84-000173RX Gerald Balsam, Howard M. Israel, Lawrence Levinson, Herbert Schwartz And Arnold Zager vs. Department Of Health And Rehabilitative Services Status: Closed DOAH Final Order on Thursday, March 29, 1984.

Summary: Pet. chall. admin. code as invalid deleg. of legis. auth. as det. of ratio of patients to beds. RO: HRS use of BEBR popul. proj. is inval. deleg. auth.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GERALD BALSAM, HOWARD M. ISRAEL, )

LAWRENCE LEVINSON, HERBERT )

SCHWARTZ and ARNOLD ZAGER, )

)

Petitioner, )

)

vs. ) CASE NO. 84-0173RX

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

_________________________________)

FINAL ORDER

This matter came on for final hearing before the Division of Administrative

Hearings by its duly designated Hearing Officer, Robert T. Benton, II, on

February 28, 1984. The parties were represented by counsel:

APPEARANCES

For Petitioner: Kenneth G. Oertel, Esquire

646 Lewis State Bank Building

Tallahassee, Florida 32301-1879

For Respondent: James M. Barclay, Esquire

1317 Winewood Boulevard

Building Two, Suite 256

Tallahassee, Florida 32301

1. This rule challenge arises in connection with formal substantial

interest proceedings that Petitioners initiated when Respondent Department of

Health and Rehabilitative Services ("HRS") proposed to deny their application

for a certificate of need to construct a 100-bed psychiatric facility in Broward

County, citing Rule 10-5.11(25) and (27), Florida Administrative Code. Case No.

83-3418.

2. The present proceedings began on January 13, 1984, with the filing of a

petition to invalidate agency rule, in which Petitioners contended that

subsections 5.11(25)(d) and 5.11(27)(f) of Rule 5.11, Florida Administrative

Code, are invalid exercises of delegated legislative authority, subject to

invalidation pursuant to Section 120.56, Florida Statutes (1983).

3. The challenged provisions set out methods for determining the need for

inpatient psychiatric beds and for short-term hospital substance-abuse beds,

respectively. Each method employs a ratio of beds to population, and each

specifies that population projections are to be "based on latest mid-range

projections published by the Bureau of Economic and Business Research at the

University of Florida." Rules 10-5.11(25)(d)(3) and (27)(f)(l), Florida

Administrative Code.

4. Petitioners raised the same two issues with respect to each provision

they challenge. The first issue was resolved, with respect to both challenged

rule sections, by the parties' agreement, stated on the record at hearing, to

the effect that expert testimony or other evidence of bed need would not be

inadmissible at final hearing in Case No. 83-3418, if predicated on relevant

criteria, simply because it was framed as a bed-to-population ratio different

from those set out in Rule 10-5.11(25)(d)(3) and (27)(f)(l), Florida

Administrative Code. On the basis of this agreement, Petitioners dismissed,

with prejudice, their challenge to the ratios set forth in Rule 5.11(25) and

(27), Florida Administrative Code.

5. The second issue, the only one remaining to be decided 1 concerns the

rule's requirement that population projections used to determine bed need be

"based on" projections by the Bureau of Economic and Business Research ("BEBR").

It is clear from the state agency action report, Petitioner's Exhibit 3, that

HRS relies on forecasts based on BEBR projections in proposing to deny

Petitioners' application for certificate of need. Petitioners are, therefore,

substantially affected by the challenged rules insofar as they specify the basis

for population projections used in determining bed need.

6. According to the uncontroverted testimony of Ms. Elfie Stamm, a health

planner in HRS' employ, BEBR has projected population figures for Broward County

for 1985 and 1990 on which HRS routinely relies, not only for those years, but

also as a basis for interpolation for intervening years. An HRS memorandum sets

forth the method of interpolation. This memorandum has been widely circulated,

but has presumably, like the BEBR projections themselves, not been promulgated

as a rule or filed with the Secretary of State.

7. Petitioners contend that the rule provisions under challenge do nothing

less than adopt by reference the "latest mid-adoption by reference have not been

met. Section 120.54(8), Florida Statutes (1983), provides:

(8) Each rule adopted shall contain

only one subject and shall be pre-

ceded by one concise statement of the

purpose of the rule and reference to

the rules repealed or amended, which

statement need not be printed in the

Florida Administrative Code. Pursu-

ant to rule of the Department of

State, a rule may incorporate material

by reference but only as such material

exists on the date the rule is

adopted. For purposes of such rule,

changes in such material shall have

no effect with respect to the rule

unless the rule is amended to incor-

porate such material as changed. No

rule shall be amended by reference

only. Amendments shall set out the

amended rule in full in the same man-

ner as required by the constitution

for laws.

8. By Rule 10-2.11, Florida Administrative Code, HRS has adopted as its

own the Model Rules on rulemaking, including Rule 28-3.35, Florida

Administrative Code, which provides:

Incorporation by Reference. Any rule,

standard, specification or similar

material which is generally available

to affected persons may be incorporated

in a rule, by reference, in the manner

adopted by rule by the Department of

State.

The rule to which both Section 120.54(8), Florida Statutes (1983), and Rule 28-

3.35, Florida Administrative Code, refer provides:

(1) Any ordinance, standard,

specification or similar material may

be published by reference in a rule

subject to the following conditions:

(a) The material shall be

generally available to affected persons.

(b) The material shall be

published by a governmental agency

or a generally recognized profess-

ional organization.

(2) The agency publishing material

by reference shall file with the

Department of State a correct and

complete copy of the referenced

material with an attached certifica-

tion page which shall state a

description of the referenced

material and specify the rule to

which the referenced material relates.

(3) Any amendments to material

published by reference must be

promulgated under the rulemaking

provisions of Section 120.54, Florida

Statutes, in order for the amended

portions to be validly incorporated.

Rule 1S-1.005, Florida Administrative Code.

HRS does not dispute a Petitioners' contention that it has not taken the steps

necessary to adopt the BEBR projections as a rule by reference, see Memorial

Hospital of Jacksonville v. Department of Health and Rehabilitative Services,

No. 81-041R (DOAH; March 12, 1981), 3 F.A.L.R. 699-A, and takes no issue with

Petitioners' assertion that the BEBR projections will inevitable change over

time, but argues that the language of the rule relating to BEBR projections is

shorthand for requiring that "the methodologies and techniques used by BEBR to

make its projections" be looked to. The challenged rule provisions will not

bear this construction, however. They require that the population figures used

in determining bed need be based on the BEBR projections themselves, not on

whatever methodology, may underlie the BEBR projections.

9. HRS makes another, inconsistent argument that Rule 10-5.11(25) and

(27), Florida Administrative Code, does adopt specific population numbers by

reference, but does so for specific geographical areas, rather than for the

state as a whole, citing Department of Commerce v. Matthews Corporation, 358 So.

2d 256 (Fla. 1st DCA 1978). But the wage rates at issue in Matthews applied

only to a particular project, see 358 So. 2d at 259, and White Advertising

International v. State Department of Transportation, 368 So. 2d 411, 413 n. 3

(Fla. 1st DCA 1979), unlike the population figures in the present case, which

apply to any proposed facility within any particular area. The challenged

provisions purport to incorporate BEBR projections by reference, and are invalid

to that extent, because the procedures specified by Section 124.54(8), Florida

Statutes (1983), and applicable rules were not followed.

It is, therefore,

ORDERED:

Insofar as Rules 10-5.11(25) and (27), Florida Administrative Code, purport

to adopt BEBR projections as the only basis for population projections for bed

need purposes, they are declared to be an invalid exercise of delegated

legislative authority.

DONE AND ENTERED this 29th day of March, 1984, in Tallahassee, Leon County,

Florida.

_____________________________________

ROBERT T. BENTON, II, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of March, 1994.

ENDNOTE

1/ HRS' memorandum in support of validity of rules and Petitioners' written

final argument each proceed on the assumption that no other issue remains

between the parties.

COPIES FURNISHED:

Kenneth G. Oertel, Esquire

646 Lewis State Bank Building

Tallahassee, Florida 32301

James M. Barclay, Esquire

1317 Winewood Boulevard

Building Two, Suite 256

Tallahassee, Florida 32301

David H. Pingree, Secretary

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32301

Carroll Webb, Executive Director

Administrative Procedures

Committee

120 Holland Building

Tallahassee, Florida 32301

Liz Cloud, Chief

Bureau of Administrative Code

1802 The Capitol

Tallahassee, Florida 32301