Charles Minardi, Vice President of the contracting firm scheduled to build the facility; and introduced Petitioner's Exhibits 1 through 10.
Respondent recalled for testimony Mr. Ward and Mr. Finley and introduced Respondent's Exhibits A through C.
On May 19, 1982, Respondent, Department of Health and Rehabilitative Services (HRS), issued Certificate of Need No. 2080 to Beverly Enterprises to build a 120-bed nursing home to cost $2,047,000 on State Road 674, Sun City Center, in Hillsborough County, Florida, with a termination date stated on the face thereof of May 18, 1953.
At Paragraph 2 of the CON, it was stipulated that any person, upon a showing of good cause, could reguest, within 30 days of the issuance of the certificate, a hearing for the purpose of reconsidering the issuance of the certificate.
At Paragraph 3 of the CON, it was stipulated that within 30 days of written notice of the issuance of denial of the certificate, any person whose interests are substantially affected by the Department's decision shall have the right of appeal. Publication of notice of issuance in the Florida Administrative Weekly was determined to constitute receipt of written notice. Notice of the issuance of the CON was published in that Publication on June 4, 1982.
Thereafter, the stock in Sun City Health Care, Inc., formerly a wholly owned subsidiary of Beverly Enterprises, was sold to Coronado Bay Corporation, Petitioner herein. By letter dated April 6, 1983, Petitioner notified HRS (Office of Community Medical Facilities) of this sale and its intention to transfer the location of the proposed facility from Sun City Center to a piece of property in Bahia Beach on which Petitioner had an option to purchase. The letter here referenced was also to be considered by HRS as a request to approve the transfer of the CON as described. No action was required of HRS on this request and none was taken, silence signifying acquiescence.
Approximately one month later, on May 3, 1983, 16 days before the expiration of the CON, Petitioner requested a six-month extension of the CON and, by letter dated May 13, 1983, HRS granted the extension, establishing a new termination date of November 18, 1983. By that letter of May 13, 1983, HRS notified Petitioner of the requirements to start construction when in the second paragraph thereof it stated:
Please be advised that the project must be under physical and continuous
construction, other than site preparation (emphasis supplied] prior to the new termination date to have a valid
and continuing Certificate of Need.
Though the HRS rule that previously defined the term "physical and continuous" was subsequently held by the courts to be invalid, and there still exists some question that the term may include work accomplished prior to site preparation, such as the execution of a construction contract, Mr. Ward, writing for Respondent, HRS, obviously did not follow this school of thought and intended by his words to mean that the construction work actually be in progress, which constitutes a statement of HRS policy. He indicates that on October 19, 1983, a letter was sent by Respondent to Petitioner advising it of this definition. The letter was addressed to Beverly Enterprises, d/b/a Sun City Health Care, 1050 Avenida del Circe, Venice, Florida. All other correspondence was sent either to Petitioner's Orlando or Ruskin, Florida, offices. This October 19, 1983, letter was not introduced by either party.
On October 27, 1983, Petitioner paid $12,900 to the Hillsborough County Board of County Commissioners for water connection ($3,900) and sewer connection ($9,000) at the site. Even before that, however, on October 19, 1983, Petitioner applied for and was granted a certification of street address of "750 Vernum Road" by the Hillsborough County Department of Streets and Addresses. On or before November 1, 1983, Petitioner submitted the facility plans to the Hillsborough County Health Department. Thereafter, upon approval of all of the above, on November 1, 1983, Petitioner notified HRS by letter that the Bahia Beach site was not to be utilized and that the project covered by the CON which had been extended to November 18, 1983, would actually be constructed on the original site designated in the CON; i.e., in Sun City Center. No objection to this was interposed by Respondent, HRS. In furtherance of that plan, Petitioner entered into an agreement with a builder on November 2, 1983, to construct the facility.
On November 15, 1983, Respondent's Medical Facilities Architect Supervisor in the Office of Licensure and Certification, by letter, gave Petitioner approval for the commencement of foundation work, only specifying that: "No work may be done on any of this portion of the building until final approval has been received from this office." This same letter also bears the caveat:
You are advised that subsequent review
by the licensing agency may, by necessity, cause changes to be made within
the building and these changes may affect the foundation work. Therefore, the risk of starting foundation work
at this time must be assumed by the owner.
This letter, dated three days before the expiration of the extension of the CON, was mailed by Petitioner to Respondent's Ruskin, Florida, address, even though Petitioner had, as early as its May 3, 1983, letter requesting the extension, requested replies be sent to the Orlando, Florida, address. Petitioner contends that this letter should have gone to Hillsborough County.
On November 14, 1983, Petitioner was issued a clearing Permit No. 83- 603-8CA, which was "for underbrushing and foundation only--per J. Miller"; and on November 18, 1983, Petitioner was issued a foundation Permit No. 06610 by Hillsborough County for the site in question, for which it paid $277.50.
Sometime in late November or early December, 1983, Mr. Ward, who was in the area on other business, attempted to visit the site. He went to the medical center to find out where the proposed site was, but relates nobody there seemed to know where it was. He then went to Mr. Godby's office at the development company and again could not find the correct site. From a phone call he had with Mr. Ward in December, 1983, Mr. Finley got the impression that Mr. Ward went to the wrong site. As a result, the two men arranged for Mr. Ward to visit the proper site on December 21, 1983. When Ward arrived in Tampa on that date, he was taken to the site, where he found minimal land clearing operations were underway. Only one bulldozer was at the site, which had come for the first time that morning, and only a portion of the area had been scraped.
On the basis of this inspection and comments regarding a lack of construction made to him by at least one individual connected with the Petitioner, he concluded that construction had not been started sufficiently to comply with the Respondent's "physical and continuing" test and that, therefore, the CON should be considered void.
Mr. Ward conveyed this information to Mr. Finley by phone on December 22, 1983, and the oral notification was followed up the same day by a letter to Mr. Finley from W. Eugene Nelson, Administrator of Community Medical Facilities, Office of Health Planning and Development, for Respondent. The letter stated that because Petitioner had not "commenced construction" as set forth by Chapter 83-244, Laws of Florida, 1983, the CON was null and void. Deficiencies cited in the letter included: (a) no site preparation until December 21, 1983; and (b) no undertaking of foundation forming with steel installation and concrete pouring as of December 21, 1983.
Upon receipt of the oral information from Mr. Ward, Finley immediately called the contractor and told him to cease work. This was done: (1) to cut losses (according to Mr. Finley, approximately $150,000 had already been expended on the project); and (2) to prevent any violation of the law by undertaking construction without a valid CON. It is the stated position of Mr. Finley that had Mr. Ward not called him on December 21, the required materials would have been on the site to actually begin construction by December 22, 1983.
This projection was confirmed by Mr. Minardi, a representative of the contractor, who indicated that the site engineering (the actual laying out of the corners of the building) had been accomplished prior to the bulldozer coming in to do the site clearing. He contends that construction was commenced when the foundation permit was received on November 18, and he further indicates that the schedule under which he was operating called for the subcontractor to come onto the site on December 22, 1983, to dig and Place the reinforcing steel for the foundation, with the concrete scheduled for late that afternoon. In his opinion, by January 1, 1984, they would have been well into the flow of construction. While the total foundation would not have been in, some would have been.
Petitioner cites numerous reasons for the delay in the beginning of construction. At first, the site was changed from Sun City Center to Bahia Beach. However, between April, 1983, and November, 1983, Petitioner experienced numerous problems with the Hillsborough County Planning and Zoning Department and finally was told that Bahia Beach was not a good place for the facility.
Based on the information, Petitioner decided to again utilize the Sun City Center site. It was at that time, late October and early November, 1983, that Petitioner began the spadework to get the project under way at that location, with the water and sewer deposits, the addressing, the signing of the construction contract, and the foundation permit all coming within a period of
23 days from October 27 to November 18, 1983.
Petitioner attributes the delay from that last date to December 21, 1983, for the most part to the rainy weather experienced in the area during that period which so wet the ground that nothing could be done.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of the proceedings.
Section 351.494(8)(f)1, Florida Statutes, provides in part that: A certificate of need shall terminate
1 year after the date of issuance
unless the applicant has commenced construction, if the project provides for construction . . . or unless the certificate-of-need validity period
is extended by the department for an additional period of up to 6 months, upon showing of good cause, as defined by rule, by the applicant for the extension. The department shall monitor the progress of the holder of the certificate of need in meeting the timetable for project development specified in the application and may revoke the certificate of need, if
the holder of the certificate is not meeting such timetable and is not making a good faith effort, as defined by rule, to meet it.
Section 381.493(3)(d), Florida Statutes, which defines "commence construction," was passed by the 1983 Florida Legislature and became effective on July 1, 1983. It defines the term "commence construction" as:
[I]nitiation of and continuous activities beyond site preparation associated with erecting or modifying a health care facility, including procurement of a building permit, applying the use of department approved construction documents, proof of an
executed owner/contractor agreement or an irrevocable or binding forced account,
and actual undertaking of foundation forming with steel installation and concrete placing.
This provision is similar to, but expands on, HRS former Rule 10-5.02(21),
Florida Administrative Code, the invalidation of which was sustained by the First District Court of Appeal in Westchester General Hospital v. State of Florida, Department of Health and Rehabilitative Services, 417 So.2d 261 (Fla. 1st DCA 1982), and was, no doubt, enacted by the Legislature to provide a means of insuring that CONs, once issued, would be acted upon within a reasonable time frame.
Here, the CON was issued on May 19, 1982, at a time when HRS had no rule in place defining the term "commence construction" as it now appears in Section 381.493(3)(c), Florida Statutes, which became effective on July 1, 1983, which is also subsequent to HRS's approval of the six-month extension of the CON. HRS claims the passage of this provision to be a vindication of its former invalidated policy and as requiring actual steel and concrete construction. It is, but is not applicable in this proceeding since it was enacted after Petitioner was awarded its CON.
Therefore, there was neither rule nor statutory definition of "commence construction" applicable here, only policy which was outlined by the HRS letter to Petitioner of May 13, 1983, which called for "physical and continuous [emphasis supplied] construction," and for which policy the reasons were clearly set out in the record. There is evidence that Petitioner had, before the expiration date, entered into a contract for the construction of the facility, expended considerable sums for water and sewer permits, had the site identified for a street address, and had procured both clearing and foundation permits. These steps might not, however, constitute "commencement of construction."
Though all the steps described in the paragraph next above were taken prior to November 18, 1983, the fact still remains that nothing was done to even start clearing operations, much less pouring concrete, until December 22, 1983, more than one month after the date of expiration for the extension which was clearly set out in the document granting it. This cannot reasonably be considered construction "other than site preparation," either physical or continuous. In short, Petitioner was fully advised of what it had to do in order to maintain the CON in force and effect and failed to do so, or even come close. Its excuse that poor weather prevented site clearing in late November and early December is not persuasive, nor is the contention that it acted in good faith.
Further, Petitioner's argument that the expiration date of the CON and the extension were expanded by the time allowed for protest of the original award is also not persuasive. In the first place, there is no showing that any protest occurred, but regardless of that fact, though the CON award might not be final until the expiration of the protest period, there is no legal authority to use that period to extend the Certificate's period of validity, which is specified, by date, in both the original Certificate and the letter of extension.
The parties have submitted proposed recommended orders which include proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law above. They have been otherwise rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues, or legally erroneous.
