STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARTIN MEMORIAL HOSPITAL )

ASSOCIATION, INC., et al., )

)

Petitioner, )

)

vs. ) CASE NO. 83-010

)

DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, and ) LAWNWOOD MEDICAL CENTER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William E. Williams, held a public hearing in this cause on March 25, 1983, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Byron Mathews, Jr., Esquire

McDermott, Will & Emery 700 Brickell Avenue

Miami, Florida 33131

For Respondent, James M. Barclay, Esquire DHRS: Frank R. Olsavsky, Esquire

1317 Winewood Boulevard

Building 2, Room 256

Tallahassee, Florida 32301

For Respondent, Donna H. Stinson, Esquire Lawnwood: Barnett Bank Building, Suite 858

Tallahassee, Florida 32301

In November of 1982, the Department of Health and Rehabilitative Services ("DHRS") issued a Certificate of Need ("CON") to Lawnwood Medical Center ("Lawnwood") to expand its oncology department by acquiring a second linear accelerator for its facility in St. Lucie County. Pursuant to Sections 120.57(1) and 38l.494(7)(e), Florida Statutes, Petitioner, Martin Memorial Hospital Association, Inc. ("Martin Memorial"), contests the action of DHRS in granting the CON to Lawnwood. Martin Memorial contends that the CON application submitted to DHRS by Lawnwood does not meet the essential criteria established by the Health Facilities and Health Services Planning Act, Sections 381.493, 381.495, 381.488 and 381.499, Florida Statutes, and by DHRS' rules contained in Chapter 10-5, Florida Administrative Code. Martin Memorial also contends that Lawnwood's letter of intent and its application for a CON to expand its oncology department were not properly filed as required by the CON law and the rules of DHRS. By virtue of a prehearing order issued on February 23, 1983, pursuant to

Petitioner's uncontested Motion to Bifurcate Hearing, the issues addressed in this Recommended Order deal only with Lawnwood's compliance with necessary filing requirements.

At the final hearing, neither Petitioner nor DHRS called any witnesses.

Respondent, Lawnwood, called Gary Clarke as its only witness. The parties stipulated to the receipt into evidence of Joint Exhibits 1 through 24.

Each of the parties to this proceeding has submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that those proposed findings of fact are not included in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues involved in this cause, or as not having been supported by evidence of record.

FINDINGS OF FACT

Prior to convening the final hearing in this cause, the parties stipulated to the following statements of fact and law:

1. Lawnwood's letter of intent is the letter dated June 29, 1982 from Phil Unger to Mr. Tom Konrad. This letter was received by the Department on June 30, 1982.

2. Lawnwood never furnished a copy of

   its letter of intent to either the local Health Systems Agency (HSA)(known as the Health Planning Council, Inc.) or to the Local Health Council.

3. Lawnwood's application for certificate of need to expand its oncology department by acquiring a second linear accelerator was filed with the Department on August 16, 1982. A copy of this application was not furnished to the Local Health Council.

4. Martin Memorial first received actual notice of Lawnwood's application for certificate of need to acquire a second linear accelerator when its Associate Administrator, R. M. Harman, was contacted by a newspaper reporter on or about October 22, 1982.

5. Martin Memorial's Executive Vice President,

   Guy Cromwell, was on notice of a certificate of need application by Lawnwood to expand its oncology center when this item was discussed at the July 29, 1982 HSA Board meeting.

6. Martin Memorial first received construc- tive notice of Lawnwood's application for certificate

   of need when the Department's "Notice of Completeness" was published in the October 15, 1982 edition of

   the Florida Administrative Weekly.

7. On June 30, 1982, the Health Facilities and Health Services Planning Act required that:

   "The Department, by rule, shall provide for applications to be submitted on a timetable or cycle basis; provide for application review on a timely basis; and provide for all completed appli-

   cations pertaining to similar types of services, facilities or

   equipment affecting the same health service area to be considered in relation to each other no less often than twice a year. At least

   30 days prior to filing an appli- cation, a letter of intent shall be submitted by the applicant to the health systems agency and the department respecting the develop- ment of a proposal subject to review." (Emphasis added.)

8. On June 30, 1982 the Department's rules, implementing the above-cited statu- tory provision, provided that:

"10-5.08 Certificate of Need Applications [sic] Procedure.

1. In order that applications pertaining to similar types of service, facilities, or equip- ment affecting the same health service area may be considered in relation to each other for purposes of competitive review,

   letters of intent and applications shall be submitted to the appropriate HSA and the Department pursuant to dates prescribed in application schedules (Attachments 1 through

   9) developed under the following conditions:

   1. Projects shall be categorized as all hospital related projects; all nursing home projects; all end- stage renal dialysis projects; and all other projects; including but

      not limited to home health agencies, ambulatory surgical centers, health maintenance organizations, hospices, and intermediate care facilities for the mentally retarded.

   2. Hospital projects may be sub- categorized, at the option of each HSA, into no more than four reasonably related groups.

   3. Each project category or sub- category shall be reviewed not less than three times per calendar year.

   4. Each HSA, at its option, may sub-divide its entire area into smaller, distinct health service

      areas that have a reasonable relation to the actual use of health and medi- cal services on a geographic basis.

      If such sub-division is accomplished, each project category or sub-category

      shall be reviewed not less than two times and not more than three times per calendar year.

   5. In cases where a letter of intent was filed within five working days of the letter of intent deadline, a grace period of 10 days from the deadline date for receipt of letters of intent shall be established to provide an opportunity for a competing applicant to file a letter of intent.

   1. Effective July 1, 1982, the Health Facili ties and Health Services Planing [sic] Act was amended by Ch. 82-182 (Laws of Florida) to read as follows:

      "S381.494(5) Notice to the local health council and the department" - The department, by rule, shall pro- vide for applications to be sub- mitted on a timetable or cycle basis, provide for review on a timely basis; and provide for all completed appli- cations pertaining to similar types of services, facilities, or equipment

      affecting the same health service area to be considered in relation to each other no less often than four times

      a year. At least 30 days prior to filing an application, a letter of intent shall be submitted by the appli- cant to the local health council and the department respecting the develop- ment of a proposal subject to review.

      At the time of filing an application with the department the applicant shall send a copy of the application to the local health council."

   2. The Department's rule, implementing the amended statutory provision cited above, was adopted effective July 29, 1982 and reads as follows:

      "In order that applications pertaining to similar types of service, facili- ties, or equipment affecting the same service district may be considered in relation to each other for purposes

      of competitive review, letters of intent and applications shall be filed with

      the Department no later than dates prescribed in the following schedule under the following conditions:

      Month for

      Types of Projects		Application Filed By		Application Complete By		Final Dept. Action
      All Hos- pital Projects		Jun 15 Aug 15 Nov 15 Mar 15		Aug 15 Oct 15 Jan 15 May 15		Sep Nov Feb Jun

      
      

      All Nur-	Jul	15	Sep 15	Oct
      sing Home	Oct	15	Dec 15	Jan
      Projects	Jan	15	Mar 15	Apr
      	Apr	15	Jun 15	Jul
      All	May	15	Jul 15	Aug
      Other	Sep	15	Nov 15	Dec
      Projects	Dec	15	Feb 15	Mar
      	Feb	15	Apr 15	May

      1. All other projects includes, but is not limited to, home health agencies,

         ambulatory surgical centers, health main- tenance organizations, hospices and inter- mediate care facilities for the mentally retarded.

      2. At least 30 days prior to filing an application, a letter of intent respecting the development of a proposal must be actually received by the Local Health Council and by the Department. Letters of intent filed with the Department before July 1, 1982, will be accepted for

      use in conjunction with the foregoing schedule. Letters of intent filed after July 1, 1982, must indicate the batching cycle for which the appli- cant intends to file an application.

      If an application is not filed during the time period indicated in the letter of intent, the letter of intent will be considered invalid and a new letter

      of intent must be timely filed before an application may be filed. Because letters of intent give applicants a right of entry into the Certificate of Need process, failure to file a timely letter of intent and to have

      it actually received by the Department and by the local health council at least

      30 days prior to the filing of an application will prevent the Depart- ment from accepting an application. Failure to timely file a letter of intent or to timely file an applica- tion will cause a delay in a Certificate of Need project until the next avail- able review cycle.

   3. The Department's acknowledgement of receipt of Lawnwood's letter of intent is the letter dated July 7, 1982 from Herbert E. Straughn to Mr.

      Philip Unger. . .The Department erroneously furnished a copy of this acknowledgment letter to a Mike

      Boggs, who was the Executive Director of the Pan handle HSA. The Department intended to furnish this copy of its acknowledgement letter to

      Mr. Richard Warfield, the Executive Director of

      the HSA serving Plam [sic] Beach, Martin, St. Lucie, Okeechobee, and Indian River Counties.

   4. The Health Planning Council, Inc. (the HSA serving Palm Beach, Martin, St. Lucie, Okee- chobee, and Indian River Counties) did not receive the Department's acknowledgement letter until

      July 19, 1982 after Mike Boggs of the Panhandle HSA noticed the Department's error and mailed the acknowledgment letter to Mr. Warfield in West Palm Beach. The actual letter of intent was never received by the Health Planning Council, Inc.

   5. The Department did not provide public notice, until the publication of its Notice of Completeness in the October 15, 1982 F.A.W., of either the filing of Lawnwood's letter of intent or of Lawnwood's application for certificate of need.

   6. Lawnwood's application for certificate of need was considered by the Department in the cycle for "All Hospital Projects" that required that the application be filed by August 15,

      1982 and that the application be deemed com- plete by October 15, 1982.

   7. In order to be considered in the same batching cycle as Lawnwood's application, an applicant would have had to file a letter of intent on or prior to July 16, 1982, a date which is 30 days prior to the August 15, 1982 deadline for the filing of the application.

   8. Mr. Dick Harmon, the Associate Adminis- trator at Martin Memorial, would testify that

      had Martin Memorial known on/prior to July 16, 1982 that Lawnwood had filed a letter of intent to apply for a certificate of need to acquire a second linear accelerator, Martin Memorial

      would have filed a letter of intent and an appli- cation for certificate of need in the same batch- ing cycle as Lawnwood's.

   9. Martin Memorial and Lawnwood are in the same "health service area", as defined by statute and rule, and if both of these hospitals had filed applications for a certificate of

      need to acquire a linear accelerator in the same batching cycle, the Department would have re- viewed these two applications on a comparative basis.

   10. Martin Memorial filed with the Depart- ment a letter of intent to apply for a Certificate of Need to acquire a linear acceleration [sic] on/about October 28, 1983 [sic] and has further

       filed an application for same on March 15, 1982 [sic] which was the next available review cycle it could enter upon such filing of its letter of intent.

   11. Mr. Guy Cromwell, the Executive Vice- President of Martin Memorial, was a member of the Board of Directors of the Health Planning Council,

       Inc. (HSA) during June through October of 1982.

   12. The local Health Council for HRS service district #9 held its first organizational meeting sometime in September, 1982. This local Health Council occupied, and continues to occupy, the same office space as the Health Planning Council, Inc. (the HSA) and, with the exception of Mr.

       Richard Warfield, the local Health Council employed all the former staff members of the Health Planning Council, Inc. (the HSA).

   13. Applications for certificate of need filed in the August 15, 1982 batching cycle, and deemed complete by the Department on/before October 15, 1982, were not reviewed by the HSA.

   14. The Division of Administrative Hearings has jurisdiction of the parties and of the sub- ject matter in this administrative proceeding.

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding. Section 120.57(1) , Florida Statutes.

   
   

2. The sections of the Florida Statutes and pertinent portions of the Florida Administrative Code applicable to this proceeding are set forth in paragraphs 7, 8, 9, and 10 as stipulated by the parties and contained in the Findings of Fact section of this Recommended Order.

   
   

3. Petitioner in this cause contends that Lawnwood's failure to submit a copy of its letter of intent to the local HSA and its failure to fully describe its proposed project in the letter of intent filed with DHRS constitute such substantial violations of the CON law as to preclude noncomparative review of Petitioner's and Lawnwood's allegedly competing applications. Petitioner seeks relief in the form of a rescission or revocation of the CON previously issued to Lawnwood by DHRS, and the submission of both Petitioner's and Lawnwood's application to DHRS for consideration by way of comparative review. It is concluded, as a matter of law, that each of these contentions by Petitioner is without merit.

   
   

4. At all times material hereto, Section 331.494(5) Florida Statutes, required filing of a letter of intent by an applicant with the Health Systems Agency and DHRS. Neither the applicant, DHRS, nor the local Health Systems Agency is required by either statute or rule to notify competing health care providers of the pendency of potentially competing proposals until after the application itself has been filed and deemed complete. Rule 10-5.08(4), Florida Administrative Code. Consequently, potentially competing applicants are placed on inquiry at the end of the filing period for batching cycles to determine from the agencies whether competing applications have been filed. The record in this cause contains no evidence that Petitioner inquired of either the local HSA or DHRS to determine whether any letters of intent in which it might be interested had been filed by the batching cycle deadline. Accordingly, it is concluded that Petitioner was in no way misled by Lawnwood's failure to file a copy of its letter of intent with the local Health Systems Agency, so that any procedural error, if it existed at all, was harmless with regard to the Petitioner. See, Polk v. School Board of Polk County, 373 So.2d 960 (Fla. 2d DCA 1979).

5. Additionally, by virtue of amendments to Section 381.494, Florida Statutes, enacted by the 1982 Legislature, local Health Systems Agencies ceased to perform any meaningful review of CON applications after July 1, 1982. In fact, the record in this cause affirmatively establishes that the affected Health Systems Agency reviewed no CON applications in the batching cycle in which Lawnwood's application was filed. Further, the local health council established pursuant to 1982 amendments to Chapter 381, Florida Statutes, did not hold its first organizational meeting until September of 1982. Lawnwood's letter of intent was filed on June 30, 1982. The local Health Systems Agency ceased to perform any functions in the CON review process on July 1, 1982. As a result, filing of the letter of intent with the Health Systems Agency would have been useless since it performed no review functions after July 1, 1982, and filing of the letter of intent with the local health council would have been impossible, since it did not exist at the time the letter of intent was filed. It is axiomatic that the law does not require the performance of a needless act.

   
   

6. Finally, Petitioner complains that Lawnwood did not adequately describe its project in the letter of intent filed with DHRS. However, neither Section 381.494(5) Florida Statutes, nor any provision of the rules of DHRS concerning certificate of need review establishes any necessary components for inclusion in a letter of intent. The only language in the statute touching on this issue simply requires that . . . a letter of intent shall be submitted by the applicant to the health systems agency and the department respecting the development of a proposal subject to review Section 381.494(5) , Florida Statutes (emphasis added). The underlined portion of the statute seems to imply that the legislature envisioned instances in which applicants might still be developing their proposal at the time the letter of intent was filed, and that an applicant's exact intentions would be set forth more fully in the completed application to be subsequently filed. Thus, Lawnwood's letter of intent satisfies all existing statutory and rule requirements. Even if this were not so, Petitioner, having failed to inquire of DHRS concerning the filing of any letters of intent, has not in any way been prejudiced by any alleged lack of specificity in Lawnwood's letter of intent. See, Polk v. School Board of Polk County, supra.

Accordingly, based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED:

That a Final Order be entered by the State of Florida, Department of Health and Rehabilitative Services, finding that the Certificate of Need issued to Lawnwood Medical Center not be revoked, and that no comparative review be conducted on the Certificate of Need applications filed by Lawnwood Medical Center and Martin Memorial Hospital, Inc.

DONE AND ENTERED this 8th day of July, 1983, at Tallahassee, Florida.

WILLIAM E. WILLIAMS

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 8th day of July, 1983.

COPIES FURNISHED:

Byron Mathews, Jr., Esquire McDermott, Will & Emery

700 Brickell Avenue

Miami, Florida 33131

James M. Barclay, Esquire and

Frank R. Olsavsky, Esquire Department of Health and

Rehabilitative Services 1317 Winewood Boulevard

Building 2, Room 256

Tallahassee, Florida 32301

Donna H. Stinson, Esquire

Suite 858, Barnett Bank Building Tallahassee, Florida 32301

David H. Pingree, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 83-000010

Orders for Case No: 83-000010