STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BEVERLY HEALTH AND REHABILITATION SERVICES-PALM BAY,

Petitioner,

vs.

AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

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) Case No. 02-1297F

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FINAL ORDER

Administrative Law Judge (ALJ) Daniel Manry conducted the administrative hearing of this case on September 20, 2002, in St. Petersburg, Florida, on behalf of the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Donna Holshouser Stinson, Esquire

R. Davis Thomas, Jr. Qualified Representative

Broad and Cassel

215 South Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302

For Respondent: Gerald L. Pickett, Esquire

Agency for Health Care Administration

525 Mirror Lake Drive, North Sebring Building, Suite 310H St. Petersburg, Florida 33701

STATEMENT OF THE ISSUES

The issues are whether Petitioner is entitled to recover attorney's fees and costs (fees and costs) pursuant to

Section 120.569(2)(e), Florida Statutes (2002); and, if so, what amount of fees and costs is reasonable. (All statutory references are to Florida Statutes (2000)).

PRELIMINARY STATEMENT

On March 28, 2002, Petitioner filed the Motion for Attorney's Fees that is the basis for this proceeding. The Motion for Attorney's Fees relies on Sections 120.569(2)(e) and 120.595(1). However, Petitioner subsequently represented that it was seeking attorneys fees and costs solely on the basis of Section 120.569(2)(e).

The ALJ scheduled the hearing for June 12, 2002, but granted two motions for continuance by Respondent that postponed the hearing until September 20, 2002. At the hearing, Petitioner submitted the testimony of two witnesses and five exhibits for admission into evidence. Respondent called no witnesses and submitted no exhibits for admission into evidence. The parties agreed for the record in DOAH Case Number 01-1605 (the underlying case or proceeding) to be filed after the conclusion of the hearing. The identity of the witnesses and exhibits and any attendant rulings are set forth in the Transcript of the hearing filed on October 9, 2002.

At the conclusion of the hearing, the ALJ ordered the parties to file their Proposed Final Orders (PFOs) within 30 days from the later of the date of the filing of the Transcript with DOAH or the filing of the record from the underlying case. On January 8, 2003, Petitioner filed its Notice of Filing of Exhibits in the underlying case. On January 23, 2003, the parties filed a Joint Request to file their PFOs on February 24, 2003. On January 27, 2003, the ALJ entered an Order granting that request. The parties timely filed their respective PFOs on February 24, 2003.

FINDINGS OF FACT

1. The underlying case arose from an inspection conducted by the Agency for Health Care Administration (AHCA) employees on March 8, 2001, of a nursing home facility owned and operated by Petitioner and identified in the record as Palm Bay. AHCA employees prepared a survey report that alleged several deficiencies at Palm Bay.

2. The parties attempted unsuccessfully to resolve the alleged deficiencies through Informal Dispute Resolution. By letter dated May 14, 2001, the Director of Nursing Services for AHCA notified Petitioner that Respondent proposed to uphold the deficiencies cited in the survey report.

3. Neither the survey report nor the letter dated May 14, 2001, is a "pleading, motion, or other paper" within the meaning

   of Section 120.569(2)(e). Petitioner does not identify a specific pleading, motion, or other paper that Petitioner claims Respondent filed for an improper purpose.

4. Petitioner claims that Respondent "participated" in the underlying proceeding for a frivolous purpose or to needlessly increase the cost of litigation. In paragraph 32 of Petitioner's Proposed Final Order, for example, Petitioner proposes that the ALJ conclude:

   . . . that AHCA participated in the underlying proceeding for a frivolous purpose or to needlessly increase the cost of litigation within the meaning of Section 120.569(2). (emphasis supplied)

   
   

5. Section 120.569(2) does not include the term "participated" and does not include any derivation of the term. The scope of Section 120.569(2) is expressly limited to pleadings, motions, or other papers filed in the underlying proceeding. Section 120.569(2) neither requires nor authorizes the ALJ to make findings or conclusions concerning the issue of whether Respondent "participated" in the underlying proceeding for an improper purpose.

6. Statutory authority to determine whether Respondent "participated" in the underlying proceeding for an improper purpose is found in Section 120.595. However, Petitioner relies

   solely on Section 120.569(2)(e) as the basis for its claim for fees and costs.

7. Petitioner did not provide prompt notice to the ALJ or Respondent that Petitioner intended to seek fees and costs pursuant to Section 120.569(2)(e). At the outset of the administrative hearing in the underlying case, Petitioner made an ore tenus motion on the record for fees and costs without specifying the statutory basis of the claim. At the suggestion of the ALJ, the parties agreed to address the issue of fees and costs after the ALJ issued a recommended order.

8. The fees and costs sought by Petitioner are not reasonable for the purposes of Section 120.569(2)(e). By not providing prompt notice that Petitioner intended to seek fees and costs pursuant to Section 120.569(2)(e), Petitioner did not take action to mitigate the amount of resources expended by Petitioner in defense of a pleading, motion, or other paper filed by Respondent in the underlying proceeding.

9. Petitioner failed to show that Respondent did not have a reasonably clear legal justification for issuing the survey report and letter dated May 14, 2001. The issue of whether Respondent was reasonably justified in filing the survey report and letter dated May 14, 2001, must be resolved on the basis of the facts known to Respondent at the times that Respondent issued the report and letter. The ALJ should not engage in

   hindsight based on the evidence adduced at the hearing in the underlying case.

10. Petitioner relies on findings in the Recommended Order that evidence submitted by Respondent was either insufficient to sustain that allegations against Petitioner, not credible, or not persuasive. Petitioner also relies on conclusions in the Recommended Order that Respondent's legal interpretation of applicable law conflicted with published opinions of the United States Department of Health and Human Services. That the ALJ chose to adopt Petitioner's position over that of Respondent is not an adequate basis for the imposition of fees and costs pursuant to Section 120.569(2)(e). Section 120.569(2)(e) is not aimed at fee shifting to compensate the prevailing party.

11. Even if Section 120.569(2)(e) were aimed at fee shifting to compensate the prevailing party, Petitioner's reliance on findings and conclusions in the Recommended Order is misplaced. The Final Order issued by Respondent in the underlying case modified many of the findings and conclusions in the Recommended Order that Petitioner relies on to support its request for fees and costs; even though the Final Order did not change the ultimate outcome.

12. The recommended findings and conclusions modified in the Final Order are a matter of record and need not be repeated. The changes made in the Final Order in the underlying case

    illustrate the justification Respondent had for issuing the survey report and letter dated May 14, 2001.

    CONCLUSIONS OF LAW

    
    

13. DOAH has jurisdiction over the parties and the subject matter of the proceeding. Section 120.569(2)(e). Petitioner originally asserted that Section 120.595(1)(b) also served as a basis for its claim. At the hearing, however, Petitioner conceded that Section 120.595 is not applicable because Respondent is not a "nonprevailing" adverse party within the meaning of Section 120.595(1)(e)(3).

14. Section 120.569(2)(e) is aimed at deterring parties from filing "pleadings, motions, and other papers" for improper purposes. The statute is not intended to shift fees and costs to compensate the prevailing party. Section 120.569(2)(e) is aimed at the conduct of counsel and not the outcome of the proceeding. See Mercedes Lighting and Electrical Supply, Inc. v. State, Department of General Services, 560 So. 2d 272, 276 (Fla. 1st DCA 1990)(involving former Section 120.57(1)(b)5 that is now codified in Section 120.569(2)(e)).

15. A party seeking sanctions under Section 120.569(2)(e) is required to take action to mitigate the amount of resources expended by the party in defense of a pleading that the party claims is filed for an improper purpose. Mercedes, 560 So. 2d at 277. The party must give prompt notice to the opposing party

    and allow the ALJ an opportunity to promptly punish an offending party. The purpose of Section 120.569(2)(e) is not well served if an offending party is not sanctioned until the end of the administrative hearing. Id.

16. If a reasonably clear legal justification can be shown for filing a pleading, an improper purpose cannot be found to exist. Mercedes, 560 So. 2d at 278. That the evidence adduced at hearing was insufficient to sustain the allegations in the pleading is not a basis for finding that Respondent filed the pleading for an improper purpose.

ORDER

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

ORDERED that Petitioner is not entitled to fees and costs pursuant to Section 120.569(2)(e).

DONE AND ORDERED this 25th day of April, 2003, in Tallahassee, Leon County, Florida.

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 2003.

COPIES FURNISHED:

Gerald L. Pickett, Esquire

Agency for Health Care Administration

525 Mirror Lake Drive, North Sebring Building, Suite 310H St. Petersburg, Florida 33701

Donna Holshouser Stinson, Esquire Broad and Cassel

215 South Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302

R. Davis Thomas, Jr. Broad and Cassel

215 South Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302

Lealand McCharen, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building, Suite 3431 Tallahassee, Florida 32308

Rhonda M Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building, Suite 3116 Tallahassee, Florida 32308

NOTICE OF RIGHT TO JUDICIAL REVIEW

A 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 the original notice of appeal with the Clerk of the Division of Administrative Hearings and a 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.

Docket for Case No: 02-001297F

Orders for Case No: 02-001297F