STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH & WELLNESS NURSING )

SERVICES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-0279

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION and SOUTHWEST ) FLORIDA REGIONAL MEDICAL CENTER, ) INC., )

)

Respondents. )

)

RECOMMENDED ORDER

This case was heard by David M. Maloney, Hearing Officer of the Division of Administrative Hearings, on February 21, 1996, in Tallahassee, Florida.

APPEARANCES

Petitioner: Lance Levenstein, President

Health & Wellness Nursing Services, Inc.

211 South Federal Highway, Suite 201 Boynton Beach, Florida 33435

Respondent: Mark S. Thomas, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3407

Tallahassee, Florida 32308 STATEMENT OF THE ISSUE

Whether Health & Wellness Nursing Services, Inc., is entitled to any relief from the decision of the Agency for Health Care Administration to withdraw its application for a certificate of need to be a Medicare certified home health agency because of the failure of the company to have a "notice of filing" timely published in a local newspaper of general circulation?

PRELIMINARY STATEMENT

On January 4, 1996, the Clerk for the Agency for Health Care Administration ("AHCA" or the "agency") issued a notice to the Division of Administrative Hearings. Received January 6, 1996, the notice advised the division that a request for a formal administrative hearing had been received from Health & Wellness Nursing Services, Inc. The notice further requested that a hearing officer be assigned to conduct all necessary proceedings required

under law, including submission of a Recommended Order. The case was assigned first to another hearing officer; ultimately it was transferred and assigned to the undersigned.

Attached to the notice is a document titled "Petition for Hearing." Filed with AHCA by Petitioner Health & Wellness, the petition contests the agency's withdrawal of Petitioner's application for a certificate of need to become a Medicare certified home health agency, notice of which was received in a letter dated November 8, 1995.

The petition raises two issues. In summary, they are: (1) whether petitioner timely published its notice of filing in a newspaper of general circulation as required by rule and statute; and, (2) whether petitioner is entitled to relief from any non-compliance with the rule and statute because it relied to its detriment on erroneous advice of employees and legal representatives of the agency.

With the parties unable to stipulate to any issues of law or fact, the case proceeded to hearing on February 21, 1996. At hearing, petitioner presented the testimony of four witnesses: M. Riley Gibson, Richard Patterson, James McLemore, (all agency employees) and, finally, Lance Levenstein, petitioner's owner and President. The agency presented the testimony of Alberta Granger, a health services and facilities consultant supervisor at the agency. All seven exhibits offered by petitioner and all six exhibits offered by the agency were admitted into evidence.

Following the hearing, the agency submitted a proposed recommended order received by the division on March 29, 1996. Rulings on the proposed recommended order are in the appendix to this petition. Petitioner did not file a proposed recommended order.

FINDINGS OF FACT

The Parties

1. Petitioner Health & Wellness is a provider of home health services in the area of greater West Palm Beach.

   
   

2. The Agency for Health Care Administration is the "single state agency [designated by statute] to issue, revoke, or deny certificates of need ... in accordance with the district health plans, the statewide health plan, and present and future federal and state statutes." Section 408.034(1), F.S.

   
   

   Notices of Filing, Letters of Intent Deadlines, Extensions and Grace Periods

   
   

3. Section 408.039(2)(d), Florida Statutes, states:

   
   

   Within 14 days after filing a letter of intent, the applicant shall publish a notice of filing to be published in a newspaper of general circulation in the area affected by the proposal.

   
   

4. The statute is implemented by Rule 59C-1.008, Florida Administrative Code (the "Rule"). Section (1)(i) of the rule provides:

   Within fourteen calendar days of the deadline established in Rule 59C-1.008, F.A.C., for the receipt of letters of intent for projects in the same batch cycle, or if a grace period is in effect and a letter of intent is filed by the applicant during the grace period then within fourteen days of the grace period dead- line, the applicant shall publish the first

   of two required notices of filing.

   
   

   The rule differs from the statute in that it requires two notices of filing and the time for publication of the first notice runs not from the filing of the letter of intent but from one of two other dates: the deadline established in Rule 59C-1.008 or, if a grace period is in effect, from the grace period deadline.

   
   

5. For "Hospitals and Other Projects [including home health agencies], 2nd Batching Cycle -- 1995," the Letter of Intent Deadline, is listed by Subsection (1)(e) of the rule as "8-21-95."

   
   

6. Letter of Intent deadlines may be extended. The purpose of a deadline extension is to provide a mechanism for the filing of applications in competition with proposals described in filed letters of intent. The extensions are explained in Subsection (1)(g) of the rule, which provides in pertinent part,

   
   

   1. In cases where a letter of intent for a specific type of project has been received by the agency and the local health council

      30 calendar days or more prior to the appropriate application filing due date as set forth in paragraph 59C-1.008(1)(l), and been initially accepted by the department, a grace period shall be established.

   2. The grace period provides an opportunity for applicants applying for beds, services, or programs having the same Certificate of Need need methodology or health service

      licensing category or like major medical equip- ment proposed in the initially accepted letter of intent in the same applicable subdistrict, district or region to file a proposed competing letter of intent. Under this grace period, a competing letter of intent must be filed not later than 16 days after the letter of intent deadline promulgated under Rule 10-5.008(1)(l), F.A.C.

      
      

      A grace period is not established until an "initially accepted" letter of intent is filed more than thirty days prior to the due date for the filing of an application. But an established grace period is of no benefit to the filer of the letter or letters of intent that lead to establishment of the grace period. Instead, the grace period benefits competitors of those who have filed letters of intent by the deadline. The grace period gives competitors 16 days from the "non-grace period deadline" for filing a letter of intent in which to file a competing letter. The rule's provision of 16 days is significant. This provides two days for filing a competing letter after the expiration of the time

      for publishing a notice of filing by the filer of the "initially accepted" letter of intent. This ensures that a competitor will have had the opportunity by virtue of the publication to learn of the earlier filed letter of intent.

      The time for filing competing letters of intent is also uniform: within two days after the last date that publication of the notice will have occurred.

      
      

      Health & Wellness' Letter of Intent and Notice of Filing

      
      

7. In a "letter of intent" dated March 18, 1995, Health & Wellness wrote to the Administrator of the agency's Certificate of Need Program:

   
   

   Please find for filing this Letter of Intent pursuant to Section 381.709(2) of the Florida Statutes and Rule 59C-1.008, Florida Admin- istrative Code, in order that Health & Well- ness Nursing Services, Inc. may subsequently file a Certificate of Need application to become a Medicare certified home health agency.

   
   

   Respondent's Ex. No. 1.

   
   

8. Although dated March 18, 1995, curiously, the letter of intent was not stamped "Received" until August 21, 1995, the deadline established in the rule for filing letters of intent. This curiosity was not explained at hearing by any party.

   
   

9. In any event, Health & Wellness did not publish a notice of filing in a newspaper of general circulation by September 4, 1995, the deadline for publication for letters of intent filed August 21, 1995.

   
   

   Grace Period Filings

   
   

10. The time for filing "grace period" letters of intent in the 1995 Second Batching Cycle for Hospitals and Other Projects expired on September 6, 1995, that is, 16 days after the August 21, 1995, deadline for filing "non-grace period" letters of intent and two days after the deadline for publication of the first notice of filing, September 4, 1995.

    
    

11. Two days later, on September 8, 1995, the agency produced a list of "grace period letters of intent" accepted for the August 1995 Hospital Review Cycle. Twenty-two grace period letters are listed. Thirteen are to "[e]stablish a Medicare- certified home health agency." Respondent's Exhibit No. 5. But, none of these are in Palm Beach County or the same area as Health & Wellness so as to be in competition with Health and Wellness' proposed certification. One "grace period" letter of intent refers to a Palm Beach County proposed CON but it is Bethesda Memorial Hospital's proposal to "[d]evelop up to a 4 bed level III NICU unit thru (sic) the conversion of up to

    4 acute care beds," id., and, therefore, is not in competition with Health & Wellness' proposal.

    
    

    The Agency's Response to H & W's Filing

    
    

12. In the meantime, on August 24, 1995, the agency, under the signature of Alberta G. Granger, mailed a letter to Mr. Levenstein, owner and President of Health & Wellness, informing him that the company's "letter of intent has been accepted by th[e agency]." Respondent's Ex. No. 3. The letter further informed

    Mr. Levenstein of assessment of a non-refundable filing fee of $5,750.00 to "be submitted with the application on or before the application due date listed above." Id. That due date was listed as "9/20/94."

    
    

13. Other significant dates are also listed on the face of the August 24, 1995, letter. In addition to September 20, 1995, as the date by which the application is to be filed, the letter lists November 6, 1995, as the date for completion of the application and January 5, 1996, as the date of the agency decision. These dates constituted an "anticipated" schedule. The letter from Ms. Granger does not inform Mr. Levenstein or Health & Wellness, however, that publication of the notice of filing was required within 14 days of August 21, 1995, that is by September 4, 1995. But, it did enclose "[c]opies of statutes and rules," id., consisting of 20 pages of statutes and some 46 pages of rules.

    
    

14. Included among the copies of statutes and rules are Section 408.039(2)(d), Florida Statutes, setting the fourteen- day requirement for publication of the notice of filing and Rule 59C-1.008, which set the deadlines for both the filing of letters of intent and publication of the notices of filing, and described the circumstances for the extension of deadlines and establishment of grace periods.

    
    

15. While supplying the relevant statutes and rules, the package sent by the agency to Health & Wellness also delineated other applicable time frames besides those set out in the cover letter. For example, there is a "Batching Cycle Calendar." The calendar lists pertinent dates in six categories for the years 1994, 1995 and 1996 for both "Nursing Home Projects," and "Hospital and Other Projects [including home health agency medicare certification]." These six categories are:

    
    

    1. Bed Need Published in F.A.W.

    2. LOI Deadline

    3. Application Deadline

    4. Completeness Review Deadline

    5. Applicant Ommissions (sic) Deadline

    6. Agency Decision Deadline

       
       

       None of the six, obviously, deal with publication of the notice of filing. Nor does any part of the other material prepared by the agency to assist applicants for CONs deal with publication of the notice. To ascertain the notice of filing publication requirements, therefore, Health & Wellness was left on its own to sift through the 66 or so pages of statutes and rules provided in the package.

       After reading Section 408.039(2)(d) of the statutes, Health & Wellness had to read the rules, isolate Rule 59C-1.008 (a rule composed of six sections, numerous subsections and which occupies 9 pages of the Florida Administrative Code) as the rule which governs the notice of filing and understand that the rule refines the statute so as to make the notice of filing due not from within fourteen days from actual receipt, but from within fourteen calendar days of the deadline for filing letters of intent established in the rule. At the same time, Health & Wellness would have to make sure that no other statutes or rules among the 66 pages affects the publication requirement.

       
       

16. In response to the question of whether the CON process is difficult, complicated, convoluted, or required "a lot of things to know," Ms. Granger answered straight forwardly:

    ... I think there's a lot of things to know. I think, based on our experience, particularly with new applicants, if you

    will, that are just coming into the CON world, I think they would label it as difficult. But it is cumbersome.

    * * *

    ... I think for someone that is new at trying to go through the CON process, it is overwhelming, and it is cumbersome if you don't take it seriously and really, really understand that some of these deadlines mean something, and there's no option for you.

    
    

    Tr. 105, 106.

    
    

17. For this reason, when a new applicant or layman asks Ms. Granger a question, she says,

    
    

    Look, if you're finding this hard to under- stand, there are people out there that do this for a living. Let me send you a packet. Read it. Call me back. Write down your questions, because if you don't follow it letter for letter, eye for eye, you can get withdrawn. There's nothing you can do about it if you don't meet the minimum statutory requirements.

    
    

    Tr. 105, 106.

    
    

18. It is readily understood, then, that in the CON process it is common for applicants to retain professional help, "even for experienced certificate of need filers, like hospitals that file them all the time." (Tr. 106.)

    
    

19. Health & Wellness is not a hospital and Mr. Levenstein, quite obviously, is not an experienced certificate of need filer. On September 10, 1995, six days after the time for publication of the notice of filing had expired, the issue of publication came to Mr. Levenstein's attention. He commenced placing telephone calls to Tallahassee.

    
    

20. On September 12, 1995, Mr. Levenstein spoke on the telephone with Morgan Riley Gibson, a certificate of need consultant with the agency. The purpose of the conversation was for Mr. Levenstein to verify whether it was still possible for Health & Wellness to timely publish a notice of filing. The conversation lasted 22 minutes, from 10:24 to 10:46 a.m. As the result of being unsure of the answer, Mr. Gibson referred Mr. Levenstein to Richard Patterson, counsel for the agency.

    
    

21. Mr. Levenstein immediately made a call to Mr. Patterson. Mr. Patterson was not in. At 11:09 a.m. and then at 11:10 a.m., Mr. Levenstein called a second and third time; the third time with success. The grace period was discussed. Mr. Patterson told Mr. Levenstein that if the grace period applied, he might still be able to meet the publication requirement in a timely fashion. Establishment of a grace period would have extended the time for publishing a notice of the filing of a "grace period" letter of intent until September 20, 1994. But Mr. Patterson felt he did not have enough information

    to definitively answer whether Health & Wellness was entitled to the benefit of a grace period. He advised Mr. Levenstein to call Mr. Gibson again.

    
    

22. Two days later, on September 14, 1995, Mr. Levenstein called Mr. Gibson once more. The conversation was short - six minutes. The only question asked was whether a grace period had been established. The answer to the question was important to Mr. Levenstein. If a grace period had been established, he felt he could meet the publication requirement and would go forward with the application. Going forward with the application would entail, at a minimum, the filing fee ($5,750), the hiring of an accountant to prepare an audited financial statement at a fee of approximately $2,500, and preparation of an omissions response necessitating a substantial amount of work over a two- month period.

    
    

23. The answer Mr. Gibson gave to Mr. Levenstein was that a grace period had been established. When asked by Mr. Levenstein whether Health & Wellness could go forward with the application, Mr. Gibson's answer was, "I see no reason why you cannot." Tr. 84.

    
    

24. Mr. Gibson and Mr. Patterson remember nothing of the conversations with Mr. Levenstein. In fact, they do not remember speaking at all with Mr. Levenstein in September. In the course of their employment, it goes without saying, they discuss applications with numbers of applicants every month of every year. It is not surprising that they do not remember the September conversations with Mr. Levenstein. But Mr. Levenstein remembers the conversations very well. He is able to quote verbatim Mr. Gibson's response that there was no reason not to proceed with the application. The clarity with which Mr. Levenstein remembers the conversation, when compared to the agency employees, is not surprising either since riding on the outcome of the conversations was whether Health & Wellness should expend over $7500 and several months of work as well.

    
    

25. Health & Wellness proceeded with filing its application. The application was withdrawn by the agency for failure to timely publish the notice. Mr. Levenstein was informed of the withdrawal by letter dated November 8, 1995.

    
    

26. It is common for the agency to withdraw applicants for failure to meet a requirement governing an application, whether that failure is substantive or could be viewed as merely technical. It is not unusual for as many as one- fourth of the applications in any one cycle to be withdrawn. This is because it is customary for many applicants to file "shell" applications as part of a strategy to keep potential competitors from discovering information, crucial and otherwise, about the application. The applicant, typically, does not file the full application until it files an omissions response by the date established for the filing of a complete application. The strategy frequently backfires. The applicant makes a technical or substantive mistake in the omissions response, or misses some deadline, and has no opportunity to correct it.

    
    

27. The agency does not make exceptions to failures to meet the requirements of applicable statutes or rules. If it did so, the result in Ms. Granger's view would be "[t]otal chaos." (Tr. 107.) The agency professes sincerely that it does not intend to "make applicants' and potential applicants' lives miserable." Id. But, if the agency did not hold the applicants' feet to the fire of the requirements of the statutes and rules, then competitors through administrative challenges to the agency's decisions would do so. The intense competition observed at the Division of Administrative Hearings among CON

    applicants, most of whom are highly sophisticated with respect to CON procedures and law, is vivid testament to the agency's sentiments.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

29. The agency maintains in this proceeding that the grace period provided for in Rule 59C-1.008(1)(g)1., Florida Administrative Code, is necessarily inapplicable because the Health & Wellness Letter of Intent was date-stamped by the agency August 21, 1995. The filing, therefore, was both a timely filing and within 30 days of the Rule 59C-1.008(1)(l) deadline, that is, the deadline for filing an application.

    
    

30. In fashioning this argument, the agency relies on the following interpretation of the Rule:

    
    

    Essentially, Rule 59C-1.008 creates three different notice publication requirements for letters of intent, based upon when the filing takes place in relation to the LOI [letter of intent] submission deadline. Those LOIs timely filed within 30 days of the LOI dead- line must be publicly noticed within fourteen

    (14) days of such deadline. Rule 59C-1.008 (1)(i), Fla.Admin.Code. LOIs filed 30 days or more before the LOI deadline are subject to an extension of the fourteen day deadline in which to publish notice, a "grace period," for the purpose of delaying such publication in order to place it closer in time to no-

    tices of competing LOIs in the same batch that were submitted closer to the deadline.

    Rule 59C-1.008(1)(g), Fla.Admin.Code. Fin- ally, those LOIs submitted after the LOI dead- line are not admitted to the current batch

    but are instead in the next cycle (and necessarily provided a grace period in which to publish notice).

    
    

    Agency Proposed Recommended Order, fn. 19, pgs. 6 and 7.

    
    

31. This interpretation of the rule appears to run afoul of the Rule's plain wording. Subsection (1)(i) of the Rule establishes two deadlines for publication of notices of filing of letters of intent: fourteen days after the deadline for filing a letter of intent, or, if a grace period has been established, then fourteen days after the grace period deadline.

    
    

32. A grace period was not established for Health & Wellness letter of intent because it was not filing as a competitor to another provider that had filed an "initially accepted" letter of intent in the "same applicable subdistrict, district or region." Rule 59C-1.008(1)(g)2., F.A.C. Furthermore, and most pertinently, Health & Wellness filed its letter of intent by the "non- grace period" deadline, August 21, 1995. It did not file its letter during a grace period. Extension for publishing a notice of filing applies only in cases

    in which a grace period is in effect, "and a letter of intent is filed by the applicant during the grace period," Rule 59C-1.008(1)(i), F.A.C., Respondent's Exhibit No. 3.(e.s.)

    
    

33. Regardless of the correctness of the agency's interpretation, one conclusion is clear. Health & Wellness did not file a letter of intent during a grace period. It filed its letter by the deadline established in the rule, August 21, 1995. Health & Wellness, therefore, was required to publish the notice of filing by September 4, 1996. It did not do so.

    
    

34. Failure to comply with the publication requirements of Subsection (1)(i) of the Rule requires that any subsequently filed application be deemed incomplete and withdrawn from consideration, unless failure is due solely to documented error of the newspaper. Rule 59C-1.008(1)(j), F.A.C.

    
    

35. Mandatory minimum CON application provisions require exact compliance and cannot be waived by the agency. Humhosco v. Department of Health and Rehabilitative Services, 561 So.2d 388 (Fla. 1st DCA 1990).

    
    

36. Furthermore, any reliance by Mr. Levenstein on the information gathered in his conversations with Messrs. Gibson and Patterson cannot serve as a basis for estopping the agency from withdrawing the application. "An applicant seeking a certificate of need is presumed to know the applicable law." Health Care & Retirement v. Department of Health and Rehabilitative Services,

    463 So.2d 1175 (Fla. 1st DCA 1984). As a general rule equitable estoppel is applied against the state only in rare instances and under exceptional circumstances. North American Company v. Green, 120 So.2d 603, 610 (Fla. 1959). The use of estoppel occurs only in cases of severe injustice and "egregious" circumstances. Green, above, and First National Bank of Birmingham v. Department of Revenue, 364 So.2d 38, 41-42 (Fla. 1st DCA 1978).

    
    

37. The facts of this case do not establish egregious circumstances. Being passed from one employee to another was not helpful to Mr. Levenstein and his company. But it is not clear in the second "short" conversation with Mr. Gibson, that Mr. Gibson was still aware that the issue was timely publication. At best, Mr. Levenstein was told by one employee that, if a grace period were established, there still might be time to publish a timely notice. He was then told by Mr. Gibson that a grace period had been established (and it is unknown whether Mr. Gibson's recollection was refreshed that the issue was publication of the notice) and, finally, that Mr. Gibson saw no reason not to proceed with the application. Moreover, it is not known precisely what information Mr. Levenstein supplied to these agency employees. These facts, consisting of conversations remembered by only one of the parties, as they do, do not rise to

    the level of grievous mistakes on the part of the agency clearly communicated to a party upon which the party relied so as to call into play against the state principles of the doctrine of equitable estoppel. The outcome of this case would be different if, for example, the agency had informed Mr. Levenstein in writing that he had until September 20, 1995, (14 days after expiration of a grace period) in which to publish a notice of filing as required by the rule.

    
    

38. Still, this case demonstrates what a guileless citizen innocent in the ways of the CON world and without professional assistance is up against. It is not that the agency does not have a human face. Certainly, Ms. Granger in the midst of the many demands on her position, makes every effort to assist CON applicants. It is simply that the CON arena, dominated by sophisticated applicants vying to outdo each other at every turn, is a harsh environment for any citizen, with or without professional assistance. At the least, this case

should point out to the agency the benefit to CON applicants, represented or unrepresented, that would flow from providing a date sheet with all applicable deadlines, including the deadline for publication of the notice of filing, in the package provided the applicant in response to the filing of the letter of intent. While nothing can be done to resuscitate Health & Wellness' application filed in the Second Hospital Batching Cycle of 1995, the agency should consider every possible avenue for allowing Heath & Wellness to file an application in the Second Batching Cycle for 1996 for Hospitals and Other Projects without fees and costs imposed by the agency.

RECOMMENDATION

Based on the foregoing, it is, hereby, RECOMMENDED:

1. That the agency issue a final order withdrawing Health & Wellness' application in the Second Batching Cycle for Hospitals and Other Projects in 1995 to establish a Medicare-certified home health agency; and,

   
   

2. That the agency make every effort to allow Health & Wellness to file without filing fees a second application to establish a Medicare-certified home health agency in the second 1996 batching cycle.

DONE and ENTERED this 21st day of May, 1996.

DAVID M. MALONEY, 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 21st day of May, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-0279

Paragraphs 1 through 12 of the agency's proposed recommended order are accepted.

COPIES FURNISHED:

Mark S. Thomas, Esquire Agency for Health Care

Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3407

Tallahassee, Florida 32308

Lance Levenstein, President

Health & Wellness Nursing Services, Inc.

211 South Federal Highway, Suite 201 Boynton Beach, Florida 33435

Sam Power, Agency Clerk Agency for Health Care

Administration 2727 Mahan Drive

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 96-000279CON

Orders for Case No: 96-000279CON