STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOSPICE OF SOUTHWEST FLORIDA, INC. )

)

Petitioner, )

vs. ) CASE NO. 95-3266

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent, )

and )

) THE HOSPICE OF CHARLOTTE, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER OF DISMISSAL ON MOTION IN OPPOSITION TO THE PETITION

STATEMENT OF THE ISSUES

Whether Hospice of Southwest Florida, Inc. has standing to initiate a challenge to the issuance of a license to Hospice of Charlotte, Inc.

PRELIMINARY STATEMENT

On June 15, 1995, Hospice of Southwest Florida, Inc. (Southwest) filed a Petition For Formal Administrative Hearing with the Clerk of the Agency For Health Care Administration (AHCA). Southwest, an existing hospice in Charlotte County, challenged AHCA's issuance of a license to Hospice of Charlotte, Inc. (HOC).

AHCA referred the case to the Division of Administrative Hearings (DOAH) on June 27, 1995. On July 5th, HOC filed a Motion in Opposition To The Petition, to which Southwest responded on July 24th. Oral argument on the Motion was held at DOAH in Tallahassee, Florida, on August 25, 1995.

FINDINGS OF FACT

The facts alleged in the petition, which for purposes of this Motion, are taken as true, are as follows:

1. In a March 10, 1994 letter, the President of HOC notified AHCA that the Board of Directors met that day and decided to dissolve HOC, that the only patient receiving services had been transferred to another provider, and that HOC intended to accept no further referrals.

   
   

2. On March 15, 1994, AHCA responded by "terminating the license of Hospice of Charlotte effective March 10, 1994." AHCA requested a copy of the minutes of the March 10th board meeting.

3. On March 25, 1994, the President of HOC wrote to AHCA again, this time requesting review of his letter seeking dissolution, "for the purpose of re- opening our case." He said the Board, on March 10th, intended to restructure the operation and, on March 22nd, met again and approved an agreement to work with another home health agency.

   
   

4. Referring in his letter to advice given him in a telephone conversation with agency staff, the President sent HOC licenses number 0046 and 00442 to AHCA. The licenses had April 30, 1994 expiration dates. The letter also stated that HOC and its new partner would re-apply for licensure.

   
   

5. In May 1994, HOC requested the return of the renewal license fee sent in on March 3, 1994, for a license that was not pursued. In December, 1994, AHCA investigated an allegation that HOC was continuing to operate without a license and concluded by finding the allegation unconfirmed.

   
   

6. HOC had no license after March 1994 until January 31, 1995, when AHCA issued License No. 5015-94 to HOC, effective from May 1, 1994 to April 30, 1995.

   
   

7. On April 21, 1995, AHCA notified HOC that its license was void ab initio for failure to first obtain a certificate of need (CON).

   
   

   The following facts are taken from public records at DOAH and from documents submitted by HOC as attachments to the Motion In Opposition:

   
   

8. On May 16, 1995, HOC filed a Petition For Formal Administrative Hearing challenging AHCA's April 21, 1995 action voiding its license. On June 1, 1995, the First District Court of Appeal issued an Order to Show Cause by June 7, why a petition to review non-final administrative action should not be granted, and required the agency to specifically address the authority of the agency to revoke HOC's license.

   
   

9. On June 7, HOC and AHCA entered into a settlement agreement, pursuant to which HOC voluntarily dismissed its actions at DOAH and in the District Court, and AHCA withdrew its letter of April 21, 1995, and issued HOC a license effective May 1, 1995.

   
   

10. There is no evidence in the record of HOC's CON status. Whether HOC has or ever had a CON, or was a grandfathered provider is not know.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this case, pursuant to Subsection 120.57(1), Florida Statutes.

    
    

12. Subsection 120.60(7), Florida Statutes, requires an agency to initiate a license revocation proceeding.

    
    

13. Subsection 408.039(5)(b), Florida Statutes, allows affected, existing health care providers to initiate or intervene in cases contesting intents to grant or deny CONs. AHCA has also interpreted the statute to allow existing providers to initiate or intervene in CON exemption or de facto CON cases. Humhosco v. HRS, DOAH Case No. 90-6905 (HRS Order Granting Intervention 6/29/91); University Community Hospital v. DHRS, 555 So.2d 922 (Fla. 1st DCA 1990).

14. Subsection 408.036(1)(f) requires the issuance of a CON for the establishment of a home health agency. In this case, Southwest challenges AHCA's issuance of a de facto CON to HOC, as a result of the issuance of a license.

    
    

15. HOC relies on Associated Home Health Agency, Inc. v. DHRS, et al., 453 So.2d 104 (Fla. 1st DCA 1984), in which the Court ruled that only the agency could initiate a license revocation proceeding. In that case, an applicant was initially denied a license to operate a home health agency for failure to obtain a CON or to demonstrate a CON exemption. After receiving information showing entitlement to an exemption under a grandfather statute, the agency issued the license. A competitor's challenge to the validity of the license was held improper, having not been commenced and prosecuted by the agency pursuant to Section 120.60, Florida Statutes.

    
    

16. By contrast, Southwest relies on University Psychiatric Center, Inc.

    v. DHRS, 597 So.2d 400 (Fla. 1st DCA 1992). In that case, a petitioner sought to challenge an agency decision that a substance abuse hospital could treat patients with eating disorders with its existing CON. The Court held that the action could be initiated by a competitor. The action was deemed a challenge to a CON exemption or to the issuance of de facto CON, not a license revocation proceeding.

    
    

17. Southwest also cited, among others, the decision in University Community Hospital v. DHRS, 555 So.2d 922 (Fla. 1st DCA 1990). UCH originally sought both an exemption for 9 rehabilitation beds and approval of a CON to operate a new CMR unit. HRS granted the exemption, but denied the CON. UCH challenged the preliminary denial of its CON, and Tampa General Hospital intervened. Tampa General Hospital was also allowed to file a separate petition to contest HRS' decision to grant a grandfather exemption for the 9 beds. Footnote one to the opinion of the Court is as follows:

    
    

    Among the other issues raised by appellant is the argument that Tampa General Hospital had no standing to contest HRS' initial determination that some of appellant's beds were exempt from review, i.e., were "grand-

    fathered." The hearing officer properly found standing under the authority of Baptist Hospital, Inc. v. HRS, 500 So.2d 620 (Fla. 1st DCA 1986)

    (any party whose substantial interest will be affected by proposed agency action has standing to participate in a 120.57 proceeding). Compare, Associated Home Health Agency, Inc. v. HRS, 453 So.2d 104 (Fla. 1st DCA 1984)(a third party is not permitted to initiate and prosecute a license

    revocation proceeding though the licensee may have been wrongfully granted a grandfather exemption). Appellant also contends that when HRS adopted the recommended order, it employed standards different from those initially used. This argument fails to consider the findings by the hearing officer that HRS failed to follow its own rules governing grandfather eligibility when HRS issued its proposed agency action. Finally, appellant claims

    that the findings are not supported by the competent and substantial evidence. Following a review of

    the record, we find this last argument to be meritless.

    
    

18. In the Baptist Hospital case, HRS first advised Baptist that its proposed project was exempt from CON review, but reversed its position when the formal proposal was submitted. Baptist petitioned to challenge the decision, and West Florida Hospital was allowed to intervene. The Court upheld intervention, relying on the statutory right of a person whose substantial interests are affected to participate in a 120.57 proceeding.

    
    

19. One explanation of the apparent difference in results in the Associated and University Psychiatric Center cases is given in the Recommended Order in UCH. One party suggested that the grandfathering issue in Associated is not one of potential substantial adverse effect because an existing services is allowed to continue. By contrast, an exemption for a substantial change or new service can adversely affect an existing provider. The Hearing Officer commenting on the matter, relies on the interrelationship between the CON application and the CON exemption, as follows:

    
    

    While it is true that UCH seeks to exempt from CON review an allegedly ongoing existing service, it has interwoven that request with its appli- cation for a CON and, after its first motion

    to dismiss was denied, consented to having the two matters considered jointly and on a consolidated record. Indeed, the exemption request was filed shortly after the application, and the number of beds sought in the application is directly dependent upon HRS's decision on the exemption request. Under these circumstances, the two matters may be considered as one, and the agency decision clearly impacts TGH's substantial interest. As such, TGH has standing to protect its interest and to challenge HRS's decision to grant an exemption. The renewed motion to dismiss is accordingly denied.

    
    

20. The same explanation of an interwoven exemption/CON case applies to UCH, particularly because exempt rehabilitation beds were to be included in a new CON approved unit, the establishment of which was in and of itself deemed a substantial change in service.

    
    

21. The Associated case is controlling because the only relief available if Southwest prevails is the termination of HOC's license. Associated was not repudiated but, rather, distinguished by the Court in University Psychiatric Center, which was ". . . unable to determine the basis for the Department's determination that UPC was seeking a license revocation." Associated leaves no option to treat a license revocation based on the need for a CON differently from any other license revocation proceeding, despite the rules of statutory construction announced in Kiesel v. Graham, 388 So.2d 594 (Fla. 1st DCA 1980), pet. denied 397 So.2d 778 (Fla. 1981).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Agency For Health Care Administration enter a Final Order dismissing the Petition For Administrative Hearing filed by Hospice of Southwest Florida, Inc.

DONE AND ENTERED this 1st day of September, 1995, in Tallahassee, Leon County, Florida.

ELEANOR M. HUNTER

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 1st day of September, 1995.

COPIES FURNISHED:

Michael O. Mathis, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

J. Robert Griffin, Esquire

McFarlain, Wiley, Cassedy & Jones, P.A.

215 South Monroe Street Suite 600

Tallahassee, Florida 32301

Peter A. Lewis, Esquire Goldsmith & Grout, P.A.

307 West Park Avenue Post Office Box 1017

Tallahassee, Florida 32302-1017

R. S. Power, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

Tom Wallace Assistant Director

Agency For Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

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 ten 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.

Docket for Case No: 95-003266CON

Orders for Case No: 95-003266CON