09-000695 Miami Jewish Home And Hospital For The Aged, Inc. vs. Agency For Health Care Administration
 Status: Closed
Recommended Order on Monday, May 11, 2009.


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Summary: Respondent should waive the 15-day requirement for submission of Miami Jewish Home`s request to extend the validity period of its CON that authorizes an LTCH in Miami-Dade County.

1STATE OF FLORIDA

4DIVISION OF ADMINISTRATIVE HEARINGS

8MIAMI JEWISH HOME AND HOSPITAL )

14FOR THE AGED, INC., )

19)

20Petitioner, )

22)

23vs. ) Case No. 09-0695

28)

29AGENCY FOR HEALTH CARE ADMINISTRATION, )

35)

36)

37Respondent. )

39)

40RECOMMENDED ORDER

42This case was heard by David M. Maloney, Administrative Law

52Judge of the Division of Administrative Hearings, on March 24

62and 25, 2009, in Tallahassee, Florida.

68APPEARANCES

69For Petitioner: Shaddrick Haston, Esquire

74Agency for Health Care Administration

79Fort Knox Building, Mail Stop 3

852727 Mahan Drive, Suite 3431

90Tallahassee, Florida 32308

93For Respondent: Karl David Acuff, Esquire

99Watkins & Associates, P.A.

1033051 Highland Oaks Terrace, Suite D

109Post Office Box 15828

113Tallahassee, Florida 32317-5828

116STATEMENT OF THE ISSUE

120Florida Administrative Code Rule 59C-1.018(3)(c) requires

126that a request for an extension of a CON's validity period be

138made 15 days in advance of the period's expiration (the "15-Day

149Requirement.") The issue is whether the Agency for Health Care

160Administration should waive the 15-Day Requirement for Miami

168Jewish Home.

170PRELIMINARY STATEMENT

172On February 10, 2009, the Division of Administrative

180Hearings (DOAH) received a notice from the Agency for Health

190Care Administration ("AHCA" or the "Agency"). Attached was a

201request for a formal administrative hearing (the "Petition")

210from Miami Jewish Home and Hospital for the Aged, Inc. ("MJHHA"

222or "Miami Jewish Home".)

227The Petition challenged: (1) AHCA's Determination that CON

2359893 Terminated and (2) AHCA's Denial of its Emergency Petition

245for Variance or Waiver of Rule 59C-1.018(3), F.A.C. (the

"254Emergency Petition"). Miami Jewish Home requests entry of a

264final order "granting a variance or waiver of [the application]

274of Rule 59C-1.018(3)(c), F.A.C. to Petitioner." The Petition

282at 11.

284The final hearing was held on March 24 and 25, 2009. At

296the hearing, Miami Jewish Home presented three witnesses:

304Tanira Ferreira, M.D., accepted as an expert in Medicine with

314specialties in pulmonary medicine, critical care, internal

321medicine, sleep disorders, and pulmonary care program

328development including ventilator programs; Mark Knight, CFO of

336MJHHA and accepted as an expert in health care finance and

347health care system and facilities operations; and, Jay Cushman,

356accepted as an expert in health planning, Certificate of Need

366(CON) review and regulation, and Medicare reimbursement. Miami

374Jewish Home's Exhibits 1 through 33 were admitted into evidence.

384Miami Jewish Home also requested official recognition of a

393composite of documents marked for identification as OR-1 and two

403other documents marked for identification as OR-2 and OR-3. No

413objection was raised as to the first and second requests and

424official notice of them was taken. Objection to the third was

435raised by AHCA on the ground that the request was made late,

447that is, on the morning of the second day of hearing after MJHHA

460had rested its case the day before.

467The material requested for recognition by OR-3 is Section

4761.01, Florida Statutes, which bears the catchline:

"483Definitions." Of particular import to MJHHA's request is

491subsection (1) which reads:

495In construing these statutes and each and

502every word, phrase, or part hereof, where

509the context will permit:

513(1) The singular includes the plural and

520vice versa.

522§ 1.01 (1), Fla. Stat. The objection by AHCA was overruled and

534official recognition was taken of the material in OR-3.

543The Agency presented its case-in-chief through the

550testimony of Jeffrey H. Gregg, Chief of AHCA's Bureau of Health

561Facility Regulation, accepted as an expert in health care

570planning, certificate of need review and health care regulation.

579It offered five exhibits marked consecutively for identification

587as AHCA 1 through 5. The first of the five was admitted. The

600Agency withdrew its offer with regard to the other four with the

612understanding that they were duplicates of MJJHA Exhibits 12,

62113, 14, and 15, all admitted into evidence earlier in the case.

633The final hearing concluded on March 25, 2009. Proposed

642recommended orders were timely filed by both parties and have

652been considered.

654FINDINGS OF FACT

657CON 9893 and its Construction Timeline

6631. On June 29, 2007, AHCA awarded CON 9893 (the "CON") to

676MJHHA. The CON authorized MJHHA to establish a 30-bed long term

687acute care hospital (LTCH) in Dade County.

6942. The Agency determined that the LTCH authorized by the

704CON was needed and would be of benefit in the service district

716(AHCA Acute Care District 11) where it would be located. It

727also determined that the LTCH would enhance access to health

737care in conformance with the goals of the Health Facilities and

748Services Development Act.

7513. The determination followed a contested comparative

758review proceeding at DOAH in which it was found that Miami

769Jewish Home had "demonstrated need for its project through a

779thorough and conservative analysis." MJHHA Ex. 26, p. 49, para.

789106. All findings of fact and conclusions of law of the

800administrative law judge in the Recommended Order were accepted

809by the Agency in its Final Order that approved MJHHA's CON

820application. Un-rebutted evidence in this proceeding, moreover,

827establishes that the need for the LTCH continues to exist in

838AHCA Acute Care District 11.

8434. Miami Jewish Home proposed to locate the LTCH on its

854Douglas Gardens Campus, the site of a broad array of health and

866social services that span the continuum of health care. The

876continuum includes services related to community outreach,

883independent and assisted living facilities, nursing home

890diversion, chronic illness, outpatient programs, acute care

897hospital, rehabilitation and post-acute care, Alzheimer's

903disease, pain management, skilled nursing and hospice.

9105. The community surrounding the campus is an area known

920as "Little Haiti," one of the most densely populated areas of

931Dade County. The community is primarily low-income. It is a

941federally-designated "medically underserved area." Miami Jewish

947Home is a "safety net" provider of health care services, one of

959only 20 or so in the entire state. Its skilled nursing facility

971is the largest provider of Medicaid skilled nursing services in

981the state.

9836. Miami Jewish Home operates Florida's only Teaching

991Nursing Home program. Medical students, interns, and other

999health professionals rotate through the service program in the

1008nursing home and hospital on a regular basis. In its teaching

1019capacity, Miami Jewish Home serves as a student and resident

1029training site for the University of Miami and Nova Southeastern

1039University Medical Schools and the Barry University, Florida

1047International University and University of Miami nursing

1054schools.

10557. The LTCH was proposed as a hospital-in-a-hospital

1063(HIH), that is, it would be part of an existing hospital and

1075constructed within the hospital's existing structure rather than

1083as a free-standing facility. Its status as an HIH meant that

1094the construction required for it to achieve operable status

1103would be more in the nature of renovation as opposed to breaking

1115new ground as in the case of a free-standing LTCH facility.

1126The Construction Deadline

11298. Paragraph (a) of Subsection 408.040(2), Florida

1136Statutes, requires successful applicants for CONs to commence

1144construction within 18 months of the CON's issuance. If

1153construction is not timely commenced, the CON validity period

1162expires and the CON terminates. By operation of law, therefore,

1172December 28, 2008, was the deadline for the commencement of

1182construction (the "Commencement of Construction Deadline" or the

"1190Deadline"). See Finding of Fact 1.

1197The Approach of the Deadline

12029. In the wake of the issuance of the CON, Miami Jewish

1214Home worked to develop the project approved by the CON and to

1226implement it.

122810. Shortly after the award of the CON, Miami Jewish Home

1239contracted for the construction and development work with an

1248architectural firm, Louis Sousa & Associates ("Sousa"). The

1258firm was engaged "to do preliminary drawings to cost out [the]

1269project and get … more detail on … other issues that [might] be

1282encountered in the renovation of the area." Tr. 68. Garrett's

1292Construction was identified as the construction company that

1300would perform the construction on the basis of the Sousa

1310drawings.

131111. After the issuance of the CON, a new Chief Executive

1322Officer took the helm at MJHHA. Eventually, Sousa completed a

1332full scale set of drawings that included changes and expansions

1342in the program that had not been shown on the drawings that

1354accompanied the CON application. Among the expansions were the

1363addition of an elevator tower, a drive-through canopy and a

1373second operating room in which the new CEO took an interest

1384because of his development background.

138912. The completed drawings were submitted to the City of

1399Miami for approval and Sousa was engaged to be the architect

1410during construction.

141213. There were several surprises during the process of

1421developing the drawings. These were described at hearing by

1430Mr. Knight, MJHHA's Chief Financial Officer:

1436It was identified that the backup generator

1443located in the Chernin Building was not

1450sufficient and could not bear the load to

1458support a 30-bed acute care hospital [the

1465LTCH.]

1466* * *

1469In addition . . . , it was identified that

1478the current 02 or oxygen tank farm that we

1487have on the west side of the property was

1496problematic. It was freezing up.

1501. . . it was advised . . . by an external

1513vendor that it would not be able to

1521accommodate the additional 30 beds [beyond]

1527the 30 beds … in operation.

1533***

1534It was a little over a million two [hundred

1543thousand dollars] for both of those projects

1550. . . , a significant increase over what we

1559had anticipated to be the total cost of the

1568project.

1569Tr. 69-70. Submitted in June of 2008 to the City of Miami,

1581permits for the generator and the 02 farm project were received

1592in December of 2008. The 02 farm project started in the third

1604week of March 2009 and was fully underway at the time of the

1617final hearing in this case. Demolition for the generator

1626project was scheduled to commence within two weeks of the

1636conclusion of the hearing, that is, in April of 2009.

164614. By December of 2008, however, none of the construction

1656plans had been submitted for review to AHCA. (In fact, none had

1668been submitted by the last day of final hearing in this case,

1680March 25, 2009.)

168315. AHCA's review "of plans . . . is an essential part of

1696implementing a project that requires construction." Tr. 263.

1704Following cross-examination on this point at hearing, Mr. Gregg

1713was asked by AHCA's counsel to review the definition of

"1723commenced construction" in the Health Facility and Services

1731Development Act:

"1733Commenced construction" means initiation of

1738and continuous activities beyond site

1743preparation associated with erecting or

1748modifying a health care facility, including

1754procurement of a building permit applying

1760the use of agency-approved construction

1765documents , proof of an executed

1770owner/contractor agreement or an irrevocable

1775or binding forced account, and actual

1781undertaking of foundation forming with steel

1787installation and concrete placing.

1791§ 408.032(4), Fla. Stat. (emphasis added.) After his review of

1801the definition, Mr. Gregg explained that construction cannot be

1810commenced without AHCA plan review because "it's a[]. . .

1820technical . . . area that requires the expertise of the people

1832in [AHCA's] office of plans and construction to give a project

1843an okay from the health care perspective before it proceeds to

1854the point of construction." Tr. 319.

186016. Plans were not submitted and construction was not

1869commenced by the Deadline because of difficulty in financing the

1879construction. The more than one million dollars required to

1888update the generator system and the O2 Farm, unanticipated at

1898the time of the CON approval, contributed to the difficulty. In

1909the main, however, the delay was due to what the stipulation of

1921the parties describes as "unique in the history of Florida's CON

1932regulation," that is, the financial crisis of which the public

1942became generally aware in the early fall of 2008.

1951Distress in the Financial Markets

195617. In the early autumn of 2008, as the Commencement of

1967Construction Deadline neared, the financial markets in the

1975United States became unstable. World-wide financial markets

1982followed suit. The gravity of the financial situation has been

1992widely acknowledged to be the most serious since the Great

2002Depression that immediately preceded World War II. During the

2011years that Florida's CON regime has been in place, there has

2022been no time period during which economic distress has been as

2033severe as the period that commenced in September of 2008 and

2044continued at least into early 2009, after the expiration of the

2055Deadline.

205618. The problems in financial markets made further

2064development of the CON unreasonable. Miami Jewish Home had

2073proposed and was approved to pay for the costs of the

2084implementing the LTCH from its cash on hand and other assets.

2095At the time of the approval, the "cash-on-hand" approach was

2105reasonable. It continued to be achievable, despite cost

2113increases, until the late 2008 financial crisis' serious

2121negative impact on MJHHA's investments.

2126Loss in Investment Income

213019. Miami Jewish Home's un-audited balance sheet, admitted

2138into evidence as MJHHA's Ex. 1, shows a steep reduction in Net

2150Assets over the six months from June 30, 2008 to December 31,

21622008, the six months in which the financial crisis occurred.

2172The Balance Sheets June 30, 2008 column (audited) shows "Net

2182Assets" of $101,363,000. The 12/31/2008 column shows "Net

2192Assets" of $82,209,000 a reduction in net assets of between $19

2205million and $20 million.

220920. Over $12 million of the loss was due to losses

2220suffered by MJHHA's endowment and foundation account which

2228represents Miami Jewish Homes investments. This "investment

2235account" was $72 million on June 30, 2008 and had shrunk to $50

2248million by the end of 2008. At the time of hearing, the

2260investment account had lost another $40 million, making MJHHA's

2269decision not to proceed with the LTCH appear to be a prudent one

2282at the time of final hearing.

228821. The decision was prudent not merely because of a loss

2299of funds. The impact of the loss of investment funds was

2310compounded for Miami Jewish Home because of the use of income

2321from those funds to keep MJHHA's nursing home operation afloat.

2331Mr. Knight explained, "when the significant decrease in cash

2340occur[red], that also reduced the income potential on that cash

2350and ultimately the subsidy back to the nursing home." Tr. 74.

236122. Miami Jewish Home's nursing home operation's financial

2369stability was also threatened by Medicaid reimbursement "looking

2377to be getting worse." Tr. 75. With the Deadline approaching,

2387the situation was summed up by Mr. Knight:

2395[B]etween the incremental costs that were

2401identified [with regard to the generator and

2408the O2 farm] and the significant decrease in

2416our ability to fund from cash [the loss of

2425investment return produced by the investment

2431account] and ultimately the . . . loss on

2440the nursing home operations, in September

2446and October of '08 [MJHHA] began the process

2454of seeking another developer or another

2460potential acquirer of a certificate of need.

2467Tr. 77.

2469Looking for a Purchaser of the CON

247623. As Miami Jewish Home became aware of the deterioration

2486of its financial situation, it began to seek alternative means

2496to finance the development of the LTCH, including standard loans

2506and alternative financing. It approached its commercial banker

2514SunTrust. The deterioration of MJHHA's finances, however, was

2522occurring at the same time as "the credit crunch came into

2533place." Tr. 96. SunTrust was not interested in financing the

2543LTCH.

254424 . With the realization that it could not reasonably fund

2555the development of the LTCH and still believing it to be a

2567needed service, MJHHA began to seek out other operators and

2577developers.

257825. At first, MJHHA looked for a known LTCH company or a

2590compatible provider to develop the LTCH on the Miami Jewish Home

2601campus. Promise Health Care and Mt. Sinai were approached. For

2611various reasons, no firm commitments were forthcoming.

261826. As autumn wore on, Miami Jewish Home continued to make

2629progress toward the permits necessary to develop the LTCH, but

2639it became clear it was not in a financial position to go forward

2652with construction. It scheduled a call with AHCA for December

266218, 2009, to inform AHCA that it would be abandoning the

2673project.

267427. Nearly resigned to the loss of the project, MJHHA

2684management met with principals of the Sanderling group in mid-

2694December 2008. Sanderling showed a desire to work through the

2704details of the LTCH project with Miami Jewish Home.

271328. A general agreement was reached between Sanderling and

2722Miami Jewish Home by the time of the scheduled call with AHCA.

2734When the call took place on December 18, 2008, instead of

2745relinquishing the CON, MJHHA informed AHCA that there was a

2755provider compatible with Miami Jewish Home that intended to

2764purchase the CON and develop the LTCH. During the call, the

2775Agency responded verbally that MJHHA should do whatever it

2784needed to do to keep the project moving forward. Miami Jewish

2795Home took immediate action. It submitted a written request for

2805the extension of the validity period of the CON.

2814The December 18 Written Request for an Extension

282229. On the same day as the call, Miami Jewish Home

2833provided AHCA with written notice of intent to transfer the CON.

2844The letter informed AHCA of MJHHA's financial difficulty due to

"2854additional costs . . . required to develop the LTCH which were

2866material, . . . the large (20%)losses to the Homes endowment

2877. . . and] [g]iven these changed circumstances, . . . [that]

2889the Home . . . cannot justify the development costs to

2900implement [the CON] without impacting other services." MJHHA

2908Ex. 11. Dated December 18, 2009, the letter bears the heading,

" 2919Via Electronic Mail ". Id.

292430. The letter went one step further. It specifically

2933noted that paragraph (c) of Florida Administrative Code Rule

294259C-1.018(3) (the "Transfer Extension Paragraph"), provides that

2950a 60-day extension of the life of the CON would be granted upon

2963receipt of a notice and application for a transfer if the notice

2975and application were received 15 days prior to the deadline for

2986commencement of construction. After quoting the paragraph

2993verbatim, the letter asked for relief under the variance and

3003waiver provision of the Administrative Procedure Act,

"3010[p]ursuant to Section 120.542, F.S., we are requesting a waiver

3020of the 15 days prior notice provision." Id. at 2. Noting that

"3032there is no statutory requirement for the 15 days notice," the

3043letter asserted that the notice and proof of the closing of the

3055acquisition would be submitted "with the initial transfer

3063application as soon as possible and before the December 28, 2008

3074termination date." Id.

307731. The written request that comprised the letter (the

"3086December 18 Written Request") was furnished five days later

3096than required by the Transfer and Extension Paragraph. Had it

3106been submitted on December 13, 2008, instead of December 18,

31162008, it would have been timely.

312232. Before AHCA responded in writing to the December 18

3132Written Request, Miami Jewish Home took further action. It

3141submitted a more formal request for relief: an emergency

3150petition.

3151The Emergency Petition

315433. On December 24, 2008, six days after the submission of

3165the December 18 Written Request, Miami Jewish Home filed with

3175AHCA a document entitled, "Emergency Petition for Variance of

3184Waiver of Rule 59C-1.018(3)(c), F.A.C." (the "Emergency

3191Petition"). See MJHHA Ex. 12. Denominated an emergency "because

3201the CON is scheduled to terminate on December 28, 2008," id. at

32132, the Emergency Petition pointed out that "the 90 days

3223typically provided for review of petitions for variance or

3232waiver would not allow the resolution of this petition." Id.

324234. Substantially similar to the December 18 Written

3250Request, the petition expressed one new fact and pointed out an

3261additional significant feature for AHCA's consideration. The

3268new fact was that the initial application for transfer of the

3279CON to Sanderling had been submitted to AHCA on December 24,

32902009, along with the petition. The featured consideration was

3299asserted in the petition's final paragraph:

3305Granting the waiver will foster the goals of

3313the Health Facility and Services Development

3319Act as stated in the Recommended Order and

3327Final Orders in DOAH Case No. 06-557 (AHCA

3335No. 2006000716) approving CON 9893.

3340Id. at para. 12., p. 4 (emphasis added.) This assertion

3350amounted to the claim that the statute underlying the Transfer

3360Extension Paragraph and the entire Termination and Extension

3368Rule is not merely the law implemented by the rule but the

3380entire Health Facility and Services Development Act.

3387The Act

338935. The Act is a subset of one part of Chapter 408,

3401Florida Statutes. The chapter governs "Health Care

3408Administration" and is composed of Parts I - IV.

341736. Part I consists of Sections 408.031 through 408.7071.

3426Fifteen sections, Sections 408.031 through 408.045, comprise the

3434Act. "Sections 408.031-408.045 shall be known and may be cited

3444as the "Health Facility and Services Development Act."

3452§ 408.031, Fla. Stat.

345637. Of the Act's fifteen statutory sections, several stand

3465out as having been applied by the Agency and the DOAH in the

3478process that led to the approval of Miami Jewish Home's

3488application and the award of the CON. These include Section

3498408.037, which prescribes the content for a CON application,

3507Section 409.035, which delineates the criteria for review of a

3517CON application, and Section 408.039, which establishes the

3525process for review of a CON application.

353238. The Act recognizes the transfer of CONs from the

3542holder of a CON to another. See § 408.042, Fla. Stat., the

3554catchline of which is: "Limitation on Transfer." This

3562recognition is reflected in the section's opening sentence:

"3570The holder of a certificate of need shall not charge a price

3582for the transfer of the certificate of need to another person

3593that exceeds the total amount of the actual costs incurred by

3604the holder in obtaining the certificate of need." (emphasis

3613added.)

361439. One of the 15 provisions of the Act bears particular

3625relevance to this proceeding: Section 408.040, Florida

3632Statutes, the "Conditions and Monitoring" Section.

3638Section 408.040, Conditions and Monitoring

364340. Section 408.040 has two subsections: the first is

3652concerned primarily with "conditions," the second with

3659monitoring." The section, accordingly, bears the catchline,

"3666Conditions and monitoring."

366941. Subsection (2), the "monitoring" subsection, is

3676directly at issue in this case because it is cited in Rule 59C-

36891.018 as its "law implemented." It provides, in pertinent part:

3699(2)(a) Unless the applicant has commenced

3705construction . . . , a certificate of need

3713shall terminate 18 months after the date of

3721issuance. The agency shall monitor the

3727progress of the holder of a certificate of

3735need in meeting the timetable for project

3742development specified in the application,

3747and may revoke the certificate of need, if

3755the holder of the certificate is not meeting

3763such timetable and is not making a good

3771faith effort, as defined by rule, to meet

3779it.

3780* * *

3783(c) The certificate-of-need validity period

3788for a project shall be extended by the

3796agency, to the extent that the applicant

3803demonstrates to the satisfaction of the

3809agency that good-faith commencement of the

3815project is being delayed by litigation or by

3823governmental action or inaction with respect

3829to regulations or permitting precluding

3834commencement of the project.

3838§ 408.040(2), Fla. Stat. Because the subsection is concerned

3847with termination and extension of the deadlines for commencement

3856of construction of CON project, the subsection will be referred

3866to in this order as the "Termination and Extension Subsection."

387642. Paragraph (a) of the Termination and Extension

3884Subsection focuses on the 18-month CON validity period during

3893which the agency is to monitor the progress toward project

3903development. It provides for revocation of a CON if a good

3914faith effort is not being made toward meeting the 18-month

3924timetable. It further provides for termination of the CON at

3934the end of the 18-month CON validity period.

394243. Paragraph (c) of the Termination and Extension

3950Subsection focuses on when the time for termination may be

3960extended and the circumstances for such an extension: in cases

3970plagued by litigation or when governmental action or inaction

3979causes delay.

398144. One observation of the Termination and Extension

3989Subsection is of particular import to this proceeding. It is

3999silent with regard to extensions of a deadline for commencement

4009of construction when a CON is transferred.

401645. Although not mentioned as a basis for an extension in

4027the Termination and Extension Statute, transfer of a CON is a

4038basis for an extension under paragraph (c) of Section (3) of

4049Florida Administrative Code Rule 59C-1.018 (the "Termination

4056Rule").

4058The Termination Rule

406146. The Termination Rule is divided into three sections.

407047. The first, denominated "Validity Period of Certificate

4078of Need," restates the Termination and Extension Subsection's

4086prescription that a CON shall terminate 18 months after issuance

"4096unless the holder meets the applicable conditions for an

4105extension set forth in Section 408.040(2), F.S., and this rule."

4115Fla. Admin. Code R. 59C-1.018(1).

412048. The second section of the Termination Rule, called

"4129Undertaking a Project Authorized by a Certificate of Need,"

4138prescribes minimum requirements to prevent termination of a CON

4147and the expiration of its validity period. These requirements

4156govern both new construction or renovation projects and non-

4165construction projects that involve capital expenditures.

417149. The third section of the Termination Rule governs

4180extension of a CON's validity period. It is divided into three

4191paragraphs.

419250. Paragraph (a) deals with extensions when there is a

4202demonstration that "good faith commencement of the project is

4211being delayed by litigation or governmental action or inaction,"

4220Fla. Admin. Code R. 59C-1.018(3)(a), related to regulation which

4229precludes commencement. Delay caused by litigation or

4236government are the two bases for an extension provided by the

4247statutory Termination and Extension Subsection. Unlike the case

4255where extensions are sought because of a transfer, the filing of

4266a request under paragraph (a) does not extend the validity

4276period of a CON. A paragraph (a) extension request requires the

4287Agency to pay close attention to a number of details in its

4299review. The requester must make a showing of good faith. Other

4310details the Agency must examine are revealed by the following

4320provisions:

4321The request must provide the agency a

4328detailed explanation of the problem and a

4335plan of action to be undertaken by the

4343holder to resolve the problem within the

4350time frame requested.

43531. Land zoning issues will be considered

4360for extension of the certificate of need

4367validity period beyond the 18 months, if the

4375certificate of need holder can demonstrate

4381that action has been initiated to obtain

4388proper zoning for the proposed site for the

4396facility, and that such action was timely

4403with respect to the requirements for

4409obtaining proper zoning.

44122. Untimely filing of submission of plans

4419and requests for local and state permits,

4426based on the processing time required by the

4434state and local governments for such plans

4441and permits, will not be considered as

4448justification for an extension beyond the

445418-month period.

4456Fla. Admin. Code R. 59C-1.018(3)(a).

446151. Paragraph (b) contains yet another consideration for

4469the Agency in cases of extensions requests on the basis of

4480litigation. The extension "shall be granted for the actual time

4490of the validity period which is equivalent to the period of

4501litigation, including appeal." Fla. Admin. Code R. 59C-

45091.018(3)(b).

451052. Paragraph (c) (the "Transfer Extension Paragraph")

4518deals with extensions requests in the case of transfers, as in

4529this case:

4531Upon written request from the holder of a

4539certificate of need received at least 15

4546days prior to the termination date of the

4554certificate of need, and upon submission of

4561a transfer application by the proposed

4567transferee, the agency will extend the

4573validity period of the proposed transferred

4579certificate of need for a period of 60 days

4588to ensure that the certificate of need

4595remains valid throughout the agency's

4600timetable for review of the transfer

4606application. Only one such request for a 60

4614day extension will be granted under the

4621provisions of this subsection.

4625Fla. Admin. Code R. 59C-1.108(3)(c) (emphasis added.)

463253. The terms of the Transfer Extension Paragraph that

4641govern "transfer extensions" are significantly different from

4648the terms of paragraphs (a) for other extensions.

465654. For one, there is no showing of "good faith" required

4667on the part of the holder of the CON as there is with paragraph

4681(a). Instead, Paragraph (c) directs extension upon the

4689submission of two documents: a written request and a transfer

4699application ("the agency will extend the validity period . . .",

4711emphasis added). By comparison, paragraph (a) is written in

"4720discretionary" language: "[e]xtensions . . . may be requested

4729by a certificate of need holder . . .". (emphasis added.)

474155. Paragraph (a) extensions require much more review by

4750the Agency; the paragraph sets up points at which the Agency may

4762exercise discretion in turning down the request. In addition to

4772the "good faith" demonstration by the holder of the CON, there

4783must be a detailed explanation offered and a plan of action to

4795resolve the problem within the time frame requested. In

4804contrast, review triggered under the Transfer Extension

4811Paragraph by a written extension request is minimal. All the

4821Agency need determine is whether a transfer application has been

4831submitted by the transferee and that no other requests on the

4842basis of a transfer have been granted previously.

485056. Miami Jewish Home seeks a waiver from only one clause

4861in the Transfer and Extension Paragraph: that its written

4870request must have been received fifteen days prior to the

4880termination date of the CON (the "15-day Requirement"). It

4890makes the request for the waiver under Section 120.542, Florida

4900Statutes.

4901Section 120.542: the Variance and Waiver Statute

490857. Section 120.542, Florida Statutes (the "Variance and

4916Waiver Statute") was enacted in 1996 as part of a major revision

4929to Chapter 120, Florida Statutes. Described as perhaps "the

4938most significant aspect of the revised APA," Loosening the

4947Chains that Bind: the New Variance and Waiver Provision in

4957Florida's Administrative Procedure Act , Vol. 24, at 353, Florida

4966State University Law Review (1997), the section sets forth the

4976legislative intent in two straightforward sentences:

4982Strict application of uniformly applicable

4987rules requirements can lead to unreasonable,

4993unfair and unintended results in particular

4999instances. The Legislature finds that it is

5006appropriate in such cases to adopt a

5013procedure for agencies to provide relief to

5020persons subject to regulation.

5024§ 120.542, Fla. Stat.

502858. The operative part of the Variance and Waiver Statute

5038is found in subsection (2), the first sentence of which reads,

"5049Variances and waivers shall be granted when the person subject

5059to the rule demonstrates that the purpose of the underlying

5069statute will be or has been achieved by other means by the

5081person and when application of a rule would create a substantial

5092hardship or would violate principles of fairness."

509959. The Variance and Waiver Statute provides a process for

5109agencies in dealing with variance and waiver petitions. The

5118agency is to give notice to the Department of State within 15

5130days of receipt of the petition. The Department of State, in

5141turn, publishes notice of the petition in the first available

5151issue of the Florida Administrative Weekly. See § 120.542(6),

5160Fla. Stat. Within 30 days of receipt of the petition, the

5171agency is to review it and request additional information it is

5182permitted to require, see Section 120.542(7), Florida Statutes,

"5190except for requests for emergency variances or waivers". Id.

5200Agency Response to the December 18 Written Request

520860. The Agency did not rule on the December 18 Written

5219Request prior to the expiration of the CON's validity period on

5230December 28, 2008.

523361. The December 18 Written Request was hand-delivered to

5242Mr. Gregg's office six days before the filing of the Emergency

5253Petition (December 24, 2008). Mr. Gregg took the December 18

5263Written Request to the legal staff and said "please respond to

5274this." Tr. 265.

527762. Before any response to the December 18 Written Request

5287was issued in writing, the Emergency Petition was filed with

5297AHCA together with the transfer application.

5303Agency Response to the Emergency Petition

530963. The timing of the filing of the Emergency Petition,

5319Christmas Eve, was problematic for the Agency. Mr. Gregg

5328explained at hearing:

5331[B]eing the holiday season, various key

5337people were not there . . .

5344The chief facilities counsel had broken his

5351foot. The deputy secretary was out before

5358Christmas. I was out after Christmas. This

5365is a perfect example, apart from the fact

5373that we all are juggling many different

5380subjects, of why we would need [a] review

5388period [as called for by the 15-Day

5395Requirement] in order to develop an opinion

5402about any request for extension or a request

5410for a variance and transfer.

5415Tr. 273. Since Mr. Gregg was not available to review the

5426Emergency Petition the day of its submission, it was reviewed by

5437the Deputy Secretary and Acting General Counsel. They

5445formulated the Agency response: denial. Later, after Mr. Gregg

5454had returned to the office and read the Emergency Petition, "we

5465all agreed it was not something that we could grant." Tr. 266.

547764. In the wake of the receipt of the Emergency Petition

5488and the transfer application, the Agency followed prescribed

5496process. It issued a CON application omissions letter to

5505Sanderling. Notice of the receipt of the Emergency Petition was

5515published on January 16, 2009 in the Florida Administrative

5524Weekly . Notice was also published on the Agency internet site.

553565. In the meantime, AHCA notified counsel for MJHHA that

5545the CON had expired. The Agency letter, dated

5553January 15, 2009, states:

5557It has been determined that the holder of

5565CON Number 9814 for the above referenced

5572project [CON 9893] has violated the

5578provision of section 408.040(2)(a), Florida

5583Statutes . . . and Rule 59C-1.018(2) Florida

5591Administrative Code in that the project has

5598not commenced continuous construction, as

5603defined in section 408.032(4), F.S., by the

5610December 28, 2008 termination date.

5615Therefore the CON has expired.

5620* * *

5623The final determination on your request for

5630an emergency waiver could have an impact on

5638whether or not this CON remains valid.

5645Exhibit "E" attached to MJHHA Ex. 13.

565266. On January 22, 2009, written comments in opposition to

5662the Emergency Petition were received from Victoria Healthcare,

5670Inc., a wholly owned subsidiary of Select Medical Corporation

5679and from Kindred Hospitals East, L.L.C. No comments were

5688received in support of the petition.

569467. On January 23, 2009, the Agency issued a Final Order

5705denying the Emergency Petition.

5709The Agency's Final Order

571368. The findings of fact in the Final Order relate the

5724history of the CON and the filing of the Emergency Petition.

5735The order does not make reference to the December 18 Written

5746Request.

574769. The findings of fact also cite and quote text from

5758relevant statutory and rule provisions. The sixth and last

5767finding of fact in the final order is:

5775Since CON 9893 expired on December 28, 2008,

5783Rule 59C-1.018(3)(c) required . . . the

5790request and transfer application be received

5796by the Agency no later than December 13,

58042008. The petition and transfer application

5810were received on December 24, 2008, eleven

5817days late.

5819MJHHA Ex. 13, at 2-3.

582470. The Final Order does not identify the specific statute

5834underlying the Termination and Extension Rule. Nonetheless, it

5842concludes with regard to the first prong of the Waiver and

5853Variance Statute that the Emergency Petition comes up short:

5862Beyond the bare, unsupported, and conclusory

5868allegation in paragraph 9 of the Petition

5875that "requiring the CON to terminate would

5882be detrimental to the goals of the Health

5890Facility and Services Development Act and

5896the accessibility and quality of health care

5903services to the community," and a reference

5910in passing to the Recommended and Final

5917Orders in DOAH Case No. 06-0557 CON, the

5925Petition does not address or provide

5931specifics explaining how waiving the 15 day

5938prior notice rule requirement would achieve

5944the purpose of the statute.

5949Id.

595071. After its conclusion that MJHHA failed to meet the

5960first prong, the Final Order reflects the Agency's conclusion

5969that it was not necessary to address the second prong of the

5981Variance and Waiver Statute. The order, however, reflects the

5990Agency's decision to deal with the second prong "briefly."

5999MJHHA Ex. 13, at 5. The Final Order finds that MJHHA failed to

6012demonstrate that application of the rule would work create a

6022substantial hardship or that principles of fairness had been

6031violated. Accordingly, the Final Order denies the Emergency

6039Petition.

6040Section 120.57(1) Petition

604372. The Final Order's denial of MJHHA's request for a

6053variance was challenged by a petition filed on February 2, 2009

6064(the "Section 120.57(1) Petition"). In the Section 120.57(1)

6073Petition, MJHHA characterizes the December 18, 2009 Written

6081Request, as a "written request" within the meaning of the term

6092in the Termination Rule and characterizes the Emergency Petition

6101as a "second" written request.

610673. The Section 120.57(1) Petition, of course, raises the

6115issue of whether it demonstrated that both prongs of the

6125Variance and Waiver Statute had been met. It also raises a

6136number of issues surrounding the emergency nature of the

6145Emergency Petition, whether the CON terminated, and whether

6153there is a statutory basis for the 15-Day Requirement. See

6163Section 120.57(1) Petition, at 7-9.

6168Stipulated Facts

617074. Prior to hearing, the parties filed a joint pre-

6180hearing stipulation. The stipulation contains a section

6187entitled, "Facts Which Are Admitted and Require No Proof at

6197Hearing." The section contains the following:

6203AHCA is the state agency responsible for the

6211administration of the Certificate of Need

6217program in Florida.

6220AHCA did not provide MJHHA copies of the

6228relevant statutes and rules when it was

6235presented with a request for relief (the

6242December 18 letter) from the provisions of

6249the rule. (Item a of the petition)

6256The current financial crisis is unique in

6263the history of the Florida's CON regulation.

6270(Item g of the petition)

6275Joint Pre-hearing Stipulation, at. 4.

6280Final Hearing

628275. At final hearing, the Agency identified the statute it

6292believes underlies the Termination and Extension Rule: Section

6300408.040(2), Florida Statutes, referred to in this order as the

6310Termination and Extension Subsection.

631476. The Agency offered further evidence of the context in

6324which its decision was made. Mr. Gregg opined that Miami Jewish

6335Home was not positioned to request an extension. Construction

6344plans had not been submitted for AHCA review. The extension

6354request was first presented to AHCA ten days before the

6364Construction Deadline; normally, AHCA is informed months in

6372advance of the need for an extension. The Agency denied the

6383request in an "attempt to be consistent and treat each situation

6394in the same way." Tr. 274. Mr. Gregg further opined:

6404And in the case of CON, given that we know

6414that the financial situation is very

6420widespread, if we were to be too liberal in

6429our application of these laws and rules, I

6437can guarantee you that we would quickly have

6445other people asking us to do a similar

6453thing, based upon financial problems. And

6459we don't feel we have [that] flexibility . .

6468. .

6470In recognition of that, we have proposed . .

6479. a total extension of the CON validity

6487period that would extend it from 18 month to

6496three years. And that is included in a bill

6505that is generally referred to in this season

6513as the agency's regulatory reform bill.

6519[Without such legislation] we don't think we

6526have authority to [give MJHHA an extension.]

6533Tr. 275-6.

653577. Mr. Gregg also mentioned another instance in which a

6545CON holder "had communicated . . . that they have financial

6556problems . . . but they also happen to have local planning and

6569zoning issues and environmental issues as well." Tr. 274. That

6579instance was a case involving Hillsborough Extended Care, LLC.

6588The Hillsborough Case

659178. On August 30, 2005, CON 9814 was issued to

6601Hillsborough Extended Care, LLC, ("Hillsborough") to relocate

6610120 existing community nursing home beds from one facility in

6620Tampa to a new freestanding 120-bed facility. The deadline for

6630commencing construction of the project authorized by CON 9814

6639was February 28, 2007 .

664479. Prior to November of 2007, Hillsborough invoked the

6653Termination and Extension Rule on four separate occasions.

6661Extensions were granted each time on February 1, May 17,

6671June 15, and August 13, 2007.

667780. The letter granting the last extension informed

6685Hillsborough that the CON validity period expired

6692October 7, 2007 "and specifically stated that to request another

6702extension pursuant to Rule 59C-1.018, Florida Administrative

6709Code, that the extension request must have been received by the

6720Agency no later than October 7, 2007." MJHHA Ex. 21 at 2; see

6733also the fourth page of Exhibit "B" attached to MJHHA Ex. 21.

674581. On October 16, 2007, nine days late, Hillsborough

6754filed a fifth extension request. The Agency sent a letter to

6765Hillsborough on October 23, 2007. It denied the request and

6775informed Hillsborough as follows:

6779It has been determined that the holder of

6787CON Number 9814 . . . has violated the

6796provisions of section 408.040(2)(a), Florida

6801Statutes . . . and Rule 59C-1.018(2),

6808Florida Administrative Code in that the

6814project has not commenced continuous

6819construction, as defined in Section

6824408.032(4), F.S., by the October 22, 2007

6831termination date. Therefore, the CON has

6837expired.

6838Fifth page of Exhibit "B" attached to MJHHA Ex. 21.

684882. Hillsborough filed an emergency petition for a

6856variance from or a waiver of the Termination Rule. The

6866emergency petition invoked the Variance and Waiver Statute. The

6875emergency petition recognized the law implemented by the

6883Termination Rule to be the Termination and Extension Subsection,

6892Section 408.040(2), Florida Statutes. With regard to the

"6900underlying statute," Hillsborough took a position similar to

6908that of Miami Jewish Home in this proceeding, that is, that the

6920underlying statute is the Act. See MJHHA Ex. 20 at 2. The

6932emergency petition asserted that in support of the end promoted

6942by the Act, "the orderly development of health facilities and

6952services in the State," id. , the Agency had determined a need

6963for the nursing home beds authorized to be relocated by CON

69749814.

697583. The Agency issued a Final Order denying Hillsborough's

6984emergency petition on December 28, 2007 (the "Hillsborough Final

6993Order of December 28, 2007.") The Agency found that although a

7005need for the nursing home beds had been determined when CON 9814

7017was issued, "there is no longer a need for these beds in

7029Hillsborough County." MJHHA Ex. 21. The Agency at first, see

7039Finding of Fact 86, below, concluded that the statute underlying

7049the Termination Rule was the Termination and Extension

7057Subsection not the Act.

706184. The Agency in the order further concluded that while

"7071it appears there may have been ongoing litigation or other

7081matters pending relating to permitting which may have justified

7090a fifth extension of CON 9814," id. at 5, that the issue was

7103whether a variance from or waiver should be granted as to the

711515-Day Requirement. The Agency recognized that the 15-Day

7123Requirement is not statutory. See MJHHA Exhibit 21 at 6, para.

713418: "[i]t is true that there is nothing in the statute

7145explicitly requiring that CON validity extension requests by

7153received at least 15 days prior to the extension date . . .".

716785. The Agency further concluded that Hillsborough did not

7176demonstrate that the purpose of the underlying statute, the

7185Termination and Extension Subsection, would be met by a variance

7195from or waiver of the 15-Day Requirement. In fact, the Agency

7206wrote an untimely request "is contrary to the purpose of the

7217underlying statute, which requires the Agency to determine

7225whether an extension is justified before the CON has expired."

7235Id. at 7.

723886. The Agency expanded upon the meaning of the term,

"7248underlying statute" when it wrote the following in the

7257Hillsborough Extended Care final order:

7262Moreover, the entire CON statute, found at

7269Chapter 408, Part I, [the Act] is dedicated

7277to the principle that a CON is granted when

7286there is a demonstrated need.

7291* * *

7294Therefore, the purpose of the underlying CON

7301statute [emphasis added] has not been met in

7309this case: this district does not need these

7317beds [any longer.] The issue, always, in

7324the CON program is whether there is a need

7333for a facility or service, not whether it

7341would be desirable to have additional

7347options and choices beyond that need. In

7354this case, the need does not exist. The

7362Petitioners have not demonstrated that they

7368have met the purpose of the underlying

7375statute . [emphasis added.]

7379Id. at 7-8. Thus, the Agency concluded that the Act is the

7391statute underlying the Termination Rule as well as the law

7401implemented, a provision contained within the Act. The

7409Hillsborough Final Order or December 28, 2007, accordingly

7417denied Hillsborough's emergency petition.

742187. Hillsborough challenged the decision by filing two

7429petitions for formal administrative hearings. On February 19,

74372008, the Agency entered a second final order (the "Hillsborough

7447Final Order of February 19, 2008.") It reports, "[t]he Agency

7458and Hillsborough have reached a settlement by which the AHCA

7468notices are superseded and Hillsborough is given an extension to

7478begin continuous construction pursuant to the time line schedule

7487included in the Settlement Agreement." MJHHA Ex. 22 at 2. The

7498final order approves and adopts the Settlement Agreement as part

7508of the final order.

751288. The Settlement Agreement in its "whereas" clauses

7520describes action and inaction of the local government that

7529justified an extension. See MJHHA Ex. 22, Settlement Agreement

7538at 3-4.

754089. With regard to the 15-day Requirement that its earlier

7550letter had found Hillsborough to have violated, the Settlement

7559Agreement recites the following in a "whereas" clause: "the

7568parties agree that AHCA has evenly enforced its fifteen day

7578requirement for filing an extension request and did nothing

7587incorrect in denying the late filed extension request and

7596canceling the CON ...". Id. at 5. Neither the Hillsborough

7607Final Order of February 19, 2008 nor the Settlement Agreement

7617attached to it provides any explanation as to why the 15-Day

7628Notice Requirement was no longer to be enforced against

7637Hillsborough. The lack of explanation is particularly worthy of

7646observation in light of the agreement that AHCA did nothing

7656incorrect in enforcing it in the first place.

766490. The Settlement Agreement sets out a detailed schedule

7673for plan review, commencing construction and continuing

7680construction. Id.

768291. As for future extensions, the Settlement Agreement

7690contained a few additional provisions that relate to

7698circumstances that would support further extensions and timely

7706requests for extensions:

7709e. The schedule and continuous construction

7715commencement date of CON 9814 may only be

7723extended by agreement of the parties because

7730of governmental action or inaction or for

7737unforeseen natural disasters or Acts of God.

7744f. If such an extension or extensions

7751become necessary, the Petitioner agrees to

7757timely file the request(s) for extension in

7764full compliance with the requirements of

7770Rule 59C-1.018(3)(a), F.A.C., and upon

7775failure to fully comply with the

7781requirements of said rule, Petitioner agrees

7787that CON 9814 shall become null and void by

7796operation of law, without further action by

7803the agency, and without any further

7809administrative or legal remedies being

7814available to the Petitioner.

7818Id. at 7-8.

7821The Agency's Position at Final Hearing

782792. At final hearing, the Agency embellished upon the

7836circumstances that led to its decision to deny the Emergency

7846Petition, including its view of why the outcome in the

7856Hillsborough case is justifiably different from the Agency's

7864preliminary denial in the Final Order in this case. See Finding

7875of Fact 76.

787893. In essence, the Agency adhered to the position taken

7888in the Final Order in this case: that MJHHA's Emergency Petition

7899should be denied because it was filed eleven days late and Miami

7911Jewish Home had failed to demonstrate a basis for waiving the

792215-Day Requirement.

7924CONCLUSIONS OF LAW

792794. The Division of Administrative Hearings has

7934jurisdiction over the parties to and the subject matter of this

7945proceeding. §§ 120.569 and 120.57(1), Fla. Stat.

795295. As the party seeking a variance or waiver, Miami

7962Jewish Home has the burden of establishing entitlement to the

7972relief it seeks. It must prove its case by a preponderance of

7984the evidence. Dep't of Banking and Finance, Div. of Securities

7994and Investor Prot. v. Osborne Stern & Co. , 670 So. 2d 932 (Fla.

80071996); Florida Dep't of Transp. v. J.W.C. Co. , 396 So. 2d 778

8019(Fla. 1st DCA 1981); Balino v. Dep't of Health and

8029Rehabilitative Services , 348 So. 2d 349 (Fla. 1st DCA 1977).

8039The Hillsborough Case

804296. As AHCA recognizes, the extensions in the Hillsborough

8051Case were entered on the basis of litigation or government

8061action and inaction whereas the extension in this case is sought

8072on the basis of a transfer. The Hillsborough Case, therefore,

8082is not on all fours with this case. The difference in the bases

8095for the extensions serves the Agency attempt to distinguish the

8105two cases.

810797. The Settlement Agreement attached to the Hillsborough

8115Final Order of February 19, 2008, that granted the fifth

8125extension also demonstrates the import that the Agency places on

8135the 15-Day Requirement. This emphasis is appropriate in a case

8145in which an extension is sought on the basis of litigation or

8157government action or inaction. In such a case, the Agency is

8168called upon to determine a number of matters that require

8178careful review that is often time-consuming. The Agency must

8187determine that the holder of a CON seeking the extension has

8198acted in good faith after it received the CON in moving toward

8210the commencement of construction. The Agency must evaluate the

8219nature and effect of litigation or the nature and effect of what

8231government is or is not doing. These determinations are

8240required by statute when an extension is sought on the basis of

8252delay caused by litigation or government. In addition, the

8261Termination Rule requires that the Agency pay close attention to

8271a number of details dependent on what type of government action

8282or inaction serves as the basis for the request. See Finding of

8294Fact 48.

829698. The review period under such a request not only

8306requires close attention to a number of details but also

8316requires evaluation and analysis of facts related to

8324governmental concerns or litigation if there is to be a good

8335decision about whether to grant the extension or not.

834499. Unlike the extensions sought in the Hillsborough Case,

8353however, the extension in this case required no such detailed

8363analysis. All the Agency is required to do under the Transfer

8374Extension Paragraph of the Termination Rule when the 15-Day

8383Requirement is observed is to check for two matters that do not

8395require evaluation or analysis: (1) is the written request

8404supported by a transfer application by the proposed transferee

8413and, (2) has the Agency ever granted a extension before on the

8425basis of a transfer.

8429100. There is no contention in this case that any other

8440extension of the Construction Deadline for the CON had ever been

8451granted. The Agency's documents of record, moreover, show that

8460a transfer application by Sanderling had been submitted to the

8470Agency long before it entered the Final Order denying the

8480extension.

8481101. The minimal review required by the Transfer Extension

8490Paragraph of the Termination Rule defeats the Agency's

"8498Christmas Eve" argument. The argument is defeated, too, by the

8508fact that the December 18 Written Request was sufficient to

8518trigger the review required by the Transfer Extension Paragraph.

8527Including the day the request first appeared at the Agency, AHCA

8538had four working days before Christmas Eve to make the

8548relatively simple determinations of whether a transfer

8555application had been filed and whether an extension had been

8565granted previously. That the transfer application was not

8573received until December 24 is of little moment. The December 18

8584Written Request had promised the transfer application would be

8593filed before the Commencement of Construction Deadline. All

8601that needed to be done after review of the request under the

8613circumstances was to instruct appropriate staff to be alert for

8623the filing of the transfer application and to grant the request

8634once it was filed.

8638102. The Hillsborough Case has additional value in this

8647case: it is precedent in one significant way. It demonstrates

8657that AHCA, despite its claim to the contrary, does have

8667authority for waiving the 15-Day Notice Requirement. The

8675authority is that used in the Hillsborough Case: Section

8684120.542, Florida Statutes, the Variance and Waiver Statute.

8692Application of the Variance and Waiver Statute

8699103. As the Agency has recognized and as evident from the

8710statute's plain meaning, the test for granting a waiver of the

872115-Day Notice Requirement is two-pronged.

8726104. The Findings of Fact here easily satisfy the second

8736of the two prongs: a demonstration by Miami Jewish Home that

8747application of the Termination Rule would create a substantial

8756hardship or would violate principles of fairness.

8763105. Application of the 15-Day Notice Requirement in this

8772case would create substantial hardship. Substantial hardship

8779was created by the interaction of a number of factors beyond

8790Miami Jewish Home's control. These included an environment in

8799which MJHHA lost investment income necessary to fund the project

8809(at a time when the entire country suffered a massive reduction

8820in the value of equities), a moment when credit necessary to

8831substitute for the loss of cash had become generally

8840unavailable, and an inability despite diligence to find a

8849transferee for the CON until a point in time at which notice to

8862the Agency was untimely.

8866106. Whether Miami Jewish Home has demonstrated that the

8875purpose of the underlying statute will be or has been achieved

8886by other means is a more difficult question. The answer

8896requires identification of the statute that underlies the

8904Termination Rule.

8906The Underlying Statute.

8909107. The Agency's claim that the Termination Subsection

8917underlies the Termination Rule and the Transfer Extension

8925Paragraph is certainly correct. After all, "408.040(2) FS" is

8934shown as the law implemented by the Termination Rule in the

8945Florida Administrative Code. Certainly, the law implemented by

8953a rule should be a statute underlying the rule.

8962108. But the claim is beset by a curiosity. There is not

8974a single word in the Termination Subsection nor in all of

8985Section 408.040, Florida Statutes, about extensions in the case

8994of "transfers," the basis of the extension sought by Miami

9004Jewish Home.

9006109. Nor is the 15-Day Requirement, the clause in the

9016Transfer Extension Paragraph, mentioned in Section 408.040,

9023Florida Statutes. That the 15-Day Requirement is not

9031statutory is a fact the Agency wrestled with in the Hillsborough

9042Case. See Finding of Fact 84.

9048110. At the same time, the place in the statutes which

9059references CON transfers is Section 408.042, Florida Statutes,

9067which governs "limitations on transfers." Section 408.042 is

9075not listed by the Florida Administrative Code as a law

9085implemented under the Termination Rule.

9090111. Here the Hillsborough Case is again of assistance.

9099The Agency referred in the Hillsborough December 28, 2007, Final

9109Order to "the entire CON statute, found at Chapter 408, Part I,"

9121MJHHA Exhibit 21 at 7, paragraph 20, as the statute underlying

9132the 15-Day Requirement and the Termination Rule. See MJHHA

9141Exhibit 21 at 7-8 and Finding of Fact 86.

9150112. In the Hillsborough Final Order of February 19, 2008,

9160when AHCA granted the extension instead of denying it as in the

9172earlier final order, it did not retreat from its language with

9183regard to the meaning of "underlying statute." Without such a

9193retreat which would have necessitated a reasonable explanation

9201for the departure, the Agency is required to follow the

9211Hillsborough Case's December 27, 2007, Final Order's

9218construction of "underlying statute," that is, that "underlying

9226statue" means the Act, not just the law implemented by the

9237Termination and Extension Rule. See Nordheim v. Dep't of Envtl.

9247Prot. , 719 So. 2d 1212, 1214 (Fla. 3d DCA 1998); Gessler v.

9259Dep't of Bus. & Prof. Reg. , 627 So. 2d 501, 503-4 (Fla. 4th DCA

92731993).

9274113. Furthermore, unlike substantive CON statutes and its

9282own rules for which the Agency's interpretation is given

9291deference because of its expertise in substantive CON Law, the

9301term "underlying statute" occurs in this case in a procedural

9311context. The Agency enjoys no deference in construing terms in

9321the Waiver and Variance Statute, a provision of the

9330Administrative Procedure Act, Chapter 120, Florida Statutes.

9337See generally Barfield v. Dep't of Health , 805 So. 2d 1008 (Fla.

93491st DCA 2001) and Deep Lagoon Boat Club, Ltd., v. Sheridan , 784

9361So. 2d 1140, 1144 (Fla. 2d DCA 2001).

9369114. The view as to the meaning of the term "underlying

9380statute" as used in the Variance and Waiver Statute taken by the

9392Agency in the December 28, 2007 Final Order in the Hillsborough

9403Case, moreover, is a better one than the construction AHCA

9413advances in this case.

9417Need

9418115. Finally, it should be stressed that the un-rebutted

9427evidence in this case is that the need for the LTCH authorized

9439by the CON continued as of the time of final hearing. To

9451reiterate what the Agency stated with such clarity in its

9461December 27, 2007 Final Order in the Hillsborough Case, "[t]he

9471issue, always, in the CON program is whether there is a need for

9484a facility or service, not whether it would be desirable to have

9496additional options and choices beyond that need." MJHHA Ex. 21

9506at 7-8 (emphasis added.)

9510MJHHA Has Met its Burden

9515116. Miami Jewish Home has demonstrated that the purpose

9524of the underlying statute (the Act) will be achieved by waiving

9535the 15-Day Notice Requirement. It has also demonstrated that

9544application of the 15-Day Notice Requirement will create a

9553substantial hardship.

9555117. Having demonstrated that both prongs of the test

9564under the Variance and Waiver Statute have been met, the 15-Day

9575Requirement should be waived, the CON should be determined to

9585still have validity, and the CON validity period should be

9595extended for 60 days from the issuance of a final order by the

9608Agency after consideration of this Recommended Order.

9615RECOMMENDATION

9616Based on the foregoing Findings of Fact and Conclusions of

9626Law, it is recommended that the Agency waive the 15-Day

9636Requirement for Miami Jewish Home with regard to its written

9646request to extend the validity period of CON 9893, revoke the

9657termination of the CON, and grant an extension of 60 days of the

9670CON's validity period upon issuance of a final order.

9679DONE AND ENTERED this 11th day of May, 2009, in

9689Tallahassee, Leon County, Florida.

9693S

9694DAVID M. MALONEY

9697Administrative Law Judge

9700Division of Administrative Hearings

9704The DeSoto Building

97071230 Apalachee Parkway

9710Tallahassee, Florida 32399-3060

9713(850) 488-9675

9715Fax Filing (850) 921-6847

9719www.doah.state.fl.us

9720Filed with the Clerk of the

9726Division of Administrative Hearings

9730this 11th day of May, 2009.

9736COPIES FURNISHED :

9739Karl David Acuff, Esquire

9743Watkins & Associates, P. A.

97483051 Highland Oaks Terrace, Suite D

9754Post Office Box 15828

9758Tallahassee, Florida 32317-5828

9761Shaddrick Haston, Esquire

9764Agency for Health Care Administration

9769Fort Knox Building, Mail Stop 3

97752727 Mahan Drive, Suite 3431

9780Tallahassee, Florida 32308

9783Holly Benson, Secretary

9786Agency for Health Care Administration

9791Fort Knox Building, Mail Stop 3

97972727 Mahan Drive, Suite 3116

9802Tallahassee, Florida 32308

9805Justin Senior, General Counsel

9809Agency for Health Care Administration

9814Fort Knox Building, Mail Stop 3

98202727 Mahan Drive, Suite 3116

9825Tallahassee, Florida 32308

9828Richard J. Shoop, Agency Clerk

9833Agency for Health Care Administration

9838Fort Knox Building, Mail Stop 3

98442727 Mahan Drive, Suite 3431

9849Tallahassee, Florida 32308

9852NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

9858All parties have the right to submit written exceptions within

986815 days from the date of this Recommended Order. Any exceptions

9879to this Recommended Order should be filed with the agency that

9890will issue the Final Order in this case.

Select the PDF icon to view the document.
PDF
Date
Proceedings
PDF:
Date: 07/02/2009
Proceedings: Agency Final Order
PDF:
Date: 07/02/2009
Proceedings: (Respondent's) Exceptions to Recommended Order filed.
PDF:
Date: 07/02/2009
Proceedings: Final Order filed.
PDF:
Date: 06/16/2009
Proceedings: Transmittal letter from Claudia Llado forwarding three-volume Transcript along with official recognition exhibits numbered 2 and 3, which were inadvertently omitted from the closing package sent out on May 11, 2009, to the agency.
PDF:
Date: 05/11/2009
Proceedings: Recommended Order
PDF:
Date: 05/11/2009
Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
PDF:
Date: 05/11/2009
Proceedings: Recommended Order (hearing held March 24 and 25, 2009). CASE CLOSED.
PDF:
Date: 04/23/2009
Proceedings: MJH`s Proposed Recommended Order filed.
PDF:
Date: 04/22/2009
Proceedings: (Respondent`s) Proposed Recommended Order filed.
Date: 04/13/2009
Proceedings: Transcript (Volumes 1-3) filed.
Date: 03/24/2009
Proceedings: CASE STATUS: Hearing Held.
PDF:
Date: 03/24/2009
Proceedings: Order (denying Respondent`s Motion in Limine)
PDF:
Date: 03/20/2009
Proceedings: Miami Jewish Home and Hospital for the Aged, Inc.`s Response in Opposition to the Agency for Health Care Administration`s Motion in Limine filed.
PDF:
Date: 03/20/2009
Proceedings: (Respondent`s) Motion in Limine filed.
PDF:
Date: 03/20/2009
Proceedings: Joint Pre-Hearing Stipulation filed.
PDF:
Date: 03/20/2009
Proceedings: Order (denying Motion for Continuance).
PDF:
Date: 03/19/2009
Proceedings: Request for Official Recognition filed.
PDF:
Date: 03/18/2009
Proceedings: MJHHA`s Response in Opposition to AHCA`s Motion for Continuance filed.
PDF:
Date: 03/17/2009
Proceedings: Notice of Hearing Thursday March 19, 2009 at 2:00 p.m. on AHCA`s Motion for Continuance filed.
PDF:
Date: 03/16/2009
Proceedings: Motion for Continuance filed.
PDF:
Date: 03/11/2009
Proceedings: Notice of Unavailability (L. Novak) filed.
PDF:
Date: 03/11/2009
Proceedings: Notice of Appearance of Counsel (filed by S. A. Haston).
PDF:
Date: 03/11/2009
Proceedings: Notice of Taking Deposition (Dr. T. Ferreira) filed.
PDF:
Date: 03/10/2009
Proceedings: Miami Jewish Home and Hospital for the Aged, Inc.`s Notice of Service of Answers to AHCA`s First Interrogatories to MJHHA filed.
PDF:
Date: 03/10/2009
Proceedings: Miami Jewish Home and Hospital for the Aged, Inc.`s Response to the Agency Health Care Administration`s First Request for Production filed.
PDF:
Date: 03/10/2009
Proceedings: Notice of Taking Deposition (of M. Knight) filed.
PDF:
Date: 03/10/2009
Proceedings: Notice of Taking Deposition (of J. Cushman) filed.
PDF:
Date: 03/09/2009
Proceedings: The Agency for Health Care Administration`s Responses to Miami Jewish Home and Hospital for the Aged, Inc.`s First Set of Interrogatories filed.
PDF:
Date: 03/09/2009
Proceedings: Petitioner`s Notice of Filing Agency`s Response to the First Set of Interrogatories filed.
PDF:
Date: 03/09/2009
Proceedings: The Agency for Health Care Administration`s Responses to Miami Jewish Home and Hospital for the Aged, Inc.`s First Request for Production of Documents filed.
PDF:
Date: 03/09/2009
Proceedings: Agency for Health Care Administration`s Notice of Service of Answers to Miami Jewish Home and Hospital for the Aged, Inc.`s First Set of Interrogatories to AHCA filed.
PDF:
Date: 03/09/2009
Proceedings: Miami Jewish Home and Hospital for the Aged, Inc.`s Final Witness List filed.
PDF:
Date: 03/09/2009
Proceedings: The Agency for Health Care Administration`s Final Witness List filed.
PDF:
Date: 03/06/2009
Proceedings: Notice of Taking Deposition filed.
PDF:
Date: 03/05/2009
Proceedings: Joint Proposed Order of Pre-hearing Instructions filed.
PDF:
Date: 03/05/2009
Proceedings: Miami Jewish Home and Hospital for the Aged, Inc.`s Preliminary Witness List filed.
PDF:
Date: 03/04/2009
Proceedings: The Agency for Health Care Administration`s Preliminary Witness List filed.
PDF:
Date: 02/24/2009
Proceedings: Respondent, Agency for Health Care Administration`s Request for Production of Documents to Petititioner, Miami Jewish Home and Hospital for the Aged, Inc. filed.
PDF:
Date: 02/24/2009
Proceedings: Notice of Service of the Agency for Health Care Administration`s First Set of Interrogatories to Miami Jewish Home and Hospital for the Aged, Inc. filed.
PDF:
Date: 02/23/2009
Proceedings: Miami Jewish Home and Hospital for the Aged, Inc.`s Notice of Service of its First Set of Interrogatories on the Agency for Health Care Administration filed.
PDF:
Date: 02/23/2009
Proceedings: Miami Jewish Home and Hospital for the Aged, Inc.`s First Request for Production to the Agency for Health Care Administration filed.
PDF:
Date: 02/16/2009
Proceedings: Notice of Hearing (hearing set for March 24 through 26, 2009; 9:00 a.m.; Tallahassee, FL).
PDF:
Date: 02/16/2009
Proceedings: Order (within 30 days of this Order, the parties shall file a proposed order of pre-hearing instructions).
PDF:
Date: 02/13/2009
Proceedings: Joint Response to Initial Order filed.
PDF:
Date: 02/12/2009
Proceedings: Initial Order.
PDF:
Date: 02/10/2009
Proceedings: Final Order Denying Emergency Petition for Variance or Waiver of Rule 59C-1.018(3)(c), Florida Adminstrative Code filed.
PDF:
Date: 02/10/2009
Proceedings: Section 120.57(1), F.S., Petition on Behalf of Miami Jewish Home and Hospital for the Aged, Inc., Challenging (1) AHCA`s Determination that CON 9893 Terminated and (2) AHCA`s Denial of its Emergency Petition for Variance or Waiver of Rule 59C-1.01 filed.
PDF:
Date: 02/10/2009
Proceedings: Notice (of Agency referral) filed.

Case Information

Judge:
DAVID M. MALONEY
Date Filed:
02/10/2009
Date Assignment:
02/12/2009
Last Docket Entry:
07/02/2009
Location:
Tallahassee, Florida
District:
Northern
Agency:
ADOPTED IN PART OR MODIFIED
 

Counsels

Related DOAH Cases(s) (3):

Related Florida Statute(s) (12):

Related Florida Rule(s) (1):