STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NME HOSPITALS, INC., d/b/a PALMS ) OF PASADENA HOSPITAL, et al., )

)

Petitioner, )

)

vs. ) CASE NO. 94-313F

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION and GALENCARE, ) INC. d/b/a NORTHSIDE HOSPITAL, )

)

Respondents. )

)

FINAL ORDER GRANTING PALMS' MOTION FOR SANCTIONS AGAINST NORTHSIDE

This case was heard by Eleanor M. Hunter, Hearing Officer, of the Division of Administrative Hearings, Tallahassee, Florida.

APPEARANCES

For Petitioner, C. Gary Williams, Attorney At Law NME Hospitals, Michael J. Glazer, Attorney At Law Inc., d/b/a Palms Ausley, McMullen, McGehee,

of Pasadena Carothers & Proctor Hospital: Post Office Box 391

Tallahassee, Florida 32302

For Respondent, Richard Patterson, Attorney At Law Agency For Agency for Health Care Administration Health Care 325 John Knox Road, Suite 301 Administration: Tallahassee, Florida 32303-4131

For Respondent, James C. Hauser, Attorney At Law Galencare, Inc., Messer, Vickers, Caparello, d/b/a Northside Madsen, Lewis, Goldman & Metz Hospital: Post Office Box 1876

Tallahassee, Florida 32301 STATEMENT OF THE ISSUES

The issue is whether NME Hospitals, Inc., is entitled to reasonable expenses, including attorneys' fees, because a Motion filed in DOAH Case No. 93- 4897 by Galencare, Inc. was frivolous.

PRELIMINARY STATEMENT

On November 3, 1993, Galencare, Inc., d/b/a Northside Hospital ("Northside"), filed a Motion For Summary Recommended Order in Case No. 93-4897, to dismiss the certificate of need ("CON") application of NME Hospitals, Inc.,

d/b/a Palms of Pasadena Hospital ("Palms"). In the Motion, Northside alleged that Palms' Board Resolution is fatally flawed in describing the proposed project in one clause as an "open heart surgery program," and in another as an "adult open heart surgery program." The Motion alleged that another fatal defect is Palms' failure to use the word "certify" in the clause in which the applicant commits that "the Corporation shall accomplish the project on time and at or below the costs in the application."

On November 15, 1993, Palms' filed a Motion For Sactions Against Northside alleging that the Motion For Summary Recommended Order was frivolous.

Northside's Response was filed on November 17, 1993. On March 11, 1994, the Agency For Health Care Administration entered a Final Order in Case No. 93-4897, adopting the Recommended Order of Dismissal on other grounds, without comment on the Motion at issue. Upon the closing of Case No. 93-4897, without a resolution of the motion for sanctions, this case was opened for consideration of that matter.

FINDINGS OF FACT

1. Galencare, Inc., d/b/a Northside Hospital ("Northside") and NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital ("Palms") were litigants in administrative proceedings concerning the Agency For Health Care Administration's ("AHCA's") preliminary action on certificate of need applications.

   
   

2. Northside moved to dismiss Palms' application based on defects in the corporate resolution. The resolution is as follows:

   
   

   RESOLVED, that the Corporation be and hereby is authorized to file a Letter of Intent and Certificate of Need Application for an adult open heart surgery program and the designation of three medical/surgical beds as a Coronary

   Intensive Care Unit as more specifically described by the proposed Letter of Intent attached hereto.

   
   

   RESOLVED, that the Corporation is hereby authorized to incur the expenditures necessary to accomplish the aforesaid proposed project.

   
   

   RESOLVED, that if the aforedescribed Certificate of Need is issued to the Corporation by the Agency for Health Care Administration, the Corporation shall accomplish the proposed project within the time allowed by law, and at or below the costs contained in the aforesaid Certificate of Need Application.

   
   

   RESOLVED, that the Corporation certifies that it shall appropriately license and immediately there- after operate the open heart surgery program.

   
   

3. In its Motion, Northside claimed that the third and fourth clauses in the Resolution are defective, the third clause because it does not "certify" that the time and cost conditions will be met and the fourth for omitting "adult" to describe the proposed open heart surgery program. Northside relies on the language of the statute requiring that a resolution shall contain statements

   . . .authorizing the filing of the application described in the letter of intent; authorizing the applicant to incur the expenditures necessary

   to accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and at or below the costs contained

   in the application; and certifying that the applicant shall license and operate the facility.

   
   

   Subsection 408.039(2)(c), Florida Statutes.

   
   

4. Northside also relies on Rule 59C-1.008(1)(d), which is as follows:

   
   

   The resolution shall contain, verbatim, the requirements specified in paragraph 408.039 (2)(c), F.S., . . .

   
   

5. Palms' filed the Motion For Sanctions against Northside on November 15, 1993, pursuant to Subsection 120.57(1)(b)5 for filing a frivolous motion for an improper purpose, needlessly increasing the cost of the litigation, with no legal basis.

   
   

6. Northside's claims that the Resolution was defective were rejected in the Recommended Order of Dismissal of January 11, 1994, amended and corrected on January 26, 1994, and not discussed in AHCA's Final Order of March 15, 1994.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this proceeding, pursuant to Subsections 408.039(5) and 120.57(1), Florida Statutes.

   
   

8. Palms relies on the decisions in Mercedes Lighting v. Department of General Services, 560 So.2d 272 (Fla. 1st DCA 1990), and Martin Memorial Hospital Association v. HRS, 584 So.2d 39 (Fla. 4th DCA 1991).

   
   

9. In Mercedes Lighting, the First District Court construed 120.57(1)(b)5, as not requiring willfulness or bad-faith, but a test of reasonableness under circumstances. The Court also included factors such as ". . .whether the pleading was a plausible view of the law at the time." The Court cautions against determinations made in hindsight or based on the outcome of the case, and the possible chilling effect of the imposition of sanctions. The Court described a pleading as frivolous if the law is well-settled. After a factual analysis of Mercedes Lighting to a prior case on the same issue (omissions from competitive bids), the Court refused to find the pleading frivolous. The information omitted and potential effect of the omission was different in Mercedes Lighting from that considered in the prior case.

   
   

10. In this case, Palms cites Martin Memorial as having resolved the same legal issues raised in Northside's motion. In Martin Memorial, the Fourth District Court required the acceptance of a certificate of need application in which the board resolution used the term "within the cost guidelines," rather than "at or below the costs" contained in the application.

11. Northside also relies on Mercedes Lighting for the proposition that its motion need only be supported by a reasonably clear legal justification. The legal justification claimed is the requirement in Rule 59C-1.008(1)(d) that the resolution contain, verbatim, the requirements of Subsection 408.039(2)(c),

    Florida Statutes. However, the statutory and rule provisions were the same when Martin Memorial was decided as they are now, including the agency rule requiring that a resolution contain "verbatim" the requirements specified by statute.

    
    

12. When the facts are different from those in Martin Memorial, Northside asserts that it should file Motions based on any other deviations from the language in the statute, some of which may be material and others merely "technical" errors. Northside's claim that any deviation from the language in the statute could be material under the existing case law is not valid. The Court, in Martin Memorial, noted that the Department of Health and Rehabilitative Services ("HRS"), at the time it adopted the rule, took the position that verbatim did not mean word-for-word. Reasonable or substantial compliance is what the rule requires.

    
    

13. There is no reasonably clear legal justification for finding that "Resolved, that the Corporation shall . . ." is not substantially the same as "certifying that the applicant shall" meet the requirements.

    
    

14. There is also no plausible claim that the open heart surgery program referred to in the last clause of the resolution could be any other than the same adult open heart surgery program referred to in the first clause of the same resolution.

For the foregoing reasons, the Motion For Sanctions is GRANTED. Jurisdiction is retained to determine the amount of reasonable attorney's fees and expenses, if the parties fail to reach an agreement among themselves.

DONE AND ENTERED this 8th day of December, 1994, in Tallahassee, Leon County, 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 8th day of December, 1994.

COPIES FURNISHED:

Richard Patterson Senior Attorney

Agency for Health Care Administration

325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131

James C. Hauser, Esquire MESSER, VICKERS, CAPARELLO,

MADSEN, LEWIS, GOLDMAN & METZ

Post Office Box 1876 Tallahassee, Florida 32301

C. Gary Williams, Esquire Michael J. Glazer, Esquire Post Office Box 391 Tallahassee, Florida 32302

R. S. Power, Agency Clerk

Agency for Health Care Administration Atrium Building, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Harold D. Lewis, Esquire The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate procedure. Such proceedings are commenced by filing one copy of a Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 94-000313F

Orders for Case No: 94-000313F