Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.
For Petitioners: Frank P. Rainer, Esquire
Gary J. Clarke, Esquire Sternstein, Rainer & Clarke, P.A.
For Respondent: Stephanie A. Daniel, Esquire
M. Catherine Lannon, Esquire Chesterfield Smith, Jr., Esquire Tom Barnhart, Esquire, Esquire Phillip P. Quaschnick, Esquire Administrative Law Section
Grant P. Dearborn, Esquire Karen Varn Haber, Esquire Donna Riselli, Esquire
Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive
Whether the undisputed facts of this case support a Final Order of Dismissal against the Respondent, Agency for Health Care Administration.
This case is the progeny of a related matter before the Division of Administrative Hearings (Division or DOAH). In the related case, DOAH Case No. 04-0217RU, the Petitioners challenged an unpromulgated statement of Agency policy and maintained the matter should have been adopted by Agency rule. At the heart of the issue are the statewide rates for the Medicaid Developmental Disabilities Home and Community Based Services Waiver. In essence, the Petitioners maintained that the rates must be adopted by rule.
matter, the Respondent, Agency for Health Care Administration (Respondent or AHCA), announced its intention to proceed with rulemaking. Then DOAH Case No. 04-0217RU went into abeyance. The instant case evolved from the rulemaking process. The instant case was filed with the Division of Administrative Hearings on January 11, 2005.
When an agency announces its intention to engage in rulemaking, as herein, there are two guidelines set forth by law: that the agency will take action within 30 days to engage in the rulemaking, and that the agency will within 180 days adopt a rule addressing the subject matter. When the agency then proceeds expeditiously and in good faith to adopt a rule, the statute governing the underlying unpromulgated rule challenge affords considerable leeway. In fact, the adoption of the rule renders the underlying matter (in this case DOAH Case No. 04-0217RU) moot. Presumably, when the agency acts expeditiously and in good faith to proceed with rulemaking, the public’s interest is protected.
In this case, AHCA timely proceeded to rulemaking but did not, as a matter of law, afford the Petitioners with a point of entry to challenge the proposed rule. Accordingly, the rule that AHCA now deems to be an “existing rule,” must be set aside.
2005. A flurry of motions preceded the commencement of that hearing with both parties confounded as to the procedural status of the case. As will be more specifically addressed below, the Petitioners thought they filed a challenge to the proposed rule. The Respondent argued that the rule was an “existing rule” as a matter of law. Neither side correctly outlined the issues of the matter until the case was rescheduled and argued on March 3, 2005. At that time the parties were advised of the instant ruling. This Final Order of Dismissal is rendered to more fully outline the legal conclusions reached. The parties do not dispute the facts that follow.
On or about May 3, 2004, after the commencement of the hearing in DOAH Case No. 04-0217RU, AHCA announced it intended to engage in rulemaking for the subject matter addressed by the rule challenge (the statewide rates described above).
DOAH Case No. 04-0217RU went into abeyance pending the results of the agency’s rulemaking effort.
The Respondent scheduled a “rule development workshop” for June 8, 2004.
On or about October 8, 2004, AHCA published a notice in the Florida Administrative Weekly that scheduled the public
hearing in the cause, proposed a rate table, and gave persons interested in participating in the matter who wished to provide information regarding the “statement of estimated regulatory costs” to file such information within 21 days.
The Petitioners timely responded to the notice.
The Petitioners did, in fact, submit information regarding the statement of estimated regulatory costs. Whether or not AHCA was “required” to respond to the information provided by Petitioners is unknown. The Respondent did not notify the Petitioners that it was not “required” to consider the information.
The parties participated in a public hearing on the subject matter of the rule on November 2, 2004. The Respondent did not notify the Petitioners at the public hearing that it would not respond to the information regarding the statement of estimated regulatory costs.
In fact, AHCA elected to review the information and did prepare a response to the Petitioners. On December 23, 2004, AHCA issued the response to the information provided by the Petitioners regarding the statement of estimated regulatory costs. Whether or not the response was “adequate” under the law is not known. For purposes of this matter, it is undisputed that the Respondent tendered the response.
On December 27, 2004, AHCA filed the proposed rule
(designated in this record as Rule 59G-8.200) with the Secretary of State.
The notice of the filing of the instant rule with the Secretary of State was published in the Florida Administrative Weekly on January 14, 2005.
The subject rule became “effective” on January 16, 2005.
The Petitioners first challenged the “proposed rule” on January 11, 2005. At that time the publication of filing of the rule was not publicly available.
There was no published notice prior to January 11, 2005, to indicate that the proposed rule had been filed with the Secretary of State.
After the petition challenging the “proposed” rule was filed with the Division, the case was set for hearing for February 7, 2005. At that time the Respondent filed a series of motions seeking to continue the hearing, limit the Petitioners to specified issues, and to require a more definite statement. Essentially, the Respondent has maintained that the Petitioners did not timely file the proposed rule challenge and that the petition to challenge the existing rule is inadequate.
The Petitioners intended to challenge the proposed
rule and were unaware that the rule had been filed until January 14, 2005.
The Petitioners sought to amend their petition challenging the proposed rule.
At the hearing commenced on February 7, 2005, the procedural issues of the matter became more fully evident to all parties.
At one point during the proceedings, the undersigned asked counsel for the Respondent when the Petitioners were afforded a point of entry to challenge the proposed rule. While the Respondent maintained the Petitioners had not adequately alleged the factual basis for their challenge, the procedural issue of whether the rule at issue was a “proposed” rule verses an “existing” rule had not been fully deciphered. The Respondent’s legal position, as noted by counsel, continued to be that the rule was an existing rule, that the Petitioners had not fleshed-out their claims sufficiently to meet a due process burden, and that the Petitioners bear the burden of proof in this case.
The Petitioners entered an ore tenus motion for summary final order that was later reduced to writing and filed with the Division on February 22, 2005.
The Respondent was granted leave to respond to the motion and did so.
When the hearing was reconvened on March 3, 2005, both sides had fully addressed the issues of the case. Both sides were afforded additional argument on the matter.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. § 120.56, Fla. Stat. (2004).
As the movant, the Petitioners have been charged with the burden of proof as it relates to the Motion for Summary Final Order. As there are no genuine issues of material fact to be resolved by a formal hearing, this Final Order is entered as a matter of law.
Section 120.56, Florida Statutes (2004), outlines the procedures for challenging the validity of a rule or a proposed rule. Subsection (2) of the statute addresses challenges to proposed rules and provides:
Any substantially affected person may seek an administrative determination of the invalidity of any proposed rule by filing a petition seeking such a determination with the division within 21 days after the date of publication of the notice required by s. 120.54(3)(a), within 10 days after the final public hearing is held on the proposed rule as provided by s. 120.54(3)(c), within 20 days after the preparation of a statement of estimated regulatory costs required pursuant to s. 120.541, if applicable, or within 20 days after the date of publication of the notice required by s. 120.54(3)(d). The petition shall state with particularity the
objections to the proposed rule and the reasons that the proposed rule is an invalid exercise of delegated legislative authority. The petitioner has the burden of going forward. The agency then has the burden to prove by a preponderance of the evidence that the proposed rule is not an invalid exercise of delegated legislative authority as to the objections raised. Any person who is substantially affected by a change in the proposed rule may seek a determination of the validity of such change. Any person not substantially affected by the proposed rule as initially noticed, but who is substantially affected by the rule as a result of a change, may challenge any provision of the rule and is not limited to challenging the change to the proposed rule. [Emphasis added.]
Section 120.56(3), Florida Statutes (2004), provides:
A substantially affected person may seek an administrative determination of the invalidity of an existing rule at any time during the existence of the rule. The petitioner has a burden of proving by a preponderance of the evidence that the existing rule is an invalid exercise of delegated legislative authority as to the objections raised.
The administrative law judge may declare all or part of a rule invalid. The rule or part thereof declared invalid shall become void when the time for filing an appeal expires. The agency whose rule has been declared invalid in whole or part shall give notice of the decision in the Florida Administrative Weekly in the first available issue after the rule has become void. [Emphasis added.]
In a nutshell, the challenger to the “existing rule”
bears the burden of proof and must show the rule is an invalid exercise of delegated legislative authority. If the challenge precedes the filing (and transformation of the rule from “proposed” to “existing”), the agency has the burden to prove by a preponderance of the evidence that the proposed rule is not an invalid exercise of delegated legislative authority as to the objections raised. This shift in burden of proof is a material consequence as a matter of law.
Section 120.56(1)(c), Florida Statutes (2004), provides, in part:
...The failure of an agency to follow the applicable rulemaking procedures or requirements set forth in this chapter shall be presumed to be material; however, the agency may rebut this presumption by showing that the substantial interests of the petitioner and the fairness of the proceedings have not been impaired.
Section 120.541, Florida Statutes (2004), provides, in pertinent part:
(1) (a) A substantially affected person, within 21 days after publication of the notice provided under s. 120.54(3)(a), may submit to an agency a good faith written proposal for a lower cost regulatory alternative to a proposed rule which substantially accomplishes the objectives of the law being implemented. The proposal may include the alternative of not adopting any rule, so long as the proposal explains how the lower costs and objectives of the law will be achieved by not adopting any rule. If such a proposal is submitted, the
90-day period for filing the rule is extended 21 days.
(b) Upon the submission of the lower cost regulatory alternative, the agency shall prepare a statement of estimated regulatory costs as provided in subsection (2), or shall revise its prior statement of estimated regulatory costs, and either adopt the alternative or give a statement of the reasons for rejecting the alternative in favor of the proposed rule. The failure of the agency to prepare or revise the statement of estimated regulatory costs as provided in this paragraph is a material failure to follow the applicable rulemaking procedures or requirements set forth in this chapter. An agency required to prepare or revise a statement of estimated regulatory costs as provided in this paragraph shall make it available to the person who submits the lower cost regulatory alternative and to the public prior to filing the rule for adoption. (Emphasis added.)
It is undisputed the Petitioners filed information that sought to demonstrate to the Respondent an alternative to the statement of estimated regulatory costs. It is undisputed the Respondent did not notify the Petitioners that it did not deem such information “required” a response on their part.
The statute specifies that the agency “shall” take certain action. Implicit in the process is the requirement that the agency will consider information, make a determination of some kind, and report to the party (and presumably the public) submitting the alternative. Nevertheless, the Respondent provided a response to the Petitioners and then, without
waiting 21 days, filed the proposed rule with the Secretary of State. The chronological procession of the Respondent’s inappropriate activity was sufficiently set forth in the Petitioners’ pleadings in this cause to provide notice to the Respondent of the legal issue at hand. Moreover, to suggest that the Petitioners were less than forthcoming in the allegations (and thereby sought to blindside AHCA) is somewhat disconcerting given the Respondent’s blatant lack of notice regarding a point of entry to the Petitioners. Had the Respondent felt it was not “required” to respond to the statement of estimated regulatory costs, a simple notice of that decision would have cured all issues in this cause.
Because the rule was filed prematurely and with the Respondent’s certification to the Secretary of State that all time limitations prescribed by the statute had been complied with, that all statutory rulemaking requirements had been met, and that there were no administrative determinations pending on the rule, the matter was processed and became an “existing” rule without affording the Petitioners a point of entry to challenge the proposed rule. Accordingly, the Respondent failed to proceed with rulemaking in fairness and failed to consider the substantial interests of the Petitioners. The failure to follow applicable rulemaking procedures is a material violation of law.
