STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

1. GULF COAST HOSPITAL, )

   )

   Petitioner, )

   )

   vs. ) CASE NO. 87-4761

   ) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

   )

   Respondent. )

   )

   
   

   RECOMMENDED ORDER

   
   

   This matter came on for hearing in Tallahassee, Florida before the Division of Administrative Hearings by- its duly designated Hearing Officer, Diane Cleavinger on February 8, 1988. The parties are represented by counsel;

   
   

   For Petitioner: Donna H. Stinson, Esquire

   Thomas M. Beason, Esquire Moyle, Flanigan, Katz,

   Fitzgerald & Sheehan, P.A. The Perkins House, Suite 100

   118 North Gadsden Street Tallahassee, Florida 32301

   
   

   For Respondent: Lee Elzie, Esquire

   Stephen M. Presnell, Esquire MacFarlane, Ferguson, Allison & Kelly

   215 South Monroe Street Tallahassee, Florida 32302

   
   

   The specific issue addressed in this proceeding is whether there is a numeric need for a cardiac catheterization laboratory at Petitioner's location pursuant to Section 381.705(1)(a), (b), (i) and (1) and 381.705(2)(a), (b) and (d), Florida Statutes and Rule 10-5.011(1)(e) 6, 11, 12, and 15, F.A.C. The parties agreed that all other criteria for a cardiac catheterization lab have either been satisfied by the Petitioner or are not applicable in this case.

   
   

   PRELIMINARY MATTERS

   
   

   Bay Memorial Hospital, an existing provider in the Panama City, Florida area, requested, through their counsel, Douglas Sale, to be allowed to present public comments at the hearing pursuant to Section 120.57, F.S., and Rule 22I- 6.025, F.A.C., Bay Memorial wished to present an expert who would give his opinion on how the rule should be interpreted. Petitioner objected to allowing such statement since Bay Memorial had not sought intervention under the Division's rules of procedure. The request to participate in the hearing by Bay Memorial was denied - since Bay Memorial did not follow the clear rules of the Division regarding intervention.

   At the hearing, Petitioner presented the testimony of W. Eugene Nelson and the video tape deposition testimony of Thomas F. Porter and six exhibits.

   Respondent presented the testimony of Elizabeth Dudek and three exhibits.

   
   

   The Division of Administrative Hearings received the transcript of proceedings on March 1, 1988, and the parties filed Proposed Recommended Orders on March 11, 1988. Petitioner's and Respondent's Proposed Findings of Fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence or were immaterial, cumulative or subordinate. Specific rulings on the parties Proposed Findings of Fact are contained in the Appendix to this Recommended Order.

   
   

   FINDINGS OF FACT

   
   

   1. On or about April 13, 1987, Petitioner, H.C.A. Gulf Coast Hospital, submitted its application for a Certificate of Need to operate a cardiac catheterization laboratory in Panama City, Florida. On September 22, 1987, Respondent, Department of Health and Rehabilitative Services (HRS), denied the application because the addition of a sixth cardiac catheterization lab in HRS District 2 would lower the average number of procedures below the 600 procedures required by Rule 10-5.011(1)(e)15, F.A.C. The actual reasoning behind the Letter of Denial was contained in the State Agency Action Report regarding CON 5121, the project concerned in this case, dated September 9, and 10, 1987. The relevant portions of the State Agency Action Report for purposes of this proceeding are contained on Page 8 and Page 10 of the Report. Petitioner's Composite Exhibit #4. On November 11, 1987, Petitioner requested the Respondent to reconsider its denial of its Certificate of Need for the cardiac catheterization lab. On December 3, 1987, the Respondent upheld its original denial of the Certificate of Need, citing the same rationale it had utilized earlier. Petitioner's Composite Exhibit #5.

      
      

   2. While pending reconsideration, Petitioner requested that a Section 120.57, F.S., hearing be convened on HRS's denial of Petitioner's CON, and the case was subsequently sent to the Division of Administrative Hearings to conduct the hearing.

      
      

      The Hospitals

      
      

   3. Petitioner is one of two hospitals located in Bay County, Florida. The other hospital and Gulf Coast Hospital's main competitor is Bay Memorial, located about ten minutes away from Petitioner's facility. Both of these hospitals are considered to be in District 2 and specifically in Subdistrict 2A for purposes of HRS CON review. District 2 consists of Bay, Calhoun, Franklin, Gadsden, Gulf, Holmes, Jackson, Jefferson, Leon, Liberty, Madison, Taylor, Washington and Wakulla Counties. See Chapter 10-5, F.A.C.

      
      

   4. Currently there are no cardiac catheterization facilities at Petitioner's hospital. The only facilities in Bay County are located at Bay Memorial. Bay Memorial has two labs at its facility.

      
      

      The Need Criteria

      
      

   5. All parties agreed that Rule 10-5.011, F.A.C., is the controlling rule in this case. The rule in itself requires a mathematical calculation to arrive at certain need criteria. Rule 10-5.011(1)(e)12, F.A.C. That formula is intended to calculate the number of catheterization procedures expected in a given year in the near future. In this case, the target date was January, 1989.

      In order to arrive at the expected number of catheterization procedures, the rule requires that one multiply the current number of catheterization procedures which have actually been performed in the applicant's intended service area per 100,000 of population times the projected population for the year service is initiated. The current number of catheterization procedures in District 2 is 3,215. In order to convert that figure to a figure per 100,000 of population, 3,215 must be multiplied by the current base population divided by 100,000. The current base population is 513,825. The first element of the need formula looks as follows: 3215 x 513,825/100,000. This calculation yields a current use criteria of 625.70 catheterization procedures per 100,000 of population.

      
      

   6. In order to arrive at the number of expected catheterization procedures in January, 1989, for District 2, it is necessary to multiply 625.70 times the projected population for January, 1989. The projected population in the year 1989 for District 2 is 543,518 persons. The calculation is as follows: 625.70 x 543,518/100,00. Based on the above calculations, the Department predicts that there will be 3,401 cardiac catheterizations performed in District 2 in January, 1989, or that there will be a need for 3401 catheterization procedures in January, 1989.

      
      

      Too Many Formulas

      
      

   7. The above need calculation is utilized by the Department to determine whether, under its rule, the applicant will meet the criteria and goals established in its Rule 10- 5.011, F.A.C. and obtain the goals set out in Chapter 381, F.S., and relevant local and state health plans. The Department adopted this rule in 1977. For purposes of this case and the issues involved herein, the rule has essentially remained the same since 1977. The relevant portions of Rule 10-5.011 involved in this case are as follows: 10-5.011(1)(e)6 F.A.C.:

      
      

      6. Department Goal. The Department will consider applications for cardiac catheterization laboratories in context with applicable statutory and rule criteria. The Department will not normally approve applications for new cardiac catheterization laboratories in any service area unless additional need is indicated, as calculated by the formula in sub-paragraph 12, below, and unless the application satisfies the requirements set forth in sub-paragraph 15, below.

      
      

      and 10-5.011(1)(e)15.c. F.A.C.:

      
      

      Applications proposing to establish cardiac catheterization laboratories will not be approved if they would reduce the average volume of procedures performed by laboratories in the service area below 600 adult procedures and 275 pediatric procedures, based on projected need in the service area.

      
      

      At the rule's inception in 1977, the HRS staff at least two mathematical formulas to implement Rule 10.5011(1)(e)15.c F.A.C. The two formulas involved

      whether the need criteria outlined above should be divided by 600 and then round any resulting fractions to the nearest whole number, or by dividing the need number by the number of laboratories proposing to operate with no concomitant rounding of resulting fractions. In this case, the number of laboratories proposing to operate for January, 1989, would be six (five existing laboratories, plus the applicant Gulf Coast).

      
      

   8. The problem with the differing mathematical methodologies do not appear when both results show that there would not be enough future catheterization procedures to warrant an additional laboratory, or conversely that there would be enough procedures to warrant an additional laboratory. The anomaly of the two methodologies arises in the type of case presented here. In this case, the first calculation is represented by the methodology utilized in the State Agency Action Report on page 8. That calculation results in the Respondent concluding that in January, 1989, there is a need in District 2 for six catheterization laboratories, i.e., one additional laboratory than now exists. Gulf Coast, by requesting a Certificate of Need for a catheterization laboratory, has applied for that one additional space. The second mathematical formula is illustrated by the State Agency Action Report on page 10. There, the report concludes that six labs would be too many and divides the estimated need number by six or multiplies six by 600 which essentially yields the same result percent in essence, Respondent has concluded there is a need for six labs and then turned around and concluded there is not a need for six labs.

      
      

      Past Policy On Inconsistent Formulas And Its Reasons

      
      

   9. In either late 1983 or early 1984, these anomalous results were quite appropriately a concern to the Department. At that time, Gene Nelson, Petitioner's expert witness, was the Administrator of the Office of Community Medical Facilities in HRS. His duties entailed the entire oversight of the CON process for catheterization laboratories, including formulating agency policy regarding implementation of its rule on cardiac catheterization. The Department was concerned that it was reaching inconsistent results by utilizing the two mathematical methodologies outlined above and therefore were not treating applicants in a consistent manner. In order to resolve this inconsistent approach, the Department decided upon a policy that the first calculation would control the result of granting or denying an applicant's request. This policy was established in late 1983 or early 1984 and was disseminated verbally throughout Mr. Nelson's staff. The dissemination may not have been as complete as it should have been given the Agency's policy of not putting anything in writing for fear that it might be challenged as a rule. The policy apparently did not trickle down to Elizabeth Dudeck, who was then a CON applicant analyst under Mr. Nelson. The Department did not stop utilizing the second calculation. However, the second calculation was no longer considered to be the controlling methodology for purposes of granting or denying a CON application. The reason given by both Mr. Nelson and Thomas R. Porter, the then supervisor in the CON program, was to achieve internal consistency among the rules differing provisions and requirements for catheterization laboratory CON review.

      
      

   10. The differing provisions and requirements involved are Rule 10- 5.011(1)(e)9.d., F.A.C.:

       
       

       D. Minimum Service Volume. In order to assure quality of service, there shall be a minimum of 300 cardiac catheterizations performed annually in any adult cardiac catheterization laboratory within three years

       following its initiation of service. In order to assure quality of service, there shall be a minimum of 150 pediatric cardiac catheterizations performed annually in any laboratory performing pediatric cardiac catheterizations, within three years following its initiation of service.

       Applicants for either of these services must document that proposed laboratories can meet these minimum volume requirements. (emphasis added)

       
       

       and 10-5.011(1)(e)12, F.A.C.:

       
       

       12. Need Determination. The need for cardiac catheterization capacity in a service area

       shall be determined by computing the projected number of cardiac catheterization procedures in the service area. The following formula shall be used in this determination:

       Nx= Uc X Px Where:

       Nx = N Number of catheterization procedures x projected for Year X;

       Uc = Actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle;

       Px = Projected population in the service area in Year x; and

       Year X = The year in which the proposed cardiac catheterization laboratory

       would initiate service, but not more than two years into the future. (emphasis added)

       
       

       and Rule 10-5.011(1)(e)15.c., F.A.C., noted earlier. As can be readily seen from the language of the rule, the various provisions listed above have differing time provisions for accomplishing the requirements that the particular rule provision addresses, or does not state any time provisions. The first calculation achieved consistency between these differing time requirements by recognizing that a new catheterization lab would be unlikely to achieve 600 procedures in two years in light of the fact that only 300 procedures are required in three years. Thus, the first calculation allows the time elements to be flexible and more reflective of reality and the start-up of a new business. The second calculation does not achieve this flexibility and internal consistency within the rule, and in fact, results in a very rigid rule which in effect presumes that a new lab will achieve 600 procedures in two years, regardless of whether it, in fact, can or desires to do so. Petitioner's application illustrates this point since its plan predicts Petitioner will perform only 325 procedures within three years from start up. In essence, Petitioner's new lab is nearly equal to 1/2 of a fully functional lab under the expectations of the Department's rule.

   11. The Department's original policy was given public recognition in Lee Memorial Hospital and Ft. Myers Community Hospital vs. HRS Case Numbers 82-1659 and 83-1518, 6 FALR 6774, (November 19, 1984). In that case, the Department specifically rejected a Recommended Order by a DOAH Hearing Officer who utilized the second calculation in recommending denial of the Petitioner's Certificate of Need. As in this case, the Hearing Officer was confronted with the situation where the first calculation recommended approval and the second calculation recommended denial. The Department specifically rejected the second methodology as being controlling and found that the first calculation was the controlling calculation and approved the Certificate of Need for the applicants. Since 1984, numerous other decisions of the department have followed the policy established by Mr. Nelson. See Humana Inc. v. DHRS, 6 FALR 2874 (1984), Plantation General Hospital v. DHRS, 6 FALR 6796 (1984), Humana Inc. v. DHRS,

       492 So.2d 388 (Fla 4th DCA 1986), Humana Inc. v. DHRS, 469 So.2d 889 (Fla 1st DCA 1985), South Sarasota County Memorial Hospital Association, Inc. v. DHRS, 7 FALR 1345 (1985), Adventist Health Systems/Sunbelt d/b/a Medical Center Hospital

       v. DHRS, 7 FALR 3500 (1985) and Lawnwood Regional Medical Center v. DHRS, 9 FALR 2646 (1987). It is clear that Petitioner's CON would be granted under the Department's past policy.

       
       

       The New Policy and Its Reasons

       
       

   12. As noted earlier, during Mr. Nelson's tenure, and Mr. Porter's tenure Miss Dudeck, the Department's expert witness, was one the staff personnel who examined CON applications. She was also one of the staff personnel who believed the second mathematical method was the controlling calculation for purposes of CON approval or denial. Sometime after May of 1985, Miss Dudeck was promoted to occupy the space once filled by Mr. Porter, i.e., Supervisor in the CON Program. According to Miss Dudek's testimony, the Department apparently decided to change its policy regarding which mathematical methodology would be controlling in CON approval or denial approximately two years ago. The Department decided, again with nothing written down, that the second mathematical calculation would be the controlling factor in CON review. The only rationale given by the agency at the hearing for its changed course of action was stated by Miss Dudeck to be the result of a change in agency personnel and the fact she thought it was required by the rule. There was no rulemaking engaged in by the agency and no formal written statements or informal memos rendered by the agency. Additionally, there is no credible evidence that there is any established method by which a member of the public could deduce this change in policy.

       
       

   13. In effect, the Department's change in position has achieved an impossibility by its own rule. On the one hand, the Department is saying six labs are needed in District 2. On the other hand, the Department by another statistic has made that goal impossible to achieve. The Department has established a system where it bases its decision on hypothetical need. The Department then establishes a presumption that all facilities operating will be operating at a level of 600 catheterization procedures within two years. This presumption has absolutely no basis in fact, as was evidenced by the continued examples given by all parties where a lab, in fact, would not be operating at either the 600 or the 300 catheterization level within two years, and as was further evidenced by Petitioner's application. Moreover, the Department's original 1984 policy recognized that new businesses do not start at a 600 level, but are only required to achieve a 300 level after three years. When the 600 level is to be achieved is not stated in the rule, nor did anyone seem to know who testified. Similarly, there are no resulting consequences to an operating lab which does not attain the 600 or even the 300 level of procedures. The

       Department's newest policy clearly does not allow for the other provisions of its Rule and is not consistent with those provisions or Chapter 381, F.S.

       
       

       CONCLUSIONS OF LAW

       
       

   14. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

       
       

   15. CON applications by their very nature are complicated and highly dependent on the facts and circumstances of each case. Therein lies the reason Chapter 381, F.S., requires a flexible rule and the weight accorded each criteria will vary, depending on the relevant facts and circumstances. Collier Medical Center v. HRS, 462 So.2d 83 (Fla. 1st DCA 1985). See also: Graham v. Estuary Properties, Inc., 399 So.2d 1374 (Fla. 1981)

       
       

   16. Against that background is the desire, if not the right, of an applicant to be treated in a consistent manner as other applicants by HRS or any agency. Consistency is accomplished through an agency's rules and non-rule policies, and judical decisions. As stated in Amos v. Department of Health and Rehabilitative Services, 444 So.2d 43, 47 (Fla. 1st DCA 1983):

       
       

       Central to the fairness of administrative proceedings is the right of affected persons to be given the opportunity for adequate and full notice of agency activities. These - persons have the right to locate precedent and have it apply, and the right to know the factual basis and policy reasons for agency action.

       
       

       See North Miami General Hospital, Inc. v. Office of Community Medical Facilities, 355 So.2d 1272 (Fla. 1st DCA 1978). Simply put, if an applicant is not treated in a consistent manner either under a rule or under non-rule agency policy then the applicant is entitled to know the reason why. McDonald v.

       Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977); Florida Cities Water Company v. PSC, 384 So.2d 1280 (Fla. 1980); Anheuser Busch, Inc. v. DBR, 393 So.2d 1177 (Fla. 1st DCA 1981). The above is particularly true when an agency acts through non- rule policy and, as in this case, elects not to write anything down to memorialize that policy.

       
       

   17. There is one very important limitation to the agency's ability to act under or change its non-rule policy. The agency's reason for acting under or deviating from its non-rule incipient policy must fall within and be rationally related to the agency's delegated authority. McDonald supra, Fla. Cities, supra, Anheuser-Busch, supra.

       
       

   18. A Section 120.57, F.S. hearing is precisely the statutory mechanism for an agency developing non-rule policy on a case by case basis. In such a hearing the agency has the opportunity to call witnesses, expert or otherwise, to explain its policy choice. However, the accuracy of every factual premise and the reason and rationality of every policy choice must be shown by evidence. Anheuser-Busch, supra.

       
       

   19. The evidence in this case did not demonstrate any rational basis for the change in the Department's policy regarding which mathematical formula would control the granting or denial of CON applications. The reasons given by Miss Dudeck for the change in policy either do not provide a record foundation for

       the change of policy or do not fall within the Department's statutorily delegated authority. A change in agency personnel is simply not within or rationally related to the Department's authority under Chapter 381, F.S., and therefore cannot stand as a reason for HRS to change its non-rule policy.

       Similarly, the reason that "the rule requires" the second calculation provides no record foundation, factual or otherwise, to support the Department's policy change. Florida Cities, supra. There must be some evidence which demonstrates how its changed policy meets the rules and statutory requirements and goals of CON applications, and why its changed policy meets those requirements and goals. No evidence was presented on either of these points by the Department.

       
       

   20. Moreover, the Department's newest policy is not consistent with either Chapter 381, F.S., or Rule 10-5.011, F.A.C. First, the key to Chapter 381, F.S., is flexibility. HRS v. Johnson & Johnson Home Health Care, 447 So.2d 361 (Fla. 1st DCA 1984). The Department's new policy precludes a balanced consideration of all the statutory and rule criteria by instituting a rigid numerical cutoff. This result is especially compelling since the Department's new policy does not appear to have a basis in reality regarding a new business' ability to achieve the numbers required among the various provisions of the Rule or a new business' desire to perform the number of catheterization procedures a numerical cutoff would suggest. Johnson & Johnson, supra. The old policy met this flexibility.

       
       

   21. On the contrary, the Petitioner did establish its need under HRS' former policy and did present rational reasons for that former non-rule policy. The parties stipulated that the resolution of the need criteria as outlined above was the only factor which mitigated against HRS granting Petitioner'S CON application. Petitioner met all other pertinent requirements and met all HRS' requirements, including need under HRS' former policy. Petitioner therefore, met its burden of proof for approval of its CON application.

RECOMMENDATION

Based on consideration of the foregoing, it is RECOMMENDED:

That the Department of HRS grant Gulf Coast's - application for a Certificate of Need for a new cardiac catheterization service.

DONE and ORDERED this 11th day of March, 1988, in Tallahassee, Florida.

DIANE CLEAVINGER

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 11th day of March, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-4761

Petitioner's proposed Findings of Fact Numbers 1, 2, 3, 4, 5, 6, 7, 9, 10,

11, 12, 14, 15, 16, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31 and

32 have been adopted, in substance, insofar as material.

Petitioner's proposed Findings of Fact Number 8 has been adopted as representing the correct figures in this case.

The first three sentences and the fifth and sixth sentences of Petitioner's proposed Findings of Fact Number 17 have been adopted. The 4th sentence is subordinate. The - reference to exclusive method in the 6th sentence was not shown by the evidence. The evidence showed the method to be controlling.

Petitioner had no proposed Findings of Fact Numbers 13 or 21.

Respondent's proposed Findings of Fact Numbers 1, 2, 3, 4, 5, 6, 9 and 12 have been adopted in substance, insofar as material.

Respondent's proposed Findings of Fact Numbers 7, 10, 11 and 13 were not shown by the evidence.

Respondent's proposed Findings of Fact Number 8 reflects the correct math, but the evidence did not demonstrate that the rule requires either the mathematical procedure or the result.

COPIES FURNISHED:

Thomas Beason, Esquire MOYLE, FLANIGAN, KATZ, FITZGERALD & SHEEHAN

118 North Gadsden Street Tallahassee, Florida 32301

Stephen Presnell, Esquire

MCFARLANE, FERGUSON, ALLISON & KELLY

215 South Monroe Street, 8th Floor Tallahassee, Florida 32302

Douglas J. Sale, Esquire BROWN & SMOAK

Post Office Box 426

Panama City, Florida 32402

John Miller, Acting General Counsel

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0955

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0955

Sam Power, HRS Clerk Department of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, Florida 32399-0955

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

HCA GULF COAST HOSPITAL,

Petitioner,

vs. CASE NO.: 87-4761

CON NO.: 5121

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent.

/

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 case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.

RULING ON EXCEPTIONS FILED BY HRS

1. HRS takes exception to finding of fact paragraph 8, where the Hearing Officer found that the use of two formulas is an "anomaly" in this case because the department has allegedly "concluded there is a need for six labs and then turned around and concluded there is not a need for six labs." Exception number one (1) is granted as the department determined that there was no numeric need for petitioner's proposed laboratory.

   
   

2. HRS takes exception to finding of fact, paragraph 9, where the Hearing Officer found that HRS has a "policy of not putting anything in writing for fear that it might be challenged as a rule." This is not the policy of the department; therefore, exception number two CAN'T READ.

   
   

3. HRS takes exception to finding of fact, paragraph 10, where the Hearing Officer found that "[t]he first calculation recognizing that a new catherization lab would be unlikely to achieve 600 procedures in two years in light of the fact that only 200 procedures are required in three years. Thus, the first calculation allows the time elements to be flexible and more reflective of reality and the start-up of a new business. The second calculation does not

   achieve this flexibility and internal consistency within the rule, and in fact, results in a very rigid rule which in effect presumes that a new lab will achieve 600 procedures in two years, regardless of whether it, in fact, can or desires to do so."

   
   

4. The Hearing Officer's criticism of the rule might be appropriate in a rule challenge proceeding. This case was brought under Section 120.57, Florida Statutes; therefore, exception number three (3) is granted.

   
   

5. HRS takes exception to finding of fact, paragraph 12, where the Hearing Officer found that there is no established method by which a member of the public could deduce this change in policy. The State Agency Action Reports applying the department's methodology were available to the public; therefore, exception number four (4) is granted.

   
   

6. HRS takes exception to finding of fact, paragraph 12, where the Hearing Officer found that "[t]he department's newest policy clearly does not allow for the other provisions of its Rule and is not consistent with those provisions or chapter 281, Florida Statutes." The department's interpretation and application of subpart 15.c of Rule 10-5.011(1)(d) does not establish a goal "impossible to achieve", and is not in conflict with the other provisions of the Rule or of Chapter 381, Florida Statutes. The Hearing Officer's finding is a legal conclusion and is rejected. Exception number five (5) is granted.

   
   

7. The department takes exception to conclusion of law, paragraph 6, where the Hearing Officer concluded that "[t]he reasons given by Miss Dudek for the change in policy ... do not fall within the department's statutorily delegated authority." McDonald vs. Department of Banking and Finance 1/ holds that when an agency makes policy through adjudication, the Final Order and the record must contain a predicate to support this policy. If the agency relies upon an "emerging policy" that is not found in preexisting rules or orders, that policy must be established and may be challenged during the adjudicative proceeding, and the Hearing Officer must record, recommend, and critique agency policy as it is revealed in the record.

   
   

8. The Division of Administrative Hearings is obligated to accept an agency's established interpretation of its own statutes and rules. Section 120.57(1)(b)10, Florida Statutes; Miller vs. Department of Environmental Regulation, 504 So2d 1325 (Fla. 1st DCA 1987) 2/

   
   

9. I conclude that the record predicate required in McDonald is not applicable where an agency applies the plain language of a rule or statute. I further conclude that a record predicate is not required for an interpretation of a statute or rule which has been established in a prior Final Order. A record predicate is required when an agency initially interprets the plain language of a rule or statute, and when an agency changes its established interpretation.

   
   

10. Returning to the present case, the department's change in interpretation of the need rule was explained as being the result of a change in personnel. Such an explanation does not satisfy the McDonald requirement for a record predicate. When the department changes its interpretation, the change should be justified by health planning reasons or a new judicial opinion such as Gulf Court Nursing Center vs. HRS, et al., 483 So2d 700 (Fla. 1st DCA 1986); therefore, exception number six (6) is denied.

11. The department takes exception to conclusion of law, paragraph 7, where the Hearing Officer concluded the department's policy "is not consistent with either Chapter 381, Florida Statutes or Rule 10-5.011" and "precludes a balanced consideration of all the statutory and rule criteria by instituting a rigid numerical cutoff." The First District Court of Appeal has ruled that the cardiac catherization rule does not preclude a balanced consideration of the applicable statutory and rule criteria because it allows an applicant to demonstrate that exceptional circumstances justify the approval of its application in the absence of numeric need. NME Hospital, Inc. vs. HRS, 494 So2d 256 (Fla. 1st DCA 1986); Humana, Inc. vs. HRS, 469 So2d 889 (Fla. 1st DCA 1988). Exception number seven (7) is granted.

RULING ON EXCEPTIONS

FILED BY BAY MEMORIAL HOSPITAL

Bay Memorial takes exception to the Hearing Officer's decision not to allow Bay Memorial to present testimony at the final hearing in this cause. Bay Memorial's request to participate was denied because Bay Memorial did not follow the clear rules regarding intervention. The Hearing Officer's ruling was correct; the exception is denied.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where conclusions of law are stated, which are inconsistent with the rulings on the exceptions.

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the rulings on the exceptions. The department failed to adequately justify its change in interpreting the need methodology; therefore, I conclude that the certificate of need should be approved based on a balanced weighing of all applicable statutory and rule criteria.

Based upon the foregoing, it is

ADJUDGED, that HCA Gulf Coast Hospital's application for CON number 5121 for the establishment of a cardiac catherization laboratory be approved.

DONE and ORDERED this 18th day of May, 1988, in Tallahassee, Florida.

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

by Assistant Secretary for Programs

ENDNOTES

1/ 346 So2d 569 (Fla. 1st DCA 1977)

2/ See Pan Am Airways vs. Florida Public Service commission, 427 So2d 716 (Fla. 1983), Humana vs. HRS, 492 So2d 388 (Fla. 4th DCA 1986); regarding the deference of the judiciary to an agency's interpretation of its rules and statutes.

COPIES FURNISHED:

Diane Cleavinger Lee Elzie, Esquire

Hearing Officer Stephen M. Presnell, Esquire DOAH The Oakland Building MACFARLANE, FERGUSON, ALLISON 2009 Apalachee Parkway & KELLY

Tallahassee, Florida 32301 215 South Monroe Street

Tallahassee, Florida 32302

Donna H. Stinson, Esquire Theodore E. Mack, Esquire Thomas M. Beason, Esquire Assistant General Counsel MOYLE, FLANIGAN, KATZ, Department of Health and FITZGERALD & SHEEHAN, P.A. Rehabilitative Services The Perkins House Suite 100 2727 Mahan Drive

118 North Gadsden Street Fort Knox Executive Center Tallahassee, Florida 32301 Tallahassee, Florida 32308

FALR Nell Mitchem (PDDR)

Post Office Box 385 Gainesville, Florida 32602

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 20th day of May, 1988.

R. S. Power, Agency Clerk Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700 904/488-2381

NOTICE OF RIGHT TO JUDICIAL REVIEW

PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE SECOND DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED

Docket for Case No: 87-004761

Orders for Case No: 87-004761