Humana v. Department of Health and Rehabilitative Services

• Decision Date: 16 April 1986
• Docket Number: No. 84-2515,84-2515
• Citation: 492 So.2d 388,11 Fla. L. Weekly 928
• Parties: 11 Fla. L. Weekly 928 HUMANA, INC., d/b/a Cypress Community Hospital, Appellant, v. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Plantation General Hospital, North Broward Hospital District d/b/a North Broward Hospital, Appellees.
• Court: Florida District Court of Appeals

Page 388

492 So.2d 388

11 Fla. L. Weekly 928

HUMANA, INC., d/b/a Cypress Community Hospital, Appellant, v. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Plantation General Hospital, North Broward Hospital District d/b/a North Broward Hospital, Appellees.

No. 84-2515.

District Court of Appeal of Florida Fourth District.

April 16, 1986.

Rehearing Denied Aug. 27, 1986.

James C. Hauser, John H. French, Jr., and Timothy J. Warfel of Messer, Rhodes & Vickers, Tallahassee, for appellant-Humana, Inc., d/b/a Cypress Community Hosp.

Jay Adams, Deputy Gen. Counsel, Dept. of Health and Rehabilitative Services, Tallahassee, for appellee-Dept. of Health and Rehabilitative Services.

John H. Parker, Jr., J. Marbury Rainer and Jack C. Basham, Jr., of Parker, Hudson, Rainer, Dobbs & Kelly, Atlanta, Ga., for appellee-North Broward Hosp. Dist. d/b/a North Broward Hosp.

Thomas A. Sheehan, III, of Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P.A., West Palm Beach, for appellee-Plantation Gen. Hosp DOWNEY, Judge.

Appellant, Humana, Inc., d/b/a Cypress Community Hospital (Cypress), appeals from a final order of the Department of Health and Rehabilitative Services (HRS) denying its application for a certificate of need (CON) and approving the competing applications of appellees, Plantation General Hospital (Plantation) and North Broward Hospital District d/b/a North Broward Hospital (NBH) for cardiac catheterization laboratories (cardiac cath labs) in Broward County. We affirm the agency's final order.

Cypress, Plantation, and NBH submitted CON applications to HRS seeking to establish cardiac cath labs at their respective facilities. Prior to HRS's review of the three applications, they were submitted to the Broward County Health Planning and Development Council for its recommendation. The board of directors and the project review committee of the council voted to approve NBH's and Plantation's application and to disapprove the application of Cypress. However, HRS denied all three applications, and each applicant petitioned for a formal hearing, challenging the denials.

After HRS initially denied all three applications, but before the administrative hearing was held, rule 10-5.11(15), Florida Administrative Code, was amended to establish a mathematical formula for calculating and projecting the need for cardiac cath labs. The pertinent provisions of the rule state:

(f) Departmental Goal. The Department will consider applications for cardiac catheterization laboratories in context with applicable statutory and rule criteria. The department will not normally approve applications for new cardiac catheterization laboratories in any service area unless additional need is indicated, as calculated by the formula in paragraph (1) below, ...

....

(1) Need Determination. The need for cardiac catheterization capacity in a service area shall be determined by computing the projected number of cardiac catheterization procedures in the service area. The following formula shall be used in this determination:

N subx = U subc X P subx

Where:

N subx = Number of catheterization procedures

projected to be delivered in Year X;

U subc = 1981 use rate (number of procedures per

hundred thousand population) in the service

area;

P subx = Projected population in the service area in

Year X; and

Year X = The year in which the proposed cardiac

catheterization laboratory would initiate

service, but not more than two years into

the future.

After rule 10-5.11(15) was amended, and before the hearing in this case, NBH, Plantation, Cypress and others challenged the rule's validity on several grounds, including use of 1981 as the base year for calculating need. It was contended, inter alia, that the rule's use of 1981 as the base year for calculating need was arbitrary and capricious and would understate the utilization of cardiac cath services. The hearing officer upheld the validity of the rule, concluding that the method is not without explanation or rational basis in fact and it does not preclude a consideration of factors other than the numerical need for additional facilities in a service area. The hearing officer's "well-reasoned" order was recently affirmed in Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985). The appellate court stated:

Rule 10-5.11(15)(f) ... contains the provision that the Department will not normally approve new labs unless additional need is indicated by the formula methodology contained in Rule 10-5.11(15). Thus, the numerical factor does not rigidly control the granting or withholding of approval. As pointed out by the hearing officer, should the formula methodology in Rule 10-5.11(15) result in an underestimation of the need for additional services in an area, the applicant has the opportunity to demonstrate need by showing that existing facilities are unavailable or inaccessible, the quality of care in the service area is suffering from overutilization, or by providing other information to illustrate that the situation is not "normal" in the service area.

Id. at 891.

At the administrative hearing in the instant case, following the amendment of rule 10-5.11(15), HRS modified its position on the need for additional cardiac cath services in Broward County. Applying the amended rule, HRS submitted there was a need for two additional cardiac cath labs. After comparing the three CON applications, HRS determined and maintained at the hearing before the hearing officer that the applications of NBH and Plantation were superior to that of Cypress and that NBH and Plantation should be awarded CONs to establish cardiac cath labs. NBH, Plantation and Cypress each took the position at the hearing that its application should be approved and that approval of all three applications would be appropriate.

All parties agreed at the hearing that 1986 was the appropriate year to assess the need for these applications. In applying the rule formula, it was established through testimony of health planning officials that the 1981 use rate of 3.37, multiplied by the 1986 population estimate, projected need in 1986 for 4,013 catheterizations to be performed. Dividing that figure by the low average standard figure of 600 catheterizations to be performed per lab, yielded a total of 6.68 labs needed. Five labs already exist in Broward County. Therefore, only 1.68 more labs, rounded off to two more labs, would be needed in 1986 according to the rule formula. Testimony was also presented, however, that the utilization of cardiac cath procedures had increased approximately thirty percent over the past few years and that the procedures actually performed in 1982 and 1983 far exceeded the projected total for 1986 per the rule formula.

The hearing officer thereafter entered his recommended order, which recognized that a need for only two additional cardiac cath labs was indicated under rule 10-5.11(15), but concluded that this case was taken out of the rule because, by using 1981 as the base year, the rule's methodology understated the utilization of cardiac cath services in Broward County. The hearing officer relied on 1982 and 1983 data instead, and determined that there would be a need for three additional cardiac cath labs in Broward County in 1986. Because the hearing officer found a need for three additional labs, he concluded that a comparison of the merits of the applications was unnecessary. The hearing officer recommended that HRS issue CONs to all three applicants. HRS filed exceptions to the hearing officer's conclusion.

In its final order, HRS rejected the hearing officer's recommendation that all three applicants be awarded CONs, concluding that the recommended order was based upon an erroneous, inappropriate interpretation and application of rule 10-5.11(15). HRS held that rule 10-5.11(15) applied and that, under the rule's methodology, there was a need for only two additional cath labs. HRS stated: "The record fails to justify an exception to the stated rule, i.e., fails to show that, if two laboratories were added rather than three, people would be denied access to cardiac catheterization services, existing laboratories would be overcrowded, or the quality of care would be diminished."

Because the hearing officer's recommendation to award three CONs was rejected, HRS found it necessary to determine which two applications were superior. Following a review of the complete record, which included a transcript of the hearing (wherein most of the evidence presented was intended to show that each hospital's application was superior to the others), HRS found that the applications of NBH and Plantation were superior to that of Cypress. HRS then awarded CONs to NBH and Plantation and denied Cypress's application.

On appeal, Cypress raises four points, only two of which we deem worthy of discussion. First, Cypress contends that the hearing officer's determination of need for three additional cardiac cath labs was a finding of fact, which HRS unlawfully rejected. Second, Cypress contends that, if HRS was correct in finding a need for only two cardiac cath labs, the case should be remanded to the hearing officer for comparative review of the...