STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA PSYCHIATRIC CENTERS, )

)

Petitioner, )

)

vs. ) CASE NO. 88-0008RU

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) FLORIDA RESIDENTIAL TREATMENT ) CENTERS, INC., )

)

Intervenor. )

)

FINAL ORDER

Final hearing in the above-styled action was held on January 28, 1988 in Tallahassee, Florida, before Mary Clark, Hearing Officer of the Division of Administrative Hearings.

The parties were represented as follows:

For Petitioner: Kenneth G. Oertel, Esquire Florida M. Christopher Bryant, Esquire Psychiatric Oertel & Hoffman, P. A. Centers 2700 Blair Stone Road

Tallahassee, Florida 32301

For Respondent: Stephen Presnell, Esquire

Florida MacFarlane, Ferguson, Allison and Kelly Department of 215 South Monroe Street

Health and Tallahassee, Florida 32301 Rehabilitative

Services

For Intervenor: William E. Hoffman, Jr., Esquire Florida King & Spalding

Residential 2500 Trust Company Tower Centers, Inc. 25 Park Place

Atlanta, Georgia 30303

Petitioner filed its petition to determine the invalidity of agency rule(s) on January 4, 1988. Thereafter, on January 12, 1988, Florida Residential Treatment Centers, Inc., filed its petition to intervene. Intervention was granted in an order entered on January 26, 1988, in the absence of any objection or other response by the parties.

On January 26, 1988, Florida Residential Treatment Centers, Inc., filed a motion to exclude testimony of Larry Levinson, a general partner of Florida Psychiatric Centers, based on the intervenor's lack of opportunity to depose this witness. The motion was denied at the commencement of the hearing, after oral argument by the parties.

Also at the commencement of the hearing, HRS moved for dismissal of the petition based on lack of standing of the petitioner and on the argument that if a non-rule policy exists, it could be explicated and justified in a separate pending Section 120.57(1) proceeding (DOAH case No. 87-2046) involving a proposed certificate of need. The motion was denied for reasons found below in my conclusions of law.

In support of its petition, Florida Psychiatric Centers presented the testimony of three witnesses, Lawrence Levinson, Elizabeth Dudek, and Bruce Jones, M.D. (by deposition, without objection). Twelve exhibits were introduced and all but one were received into evidence. Ruling on exhibit #4, a deposition of Dr. Ronald Luke in DOAH case No. 87-2046, was held under advisement after objection by the other parties based on hearsay.

Petitioner argued that Exhibit 4 was an exception to the hearsay rule as an admission against interest by a party; however, the deponent's relationship, other than consultant hired to do a need analysis, was never established. Need analysis was not an issue in this proceeding; therefore, assuming that the offered statements are within the exceptions described in subsection 90.803(18)(c) or (d), those statements are irrelevant. Exhibit 4 is rejected.

The Department of Health and Rehabilitative Services and Florida Residential Treatment Centers, Inc., presented their case through cross- examination of the witnesses. In addition, Florida Residential Treatment Centers, Inc., was permitted to file two exhibits after the hearing, its exceptions to a recommended order in case Nos. 87-2036/87-2049, and certificate of need No. 4851.

A transcript of hearing was prepared, and only Florida Residential Treatment Centers, Inc., filed proposed findings of fact. Those are addressed in the attached appendix. The other parties submitted written arguments, and Florida Psychiatric Centers was permitted to file a response. All of these documents have been considered in the preparation of this order.

STATEMENT OF ISSUES

In its petition, Florida Psychiatric Centers (FPC) alleges that HRS seeks to grant a CON to Florida Residential Treatment Centers, Inc. (FRTC), based on the agency's unpromulgated policy that ". . . at least one residential treatment center should be approved in each of DHRS' eleven health planning districts in Florida, regardless of the need for such facilities." (Petition, page 2, paragraph 6.)

FPC argues that the policy is a "rule" and is invalid as a rule because it has not been adopted pursuant to Section 120.54, F.S., and because it conflicts with Sections 381.493, F.S., and 381.494, regarding need criteria. Further, FPC argues the "rule" is arbitrary and violates due process because the agency predetermines need regardless of the availability of like and existing services.

HRS and Intervenor, FRTC, argue that the policy is incipient and needs not be promulgated. Further, the policy does not obviate a determination of need. HRS and FRTC claim that FPC lacks standing to bring this action, as its facility is a hospital and not the same as an intensive residential treatment program.

HRS admits that the alleged policy has not been promulgated under Section 120.54, F.S.

The issues for determination in this proceeding are summarized as follows:

1. Whether FPC has standing to bring this action;

   
   

2. Whether HRS has a policy regarding CON approval of intensive residential treatment programs, and whether that policy is a "rule"; and

   
   

3. If the policy is a rule, is it an invalid rule?

FINDINGS OF FACT

1. FPC is a partnership which has received CON #2654 to construct a 100- bed psychiatric hospital in the Plantation/Sunrise area of West Broward County. The facility is under construction and will include 80 short-term psychiatric beds (40 geriatric, 15 adolescent, and 25 adult beds) and 20 short-term substance abuse beds.

   
   

   FPC anticipates an average length of stay of approximately 28 days for adults and less than 60 days for adolescents.

   
   

2. FRTC is owned by Charter Medical Corporation. It proposes to build and operate a 60-bed intensive residential treatment program for children and adolescents in Broward County. The proposed facility will treat children and adolescents in need of psychiatric services. Its anticipated average length of stay is approximately one year.

   
   

   If it is awarded a certificate of need, FRTC intends to obtain licensing by HRS pursuant to Chapter 395, F.S., and Chapter 10D-28 F.A.C. No other facility licensed as an intensive residential treatment program, as defined in subsection 395.002(8), F.S. (1987), is available in Broward County.

   
   

3. On March 11, 1987, HRS issued CON #4851 to FRTC for its 60-bed facility. A challenge to that CON is pending in DOAH consolidated cases #87- 2046/87-2400/87-2401. FPC is a petitioner in the case, with Florida Medical Center and South Broward Hospital District.

   
   

4. Section 395.002(8), F.S., defines "Intensive Residential Treatment Programs for Children and Adolescents as:

   
   

   . . . a specialty hospital accredited by the Joint Commission on Accreditation of Hospitals which provides 24-hour care and which has the primary functions of diagnosis and treatment of patients under the age of 18 having psychiatric disorders in order to restore such patients to an optimal level of functioning.

5. When completed, FPC will be accredited by the Joint Commission on Accreditation of Hospitals; it will provide 24-hour care and will have the primary function of diagnosis and treatment of patients with psychiatric disorders and problems of substance abuse.

   
   

   Unlike the other psychiatric hospitals in Broward County, FPC will have a campus-like setting and separate buildings for the various services. FPC will not be a locked facility.

   
   

   With the exception of the length of stay, the services provided by FPC for its adolescent patients will be essentially the same as an intensive residential treatment program, as defined above.

   
   

6. Until recently, HRS has had very few CON applications for intensive residential treatment programs. HRS has considered that these programs must undergo CON review only if they seek licensure as a specialty hospital.

   
   

7. In considering need for intensive treatment programs, HRS does not consider unlicensed residential treatment programs to be like and existing services because HRS is not required to review unlicensed facilities; HRS would not have any way of knowing all the programs in operation and would have no control over the services offered. This policy is similar to the policy HRS employed in conducting CON review of ambulatory surgery centers. In those cases, HRS did not consider the outpatient surgery being performed in physicians' offices.

   
   

8. Because the legislature has created a special definition of intensive residential treatment facility, and because the State Health Plan seeks a continuum of mental health services, HRS presumes there is a need for a reasonably sized intensive residential treatment facility in each planning district. This presumption can be rebutted with evidence in a given case, such as the fact that the district has few children with mental illnesses, or that such programs have been tried and failed, or that parents in the area prefer to send their children outside the district.

   
   

   Moreover, any applicant for a CON for an intensive residential treatment facility must evidence compliance with the myriad criteria in Section 381.705,

   F.S. (1987), and in Chapter 10-5, F.A.C.

   
   

   Although there is no specific bed need methodology adopted by HRS for intensive residential treatment facilities, other psychiatric services, such as long-term psychiatric care, are also evaluated without a numeric bed need methodology.

   
   

9. HRS has applied its presumption of need policy in intensive residential treatment program CON reviews at least since 1983. One reason why the policy has not been adopted as a rule is that there have been so few applications in that category.

   
   

   In the experience of Elizabeth Dudek, Health Facilities and Services Consultant Supervisor, the first level supervisor for CON review, there were merely three applications of this type prior to a recent batch of three more applications.

   
   

10. FPC's Petition to Determine Invalidity of Agency Rule(s) alleges that HRS' policy is ". . . at least one residential treatment center should be

    approved in each of DHRS' eleven health planning districts in Florida, regardless of the need for such facilities." (paragraph 6)

    
    

    FPC further alleges that HRS construes Chapter 395 as requiring it to ". .

    . automatically approve at least one residential treatment center in each DHRS health planning district regardless of whether the statutory criteria for need in Section 381.494(b), F.S. [renumbered and amended as Section 381.705, F.S., in 1987] would be met by the applicant." (paragraph #7)

    
    

    These allegations were not proven in this proceeding and are rejected in favor of the less rigid presumption of need policy described in findings of fact #7 and #8, above.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction in this matter pursuant to Section 120.56, F.S.

    
    

12. Section 120.56(1) F.S., provides:

    
    

    1. Any person substantially affected by a rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority.

       
       

       A rule is an invalid exercise of delegated legislative authority if,

       
       

       1. The agency has materially failed to follow the applicable rulemaking procedures set forth in Section 120.54, F.S.;

       2. The agency has exceeded its grant of rulemaking authority, citation to which is required by Section 120.54(7), F.S.;

       3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by Section 120.54(7), F.S.;

       4. The rule is vague, fails to establish adequate standards for agency decision, or vests unbridled discretion in the agency; or

       5. The rule is arbitrary or capricious. Section 120.52(8), F.S.

       
       

13. FPC has standing as a person substantially affected by the agency policy alleged to be a rule. Both FPC and FRTC will provide psychiatric services to adolescents who are mentally ill and substance abusers, and FPC is currently a party in a proceeding challenging FRTC's CON application in which the agency policy will presumably be exposed.

    
    

    With the exception of the average length of stay, the services to be provided by FPC under its CON are substantially the same as the services provided by an intensive residential treatment facility as defined in Section 395.002(8), F.S. Length of stay and differing rule methodologies do not control the issue of standing in CON proceedings. St. Francis Parkside Lodge of Tampa Bay v. Department of Health and Rehabilitative Services, 503 So.2d 381 (Fla. 1st DCA 1987)

14. Petitioner has proven that HRS has a policy which it has consistently applied in its CON evaluations of intensive residential treatment facilities. That policy is described in findings of fact #7 and #8, above.

    
    

    That policy is a "rule," based upon the plain reading of the definition in Section 120.52(16), F.S.:

    
    

    (16) "Rule" means each agency statement of general applicability that implements, interprets, or prescribes law or policy

    
    

15. The policy/rule is not inconsistent with Chapter 381, F.S., or other statutory provisions, but is a criteria similar to those formula methodologies adopted for other types of facilities in Rule 10-5.011, F.A.C. It is most closely related to the access standards found in Rules 10-5.011(1)(o)g. and 10- 5.011(1)(p)c., for short and long-term inpatient hospital psychiatric services. Those access standards provide that short and long-term services should be available for at least 90 percent of the service area's population within a maximum travel time of 45 minutes, for short term, and two hours for long term services.

    
    

    As described in this proceeding, HRS' policy does not result in an automatic grant of CON to the first applicant in the district nor does it relieve the applicant of its burden of proving entitlement to the certificate. The policy/rule is not, therefore, in derogation of the criteria in Section 381.705, F.S. (1987), nor the general criteria found in Rule 10-5.011, F.A.C.

    
    

16. Its admitted failure to promulgate its policy as a rule is not fatal to HRS' application of that policy on a case by case basis. The opportunity for exposure and challenge to the policy is available in a 120.57(1), F.S., proceeding, in lieu of the 120.54, F.S., rule making process.

The appellate courts, in construing Section 120.56, F.S., have evolved from the early cases invalidating policies unpromulgated as rules, but within the virtually limitless definition of "rule" in Section 120.52(16) F.S. Agencies are given the choice of properly promulgating policies as rules and applying them with the force and effect of law, or of fully explicating those policies and exposing them to challenge every time they are applied in an adjudicatory procedure. McDonald v. Department of Banking and Finance 346 So.2d 569 (Fla.

1st DCA 1977). Amos v. Department of Health and Rehabilitative Services, 444 So.2d 43 (Fla. 1st D.C.A. 1983); Gulf Coast Home Health Services of Florida, Inc. v. State of Florida, Department of Health and Rehabilitative Services, 513 So.2d 704 (Fla. 1st DCA 1987).

In Amos, p. 47, supra, the agency's policy was invalidated, not solely because it had not been promulgated as a rule, but because the agency also failed to affirmatively show the reasonableness and factual accuracy of the policy. Whether the policy is "incipient" or evolving, is not material to the application of this principle. Suffice it to say that the policy in the instant case is at least as "incipient" as the home health agency policy addressed in Gulf Coast, supra.

Petitioner has cited no case which invalidates a policy summarily for its unpromulgated status. The policies, rather, have been invalidated as rules.

State Department of Administration v. Harvey, 356 So.2d 323 (Fla. 1st DCA 1978). This means, of course, they cannot be applied as rules, but must be defended on

a case by case basis each time the occasion arises in a Section 120.57(1), F.S., proceeding.

Presumably this is precisely what is transpiring in DOAH #87-2046, the Section 120.57(1), F.S., challenge to FRTC's CON. The wisdom of the policy and its appropriate application in the real matter in controversy among these parties will be determined in that case, rather than here.

Based upon the foregoing, it is hereby, ORDERED:

1. Petitioner, Florida Psychiatric Centers, has standing to bring this action.

   
   

2. HRS' policy regarding a rebuttable presumption of need for one reasonably sized intensive residential treatment program in each HRS planning district is invalid as a rule for failure to promulgate pursuant to Section 120.54, F.S.

   
   

3. The policy is not invalid as contrary to Chapter 381 F.S., or other statutory provisions.

DONE and ORDERED this 5th day of May 1988, in Tallahassee, Florida.

MARY CLARK

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 5th day of May 1988.

APPENDIX

The following constitute my rulings on the findings of fact proposed by Florida Residential Treatment Center, Inc.:

1. Adopted in substance in paragraph 2.

2. Adopted in paragraph 1.

3-4. Rejected as summary and commentary on testimony, rather than a finding of fact.

1. Adopted in substance in paragraph 3.

2. Adopted in substance in paragraphs 6 and 8 7-8. Adopted in substance in paragraph 7.

1. Rejected as unnecessary, except as provided in paragraph 8.

2. Adopted in paragraph 9.

3. Adopted in paragraph 8.

12-13. Rejected as unnecessary and immaterial.

COPIES FURNISHED:

Sam Power, Clerk

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Building One, Suite 407 Tallahassee, Florida 32399-0700

Gregory L. Coler, Secretary

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

John Miller, Esquire Acting General Counsel

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Building One, Suite 407 Tallahassee, Florida 32399-0700

Kenneth G. Oertel, Esquire

M. Christopher Bryant, Esquire Oertel & Hoffman, P. A.

2700 Blair Stone Road Tallahassee, Florida 32301

Stephen Presnell, Esquire

MacFarlane, Ferguson, Allison and Kelly

215 South Monroe Street Tallahassee, Florida 32301

William E. Hoffman, Jr., Esquire King & Spalding

2500 Trust Company Tower

25 Park Place

Atlanta, Georgia 30303

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: 88-000008RU

Orders for Case No: 88-000008RU