STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LIFEPATH HOSPICE AND PALLIATIVE ) CARE, INC., )

)

Petitioner, )

)

vs. )

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

Case No. 02-2703RU

)

FINAL ORDER

On July 15 through 19, August 2, 6 through 9, and 21, 2002, a formal administrative hearing in this case was held in Tallahassee, Florida, before William F. Quattlebaum, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Lifepath Hospice and Palliative Care, Inc.:

H. Darrell White, Esquire McFarlain & Cassedy, P.A.

305 South Gadsden Street Post Office Box 2174

Tallahassee, Florida 32316-2174 For Hernando-Pasco Hospice, Inc.:

Frank P. Ranier, Esquire Sternstein, Rainer & Clarke, P.A.

101 North Gadsden Street Tallahassee, Florida 32301-7606

For Agency for Health Care Administration:

Michael O. Mathis, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403

STATEMENT OF THE ISSUE

The issue in the case is whether statements made by an authorized representative for the Agency for Health Care Administration constitute unpromulgated rules in violation of applicable Florida law.

PRELIMINARY STATEMENT

This case arose from deposition testimony obtained during discovery in a dispute involving an application for a Certificate of Need (CON) filed by Hernando-Pasco Hospice, Inc. (HPH) to operate a hospice in Hillsborough County. The testimony allegedly suggested that the Agency for Health Care

Administration (AHCA) had adopted policy positions constituting unpromulgated rules that were utilized in reviewing the HPH application.

Lifepath Hospice, Inc. (Lifepath) is currently the sole hospice care provider in Hillsborough County (AHCA Service Area 6A), and is challenging the proposed award of the CON to HPH. Based on the deposition testimony, Lifepath filed the instant case seeking to challenge two agency positions as unpromulgated

rules. As set forth in the Petition for Hearing, the two statements are as follows:

Statement #1

The term "regional monopoly" means the existence of only one licensed hospice provider serving a single Hospice Service Area.

Statement #2

Regardless of the absence of a determination of need for a new hospice program pursuant to the provisions of paragraph 4 of

Rule 59C-1.0355, Florida Administrative Code, and unless it is documented that approval of an application will result in the closure of an existing hospice or have a significant adverse impact on patients, the need for a new hospice program is demonstrated and preference shall be given to an applicant who proposes to establish a new hospice program in any Service Area which comprises a large metropolitan area with a population of 500,000 or more persons and which is served by only one licensed hospice.

This case was consolidated with the challenge to the CON application (DOAH Case Nos. 00-3203CON and 00-3205CON) and to a second rule challenge case (DOAH Case No. 01-0440RX). At the request of the parties, the related cases are addressed in three separate orders.

During the proceeding on the Case No. 02-2703RU, Lifepath presented the testimony of one witness. No other parties presented testimony or exhibits in the instant case.

A transcript of the hearing was filed on October 10, 2002. The parties filed Proposed Recommended and Proposed Final Orders

on January 6, 2003.

Statement 1

FINDINGS OF FACT

1. During a deposition taken on July 2, 2002, Jeffery Gregg, the authorized representative of AHCA, testified as to AHCA's understanding of the term "regional monopoly" as used in Section 408.043(2), Florida Statutes.

2. Section 408.043(2), Florida Statutes, provides in relevant part, as follows:

   HOSPICES.--When an application is made for a certificate of need to establish or to expand a hospice, the need for such hospice shall be determined on the basis of the need for and availability of hospice services in the community. The formula on which the certificate of need is based shall discourage regional monopolies and promote competition . . . .

   
   

3. The statute does not define the term "regional monopoly."

4. Mr. Gregg testified that in the context of the statute, AHCA considers the term "region" to mean a Hospice Service Area.

5. Mr. Gregg testified that he defines the term "regional monopoly" to mean a single licensed hospice program in a hospice service area.

6. The definition of "regional monopoly" to mean a single licensed hospice provider in a hospice service area is a statement of general applicability that implements or interprets the statute. The definition is applicable to all hospice service areas that are served by a single licensed hospice program.

7. The definition of "regional monopoly" is not based on internal management memoranda from AHCA, or on legal memoranda or opinions issued to an agency by the Attorney General, or on AHCA legal opinions rendered prior to their use in connection with an agency action.

8. The definition of "regional monopoly" is not related to the preparation or modification of agency budgets. The definition of "regional monopoly," is not a statement, memoranda, or instruction to state agencies issued by the Comptroller as chief fiscal officer of the State and relating or pertaining to claims for payment submitted by state agencies to the Comptroller. The definition of "regional monopoly" is not related to contractual provisions reached as a result of collective bargaining. The definition is not based on memoranda issued by the Executive Office of the Governor relating to information resources management.

9. The agency has not adopted a definition of "regional monopoly" by the rulemaking process set forth at Section 120.54, Florida Statutes.

10. There is no evidence that adoption of the definition by rule is not feasible or practicable.

    Statement 2

    
    

11. The evidence fails to establish that, in either the July 2, 2002, deposition or in his testimony at hearing,

    Mr. Gregg offered the text of Statement 2 as a general statement of AHCA's position in reviewing all CON applications.

12. The statement is not a reasonable extrapolation of general AHCA policy.

13. Mr. Gregg's testimony during the deposition and at hearing indicate that his responses to questions were offered in the context of the AHCA review of the particular CON application at issue in DOAH Case Nos. 00-3203CON and 00-3205CON and are of limited applicability.

14. There is no credible evidence that Statement 2 has been the subject of any substantive discussion at AHCA.

    Mr. Gregg acknowledged that the issue has not been the subject of much agency discussion and was unable to recall ever having discussed hospice issues with the AHCA agency head.

15. Mr. Gregg also stated that he was thinking "off the top of his head." Mr. Gregg essentially testified that the

    agency feels that citizens are better served by having a choice of hospice care providers, especially in areas of relatively large populations. The opinion offered by Mr. Gregg was essentially grounded in his belief that the Governor supports choice in hospice care.

16. The evidence fails to establish that Statement 2 is an appropriate extrapolation of general AHCA policy set forth during Mr. Gregg's testimony at deposition and hearing, therefore the evidence fails to establish that Statement 2 is a statement of general applicability that implements or interprets

    the statute.

    
    

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of this proceeding. Section 120.56(4), Florida Statutes.

18. Section 120.52(15), Florida Statutes, defines a "rule" as follows:

    "Rule" means each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule. The term also includes the amendment or repeal of a rule. The term does not include:

    1. Internal management memoranda which do not affect either the private interests of

       any person or any plan or procedure important to the public and which have no application outside the agency issuing the memorandum.

    2. Legal memoranda or opinions issued to an agency by the Attorney General or agency legal opinions prior to their use in connection with an agency action.

    3. The preparation or modification of:

       1. Agency budgets.

       2. Statements, memoranda, or instructions to state agencies issued by the Comptroller as chief fiscal officer of the state and relating or pertaining to claims for payment submitted by state agencies to the Comptroller.

       3. Contractual provisions reached as a result of collective bargaining.

       4. Memoranda issued by the Executive Office of the Governor relating to information resources management.

       
       

19. In the absence of a statutory directive to the contrary, the Petitioner has the burden of establishing by a preponderance of evidence that the cited statements constitute unpromulgated rules. Dravo Basic Materials Co., Inc., v. Department of Transportation, 602 So. 2d 632 (Fla. 2d DCA 1992); Florida Department of Transportation v. J.W.C. Company, 396

    So. 2d 778 (Fla. 1st DCA 1981). As to Statement 1, the Petitioner has met the burden of establishing that the statement is an unpromulgated rule. As to Statement 2, the Petitioner has failed to meet the burden.

20. Once the Petitioner establishes that the cited statutes constitute rules, the burden then shifts to the agency to establish that rulemaking is not feasible and practicable

    under Section 120.54(1)(a), Florida Statutes. Section 120.56(4)(b), Florida Statutes.

21. Section 120.54(1)(a), Florida Statutes, provides as follows:

    120.54 Rulemaking.--

    1. GENERAL PROVISIONS APPLICABLE TO ALL RULES OTHER THAN EMERGENCY RULES.--

       1. Rulemaking is not a matter of agency discretion. Each agency statement defined as a rule by s. 120.52 shall be adopted by the rulemaking procedure provided by this section as soon as feasible and practicable.

    1. Rulemaking shall be presumed feasible unless the agency proves that:

       1. The agency has not had sufficient time to acquire the knowledge and experience reasonably necessary to address a statement by rulemaking;

       2. Related matters are not sufficiently resolved to enable the agency to address a statement by rulemaking; or

       3. The agency is currently using the rulemaking procedure expeditiously and in good faith to adopt rules which address the statement.

    2. Rulemaking shall be presumed practicable to the extent necessary to provide fair notice to affected persons of relevant agency procedures and applicable principles, criteria, or standards for agency decisions unless the agency proves that:

       1. Detail or precision in the establishment of principles, criteria, or standards for agency decisions is not reasonable under the circumstances; or

       2. The particular questions addressed are of such a narrow scope that more specific resolution of the matter is impractical outside of an adjudication to determine the substantial interests of a party based on individual circumstances.

22. The agency has not established that, as to Statement 1, rulemaking is not feasible or practicable.

    Statement 1

    
    

23. The term "regional monopoly" is set forth at

    
    

    Section 408.043(2), Florida Statutes, which provides that "[t]he formula on which the certificate of need is based shall discourage regional monopolies and promote competition. "

24. The formula referenced in the cited statute is the formula set forth at Rule 59C-1.0355(4)(a), Florida Administrative Code, which is used to calculate the numeric need for new hospice programs (the "fixed need calculation"). In this case, the fixed need calculation is zero. Issues related to the relevant fixed need calculation were litigated in DOAH Case No. 00-1067 and are not at issue in this proceeding.

25. The application at issue in the related proceeding (DOAH Case Nos. 00-3203CON and 00-3205CON) is based upon Rule 59C-1.0355(4)(d), Florida Administrative Code, which

    requires demonstration of "special circumstances" which justify the approval of a new hospice in the absence of numeric need.

    The issue of whether or not a regional monopoly exists in the relevant service area arose as AHCA attempted to explain the proposed award of a CON license to HPH in the absence of numeric need.

26. During the litigation AHCA defined a "regional monopoly" to mean a single licensed hospice provider in a hospice service area. AHCA's definition of "regional monopoly" is a statement of general applicability that implements or interprets the statute. As such, the definition of "regional monopoly" is a "rule" as that term is defined at

    Section 120.52(15), Florida Statutes.

    
    

27. A Department statement that is the equivalent of a rule must be adopted according to the rulemaking procedures in the Florida Administrative Procedure Act, Chapter 120, Florida Statutes (APA). Environmental Trust, Inc. v. State Department of Environmental Protection, 714 So. 2d 493 (Fla. 1st DCA 1998) and Christo v. State Department of Banking & Finance, 649 So. 2d

    318 (Fla. 1st DCA 1995). AHCA has not complied with the rulemaking procedures set forth at Section 120.54, Florida Statutes, and has failed to establish that such rulemaking would not be feasible or practicable as required by Section 120.56(4)(b), Florida Statutes.

    Statement 2

    
    

28. The text of Statement 2 is essentially an extrapolation of Lifepath's understanding of Mr. Gregg's deposition testimony. The evidence fails to establish that Statement 2 constitutes a "rule" as the term is defined at Section 120.52(15), Florida Statutes.

29. Mr. Gregg's testimony was an attempt to explain AHCA's review process in this particular case. Review of Mr. Gregg's testimony in its entirety clearly indicates that there is no statement of general applicability included therein.

FINAL ORDER

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

ORDERED that AHCA shall immediately discontinue reliance on the definition of "regional monopoly" set forth herein. In all other respects, the Lifepath Petition for Formal Administrative Hearing to Challenge Agency Rules is DISMISSED.

DONE AND ORDERED this 17th day of March, 2003, in Tallahassee, Leon County, Florida.

WILLIAM F. QUATTLEBAUM

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 17th day of March, 2003.

COPIES FURNISHED:

Michael O. Mathis, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403

Robert D. Newell, Jr., Esquire Newell & Terry, P.A.

817 North Gadsden Street Tallahassee, Florida 32303-6313

Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A.

101 North Gadsden Street Tallahassee, Florida 32301-7606

H. Darrell White, Esquire McFarlain & Cassedy, P.A.

305 South Gadsden Street Post Office Box 2174

Tallahassee, Florida 32316-2174

Carroll Webb, Executive Director

Jt. Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32399-1300

Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308

Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431

2727 Mahan Drive

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: 02-002703RU

Orders for Case No: 02-002703RU