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Greynolds Park Manor, Inc. v. Department of Health & Rehabilitative Services

District Court of Appeal of Florida, First District
Jul 18, 1986
491 So. 2d 1157 (Fla. Dist. Ct. App. 1986)


No. BI-206.

May 30, 1986. On Motion for Rehearing July 18, 1986.

Petition from the Department of Health and Rehabilitative Services.

Michael J. Bittman of Dempsey Goldsmith, Orlando, for appellant.

Theodore E. Mack, Asst. Gen. Counsel, Tallahassee, for appellee.

Greynolds Park Manor, Inc. appeals from the dismissal of its petition for the administrative determination of the invalidity of a rule, pursuant to Section 120.56, Florida Statutes (1985). We reverse and remand for further proceedings.

Greynolds operates a nursing home which serves Medicaid recipients. To obtain reimbursement for those services, Greynolds must submit cost reports to the Department of Health and Rehabilitative Services (HRS), the administrator of Florida's Medicaid program, by whom they are audited. The audits of Greynolds' cost reports for the fiscal years ending 31 May 1979 and 31 May 1981 allegedly revealed overpayments to Greynolds of $288,024 in 1979 and $61,258 in 1981. Greynolds requested a Section 120.57 hearing for each fiscal year and also filed the instant Section 120.56 petition, seeking a determination that the "adjustment methodology" used by HRS to determine the overpayments was a rule and, as such, was an invalid exercise of delegated legislative authority.

The Section 120.57 petitions were consolidated for hearing; Greynolds' motion to consolidate the proceeding with that addressed to the Section 120.56 petition was denied. At the outset of the 120.57 hearing, Greynolds' counsel stated that "[t]he Medicare adjustment for fiscal year [sic] 1979 and 1981 is not challenged in this proceeding, but the subject of an upcoming rule challenge proceeding." The hearing therefore addressed only audit adjustments relating to a pension plan and automobile expenses. The final order held that Greynolds was required to repay these disputed expenses and was affirmed by this court in Greynolds Park Manor, Inc. v. HRS, 454 So.2d 29 (Fla. 1st DCA 1984).

After the Section 120.57 hearing, Greynolds and HRS proceeded with discovery on the Section 120.56 petition. One week prior to the scheduled hearing thereon, HRS filed a motion to dismiss on grounds of mootness. The motion alleged that, because the adjustment methodology was no longer used by HRS, its invalidation pursuant to the petition would not affect Greynolds in the future. It further contended that the basis for Greynolds' 120.56 standing, i.e., the way in which the methodology "substantially affected" it, was its operation to create overpayments in 1979 and 1981. Because Greynolds had "withdrawn" its challenge of those overpayments at the outset of the 120.57 proceeding, an invalidation could not result in the return of the money repaid.

At the hearing on the motion, Greynolds argued that it had been "substantially affected" when it was required to repay money under the challenged methodology, and that a challenge to that methodology stood apart from any effort to recover the money. HRS, although conceding that the amounts involved were substantial, reiterated that Greynolds' "waiver" at the 120.57 hearing forestalled recovery of that money, making the rule challenge moot. In his final order, the hearing officer found that because invalidation of the methodology could not result in recovery of the money paid thereunder, Greynolds was not "substantially affected" and the petition was dismissed.

Section 120.56(1) provides that "[a]ny person substantially affected by a rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority" (emphasis supplied). The petition herein also requested a determination that the methodology was a rule at all; this is properly within the scope of a Section 120.56 proceeding. See Balsam v. HRS, 452 So.2d 976 (Fla. 1st DCA 1984).

The hearing officer did not dismiss Greynolds' petition because it had been rendered moot; he dismissed it for a failure to demonstrate "substantial effect," based on a finding that Greynolds was precluded from further relief given a finding of invalidity. The merits of the finding that Greynolds is precluded from further relief need not be determined. The only issue before us is whether, assuming arguendo that no further relief would be available if the methodology were declared invalid, Greynolds is therefore not "substantially affected"? The answer must be no.

In Hasper v. Department of Administration, 459 So.2d 398 (Fla. 1st DCA 1984), appellant's 120.56 challenge of a rule used by the agency to fire her was dismissed for her failure to prove that the rule constituted an invalid exercise of delegated legislative authority. This court affirmed the dismissal on that ground but, in adopting the hearing officer's conclusions of law, rejected the agency's argument that she had no substantial interest in the challenge because invalidation of the rule would not get her job back. The court held that the rule challenge was not the forum in which to litigate her entitlement to the job and that, based on the agency's reliance on the challenged rule to fire her, she was "substantially affected" and entitled to a determination of its validity or not. Hasper at 399.

Similarly, the rule challenge proceeding herein is not the place in which to litigate Greynolds' entitlement to recovery of its money. The statute requires only that the petitioner demonstrate that he is "substantially affected" by the rule. There was no dispute that Greynolds was held liable for substantial amounts of money as a result of HRS's application of the challenged methodology and was "docked" to fulfill that liability. HRS stipulated that the amounts could not form the basis for a "no substantial effect" argument. Therefore, Greynolds has sufficiently established that it was substantially affected by the challenged methodology and is therefore entitled to proceed with its rule challenge petition.

Greynolds' argument that the motion to dismiss should have been dismissed as untimely filed is without merit, as it has failed to establish that the untimeliness impaired the fairness of the proceedings or the correctness of the action. See G B of Jacksonville, Inc. v. DBR, 362 So.2d 951, 956 (Fla. 1st DCA 1978). The motion for attorney's fees is granted, with directions to the agency to set a reasonable fee.

Reversed and remanded.



The Department of Health and Rehabilitative Services moves for rehearing of our opinion herein holding that Greynolds Park was "substantially affected" so as to have standing to file a rule challenge pursuant to Section 120.56, Florida Statutes, despite the possibility that, even if the challenge was successful, Greynolds would not be able to use the ruling to recover money paid under the challenged rule. The Department also moves for rehearing of our grant of Greynolds' motion for appellate attorney's fees.

As grounds for rehearing on the merits, the Department contends first that the court misapplied Hasper v. Department of Administration, 459 So.2d 398 (Fla. 1st DCA 1984), in that the affected party in that case had not "waived any rights to a Section 120.57 hearing" as Greynolds allegedly has. This argument is without merit, since our opinion held that "substantially affected" within Section 120.56 did not depend on the availability of further relief. Even if Hasper possessed the right to further relief pursuant to Section 120.57, the court did not depend on that right to find her "substantially affected."

The Department further contends that we overlooked Montgomery v. Department of Health and Rehabilitative Services, 468 So.2d 1014 (Fla. 1st DCA 1985), wherein it was held that the petitioner had no standing to challenge a proposed rule because "any eventual determination would have no present effect on appellants." Montgomery involved a challenge to the "workfare" rule, which initially was to be applied statewide. While under that circumstance the appellants had standing, the claim was rendered moot when it became clear that the rule would not be applied to them. The Montgomery court clearly held that, it appellant had been subject to the rule, the challenge would be appropriate.

In this case, there was no dispute that the challenged rule had been applied to Greynolds or that, as a result, substantial financial injury occurred. Montgomery is therefore clearly distinguishable and provides no grounds on which to alter our previous opinion. The motion for rehearing on the merits is accordingly denied.

However, we grant the motion with regard to our award of appellate attorney's fees and reverse our previous opinion on that point. The Department correctly points out that Greynolds relied for its motion on Section 120.57(1)(b)9, Florida Statutes, despite the fact that it appealed from an order of the hearing officer pursuant to Section 120.56. Therefore, there was no "agency action which precipitated the appeal" and was a "gross abuse of the agency's discretion," as required before attorney's fees can be awarded under the section cited by Greynolds. Section 120.56 does not authorize appellate attorney's fees nor is there any general authorization therefor in Section 120.68. Rule 9.400, Fla. R.App.P. requires a motion for appellate fees to state the legal justification therefor and Greynolds has failed to do so in this case.

The motion for rehearing on the merits is denied. The motion for rehearing on the grant of appellate attorney's fees is granted, and the award thereof in our previous opinion is reversed.


Summaries of

Greynolds Park Manor, Inc. v. Department of Health & Rehabilitative Services

District Court of Appeal of Florida, First District
Jul 18, 1986
491 So. 2d 1157 (Fla. Dist. Ct. App. 1986)
Case details for

Greynolds Park Manor, Inc. v. Department of Health & Rehabilitative Services

Case Details


Court:District Court of Appeal of Florida, First District

Date published: Jul 18, 1986


491 So. 2d 1157 (Fla. Dist. Ct. App. 1986)

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