent publication of net bed need numbers.
Jurisdiction under s. 120.57(1)
At the outset, it would appear that Health Quest and HRS' view of this case as an appropriate new Section 120.57(1) F.S. rung on the ladder to securing or preventing issuance of a CON application is flawed because the standing of either an existing provider (Health Quest) or of a potential provider (Arbor Care) with regard to a published raw number is largely speculative. This is because traditionally, a published net need number did not finally determine whether a certificate of need (CON) would issue. Hypothetically, even if a zero bed need, not just the reduced figures urged by the Petitioner, were published, proof of other numbers or "not normal" circumstances could ultimately result in the issuance of a CON. Traditionally, at the publication stage of the CON process, any justiciable issue was premature. The facts set forth above are replete with "recalculated" HRS figures, and it is common knowledge within the health care community that HRS amends such calculations frequently and repeatedly. Traditionally, at least, every Section 120.57(1) proceeding with regard to issuance of a certificate of need (CON) has been a de novo proceeding. See, McDonald v. Dept. of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977), and its progeny.
In general, and traditionally, the window for such an assault as Health Quest makes here would properly be when, and if, HRS ever issues a State Agency Action Report (SAAR) to grant a CON in an existing provider's locale. Specifically with regard to the parties in this proceeding, Health Quest's traditionally recognized entry into the CON process would be as a Petitioner (existing provider) protesting HRS' intent to grant a CON to Arbor Care.
Ironically, HRS' memorandum in support of taking this instant cause through a formal Section 120.57(1) F.S. evidentiary hearing emphasizes the highly speculative effect of the HRS' publication of raw net bed need numbers by asserting,
"Since a potential [CON] applicant is more likely to file an application if numeric need is projected in the fixed need pool, it follows that existing providers, who will face increased competition if such applications are ultimately approved, have a substantial interest in challenging such numbers and thereby reduce the probability applications will be filed in their service district in subsequent batches." (Emphasis and bracketed material supplied.)
However, the relief sought by Petitioner Health Quest is available, just not in the form of the instant Section 120.57(1) F.S. proceeding.
The relief sought by Health Quest as Petitioner in this matter is a declaration that the rule methodology by which net bed need is projected is invalid. Therefore, Petitioner either seeks to invalidate Rule 10-5.011(1)(k)2, F.A.C., the community nursing home bed need formula, whereby HRS sets forth its rule methodology (formula) for determining net bed need for community nursing home beds, in which case this instant Section 120.57(1) proceeding is not a rule challenge proceeding and the Hearing Officer has no jurisdiction or authority to
grant the relief sought. Alternatively, Health Quest seeks to invalidate Rule 10-5.008(2)(a), the fixed need rule, whereby HRS sets forth its policy that calculations of net need must be published 15 days in advance and thereafter may never be amended, in which case, this Section 120.57(1) proceeding still is not a rule challenge proceeding and the Hearing Officer likewise has no jurisdiction or authority to grant the relief sought. As a further alternative, Health Quest may be seeking solely the invalidation of the raw number calculated and finally published under the fixed need rule. This is also a rule or policy challenge improperly brought here via Section 120.57(1) F.S.
Although it is formidable to contemplate that existing providers' dissatisfaction with the arithmetic of the agency calculations might give rise to a rule challenge with each and every publication of HRS' net need projections under each and every one of its published rule formulas, that still does not legitimize the course the parties have chosen in taking this Section 120.57(1)
F.S. proceeding.
In an abundance of caution, Health Quest has obviously taken to heart HRS' announced position that the fixed need pool may no longer be challenged in a Section 120.57(1) F.S. proceeding, a position contrary to what has traditionally been the situation throughout the history of CON practice in Florida. (See above) Although HRS' memorandum does not specifically set forth a statutory or regulatory basis for its position, it may be reasonably assumed that the basis of this position/policy statement asserted by HRS in its memorandum must reside in the new "fixed need rule" itself, 10-5.008(2)(a) F.A.C., which provides in pertinent part as follows:
... These batching cycle specific fixed need pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied.
HRS is required by the first part of its Rule 10-5.008 (2)(a), on fixed need, to publish in the Florida Administrative Weekly, at least 15 days prior to the letter of intent deadline for the applicable batching cycle, the fixed bed need pool for that cycle as that need is set forth by the methodology in Rule 10-5.011(1)(k)2, F.A.C. and this portion of the rule or the number calculated thereunder could have been subject to rule/policy challenge. The second part of the Rule 10-5.008(2)(a), which remains open to the interpretation the agency has placed upon it, also could have been subject to a rule challenge.
Health Quest reasonably feared that if it did not challenge the published raw number determined by way of Rule 10-5.011, which raw number was published and locked in place by Rule 10-5.008, it would thereafter be bound by that raw number in a subsequent Section 120.57(1) CON grant/denial hearing, but clearly Health Quest's appropriate recourse was to challenge, pursuant to Sections 120.54 and/or 120.56 F.S., either the raw number as a "rule/policy", or to challenge the above-quoted "fixed need rule" itself either in part or in whole, because both the fixed need rule and the number published thereunder meet the statutory definition of "rule."
Section 120.52(16) F.S. defines "rule" as follows:
"Rule" means each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of an agency ...
Initially, Health Quest did approach the problem in each of those ways, but it later voluntarily dismissed those challenges of the fixed need rule in favor of proceeding with the instant case pursuant to Section 120.57(1) F.S. The fact that it did so with HRS' acquiescence to bringing the issue to resolution through this instant Section 120.57 F.S. proceeding does not transform the instant proceeding into the proper vehicle for a rule challenge.
It is noted that Health Quest asserts that because HRS, "which is not bound by the Hearing Officer's legal conclusions, has already determined that Health Quest's `substantial interests' are affected by the Department's need, no purpose is served by a DOAH Hearing Officer dismissing a case for lack of standing where the agency has already stipulated that standing exists." Health Quest further argues that pursuant to Curr v. Helen Transportation Corp., 287 So.2d 695 (Fla. 3d DCA 1973), HRS is bound by its stipulations unless induced by fraud.
There is no suggestion herein that anyone has attempted fraud, but neither is it appropriate for litigants to agree to manufacture litigation. HRS may not unilaterally confer standing pursuant to Section 120.57(1); the circumstances do that. It therefore follows that HRS may not agree or stipulate with Petitioner to confer standing. Certainly, agreement or consent of the parties cannot enlarge or confer jurisdiction, Swebilius v. Florida Construction Industry Licensing Board, 365 So.2d 1069 (Fla. 1st DCA 1978).
This cause has been inappropriately brought pursuant to Section 120.57(1), when, in fact, the relief prayed for is only available pursuant to Sections 120.56 and/or 120.54 F.S., and therefore, the Petition herein should be dismissed.
Jurisdiction under ss. 120.54 and 120.56
The language and mixed statutory authority recited in Health Quest's original Petition herein raised the consideration that this proceeding could have been intended as a rule challenge, for the Petition speaks in terms a rule challenge. 1/ The Petition does not specifically allege that HRS erroneously calculated the numbers pursuant to Rule 10-5011(1)(k)2., F.A.C. in determining nursing home net bed need, only that "the projections ... are arbitrary and capricious in regard to computation of actual numeric need" and "result in an arbitrary and incorrect number of needed beds," and "the projections incorrectly calculate need." The amendment thereto does not amend to correct the absence of an allegation of erroneous mathematical calculation, but does incongruously alter the statutory authority relied upon so as to substitute a citation to Section 120.57 F.S. in place of the citations to Sections 120.54 and 120.56 F.S. Although the prayer seeks a Final Order (this portion of the Petition was not amended), it apparently does not contemplate that the Final Order would be entered other than by HRS.
At the time of the telephone Status Conference to determine a hearing date, the undersigned raised with Health Quest and HRS (at that time the only
parties hereto) whether or not the instant cause had not been intended as a rule challenge but incorrectly filed with HRS and inadvertently forwarded to the Division of Administrative Hearings. Oral assurances were given by Health Quest and HRS at that time that such was not the intent.
There is no dispute that the Petition in this matter does not meet the requirements of a rule challenge of the raw number (mathematical calculation) as an unpublished rule, of Rule 10-5.011(1)(k)2, community nursing home bed need formula, or of Rule 10-5.008(2)(a) fixed need rule. The Petition was filed with HRS and not the Division of Administrative Hearings. It therefore did not result in a formal order of "assignment" by the Executive Director to a Hearing Officer pursuant to Section 120.56(2), F.S. Nor does the Petition seek relief under either Section 120.56 or 120.54, F.S., by way of a Final Order of a Hearing Officer of the Division of Administrative Hearings. Indeed, as shown by Health Quest and HRS's November 14, 1988 stipulation in the dismissed cases on rule challenges of the fixed need rule and of its published number, Petitioner had filed two rule challenges with the Division of Administrative Hearings in addition to this instant proceeding, which rule challenges it ultimately voluntarily dismissed. The instant Section 120.57(1) F.S. proceeding cannot be used to revitalize those cases. By analogy, see, Bayonet Point Regional Medical Center v. HRS, 490 So.2d 1318, (Fla. 1st DCA 1986).
An administrative agency may not enlarge its jurisdiction, nor may it have jurisdiction conferred upon it by agreement or consent of the parties. See, Swebilius v. Florida Construction Industry Licensing Board, supra.
Accordingly, and despite their attempts to do so, the Petitioner and HRS cannot, by way of their stipulation in those other cases, confer upon DOAH jurisdiction which it does not otherwise have by law.
RECOMMENDED that HRS enter a final order dismissing the Petition herein. DONE and ENTERED this 3rd day of May, 1989, in Tallahassee, Leon County,
Florida.
ELLA JANE P. DAVIS
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 1989.
1/ The Petition alleges that the methodology of calculation is invalid, states criteria and health planning information not considered by the rule, alleges
absence of statutory authority for the projections, and also alleges that the projections are arbitrary and capricious and "do not effectively address the other criteria of Section 381.705(1)(b)-(n)." Paragraph 10 of the Petition is pure rule challenge language. The statutory authorities cited are Sections
120.54 and 120.56, which govern rule challenges, and Section 120.57 F.S.
Steven W. Huss, Esquire 1017-C Thomasville Road Tallahassee, Florida 32303
Stephen M. Presnell, Esquire MacFarlane, Ferguson, Allison
Chris H. Bentley, Esquire and John L. Wharton, Esquire Rose, Sundstrom & Bentley 2548 Blairstone Pines Drive Tallahassee, Florida 32301
R. S. Power, Esquire Agency Clerk
Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard
