Balino v. Department of Health and Rehabilitative Services

• Citation: 362 So.2d 21
• Decision Date: 10 July 1978
• Docket Number: No. HH-177,HH-177
• Parties: America BALINO et al., Petitioners, v. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES of the State of Florida, Respondent.
• Court: Court of Appeal of Florida (US)

Page 21

362 So.2d 21

America BALINO et al., Petitioners, v. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES of the State of Florida, Respondent.

No. HH-177.

District Court of Appeal of Florida, First District.

July 10, 1978.

On Rehearing Sept. 18, 1978.

Stephen T. Maher, Miami, Robert F. Williams, Tallahassee, for petitioners.

Charles T. Collette, George L. Waas and David St. John, Tallahassee, for respondent.

BOOTH, Judge.

This cause is before us on petition for review of final agency action resulting from a rule-making proceeding pursuant to Florida Statute § 120.54(3). Petitioners are patients residing in Florida nursing homes who receive Medicaid. Respondent (HRS) is the agency charged with administration of the Medicaid program in Florida and has promulgated rules governing eligibility for the program.

The basic dispute between the parties involves the criteria for designation of a patient as a "skilled nursing facility (SNF) patient" and specifically Rule 10c-7.32, Florida Administrative Code, setting out those criteria. The SNF patient designation entitles the patient to Medicaid financing for the highest or most intensive of the three levels of nursing care financed by Medicaid.

In prior litigation between the parties ¹ this Court ruled that in the reclassification proceedings required by the new more stringent federal and state regulations, the HRS, not petitioners, has the burden of establishing the grounds for reclassification of SNF patients.

On the administrative level, petitioners challenged Rule 10c-7.32 on the basis that it lacked essential definitions. A full evidentiary hearing was held in the rule-challenge proceedings and final order issued October 19, 1976 providing in part as follows:

"Rule 10c-7.21 (now 10c-7.32) will be amended to include definitions and examples of key words and phrases such as 'nurse'; 'professional person'; 'technical person'; 'available on a 24-hour basis'; 'which as a practical matter can only be provided in a skilled nursing care facility on an inpatient basis'."

Pursuant to the mandate of the above-quoted order, HRS on June 17, 1977, caused a notice of proposed rule-making to be published. Petitioners filed a request for a hearing pursuant to Florida Statute § 120.54(3), which states:

"If the intended action concerns any rule other than one relating exclusively to organization, procedure or practice, the agency shall, on the request of any affected person received within 14 days after the date of publication of the notice, give affected persons an Opportunity to present evidence and argument on all issues under consideration appropriate to inform it of their contentions." (e. s.)

The rule-making hearing was held July 18, 1977. Petitioners appeared through counsel and sought to call and examine "Rulemaking proceedings shall be governed solely by the provisions of this section unless a person timely asserts that his substantial interests will be affected in the proceedings and affirmatively demonstrates to the agency that the proceeding does not provide adequate opportunity to protect those interests. If the agency determines that the rule making proceeding is not adequate to protect his interests, it shall suspend the rule making proceeding and convene a separate proceeding under the provisions of section 120.57 . . ."

witnesses, to cross-examine witnesses and to invoke the rule excluding witnesses from the proceedings while other witnesses were testifying. The hearing officer disallowed these requests on the grounds that the proceeding was a public hearing, not a formal adversary hearing, and that only comments or statements could be received. Faced with that ruling, petitioners requested the hearing officer to "draw out" the proceedings pursuant to Florida Statute § 120.54(16) which provides:

Rule 28-5.13 of the Model Rules of Procedure provide that the request for a draw-out can be made "at any time prior to the conclusion of a public hearing conducted under the provisions of § 120.54."

In the instant case, the hearing officer refused the request for a draw-out on the grounds: (1) That the request was not timely and (2) That petitioners' substantial interest would be protected by virtue of the fact that petitioners' counsel was present at the rule-making hearing.

The hearing officer also refused to allow counsel to proffer the testimony of petitioners' witnesses who were present at the hearing though he indicated a willingness to allow counsel to make a statement or comment. Thereafter, the hearing continued with several individuals representing the Florida Health Care Association and one member of the Department's staff making comments. A month later, on August 9, 1977, the amended rule was filed. This petition for review followed.

The purpose of a rule-making hearing under § 120.54(3) is two-fold:

(1) To allow the agency to inform itself of matters bearing on the proposed rules or modifications thereof, and

(2) To allow the public, and specifically individuals and groups having particular interests and/or information, to participate in the rule-making process. The hearing is of a quasi-legislative, information-gathering type, which in theory at least, does not adjudicate the rights of any particular individual. ²

In its conduct of the hearing, the agency has the affirmative duty to inform itself to the fullest extent possible of the interest and problems of those who seek to present evidence and argument. The hearing under § 120.54(3) is not an adversary proceeding and is, in fact, presided over by a member of the agency's own staff. Use of technical requirements by the agency's hearing officer solely for the purpose of avoiding informational input is not in keeping with the nature of the proceedings. The agency has no right, as a litigant in an adversary proceeding might have, to protect itself from evidence or argument that may be unfavorable. The officer conducting the hearing must make every effort to assure those present have fair opportunity to present evidence and argument which is material to the rules in question and appropriate under the circumstances. What is material evidence and argument, appropriate in form, will vary with the nature of the issues involved. Considerations of time and of the number of participants in attendance at the hearing will necessarily affect the manner of presentation allowable by the hearing officer. Within those limitations, however, participants must be afforded fair opportunity "to present evidence and argument . . . appropriate In Walter Holm & Company v. Hardin, 145 U.S.App.D.C. 347, 449 F.2d 1009 (1971), involving regulations of the Secretary of Agriculture affecting the import of tomatoes, the court held that tomato importers must be afforded "effective opportunity to make a presentation to the Secretary" in the informal rulemaking proceedings under the federal APA, ⁴ and stated (145 U.S.App.D.C. at 353, 354, 449 F.2d at 1015, 1016):

to inform it of their contentions." F.S. § 120.54(3). ³

"This is not an area that may rightly be approached in terms of absolute rigidity of requirement . . .

American Airlines (v. CAB) ⁵ indicates that the oral hearing may be legislative in type, although fairness may require an opportunity for cross-examination on the crucial issues. The requirement of hearing is not shackled by rigidities of procedure that may stultify the regulatory program. What counts is the reality of an opportunity to submit an effective presentation, to assure that the Secretary and his assistants will take a hard look at the problems in the light of those submissions." (e. s.)

Here, petitioners' contentions are that the definitions proposed and subsequently adopted after the § 120.54 proceedings are (1) incomplete because they fail to define all the criteria required to be defined in the order of HRS Secretary Page and (2) unworkable. The latter contention petitioners propose to support by examination and cross-examination of witnesses who must work with and apply the criteria for determining the "SNF patient." That type of presentation is Not prohibited in a § 120.54 proceeding but is allowable within the discretion of the agency. Petitioners have not demonstrated any unique circumstances that might justify a trial-type presentation in the informal rule-making proceeding. ⁶ However, since the hearing officer was apparently of the view that he could not permit formal presentation, on remand the request may be renewed for his consideration.

Concerning the agency's denial of the requested evidentiary hearing under § 120.57, we note that neither of the bases stated by the hearing officer for that denial is sufficient. The request was timely and the fact that petitioners' counsel was present at the rule-making proceedings does not eliminate the need for a § 120.57 proceeding. In Bert Rogers Schools of Real Estate v. Florida Real Estate Commission, 339 So.2d 226 (Fla. 4th DCA 1976) petitioner attended the agency's rule-making hearing and requested a § 120.57 proceeding. The court ruled that the agency had failed "(I)t seems apparent that everyone involved was somewhat in doubt as to the correct procedure to follow under the circumstances. We do not say this critically because these waters are unchartered and only time and experience will enable those dealing with the Administrative Procedure Act to know with any degree of certitude proper application of its legislative directives . ."

to expressly determine whether the § 120.54 proceeding was adequate to protect the interest asserted and, further, that there was nothing in the record which would support such a determination and therefore the denial of a § 120.57 proceeding was arbitrary. The court remanded the cause with directions that the petitioner be granted a hearing under § 120.57, and in so doing made the following statement concerning the basic problem of the § 120.54 hearing which is appropriate here:

In the instant case...