STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALACHUA GENERAL HOSPITAL, INC., )

)

Petitioner, )

with )

) TALLAHASSEE REGIONAL MEMORIAL ) MEDICAL CENTER, INC. and ) MARION COUNTY HOSPITAL DISTRICT )

)

Intervenors, )

)

vs. ) CASE NO. 79-1430RX

) DEPARTMENT OF COMMUNITY AFFAIRS, )

)

Respondent, )

with )

) NORTH FLORIDA REGIONAL HOSPITAL, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on 14 August 1979 at Tallahassee, Florida.

APPEARANCES

For Petitioner: Robert M. Rhodes, Esquire

Post Office Box 1876 Tallahassee, Florida 32302

and

William C. Andrews, Esquire 1133 Northwest 23rd Boulevard Gainesville, Florida 32601

For Intervenor,

Tallahassee Regional John D. Buchanan, Jr., Esquire Memorial Medical Post Office Drawer 1049 Center, Inc.: Tallahassee, Florida 32302

For Intervenor, James A. Cornelius, Esquire Marion County William G. 0'Neill, Esquire Hospital District: Post Office Box 253

Ocala, Florida 32670

For Respondent: C. Laurence Keesey, Esquire

Staff Attorney

Department of Community Affairs

204 Carlton Building Tallahassee, Florida 32301

For Intervenor, Daniel H. Jones, Esquire North Florida Jon C. Moyle, Esquire

Regional Post Office Drawer 3888

Hospital: West Palm Beach, Florida 33402

By Petition to determine the invalidity of a rule filed 6 July 1979, Alachua General Hospital, Inc., (AGH), Petitioner, seeks to have the binding letter of development of regional impact (DRI) determination (BLID) issued by the Division of State Planning, whose functions have been transferred to Department of Community Affairs, Respondent, dated June 22, 1979, declared a rule and invalid. As grounds for the rule determination it is alleged that the BLID interprets Section 380.06(15), Florida Statutes, and thereby fits the definition of a rule contained in Section 120.52(14), Florida Statutes. As grounds for the invalidity of the rule it is alleged that the procedural steps required by Chapter 120 for rule adoption were not followed.

North Florida Regional Hospital's (NFRH) Petition to intervene in these proceedings was granted in Order entered 27 July 1979.

Both NFRH and Respondent moved to dismiss the Petition on grounds that Petitioner does not have standing to bring this action. These motions were denied at the hearing.

At the commencement of the hearing Tallahassee Memorial Regional Medical Center, Inc. and Marion County Hospital District petitioned to intervene in these proceedings. NFRH and Respondent objected to these petitions to intervene due to lack of standing. This objection was overruled and the petitions to intervene were granted. During the proceedings which followed neither of these intervenors presented evidence or questioned witnesses. For reasons noted in Conclusions of Law, the objections to their intervention should have been sustained.

The parties stipulated that the procedural requirements established by Section 120.54, Florida Statutes, for the adoption of a rule were not followed by Respondent when the BLID of 22 June 1979 was issued. Thereafter, one witness was called and five exhibits were admitted into evidence. There is little, if any, dispute regarding the facts here involved.

FINDINGS OF FACT

1. On May 25, 1979 NFRH requested a binding letter of determination of a Development of Regional Impact status for a proposed 97-bed addition to the hospital at Gainesville, Florida (Exhibit 1). In this request NFRH suggested that the 97-bed addition was exempted by Section 380.06(15), Florida Statutes, from the other provisions of Section 380.06 and included evidence to show that NFRH was constructed prior to 1973 and had thereby obtained a vested status.

   
   

2. Petitioner sought to intervene in that proceeding and requested a formal hearing before the BLID issued. This was denied by Respondent.

3. In response to NFRH request for this binding letter of interpretation, Respondent, on 22 June 1979, issued the letter in the format of a final order as prescribed by Section 120.59, Florida Statutes, containing findings of fact, conclusions of law and an order that the proposed addition of 97 beds to NFRH at Gainesville did not have to comply with the review requirements of Section 380.06, Florida Statutes, applicable to developments of regional impact.

   
   

4. Petitioner has appealed the issuance of this final order to the district court of appeal. This action to challenge the BLID as a rule was then filed.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of these proceedings.

   
   

6. Respondent and NFRH contend Petitioner and Intervenors are without standing to contest the BLID. In ruling on the motions to dismiss for lack of standing the allegation by Petitioner that the BLID is a rule is assumed to be true. Petitioner alleges that the addition of 97 beds to the NFRH facility will create an adverse economic impact on Petitioner and Petitioner will be substantially affected if the additional beds are added. This is a sufficient allegation to meet the test of standing established by Florida Department of Offender Rehabilitation v. Jerry, 353 So.2d 1230 (Fla. 1st DCA 1978) and State Department of Health and Rehabilitative Services v. Alice P. et al., 367 So.2d 1045 (Fla. 1st DCA 1979) viz. that Petitioner is substantially affected by the [assumed] rule.

   
   

7. A careful reading of HRS v. Alice P., supra, raises serious questions whether the intervenors, Tallahassee Memorial Regional Hospital, Inc. and Marion County Hospital District, have alleged a substantial interest to accord them standing. The BLID affects only NFRH and authorizes NFRH to proceed with a 97- bed addition without going through the DRI requirements of Section 380.06. No allegation was made that this addition to NFRH would adversely affect these intervenors. Their position was that the "rule" would be applicable to other hospitals located in their area and these other hospitals might likewise be able to expand their bed capacity without going through the DRI process. The fact that these intervenors "might be" adversely affected by the "rule" in the future is not sufficient to create standing to attack this "rule". In this connection these would-be intervenors appear in exactly the same position as the not- pregnant women in Alice P. who were held to be without standing to attack the rule cutting off state funds for abortions. The error in allowing these parties to intervene, under the circumstances, could not prejudice either NFRH or Respondent.

   
   

8. The primary issue to be considered here is whether or not the BLID under attack is a rule.

   
   

9. Petitioner's contention is predicated almost entirely on the definition of rule in Section 120.52(14), Florida Statutes, which provides in pertinent part:

   
   

   "Rule means each agency statement of general applicability that implements, interprets, or describes law or policy . . .

10. Because the BLID in the Conclusions of Law interprets Section 380.06(15), Florida Statutes, Petitioner contends it is a rule. Respondent and Intervenor NFRH contend that the BLID is an order.

    
    

11. Rule challenges have received considerable judicial attention. In Price Wise Buying Group v. Nuzum, 343 So.2d 115 (Fla. 1st DCA 1977) an agency statement issued as a declaratory statement which announced a change to an existing policy was held to be a rule and invalid because not properly promulgated.

    
    

12. The Nuzum case was severely limited by State Department of Health and Rehabilitative Services v. Barr, 359 So.2d 503 (Fla. 1st DCA 1978), which also involved an attack on a declaratory statement in a rule challenge proceeding. In Barr the court held, at p. 505:

    
    

    We have recognized that Section 120.56

    rule-challenge proceedings are appropriate to test and declare invalid informal agency policy declarations of general applicability which were promulgated without the requisite formality of rules. State Department of Administration v. Stevens, 344 So.2d 290 (Fla. 1st DCA 1977). But neither the letter nor the purpose of the Act justify subjecting formal agency statements, in declaratory statements rendered pursuant to Section 120.565, or in orders entered pursuant to Sections 120.57 and .59 to such collateral scrutiny and review by hearing officers.

    Section 120.565 declaratory statements constitute "final agency action" and they are reviewable, in the sane way as orders entered in Section 120.57 proceedings, by timely petition in a district court of appeal Section 120.68. Nothing in the Act gives hearing officers collateral review power over final agency action taken after regular proceedings under the provisions of the Act. See State ex rel. Greenburg v. Florida State Board of Dentistry, 297 So.2d 628 (Fla. 1st DCA 1974) cert. dismissed 300 So.2d 900 (Fla.

    1974).

    
    

13. McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977), also involved agency policies. Therein the court stated at p. 581, 582:

    
    

    While the Florida APA thus requires rulemaking for policy statements of general applicability, it also

    
    

    recognizes the inevitability and desirability of refining incipient agency policy through adjudication of individual cases. There are quantitative limits to the detail of policy that can effectively be promulgated as rules, or assimilated; and even the agency that

    knows its policy may wisely sharpen its purposes through adjudication before casting rules.

    
    

    By requiring agency explanation of any deviation from "an agency rule, an officially stated policy, or a prior agency practice," Section 120.68(12)(b) recognizes there may be "officially stated agency policy" otherwise than in "an agency rule"; and, since all agency action tends under the APA to become either a rule or an order, such other "officially stated agency policy" is necessarily recorded in agency orders. [Citations omitted].

    
    

14. The distinction between an agency rule and an order was considered in Department of Commerce v. Matthews, 358 So.2d 256 (Fla. 1st DCA 1978) wherein the court quoted Mr. Justice Holmes in Prentis v. Atlantic Coast Line Co., 211 U.s 210.226, 29 S.Ct. 67, 69, 53L.Ed. 150 (1908) as follows:

    
    

    A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. This is its purpose and end. Legislation, on the other hand, looks to the future and changes existing conditions by making a new rule to be applied thereafter to all or some part of those subject to its power.

    
    

15. The issuance of the binding letter of DRI determination is provided for in Section 380.06(4) which provides in pertinent part:

    
    

    1. If any developer is in doubt whether his proposed development would be a development of regional impact, whether his rights have vested pursuant to subsection (12), or whether a proposed substantial change to a development of regional impact [concerning which rights had] previously vested pursuant to subsection (12) would divest such rights, he may request a determination from the state land planning agency. Within 60 days of the receipt of

       such request, the state land planning agency shall issue a binding letter of interpretation with respect to the proposed development. Binding letters of interpretation issued by the state land planning agency shall bind all state, regional, and local agencies, as well as the developer.

       
       

16. The binding letter here involved resulted from an investigation and it declared and enforced liabilities as they stand on present or past facts and under laws then in existence. As such it has the characteristics of an order

    which determined issues. Cf. South Florida Regional PlannIng Council v. Florida Land and Water Adjudicatory Commission, 372 So.2d 159 (Fla. 3rd DCA 1979). If the interpretation of Section 380.06(15) here announced is to be followed in subsequent similar cases, this is stare decisis and not res judicata. As stated by the court in Matthews, supra:

    
    

    While Section 120.52(14) defines rule in

    part as an amendment or repeal of a rule, the testimony given by the administrator of the labor and wage section, as to the agency's inconsistent policy, does not meet the primary requirement of Section 120.52(14) that such deviation be a statement of general applicability.

    
    

    Likewise the BLID here applies only to NFRH and does not have general applicability.

    
    

17. Here no deviation from previous policy was claimed. The gist of the Petition is that in the BLID Respondent interpreted Section 380.06(15) which provides:

    
    

    Any proposed hospital which has a designed capacity of not more than 100 beds is exempt from the provisions of this section.

    
    

18. The interpretation was not inconsistent with prior policy. To the contrary, since the above quoted provision became law in 1975 at least 20 hospitals with 100 beds or more have added up to 100 additional beds without even a by-your-leave to the state planning agency. The interpretation of Section 380.06(15) by Respondent that the exemption from the DRI requirements applies to additions to existing hospitals as well as new construction is a valid statutory interpretation by the agency charged with the administration of the statute. As such It is entitled to great weight.

    
    

19. It is to be noted that orders, pursuant to Section 120.59, are required to contain findings of fact and conclusions of law. The vast majority of these orders, as well as recommended orders upon which most final orders are based, in the conclusions of law sections, involve an interpretation of statutes and am application of the facts of the particular case to the applicable statutory provisions. If the contention of Petitioner, that every agency statement which interprets a law is ipso facto a rule, was followed, most orders would be subject to collateral attack as rules. Hearing officers have no jurisdiction to review orders which constitute final agency action. State Department of HRS v. Barr, supra. The BLID here involved constituted final agency action and Petitioner properly appealed that order to the district court of appeal.

    
    

20. In many respects the instant case is sui generis. Petitioner has successfully tolled NFRH's proposed expansion of its hospital in earlier proceedings in which it contested, in a hearing involving the Department of Health and Rehabilitative Services, the petition of NFRH for exemption from the certificate of need requirements. That proceeding, which resulted in NFRH being held exempt from the certificate of need requirements, because it met the exemption for those hospitals submitting plans before July 1, 1973, was followed by a hearing to determine if the them proposed 150-bed addition was a Development of Regional Impact. The recommended order which found the parties

    had stipulated that the certificate of need determination would be dispositive of the DRI determination was rejected by the Division of State Planning on the grounds that they had not joined in the stipulation, even though they were represented by counsel at the prehearing conference where this stipulation was entered and their counsel participated in the discussions leading to the stipulation. It was after the case had been returned for a hearing for facts to be presented as to whether the addition was a DRI that NFRH reverted hack to earlier plans for a 97-bed addition and requested the binding letter of interpretation which was issued and is here being challenged.

    
    

21. This case is unique also because the exemption from certificate of need requirements for projects for which plans had been filed with HRS prior to

    1 July 1973 (Section 381.497) expired 1 July 1979. Accordingly, any hospital desiring to increase its bed capacity by up to 100 beds in the future, while exempt from the DRI proceedings, will still have to obtain a certificate of need to which other hospitals, like the Petitioner and would-be intervenors here, could object and request a hearing.

    
    

22. From the foregoing it is concluded that neither the Tallahassee Memorial Regional Medical Center, Inc. nor the Marion County Hospital District have standing to intervene in these proceedings. It is further concluded that the binding letter of interpretation dated 22 June 1979 which found that the 97- bed addition to NFRH was exempt from the requirements of Section 380.06 was an order and not a rule.

It is therefore

ORDERED that the Petitions of Tallahassee Memorial Regional Medical Center, Inc. and Marion County Hospital District for leave to intervene be denied, and that the petition of Alachua General Hospital to have the BLID issued 22 June 1979 declared invalid be dismissed.

Entered this 12th day of September, 1979.

K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

Robert M. Rhodes, Esquire P. 0. Box 1876

Tallahassee, Florida 32302

William C. Andrews, Esquire 1133 Northwest 23rd Boulevard Gainesville, Florida 32601

John D. Buchanan, Jr., Esquire

P. 0. Drawer 1049 Tallahassee, Florida 32302

James A. Cornelius, Esquire and

William G. 0'Neill, Esquire

P. 0. Box 253

Ocala, Florida 32670

C. Laurence Keesey, Esquire Staff Attorney

Department of Community Affairs

204 Carlton Building Tallahassee, Florida 32301

Docket for Case No: 79-001430RX

Orders for Case No: 79-001430RX