STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATIONAL HEALTHCORP, L.P., )

)

Petitioner, )

)

vs. ) CASE NO. 88-3490

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William R. Cave, held a public hearing in the above- styled case, on August 31, 1988, at Tallahassee, Florida. The issue for determination is whether the Respondent properly refused to accept Petitioner's certificate of need applications for the May/June, 1988, nursing home batching cycle in Lee, Flagler/Volusia, Gadsden and Bay Counties because the "needed capital expenditures" specified in the certificate of need applications exceeded the "proposed capital expenditures" specified in the letters of intent.

APPEARANCES

For Petitioner: Gerald B. Sternstein, Esquire

Darrell White, Estquire

McFarlain, Sternstein, Wiley & Cassedy Post Office Box 2174

Tallahassee, Florida 32316-2174

For Respondent: Theodore E. Mack, Esquire

Assistant General Counsel Department of Health and

Rehabilitative Services Regulation & Health Facilities 2727 Mahan Drive

Tallahassee, Florida 32308 BACKGROUND

By Petition For Formal Administrative Hearing, Petitioner challenges Respondent's summary rejection of its certificate of need applications for the May/June, 1988 nursing home batching cycle for 1988 in Lee, F1agler/Volusia, Gadsden and Bay Counties because the specified "needed capital expenditures" in the certificate of need applications exceeded the specified "proposed capital expenditures" in the letters of intent.

This petition was filed pursuant to Section 120.57(1), Florida Statutes, and consolidated with National Healthcorp, L.P. v. Department of Health and

Rehabilitative Services, Case No. 88- 4080R filed pursuant to Section 120.56, Florida Statutes.

In support of its contention, Petitioner presented the testimony of Bruce Duncan, Amy Jones, Sharon Gordon-Girvin and Gene Nelson. Petitioner's Exhibits

1 through 18 were received into evidence. Respondent presented the testimony of Sharon Gordon-Girvin. Respondent's Exhibits 1 through 4 were received into evidence.

The parties submitted post-hearing Proposed Findings of Fact and Conclusions of Law. A ruling on each proposed Finding of Fact has been made as reflected in the Appendix to this Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. On May 12, 1988, Petitioner, in accordance with Section 381.709(2), Florida Statutes, and Rule 10-5.008, Florida Administrative Code, timely filed four separate letters of intent (LOIs) reflecting its intent to file applications for certificates of need (CONs) for the development of nursing homes in Lee, Flagler/Volusia, Gadsden and Bay Counties.

   
   

2. The LOIs set forth the following "proposed capital expenditure" in accordance with Section 381.709(2)(c), Florida Statutes:

   
   

   Lee County	$3,800,000.00
   Flagler/Volusia County	$4,600,000.00
   Gadsden County	$3,800,000.00
   Bay County	$3,800,000.00

   
   

3. As required by Section 381.709, Florida Statutes, each of the LOIs contained a resolution by Petitioner's board of directors authorizing and approving the filing of a CON application for the project. Additionally, the resolution authorized and approved the expenditure of such funds as was necessary to accomplish the project anticipated for the CON and within the cost guidelines specifically indicated in the CON. The format of the board resolution used by Petitioner was basically the same as the sample board resolution published by the Respondent in March, 1987, in the Florida Administrative Weekly which does not require a specific project cost to be stated. A copy of this sample board resolution was furnished to Petitioner.

   
   

4. By letter dated May 19, 1988, Respondent acknowledged its acceptance of Petitioner's LOIs and advised Petitioner that the deadline for filing its CON applications was June 1, 1988. At the same time Petitioner was advised of the schedule to be followed by Respondent in reviewing the CON application and the date for final action by the Respondent. There was no mention of Respondent's policy to summarily reject a CON application where the "needed capital expenditure" specified in the application exceeded the "proposed capital expenditures" specified in the LOI.

   
   

5. By letter dated May 25, 1988, signed by Amy Jones and received by Petitioner on June 1, 1988, after the mailing of its CON applications on May 31, 1988, Respondent informed Petitioner that its CON applications would not be accepted and would be returned without further review "if the proposed project costs [needed capital expenditures] in the application exceed the proposed

   project costs [proposed capital expenditures] set forth in your letter of intent". This letter was also mailed to all other applicants in the May/June, 1988 nursing home batching cycle.

   
   

6. There is insufficient evidence to show that any other applicant received the May 25, 1988 letter from Amy Jones in time to change its application or that any other applicant did, in fact, change its application based on this letter.

   
   

7. Neither the application form nor the instructions pertinent to the application form advised the applicant in any fashion that the application would be summarily rejected without further review if the total project costs [needed capital expenditure] specified in the application exceeded the "proposed capital expenditures" specified in the LOI. To the contrary, the applicant is directed to provide estimated project cost in Table 25.

   
   

8. On June 1, 1988, Petitioner timely filed its CON application on each of the proposed projects in the prescribed format with Respondent for the four service areas in question. In the documentation filed on June 1, 1988, Petitioner indicated the following "needed capital expenditures" for the proposed projects:

   
   

   Lee County $4,369,200.00 Flagler/Volusia Counties $5,165,930.00 Gadsden County $4,002,500.00

   Bay County $4,005,000.00

   
   

   The CON applications were mailed on May 31, 1988 by "UPS Overnight Mail" and received by Respondent on June 1, 1988.

   
   

9. The record is silent as to whether the total project cost [estimated project costs] specified in Petitioner's applications were inappropriate or whether the "proposed capital expenditures" specified in the Petitioner's LOIs were inappropriate or intentionally lowered to mislead any potential competing applicant.

   
   

10. By letter dated June 3, 1988, Petitioner attempted to file with Respondent changes in its applications indicating "needed capital expenditures" that would conform to the "proposed capital expenditures" specified in the LOIs. These changes would have required Petitioner to change its proposed construction from a steel frame to a wood frame building. Petitioner learned of the Respondent's policy too late to submit timely conforming CON applications.

    
    

11. Petitioner's "proposed capital expenditures", although correct at the time the LOIs were filed, were only intended to be "rough estimates".

    
    

12. By letter dated June 9, 1988, Respondent informed Petitioner that its CON applications were being rejected because the specified costs [needed capital expenditures] in the applications exceeded the "proposed capital expenditures" specified in the LOIs.

    
    

13. Petitioner was aware of the substantial statutory changes to the CON law that became effective October, 1987. This was the first nursing home batching cycle to fall under the new statutory changes.

    
    

14. The board resolution referred to in Section 381.709(2)(c), Florida Statutes, that is required to be filed with the LOI is the same board resolution

    referred to in Section 381.707(4), Florida Statutes that is required to be filed with the CON application. For this reason, the Respondent considers the LOT to be an integral part of the application and, thereby locks in an applicant to the type of service, number of beds and proposed capital expenditures specified in the LOT.

    
    

15. As to the prohibition of increasing the "proposed capital expenditures" specified in the LOT, the Respondent points to the fact that the board resolution must be prepared before the LOT and the cost can not be increased after the board's resolution is filed in the LOT.

    
    

16. Respondent will reject an application where the board resolution is not filed with the LOT but filed with the application. However, the Respondent will not reject an application where the board resolution is filed with the LOT but not filed with the application.

    
    

17. The proposed costs of the project must be shown in the public notification of the applicant's intent to file a CON application, pursuant to Rule 10-5.008(1)(c), Florida Administrative Code.

    
    

18. There is currently no statute or rule which specifically prohibits the "needed capital expenditures" in the CON application from exceeding the "proposed capital expenditures" in the LOI. Likewise, there is currently no statute or rule that specifically requires the Respondent to summarily reject a CON application where the "needed capital expenditures" specified in the CON application exceed the "proposed capital expenditures" specified in the LOI.

    
    

19. Although Respondent concedes there is no specific authority for rejecting an application where the "needed capital expenditures" specified in the application exceed the "proposed capital expenditures" specified in the LOI, it contends its "policy" is justified because the legal advertisement, which is published after the LOI is filed but before the application is submitted, is required for the purpose of putting other potential competing applicants on notice of what that applicant intends to do so that a potential competing applicant can make a business decision as to whether it wants to file an application.

    
    

20. The record is silent as to what extent the general public, competing applicants and businesses rely upon the published notice, how they might be mislead by relying upon the same, or the effects, if any, of such misunderstanding.

    
    

21. Since the 1987 amendment became effective, Respondent has been consistent in following its policy of returning an application that contains project costs greater than the "proposed capital expenditures" specified in the the LOI.

    
    

22. Although the Respondent allows an applicant to supply additional information, within a specified time period, where there are omissions or ambiguities in an application, the Respondent does not consider changes in the number of beds, type of service or project costs to be an omission or ambiguity which can be corrected or revised at a later time through the omissions process.

    CONCLUSIONS OF LAW

    
    

23. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings pursuant to Section 120.57(1), Florida Statutes.

    
    

24. Section 381.707, Florida Statutes, establishes the content requirement for a CON application that is to be filed with the Respondent. Pertinent to this case, that section provides:

    
    

    Application content - An application for a certificate of need shall contain:

    * * *

    (2) A statement of the financial resources needed by and available to the applicant to accomplish the proposed project. This statement shall include:

    * * *

    (b) A detailed listing of the *needed capital expenditures*, including sources of funds. (e.s. between *)

    * * *

    (4) A certified copy of a resolution by the board of directors of the applicant...authorizing the filing of the application; authorizing the applicant to incur the expenditures necessary to

    accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and *at or below the costs contained in the appli- cation*.... (e.s. between *)

    
    

25. Rule 10-5.008(5), Florida Administrative Code, provides that the "application for certificate of need shall meet the content requirement in section 381.707, F.S.

    
    

26. Section 381.709, Florida Statutes, establishes the process for certificate of need review. Pertinent to this case, that section provides:

    
    

    Review process. - The review process for certificates of need shall be as follows:

    * * *

    1. LETTERS OF INTENT. -

       (a) At least 30 days prior *to filing an application*, a letter of intent shall be filed by the applicant with the local health council and the department respecting the development of a proposal subject to review (e.s.

       between *)

       * * *

       (c) Letters of intent shall describe the

       *proposal with specificity*, including proposed capital expenditures... The letter of intent shall contain a certified copy of resolution by the board of directors of the applicant... authorizing the filing of the application described in the letter of intent... certifying that if issued a

       certificate, the applicant shall accomplish the the proposed project within the time allowed by law and at or below the costs contained in the application....

       * * *

    2. APPLICATION PROCESSING. -

    (a) An applicant shall file an application with the department, and shall furnish a copy of the application to the local health council and the department. Within 15 days after the applicable application deadline established by

    department rule, the staff of the department *shall* determine if the application is complete. If the application is incomplete, the staff *shall* request specific information from the applicant necessary for the application to be complete; however, the staff may make only one such request. If the requested information is not filed with the department within 21 days of the receipt of the staff's request, the application *shall* be deemed withdrawn from consideration. (e.s. between *)

    
    

27. The Respondent's policy was challenged in a Section 120.56, Florida Statutes proceedings and the policy declared to be invalid as a rule for failure to promulgate pursuant to Section 120.54, Florida Statutes. National Healthcorp, L.P. v. Department of Health and Rehabilitative Services, Case No. 88-4080R, (Final Order entered January 4, 1989). This does not preclude the Respondent from applying the policy, but Respondent is required to fully explicate such policy. However, the burden of going forward shifts to the Respondent to explicate, support and defend the policy. Gulf Coast Home Health Service of Florida, Inc. v. Department of Health and Rehabilitative Services, 513 So2d 704 (1 DCA Fla. 1987)

    
    

28. Although not specifically authorized by rule or statute, Respondent's policy lies in its interpretation of Section 381.707 and 381.709, Florida Statues. Whether this interpretation is appropriate depends on whether the agency's interpretation is a permissible construction of the law. In resolving this issue, it is noted that an administrative construction of a statute by an agency responsible for its administration is entitled to great weight and should not be overturned unless clearly erroneous. See, e.g., Shell Harbor Group, Inc.

    v. Department of Business Regulation, 487 So2d 1141, 1142 (1 DCA Fla. 1986). Even so, the statutory construction must be a permissible one and not "any conceivable construction of a statute . . . irrespective of how strained or ingeniously reliant on implied authority it might be". State of Florida, Board of Optometry, et al v. Florida Society of Ophthalmology, et al, 13 FLW 2764, 2767 (1 DCA Fla., December 19, 1988). Such a construction as Respondent has placed on Sections 381.707 and 381.709, Florida Statutes, is reasonable and, while this interpretation is not the only one that could be given to the statutes, or may not be the most desirable, it is a permissible construction of the law and is not "clearly erroneous".

    
    

29. Having concluded that Respondent's interpretation of the law is a permissible one, it must be shown that Respondent's policy has been explicated, supported and defended by an adequate record foundation. The Respondent has failed to sustain its burden in this regard. There has been no showing of a "rational basis" for the policy and, therefore, it must fail.

30. However, assuming arguendo that Respondent fully explicated its policy in the instant case, Petitioner's compliance should not be required because the policy is not readily apparent from the pertinent statutes or rules and Respondent's failure to give Petitioner timely notice of the policy has effectively precluded compliance by Petitioner through no fault of its own even though Petitioner was given the opportunity to challenge the policy in a section 120.57(1), Florida Statutes, hearing.

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Respondent accepting the

applications of Petitioner for review in the May/June, 1988, nursing home batching cycle.

DONE and ENTERED this 25th day of January, 1989, at Tallahassee, Florida.

WILLIAM R. CAVE, 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 25th day of January, 1989.

APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-3490

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the Proposed Findings of Fact submitted by the parties in this case.

Specific rulings on Proposed Findings of Fact submitted by Petitioner

1. Adopted in Findings of Fact 1 and 4, otherwise unnecessary.

2. Adopted in Finding of Fact 6, otherwise unnecessary.

3. Adopted in Findings of Fact 5 and 7, but clarified.

4.-8. Proposed Findings of Fact 4, 5, 6, 7, and 8 are subordinate to the facts actually found in this Recommended Order.

9. Adopted in Findings of Fact 2 and 8.

10.-12. Proposed Findings of Fact 10, 11 and 12 are subordinate to the facts actually found in this Recommended Order.

1. The first two sentences adopted in Findings of Fact 14 the balance of Finding of Fact 13 is unnecessary.

2. Adopted in Finding of Fact 17.

16. Adopted in Findings of Fact 3 and 14.

17-20. Proposed Findings of Fact 17-20 are subordinate to the facts actually found in this Recommended Order.

21-24. Rejected as being immaterial or unnecessary.

25.-31. Proposed Findings of Fact 25-31 are subordinate to the facts actually found in this Recommended

Order.

Specific rulings on Proposed Findings of Fact submitted by Respondent

1.-5. Adopted in Findings of Fact 1-5, respectively. 6.-7. Adopted in Finding of Fact 5.

8. Adopted in Finding of Fact 6.

9.-10. Adopted in Finding of Fact 8.

1l.-12. Adopted in Findings of Fact 10 and 12, respectively. 13.-14. Rejected as being immaterial or unnecessary.

15.-16. Adopted in Finding of Fact 11.

1. Adopted in Finding of Fact 10.

2. Rejected as not being supported by substantial competent evidence in the record.

3. Adopted in Finding of Fact 13.

4. Rejected as being immaterial or unnecessary.

5. Adopted in Finding of Fact 13.

22.-24. Rejected as being immaterial or unnecessary.

1. Adopted in Finding of Fact 14.

2. Rejected as being argument rather than a Finding of Fact.

27.-28. Subordinate to facts actually found in this Recommended Order.

29. Adopted in Finding of Fact 14 but clarified.

30.-31. Findings of Fact 30 and 31 are subordinate to the facts actually found in this Recommended Order.

1. The first sentence of Finding of Fact 32 is adopted in Finding of Fact 3, the balance is rejected as not being supported by substantial competent evidence in the record.

2. Adopted in Finding of Fact 17.

3. The first sentence adopted in Finding of Fact 19, the balance is unnecessary.

35.-40. Rejected as not being a finding of fact but a restatement of testimony.

*41.-45. Rejected as being argument rather than a finding of fact.

46.-47. Rejected as not being supported by substantial competent evidence in the record.

48.-50. Rejected as being argument rather than a finding of fact.

*There were two paragraphs numbered 43 and both are included.

COPIES FURNISHED:

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700

Sam Power, Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700

Gerald B. Sternstein, Esquire Darrell White, Esquire

McFarlain, Sternstein, Wiley & Cassedy Post Office Box 2174

Tallahassee, Florida 32316-2174

Theodore E. Mack, Esquire Assistant General Counsel

Department of Health and Rehabilitative Services

Regulation and Health Facilities 2727 Mahan Drive

Tallahassee, Florida 32308

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

NATIONAL HEALTHCORP, L. P.,

Petitioner,

vs. CASE NO.: 88-3490

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 THE DEPARTMENT

Counsel excepts to the Hearing Officer's conclusion that the department did not establish a rational basis for its non-rule interpretation of Sections

381.707 and .709, Florida Statutes which require consistency between the letter of intent and the subsequent CON application as to type of service, unit size, and project costs; and rejection of an application which is inconsistent with the letter of intent. Counsel also excepts to the Hearing Officer's conclusion that a state agency must give notice to potentially affected persons before the agency relies on non-rule policy. Both issues were considered in St. Francis Hospital, Inc. vs. HRS, Case Number 88-5693 (HRS 2/2/89). The Hearing Officer's conclusions are rejected for the reasons given in the St. Francis Order. The exceptions are granted.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

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 ruling on the exceptions.

Based upon the foregoing, it is that petitioner's applications for certificates of need be rejected.

DONE and ORDERED this 13th day of February, 1988, in Tallahassee, Florida.

Gregory L. Coler Secretary

Department of Health and Rehabilitative Services

by Deputy Secretary for Operations

COPIES FURNISHED:

Gerald Sternstein, Esquire Darrell White, Esquire McFARLAIN, STERNSTEIN, WILEY

& CASSEDY, P. A.

600 First Florida Bank Bldg. Post Office Box 2174 Tallahassee, Florida 32316-2174

Theodore Mack, Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, Florida 32308

William R. Cave Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550 Janie Block (PDDR)

FALR

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 17th day of February, 1989.

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

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.

================================================================= DISTRICT COURT OPINION

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

IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

NATIONAL HEALTHCORP, L.P., NOT FINAL UNTIL TIME EXPIRES TO

FILE MOTION FOR REHEARING AND

Appellant, DISPOSITION THEREOF IF FILED.

vs. CASE NO. 89-430

DOAH CASE NO. 88-3490

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Appellee.

/ Opinion filed December 22, 1989.

An Appeal from an order of the Department of Health and Rehabilitative Services.

Gerald B. Sternstein, Darrell White and Charles A. Stempelos of McFarlain, Sternstein, Wiley & Cassedy, P.A., Tallahassee, for Appellant.

Richard A. Patterson, Assistant General Counsel, Department of Health and Rehabilitative Services, Tallahassee, for Appellee.

SMITH, J.

National Healthcorp (National) appeals a final order of the Department of Health and Rehabilitative Services (HRS) rejecting four of its certificate of need (CON) applications without review, because the project costs in the applications exceeded the project costs set forth in the respective letters of intent. We reverse.

National filed letters of intent to develop and operate nursing home facilities in Bay, Gadsden, Volusia and Lee Counties. The CON applications for these projects were required to be filed by June 1, 1988. Shortly before, on May 25, 1988, an HRS employee wrote a letter to National advising National that its applications would not be accepted if the proposed project costs in the applications exceeded the proposed project costs set forth in the letters of intent. National did not receive this letter until June 1, 1988, after its CON applications were mailed by overnight mail on May 31, 1988, to HRS. In each of the four applications, the estimated project costs exceeded the proposed capital expenditures set forth in the respective letters of intent. On June 3, 1988, National filed documents with HRS to reflect changes in the estimated project costs to conform with HRS's policy. However, HRS refused to accept the four CON applications and would not permit National to amend or correct its applications. National requested a formal administrative hearing pursuant to section 120.57, Florida Statutes, challenging the rejection of its applications. At the same

time, National filed a challenge to HRS's policy contending it was an invalid unpromulgated rule. 1/ The two proceedings were consolidated and heard by the same hearing officer.

In the 120.57 proceeding, the hearing officer found that HRS's non-rule policy had not been explicated, supported and defended by an adequate record foundation so that HRS could not apply this policy to National. Accordingly, the hearing officer recommended that HRS accept National's applications for review in the May/June 1988 nursing batching cycle. In his recommended order, the hearing officer recognized that although there is currently no statute or rule specifically prohibiting the needed capital expenditures in the CON application from exceeding the proposed capital expenditures in the letter of intent, HRS's policy was a permissible construction of the newly amended provisions of section 381.707 and 381.709, Florida Statutes (1979). Even so, the hearing officer concluded, HRS was required to explicate, support and defend by adequate record foundation its policy, which it failed to do in this case.

Subsequently, HRS entered its final order adopting the hearing Officer's findings of fact but concluding that it was not required to provide a rational basis for application of its policy because its policy was based upon an admittedly permissible interpretation of sections 381.707 and 381.709.

This main issue in this case, HRS's refusal to accept the applications, is controlled by our decision in St. Francis Hospital v. Department of Health and Rehabilitative Services, So.2d (Fla. 1st DCA 1989), filed this same day. Reversal is therefore required. However, there is an additional issue not present in St. Francis which requires further elaboration. While National was awaiting the hearing Officer's recommended order in this case, HRS continued with its review of the June 1988 batching cycle. Four unsuccessful CON applicants for nursing homes in Bay, Gadsden, Lee and Volusia Counties requested

120.57 proceedings on the denial of their CON applications. National moved to intervene in all four proceedings, but HRS denied National's motions for lack of standing. Some, if not all, of these four CON proceedings have proceeded to final adjudication, and CON's are either expected to be or have already been issued. For one reason or another, National did not pursue its legal remedies in these other CON proceedings.

In this appeal, National contends that this court has jurisdiction to require HRS to annul the CONs issued to the other June 1988 applicants because they were unlawfully issued and cancellation or annulment would be proper. We disagree. National should have pursued its legal remedies in the other four CON cases by appealing the final orders in those cases, arguing that its petitions to intervene should not have been denied. See Boca Raton Artificial Kidney Center v. Florida Department of Health and Rehabilitative Services, 475 So.2d

260 (Fla. 1st DCA 1985), and Charter Medical-Jacksonville v. Community Psychiatric Centers of Florida, 482 So.2d 437 (Fla. 1st DCA 1985).

There is some intimation in National's arguments that HRS did not provide it with timely copies of the final orders in some of these CON proceedings. If that is the case, National's proper remedy is to apply to the agency to vacate and reenter the operative order which National can then appeal. New Washington Heights Community Development Conference v. Department of Community Affairs, 515 So.2d 328 (Fla. 3d DCA 1987)(where state action deprived appellant of ability to file timely administrative appeal, untimely appeal would be dismissed without prejudice to appellant to apply to administrative agency to vacate and reenter operative order from which appellant could then timely file appeal).

REVERSED and REMANDED for proceedings consistent with this opinion.

THOMPSON and MINER, JJ., CONCUR.

ENDNOTE

1/ Untimately, the hearing officer entered a separate final order determining that HRS' policy was an invalid, unpromulgated rule. National Healthcorp, L.P.

v. HRS, 11 FALR 359 (HRS 1989). HRS did not appeal this final order.

Docket for Case No: 88-003490

Orders for Case No: 88-003490