STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LAKELAND REGIONAL MEDICAL )

CENTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 90-7682

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

) WINTER HAVEN HOSPITAL, INC. ) and UNIVERSITY COMMUNITY )

HOSPITAL, )

)

Intervenors, )

) WINTER HAVEN HOSPITAL, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 90-7683

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

)

LAKELAND REGIONAL MEDICAL ) CENTER, INC., and UNIVERSITY ) COMMUNITY HOSPITAL, )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the above-styled case on April 4, 5 and 15, 1991, in Tallahassee, Florida.

APPEARANCES

For Lakeland Regional John H. Parker, Jr., Esquire Medical Center: PARKER HUDSON RAINES & DOBBS

1200 Carnegie Building

133 Carnegie Way Atlanta, Georgia 30303

and

John M. Knight, Esquire PARKER HUDSON RAINES & DOBBS

118 North Gadsden Street Tallahassee, Florida 32301

For Department of Richard A. Patterson, Esquire Health and Assistant General Counsel Rehabilitative Fort Knox Executive Center Services: 2727 Mahan Drive - Suite 108

Tallahassee, Florida 32308

For Winter Haven Patricia A. Renovitch, Esquire Hospital: OERTEL HOFFMAN FERNANDEZ

& COLE, P.A.

Post Office Box 6507 Tallahassee, Florida 32314-6507

For University Cynthia S. Tunnicliff, Esquire Community Hospital: CARLTON FIELDS WARD EMMANUEL

SMITH & CUTLER, P.A.

215 S. Monroe Street, Suite 410 Tallahassee, Florida 32301

STATEMENT OF THE ISSUES

Whether Winter Haven Hospital should be authorized for a Level II, neonatal intensive care service with 11 beds via the final inventory of NICU beds for District VI, to be published by the Department of Health and Rehabilitative Services.

Whether Lakeland Regional Medical Center should be authorized for more than

14 Level II beds in the same final inventory.

Whether University Community Hospital established its right to challenge the number of Level II NICU beds to be authorized for either hospital.

PRELIMINARY STATEMENT

The neonatal intensive care services rule (NICU Rule) went into effect on August 6, 1990. The rule was established for two distinct purposes: 1) to provide objective criteria for the licensing of future Level II and Level III neonatal intensive care unit beds; and 2) to reacknowledge and affirmatively validate existing Level II and Level III NICU beds that meet the grandfathering provisions of the rule.

Reacknowledgement of existing beds was necessary because the Department of Health and Rehabilitative Services (HRS) did not have a universal definition of these types of services that was uniformly applied within the agency during the time period between 1977 and 1987. As a result, authorizations from different divisions in the agency were inconsistent and unclear. The "grandfathering" provisions were included in the rule to clarify which health care providers were authorized to provide the currently defined Level II and Level III services under past authorizations from different divisions of HRS. In order to validate prior agency authorization and to establish the current need within the districts for additional NICU beds, an inventory was prepared by HRS.

The initial preliminary inventory of authorized Level II and Level III providers in District VI was published on August 24, 1990. This inventory recognized the existence of a Level II service at Lakeland Regional Medical Center (Lakeland) with 11 beds under "grandfathering" provisions of the NICU Rule.

In a revised preliminary inventory published September 21, 1990, HRS listed Winter Haven Hospital (Winter Haven) as a Level II service provider. Winter Haven was listed as an authorized provider with 11 beds. Another revised preliminary inventory published October 12, 1990, indicated 16 Level II beds had previously been authorized at Lakeland as opposed to the 11 beds published in the earlier inventory.

After the revised inventories were published, Lakeland challenged the proposed inventory allocation of 11 beds to Winter Haven under the grandfathering provisions of the rule. Winter Haven challenged the 16 bed allocation to Lakeland. University Community Hospital (University) intervened in both challenges as a hospital adversely affected by the number of NICU beds established as pre-existing beds through the inventory determinations. The two cases were consolidated for hearing and the rendering of the Recommended Order.

Prior to the invocation of the Rule of Sequestration during hearing, Winter Haven notified the Hearing Officer that Dr. Hanes Swingle, who was scheduled to testify as an expert in neonatal and perinatal medicine, was also Winter Haven's designated corporate representative. Lakeland objected to the designation and asserted that the status of corporate representative could not be conferred upon an independent contractor. Based upon the representation of Winter Haven's counsel that the corporation would benefit from Dr. Swingle's presence at hearing and the additional representation that the witness was not a fact witness because he did not practice at Winter Haven during the time frame looked to by HRS for the grandfathering provisions of the NICU Rule, the witness was allowed to remain in the proceedings as the corporate representative.

During hearing, Winter Haven proceeded first with its case-in-chief, followed by Lakeland, University and HRS, as agreed in the Revised Joint Prehearing Stipulation dated April 4, 1991. Lakeland presented nineteen witnesses. Seven appeared in person and twelve submitted testimony through

depositions noticed for use at hearing. The exhibits presented by Winter Haven was offered in the following order: 8A, 20, 1A, 1A2, 1B, 1C, 1D, 21A, 21B, 21C, 10A, 8B, 10B, 10C, 2J, 8C, 8D, 18, 8E, 11, 2A, 2B, 2C, 2D, 2E, 2F, 2G, 2H, 21,

2K, 2A, 8F, 12, 8G, 4, 5, 7, 8H, 9, 13, 14, 15 and 19. Of these exhibits, only 10C was rejected by the Hearing Officer. Winter Haven's exhibits 1A, 1B, 1D, 21A, 21B, and 21C were admitted for limited purposes. The remaining exhibits were admitted without restrictions.

Lakeland called four witnesses and filed its exhibits in the following order: 5, 6, 10, 11, 12, 9, 13, 14, 15, 16, 18, 20, 21, 19, 36, 38, 39, 22, 23,

24, 25, 26, 27, 28 and 29 (duplicates of Winter Haven #2A, Ex. Q-R), 30, 31

(duplicate of Winter Haven Exhibit #13), 32, 33, 43, 40, 41, and 42. All of the exhibits were received into evidence.

University offered the statement of one witness, which was read into the record by the University's attorney, upon agreement of the parties. Two exhibits were filed by University. HRS did not call any witnesses, but the agency did submit one exhibit. The exhibits filed by University and HRS were accepted, and the evidentiary portion of the proceedings closed on April 15, 1991.

The transcript of the hearing was filed on April 29, 1991, with corrections filed May 23, 1991. All proposed recommended orders were filed by the agreed upon deadline of May 29, 1991. Rulings on the proposed findings of fact are in the Appendix of the Recommended Order.

FINDINGS OF FACT

1. Description of the Parties

   
   

   1. Winter Haven is a 579-bed general hospital in Winter Haven, Florida. Since 1987, it has been authorized to operate 475 acute care, 80 short term psychiatric and 24 comprehensive medical rehabilitation beds.

      
      

   2. Lakeland is an 897-bed general hospital in Lakeland, Florida. Its licensed bed complement includes the following: 805 acute care, 54 psychiatric short term and 38 substance abuse short term beds.

      
      

   3. University is a 404-bed acute care hospital in Tampa, Florida. University is seeking a certificate of need for a 10-bed Level II NICU at its facility. In order to obtain the license, University proposes to convert 10 of its existing medical-surgical beds to a 10-bed NICU.

      
      

   4. HRS is the state agency charged with the duty of regulating tertiary services, including neonatal intensive care. The provision of Level II NICU services in HRS District VI is the subject of this proceeding. All three hospitals are located in the district.

      
      

2. University's Standing to Intervene

   
   

   1. University does not have a program to provide neonatal intensive care services at the present time. However, as part of the hospital's long-range planning goals, it intends to develop a Women's Center, which will include a 10- bed Level II NICU.

   2. University applied for the Level II NICU service in the batching cycle of 1990, prior to the effective date of the NICU rule. At the close of evidence on April 15, 1991, the outcome of the application was still pending. Additionally, University filed a Letter of Intent and an application for a 10- bed Level II NICU in the first batching cycle of 1991. That application was also still pending during the evidentiary portion of these proceedings.

      
      

   3. University's attempt to secure a certificate of need for NICU beds are directly impacted by the number of NICU beds reacknowledged and validated in the District VI inventory of "grandfathered" NICU beds. The number of beds ultimately established by the inventory will directly affect the fixed need pool to be applied to all subsequent certificate of need batching cycles.

      
      

3. The NICU Rule

   
   

   1. The NICU Rule promulgated by HRS went into effect on August 6, 1990. The preliminary inventory of authorized Level II and Level III providers in District VI was published August 24, 1990. According to this inventory, Lakeland was authorized to have 11 Level II NICU beds and Winter Haven was not allocated any Level II beds on the initial preliminary inventory.

      
      

4. Winter Haven's Inclusion in a Revised Preliminary Inventory Published September 12, 1990

   
   

   1. When the preliminary inventory of Level II NICU beds was published, Winter Haven advised HRS that it had been excluded. Documentation was transmitted to the agency to support Winter Haven's contention that it has continuously developed and now has a operating Level II neonatal intensive care unit based upon past authorization from the agency.

      
      

   2. The documentation supplied by Winter Haven included past authorizations from the agency, which were relied upon by the hospital before expenditures were made on construction of the NICU and the unit created, and before a personal service contract was entered into for a hospital-based neonatologist in April 1988. Reliance on the agency's approval of the expansion project began on July 9, 1985, and was continuously relied upon throughout the development and establishment of these services at Winter Haven.

      
      

   3. When the documentation was reviewed by HRS, the decision was made to amend the preliminary inventory to include 11 NICU beds at this hospital. The revised preliminary inventory that included these beds was published on September 12, 1990.

      
      

   4. HRS decided 11 was the appropriate number of Level II beds to place on the inventory for Winter Haven as the approved construction plans show an isolation room of four beds and a continuing care room with seven beds. The beds in these rooms were described on the plan as "neonatal intensive care centers" and "intensive care bassinets." During the approval period, the square footage for each bed satisfied the draft rules that proposed fifty square feet per each Level II NICU bed.

      
      

   5. The decision to include Winter Haven on the revised preliminary inventory does not comport with the grandfathering provisions of the NICU Rule. Winter Haven does not meet the threshold requirements specified in sub- subparagraphs 14.a, 14.b or 14.f of the rule deems necessary for grandfathering to occur.

   6. During the years in which the NICU Rule was created, HRS did not consider the possibility that some hospitals might have progressed in the development stage of Level II NICU beds to such a level that the promulgated rule would contradict prior agency approvals reasonably relied upon by these hospitals.

      
      

   7. Before Winter Haven's beds were placed on the revised preliminary inventory, HRS permitted Alachua General Hospital's Level II NICU beds to be placed on the inventory based upon a CON exemption letter and construction plans approved prior to October 1, 1987. There have been no challenges to this decision, therefore, Alachua General can continue these services without a certificate of need as a grandfathered facility.

      
      

   8. Like Winter Haven, Alachua General did not comport with the grandfathering provisions of the NICU Rule. The decision to place Level II beds on the inventory was based on the approval of construction plans obtained through the licensure process at HRS in effect prior to October 1, 1987. HRS created the construction plans exception to the rule to acknowledge pre-existing bed authorizations not covered by the NICU Rule.

      
      

5. Lakeland's Increase to 16 Level II Beds in the Revised Preliminary Inventory Published October 12, 1990

1. Lakeland was issued a CON exemption by HRS for 16 "Level II neonatal intensive care beds" in a letter dated March 12, 1985. This letter allowed Lakeland to re-designate 16 medical/surgical beds as Level II neonatal intensive care beds.

   
   

2. On May 20, 1986, HRS approved Lakeland's construction plans for a 14- bed, Level II NICU.

   
   

3. Lakeland did not rely on its opportunity to re-designate all 16 beds as Level II NICU beds when it established its NICU pursuant to the CON exemption.

   
   

4. Lakeland was providing Level II NICU services prior to October 1, 1987, and continuously since then under the direction of a neonatologist or group of neonatologists, who were providing 24-hour coverage and who were either board-certified or board-eligible in neonatal-perinatal medicine as the various terms are defined in the NICU Rule.

   
   

5. In its 1989 Neonatal Intensive Care Survey response to HRS, Lakeland erroneously underreported its Level II patient days from October 1, 1987 through September 20, 1988. The number reported was different than the 4,412 Level II neonatal intensive care services patient days reported separately to the Hospital Cost Containment Board for the same period, based upon audited data. A third review of the data revealed Lakeland provided, 4,414 Level II patient days in 1987-1988 reporting period for the 1989 survey.

   
   

6. Pursuant to the formula set forth in sub-subparagraph 14.c of the NICU Rule, Lakeland should be authorized for 15 Level II beds on the final inventory which lists the established NICU beds that meet the grandfathering provisions of the rule. The inclusion of 16 Level II NICU beds on the revised preliminary inventory published October 12, 1990, went beyond the bed numbers allowed by rule.

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Section 120.57(1), Florida Statutes, and Rule 10-5.042(15), Florida Administrative Code.

   
   

8. During the hearing, University demonstrated that an erroneous inventory of existing NICU beds in HRS District VI directly impacts the fixed need pool for additional NICU beds sought by hospitals who seek CONs for future Level II beds. University's pending CON application filed prior to the effective date of the NICU rule and its pending application in the first batching cycle immediately after the implementation of the rule, reveal that its intent to expand its services to include Level II NICU beds is an active pursuit as opposed to a contemplation. Therefore, University has the identical interest in the correctness of the inventory that existing providers in a district have in the reacknowledgement of beds to all of the other hospitals listed. It follows logically that University has the same point of entry and the same standing to challenge the preliminary inventories as was granted to Winter Haven and Lakeland regarding each other's bed allocation under the grandfathering provision of the NICU Rule.

   
   

9. The rule governing the grandfathering of Level II NICU services is set forth in Rule 10-5.011(1)(v)14., Florida Administrative Code. By its own terms, the rule authorizes providers to implement, or to continue to operate Level II services if they are found to be in compliance with the conditions specified in sub-subparagraph 14.a, 14.b, or 14.f of the rule. These subparagraphs provide as follows, in pertinent part:

   
   

   1. Providers Holding a Valid Certificate of Need. Providers which have obtained a certi- ficate of need for provision of services regu- lated under this rule shall be restricted to the total number of neonatal intensive care unit beds by level of care for which certifi- cate of need approval was granted unless the provisions of sub-subparagraph 14.d. authorize a greater number.

   2. Providers with Licensed Acute Care Beds Which Include Level II . . . Neonatal Intensive Care Unit Beds. Facilities providing Level II

      . . . neonatal intensive care services prior to October 1, 1987 and continuously since then under the direction of a neonatologist or a group of neonatologists, as described in

      sub-sub-subparagraph 14.f.(I) . . . below, shall be limited to the total number of neonatal intensive care unit beds accepted by the department in its approval of the most recent application for a license, unless the provisions of sub-subparagraph 14.d. authorize a greater number.

      * * *

      f. Providers Not Authorized Under Certificate of Need or Licensure Provisions. Providers claiming to have provided Level II . . . neo-

      natal intensive care services prior to October 1, 1987 and continuously since then, but which

      were not authorized by certificate of need consistent with sub-subparagraph 14.a. or by license consistent with sub-subparagraph 14.b., will be authorized to provide Level II . . . neonatal intensive care services provided the conditions of sub-sub-subparagraph 14.f.(I)

      . . . below are met.

      (I) A provider will be deemed to have had operational Level II neonatal intensive care services prior to October 1, 1987 if Level II neonatal intensive care services were being provided on or before September 30, 1987 under the direction of a neonatologist or a group of neonatologists who were on the active staff

      of the hospital with unlimited privileges and provided 24-hour coverage, and who were either board certified or board eligible in neonatal- perinatal medicine.

      
      

10. Evidence adduced at hearing demonstrates Winter Haven is unable to meet the conditions specified in the rule which allow for the grandfathering of its Level II NICU beds. The unit was not developed to the particular service stage required during the time period referenced in the rule. When HRS reviewed the documentation provided by Winter Haven to support its contention that it had been improperly omitted from the preliminary inventory, it became apparent that Winter Haven had relied upon prior authorizations of its Level II unit development from HRS. As the agency had not addressed the possibility that some Level II neonatal intensive care units might have reached considerable development before and after the time period referenced in the rule, these type of situations were not covered by the NICU Rule. Instead, once such situations were discovered, HRS created an unpromulgated policy that allowed hospitals with Office of Licensure and Certification - approved construction plans to have NICU beds placed on the preliminary inventory.

    
    

11. The agency's attempted modification of the grandfathering provisions of the NICU Rule by use an unpromulgated policy that departs from the specific meaning of the rule is a practice specifically forbidden by Section 120.68(12), Florida Statutes. In Boca Raton Artificial Kidney Center, Inc. v. DHRS, 493 So.2d 1055 (Fla. 1st DCA 1986), the appellate court ruled that an agency cannot modify its own rules by unpromulgated policy even if it explicates such departure on a case-by-case basis. If a rule is found to be impractical, the agency's recourse is to amend the rule pursuant to rulemaking procedures.

    
    

12. It is clear from the wording of the grandfathering provisions that the NICU Rule was primarily designed to be exclusive as opposed to inclusive. In certain situations such as those experienced by Winter Haven, the rule as written impairs the obligation of contracts and detrimentally affects a hospital's interests. Winter Haven reasonably relied upon earlier authorizations given by HRS under color of law when the hospital made expenditures and established a neonatal intensive care service in its district between 1977 and 1990.

    
    

13. In spite of the harms caused by the exclusion of hospitals in Winter Haven's situation by the grandfathering provisions, the NICU Rule cannot be expanded through unpromulgated policy to include providers with approved construction plans. Such a policy would cause the provisions of sub- subparagraph 14.b. to become meaningless. This type of effect on a promulgated

    rule by an unpromulgated policy constitutes an impermissible deviation from the terms of an existing rule. Hillsborough County Hospital Authority d/b/a Tampa General Hospital v. Department of Health and Rehabilitative Services and Lakeland Regional Medical Center v. Department of Health and Rehabilitative Services, 12 FALR 785 (Final Order 1990). Accordingly, Winter Haven's 11 Level II NICU beds cannot remain on the preliminary inventory published pursuant to Rule 10-5.011(1)(v)(15), Florida Administrative Code, which purports to include all facilities with authorized neonatal intensive care services based upon the provisions of sub-subparagraphs 14.a. through 14.g. of the NICU Rule.

    
    

14. Lakeland is an authorized provider of Level II neonatal intensive care services pursuant to sub-subparagraph 14.f. of the NICU Rule. The number of beds established is based upon the formula contained in sub-subparagraph 14.c. The application of the formula to the data presented at hearing regarding Level II neonatal intensive care patient days at Lakeland from October 1, 1987 through September 30, 1988, allocates 15 Level II beds to the facility.

RECOMMENDATION

Based upon the foregoing, it is recommended:

1. A Final Order be entered which excludes Winter Haven from the inventory which lists authorized neonatal intensive care services based on the provisions of sub-subparagraphs 14.a. through 14.g. of the NICU Rule.

   
   

2. A Final Order be entered reducing Lakeland's inventory to 15 Level II NICU beds.

RECOMMENDED this 6th day of August, 1991, in Tallahassee, Florida.

VERONICA E. DONNELLY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of August, 1991.

APPENDIX TO RECOMMENDED ORDER, CASE NOS. 90-7682 and 90-7683

Lakeland Regional Medical Center's proposed findings of fact are addressed as follows:

1. Accepted. See Preliminary Statement.

2. Accepted. See HO #8, #11, #17 and #22.

3. Accepted.

4. Accepted.

5. Accepted.

6. First two sentences accepted. The rest of the paragraph is rejected.

   Argumentative.

7. Accepted.

8. Accepted.

9. Accepted.

10. Rejected. Irrelevant.

11. Accepted. See Conclusions of Law.

12. Accepted.

13. Accepted.

14. Accepted.

15. Accepted.

16. Accepted. See HO #13.

17. Rejected. Contrary to law. See Conclusions of Law.

18. Accept the first two sentences. Reject the next sentence. Speculative. The next two sentences accepted. The last sentence is rejected. Contrary to fact. See HO #12.

19. Rejected. Irrelevant.

20. Accept first three sentences. See HO #10. Reject fourth sentence. Incompetent legal conclusion.

1. Rejected. Irrelevant to resolution of material fact dispute.

2. Accepted. See HO #17 and #19.

3. Accepted. See HO #22.

4. Accepted. See HO #21.

Department of Health and Rehabilitative Services' proposed findings of fact are addressed as follows:

1. Accepted. See HO #12 and Preliminary Statement.

2. Accepted. See Preliminary Statement.

3. Accepted. See Preliminary Statement.

4. Accepted. See HO #8.

5. Accepted. See HO #12 and #22.

6. Accepted. See HO #17.

7. Accepted. See HO #10.

8. Accepted.

9. Accept all but last sentence. See HO #16. The last sentence is improper Conclusion of Law.

Winter Haven Hospital's proposed findings of fact are addressed as follows:

1. Accepted. See HO #1.

2. Accepted. See HO #2.

3. Accepted. See HO #3.

4. Accepted. See HO #4.

5. Accepted. See HO #10.

6. Accepted. See HO #8.

7. Accepted.

8. Accepted. See Preliminary Statement.

9. Accepted.

10. Accepted.

11. Accepted.

12. Accepted.

13. Accepted.

14. Accepted.

15. Rejected. Irrelevant.

16. Accepted. See Preliminary Statement.

17. Accepted.

18. Accepted.

19. Accepted. See HO #14.

20. Accepted.

21. Accepted.

22. Accepted. See HO #15.

23. Rejected. Improper Conclusion of Law.

24. Accepted.

25. Accepted.

26. Accepted.

27. Accepted.

28. Rejected under current definition.

29. Accepted to the extent the room provided many aspects of Level II care.

30. Accepted.

31. Accepted.

32. Rejected. Contrary to fact.

33. Accepted.

34. Accepted. See HO #10.

35. Rejected. Irrelevant.

36. Rejected. Irrelevant.

37. Accepted. See HO #10.

38. Accepted. See HO #10.

39. Accepted.

40. Accepted.

41. Accepted.

42. Accepted.

43. Accepted.

44. Accepted.

45. Accepted.

46. Accepted.

47. Accepted.

48. Accepted.

49. Accepted.

50. Accepted. See HO #12.

51. Accepted.

52. Accepted.

53. Accepted.

54. Accepted.

55. Accepted.

56. Rejected. Improper Conclusion of Law.

57. Accepted.

58. Rejected. Speculative.

59. Accepted.

60. Accepted.

61. Accepted.

62. Accepted.

63. Accepted.

64. Accepted.

65. Accepted. See HO #10.

66. Accepted.

67. Accepted. See HO #15 and #16.

68. Accepted.

69. Accepted.

70. Accepted.

71. Accepted. See HO #11 and #12.

72. Rejected. Improper Conclusion of Law.

73. Rejected. Improper Conclusion of Law.

74. Accepted.

75. Accepted.

76. Accepted.

77. Accepted.

78. Accepted.

79. Accepted.

80. Accepted. See HO #18.

81. Accepted. See HO #21.

82. Rejected. Improper Conclusion of Law.

83. Rejected. Improper Conclusion of Law. See HO #23 - #26.

84. Accepted.

85. Rejected. Contrary to fact. See HO #7.

86. Accepted.

87. Rejected. Incorrect legal conclusion.

88. Accepted.

89. Rejected. Insufficient foundation provided for the opinion to assist Hearing Officer as to weight and sufficiency.

90. Accepted.

91. Accepted.

University Community Hospital's proposed findings of fact are addressed as follows:

1. Accepted. See Preliminary Statement.

2. Accepted.

3. Accepted.

4. Accepted. See HO #8.

5. Accepted. See HO #12 and #22.

6. Accepted. See Preliminary Statement.

7. Accepted. See HO #4.

8. Accepted.

9. Accepted.

10. Accepted.

11. Accepted. See HO #5.

12. Accepted. See HO #6 and #7.

13. Accepted.

14. Accepted. See HO #7.

15. Accepted. See HO #7.

16. Accepted.

17. Accepted.

18. Rejected. Speculative.

19. Accepted.

20. Accepted.

21. Accepted.

22. Accepted.

23. Accepted.

24. Rejected. Irrelevant.

25. Rejected. This opinion was rejected by the Hearing Officer as an improper legal conclusion.

26. Accepted.

27. Accepted.

28. Accepted.

29. Accepted.

30. Accepted.

31. Accepted.

32. Accepted.

33. Accepted.

34. Accepted. See HO #11 and #12.

35. Accepted.

36. Accepted.

37. Accepted.

38. Accepted.

39. Accepted.

40. Rejected. Contrary to fact.

41. Rejected. Contrary to fact. See HO #12.

42. Rejected. See HO #12.

43. Rejected. Contrary to fact.

44. Accepted.

45. Accepted.

46. Accepted.

47. Accepted.

48. Accepted.

49. Accepted.

50. Accepted.

51. Accepted.

52. Accepted.

53. Accepted.

54. Accepted.

55. Accepted. See HO #10.

56. Accepted.

57. Accepted.

58. Accepted.

59. Accepted.

60. Accepted.

61. Accepted.

62. Accepted.

63. Accepted. See HO #22.

64. Accepted.

65. Accepted.

66. Accepted.

67. Accepted.

68. Accepted. See HO #21.

69. Accepted.

COPIES FURNISHED:

John H. Parker, Jr., Esquire PARKER HUDSON RAINES & DOBBS

1200 Carnegie Building

133 Carnegie Way Atlanta, Georgia 30303

John M. Knight, Esquire PARKER HUDSON RAINES & DOBBS

118 North Gadsden Street Tallahassee, Florida 32301

Richard A. Patterson, Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 2727 Mahan Drive - Suite 103

Tallahassee, Florida 32308

Patricia A. Renovitch, Esquire OERTEL HOFFMAN FERNANDEZ

& COLE, P.A.

Post Office Box 6507 Tallahassee, Florida 32314-6507

Cynthia S. Tunnicliff, Esquire CARLTON FIELDS WARD EMMANUEL

SMITH & CUTLER, P.A.

215 South Monroe Street - Suite 410 Tallahassee, Florida 32301

R. S. Power, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

John Slye, General Counsel 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 CONTACT 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.

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

LAKELAND REGIONAL MEDICAL )

CENTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO.: 90-7682

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

) WINTER HAVEN HOSPITAL, INC. ) and UNIVERSITY COMMUNITY )

HOSPITAL, )

)

Intervenors. )

)

WINTER HAVEN HOSPITAL, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 90-7683

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

)

LAKELAND REGIONAL MEDICAL ) CENTER, Inc. and UNIVERSITY ) COMMUNITY HOSPITAL, )

)

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 Hearing (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 WINTER HAVEN HOSPITAL, INC., (WINTER HAVEN)

Winter Haven excepts to the Hearing Officer's conclusion that to grandfather Winter Haven's Level II NICU beds would conflict with the plain language of the grandfathering rule, Section 10-5.011(1)(v)14, Florida Administrative Code, which imposes the staffing requirement for a hospital based neonatologist. The department is not free to adopt a policy which conflicts with the plain language of its rules. Section 120.68(12)(b), Florida Statutes (1989), Boca Raton Artificial Kidney Center vs. Department of Health and Rehabilitative Services, 493 So2d 1055 (Fla. 1st DCA 1986), Kearse vs.

Department of Health and Rehabilitative Services, 474 So2d 819 (Fla. 1st DCA 1985).

The dispositive issue here is whether the facts constitute exceptional circumstances so as to justify an equitable estoppel against the department.

The doctrine of equitable estoppel may be applied to prevent the application of a rule or statute, as explained by the Florida Supreme Court in Noble vs. Yorke, 490 So2d 29, 31 (Fla. 1986):

Further, absent specific statutory provision, there is no rule of law which in general exempts statutory rights and defenses from the operation of the doctrine of equitable estoppel. Significantly, the statute neither expressly

disallows application of the doctrine nor contains language suggesting such a result.

See also Harris vs. State of Florida, Department of Administration, 577 So2d 1363, 1366-7 (Fla. 1st DCA 1991) (doctrine of equitable estoppel can be asserted against a state agency when challenged state action was taken pursuant to a rule). That is because the proper application of the doctrine is consistent with Florida's Constitution and statutes. Quality Shell Homes and Supply Company vs. Raloy, 186 So2d 837, 840 (Fla. 1st DCA 1966) ("The doctrine of estoppel is firmly established in the jurisprudence of Florida... [and] rests on the principles of equity, justice, and mora1ity."). The doctrine "operates as a shield, not a sword...it serves to prevent losses otherwise inescapable or to preserve rights already acquired...". 22 Fla.Jur.2d Equitable Estoppel and Waiver, Section 7, page 419.

Returning to the present case, Winter Haven relied on representations by the department over a five (5) year period to establish its Level II NICU unit, hire employees, and commence operation of it. About 1300 babies are born annually at Winter Haven and about 10% of those babies require intensive care in the Level II unit.

I conclude that these facts constitute exceptional circumstances for purposes of an equitable estoppel.

FINDINGS OF FACT

The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

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 ruling on the exceptions.

Based upon the foregoing, it is

ADJUDGED, that the inventory include fifteen (15) Level II NICU beds at Lakeland Regional Medical Center, Inc. and eleven (11) Level II NICU beds at Winter Haven Hospital, Inc.

DONE and ORDERED this 14th day of September, 1991, in Tallahassee, Florida.

Robert B. Williams Secretary

Department of Health and Rehabilitative Services

by Deputy Secretary for Human Services

COPIES FURNISHED:

Veronica E Donnelly Hearing Officer

Division of Administrative Hearings 1230 Apalachee Parkway

The DeSoto Building Tallahassee, FL 32399-1550

John H. Parker, Jr., Esquire PARKER, HUDSON, RAINER & DOBBS

1200 Carnegie Building, 133 Carnegie Way, NE Atlanta, GA 30303

John M. Knight, Esquire PARKER, HUDSON, RAINER & DOBBS

The Perkins House, 118 North Gadsden Street Tallahassee, FL 32302

Richard Patterson, Esquire Assistant General Counsel Department of Healtha and

Rehabilitative Services 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, FL 32308

Patricia A. Renovitch, Esquire

OERTEL, HOFFMAN, FERNANDEZ & COLE, P. A.

Post Office Box 6507 Tallahassee, FL 32314-6507

Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL SMITH and CUTLER, P. A.

215 South Monroe Street Suite 410

Tallahassee, FL 32302

Wayne McDaniel

Nell Mitchem (PDRFM) Susan Lincicome (PDRHD)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above named people by U. S. Mail this 25th day of September, 1991.

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

Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, FL 32399-0700 904/488-2381

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

UNIVERSITY COMMUNITY HOSPITAL, NOT FINAL UNTIL TIME EXPIRES TO

FILE MOTION FOR REHEARING AND

Appellant, DISPOSITION THEREOF IF FILED.

vs. CASE NO. 91-3270

DOAH CASE NO. 90-7682

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and WINTER HAVEN HOSPITAL, INC.

Appellees.

/ LAKELAND REGIONAL MEDICAL

CENTER

Appellant,

vs. CASE NO. 91-3292

DEPARTMENT OF HEALTH AND

REHABILITATIVE SERVICES and CONSOLIDATED WINTER HAVEN HOSPITAL, INC.

Appellees.

/ Opinion filed December 29, 1992.

An appeal from a final order of the State of Florida, Department of Health and Rehabilitative Services, Robert B. Williams, Secretary.

Cynthia S. Tunnicliff and Loula M. Fuller of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tallahassee, for Appellant University Community Hospital.

Robert A. Weiss and John M. Knight of Parker, Hudson, Rainer & Dobbs, Tallahassee, for Appellant Lakeland Regional Medical Center, Inc.

Richard A. Patterson, Department of Health and Rehabilitative Services, Tallahassee, for Appellee Department of Health and Rehabilitative Services.

Patricia A. Renovich of Oertel, Hoffman, Fernandez & Cole, P.A., Tallahassee, for Appellee Winter Haven Hospital.

ZEHMER, J.

In these consolidated cases, University Community Hospital and Lakeland Regional Medical Center, Inc., two hospitals located in District 6, appeal a final order of the Department of Health and Rehabilitative Services (HRS) ruling that the inventory of neonatal intensive care unit (NICU) beds for District 6 shall include 11 Level II NICU beds for Winter Haven Hospital, Inc. HRS ruled that, under the circumstances, it was estopped to exclude these beds from the inventory. We reverse and remand for further proceedings on the estoppel issue.

I.

This controversy arose after HRS rule 10-5.011(1)(v) [now 10-5.042], Florida Administrative Code, became effective on August 6, 1990. That rule provides that all facilities providing NICU services must obtain a certificate of need (CON) for level II and III NICU services after the rule's effective date. The rule provides an exception for beds that are included in an initial inventory of such facilities by HRS. The rule sets forth the criteria for obtaining a CON, and states that such beds may be included in the initial inventory of Level II NICU beds provided the hospital is able to satisfy one of three grandfather provisions in rule 10-5.011(1)(v)14.a., 14.b., or 14.f. of the Florida Administrative Code.

In August 1990, HRS published in the Florida Administrative Weekly (16 Fla.

Admin. W. 3906) a "Notice of Preliminary Inventory Hospitals Authorized to Provide Neonatal Intensive Care (NICU) Services" that listed the number of beds for each of the major categories within a hospital's total licensed beds. The preliminary inventory included 11 Level II NICU beds for Lakeland Regional, butt Winter Haven and University Community were not included in this inventory.

Winter Haven advised HRS that it had been improperly excluded from the inventory and submitted documentation to support its contention that it should have been included. That documentation showed that approval had been given by HRS's Office of Licensure and Certification to Winter Haven's plans for construction of an NICU unit, based on a CON exemption letter dated July 9, 1985. In September 1990, HRS published a Notice of Change to the preliminary inventory that included 11 Level II NICU beds for Winter Haven (16 Fla. Admin. W. 4414).

On October 10, 1990, Lakeland Regional filed a petition for a formal administrative hearing to contest the September 1990 Notice of Change to the preliminary inventory indicating 11 NICU beds for Winter Haven, arguing that Winter Haven had no authorized NICU beds and failed to satisfy the criteria stated in rule 10-5.011(1)(v) for authorization to provide Level II NICU services. Winter Haven also filed a petition for administrative hearing to challenge the October 1990 Notice of Change to the preliminary inventory of Level II NICU beds increasing the number of beds awarded to Lakeland Regional, based on the argument that Lakeland Regional failed to satisfy the rule requirements for operation of that number of beds. Winter Haven and Lakeland Regional then filed separate petitions to intervene in each other's case, and the two cases were consolidated. University Community, having a pending CON application to operate an NICU service, filed a petition to intervene in both cases challenging the inclusion of Level II NICU beds at both Lakeland Regional and Winter Haven. Only the Winter Haven beds are involved in this appeal, however.

The matter went to hearing before a DOAH hearing officer. Winter Haven contended that it qualified under the rule's grandfather provisions as these provisions had previously been interpreted by HRS. It based this contention, in part, on evidence that HRS had previously approved NICU beds for Winter Haven and that, in reliance on this approval, Winter Haven had done a number of things

to fund and place the NICU beds so authorized in operation. However, Winter Haven had not employed a full-time neonatologist on its active staff prior to October 1, 1987, as specified in the grandfather provisions of the rule, because its neonatologist did not come on board until April 1988.

The hearing officer's order recommended that HRS exclude all of Winter Haven's beds from the NICU inventory in view of its non-compliance with all relevant provisions in subparagraphs 14.a. through 14.g. of the NICU rule. We quote a portion of the findings and conclusions made in support of this recommendation:

Evidence adduced at the hearing demonstrates Winter Haven is unable to meet the conditions specified in the rule which allow for the grandfathering of its Level II NICU beds. The unit was not developed to the particular service stage required during the time period referenced in the rule. When HRS reviewed the documentation provided by Winter Haven to support its contention that it had been improperly omitted from the preliminary inventory, it became apparent that Winter Haven had relied upon prior authorizations of its Level II unit development from HRS. As the agency had not addressed the possibility that some Level II neonatal intensive care units might have reached considerable development before and after the time period referenced in the rule, these type[s] of situations were not covered by the NICU Rule. Instead, once situations were discovered, HRS created an unpromulgated policy that allowed hospitals with Office of Licensure and Certification-approved construction plans to have NICU beds placed on the preliminary inventory.

The agency's attempted modification of the grandfathering provisions of the NICU Rule by use [sic] an unpromulgated policy that departs from the specific meaning of the rule is a practice specifically forbidden by Section 120.68(12), Florida Statutes. In Boca Raton Artificial Kidney Center, Inc. v. DHRS, 493 So.2d 1055 (Fla. 1st DCA 1986), the

appellate court ruled that an agency cannot modify its own rules by unpromulgated policy even if it explicates such departure on a case-by-case basis. If a rule is found to be impractical, the agency's recourse is to amend the rule pursuant to rulemaking procedures.

It is clear from the wording of the grandfathering provisions that the NICU Rule was primarily designed

to be exclusive as opposed to inclusive. In certain situations such as those experienced by Winter Haven, the rule as written impairs the obligation of contracts and detrimentally affects a hospital's interests. Winter Haven reasonably relied upon earlier authorizations given by HRS under color of law

when the hospital made expenditures and established neonatal intensive care service in its district between 1977 and 1990.

In spite of the harms caused by the exclusion of hospitals in Winter Haven's situation by the grandfathering provisions, the NICU Rule cannot be expanded through unpromulgated policy to include providers with approved construction plans. Such a policy would cause the provisions of sub-subparagraph

14.b. to become meaningless. This type of effect on a promulgated rule by an unpromulgated policy constitutes an impermissible deviation from the terms of an existing rule. Hillsborough County Hospital Authority d/b/a Tampa General Hospital v. Department of Health and Rehabilitative Services and Lakeland Regional Medical Center v. Department of Health and Rehabilitative Services, 12 FALR 785 (Final Order 1990). Accordingly, Winter Haven's 11 Level II NICU beds cannot remain on the preliminary inventory published pursuant to Rule 10-5.011(1)(v)(15), Florida Administrative Code, which purports to include all facilities with authorized neonatal intensive care services based upon the provisions of sub- subparagraphs 14.a. through 14.g. of the NICU Rule.

Winter Haven filed exceptions to the recommended order, contending that the recommended order had misconstrued the meaning of the rules. It emphasized that the hearing officer's construction of the rule, as found in the hearing officer's recommended order, was contrary to that previously followed by HRS, on which Winter Haven had relied when establishing the level II NICU beds. Winter Haven further contended that, if HRS were not permitted to adhere to its previous construction of the rule but required to follow the hearing officer's recommended construction, thereby preventing application of the grandfather provisions to Winter Haven, HRS was nevertheless estopped from excluding Winter Haven's beds from the inventory because the facts found in the recommended order satisfied all of the elements of estoppel. Winter Haven cited a number of Florida cases recognizing the application of equitable estoppel in administrative law cases. 1/ This was the first time the matter of estoppel had been mentioned in these proceedings.

HRS entered a final order adopting all of the hearing officer's findings of facts. It also approved the hearing officer's construction of the rule as precluding the inclusion of Winter Haven's 11 level II NICU beds in the inventory pursuant to the grandfather provisions. With respect to Winter Haven's contention that the doctrine of equitable estoppel would apply based on the facts found by the hearing officer, HRS noted that:

Winter Haven relied on representations by the department over a five (5) year period to establish its Level II NICU unit, hire employees, and commence operation of it. About 1300 babies are born annually at Winter Haven and about 10% of those babies require intensive care in the Level II unit.

HRS ruled that the "facts constitute exceptional circumstances for purposes of an equitable estoppel" and declined to exclude Winter Haven's NICU beds from the inventory for District 6.

II.

On this appeal, University Community and Lakeland Regional challenge the application of estoppel on several grounds. While we do not agree with all of these contentions, we do agree that it was error for HRS to apply the doctrine of estoppel without first affording these two hospitals an opportunity to confront this issue in the evidentiary hearing before the hearing officer.

Although it would appear from the findings of fact that application of the doctrine of estoppel to the circumstances shown might well be appropriate, it is premature for this court to address this substantive issue before the matter can be properly presented to the hearing officer. We reach this conclusion for the following reasons.

Estoppel, whether being asserted as the basis for a claim of right or as an affirmative defense, ordinarily must be pleaded in administrative cases when one expects to obtain relief based thereon. See Southeast Grove Management, Inc. v. McKiness, 578 So.2d 883 (Fla. 1st DCA 1991). See also rules 60Q-2.004, 60Q- 2.010, and 28-5.203, Fla. Admin. Code. In court proceedings, a party's failure to plead an issue usually precludes the fact-finder from ruling on the issue.

See, e.g., Godshalk v. City of Winter Park, 95 So.2d 9 (Fla. 1957); Brown v. Broward Minority Builders Coalition, Inc., 431 So.2d 230 (Fla. 1st DCA 1983); Sanders v. Bureau of Crimes Compensation, 474 So.2d 410 (Fla. 5th DCA 1985).

The requirement for pleading specific issues is necessary because "parties to civil and criminal proceedings, whether judicial or administrative, are entitled to notice of the issues, as a matter of due process." Conklin Center v.

Williams 519 So.2d 38, 39 (Fla. 5th DCA 1988). See also Deel Motors, Inc. v. Department of Commerce, 252 So.2d 389 (Fla. 1st DCA 1971). The rules of pleading are not applied in administrative proceedings as strictly as they are in court proceedings, however.

It is the ultimate responsibility of HRS in this licensing proceeding to exercise its discretion to make the correct decision based on an accurate understanding of the facts. The section 120.57(1) evidentiary hearing before the hearing officer is an important part of the agency's decision-making process in this permitting matter, but the recommendations of the hearing officer are not conclusive on the ultimate decision of the agency. Thus, while HRS was undoubtedly bound to accept the findings of fact made by the hearing officer so long as they were supported by competent, substantial evidence, HRS was nevertheless free to disagree with the hearing officer's recommended conclusions of law and was authorized to apply its own understanding and interpretation of the law when entering its final order. Section 120.57(1)(b)10, Fla. Stat. (1991).

In this case, HRS agreed with the hearing officer's findings of fact and accepted them without change, and did not err in doing so. But in reaching its final decision, HRS concluded on the basis of these facts that it was estopped from changing its prior decision authorizing Winter Haven to operate NICU beds in the face of Winter Haven's substantial reliance thereon. We are not aware of any provision of substantive law that would preclude HRS from applying estoppel in this situation so long as the elements of estoppel are supported by the evidence and HRS deems that it is necessary to reach a legally correct and just decision. Nor do we conclude that Winter Haven's failure to raise the estoppel issue in preliminary pleadings should operate as a conclusive waiver of its

right to rely on this issue before HRS reached a final decision. As in court proceedings, the procedure must afford reasonable opportunity to amend the issues if necessary to reach a just result in conformance with the evidence. In view of the findings of fact in the recommended order, Winter Haven's exceptions appropriately raised this issue similar to a motion to amend the complaint to conform to the evidence in a court proceeding.

Procedurally, however, University Community and Lakeland Regional were not afforded an opportunity to address the estoppel issue in the section 120.57 hearing before the hearing officer. Since the application of estoppel, like a finding of negligence, is often a mixed issue of law and fact, we agree with these appealing parties that they have been deprived of their right to an evidentiary hearing on this issue. The appropriate procedure that should have been followed, once it became apparent to HRS that estoppel was a relevant issue in reaching its decision, was for HRS to refer the matter back to the hearing officer for further evidence and findings of fact on that issue. See Fire Defense Centers v. State, Dept. of Ins., 548 So.2d 1166 (Fla. 1st DCA 1989), rev. denied, 560 So.2d 233 (Fla. 1990); Inverness Convalescent Center v.

Department of Health and Rehab. Servs., 512 So.2d 1011 (Fla. 1st DCA 1987); Friends of Children v. Department of Health and Rehab. Servs., 504 So.2d 1345 (Fla. 1st DCA 1987). Because that was not done, we reverse the order and remand the cause to HRS with directions that it be referred to the hearing officer for additional evidence on the estoppel issue, if University Community and Lakeland Regional so request, and for the entry of additional findings of fact as may be appropriate to the estoppel issue.

III.

One further issue needs to be addressed before remand. University Community and Lakeland Regional contend that the presence of the grandfather provisions in rule 10-5.011(1)(v), which Winter Haven failed to satisfy, precludes the application of equitable estoppel in this case, citing to our opinion in State, Department of Environmental Regulation v. C.P. Developers, Inc., 512 So.2d 258 (Fla. 1st DCA 1987). They read that opinion as precluding, as a matter of law, the application of estoppel in a permitting case where the statute involved includes grandfather provisions.

We do not agree that our decision in C.P. Developers precludes the application of estoppel under the circumstances shown in this case. In C.P. Developers, the circuit court granted a partial summary judgment for the developers of certain property (the Stonebridge site) in their suit against the Department of Environmental Regulation for declaratory judgment to determine DER's jurisdiction to require further permitting of that project under the Warren S. Henderson Wetlands Protection Act of 1984. The developers contended that in 1983, before the October 1984 effective date of that act, a DER representative had established and flagged a line, which was essentially coincidental with a +2 foot mean sea level (MSL) contour line, and effectively demarked DER's jurisdiction of wetlands waterward of this line. DER disputed both the location of this line and that the flagged line was intended to establish its jurisdictional boundary, and asserted that the developers had

illegally proceeded with construction of the project without obtaining the proper dredge and fill permits. C.P. Developers sought a declaratory judgment from the trial court

(1) that pursuant to the October 1983 jurisdictional determination, DER had no regulatory authority over

C.P. Developers dredge and fill activities on the Stonebridge site; (2) that DER's dredge and fill jurisdiction over the Stonebridge property was limited to the area waterward of the +2 foot MSL contour elevation; and (3) that DER was equitably estopped to deprive C.P. Developers of the right to develop the Stonebridge property in accordance with the jurisdictional determination provided in October 1983.

512 So.2d at 260.

On DER's appeal from the adverse partial summary judgment, we held "that genuine issues of material fact exist concerning whether the October 1983 jurisdictional determination encompassed more than phase one of the Stonebridge development, and whether the +2 foot MSL contour elevation line actually delineated DER's pre-Henderson Act jurisdiction." Id. at 261. We further held that C.P. Developers had not complied with the procedures set forth to implement the grandfather provisions in the Act for validating jurisdictional lines determined by DER prior to 1984 and thus had not validated the flagged line under those provisions. Finally, we held that, "since there are disputed issues of material fact with regard to the October 1983 jurisdictional determination, we find the doctrine of equitable estoppel to be inapplicable in this case," and explained:

The record in this case reflects that there is a dispute concerning the extent of the October 1983 jurisdictional determination, and the validation of that jurisdictional determination. Therefore, C.P. Developers alleged reliance on the pre-Henderson Act jurisdictional determination is not a sufficient basis upon which to invoke the doctrine of equitable estoppel against the state... Furthermore, the availability of grandfather procedures to preserve a viability of a pre-October 1, 1984, jurisdictional determination precludes the application of estoppel against the state in this case...

Id. at 262-63 (emphasis added).

Our decision in C.P. Developers should not be read as broadly prohibiting the application of estoppel in any case where a grandfather provision is included in the statutory scheme. Rather, its precedential value on this point must be limited to the unusual circumstances involved in that case. We held that C.P. Developers' purported reliance on the disputed jurisdictional line determination allegedly made by DER was unavailing in that case only because the nature of that dispute precluded any right on the part of C.P. Developers to rely on that line as a jurisdictional determination. Additionally, the grandfather provisions in the Henderson Act were specifically designed to preserve pre-1984 jurisdictional determinations of the sort on which C.P. Developers claimed reliance, but C.P. Developers had not complied with the

procedures contained in implementing rules adopted by DER for validating such prior jurisdictional determinations. Thus, we concluded that C.P. Developers could not use the doctrine of estoppel as a substitute for avoiding the validation procedure designed to accomplish the same result.

Our decision in C.P. Developers is materially distinguishable and thus inapplicable to this case. Here, the hearing Officer found that prior to the adoption of rule 10-5.011, HRS had given, in the form of written approval by its Office of Licensure and Certification to Winter Haven's construction plans, effective authorization for Winter Haven to construct and operate its NICU unit, and that Winter Haven had relied thereon. Indeed, the hearing officer specifically found that:

14. During the years in which the NICU Rule was created, HRS did not consider the possibility that some hospitals might have progressed in the development stage of Level II NICU beds to such a level that the promulgated rule would contradict prior agency approvals reasonably relied upon by these hospitals.

HRS admits to the facts and conduct upon which Winter Haven claims to have relied, quite unlike DER's denial that a jurisdictional determination had been made in the C.P. Developers case.

The order is reversed and the cause is remanded for further proceedings in accordance with this opinion.

REVERSED AND REMANDED. SHIVERS and KAHN, JJ., CONCUR.

ENDNOTE

1/ The list included City of Winter Haven v. State ex rel. Landise, 125 Fla. 392, 170 So. 100, 108 (Fla. 1936); Noble v. Yorke, 490 So.2d 29, 31 (Fla. 1986);

Harris v. State, Dept. of Admin., 577 So.2d 1363, 1366-67 (Fla. 1st DCA 1991); Quality Shell Homes & Supply Co. v. Roley, 186 So.2d 837, 840 (Fla. 1st DCA 1966); Salz v. Department of Admin., 432 So.2d 1376, 1378 (Fla. 3d DCA 1983); Warren v. Department of Admin., 554 So.2d 568 (Fla. 5th DCA 1989), rev. dismissed, 562 So.2d 345 (Fla. 1990); Tri-State Systems, Inc. v. Department of Transp., 500 So.2d 212, 216 (Fla. 1st DCA 1986), rev. denied, 506 So.2d 1041

(Fla. 1987).

Docket for Case No: 90-007682

Orders for Case No: 90-007682