STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH QUEST CORPORATION, )

HEALTH QUEST REALTY II, )

HEALTH QUEST MANAGEMENT )

CORPORATIONS III & IV, )

)

Petitioners, )

)

vs. ) CASE NO. 89-2623RX

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

)

ARBOR HEALTH CARE COMPANY, )

MERIDIAN HEALTHCARE, INC., ) MANOR CARE OF BOCA RATON, INC., ) d/b/a MANOR CARE OF BOCA RATON, ) BOOTH LIMITED PARTNERSHIP, d/b/a ) MANOR CARE NURSING CENTER OF ) ORANGE COUNTY, HEALTH CARE AND ) RETIREMENT, INC., )

REGENCY INVESTORS, LTD., ) VARICARE, INC., d/b/a BOULEVARD ) MANOR NURSING CENTER, WHITEHALL ) BOCA, AND FIRST HOSPITAL ) CORPORATION OF FLORIDA, d/b/a ) FIRST HOSPITAL OF PALM BEACH ) COUNTY, )

)

Intervenors. )

)

FINAL ORDER

The final hearing in this case was held on August 28, 1989, in Tallahassee, Florida, before Donald D. Conn, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Steven W. Huss, Esquire

1017-C Thomasville Road Tallahassee, Florida 32303

Respondent: Lee Elzie, Esquire

Post Office Box 82 Tallahassee, Florida 32302

For Intervenors: Chris H. Bentley, Esquire

Diane D. Tremor, Esquire 2548 Blair Stone Pines Drive Tallahassee, Florida 32301 (Arbor Health Care Co.)

Robert D. Newell, Jr., Esquire 817 North Gadsden Street Tallahassee, Florida 32303 (Meridian Healthcare Inc.)

James C. Hauser, Esquire 204-B South Monroe Street Tallahassee, Florida 32301 (Manor Care)

Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302

(Health Care and Retirement, Inc.)

R. Bruce McKibben, Jr., Esquire Post Office Box 10651 Tallahassee, Florida 32302 (Regency Investors, Ltd.)

Samuel J. Dubbin, Esquire Gerald Cohen, Esquire

4000 Southeast Financial Center Miami, Florida 33131-2398 (Varicare, Inc.)

Thomas J. Jones, Esquire Eleanor Joseph, Esquire Post Office Drawer 810 Tallahassee, Florida 32301

(First Hospital Corp. of Florida)

Byron B. Mathews, Jr., Esquire Paul Shelowitz, Esquire

700 Brickell Avenue

Miami, Florida 33131 (Whitehall Boca)

STATEMENT OF THE ISSUE

The issue in this case is whether Rule 10-5.008(2)(a), Florida Administrative Code, which provides for publication of Certificate of Need Fixed Need Pools, is an invalid exercise of delegated legislative authority, as defined by Section 120.52(8), Florida Statutes.

PRELIMINARY STATEMENT

The Petitioners have challenged the validity of Rule 10-5.008(2)(a) both on it's face, and by its effect through policies of the Department of Health and Rehabilitative Services interpreting this Rule. See, in part, paragraphs 18, 19, 20(a)(c), 21 and 24 of the Petition for Determination of Invalidity of Rule,

filed May 17, 1989. Therefore, evidence was received concerning not only the facial validity of Rule 10-5.008(2)(a), but also concerning policies of the Department which set forth its interpretation of this Rule. However, in this proceeding the Petitioners have not sought to invalidate these interpretive policies as unpromulgated rules. Rather, they urge that Rule 10-5.008(2)(a) is invalid, and accordingly, this case will be decided on that issue alone.

The Petitioners called Amy Jones, Assistant Director of the Department's Office of Regulation and Health Facilities, and Kevin Krischer, Vice President of Planning for Health Quest Corporation, who was accepted as an expert in health care planning. Petitioners also introduced three exhibits. Official recognition was taken of Rule 10-5.008, Florida Administrative Code. The Department called Elfie Stamm, who was accepted as an expert in health planning, and introduced one exhibit. Intervenor Meridian Healthcare, Inc., introduced one exhibit.

The transcript of the final hearing was filed on September 11, 1989, and the parties were given ten (10) days thereafter to file proposed recommended orders, and memoranda. A ruling on each timely filed proposed finding of fact is included in the Appendix to this Final Order.

FINDINGS OF FACT

1. The Department of Health and Rehabilitative Services (Department) has adopted Rule 10-5.008(2)(a), Florida Administrative Code, which provides:

   
   

   10-5.008 Certificate of Need Application Procedure.

   * * *

   (2) Fixed Need Pools.

   1. Publication of Fixed Need Pools. The department shall publish in the Florida Administrative Weekly at least 15 days prior to the letter of intent deadline for a particular batching cycle the fixed need pools for the applicable planning horizon specified for each service in applicable departmental rules contained in 10-5.011,

      F.A.C. These batching cycle specific fixed need pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. (Emphasis Supplied.)

      
      

2. According to the Department's Certificate of Need (CON) Manual, dated October 1, 1988, a fixed need pool is defined as:

   
   

   . . . the identified numerical need for new beds or services for the applicable planning horizon established by the department in accordance with need methodologies which are in effect by rule at the time of publication of fixed need pools for the applicable batching cycle. (Section 9-6(a), HRSM 235-1)

3. As it relates to Petitioners and Intervenors in this case, the Department's various need methodologies are found at Rule 10-5.011(1), Florida Administrative Code. After calculating numeric need for each CON batching cycle in accordance with the formulae set forth in Rule 10-5.011(1), the Department then publishes those calculations as the fixed need pool applicable for a particular batching cycle, pursuant to Rule 10-5.008(2)(a), the validity of which is at issue in this case. Although the fixed need pool relevant to the parties in this case concerns nursing home beds, fixed need pools are also published pursuant to this Rule for other health care services such as open heart surgery and cardiac catheterization programs, short-term psychiatric and substance abuse beds, and home health agencies.

   
   

4. The Petitioners urge that Rule 10-5.008(2)(a) is an invalid exercise of delegated legislative authority, as defined by Section 120.52(8), Florida Statutes, because it arbitrarily or capriciously precludes the correction of errors in the published fixed need pool under certain circumstances, is vague in its application, and exceeds the Department's delegated legislative authority.

   
   

5. Based upon this Rule, the Department set forth its policy on changes or corrections to the published fixed need pool by Final Order in National Healthcorp v. Department of HRS and Ocean View Nursing Home, DOAH Case Nos. 88- 1836, 88-1839, Final Order filed July 18, 1989, as follows:

   
   

   The department's policy is that a published fixed need pool cannot be changed after the grace period of Rule 10-5.001(1)(b), Florida Administrative Code, has elapsed.

   It is the department's policy to correct errors in the fixed need pool in the batch for which they are published only if the error is brought to the department's attention in time for it to publish a correction in the Florida Administrative Weekly within the grace period. This policy gives all prospective applicants the opportunity to apply or not to apply based on the same information and is the most equitable method for dealing with errors in the published fixed need pool number. By virtue of this policy the department does not ignore the numeric need formula of Rule 10- 5.011(1)(k), Florida Administrative Code, but places a greater priority on the necessity of certainty and equity in health planning.

   
   

   This policy is also reflected in the Department's CON Manual, dated October 1, 1988, as follows:

   
   

   The department will make every effort to ensure accurate computation of a fixed need pool prior to a batching cycle. In the event of a computational error in the need projection, the following will occur:

   1. If a grace period is in effect for the district/subdistrict, - as determined by the receipt of letters of intent, then any computational errors will be corrected and

      immediately published in the next Florida Administrative Weekly.

   2. If no grace period is in effect, as initiated by the receipt of letters of intent, then the published pool will be construed as valid by the department. (Section 9-6(c), HRSM 235-1)

      
      

6. The policy of the Department has recently been further specified in the Cardiac Catheterization Fixed Need Pool published on August 11, 1989, which states:

   
   

   Any person who identifies any errors in the fixed need pool numbers must advise the agency of the error within ten (10) days of publication of the number. If the agency concurs in the error, the fixed need pool number will be adjusted prior to or during the grace period for this cycle. Failure to notify the agency of the error during this ten day time period will result in no adjustment to the fixed need pool number for this cycle and a waiver of the person's right to raise the error at subsequent proceedings. Any other adjustments will be made in the first cycle subsequent to identification of the error including those errors identified through administrative hearings or final judicial review.

   
   

   See Florida Administrative Weekly, Vol. 15, No. 32, at page 3503. The Department is now including this notice in its fixed need pool publications.

   
   

7. According to the Department's spokesperson at hearing, Amy Jones, the Department will correct computational errors in a published fixed need pool, including errors in arithmetic and those based on incorrect data, only if they are brought to the Department's attention during the grace period which is triggered by the filing of a letter of intent, and if there is sufficient time to publish a corrected fixed need pool prior to the CON application deadline so that all potential competing providers will have notice of the changes or corrections. Errors brought to the Department's attention after the grace period will only be considered in the development of the subsequent batching cycle's fixed need pool, regardless of the nature or extent of the error. Errors brought to the Department's attention during the grace period, but which are not reviewed by the Department until after the grace period, will only be corrected for subsequent batches. Inaccurate occupancy data will be corrected in subsequent batches if the errors in such data was not known at the time the Department calculated a fixed need pool. Errors identified in administrative hearings or upon judicial review will be corrected in subsequent batches, but not for the batch in which the error occurred. Based upon its desire for predictability and fairness, the Department will take the position at

   comparative CON hearings that the published fixed need pool number is correct if it has not been corrected during the grace period, regardless of later discovered errors in the Department's need calculations.

   
   

8. The grace period during which the Department will correct errors brought to its attention for the current batching cycle, if there is sufficient

   time to publish a notice of such corrections, is triggered by the filing of letters of intent, as specified in Rule 10-5.008(1)(b):

   
   

   In cases where an initial letter of intent for a specific type of project has been received by the Office of Regulation and Health Facilities and the local health council 30 calendar days or more prior to the appropriate application filing due date as set forth in paragraph 10-5.008(1)(e), a grace period shall be established to provide an opportunity for applicants applying for the same type of project in the same applicable subdistrict, or district to file a letter of intent. Under this grace period, a competing letter of intent may be filed not later than 16 days after the letter of intent deadline or 14 days prior to the appropriate application filing due date. . .

   
   

   However, if no letter of intent is filed, there is no grace period, and therefore, no opportunity to correct errors in a published fixed need pool for the then current batch. The Department urges that this does not matter since without letters of intent there can be no CON applications, and thus, any such errors have no effect.

   
   

9. Existing providers that do not intend to file a CON application can avail themselves of the ten day period for identifying errors contained in the published fixed need pool notice, as set forth in Finding of Fact 6. They can also raise their objections at a public hearing on any CON application, or intervene in an administrative proceeding. It is, therefore, not necessary to file a letter of intent to bring errors to the Department's attention. However, if there is no grace period by virtue of a lack of letters of intent, any such errors identified within the ten day period, or through public hearings or administrative proceedings, will only be corrected for subsequent batches.

   
   

10. If the Department disputes that an error has been made, the provider that timely identified what it believed to be an error will be afforded an opportunity for a hearing under Section 120.57(1), Florida Statutes. However, any changes resulting from such a hearing will only be made for subsequent batches, and not for the batch in which the error was actually made and identified. This Section 120.57 hearing is to be conducted separately from, and generally prior to, any comparative review hearing also conducted under Section 120.57(1) for CON applicants competing for the same fixed need pool. Numeric need is a part of the Department's determination of consistency with State and Local Health Plans, but will be considered separately from, and generally prior to the other criteria set forth at Sections 381.705(1)(a) through (n), Florida Statutes. While numeric need is not a threshold criteria, it is the most weighted factor in the Department's review of CON applications.

    
    

11. Certain factors used in the calculation of fixed need under the Department's rule methodologies cannot be corrected in subsequent batches. Population and occupancy rates are calculated anew each time the calculations are made, and are not based on calculations from a previous batch. Therefore, the Department's position that errors will be corrected in subsequent batches if not identified within the grace period, or if there is no grace period, does not pertain to these factors In addition, the correction of some errors may not

    result in any change in the need number for a subsequent batch, but will ensure that the error which lead to the incorrect number in the prior batch is not repeated.

    
    

12. The projection of need is not an exact science. If need is erroneously overprojected, beds may be approved earlier than they otherwise should have been. Elfie Stamm, the Department's expert in health planning, testified that if need is erroneously overestimated and excess beds are approved, this will be corrected over time through the eventual growth in need. This testimony was in the context of nursing home beds, and did not address the effect of overbedding in the other health care service areas for which fixed need pools are also published. There was no evidence that errors by the Department in its projection of numeric need has actually resulted in overbedding. It was pointed out that upon a balanced consideration of all criteria, the Department can still deny CONs for additional beds, even if there has been an erroneous overprojection of numeric need. Kevin Krischer, also an expert in health planning, testified that the effect of any overbedding on existing providers is real and immediate since such a condition can reasonably be expected to result in fewer patients for existing providers, and a resulting inability to cover their fixed costs. However, existing providers with existing health care programs in the same Service District can point out errors to the Department, and their consequences, by participating in the application review process through public hearings and administrative challenges to the Department's intention to issue a CON based upon its projection of numeric fixed need.

    
    

13. The following statutory provisions have been cited by the Department as specific authority for Rule 10-5.008(2)(a); Sections 381.031(1)(g)11 and 381.704(4), Florida Statutes. Additionally, the Department has cited the following laws implemented by this Rule; Sections 381.707 through 381.709, Florida Statutes. Although not cited as authority in the Florida Administrative Code, the Department also contends that the adoption of Rule 10-5.008(2)(a), and its interpretation, is based upon, and in response to, the decision of the First District Court of Appeal in Gulf Court Nursing Center v. DHRS, 483 So.2d 700 (Florida 1st DCA 1986). The Rule here at issue was adopted by the Department to increase predictability and fairness in the CON process, and also to reduce frivolous applications, encourage competition, provide for a meaningful comparative review of competing applications, and make better use of the Department's resources. In fact, the Department has seen a reduction in the number of CON applications since this Rule was adopted. Prior to the implementation of the fixed need pool rule, it was the practice of CON applicants to file applications, and if denied, seek to delay a final resolution of their application while waiting for factors upon which need calculations are based to change. Applicants also filed in every batching cycle, hoping to have a pending application in process when factors did change and need was eventually projected. This prior practice did not promote fairness and predictability, and did not provide for a meaningful comparative review of competing applications.

    
    

14. The parties have stipulated to the standing of all parties to this proceeding. Therefore, there are no factual disputes regarding allegations of standing set forth in the various petitions filed herein.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this cause. Section 120.56, Florida Statutes. The Petitioners have the burden in this proceeding since they are challenging the validity of the Department's Rule 10-5.008(2)(a) Florida Administrative Code.

    Agrico Chemical Company v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978), cert. den. 376 So.2d 777 (Fla. 1st DCA 1986).

    
    

16. Section 120.52(8), Florida Statutes, defines and specifies that an "invalid exercise of delegated legislative authority means action which goes beyond the powers, functions, and duties delegated (to an agency) by the Legislature." It further provides that if any one or more of the following applies, an agency's proposed or existing rule is invalid:

    
    

    1. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(7);

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

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

    4. The rule is arbitrary or capricious.

    
    

17. The Petitioners do not assert that the Department failed to follow proper rulemaking proceedings in adopting Rule 10-5.008(2)(a), but do urge that the Rule be declared an invalid exercise of delegated legislative authority pursuant to Subsections (b) through (e) of Section 120.52(8), Florida Statutes, shown above, both on its face and as interpreted and applied by the Department.

    
    

18. In considering any challenge to an agency's administrative rules, it is recognized that those parties asserting the invalidity of such enactment have a heavy burden. As reiterated in Austin v. Department of Health and Rehabilitative Services, 495 So.2d 777 (Fla. 1st DCA 1986):

    
    

    . . . agencies are given wide discretion in the exercise of their lawful rulemaking authority. "An agency's construction of a statute is entitled to great weight and is not to be overturned unless clearly erroneous." Department of Professional Regulation, Board of Medical Examiners v.

    Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1984). This court in Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978), cert.

    den. sub nom. Askew v. Agrico Chemical Co.,

    376 So.2d 74 (Fla. 1979), stated that a court must uphold the validity of a proposed rule, if the rule is reasonably related to the purpose of the enabling legislation, and is not arbitrary and capricious. The burden is on one who attacks a rule to show that the rule exceeds its statutorily delegated authority. The person attacking the rule must show also that the rule is arbitrary and capricious by a preponderance of evidence. Id.

19. See also, General Telephone Company of Florida, et al. v. Florida Public Service Commission, 446 So.2d 1063 (Fla. 1984); Florida Waterworks Association v. Florida Public Service Commission, 473 So.2d 237 (Fla. 1st DCA 1985); State of Florida, Marine Fisheries Commission v. Organized Fishermen of Florida, 503 So.2d 935 (Fla. 1st DCA 1987); and Florida Board of Optometry v. Florida Society of Ophthalmology, 538 So.2d 878 (Fla. 1st DCA 1988).

    
    

20. Where an agency construes the statute in its charge in a permissible way, that interpretation must be sustained though another may be possible or even, in the view of some, preferable. State, Department of Health and Rehabilitative Services v. Framat Realty, Inc., 407 So.2d 238, 241 (Fla. 1st DCA 1981); Pan American World Airways, Inc. v. Florida Public Service Commission and Florida Power and Light Co., 427 So.2d 716, 719 (Fla. 1983). The Petitioners must show that the agency's interpretive rule is clearly erroneous or unauthorized. See, ABC Liquors, Inc. v. Department of Business Regulation, 397 So.2d 696, 697 (Fla. 1st DCA 1981). Administrative rules should not be invalidated if they are reasonably related to the purposes of the enabling statutes, and are not arbitrary or capricious. Grove Isle, Ltd. v. Department of Environmental Regulation, 454 So.2d 571 (Fla. 1st DCA 1984).

    
    

    The Rule Does Not Exceed The Department's Rulemaking Authority or Enlarge,

    Modify, or Contravene Specific Provisions of Law

    
    

21. The Department has cited as authority for this Rule the provisions of Sections 381.031(1)(g)11 and 381.704(4), Florida Statutes, which generally allow the Department to adopt rules which carry out the purpose and intent of laws enacted for the protection of the public health, and to implement the Health Facility and Services Development Act (Sections 381.701 through 381.715, Florida Statutes). These statutes provide general rulemaking authority for the Department. In addition, Sections 381.707 through 381.709 are cited as the laws implemented by this Rule. Section 381.707 specifies the content of CON applications and Section 381.708 prescribes fees for CON applications. Section 381.709, Florida Statutes, establishes the CON review process, and Subsections

    (1) and (2) of Section 381.709, Florida Statutes, deal with CON review cycles and letters of intent. The Department is authorized to provide by rule for CON applications to be filed on a timetable or cycle basis, and for comparative review of competing applications. A mechanism by which applications may be filed to compete with proposals described in filed letters of intent is to be developed by the Department.

    
    

22. The evidence presented at hearing establishes that the Department adopted Rule 10-5.008(2)(a) in response to, and as a means of correcting, the problems found to exist in the prior CON review process in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1985). Prior to the fixed need pool rule, continuous changes in projections of need based upon updated data, correction of errors and the application of different need methodologies caused providers to file multiple applications in successive batching cycles in order to ensure that they would have an application pending whenever need arose. With regard to the prior practice of the Department, the Court noted:

    
    

    Our review of the applicable federal and state statutes and HRS rules leads us to conclude that the challenged policy and practice of HRS does not

    comport with the above-cited principles (of Biomedical

    Applications v. Department of Health and Rehabilitative Services, 370 So.2d 19 (Fla. 2nd DCA 1979)) and is

    not in compliance with the requirements of the state and federal acts. . . . We are convinced that HRS's past practices, which have been appropriately criticized, are a principal cause of the inordinate number of CON applications being filed with HRS,

    and undoubtedly adversely affected the limited ability of HRS to investigate and process CON applications.

    Gulf Court Nursing, supra at 483 So.2d 706, 708.

    
    

23. Subsequent to this decision, the Department sought to establish a CON review process which affords a meaningful opportunity for comparative review of competing applications. Applicants have a reasonable assurance under the fixed need pool process that the Department's projection of fixed need for the planning horizon year to which their application is addressed will not change after that projection is published, except if an error is found and a corrected need number is also published prior to the application deadline. Existing providers that do not intend to file an application, but seek to challenge the issuance of a CON in their same Service District, also know that the published need projection will not change without republication. This brings certainty to the CON review process, obviates the need for applicants to file in each batching cycle due to ever changing numeric need projections, and allows health care providers to truly compete, on a comparative basis, for an established fixed pool of beds.

    
    

24. In the recent decision in Meridian, Inc. v. Department of Health and Rehabilitative Services, Case Nos. 88-419 & 88-421, Fla. 1st DCA, Op. filed September 12, 1989, and not final until time expires to file motion for rehearing and disposition thereof, if filed, the Court addressed the Department's policy of refusing to allow updates of population estimates at hearing and requiring the estimates available at the time an application was submitted to be used throughout the review process If updated estimates were allowed at hearing, "projections would vary depending on the date of an applicant's final administrative hearing and this would encourage needless applications and delay in the hope that eventually new projections would justify approval of the application." Further the Court stated:

    
    

    The logic of HRS's position is unassailable.

    It gives effect to the notion that, pursuant to applicable principles of comparative review, the number of beds in the fixed pool in the July 1985 planning cycle (July 1988) to which the applicants' applications were addressed . . . would become set at July 1985 for purposes of comparative review, even though new data coming to light in later months or years might reflect a different bed need when factored into the formula. If the number of beds in the fixed pool could be altered by new

    information developed after the initial applications were filed, there would be no basis for ever fixing the number in the pool, and the evils in the system addressed in Gulf Court would be perpetuated.

    Id. at pages 4 and 5.

    
    

25. Rule 10-5.008(2)(a) is consistent with the reasoning in Gulf Court and Meridian, and is authorized by the above cited statutes. In order to have a

    meaningful comparative review of competing applications, and to implement a CON review process consistent with the purposes and intent of the CON law in Florida, numeric need projections must be fixed so that the need considered at comparative hearing is the same numeric need published to initiate a batching cycle, even though information is uncovered later which would result in a different projection of need. It has been shown that the Rule infuses the CON review process with predictability and fairness, and results in a better allocation of the Department's resources, by reducing frivolous applications and unnecessary litigation. This Rule is necessary for the proper implementation of the "Health Facility and Services Development Act," Sections 381.701 through 381.715, Florida Statutes, and therefore, is a proper exercise of the Department's general rulemaking authority under Sections 381.031(1)(g)11 and 381.704(4), and implements the specific provisions of Section 381.709, Florida Statutes.

    
    

26. It is, of course, recognized that Section 120.54(15), Florida Statutes, provides that, "No agency has inherent rulemaking authority. "

    However, "rulemaking authority may be implied to the extent necessary to properly implement a statute governing the agency's statutory duties and responsibilities." Fairfield Communities v. Florida Land and Water Adjudicatory Commission, 522 So.2d 1012, 1014 (Fla. 1st DCA 1988). While it is specifically concluded that the Petitioners have failed in their burden, and the Rule here at issue is authorized by the clear meaning and intent of the cited statutory provisions, nevertheless, the authority for this Rule can also be implied as "necessary" to the proper implementation of the CON law, as previously explained in the discussion of the Gulf Court and Meridian decisions, above.

    
    

    The Rule Is Not Vague And Establishes Adequate standards

    
    

27. The record establishes that the Petitioners are primarily concerned about the certainty and specificity of this Rule, rather than any allegation of vagueness The meaning of the terms used in the Rule are clear, and the interpretations set forth by the Department based on this Rule are consistent therewith.

    
    

28. A specific time period is established for bringing errors in the published fixed need projections to the Department's attention. If timely notice of errors is received, and the Department concurs, a corrected notice will be published if there is sufficient time prior to the application deadline for all potential applicants to have notice of such correction. Otherwise, the Department will still consider any notice of errors for correction in the subsequent batching cycle.

    
    

29. In reviewing an administrative rule for vagueness, the test is more lenient than when a statute is tested on the same grounds. In City of St. Petersburg v. Pinellas County Police Benevolent Association, 414 So.2d 293 (Fla. 2nd DCA 1982), the Court applied a two pronged test: (1) whether persons of common intelligence are required to guess at the rule's meaning; and (2) whether persons affected by the rule were properly apprised of the rule's effect on them. The Rule here at issue meets this two-pronged test. No one need guess at the meaning of the Rule because its terms, and their interpretation by the Department, are clear. All potential CON applicants and existing providers are uniformly placed on notice by this Rule of the steps which must be taken to correct errors in the published fixed need pool for the current batching cycle, and that failure to timely bring such alleged errors to the Department's attention shall result in any changes being made for subsequent batches, but not

    for the current batching cycle. See also, Southeastern Fisheries Association v. Department of Natural Resources, 453 So.2d 1351 (Fla. 1984). Thus, Petitioners have failed to show that this Rule is vague on its face, or in its interpretation by the Department.

    
    

    The Rule Is Not Arbitrary Or Capricious

    
    

30. In Agrico Chemical Company v. Department of Environmental Regulation,

    365 So.2d 759, 763 (Fla. 1st DCA 1978), the terms "arbitrary" and "capricious" were defined as follows:

    
    

    A capricious action is one which is taken without thought or reason or irrationally. An arbitrary action is one not supported by facts or logic, or despotic.

    
    

31. The Rule here at issue is neither arbitrary, nor capricious. The record establishes that this Rule was the well reasoned response of the agency to criticisms and problems with the previous CON review process addressed by the Court in Gulf Court. While there is the recognized potential under this Rule and its interpretation for errors to occur which may not be able to be corrected for the batching cycle in which the error occurred, the Department considered this, and in the exercise of its discretion determined that the risk of such error actually resulting in the approval of excess beds is outweighed by the need for fairness and predictability in the CON process. A reasonable opportunity to timely notify the Department of errors is provided, and if notice of corrections can be published in a manner which will give all prospective applicants an equal opportunity to compete, such errors can be corrected in that same batching cycle. If such republication cannot be accomplished, corrections will be made in the subsequent batch. The Rule is supported by both fact and logic, and is a reasonable means of implementing the CON law in Florida.

    
    

32. There is no evidence in the record of this proceeding which would indicate that erroneous need projections have occurred and actually resulted in an overbedding condition. While certainly an important factor, numeric need is only one of the criteria considered by the Department in the CON review process, and is not a threshold factor. If errors in need projections are uncovered in the administrative hearing process, and the need for more beds is projected than actually should be the case, the Department is not mandated to approve such excess beds. Rather, a balanced consideration of all criteria, including accessibility, availability and quality of care, must be undertaken, and would provide a reasonable basis for denial if numeric need is outweighed by these other criteria. Thus, Petitioners have not established that this Rule is arbitrary or capricious on its face, or as interpreted by the Department.

Based upon the foregoing, it is:

ORDERED that the Petition filed herein seeking a determination of the invalidity of Rule 10-5.008(2)(a), Florida Administrative Code, is DISMISSED, and the relief sought therein is DENIED.

DONE and ORDERED this 4th day of October, 1989 in Tallahassee, Leon County, Florida.

DONALD D. CONN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 1989.

APPENDIX

Rulings on Petitioners' Proposed Findings of Fact:

1. Adopted in Finding 14, but otherwise Rejected as irrelevant.

2. Adopted in Finding 1.

3. Adopted in Findings 3, 14.

4. Adopted in Finding 14, but otherwise Rejected as irrelevant.

5. Adopted in Finding 14.

6. Adopted in Findings 5, 7.

Rulings on the Respondent's Proposed Findings of Fact:

1. Adopted in Finding 13.

2. Adopted in Findings 7, 13.

3. Adopted in Finding 13.

4. Adopted in Finding 1.

5. Adopted in Finding 5.

6. Adopted in Finding 7.

7. Adopted in Finding 13.

8. Adopted in Findings 6, 7.

9. Adopted in Finding 8.

10. Adopted in Findings 1, 8.

11. Adopted in Finding 11.

12. Adopted in Finding 6.

13. Adopted in Findings 7, 10.

14. Adopted in Findings 9, 10.

15-16. Adopted in Findings 10, 12.

1. Adopted in Finding 12, but otherwise Rejected as not based on competent substantial evidence.

2. Adopted in Finding 12.

3. Rejected as unnecessary and cumulative.

4. Adopted in Findings 7, 13.

5. Adopted in Finding 12.

6. Rejected as unnecessary. 23-24. Adopted in Finding 13.

25. Adopted in Findings 7, 12, 13.

Rulings on Intervenor Health Care and Retirement's Proposed Findings of Fact:

1. Adopted in Finding 14. 2-3. Adopted in Finding 1.

1. Adopted in Findings 1, 5-8.

2. Adopted in Finding 7.

3. Adopted in Findings 5, 7, 8.

4. Adopted in Findings 8, 13.

5. Adopted in Findings 5, 7, 9. 9-10. Adopted in Finding 10.

1. Adopted in Findings 10, 12.

2. Adopted in Findings 7, 8.

3. Adopted in Finding 10.

4. Adopted in Finding 12.

5. Adopted in Finding 3.

6. Adopted in Finding 13.

7. Adopted in Finding 12.

18-20. Adopted in Finding 13.

1. Rejected as cumulative and unnecessary.

2. Adopted in Findings 9, 10, 12.

3. Adopted in Findings 12, 13.

4. Adopted in Findings 7, 12, 13.

5. Adopted in Finding 13.

6. Adopted in Findings 11-13.

7. Adopted in Finding 13.

28-29. Adopted in Finding 12.

Rulings on Intervenor First Hospital's Proposed Findings of Fact:

(It should be noted that Intervenor has failed to comply with Rule 221-6.031(3), Florida Administrative Code, by failing to include citations to the record.)

1-10. Rejected as irrelevant and unnecessary.

1. Adopted in Findings 1, 7.

2. Adopted in Finding 13.

13-15. Adopted in Findings 7, 13.

1. Rejected as without citation to the record.

2. Adopted in Findings 1, 3.

18-20. Rejected as irrelevant and unnecessary.

1. Adopted in Finding 5.

2. Adopted in Finding 7.

3. Adopted in Finding 8.

4. Adopted in Finding 6.

5. Adopted in Findings 6, 7.

6. Adopted in Finding 8.

7. Adopted in Finding 10.

8. Adopted in Finding 7.

9. Adopted in Finding 11.

30-31. Adopted in Finding 13, but otherwise Rejected as without citation to the record.

32. Adopted in Finding 12.

Rulings on Intervenor Varicare's Proposed Findings of Fact:

1-21. Rejected as irrelevant and unnecessary.

1. Adopted in Finding 14.

2. Adopted in Finding 13.

3. Rejected as unnecessary.

4. Adopted in Finding 1.

5. Rejected as a conclusion of law rather than a finding of fact.

6. Adopted in Finding 13.

7. Adopted in Findings 5, 7, 8.

29-30. Adopted in Findings 7, 8, but otherwise Rejected as irrelevant.

1. Adopted in Finding 8.

2. Adopted in Findings 9, 10.

3. Adopted in Finding 6.

4. Adopted in Findings 6, 9.

5. Adopted in Finding 10.

6. Rejected as irrelevant and unnecessary.

7. Adopted in Findings 9, 12.

8. Adopted in Finding 7.

9. Adopted in Findings 11, 12.

10. Rejected as irrelevant and unnecessary, and otherwise as simply a statement of position.

11. Adopted in Finding 7.

12. Adopted in Finding 10.

43-46. Adopted in Finding 12.

47-50. Adopted in Finding 13.

1. Adopted in Findings 7, 13.

2. Adopted in Findings 7, 12.

53-54. Adopted in Finding 13, but otherwise Rejected as irrelevant and as a conclusion of law rather than a finding of fact.

COPIES FURNISHED:

Steven W. Huss, Esquire l017-C Thomasville Road Tallahassee, FL 32303

Lee Elzie, Esquire

P. O. Box 82 Tallahassee, FL 32302

Chris H. Bentley, Esquire Diane D. Tremor, Esquire 2548 Blairstone Pines Drive Tallahassee, FL 32301

Robert D. Newell, Jr., Esquire 817 North Gadsden Street Tallahassee, FL 32303

James C. Hauser, Esquire 204-B South Monroe Street Tallahassee, FL 32301

Alfred W. Clark, Esquire

P. O. Box 623 Tallahassee, FL 32302

R. Bruce McKibben, Jr., Esquire

P. O. Box 10651 Tallahassee, FL 32302

Samuel J. Dubbin, Esquire Gerald Cohen, Esquire

4000 Southeast Financial Center Miami, FL 33131-2398

Thomas J. Jones, Esquire Eleanor Joseph, Esquire

P. O. Drawer 810 Tallahassee, FL 32301

Byron B. Mathews, Jr., Esquire Paul Shelowitz, Esquire

700 Brickell Avenue

Miami, FL 33131

John Miller, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, FL 32399-0700

Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, FL 32399-0700

Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, FL 32399-0700

Carroll Webb, Executive Director Administrative Procedures Committee

120 Holland Building Tallahassee, FL 32399-1700

Ms. Liz Cloud, Chief

Bureau of Administrative Code Room 1802, The Capitol Tallahassee, FL 32399-0250

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68. FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 89-002623RX

Orders for Case No: 89-002623RX