STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN M. JENKINS, REACHOUT GROUP, )

)

Petitioners, )

)

vs. ) CASE NO. 78-1265

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Michael R.N. McDonnell, Hearing Officer for the Division of Administrative Hearings, at 9:00 a.m., on August 10, 1978, in Room 297, Federal Building, U.S. Courthouse, 80 North Hughey, Orlando, Florida.

Petitioner, John M. Jenkins, appeared in his own behalf and on behalf of Reachout Group. Respondent was represented by Doug Whitney, Esquire, Department of HRS, District VII, Room 912, 400 West Robinson Street, Orlando, Florida.

Petitioner, Reachout Group (hereafter Reachout), seeks an extension of its previously issued Certificate of Need for the construction of an intermediate care facility for mentally retarded children (ICF/MR). Respondent, Department of Health and Rehabilitative Services (hereafter HRS) opposes the extension contending that Reachout does not meet criteria for the establishment of "good cause" for such an extension.

FINDINGS OF FACT

1. On June 6, 1977, HRS issued a Certificate of Need to Reachout for the construction of a 120 bed ICF/MR facility in Winter Garden, Florida, at an approximate cost of two million dollars. The certificate stated that its termination date was June 5, 1978, with "renewal possible only if applicant clearly demonstrates positive construction efforts."

   
   

2. On May 8, 1978, Reachout requested a six month extension of the Certificate of Need due to delays occasioned by what Reachout termed "changing thinking" in the field of mental retardation facility planning. On May 30, 1978, HRS responded to Reachout's request by requesting documented evidence that

   1) the project site had been secured, 2) firm financing for the project had been secured and 3) final construction plans had been submitted for review to HRS.

   
   

3. In its letter of June 2, 1978, Reachout submitted its position on these three points raised by HRS. Subsequently, on June 5, 1978, HRS denied the request for extension of Certificate of Need on the grounds that documented evidence had not been submitted with regard to the three points raised. Thereupon, Reachout requested this administrative proceeding.

4. Reachout is a general partnership organized by Mr. John M. Jenkins, Mr. William C. Demeteree and Mr. Hale Washburn. Mr. Washburn was the sole owner of the property constituting the project site and as of June 2, 1978, Reachout had agreed to finalize the purchase of the property from Mr. Washburn.

   
   

5. Reachout was pursuing a Federal Housing and Urban Development (hereafter HUD) insured loan under Section 232 of the National Housing Act. As of the date of the request for extension of time, Reachout was in the conditional commitment stage of its financing with a tentative date of June 15, 1978, set for receiving the conditional commitment. Conditional commitment is the second stage of a three stage processing procedure which must be accomplished prior to receiving the federal funding. It was estimated that the final stage would be completed sometime during the late summer with construction beginning shortly thereafter. The processing of the HUD application was delayed some two months by virtue of HRS's failure to file a HUD form on behalf of Reachout. While the delay was necessitated because of HRS's need for legal clearance to file the form, the delay was nonetheless occasioned by HRS and not Reachout.

   
   

6. In August, 1977, some two months after the Certificate of Need was originally issued, Reachout retained the services of Fred G. Owles as architect to design Reachout's ICF/MR. Upon assuming his employment, Mr. Owles contacted all State agencies within his knowledge that dealt with the treatment of the mentally retarded in order to secure their guidance during the design phase.

   
   

7. On November 14, 1977, as a result of his efforts, Mr. Owles received from the Retardation Program office of HRS draft proposals of final guidelines for ICF/MR physical plant designs. Mr. Owles was advised that the draft proposals were not expected to vary significantly from the final versions to be promulgated in the future. Mr. Owles subsequently resigned as Reachout's architect because he was, in his words, totally frustrated by the absence of State design criteria for the construction of an ICF/MR facility.

   
   

8. At the time of his resignation in the first week of March, 1978, Mr. Owles was aware that plans could be submitted in accordance with Nursing Home facility criteria, but Owles was not assured that such a design would please the Retardation Program office which, while not having licensing authority at that time, would be in a position of approving the use of Reachout's proposed facility for the transfer of State patients. Mr. Owles was advised by Ira Wagner, a medical facility's architect with the Office of Licensure and Certification in Jacksonville, that while approval would probably be forthcoming for a facility designed with standard nursing home guidelines, that did not mean that the facility would ultimately receive State patient referrals.

   
   

9. On March 17, 1978, Reachout contracted with Mr. James Fulcher as their new architect for the ICF/MR project. Mr. Fulcher immediately began diligent efforts to incorporate the latest ideas of the Retardation Program office in the plan design for the ICF/MR facility. Five days after being retained as architect, Mr. Fulcher submitted his first schematic design to HRS. On April 14, 1978, Fulcher received a letter from HRS listing seventeen (17) items to be resolved in the first schematic design. After two more telephone calls, Fulcher, on April 27, 1978, submitted the second schematic design incorporating responses to all of the seventeen (17) comments contained in the April 14th letter. On May 12, 1978, revised plans showing additional land added to the project were delivered to HRS.

10. On May 25, 1978, Mr. Charles Kimber, the director of the Retardation Program office of HRS advised Mr. Jenkins that the schematic plan did not express a concept consistent with their goal of placing clients in residential facilities that were non-institutional in nature and which reflected the characteristics of a home. Mr. Kimber expressed his desire for an early meeting to discuss alternative designs. As of the date of the hearing, Reachout had not received a letter of approval of its schematic design, although Ira Wagner assured Mr. Fulcher that such approval would be forthcoming.

    
    

11. It was Mr. Fulcher's opinion that upon receipt of the letter of approval of schematic design, the preliminary drawings and the final construction plans could be submitted and construction commenced within the six month extension requested in these proceedings.

    
    

    CONCLUSIONS OF LAW

    
    

12. HRS asserts that because Reachout has 1) not secured the site, 2) not secured further financing and 3) not submitted final construction plans, Rule 10-5.13(5), Florida Administrative Code, mandates the denial of the requested extension. That Rule states:

    
    

    1. An applicant desiring a 6 month validity extension to a Certificate of Need or Section 1122 approved capital expenditure should sub- mit such request to the DPA providing docu- mentation of good cause upon which such request is based. Criteria against which

       the DPA shall consider requests for such extensions are:

       1. If applicable, has a site been firmly secured?

       2. Has firm financing been secured?

       3. Have final construction plans for the proposed project been submitted for

          review by State licensing authorities (Office of Licensure and Certification)?

       4. Can it reasonably be expected that the project can actually be under construc- tion within the requested extension period?

          
          

13. Indeed, if the criteria contained in paragraphs (a), (b), (c) and (d) above, are considered conditions precedent to the issuance of an extension, then Reachout's request would have to be denied since, at best, Reachout has not yet secured firm financing nor submitted final construction plans. However, such an interpretation of the rule is inappropriate and would be inconsistent with the authority delegated to HRS by the Legislature.

    
    

14. Section 381.494(6)(f), Florida Statutes, provides that a Certificate of Need may be extended for an additional period of up to six months upon a showing of good cause by the applicant for the extension. No reference is made to the four criteria set forth in the previously quoted rule. In fact, those criteria do not relate to good cause for an extension but rather they relate to the question of whether a project will be completed within a reasonable period of time if an extension is granted. If the four criteria were considered mandatory, then the only time an extension could properly be issued is when HRS delayed approval of the final plans beyond the 12 month lifetime of the

    Certificate of Need. However, such a circumstance is only one of many in which good cause for an extension might possibly exist.

    
    

15. The wording of the rule itself supports such a construction. The rule does not state that such criteria shall be met prior to the granting of an extension but rather, says that DPA shall consider requests for extensions against the criteria. Accordingly, it is concluded as a matter of law that under Rule 10-5.13(5), Florida Administrative Code, good cause for an extension may properly be established by factors in addition to the four considerations contained in the Rule.

    
    

16. Turning now to the facts of the instant case, it is concluded that good cause for an extension has been established. While there have been some delays occasioned by the fault of Reachout, there have also been significant delays occasioned by HRS. Furthermore, the site has virtually been secured, firm financing has virtually been secured and final construction plans can reasonably be expected to be submitted and construction can reasonably be expected to commence within the requested extension period.

    
    

17. It would be an unnecessary and imprudent waste of money, time and effort to require Reachout to begin again the Certificate of Need process. Since only one extension is authorized by statute, if construction is not commenced within such extension, Reachout will then be required to resubmit its application for Certificate of Need. Therefore, sufficient motivation remains for Reachout to pursue diligently the completion of the project.

    
    

18. It is further concluded, as a matter of law, that the running of the six months period of extension is tolled by the filing of a request for a hearing with the Division of Administrative Hearings. It is, accordingly,

RECOMMENDED that an extension of time to the Certificate of Need be granted for a period of 6 months from the date of final order less the seven days that expired between the termination of the Certificate of Need and Reachout's request for an administrative hearing.

DONE and ENTERED this 20 day of October, 1978, in Tallahassee, Florida.

MICHAEL R. N. McDONNELL

Hearing Officer

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32399-1550

(904) 488-9675

COPIES FURNISHED:

Mr. John M. Jenkins Reachout Group

101 Trinity Lakes Drive

Sun City Center, Florida 33570

Mr. John M. Jenkins 3215 Rantoul Lane

Sanford, Florida 32771

Mr. Nathaniel W. Ward

Medical Facilities Specialist 1323 Winewood Boulevard

Building 2, Room 220

Tallahassee, Florida 32301

Doug Whitney, Esquire Department of HRS District VII

Room 912

400 West Robinson Street Orlando, Florida 32801

Mr. Art Forehand Medical Facilities Department of HRS

1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 78-001265

Orders for Case No: 78-001265