93-007094RX Manatee Hospitals And Health Systems, Inc., D/B/A Manatee Memorial Hospital vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Monday, February 21, 1994.

Summary: Rules requiring filing with local health council at same time as with agency are valid rules and agency properly rejected late applicant for CON.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MANATEE HOSPITALS & HEALTH SYSTEMS,)

INC., d/b/a MANATEE MEMORIAL )

HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 93-7094RX

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

___________________________________)

MANATEE HOSPITALS & HEALTH SYSTEMS,)

INC., d/b/a MANATEE MEMORIAL )

HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 94-0003

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

___________________________________)

FINAL ORDER (#93-7094RX)

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, Mary Clark, held a formal hearing in the above-

styled consolidated cases on January 14, 1994, in Tallahassee, Florida.

APPEARANCES

For Petitioner: John M. Knight, Esquire

Robert S. Weiss, Esquire

Parker, Hudson, Rainer & Dobbs

118 North Gadsden Street

Tallahassee, Florida 32301

For Respondent: J. Robert Griffin, Esquire

Agency for Health Care Administration

The Atrium Building, Suite 301

325 John Knox Road

Tallahassee, Florida 32399

STATEMENT OF THE ISSUES

The issue presented for consideration is whether rules 59C-1.008(1)(k)1.,

and 2., and 59C-1.008(4), F.A.C., constitute an invalid exercise of delegated

legislative authority.

PRELIMINARY STATEMENT

On December 16, 1993, Petitioner, Manatee Hospitals and Health Systems,

Inc., d/b/a Manatee Memorial Hospital (Manatee) filed its petition pursuant to

section 120.56 to contest the validity of the subject rules. (DOAH #93-7094RX)

Manatee also filed a petition pursuant to section 120.57(1), F.S., contesting

the Respondent's (Agency) decision to reject for review a certificate of need

(CON) application submitted by Manatee. (DOAH #94-0003)

Without objection, the two cases were consolidated for hearing in an order

dated January 12, 1994. As provided in section 120.57(1), F.S., a separate

recommended order is being issued this same date in DOAH #94-0003.

At the hearing the parties presented a thorough stipulation of material

facts, and the testimony of Elizabeth Dudek, qualified as an expert in health

planning and administration of the certificate of need program. Joint exhibits

#1-6 were received in evidence; official recognition was taken of an amendment

to former rule 10-5.008, F.A.C., filed on October 28, 1987, and effective

November 17, 1987. Official recognition was also taken of rules 10-5.002-.024,

F.A.C., as published in the Florida Administrative Weekly, Vol. 16, number 13,

on March 30, 1990.

The proposed findings of fact submitted by both parties are substantially

adopted here, there being no disputed issues of material fact.

FINDINGS OF FACT

1. Manatee Hospitals and Health Systems, Inc. d/b/a Manatee Memorial

Hospital (Manatee) is a nonprofit corporation which operates a short-term

general acute care hospital in Manatee County, Florida.

2. On November 1, 1993, Manatee timely and properly submitted a letter of

intent to the Agency for Health Care Administration (Agency) seeking authority

to convert up to 11 substance abuse beds and/or up to 28 acute care beds to 28

skilled nursing beds for review in the Nursing Home Batch Cycle, 2nd Cycle,

1993.

3. On December 1, 1993, Manatee submitted a CON application to the agency

seeking authority to convert up to 11 adult substance abuse beds and/or up to 28

acute care beds to 28 skilled nursing beds for review in the nursing home batch

cycle, 2nd cycle, 1993. The application included the appropriate filing fee.

4. Manatee failed to submit a copy of its CON application to the local

health council by 5:00 p.m. on the application due date of December 1, 1993.

Instead, the application was submitted to the local health council on December

2, 1993.

5. By correspondence from Liz Dudek, Chief, Certificate of Need and Budget

Review Section, dated December 7, 1993, the agency advised Manatee that its CON

application was not accepted and was being returned to Manatee because Manatee

failed to submit a copy of its application to the health council by 5:00 p.m. on

the application due date of December 1, 1993, as required by rules 59C-

1.008(1)(k)1., and 2., and 59C-1.008(4), F.A.C.

6. Rules 59C-1.008(1)(k)1., and 2., F.A.C. provide:

(k) Certificate of Need Application

Submission. An application for a certificate

of need shall be submitted on HRS Form 1455,

August 1985, and HRS Form 1460, June 1991

incorporated by reference herein, and shall

be provided by the agency upon request.

1. The application must be actually

received by the agency by 5 p.m. local time

and a copy must actually be received by the

local health council by 5 p.m. local time on

or before the application due date.

2. An application submitted to the agency

shall not be accepted by the agency, and the

application fee will be returned if a copy of

the application is not received by the

appropriate local health council as provided

above.

7. Rule 59C-1.008(4), F.A.C. provides:

(4) Submission to Local Health Council.

Each applicant shall submit a copy of its

application to the applicable local health

council at the same time the application is

submitted to the agency. Failure to timely

file with the local health council as set

forth in Rule 59C-1.008(1)(k), F.A.C., will

result in the application not being accepted

by the agency.

8. Rules 59C-1.008(1)(k)1., and 2., and Rule 59C-1.008(4), F.A.C., became

effective January 11, 1991.

9. Rules 59C-1.008(1)(k)1., and 2., and Rule 59C-1.008(4), F.A.C., were

promulgated in conformance with all applicable rule promulgation procedures.

10. The agency does not view the requirement of timely filing of a CON

application with the local health council as an "omissions" item. Omissions

items are addressed in section 408.037, F.S., and in rule 59C-1.010(2)(a),

F.A.C. The statute describes the necessary contents of a CON application and

the rule provides a process for the agency to identify missing items and notify

the applicant of the specific information necessary for the application to be

deemed complete. This "omissions" process occurs after the initial application

filing deadline. The agency properly did not provide an opportunity for Manatee

to cure its deadline defect in this omissions process, as obviously the deadline

had already passed.

11. The agency construes section 408.039(3)(a), F.S., (1993), which states

in pertinent part: "An applicant shall file an application with the department,

and shall furnish a copy of the application to the local health council and the

department.", as requiring submission of applications by the application

deadline date both to the agency and to the local health council.

12. Manatee has not alleged that rules 59C-1.008(1)(k)1., and 2., and rule

59C-1.008(4), F.A.C., are arbitrary and capricious. Manatee's sole basis for

challenge of the subject rules pursuant to section 120.56 is that the rules

enlarge, modify, or contravene the statute.

13. There is a rational policy basis for the requirement that an

application be filed by the application deadline at both the agency and the

local health council. The submission to the local health council provides

notice to the individuals within an area. It affords an opportunity for the

agency to begin to solicit information from the public. A public hearing can be

requested only when an application has been submitted and a request for a public

hearing cannot be based on submission of a letter of intent. The local health

council is the source that local citizens may consult to find out what, if any,

applications have been submitted, and the substance of any which are submitted.

14. Timely submission to the local health council also significantly

contributes to an orderly review process, and is therefore rationally related to

the enabling statutes creating the certificate of need program. The requirement

of filing of applications at the agency and the local health council by the

application submission deadline affords consolidation of verification of proper

application receipt. It also provides clear and unambiguous notice to

applicants and others when applications are due and will be received. The

requirement provides the agency a beginning point from which to begin reviewing

applications.

15. Unrebutted expert testimony established that the rule is necessary for

the effective administration of the certificate of need program.

CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has jurisdiction in this

proceeding pursuant to sections 120.56 and 120.57(1), F.S. Manatee has standing

in this proceeding, as it is substantially affected by the subject rules.

17. Rules 59C-1.008(1)(k)1., and 2., and rule 59C-1.008(4), F.A.C., became

effective January 11, 1991. Pursuant to section 15 of Chapter 92-33, Laws of

Florida, sections 381.701 through 381.715, F.S., governing the certificate of

need program, are renumbered as sections 408.031 through 408.045, F.S., (1993),

respectively. This recodification of the statutes governing the certificate of

need program was consequent to the creation of the Agency for Health Care

Administration by chapter 92-33, Laws of Florida, and the concomitant transfer

of certain statutory responsibilities to the new agency, including

administration of the certificate of need program, effective July 1, 1992.

Section 19 of chapter 92-33, Laws of Florida, renumbered and amended section

381.7155, F.S., as section 408.0455, F.S. (1993), which states in pertinent

part:

(1) Nothing contained in ss. 408.031-

408.045 is intended to repeal or modify any

of the existing rules of the Department of

Health and Rehabilitative Services, which

shall remain in effect and shall be

enforceable by the Agency for Health Care

Administration; the existing composition of

the local health councils and the Statewide

Health Council; or the state health plan; or

any of the local district health plans,

unless and only to the extent there is a

direct conflict with the provisions of ss.

408.031-408.045. (emphasis added).

18. The effect of this statutory mandate is irrefutable. Since rules 59C-

1.008(1)(k)1., and 2., and rule 59C-1.008(4), F.A.C., were in effect prior to

July 1, 1992, (the effective date of the savings clause) they must remain in

effect and enforceable by the agency until the rules are repealed or amended by

the agency, or superseded by passage of statutory language in direct conflict

with such rules.

19. Manatee has failed to produce any evidence of conflict between the

challenged rules and any provision of sections 408.031 through 408.045, F.S.,

(1993). Based on this issue alone, Manatee cannot prevail in this proceeding.

See, NME Hospitals, Inc., d/b/a Seven Rivers Community Hospital v. Department of

Health and Rehabilitative Services, 12 FALR 3115, at 3127 (DOAH 1990), wherein

the hearing officer found administrative rules valid based in part upon the

existence of the rules prior to passage of the saving clause contained in

section 381.7155, F.S., (1989), substantially the same as the saving clause set

forth above. Also see, State ex rel. Szabo Food Services, Inc. of North

Carolina v. Dickinson, 286 So.2d 529 (Fla. 1973). When the legislature reenacts

a law it is presumed to know of and approve of prior administrative construction

and interpretation of that law. Here, the legislature is presumed to have

authorized and adopted the agency's administrative interpretation of applicable

statutes through rulemaking pertaining to rules 59C-1.008(1)(k)1., and 2., and

rule 59C-1.008(4), F.A.C. Thus the challenged rules, rather than enlarging,

modifying or contravening the requirements of sections 408.031 through 408.045,

F.S., (1993), implement those sections in accordance with express legislative

intent.

20. As addressed in Finding of Fact 11. above, the agency interprets

section 408.039(3)(a), F.S., (1993), as requiring that an applicant for a

certificate of need submit applications both to the agency and to the local

health council by the same application deadline. Section 408.039(3)(a), F.S.

(1993), provides in pertinent part:

(3) APPLICATION PROCESSING.--

(a) An applicant shall file an application

with the department, and shall furnish a copy

of the application to the local health

council and the department. Within 15 days

after the applicable application filing

deadline established by department rule, the

staff of the department shall determine if

the application is complete...

(emphasis added)

Even though the reference is to both "furnish[ing] a copy of the application to

the local health council and the department" the word "deadline" is singular.

The legislature contemplates a deadline for submission of the copies of the

application, not "deadlines" as Manatee would argue. The Agency's

interpretation of the statute is consistent with the plain meaning of the

statute.

21. Agencies are afforded wide discretion in the interpretation of

statutes which they administer. Pan American World Airways, Inc. v Public

Service Commission and Florida Power and Light, 427 So.2d 716, 719 (Fla. 1983).

This is true even though an interpretation is not the one preferred by the

court. Retail Grocers Ass'n of Florida Self Insurer's Fund v. Dept. of Labor

and Employment Security, 474 So.2d 379 (Fla. 1st DCA 1985). Moreover, the

agency's interpretation of the statute need not be the sole possible

interpretation or even the most desirable one. It need only be within the range

of possible interpretations. Department of Administration v. Nelson, 424 So.2d

852 (Fla. 1st DCA 1982); General Telephone Company of Florida v. Florida Public

Service Commission, 446 So.2d 1063 (Fla. 1984). In Nelson, at 858, the court

went on to emphasize that "when the agency so interprets the statute through

rulemaking, the presumption of correctness is stronger." Here, the agency has

specifically articulated its statutory interpretation through promulgation of

rules 59C-1.008(1)(k)1., and 2., and rule 59C-1.008(4), F.A.C.

22. The legislature has specifically and unambiguously delegated authority

to the agency to provide for an application submission deadline by rule without

reservation. Section 408.034(5), F.S. (1993), specifically authorizes the

agency to "adopt rules necessary to implement" the statutory provisions related

to the certificate of need program. F.A.C., rules 59C-1.008(1)(k)1., and 2.,

and rule 59C-1.008(4), F.A.C., are authorized by this general statutory

provision as they are necessary to implement the CON program.

The language contained in section 408.034(5), F.S. (1993), is similar to

the statutory language reviewed by the Florida Supreme Court in General

Telephone Co. of Florida, supra. There the court, at 1067, approved the

standard of review adopted in Agrico Chemical Co. v. State, Dept. of

Environmental Regulation, 365 So2d 759 (Fla. 1st DCA 1978):

Where the empowering provision of a

statute states simply than (sic) an agency

may "make such rules and regulations as may

be necessary to carry out the provisions of

this Act," the validity of the promulgations

thereunder will be sustained as long as they

are reasonably related to the purposes of the

enabling legislation, and are not arbitrary

or capricious.

23. The legislature also specifically delegated the authority to the

agency to develop the application deadline by rule. Section 408.039(3)(a), F.S.

(1993), provides in pertinent part: "[w]ithin 15 days after the applicable

application filing deadline established by department rule..." And again, this

language must be considered in context with the preceding sentence which

references furnishing of copies of the application to both the agency and the

local health council. The legislature does not restrict or reserve application

of this unambiguous language of delegation in any way. Thus, the agency is

specifically and expressly delegated authority to promulgate application

deadlines by rule, both for submission to the agency and for submission to the

local health council.

24. Manatee argues that sections 120.60(2) and 408.039(3)(a), F.S. (1993),

require that the agency afford an applicant an opportunity to cure and correct

an incomplete CON application, and that it inexorably follows that if the

applicant files an application with the Agency but fails to provide the required

copy with the local health council the applicant must be afforded notice and an

opportunity to correct the defect. This position is without basis in law or

logic.

There is a fundamental factual difference between an omission of a required

application component and a failure of submission. Section 120.60(2), F.S.

(1993), specifically provides that the "...agency shall examine the application,

notify the applicant of any apparent errors or omissions, and request any

additional information the agency is permitted by law to require." The plain

meaning of "additional information" is information which has not previously been

submitted. That is, the plain meaning of "additional information" assumes that

some information must have been received. But if no information (i.e., no

application) is received by the local health council, the submission required by

section 408.039(3)(a) to the local health council is not made, and any request

would be a request for an initial submission to the local health council, not a

request for additional information. Also, it would be a request for duplicate

submission of the same information submitted to the agency, not additional

information.

25. Likewise, section 408.039(3)(a), F.S. (1993), provides in pertinent

part, "the staff shall request specific information from the applicant necessary

for the application to be complete." The plain meaning is that some component

or element of the application is missing but that the application has been

submitted. Thus, the language of rules 59C-1.008(1)(k)1., and 2., and rule 59C-

1.008(4), F.A.C., is consistent with the applicable statutory language as

discussed above.

26. Manatee also argues that the rule should be invalidated based on the

ruling in Inverness Health Care v. Department of Health and Rehabilitative

Services, 11 FALR 4470 (DOAH 1989). For a number of reasons, the Inverness case

is inapplicable. First, it is presumed that a legislative body knows of,

adopts, and authorizes an administrative agency's interpretations of its

statutory language where the legislature has met in session subsequent to the

promulgation of the rule interpreting the statutory language. In Inverness

there is an express finding of a direct contravention with applicable statutory

language. (Inverness, at 4478). Also, authority for the rules here under

challenge is expressly delegated to the agency, both generally and specifically,

as discussed above. In addition, Inverness and the instant case are

distinguishable factually. Inverness dealt with a rule which required that

minimum content requirements be satisfied at the time of submission of the

application. Current rules of the agency allow for omissions review, notice,

and an opportunity to correct any and all content deficiencies. Rules 59C-

1.008(1)(k)1., and 2., and rule 59C-1.008(4), F.A.C., relate to initial

submission of an application, not to omitted content requirements or

information. The failure to timely submit an application is simply not

factually the same as an error or omission.

27. Prior to 1987, the statute governing the CON process, section 381.494,

contained a requirement that the applicant furnish a copy of the application to

the local health council at the same time it filed its application with the

agency, but such language was omitted during the 1987 rewrite. Manatee argues

that it necessarily follows that the legislature specifically intended that no

such requirement be imposed. However, there are a number of reasons that the

legislature may make any particular editing change. The legislature could have

removed the language to add clarity to the statute, or indeed because it

otherwise authorizes the agency to set application submission deadlines and

requirements. Legislative intent is subject to research and proof, but Manatee

has failed to produce any evidence whatever of legislative intent regarding this

change. Manatee's argument regarding the reason for elimination from the

statute of the particular language is simply conjecture.

28. It is well established that a petitioner attempting to invalidate a

rule is held to a stringent burden of proof. The petitioner must factually

establish by a preponderance of the evidence that a rule is an invalid exercise

of delegated legislative authority. Case law, beginning with Agrico Chemical

Co., supra has developed specific criteria to be applied in determining whether

the rule or proposed rule complies with the enabling legislation. Manatee has

not alleged that rules 59C-1.008(1)(k)1., and 2., and rule 59C-1.008(4), F.A.C.,

are arbitrary or capricious, and unrebutted expert testimony has shown that the

rules are reasonably related to the enabling legislation. The rules afford

notice to all potential applicants. The rules are unambiguous with respect to

what is required and the precise consequences of failure to comply. Petitioner

has produced no evidence whatever of any inconsistency with statutory language

or statutory intent.

Petitioner has failed to meet the burden of proving that the rules

constitute invalid exercises of delegated legislative authority.

ORDER

Based on the foregoing, it is, hereby,

ORDERED:

The petition for determination of invalidity of rules 59C-1.008(1)(k)1. and

2. and rule 59C-1.008(4), F.A.C. is DENIED.

DONE AND ORDERED this 21st day of February, 1994, in Tallahassee, Leon

County, Florida.

_______________________________

MARY CLARK

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 21st day of February, 1994.

COPIES FURNISHED:

John M. Knight, Esquire

The Perkins House, Suite 200

118 North Gadsden Street

Tallahassee, Florida 32301

J. Robert Griffin, Esquire

Agency for Health Care Administration

The Atrium, Suite 301

325 John Knox Road

Tallahassee, Florida 32303

Robert L. Powell, Agency Clerk

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Kim Tucker, General Counsel

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Liz Cloud, Chief

Bureau of Administrative Code

Department of State

The Elliot Building

401 South Monroe Street

Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director

Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399-1300

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 Rule 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.