STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
WELLINGTON REGIONAL MEDICAL ) CENTER, INC., d/b/a WELLINGTON ) REGIONAL MEDICAL CENTER, )
)
Petitioner, )
)
vs. ) CASE NO. 90-6832
)
DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES and ) PALMS WEST HOSPITAL, INC., )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was conducted in this case on April 15 and 16, 1991, in Tallahassee, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Robert D. Newell, Jr., Esquire
Newell & Stahl, P.A. 817 North Gadsen Street
Tallahassee, Florida 32303-6313
For the Department: Edward G. Labrador, Esquire
Assistant General Counsel Department of Health and
Rehabilitative Services Fort Knox Executive Center 2727 Mahan Drive, Suite 103
Tallahassee, Florida 32308
For Palms West: Gerald M. Cohen, Esquire
Steel, Hector & Davis
4000 Southeast Financial Center Miami, Florida 33131-2398
STATEMENT OF THE ISSUES
Whether Petitioner has standing to initiate the instant challenge to the preliminary determination to issue CON 6254 to Respondent Palms West Hospital, Inc.?
If so, whether CON 6254 should be granted?
PRELIMINARY STATEMENT
On September 21, 1990, Petitioner filed a petition requesting a formal administrative hearing on the Department of Health and Rehabilitative Services' (HRS') preliminary decision, following an expedited review of Palms West Hospital, Inc.'s, (Palms West's) application, to grant Palms West certificate of need (CON) 6254 "to construct a 23 bed wing of acute care beds to 'replace' . .
. 23 licensed beds" at the facility, which is located in Palm Beach County (HRS District 9). In its petition, Petitioner alleged, among other things, the following: (1) the project which is the subject of CON 6254 represents "a. the addition of new beds by new construction or alteration; b. a capital
expenditure of $1,000,000 or more on behalf of a health care facility related to furnishing health services at the facility; c. a change in Palm West's licensed bed capacity; and/or d. an obligation of capital expenditures for the offering of health services by a health care facility;" (2) "[a]s such Palms West's CON application is subject to detailed and batched [rather than expedited] CON review pursuant to Section 381.706(1)(a),(c),(e), and (h), Fla.
Stat.;" (3) Petitioner is "an existing provider of acute-care hospital services, located in Palm Beach County, DHRS District 9;" and (4) "[t]he issuance of CON 6254 will result in an unnecessary duplication of the general acute-care services provided by [Petitioner] in DHRS District 9[, which] will result in decreased utilization of [Petitioner's] acute-care services with resultant increased costs to general acute-care patients and the decreased financial viability of [Petitioner's] established general acute-care program."
In accordance with Petitioner's request, on October 25, 1990, the matter was referred to the Division of Administrative Hearings for the assignment of a Hearing Officer. On December 10, 1990, Palms West filed a prehearing motion to dismiss the petition on the ground that Petitioner lacked standing to initiate a challenge to the proposed issuance of CON 6254. Petitioner filed a response to the motion on December 19, 1990. Finding that the petition alleged ultimate facts sufficient to withstand a prehearing attack upon Petitioner's standing, the Hearing Officer, on December 28, 1990, denied the motion to dismiss.
Based upon the responses provided by the parties to the initial order issued by the Hearing Officer, the final hearing in this case was originally scheduled to commence on March 5, 1991. At the request of the parties, the hearing was continued and rescheduled for April 15-16, 1991. The hearing was held as scheduled on these dates.
Six witnesses testified at hearing: Philip Rond III, a health care consultant; Paul Schwarzkopf, Petitioner's comptroller; Paul Pugh, Palms West's chief executive officer; Sharon Gordon-Girvin, a former administrator of HRS's Office of Community Health Services and Facilities and now a health care consultant; Elizabeth Dudek, the acting director of HRS's Office of Regulation and Health Facilities; and Amy Jones, the assistant director of HRS's Office of Regulation and Health Facilities. In addition to the testimony of these witnesses, a total of thirty exhibits were offered and received into evidence.
At the close of the evidentiary portion of the hearing, the Hearing Officer announced on the record that post-hearing submittals had to be filed no later than 25 days after the Hearing Officer's receipt of the transcript of the hearing. The hearing transcript was received by the Hearing Officer on May 1, 1991. Thereafter, at the request of HRS, the deadline for the submission of post-hearing submittals was extended to June 14, 1991. The parties timely filed their proposed recommended orders on June 14, 1991. The proposed findings of
fact set forth in these proposed recommended orders have been carefully considered and are specifically addressed in the Appendix to this Recommended Order.
FINDINGS OF FACT
Based upon the record evidence, the following Findings of Fact are made:
Palms West Hospital and Wellington Regional Medical Center are general acute care hospitals located five miles apart in western Palm Beach County, Florida (HRS District 9).
Due to their proximity to one another, the two hospitals draw from essentially the same patient pool and, as a result, are close competitors.
Early on, Wellington was well ahead of Palms West in terms of the number of patient days generated by the facility. Palms West, however, has since surpassed Wellington and now enjoys a slight edge over its competitor in this performance category.
Wellington is licensed to operate a total of 120 beds. One-hundred and four of these licensed beds are acute care beds. The remainder are substance abuse beds.
Of Wellington's 104 licensed acute care beds, approximately 45 or 46 are staffed.
Wellington currently operates at 53% of its licensed total bed capacity and 49% of its licensed acute care bed capacity.
During this past calendar year, Wellington has consistently operated at between 50 to 55% of its licensed total bed capacity.
Palms West is now, and has been at all times material hereto, licensed to operate 117 acute care beds at its facility in District 9. At no time has Palms West been subject to a license revocation proceeding, nor has it filed any documents with HRS requesting a reduction in its licensed bed capacity. 1/
Palms West's initial license (License No. 1869) was issued on February 17, 1986. The license was effective February 14, 1986, and expired February 13, 1988.
Prior to the issuance of License No. 1869, Palms West received a certificate of need (CON 1845) for 117 acute care beds in District 9.
Palms West is currently operating under License No. 2701. License No. 2701 was issued on September 1, 1989, with an effective date of September 17, 1989, and an expiration date of September 16, 1991. The license provides, in pertinent part, that Palms West "is authorized to operate a Class I General hospital with 117 Acute beds."
License No. 2701 was issued pursuant to a licensure renewal application submitted by Palms West. The application, which had been prepared in May, 1989, made reference to a "renovation" "[b]uilding program . . . in progress" at Palms West with an "[a]nticipated completion date [of] 8/89," but did not provide any additional information regarding the project.
The "renovation" project referenced in the application involved the third and fourth floors of the hospital. Space on these floors was being converted to house an eight-bed Labor Delivery Recovery Program.
By letter dated February 1, 1989, Palms West, through its Administrator, Paul Pugh, had requested a certificate of need exemption from HRS to initiate this obstetric program at an estimated cost of $1.2 million.
Sharon Gordon-Girvin, the then administrator of HRS's Office of Community Health Services and Facilities, sent Pugh a letter, dated February 9, 1989, granting the requested exemption.
Girvin explained in the letter that the exemption was being granted pursuant to Section 381.706(3)(f), Florida Statutes, which, she noted, "eliminates Certificate of Need review for initiation or expansion of obstetric services, provided that the licensed bed capacity 2/ does not increase."
She also stated in the letter, among other things, that Palms West's "architectural plans [had to] be approved by the Office of Licensure and Certification, Plans and Construction, before construction is undertaken [to] assure conformance with licensure standards."
In her letter, Girvin did not purport to authorize a decrease in Palms West's licensed bed capacity.
Palms West's architectural plans were approved by Plans and Construction and work on the renovation project commenced.
The project's progress was monitored by Plans and Construction.
In or around August, 1989, the project was completed.
The completed eight-bed obstetric unit occupied space that previously had been used to house 30 general acute care beds.
As a result of the project, Palms West no longer had the space necessary to accommodate its licensed complement of 117 acute care beds. It had the physical capacity (hereinafter referred to as "constructed bed capacity") to house only 95 of its 117 licensed beds.
Palms West, in undertaking this project, never intended to reduce the number of licensed beds at the facility. While it did not specifically so state in its exemption request, it had every intention of seeking authorization, "sometime soon after the [obstetric] unit was up and going," to expand its facility to accommodate the 22 licensed beds taken out of service as a result of the project.
On August 18, 1989, Plans and Construction conducted an inspection of the completed project. The inspection revealed that the project had "permanently reduced" the constructed bed capacity of the facility from 117 to
95 beds. Nonetheless, Plans and Construction found the facility "to be in substantial compliance with the requirements of the licensure regulations." Accordingly, the project was approved for patient care. The first obstetric patient was admitted to the hospital on August 21, 1989.
On November 14, 1989, Ira Wagner, an Architect Supervisor in Plans and Construction, sent the following letter to Palms West: 3/
On August 18, 1989 the Plans and Construction Section of the Office of Regulation and Health Facilities ran a final construction survey in your new obstetrical services project. Based on the survey results, we are able to release the area for occupancy.
One requirement for the close-out documenta- tion for this type survey is a bed count iden- tifying the previous and new bed capacity. In order for this office to further clarify the information available during the referenced survey, this office would appreciate an in-depth bed count prepared by the facility and forwarded to us.
The bed count format should include both the constructed bed count and the licensed capacity (not always the same) both prior and subsequent to this project. Further, the format should be on a floor and bed by bed designation basis.
In response to this request, Pugh, on behalf of Palms West, sent Wagner a letter dated December 18, 1989. In his letter, Pugh provided a floor by floor "bed count" showing a total of "117 beds" "[p]rior to 8/18/89" and a total of "95 beds" "[s]ubsequent to 8/18/89" and "as of December, 1989." At Wagner's behest, Pugh sent Wagner a second letter to clarify and confirm the "bed count" figures given in the December 18, 1989, letter. This second letter, which was dated January 1, 1990, contained "bed count" information identical to that which had been reported in Pugh's first letter to Wagner. In neither letter did Pugh indicate whether the pre-8/18/89 and post-8/18/89 "bed counts" reflected licensed bed capacity or constructed bed capacity, or both. It was Pugh's unstated intention, however, to convey in these letters information regarding only the facility's constructed bed capacity.
Wagner and Pugh communicated not only in writing, but by telephone as well. During one such telephone conversation, Wagner suggested that Pugh contact Girvin to seek guidance regarding what, if anything, the hospital should do now that its constructed bed capacity had been reduced to 95.
Thereafter, Pugh followed Wagner's suggestion and telephoned Girvin. During their telephone conversation, Pugh and Girvin discussed the various alternative courses of action that were available to Palms West given the discrepancy between its licensed bed capacity (117) and its constructed bed capacity (95).
Following their conversation, Girvin sent Pugh the following letter, dated January 18, 1990:
I enjoyed talking with you by phone on Tuesday, January 9. Our conversation involved various options you have for complying with the licensure requirement that you have the capability for bringing all licensed beds into
service within a 24 hour period. At the present time, the obstetrical program utilized existing space within the hospital for expan- sion. The effect was that 22 medical or surgical beds cannot be put into service within the time prescribed by law.
Any change in licensed bed capacity is sub- ject to a certificate of need. (Reference Section 381.706(1)(e), F.S.) Therefore, Palms West has no authority to change its licensed bed capacity. Should a licensure inspection occur, the hospital may be found in violation if the 22 beds cannot be put into service.
You have four options from which to choose:
File a certificate of need application in the next hospital batch (letter of intent due
no later than 5:00 p.m. local time on February 26, 1990) to reduce your licensed capacity by 22 beds;
File a certificate of need application for a capital expenditure (expedited review) to seek authorization to construct capacity to
house the 22 beds (due on or before May 15, 1990);
File a letter seeking determination of reviewability if the proposed capital expend- iture to construct the capacity to house the
22 beds is below $1 million; or
Do nothing to increase capability which would make the department file an administra- tive complaint to revoke the 22 beds.
Based upon our discussion at the time, you found either option 2 or 3 to be the most appropriate one for you. It is similar to the situation at Doctor's Hospital in Coral Gables. I'm enclosing a copy of the corre- spondence between Doctor's Hospital and me.
Option 3 would only be applicable if the esti- mated cost of constructing the 22 beds could
be accomplished below the $1 million threshold. In my experience, 22 beds including the atten- dant and ancillary space and the equipment exceeds $1 million (especially if any land acquisition is involved.)
The situation requires expeditious attention to the matter because the hospital may be found to be in violation. Therefore, I would like to work with you to avoid an adversarial relationship. To that end, the same agreement
I reached with Doctor's Hospital is appropriate for Palms West.
Please respond in writing by January 31 as to which of the options you will pursue. With any or all of them, I will be glad to discuss them with you or your representative. You may reach me at (904) 488-8673.
In declining to take immediate action to institute disciplinary proceedings and instead providing Palms West the opportunity to bring its licensed bed capacity 4/ and constructed bed capacity into balance, HRS was following established non-rule policy and practice. 5/
Because the imbalance was the product of a renovation project that had been undertaken and completed with HRS approval and under its supervision, HRS believed that such a "wait and see" approach was particularly appropriate in the instant case.
By letter dated February 2, 1990, Pugh informed Girvin that Palms West intended to pursue the second of the four options presented by Girvin in her January 18, 1990, letter. Pugh's letter read as follows:
Thank you for your letter of January 18, 1989 [sic], regarding licensure requirements for Palms West Hospital. I appreciated the infor- mation relative to regulations compliance and the options my facility has at this time to maintain our current licensed capacity at 117 acute care beds.
As you know, our recent obstetrical construc- tion project utilized existing space within the hospital for expansion. The effect was that 22 acute care . . . beds cannot presently be placed into service within the time
[24 hours] prescribed by law. Accordingly, Palms West Hospital agrees to file a Certifi- cate of Need application for a capital expend- iture (expedited review) to seek authorization to construct capacity to house 22 beds.
We agree to file the CON application on or before May 15, 1990.
Please call or write my office for clarifica- tion, if necessary. I look forward to confir- mation of our request.
Again, my apologies for the delay in our response. Thank you for your input and advice.
A very short time after making its decision to exercise this option, Palms West hired a health planning consultant to assist it in preparing the certificate of need application.
As promised, on May 11, 1990, Palms West filed the certificate of need application. The application was accompanied by a transmittal letter addressed to Girvin. The letter, which was signed by Palms West's health planning consultant, read as follows:
Enclosed is the original copy of an applica- tion for Certificate of Need for the construc- tion of a 23-bed wing of acute care beds to replace a like number of licensed beds which are out of service at Palms West Hospital, Loxahatchee.
This application is filed pursuant to an agreement between your office and Mr. Mike Pugh, administrator of the hospital.
The filing fee of $10,000 is being submitted under separate cover on May 15, 1990 for attachment to this document, under agreement between Mr. Pugh and your staff.
We look forward to working with you on the review of this document. Please contact me at this office for additional information you may need.
Contrary to the statement made in the letter, only 22, not 23, of Palms West's licensed acute care beds were "out of service." One of the 23 licensed beds to be housed in the proposed new wing was to be relocated from an area of the existing facility that Palms West intended to convert into a telemetry unit. That bed was at the time of the filing of the application, and still is, operational.
In Section I of the application, the project Palms West sought permission to undertake was described as follows:
Replacement of existing licensed beds by construction of new bed wing on existing third floor of hospital.
Section II of the application contained the following, more detailed description of the proposed project and its purpose:
In 1989, in response to rapid service area growth and to local requests for high quality obstetrical service, the hospital opened an eight (8) bed LDRP obstetrical unit on its third floor. This unit and its support areas required conversion or remodeling of twenty-six
(26) acute care bed spaces on the third floor. It also required use of another four (4) acute care bed spaces on the second floor for mechan- ical support systems for the C-section room
in the third floor obstetrical unit. This reduced available bed space by twenty-two
(22) beds.
In early 1990, the hospital committed to con- vert one (1) bed space on the second floor to house telemetry equipment for the adjacent nursing unit. When this equipment is placed in service, it will reduce available bed space by an additional bed.
As a result, Palms West Hospital will have temporarily lost the use of twenty-three (23) net bed spaces, or some 20% of its licensed bed capacity, in the development of expanded and improved services for patients of its service area.
This application proposes to restore the hospital's available bed capacity to its current licensed bed level of one hundred seventeen (117) acute care beds. No addi- tional licensed beds or new services are proposed. The restoration of capacity will be accomplished through construction of a twenty-three (23) bed wing on the second floor of the hospital, containing seven private and eight semiprivate patient rooms.
Construction should commence by May of 1991 and be completed by the end of September 1991.
The estimated cost of the project is $1,560,888. All required funds will be provided by a cash grant from the applicant's parent company, so that the project itself will not adversely impact the hospital's rates and charges.
The project is required if the hospital is to maintain the licensed capacity for which it received CON approval in 1984. Currently only ninety-four bed spaces can be made available for patient occupancy within 24 hours notice. In a high growth service area such as West Palm Beach County, it is not desirable for existing bed resources to be diminished. It is also
not appropriate for the hospital to be penalized by reduction in licensure for the development of exempt and appropriate services which improve the quality of care and access to care in its service area.
For these and other reasons, the administra- tion of Palms West Hospital and Sharon M. Gordon-Girvin of the Office of Community Health Services and Facilities agreed in early 1990 that the hospital should file this
expedited CON proposal to restore its functional bed capacity to the original licensed level.
Palms West's application was assigned CON Application No. 6254.
In accordance with long-standing HRS non-rule policy and practice, the project proposed in the application was deemed to be a capital expenditure project reviewable only pursuant to subsection (1)(c) of Section 381.706, Florida Statutes, and, as such, it was subjected, not to a full batched comparative review, but to an expedited review that was applicant specific in nature. 6/
Full batched comparative review was considered inappropriate because Palms West was proposing to merely add space to its existing facility in order to accommodate licensed beds for which it had already successfully competed. Inasmuch as they were approved and licensed, these beds, under the bed need methodology established by HRS rule, were already included in the existing acute care bed inventory utilized to determine the number of additional beds, if any, needed in District 9 to meet projected demand (fixed need pool). 7/ Had Palms West's application been subjected to full batched comparative review, it would have been evaluated against this fixed need pool. In declining to subject the application to full batched comparative review, HRS also took into consideration that the bed space Palms West sought to restore had been lost as a result of the hospital's initiation of obstetric services. In the view of the agency, to subject such restoration projects to full batched comparative review would tend to discourage the development and expansion of obstetric programs in the state and therefore run counter to, what it perceived to be, the Legislature's intent in exempting obstetric services projects from certificate-of-need review.
On August 17, 1990, following this expedited review of Palms West's application, HRS published a State Agency Action Report in which it announced its preliminary determination to issue the certificate of need requested in CON Application No. 6254.
CONCLUSIONS OF LAW
HRS has been "designated as the single state agency to issue, revoke or deny certificates of need [for health-care-related projects] and to issue, revoke and deny exemptions from certificate-of-need review in accordance with the district plans, the statewide health plan, and present and future federal and state statutes." Section 381.704(1), Fla. Stat.
A "certificate of need" is statutorily defined as "a written statement issued by [HRS] evidencing community need for a new, converted, expanded, or otherwise significantly modified health care facility, health service, or hospice." Section 381.702(2), Fla. Stat.
Subsection (1) of Section 381.706, Florida Statutes, "lists all the projects which are subject to [certificate of need] review, and subsections (2) and (3) [of that statute, respectively,] list which of the projects set forth in subsection (1) are subject to expedited[, as opposed to full batched comparative,] review or are exempt from review." 8/ Beverly Enterprises- Florida, Inc. v. Department of Health and Rehabilitative Services, 573 So.2d 19, 22 (Fla. 1st DCA 1990).
The following are among the projects set forth in subsection (1) of Section 381.706, Florida Statutes:
The addition of beds by new construction or alteration.
* * *
(c) A capital expenditure of $1 million or more by or on behalf of a health care facility or hospice for a purpose directly related to the furnishing of health services at such facility; provided that a certificate of
need shall not be required for an expenditure to provide an outpatient health service, or to acquire equipment, for which a certificate of need is not otherwise required pursuant to this subsection. The department shall, by
rule, adjust the capital expenditure threshold annually using an appropriate inflation index.
* * *
(e) Any change in licensed bed capacity.
* * *
(h) The establishment of inpatient institu- tional health services by a health care facility, or a substantial change in such services, or
the obligation of capital expenditures for the offering of, or a substantial change in, any
such services which entails a capital expenditure in any amount, or an annual operating cost of
$500,000 or more. The department shall, by rule, adjust the annual operating cost threshold annually using an appropriate inflation index.
A "capital expenditure," as that term is used in Section 381.706, Florida Statutes, is defined as follows in Section 381.702(1), Florida Statutes:
"Capital expenditure" means an expenditure, including an expenditure for a construction project undertaken by a health care facility as its own contractor, which, under generally accepted accounting principles, is not pro- perly chargeable as an expense of operation and maintenance; or an expenditure which exceeds the minimum as specified in s.
381.706(1)(c), changes the bed capacity of the facility, or substantially changes the services or service area of the health care
facility, health service provider, or hospice, and which includes the cost of the studies, surveys, designs, plans, working drawings, specifications, refinancing costs, and other activities essential to acquisition, improvement, expansion, or replacement of the plant and equipment. The department shall,
by rule, adjust the capital expenditure threshold annually using an appropriate inflation index.
Capital expenditure projects, while not specifically mentioned in subsection (2) of Section 381.706, Florida Statutes, are among the "additional" types of projects identified in Florida Administrative Code Rule 10-5.004(2) as being subject to expedited review. Fla. Admin. Code Rule 10-5.004(2)(g). 9/
That Palms West's proposed project is a capital expenditure project reviewable pursuant to subsection (1)(c) of Section 381.706, Florida Statutes, is not in dispute. What is in dispute is whether the proposed project is reviewable under any of the other subsections of Section 381.706(1), Florida Statutes.
Palms West and HRS take the position that the proposed project is subject to review solely on the basis of subsection (1)(c) of Section 381.706, Florida Statutes. Therefore, they contend, it was properly reviewed on an expedited basis and that, in any event, in view of the following language in Section 381.709(5)(b), Florida Statutes, Petitioner does not have standing to contend otherwise and request an administrative hearing on the matter:
Existing health care facilities may initiate or intervene in such administrative hearing [on the proposed issuance or denial of a cer-
tificate of need] upon a showing that an estab- lished program will be substantially affected by the issuance of a certificate of need to a competing proposed facility or program within the same district, provided that existing
health care providers, other than the applicant, have no standing or right to initiate or intervene in an administrative hearing
involving a health care project which is subject to certificate-of-need review solely on the basis of s. 381.706(1)(c).
Petitioner, on the other hand, argues that the project proposed by Palms West is reviewable pursuant to subsections (1)(a), (e) and (h), as well as subsection (1)(c), of Section 381.706, Florida Statutes, and that therefore the proposed project should have been subjected, not to expedited review, but to full batched comparative review.
Subsection (1)(a) of Section 381.706, Florida Statutes, applies to applications for the "addition of beds by new construction or alteration."
Palms West, however, is merely seeking to add space to accommodate beds that already have been approved and licensed. It is not proposing in its application to add to the existing inventory of approved and licensed beds in its district inasmuch as the beds that it intends to house in this added space are already a part of that inventory. Because its proposed project involves the addition of space, not beds, it is not reviewable pursuant to subsection (1)(a) of Section 381.706, Florida Statutes. See Central Florida Regional Hospital v. Daytona Beach General Hospital, 475 So.2d 974 (Fla. 1st DCA 1985)(where total number of licensed beds will remain the same, proposed project does not involve the "addition of beds by new construction or alteration;" the "futility of applying bed need methodology by rule" under such circumstances is "apparent"). 10/
Subsection (1)(e) of Section 381.706, Florida Statutes, applies to applications for "[a]ny change in licensed bed capacity." While Palms West may be proposing to increase its "bed capacity," as that term is used in the definition of "capital expenditure" set forth in Section 381.702, Florida
Statutes, it is not seeking to increase, or decrease for that matter, its "licensed bed capacity," as that term is used in subsection (1)(e) of Section 381.706, Florida Statutes. Palms West is currently licensed to operate a maximum of 117 acute care beds. If its application is granted, it will still have a licensed bed capacity of 117 acute care beds. 11/ Because its proposed project to add space to increase its "bed capacity" does not involve any change in the number of acute care beds it is licensed to operate, the proposed project is not reviewable pursuant to subsection (1)(e) of Section 381.706, Florida Statutes, which applies to increases in "licensed bed capacity." To construe subsection (1)(e) to apply to a proposed project, such as Palms West's, which merely involves an increase in "bed capacity," would be to disregard the Legislature's inclusion of the word "licensed" in this statutory provision.
Such a construction would be contrary to the maxim that operative statutory language may not be viewed as mere surplusage. See City of Pompano Beach v. Capalbo, 455 So.2d 468, 469 (Fla. 4th DCA 1984); Teerinoni v. Westward Ho!, 418
So.2d 1143, 1146 (Fla. 1st DCA 1982).
Subsection (1)(h) of Section 381.706, Florida Statutes, applies to projects involving a "substantial change" in "inpatient institutional health services [offered] by a health care facility." A "substantial change in health services" is defined in Florida Administrative Code Rule 10-5.002(63) as follows:
The offering by a health care facility of a new institutional health service or a health service which has not been offered on a continuing basis by or on behalf of the health care facility within the 12-month period prior to the time such service would be offered, excluding obstetrical services; or
The designation of acute care beds in a health care facility as beds regulated under Rule 10-5.011(1)(k), F.A.C., or the redesig- nation of such beds back to acute care beds.
The project proposed by Palms West does not meet this definition. Palms West has provided, and will continue to provide following the completion of the project, acute care services at its facility. The proposed project will simply increase the amount of space Palms West will have available at the facility to offer these acute care services. No new or different services will be offered. Consequently, the proposed project is not one involving a "substantial change" in "inpatient institutional health services [offered] by a health care facility" that is reviewable pursuant to subsection (1)(h) of Section 381.706, Florida Statutes.
For the foregoing reasons, contrary to the assertions made by Petitioner, Palms West's proposed project is not reviewable pursuant to either subsections (1)(a), (e) or (h) of Section 381.706, Florida Statutes.
Only subsection (1)(c) of Section 381.706, Florida Statutes, is applicable to the proposed project.
Because the proposed project is one that is subject to certificate-of- need review solely on the basis of subsection (1)(c) of Section 381.706, Florida Statutes, Petitioner does not have standing to challenge the preliminary determination made by HRS to approve the project. Section 381.709(5)(b), Fla. Stat.
Accordingly, HRS should dismiss Petitioner's challenge and grant the certificate of need requested by Palms West.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby recommended that the Department of Health and Rehabilitative Services enter a final order (1) dismissing, for lack of standing, the petition filed by Petitioner in the instant case, and (2) issuing CON 6254 to Palms West.
RECOMMENDED in Tallahassee, Leon County, Florida, this 3rd day of July, 1991.
STUART M. LERNER
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 3rd day of July, 1991.
ENDNOTES
1/ A hospital that desires to reduce its licensed bed capacity may do so only with the permission of HRS in the form of a certificate of need. Section 381.706(1)(e), Fla. Stat.
2/ In using the term "licensed bed capacity," Girvin was referring to the number of beds indicated on the face of the hospital's license.
3/ The reference line in the letter read as follows: "RE: Change in License Bed Capacity of a Health Care Facility."
4/ As far as HRS was concerned, Palms West's licensed bed capacity was unaffected by the renovation project inasmuch as the number of beds indicated on the face of Palms West's license remained the same. According to the view taken by HRS, while a renovation project, such as that undertaken by Palms West, may result in the loss of bed space for a period of time in excess of 24 hours, such a loss of bed space is not tantamount to a reduction of licensed bed capacity.
5/ Only where there is an immediate threat to the public health, safety or welfare does HRS not give a licensee the opportunity to cure licensure deficiencies and thus avoid disciplinary action.
6/ The HRS policy to review capital expenditure projects on an expedited basis is now codified in Florida Administrative Code Rule 10-5.004(2)(g).
7/ If the existing inventory includes licensed beds that are not, and will not be, actually available and in service during the planning horizon, the effectiveness of HRS' bed need methodology as a planning tool will suffer.
Accordingly, HRS attempts to exercise its regulatory authority to prevent such an occurrence. Indeed, it did so in connection with the instant case when, by the January 18, 1990, letter from Girvin to Pugh, it threatened to file an administrative complaint seeking the revocation of Palms West's 22 out-of- service beds if Palms West did nothing to increase its constructed bed capacity.
8/ Subsection (2) provides that "[u]nless exempt pursuant to subsection (3), projects subject to an expedited review shall include, but not be limited to," those projects specifically enumerated in subsection (2). Subsection (2) therefore must be viewed as containing only a partial, rather than an exhaustive, listing of projects that are subject to expedited review. See P.C. Pfeiffer Company, Inc. v. Ford, 444 U.S. 69, 100 S.Ct. 328, 334 (1979).
9/ Florida Administrative Code Rule 10-5.004(2)(g) did not become effective until after the filing of Palms West's application for CON 6254. Nonetheless, because it is a procedural rule provision and it codified long-standing HRS non- rule policy and practice of which Palms West was well aware at the time it filed its application, it is applicable to this proceeding. See Turro v. Department of Health and Rehabilitative Services, 458 So.2d 345, 346 (Fla. 1st DCA 1984).
10/ Under the methodology established by HRS rule to compute fixed need pools, previously approved beds and licensed beds, whether operational or not, are included in the supply of existing beds against which projected demand is compared to arrive at the number of additional beds, if any, needed in the planning horizon. These additional beds comprise the fixed need pools that are used in the evaluation of proposed bedding projects subject to full batched comparative review. See Fla. Admin. Code Rule 10-5.008(2). Because these fixed need pools reflect, not the total number of beds needed to meet projected demand, but only the number needed to be added to the existing supply, it is illogical, as the First District recognized in Central Florida Regional Hospital, to evaluate a proposed project to add space to house licensed beds, which are part of the existing supply, based upon the number of beds, if any, in the fixed need pool.
11/ Petitioner has taken the position that Palms West's licensed bed capacity is 95, not 117. It contends that Palms West "reduced, de facto, its licensed bed capacity" by failing to maintain 22 of its licensed beds as "hospital beds," as defined in Section 395.002(7), Florida Statutes, and Florida Administrative Code Rule 10D-28.152(11) ("accommodation[s] which [are] ready for immediate occupancy, or [are] capable of being made ready for occupancy within 24 hours, excluding provision of staffing, and which conforms to minimum space, equipment, and furnishings standards"). It is true that these 22 beds are now, and have been since they were displaced by the hospital's obstetric unit, out of service. The Hearing Officer, however, disagrees with Petitioner that, in taking these beds out of service, Palms West effectively reduced its licensed bed capacity.
It is apparent from a reading of subsection (1)(e) of Section 381.706, Florida Statutes, that a hospital may not, as Petitioner contends Palms West has done in the instant case, unilaterally reduce its licensed bed capacity prior to the expiration of its license. Only HRS may take action to effectuate a reduction in a hospital's licensed bed capacity. HRS has not heretofore taken any such action with respect to Palms West's license. Accordingly, Palms West licensed
bed capacity is still 117, the number indicated on the face of its current license, notwithstanding that 22 of these licensed beds have been out of service for a substantial period of time.
12/ In the instant case, there is no "overlap." Only subsection (1)(c) of Section 381.706, Florida Statutes, is applicable to the proposed project.
13/ While, "[f]rom a health planning perspective," licensed bed capacity may not be a "valid" measure of constructed bed capacity where there has been a permanent loss of bed space at a facility, that is not to say that such a permanent loss of bed space automatically renders the facility's license invalid from a legal perspective.
14/ Regardless of the impact that the proposed project will have on it, Petitioner is without standing, pursuant to Section 381.709(5)(b), Florida Statutes, to challenge the preliminary determination made by HRS to approve the project.
15/ Although he has made factual findings that reference existing HRS non-rule policy and practice in the area of certificate-of-need review, the Hearing Officer recognizes that the focus of the inquiry in the instant case is on, not what the agency's non-rule policy and practice in this area is or has been, but what it should be. See McDonald v. Department of Banking and Finance, 346 So.2d
569 (Fla. 1st DCA 1977).
APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-6832
The following are the Hearing Officer's specific rulings on the findings of fact proposed by the parties:
Petitioner's Proposed Findings of Fact
1-14. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order.
15. To the extent that this proposed finding of fact purports to describe the contents of the September 13, 1989, memorandum authored by Architect James Gregory of Plans and Construction, it has been accepted and incorporated in substance. To the extent that it suggests that this memorandum was sent to Palms West, it has been rejected because it is not supported by persuasive competent substantial evidence.
16-19. Accepted and incorporated in substance.
20-21. Rejected because they constitute summaries of testimony rather than findings of fact.
To the extent that this proposed finding states that the policy in question has not been reduced to a rule, it has been accepted and incorporated in substance. Otherwise, it has been rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
Accepted and incorporated in substance.
24-27. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer. 12/
28-29. Accepted and incorporated in substance.
Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
Accepted and incorporated in substance.
32-33. Rejected because they are summaries of testimony rather than findings of fact.
34-36. Accepted and incorporated in substance.
37-38. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.
39-40. Rejected because they are summaries of testimony rather than findings of fact.
41. First sentence: Rejected because it does not fairly characterize the position that HRS has taken in this matter regarding the various reasons why Palms West's proposed project was properly reviewed pursuant to subsection (1)(c), instead of subsection (1)(a), of Section 381.706, Florida Statutes; Second sentence: Rejected because it is more in the nature of argument than a finding of fact.
42-43. Rejected because they are summaries of testimony rather than findings of fact.
44-45. Accepted and incorporated in substance.
46. First sentence: Accepted and incorporated in substance; Second sentence: Rejected because it is not supported by persuasive competent substantial evidence.
47-48. Accepted and incorporated in substance.
Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
Rejected because it is more in the nature of argument than a finding of fact.
Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
To the extent that it asserts that "there is no mention in Palms West's application that the service area is shared with Wellington," this proposed finding has been rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer. Otherwise, it has been accepted and incorporated in substance.
First sentence: Accepted and incorporated in substance; Remaining sentences: Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.
54-56. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.
First sentence: Accepted and incorporated in substance; Second sentence: Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
Accepted and incorporated in substance.
59-60. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.
61-62. Accepted and incorporated in substance. 13/
63. First sentence: Rejected because it is more in the nature of argument than a finding of fact; Second and third sentences: Accepted and incorporated in substance; Fourth sentence: Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer. 14/
HRS' Proposed Findings of Fact
1-2. Accepted and incorporated in substance.
Last sentence: Rejected because it is more in the nature of argument than a finding of fact; Remaining sentences: Accepted and incorporated in substance.
Accepted and incorporated in substance.
First sentence: Accepted and incorporated in substance; Second and third sentences: Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.
To the extent that it references the "plan of correction" given Palms West and the action taken by Palms West "[p]ursuant to this plan of correction," this
proposed finding has been accepted and incorporated in substance. Otherwise, it has been rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
First sentence: To the extent that it references Palms West's "compliance," this proposed finding has been accepted and incorporated in substance. Otherwise, it has been rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer; Second sentence: Rejected because it is a summary of testimony rather than a finding of fact.
First sentence: Rejected because it is a summary of testimony rather than a finding of fact; Remaining sentences: Accepted and incorporated in substance.
First and second sentences: Rejected because they are summaries of testimony rather than findings of fact.
Rejected because it is a statement of the law rather than a finding of fact.
First and second sentences: Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer; Third sentence: Rejected because it is a conclusion of law rather than a finding fact.
Accepted and incorporated in substance.
Rejected because it is a summary of testimony rather than a finding of fact.
First and second sentences: Accepted and incorporated in substance; Third sentence: Rejected because it is a summary of testimony rather than a finding of fact.
First sentence: Accepted and incorporated in substance; 15/ Second sentence: Rejected because it is a summary of testimony rather than a finding of fact; Third and fourth sentences: Rejected because they are conclusions of law rather than findings of fact.
Accepted and incorporated in substance.
First and third sentences: Rejected because they are conclusions of law rather than findings of fact; Second sentence: Accepted and incorporated in substance.
First sentence: Rejected because it is a summary of testimony rather than a finding of fact; Second sentence: Rejected because it is a conclusion of law rather than a finding of fact.
Second sentence: Rejected because it is a summary of testimony rather than a finding of fact; Remaining sentences: Accepted and incorporated in substance.
Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
First and third sentences: Rejected because they are summaries of testimony rather than findings of fact; Second sentence: Rejected because it is a statement of the law rather than a finding of fact.
Accepted and incorporated in substance.
Palms West's Proposed Findings of Fact
Accepted and incorporated in substance.
First sentence: Accepted and incorporated in substance; Second sentence: Rejected because it is not supported by persuasive competent substantial evidence.
3-9. Accepted and incorporated in substance.
10. To the extent that this proposed finding references what HRS had the authority to do, it has been rejected because it is a conclusion of law rather than a finding of fact. Otherwise, it has been accepted and incorporated in substance.
11-12. Accepted and incorporated in substance.
13. Last sentence: Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer; Remaining sentences: Accepted and incorporated in substance.
14-15. Accepted and incorporated in substance.
16. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
17-21. Accepted and incorporated in substance.
22. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
23-25. Accepted and incorporated in substance.
Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
First sentence: Accepted and incorporated in substance; Second sentence: Rejected because it is a statement of the law rather than a finding of fact; Remaining sentences: Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.
28-30. Accepted and incorporated in substance.
First sentence: Rejected because it is a conclusion of law rather than a finding of fact; Second sentence: Accepted and incorporated in substance.
Accepted and incorporated in substance.
First sentence: Accepted and incorporated in substance; Second sentence: Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.
Last sentence: Accepted and incorporated in substance; Remaining sentences: Rejected because they are conclusions of law rather than findings of fact.
First and third sentences: Rejected because they are conclusions of law rather than findings of fact; Second sentence: Accepted and incorporated in substance.
Accepted and incorporated in substance.
First sentence: Accepted and incorporated in substance; Second sentence: Rejected because it is a conclusion of law rather than a finding of fact.
Rejected because it is a conclusion of law rather than a finding of fact.
COPIES FURNISHED:
Robert D. Newell, Jr., Esquire Newell & Stahl, P.A.
817 North Gadsen Street Tallahassee, Florida 32303-6313
Edward G. Labrador, Esquire Department of Health and
Rehabilitative Services Fort Knox Executive Center 2727 Mahan Drive, Suite 103
Tallahassee, Florida 32308
Gerald M. Cohen, Esquire Steel, Hector & Davis
4000 Southeast Financial Center Miami, Florida 33131-2398
R.S. Power, Agency Clerk Department of Health and
Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407
Tallahassee, Florida 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 OF TIME 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.
| Issue Date | Proceedings |
|---|---|
| Aug. 29, 1991 | Final Order filed. |
| Jul. 03, 1991 | Recommended Order sent out. CASE CLOSED. Hearing held 4/15-16/91. |
| Jun. 14, 1991 | HRS' Proposed Recommended Order filed. (From Edward G. Labrador) |
| Jun. 14, 1991 | Proposed Recommended Order of Palms West Hospital, Inc. filed. (From Gerald M. Cohen) |
| Jun. 14, 1991 | Wellington's Proposed Recommended Order filed. (From Robert D. Newell, Jr.) |
| May 23, 1991 | Order sent out. (proposed RO's due 6/14/91) |
| May 22, 1991 | HRS' Motion for Extension of Time filed. (From Ed Labrador) |
| May 01, 1991 | Transcript (3 Vols) filed. |
| Apr. 16, 1991 | CASE STATUS: Hearing Held. |
| Apr. 12, 1991 | Respondent's Proposed Pre-Hearing Stipulation w/attached Final Witness And Exhibit filed. (From Edward G. Labrador) |
| Apr. 12, 1991 | Prehearing Statement filed. (from Robert D. Newell) |
| Apr. 10, 1991 | Welloington's Final Witness and Exhibit List filed. (From Robert D. Newell) |
| Apr. 08, 1991 | Order sent out. (4/16/91 also reserved if needed for hearing). |
| Apr. 08, 1991 | HRS' Final Witness and Exhibit List filed. (From Edward G. Labrador) |
| Apr. 01, 1991 | (Palms West Hospital) Notice of Taking Deposition filed. |
| Mar. 29, 1991 | (Respondent) Cross Notice of Taking Depositions Duces Tecum filed. |
| Feb. 26, 1991 | Order (motion GRANTED) sent out. (hearing rescheduled for 4/15/91; at 9:15am; in Talla) |
| Feb. 25, 1991 | Joint Motion for Continuance of Final Hearing filed. |
| Feb. 04, 1991 | (Respondent) Notice of Taking Deposition filed. (From Gerald M. Cohen) |
| Feb. 04, 1991 | (Petitioner) Notice of Taking Deposition and Site Visit filed. (From Robert Newell) |
| Jan. 28, 1991 | Notice of Taking Deposition filed. |
| Dec. 31, 1990 | Palms West Hospital, Inc First Interrogatories to Wellington RegionalMedical Center, Inc. d/b/a Wellington Regional Medical Center filed. |
| Dec. 31, 1990 | (petitioner) Notice of Service of Interrogatories filed. |
| Dec. 28, 1990 | Order (Palm West request that HO recommend dismissal of petition DENIED) sent out. |
| Dec. 19, 1990 | Petitioner's Response to Motion to Dismiss filed. (From T. W. Stahl) |
| Dec. 10, 1990 | (Respondent) Motion to Dismiss filed. (From, G. M. Cohen) |
| Nov. 28, 1990 | Notice of Hearing sent out. (hearing set for March 5-7, 1991: 9:00 am: Tallahassee) |
| Nov. 21, 1990 | (Respondent) Response to Order filed. (From G. M. Cohen) |
| Nov. 19, 1990 | (DHRS) Response to Initial Order filed. |
| Nov. 19, 1990 | Petitioner's Response to Initial Order filed. |
| Nov. 16, 1990 | Notice of Appearance filed. (From Maria Currier) |
| Nov. 07, 1990 | Order (Re: Governing Rules) sent out. |
| Nov. 06, 1990 | PPF's sent out. |
| Oct. 25, 1990 | Notice; Petition for Formal Hearing filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Aug. 26, 1991 | Agency Final Order | |
| Jul. 03, 1991 | Recommended Order | Proposed project to add space to existing facility for already approved and licensed beds subject to Certificate Of Need review solely on basis of FS381.706(1)(c). |
