17-001976RX Orlando Health Central, Inc. vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Friday, June 9, 2017.

Summary: Petitioner did not meet its burden to invalidate rule 59C-1.012(2)(a).

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ORLANDO HEALTH CENTRAL, INC.,

Petitioner,

vs. Case No. 17 - 1976RX

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent,

and

ADVENTIST HEALTH SYSTEM/SUNBELT,

INC., d/b/a FLORIDA HOSPITAL ;

AND CENTRAL FLORIDA HEALTH

SERVICES, LLC,

Intervenors.

_______________________________/

SUMMARY FINAL ORDER

This case was considered by Yolonda Y. Green, a duly -

designated Administrative Law Judge (ÐALJÑ) of the Division of

Administrative Hea rings (ÐDivisionÑ) on Petitioner, Respondent,

and IntervenorsÓ respective Motions for Summary Final Order

regarding the original Petition for Determination of Invalidity

of Existing Rule, pursuant to section 120.57(1)(h), Florida

Statutes (2016). 1/ Oral a rgument on the partiesÓ motions for

summary final order was held on May 3, 2017, in Tallahassee,

Florida.

APPEARANCES

For Petitioner: Karen Ann Putnal, Esquire

John C. Moyle, Esquire

Moyle Law Firm, P.A.

118 North Gadsden Street

Tallahassee, Florida 32301

For Respondent: Richard Joseph Saliba, Esquire

Agency for Health Care Administration

Fort Knox Building III, Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

For Intervenor Adventist Health System/Sunbelt, Inc.,

d/b/a Florida Hospital:

Stephen K. Boone, Esquire

Boone, Boone, Boone, and Koda, P.A.

1001 Avenida Del Circo

Post Office Box 1596

Venice, Florida 34284

For Intervenor Central Florida Health Services, LLC:

Stephen A. Ecenia, Esquire

Jennifer F. Hinson, Esquire

Craig D. Miller, Esquire

Rutledge, Ecenia, & Purnell, P.A.

Suite 202

119 South Monroe Street

Tallahassee, Florida 32302 - 0551

STATEMENT OF THE ISSUE S

1. Whether Florida Administrative Code Rule

59C - 1.012(2)(a) is an invalid exercise of delegated legisla tive

authority in vi olation of section 120.52(8) because the rule

exceeds the Agency for Health Care AdministrationÓs (ÐAHCAÑ)

grant of rulemaking authority;

2 . Whether rule 59C - 1.012(2)(a) is an invalid exercise of

delegated legislative authority under s ection 120.52(8), because

the rule enlarges, modifies, or contravenes the law purported to

be implemented; and

3. Whether section 408.0455 , Florida Statutes, prevents a

determin ation that rule 59C - 1.012(2)(a) is invalid.

PRELIMINARY STATEMENT

On March 30 , 2017, Petitioner, Orlando Health Central, Inc.

(ÐOrlando HealthÑ) , filed a Petition to Determine Invalidity of

Existing Rule with AHCA. Orlando Health challenges

rule 59C - 1.012(2)(a), which governs administrative procedures

related to certifica tes of need, more specifically, the time

frame for a granted applicant to request a comparative hearing,

as an invalid exercise of delegated legislative authority.

On April 3, 2017, the petition was referred to the Division

and was assigned to the undersi gned to conduct the proceedings

in this matter. On April 5, 2017, Adventist Health

System/Sunbelt, Inc. , d/b/a Florida Hospital (ÐFlorida

HospitalÑ) , and Central Florida Healt h Services, LLC (ÐCFHSÑ)

filed petition s to intervene in this proceeding. On Ap ril 5,

2017, the undersigned granted both petitions for intervention .

On April 6, 2017, the undersigned conducted a scheduling hearing

with all parties represented by counsel and issued a Notice of

Hearing scheduling the final hearing for May 3, 2017, in

Tallahassee, Florida.

On April 12, 2017, the parties filed a Joint Motion to Set

Briefing Schedule and Joint Stipulated Preliminary Statement and

Facts, asserting that there were no genuine disputed issues of

material fact. The stipulated facts, to th e extent rel evant,

are incorporated in the Findings of F act below.

The parties stipulated to an oral argument rather than a

full evidentiary hearing. On May 3, 2017, the oral argument

convened as scheduled. The parties did not present any

witnesses. Pur suant to the joint stipulation, the parties

offered Joint Exhibits A through K, which were admitted.

The parties agreed that proposed final orders were not

necessary. The parties ordered a transcript of t he proceeding.

The one - volume T ranscript was filed on May 4, 2017.

FINDING S OF FACT

1. Respondent, AHCA, is the state agency responsible for

administering the Certificate of Need ("CON") laws and rules a s

codified at sections 408.031 through 408.045, and chapter 59C - 1.

2. The CON program is the metho d AHCA uses to determine

whether there is a community need for regulated health care

facilities as a prerequisite for licensure and operation in

Florida.

3. Petitioner, Orlando Health, holds the license for

Health Central Hospital, a not - for - profit, full - service , Class I

general hospital located in Ocoee, Orange County, Florida.

4. Intervenor, Florida Hospital, is a not - for - profit,

full - service, Class I general hospital with seven campuses

located throughout the greater Orlando area and various

outpatie nt locations, including a free - standing emergency

department and outpatient facility located in Winter Garden,

Florida.

5. Intervenor, CFHS, is a developmental stage entity

affiliated with Hospital Corporation of America, North Florida

Division.

6. On o r about September 7, 2016, Florida Hospital

submitted CON Application No. 10450 to establish a new hospital

in Orange County, Florida, State Health Services Planning

District 7, Acute Care Subdistrict 7 - 2.

7. On or about September 7, 2016, CFHS submitted CON

Application No. 10451 to establish a new hospital in Orange

County, Florida, State Health Services Planning District 7,

Acute Care Subdistrict 7 - 2.

8. On September 7, 2016, Orlando Health submitted CON

Application No. 10454 to establish a new hospita l in Orange

County, Florida, State Health Services Planning District 7,

Acute Care Subdistrict 7 - 2.

9. Under section 408.039(1), all three CON applications,

i.e., the Orlando Health, Florida Hosp ital, and CFHS CON

applications, were comparatively review ed by AHCA as a part of

the August 2016 co - batching cycle.

10. On December 2, 2016, AHCA issued its State Agency

Action Report (ÐSAARÑ) and Notice of Intent to simultaneously

approve: 1) Florida HospitalÓs CON Application No. 10450;

2) CFHSÓ CO N Applic ation No. 10451; and 3) Orlan do HealthÓs

CON Application No. 10454.

Challenged Rule

11. Rule 59C - 1.012, the challenged rule, states in

paragraph (a) of subsection (2):

If a valid request for administrative hearing

is timely filed challenging the noticed

intended award of any certificate of need

application in the batch, that challenged

granted applicant shall have ten days from

the date the notice of litigation is

published in the Florida Administrative

Weekly to file a petition challenging any or

all oth er cobatched applications.

12. Rule 59C - 1.012 is entitled "Administrative Hearing

Procedures." It is one of two chapters of AHCA rules in Volume

59C of the Florida Administrative Code that appear under the

caption, "CERTIFICATE OF NEED." The first cha pter, 59C - 1, which

includes the challenged rule, is entitled: "Procedures for the

Administration of Sections 408.031 -- 408.045, Florida Statutes,

Health Facility and Services Development Act."

13. The purpose of rule 59C - 2.012(2)(a) is to provide the

p rocess for a party to exercise its right to a comparative

review. Thus, it is commonly known as the Ðcomparative review

rule.Ñ

14. Rule 59C - 1.012 was originally adopted on

January 1, 1977, as Florida Administrative Code R ule 10 - 5.12, and

was amended fo ur times including: September 1, 1978; June 4,

1979; October 24, 1979; and April 24, 1980.

15. Rule 10 - 5.12 was amended and renumbered as rule

10 - 5.012, on November 24, 1986.

16. Rule 10 - 5.012 was amended on November 17, 1987. The

rule was amend ed and renumbered as rule 59C - 1.012, on

November 24, 1992. The challenged rule 59C - 1.012(2)(a) was

adopted as part of the Novemb er 24, 1992, amendments to

rule 10 - 5.012.

17. Although parts of rule 59C - 1.012 were amended on

April 21, 2010, the language of rule 59C - 1.012(2)(a) has not been

amended since its inclusion in rule 59C - 1.012, on

November 24, 1992.

18. ÐRulemaking AuthorityÑ for rule 59C - 1.012 is listed as

sections 408.15(8) and 408.34(8) . "Law Implemented Ñ for the

challenged rule is listed a s section 408.039(5).

Substantial Interests

1 9 . Orlando Health is sub stantially affected by rule

59C - 1.012( 2)(a) , and has standing to seek an administrative

determination of the invalidity of the rule on the ground that

the rule is an invalid exercise of delegated legislative

authority.

20 . Specifically as it relates to Orlando Health, Florida

Hospital seeks to prevent issua nce of Orlando HealthÓs CON

No. 10454 and to contest Orlando HealthÓs entitlement to

issuance of its CON. Orlando HealthÓs subst antial interests are

affected by t he delay in issuance of its CON.

21 . Intervenors Florida Hospital and CFHS (collectively

Ð Intervenors Ñ ) are substantially affected by the implementation

of rule 59C - 1.012(2)(a), and have standing to intervene in this

rule challenge proceeding.

22 . Florida HospitalÓs substantial interests are a ffected

by rule 59C - 1.012(2)(a) i n that, if rule 59C - 1.012(2)(a) is

determined to be invalid, then Florida Hospital's challenge to

Orlando HealthÓs CON may also b e determined to be i nvalid.

Florida Hospital is an existing provider in the same district

and subdistrict as that applied for by Orlando Health. Thus,

without the rule in effect, Florida Hospital would be faced with

potentially harmful competition with no meaningful avenue of

redress. Finally, Florida Hospital was also a competing,

cobatched applicant in the same batching cycle for the same

service in the same service area as that applied for by Orlando

Health.

23 . Regarding CFHSÓs substantial interests affected by

rule 59 C - 1.012( 2)(a), if rule 59C - 1.012(2)(a) is determined to

be invalid, Florida Hospital will likely use that ruling as a

basis for seeking dismissal of CFHS's petition contesting AHCA's

approval of Florida HospitalÓs CON application. CFHS was also a

competin g cobatched applicant , and t hus, without the rule in

effect, CFHS would also be faced with potentially harmful

competition with no meaningful avenue of redress .

24 . On December 5, 2016, AHCAÓs Notice of Intent was

published in the Florida Administrative R egister.

25 . Florida Hospital timely filed, within the 21 - day

period established by section 408.039(5)(a), a reques t for

hearing to contest AHCA's intended approval of CFHSÓ CON

application.

26 . Orlando Health timely filed, within the 21 - day period

es tablished by section 408.039(5)(a), a request for an

administrative hearing to contest AHCA's intended approval of

Florida HospitalÓs CON application.

27 . No request for an administrative hearing to contest

AHCA's intended approval of Orlando Health's CON application was

filed within the 21 - day period established by section

408.039(5)(a).

2 8 . On January 5, 2017, CFHS, as a challenged granted

applicant and within the 10 - day period established by rule

59C - 1.012(2)(a), filed a petition contesting AHCAÓs ap proval of

Florida HospitalÓs CON Application No. 10450.

2 9 . On January 11, 2017, Florida Hospital, as a challenged

granted applicant and within the 10 - day period established by

rule 59C - 1.012(2)(a), filed a petition challenging Orlando

HealthÓs CON Appli cation No. 10454.

30. All parties to this stipulation have sufficient

substantial interests affected that standing is established in

this case and for appellate purposes.

Comparative Review/Law Implemented

31 . Under the statutory scheme for administrat ion of the

CON p rogram, a CON is required for the establishment of certain

types of health care facilities (such as a hospital or nursing

home), for the establishment of additional beds at an existing

facility, and for the establishment of certain services .

32 . Persons seeking a CON must file an application in what

is known as a "batching cycle." In a Ðbatching cycle,Ñ all

applications seeking approval for the same type of facility,

beds, or services undergo "comparative review" by AHCA .

Applica tion s su bmitted within the same batching cycle are

commonly referred to as ÐcobatchedÑ applications .

33 . "Comparative review" is defined as follows:

"Comparative review" means the process by

which CON applications, submitted in the same

batching cycle for beds , services or programs

for the same planning area, as defined by

applicable rules, are competitively evaluated

by the agency through final agency action for

purposes of awarding a Certificate of Need.

34 . AHCA proposes a decision to approve or deny a CON

a pplication and then approved and denied applicants are afforded

rights to further administrative proceedings pursuant to section

408.039.

35 . Specifically, section 408.039(5) contains the statutory

provisions related to a request for administrative hearings

regarding CON decisions:

(a) Within 21 days after publication of

notice of the State Agency Action Report and

Notice of Intent, any person authorized under

paragraph (c) to participate in a hearing may

file a request for an administrative hearin g;

failure to file a request for hearing within

21 days of publication of notice shall

constitute a waiver of any right to a hearing

and a waiver of the right to contest the

final decision of the agency. A copy of the

request for hearing shall be served o n the

applicant.

36 . The right to a com parative hearing related to CON s is

set forth in paragraph (c), which states :

(c) In administrative proceedings

challenging the issuance or denial of a

certificate of need, only applicants

considered by the agen cy in the same batching

cycle are entitled to a comparative hearing

on their applications. Existing health care

facilities may initiate or intervene in an

administrative hearing upon a showing that an

established program will be substantially

affected by the issuance of any certificate

of need, whether reviewed under s. 408.036(1)

or (2), to a competing proposed facility or

program within the same district.

37 . Pursuant to rule 59C - 1.002(10), comparative hearing is

defined to mean:

(10) "Comparative h earing" means a single

hearing, conducted pursuant to s. 120.57,

F.S., and s. 59C - 1.012, F.A.C., held to

review all pending applications in the same

batching cycle and comparatively reviewed by

the agency.

Comparative Review Proceedings

38 . Approved ap plicants in a batched cycle may challen ge

other applicants as an approved applicant. Once a cobatc hed

applicant has challenged an approved application, the proceedings

related to the comparative hearing commence. But under th e rule,

if each challenge to an approval is subsequently voluntarily

dismissed, the approved applicant would be severed from the

batch. The severed applicant then receives a CON separately from

action with regard to its cobatched applicants by final agency

action. (This was the scen ario with regard to Orlando Health

prior to CFHSÓs request for a comparative hearing.) Likewise, an

approved unchallenged applicant is severed from the batch and

receives the CON awarded by the SAAR by separate final agency

action. These processes are no t at issue in this matter, but are

codified in sub paragraphs (b) and (c) of s ection (2) of the rule.

Savings Statute

39 . In 1997, the Florida Legislature recognized all of

AHCA's rules, including the CON Administrative Hearings

Procedure rule, declaring the rules implementing CON statutes

effective and enforceable.

40 . In 1997, section 408.0455 provided:

The rules of the agency in effect on

June 30, 1997 shall remain in effect and

shall be enforceable by the agency with

respect to ss. 408.031 - 408.045 u ntil such

rules are repealed or amended by the

agency, . . . .

41 . In 2004, section 408.0455 was amended to state:

The rules of the agency in effect on June

30, 2004 shall remain in effect and shall be

enforceable by the agency with respect to

ss. 408.03 1 - 408.045 until such rules are

repealed or amended by the agency.

Section 408.0455 has not been amended since 2004.

CONCLUSIONS OF LAW

42 . The Division has jurisdiction over the parties and

subject matter of this proceeding. §§ 120.56(1), (3) ; 120.569;

and 120.57(1), Fla. Stat.

43 . Petitioner initiated this proceeding pursuant to

section 120.56, to challeng e the validity of existing rule

59C - 1.012(2)(a).

44 . Pursuant to section 120.56(1)(a), ÐAny person

substantially affected by a rule . . . may se ek an

administrative determination of the invalidity of the rule on

the ground that the rule is an invalid exercise of delegated

legislative authority.Ñ For challenges to existing rules,

section 120.56(3)(a) provides:

A substantially affected person may s eek an

administrative determination of the

invalidity of an existing rule at any time

during the existence of the rule. The

petitioner has a burden of proving by a

preponderance of the evidence that the

existing rule is an invalid exercise of

delegated le gislative authority as to the

objections raised.

45 . Thus, the basis upon which the comparative review rule

may be invalidated in this proceeding is Ðon the ground that the

rule is an invalid exercise of dele gated legislative authority.Ñ

§ 120.56(1)(a), Fla. Stat.

46 . An existing rule challenge pursuant to section 120.56

is directed to the facial validity of the challenged rule, and

not to its validity as interpreted or applied in specific factual

scenarios. See Fairfield Communities v . Fla. Land & Wa ter Adj.

CommÓn , 522 So. 2d 1012, 1014 (Fla. 1st DCA 1988).

47 . Petitioner has the burden of proving that the

challenged comparative review rule, facially, is an Ðinvalid

exercise of delegated legislative authority.Ñ § 120.56(3)(a),

Fla. Stat.

48 . The Petition contends that the comparative review rule

is an invalid exercise of delegated legislative authority as

defined in section 120.52(8)(b) and (c), and the flush - left

paragraph, which provides , in pertinent part , as follows:

A proposed or existing ru le is an invalid

exercise of delegated legislative authority

if any one of the following applies :

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is

required by section 120.54(3)(a)1.;

* * *

(c) The rule enlarges, modi fies, or

contravenes the specific provisions of law

implemented, citation to which is required

by section 120.54(3)(a)1.;

* * *

A grant of rulemaking authority is necessary

but not sufficient to allow an agency to

adopt a rule; a specific law to be

imple mented is also required. An agency may

adopt only rules that implement or interpret

the specific powers and duties granted by

the enabling statute. No agency shall have

authority to adopt a rule only because it is

reasonably related to the purpose of the

enabling legislation and is not arbitrary

and capricious or is within the agencyÓs

class of powers and duties, nor shall an

agency have the authority to implement

statutory provisions setting forth general

legislative intent or policy. Statutory

language granting rulemaking authority or

generally describing the powers and

functions of an agency shall be construed to

extend no further than implementing or

interpreting the specific powers and duties

conferred by the enabling statute.

49 . An agency may ado pt rules Ðonly where the Legislature

has enacted a specific statute, and authorized the agency to

implement it, and then only if the rule implements or interprets

specific powers or duties[.]Ñ State, Bd. of Tr s . of the Int.

Impust Fund v. Day Cruise A ssÓn , 794 So. 2d 696, 700

(Fla. 1st DCA 2001). In considering an agencyÓs statutory

authority to adopt a rule, Ð[t]he question is whether the

statute contains a specific grant of legislative authority for

the rule, not whether the grant of authority is sp ecific

enough.Ñ SW Fla. Water Mgmt. Dist. v. Save the Manatee Club,

Inc. , 773 So. 2d 594, 599 (Fla. 1st DCA 2000).

50 . Petitioner argues that the comparative review rule

does not implement or interpret specific powers or duties

granted by the enabling st atute; instead, the comparative review

rule: 1) exceeds AHCAÓs grant o f rulemaking authority; and

2) enlarges, modifies, or contravenes the specific laws

implemented.

Whether Rule 59C - 1.012(2)(a) Exceeds AHCAÓs R ulemaking A uthority .

51 . Rule 59C - 1.012(2) (a) cites se ctions 408.034(8 ) and

408.15(8) as the sources of AHCAÓs rulemaking authority.

52 . Section 408.034(8) provides that the agency may adopt

ru les necessary to implement ss. 4 08.031 - 408.045.

53 . Section 408.039(5) is cited as the law implemented .

However, that subsection does not provide AHCA with the

authority to adopt rules necessary to implement the statute.

5 4 . Section 408.15(8) provides that in addition to other

powers granted elsewhere in chapter 408, AHCA is authorized to:

ÐAdopt rule s pursuant to ss. 120.536(1) and 120.54 to implement

the provisions of this chapter.Ñ

55 . Both sections 408.034(8) and 408.15(8) provide general

rulemaking authority. However, as the flush - left paragraph

makes clear, this general grant of rulemaking aut hority is,

alone, insufficient to authorize the adoption of the comparative

review rule.

56 . The next inquiry required by the flush - left paragraph

is whether the challenged rule provisions Ðimplement or

interpret the specific powers and duties gran ted b y the enabling

statute.Ñ § 120.52(8), Fla. Stat.

57 . To f urther examine the merits of P etitionerÓs

challenge of rule 59 C - 1.012(2)(a) , it is necessary to examine

appellate cases that have interpreted sections 120.52(8) and

120.536 in other administrative rule challenge cases. I n

Hennessey v. Depar t ment of Bus iness & Professiona l Regulation ,

818 So. 2d 697 (Fla. 1st DCA 2002), several horse trainers

challenged the "absolute insurer rule" which makes race - animal

trainers the absolute insurers of the condit ion of the animals

entered into races at Florida pari - mutuel facilities. The

authorizing statutes for the rule were sections 550.0251(3) and

550.2415(2) and (13). Section 550.0251(3) required the Division

of Pari - Mutuel Wagering to adopt reasonable rules for the

control, supervision, and direction of all licensees, and for

the holding, conducting and operating of all races. Subsections

550.2415(2) and (13) provided as follows:

(2) Administrative action may be taken by

the division against an occupation al

licensee responsible pursuant to rule of the

division for the condition of the animal

that has been impermissibly medication or

drugged in violation of this section.

* * *

(13) The division shall adopt rules to

implement this section. The rules may

include a classification system for

prohibited substances and a corresponding

penalty schedule for violations.

58 . The court held that a plain reading of the authorizing

statutes demonstrates that the Legislature granted the

department the specific aut hority to hold a trainer responsible

for the condition of the horses he or she trains and races,

should drugs be found in their system. Id. at 701.

59 . In another case, similar to the rule in this case,

Petitioner challenged a rule involving the right t o challenge an

agencyÓs decision in a proceeding. In Depar t ment of Children &

Family Serv ices v. I.B. , 891 So. 2d 1168 (Fla. 1st DCA 2005) ,

P etitioners challenged a rule providing that adoptive applicants

did not have the right to appeal the Department's decision on

the selection of an adoptive home for a particular child. The

court affirmed the ALJÓs conclusion that there were no statutes,

collectively or individually, that provide to the Department the

necessary specific legislative authority to exempt the se lection

of adoptive homes from c hapter 120. Moreover, the court

specifically stated that after adoption of a rule, the

Department may not rely on statutory provisions not cited in the

proposed rule as statutory authority. Id. at 1172.

60 . Finally , in Smith v. Fla. DepÓt of Corr. , 920 So. 2d

638 (Fla. 1st DCA 2005), the court considered a rule of the

Department of Corrections which allowed the Department to charge

inmates for copying services and found it to be invalid for lack

of a specific grant of authority. The following portions of the

First District's decision are pertinent to the examination here:

"[A]n administrative rule must certainly

fall within the clas s of powers and duties

delegated to the agenc y, but that alone will

not make the ru le a valid exercise of

legislative power." [Save the Manatee Club ]

at 599. "The question is whether the

statute contains a specific grant of

authority for the rule, not whether the

grant of authority is specific enough." Id.

(emphasis in original). "Eit her the

enabling statute authorizes the rule at

issue or it does not." Id. In addition,

under the standard set forth in section

120.52(8), the Department's arguments as to

the wisdom of the challenged portions of the

rule in light of past experience . . .

cannot save the challenged portions of the

rule in the absence of specific statutory

authority for those provisions.

61 . On the other hand, Respondent and CFHS argue that AHCA

adopted rule 59C - 1.012(2)(a) to ensure that parties have a

meaningful oppor tunity to exercise their right to a comparative

hearing, which implements section 408.039(5)(c). Respondent and

CFHS also argue that the right to a comparative hearing in CON

proceedings is based on due process considerations as addressed

in Ashbacker Rad io Corp. v. FCC , 326 U.S. 327, 66 S. Ct. 148 ,

90 L. Ed . 108 (1945) .

62 . In a rule challenge to invalidate the same rule

challenged here, Southern Baptist v. A gency for Health Care

Administration , DOAH Case No. 02 - 0575RX (Fla. DOAH April 3 0,

2002), appeal dismissed, No. 1D02 - 2146 (Fla. 1st DCA Feb. 11,

2004 ) , the ALJ examined a CON applicantÓs right to a comparative

hearing. The relevant portions of the Final Order are referenced

below:

1. Section (2) of the CON Administrative

Procedures Rule provides a method by which a

co - batched applicant whose CON application

has been approved in a proposed decision by

AHCA and then challenged by another party

may invoke the right to a comparative

hearing.

2. The right to a comparative hearing in

CON proceedings ha s as its source due

process considerations found by the United

States Supreme Court in a federal case that

did not involve CONs but in a context that

shared with the CON arena the need for

comparative review: Ashbacker Radio Corp.

v. FCC , 326 U.S. 327, 66 S. Ct. 148,

90 L.ED. 108 (1945).

3. These due process considerations have

been described as follows:

The so - called Ashbacker doctrine, enunciated

by the Court has been adopted in Florida.

When the decision on one application will

substantially preju dice other simultaneously

pending applications because all applicants

are competing for a franchise to serve a

market that only one of them in practical

effect will be given authorization to serve

the applications are mutually exclusive. In

this situation , any of the applicants may

request a comparative hearing in which the

merits of all applications will be tried

together and against each other.

Section 2.32, Boyd, Overview of the

Administrative Procedure Act, Florida

Administrative Practice , Florida Ba r,

6 th Ed. (2001), p. 2 - 38.

4. The Ashbacker doctrine has been applied

by Florida Courts to CON proceedings

involving cobatched applicants. See Bio -

Medical Applications of Clearwater, Inc. v.

Dept. of Health & Rehabilitative Services ,

370 So. 2d 19 (Fl a. 2d DCA 1979); Bio -

Medical Applications of Ocala, Inc. v. Dept.

of Health & Rehabilitative Services , 374 So.

2d 88 (Fla. 1st DCA 1979); and South Broward

Hospital District v. Dept. of Health &

Rehabilitative Services , 385 So. 2d 1094

(Fla. 4th DCA 1980).

5. In the Second DCA's Bio - Medical

decision, above, the Court found a due

process right in cobatched applicants to

comparative hearings involving the other

cobatched applicants and recognized the

flexibility of the Agency's predecessor, HRS

to devise "administrative procedures [that]

will be promulgated to deal with

administrative problems in affording

comparative hearings, if any such problems

are anticipated." Bio - Medical Applications

of Clearwater, Inc. , above, at 25, e.s.

Southern Baptist , FO a t 6 - 7.

63 . There is no question that cobatched CON applicants are

entitled to a comparative hearing. This right to a comparative

hearing has been codified in section 408.039(5)(c), which states

"only applicants considered by the agency in the same batch ing

cycle are entitled to a comparative hearing on their

applications."

64 . Section 408.039 (5) (a) states, in pertinent part, that

ÐW ithin 21 days after publication of notice of the [ SAAR ] and

Notice of Intent, any person authorized under paragraph (c) to

participate in a hearing may file a request for an

administrative hearing.Ñ Subsection (c) of the same statute

provides, in pertinent part, ÐI n administrative hearings

challenging the issuance or denial of a certificate of need,

only applicants considered by the agency in the same batching

cycle are entitled to a comparative hearing on their

applications .Ñ

65 . The plain language of the statutes established a

21 - day time frame in which applicants who have been issued or

denied a CON are authorized to participate in the hearing. That

entitlement is not determined by whether there is a challenge to

the applicant. To the contrary, an applicant may request a

hearing anytime within the 21 days after the triggering event,

i.e., in this instance, issuance o f the CON. While a party may

decide that it is not necessary to seek a hearing until there is

a challenge to its CON, the time frame established for the party

to exercise and preserve the right to a comparative hearing is

within the 21 - day period provided in section 408.039(5)(a).

66 . In the instant case, the L egislature did not provide

AHCA rulemaking authority to develop a separate 10 - day time

frame beyond the 21 days allowed by statute, for a Ðgranted

applicantÑ to request a comparativ e hearing. Ther efore, AHCA

appears to have exceeded its rulemaking authority in developing

rule 59 C - 1.012(2)(a) in violation of section 120.52(8)(b).

Whether Rule 59 C - 1.012(2)(a) Enlarges, Modifies, or C ontravenes

the Law I mplemented.

67 . Section 408.039(5) i s identified as the law

implemented by the rule. That section pr ovides, in pertinent

part, that:

(a) Within 21 days after publication of

notice of the State Agency Action Report and

Notice of Intent, any person authorized

under paragraph (c) to participate in a

hearing may file a request for an

administrative hearing; failure to file a

request for heari ng within 21 days of

publication of notice shall constitute a

waiver of any right to a hearing and a

waiver of the right to contest the final

decision of the agency. A copy of the

request for hearing shall be served on the

applicant.

(b) Hearings shall be held in Tallahassee

unless the administrative law judge

determines that changing the location will

facilitate the proceedings. The agency

shall assign proceedings requiring hearings

to the Division of Administrative Hearings

of the Department of Manage ment Services

within 10 days after the time has ex pired

for requesting a hearing . . . .

(c) In administrative proceedings

challenging the issuance or denial of a

certificate of need, only applicants

considered by the agency in the same

batching cycle are entitled to a comparative

hearing on their applications. Existing

health care facilities m ay initiate or

intervene in an administrative hearing upon

a showing that an established program will

be substantially affected by the issuance of

any certificate of need, whether reviewed

under s. 408.036 (1) or (2), to a competing

proposed facility or pro gram within the same

district. With respect to an application

for a general hospital, competing applicants

and only those existing hospitals that

submitted a detailed written statement of

opposition to an application as provided in

this paragraph may init iate or intervene in

an administrative hearing. Such challenges

to a general hospital application shall be

limited in scope to the issues raised in the

detailed written statement of opposition

that was provided to the agency. The

administrative law judge may, upon a motion

showing good cause, expand the scope of the

issues to be heard at the hearing. Such

motion shall include substantial and

detailed facts and reasons for failure to

include such issues in the original written

statement of opposition.

68 . Petitioner also argues that rule 59C - 1.012(2)(a) is an

invalid exercise of delegated legislative authority because it

modifies, enlarges, or contravenes AHCAÓs statutory authority.

In support of this argument, Petitione r asserts that the rule

adds 10 o r more days to the 21 - day period for CON applicants to

request a comparative hearing. PetitionerÓs argument rests on a

comparison of the time period established in the statute

compared to the language of rule 59C - 1.012(2)(a).

69 . Under the explicit ter ms of the rule, a Ðgranted

applicantÑ may file a petition seeking a comparative heari ng

within 10 days of the filing of the notice of litigation,

despite the statutory 21 days for an applicant who has been

issued (or denied) a CON to request a hearing . It is clear that

rule 59C - 1.012(2)(a) extends the time frame to request a

comparative hearing beyond the time frame provided by section

408.039(5)(a) and thus, enlarges, modifies, and contravenes the

time period for which a granted (approved) applicant may r equest

a comparative hearing.

70 . Respond ent and CFHS argue that the 10 - day time frame

is simply a separate time period which does not extend the time

period to file a petition. Accepting, Respondent and CFHSÓ

argument as true, the rule creates a diffe rent 10 - day time

period separate from the 21 - day period established by section

408.039(5)(a), which also exceeds AHCAÓs rule making authority.

Thus, this argument is rejected.

71 . Furthermore, comparing the rule and statute closely,

section 408.039(5)( a) and (c) require that an applicant who has

been issued a CON request a hearing with in 21 days. By

contrast, rule 59C - 1.012 allows the approved applicant 10 days

Ð from the notice of litigation Ñ to file a petition if

challenged. It thus allows a granted applicant a different time

frame to request a comparative hearing.

72 . The different time frame whether characterized as

Ðadditional timeÑ or Ðseparate timeframeÑ enlarges the specific

provisions of law implemented, in violation of section

120.52(8)(c). While there are logistical concerns regarding a

granted applicantÓs request for a comparative review hearing,

there is no statutory authority for an agency such as AHCA to

create rulemaking authority where none exists. For this reason

and those reference d above, rule 59C - 1.012(2)(a) appears to have

exceeded AHCAÓs legislative authority in violation of section

120.52(8)(b) . 2 /

Whether Section 408.0455 Precludes a Determination that Rule

59C - 1.012(2)(a) is Invalid.

73 . Respondent and CFHS argue that section 408.0455

(Ðsavings statuteÑ) precludes a determination that rule

59C - 1.012(2)(a) is invalid. Respond ent and CFHS assert that the

10 - day time frame set forth in rule 59C - 1.012(2)(a) has not been

amended or repealed by AHCA at any time since 1 992, meaning it

was in effect at the time the savings statute was enacted in

1997.

74 . Section 408.0455, Florida Statutes (1997) , provided:

The rules of the agency in effect on

June 30, 1997 shall remain in effect and

shall be enforceable by the agency with

respect to ss. 408.031 - 408.045 until such

rules are repealed or amended by the

agency, . . . .

75 . In Southern Baptist , the ALJ considered the impact of

section 408.0455 on rule 59C - 1 . 012(2)(a). Southern Baptist

cle arly indicated that rule 59C - 1. 012(2)(a) is a mechanism to

effectuate the Ashbacker doctrineÓs comparative review

principle, applied to the CON proceedings in Bio - Medical .

76 . In his conclusions of law, in Southern Baptist

addressing contravention of statutory authority, the ALJ sta ted:

66. Baptist maintains that the [r]ule

modifies, enlarges or contravenes statutory

authority and so is an invalid exercise of

delegated legislative authority. Whatever

value its argument might have had prior to

July 1, 1997, the effective date of [s] ection

408.0455, Florida Statutes (the "Savings

Statute"), the argument loses all validity

with the passage of the Savings Statute.

Through its recognition of the rules of AHCA

in effect on June 30, 1997 and its

declaration that they "shall remain in effe ct

and shall be enforceable by the agency with

respect to [CON law] until such rules are

repealed or amended by the agency . . . ,"

Section 120.4055, Florida Statutes, the

Legislature, in essence, ratified, validated

and declared saved the Rule and its Sec tion

(2) as of July 1, 1997.

77 . As further observed in Southern Baptist :

91. A determination that section

408.0455,Florida Statutes [1997], did not

save [the challenged rule] from the

legislative repeal worked by section

120.54(5) produces the undesir able

consequence of the loss of a sensible method

for invoking the constitutional and

statutorily - recognized right to comparative

review.

78 . After Southern Baptist , section 408.0455 was amended

in 2004 to provide:

The rules of the agency in effect o n June 30,

2004, shall remain in effect and shall be

enforceable by t he agency with respect to

ss. 408.031 - 408.045 until such rules are

repealed or amended by the agency.

79 . A recent administrative case involved PetitionerÓs

challenge of a CON rule th at is subject to section 408.0455. In

The Hospice of t he Florida Suncoast, Inc., d/b/a Suncoast

Hospice v. Agency for Health Care Administration , Case

No. 15 - 3656RX (Fla. DOAH Sept. 28, 2015), affÓd , 1D15 - 4847

(Fla. 1st DCA 2 016), the ALJ consider ed the Fixed - Need - Pool

(ÐFNPÑ) rule which allows 10 days to file a p etition for hearing

following determination of a number for the pool. The ALJ

concluded, among other things, that under section 408.0455, the

substantively unchanged FNP rule provisions in effect on July 1,

2004 (the amendment effective date), remain valid and

enforceable.

80 . The legislative acknowledgement that AHCAÓs CON rules

in effect in 1997 and in 2004 were valid and enforceable until

the agency acted to amend or repeal them nec essarily means that

to the extent rule language is not amended by the agency, it

remains valid and enforceable.

81 . Petitioner argues that the savings statute does not

preempt a challenge regarding the ruleÓs invalidity. However,

as Respondent and CFH S contend, when a statute mandates that

existing rules remain in effect and are enforceable, the effect

of the statutory mandate is irrefutable. Manatee Hosps. &

Health Sys, Inc., d/b/a Manatee MemÓl Hosp. v. AHCA , Case No.

93 - 7094RX (Fla. DOAH Feb. 21, 1 994) . The savings statute in

Manatee Hospitals was the original version of section 408.0455

and is substantially identical to the amended version of the

savings statute under consideration here. It provided that the

rules cited therein "shall remain in e ffect and shall be

enforceable by the Agency for Health Care Administration . " Id.

at 4. As indicated in Manatee Hospitals , when the L egislature

reenacts a law, it is presumed to know and approve of prior

administrative construction and interpretation of that law.

Szabo Food Servs., Inc. of N.C. v. Dickinson , 286 So. 2d 529

(Fla. 1973); Cole Vision Corp. v. DepÓt of Bus. and ProfÓl Reg. ,

Bd. of Optometry , 688 So. 2d 404 (Fla. 1st DCA 1997). Most

relevant here, the ALJ in Manatee Hospitals , stated Ðthe

le gislature is presumed to have authorized and adopted the

agencyÓs administrative interpretation of applicable statutes

through rulemaking pertaining to

R ules . . . .Ñ Id.

82 . Since r ule 59C - 1.012(2)(a) was in effe ct on

June 30, 2004, pursuant to sectio n 408.0455, it must remain in

effect and enforceable by the agency until the rule is repealed

or amended. See also NME Hosps., Inc. , d/b/a Seven Rivers Comm.

Hosp. v. DepÓt of Health & Rehab. Servs. , Case No. 90 - 1869RX

(Fla. DOAH July 18, 1990)(finding ad ministrative rules valid

based, in part, on the existence of the rules prior to passage

of a savings statute).

83 . Since 1992, the L egislature has amended section

408.0455 twice, each time codifying the effect and

enforceability of the rule. In reenacti ng the savings statute,

the Legislature authorized and adopted AHCA's administrative

interpretation of the applicable statutes.

84 . Based on the foregoing, the Legislature declared that

the CON rules in effect on July 1, 1997 , and as amended on

June 30, 2004, including the comparative review rule , shall

remain in effect and are enforceable until amended or repealed

by AHCA. § 408.0455, Fla. Stat.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED th at the Petition to De termine Invalidity of

Existing Rule 59C - 1.012(2)(a) is hereby Dismissed.

DONE AND ORDERED this 9th day of June , 2017 , in

Tallahassee, Leon County, Florida.

S

YOLONDA Y. GREEN

Administrative Law Judge

Division of Adminis trative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 9th day of June , 2017 .

ENDNOT E S

1/ Unless otherwise indicated, all statutory references are to

Florida Statutes (2016 ) .

2 / It should be noted that the ability of the approved applicant

to participate in a proceeding is not dependent on the rule, as

section 408.039(5)(c) provides specific rights of participation

in a proceeding affecting their interests, subject to conditions

established by the Legislature.

COPIES FURNISHED:

Karen Ann Putnal, Esquire

Moyle Law Firm, P.A.

118 North Gadsden Street

Tallahassee, Florida 32301

(eSer ved)

Richard Joseph Saliba, Esquire

Agency for Health Care Administration

Fort Knox Building III, Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

Stephen K. Boone, Esquire

Boone, Boone, Boone, and Koda, P.A.

1001 Avenida Del Circo

Post Office Box 1596

Venice, Florida 34284

(eServed)

Jon C. Moyle, Esquire

Moyle Law Firm, P.A.

118 North Gadsden Street

Tallahassee, Florida 32301

(eServed)

Stephen A. Ecenia, Esquire

Rutledge, Ecenia, & Purnell, P.A.

Suite 202

119 South Monroe Street

Tal lahassee, Florida 32302 - 0551

(eServed)

Jennifer F. Hinson, Esquire

Rutledge , Ecenia, & Purnell, P.A.

Suite 202

119 South Monroe Street

Tallahassee, Florida 32302 - 0551

(eServed)

Craig D. Miller, Esquire

Rutledge , Ecenia, & Purnell, P.A.

Suite 202

1 19 South Monroe Street

Tallahassee, Florida 32302 - 0551

(eServed)

Justin Senior , Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

(eServed)

Stuart Williams, General Counsel

Agency for Health Care A dministration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Ernest Reddick, Chief

Anya Grosenbaugh

Department of State

R. A. Gray Building

500 South Bronough Street

Tallahassee, Florida 32399 - 0250

(eServed)

Ken Plante, Coordinator

Joint Admin istrative Proced ures Committee

Room 680, Pepper Building

111 West Madison Street

Tallahassee, Florida 32399 - 1400

(eServed)

Shena L. Grantham, Esquire

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 3230 8

(eServed)

Thomas M. Hoeler, Esquire

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing the o riginal notice of administrative appeal with the

agency clerk of the Division of Administrative Hearings within

30 days of rendition of the order to be reviewed, and a copy of

the notice, accompanied by any filing fees prescribed by law,

with the clerk of the District Court of Appeal in the appellate

district where the agency maintains its headquarters or where a

party resides or as otherwise provided by law.