STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
UNIVERSITY GENERAL HOSPITAL, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 92-1838
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on June 1, 1992, in Tallahassee, Florida.
APPEARANCES
For Petitioner: Gerald M. Cohen, Esquire
Steel Hector & Davis
4000 Southeast Financial Center Miami, Florida 33131-2398
For Respondent: Richard Patterson
Assistant General Counsel Department of Health and
Rehabilitative Services 2727 Mahan Drive
Tallahassee, Florida 32308 STATEMENT OF THE ISSUE
The issue presented is whether the audited financial statements submitted by Petitioner in conjunction with its application for Certificate of Need No. 6851 comply with Section 381.707(3), Florida Statutes.
PRELIMINARY STATEMENT
On February 28, 1992, Petitioner filed its Petition for Determination of Invalidity of a Rule alleging that certain non-rule policies of the Department constitute invalid exercises of delegated legislative authority. By Order of Assignment dated March 4, 1992, and by Amended Order of Assignment dated March 5, 1992, that cause was assigned to the undersigned for conduct of a formal proceeding. By Notice of Hearing dated March 5, 1992, that cause was scheduled for final hearing on March 30, 1992. On March 24 Petitioner filed its Petition for Formal Administrative Hearing which is the subject of this Recommended Order. Pursuant to agreed motions for continuance and for consolidation, this cause was consolidated with DOAH Case No. 92-1365RU by Order dated April 2, 1992. Pursuant to the agreement of the parties and by Notice of Hearing dated
April 7, 1992, both causes were scheduled for final hearing on June 1 and 2, 1992. A Final Order has been issued in DOAH Case No. 92-1365RU simultaneously herewith.
Petitioner presented the testimony of John F. Gilroy and John Hutchins.
Respondent presented the testimony of Elizabeth Dudek and Roger Bell. Additionally, Joint Exhibits numbered A(1)-A(6), Petitioner's Exhibits numbered B(1)-B(4), and Respondent's Exhibits numbered 1-3 were admitted in evidence.
Both parties submitted post-hearing proposed findings of fact in the form of proposed recommended orders. A specific ruling on each proposed finding of fact can be found in the Appendix to this Recommended Order.
FINDINGS OF FACT
The Petitioner is University General Hospital, Inc. (hereinafter "UGHI"), the present license holder of University General Hospital (hereinafter "University Hospital"), a 140-bed general acute-care hospital located in Seminole, Florida. During calendar years 1989 and 1990 and until July 30, 1991, University Hospital operated as a division of Community Health Investment Corporation f/k/a/ CHS Management Corporation (hereinafter "CHIC").
On July 30, 1991, UGHI was incorporated as a wholly-owned subsidiary of CHIC and became the license holder of University Hospital. University Hospital's change in licensure on that date did not change its ownership, control, management, reporting, or operation.
On or about December 2, 1991, UGHI timely filed Certificate of Need (hereinafter "CON") Application No. 6851 to convert 12 general acute-care beds to hospital-based skilled nursing beds.
As of the date of filing its CON application, UGHI was the license holder of University Hospital and complied with the definition of "Applicant" set forth in Rule 10-5.002(3), Florida Administrative Code.
Prior to submission of CON Application No. 6851, UGHI retained John Gilroy of the law firm Haben, Culpepper, Dunbar & French to serve as legal counsel for the CON project. In his initial dealings with UGHI regarding compliance with the requirements of Section 381.707(3), Florida Statutes, Gilroy learned that audited financial statements previously prepared for University Hospital while it was a division of CHIC could be reissued for UGHI.
Gilroy then contacted Elizabeth Dudek, Director of the Department of Health and Rehabilitative Services (hereinafter "HRS") Office of Community Health Services and Facilities, to inquire whether the proposed audited financial statements (i.e., the reissued statements) would comply with the applicable statutory requirements. Dudek suggested that Gilroy direct his inquiry to Roger Bell, an Audit Evaluation and Review Analyst with the HRS Office of Community Health Services and Facilities.
In conducting her responsibilities, Dudek relies upon the opinions of experts, and Bell is the most qualified person in the HRS Office of Community Health Services and Facilities to render an opinion regarding hospital audited financial statements. Among Bell's responsibilities is advising Dudek whether CON applicants' financial statements should be accepted or rejected.
At that time or soon thereafter, Gilroy had at least one telephone conversation with Bell wherein he informed Bell that UGHI had been in existence for less than one year and inquired whether the proposed reissued audited financial statements would be acceptable to HRS. Bell's response to Gilroy was that he was not aware that audited financial statements could be reissued in the manner proposed by UGHI, but if Arthur Andersen & Co. could prepare such a document, he expected that it would be acceptable. Additionally, Bell indicated to Gilroy that a balance sheet audit would not give HRS sufficient financial information and that it would be beneficial if he could look at reissued audited financial statements to conduct a more in-depth analysis.
Bell did not inform Gilroy of any HRS policy regarding the types of audited financial statements HRS would accept from applicants in existence for less than one year.
Following his discussion with Bell, Gilroy sent a letter to his client dated November 20, 1991, indicating that Bell agreed that the reissued statements would be acceptable and that Arthur Andersen & Co. should prepare such statements prior to January 17, 1992. In a letter dated December 12, 1991, Gilroy asked Bell to confirm HRS' position regarding reissued audited financial statements in writing, consistent with their prior conversation.
In a letter dated December 16, 1991, Bell reiterated to Gilroy that "if Arthur Andersen is assuming the liability for this assertion, then it is probably in order," and also stated that "[u]nless a concern appears in the auditor's reports or notes, I do not foresee any problem." The letter did not refer to any HRS policy regarding the types of audited financial statements HRS would or would not accept from corporations in existence for less than one year. After receipt and review of Bell's December 16 letter, Gilroy remained under the impression that reissued audited financial statements would be acceptable to HRS provided they were properly executed and signed and had appropriate notes.
In a letter dated December 19, 1991, HRS identified certain items of information omitted from UGHI's initial application (commonly referred to as an "Omissions Letter"), including, among other items, audited financial statements of the applicant. On that same date, HRS also sent an Omissions Letter to Edward White Hospital, Inc., an applicant in the same application review batch as UGHI.
The Omissions Letter sent to Edward White Hospital, Inc., included a section as follows:
If an applicant, due to non-existence as an entity, has not completed a fiscal year of operation, the applicant will submit an audited financial statement in which the balance sheet date falls within the period which begins on the first day of its existence as a legal entity and ends on the date of the applicant's choosing, provided the audited financial statement is available and included with the application during or before the end of the omissions process.
Had a similar statement been contained in the UGHI Omissions Letter, Gilroy would have approached HRS to determine whether UGHI's proposed audited financial statements were acceptable notwithstanding this policy.
After his review of the UGHI Omissions Letter, Gilroy remained under the impression that reissued statements would be acceptable to HRS if prepared in accordance with accounting and auditing standards.
According to Dudek, HRS did not reveal its policy regarding entities in existence for less than one year in the UGHI Omissions Letter because HRS had not been provided with information prior to the issuance of the letter that UGHI was an entity that had been in existence for less than one year. Prior to the Omissions Letter, HRS was, however, informed both orally and in writing that UGHI had been in existence for less than one year.
On or about January 15, 1992, UGHI timely filed its response to the Omissions Letter and included a document entitled "UNIVERSITY GENERAL HOSPITAL, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMMUNITY HEALTH INVESTMENT CORPORATION) FINANCIAL STATEMENTS AS OF DECEMBER 31, 1990 AND 1989 TOGETHER WITH REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS."
In a letter dated January 28, 1992, HRS notified UGHI that its CON application was being administratively withdrawn from consideration for the sole reason that it did not contain audited financial statements of the applicant, University General Hospital, Inc.
The purpose of audited financial statements from the standpoint of HRS' review of CON applications is that they provide HRS with a basis to determine the overall financial strength and financial position of the applicant and the applicant's ability to carry out the project being proposed. HRS requires that the financial statements be "of the applicant" because it looks to the source of funding and financial strength of the entity responsible for funding the project--the party submitting the CON application.
The audited financial statements submitted by UGHI reflect the resources available to it for the CON project proposed in CON Application No. 6851 and are appropriate to demonstrate the financial strength of UGHI. The audited financial statements filed by UGHI contain financial documentation for years ending December 31, 1990 and 1989, as well as information through November 13, 1991.
The issuance of audited financial statements for an entity incorporating a period of time before that entity's corporate existence (known as "reissuance") is a common practice in the accounting profession and, subject to the entity's ability to satisfy the specified prerequisites, is consistent with pronouncements and standards under generally accepted auditing standards (hereinafter "GAAS") and generally accepted accounting principles (hereinafter "GAAP"). The prerequisites for reissuance of an audited financial statement are adequate disclosure made in the notes of the financial statement and continuance of common ownership, control, management, reporting, and operation of the entity's activities.
Prior to issuance of the audited financial statements for UGHI, Arthur Andersen & Co. conducted an extensive post-audit review of UGHI and concluded that the financial statements previously issued to University Hospital could be reissued as audited financial statements of UGHI. Had Arthur Andersen & Co. found that the previously-issued audited financial statements were misleading or that the requirements set forth in GAAS and GAAP were not satisfied, it would not have reissued the audited financial statements on behalf of UGHI.
The audited financial statements submitted by UGHI to HRS constitute a valid document prepared in accordance with the pronouncements and standards under GAAS and GAAP.
It is the policy of HRS that, if an entity has been in existence for less than one year, HRS will accept only a balance sheet audit as of the date of incorporation, or a short period audit from the date of incorporation through an undefined period of time.
HRS' policy is not reflected in any of the statutes, rules, or HRS Manual provisions regarding audited financial statements, and HRS is not in the process of promulgating a rule regarding this policy. HRS' policy applies to all entities submitting CON applications that have been in existence for less than one year.
Balance sheet and short period audits are not appropriate documents to assess an entity's financial condition. In many cases, HRS would prefer a reissued audited financial statement to a balance sheet audit in analyzing a CON application.
In determining whether an applicant complies with Section 381.707(3), Florida Statutes, HRS will, with certain exceptions, look at whether the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code, is met.
HRS does not apply the definition of "Audited Financial Statement" set forth in Section 10-5.002(5), Florida Administrative Code, to applicants in existence for less than one year. The definition it applies to these entities is not set forth in any rule, statute, or HRS Manual provision.
A balance sheet audit does not comply with the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code.
The audited financial statements filed by UGHI comply with the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code.
Rule 10-5.008(5)(g), Florida Administrative Code, identifies those audited financial statements satisfying the rule definition of "Audited Financial Statement" that HRS will not accept. HRS explains the exceptions set forth within Rule 10-5.008(5)(g), Florida Administrative Code, on the basis that these audited financial statements reflect financial documentation of an affiliate entity.
The audited financial statements submitted by UGHI are not a combined audit, a consolidated audit, or an audit of a division, as prohibited under Rule 10-5.008(5)(g).
From an accounting standpoint, the audited financial statements submitted by UGHI are those of UGHI.
An accounting firm typically identifies the entity being audited on the title page of the audited financial statements and in the audit report and financial statements contained therein. The title page of, and audit report and financial statements in, the audited financial statements prepared by Arthur Andersen & Co. for UGHI all reflect that the entity being audited is UGHI.
An accounting firm faces significant liability if the audited financial statements it prepares are found to be inaccurate or misleading. HRS does not dispute, and in fact agrees, that the audited financial statements prepared by Arthur Andersen & Co. for UGHI were correctly issued and are consistent with GAAS and GAAP.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties hereto and the subject matter hereof. Section 120.57(1), Florida Statutes (1991).
A CON applicant has the burden of proving that it meets the statutory and rule criteria for the issuance of a certificate of need. Support Systems Servs. Corp. v. Department of Health and Rehabilitative Servs., 13 F.A.L.R. 716, 720 (1991); Florida Department of Transp. v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981).
Section 381.707(3), Florida Statutes, is one of the statutory criteria to be satisfied. This statute provides:
An application for a certificate of need shall contain:
* * *
(3) An audited financial statement of the applicant. In an application submitted by an existing health care facility, health maintenance organization, or hospice, financial condition documentation shall include, but need not be limited to, a
balance sheet and a profit-and-loss statement of the 2 previous fiscal years' operation. [Emphasis added.]
Rule 10-5.002(3), Florida Administrative Code, defines "applicant" as: [a]ny individual, partnership, corporation,
or governmental entity which has filed an
application for a certificate of need with the department.
UGHI is clearly the applicant for CON No. 6851. The audited financial statements it provided to HRS were audited financial statements of UGHI and incorporated financial condition documentation including, but not limited to, a balance sheet and profit-and-loss statement for two previous years' operation. Thus, any interpretation of Section 381.707(3) by HRS which results in the rejection of UGHI's audited financial statements cannot stand since it contradicts the unambiguous language of the statute. See, Department of Natural Resources v. Wingfield Dev. Co., 581 So.2d 193 (Fla. 1st DCA 1991). See also, Humhosco, Inc. v. Department of Health and Rehabilitative Servs., 561 So.2d 388,
390 (Fla. 1st DCA 1990) ("The language of the statute [Section 381.707(3), Florida Statutes, does not leave to the agency's discretion whether or how to enforce these requirements.")
To the extent that HRS is permitted to interpret Section 381.707(3), Florida Statutes, such interpretation must be consistent with the statute's legislative intent. Reedy Creek Improvement Dist. v. State Department of Envtl.
Regulation, 486 So.2d 642, 648 (Fla. 1st DCA 1986) (citing Public Employees Relations Comm. v. Dade County Police Benevolent Assoc., 467 So.2d 987, 989 [Fla. 1985]). Section 381.707(3), Florida Statutes, is intended to require a CON applicant to provide an objective source of evidence (through the independent opinion of an auditor) of its financial condition and capabilities. Support Systems Servs. v. Department of Health and Rehabilitative Servs., supra. UGHI's audited financial statements contain financial information that gives HRS the legislatively-intended objective evidence of its financial condition. HRS acknowledges that the audited financial statements provide a good indication of the financial strength of the applicant and the resources it has available to undertake the proposed CON project.
Rule 10-5.008(5)(g), Florida Administrative Code, specifies those types of audited financial statements HRS will not accept from CON applicants and provides, in part, as follows:
Audited financial statements of any part of the applicant, including but not limited to divisions, specific facilities or cost centers, will not qualify as an audit of the applicant. Neither combined audits or consolidated audits will qualify as an audit of the applicant;
HRS has continuously rejected audited financial statements of the parent or subordinate entity of an applicant. See, e.g., Lykes Memorial Hospital v. Department of Health and Rehabilitative Servs., 13 F.A.L.R. 951 (1991); Support Systems Servs. Corp. v. Department of Health and Rehabilitative Servs., supra; Sarasota County Pub. Hosp. Bd. d/b/a Memorial Hosp., Sarasota v. Department of Health and Rehabilitative Servs., 12 F.A.L.R. 3810 (1990); Humhosco, Inc. v.
Department of Health and Rehabilitative Servs., supra. These cases were decided against the applicants because the audits provided were combined or consolidated audits and therefore could not be considered audits of the applicant. See, e.g., Lykes Memorial Hosp., supra, at 955 ("it is not possible to isolate information applicable to [the applicant] from the auditors notes to the consolidated audit.") Expert testimony established that the audited financial statements submitted by UGHI were neither an audit of any part of UGHI nor a combined or consolidated audit, but were, in fact, an audit of UGHI. Further, the audited financial statements contain information appropriate to demonstrate the financial strength of UGHI.
It is the policy of HRS that if an entity has been in existence for less than one year, HRS will accept a balance sheet or short period audit of the applicant. This policy is not recorded in applicable statutes, rules, or written policies, and is not readily apparent from a literal reading of the statute involved. As such, HRS may apply such non-rule policy in a Section
120.57 administrative hearing only if it explicates, supports, and defends such policy with competent, substantial evidence on the record. St. Francis Hosp., Inc. v. Department of Health and Rehabilitative Servs., 553 So.2d 1351, 1354 (Fla. 1st DCA 1989) (citing Gulf Coast Home Health Servs. v. Department of Health and Rehabilitative Servs., 513 So.2d 704 [Fla. 1st DCA 1987]). Competent substantial evidence must demonstrate a rational and reasonable basis to support the agency's policy. The policy must be proved on a case-by-case basis.
The record reflects that HRS failed to demonstrate the reasonableness and factual accuracy of its policy. HRS argued that the policy regarding balance sheet or short period audits is a permissible construction of Section
381.707(3), Florida Statutes, which provides that audited financial statements must be "of the applicant." However, HRS was unable to demonstrate a rational and reasonable basis for its refusal to accept audited financial statements that have been reissued in accordance with generally accepted auditing standards and generally accepted accounting principles. In fact, the testimony of HRS witnesses supported UGHI's contention that there is no rational basis for HRS' non-rule policy. In particular, Roger Bell agreed that the audited financial statements submitted by UGHI were prepared in accordance with GAAS and GAAP and are those of the applicant, UGHI.
Moreover, the record reveals that HRS rejected UGHI's audited financial statements despite acknowledging that they were consistent with GAAP and GAAS, satisfied the rule definition of "audited financial statement" set forth in Rule 10-5.002(5), Florida Administrative Code, and were capable of demonstrating the financial strength of University General Hospital, Inc. In essence, HRS' policy results in (1) the acceptance of financial statements (e.g., balance sheet audits) that do not comply with the definition of audited financial statements set forth in Rule 10-5.002(5), Florida Administrative Code, and provide weak financial documentation, and (2) the rejection of financial statements that satisfy the definition set forth in Rule 10-5.002(5), Florida Administrative Code, and provide strong financial documentation.
The elements necessary to establish estoppel against the state are:
a representation [by an agent of the state] as to a material fact that is contrary to a later-asserted position;
reliance on that representation; and
change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon.
Tri-State Sys. v. Department of Transp., 500 So.2d 212, 215-16 (Fla. 1st DCA 1986), review denied, 506 So.2d 1041 (Fla. 1987). See also, Humhosco, Inc. v. Department of Health and Rehabilitative Servs., supra. The fact that one relies to one's detriment upon preliminary as opposed to final action will not act as a bar to the application of estoppel as long as the affected party has no reason to believe "the official mind would change." Reedy Creek Improvement Dist., supra, at 646.
The record is clear that UGHI was led to believe that the audited financial statements it intended to file would be accepted by HRS if Arthur Andersen & Co. was able to satisfy applicable requirements and standards set forth in GAAP and GAAS. The record further reveals that HRS failed to inform representatives of UGHI that HRS' non-rule policy (mandating that applicants in existence for less than one year file either a balance sheet audit or short period audit) precluded an applicant from submitting reissued audited financial statements to satisfy the requirements set forth in Section 381.707(3), Florida Statutes. Finally, the record reflects that UGHI's audited financial statements were the sole basis for HRS' rejection of CON No. 6851.
HRS' reliance on the case of ABC Home Health Servs., Inc. v. Department of Health and Rehabilitative Servs., DOAH Case Nos. 91-1606, 91-1607, and 91-1608, reported, in part, at 13 F.A.L.R. 3715, is misplaced. In that case, a CON application was rejected because the applicant's corporate resolution accompanying its Letter of Intent was executed and submitted prior to
the corporation coming into existence. The corporate resolution was, therefore, held to be invalid.
In this case, University Hospital was an existing facility operating as a division of CHIC. The evidence is uncontroverted that University Hospital, as a division of CHIC, could not apply for a CON. UGHI was incorporated as a wholly-owned subsidiary of CHIC and became the license holder of University Hospital. University Hospital's change in licensure did not change its ownership, control, management, reporting, or operations. There is no legal barrier to the reissuance of University Hospital's audited financial statements to UGHI, as there is a legal barrier to corporations which do not exist issuing corporate resolutions.
Section 381.707(3) requires an audited financial statement of the applicant and provides that for an existing facility the documentation cover the two previous fiscal years' operations. Petitioner has complied with Section 381.707(3), Florida Statutes. Rule 10-5.002(5), Florida Administrative Code, contains the definition for audited financial statements, with which definition Petitioner has complied. From an accounting standpoint, the reissuance of audited financial statements is common, and the reissuance of the audited financial statements of UGHI was done in accordance with both GAAS and GAAP. Accordingly, Petitioner's Certificate of Need application No. 6851 was improperly withdrawn administratively from review.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered accepting Certificate of Need Application No. 6851 filed by University General Hospital, Inc. for review in the nursing home batching cycle in which it was filed.
RECOMMENDED this 20th day of July, 1992, at Tallahassee, Leon County, Florida.
LINDA M. RIGOT
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675 SC 278-9675
Filed with the Clerk of the Division of Administrative Hearings this day of July, 1992.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1838
Petitioner's proposed findings of fact numbered 1-54 have been adopted either verbatim or in substance in this Recommended Order.
Respondent's proposed findings of fact numbered 1-3 have been adopted either verbatim or in substance in this Recommended Order.
Respondent's proposed findings of fact numbered 4-6 have been rejected as not being supported by the weight of the competent evidence in this cause.
COPIES FURNISHED:
Gerald M. Cohen, Esquire Steel Hector & Davis
4000 Southeast Financial Center Miami, Florida 33131-2398
Richard Patterson Assistant General Counsel Department of Health and
Rehabilitative Services 2727 Mahan Drive
Tallahassee, Florida 32308
Sam Power, Clerk Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
John Slye, General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
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 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.
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AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
AGENCY FOR HEALTH CARE ADMINISTRATION
UNIVERSITY GENERAL HOSPITAL, INC.,
Petitioner,
vs. CASE NO.: 92-1838
RENDITION NO.: AHCA-92-25-FOF-CON
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). The Recommended Order entered July 20, 1992, by Hearing Officer Linda M. Rigot is incorporated by reference.
RULING ON EXCEPTIONS
Respondent takes exception to the second sentence of Finding of Fact No. 2, as well as the second full sentence on page 17 of the Conclusion of Law, which states: "University Hospital's change in licensure on that date [July 30, 1992] did not change its ownership, control, management, reporting, or operation." These issues in this case arise from the legal change in the corporate ownership of the hospital facility. As set forth in Finding of Fact No. 1 the hospital operated as a division of Community Health Investment Corp. (CHIC) until July 30, 1991. After that date Petitioner became a wholly owned corporate subsidiary of CHIC. Official notice is taken of the license dated September 30, 1991, authorizing Petitioner to operate the hospital facility.
The exception is granted.
Respondent takes exception to that part of Finding of Fact No. 23 wherein the Hearing Officer found that, if an entity has been in existence for less than one year, HRS would accept only a balance sheet or a short period audit. A balance sheet or a short period audit was the minimum required; however, an applicant was not precluded from submitting more than that minimum requirement. See T 58, 88. The exception is granted.
Respondent excepts to Finding of Fact No. 29 on the grounds it is a Conclusion of Law. The exception is granted.
Respondent takes exception to that portion of the Conclusions of Law found at pages 11 - 12, specifically, that the audited financial statements University General Hospital, Inc., provided to HRS "incorporated financial condition documentation including, but not limited to, a balance sheet and a profit-and-loss statement for two previous years' operation." The undisputed evidence is that the application, University General Hospital, Inc., was incorporated on July 30, 1991. The Hearing Officer's conclusion is that under the facts and circumstances the audited financial statements based on the performance of Petitioner's predecessor are useful and in fact more useful than Petitioner's balance sheet in assessing the financial strength of Petitioner.
Respondent takes exception to that portion of the Conclusions of Law found at pages 14 - 15, specifically, that "In particular, Roger Bell agreed that the audited financial statements submitted by UGHI . . . are those of the applicant, UGHI." This comment is contrary to that witness' testimony (see T 86, 93, 94, 95) and is stricken.
FINDINGS OF FACT
The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where inconsistent with the ruling on the exceptions.
CONCLUSIONS OF LAW
In this case the department relied on non-rule policy in making the decision to withdraw Petitioner's CON application number 6851 from batched review. When an agency relies on non-rule policy, the policy enjoys no presumption of correctness. To the contrary, such policy must be defended and proved on a case-by-case basis. St. Francis Hospital vs. Department of Health and Rehabilitative Services, 553 So2d 1351 (Fla. 1st DCA 1989). An agency is not free to reject a Hearing Officer's finding that a non-rule policy was not proved if the finding is supported by competent, substantial evidence.
Southpoint Pharmacy vs. Department of Health and Rehabilitative Services, 596 So2d 106 (Fla. 1st DCA 1992). Thus, the Hearing Officer's conclusion that HRS failed to demonstrate the reasonableness and factual accuracy of its policy is dispositive. See page 14 of the Recommended Order.
Based upon the foregoing, it is
ADJUDGED, that Petitioner's certificate of need application number 6851 be accepted for review in the batching cycle in which it was filed.
DONE and ORDERED this 9th day of September 1992, in Tallahassee, Florida.
Douglas M. Cook, Director Agency for Health Care Administration
COPIES FURNISHED:
Gerald M. Cohen, Esquire Steel Hector & Davis
4000 Southeast Financial Center Miami, FL 33131-2398
Richard Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Fort Knox Executive Center Tallahassee, FL 32308
Linda M. Rigot Hearing Officer
DOAH, The DeSoto Building 1230 Apalachee Parkway
Tallahassee, FL 32399-1550
Wayne McDaniel (AHCA) Wendy Thomas (AHCA)
NOTICE OF RIGHT TO JUDICIAL REVIEW
PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above named people by U.S. Mail this 11th day of September
R. S. Power, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, FL 32399-0700 904/488-2381
| Issue Date | Proceedings |
|---|---|
| Sep. 11, 1992 | Final Order filed. |
| Jul. 21, 1992 | Case No/s 92-1838: unconsolidated. |
| Jul. 20, 1992 | Recommended Order sent out. CASE CLOSED. Hearing held 6-1-92. |
| Apr. 02, 1992 | Order Granting Continuance and Consolidation sent out. (Consolidated cases are: 92-1365RU and 92-1838) |
| Mar. 30, 1992 | (Respondent) Motion to Consolidate (with DOAH Case No. 92-1365RU) filed. |
| Mar. 30, 1992 | Notice of Substitution of Counsel filed. (From Gerald M. Cohen) |
| Mar. 27, 1992 | Prehearing Order sent out. |
| Mar. 25, 1992 | Notification card sent out. |
| Mar. 24, 1992 | Notice; Petition for Formal Administrative Hearing filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 09, 1992 | Agency Final Order | |
| Jul. 20, 1992 | Recommended Order | Audited financial statement re-issued to new entity applying for certificate of need meets statutory criteria and HRS estopped from denying review. |
