STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SAINT VINCENT'S MEDICAL CENTER, ) (JACKSONVILLE), )

)

Petitioner, )

)

vs. ) CASE NO. 83-1130RX

) STATE OF FLORIDA, DEPARTMENT OF ) HEALTH AND REHABILITATIVE )

SERVICES, )

)

Respondent. )

and )

)

AMBULATORY CARE-DUVAL )

DEVELOPMENT CORPORATION, )

)

Intervenor. )

)

FINAL ORDER

Following notice, consideration was given to a rules challenge made by the Petitioner related to action by the State of Florida, Department of Health and Rehabilitative Services. The hearing was conducted on May 17 and 18, 1983, in the Richard P. Daniel Building, Jacksonville, Florida. A final session was held on May 20, 1983, in the office of the Division of Administrative Hearings, The Oakland Building, Tallahassee, Florida.

APPEARANCES

For Petitioner: Kenneth F. Hoffman, Esquire

646 Lewis State Bank Building Tallahassee, Florida 32301

For Respondent: Claire Dryfuss, Esquire

Department of Health and Rehabilitative Services

1323 Winewood Boulevard Suite 406

Tallahassee, Florida 32301

For Intervenor: Carl Pennington, Jr., Esquire

Russell D. Gautier, Esquire Pennington, Wilkinson & Dunlap, P.A. Post Office Box 3985

Tallahassee, Florida 32315 ISSUES

At issue in this case is consideration of the Petitioner's claim that the Respondent has adopted a 29 percent factor in determining the number of

ambulatory surgeries that can be expected as a percentage of all surgeries done in the State of Florida, related to regulation of the certificate of need program, with particular emphasis on the construction of ambulatory surgery centers as envisioned by Subsections 381.493(3)(j) and 381.494(1), Florida Statutes (1982). Petitioner claims that this decision was made without the benefit of rulemaking in accordance with Section 120.54, Florida Statutes.

Petitioner attacks alleged vagueness of this choice and claims arbitrariness and capriciousness in the Respondent's action. Finally, Petitioner asserts that Respondent did not prepare an economic impact statement as required by Section 120.54, Florida Statutes.

FINDINGS OF FACT

1. Petitioner is a hospital licensed by the State of Florida and is located in Jacksonville, Florida. Respondent, the affected state agency, as defined in Subsection 120.52(1), Florida Statutes, is responsible for the regulation of health care facilities, to include Petitioner. The Department also considers the question of provision of additional health care in the community through its certificate of need program. Intervenor has made application to provide ambulatory surgery in Duval County, Florida, through a freestanding surgery center. Jacksonville, Florida, is in Duval County.

   
   

2. This case is part of a consolidated hearing process and is the companion matter to Saint Vincent's Medical Center, Petitioner v. State of Florida, Department of Health and Rehabilitative Services and Ambulatory Care - Duval Development Corp., d/b/a Jacksonville Surgical Center - Ambulatory Surgical Center, Respondents, D.O.A.H. Case No. 83-337 and Riverside Hospital, Petitioner v. State of Florida, Department of Health and Rehabilitative Services and Ambulatory Care - Duval Development Corp. d/b/a Jacksonville Surgical Center

   - Ambulatory Surgical Center, Respondents, D.O.A.H. Case No. 83-482. The first three days of the hearing were conducted on the dates alluded to in this order. That presentation was transcribed. In addition, deposition testimony was presented and accepted as part of the record in this matter. The campanion cases concern the propriety of the grant of a certificate of need to the Intervenor in this cause to allow construction and operation of a freestanding ambulatory surgery center which would be used for performing outpatient surgeries. At all times relevant to this case, Saint Vincent's had a department in which outpatient surgical procedures were performed and are expected to be performed in the future. With the advent of the establishment of the Intervenor's facility, that health care unit will be in competition with Petitioner in the realm of providing surgical procedures.

   
   

3. As recently as 1975, Respondent knew that ambulatory surgery centers, such as that proposed by the Intervenor, would need permission to construct such a facility. This permission relates to the need to apply and receive a certificate of need from the Department. The authority for such regulation was pursuant to applicable provisions of Chapter 381, Florida Statutes. Notwithstanding this regulatory role to be fulfilled, Respondent did not undertake a program for enacting rules to consider the question of need for ambulatory surgical centers. This lack of rulemaking was primarily due to inactivity of applicants seeking ambulatory surgical center certificates of need. This circumstance changed in late 1982. In December, 1982, Respondent received approximately thirteen applications for ambulatory surgical center certificates of need, as contrasted with approximately ten applications over the prior three years. At the same time Respondent was in the throes of having to revamp its certificate of need review process related to the overall health industry, brought about by statutory changes which abolished health system

   agencies and created local health councils. In 1983, at the time of the hearings, Respondent had received 27 applications for ambulatory surgery centers. This glut of applications by would-be ambulatory surgical centers and the 1982 applications were examined without formal rules defining the need question, related to expected numbers of surgical procedures that might be conducted on an outpatient or ambulatory basis. The determination of this ratio of outpatient surgical procedures to inpatient surgical procedures is a vital part of the need question. 1/

   
   

4. Absent promulgated rules, Department officials began their attempt to ascertain the percentage comparison between outpatient and inpatient surgeries, as that item was involved in the establishment of a methodology for considering the need question. Based upon information provided by applicants for ambulatory surgery centers and its own research, Respondent concluded that anywhere from 18 to 40 percent of total surgeries could be expected to be outpatient surgeries. Having utilized a median projection related to population expectations in the certificate of need process, the Department decided to use a median projection for the expected percentage of outpatient surgery. Thus, 29 percent was selected as the percentage of outpatient surgeries in the total number of surgical procedures and that percentage was utilized in the computation of the number of expected outpatient surgical procedures. Utilization of this 29 percent factor in the computation of the number of procedures to be expected on an outpatient basis may be seen in Petitioner's Exhibit 2 and Respondent's Exhibit 1, application reviews.

   
   

5. Once the Department decided to employ the 29 percent factor, it has consistently, on a statewide basis, utilized that factor in evaluating the question of the grant of certificates of need for ambulatory surgical center applicants. This has been done in more than one batch or cycle and was done in the instance of Intervenor's application which is at issue. Although the 29 percent factor is not the only determining element of the certificate of need process, it is an integral part of that process and can affect the outcome of the grant of the certificate, as has been the case in two instances alluded to in the course of the hearing. This policy choice by the agency is not emerging. It is not one of a series of approaches that have been experimented with in trying to arrive at a concluding agency position, prior to the formal adoption of a rule. This percentage factor has been the only number utilized in the review of all ambulatory surgery center applications commencing late 1982 to the time of final hearing in this action. This choice has not stood the test or scrutiny of the rulemaking process set forth in Section 120.54, Florida Statutes. Notwithstanding the stated willingness of the agency to modify its position when presented with a more credible method, that contingency or eventuality has not occurred and every applicant for ambulatory surgery center certificate of need has had its application measured against the 29 percent factor commencing December 1982, to the exclusion of other techniques suggested by applicants.

   
   

6. In the face of the facts reported above and the record considered, and recognizing that the agency should be afforded an opportunity to establish a record basis for the utilization of the 29 percent factor, even if it were found to be an invalid rule, a decision was reached at the time of hearing on the question of the utilization of the 29 percent factor and whether it was a rule not duly promulgated. It was found that the 29 percent factor is an unpromulgated rule and could not stand as law without first being subject to an assessment of the quality of the record basis for the agency's policy choice. The argument related to this case may be found at pages 798 through 829 of the transcript. The ruling is announced at pages 829 through 832. Respondent

   subsequently presented additional evidence in support of its policy choice and that may be found in succeeding sections within the transcript. This written order memorializes the ruling announced at hearing.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this action. See Sections 120.56 and 120.57, Florida Statutes.

   
   

8. Petitioner has standing to maintain this action pursuant to Sections

   120.56 and 120.57, Florida Statutes.

   
   

9. The action of the Respondent in establishing the 29 percent factor is a rule within the meaning of Section 120.52(14), Florida Statutes. This "rule" was not duly promulgated in accordance with Section 120.54, Florida Statutes, and is declared invalid in accordance with Section 120.56, Florida Statutes.

Upon consideration of this case, it is, ORDERED:

The 29 percent factor for evaluating ambulatory surgery applications is an invalid rule.

DONE and ORDERED this 7th day of October 1983, in Tallahassee, Florida.

CHARLES C. ADAMS

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 Administration Hearings this 7th day of October, 1983.

ENDNOTE

1/ Outpatient surgical procedures are those in which the procedure is performed on the patient and the patient is released within that same working day, as contrasted with the inpatient procedures where the procedure is performed and the patient is involved in a hospital stay as part of his treatment.

COPIES FURNISHED:

Kenneth F. Hoffman, Esquire James M. McClean, Esquire 646 Lewis State Bank Building Allan T. Geiger, Esquire

Tallahassee, Florida 32301 Rogers, Towers, Bailey, Jones

and Gay

Claire Dryfuss, Esquire 1300 Gulf Life Drive, Suite 800 Department of Health and Jacksonville, Florida 32207 Rehabilitative Services

1323 Winewood Boulevard

Suite 406

Tallahassee, Florida 32301

Carl Pennington, Jr., Esquire Russell D. Gautier, Esquire Pennington, Wilkinson & Dunlap, P.A. Post Office Box 3985

Tallahassee, Florida 32315

Liz Cloud, Chief

Bureau of Administrative Code Department of State

The Capitol - Suite 1802 Tallahassee, Florida 32301

Carroll Webb, Executive Director Joint Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32301

David H. Pingree, Secretary Department of Health and Rehabilitative Services 1321 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 83-001130RX

Orders for Case No: 83-001130RX