Hialeah Hospital, Inc. v. Department of Health & Rehabilitative Services (In re King Memorial Hospital, Inc.)

42 B.R. 942, 1984 Bankr. LEXIS 4877
CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedOctober 3, 1984
DocketBankruptcy No. 79-01220-BKC-SMW; Adv. No. 84-0284-BKC-SMW-A
StatusPublished
Cited by1 cases

This text of 42 B.R. 942 (Hialeah Hospital, Inc. v. Department of Health & Rehabilitative Services (In re King Memorial Hospital, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Florida. primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hialeah Hospital, Inc. v. Department of Health & Rehabilitative Services (In re King Memorial Hospital, Inc.), 42 B.R. 942, 1984 Bankr. LEXIS 4877 (Fla. 1984).

Opinion

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SIDNEY M. WEAVER, Bankruptcy Judge.

Plaintiff, Hialeah Hospital, Inc. (“Hialeah”), is a Florida not-for-profit corpora[943]*943tion which owns and operates a 411-bed acute care hospital located in Hialeah, Dade County, Florida. Defendants, Robert A. Schatzman and Justin P. Havee, Co-Trustees of King Memorial Hospital (“Co-Trustees”), are the duly qualified and acting Co-Trustees of King Memorial Hospital, Inc. and Florida Hospital Group, Inc., debtors in Chapter 7 proceedings. Defendant, Department of Health and Rehabilitative Services (“HRS”), is an administrative agency of the State of Florida charged with the responsibility of enforcing and administering the Florida Certificate of Need law. HRS has the sole and exclusive responsibility for determinations as to the existence, preservation, and relocation of exemptions from the Florida Certificate of Need law. Defendant, Republic Health Corporation (“Republic”), is a Delaware corporation with its principal place of business in Dallas, Texas. Republic entered into an Offer to Purchase with the Co-Trustees and Miami Capital Development, Inc. (“Miami Capital”) to purchase the real property, improvements, and other personal property, including a certain exemption from the Florida Certificate of Need law (the “Exemption”) for the construction of a 126-bed general acute care hospital, from the estate in bankruptcy of King Memorial Hospital, Inc. (“King”). Defendant Miami Capital is a Florida corporation with its principal place of business in Dade County, Florida. Miami Capital claims an interest in the property of the estate.

Plaintiff Hialeah has filed a three count adversary complaint in this Court seeking declaratory and injunctive relief against HRS, the Co-Trustees, Republic, and Miami Capital, contending that it had a right to notice and to be heard with regard to the sale and relocation of the site for construction of the 126-bed general acute hospital to be built pursuant to the Exemption. Defendants contend that this court had the authority to authorize the sale and relocation of the Exemption by virtue of the provisions of the Bankruptcy Code and the laws of the State of Florida and that HRS, acting as legal representative of the people, determined that the Exemption could be transferred and relocated within certain parameters and acted adequately, sufficiently, and in accordance with law in reaching a court approved settlement with the Co-Trustees.

The above styled and numbered adversary proceeding was heard by the Court on August 7, 1984, and adjourned to August 28, 1984, at which time the trial was concluded. After considering all of the evidence, arguments, and briefs of counsel, the Court makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. King, a 27-bed hospital facility located in Opa Locka, Florida, filed for relief under Chapter 11 of Title 11 of the United States Code on October 2, 1979. Shortly thereafter, on November 8, 1979, Robert A. Schatzman and Justin P. Havee were appointed Co-Trustees. On March 2, 1982, the Chapter 11 case was converted to a case under Chapter 7 of the Bankruptcy Code.

2. Prior to the institution of the Chapter 11 proceeding, in December of 1973, King was advised by letter from the HRS that King qualified for an Exemption from the Florida Certificate of Need law relating to the construction of a hospital. Five years later, in July of 1978, King was notified by HRS that the Florida Certificate of Need law had been amended to repeal future exemptions and that King’s Exemption would be preserved if it engaged in “physical and continuous” construction of a hospital by July, 1979.

3. On November 30, 1979, HRS notified the Co-Trustees of King that HRS had determined that King had forfeited the Exemption and gave King a period of time during which to request an administrative hearing pursuant to the Florida Administrative Procedures Act. Whereupon, the Co-Trustees filed an adversary proceeding in this Court against HRS seeking injunc-tive relief to restrain HRS from entering any order revoking the Exemption. On February 14,1980, this Court enjoined HRS from entering any orders regarding the Exemption. The Court entered its order in

[944]*944the adversary proceeding on June 24, 1980 providing that the automatic stay of Section 362 of the Bankruptcy Code prevented HRS from using administrative proceedings to revoke the Exemption. In Re King Memorial Hospital, Inc., 4 B.R. 704 (Bankr.S.D.Fla.1980). On April 30, 1982, this Court determined that the Exemption which was at issue was preserved and that the Co-Trustees were authorized to construct a health care facility and were accordingly to submit a construction schedule. In Re King Memorial Hospital, Inc., 19 B.R. 885 (Bankr.S.D.Fla.1982). Such order is now final.

4. During the course of these Chapter 7 proceedings, the Co-Trustees have made a diligent and deliberate effort to dispose of the estate’s interest in the real and intangible property known as King Memorial Hospital, Inc. including the Exemption. The Co-Trustees offered the assets for sale to thirty-three proprietary hospital companies situated in the United States, advertised the assets for sale in the Miami Herald and the Wall Street Journal, and made additional private inquiries. The Court finds that the Co-Trustees utilized due diligence in seeking a purchaser for the assets of the estate.

5. The Co-Trustees were unable to sell the Exemption in its original location because it was not economically feasible to construct a hospital on the original site or to profitably operate the facility located thereon. Recently civil disturbances occurred in the area where the site is located. The area has been, and continues to be, economically depressed. The original construction site does not have sufficient land available to make a hospital facility economically viable.

6. On May 23, 1983, the Co-Trustees filed an adversary proceeding against HRS seeking a declaratory judgment determining the Co-Trustees’ rights to construct a 126-bed hospital facility at a relocated site generally within the Opa Locka area.

7. Neither the Exemption nor this Court’s order of April 30, 1982 providing that the Exemption was preserved limit the hospital site to a specific location.

8. HRS and the Co-Trustees subsequently entered into a settlement of the May 23, 1983 adversary proceeding. On November 28, 1983, after notice pursuant to the provisions of the Bankruptcy Code and the Bankruptcy Rules of Procedure, this Court entered its order approving the Joint Application for Settlement between the Co-Trustees and HRS which provided in part that HRS approved of King’s transfer of the Exemption to defendant Republic. The settlement and order approving it recognized Republic had sufficient resources and the necessary commitment to serve the needs of the Opa Locka community and that HRS considered Republic to have the same status and rights as a party holding a Certificate of Need to construct a 126-bed general acute care hospital at a relocated site. In the settlement agreement HRS acknowledged that this Court had exclusive jurisdiction to issue any order with respect to the sale of the Exemption to Republic.

9. On December 16, 1983, this Court entered its Order approving a sale of the real property and improvements to Republic for the sum of $1,000,000.00 and providing that Republic would acquire the Exemption.

10.

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42 B.R. 942, 1984 Bankr. LEXIS 4877, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hialeah-hospital-inc-v-department-of-health-rehabilitative-services-flsb-1984.