STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HALIFAX MEDICAL CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 90-2758

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

) ATLANTIC TREATMENT CENTER, ) INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

This Recommended Order disposes of the Second Amended Petition of Halifax Medical Center (Halifax) challenging the Department of Health and Rehabilitative Services' (HRS') intent to issue a certificate of need (CON) to Atlantic Treatment Center, Inc. d/b/a Atlantic Shores Hospital (ATC).

APPEARANCES

FOR PETITIONER: Harold C. Hubka, Esquire

Black, Crotty, Sims, Hubka, Burnett, Bartlett and Samuels

501 North Grandview Avenue Post Office Box 5488

Daytona Beach, Florida 32118

Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House

118 North Gadsden Street Tallahassee, Florida 32301

FOR RESPONDENT: Lesley Mendelson

Senior Attorney Department of Health and

Rehabilitative Services 2727 Mahan Drive, Suite 103

Tallahassee, Florida 32308

FOR INTERVENOR: Robert D. Newell, Jr., Esquire

Newell & Stahl, P.A.

817 North Gadsden Street Tallahassee, Florida 32303-6313

STATEMENT OF THE ISSUE

Whether or not Halifax' Second Amended Petition has alleged sufficient standing to initiate a Section 120.57(1) F.S. formal hearing, pursuant to Subsection 381.709(5)(b) F.S., in challenge of HRS' modification of ATC's CON.

PRELIMINARY STATEMENT

On March 7, 1990, HRS authorized a modification of ATC's previously issued CON 2331. The modification contemplated conversion of 15 beds currently being operated by ATC as long-term adolescent beds to 15 long-term adult beds operated as a secure unit. All other elements of CON 2331 as originally issued remained unchanged.

On April 12, 1990, Halifax filed its Petition for Formal Administrative Proceeding. ATC petitioned to intervene in the Division of Administrative Hearings proceeding, was granted intervention, and moved to dismiss Halifax' formal Petition on or about May 18, 1990. By Order of June 7, 1990, an Order of Dismissal Without Prejudice was entered, giving Halifax leave to refile its formal petition. Halifax thereafter filed its First Amended Petition for Formal Administrative Proceeding on or about June 27, 1990. HRS and ATC filed a joint Motion to Dismiss on July 26, 1990, which was granted in an Order entered August 22, 1990, upon the following terms:

The joint motion to dismiss alleges:

1. That, although Halifax has alleged it has in existence under an existing CON a 50-bed secure psychiatric unit, it has not alleged with specificity that this unit constitutes an "established program" as required by the language of Section 381.709(5)(b) F.S.; and,

2. That, as a matter of law, HRS' proposed amendment to ATC's existing CON 2331 which would permit ATC to convert 15 of its 20 child and adolescent long- term psychiatric beds into long-term adult psychiatric beds, both of which types of long-term psychiatric beds are governed by Rule 10-5.011(1)(p) F.A.C., does not constitute a "substantial change in services" as described in Section 381.706(1)(h) F.S. so as to be subject to CON review pursuant to Section 381.709(5)

1. in this proceeding

   The Halifax response addresses only standing of existing short-term psychiatric providers to contest issuance of new CONs to applicants for long-term psychiatric beds. It does not directly meet either of the foregoing allegations of the motion to dismiss.

   Accordingly, it is ORDERED:

   1. The motion to dismiss is granted.

   2. Petitioner Halifax is granted 10 days in which to file a Second Amended Petition.

On August 31, 1990, Halifax filed its Second Amended Petition for Formal Administrative Proceeding. HRS filed its Motion to Dismiss of September 24, 1990, with supplement thereto filed September 26, 1990. ATC filed its Motion to Dismiss on September 25, 1990. Halifax' Response to Motions to Dismiss was filed October 4, 1990. ATC filed an unauthorized Reply on October 9, 1990.

This cause may be disposed of upon the facts as pled and the issues of law raised.

FINDINGS OF FACT

1. ATC is an existing 50-bed specialty psychiatric hospital with 25 short- term psychiatric beds for children or adolescents, five beds for short-term substance abuse by children or adolescents, and 20 long-term psychiatric beds for children or adolescents.

   
   

2. ATC has operated under CON 2331 since 1984. By correspondence dated March 7, 1990, HRS issued to ATC Amended CON 2331 authorizing ATC to convert 15 of its 20 long-term psychiatric beds for children and adolescents into long-term psychiatric beds for adults in a secure unit.

   
   

3. Petitioner Halifax is an existing 545 bed acute care hospital with adult patients in its 50-bed secure psychiatric unit. Its existing hospital license 2700 is for a short-term psychiatric program which does not specify use of the beds for either adults or for children and adolescents. Halifax does not have a CON for a long-term psychiatric program.

   
   

4. Halifax' Second Amended Petition alleges its standing in the following terms:

   
   

   1. . . . Halifax is a 545 bed acute care hospital, licensed pursuant to Chapter 395, Florida Statutes, and located within HRS District IV. Halifax provides psychiatric services to adult patients in its 50 bed psychiatric unit. Due to the nature of the patients served, Halifax operates it (sic) psychiatric services in a secured unit. Halifax's psychiatric unit has been in operation since December 7, 1951 and is an "established program" under Section 381.709(5)(b) Fla. Stat.

      * * *

      5. Halifax is a substantially affected party, and its substantial interest is subject to a determination in this proceeding in that:

      1. Halifax is an existing provider of acute care hospital services, located in Volusia County, Florida, and within HRS District IV. Halifax has an established program which provides psychiatric services to adult patients within HRS District IV. If the issuance of Amended CON 2331 were upheld, ATC would offer the same adult psychiatric services presently offered at Halifax' established psychiatric program. Therefore, Halifax is entitled to initiate this proceeding pursuant to Section 381.709(5)(b) F.S. (1989).

      2. The issuance of Amended CON 2331 will result in an unnecessary duplication of the same adult psychiatric services provided by Halifax in HRS District IV. Such

      duplication of services will result in decreased utilization of Halifax' psychiatric program, increased costs to consumers of such psychiatric health care services, and the decreased financial viability of Halifax' established psychiatric program.

      
      

5. Additionally, the Second Amended Petition asserts that ATC's requested amendment of CON 2331 would represent a substantial change in the inpatient institutional health services offered by ATC and, thus, is subject to CON review pursuant to Section 381.706(1)(h) F.S. (1989). Further, Halifax alleges that, if approved, the amendment to CON 2331 will authorize ATC to serve an entirely new patient population that it is not authorized to serve pursuant to the original CON.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction of the parties and subject matter of this cause. See, Section 120.57(1) F.S.

   
   

7. In its Motion to Dismiss, HRS argues that Halifax does not have standing to initiate these proceedings because it does not have an "established program" of the type necessary to allow an existing facility to initiate an administrative hearing pursuant to Section 381.709(5)(b) F.S.

   
   

8. ATC's Motion to Dismiss alleges that Halifax does not have standing in these proceedings because it failed to allege that it has a long-term adult psychiatric program which will be substantially affected by the issuance of the amended CON to ATC.

   
   

9. Put in an easily understood format, the proposed modification would allow ATC to convert existing long-term child/adolescent psychiatric beds to existing long-term adult psychiatric beds, secured. No new number of beds are being authorized. No new short-term beds are being authorized.

   
   

10. Halifax' general allegation that it provides psychiatric services to adult patients in its 50-bed psychiatric unit is insufficient to establish standing under Subsection 38l.709(5)(b) F.S. because Halifax has failed to allege with specificity the following elements essential to establish standing under that subsection:

    
    

    1. that Halifax as protestant has a licensed established program which offers psychiatric services of the type Atlantic would be licensed to offer under its proposed amended certificate of need; and

    2. that Halifax' licensed established program will be substantially affected by the proposed amendment of Atlantic's certificate of need which Halifax seeks to protest.

    
    

11. Although Halifax' petition outlines some generally anticipated impacts of the proposed amendment, nowhere does Halifax allege that those impacts or that the effect of the proposed amendment per se will substantially affect an established licensed program. Halifax has not alleged that it is licensed to provide the kind of services that would be permitted by ATC's amended CON, that is, a long-term psychiatric program for adults.

12. The bulk of the cases cited by Halifax are distinguishable from the instant one because they involve interpretations of the standing provision of the old CON statute, Section 381.494 F.S. (1985), or because they addressed the creation or addition of new beds rather than the modification of existing beds, or both. In that light, they are not persuasive here.

    
    

13. The controlling organic law today is Subsection 381.709(5)(b) F.S. (1989). Effective October 1, 1987, that subsection limited standing for administrative hearings in the CON review process to applicants in the same batching cycle and to "existing health care facilities . . . upon a showing that an established program will be subsequently affected . . ." See, First Hospital Corporation of Florida d/b/a First Hospital of Palm Beach County v. Department of Health and Rehabilitative Services and Community Hospital of the Palm Beaches, Inc. d/b/a Humana Hospital - Palm Beaches, 15 F.L.W. D2328 (Fla. 1st DCA Opinion filed September 12, 1990).

    
    

14. Although not defined by statute or rule, the term "established program" has been interpreted by Final Orders of HRS, most recently in the case of Lake Hospital & Clinic, Inc., d/b/a Lake Hospital of the Palm Beaches, et al. vs. Department of Health and Rehabilitative Services and First Hospital Corporation of Florida d/b/a First Hospital of Palm Beach County, 12 F.A.L.R. 3438 (Final HRS Order July 25, 1990; Recommended Order May 25, 1990). Therein, Humana Hospital of the Palm Beaches sought to challenge the intent of HRS to issue a CON to establish and operate a short-term adolescent psychiatric facility in Palm Beach County. First Hospital had received preliminary approval to construct a short-term adolescent/child hospital but at the time of its petition of protest its own CON application remained embroiled in the CON process in a separate proceeding before the Division of Administrative Hearings. Therefore, its petition for an administrative hearing to contest the preliminary HRS decision to partially approve its rival's requested CON modification to authorize a district adolescent treatment unit was dismissed as without standing. Humana was ultimately found not to have standing based upon the facts found by the hearing officer that Humana did not operate a short-term adolescent program at the time they filed their petition but rather operated a long-term program. Also, in St. Joseph Hospital of Charlotte, Florida, Inc. vs. Department of Health and Rehabilitative Services, and Fawcett Memorial Hospital,

    595 So.2d 595 (Fla. 1st DCA 1990), the court found St. Joseph to lack standing under Section 381.709(5)(b) providing that health care facilities may initiate or intervene upon a showing that an established program would be substantially affected. Therein, it was held that the appellant lacked standing to intervene in the CON proceeding, absent a showing that its specific licensed program or program requiring a CON would be substantially affected by issuance of the CON to the competing applicant and that the term "program" for purposes of establishing standing for intervention did not refer to "general services to a range of patients" but rather to a "specific licensed program or a program requiring a certificate of need." (Emphasis supplied)

    
    

15. As of April 12, 1990, the date Halifax filed its initial petition, a change from the treatment of adolescents/children to adults within a long-term psychiatric program was not a "substantial change in service." See, Subsection 381.706(1)(h) F.S.

16. Rule 10-5.002(39) F.A.C., in effect on that crucial date, provided:

    
    

    (39) "Substantial change in health services" means:

    1. The offering by a health care facility of a new institutional health service or a health service which has not been offered on a continuing basis by or on behalf of the health care facility within the 12-month period prior to the time such service would be offered, excluding obstetrical services,; or

    2. Any change in the number of psychiatric, substance abuse, or comprehensive medical rehabilitation beds, provided by a health care facility, including a change from short-term to long-term, or from long-term to short-term; or

    3. The conversion of acute care beds in a health care facility to skilled or intermediate care nursing home beds or the conversion of skilled and intermediate care nursing home beds to acute care beds; or

    4. The termination of a health service.

    
    

    The rule included as a "substantial change in health services" a change from providing long-term to providing short-term care, but not a change from providing long-term care to adolescents/ children to providing long-term care to adults.

    
    

17. Also, Rule 10-5.011(1)(p) F.A.C. as in effect on that crucial date was the rule which provided the methodology for establishing long-term psychiatric programs, and it recognized no distinction between adult and adolescent levels of service within long-term programs.

    
    

18. Halifax has rightly brought to the attention of the undersigned the September 28, 1990 Final Order in Florida League of Hospitals, Inc. v. Department of Health and Rehabilitative Services, DOAH Case No. 90-1036R, upholding the validity of HRS' proposed repeal of Rule 10-5.011(1)(p) F.A.C. regarding long-term psychiatric services and amendment of Rule 10-5.011(1)(o) to remove the definition of short-term psychiatric services, thereby allowing facilities to serve patients without regard to length of stay. The proposed amendments provide that a separate CON is required for adult psychiatric services and for adolescent/children psychiatric services. However, Halifax' initial Petition, First Amended Petition, and Second Amended Petition were all filed prior to the foregoing amendments taking effect. It has recently been held in Lake Hospital and Clinic v. Department of Health and Rehabilitative Services, supra, that the relevant point in time for determining standing is the point at which the petition for hearing was filed. Therefore, the HRS rules in effect on April 12, 1990 must be applied to this cause. The HRS Final Order in that cause ratified language from the Recommended Order of Hearing Officer Kendrick as follows: "Standing is, however, to be judged at the time the petition was initiated and gauged by the threat the application poses at that time." While application of such a principal may seem harsh under the facts of the instant case, the First District Court of Appeal's treatment of a similar issue on rehearing in St. Joseph Hospital of Charlotte, Inc. v. Department of Health and Rehabilitative Services, supra, emphasizes that the law in effect at the date the window for petition opens is the controlling law.

19. Accordingly, as a matter of law, on April 12, 1990, a change from the treatment of adolescents/children to adults within a long-term psychiatric program was not a substantial change in services under the provisions of Subsection 381.706(1)(h) F.S., and the HRS rules interpreting that section. As a result, the modification of ATC's CON is not, as a matter of law, a project for which CON review is necessary.

    
    

20. HRS and ATC's respective motions to dismiss should be granted.

RECOMMENDATION

Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order dismissing Halifax' Second Amended Petition and affirming the agency action modifying ATC's CON 2331.

DONE and ENTERED this 26th day of October, 1990, at Tallahassee, Florida.

ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this

26th day of October, 1990.

Copies furnished to:

Harold C. Hubka, Esquire Black, Crotty, Sims, Hubka,

Burnett, Bartlett and Samuels

501 North Grandview Avenue Post Office Box 5488

Daytona Beach, Florida 32118

Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House

118 North Gadsden Street Tallahassee, Florida 32301

Lesley Mendelson, Senior Attorney Department of Health and

Rehabilitative Services 2727 Mahan Drive, Suite 103

Tallahassee, Florida 32308

Robert D. Newell, Jr., Esquire Newell & Stahl, P.A.

817 North Gadsden Street Tallahassee, Florida 32303-6313

Sam Power, Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-002758

Orders for Case No: 90-002758