STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FLORIDA CONVALESCENT CENTERS, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 88-0840
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on August 10, 1988, in Tallahassee, Florida.
APPEARANCES
Petitioner: Robert P. Daniti, Esquire
1017-C Thomasville Road Tallahassee, Florida 32303
Respondent: Richard A. Patterson, Esquire
Department of Health and Rehabilitative Services 2727 Mahan Drive
Fort Knox Executive Center Tallahassee, Florida 32308
PRELIMINARY STATEMENT
Respondent notified Petitioner Florida Convalescent Centers, Inc. (hereinafter "FCC"), that Petitioner's Certificate of Need (hereinafter "CON") No. 3024 for the construction of a 120-bed nursing home in Dade County, Florida, was null and void since the project was not under physical and continuous construction beyond site preparation by January 26, 1988. Petitioner timely filed a request for formal hearing to determine the continued validity of that CON. Accordingly, the issue for determination herein is whether the project was under physical and continuous construction by that date.
Petitioner presented the testimony of Anthony J. Estevez, Mark Druash, and William T. Searcey. Petitioner's Exhibits numbered 1-12 were admitted in evidence. Respondent presented the testimony of William Wayne McDaniel, Sharon Gordon-Grivin, and Robert Edward Pannell. Respondent's Exhibits numbered 1-11 and 13-21 were admitted in evidence.
Both parties submitted post-hearing proposed findings of fact in the form of proposed recommended orders. A ruling on each proposed finding of fact can be found in the Appendix to this Recommended Order.
FINDINGS OF FACT
Agreed Facts:
The Department of Health and Rehabilitative Services (hereinafter "HRS") is the affected agency and is responsible for agency action concerning certificates of need in Florida.
FCC is a Florida corporation located at 345 South Magnolia Drive, Suite E-21, Tallahassee, Florida 32301.
FCC applied for a CON to construct a 120-bed nursing home in Dade County, Florida, in January 1984. HRS denied that application on March 2, 1984, and FCC timely requested an administrative hearing.
During the course of this first round of administrative litigation, HRS resolved its dispute with FCC and issued to FCC CON No. 3024 to construct a 120- bed nursing home in Dade County, Florida. HRS required 24 of the 120 beds to be dedicated to Medicaid patients. HRS issued the CON to FCC on February 4, 1985, but did not issue its final order in the first round of litigation until July 1, 1985.
In October 1985, St. Francis Hospital challenged FCC's CON No. 3024. This litigation was independent of the initial first round of litigation concerning this CON. The St. Francis case was resolved in December 1985, and HRS tolled the time for FCC to commence construction. HRS stated that the new starting date for the project was December 4, 1985, and that the project must be under continuous construction by December 3, 1986.
On November 14, 1986, FCC requested a six-month extension of the one- year validity period for CON No. 3024. HRS granted that request on February 5, 1987, and established June 3, 1987, as the new termination date for CON No. 3024. HRS does not dispute that FCC properly obtained this six-month extension.
On December 1, 1986, however Forum Group initiated new litigation challenging FCC's CON pursuant to the opinion of the First District Court of Appeal in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st Dist. 1985).
This third round of litigation concluded when Forum Group voluntarily dismissed its appeal before the District Court of Appeal, and the District Court issued its order closing the case on July 28, 1987.
Based on this third round of litigation, HRS established January 26, 1988, as the new termination date for CON No. 3024.
On October 23, 1987, FCC filed an interim cost report for this project showing an expenditure of $84,000.
On January 7, 1988, HRS issued a letter to FCC permitting FCC to lay the foundation for CON project No. 3024. On January 19, 1988, HRS approved the entire construction plans for CON No. 3024, and through its contractor, FCC promptly obtained a local building permit, No. 0788, on January 22, 1988.
At 11:15 a.m. on January 27, 1988, the day after the termination date for this CON, HRS conducted a site visit.
By letter dated January 29, 1988, HRS stated that the CON was null and void and requested FCC to return the original CON. FCC received that letter on February 8, 1988.
FCC timely petitioned for a formal administrative hearing under Section 120.57(1), Florida Statutes (1987), on February 12, 1988. HRS referred the petition to DOAH to conduct a formal hearing.
The only grounds stated by HRS as the basis for voiding CON No. 3024 is that the project was not "under physical and continuous construction beyond site preparation" by January 26, 1988.
Prior to January 26, 1988, FCC completed the following activities with regard to CON No. 3024:
Obtained land for the project;
Procured a building permit from the local building authorities;
Obtained a foundation permit from HRS;
Obtained HRS' approval of the actual construction documents for the construction of the entire 120-bed nursing home, pursuant to a letter from Mr. Richard Rosenvold, HRS, dated January 19, 1988 (authorizing the construction of the entire project beyond the foundation).
On or before January 26, 1988, FCC undertook the foundation forming of the nursing home authorized CON No. 3024 by installing steel and placing concrete on its site in Dade County, Florida, in accordance with HRS-approved construction documents.
HRS agrees that, if FCC prevails in this case, FCC will have twelve months from the rendition of the Final Order within which to recommence construction pursuant to CON No. 3024.
Disputed Facts:
Interruptions in the Validity Period
The purpose of the validity period of a CON is to provide an uninterrupted space of time for the CON holder to commence construction. During this period the holder of the CON must get architectural plans approved by HRS, obtain land and proper zoning, obtain a building permit, obtain financing, and begin constructing the project.
The CON validity period is twelve months. HRS may authorize one six- month extension, for a maximum validity period of eighteen months.
The validity period for CON No. 3024 was unique, in that the CON was twice subjected to legal challenges which threatened the validity of the CON long after the CON was issued by final agency action.
Because HRS recognizes the significance of legal challenges which threaten the validity of a CON, HRS tolls the validity period throughout the duration of such challenges.
HRS twice tolled the validity period for FCC's CON No. 3024, first, because of the challenge brought by St. Francis Hospital and, second, because of Forum Group's Gulf Court challenge
As a result of this stop-and-go process, FCC did not have an uninterrupted eighteen months, to commence construction of CON No. 3024.
The significance to FCC of the interruptions to the validity period for CON No. 3024 were:
FCC could not obtain project financing during legal challenges to the CON or during the time periods after the challenges were concluded but before HRS issued its letter recommencing the validity period.
Because of the Forum Group challenge, FCC could not close on its contract to purchase land for the project and lost the first site it had selected for construction of its nursing home.
FCC incurred increased costs for zoning in that it lost the sums it had expended to obtain appropriate zoning approval from the local zoning authority for the first site.
The St. Francis and Forum Group legal challenges delayed the commencement of construction for CON No. 3024 between three and four months. This delay is in addition to the time lost during the pendency of the litigation when FCC could make no additional expenditures to develop the project.
FCC did not make expenditures toward commencing construction of CON No. 3024 during the pendency of any litigation challenging the validity of that CON because to do so is commercially unreasonable.
However, FCC did not wait for HRS' notification that the validity period for this CON had recommenced before contracting to purchase an additional site. After investigating five other locations, FCC contracted to purchase land located at 16100 Northwest 2nd Avenue, Miami, Dade County, Florida, on September 4, 1987.
Retroactive Notices
By statute, HRS is responsible for notifying CON holders of the commencement tolling, and recommencement of the CON validity period.
Without notification from HRS about the duration, commencement, tolling, and recommencement of the validity period for a CON, the CON holder cannot make appropriate plans to commence construction of a CON project. Without clear notification from HRS about the duration of the CON validity period, lenders will not finance CON projects.
HRS twice provided tardy notice to FCC about the recommencement of the validity period for CON No. 3024:
The St. Francis Hospital litigation was settled favorably for FCC in December 1985. Nonetheless, HRS did not notify FCC that its validity period had recommenced as of the date of the December 1985 final order until its letter dated February 10, 1986.
Forum Group dismissed its appeal and the First District Court of Appeal issued an order of dismissal on July 27, 1987. Nevertheless, HRS did not notify FCC that the validity period for CON No. 3024 would recommence as of July 27, 1987, until its letter dated September 28, 1987.
Even though FCC did not complain about the January 26, 1988, termination date which HRS established for CON No. 3024 by letter dated September 28, 1987, until HRS initiated this action, FCC's failure to complain does not rectify HRS' retroactive notifications.
Forum group initiated its challenge with two days then remaining for the validity period for CON No. 3024. HRS then tolled the validity period for this CON throughout the legal challenge. HRS approved FCC's request for the six-month extension by letter dated February 5, 1987, while the validity period continued to be tolled. When the Forum Group litigation was dismissed, HRS extended FCC's validity period for this CON to January 26, 1988, which is a total of six months and two days (182 days) from the date of the July 27, 1987, order of dismissal.
Tree Permit
There were no trees where the foundation for CON No. 3024 was to be located, and there were no protected species of trees on the site for this project. Accordingly, the local authority for Dade County did not require a tree permit for this site.
Zoning and Other Approvals
FCC, through its Vice President of Development and Project Architect William T. Searcy, an expert in architecture and in the evaluation of construction costs, applied for zoning for the second project site for CON No. 3024. Prior to commencing construction before the termination date of the CON, the local zoning authority unanimously approved FCC's application for a 120-bed nursing home with a screened fence between the nursing home and its adjoining neighbors.
FCC obtained a waiver of the requirement to plat its site for CON No. 3024 from the local authorities for Dade County on January 22, 1988.
FCC did preliminary worth with local utility companies to insure all utility service would be available to the nursing home, prior to the January 26, 1988, termination date for CON No. 3024.
Construction Contract
In late January 1988, FCC, through its owner, James McCarver, verbally agreed to engage Anthony Estevez and Project Advisors Corporation as general contractor to construct the nursing home authorized by CON No. 3024.
FCC ordered Estevez to proceed to construct CON No. 3024, and FCC agreed to pay the contractor's time and materials plus 15 percent for overhead and profit. These terms would later be reduced to a written contract, but this action by HRS intervened.
Estevez obtained the building permit for CON No. 3024 from the local building authority for Dade County, Florida, only after this verbal construction contract was entered into between FCC and Estevez.
Construction Activities
FCC hired a soils testing laboratory on October 21, 1987, to do a soil investigation report on the second site for CON No. 3024; adapted its construction plans to fit the new site; hired a building permit specialist familiar with the Dade County building authorities; and hired a civil engineer for the project.
The soil testing laboratory, Wingerter Laboratories, Inc., issued its report on October 30, 1987.
The project general contractor followed the soil engineer's recommendation in the Wingerter soils report in constructing the footer for the southeast corner of the nursing home authorized by CON No. 3024, and the site was properly prepared.
FCC's general contractor, Anthony Estevez, is an expert in general contracting and in the design, construction, and management of health care facilities.
On or before the January 26, 1988, termination date, the project's general contractor for CON No. 3024:
Had the surveyor, J. F. Lopez, stake out the corners of the building and the footings the contractor planned to pour.
Performed all work on the site in accordance with HRS-approved construction documents.
Had Vallero Trucking clear the site to good soil where the footer was to be poured. Several thousand square feet were cleared for the footer. The contractor was clearing additional portions of the site when HRS inspected on January 27, 1988.
Filled the pad where the footer would be poured.
Vibro-compacted the soil under the footer in layers.
Used limerock to make a very supportive base for the footer.
Set reinforcing steel where the footer was poured.
Obtained the threshold engineer's inspection and approval to pour the footer. The threshold engineer inspected the soil compaction and approved the pour. The soil-bearing capacity under the footer was 6,000 pounds per square inch ("PSI"), well in excess of the required 25 PSI for this project.
Poured concrete to form a footer of 15 feet at the southeast corner of the foundation for the subject nursing home.
Had a compression cylinder test done to determine the strength of the footer. The footer had a strength of 4,600 PSI twenty-eight days after it was poured, well in excess of the 3,000 PSI required.
The footer met and exceeded the specification for CON No. 3024 and represents a continuous 15-foot segment of the foundation at the southeast
corner of the proposed nursing home. The footer is strong enough to support more than the one-story structure of the nursing home for which it was designed.
The contractor had a construction trailer on site for CON No. 3024 on the afternoon of January 27, 1988, just after HRS' inspection.
The contractor had a bulldozer, a vibro-compacting roller, and a combination backhoe and front-end loader on site between January 23, 1988, and the end of January or the beginning of February 1988.
The contractor's crew was on site for CON No. 3024 from January 22, 1988, until the end of January or the beginning of February 1988, including Saturdays and Sundays.
But for this action, there were no barriers to FCC's continuous construction of CON No. 3024 after January 26, 1988.
Expenditures and Losses
FCC and its general contractor expended, or owe, $256,000 to construct the nursing home in Dade County authorized by CON No. 3024. This includes FCC's expenditures for studies and consultants as well as for legal fees to obtain the CON. This also includes direct costs for travel and long-distance telephone calls, for the development of the architectural plans and construction documents, for engineering, for the down-payment on the second site, and for zoning for both the first and second sites.
The general contractor for CON No. 3024 spent in excess of $50,000 on the project to obtain the building permit, fill, equipment, supervision, labor, a threshold engineer, temporary electricity, steel, concrete, the construction trailer, a portable toilet, and insurance.
After HRS' site visit on January 27, 1988, when HRS told Estevez, the general contractor for the project, that HRS would terminate CON No. 3024, Estevez ordered all construction on the project to stop. Estevez did so because HRS told him he could not proceed with construction.
Because HRS issued its January 29, 1988, letter declaring CON No. 3024 null and void, FCC lost the right to purchase the second site, the land on which it had commenced construction.
The HRS Inspection
During HRS' inspection on January 27, 1988, there was a bulldozer on site for this project, a construction foreman, and several workers. The construction trailer was in place on the site for this project by the afternoon of January 27, 1988.
HRS found a building permit for the project on site during the January
27 inspection.
The HRS inspector took pictures of the site for CON No. 3024 depicting construction activity which included foundation forming with steel installation and concrete placing of the footer for the southeast corner of the nursing home authorized by CON No. 3024.
HRS sent FCC notice that it was terminating CON No. 3024 as null and void based solely on the January 27, 1988, inspection.
HRS based its notice letter on faulty information:
HRS believed that a tree permit was required when in fact there were no protected species of trees on the site for CON No. 3024. Consequently, FCC did not need a tree permit from local (Dade County) authorities.
HRS believed FCC did not have a soil report when in fact the threshold engineer approved the pouring of a footer based on specified soil compaction.
HRS believed that only 25 square feet of the site had been cleared but the footer required, and the contractor cleared, several thousand square feet of the site to pour the 15-foot footer.
HRS' decision makers lacked adequate expertise to determine whether FCC had commenced construction of CON No. 3024. The HRS decision makers did not know that the HRS Plans Review Section had approved the construction plans and specifications for CON No. 3024 prior to the January 26, 1988, expiration date for that CON.
Site Preparation
HRS has no rule for interpreting the "continuous [construction] activities beyond site preparation" portion of the definition of "commence construction." HRS' non-rule interpretation of this phrase is that all site work, including soil compaction for the foundation, delineation of the foot print of the facility, and the clearing of vegetation within the area of the site where the foundation will be poured, must be completed before the termination date in order for the CON holder to validate the CON by commencing construction.
FCC was not on notice as to HRS' "policy" definition of construction activity beyond site preparation, and HRS' witnesses did not uniformly describe that "policy."
In construction parlance, site preparation includes the preparation of the entire project site. This includes sub-grading under the paving, placing fill under the footers, clearing the entire project site, and finishing the project up to the finished grade.
For most large health care and commercial projects, clearing is done in stages and site preparation is merely kept ahead of forming the foundation. No phase is completed before the next phase is begun.
If all site preparation had to be completed before a CON holder could go on to the next phase of construction, each CON project would be delayed approximately five weeks at a great cost to the CON holder and to taxpayers and health-care consumers.
Prior Inconsistent Action by HRS
HRS has not required FCC, nor any other CON holder, to meet the definition of commencing continuous construction beyond site preparation that it required of FCC in this case.
HRS found FCC to have commenced construction of five other nursing home projects in Florida after FCC performed construction activities and site preparation identical with FCC's work on CON No. 3024.
HRS did not terminate Glenbeigh Hospital's (hereinafter "Glenbeigh") CONs to construct two hospitals even though Glenbeigh completed less construction activity to commence these projects prior to their termination date than FCC had with CON No. 3024.
HRS validated Glenbeigh's CON No. 3217 for an eighty-bed substance abuse hospital in Orlando when:
Glenbeigh had only a verbal contract with its general contractor three or four days before constructing two small column pads. A building permit was obtained May 21, 1986, before there was any written AIA contract.
Glenbeigh only constructed two column pads two feet long by two feet wide by a foot and one-half deep before its June 7, 1986, termination date, versus FCC's fifteen-foot continuous footer on CON No. 3024.
A retention pond, shown in pictures taken by HRS of Glenbeigh's project, was not even on the project site and was not something constructed by the CON holder to commence the project.
There was no soil test or geologist's report for the column pads, nor for the site.
Glenbeigh did site preparation under the foundation long after the column pads were poured and after the termination date for that CON.
HRS validated Glenbeigh's CON No. 2667 for a sixty-bed adolescent chemical dependence hospital in West Palm Beach, now licensed, when:
Prior to the termination date, Glenbeigh poured two column pads after compacting only under the pads.
Glenbeigh continued to perform site preparation under the foundation after the termination date of December 28, 1985, for that CON.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter hereof and the parties hereto. Section 120.57(1) Florida Statutes.
Section 381.710(2)(a), Florida Statutes (1987), [formerly Section 381.494(8)(f), Florida Statutes (1985)] provides, in pertinent part, as follows:
Unless the applicant has commenced construction, if the project provides for construction, . . . a certificate of need shall terminate 1 year after the date of issuance. The department may extend the period of validity of the certificate for an additional period of up to 6 months, upon a showing of good cause, as defined by rule, by the applicant for the extension.
The term "commenced construction" is defined by Section 381.702(3), Florida Statutes (1987) [formerly Section 381.493(3)(d), Florida Statutes (1985)], to mean:
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.
Rule 10-5.018(1), Florida Administrative Code, provides, in pertinent part, as follows:
A certificate of need shall terminate not more than 1 year after the date of issuance unless the project for which it was issued has commenced construction, if the project provides for construction . . . . A holder of a certificate of need shall be deemed to have commenced construction if the following documents have been provided to the department representative on the first site visit.
A valid building permit applying the use of department-approved construction documents; and
A properly executed owner/contractor agreement or an irrevocable, binding forced account; and
A properly executed and authenticated legal instrument, signed by the project architect registered in the State of Florida, and including photographs of the project site, which conclusively establish that foundation forming with steel installation and concrete placing has been actually undertaken relative to the project for which the certificate of need was issued to the holder; and
A detailed site map which includes an identification of the location of the project site relative to the surrounding geographic area.
It is HRS' burden in this proceeding to demonstrate that FCC failed to commence construction as defined by the statutes and rules set forth above. Since HRS is asserting the affirmative of the issue of whether FCC's CON should be terminated as null and void, it has the ultimate burden of persuasion. The party having the ultimate burden of persuasion has the burden of proof. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. Dist.
1981); Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st Dist. 1977). In effect, HRS seeks to revoke FCC's CON No. 3024 for FCC's failure to meet statutory and rule criteria. HRS has failed to meet its burden of proof in this proceeding.
FCC did commence construction of the nursing home authorized by CON No. 3024 on or before January 26, 1988, within the meaning of Sections 381.702(3) and 381.710(2)(a), Florida Statutes (1987), and Rule 10-5.018(1), Florida Administrative Code, in that:
A valid building permit was obtained for the construction of the project based upon HRS-approved construction documents, satisfying Rule 10- 5.018(1) (a), Florida Administrative Code
FCC obtained an irrevocable, binding forced account in that it had a verbal agreement with the project general contractor to construct the 120-bed nursing home authorized by CON No. 3024 in Dade County, Florida, and the contractor incurred considerable expense performing pursuant to that verbal contract. Thus, Rule 10-5.018(1)(b), Florida Administrative Code, was satisfied.
Both the site visit and the overwhelming evidence in this case confirm that forming the foundation with steel installation and concrete had been undertaken at the site sufficient to satisfy the requirements of Sections 381.702(3) and 381.710(2)(a), Florida Statutes (1987), and Rule 10-5.018(1), Florida Administrative Code. A 15-foot continuous footer was constructed which could support the southeast corner of the proposed nursing home. Construction of the footer was such that it conformed to and exceeded the plans and specifications in the construction documents approved by HRS for the construction of this nursing home. This satisfied Rule 10-5.018(1)(c), Florida Administrative Code.
HRS' inspection of the site for this project substantiated the location of the project site with regard to adjacent property, satisfying Rule 10- 5.018(1)(d), Florida Administrative Code.
The verbal agreement between FCC and Estevez is a valid, binding contract which is not prohibited by Florida law or policy. This verbal contract satisfies the requirements of Section 381.702(3), Florida Statutes (1987), and Rule 10-5.018(1), Florida Administrative Code, in that its terms constitute a binding forced account. Under the contract, FCC was legally bound to pay the general contractor for time and materials as well as 15 percent for overhead and profit.
HRS' position would require a CON holder to completely clear the site where the foundation of the proposed health-care facility is to be placed prior to validating the CON. This is unreasonable and arbitrary because large commercial projects, such as a nursing home, can be built and are most frequently built in stages. HRS has no authority to require how a project is to be built other than to ensure the public that construction is timely commenced. Sections 381.702(3) and 381.710(2)(a), Florida Statutes (1987). It is costly and commercially unreasonable for HRS to prevent CON holders from constructing health care facilities in stages. Moreover, in this case, FCC fully satisfied that statutory requirement by clearing the land and compacting the soil beneath the footer which it constructed. This is construction activity beyond site preparation. The footer was prepared sufficiently and concrete was poured with reinforcing steel such that it could more than withstand the weight of the
structure which it was designed to support (the southeast corner of the 120-bed nursing home authorized by CON No. 3024). But for this action, HRS proved no impediments to FCC continuously constructing the subject nursing home in stages after commencing construction on or before January 26, 1988.
Neither Section 381.702(3), Florida Statutes, nor Rule 10-5.018(1), Florida Administrative Code, requires that all site preparation be completed before construction can be deemed to have commenced; rather, they only require some kind of construction activity in addition to, i.e., "beyond," site preparation activity. Pouring concrete footers is not site preparation. Likewise, neither Section 381.702(3), Florida Statutes, nor Rule 10-5.018(1), Florida Administrative Code, require that the foundation be completed before construction can be deemed to have commenced; rather, they only require that foundation forming be initiated, i.e., "undertaken." To the extent that HRS relies upon a non-rule "policy" interpretation of the statute or rule, it has failed to establish the requisite record foundation for such "policy" interpretation and has failed to clearly articulate it. Moreover, there is no showing that FCC was on notice that HRS might interpret the statute or its rule in some way different from the plain meaning of the language contained therein.
FCC had obtained all of the required approvals to commence construction prior to January 26, 1988, in that FCC had not only obtained from HRS a foundation approval letter but also approval of its final construction plans. These approvals were used to obtain a building permit from the local Dade County building authority. FCC obtained the necessary zoning approvals to construct a 120-bed nursing home on the subject site. FCC had obtained clearance from the local building authority with regard to tree removal. There were no trees on the project site which required a separate permit. Consequently, the subject of trees did not present a barrier to the continuous construction of the project once FCC had commenced construction.
The record in this cause does not support the imposition of any sanction against FCC's CON No. 3024. Rather, FCC's action in commencing construction of this project demonstrates the good- faith effort required to defeat an action by HRS to revoke a CON, pursuant to Section 381.710(2)(a), Florida Statutes (1987). That statute recognizes the defense of a good-faith effort to construct a project authorized by a CON. In the instant case, FCC's efforts constitute a good-faith effort to commence construction in that FCC not only constructed a portion of the foundation of the subject nursing home and obtained all of the requisite approvals in order to commence construction beyond site preparation, but FCC also expended more than $256,000 to commence construction. FCC efforts to commence construction were hampered by the two interruptions in the CON validity period caused by St. Francis Hospital and Forum Group. Those entities challenged the validity of the CON at different times during the eighteen-month validity period for the CON, consequently interrupting the steady development of the project. When the validity of such a project is challenged, FCC and other CON holders are unable to obtain financial commitments nor are they able, from a commercial standpoint, to expend necessary funds to develop the project. Although HRS tolled the validity period for FCC's CON pursuant to Section 381.710(2)(c), Florida Statutes (1987), HRS provided FCC with severely retroactive notices each time it recommenced the validity period for CON No. 3024 after each legal challenge. The interruptions and HRS' tardy notices are circumstances beyond FCC's control which fully excused FCC from having accomplished more in the commencement of this project than it had by January 26, 1988.
The validity period for CON No. 3024 was interrupted two times by litigation challenging its validity. These interruptions justify a flexible approach to FCC's commencing construction of the project, not the rigid approach offered by HRS in this case. HRS allowed FCC no start-up time to recommence the validity period after the litigation was settled or dismissed. These interruptions caused FCC to lose land (the first site) for this project. FCC also lost valuable time since it was unreasonable to make expenditures on this project while litigation challenging the validity of the CON was pending. HRS calculated the validity period to be exactly eighteen months (one year plus one six-month extension) but did not promptly notify FCC of its determination and retroactively recommenced the validity period two months after the conclusion of the Forum Group litigation. In effect, HRS itself used four months of the eighteen-month validity period when it issued each of its validity recommencement letters two months after the date it selected for recommencing the validity period. HRS inspected the project the morning after the termination date. Under the facts and circumstances of this case, HRS' attempts to rigidly calculate the validity period for FCC's CON No. 3024 constitutes unreasonable, arbitrary, and capricious agency action. Astral Liquors v. Department of Business Regulation, 463 So.2d 1130 (Fla. 1985); Mediplex, Inc. v. Department of Health and Rehabilitative Services, 6 F.A.L.R. 1468 (HRS Case No. 82-736, Final Order issued November 18, 1983).
Moreover, HRS has been inconsistent in determining what is required by a CON holder to "commence construction" pursuant to Sections 381.702(3) and 381.710(2)(a), Florida Statutes (1987), and Rule 10-5.018(1), Florida Administrative Code. Except for the instant case, HRS has determined that a CON holder has commenced construction where there has been identical or substantially less continuous construction activity beyond site preparation.
All of FCC's prior CONs to develop nursing homes were validated by HRS as having commenced construction when FCC performed construction activities identical to the instant case. Additionally, HRS determined that Glenbeigh Hospital of Orlando (CON No. 3217) and Glenbeigh Hospital of West Palm Beach (CON No. 2667) commenced construction on or prior to their respective CON termination dates, but Glenbeigh did less to construct those two projects than FCC did to commence construction of CON No. 3024. HRS allowed Glenbeigh to do what HRS now calls site preparation long after the termination date for both of those CONs. HRS seeks to terminate FCC's CON No. 3024 for the same type of site preparation which it approved Glenbeigh's two projects. The inconsistencies in HRS' intended agency action are not explained in the record of this proceeding and cannot form the basis for revoking FCC's CON.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is,
RECOMMENDED that a Final Order be entered finding that FCC's CON No. 3024 remains valid. In compliance with the Prehearing Stipulation, it is further
RECOMMENDED that FCC be given twelve months from the rendition of the Final Order in this proceeding within which to recommence construction of the Dade County nursing home project authorized by CON No. 3024.
DONE and RECOMMENDED this 15th day of December, 1988, at Tallahassee, Florida.
LINDA M. RIGOT, 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 Administrative Hearings this 15th day of December, 1988.
APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 88-0840
Petitioner's proposed findings of fact numbered 1-69 have been adopted either verbatim or in substance in this Recommended Order.
Respondent's proposed findings of fact numbered 1, 4, 6, 7, 10, 12, 14, 17, and 21-23 have been adopted either verbatim or in substance in this Recommended Order.
Respondent's proposed findings of fact numbered 2, 3, 5, 8, 9, 11, 13, 15, 18-20, and 24 have been rejected as being unnecessary for determination herein.
Respondent's proposed finding of fact numbered 16 has been rejected as being irrelevant to the issues in this cause.
COPIES FURNISHED:
Sam Power, Clerk Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, FL 32399-0700
Robert P. Daniti, Esquire 1017-C Thomasville Road Tallahassee, FL 32303
Richard A. Patterson, Esquire Department of Health and
Rehabilitative Services 2727 Mahan Drive
Fort Knox Executive Center Tallahassee, FL 32308
Gregory L. Coler, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, FL 32399-0700
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AGENCY FINAL ORDER
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STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
FLORIDA CONVALESCENT CENTERS, INC.,
Petitioner,
vs. CASE NO. 88-0840
CON NOs. 3024
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent.
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FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order, it appearing from the Settlement Stipulation for Final Order, attached hereto, that there are no disputed issues of fact.
FINDINGS OF FACT
On April 11, 1989, Petitioner and Respondent executed a Settlement Stipulation for Final Order, a copy of which is attached.
The Department hereby adopts and incorporates by reference the agreement.
There are no remaining issues of fact or law.
CONCLUSIONS OF LAW
The Department of Health and Rehabilitative Services has jurisdiction over the parties and subject matter of this proceeding pursuant to Section 120.57, Fla. Stat. (1987).
Based on the foregoing, IT IS ADJUDGED that:
The parties have stipulated that certificate of need number 3024 remains valid and that the project will be completed under the terms listed in the stipulation incorporated herein.
DONE and ORDERED this 25th day of April in Tallahassee, Florida.
Gregory L. Coler Secretary
by Deputy Secretary for Programs
COPIES FURNISHED:
Linda M. Riot, Hearing Officer
Division of Administrative Hearings (DOAH) The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
Robert P. Daniti, Esquire 1017-C Thomasville Road Tallahassee, Florida 32303
Richard A. Patterson (PDDR/Legal) Assistant General Counsel Department of HRS
2727 Mahan Drive - Suite 103
Tallahassee, Florida 32303
Janie Blok (PDDR)
PDDR/Legal Office (information copy)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by U.S. Mail this 26th day of April 1989, to the above-named people.
R. S. Power, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407
Tallahassee, Florida 32399-0700
(904) 488-2381
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE 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.
ATTACHMENT ONE STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
FLORIDA CONVALESCENT CENTERS, ) INC., )
)
Petitioner )
)
v. ) CASE NO. 88-0840
) CON NO. 3024
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
SETTLEMENT STIPULATION FOR FINAL ORDER
The parties, FLORIDA CONVALESCENT CENTERS, INC. ("FCC"), and the DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES ("HRS"), by and through their
undersigned counsel and pursuant to Section 120.57(3), Florida Statutes (1987), hereby stipulate and agree as follows:
By letter dated January 29, 1988, HRS initiated action to declare certificate of need ("CON") number 3024, issued to FCC, to have been terminated and to be null and void. FCC timely requested a formal administrative hearing pursuant to Section 120.57(1), Florida Statute (1987), to contest that initial agency action.
HRS' position on monitoring health care projects authorized by CONs with respect to commencement of construction beyond site preparation is to assure that steel-forming concrete beyond site preparation has occurred. The site preparation on that portion of the site which will contain the foundation must be in place for construction to have commenced. Once construction has commenced on a health care project, the CON holder cannot return to site preparation on that portion of the site which will contain the foundation.
Pursuant to agreement of the parties, HRS hereby dismisses its preliminary determination that CON No. 3024 has terminated and is null and void. FCC agrees to meet the attached Project Completion Forecast for CON No. 3024, Dade County, which shall commence on the date the Final Order is issued in this case. In agreeing to meet the Project Completion Forecast, FCC understands that each step must be completed on or before the scheduled date. The attached Project Completion Forecast is hereby incorporated into this Settlement Stipulation. Upon commencing construction, FCC will submit to HRS a construction timetable as well.
Upon execution of this Settlement Stipulation For Final Order, HRS will enter a Final Order incorporating by reference the terms of this Settlement Stipulation.
The undersigned represent and warrant they are vested with the authority to bind the respective parties to the terms of this Settlement Stipulation For Final Order and do hereby bind their respective parties to the terms hereof. Each party shall bear its own costs and attorney's fees.
For the FLORIDA DEPARTMENT OF For FLORIDA CONVALESCENT HEALTH AND REHABILITATIVE CENTERS, INC.
SERVICES
RICHARD A. PATTERSON, Esquire ROBERT P. DANITI, Esquire
Assistant General Counsel 1017-C Thomasville Road 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32303 Tallahassee, Florida 32308 904/224-7189
904/488-8763
Dated: April 11, 1989 Dated: April 11, 1989
ROBERT GRIFFIN Assistant Secretary for
Health Planning and Regulation Department of Health and
Rehabilitative Services 2727 Mahan Drive
Tallahassee, Florida 32308 904/488-8763
Dated: April 12, 1989
Table 26
PROJECT COMPLETION FORECAST FOR CON NO. 3024, DADE COUNTY
Timetable Projections Date (month and year)*
Site ownership secured
(contract on land) 6 months
Project financing obtained 12 months
Architectural and engineering
contract signed 6 months
Construction documents approved
by HRS 10 months
5. Construction contract signed | 11 | months |
6. Site preparation completed | 12 | months |
7. Building permit secured | 12 | months |
8. Commenced construction** | 12 | months |
| 24 | months |
11. Project occupied and in use | 24 | months |
*Time frames shown are from the date the Final Order in Florida Convalescent Centers v. Department of Health and Rehabilitative Services, Division of Administrative Hearings Case No. 88-0840, is rendered. The final order has not yet been issued as of the date this Table was furnished to HRS on Thursday, March 2, 1989.
**Upon commencing construction, the certificate of need holder will submit to the Department of Health and Rehabilitative Services a project construction timetable.
| Issue Date | Proceedings |
|---|---|
| Dec. 15, 1988 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 25, 1989 | Agency Final Order | |
| Dec. 15, 1988 | Recommended Order | HRS determination that owner had not commenced construction of nursing home prior to expiration of its Certificate Of Need was erroneous. Some delays caused by HRS |
