on March 17, 1977, in Room217, 1323 Winewood Boulevard, Tallahassee, Florida. As stipulatedby the parties, the hearing officially closed on April 27, 1977, the date of receipt of the transcript.
For Petitioner: James M. Bradshaw, Jr.
For Respondent: Douglas E. Whitney, Esquire
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
On June 2, 1976, respondent received petitioner'sapplication for a certificate of need to construct a new 91-bednursing home in Gainesville, Alachua County, Florida. (Exhibit 8)The proposed facility is to be located on Highway 26, about one-quarter mile from North Florida Regional Hospital and is to consist of sixty skilled and thirty-one intermediate care beds. At the time petitioner submitted its application, the 1975 Florida StatePlan for Construction of Hospitals and Related Medical Facilities indicated a need for 91 long-term care beds in Alachua County. (Exhibit 4)
By letter dated June 18, 1976, Mr. Robert J. Greene,Health Planner with the North Central Florida Health PlanningCouncil (HPC) notified respondent's medical facilities specialistthat the HPC deemed petitioner's application to be incomplete andrequested additional information. (Exhibit 5) By letter datedJune 22, 1976, respondent notified petitioner of the HPC's requestfor additional information and stated that upon receipt of the same, respondent would initiate the formal review of petitioner's proposal. (Exhibit 3)
By letter dated July 12, 1976, petitioner furnishedMr. Greene with the additional information requested. (Exhibit 9) A copy of this was received by respondent on July 21, 1976. (Exhibit A) On July 22, 1976, respondent acknowledged receipt, effective July 21, of petitioner's capital expenditure proposal and informedpetitioner that a decision by respondent would be rendered no later than October 19, 1976. (Exhibit 1) By letter dated August 3, 1976, Mr. Greene of the HPC also acknowledged receipt of petitioner's proposal and informed petitioner of the review schedule before the various committees of the HPC. The last date in the review schedule wasstated to be September 27, 1976, at which date the application was to go before the Executive Committee of the HSA. Attached to this letter was a notice that the Executive Committee of the HPC had adopted atits July 26, 1976, meeting new interim procedures and criteria for the review of new institutional health services. It was announced that these new procedures and criteria would be effective for all applications received after July 26, 1976. (Exhibit 1) Petitioner acknowledged this letter from Mr. Greene, stating its appreciation for "your courtesy [of] letting us know of the scheduled meeting dates this far in advance." (Exhibit D)
On August 19, 1976, a public hearing was held onpetitioner's application. Petitioner was notified at said hearing that its application would be reviewed at the Project Review Committee meeting on September 9, 1976. (Exhibit C)
By a document dated September 3, 1976, the Staff Report of the HPC concluded that petitioner's proposal for a 91-bednursing home failed to meet the criteria for issuance of a certificate of need. The reasons for this evaluation included the following:
"1. The reclassification of Medicaid nursing home patients pursuant to Federal Guidelines has reclassified 46 percent of such patients from skilled to intermediate care;
Consequent to the reclassification process (which occurs quarterly) in Alachua
County, 96 patients are in need of Intermediate I level of care;
Approximately 96 to 100 skilled nursing beds will be available due to reclassification;
The addition of 60 skilled beds by the applicant will unnecessarily duplicate available resources and is counter to the promotion of cost containment."
This Staff Report recognized that the Florida State Plan calledfor the addition of 91 long-term care beds, but pointed out thatsaid Plan does not relate to specific levels of care and does notaccess the need for intermediate care beds.
It was concluded that while petitioner's proposed 31 intermediate care beds would alleviate part of the need for the same in Alachua County, the addition of
60 skilled beds would duplicate currently existing facilities and run counter to the goal of cost containment. (Exhibit B)
On September 9, 1976, the Project Review Committee of the HPC disapproved petitioner's application. The ExecutiveCommittee of the HPC also recommended denial, finding that a needfor intermediate care facilities has been determined, that therewould be a duplication of skilled beds in Alachua County and accepting the HPC Staff Report. (Exhibit 7)
By letter dated September 28, 1976, the ExecutiveDirector of the HPC notified respondent of the "HPC's recommendation that petitioner's application for a certificate of need be denied. (Exhibit 1) Documents and materials relative to the project were forwarded to respondent.
In a letter dated October 19, 1976, respondent notified petitioner that it concurred with the HPC's recommendation of denial. The proposal was not favorably considered by respondent for the following reason: "lack of demonstrated need for skilled beds based on the Council's report." (Exhibit 6) Respondent's administrator testified that petitioner's proposal was found to be in conformity with the State Plan as to the number of long-term care beds needed in the area. However, extenuating circumstances regarding the categories of such beds needed in the area -- i.e, intermediate as opposed to skilled, were considered. Measuring this consideration as set forth in the report submitted to respondent by the HSA, against the other criteria set forth in federal and state law, it was determined that no demonstrated need for 60 skilled care beds existed. (Transcript, pp. 135-146)
Petitioner timely requested a fair hearing on therespondent's adverse determination and the undersigned was dulydesignated to conduct the hearing. The hearing was originally scheduled for December 16, 1976. At petitioner's request, two continuances were granted and the hearing was held on March 17, 1977. As noted above, the hearing officially was closed on April 27, 1977, the date of receipt of the transcript, as per stipulation of the parties.
CONCLUSIONS OF LAW
In addition to its contention that its application is in conformance with the applicable standards, plans and criteria for a certificate of need, petitioner claims that procedural defects performed by respondent mandate the approval of petitioner's capital expenditure proposal. In contrast, respondent contends that petitioner's proposal does not meet all the criteria for review and that, if anyprocedural defect did occur as to timeliness of the review process, petitioner waived such defect by its failure to timely object to the notified schedules for review.
Specifically, petitioner contends that, contrary to the applicable law:
respondent did not notify petitioner within 15 daysfrom receipt of its application that the application was deemed incomplete and that further information was required;
the HPC did not render its recommendation within 65days and the respondent therefore erred in considering the adverse recommendation of the HPC;
respondent did not notify petitioner of its adverse findings within 90 days.
Additionally, petitioner contends that the HPC's new review criteria adopted on July 26, 1976, should not have been applied to petitioner's application filed on July 21, 1976; that petitioner was not afforded, an opportunity to appear before respondent's governing body or advisory board and that respondent failed to make a determination as to conformity or nonconformity of petitioner's proposal to existing state plans.
Summarizing the facts set forth above, the important dates occurring in the review process of petitioner's application are as follows:
June 2, 1976 - receipt by respondent of
petitioner's application
June | 22, | 1976 | - notification by respondent that petitioner's application is incomplete |
July | 21, | 1976 | - receipt of completed application |
July | 22, | 1976 | - letter from respondent acknow ledging receipt of petitioner's application |
September 28, 1976 - letter from HSA to respondent
recommending denial
October 19, 1976 - letter from respondent to
petitioner denying application
Measuring these time spans against federal and state requirementspertaining to the review process illustrates three procedural irregularities.
While the state statutes (Florida Statutes ss381.493 -381.497) and regulations in implementation thereof (F.A.C. Chapter 10I-1) contain no specific time requirement for the respondent to notify an applicant that its application is incomplete, there is a specific federal requirement on this aspect of the review process. The rules and regulations in implementation of section 1122 of the Social Security Act (42 U.S.C. 1320a-1) provide in 42 C.F.R. sl00.106(a) (3) that if the notice of intention to make a capital expenditure (the application for a certificate of need) is found to be incomplete, the designated planning agency (respondent) shall so notify theapplicant within 15 days of receipt of the incomplete notice, advising him of the additional information required.
That section further provides that "where such timely notificition of incompleteness is provided . . ." the 90 day review period shall run from the date of receipt of the completed application. Thus, it was clearly a violation of the federal notification and review procedures for the respondent to wait 20 days to notify petitioner of the incompleteness of its capital expenditure proposal. Under federal law, it is only when the notification of incompleteness is timely provided to the applicant that the review period commences to run from the date of receipt of the additional information requested. Since such timely notice was not provided in this instance, it must be deemed that the review period commenced on June 2, 1976 -- the date respondent received petitioner's original application. Respondent's letter of denial dated October 19, 1976,
occurs 139 days from receipt of the application and is thus 49 days overdue. The failure of the respondent to complete the review process within 90 days (unless said period is otherwise properly extended) has the effect of a determination that the proposal is in conformity with the standards, plans and
criteria prescribed by federal and state law. There has been no showing in this case that the 15 day period for determining completeness of the application was properly extended.
Even if the respondent had given timely notification of incompleteness, there are other procedural defects in the review process which occurred in this case. Petitioner was notified by respondent that its completed capital expenditure proposal was received and acknowledged effective July 21, 1976. A copy of this letter was forwarded to the Executive Director of the HSA. The final recommendation of denial from the HSA was set forth in a letter to respondent dated September 28, 1976 -- 69 days from July 21, 1976. In this step of the review process, the federal regulations provide no time limit within which local review agencies must complete their review. However, the state statutes are abundantly clear on this point. F.S. s38l.494(5) (d) provides that the HSA must make its recommendation in writing to the respondent not more than
65 days from the receipt of the completed application. This period may be extended by thewritten mutual agreement of the applicant, the respondent and theHSA. F.S. s381.494(5)(e). Here, while petitioner acknowledged the review schedule set forth by the HSA, this cannot be construed as a "written mutual agreement" of the extension by the applicant, the respondent and the HSA. F.S. s381.494(5) (e) provides that if the HSA fails to make a decision within 65 days without a proper extension having been agreed upon, then it shall be deemed that the application is approved by the HSA. It thus appears that respondent violated the applicable state statues in relying upon the unfavorable recommendation provided by the HSA, when the law required that failure of the HSA to act within 65 days is deemed an approval by the HSA.
Finally, as to the time requirements for review, both state and federal law require a 90-day period for determination by the respondent, absent a valid extension. Failure to complete the review within this time limitation is construed as approval of the proposed capital expenditure. F.S. s381.494(6):
F.A.C. Chapter 10I-1.03 (a) (5); 42 C.F.R sl00.106(a) (4) The state and federal law differ somewhat as to what must actually occur within 90 days and when that 90-day period commences. The federal regulations speak in terms of "providing written notification" to the applicant within 90 days. This would seem to imply that the applicant must actually receive the respondent's decision no later than the ninetieth day. The state statutes and regulations speak in terms of "making a determination" or rendering a decision within 90 days. Thus, even if the review period were to be deemed to commence as late as July 21, 1976, a decisioncontained in a letter dated October 19, 1976, would probably meetthe state requirement of "making a determination" within 90 days, but would not meet the federal requirement of "providing notification" within 90 days. Inasmuch as the purpose for this procedure surrounding certificates of need is to enable the provider to obtain federal funds in reimbursement for needed capital expenditures, it would seem that the federal law on the subject should prevail. Indeed, the federal regulations state that the Agreement between the federal and state governments for implementation of s1122 shall provide for notification and review procedures as set forth in the federal law. 42 C.F.R. s100.106(a). In addition, there is the question of when the 90 day period begins to run. If the first day counted is the "date of receipt" of the completed application, as set forth infederal law [42 C.F.R. s100.l06(a)(3)], the letter dated October 19, 1976, falls on the 91st day. If it is the date the application is "declared to be complete" as set forth in Florida law [F.S. s381.494 (6)(c) and F.A.C.
Chapter 10I-1.03(a)(5)], then the denial letter was written on the 90th day. Again, it would seem that the federal law should prevail and the first day counted should be the date of receipt of the completed application. Otherwise, the respondent could indefinitely extend the review period on a completed application by simply failing to notify an applicant that its application was deemed complete.
In conclusion, it is found that the procedural deficiencies discussed above as to the timeliness of the review process occurring herein are sufficient to result in an automatic approval by respondent of the petitioner's capital expenditure proposal.
In light of the conclusions of law previously made, thepetitioner's remaining contentions regarding the review processare moot. However, they will be briefly discussed herein. It iscontended that the HSA applied to petitioner review criteria which were adopted after petitioner's review period had begun. This contention was refuted by the testimony of Mr. Robert J. Greene, a Planner with the HSA. Mr. Greene stated that what was adopted by the HSA on July 26, 1976, did not involve any variances in procedure, except with regard to the occurrence of the public hearing, and that there was no change in the substantive criteria upon which to evaluate applications. Hence, this contention is without merit.
Petitioner also contends that it was not afforded anopportunity to appear before respondent's governing body or advisory board. The undersigned has found nothing in the federal or state statutes or regulations which afford any right to an applicant to appear before any such body or board.
Finally, it is contended by petitioner that respondentfailed to make a determination as to the proposal's conformityor nonconformity with existing criteria, standards and plans.The testimony at the hearing indicates that respondent consideredthe State Plan indication for a need of 91 beds in Alachua Countyand also considered the HSA's report concerning the need for intermediate beds and the lack of need for skilled beds. It then measured these determinations against the federal and state criteria and standards for review and concluded that there was a lack of demonstrated need for skilled beds in Alachua County. A lack of demonstrated need is certainly one of the criteria for review for capital expenditure proposals, and thus respondent made a determination of nonconformity with the criteria for review.
