95-003335RU Winter Park Healthcare Group, Ltd., D/B/A Winter Park Memorial Hospital vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Thursday, October 31, 1996.

Summary: Allegations of petitions were insufficient to show entitlement to relief sought in view of new court decisions.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WINTER PARK HEALTHCARE GROUP, LTD. )

and FLORIDA HOSPITAL ASSOCIATION, )

INC., )

)

Petitioners, )

)

vs. ) CASE NO. 95-3335RU

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

___________________________________)

SOUTH DADE HEALTHCARE GROUP, LTD. )

and FLORIDA HOSPITAL ASSOCIATION, )

INC., )

)

Petitioners, )

)

vs. ) CASE NO. 95-3336RU

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

___________________________________)

FINAL ORDER OF DISMISSAL

1. These two consolidated proceedings are presently pending

on the Respondent's Supplemental Motion To Dismiss or,

Alternatively Motion For Summary Final Order and for Summary

Recommended Order filed on May 3, 1996, which supplements an

earlier similar motion filed on March 14, 1996. 1/ Extensive

responses, replies, and memorandums of law have been filed in

support of and in opposition to the pending motion. Two lengthy

sessions have been devoted to oral argument for and against the

motion.

2. The petitions in these two consolidated cases are

identical, with the exception of allegations describing the

Petitioners in each case. Both petitioners seek relief under

Section 120.535, Florida Statutes (1995). 2/ Both petitions

seek relief based on the same alleged agency statement. Both

petitions make the same factual assertions and both rely on the

same legal arguments.

3. For purposes of the pending motion, all of the factual

allegations set forth in the two petitions have been taken as

true. Those allegations need not all be repeated here. For

purposes of the pending motion it is sufficient to direct

attention to a few of the more salient of the facts alleged. 3/

In each case one of the Petitioners currently holds a single

license for the operation of two hospital facilities each located

on separate premises. In each case one of the hospitals is a

general acute care hospital and the other is a psychiatric

specialty hospital. Among the several alleged benefits of such a

single license for two separate facilities has been the ability

to seek Medicaid reimbursement for care rendered to Medicaid

eligible psychiatric and substance abuse patients treated at the

psychiatric specially hospital. On June 8, 1995, the Agency for

Health Care Administration ("AHCA") wrote a letter to the

administrators of the Petitioner hospitals advising them of a

"procedural change" in the issuance of single licenses for

multiple hospitals. The letter to the administrator of Winter

Park Memorial Hospital read as follows, in pertinent part:

This is to advise you of a procedural change

in the issuance of single licenses for

multiple hospitals. Winter Park Memorial

Hospital is currently licensed as a Class

I General Hospital with two separate

premises. Upon the next biennial renewal

of Winter Park Memorial Hospital's license,

or issuance of a new license for any other

purpose, whichever may occur sooner, the

face of the license will be amended as

follows:

Section 395.003(2)(d), Florida Statutes,

requires that a single license issued to a

licensee for hospitals located on separate

premises shall specifically state the

location of the hospitals, the services, and

the licensed beds available on each separate

premise. In order to comply with this

requirement, if Winter Park Memorial Hospital

desires to retain a single license for the

two separate premises, the next license

issued to Winter Park Memorial Hospital will

identify each separate hospital by the

"class" of services that the hospital

provides. The "class" of service designates

the statutory categorization of general

versus specialty hospitals. Therefore

Winter Park Memorial Hospital will be

identified as a Class I General Hospital,

and Winter Park Pavilion will be identified

as a Class III Special Psychiatric Hospital.

As an alternative to a single license, the

agency will issue separate licenses to the

two hospitals, upon request of the hospital

licensee.

This revision in the hospitals' single

license will not affect the hospitals'

Medicare certification. However, there

will be an impact on Medicaid reimbursement

for services provided at Winter Park

Pavilion. Medicaid reimbursement policy

prohibits reimbursement for hospital

inpatient services that are provided in a

facility primarily restricted to the care

and treatment of patients having mental

disorders or mental diseases, as evidenced

by 50 percent or more psychiatric primary

admission diagnoses. Therefore, upon the

effective date of the next license issued

to Winter Park Memorial Hospital, services

provided at Winter Park Pavilion may not be

billed to Medicaid, if Winter Park Pavilion

meets the criteria stated above.

A letter of identical effect was sent to the administrator of

Deering Hospital, the only changes being the names of the

affected hospitals.

4. The language quoted immediately above is the "agency

statement" these Petitioners are challenging as constituting an

unadopted "agency statement defined as a Rule" by Section 120.52,

Florida Statutes (1995), as amended. The challenge fails for

several reasons, the most significant of which is that the

primary legal precedents upon which the Petitioners relied at the

time of filing their petitions have since been reversed. Those

legal precedents consisted of a Final Order of the Division of

Administrative Hearings invalidating proposed rules related to

single hospital licenses for multiple hospitals and two writs of

mandamus issued by the Circuit Court in and for Leon County

requiring AHCA to issue hospital licenses different in effect

from those described in the above-quoted letters of June 8, 1995.

In Agency for Health Care Administration v. Sebastian Hospital,

Inc., 21 Fla. L. Weekly D649 (1st DCA 1996), and in Agency for

Health Care Administration v. University Hospital, Ltd., 21 Fla.

L. Weekly D650 (1st DCA 1996), the Final Order invalidating

proposed rules and the two writs of mandamus were all reversed.

5. The court in University Hospital, supra, directed

attention to two statutory provisions which are also relevant to

the disposition of these proceedings. The first of these is

Section 395.003(2)(d), Florida Statutes, which provides, in part:

(d) The agency shall, at the request of a

licensee, issue a single license to a

licensee for facilities located on separate

premises. Such a license shall specifically

state the location of the facilities, the

services, and the licensed beds available

on each separate premises.

The other is Section 409.905(5), Florida Statutes, which

provides, in part:

A licensed hospital maintained primarily for

the care and treatment of patients having

mental disorders or mental diseases is not

eligible to participate in the hospital

inpatient portion of the Medicaid program

except as provided in federal law.

6. The court in University Hospital, supra, also directed

attention to two rule provisions which are also relevant to the

disposition of these proceedings. The first of these is proposed

Rule (now existing Rule) 4/ 59A-3.203(2)(i), Florida

Administrative Code, which provides:

(i) A single license will be issued to a

licensee for facilities located on separate

premises, upon request of the applicant.

The license will specifically state the

location of the facilities, their services,

and the licensed beds available on each

separate premises. Such a license shall

also specifically identify the general or

specialty classification of hospitals

located on separate premises.

The other is proposed Rule (now existing Rule) 59A-3.203(6),

Florida Administrative Code, which provides:

(6) Each license shall specifically state

the name of the licensed operator of the

hospital, the class of hospital, and the

name and location of the hospital. Any

beds in the hospital which are regulated

under the certificate of need program, as

specified in Chapter 59C-1, F.A.C., shall

be listed, including the number of licensed

beds by type. The license for hospitals

having facilities on more than one premises

shall specifically state the location of each

facility, their general or specialty classi-

fication, their services, and the licensed

beds available on each separate premises.

7. The court in Sebastian Hospital, supra, concluded its

opinion with the following observations:

We agree with the Agency that the trial

judges improperly issued writs of mandamus.

In each instance, the Agency issued a

single license for facilities located on

separate premises, specifically stating the

location of the premises, the services, and

the licensed beds available on each separate

premises, in accordance with section

395.003(2)(d). Nothing in the language of

section 395.003(2)(d) requires that the

license consolidate each facility under the

same classification of hospital. The

appellees are actually arguing not about

whether the Agency performed its ministerial

duty to issue single licenses, but instead

about the form of a single license and the

effect of a single license for separate

facilities, particularly upon eligibility

for Medicaid reimbursement. The form and

effect of issuance of a single license in

these instances are not appropriate subjects

for a writ of mandamus. Accordingly, the

orders on appeal are quashed.

8. The court in University Hospital, supra, said, "We agree

with the Agency that the proposed rules constitute a permissible

interpretation of section 395.003," and then concluded its

opinion with the following observations:

Section 395.003(2)(d) requires the license

to specifically state the location, the

services, and the licensed beds available

on each separate premises. As noted in

Agency for Health Care Administration v.

Sebastian Hospital, Inc., Case No. 95-586/

95-1231 [21 Fla. L. Weekly D649], nothing

in the language of section 395.003(2)(d)

requires that the license consolidate each

facility under the same classification of

hospital. Section 395.003(4) provides that

the agency shall issue a license which

specifies the services categories and the

number of hospital beds in each category for

which a license is issued. Section 395.003(6)

provides that no specialty hospital shall

provide any service or regularly serve any

population group beyond those services or

groups specified in its license.

The Agency indicated that section 395.003

was one of the statutory provisions

implemented by the proposed rules. Any

entity that has or wants a single license

for facilities located on separate premises

would be on notice that issuance of a single

license would be affected by the proposed

rule. Any entity that wanted to receive

Medicaid reimbursement for a Class III

specialty psychiatric hospital would be aware

that a single license setting forth only a

Class I general hospital classification was

required in order to do so.

9. An additional rule provision which bears on this matter

is AHCA's Rule 59G-4.150, Florida Administrative Code. On May

20, 1996, AHCA filed for adoption an amendment to Rule 59G-4.150

which adds the following to the itemization of "procedures and

services excluded from reimbursement within the Inpatient

Hospital Services Program:"

4. Inpatient hospital services that are

provided in any hospital that is maintained

primarily for the care and treatment of

patients having mental disorders or mental

diseases, as evidenced by fifty percent or

more admissions resulting from primary

diagnoses that are psychiatric in nature,

and treatment of patients having mental

disorders or diseases.

10. Since the filing of the petitions in these two

proceedings, Section 120.535, Florida Statutes, has been

repealed. The current statutory provisions applicable to

proceedings like these challenging agency statements defined as

rules are found at Sections 120.54(1) and 120.56(4), Florida

Statutes (1995), as amended by Chapter 96-159, Laws of Florida.

The relevant portions of Section 120.54(1), as amended, read as

follows:

(1) GENERAL PROVISIONS APPLICABLE TO ALL

RULES OTHER THAN EMERGENCY RULES.--

(a) Rulemaking is not a matter of agency

discretion. Each agency statement defined

as a rule by s. 120.52 shall be adopted by

the rulemaking procedure provided by this

section as soon as feasible and practicable.

1. Rulemaking shall be presumed feasible

unless the agency proves that:

a. The agency has not had sufficient time

to acquire the knowledge and experience

reasonably necessary to address a statement

by rulemaking;

b. Related matters are not sufficiently

resolved to enable the agency to address a

statement by rulemaking; or

c. The agency is currently using the

rulemaking procedure expeditiously and in

good faith to adopt rules which address

the statement.

2. Rulemaking shall be presumed practic-

able to the extent necessary to provide fair

notice to affected persons of relevant

agency procedures and applicable principles,

criteria, or standards for agency decisions

unless the agency proves that:

a. Detail or precision in the establish-

ment of principles, criteria, or standards

for agency decisions is not reasonable

under the circumstances; or

b. The particular questions addressed are

of such a narrow scope that more specific

resolution of the matter is impractical

outside of an adjudication to determine the

substantial interests of a party based on

individual circumstances.

11. The relevant portions of Section 120.56(4), as amended,

read as follows:

(4) CHALLENGING AGENCY STATEMENTS DEFINED

AS RULES; SPECIAL PROVISIONS.--

(a) Any person substantially affected by

an agency statement may seek an administra-

tive determination that the statement

violates s. 120.54(1)(a). The petition

shall include the text of the statement or

a description of the statement and shall

state with particularity facts sufficient

to show that the statement constitutes a

rule under s. 120.52 and that the agency

has not adopted the statement by the rule-

making procedure provided by s. 120.54.

(b) The administrative law judge may

extend the hearing date beyond 30 days after

assignment of the case for good cause. If

a hearing is held and the petitioner proves

the allegations of the petition, the agency

shall have the burden of proving that rule-

making is not feasible and practicable under

s. 120.54(1)(a).

(c) The administrative law judge may

determine whether all or part of a statement

violates s. 120.54(1)(a). The decision of

the administrative law judge shall

constitute a final order. The division

shall transmit a copy of the final order to

the Department of State and the committee.

The Department of State shall publish notice

of the final order in the first available

issue of the Florida Administrative Weekly.

(d) When an administrative law judge

enters a final order that all or part of an

agency statement violates s. 120.54(1)(a),

the agency shall immediately discontinue all

reliance upon the statement or any

substantially similar statement as a basis

for agency action.

(e) Prior to entry of a final order that

all or part of an agency statement violates

s. 120.54(1)(a), if an agency publishes,

pursuant to s. 120.54(3)(a), proposed rules

which address the statement and proceeds

expeditiously and in good faith to adopt

rules which address the statement, the

agency shall be permitted to rely upon the

statement or a substantially similar state-

ment as a basis for agency action if the

statement meets the requirements of s.

120.57(1)(e). If an agency fails to adopt

rules which address the statement within 180

days after publishing proposed rules, for

purposes of this subsection, a presumption

is created that the agency is not acting

expeditiously and in good faith to adopt

rules. If the agency's proposed rules are

challenged pursuant to subsection (2), the

180-day period for adoption of rules is

tolled until a final order is entered in

that proceeding.

12. Although there are some differences between the

statutory language quoted above and the language of former

Section 120.535, Florida Statutes (1995), the current statutory

provisions are substantially similar to the prior provisions in

most respects. The similarity is such that many Final Orders

determining issues under the provisions of the prior statutory

language are still relevant to the determination of issues raised

under the current statute.

13. Also relevant to the disposition of these proceedings

is the definition of the term "rule," which now appears at

Section 120.52(15), Florida Statutes (1995), as amended by

Chapter 96-159, Laws of Florida, 5/ and reads as follows, in

pertinent part:

(15) "Rule" means each agency statement

of general applicability that implements,

interprets, or prescribes law or policy or

describes the procedure or practice require-

ments of an agency and includes any form

which imposes any requirement or solicits

any information not specifically required by

statute or by an existing rule. The term also

includes the amendment or repeal of a rule.

14. Upon consideration of all the statutory provisions and

rule provisions, especially in view of their interpretation in

the two appellate court opinions mentioned above, it is clear

that the allegations of the Petitioners in these consolidated

proceedings are insufficient to show that the challenged

statement is an unadopted statement that constitutes a rule under

Section 120.52(15), Florida Statutes (1995), as amended. The

insufficiencies in the Petitioners' positions are succinctly

described as follows in AHCA's supplemental motion:

3. The decision of the First District Court

of Appeal in Agency for Health Care

Administration v. University Hospital, Ltd.

et al., 1st DCA Case No. 95-1530, reverses

the May 1, 1995 decision of the Division of

Administrative Hearings in University

Hospital, Ltd. et al. vs. Agency for Health

Care Administration, DOAH Cases No. 95-0632RP

and 95-0634RP. The DOAH decision, which is

now reversed, had invalidated the Agency's

proposed Rules 59A-3.203(2)(i) [and]

59A- 3.203(6). Those proposed Rules were

originally published, pursuant to Section

120.54(1), F.S., in the January 20, 1995

Florida Administrative Weekly. ***

4. The "invalid non-rule policy" which

is complained of by petitioners in instant

DOAH Cases No. 95-3318RU, 95-3335RU, and

95-3336RU is in fact the policy clearly

stated in the proposed Rules which were

wrongly invalidated. That policy, i.e.,

that hospitals on separate premises are to

be separately identified and classified if

listed on a single hospital license, has

been the Agency's policy at all times

material herein. The policy remained

unchanged through the time during which the

appeal of DOAH Cases No. 95-0632RP and

95-0634 was pending. The Agency's corres-

pondence of June 8, 1995 to petitioners,

which is attached as an exhibit to each of

the petitions herein, merely reflects the

said policy--to repeat, the policy which is

embodied in the proposed Rules which have

now been upheld on appeal.

5. The First District Court of Appeal's

reversal of University Hospital, Ltd. et al.

vs. Agency for Health Care Administration,

DOAH Cases No. 95-0632RP and 95-0634RP,

establishes the validity of the Agency's

proposed Rules 59A-3.203(2)(i) and

59A- 3.203(6). ***

6. The Agency's June 8, 1995 corres-

pondence which is alleged to be an "invalid

non-rule policy" by petitioners is merely

in accord with the policy already set out in

proposed Rules 59A-3.203(2)(i) and

59A-3.203(6); that is, that hospitals

located on separate premises will be

separately identified and separately

classified if listed on a single hospital

license. At this point in these proceedings,

it is utterly specious to argue that the

policy embodied in the said correspondence

must, under Section 120.535, F.S., be

promulgated as a rule in accord with Section

120.54, F.S.: the policy has already been

promulgated as a rule in accord with Section

120.54, F.S.; and the rules in question have

now been upheld by the First District Court

of Appeal. In sum, the "invalid non-rule

policy" complained of in the petitioners'

pleadings is neither a "non- rule," nor is

it "invalid."

7. The decision of the First District

Court of Appeal in Agency for Health Care

Administration v. Sebastian Hospital, Inc.

et al., 1st DCA Cases No. 95-586 and

95-1230, quashed two writs of mandamus

issued by the Circuit Court, Leon County,

which writs had wrongly been issued against

the Agency in the belief that hospitals have

an "entitlement" to a certain form of

hospital licensure and, consequently, to

Medicaid reimbursement. With the quashal of

the writs issued in the Circuit Court cases,

and the reversal of DOAH's decision

invalidating the Agency's proposed Rules

59A-2.203(2)(i) and 59A-3.203(6), petitioners

have lost the entirety of the legal authority

on which they rely in instant DOAH Cases.

. . . Petitioners' construction of Section

395.003(2)(d), F.S., now has no ground

whatever in law.

15. Contrary to the arguments asserted by the Petitioners,

the statutory and duly promulgated rules heretofore discussed

provide ample authority for the AHCA action proposed in the June

8, 1995, letters that are the subjects of these proceedings. The

Petitioners have failed to allege any facts which would show that

AHCA is applying any criteria that is not apparent from an

application or reading of such statutes and rules, especially in

view of the recent appellate court construction of such statutes

and rules. For all of the foregoing reasons, the allegations of

the petitions in these consolidated cases, taken as true, are

insufficient to demonstrate that AHCA has violated Section

120.54(1)(a), Florida Statutes (1995), as amended. Such being

the case, it would serve no useful purpose to conduct an

evidentiary hearing in these cases and they should be dismissed.

6/

Accordingly, it is ORDERED that the petitions in both of

these consolidated cases are hereby DISMISSED and all relief

requested in both petitions is hereby DENIED.

DONE AND ORDERED this 31st day of October, 1996, in

Tallahassee, Florida.

___________________________________

MICHAEL M. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 31st day of October, 1996.

ENDNOTES

1/ The March 14, 1996, motion was denied as premature because it

relied in large part on appellate court decisions in which

motions for rehearing were still pending. The order denying the

motion as premature provided: "The motion may be refiled once

the subject appellate court orders have become final."

2/ Chapter 120, Florida Statutes (1995), was extensively amended

by Chapter 96-159, Laws of Florida. Section 120.535, Florida

Statutes (1995) was repealed by Section 8 of Chapter 96- 159,

Laws of Florida. However, the substance of those repealed

provisions was reenacted by other provisions of Chapter 96-159,

Laws of Florida, and now appears in other sections of Chapter

120, Florida Statutes.

3/ Many of the historical details alleged in the petitions add

interesting context to the matters at hand, but are not relevant

or necessary to the disposition of these proceedings. The

significance of a number of the historical details has also been

overtaken by subsequent events, most significantly by the two

appellate court decisions that reversed the lower decisions on

which the Petitioners were relying.

4/ Following the appellate court decision in University

Hospital, supra, proposed rules 59A-3.203(2)(i) and 59A-3.203(6)

were filed for adoption and are now existing rules.

5/ The 1996 amendments to the definition of the term "rule" did

not make any changes material to the disposition of these

proceedings.

6/ Although not argued by any of the parties, and not necessary

to the disposition of these proceedings, the petitions in these

cases appear to also be subject to dismissal on the grounds that

the statements which are challenged in these proceedings are not

statements of "general applicability," and, therefore, are not

rules within the definition at Section 120.52(15), Florida

Statutes (1995), as amended. In this regard attention is

directed to the discussion and to the authorities cited at

paragraphs 6 through 12 of the Final Order in Citifirst Mortgage

Corp. v. Department of Banking and Finance, DOAH Case No. 92-

7496RU, Final Order issued April 1, 1993.

COPIES FURNISHED:

R. Terry Rigsby, Esquire

Wendy A. Delvecchio, Esquire

Blank, Rigsby and Meenan

204 South Monroe Street

Tallahassee, Florida 32301

Michael O. Mathis, Esquire

Richard M. Ellis, Esquire

Agency for Health Care Administration

2727 Mahan Drive

Tallahassee, Florida 32308

Stephen A. Ecenia, Esquire

R. David Prescott, Esquire

Rutledge, Ecenia, Underwood,

Purnell and Hoffman, P.A.

Post Office Box 551

Tallahassee, Florida 32302-0551

Gerald Sternstein, Esquire

Ruden, Barnett, McClosky, Smith

215 South Monroe Street

Post Office Box 10888

Tallahassee, Florida 32301

James M. Barclay, Esquire

Cobb, Cole and Bell

131 North Gadsden Street

Tallahassee, Florida 32302

Steven R. Bechtel, Esquire

Mateer, Harbert and Bates, P.A.

Post Office Box 2854

Orlando, Florida 32802

Stephen K. Boone, Esquire

John S. Koda, Esquire

Boone, Boone and Boone, P.A.

Post Office Box 1596

Venice, Florida 34284

Robert A. Weiss, Esquire

Karen Putnal, Esquire

Parker, Hudson, Rainer and Dobbs

The Perkins House

118 North Gadsden Street, Suite 200

Tallahassee, Florida 32301

Carroll Webb, Executive Director

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

Sam Power, Agency Clerk

Agency for Health Care Administration

Fort Knox, Building 3, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308-5403

Jerome Hoffman, General Counsel

Agency for Health Care Administration

2727 Mahan Drive

Tallahassee, Florida 32308-5403

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled

to judicial review pursuant to Section 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing one copy of

a Notice of Appeal with the Agency Clerk of the Division of

Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First

District, or with the District Court of Appeal in the appellate

district where the party resides. The Notice of Appeal must be

filed within 30 days of rendition of the order to be reviewed.

=================================================================

DISTRICT COURT ORDER

=================================================================

DISTRICT COURT OF APPEAL, FIRST DISTRICT

Tallahassee, Florida 32399-1850

Telephone [phone]

DATE: March 27, 1997

CASE NO: 96-04567

L.T. CASE NO. 95-3335RU

Winter Park Healthcare v. Agency for Health Care

Group, LTD., et al. Administration

Appellant(s), Appellee(s).

BY ORDER OF THIS COURT:

Appeal dismissed pursuant to Rule 9.350(b), Fla.R.App.P.

I HEREBY CERTIFY that the foregoing is (a true copy of) the

original court order.

John S. Wheeler, Clerk

By: __________________ (SEAL)

Leslie Tharp

Deputy Clerk

Copies:

Stephen A. Ecenia R. David Prescott

Thomas W. Konrad Richard Ellis

R. S. Power, Clerk