98-004020CON Public Health Trust Of Miami-Dade County, Florida vs. Cleveland Clinic Florida Hospital And Agency For Health Care Administration Status: Closed Recommended Order on Wednesday, October 14, 1998.

Summary: Dismissal of petition recommended because challenges are not "within the same district" as granted applicant, a requirement for standing in Certificate of Need cases.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PUBLIC HEALTH TRUST OF MIAMI-DADE )

COUNTY, FLORIDA, )

)

Petitioner, )

)

vs. ) Case No. 98-4020

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION and CLEVELAND )

CLINIC FLORIDA HOSPITAL, )

)

Respondents. )

)

RECOMMENDED ORDER OF DISMISSAL

Pursuant to notice, Cleveland Clinic Florida Hospital's

Motion to Dismiss Petition for Formal Administrative Hearing was

heard by the Division of Administrative Hearings, through its

Administrative Law Judge David M. Maloney, on September 28, 1998.

APPEARANCES

For Petitioner: Jack P. Hartog, Esquire

Assistant County Attorney

Jackson Memorial Hospital

West Wing 1 09

1611 N.W. 12th Avenue

Miami, Florida 33136

For Respondent

Cleveland Clinic

Florida Hospital: Robert A. Weiss, Esquire

Karen A. Putnal, Esquire

Parker, Hudson, Rainer & Dobbs LLP

118 North Gadsden Street, 2nd Floor

Tallahassee, Florida 32301

For Respondent Agency

for Health Care

Administration: Richard A. Patterson, Esquire

Agency for Health Care

Administration

2727 Mahan Drive, Building 3

Tallahassee, Florida 32308

STATEMENT OF THE ISSUE

Whether Respondent Cleveland Clinic Florida Hospital's

Motion to Dismiss the Petition in this case, for lack of

standing, should be granted.

PRELIMINARY STATEMENT

On September 10, 1998, the Division of Administrative

Hearings received a notice from R.S. Power, Agency Clerk for the

Agency for Health Care Administration ("AHCA" or the "Agency").

The notice advised that AHCA had received a request for formal

administrative hearing from Public Health Trust of Miami-Dade

County, Florida (the "Trust"). By the notice, the Agency

requested that the Division conduct the proceedings required by

law. Attached to the notice were copies of pleadings and papers

already filed in the case.

Among the pleadings and papers attached was a motion

denominated "Cleveland Clinic Florida Hospital's Motion to

Dismiss Petition for Formal Administrative Hearing." Also

attached, among other papers, were the petition itself, the

Trust's response to the motion, and an amended petition.

Following des ignation of the undersigned to conduct the

proceedings, the motion to dismiss was set for oral argument. At

the conclusion of argument (in which the Agency supported the

Petitioner in opposing the Motion to Dismiss) the motion was

taken under advisement. The parties were given one week to

submit post-hearing filings in favor of or opposed to the Motion.

Cleveland Clinic Florida Hospital ("CCFH") and the Trust

filed post-hearing documents; the Agency did not. CCFH's

Proposed Recommended Order and the Trust's Post-hearing

Memorandum were both timely filed on October 5, 1998.

FINDINGS OF FACT

1. The facts necessary for disposition of the Motion to

Dismiss are not in dispute.

2. The Public Health Trust of Miami-Dade County operates

Jackson Memorial Hospital ("JMH") in Dade County ( AHCA District

11). In its Petition for Formal Administrative Hearing,

certified to have been served on August 19, 1998, the Trust

alleged that JMH is the only provider of adult kidney

transplantation services within Florida Transplant Service

Planning Area 4, which includes AHCA Districts 8, 9, 10 and 11.

The Trust described itself in both the Petition and an amended

Petition which followed as:

[A]n agency and instrumentality of Miami-Dade

County, which is organized and operated

pursuant to Chapter 154, Part II, Florida

Statutes, and Chapter 25A of the Code of

Miami-Dade County. It governs and operates

Jackson Memorial Hospital and other

designated health care facilities. Its

address is 1611 N.W. 12th Avenue, Miami,

Florida 33136.

Amended Petition, paragraph 2, p. 2. The Trust and Jackson

Memorial Hospital are both in Dade County, AHCA District 11.

3. With regard to CCFH, the Petition alleged the following.

CCFH is located in Fort Lauderdale, Broward County ( AHCA District

10). CCFH has CON approval to construct a new facility in

Weston, also in Broward County. It submitted an application for

an adult kidney transplantation program at the new Broward County

facility which was awarded preliminary CON approval as noticed in

the Florida Administrative Weekly on July 31, 1998.

4. It is the application for the adult kidney

transplantation program at the Weston facility in AHCA District

10 which the petition seeks to have denied contrary to AHCA's

preliminary approval.

5. The Petition's allegations with regard to standing are

contained in paragraphs seven and eight:

7. As the sole provider of adult

transplantation services in Transplant Area

4, Petitioner has standing to file this

petition because its substantial interests

will be directly affected by the Agency

action for which this petition seeks review.

8. The adverse affects to the PHT if the

preliminary approval of CON No. 9026 is

upheld include but are not limited to:

a. A decrease in the number of procedures

performed at JMH, which may impair research

objectives and medical proficiency;

b. A loss of needed revenue to JMH, the

largest provider of indigent hospital care in

Florida;

c. An increase in the competition for

professional staffing, thereby driving up the

costs of performing these hospital services;

and

d. An increase in the cost to the health

care system for performing transplant

services through he unnecessary duplication

of services.

Petition for Formal Administrative Hearing, p. 3 and 4.

6. CCFH moved to dismiss the Petition on the basis that the

Trust had not alleged facts sufficient to meet the standing

requirement in CON proceedings found in Section 408.039(5),

Florida Statutes. In essence, CCFH asserted that the Trust had

failed to allege that its adult kidney transplantation program in

District 11 was within the same district as the challenged kidney

transplant program of CCFH approved by AHCA for District 10.

7. In response, the Trust informed the Agency that it had

on the same date filed an Amended Petition which,

differs substantively from the original

petition only in paragraphs 4 and 8,

concerning the issue of standing. By filing

its Amended Petition, the Trust adds an

additional basis for standing, and does not

in any manner retreat from the basis for

standing asserted in its original Petition.

Public Health Trust's Response to Cleveland Clinic Florida

Hospital's Motion to Dismiss, p. 2, paragraph 2.

8. The new paragraphs four and eight in the Amended

Petition, state:

4. PHT's medical staff (including its

transplantation physicians) is provided by

the university of Miami School of Medicine,

doing business as the University of Miami

Medical Group (UMMG), under an affiliation

agreement between the PHT and the University

of Miami. Through the UMMG, JMH conducts

various activities in Broward County as part

of its adult kidney transplantation program,

including but not limited to the following:

a. UMMG sees approximately one third of all

its post transplant patients at two satellite

clinics in Fort Lauderdale; and

b. UMMG through the University of Miami's

Organ Procurement Organization maintains

agreements with various Broward donor

hospitals and provides in-service training to

hospital personnel involved in organ

procurement, including kidney procurement.

* * *

8. As the sole provider of adult

transplantation services in Transplant Area

4, as an existing health care facility with

an established adult kidney transplant

program operating in both Districts 10 and

11, Petitioner has standing to file this

petition because its substantial interests

will be directly affected by the Agency

action for which this petition seeks review.

Amended Petition, pages 2 and 3.

9. The Amended Petition was filed with the Department Clerk

for AHCA on September 4, 1998, prior to the case's referral by

AHCA to DOAH.

10. Argument on the Motion to Dismiss was heard on

September 28, 1998. Ruling was reserved until entry of this

order.

CONCLUSIONS OF LAW

11. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of cases

initiated in order to challenge decisions of the Agency for

Health Care Administration on applications for certificates of

need (CON) issued pursuant to the Health Facility and Services

Development Act," Sections 408.031-408.045, Florida Statutes.

Section 408.039(5), Florida Statutes. This is such a case. In

this case, however, the Petition must be dismissed because the

Petitioner does not have standing to initiate the proceeding

under the terms of the standing provision in CON law, which

states in pertinent part:

Existing health care facilities may initiate

. . . an administrative hearing upon a

showing that an established program will be

substantially affected by the issuance of any

certificate of need to a competing proposed

. . . program within the same district .

Section 408.039(5)(c), Florida Statutes (emphasis supplied).

12. As the Trust pointed out in its response to the Motion

to Dismiss, filing of the Amended Petition was permitted by Rule

28-106.202, Florida Administrative Code. The question, then, is

whether the allegations in the Amended Petition (both those

retained from the original petition and those added in the new

paragraphs 4 and 8, quoted above) were sufficient to withstand

CCFH's Motion to Dismiss.

13. While not agreeing the allegations are correct, the

Motion to Dismiss does not take issue with the sufficiency of the

allegations with regard to the Trust's claim that it will be

substantially affected by approval of CCFH's kidney

transplantation program in District 10. Rather, the Motion to

Dismiss, reduced to its essence, maintains that the Trust has

failed to allege that its established kidney transplantation

program is "within the same district" as CCFH's putative program.

14. An allegation that the programs are "within the same

district," is clearly necessary under the plain meaning of

Section 408.039(5), Florida Statutes. The Trust argues that its

Amended Petition's allegations satisfy the "same district"

requirement on two independent bases: first, (despite its

admissions that it is located in District 11, operates through

Jackson Memorial Hospital which is located in District 11 and has

an address in District 11) the Trust alleges that "through its

satellite clinics in Broward County [it] provides post-

transplantation services to JMH transplantation patients" (the

Trust's post-hearing memorandum, p. 2) in District 10; second,

the Trust argues that "rules of statutory construction compel

deference to AHCA's wholly consistent and repeated interpretation

of the word 'district' to mean regional service planning area

when AHCA conducts regional planning for tertiary services, not

only in the standing provision, but also Section 408.035(1)(b)

(requiring CON review of 'like and existing health care

facilities and health services in the service district of the

applicant')." Id.

i. Satellite Clinic Allegations

15. For purposes of the Motion to Dismiss, the facts

alleged in the Trust's Amended Petition must be taken as true.

Alvarez vs. E.A. Produce Corp. , 708 So. 2d 999 (Fla. 3rd DCA

1998).

16. CCFH argues that the allegations concerning two

satellite clinics in Broward County (as well as allegations

concerning "organ procurement" agreements with Broward County

donor hospitals) are not sufficient to confer standing (if shown

by evidence) because, on their own, they do not amount to an

"established program" in District 10 that is "within the same

district." Indeed, the CON standing provision requires that the

Petitioner have an established program in the same district as

the program of the approved applicant: "[e]xisting health care

facilities may initiate . . . an administrative hearing upon a

showing that an established program will be substantially

affected by the issuance of [a CON to a competing proposed

program] within the same district." Section 408.039(5)(c),

Florida Statutes, emphasis supplied.

17. CCFH is right.

18. The definition of a "transplantation program" is found

in Rule 59C-1.044(2)(h), Florida Administrative Code: "The

offering of surgical services by a hospital through which one or

more types of organ transplants are provided to nor or more

patients . . .".

19. There is logic in the Trust's response that the term

"surgical service" cannot be limited to "surgery" or even

"surgical services," and, in the context of this case, must be

construed to include post-transplantation services because

"[t]ransplantation surgery necessarily involves extensive post-

transplantation services as an integral part of the surgical

services." The Trust's post-hearing memorandum, p. 5.

20. But the definition also contains the words "by a

hospital." Although not perfectly analagous, the definition of

"open heart program" found in a rule of AHCA's predecessor was

considered by the First District Court of Appeal in justification

of its affirmance of denying standing in a case to a Petitioner

in one district challenging the standing of a granted-applicant

in another. The court wrote,

We also note that [the rule] defines'open

heart program,' in part, as 'rooms in a

hospital equipped for open heart surgical

procedures' (emphasis supplied). Therefore,

North Ridge cannot successfully argue the

facility/program distinction in this area of

specialization.

Amisub vs. Department of Health and Rehabilitation Services , 577

So. 2d 648, 650 (Fla. 1st DCA 1991).

21. Amisub was recently cited in a per curiam affirmance of

an award of a CON for a liver transplantation program in which a

competitor in another district was not allowed to participate in

the hearing which led to the award because of lack of standing.

See Shands Teaching Hopsital vs. St. Luke's Hospital Association,

695 So. 2d 793 (Fla. 1st DCA 1997).

22. These two cases, Amisub and Shands , one in the area of

open heart surgery programs, the other in the area of organ

transplantation programs, stand for another proposition that

relates to CON standing: "The legislature intended by creating

section 381.709(5)(b) [the substantially similar predecessor to

the current standing provision] to restrict standing in CON

cases." Amisub , above at 649 (emphasis supplied).

23. Ultimately, it is this long-lasting, clear intention of

the Legislature that CON standing be restricted in cases of doubt

rather than expanded, coupled with the Legislature's insistence

that executive branch agencies express and act out policies by

rule rather than reliance in one case on an adjudicated decision

reached in another that finally defeats the Trust's arguments

based on both the amendments to its Petition and its reliance on

AHCA's interpretation in other case of the term "district."

ii. AHCA's Interpretation of the Term "District"

24. As the Trust is quick to point out, AHCA has

interpreted the word "district" in the context of organ

transplant cases to mean "service planning area." In its final

order in Public Health Trust of Dade County, Florida vs. AHCA , 17

F.A.L.R. 2330 (AHCA May 30, 1995) the agency defined "district"

to mean "service planning area . . . where a CON for a transplant

program is at issue." This approach was again taken by the

Agency in St. Luke's Hospital Association vs. AHCA , 18 F.A.L.R.

3551 (AHCA Sept. 9, 1996), affirmed Shands Teaching Hospital vs.

St. Luke's Hospital Association , 695 So. 2d 793 (Fla. 1st DCA

1997). The Agency has maintained the same position in this

proceeding, that the term "district" in a case involving an organ

transplant program means "service area." If the Agency's

equation of the term "district" with "service area" is correct,

then the Motion to Dismiss fails because the Trust alleged that

its established program is in the same service planning area as

the newly-approved program of CCFH, as, the parties concede they

are.

25. First, the term "district," as used in Section

408.039(5)(c), Florida Statutes, is not ambiguous. No matter how

much sense it makes in the broader context of CON law to equate

the term "district" with "service planning area" in tertiary care

cases including organ transplantation cases, "district" does not

mean "service planning area." As counsel for the Agency conceded

at argument on the Motion, AHCA has attempted to persuade the

legislature to amend Section 408.095(5)(c) to expand standing in

tertiary cases consistent with its interpretation, but has not

been successful in the attempt.

26. Second, when the First District Court of Appeal

affirmed the St. Luke's final order in Shands Teaching Hospital ,

it did so by a per curiam affirmance but with citation to Amisub ,

above. The only reasonable interpretation of the Court's

reliance on Amisub in Shands Teaching Hospital , is that the Court

agreed with the decision of the Division of Administrative

Hearings to deny Shands' petition to intervene because it was not

in the same district as St. Luke's.

27. Finally, the Agency's reliance o n final orders in other

cases to support its statement of general applicability

interpreting Section 408.039(5), Florida Statutes, (in other

words, its rule; see Section 120 52(15), Florida Statutes) and

applying that statement to this case does not square with its

obligations under the Administrative Procedure Act. Not only has

the legislature not seen fit to amend the statute, the Agency has

not promulgated a rule in which it defines the standing

provision's term "district" in transplant cases to mean "service

planning area." The legislature made very clear in its 1996

revision of the Administrative Procedure Act that "[r]ulemaking

is not a matter of agency discretion." Section 120.54(1)(a),

Florida Statutes. "Each agency statement as defined as a rule by

s. 120.52 shall be adopted by the rulemaking procedure provided

by [Section 120.54] as soon as feasible and practicable." Id.

The agency's failure to adopt in rule its interpretation of the

word "district" in the standing provision to mean "service

planning area" prevents it from substituting final orders in

other cases for a rule to sustain the standing of the Trust in

this case.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of

law, it is recommended that the Agency for Health Care

Administration enter a final order dismissing the amended

petition in this case of the Public Health Trust of Miami-Dade

County, Florida.

DONE AND ENTERED this 14th day of October, 1998, in

Tallahassee, Leon County, Florida.

___________________________________

DAVID M. MALONEY

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 14th day of October, 1998.

COPIES FURNISHED:

Jack P. Hartog, Esquire

Assistant County Attorney

Jackson Memorial Hospital

West Wing 109

1611 Northwest 12th Avenue

Miami, Florida 33136

Robert A. Weiss, Esquire

Karen A. Putnal, Esquire

Parker, Hudson, Rainer & Dobbs LLP

118 North Gadsden Street, 2nd Floor

Tallahassee, Florida 32301

Richard A. Patterson, Esquire

Agency for Health Care

Administration

2727 Mahan Drive, Building 3

Tallahassee, Florida 32308

Sam Power, Agency Clerk

Agency for Health Care

Administration

2727 Mahan Drive

Fort Knox Building 3

Suite 3431

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

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

this Recommended Order should be filed with the agency that will

issue the final order in this case.