STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NORTH BROWARD HOSPITAL )

DISTRICT d/b/a NORTH )

BROWARD MEDICAL CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 86-1186RX

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

FINAL ORDER

This case was heard at final hearing on June 19, 1986, in Tallahassee, Florida. Appearing for the parties were:

APPEARANCES

For the Petitioner: J. Marbury Rainer, Esquire

Jonathan L. Rue, Esquire Parker, Hudson, Rainer & Dobbs 1200 Carnegie Building

133 Carnegie Way Atlanta, Georgia 30303

For the Respondent: F. Bruce McKibben, Esquire

Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

This proceeding is a rule challenge pursuant to section 120.56, Fla. Stat., to determine whether Rule 10-5.11(16), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

The parties presented a joint stipulation of fact which has been adopted herein as the Findings of Fact for this order. There are six joint exhibits attached to the stipulation lettered A through F. The parties also submitted memoranda and reply memoranda of law on the legal issues presented for resolution in this final order.

FINDINGS OF FACT

1. Petitioner's name and address are North Broward Hospital District d/b/a North Broward Medical Center, 201 E Sample Road, Pompano Beach, Florida 33604.

   The North Broward Hospital District is a Special Taxing District created by the Florida Legislature. It currently owns and operates three public, nonprofit hospitals in Broward County including Broward General Medical Center ("BGMC") and North Broward Medical Center

   
   

2. Respondent, Department of Heath and Rehabilitative Services ("HRS"), is responsible for the administration of Section 381.493 through 381.499, Fla. Stat. ("the CON statute"), and Fla. Administrative Code Ch. 10-5 ("the CON rules").

   
   

3. Under the foregoing, authorities, HRS reviews applications for CONs to construct, purchase or otherwise implement certain new health care facilities and new institutional health care services, as defined by the CON statute. One of these new institutional health care services subject to HRS' review under the CON statute and CON rules is open-heart surgery service, as defined in Fla. Admin. Code Rule 10-5.11(16)(a).

   
   

4. By formal application under the CON statute and CON rules which was deemed complete by HRS effective October 16, 1985, NBMC applied for a certificate of need ("CON") to institute an open-heart surgery service at 201 E. Sample Road, Pompano Beach, Florida 33604. Exhibit "A" is a true, correct, and authentic copy of NBMC's application for certificate of need for open-heart surgery.

   
   

5. NBMC's application was denied by HRS by letter dated February 28, 1986, received by NBMC open March 10, 1986. Exhibit "B" is a true, correct, and authentic copy of said letter. Publication of the denial appears at Vol. 12; No. 11, Florida Administrative Weekly (March 14, 1986).

   
   

6. HRS' basis for denying the application is contained in the "State Agency Action Report". Exhibit "C" is a true, correct, and authentic copy of HRS' State Agency Action Report pertaining to NBMC's application.

   
   

7. NBMC has petitioned HRS for formal Section 120.57(1), Fla. Stat., administrative proceedings challenging the denial of its application for open- heart surgery. Exhibit "D" is a true, correct, and authentic copy of that petition.

   
   

8. In its application, NBMC stated that one of its sister hospitals, BGMC, currently provided open-heart surgical services. NBMC proposed in its application to utilize the same open-heart surgical team at NBMC as was then practicing at BGMC.

   
   

9. Applicants for CONs for open-heart surgery services must satisfy certain regulatory standards prescribed in CON Rule 10-5.11(16). These standards include:

(k)1. There shall be no additional open- heart surgery programs established unless:

1. The service volume of each existing and approved open-heart surgery program within the service area is operating at and is

   and expected to continue to operate at a minimum of 350 adult open-heart surgery cases per year or 130 pediatric heart cases per year; and

2. The conditions specified in (e)4., above will be met by the proposed program. (E.S.)

Rule 10-5.11(16)(e)4. provides in pertinent part as follows: There shall be a minimum of 200 adult open-

heart procedures performed annually, within

three years after initiation of service, an any institution in which open-heart surgery is performed for adults. (E.S.)

Exhibit "E" is a true, correct, and authentic copy of CON Rule 10-5.11(16).

10. In 43 Fed. Reg. 13040, 13048 (March 28, 1978) (42 C.F.R. 121.207), the

Secretary of the United States Department of Health and Human Services ("HHS") set forth the federal CON standards for open-heart surgery, as part of the National Guidelines for Health Planning. The National Guidelines for Health Planning are referenced in HRS's State Agency Action Report. Exhibit "F" is a true, correct, and authentic copy of that portion of the Nation Guidelines for Health Planning which pertain to the implementation of open-heart surgery services.

1. The National Guidelines for Health Planning also provide that approval of new open-heart surgery services should be contingent upon existing units operating and continuing to operate at a level of at least 350 procedures per year. The National Guidelines for Health Planning further provide as follows:

   
   

   In some areas, open-heart surgical teams, including surgeons and specialized technologists, are utilizing more than one institution. For these institutions, the guidelines may be applied to the combined number of open-heart procedures performed by the surgical team where an adjustment is justifiable in line with Section 121.6(B) and promotes more cost effective use of available facilities and support personnel. In such cases, in order to maintain quality care a minimum of 75 open-heart procedures in any institution is advisable, which is consistent with recommendations of the American College of Surgeons. (E.S.)

   
   

2. HRS' CON Rule 10-5.11(16); which contains the "350" standard, does not contain any comparable exception for institutions sharing open-heart surgical teams.

   
   

3. NBMC's application for CON projects 200 open-heart surgeries by the end of the third year of operations and, when combined with BGMC's open-heart procedures satisfies the exception contained in the National Guidelines for Health Planning, as described above.

   
   

4. There are no disputed issues of material fact that will require an evidentiary hearing in this matter. The parties therefore agree that the matter shall be submitted pursuant to legal memoranda and oral argument. The parties'

   legal memoranda will be due on June 17, 1986, and oral argument will be held on the scheduled hearing date of June 19, 1986. The parties agree to allow responses to the legal memoranda, which responses shall be submitted no later than June 26; 1986.

   
   

   CONCLUSIONS OF LAW

   
   

5. Jurisdiction exists pursuant to section 120.56, Fla. Stat.

   
   

6. A challenge to a proposed agency rule is governed by the following standard:

   
   

   To successfully challenge the validity of an agency rule, one must show that (1) the agency adopting the rule has exceeded its

   authority, (2) the requirements of the rule are not appropriate to the ends specified in the legislative act, and (3) that requirements contained in the rule are

   not reasonably related to the purpose of the enabling legislation, but are arbitrary

   or capricious. Agrico Chemical Co. v. State, Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1979); Dept. of Administration, Division of Retirement

   v. Albanese, 445 So.2d 639 (Fla. 1st DCA 1984).

   
   

   Department of Professional Regulation, Board of Professional Engineers v. Florida Society of Professional Land Surveyors, 475 So.2d 939 (Fla. 1st DCA 1985).

   
   

7. The standard to be applied to an existing rule has been determined to be essentially the same as the standard to determine the validity of a proposed rule. Grove Isle Ltd. v. State, Department of Environmental Regulation, 454 So.2d 571, 573 (Fla. 1st DCA 1984).

   
   

8. The Petitioner argues that rule 10-5.11(16), Florida Administrative Code, is an invalid rule because it does not contain the exception found in the National Guidelines for Health Planning mentioned in paragraph 11 of the Findings of Fact. The Petitioner argues that failure to provide this exception for the circumstances of a single open-heart surgical team using more than one institution causes the rule to be arbitrary and capricious.

   
   

9. The Petitioner primarily relies upon Farmworker Rights Organization, Inc. v. State, Department of Health and Rehabilitative Services, 430 So.2d 1 (Fla. 1st DCA 1983). The Farmworker Rights case, however, does not support the result sought by Petitioner.

   
   

10. At issue in the Farmworker Rights case was the validity of rules 10-

    5.11 and 10-5.12(8); Florida Administrative Code, and more specifically, whether these rules were invalid for failure to contain provisions that state review of applications for certificates of need consider the degree to which medically underserved persons, including low income minorities, have access to the services under review. 430 So.2d at 3.

    
    

11. The Court in Farmworker Rights concluded that "in

    order to be a valid exercise of delegated legislative authority under section 381.494(7)(a); Florida Statutes, the HRS rules in question must be in accordance with federal statutes." 430 So. 2d at 4. The Court further held that:

    
    

    in order for HRS's certificate of need rules to be valid exercises of delegated legislative authority under Florida statutes, any such rule must be "consistent with" federal regula- tions on the same subject in order to be "in accordance with" federal statutes.

    
    

12. 42 C.F.R. Section 123.413(a), cited in footnote 6 of the Court's opinion, contains two mandatory references:

    
    

    1. Under Section 123.412(a)(5) and (6), the State Agency is required to develop criteria based on considerations relating to the need

       of the population to be served for the proposed project and the extent to which the residents of the area will have access to the project.

       For each project it approves, the State Agency shall make a written finding . . . on the extent to which the project will meet the State Agency's criteria developed based

       on the considerations in Section 123.412(1)(5) and (6) . . . .

       
       

       42 C.F.R. 123.412(a)(5) and (6), at footnote 5 of the Court's opinion, contain express mention of the need of low income persons and medically underserved groups, and the prefatory portion of that regulation provides the following:

       
       

       1. The state Agency shall adopt, and use as applicable, specific criteria for conducting the reviews covered by this subpart. The criteria must be based only on the following general considerations . . . .

       
       

       * * *

       
       

       (5)(i) and (ii) [text omitted concerning low income access]

       
       

       (6) [test omitted concerning medically underserved access]

       
       

13. Thus, the federal regulations cited in the Farmworker Rights case explicitly required states to adopt criteria for access to health services by low income persons and the medically underserved.

    
    

14. Given the complete absence of any criteria in the Florida rules concerning low income access and access for the medically underserved, coupled with the foregoing explicit federal mandates the Court in Farmworker Rights found the Florida rules to be "inconsistent" with the federal regulations, and thus invalid to that extent.

    
    

15. In two memoranda of law, as well as at the final hearing, Petitioner's counsel set forth a detailed and skillful analysis of the link between the

    National Guidelines for Health Planning and rule 10-5.11(16). The argument begins with 42 U.S.C. Section 300K-1(a), which states that "the Secretary shall

    . . . by regulation issue guidelines concerning national health planning policy." Assuming the probably correct conclusion that one can substitute "local and state health plans" for the now outdated references to "health systems plans," the path of statutory and regulatory construction does inexorably lead to the conclusion offered by the Petitioner: that rule 10- 5.11(16) must be "consistent" with the National Guidelines.

    
    

16. But this only establishes part one of the analysis of the Farmworker Rights case. Part two is to establish that the National Guidelines, or some other federal provision; mandates that Florida's certificate of need rules contain a criteria for surgical teams utilizing more than one open heart surgical facility. The section in which this criteria is found within the National Guidelines does not contain such a mandate. The provision in question is not contained in the "standards" section of the Nation Guidelines for Health Planning, but is located rather in the "discussion" section immediately following the standards. See Exhibit F, Section 121.207(b), Part 121, Chapter 1 Title 42. It is not the standard but rather an interpretation of the standard. But more important, there is no federal mandate that it become an explicit criteria in the state rules, either verbatim or as a general consideration.

    Rule 10- 5.11(16), Florida Administrative Code, contains provisions which are consistent" with the standards provided by the National Guidelines. Absent some specific mandate akin to that found in the Farmworker Rights case, it cannot be said that the failure of the rule to include the interpretation of those standards contained in the "discussion" section makes the rule "inconsistent" with federal law.

    
    

17. It should be noted that rule 10-5.11(16) has an exception to the requirements of subparagraph (k) (which contains the threshold standards for number of operating procedures annually per facility). The exception is for "not normal" circumstances, and the existence of this exception allows the individual applicant to present evidence concerning the practices of a single open heart surgical team at mere than one facility. In this sense the rule does not preclude consideration of the National Guidelines exception, on a case-by- case basis, and thus for that reason is not inconsistent with the National Guidelines. See Humhosco, Inc. v. Department of Health and Rehabilitative Services, 476 So.2d 258, 261 (Fla. 1st DCA 1985). It is true that had the National Guidelines mandated the exception, the general provision for "not normal" cases would have been insufficient. Farmworker Rights, supra, 430 So.2d at 7. But, as previously discussed the federal provision does not mandate inclusion of the specific exception.

    
    

18. The instant rule challenge is premised upon the theory that the rule is inconsistent with federal law. The Farmworker Rights case involved a clear conflict with explicit mandates of federal law. The instant case does not, and should be judged by the standard applicable to cases where an agency, by rule making, has interpreted law:

Where, as here, the agency's interpretation

of a statute has been promulgated in rulemaking proceedings, the validity of such rule must

be upheld if it is reasonably related to the purposes of the legislation interpreted

and it is not arbitrary and capricious.

. . . [T]he agency's interpretation of a statute need not be the sole possible

interpretation or even the most desirable one; it need only be within the range of possible interpretations. (E.S. by the Court) (E.S. by the Court)

Department of Professional Regulation, Board of Medical Examiners v. Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1984).

FINAL ORDER

For these reasons, it is ORDERED that the Petitioner has not established that rule 10-5.11(16), Florida Administrative an invalid exercise of delegated legislative authority.

DONE and ENTERED this 18th day of July 1986, in Tallahassee, Florida.

WILLIAM C. SHERRILL, JR.

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 18th day of July 1986.

COPIES FURNISHED:

J. Marbury Rainer, Esquire Jonathan L. Rue, Esquire Parker, Hudson, Rainer & Dobbs 1200 Carnegie Building

133 Carnegie Way Atlanta, Georgia 30303

F. Bruce McKibben Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Mr. William C. Page, Jr. Secretary

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32301

Liz Cloud, Chief

Bureau of Administrative Code 1802 The Capitol

Tallahassee, Florida 32301

Carroll Webb, Executive Director

Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32301

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules Of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk Of The Division Of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court Of Appeal, First District, or with the District Court Of Appeal in the appellate district where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 86-001186RX

Orders for Case No: 86-001186RX