The Issue Whether Respondent, Department of Financial Services, Division of Workers' Compensation (Department or Respondent), should pay Petitioner, Gulf Coast Development Service, Inc.'s (Petitioner or Gulf Coast Development), attorney's fees and costs under section 57.111, Florida Statutes (2012),1/ for initiating Division of Administrative Hearings (DOAH) Case No. 13-0798.
Findings Of Fact The parties stipulated to the following facts set forth in this paragraph: The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees and corporate officers. Petitioner, a Florida corporation, was engaged in the Florida construction industry on February 12, 2013. On February 12, 2013, Leida Perez, workers' compensation compliance investigator for the Department (Investigator Perez), commenced an investigation at 577 Gulfshore Boulevard, Naples, Florida 34102 (job site), to determine whether the individuals performing construction industry work at the job site were compliant with the workers' compensation insurance coverage requirements of chapter 440, Florida Statutes. Quang Dinh is the owner and corporate officer of Gulf Coast Development. The Department issued a Stop-Work Order and Order of Penalty Assessment to Petitioner on February 12, 2013. The Department served a Request for Production of Business Records for Penalty Assessment Calculation to Petitioner on February 12, 2013. The calculations and the methodology applied by the Department's penalty auditor in the Amended Order of Penalty Assessment that was issued to Petitioner by the Department on February 27, 2013, and revoked on May 3, 2013, are not in dispute. Petitioner does not owe any Amended Order of Penalty Assessment to the Department. Bob Simat, drywall supervisor for Advantage Plastering and Finish Carpentry, contacted Gilberto Zepeda directly to perform the drywall operations at the job site. Mr. Simat was under the impression that Mr. Zepeda and his brother both worked for Gulf Coast Development. Discovery in this matter concluded on April 29, 2013, when the Department received check images from Petitioner's bank account. The Department issued and served an Order Releasing Stop-Work Order (Revocation) to Petitioner on May 3, 2013. Petitioner is a bona fide "small business" and incurred legal fees and costs for this action. The Department revoked the February 12, 2013, Stop-Work Order, and, therefore, Petitioner is the prevailing party in the underlying action within the meaning of section 57.111(3)(c). On February 12, 2013, when Investigator Perez arrived at the job site, she observed Gilberto and Enrique Zepeda (Zepedas) performing drywall finishing work. Upon inquiry, the Zepedas informed Investigator Perez that they were performing the drywall finishing work for their employer, Gulf Coast Development, and provided her with Quang Dinh's cellular phone number. As previously noted, Investigator Perez is an investigator with the Department's Division of Workers' Compensation. When Investigator Perez arrived at the job site on February 12, 2013, a representative from the Department's Division of Insurance Fraud (Fraud Unit) was also present. In the presence of Investigator Perez, the representative from the Fraud Unit received from the Zepedas the same information that they provided to Investigator Perez regarding their employment status with Gulf Coast Development. While meeting with Investigator Perez and the representative from the Fraud Unit, the Zepedas memorialized their verbal statements by each executing an affidavit, and affirmatively stating therein that they were employed by Petitioner. Soon after receiving Mr. Dinh's phone number from the Zepedas, Investigator Perez phoned Mr. Dinh. When Mr. Dinh answered his phone, Investigator Perez identified herself and explained that she was with the Zepeda brothers. During the conversation with Mr. Dinh, Investigator Perez asked whom he used for workers' compensation coverage. Mr. Dinh replied "I am working on it," and the phone was disconnected. Investigator Perez immediately placed a second call to Mr. Dinh, and it was during this conversation that Mr. Dinh agreed to meet her at the job site. After speaking with Mr. Dinh, Investigator Perez contacted Advantage Plastering, a contractor at the job site, who informed her that they had hired Petitioner to perform the drywall finishing work. Following her conversation with the representative from Advantage Plastering, Investigator Perez, through the use of her mobile personal computer, searched the Department of State, Division of Corporations', website database (Sunbiz) for information on Gulf Coast Development. The information found on Sunbiz showed that Petitioner had been an active Florida corporation since May 9, 2007, that 27614 Imperial Shore Boulevard, Bonita Springs, Florida 34134, was the company's principal address, and that Quang Dinh was president of the corporation. Next, Investigator Perez checked the Department's Coverage and Compliance Automated System (CCAS) for information on proof of coverage and exemptions for Petitioner. CCAS revealed that Petitioner did not have any active coverage, but did have an exemption for Mr. Dinh. An exemption is a method by which a particular corporate officer can become exempt from the requirement to obtain workers' compensation insurance coverage, as authorized by section 440.05, Florida Statutes. When Mr. Dinh arrived at the job site, Investigator Perez again asked him about the company's current workers' compensation coverage, to which Mr. Dinh again replied, "I am working on it." Mr. Dinh then gave Investigator Perez a folder containing a blank application for workers' compensation insurance coverage. Based on her interviews with the Zepedas, Advantage Plastering, and Mr. Dinh, along with the information obtained from Sunbiz and CCAS, Investigator Perez determined that the Zepeda brothers were employed by Petitioner and that the Zepedas were not covered by workers' compensation insurance coverage. Given this information, Investigator Perez issued Petitioner a Stop-Work Order. Mr. Dinh testified that when he arrived at the job site, he informed Investigator Perez that the Zepedas were not his employees. Even if Mr. Dinh informed Investigator Perez that the Zepedas were not employees of Gulf Coast Development, his assertion was insufficient to negate the verbal and sworn statements given to Investigator Perez by the Zepedas and, moreover, conflicted with his previous statements to Investigator Perez that he was "working on" getting workers' compensation coverage for the Zepedas. In March 2013, the Zepedas recanted their earlier statements that they were employed by Gulf Coast Development. On May 3, 2013, Respondent issued an Order Releasing Stop-Work Order (Revocation). The facts uncovered in Investigator Perez's investigation on February 12, 2013, provided the Department with a reasonable basis to issue the Stop-Work Order to Petitioner.
The Issue This matter arose on Petitioner's Amended Administrative Complaint which charges Respondent with aiding an unlicensed person to evade Florida contracting licensing law and with conspiracy in using his general contractor's license to further such unlawful purpose. The parties submitted proposed findings of fact which have been incorporated herein to the extent they are relevant and consistent with the evidence.
Findings Of Fact Respondent is a registered general contractor, having been issued license number RG 0013006. On January 6, 1978, Respondent obtained Dixie County building permit No. 335 for the construction of Evans Square Shopping Center located in Cross City, Florida. After purchasing the raw land and securing the building permit, Respondent was unable to borrow the funds needed for construction of the shopping center, and thereafter sold his interest in the project to Allied American Properties of Florida, Inc. (Allied). On May 15, 1978, Respondent entered into a contract with Allied to construct the Evans Square Shopping Center. On May 22, 1978, Respondent entered into a con- tract with Raymond H. Moody, individually, and Florida Gulf Coast Construction Co., Inc., acting by and through its President, Raymond H. Moody, who were to perform the actual construction of the Evans Square Shopping Center. At the time of contracting, Moody and Florida Gulf Coast Construction Co., Inc., were unlicensed to perform the type of construction outlined in the contract. Florida Gulf Coast Construction Co., Inc., eventually obtained proper licensure but did so subsequent to the period at issue here. In the contract agreement with Florida Gulf Coast Construction Co., Inc., and Moody, Respondent agreed that he would assist in obtaining necessary permits and local government services required for the construction of the Evans Square Shopping Center. Subsequent to the signing of the May 22, 1978, contract, Respondent learned from Moody that neither he nor Florida Gulf Coast Construction Co., Inc., was properly licensed to perform the type of construction for which they had contracted. Respondent took no immediate action based on this information. Moody and/or Florida Gulf Coast Construction Co., Inc., continued to perform construction activities with the use of Respondent's building permit and contractor's license. Respondent received in excess of $50,000.00 with regard to the May 22, 1978, contract which included payment for the building permit he had previously obtained. He did not, however, receive reimbursement for the several hundred thousand dollars he had invested in this project before the sale to Allied.
Recommendation From the foregoing, it if RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty as charged in the Amended Administrative Complaint and suspending his general contractor's license for a period of one year. DONE and ENTERED this 30th day of December, 1982, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1982.
The Issue Whether Gulf Coast Rehabilitative Services Limited, d/b/a North Florida Institute of Rehabilitation submitted a valid letter of intent and partnership resolution to apply for a certificate of need to construct a 40-bed inpatient comprehensive medical rehabilitation hospital in Panama City, Florida, in Department of Health and Rehabilitative Services District II. If the letter of intent and resolution are valid, whether the certificate of need application should be approved.
Findings Of Fact Respondent, Gulf Coast Rehabilitative Services Limited ("Gulf Coast"), is a Florida limited partnership which owns North Florida Institute of Rehabilitation ("NFIR") in Panama City, Florida. NFIR is a licensed comprehensive outpatient medical rehabilitation facility, opened in 1986, and accredited by the Commission on Accreditation of Rehabilitation Facilities. Respondent, Department of Health and Rehabilitative Services ("HRS") is the agency responsible for administration of the certificate of need ("CON") statutes and rules. Petitioner, Capital Rehabilitation Corporation, d/b/a Capital Rehabilitation Hospital ("Capital Rehabilitation") is an existing 40-bed inpatient comprehensive medical rehabilitation ("CMR") hospital, with CON approval for an additional 30 beds, located in Tallahassee, Florida, in HRS District 2. Capital Rehabilitation Hospital is a wholly owned subsidiary of Rehabilitation Hospital Services Corporation, a wholly owned subsidiary of National Medical Enterprises. Capital Rehabilitation's primary service area is all of HRS District 2, with additional referrals from southwest Georgia and southeast Alabama. Two acute care hospitals are located in Panama City, both of which operate generally at 90% or above occupancy. They are Bay Medical Center ("Bay Medical") with 302-beds and Hospital Corporation of America Gulf Coast ("HCA") with 176 acute care beds. Panama City, Florida is also located in HRS District 2, acute care Subdistrict One. HRS District 2 encompasses fourteen counties from the eastern boundaries of the Madison and Taylor Counties to the eastern boundary of Walton County. The acute care subdistrict includes seven of those counties, Bay, Holmes, Washington, Jackson, Calhoun, Gulf and Franklin. The Rehabilitation Institute of West Florida ("West Florida") is a 58- bed inpatient CMR hospital, located in Pensacola, Florida, in HRS District 1. HRS District 1 encompasses Escambia, Santa Rosa, Okaloosa and Walton Counties. Gulf Coast, in the application at issue in this proceeding, proposes to construct a 50,804 square foot facility with 40 beds for inpatient CMR, at a total cost of $10,009,372. The proposed facility would be connected to the existing outpatient facility which is located on an approximately 10 1/2 acre site owned by Gulf Coast. With the existing facility on the site and two acres set aside for wetlands, Gulf Coast has 5 of the 7 buildable acres remaining. The service area proposed for Gulf Coast includes Bay, Gulf, Franklin, Calhoun, Holmes, Washington, and Jackson Counties in HRS District 2, and Walton and Okaloosa Counties in HRS District 1. Gulf Coast also expects to attract patients from southeast Alabama and southwest Georgia. Letters of Intent Gulf Coast submitted a letter of intent dated October 18, 1990, notifying HRS of its intent to file its application for the proposed 40-bed CMR hospital. Attached to this first letter of intent was a resolution of the partnership, dated October 10, 1990, reciting that approval to file the CON application was given by unanimous vote of the general partners at a meeting held on October 1, 1990. Finally, a list of partners was attached. HRS notified Gulf Coast that the letter of intent did not include a statement that the attached list of partners had a controlling interest in the applicant, as required by an HRS rule which became effective on January 31, 1991. On February 7, 1991, Gulf Coast submitted a second letter of intent which included a statement that the second letter will replace the first letter and a statement that the attached list of general partners held a controlling interest in the applicant. In January 1991, one additional person became a general partner in Gulf Coast, and was included in the list submitted with the February 7, 1991, letter. This additional partner and four others, who became general partners subsequent to February 7, 1991, did not participate in the authorizing resolution of October 1990. By letter dated March 5, 1991, HRS accepted the second letter of intent. The February 7, 1991, letter of intent was accompanied by a resolution stating that the partnership secretary, not the governing body of the applicant, authorized the applicant to incur the project expenses and to accomplish the project within the allowed time at or below the costs in the application. The October 18, 1990, letter of intent had an identical resolution of the secretary attached to it, but it also had one executed on October 10, 1990, which stated that the partnership authorized the applicant's actions, as required by Section 381.709(2)(c), Florida Statutes. HRS and Gulf Coast take the position that by combining the resolution submitted with the October letter of intent with the text and partnership list of the February letter, Gulf Coast submitted a valid letter of intent with the required resolution. Capital Rehabilitation takes the position that each letter must be taken as standing alone and independent of each other, particularly because Gulf Coast stated in the February letter that it replaced the October letter. Capital Rehabilitation also relies on Florida Administrative Code Rule 10-5.008(1)(h), which provides, in relevant part, that If rejected by the department, a letter of intent may not be amended or corrected but a new letter may be submitted if time allows. and, Rule 10-5.008(1)(b): Accompanying the letter of intent must be a certified copy of a resolution by the applicant's board of directors, or other governing authority if not a corporation. (emphasis added). Capital Rehabilitation submitted evidence proving that the 1990 and 1991 annual reports of the partnership, submitted to the Department of State and dated March 19, 1990, and October 24, 1990, respectively, included the name of another general partner, whose name does not appear on either list of partners provided by Gulf Coast to HRS. By the rebuttal testimony of the partnership secretary, who is custodian of the records, and Gulf Coast's Exhibit 18, Gulf Coast demonstrated that the filings with the Department of State were in error. The exhibit, a Withdrawal, Assignment and Indemnity Agreement, shows that the interest of the general partner, whose name was never given to HRS, was not required to be listed because the interest of that partner was terminated on April 4, 1989. Capital Rehabilitation objected to the testimony of the Gulf Coast rebuttal witness, because the secretary of the partnership was not listed on Gulf Coast's witness list. Gulf Coast asserted that its listing of "rebuttal witnesses as necessary" was sufficient. Capital Rehabilitation also challenged the introduction of Gulf Coast's Exhibit 18, the Withdrawal Agreement, which was not specifically listed on Gulf Coast's exhibit list, which stated "rebuttal exhibits as necessary." The parties agree that the applicable standard, established by the Florida Supreme Court in Binger v. King Pest Control, 401 So.2d 1310 (Fla. 1981), is whether it was reasonably foreseeable that the witness would be called to testify. The rebuttal witness, Michael Rohan, was set for deposition by counsel for Capital Rehabilitation, by notice dated November 20, 1991. Capital Rehabilitation's exhibit list included the following, 21. All documents filed by Gulf Coast Rehabilitation Services, Ltd. with the Florida Department of State, including but not limited to its 1989, 1990 and 1991 Annual Reports. In addition, Capital Rehabilitation's pre-hearing statement of position included its allegation . . . that the letters of intent filed by NFIR were not in compliance with the applicable statutory and rule requirements . . . On this basis, Gulf Coast could reasonably foresee the need to call Michael Rohan, secretary of the partnership and custodian of its records, to respond to any discrepancies in those records. The description of Rohan as one of the "rebuttal witnesses as necessary" is inadequate to justify Gulf Coast's use of his testimony under Binger, supra. In the Binger case, an undisclosed privately hired accident reconstruction expert testified as an impeachment witness to contradict the testimony of another expert. As distinguished from that factual situation in this case, Rohan was known to and previously scheduled for deposition by Capital Rehabilitation. Gulf Coast's and Capital Rehabilitation's witness lists also include "any persons whose depositions were taken in this action." Because this description more narrowly includes Rohan, because Capital Rehabilitation cannot claim surprise or any unfairness in Gulf Coast's use of Rohan to explain documents submitted by the partnership, and because Capital Rehabilitation could have also called Rohan as a witness, the legal conclusion in the Binger case is not applicable to this case. The rebuttal exhibit and testimony are received into evidence and are considered in this Recommended Order. Numeric Need Using the formula in Florida Administrative Code Rule 10-5.039, HRS published its determination that no need exists for additional inpatient rehabilitation beds for the January 1996 planning horizon, for which Gulf Coast's application was filed. In fact, if the rule formula is used, Capital Rehabilitation's 40 beds which are full, at approximately 92% occupancy, would constitute a 5 bed surplus for the district. The rule also authorizes the consideration of other factors to determine need, including the historic, current and projected incidence and prevalence of disabling conditions and chronic illness in the district population, and trends in the CMR-bed utilization. See, Rule 10-5.039(2)(b)1, Florida Administrative Code. Gulf Coast proposed to demonstrate need using the incidence and prevalence rates for illnesses and diseases which usually result in a specific percentage of patients who seek rehabilitation services. Using incidence and prevalence rates, as did Capital Rehabilitation in its September 1990 CON application number 6369 for its additional thirty beds, the parties agree that there is a need for not fewer than an additional 19-21 beds in District 2. Gulf Coast, using the incidence and prevalence methodology, asserts that a need exists for as many as an additional 53 CMR beds in District 2. To calculate bed need, Gulf Coast used the same formula as Capital Rehabilitation. However, Gulf Coast used population figures, which include all of District 2, Walton County, and ten percent of its two million tourists a year, or 200,000 people. In equating population to need for CMR beds, Gulf Coast's analysis would provide approximately 20 beds for the district residents, 28 more for 200,000 of two million tourists, and 5 for Walton County. The inclusion of Walton County population in computing District 2 bed need is inconsistent with Florida Administrative Code Rule 10-5.039(2)(b)1. which provides that (b) Other factors to be considered in determining a need for comprehensive medical rehabilitation services in addition to relevant statutory and rule criteria, include: 1. Historic, current and projected incidence and prevalence of disabling conditions and chronic illness in the population in the Department service district by age and sex group. (emphasis added). Gulf Coast has not established that 200,000 tourists should be included within its population to compute need. Although the rule may be construed to include tourists, or seasonal residents, who are counted "in the population in the Department service district," Gulf Coast did not establish a basis to determine what, if any, percentage of injured tourists who are released from acute care hospitals may reasonably be expected to choose rehabilitation services in District 2. It is, in fact, reasonable to assume that tourists may seek CMR services closer to their permanent residences for all of the same reasons advanced by Gulf Coast regarding the inconvenience of Capital Rehabilitation's services to Panama City residents. In addition, if some tourists should be included, their average lengths of stay as tourists in the Panama City area is a factor not established, but necessary to compute accurately their impact on the need for CMR beds in the area. In order to support the addition of 28 beds for 200,000 tourists, Gulf Coast would have had to establish that the 2 million tourists stay an average of 36.5 days. Assuming, as Capital Rehabilitation demonstrated by illustration, that the 2 million tourists stay an average of 7 days, and that tourists should be added to the district population, then the total number of additional beds needed for tourists is 5, not 28. The only data provided by Gulf Coast on average lengths of stay for tourists was that 27,000 tourists stay approximately 5 months. Using that data, 6 additional beds are needed for tourists in addition to the 20 needed for the district population, still less than the 40 beds Gulf Coast is requesting. Additional Standards and Criteria in Florida Administrative Code Rule 10-5.039 Unit Size. As required by the CMR rule, Gulf Coast is proposing to construct a 40-bed facility. Occupancy Standards. In compliance with the CMR rule requiring a projected minimum first year occupancy of sixty-five percent (65%), Gulf Coast reasonably projects an occupancy rate of seventy percent (70%) in the first year. Gulf Coast's projected utilization is based on attracting patients from its primary service area, which includes all or part of the seven western counties in HRS District 2, which are in acute care subdistrict one, and from its secondary service area of Walton and Okaloosa Counties in HRS District 1, southeast Alabama and southwest Georgia. In addition, the average annual occupancy rate for the existing CMR beds in the district, those at Capital Rehabilitation, exceeds the eighty-five percent (85%) threshold used as an indicator of additional need in the rule. HRS has consistently used 85% as a threshold for existing providers in the numeric need methodology, not as an occupancy standard for new providers. Accessibility. With regard to geographic accessibility, Florida Administrative Code Rule 10-5.039(2)(c)3., provides, in relevant part, 3. Accessibility. Applicants for comprehensive rehabilitation services should demonstrate that at least 90% of the target population resides within two hours driving time under average traffic conditions of the location of the proposed facility. HRS interprets the "target population" accessibility requirement as meaning that 90% of those in an applicant's service area, which may be all or part of a district. Accepting this interpretation as reasonable and applying it to the Gulf Coast proposal, the geographic accessibility standard is met. Gulf Coast's proposed service area is within two hours driving time under average traffic conditions of the Gulf Coast facility. Programs and Services. Gulf Coast has established that it will provide the required services by either its staff or by contractual arrangement. Gulf Coast also proposes to provide vocational rehabilitation services beyond those mandated in the rule. Transfer and Referral Agreements. Gulf Coast has letters of support from acute care hospitals in Panama City and Chipley. These letters, and a mutual assistance agreement with one of the hospitals, support a finding that the Gulf Coast will enter into the necessary transfer and referral agreements with acute care facilities. Criteria of Subsection 381.705(1)(a), Florida Statutes - State Health Plan The 1989 Florida State Health Plan is applicable and includes five preferences for CMR beds. The three criteria of the state health plan which are inapplicable to the proposed project are the preferences 1) for the conversion of underutilized acute care beds, 2) for projects at teaching hospitals, and 3) for hospitals which are disproportionate share providers of indigent care. The criterion of the state health plan which is not met is the preference for proposals for rehabilitation services not currently offered within the district. The one preference in the state health plan which the Gulf Coast proposal meets is the preference for existing comprehensive outpatient rehabilitation facility, or CORF, which will provide follow-up outpatient services. Criteria of Subsection 381.705(1)(a), Florida Statutes - District Health Plan At hearing, counsel for Capital Rehabilitation objected to testimony on and challenged the applicability of the District 2 health plan because HRS has failed to adopt by rule the elements of the plan proposed to be used as criteria for review of CON applications. See, Subsection 381.703(1)(b), Florida Statutes. Gulf Coast asserts that the use of the district plan as criteria in the CON review process is mandated by Subsection 381.705(1)(a). The Gulf Coast interpretation is rejected because that reading of Subsection 381.705(1)(a), would render Subsection 381.703(1)(b) meaningless. Subsection 381.705(1)(b) - accessibility, extent of utilization and adequacy of like and existing services within district; Subsection 381.705(1)(f) - accessibility in adjoining areas; Subsection 381.705(1)(h) - accessibility to all district residents; Subsection 381.705(2)(d) - problems in obtaining inpatient care. Gulf Coast asserts that inpatient CMR services available only at Capital Rehabilitation in Tallahassee, in District 2, and West Florida in Pensacola, in District 1, are not accessible under the statutory criteria as defined by HRS. Gulf Coast is currently the only facility between Tallahassee and Pensacola which provides complex interdisciplinary medical treatment and speech, physical and occupational therapies. Accessibility to Capital Rehabilitation, according to Gulf Coast, is affected adversely by Capital Rehabilitation's high occupancy rates. Gulf Coast asserts that access to both Capital Rehabilitation and West Florida is affected adversely by their geographic distances from Panama City. Accessibility Based on Occupancy Capital Rehabilitation, in its CON application for its approved additional 30 beds, submitted in September 1990, noted that it had been averaging over 93% occupancy, with a waiting time of 8.2 days. In fact, Capital Rehabilitation described its facility as ". . . operating at maximum capacity over the last 12 months," and included a waiting list ranging from a low of 6 patients in September 1989 to a high of 48 patients in September 1990. Capital Rehabilitation asserts that its 30 additional beds should be opened before another District 2 facility is approved. In projecting utilization of its additional beds, Capital Rehabilitation expected its 30 new beds to be 50% occupied in the first year. Assuming the continued accuracy of the project completion forecast on Table 26 of the 1990 CON application, these beds became available in July 1992. With continued 95% occupancy in the existing 40 beds, 50% occupancy in year one and 65% in year two in the 30 new beds, then overall occupancy is expected to be 76% in 1992-1993, and 83% in 1993-1994. Gulf Coast's application is for the January 1996 planning horizon. Table 26 in Gulf Coast's application shows that Gulf Coast anticipated opening in December 1993, if its CON application approval had become final agency action on July 8, 1991. With an approximate two and a half year time lag from final approval to initiation of service, Gulf Coast cannot expect to open before early 1995. See, Gulf Coast Exhibit 2 at p. 114. West Florida, the 58-bed CMR hospital in Pensacola, has experienced occupancy levels of approximately 67% in 1990. Capital Rehabilitation noted that West Florida is within two hours travel time of western Bay County. In addition, Capital Rehabilitation presented evidence that facilities in Alabama and Georgia also provide inpatient CMR services. West Florida does have the bed capacity to serve Panama City residents, if it is geographically accessible to them. Accessibility Due to Distance Gulf Coast, using Governor's Office projections, demonstrated the following population trends: (1) that 34% of the district population lives in Bay, Gulf, Holmes and Washington Counties; (2) that a 13% population increase is projected from 1991-1996 for Bay County; (3) that 10% of the Bay County population is over 65 years of age; (4) by contrast, an 11% population increase is projected for Leon County, and 7.5% of the Leon County population is over 65 years of age. Gulf Coast also demonstrated that it would reasonably expect to serve a large number of military personnel and veterans in its area. The Associate Executive Director of the Big Bend Health Council and the Northwest Florida Health Council, local health councils for HRS Districts 1 and 2, respectively, testified that the map Gulf Coast included in its application, was taken from his agencies' travel time studies. The studies are based on 18 to 20 trips done by various staff members. Those studies demonstrated that 23% of the District 2 population, in portions of Holmes, Washington, Gulf and all of Bay County, is beyond two hours travel time of either West Florida or Capital Rehabilitation in 1985. Gulf Coast's expert also conducted a travel time study and concluded that the areas beyond two hours of either the Pensacola or Tallahassee facilities include all of Bay County, except a small portion in the northeast, most of Washington and Holmes and all of Gulf County. Gulf Coast concluded that well over 10% of the district population is beyond two hour access of CMR beds. Gulf Coast's expert's methods and conclusions are questionable due to its inclusion of stops for gas and food. Capital Rehabilitation's expert, who conducted a travel time study, found that a large portion of Bay County is within two hours of Capital Rehabilitation Hospital, and that significant portions of western Bay County are within two hours of West Florida. The conclusion was that virtually all of District 2 residents are within two hours of one or the other facility. This study was not conducted in compliance with recognized procedures, including having been based, in part, on one trip in which the driver left Tallahassee at 4:00 p.m. The most reliable, objective travel time information, was that provided by the Associate Executive Director of the local health councils for Districts 1 and 2. His conclusion that 23% of the District 2 population is more than two hours driving time under average traffic conditions from Capital Rehabilitation or West Florida is accepted. On this basis, the two existing facilities are geographically inaccessible for almost one fourth of the District 2 population. Capital Rehabilitation asserted that the travel time standard in combination with the "target" population standard should be read to require that a facility be located within two hours average travel time of a least 90% of the total district population, not just the facility's target population. In fact, the wording of the proposed new CMR rule will adopt this interpretation. Given the deposition testimony of the HRS staff person responsible for the new CMR rule that the standard in the new rule will be different from, not a codification of the agency's current interpretation of the existing rule, the interpretation suggested by Capital Rehabilitation is rejected. Finally, Capital Rehabilitation was allowed to cross-examine the Associate Executive Director of the local health council on contradictory statements in the local health plan. For this limited purpose, statements in the local health plan are considered in arriving at this finding. Subsection 381.705(1)(b) - Quality of Care, Efficiency, Appropriateness of Like and Existing Health Care Services in the District and Subsection 381.705(2)(b) - Appropriate and Efficient Use of Existing Inpatient Facilities There was evidence of isolated complaints from Panama City doctors regarding Capital Rehabilitation's failure to timely provide them with discharge reports on patients, and of the disadvantages to patients' relatives having to travel between Panama City and Tallahassee. In spite of such isolated complaints, the evidence demonstrates that Capital Rehabilitation, the only inpatient comprehensive rehabilitation hospital in District 2, is providing excellent quality of care. Its ability to provide services efficiently, appropriately and adequately is compromised, as noted above, only by its current high occupancy levels and relative distance from extreme western portion of the District, the Panama City area. See, Findings of Fact 36-38 and 41-45. Subsection 381.705(1)(c) - Applicant Ability and Record on Quality of Care, Subsection 381.705(1)(l) - Construction Methods; and Subsection 381.705(2)(e) - Less Costly Alternatives The evidence demonstrates that the applicant provides good quality of care as an outpatient facility, and that it has the ability to do so as an inpatient facility. Capital Rehabilitation contends that Gulf Coast's construction costs are not reasonable and that Gulf Coast cannot provide quality rehabilitative programs and therapies in the spaces allocated on its schematic design. Gulf Coast has two patient lounges designated for one 20-bed wing, but none for the other; and no separately designated space for activities of daily living. Gulf Coast's total size and project costs are conceded to be adequate for a 40-bed CMR inpatient hospital. In some instances, Capital Rehabilitation also pointed out inconsistencies in Gulf Coast's proposed staffing patterns and schematic design, including seven offices for four speech therapists, six spaces for two social worker/psychologists, space for case management with no case managers, one community relations employee in an area capable of accommodating 5 to 6 people, and an x-ray suite despite its plan to provide that service initially by contract. The Gulf Coast application is not well prepared, but the sources relied upon in projecting construction costs are reliable and the resulting projection is reasonable. In addition, the excess spaces designated for non- existent positions support the conclusion that the redesignation of spaces on the next set of HRS-required construction documents can correct any defects in Gulf Coast's schematic design. Subsections 381.705(1)(b) and (d), Florida Statutes - Availability and Adequacy of Alternatives in the District; Subsection 381.705(2)(a) - Efficient Use of Other Inpatient Services; Subsection 381.705(2)(c) - Alternatives to New Construction Capital Rehabilitation is the only available inpatient facility in the district. As previously noted, its availability and adequacy for Panama City area residents is adversely affected by its current high occupancy and distance from the Gulf Coast target area. See Finding of Fact 47. Due to the difference in the needs for non-ambulatory rehabilitation patients, the intensity of the therapy provided in inpatient rehabilitation hospitals and the savings in avoiding readmissions to acute care hospitals, outpatient facilities are not an adequate alternative for some rehabilitation patients. Similarly, although a preference is given in the state health plan for the conversion of underutilized acute care beds, the Bay County acute care hospitals could not qualify for the preference due to their high occupancy rates. Capital Rehabilitation does indicate correctly that the acute care hospitals could be approved for a minimum size of 20 rather than 40 beds, but they are not applicants in this proceeding. Whether the acute care hospitals as CON applicants would be superior to the one at issue is speculative. Subsection 381.705(1)(e) - Economies From Operation of Joint Health Care Resources The proposal to establish an inpatient CMR hospital which is connected to an outpatient rehabilitation facility, in part, offers some of the advantages of providing joint health care services which use shared resources. For example, Gulf Coast has already spent $1,200,000 in equipment for its outpatient facility and will need an additional $760,000 in equipment to accommodate the demand as an inpatient facility. The total of almost $2 million is adequate. By contrast, according to Capital Rehabilitation, if Gulf Coast were proposing to construct a 40-bed inpatient facility without the existing outpatient component, it would spend from $25,000 to $30,000 per bed for equipment. The proposal by Gulf Coast may allow the use of equipment and staff in the area of greatest need at any given time. Subsection 381.705(1)(g) - Research and Educational Facilities No research or training programs are proposed in the Gulf Coast project. There was, however, testimony of a willingness to cooperate with the Florida State University Panama City campus, and to assist in establishing a physical therapy assistants program at a community college in the area. Subsection 381.705(1)(h) - Resources, Manpower and Management Gulf Coast currently employs many categories of professionals needed for an inpatient program. Gulf Coast demonstrated that its working conditions and desirable geographic locations are advantages in recruiting capable staff and management. Capital Rehabilitation asserts that Gulf Coast will need more than one public relations/marketing person. However, Capital Rehabilitation's experience is based on recruitment throughout District 2, while Gulf Coast will target approximately one-fourth of the district population. West Florida, however, which has a similar desirable coastal location, has been unable to recruit a medical director since 1989, even with the help of three consulting firms. Gulf Coast could be more successful than West Florida if its recruiters are instructed not to be xenophobic. 1/ Subsection 381.705(1)(j) - Special Needs of Health Maintenance Organizations There was no evidence to show that health maintenance organizations are affected by Gulf Coast's proposal. Subsection 381.705(1)(h) - Funds to accomplish project; Subsection 381.705(1)(i) - immediate and long-term financial feasibility Capital Rehabilitation challenged the Gulf Coast pro forma, asserting that the bottom line would be losses of $800,000 in the first year and $200,000 in the second year rather than $157,760 loss in the first year and $288,702 profit in the second year. Inaccuracies, according to Capital Rehabilitation, include under estimated 1) deductions from revenue, 2) interest, 3) depreciation, 4) equipment and supply costs, and 5) staff requirements and salaries. Gulf Coast estimated deductions from revenue at 29% of its charges. Capital Rehabilitation estimates that Gulf Coast will not recover between 32 and 38% of its charges. Capital Rehabilitation's estimate of deductions from revenue in its pro forma for its 30-bed expansion ranged from 27% for its first year to 29% for its second year. In addition, Gulf Coast demonstrated that hospitals reasonably expect to receive more favorable Medicare and Medicaid reimbursements in the first years of operation. On this basis, Gulf Coast's estimated deductions for revenue and projected charges are reasonable. Gulf Coast failed to calculate depreciation based on the list of assets included in its CON application. Capital Rehabilitation objected that Gulf Coast impermissibly sought to amend its application at hearing by introducing testimony correcting the mathematical inconsistencies within the application. Recalculating the information provided and based on Capital Rehabilitation's experts testimony that Gulf Coast has some flexibility in determining whether items are capitalized or listed as non-capitalized minor equipment or facilities, Gulf Coast has established that its corrected estimated depreciation ($290,000 a year, rather than $265,000 in year one and $344,000 in year two) is reasonable. Similarly, Gulf Coast's calculation of interest on a total project cost at a specified interest rate (9 %) which is included in its application yields a result inconsistent with the total project cost ($10 million) which is also listed in the application at hearing. At hearing, the inconsistent was resolved by a witness recomputing interest. Corrected figures are $948,248 in year one, and $941.000 in year two at 9 %. However, with declining interest rates, as of the date of the hearing in this case, at 7 %, interest would be between $770,000-775,000 a year. Gulf Coast's corrected interest estimate is reasonable, given declining interest rates since the time the application was filed. Gulf Coast's proposed equipment costs are reasonable, based on Capital Rehabilitation's estimate of the need for $25,000 to $30,000 per bed, with equipment available at NFIR and additional equipment purchases by Gulf Coast totaling in excess of $1.9 million, or approximately $48,000 per bed. Assuming that some of the existing equipment is not appropriate for use for inpatients, Gulf Coast's per bed equipment costs significantly exceeds the necessary minimum estimated by Capital Rehabilitation. Supply costs, projected in Gulf Coast's pro forma, are higher in year one than year two. Capital Rehabilitation contends that supplies needed are always proportionate to the beds occupied and, it is therefore, impossible to have rising occupancy and decreasing supply costs. Gulf Coast has demonstrated that items, listed as supplies because the value is below that for capitalized equipment, and those purchased in the first year but continuing to be used in the second year, can account for decreasing second year costs. Projected salaries are based on those actually paid at Gulf Coast for most of the same categories of employees and are reasonable. Finally, with regard to financial feasibility, Capital Rehabilitation asserts that Gulf Coast cannot obtain 100% financing and has no partnership funds available to commit to the project. Gulf Cost does have letters of interest in the project, one for up to $14 million. In addition, the financial history of the partnership demonstrates its reliance on equity contributions of the partners, and that such contributions have been made. Given the testimony of Capital Rehabilitation's expert that first year losses are not atypical and the reasonableness of Gulf Coast's projected fill rate, Gulf Coast has demonstrated that its proposal is financially feasible in the immediate and long term. With corrected interest and depreciation, the project continues to be profitable in the second year. Subsection 381.705(1)(e) - impact on costs of providing services proposed; effects of competition Capital Rehabilitation estimates that it will lose $617,000. The projected decline in patient days is 3%, the total number of patient days attributable to the Panama City area. Capital Rehabilitation also believes it will experience difficulty in recruiting specialized staff. Capital Rehabilitation, in its 1990 CON application, described a well- developed recruitment program in conjunction with Florida State University and Florida A & M University. Gulf Coast will target the Panama City Community College and Florida State University campus in Panama City. The independent recruitment sources indicate the reasonableness of adequate staff being available to both facilities. Assuming a decline of 3% in Capital Rehabilitation's patient days, if Gulf Coast could be operational, in December 1993, as originally projected, the impact would be minimal on Capital Rehabilitation's 1993-1994 projected occupancy rate of 83% and would not affect the qualify of care provided at Capital Rehabilitation, given the fact that 85% occupancy is a prima facia numeric indicator that additional CMR beds are needed in a district. Subsection 381.705(1)(n) - Medicaid and medically indigent services Gulf Coast provides approximately 6% indigent care, and is willing to have its CON application conditioned on providing 7% charity care and 5% Medicaid.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered approving certificate of need application number 6573 of Gulf Coast Rehabilitative Services Limited, d/b/a North Florida Institute, to establish a 40-bed inpatient comprehensive medical rehabilitation hospital in Panama City, Florida, conditioned upon the provision of 5% of total annual patient days to Medicaid patients and a minimum of 7% of total annual patient days to charity care patients. DONE and ENTERED this 29th day of September, 1992, at Tallahassee, 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 29th day of September, 1992.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that respondent's decision to deny petitioner's capital expenditure proposal to lease the Cambridge Convalescent Center in Tampa be AFFIRMED. Respectfully submitted and entered this 9th day of September, 1977, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. Art Forehand Administrator Office of Community Medical Facilities Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Frank M. Gafford, Esquire Post Office Box 1789 Lake City, Florida 32055 Chriss Walker, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue By this action Petitioner seeks to recover costs, expenses and damages associated with state response to an oil spill incident occurring February 26, 1987, within three miles of the Florida shoreline. Respondent's vessel was responsible for that spill. In particular the costs, expenses and damages claimed are related to salaries, per diem allowances, Federal Express charges, beach sand replacement, equipment, use of a cellular phone, and consulting work at the shore and off site. Petitioner also seeks damages for bird mortality resulting from the spill. See Chapter 376, Florida Statutes, and Chapter 16N- 16, Florida Administrative Code.
Findings Of Fact On the evening of February 26, 1987, the motor vessel Fernpassat struck the south jetty at the entrance to the St. Johns River at a location within three miles of the Florida shoreline. In doing so it ruptured the hull and spilled a substantial amount of heavy fuel oil. The type of the oil was No. 5 or 6 Bunker C. A preliminary estimate placed the amount of oil in excess of 100,000 gallons. While the true amount may have been somewhat less, it was a significant spill in that it substantially threatened the public's welfare and the environment and generated wide public interest. Petitioner's exhibit 3 is a map which depicts the basic location where the vessel collided with the jetty with an "X" mark. The area impacted by the discharge ran from roughly Atlantic Beach, Florida, to Guana State Park in St. Augustine, Florida. This is approximately 25 miles of beach front. Beach property over which Petitioner has regulatory and proprietary responsibility had oil deposited upon it. The oil spill killed or injured a number of birds. The event was responded to by the "Federal Region IV Regional Response Team" (RRT). The federal on-scene coordinator (OSC) was Captain Matthew Woods, U.S. Coast Guard. The RRT, through management and control provided by the OSC, took necessary steps to combat the effects of the spill. Respondent immediately accepted responsibility for the cleanup through the use of a consultant and cleanup contractor. Under this arrangement the OSC monitored the contractor's cleanup efforts to make certain that the job was done satisfactorily. Florida officials were part of the RRT. Rule 16N-16.009(21), Florida Administrative Code, calls for personnel from Petitioner; the State of Florida, Department of Environmental Regulation (DER); and the State of Florida, Department of Community Affairs (DCA) to represent state interests as members of the RRT. Each of these agencies participated as members of the RRT. This furthered the legislative intent expressed at Section 376.021(6), Florida Statutes, to support the RRT through implementation of the "Federal Water Pollution Control Act," which is also known as the "Clean Water Act," 33 U.S.C. ss. 1251-1376. By its efforts the RRT promoted the removal of the oil in accordance with a national contingency plan. Pursuant to Section 376.021(6), Florida Statutes, the state is expected to complement applicable provisions within the "Federal Water Pollution Control Act" as well as render the support previously described. Both the support and complementary functions of the state are part of Florida's "Pollutant Spill and Prevention Control Act," Sections 376.011-376.17, 376.19-376.21, Florida Statutes. Chapters 16N-16, Florida Administrative Code, more completely identifies the role played by the state agencies in this instance. This chapter was adopted pursuant to authority set out in Section 376.07, Florida Statutes, which, among other things, empowered Petitioner to make rules which developed and implemented criteria and plans to respond to spills such as the one at issue. In its complementary role the state has established a "State Response Team" (SRT). This organization in defined at Rule 16N-16.009(13), Florida Administrative Code. It is constituted of predesignated state agencies available continually to respond to a major spill. This incident was a major spill or discharge as defined in Rule 16N-16.009(18), Florida Administrative Code. The predesignated state agencies, pursuant to the rule defining the SRT and Section 376.07(2)(e), Florida Statutes, act independently of the federal authorities, although they are expected to cooperate with the federal authorities in the efforts at cleanup. What that meant here is that notwithstanding the concerns which Captain Woods had and the state participation in the RRT through Petitioner, DER and DCA, there was a parallel function by the SRT which had its own mandate. This allowed the SRT to pursue an independent agenda in the spirit of cooperation with the OSC in an attempt to protect the resources over which the state has jurisdiction, including the beach front and birds. Both Captain Woods and the consultant to the spiller, James L. O'Brien, who is a man of considerable credentials in giving advice about oil spill problems, expressed their understanding of the interests which the state might have in carrying out its functions and did not find that reality a hindrance in performing their duties. As a result, even though state employees and equipment and consultants to the state had limited utility for the OSC and the consultant to the spiller in carrying out their duties, it does not follow that claims by the state for reimbursement in categories set out in the statement of issues must fail unless found to support the OSC or spiller's choice in attempts at cleanup. The question is whether the costs, expenses and damages are reasonably related to support for the RRT or complementary of that function through the SRT and owed or expended from the Florida Coastal Protection Trust Fund (Fund) for recoverable items. See Section 376.11, Florida Statutes. Petitioner's exhibit 15 is a copy of the state contingency plan. See Section 376.07(2)(e), Florida Statutes. It identifies the membership of Petitioner, DER and DCA. Other claimants for costs, expenses, and damages who were involved in the response to this incident as predesignated agencies are the Florida Game and Fresh Water Fish Commission (Commission), the State of Florida, Department of Transportation (DOT), and the Attorney General. The state contingency plan explains the operational responsibilities of state agencies when responding to the incident. This is a more specific reference to those responsibilities as envisioned by the general guidelines announced in the "Pollution Spill Prevention and Control Act." Having considered the testimony and exhibits in the context of the state support and complementary role in responding to the spill contemplated by the aforementioned laws, regulations and contingency plans, the costs, expenses and damages sought by the Petitioner are reasonably related to those purposes. Those costs, expenses and damages are detailed in Petitioner's exhibit 16 and summarized in Petitioner's exhibits 8 and 9. With the exception of $15,654.37 in costs and expenses for Petitioner's Executive Office and Division of Law Enforcement and $3,336.16 for salaries for the Commission, DOT and DCA, all claims for expenses and costs have been paid from the Fund. Petitioner wishes to impose the costs, expenses and damages in the state response whether or not claims were disbursed from the Fund. The damage claim associated with future beach re-nourishment by replacement of sand that had been befouled by oil and needed to be removed is a reasonable claim in the amount of $10,222.50. It has been paid from the Fund and is held in the Erosion Control Trust Fund until needed. The on-scene consulting fee of $3,525.00 and the oil spill assessment study fee of $9,880.00 commissioned by Petitioner through Jacksonville University are reasonably related to the Department's role in response to the spill. As Petitioner's exhibit 8 depicts, $30,312.53 has been disbursed from the Fund in costs, expenses and damages reasonably related to the response to the spill. There remains unpaid from the Fund the aforementioned costs and expenses in the amount of $18,990.53 which are reasonably related to the response to the spill. Those latter amounts, although presented for payment from the Fund by the agencies in question, were not paid, based upon some fiscal anomaly. By inference, it does not appear from this record that the Fund owes the agencies for these claims. According to Section 376.13, Florida Statutes, on February 27, 1987, Governor Martinez declared a state of emergency in response to the oil spill. That proclamation was withdrawn on March 25, 1987. The activities for which claims for costs and expenses are advanced transpired in the time frame of the state of emergency declaration. The amount which Respondent has expended in the cleanup effort is $700,000 plus or minus $200,000. None of this money has been paid to satisfy claims for costs, expenses and damages previously described. While it has been found that costs, expenses, and damages are reasonably related to the state's purposes in responding to the spill, not all items are recoverable. They are only recoverable if recognized for recovery by Chapter 376, Florida Statutes, and Chapter 16N-16, Florida Administrative Code, and owed or expended from the Fund. Petitioner's claims in its exhibit 8 in the amount of $12,901.30 and DOT claims for $675.19 in that exhibit qualify for recovery as well as the on-scene consulting fee of $3,525.00. Other claims do not qualify with the exception of a limited recovery for bird mortality. Reasons for this fact finding are set forth in the conclusions of law. Petitioner has disbursed $176,058.00 to the Commission for damages related to alleged bird mortality. This money was disbursed from the Fund. Petitioner now concedes that the amount should be reduced by half. This recognizes that the cost estimate for damages dealt with pairs of birds not single birds. Petitioner now asks for $88,075.00. Two hundred fourteen (214) birds are said to have died as a result of the spill, according to Petitioner. Petitioner seeks damages for each of these birds. The number proven to have been killed by the event and the theory upon which the damage claim is predicated leads to a result which diminishes the claim for reasons to be explained. As with other claims, Section 376.021.(4)(c), Florida Statutes, anticipates the payment of damages from the Fund. Section 376.11(1), Florida Statutes, is in aid of recovery of damages, as is Section 376.11(4)(d), Florida Statutes. However, these claims must be susceptible to proof that readily identifies and explains valuation methods of the birds and recognizes the predicate of establishing the actual number lost in this episode. For the most part, Petitioner has failed in the endeavor. Mark Damian Duda is a wildlife biologist with the Commission. He earned a bachelor of science degree from West Virginia University and received his master's degree in natural resource policy and planning from Yale University, both with honors. He was assigned the task of trying to arrive at an acceptable method for valuing birds that had been killed. His assessment is generally set forth in a report, a copy of which is Respondent's exhibit 3. Having considered a number of options, he reached the decision to employ what he describes as the replacement value method. Quoting from his report concerning this method, he has this to say: Replacement Value Method We believe the replacement value method is the most useful and logical method to determine the value of wildlife lost in the February 27 Jacksonville oil spill. A replacement cost approach can avoid many of the problems involved in attempting to estimate the use of value of biological resources. Under the replacement cost approach, the resource is valued at what it would cost to replace it. If the resource is replaced, the problems of identifying all its uses, the monetary value of these uses, and the users affected by the resource loss are eliminated, except for the period between the initial loss and the replacement. Four Florida institutions were asked to estimate the cost of obtaining specimens of the birds killed in the Jacksonville oil spill, or the price at which they would be willing to sell members of each species. Their estimates are shown in Table 4. One problem with most of these estimates is that they are not true replacements costs; but rather the cost of collecting already existing specimens from the wild and redistributing them to the Jacksonville Area. This does not represent true replacement, since true replacement requires a complete recovery of the species population. This can be most clearly assured by using only captive breeding programs for replacement. However, many of the species in this list probably cannot be bred in captivity. Therefore, true replacement of these species through captive breeding is probably impossible. It is absurd to value them at zero since they cannot be replaced. Therefore, this section presents some calculations on the assumption that they could be redistributed or replaced. Table 1 presents the replacement costs for the birds. The numbers were derived by multiplying the number of dead birds times the average replacement costs given in Table 4. Using this approach, the total replacement costs for the birds estimated to have been killed in the Jacksonville oil spill is $176,058.00. It should be noted that we use a deliberately conservative approach, using body counts only, and thereby underestimating the total mortality. There is an increasing amount of scientific literature indicating that actual body counts appear to significantly underestimate the total mortality resulting from a spill. For example, there have been a variety of experiments that show only 5 percent to 25 percent of the birds that die at sea, wash in or beach themselves on shore. The percent of loons found is probably even lower because of their low buoyancy and wide-ranging distribution. An alternative approach to estimating replacement costs is to estimate the cost of creating new habitat or enhancing existing habitat to support enough nesting pairs of each species to replenish the population. Again, to represent true replacement costs, this should be new or enhances habitat, not just the cost of acquiring already existing habitat. Tables 1 and 4 within Respondent's exhibit 3 are replicated here for convenience as Appendix 2 and Appendix 3, respectively. The numbers of birds shown in Duda's table are not numbers about which he has direct knowledge. They are numbers purportedly obtained from Tim O'Meara and Peter Southall, biologists who work for the Commission who got their information from the Central Region and Northeast Region, respectively. In particular, they allegedly received their information from rehabilitators working in the two regions. Neither biologist testified at hearing, and the exhibits do not satisfactorily establish what involvement the biologists had in a direct inventory of birds, if any, or the other sources of their information which was then given to Duda in preparing his report. The rehabilitators in the Central Region did not testify nor were any exhibits presented which spoke to records kept by those individuals that set out bird deaths in that area. The only person who presented any reliable information concerning bird mortality was Cindy Mosling, rehabilitator in the Northeast Region. Any records which she maintained were not produced at hearing. Nonetheless, she did remember some details concerning bird mortality, and from this testimony 56 common loons, 3 gannets, 1 black skimmer and 2 hooded mergansers are found to have died as a result of the oil spill. The replacement value method by Duda speaks to the fact that his method does not constitute a complete recovery of the species population. Instead, what is shown in Respondent's exhibit 3 is averaging of estimates from Table 4 on costs for collecting existing specimens from the wild and releasing them back to the Jacksonville area after a period as opposed to a captive breeding program. That explanation is not correct, either, because there is no intention to release birds to the wild after raising them or rehabilitating them in captivity in one of the Florida institutions mentioned in Table 4. Moreover, only one of those programs has been relied upon by Petitioner in arriving at a cost estimate. That program is Sea World. As a consequence, the cost analysis in Table 1 related to hooded mergansers is incorrect in that it reflects an average of $150 and not the $200 quoted by Sea world. Again, the prices reflect pairs and not single birds. Robin Friday is the curator from Sea World who supplied cost estimates for pairs in Table 4 to Respondent's exhibit 3. He arrived at his price estimates in a 15 to 20 minute telephone conversation with Duda. To the extent he had no actual experience with price lists reflecting cost of a specie, he assumed that theoretical permits would be issued to collect live birds or eggs in the wild and that he would keep them in a captive environment, hoping they would breed while in captivity. In the latter category, the costs to promote the outcome of breeding in captivity formed his estimate. It can be seen that this departs from Duda's method for valuation. Notwithstanding this fact, Duda relied upon the price quotation by Friday. The main species of birds which Friday has had experience with are waterfowl. Of the species which have been verified as lost in this incident, he had had experience with common loons and hooded mergansers. The hooded merganser is a waterfowl with which he has close experience in breeding, acquisition and disposition. The common loon is a shore bird. In his career he has worked to rehabilitate two or three of those birds. He has had no experience with gannets and black skimmers, which are shore birds. As Friday identified, waterfowl may be sold, shore birds may not. Sale of the shore birds is prohibited by law. His price quotes for the hooded mergansers are from actual experience in sales. His quotations on the other species are matters of conjecture in collecting, housing, feeding and establishing a breeding program for them based upon limited experience in rehabilitating common loons and no experience with gannets and the black skimmer. The price estimate on the hooded merganser of $100 per bird is accepted. The price estimates for common loons, gannets and black skimmers are not. They are too speculative. Jean Benchinol is a curator in Gulf Breeze, Florida, who works for Animal Park, Inc. She testified at hearing. She was presented as a witness who could corroborate the Friday opinion on bird valuation. Her cost estimates may be found as Petitioner's exhibit 14, quotes for single birds. She has had direct involvement with hooded mergansers. She has sold those birds and quoted the price at hearing as being $100. This coincides with the price per bird quoted by Friday. For other birds in her price estimates that cannot be bought and sold and that remain at issue here, that is, common loons, gannets and the black skimmer, she categorized them as capable of surviving in captivity or not. The black skimmers can live in captivity and the common loon and gannet cannot, according to the witness. She had had a common loon in captivity before and noted that it did not do well, being more receptive to northern climes. At hearing her opinion about birds that could not survive in the Florida environment was rejected. In this final analysis, that refers to the common loons and gannets. Likewise, having considered her explanation concerning her valuation for the black skimmer, that opinion is rejected. In rejecting this method, the cross examination at hearing concerning valuation for the royal tern was significant in that it pointed out the inexact and unreliable nature of the method. This method contemplated receiving a live bird in her facility and the costs for medication, housing, feeding and staff time for approximately 60 days. In summary, on the subject of bird mortality, there is no inherent prohibition against valuation; birds do have a value that can be measured in monetary terms. Here the effort to arrive at that understanding fails in the inventory of casualties and method of valuation, with a limited exception. It is also observed that the Respondent had paid the rehabilitators to house, feed and nurse birds back to health that were injured, a similar activity to the theoretical exercise envisioned by Duda, Friday and Benchinol.
Recommendation Based upon the consideration of the facts and the conclusions of law reached, it is, RECOMMENDED: That a Final Order be entered which requires the Respondent to reimburse the Fund in the amount of $17,301.58 and dismisses all other charges against Respondent. DONE and ENTERED this 26th day of July, 1990, in Tallahassee, Florida. CHARLES C. ADAMS, 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 26th day of July, 1990. APPENDIX 1 The following discussion is given concerning the proposed facts of the parties. Petitioner's Facts Paragraphs 1 and 2 are subordinate to facts found. Paragraph 3 is not necessary to the resolution of the dispute. Paragraphs 4 and 5 are subordinate to facts found. The first two sentences of Paragraph 6 are subordinate to facts found. The last two sentences are not necessary to the resolution of the dispute. Paragraph 7 is not necessary to the resolution of the dispute. Paragraph 8 is subordinate to facts found. The first two sentences of Paragraph 9 are subordinate to facts found. While it is agreed that the correspondence from Petitioner to Respondent did not indicate that claims for costs and expenses were only subject to collection if paid from the Florida Coastal Protection Trust Fund, in the administrative forum recoupment of costs, expenses and damages may only be permitted for monies owed or expended from the fund. Paragraphs 10-13 are subordinate to facts found. It is acknowledged as set forth in Paragraph 14 that money was transferred from Coastal Protection Trust Fund to the Erosion Control Trust Fund for future beach renourishment. The more relevant fact is whether the claim for damages of value under the renourishment is legitimate and that determination has been made favoring the Petitioner. The concept of using the funds that are being held for purposes of future renourishment is in keeping with a reasonable disposition of the damage claim. Paragraphs 15-24 are subordinate to facts found. The first sentence to Paragraph 25 is contrary to facts found. The second sentence is subordinate to facts found. The third sentence is an accurate statement of what Table 1 contributes but the findings in that table are rejected in part. The first sentence to Paragraph 26 is subordinate to facts found. The second sentence is accepted in the sense of recognizing that a list was maintained; however, that list was not produced at hearing as an aide in determining the number of birds that were killed. The third sentence is rejected. The fourth and fifth sentences are knowledged and those underlying facts were taken into account in accepting the representations by the witness Mosling concerning the number of birds that died as a result of the oil spill which she could recall. Paragraph 27 is subordinate to facts found. Paragraph 28 is subordinate to facts found. Paragraph 29 is not necessary to the resolution of the dispute. The first sentence to Paragraph 30 is subordinate to facts found. The second sentence is not necessary to the resolution of the dispute. The first sentence to Paragraph 31 is subordinate to facts found. The second sentence is accepted with the exception that certain categories of water fowl are bought and sold in the free market. Concerning the third sentence, while it is acknowledged that curators are the better persons to attempt valuation, they must have sufficient understanding of the varieties on which they are commenting to have their opinions accepted and their methods of analysis of costs must stand scrutiny. This was not achieved in this instance. The last sentence in Paragraph 31 is not accepted in that the replacement value method was not adequately explained and does not allow a ranking of whether it is inexpensive, or cheaper or some where in the middle. Paragraph 32 is subordinate to facts found. The first sentence to Paragraph 33 is subordinate to facts found. The second sentence is subordinate to facts found as it references hooded mergansers. The other references are to species which have not been found to have been lost to the spill. The last sentence is accepted in the sense that the remaining species have limitations placed upon their use by state and federal law which prohibits the buying and selling. Paragraph 34 in its reference to the cost of hooded mergansers is accepted. The balance of the information was not utilized in that the Petitioner failed to demonstrate that other species had been lost to the spill. In Paragraph 35 of the species that testimony was presented about, only the common loon, gannets and black skimmer pertain. While it is acknowledged that the method that the witness Friday used to estimate the value of those species is an accurate portrayal of his efforts, those efforts were rejected as were those of Ms. Benchinol described in Paragraph 36. In Paragraph 36 the explanation of her methods is correct. The methods were not accepted either in support of the testimony by Friday or in her own right. There is no significance to the discussion concerning the brown pelican and inadequate proof was made that the brown pelicans were lost. Respondent's Facts The first sentence to Paragraphs 1 is subordinate to facts found. The last two sentences are not necessary to the resolution of the dispute. As to Paragraph 2, it is acknowledged that Mr. Healey served as the liaison to the RRT and OSC. In the second sentence to that paragraph it is accepted that the state supports the RRT. It also has the function to compliment the RRT and to act independent of the federal response. The first sentence to Paragraph 3 is subordinate to facts found. The second and third sentences are not necessary to the resolution of the dispute. The fourth and fifth sentences are subordinate to facts found. While Paragraph 4 accurately describes the circumstance, this did not deter the state from pursuing its independent function in responding to the spill event. Paragraph 5 accurately portrays the OCS's idea of who was necessary to support the federal response. It does not preclude the activities of other state employees in carrying out their functions. Paragraph 6 is contrary to facts found. Paragraph 7 is a correct statement but does not preclude the state's efforts in its own right at responding to the spill. Paragraph 8 is subordinate to facts found. Paragraph 9 while an accurate portrayal does not preclude the state in its efforts. The same pertains to Paragraph 10. Paragraph 11 is contrary to facts found. Paragraph 12 is subordinate to facts found. Paragraph 13 is contrary to facts found as is Paragraph 14. Paragraph 15 is subordinate to facts found. Paragraph 16 is not relevant. Paragraph 17 is an accurate portrayal of the federal use of the state helicopter but does not preclude request for reimbursement for uses which the state had of that helicopter. Paragraph 18 is subordinate to facts found. The first two sentences within Paragraph 19 are subordinate to facts found. The third and fourth sentences are not relevant to the issue of whether the state was entitled to seek the assistance or Jacksonville University for its own purposes distinct from those of the federal response. The latter sentence is a correct portrayal of the outcome but for reasons different than contemplated by the Respondent. Paragraph 20 is subordinate to facts found. Paragraph 21 is subordinate to facts found. Paragraph 22 is subordinate to facts found in its first two sentences. The third sentence is not accepted beyond the fact that the Department of Interior using a nonconsumptive use technique, whether other federal agencies use that method was not subject to determination from the record. The first three sentences to Paragraph 23 are not necessary to the resolution of the dispute. The fourth sentence is not accepted. The fifth and sixth sentences are subordinate to facts found. As to the seventh sentence, it is not clear that there was the intention of redistributing to the Jacksonville area. The eighth sentence is subordinate to facts found. Paragraph 24 is subordinate to facts found as are Paragraphs 25 and 26. The suggestion of the price for hooded mergansers as set out in Paragraph 27 is not accepted. The lesser scaup was not found to have been lost to the spill. The state price of $100.00 per bird for hooded mergansers is accepted. Paragraphs 28-31 are subordinate to facts found as it pertains to the species that were proven to have been lost. Paragraph 32 is not necessary to the resolution of the dispute. Paragraphs 33 and 34 are subordinate to facts found, with the exception that it has been determined that the number of dead birds which Ms. Mosling can recall involvement with is accepted. Paragraphs 35 through 37 are subordinate to facts found in the species determined to have been lost, with the exception that the actual price for hooded mergansers was $100. COPIES FURNISHED: Tom Gardner, Executive Director Department of Natural Resources 3900 Commonwealth Boulevard Tallahassee, FL 32399 Kenneth J. Plante, General Counsel Lynn M. Finnegan, Assistant General Counsel Department of Natural Resources 3900 Commonwealth Boulevard Tallahassee, FL 32399 Robert B. Parrish, Esquire James F. Moody, Jr., Esquire Taylor, Moseley & Joyner 501 West Bay Street Jacksonville, FL 32202
The Issue Whether Respondent's Leasing Manual HRS M 70-1 is a rule and, if so, is it an invalid exercise of delegated legislative authority?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The Department's Leasing Manual HRS M 70-1 (Manual) sets out the procedure to be followed when the Department is seeking to lease space of 2,000 square feet or more in privately owned buildings. Within this manual are the forms to be utilized for this purpose and, among other forms, is an Invitation to Bid (ITB) For Existing Facilities packet that contains a Bid Submittal Form (BSF) and, within the BSF is a page entitled Evaluation Criteria. The Department followed the procedure set forth in the manual in advertising for competitive bids on Lease No. 590:2029 for office space in Inverness, Florida service area of District Three and, in doing so, used the ITB For Existing Facilities packet that contained the BSF with the Evaluation Criteria page. The BSF, including the Evaluation Criteria page, is a slightly modified version of the Department of General Services' (DGS) Request For Proposal Submittal Form - BPM 4136, incorporated by reference in Rule 13M-1.015(3)(e), Florida Administrative Code, as a suggested format. The Evaluation Criteria page of the Department's BSF contains nine of the eleven evaluation criteria set forth on the evaluation criteria page of the BPM 4136, but does not place any limit on the weight of award factor as does BPM 4136 on two of the same criteria used by the Department. Both the BSF and BPM 4136 are used in bidding for space in existing facilities and, therefore, require a scaled floor plan showing present configuration, with measurements that equate to the net rentable square footage using the Standard Method of Space Measurement. The BSF does not attach a "floor plan for suggested configuration of offices and rooms" as does the BPM 4136 but does provide the number, types and sizes of rooms to be placed in the existing facility. Both forms leave the final configuration of the floor plan to the successful bidder and the lessee. The Department's reasoning for not including a "suggested floor plan" is that this may reduce the number of prospective bidders due to the varied configuration of existing facilities in the bid area. In accordance with the procedure set forth in the Manual an Evaluation Committee (Committee) was appointed to determine, among other things, the award factor (weight) to be placed on the nine evaluation criteria set forth on the Evaluation Criteria page of the BSF. The Committee determined the significance of the nine criteria on the Evaluation page to the Department's needs in regard to Lease No. 590:2029 and awarded a weight factor in accordance with the significance of the criteria. Those criteria most significant to the Department's needs received the highest weight. These award factors were added to the Evaluation page of the BSF at the time the ITB was advertised. The procedure and the forms set forth in the Manual and used by the Department, including the procedure followed by the Evaluation Committee, in putting together the ITB for Lease No. 590:2029 comports substantially with all substantive provisions of Rule 13M-1, Florida Administrative Code, and more specifically Rule 13M-1.015, Florida Administrative Code, adopted by DGS pursuant to Section 255.249(2), Florida Statutes. The differences, such as they are, are not substantial, nor is there any extrinsic or intrinsic divergence from the substance of the rule such as to mislead any potential bidder who sought to address the ITB. The Manual, including the ITB and BSF, sets forth the Department's policy and describes the procedure to be followed by the Department, including each Evaluation Committee selected, and all prospective bidders, in its leasing practices when the Department seeks to lease 2000 square feet of office space or more in privately owned buildings and, although the Manual has been reduced to writing, it has not been promulgated or adopted as a rule.
The Issue The issue is whether Petitioners' Motions for Attorney's Fees should be granted, and if so, in what amount.
Findings Of Fact Based upon the stipulation of counsel, the papers filed herein, and the underlying record made a part of this proceeding, the following findings of fact are determined: Background In this attorney's fees dispute, Petitioners, Anderson Columbia Company, Inc. (Anderson Columbia) (Case No. 00-0754F), Panhandle Land & Timber Company, Inc. (Panhandle Land) (Case No. 00-0755F), Support Terminals Operating Partnership, L.P. (Support Terminals) (Case No. 00-0756F), Commodores Point Terminal Corporation (Commodores Point) (Case No. 00-0757F), and Olan B. Ward, Sr., Martha P. Ward, Anthony Taranto, Antoinette Taranto, J.V. Gander Distributors, Inc., J.V. Gander, Jr., and Three Rivers Properties, Inc. (the Ward group) (Case No. 00-0828F), have requested the award of attorney's fees and costs incurred in successfully challenging proposed Rule 18-21.019(1), Florida Administrative Code, a rule administered by Respondent, Board of Trustees of the Internal Improvement Trust Fund (Board). In general terms, the proposed rule essentially authorized the Board, through the use of a qualified disclaimer, to reclaim sovereign submerged lands which had previously been conveyed to the upland owners by virtue of their having filled in, bulkheaded, or permanently improved the submerged lands. The underlying actions were assigned Case Nos. 98- 1764RP, 98-1866RP, 98-2045RP, and 98-2046RP, and an evidentiary hearing on the rule challenge was held on May 21, 1998. That proceeding culminated in the issuance of a Final Order in Support Terminals Operating Partnership, L.P. et al. v. Board of Trustees of the Internal Improvement Trust Fund, 21 F.A.L.R. 3844 (Div. Admin. Hrngs., Aug. 8, 1998), which determined that, except for one challenged provision, the proposed rule was valid. Thereafter, in the case of Anderson Columbia Company, Inc. et al. v. Board of Trustees of the Internal Improvement Trust Fund, 748 So. 2d 1061 (Fla. 1st DCA 1999), the court reversed the order below and determined that the rule was an invalid exercise of delegated legislative authority. Petitioners then filed their motions. Fees and Costs There are eleven Petitioners seeking reimbursement of fees and costs. In its motion, Anderson Columbia seeks reimbursement of attorney's fees "up to the $15,000 cap allowed by statute" while Panhandle Land seeks identical relief. In their similarly worded motions, Support Terminals and Commodores Point each seek fees "up to the $15,000 cap allowed by statute." Finally, the Ward group collectively seeks $9,117.00 in attorney's fees and $139.77 in costs. In the Joint Stipulations of Fact filed by the parties, the Board has agreed that the rate and hours for all Petitioners "were reasonable." As to all Petitioners except the Ward group, the Board has further agreed that each of their costs to challenge the rule exceeded $15,000.00. It has also agreed that even though they were not contained in the motions, requests for costs by Support Terminals, Commodores Point, Anderson Columbia, and Panhandle Land in the amounts of $1,143.22, $1,143.22, $1,933.07, and $1,933.07, respectively, were "reasonable." Finally, the Board has agreed that the request for costs by the Ward group in the amount of $139.77 is "reasonable." Despite the stipulation, and in the event it does not prevail on the merits of these cases, the Board contends that the four claimants in Case Nos. 00-754F, 00-755F, 00-0756F, and 00- 757F should be reimbursed only on a per case basis, and not per client, or $7,500.00 apiece, on the theory that they were sharing counsel, and the discrepancy between the amount of fees requested by the Ward group (made up of seven Petitioners) and the higher fees requested by the other Petitioners "is difficult to understand and justify." If this theory is accepted, it would mean that Support Terminals and Commodores Point would share a single $15,000.00 fee, while Anderson Columbia and Panhandle Land would do the same. Support Terminals and Commodores Point were unrelated clients who happened to choose the same counsel; they were not a "shared venture." Each brought a different perspective to the case since Commodores Point had already received a disclaimer with no reversionary interest while Support Terminals received one with a reversionary interest on June 26, 1997. The latter event ultimately precipitated this matter and led to the proposed rulemaking. Likewise, in the case of Anderson Columbia and Panhandle Land, one was a landowner while the other was a tenant, and they also happened to choose the same attorney to represent them. For the sake of convenience and economy, the underlying cases were consolidated and the matters joined for hearing. Substantial Justification From a factual basis, the Board contends several factors should be taken into account in determining whether it was substantially justified in proposing the challenged rule. First, the Board points out that its members are mainly lay persons, and they relied in good faith on the legal advice of the Board's staff and remarks made by the Attorney General during the course of the meeting at which the Board issued a disclaimer to Support Terminals. Therefore, the Board argues that it should be insulated from liability since it was relying on the advice of counsel. If this were true, though, an agency that relied on legal advice could never be held responsible for a decision which lacked substantial justification. The Board also relies upon the fact that it has a constitutional duty to protect the sovereign lands held in the public trust for the use and benefit of the public. Because lands may be disclaimed under the Butler Act only if they fully meet the requirements of the grant, and these questions involve complex policy considerations, the Board argues that the complexity and difficulty of this task militate against an award of fees. While its mission is indisputably important, however, the Board is no different than other state agencies who likewise are charged with the protection of the health, safety, and welfare of the citizens. The Board further relies on the fact that the rule was never intended to affect title to Petitioners' lands, and all Petitioners had legal recourse to file a suit to quiet title in circuit court. As the appellate court noted, however, the effect of the rule was direct and immediate, and through the issuance of a disclaimer with the objectionable language, it created a reversionary interest in the State and made private lands subject to public use. During the final hearing in the underlying proceedings, the then Director of State Lands vigorously supported the proposed rule as being in the best interests of the State and consistent with the "inalienable" Public Trust. However, he was unaware of any Florida court decision which supported the Board's views, and he could cite no specific statutory guidance for the Board's actions. The Director also acknowledged that the statutory authority for the rule (Section 253.129, Florida Statutes) simply directed the Board to issue disclaimers, and it made no mention of the right of the Board to reclaim submerged lands through the issuance of a qualified disclaimer. In short, while the Board could articulate a theory for its rule, it had very little, if any, basis in Florida statutory or common law or judicial precedent to support that theory. Although Board counsel has ably argued that the law on the Butler Act was archaic, confusing, and conflicting in many respects, the rule challenge case ultimately turned on a single issue, that is, whether the Riparian Rights Act of 1856 and the Butler Act of 1921 granted to upland or riparian owners fee simple title to the adjacent submerged lands which were filled in, bulkheaded, or permanently improved. In other words, the ultimate issue was whether the Board's position was "inconsistent with the . . . the concept of fee simple title." Anderson Columbia at 1066. On this issue, the court held that the State could not through rulemaking "seek to reserve ownership interests by issuing less than an unqualified or unconditional disclaimer to riparian lands which meet the statutory requirements." Id. at 1067. Thus, with no supporting case law or precedent to support its view on that point, there was little room for confusion or doubt on the part of the Board. E. Special Circumstances In terms of special circumstances that would make an award of fees unjust, the Board first contends that the proposed rule was never intended to "harm anyone," and that none of Petitioners were actually harmed. But the substantial interests of each Petitioner were clearly affected by the proposed rules, and the appellate court concluded that the rule would result in an unconstitutional forfeiture of property. The Board also contends that because it must make proprietary decisions affecting the public trust, it should be given wide latitude in rulemaking. It further points out that the Board must engage in the difficult task of balancing the interests of the public with private rights, and that when it infringes on the private rights of others, as it did here, it should not be penalized for erring on the side of the public. As previously noted, however, all state agencies have worthy governmental responsibilities, but this in itself does not insulate an agency from sanctions. As an additional special circumstance, the Board points out that many of the provisions within the proposed rule were not challenged and were therefore valid. In this case, several subsections were admittedly unchallenged, but the offending provisions which form the crux of the rule were invalidated. Finally, the Board reasons that any moneys paid in fees and costs will diminish the amount of money to be spent on public lands. It is unlikely, however, that any state agency has funds set aside for the payment of attorney's fees and costs under Section 120.595(2), Florida Statutes (1999).
