Judges: SHARYN L. SMITH
Agency: Agency for Health Care Administration
Latest Update: Mar. 29, 1984
Summary: Department of Health and Rehabilitative Services (DHRS) was wrong in awarding Certificate of Needs (CONs) to previous applicants without reviewing applications.
82-1698STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
GULF COURT NURSING CENTER, )
)
Petitioner, )
)
vs. ) CASE NO. 82-1698
)
DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, OFFICE ) OF HEALTH PLANNING AND DEVELOPMENT, ) PROVINCIAL HOUSE OF FLORIDA, INC., ) and BEVERLY ENTERPRISES, INC., )
)
Respondent. )
) GULF COURT NURSING CENTER, )
)
Petitioner, )
)
vs. ) CASE NO. 83-2159
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
)
and )
)
PROVINCIAL HOUSE OF FLORIDA, ) and BEVERLY ENTERPRISES, INC., )
)
Intervenors. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by is duly designated Hearing Officer Sharyn L. Smith, held a formal hearing in the above- styled cases on July 25, 1983, in Tallahassee, Florida. The following appearances were entered:
APPEARANCES
For Petitioner: John C. Dent, Jr., Esquire
DENT PFLUGNER ROSIER AND HENDRICKS
2 North Tuttle Avenue Sarasota, Florida 33577
For Respondent: Steven Huss, Esquire
Department of Health and Rehabilitative Services
1317 Winewood Boulevard
Tallahassee, Florida 32301
For Intervenors: E. G. Boone, Esquire and
Susan Lee Stockham, Esquire
E. G. BOONE, P.A. 1001 Avenida del Circo Post Office Box 1596
Venice, Florida 34284
The issue for determination at the final hearing was whether the Department of Health and Rehabilitative Services properly entered into a stipulation to grant a certificate of need to Intervenors Provincial House of Florida and Beverly Enterprises, Inc., to construct a 120-bed nursing home facility in Lee County, Florida, from beds allocated from a health plan which was established subsequent to their application, while the Petitioner Gulf Court's application for the same beds was pending before the Department.
At the final hearing, Petitioner's Exhibits 1-7 were offered and admitted into evidence. Gene Nelson, Administrator of the Office of Comprehensive Planning, Gary Clark, formerly Deputy Assistant Secretary for Health Planning, and Thomas T. Porter, Medical Facility Consultant Supervisor and all employees of the Department of Health and Rehabilitative Services testified for the Intervenor.
Proposed Recommended Orders containing findings of fact have been submitted by the parties and considered in the preparation of this Recommended Order.
When the parties' findings of fact were consistent with the weight of the credible evidence introduced at final hearing, they were adopted and are reflected in this Recommended Order. To the extent that the findings were not consistent with the weight of the credible evidence, they have been either rejected, or when possible, modified to conform to the evidence. Additionally, proposed findings which were subordinate, cumulative, immaterial or unnecessary have not been adopted.
FINDINGS OF FACT
Prior to the hearing, the parties filed a Pretrial Stipulation which essentially sets forth the following facts contained in paragraphs 1 through 9:
The Intervenors Beverly Enterprises, Inc. (hereafter "Beverly"), and Provincial House of Florida (hereafter "Provincial House"), filed their applications for certificates of need on March 18, 1981, and January 28, 1981, respectively.
At the time Beverly and Provincial House filed their applications for 120-bed nursing home facilities, they were batched together with Health Care Management, Inc. (hereafter "Health Care"). Shortly thereafter, Health Care was granted a certificate of need to construct a 120-bed nursing home facility and Beverly's and Provincial House's applications were denied on July 8, 1981, and June 3, 1981, respectively.
Beverly and Provincial House timely filed petitions with the Division of Administrative Hearings contesting the denial of their respective applications.
By Stipulation dated December 29, 1981, Beverly and Provincial House were granted certificates of need which gave each the right to construct a 96- bed nursing home facility. This Stipulation was later amended on February 21, 1982, to authorize construction of two 72-bed nursing homes in Lee County, Florida.
Based upon the new 1982 Health Systems Plan for Lee County, an additional 143 beds were determined to be needed for Lee County for the year 1985.
Neither Beverly nor Provincial House resubmitted their applications when the new bed need was established. Rather, as part of the settlement in Provincial House, Inc. v. Department of Health and Rehabilitative Services, Case No. 81-1793, and Beverly Enterprises v. Department of Health and Rehabilitative Services, Case No. 81-2037, the certificates of need were granted based upon receipt of ". . . updated population figures which demonstrated additional need for nursing home beds in the County." Petitioner's Exhibit 3. At the time the Department entered into the Stipulation with Beverly and Provincial House, it did not consider Gulf Court's then pending application.
The sole reason the certificate of need was denied to Gulf Court Nursing Center on March 30, 1982, was that there were no longer beds available and there was no need as a direct result of granting the two certificates of need to Beverly and Provincial House.
Since Gulf Court's application was never simultaneously reviewed or considered by the Department with either Beverly or Provincial House's applications, a comparative hearing was not held in this case.
Gulf Court, Beverly and Provincial House all meet the criteria for issuance of a certificate as set forth in Rule 10-5.11, Florida Administrative Code.
The Respondent Department routinely awards certificates of need on a first-come, first-serve basis to applicants denied certificates due to a lack of need in a previous cycle, who file Chapter 120 appeals, without reviewing pending applications filed in the current cycle.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Florida Statutes.
In this proceeding, the Intervenors and the Department contend that the Petitioner's application for nursing home beds was not entitled to a comparative hearing or competitive review with the nursing home bed applications of Beverly and Provincial House since the applications were filed in different batching cycles, and, accordingly are not mutually exclusive and simultaneous or nearly simultaneous. As such, the Department and Intervenors assert that this case could properly have been settled while it was pending before the Division without consideration of the Petitioner's application which at the time of the settlement had been filed with the Department.
Section 381.494(5), Florida Statutes, requires the Department to provide by rule for applications for certificates of need to be submitted on a timetable or cyclical basis received on a timely basis and considered in relation to other applications for similar types of services facilities or equipment no less often than four times a year. Rule 10-5.08(1), Florida Administrative Code, implements Section 381.494(5), Florida Statutes, and establishes time periods or "batching cycles" in which applications for certificates of need are to be submitted to the Department for competitive review.
The Department has apparently construed the batching rule to preclude consideration of subsequent competitive applications in the same service area for identical services, even when administrative appeals essentially negate the time cycles set forth in the rule. Under the Department's interpretation, an applicant who is denied on the basis of need and files an administrative appeal is entitled to first consideration without regard to any subsequent applicants for the same services or contemporaneous applicants who failed to file an appeal, when a determination is made that a need exists. While such an interpretation of the rule facilitates the administration of the certificate of need program by limiting the choices available to the Department, it is inconsistent with the overall regulatory scheme to contain health care costs by competitively examining similar health care proposals for cost-effectiveness. See Biomedical Applications v. Department of Health and Rehabilitative Services, 370 So.2d 19, 25 (Fla. 2d DCA 1979).
Section 381.493(3), Florida Statutes, sets forth the legislative intent of providing health services and planning as follows:
It is imperative to plan the rendering of health services in order to meet and provide for community health needs in a responsible and effective manner. Every
consideration shall be given to the elimination of unnecessary duplication of health services and the provision of health services which are not currently available or which are insufficiently provided within the community.
Health services are provided in a "responsible and effective" manner when the best services are provided at the lowest cost. Biomedical Applications, supra. Comparing pending applications which the Department knows to be competitive prior to awarding a certificate of need will permit consideration of cost-effectiveness.
In the instant case, the Petitioner was entitled to an initial competitive review with the Intervenors once the Department determined that a newly discovered need for nursing home beds existed in Lee County. If the Department determined that Beverly and Provincial House's applications provided the most cost-effective delivery of services in conformity with law, the certificate should properly be awarded to them. If, however, Gulf Court's pending proposal was, following examination, superior it would be correctly entitled to the award. On the record before the Hearing Officer, the only evidence presented concerning why Beverly and Provincial House were awarded the certificates without regard to Gulf Court's proposal which sought the same beds, was that the Intervenors were first in line based on their appeal of the initial
denial, and, therefore entitled to the beds. This is simply not a consideration recognized by the statute or the rules and in certain cases, would result in the award of a certificate to the least cost-effective applicant contrary to the apparent intent of the Legislature.
All the parties agree that it has been repeatedly recognized that administrative proceedings are de novo in nature and it is, therefore, appropriate to consider changed facts and circumstances such as additional bed need which arises after an initial denial, in a certificate of need proceeding. However, under a de novo concept all relevant changed facts and circumstances must be considered including the existence of another competing applicant. The Department cannot pick and choose which changed facts it wishes to consider in awarding a certificate of need following an administrative appeal of an initial denial.
Requiring the Department to comparatively review the Petitioner's pending application for nursing home beds with the Intervenors prior to awarding a certificate, is consistent with the legitimate policy objectives recognized in Biomedical Applications, supra, at 23, as follows:
We agree that Ashbacker should apply whenever an applicant is able to show that the granting of authority to some other applicant will substantially prejudice his application. Great Western Packers Express v. United States, ICC, 273 F.Supp. 347 (D. Col. 1966).
In such a case fairness requires that the agency conduct a comparative hearing at which competing applications are considered simultaneously. Only in that way can each party be given a fair opportunity to persuade the agency that its proposal would serve the public interest better than that of its competitor. Such an opportunity is not afforded by merely allowing an applicant to intervene in the proceedings pertaining to a competing application since the merits of the intervenor's proposal are not thereby presented for comparative consideration.
The court further stated at p. 24:
We agree that a reviewing court, in considering whether a comparative hearing should have been afforded by an administrative agency should recognize there are always three competing interests involved: (1) the interest of the applicant in obtaining consideration of its proposal, recognized in the law requiring the agency to conduct a hearing before rejecting a proposal; (2) the interest of the agency [and the public] in establishing orderly procedures that permit agency decisions to be made in a timely and efficient manner; and
(3) the interest of the public in assuming
that the agency makes the best choice when several alternatives are available.
Although the Department's interpretation of the batching rule clearly furthers the second interest identified in Biomedical of providing orderly agency procedures, it does little to further the other remaining interests which require full and fair consideration of all available alternatives. The batching rule should not be interpreted to overrule the doctrine established in Ashbacker Rado Corp. v. FCC, 326 U.S. 327, (1945) and followed in Biomedical, that "if the grant of one effectively precludes the other, the statutory right to a hearing which Congress has accorded applicants before denials of their applications becomes an empty thing." Ashbacker, supra, at 150.
The instant case presents a narrow exception to the general procedures utilized by the Department in awarding certificates of need to an applicant who has administratively appealed an initial denial of an application. It is only necessary in this case to determine that the Department was required to competitively consider the Petitioner's pending application with the Intervenors prior to settling a case by awarding a certificate to the Intervenor when the direct effect of the settlement and issuance was to automatically deny the Petitioner's pending application due to lack of need in the service district.
RECOMMENDATION
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED:
That the Department of Health and Rehabilitative Services enter a Final Order finding that, under the circumstances presented in this case, Gulf Court is entitled to a comparative and competitive review with Provincial House and Beverly Enterprises, Inc.
DONE AND ENTERED this 10th day of February 1984 in Tallahassee, Florida.
SHARYN L. SMITH
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 10th day of February 1984.
COPIES FURNISHED:
John C. Dent, Jr., Esquire
DENT PFLUGNER ROSIER AND HENDRICKS
2 North Tuttle Avenue Sarasota, Florida 33577
Steven Huss, Esquire Department of Health and
Rehabilitative Services 1317 Winewood Boulevard
Tallahassee, Florida 32301
G. Boone, Esquire
Susan Lee Stockham, Esquire 1001 Avenida del Circo
Post Office Box 1596 Venice, Florida 32484
Alicia Jacobs, General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
David H. Pingree, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
GULF COURT NURSING CENTER,
Petitioner,
vs. CASE NO. 82-1698
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, OFFICE
OF HEALTH PLANNING AND DEVELOPMENT, PROVINCIAL HOUSE OF FLORIDA, INC., and BEVERLY ENTERPRISES, INC.,
Respondent.
/ GULF COURT NURSING CENTER,
Petitioner,
vs. CASE NO. 83-2159
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent,
and
PROVINCIAL HOUSE OF FLORIDA, and BEVERLY ENTERPRISES, INC.,
Intervenors.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled cases has submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.
PDCF - meaning HRS Office of Community Medical Facilities - filed Exceptions to the Recommended Order. A copy of PDCF's Exceptions is attached hereto as Exhibit A.
Provincial House/Beverly - meaning both Provincial House of Florida, Inc. and Beverly Enterprises, Inc. - filed Exceptions to the Recommended Order. A copy of Provincial House/Beverly's Exceptions is attached hereto as Exhibit B.
HRS STATEMENT AND RULING ON THE EXCEPTIONS
(AA) PDCF Exceptions (1) through (9) - These Exceptions are sustained. They present a clear and correct analysis of the law relative to formulating final agency action by way of a Section 120.57 hearing. They are correct in demonstrating that HRS has authority to enter into the Stipulations made part of the record herein.
(AA) PDCF Exception (10) - The application for a certificate of need submitted by the Petitioner is not in the same or a consecutive review cycle with the applications submitted by Provincial House and Beverly. Applications in different review cycles are neither simultaneous nor near simultaneous. No comparative review is required. The Exception is sustained. The contrary recommendation by the Hearing Officer is rejected.
(BB) Provincial House/Beverly Exceptions - The Exception is correct. The proper conclusion of law is that HRS has authority to enter into the Stipulation granting Certificates of Need to Provincial House and Beverly. The protest and petition of Gulf Court Nursing Center for a comparative review is to be dismissed. The application by Gulf Court for a Certificate of Need is to be denied.
FINDINGS OF FACT
The Department hereby adopts and incorporates by reference the findings of fact stated by the Hearing Officer.
CONCLUSIONS OF LAW
The conclusion of law recommended by the Hearing Officer is rejected. The conclusion amounts to an erroneous or otherwise inappropriate interpretation and application of law. The correct interpretation and application, which compel a different result, is set out in HRS Statement and Ruling on the Exceptions filed by PDCF and Provincial House/Beverly. Accordingly,
It is ADJUDGED that Gulf Court's Protest and Petitioner for comparative review is dismissed. In addition, Gulf Court's application for a Certificate of Need is denied.
ORDERED this 28th day of March 1984 in Tallahassee, Florida.
DAVID H. PINGREE
Secretary
COPIES FURNISHED:
John C. Dent, Jr., Esquire
2 North Tuttle Avenue Sarasota, Florida 33577
Steven Huss, Esquire Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
E. G. Boone, Esquire
and Susan Lee Stockham, Esquire 1001 Avenida del Circo
Post Office Box 1596 Venice, Florida 32484
Sharyn L. Smith, Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway
Tallahassee, Florida 32301
Harden King, Agency Clerk Department of HRS
1323 Winewood Blvd., Suite 406
Tallahassee, Florida 32301
Docket for Case No: 82-001698
Orders for Case No: 82-001698
| Issue Date |
Document |
Summary |
|
Mar. 28, 1984 |
Agency Final Order
|
|
|
Feb. 10, 1984 |
Recommended Order
|
Department of Health and Rehabilitative Services (DHRS) was wrong in awarding Certificate of Needs (CONs) to previous applicants without reviewing applications.
|
