STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
ADVENTIST HEALTH SYSTEMS, ) SUNBELT, INC., d/b/a )
FLORIDA HOSPITAL, )
)
Petitioner, )
)
vs. )
) DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, ) CASE NO. 90-1526
)
Respondent, )
)
and )
) CENTRAL FLORIDA REGIONAL ) HOSPITAL, INC., d/b/a )
HCA CENTRAL FLORIDA, )
)
Intervenor. )
)
RECOMMENDED ORDER
Pursuant to notice, final hearing in the above-styled case was held in Tallahassee, Florida, on August 1 and 3, 1990, before Robert D. Meale, Hearing Officer of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Robert T. Klingbeil, Jr.
Boone, Boone, Klingbeil, et al.
P.O. Box 1596
Venice, Florida 34284
For Respondent: Edgar Lee Elzie, Jr.
Macfarlane, Ferguson, et al.
215 S. Monroe St., Suite 804 Tallahassee, Florida 32301
For Intervenor: John Radey
Elizabeth McArthur Aurell, Radey, et al.
P.O. Drawer 11307 Tallahassee, Florida 32302
STATEMENT OF THE ISSUES
The issue is whether the application of Petitioner for a certificate of need complies with the minimum content requirements of Section 381.707(2)(a), Florida Statutes.
PRELIMINARY STATEMENT
By application dated September 27, 1989, Petitioner requested a certificate of need to provide inpatient cardiac catheterization services at Florida Hospital--Altamonte Springs.
By letter dated October 12, 1989, Respondent informed Petitioner that its application, which had been assigned CON Action Number 6033, omitted certain information, including information concerning capital projects of the applicant. By letter dated November 1, 1989, Petitioner responded to Respondent's omissions letter.
By State Agency Action Report dated January 11, 1990, Respondent announced its decision to issue the certificate of need. The decision was published in the Florida Administrative Weekly on January 26, 1990.
By petition filed with Respondent on February 16, 1990, Intervenor requested a formal hearing on whether the certificate of need should be issued. Respondent transmitted the petition to the Division of Administrative Hearings for the purpose of conducting the hearing.
By Motion for Summary Recommended Order filed July 5, 1990, Intervenor argued that Petitioner's application failed to meet the minimum content requirements of Section 381.707, Florida Statutes. By order entered July 18, the motion was denied without prejudice to the introduction, at the final hearing, of evidence on the completeness of the application.
In a telephone conference conducted on July 26, the parties agreed to bifurcate the evidentiary hearing and restrict the hearing on August 1 and 3 to the issue set forth above. The parties subsequently agreed that, if the undersigned concluded that the application should be denied, a recommended order to this effect would be entered prior to setting the remainder of the case for final hearing.
At the hearing, Petitioner called three witnesses, Respondent called one witness, and Intervenor called two witnesses. Petitioner offered into evidence
16 exhibits. All of Petitioner's exhibits were admitted into evidence. However, Exhibit 15, which was reserved for the financial statements accompanying CON application 6024, was not filed. Instead, the parties stipulated that the financial statements were identical to the financial statements in the subject application. Respondent offered no exhibits.
Intervenor offered 33 exhibits. All of Intervenor's exhibits were admitted into evidence except Exhibit 16, which was proffered. Exhibits 8 and 9, on which ruling was reserved, are admitted over Petitioner's objections, as set forth in counsel's letter of August 7, 1990.
The transcript of the final hearing was filed on August 27, 1990. Each party filed a proposed recommended order. Treatment of the proposed findings is detailed in the appendix.
FINDINGS OF FACT
The Application and HRS Review
By letter to Respondent dated August 24, 1989, Petitioner announced its intent to file an application for a certification of need (CON) for a cardiac catheterization laboratory in Seminole County.
By application dated September 27, 1989, Petitioner applied for a CON to provide inpatient cardiac catheterization services. The application states that the project, which is located in Seminole County, involves an expansion or renovation without the addition of new beds. The estimated cost of the project is $1,812,320, which would be derived from operating funds and/or equity.
The application identifies the applicant as Adventist Health System/Sunbelt, Inc., d/b/a Florida Hospital Medical Center--Altamonte Campus and the facility for which the service is proposed as Florida Hospital Medical Center--Altamonte. The applicant describes the project as a "Cardiac Cath Lab at Florida Hospital--Altamonte Campus."
Page five of the application is entitled, "Capital Expenditures Approved, Under Development, or Planned." Under this section, the application reads:
Adventist Health System/Sunbelt, Inc.
owns and operates hospitals throughout the southeastern United States. To present the detail of all planned capital expenditures for each hospital in the system would be burdensome and too detailed for this writing. Adventist Health System/Sunbelt, Inc. has as a part of the annual budgeting process required hospitals to submit a Summary Capital Budget. *This is listed below for each of the hospitals under Adventist Health System/Sunbelt, Inc.
1990 Summary Capital Budget Amounts to be Financed/Means of Financing
Hospital | Cash | Debt | Contributions | |
Walker | 600,000 | 1,000,000 | ||
Takoma | 7,000 | 513,000 | 50,000 | |
Smyrna | 1,250,000 | |||
Highland | 100,000 | 100,000 | 50,000 | |
T. Christian | 500,000 | 1,000,000 | 500,000 | |
Huguley | 250,000 | 600,000 | 2,000,000 | |
1,457,000 | 4,463,000 | 2,600,000 |
*Data for Medical Center Hospital, East Pasco Medical Center, and Central Texas Med Ctr is not yet available and will be provided during the omissions process.
Florida Hospital Medical Center Current/Planned Projects:
Biliary | Amount Outstanding | Financing By Cash Debt | |
Lithotripter | 1,670,000 | 920,000 750,000 | |
FH-Alt Rad Therapy, | |||
74 Beds | 8,483,450 | 8,483,450 | |
FH-Alt Cath Lab | 1,812,320 | 1,812,320 | |
Total: | 11,965,770 | 2,732,320 | 9,233,450 |
The project summary contained in the application states:
Florida Hospital Medical Center incorporates three facilities under one license: Florida Hospital--Orlando, Florida Hospital-- Altamonte and Florida Hospital--Apopka. The cardiac catheterization laboratories currently being used by physicians are located at Florida Hospital--Orlando.
Concerning the immediate financial feasibility of the project, the application reports that operating cash will provide the source of funds for the project. The balance sheets and statements of income attached to the application disclose, for the years ending 1988 and 1987, respectively, current assets of $494 and $473 million, long-term debt of $276 and $278 million, equity of $138 and $125 million, operating revenue of $420 and $376 million, and net income of $12 and $7 million. The statements of cash flows for 1988 and 1987, respectively, show $34 and $26 million for the purchase of property and equipment and $23 million each year for depreciation.
The notes to financial statements indicate that each of Petitioner's hospitals is assigned to one of ten operating divisions: East Pasco Medical Center, Central Texas Medical Center, Florida Hospital Medical Center, Highland Hospital, Huguley Memorial Medical Center, Medical Center Hospital, Smyrna Hospital, Takoma Adventist Hospital, Tennessee Christian Medical Center, and Walker Memorial Hospital.
With respect to property and equipment, the notes to financial statements report that construction in progress in 1988 and 1987 totalled $23 and $28 million. With respect to commitments and contingencies, the notes disclose that the estimated costs to complete "projects" under construction approximated $10,065,000 at December 31, 1988.
The application contains separate financial statements for Florida Hospital Medical Center for the year ending 1988. The commitments are described as follows:
The Hospital has entered into projects for which costs have been incurred and included in construction in progress. The
estimated costs to complete these projects
approximated $2,622,000 at December 31, 1988. The Hospital has entered into a commitment to purchase a biliary lithotripter machine at a cost of $1,350,000. Of this amount, $135,000 had been paid by December 31, 1988 and is included in construction in progress.
The financial statements for Florida Hospital Medical Center for the year ending 1987 disclose that the estimated costs to complete "projects" under construction approximated $15,000,000 at December 31, 1987.
The application is accompanied by a statement of the assistant secretary of the board of directors of Petitioner certifying that Petitioner authorized the filing of the application and the expenditure of the funds necessary to accomplish the proposed project.
By letter dated October 12, 1989, Respondent informed Petitioner that its application, which had been assigned CON Action Number 6033, lacked certain elements. The omission relevant to this case was described as follows:
Pursuant to Section 381.707(2)(a), an application must contain a complete listing of all capital projects of the applicant.
For the purpose of this question, a capital project is any capital expenditure, regardless of amount, required by GAAP [generally accepted accounting principles] to be capitalized. Equipment not related to this project may be grouped by year of acquisition. Inflation should be considered and taken into account....
This capital project listing shall include the applicant's actual or proposed financial commitment to those projects and an assessment of their impact on the applicant's ability to provide the proposed project.
By letter dated November 1, 1989, Petitioner responded to the omissions letter, in relevant part, by adding a new fifth page to the application. As revised by the omissions response, the items listed under capital expenditures approved, under development, or planned are precisely the same as those set forth in the original application, as described in Paragraph 4 above, including the reference to further information during the "omissions process." The only addition is the following:
Adventist Health System/Sunbelt, Inc. d.b.a. Florida Hospital Medical Center will not be adversely affected either financially or administratively by this project. Florida Hospital is a financially sound institution as presented in the financial statements of this application. The administration which currently oversees the cath lab service at
Orlando will also govern the service at Altamonte to help ensure a very high quality of care.
By letter dated November 13, 1989, Respondent informed Petitioner that the omissions response had been received and, "[p]ursuant to Section 381.709(3)(a), Florida Statutes, your application has been deemed complete effective November 13, 1989."
By State Agency Action Report dated January 11, 1990, Respondent announced its intent to grant CON 6033 to Petitioner to "establish an inpatient cardiac catheterization program at Florida Hospital Medical Center--Altamonte Campus in Seminole County." The State Agency Action Report notes that the
[f]inancial statements contained in the application demonstrate sufficient monetary resources to fund and operate the proposed project. The $1,812,320 capital expenditure is reported to be "in-hand" and will come from operating cash of the applicant.
The Present Challenge
Respondent published the notice of intent to issue CON 6033 to Petitioner in the Florida Administrative Weekly dated January 26, 1990. By Petition for Formal Hearing filed February 16, 1990, Intervenor timely challenged the issuance of the CON on various grounds, including the incompleteness of the application. The petition alleges the factual grounds for Intervenor's standing.
By Notices of Hearing dated April 3 and 9, 1990, the case was set for final hearing on April 26 and 27, 1990. By Order Granting Continuance entered April 19, 1990, the final hearing was rescheduled for July 30 through August 3, 1990.
By Motion to Dismiss filed July 17, 1990, Petitioner requested that Intervenor's petition requesting a hearing be dismissed on the ground, among others, that Intervenor lacks standing. This is the only pleading or motion that raises the question of Intervenor's standing. This motion was denied by Order Granting Motion for Protective Order, Denying Motion for Summary Recommended Order, and Denying Motion to Dismiss entered July 18, 1990. The order denied, without prejudice, a Motion for Summary Recommended Order filed July 5, 1990, in which Intervenor sought summary relief on the grounds that the CON application was incomplete and should therefore be denied.
During a telephone conference on July 26, 1990, problems with discovery raised the possibility of another continuance of the final hearing. As an alternative to a continuance, the parties agreed to postpone to August 1 and 3 the evidentiary hearing and limit it to the issues raised in Intervenor's Motion for Summary Recommended Order. The undersigned summarized, at the conclusion of the telephone conference, that the issues at the August 1 and 3 hearing would be limited to "whether the application complies with Section 381.707, sub (2)(a), if applicable." (Tr. of July 26 conference, p. 32.)
At the conclusion of the hearing on the completeness of the application, the undersigned requested counsel to submit recommendations for post-hearing procedures in the event the application were determined to be
complete or incomplete. Counsel for Petitioner, by letter dated August 7, 1990, proposed the following procedure in the event of a determination that the application were incomplete:
In the event the application is found to be "fatally flawed" in that Your Honor finds that the application failed to meet the provisions of [Section 381.707(2)(a)], then a Recommended Order of Dismissal should be entered and the matter sent back to HRS for final disposition. Under this scenario, if HRS adopts your recommended order, [Petitioner] will have an appealable final order which it can take to the DCA, in the event it chooses to do so. In the event HRS rejects your recommendation, the matter can be remanded to DOAH for hearing[.]
Petitioner's Relevant Capital Projects
Florida Hospital Campuses
On June 18, 1990, Petitioner filed a report with the Florida Hospital Cost Containment Board concerning the Florida Hospital division, which comprises three campuses: Orlando, Altamonte Springs, and Apopka. The report lists about
$32.5 million of actual capital expenditures for 1989. The report lists, by item, 35 capital expenditures over $150,000 each for a total of about $20.2 million. Capital expenditures for items under $150,000 are listed by category and total about $12.2 million.
The subject application omits numerous capital projects that, on September 27, 1989, were applied for, pending, approved, or underway at the Orlando, Altamonte, and Apopka campuses.
Petitioner conducted a feasibility study for multi-place hyperbaric chamber for Florida Hospital--Orlando in late 1988 or early 1989. Although construction did not commence until January, 1990, Petitioner submitted construction documents for Respondent's approval prior to this point. The $1.2 million hyperbaric chamber project, which is located at Florida Hospital-- Orlando, was pending on September 27, 1989.
By letter dated June 21, 1989, to Respondent, Petitioner gave notice of a proposed "project" to construct an angiography suite at Florida Hospital-- Altamonte at a cost of $975,000 and involving 3600 square feet. By letter dated July 3, 1989, Respondent advised Petitioner that the "project" was CON-exempt, but noted that architectural plans must be approved prior to the commencement of construction. Also known as a vascular laboratory, the angiography suite underwent construction from Thanksgiving, 1989, through June, 1990, at which time it was completed. This project was pending on September 27, 1989.
At the same time that construction was commencing on the Florida Hospital--Altamonte angiography suite, Petitioner was planning a less costly project for the Florida Hospital--Orlando angiography lab. By letter dated March 8, 1989, Petitioner requested Respondent to concur that a proposed "project" was exempt from CON review. The $312,000 project involved 2600 square feet in the angiography lab in Florida Hospital--Orlando. By letter dated March 22, 1989, Respondent determined that the $312,000 "renovation" "project" was
CON-exempt. A letter dated July 14, 1989, from Respondent to Petitioner reviews construction plans, and Petitioner provided Respondent revised construction documents by letter dated January 23, 1990. This project was thus pending on September 27, 1989.
A letter dated March 22, 1989, from Respondent informs Petitioner that a $600,000 "project" for the renovation of the cardiology hallway at Florida Hospital--Orlando involving 6000 square feet was CON-exempt. A letter dated December 15, 1989, from Respondent to Petitioner's architect or contractor and a letter dated March 8, 1990, from Petitioner to Respondent, which was accompanied by a plan review fee for the cardiology hallway project, establish that the project was still pending on September 27, 1989.
A major cafeteria project at Florida Hospital--Orlando was also pending during the time in question. Planned on an ongoing basis well prior to September 27, 1989, construction on the $3.5 million facility began in mid-1990 and is scheduled for completion in the spring of 1991.
A cafeteria project at Florida Hospital--Altamonte was pending on September 27, 1989. By letter dated January 4, 1989, Petitioner's architect provided Respondent with the plan review fee for a $550,000 proposed "project" to add and alter the cafeteria. Additional work increased the cost, and Respondent advised Petitioner by letter dated March 28, 1989, that a proposed
$730,000 expansion and renovation "project" of the Florida Hospital--Altamonte cafeteria was CON-exempt. Respondent approved the construction documents in a letter dated December 12, 1989, to the same architectural firm that sent the January 4, letter.
Another major project was pending on September 27, 1989. By letter dated March 8, 1989, Petitioner advised Respondent of a $525,000 proposed renovation "project" involving 15,057 square feet of the sixth-floor pediatrics area at Florida Hospital--Orlando. Petitioner supplied Respondent with revised construction documents, and, by letter dated October 17, 1989, Respondent approved the revised construction documents for the "project."
Petitioner also added an outpatient cardiac catheterization lab at Florida Hospital--Orlando, which was completed and opened in March, 1990. This project was pending or underway on September 27, 1989, although it was not clearly described in the record due to changes in plans between construction and renovation and the similarity of the project with others undergoing planning or construction at the same time.
A separate project pending at all relevant times was for the conversion into a fifth cardiac catheterization lab of radiology space adjacent to the existing four cardiac catheterization labs at Florida Hospital--Orlando. Although this project has been postponed until 1991, it has not been abandoned. What apparently was an early conception of this project is the subject of a letter dated June 23, 1989, from Respondent to present counsel for Petitioner. This letter determines that a proposed $922,000 "project" to add a fifth cardiac catheterization laboratory to Florida Hospital, including minor renovations to existing space, is CON-exempt. A letter dated May 22, 1990, from Respondent to Petitioner requests more detailed drawings for equipment of the fifth cardiac catheterization lab at Florida Hospital--Orlando. A letter dated June 6, 1990, from Petitioner to Respondent establishes that the project was pending on September 27, 1989.
A renovation project to the Florida Hospital--Orlando radiation medicine area was pending on September 27, 1989. By letter dated April 24, 1989, Petitioner advised Respondent of the proposed "renovation project" involving 4790 square feet at a cost of $353,000. Respondent approved revised construction documents by letter to Petitioner's architect or contractor dated July 20, 1990. The radiation medicine project was therefore pending through September 27, 1989.
Projects pending at Florida Hospital--Apopka on September 27, 1989, include a new central energy plan, upgraded fire protection sprinkler system, and electric panel reworking. Although planning had not yet been completed for the projects by July, 1990, costs were estimated to total about $670,000.
East Pasco Medical Center and Medical Center
Petitioner filed undated report with the Florida Hospital Cost Containment Board concerning the East Pasco Medical Center division, through which Petitioner operates a hospital in Zephyrhills, Florida. The report lists
$1,869,343 of actual capital expenditures during 1989 for categories of items such as buildings, fixed assets, and equipment.
According to a May 21, 1990, report submitted to the Florida Hospital Cost Containment Board concerning its East Pasco Medical Center division, Petitioner planned in 1990 about $1.2 million in capital expenditures, including
$501,000 for items over $150,000 each. These expenditures were for a cysto table for $176,000, a video endoscopy for $175,000, and a chemical profile analyzer for $150,000.
Petitioner filed an application dated September 27, 1989, for a CON to establish a cardiac catheterization service at East Pasco Medical Center at an estimated cost of $962,000. This capital project was applied for on the same date as the impatient cardiac catheterization service that is the subject of the present application.
By letter dated July 3, 1989, Respondent advised Petitioner's architect that a proposed "project" for East Pasco Medical Center was CON- exempt. The project was for the creation of an eight-bed intensive care unit involving 4550 square feet at a cost of $910,000. By letter dated December 27, 1989, Petitioner's architect informed Respondent of revisions to the original plans that raised the area involved to 4800 square feet and the cost to
$960,000. This project was pending on September 27, 1989.
Petitioner filed a report dated June 5, 1990, with the Florida Hospital Cost Containment Board concerning the Medical Center division, through which Petitioner operates a hospital in Punta Gorda, Florida. The report lists
$16.6 million in actual capital expenditures during 1989. Expenditures for items costing at least $150,000 each totalled about $2.8 million, including expenditures for surgery suites, a cath unit, patient monitoring, cardiac-area remodeling, and a nuclear gamma camera.
By letter dated August 24, 1989, Respondent granted Petitioner a six- month extension on CON 5282 for the establishment of an open-heart surgery center at Medical Center Hospital. Petitioner supplied Respondent with evidence of completion of construction of the project, estimated to cost $294,000, by letter dated January 19, 1990. This project was pending, approved, and possibly underway on September 27, 1989.
Petitioner's Other CON Applications
Petitioner submitted four CON applications in 1988 for community nursing homes. Each application divides capital expenditures for various hospital divisions into two categories: "projects or expenditures approved or underway" and "projects or expenditures applied for, pending approval, or planned."
In an application bearing a date of June 27, 1989, Petitioner applied for a CON to refinance certain bonds. This list of "capital projects/expenditures" in the application is limited to five items involving the Florida Hospital division only.
Petitioner adopted a third approach to listing capital projects in two CON applications submitted in 1990. In an application dated March 28, 1990, Petitioner omitted the heading found on page five of the subject application reading: "capital expenditures approved, under development, or planned." Instead, the March 28 application divides the information into two categories: "capital expenditures 1990" and "capital projects summary May 1990."
The "capital expenditures 1990" list in the March 28 application is identical to the first list on page five of the subject application, except that for the addition of the following entries: East Pasco Medical Center--$550,000 cash, $2,950,000 debt, and $50,000 contributions; Medical Center Hospital--N/A; and Central Texas Medical Center--N/A.
The "capital projects summary May 1990" list in the March 28 application is identical to the second list on page five of the subject application, except for the addition of the following entries: oncology third floor renovation--$350,000; multi-place hyperbaric chamber--$450,000; and angiography lab--$35,000.
Petitioner filed with Respondent a CON application on June 26, 1990. This application contains an account of capital projects or expenditures identical to that contained in the March 28 application, except that the June 26 application omits an $8.4 million radiation therapy project (CON 1846A) and the statement on the March 28 application that the transfer will not affect Petitioner financially.
Petitioner filed another CON application dated September 27, 1989. Assigned CON number 6024, this application contains the same financial statements contained in the subject application. Rather than provide a list of capital projects, Petitioner advised Respondent that
there are no projects which are applied for, pending, approved, or underway in any state as of the time of this application which would have any potential impact upon the ability of the applicant to provide the project proposed in this application.
Respondent did not question the completeness of the listing of capital projects, granted Petitioner the CON requested, and apparently maintained this position through the course of an administrative hearing.
In listing capital projects in prior applications, some of which were granted and some denied, Petitioner restricted the list to outstanding CON projects and had excluded non-CON projects involving capital expenditures.
Definition of Key Terms
A capital project is a single capital expenditure or group of capital expenditures. An expenditure is a capital item if it is not expensed in the year of accrual, but instead is capitalized over a period in excess of one year, pursuant to generally accepted accounting principles.
A capital project is applied for, pending, approved, or underway when, among other things, it is in the planning stage or underway, or is the subject of a pending CON application or request for a determination of CON-exempt status.
Due to the difficulty of defining a "major health care provider," Respondent has not, by rule or in practice, allowed major health care providers to supply less-detailed information under the authority of Section 381.707(2)(a). Respondent has instead allowed all applicants to provide less- detailed data by allowing applicants to group a series of capital expenditures under one item.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Sections 120.57(1) and 381.709(5), Florida Statutes. (All references to Sections are to Florida Statutes.)
Standing is an affirmative defense that, if not properly raised, is waived. See, e.g., City of Destin v. Department of Transportation, 541 So.2d
123 (Fla. 1st DCA 1989).
Petitioner waived the right to raise standing, at least with respect to the August 1 and 3 hearing. By agreement of the parties, the case was bifurcated, and the sole issue for determination at this stage is whether the application is complete. Counsel for Petitioner himself suggested that, if the application were found to be "fatally flawed," the undersigned should enter a recommended order that would lead to the denial of the CON for which Petitioner has applied. The parties unambiguously agreed that an order recommending the denial of the CON application would necessarily result upon a finding that the application did not satisfy the minimum content requirement of Section 381.707(2)(a).
In addition, Petitioner waived the right to raise standing at any stage of the proceedings. Rule 22I-6.004(5), Florida Administrative Code, allows a party to respond to a petition and raise affirmative defenses, but requires that the defenses be filed within twenty days of the filing of the petition. Intervenor commenced the proceeding by filing a petition on February 16, 1990. The affirmative defense of standing was not raised until the motion to dismiss was filed July 17, 1990. The failure to raise standing within the time permitted by DOAH rules constitutes a waiver of this affirmative defense, which, unlike subject matter jurisdiction, may not be raised at any time. See, e.g., South Broward Citizens for a Better Environment, Inc. v. South Broward County Resource Recovery Project, Inc., 502 So.2d 9 (Fla. 1st DCA 1986).
Section 381.707(2)(a) provides:
An application for a [CON] shall contain:
A statement of the financial resources needed by and available to the applicant to accomplish the proposed project. This statement shall include:
A complete listing of all capital projects, including new health facility development projects and health facility acquisitions applied for, pending, approved, or underway in any state at the time of the application, regardless of whether or not that state has a [CON] program or a capital expenditure review program pursuant to section 1122 of the Social Security Act. The department may, by rule, require less- detailed information from major health care providers. This listing shall include the applicant's actual or proposed financial commitment to those projects and an assessment of their impact on the applicant's ability to provide the proposed project.
Separate subsections require that the application contain a "detailed financial projection" for the project and "audited financial statement[s] of the applicant." Section 381.707(2)(c) and (3). Section 381.707(4) requires that the applicant submit a certified copy of a resolution of its board of directors authorizing the project.
The minimum content requirement of a "complete listing of all capital projects" is not satisfied by compliance with the minimum content requirement of "audited financial statements" or "detailed financial projections." Audited financial statements supply only historical data concerning the applicant, and detailed financial projections supply only prospective data concerning the projected performance of the project. The minimum content requirement concerning capital projects provides important information that the other minimum content requirements do not.
The minimum content requirements supply the data for Respondent to use in the criteria-weighing process of Section 381.705, in which Respondent considers such factors as the financial feasibility of a proposed project. The criteria-weighing process of Section 381.705 necessarily leaves Respondent with a certain amount of discretion in determining whether to award a CON. The integrity of the criteria-weighing process depends directly upon the quality and quantity of data supplied by the applicant in satisfying the minimum content requirements of Section 381.707. Compliance with the minimum content requirements is essential, and the Legislature has vested in Respondent little discretion in administering the minimum content requirements of Section 381.707.
The present case is similar to Humhosco, Inc. v. Department of Health and Rehabilitative Services, 561 So.2d 388 (Fla. 1st DCA 1990). In the Humhosco case, the CON application lacked a certificate signed by the applicant (it was signed by the applicant's parent) and financial statements of the applicant (they were of a division of the applicant). The court affirmed a final order of Respondent denying the CON on the grounds that the application failed to satisfy
the requirements of Section 381.707(3) and Section 381.709(2)(c), which imposes the certificate requirement for letters of intent that Section 381.707(4) imposes on applications. Interpreting the word "shall" that precedes all subsections of Section 381.707, the court held that the application requirements were "mandatory."
In Humhosco, as in the present case, Respondent changed its position from originally intending to issue the CON to later advocating that the CON be denied. In both cases, Respondent had deemed a CON application complete following the receipt of an omissions response from the applicant. The Humhosco court rejected the unsuccessful applicant's estoppel argument, reasoning that the acceptance of the application and issuance of a notice of intent to award a CON are "preliminary agency decisions subject to challenge in a de novo section
120.57 administrative hearing at which the applicant bears the burden of proving compliance with the CON law." 561 So.2d at 391. Respondent's preliminary acceptance of the application "does not estop HRS from considering whether Humhosco has met its burden of proving compliance with the statutory requirements in section 381.707 and 381.709." Id.
Petitioner did not include with its application a "complete listing of all capital projects," as required by Section 381.707(2)(a). Petitioner's capital projects applied for, pending, approved, or underway, as of September 29, 1989, totaled about $9.8 million at the three Florida Hospital campuses,
$1.9 million at the East Pasco Medical Center, and $300,000 at the Medical Center. Petitioner thus omitted from the subject application capital projects involving expenditures of at least $12 million.
There is no basis for limiting the minimum content requirement concerning capital projects to projects requiring a CON. In terms of financial impact upon the applicant, a capital expenditure is a capital expenditure.
The minimum contents requirement concerning capital projects requires that all such projects be listed, regardless whether they are merely in the planning stage--and thus pending--or are under construction. Page five of the subject application purports to list capital projects that are merely planned. Petitioner likewise listed planned capital projects in its four 1988 CON applications.
Petitioner failed to provide the required list of capital projects for a combination of two reasons. First, Petitioner's representatives viewed the data, which were apparently not readily available, as too burdensome to generate and report. Second, Petitioner's representatives assumed that Respondent would readily join them in assuming that a corporation as sizable and financially healthy as Petitioner would unlikely be affected adversely by a proposed project costing less than $2 million.
However, regardless of the difficulty of generating the data and the financial health of the applicant, the mandatory content requirements that the Legislature has seen fit to impose upon all CON applications do not accommodate Petitioner's approach of financial self-assessment coupled by incompletely documented assurances of financial health.
In addition to defying the legislative mandates of Section 381.707, Petitioner's casual attitude toward the mandatory content requirement concerning capital projects suffers from a flaw in logic. The evident financial health of Petitioner does not preclude the possibility of management unwisely embarking upon an unduly ambitious capital-expansion program that could jeopardize the
existence of the corporation. A financially healthy corporation is capable of pursuing a capital-expansion program that results, in the short-term or long- term, in overwhelming financial burdens. Without a list of capital projects at varying stages of planning or implementation, Respondent is deprived of vital information to determine whether an applicant's capital-expansion program may be disproportionate to its net worth and net income, even when these figures are considerable.
The purpose of the minimum content requirement concerning capital projects is to allow Respondent, as a disinterested party with considerable relevant expertise, to determine, in light of an applicant's overall capital- expansion program, whether the financial commitment required by a proposed project may be excessive. The failure to provide all of the information required by statute for making this determination has a ripple effect. By failing to supply required data, the applicant reduces the reliability of the criteria-weighing process by rendering it less precise.
In the present case, Petitioner has omitted from the subject application at least $12 million of capital projects applied for, pending, approved, or underway on the date of the application. Petitioner has thereby reduced the ability of Respondent to make an informed decision as to the financial merits of the proposed project. The law requires that an application list all capital projects, and Respondent has correctly declined Petitioner's invitation to ignore this clear legislative mandate.
Based on the foregoing, it is hereby
RECOMMENDED that Respondent enter a final order denying Petitioner's application for a CON to operate an inpatient cardiac catheterization service at Florida Hospital--Altamonte.
DONE and ORDERED this 1st day of November, 1990, in Tallahassee, Florida.
ROBERT E. MEALE
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 1990.
APPENDIX
Treatment Accorded Proposed Findings of Petitioner 1: adopted.
2: first sentence rejected as recitation of testimony. Remainder adopted. 3: first sentence adopted. Remainder rejected as unsupported by the greater weight of the evidence.
4-7: rejected as irrelevant in view of the stipulation of the parties and the waiver by Petitioner of its right to raise standing as an affirmative defense. Paragraph 7 is also rejected as unsupported by the greater weight of the evidence.
8: rejected as not finding of fact.
9 and 12: rejected as subordinate. 10-11: rejected as irrelevant.
13: adopted in substance.
14: rejected as recitation of testimony.
15: first sentence rejected as subordinate. Second sentence rejected as recitation of evidence.
16: rejected as subordinate.
17: rejected as unnecessary and subordinate. 18: rejected as irrelevant.
19: first sentence rejected as not finding of fact. Second sentence rejected as unsupported by the greater weight of the evidence.
20: rejected as unsupported by the greater weight of the evidence. 21: rejected as irrelevant and subordinate.
22: first sentence rejected as recitation of testimony. Second sentence rejected as not finding of fact.
23: rejected as recitation of testimony.
24: first sentence rejected as irrelevant. Remainder adopted in substance. 26: adopted.
27: adopted in substance.
28: rejected as irrelevant and subordinate. 29-34: rejected as unnecessary.
35: first sentence rejected as unsupported by the greater weight of the evidence. Second sentence adopted. Third sentence rejected as irrelevant. 36: rejected as irrelevant.
37: first and last sentences rejected as irrelevant. Remainder adopted. 38: rejected as unsupported by the greater weight of the evidence and irrelevant.
39: rejected as irrelevant for the purposes offered. 40: adopted in substance.
41: first sentence rejected as unsupported by the greater weight of the evidence. Remainder rejected as not finding of fact.
42: first sentence adopted. Second sentence rejected as irrelevant. 43-47: rejected as irrelevant.
48: first sentence rejected as subordinate. Second sentence rejected as unsupported by the greater weight of the evidence.
49: rejected as unnecessary.
50: first sentence adopted except for the open heart center at Medical Center. Remainder rejected as recitation of testimony and irrelevant.
51: rejected as irrelevant. 52: rejected as unnecessary.
53: rejected as unsupported by the greater weight of the evidence.
54: first sentence rejected as subordinate. Remainder rejected as irrelevant.
Treatment Accorded Proposed Findings of Respondent
1: adopted in substance.
2: first sentence rejected as cumulative. Second sentence rejected as subordinate.
3: adopted.
4-5: rejected as recitation of testimony and subordinate. 6-7: rejected as subordinate and recitation of evidence. 8: adopted.
9: rejected as subordinate.
10-11: rejected as subordinate and recitation of evidence. 12: rejected as subordinate.
13: adopted in substance. 14: rejected as subordinate.
15: rejected as subordinate and recitation of evidence. 16: rejected as unnecessary.
17: adopted in substance.
18: rejected as subordinate, recitation of evidence, and not finding of fact.
19 and 21: rejected as unnecessary.
20: rejected as subordinate, recitation of evidence, and unnecessary. 22: rejected as subordinate and unnecessary.
23: rejected as not finding of fact.
24: rejected as subordinate and recitation of evidence.
25-27: rejected as unnecessary. The minimum content requirements of Section 381.707 and criteria-weighing process of Section 381.705 require that an application be site-specific, at least when dealing with sites as discrete as the three campuses of Florida Hospital.
28: rejected as subordinate and recitation of evidence.
29 and 31: adopted.
30: rejected as subordinate.
32-35: rejected as recitation of testimony. 36-41: adopted or adopted in substance.
42: rejected as unnecessary and irrelevant.
43: adopted except for last sentence. Last sentence rejected as unsupported by the greater weight of the evidence.
44-46 (first sentence): adopted.
46 (second sentence): rejected as unsupported by the greater weight of the evidence. Construction on the Florida Hospital-- Orlando cafeteria began in
mid-1990, but the project was well into planning, and thus pending, on September 27, 1989.
47: adopted in substance. 48: rejected as irrelevant. 49-50: adopted.
51: rejected as speculative and irrelevant. 52: adopted in substance.
53: adopted as to the cafeteria and rejected as speculative and irrelevant as to the cancer center.
54: rejected as speculative and irrelevant. 55-56: adopted in substance.
57-58: adopted.
59: rejected as speculative and irrelevant. 60: adopted in substance.
61: rejected as cumulative or speculative and irrelevant. 62: adopted in substance.
63-64: adopted.
65: rejected as speculative and irrelevant. 66: adopted in substance.
67-69: rejected as irrelevant for the purposes offered. 70: adopted in substance.
Treatment Accorded Proposed Findings of Intervenor 1-3 and 6: adopted.
4-5: rejected as irrelevant. 7-8: adopted in substance.
9-11: adopted.
12: rejected as recitation of testimony. 13-16 (first sentence): adopted.
16 (remainder): rejected as irrelevant. 17-20: adopted in substance.
21 (except last sentence): adopted.
(last sentence) -22 (first sentence): rejected as speculative.
(remainder): adopted.
23: rejected as speculative.
24 (first two sentences) and 25: adopted.
24 (third sentence): rejected as speculative. 26: adopted in substance.
27: rejected as speculative. 28-29: adopted.
30: rejected as speculative. This proposed finding implies that Petitioner bore the burden of proving and going forward with the evidence on the issue that it had no capital projects other than those listed on the subject application.
It has been unnecessary in this recommended order to address this issue. The burden of proof is clearly on the applicant/Petitioner. The question is when does the applicant make a prima facie case. Stated differently, the question is whether the burden of going forward with the evidence shifts from the applicant to the protestor/Intervenor at a point that would leave the protestor with the burden of presenting evidence showing that a list of capital projects is incomplete. In this case, the capital projects list is facially incomplete.
For example, the revised list contains a confusing reference to further data to be supplied during the omissions process, which was ending with the transmittal of the revised list. In such a case, the burden of going forward with the evidence may well rest with the applicant, which has superior access to the evidence. It seems appropriate to impose the risk of nonpersuasion on the applicant under such circumstances. However, in view of the weight of the evidence, the findings have been predicated on the assumption that the burden of going forward on the completeness question, and thus the risk of nonpersuasion, falls on Intervenor. Therefore, proposed findings of Intervenor that, although perhaps likely to be true, were not proven have been rejected as speculative.
31: adopted.
32: first sentence rejected as unsupported by the greater weight of the evidence (i.e., the open heart program). Second sentence rejected as speculative.
33: adopted in substance.
34: rejected as irrelevant because, although unlikely, the project could have been completed between September 6 and September 27, 1989. See ruling on Paragraph 30 above.
35-37: adopted.
38: rejected as irrelevant because, although likely a capital rather than expense item, it is unclear whether the corrective work is properly a capital expenditure. See ruling on Paragraph 30 above.
39: adopted regarding the cardiology hallway. Rejected as irrelevant regarding the angiography lab, which, although unlikely, may not have been planned as early as September 27, 1989. See ruling on Paragraph 30 above.
40-41: adopted.
42, 47, and 49: rejected as irrelevant due to absence of link with relevant date of September 27, 1989. See ruling on Paragraph 30 above.
43-44, 46, and 48: adopted.
45: rejected as irrelevant and speculative. See ruling on Paragraph 30 above. 50: adopted except last sentence rejected as speculative. See ruling on Paragraph 30 above.
51-56: rejected as irrelevant for purposes offered. See ruling on Paragraph 30 above.
57: adopted.
COPIES FURNISHED:
John Radey Elizabeth McArthur
Aurell, Radey, et al.
P.O. Drawer 11307 Tallahassee, FL 32302
Robert T. Klingbeil, Jr.
Boone, Boone, Klingbeil, et al.
P.O. Box 1596 Venice, FL 34284
Edgar Lee Elzie, Jr. Macfarlane, Ferguson, et al.
P.O. Box 82
Tallahassee, FL 32301-0082
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, FL 32399-0700
Linda K. Harris
Acting General Counsel
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
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions
to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
CENTRAL FLORIDA REGIONAL HOSPITAL, INC. d/b/a HCA CENTRAL FLORIDA REGIONAL HOSPITAL,
Petitioner,
CASE NO.: 90-1526
vs. CON NO.: 6033
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and ADVENTIST HEALTH SYSTEM/SUNBELT INC. d/b/a FLORIDA HOSPITAL,
Respondents.
/
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 ADVENTIST
Adventist maintains that the Hearing Officer's findings of fact on Adventist's capital projects are based solely on hearsay evidence. The findings are supported by competent, substantial evidence; therefore, the exceptions are denied.
Adventist asserts that the definition of capital projects (findings of fact
48) is arbitrary. The exception is rejected.
Adventist asserts that is has substantially complied with the statutory requirement that a CON application include a complete list of all the applicant's capital projects. The omission of capital projects involving expenditures of twelve million dollars is not substantial compliance (conclusions of law 11). The exception is denied.
Finally, Adventist asserts that Central Florida Regional Hospital, Inc. (CFRH) did not offer evidence to establish its standing to oppose the issuance of a CON to Adventist.
On July 5, 1990, CFRH filed a Motion for Summary Recommended Order, based on the failure of Adventist to provide a complete listing of its capital projects. That motion was denied by Order dated July 18, 1990, without prejudice to the parties' right to submit evidence on that issue at the final hearing.
At a telephone conference hearing on July 26, 1990, Adventist ore tenus moved for a continuance of the final hearing. CFRH and the department opposed a continuance, but suggested as an alternative that the final hearing be bifurcated, with the first stage to be an evidentiary hearing on the threshold, "capital projects" issue. This procedure was accepted by the Hearing Officer and all parties with the understanding that if the threshold issue were resolved in Adventist's favor, part two of the final hearing would be scheduled for the remaining disputed issues.
I conclude that Adventist waived any right it may have had to require CFRH to present evidence to support its allegations of standing at part one of the bifurcated hearing. The exception is rejected.
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 the Hearing Officer's conclusion that standing may be raised only in a timely motion under Section 22I-6.004(5), Florida Administrative Code.
Based upon the foregoing, it is
ADJUDGED, that the application of Adventist Health System/Sunbelt, Inc for certificate of need 6033 be DENIED.
DONE and ORDERED this 28th day of December 1990, in Tallahassee, Florida.
Gregory L. Coler Secretary
Department of Health and Rehabilitative Services
by Deputy Secretary for Programs
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
Copies furnished to:
Robert Klingbeil, Jr., Esquire John Radey, Esquire
BOONE, BOONE, KLINGBEIL, Elizabeth McArthur, Esquire BOONE, & ROBERTS, P.A. AURELL, RADEY, HINKLE, &
Post Office Box 1596 THOMAS
Venice, FL 34284 Ste 1000, 101 N. Monroe Street Post Office Drawer 11307
Lee Elzie, Esquire Tallahassee, FL 32302 MACFARLANE, FERGUSON, ALLISON
& KELLY FALR
215 S. Monroe Street, Ste 804 Post Office Box 385 Post Office Box 82 Gainesville, FL 32602 First Florida Bank Bldg.
Tallahassee, FL 32302 Wayne McDaniel (PDDR)
Robert E. Meale Susan Lincicome (PDRH) Hearing Officer
DOAH, The DeSoto Building Legal (PDDR) 1230 Apalachee Parkway
Tallahassee, FL 32399-1550
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 4th day of January, 1991.
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
| Issue Date | Proceedings |
|---|---|
| Nov. 01, 1990 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 28, 1990 | Agency Final Order | |
| Nov. 01, 1990 | Recommended Order | No certificate of need when application omits capital projects. |
