STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MEDERI OF ALACHUA COUNTY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 91-2924

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

) ADVENTIST HEALTH SYSTEM/SUNBELT, ) INC., d/b/a FLORIDA HOSPITAL, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its designated Hearing Officer, Eleanor M. Hunter, held a formal hearing in the above

APPEARANCES

For Petitioner: Louise T. Jeroslow, Esquire

KOSNITZKY, TRUXTON,

DE LA GUARDIA & SPRATT, P.A.

3225 Aviation Avenue Penthouse

Miami, Florida 33131

For Respondent: Richard Patterson, Esquire

Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, Florida 32308

For Intervenor, C. Alan Lawson, Esquire St. Johns Home Health Steel Hector & Davis Agency, Inc.: 215 South Monroe Street

Suite 601

Tallahassee, Florida 32301

For Intervenor, Robert T. Klingbeil, Esquire Adventist Health 1001 Avenida del Circo System/Sunbelt, Inc.: Post Office Box 1596

Venice, Florida 34284 STATEMENT OF THE ISSUES

1. Whether the Certificate of Need ("CON") application, filed by Mederi of Alachua County, Inc. ("Mederi") erroneously with the Local Health Council for District IV, and received one day late by the correct Local Health Council for District III, was timely filed pursuant to Rule 10

   Administrative Code.

   
   

2. Whether the Respondent, Department of Health and Rehabilitative Services ("HRS") is estopped from rejecting the Mederi CON application as untimely due to representations made by the Executive Director of the Local Health Council for District III.

   
   

3. Whether HRS' policy of waiving objections to untimely filings of CON applications resulting from misrepresentations of fact made by HRS employees is applicable or inapplicable to untimely filings resulting from misrepresentations of policy made by employees of a local health council.

PRELIMINARY STATEMENT

On February 25, 1991, Mederi, Adventist Health System/Sunbelt, Inc. ("Adventist"), and St. Johns Home Health Agency, Inc. ("St. Johns") filed with HRS letters of intent to submit applications for certificates of need to establish a medicare certified home health agency in HRS District III. Mederi, Adventist and St. Johns timely filed CON applications with HRS on March 25, 1991. Adventist and St. Johns also timely filed copies of their CON applications with the local health council for HRS District III. Mederi erroneously filed a copy of its application with the local health council for District IV. The application was not received by the local health council for District III until the following day.

On March 29, 1991, HRS rejected Mederi's application for not having been filed timely with the local health council pursuant to Rule 10

Florida Administrative Code. By petition filed on April 18, 1991, Mederi requested a formal administrative hearing to contest HRS' rejection of its application.

Adventist and St. Johns filed Petitions to Intervene, which were granted without objection.

The evidentiary hearing was held on June 24, 1991. Mederi presented the testimony of Carole Gormley, Fred Huerkamp, and David Nesslein. Mederi's Exhibits 1 through 5 were received into evidence. HRS presented the testimony of Amy Jones, and Exhibits 1 through 6, which were received into evidence. St.

Johns' Exhibit 1 was received into evidence.

A transcript of the proceeding was filed with the Division of Administrative Hearings on July 9, 1991. Proposed Findings of Fact and Conclusions of Law were filed by Mederi, HRS, and Adventist on July 25, 1991. St. Johns filed a Joinder in The Proposed Recommended Order of HRS. A ruling on each Proposed Finding of Fact has been made, as reflected in the Appendix to this Order.

FINDINGS OF FACT

1. On March 25, 1991, Fred Huerkamp, who has served as Director of Health Planning Council of Northeast Florida for District IV for approximately eight years, received Mederi's CON application to establish a medicare certified home health agency in District III.

   
   

2. Huerkamp telephoned Mederi's representative, Louise Jeroslow, and told her that Mederi's application had been received that morning in his District IV office in Jacksonville, although it should have been sent to the local health council for District III in Gainesville.

   
   

3. Jeroslow then telephoned the office of the North Central Florida Health Planning Council, the local health council for HRS District III. A staff member, after consultation with and at the direction of Executive Director Carole Gormley, told Jeroslow that it would not matter if the CON application was mailed from Jacksonville to Gainesville and, therefore received late in District

   III. Gormley has served as Executive Director of the District III Council for approximately eight years.

   
   

4. Prior to January 31, 1991, Gormley and Huerkamp, the Directors of local health councils for Districts III and IV respectively, were aware that HRS checked with their councils to determine the timeliness of filings of letters of intent, but did not check on the timeliness of filings of CON applications with the councils.

   
   

5. On January 31, 1991, Rule 10-5.008(1), Florida Administrative Code was substantially amended, and included the following specific provisions:

   
   

   (k) Certificate of Need Application Submission.

   * * *

   1. The application must be actually received by the Office of Regulation and Health Facili- ties by 5 p.m. local time and a copy must actually be received by the local health council by 5 p.m. local time on or before the application due date.

   2. An application shall not be deemed complete by the department unless all information requested by the department and provided for in the application form has been submitted on the form by the applicant. An application submitted to the Office of Regulation and Health Facilities shall not be accepted by

   the department, and the application fee will be returned if a copy of the application is not received by the appropriate local health council as provided above.

   
   

6. The Mederi CON application at issue in this proceeding was filed in the February batching cycle, the first cycle following the amendment of the rule.

   
   

7. Although the specific language of the rule was clarified, the requirement for submission of CON applications by 5 p.m. on the due date with

   both HRS and the local health councils was essentially unchanged, having previously been included in an HRS Policy Manual.

   
   

8. All potential applicants were informed of the amendment of the rule by notice in the Florida Administrative Weekly on February 1, 1991.

   
   

9. All applicants who submitted letters of intent, including Mederi, also received a copy of the rule in their application packages, an HRS number to telephone for additional information, and notice of the requirement by form cover letter, one paragraph of which, stated:

   
   

   According to Section 381.709(2)(a), Florida Statutes, and Chapter 10-5.008(1)(k), Florida Administrative Code, you are advised that certificate of need applications submitted to this department must also be sent concurrently to the local health council that serves the district of your proposed project.

   
   

10. At the time Mederi's application was filed, neither Gormley of District III nor Huerkamp of District IV was aware of the specific change in the rule or, more importantly, of the new HRS policy of verifying that CON applications were timely filed with the local health councils. If either had been aware of the new policy or in doubt about the practices of HRS, they would have referred Mederi to HRS, as they routinely do when receiving inquiries from applicants and the public.

    
    

11. By letter dated March 29, 1991, HRS rejected Mederi's CON application as untimely for having been received by the local health council for District III on March 26, 1991, one day late.

    
    

12. HRS waived enforcement of the rule and accepted an untimely CON application in the same batching cycle in another district because the zip code provided by HRS in the CON application package was incorrect, causing a delay in delivery by Federal Express.

    
    

13. The North Central Florida Health Planning Council is a private non- profit corporation established pursuant to Subsection 381.703(1), Florida Statutes, as the local health council for HRS District III.

    
    

14. Pursuant to Subsection 381.703(1)(d), local health council personnel "shall not be deemed to be state employees."

    
    

15. Pursuant to Subsection 381.703(1), Florida Statutes, certain responsibilities in the CON process are delegated to local health councils. Among others local health councils develop the district health plan, advise HRS on district health resources and needs, conduct public hearings on some CON projects, and monitor construction projects.

    
    

16. In addition to the provisions of the statute, HRS used a Standard Contract to establish its relationship with private local health councils, including the councils for District III and District IV. The contract requires the councils to use State Career Service position classifications and compensation, and to have the prior approval of the HRS to reclassify positions. Council employees are also required to comply with the provisions of Chapter 112, Florida Statutes, which governs the conduct of state employees and officers.

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over the parties to, and subject matter of, this proceeding pursuant to Subsections 120.57(1) and 381.709(5), Florida Statutes.

    
    

18. Mederi's filing of its CON application with the local health council for District IV for services proposed to be established in District III did not comply with the requirements of Rule 10

    Code.

    
    

19. Mederi's late filing of its CON application in District III did not comply with the requirements of Rule 10

    Code.

    
    

20. HRS concedes having waived the rule on the timeliness of CON application filings with a local health council in the same, February

    batching cycle. HRS contends that it is not arbitrary and unreasonable to waive a late filing resulting from gratuitous and erroneous information provided by an employee of HRS, but not if similar information is provided by local health council personnel. In support of its contention, HRS distinguishes the relationship to HRS employees from its relationship to the local health council employees. The Standard Contract entered into between HRS and the North Central Florida Health Planning Council for services within HRS District III demonstrates, however, that HRS exerts extensive supervisory authority over the local health planning council employees. Subsection 381.703(1) and the Standard Contract entered into between HRS and the North Central Florida Health Planning Council for services in HRS District III establish the Council as an agent for HRS in the CON process. Therefore, HRS' distinction between its own employees, as opposed to its contractual and statutory agent is rejected as a matter of law. See, Naranja Lakes Condominium No. Two, Inc. v. Rizzo, (Fla. 3rd DCA 1985).

    
    

21. Although HRS cannot distance itself from its statutory agent to avoid the application of its policy of waiver, the type of information provided is, however, distinguishable. Unlike the factual error in the zip code provided to South Dade Nursing Home Limited, the statements made by District III personnel were clearly expectations of HRS' future policy. Mederi could not reasonably rely on expectations of continued lax enforcement of the concurrent filing provision, given the change in the rule of which Mederi received actual notice and the fact that the batching cycle was the first to occur after the enactment of the amendment. See, Health Care and Retirement Corporation of America v. Department of Health and Rehabilitative Services, et. al., 463 So.2d 1175 (Fla. 1st DCA 1984). Further, it should be noted that the time for challenging the waiver granted to South Dade Nursing Home Limited had not expired, at the time of this hearing.

    
    

22. The doctrine of equitable estoppel is also inapplicable. HRS is not estopped from requiring strict compliance with the rule due to statements made by local health council staff. Mederi was informed correctly that HRS' enforcement of the rule had been lax. Mederi, however, knew the deadline for the submission of the CON application and what it relied upon was the continued lax enforcement of the rule. Mederi's contention that equitable estoppel is applicable is not supported by the facts in this case. See, Humhosco, Inc. d/b/a Humana Hospital Brandon v. Department of Health and Rehabilitative Services, 561 So.2d 388 (Fla. 1st DCA 1990).

RECOMMENDATION

Based on the foregoing, it is hereby recommended that HRS enter a final order rejecting Mederi's application for a CON to establish a medicare certified home health agency in District III.

RECOMMENDED this 31st day of July, 1991, at Tallahassee, Florida.

ELEANOR M. HUNTER

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 31st day of July, 1991.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-2924

The following specific rulings are made pursuant to Subsection 120.59(2), Florida Statutes, submitted by the parties in this case:

Rulings on Proposed Findings of Fact Submitted by the Petitioner

1. Adopted in Finding of Fact 3.

2. Adopted in Finding of Fact 1.

3. Adopted in Findings of Fact 14, 16 and 17.

4. Covered in Finding of Fact 11.

5. Adopted in Finding of Fact 11.

6. Covered in Finding of Fact 11.

7. Adopted in Finding of Fact 4.

8. First sentence is adopted in Findings of Fact 3 and 4. Second and third sentences are not material or relevant.

9. Adopted in Finding of Fact 7.

10. Adopted in Finding of Fact 10.

11. Adopted in Finding of Fact 5.

12. Adopted in Findings of Fact 8 and 12.

13. Adopted in Finding of Fact 11.

14. Not material or relevant.

15. Adopted in Finding of Fact 13.

16. First three lines are adopted, the last line is not material or relevant.

17. First sentence is adopted in Finding of Fact 13. Second sentence is not material or relevant.

18. Not material or relevant.

19. Covered in Finding of Fact 13 and Conclusion of Law 4.

20. Covered in Conclusion of Law 4.

21. - 25. Not material or relevant.

1. Included in Preliminary Statement.

2. Adopted in Finding of Fact 1.

3. Adopted in Finding of Fact 2.

4. and 30. Adopted in Finding of Fact 3.

1. Adopted in Finding of Fact 11.

2. Adopted in Findings of Fact 1 and 12.

3. Not material or relevant.

Rulings on Proposed Findings of Fact Submitted by Respondent

1. Included in Preliminary Statement.

2. and 3. Adopted in Finding of Fact 12.

1. Not material or relevant.

2. Covered in Finding of Fact 10.

3. Included in Preliminary Statement.

4. Adopted in Finding of Fact 5.

5. Adopted in Finding of Fact 9.

6. Adopted in Findings of Fact 1-3 and 12.

7. Adopted in Findings of Fact 1-3.

8. and 12. Adopted in Finding of Fact 11.

1. Not material or relevant.

2. First sentence is adopted in Finding of Fact 17. Second sentence is not material or relevant.

Rulings on Proposed Findings of Fact Submitted by Intervenor,

Adventist Health System/Sunbelt, Inc. d/b/a Florida Hospital

1. Included in Preliminary Statement.

2. and 3. Adopted in Finding of Fact 10.

1. First three lines are not material or relevant. Last line is adopted in Finding of Fact 5.

2. and 6. Adopted in Findings of Fact 5, 9 and 10.

1. Adopted in Finding of Fact 1.

2. Adopted in Finding of Fact 2.

3. and 10. Adopted in Finding of Fact 3.

1. Covered in Finding of Fact 12.

2. Adopted in Findings of Fact 14 and 15.

3. Adopted in Finding of Fact 17.

4. Adopted in Finding of Fact 11.

5. Adopted in Finding of Fact 6.

6. Covered in Conclusion of Law 6.

7. Covered in Finding of Fact 10.

8. Covered in Finding of Fact 13.

9. and 20. Covered in Conclusions of Law 4 and 5.

21. and 22. Not material or relevant.

23. and 24. Unnecessary.

COPIES FURNISHED:

Louise T. Jeroslow, Esquire KOSNITZKY, TRUXTON,

DE LA GUARDIA & SPRATT, P.A.

3225 Aviation Avenue Penthouse

Miami, Florida 33131

Richard Patterson, Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, Florida 32308

C. Alan Lawson, Esquire Steel Hector & Davis

215 South Monroe Street Suite 601

Tallahassee, Florida 32301

Robert T. Klingbeil, Esquire 1001 Avenida del Circo

Post Office Box 1596 Venice, Florida 34284

Sam 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

MEDERI OF ALACHUA COUNTY, )

INC., )

)

Petitioner, )

)

vs. ) CASE NO.: 91-2924

) LOI NO.: H9102008

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

) ADVENTIST HEALTH SYSTEM/SUNBELT, ) INC., d/b/a FLORIDA HOSPITAL,. )

)

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

Petitioner excepts to the Hearing Officer's ruling that its proposed finding of fact 33 was not relevant. The error, if any, is harmless as petitioner failed to establish special circumstances which are required for an estoppel to be invoked against the State. 22 Fla. Jur 2d, Estoppel and Waiver, Section 80.

Petitioner excepts to the Hearing Officer's conclusion that the petitioner failed to establish a basis for estoppel against the State. I concur with the Hearing Officer's conclusion. Health Care and Retirement Corporation vs.

Department of Health and Rehabilitative Services, 463 So2d 175 (Fla. 1st DCA 1984). Petitioner's exceptions are denied.

Counsel for the department excepts to that portion of the conclusions of law found at page 9, paragraph 6, wherein the Hearing Officer concluded:

... what [Mederi] relied upon was the continued lax enforcement of the rule.

The foregoing statement is inconsistent with paragraphs 5 and 7 of the findings of fact. The "rule" concerning the specific time at which a copy of a certificate of need application must actually be received by the local health council became effective on January 31, 1991 (see findings of fact, paragraph 5). Prior to January 31, 1991, the filing requirement was expressed in the HRS Policy Manual (see finding of fact, paragraph 7).

Thus, it was not "continued lax enforcement of the rule" that Mederi relied on, but rather "continued lax enforcement of the policy." Prior to January 31, 1991, there was no rule setting forth a specific time at which the copy of the certificate of need application must actually be received. Therefore, the word "policy" is substituted in place of the word "rule" in the above-cited sentence.

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 as modified in the ruling on exceptions.

Based upon the foregoing, it is

ADJUDGED, that the application of Mederi of Alachua County, Inc. for a certificate of need to establish a Medicare certified home health agency in District III be rejected.

DONE and ORDERED this 20th day of 1991, in Tallahassee, Florida.

Robert B. Williams, Secretary Department of Health and

Rehabilitative Services

by Acting Deputy Secretary for Human Services

COPIES FURNISHED:

Louise Jeroslow, Esquire KOSNITZKY, TRUXTON de 1a GUARDIA & SPRATT, P. A.

3225 Aviation Avenue Penthouse

Miami, FL 33133

Robert T. Klingbeil, Esquire BOONE, BOONE, KLINGBEIL & BOONE

Post Office Box 1596 Venice, FL 34284

Richard Patterson, Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, FL 32308

C. Alan Lawson, Esquire STEEL HECTOR & DAVIS

215 South Monroe Street Suite 601

Tallahassee, FL 32301

Eleanor M. Hunter Hearing Officer

Division of Administrative Hearings 1230 Apalachee Parkway

The DeSoto Building Tallahassee, FL 32399-1550

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 29th day of August, 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.

Docket for Case No: 91-002924

Orders for Case No: 91-002924