Opinion
Civil Docket No. CL18-6997
11-27-2019
RE: Chesapeake Hospital Authority d/b/a Chesapeake General Hospital v. State Health Commissioner, et al.
Peter M. Mellette, Esquire Mellette, P. C. P.O. Box 6133 Williamsburg, VA 23188 Amanda L. Lavin, Esquire Assistant Attorney General Office of the Attorney General Counsel for Norman Oliver, M.D., M.A. State Health Commissioner 202 North Ninth Street Richmond, VA 23219 H. Guy Collier, Esquire McDermott Will & Emery, LLP The McDermott Building 500 North Capital Street, NW Washington, DC 20001 Jamie B. Martin, Esquire Williams Mullen P.O. Box 1320 Richmond, VA 23219
Peter M. Mellette, Esquire
Mellette, P. C.
P.O. Box 6133
Williamsburg, VA 23188 Amanda L. Lavin, Esquire
Assistant Attorney General
Office of the Attorney General
Counsel for Norman Oliver, M.D., M.A.
State Health Commissioner
202 North Ninth Street
Richmond, VA 23219 H. Guy Collier, Esquire
McDermott Will & Emery, LLP
The McDermott Building
500 North Capital Street, NW
Washington, DC 20001 Jamie B. Martin, Esquire
Williams Mullen
P.O. Box 1320
Richmond, VA 23219 Dear Counsel:
This matter comes before the Court on the Petition for Appeal by Chesapeake Regional Medical Center ("CRMC") of the Virginia State Health Commissioner's Case Decision Denying Chesapeake Regional's Open Heart Surgery COPN Application filed on November 14, 2018. The Court received extensive briefing from all parties on the matter and heard oral argument on November 7, 2019. For the reasons set forth below, the Court AFFIRMS the Commissioner's decision to deny CRMC's Certificate of Public Need ("COPN") application.
Background
During the COPN program's Batch Review Cycle starting on September 10, 2017, CRMC applied for a COPN "authorizing the introduction of open heart surgery services and the addition of cardiac catheterization equipment." (Appeal R. at 35 [hereinafter R.].) In that same Batch Review Cycle, Sentara Virginia Beach General Hospital ("SVBGH") submitted a COPN application seeking the authorization of additional cardiac catheterization equipment. (R. at 35.) SVBGH subsequently requested that the Virginia Department of Health's Division of Certificate of Public Need ("DCOPN") convene an informal fact-finding conference ("IFFC") because it believed its COPN application competed with CRMC's COPN application. (R. at 35.) Additionally, SVBGH's corporate parent, Sentara Hospitals ("Sentara") submitted a petition to show good cause party status as to CRMC's COPN application. (R. at 35.) On December 7, 2017, both Sentara and CRMC presented evidence and argument at an IFFC on Sentara's petition to show good cause party status. (R. at 35.) The Commissioner thereafter granted Sentara good cause party status, and this Court affirmed the Commissioner's decision on March 17, 2019.
CRMC, SVBGH, Sentara Norfolk General Hospital ("SNGH"), and Bon Secours Maryview Medical Center are all located in health planning district 20 ("PD 20"). (R. at 36.)
On April 12, 2018, Sentara and CRMC both presented evidence and argument at an IFFC on the merits of CRMC's COPN application. (R. at 35.) Based on that IFFC and additional evidentiary submissions, Douglas R. Harris, the Commissioner's Adjudication Officer, recommended that the Commissioner deny CRMC's COPN application. (R. at 34-47.) The Commissioner adopted that recommendation on August 24, 2018. (R. at 31-33.) CRMC appealed the Commissioner's decision to this Court.
Statutory Framework
Virginia Code § 32.1-102.3 controls COPN applications. Paragraph (A) of the statute provides:
No person shall commence any project without first obtaining a [COPN] issued by the Commissioner. No certificate may be issued unless the Commissioner has determined that a public need for the project has been demonstrated. . . . Any decision to issue or approve issuance of a certificate shall be consistent with the most recent applicable provisions of the State Medical Facilities Plan.
CRMC's proposed introduction of open heart surgery services and expansion of cardiac catheterization services satisfies the definition of "project" outlined in Virginia Code § 32.1-102.1.
Paragraph (B) of the statute directs the Commissioner to consider eight enumerated factors to evaluate whether a public need for a project exists, the third of which is "the extent to which the project is consistent with the State Medical Facilities Plan." Va. Code § 32.1-102.3(B). The Court mused at oral argument about the apparent oddity of the statutory requirement that the Commissioner first determine, as a threshold matter, that the project is consistent with the State Medical Facilities Plan ("SMFP") before considering the eight specific factors in paragraph (B), one of which is consistency with the SMFP.
In this case, the Adjudication Officer wrote in his Case Decision that the project was not consistent with the SMFP for numerous reasons. He weighed and considered all eight statutory factors "as a whole" and concluded "that CRMC has not demonstrated a public need for the project it has proposed." (R. at 47.)
Virginia's Administrative Process Act ("VAPA"), Virginia Code §§ 2.2-4000-4031, which grants aggrieved parties the right to appeal the Commissioner's decision in Virginia's circuit courts, governs appeals of the Commissioner's COPN decisions. See Va. Code § 32.1-102.6(F); Va. Code § 2.2-4026; Va. Sup. Ct. R. 2A:4. Virginia Code § 2.2-4027 notes the issues that a party may raise on review and places the burden of establishing error by the Commissioner on the appellant. If "a . . . case decision is found by the court not to be in accordance with law under § 2.2-4027, the court shall suspend or set it aside and remand the matter to the agency for further proceedings, if any, as the court may permit or direct in accordance with law." Va. Code § 2.2-4029.
Standard of Review
"[U]nder the VAPA, the circuit court's role in an appeal from an agency decision is equivalent to an appellate court's role in an appeal from a trial court." Sch. Bd. of Cty. of York v. Nicely, 12 Va. App. 1051, 1062 (1991). "In this sense, the General Assembly has provided that a circuit court acts as an appellate tribunal." Laurels of Bon Air, LLC v. Med. Facilities of Am. LIV Ltd. P'Ship, 51 Va. App. 583, 591 (2008) (quoting Gordon v. Allen, 24 Va. App. 272, 277 (1997)).
The circuit court's deference to an agency determination varies based on the type of issue before the court. Va. Code § 2.2-4027. For instance, the court "has no authority under [the] VAPA to reweigh the facts in the agency's evidentiary record." Family Redirection Inst., Inc. v. Dep't of Med. Assistance Servs., 61 Va. App. 765, 771 (2013). The court may reject an agency's factual findings "only if, considering the record as a whole, a reasonable mind would necessarily come to a different conclusion." Va. Imps. Ltd. v. Kirin Brewery of Am., Inc., 41 Va. App. 806, 809 (2003) (quoting Va. Real Estate Comm'n v. Bias, 226 Va. 264, 269 (1983)). The court cannot "substitute its own judgment for the agency's on matters committed by statute to the agency's discretion." Boone v. Harrison, 52 Va. App. 53, 62 (2008). "[T]he court must review the facts in the light most favorable to sustaining the [agency]'s action." Bio-Medical Applications of Arlington, Inc. v. Kenley, 4 Va. App. 414, 427 (1987).
Conversely, "[p]ure statutory construction" receives de novo review because it involves "a matter within the 'core competency of the judiciary.'" Va. Emp't Comm'n v. Cmty. Alts., Inc., 57 Va. App. 700, 708 (2011) (quoting Citland, Ltd. v. Commonwealth ex rel. Kilgore, 45 Va. App. 268, 275 (2005)). Similarly, courts give "less deference" to agency decisions when tasked with determining "whether an agency has, for example, . . . failed to observe required procedures." Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 243 (1988). "Where . . . the issue concerns an agency decision based on the proper application of its expert discretion, the reviewing court will not substitute its own independent judgment for that of the agency but rather will reverse the agency only if that decision was arbitrary and capricious." Id. at 246. Finally, courts must "consider the experience and specialized competence of the agency and the purposes of the basic law under which the agency acted" when it reviews an agency's decision. Id.
Analysis
Assignment of Error I —Interpretation of 12 VAC 5-230-450(A)(2)
The SMFP addresses both aspects of CRMC's proposed project. The provisions applicable to the establishment of open heart surgery services appear at 12 VAC 5-230-440-480, and those relating to the addition of cardiac catheterization equipment appear at 12 VAC 5-230-380-430.
CRMC assigns error to the Commissioner's interpretation of an SMFP provision relating to new open heart surgery services, 12 VAC 5-230-450(A)(2), which provides:
No new open heart services should be approved unless:
***
2. Open heart surgery services located in the health planning district performed an average of 400 open heart and closed heart surgical procedures for the relevant reporting period.
The Adjudication Officer summarized the parties' different interpretations of this requirement, writing that, "CRMC and Sentara disagree on whether this provision applies to a service located at an acute care hospital (regardless of the number of cardiac [operating rooms] a service might include in its suite) or whether it applies to single [operating rooms] in an acute care hospital's service." (R. at 41.)
If the provision refers to services without regard to the number of operating rooms ("OR") in each suite, the three open heart surgery services in PD 20 performed more than the required 400 procedures, and CRMC's project would have met this standard. Sentara urged that the provision must refer to ORs and argued that the existing ORs in PD 20 performed an average of 167 procedure in 2015 - far less than the required 400. The Adjudication Officer noted: "Sentara maintains that reading this provision to look at utilization per-service, rather than per-OR, is 'inconsistent with the remainder of the open heart surgery SMFP [new-service provision], the COPN law, and sound health planning. This is plain and I agree." (R. at 42.) He concluded that "[d]espite confusion arising from this provision of the SMFP, I believe, in context, the most reasonable reading of the provision compels an analysis of looking at per-OR utilization. Accordingly, the CRMC project does not meet this standard." (R. at 42.) CRMC argues that the Commissioner erred when he interpreted per-service to mean per-OR.
The court affords an agency "'great deference' in its administrative 'interpretation and application of its own regulations.'" Family Redirection Inst., Inc. v. Dep't of Med. Assistance Servs., 61 Va. App. 765, 772 (2013) (quoting Finnerty v. Thornton Hall, Inc., 42 Va. App. 628, 634 n.2 (2004)). Nonetheless, "deference is not abdication, and it requires us to accept only those agency interpretations that are reasonable in light of the principles of construction courts normally employ." E.E.O.C. v. Arabian Am. Oil Co., 499 U.S. 244, 260 (1991) (Scalia, J., concurring). Indeed, "no matter how one calibrates judicial deference, the administrative power to interpret a regulation does not include the power to rewrite it." Bd. of Supervisors of Culpeper Cty., 52 Va. App. at 466. Therefore, the court "gives no deference to an agency's interpretation of its own regulation that is 'arbitrary and capricious,' meaning an interpretation that is 'unreasonable' or 'without determining principle.'" MPS Healthcare, Inc. v. Dep't of Med. Assistance Servs./Virginia, 70 Va. App. 624, 631 (2019) (quoting Williams v. Va. Real Estate Bd., 57 Va. App. 108, 135 (2010)).
Virginia courts regularly rely on United States Supreme Court opinions regarding federal regulations to inform their interpretations of the VAPA. See, e.g., Bd. of Supervisors of Culpeper Cty. v. State Bldg. Code Tech. Review Bd., 52 Va. App. 460, 466-67 (2008) (quoting Christensen v. Harris Cty., 529 U.S. 576, 588 (2000)).
Just this year, the United States Supreme Court held that courts should not defer to an agency's interpretation of its regulation "unless the regulation is genuinely ambiguous." Kisor v. Wilkie, ___ U.S. ___, 139 S.Ct. 2400, 2414 (2019). "[B]efore concluding that a rule is genuinely ambiguous, a court must exhaust all the 'traditional tools' of construction." Id., 139 S.Ct. at 2415 (quoting Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 n.9 (1984)). Thus, a court "must 'carefully consider' the text, structure, history, and purpose of a regulation, in all the ways it would if it had no agency to fall back on." Id. (quoting Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 707 (1991)).
Adhering to these principles, the Court holds that the SMFP's use of the term "services" is not ambiguous, and the Commissioner misinterpreted 12 VAC 5-230-450(A)(2) when he determined that the term referred to ORs. The Adjudication Officer's own use of the term "services" in his report clearly reflects its unambiguous meaning: "Three open heart surgery services already serve PD 20: Sentara Norfolk General Hospital, SVBGH, and Bon Secours Maryview Medical Center (in Portsmouth)." (R. at 36.) Thus, in the Case Decision itself, "services" means providers, not operating rooms.
Other parts of the SMFP, including the very next subparagraph, explicitly articulate a per-room standard. 12 VAC 5-230-450(A)(3) ("The proposed new service will perform at least 150 procedures per room in the first year of operation."). The term "service" should not have a completely different meaning from subparagraph 2 to subparagraph 3 of the very same regulation.
The regulators make the same per-service and per-room distinction in other parts of the SMFP as well. Compare 12 VAC 5-230-450(A)(2) with 12 VAC 5-230-460. Therefore, there is no basis to presume that they intended a per-room standard, and not a per-service standard, when they drafted 12 VAC 5-230-450(A)(2). See Halifax Corp. v. First Union Nat'l Bank, 262 Va. 91, 100 (2001) (citations omitted) ("When analyzing a statute, we must assume that the General Assembly chose, with care, the words it used in enacting the statute, and we are bound by those words when we apply the statute. . .. Additionally, when the General Assembly includes specific language in one section of a statute, but omits that language from another section of the statute, we must presume that the exclusion of the language was intentional.").
Virginia courts must apply this traditional rule of statutory interpretation to parse the meaning of the regulation. See Kisor, 139 S.Ct. at 2415 (quoting Chevron U.S.A. Inc., 467 U.S. at 843 n.9). --------
The administrative history of the regulation supports CRMC's position. According to CRMC, administrative process history cited in the Supplemental Rebuttal Declaration of Louis F. Rossiter, Ph. D, (R. at 186), and included in the Record, shows that the SMFP Advisory Committee members considered "adding per room after '400 open heart procedures'" during a 2006 SMFP Advisory Committee meeting. (R. at 2021.) Thereafter, the Committee explicitly rejected that per-room language. (R. at 2021.)
The Commissioner and Sentara both protest that CRMC's interpretation of 12 VAC 5-230-450(A)(2) "lead[s] to an absurd result." (R. at 42.) The Court does not perceive the absurdity. Averaging high-volume and low-volume services gives a new provider an opportunity to start services in a district dominated by one large hospital. Sentara contends that such a measurement artificially shows need where none exists (and where it can never exist if low-volume providers continue to operate). While that may be true, the SMFP drafters perhaps felt that a district needs a new service if enough volume exists district-wide and a potential new entrant could credibly project 150 cases in the first year and 250 in the second year, as required in subparagraph 3 of the regulation. One could speculate as to why the SMFP drafters wanted to measure need in this fashion, but the language that they chose makes clear that 12 VAC 5-230-450(A)(2) employs a per-service, not a per-OR, standard. Thus, the Court accepts CRMC's first assignment of error and determines that the Commissioner erred in interpreting the language "open heart surgery services" to mean open heart surgery ORs. Assignments of Error II and III —Analysis of Diagnostic Equivalent Procedure ("DEP") Data
CRMC's second and third assignments of error both pertain to the Commissioner's decision that CRMC did not satisfy the DEP requirements of 12 VAC 5-230-450(A)(1) and 12 VAC 5-230-400. Thus, the Court address these assignments of error jointly.
Section 5-230-450(A)(1) of title 12 of the Virginia Administrative Code provides that:
No new open heart services should be approved unless:Section 5-230-400 permits the approval of an increase in cardiac catheterization services only when:
1. The service will be available in an inpatient hospital with an established cardiac catheterization service that has performed an average of 1,200 DEPs for the relevant reporting period and has been in operation for at least 30 months.
1. All existing cardiac catheterization laboratories operated by the applicant's facilities where the proposed expansion is to occur have performed an average of 1,200 DEPs per existing and approved laboratory for the relevant reporting period.
The Commissioner accepted Sentara's evidence regarding the number of DEPs that CRMC performed to determine that CRMC did not satisfy the 1200 DEP standard. CRMC argues that the Commissioner erred by: (1) acting inconsistently with previous decisions, particularly by counting only cardiac-specific DEPs when determining CRMC's compliance with the 1200 DEP requirement; (2) using the Virginia Health Information's ("VHI") Open Heart Service Data Report ("Service Line Report"), instead of the VHI Annual Licensure Survey Data ("ALSD") or Truven data as an information source about procedures performed; (3) strictly adhering to the requirements in 12 VAC 5-230-400; and (4) misinterpreting the requirement set forth in 12 VAC 5-230-450(A)(1) as requiring CRMC to perform 1200 DEPs per-laboratory as opposed to 1200 DEPs per-service.
1. Inconsistent Decisions
To support its argument that the Commissioner acted inconsistently with past decisions, CRMC cites a DCOPN report regarding an application for the expansion of cardiac catheterization services in Woodbridge, Virginia. (R. at 2072-89.) The Court reviewed that past decision and does not find it inconsistent with the Commissioner's decision.
2. Use of the Service Line Report Instead of ALSD or Truven Data
The Court notes that the Case Decision does not discuss the use or relative merits of the data sources that measure or count the number of procedures performed at hospitals. The Commissioner does not mention the Service Line Report, the ALSD, or Truven. The Record indicates that the parties argued throughout the proceeding about the reliability of the data sets and which one the Commissioner should use when considering volumes reported by providers. At oral argument, counsel for CRMC stated that the Adjudication Officer ultimately relied on figures that came from the Service Line Report, which Sentara endorsed, and not those included in the ALSD or Truven data that CRMC preferred.
The Commissioner's actual ruling states: "I believe CRMC has conflated various procedures capable of being performed in a cardiac catheterization laboratory to arrive at its figures. After considering the record as a whole, as well as Sentara's specific IFFC exhibits and arguments, I believe Sentara's numbers are more credible and reliable." (R. at 41.) This factual finding by the Commissioner deserves the Court's deference. CRMC's contention that the Commissioner should not have used the Service Line Report asks the Court to review the Commissioner's factual findings and "substitute its own independent judgment for that of the agency." Boone, 52 Va. App. at 62. This court will not do so unless "considering the record as a whole, a reasonable mind would necessarily come to a different conclusion." Va. Imps. Ltd., 41 Va. App. at 809 (quoting Bias, 226 Va. at 269). After considering the record, party briefs, and the information presented at oral argument, the Court cannot conclude that a reasonable mind would necessarily have used the ALSD or Truven data instead of the Service Line Data.
3. Strict Compliance
The Court does not conclude that the Commissioner required strict compliance with the 1200 DEP requirements in violation of some prior practice. He stated that he could not make a determination about CRMC's compliance, noting that CRMC "obfuscates facts and complicates the ability to determine whether the project satisfies" the regulations' requirements about DEPs. (R. at 41.) CRMC bore the burden of either demonstrating strict compliance with the SMFP or convincing the Commissioner to adopt a more lenient approach. 12 VAC 5-230-40. Its failure to do so does not render the Commissioner's decision arbitrary and capricious.
4. Per-Lab or Per-Service
The parties again argue about the meaning of the word "service," this time as it relates to cardiac catheterization. When 12 VAC 5-230-450(A)(1) refers to "an established cardiac catheterization service that has performed an average of 1,200 DEPs for the relevant reporting period," does it mean 1200 DEPs in the entire service or hospital or 1200 DEPs per laboratory in that hospital? CRMC has two cardiac catheterization laboratories; it can satisfy this standard if 12 VAC 5-230-450(A)(1) requires 1200 DEPs for the entire service but not if it requires 1200 per laboratory.
Unlike in the very next subparagraph, 12 VAC 5-230-450(A)(2), discussed above, the Court finds that 12 VAC 5-230-450(A)(1) is genuinely ambiguous because it requires "an average." If the Commissioner counted DEPs on a per-service basis, then he would not actually average anything, giving those two words no meaning. If he must "average" the number of procedures, one could conclude that he must average the volumes per laboratory because there is nothing else to average.
These competing interpretations create genuine ambiguity as to the regulation's meaning. Thus, the Court will defer to the agency's interpretation of the regulation if it is "reasonable," "actually made by the agency," "implicate[s] its substantive expertise," and "reflect[s the agency's] 'fair and considered judgment.'" Kisor, 139 S.Ct. at 2415-17. Here, the Commissioner's interpretation of 12 VAC 5-230-450(A)(1) and 5-230-400 satisfies that standard, entitling his interpretation of the regulations to judicial deference. Assignment of Error IV —The Service Line Report
CRMC's fourth assignment of error revisits the claim that the Commissioner used the wrong data set when interpreting the DEP volumes at the hospital. Specifically, CRMC believes that the Commissioner committed reversible error when he used the Service Line Report instead of the ALSD or Truven data. The reliability of these data sets constitute the Commissioner's factual findings. After examining the record, the Court cannot say that "a reasonable mind would necessarily come to a different conclusion" about the relative reliability of the Service Line Report vis-à-vis the ALSD and Truven data. Va. Imps. Ltd., 41 Va. App. at 809 (quoting Bias, 226 Va. at 269). Therefore, the Court holds that the Commissioner did not err when he considered the data reported in the Service Line Report rather than data reported by those sources advocated by CRMC. Assignment of Error V —Accessibility
CRMC argues that the Commissioner "arbitrarily and capriciously found that CRMC's proposed project would not improve access." (Pet'r Mem. Supp. Appeal 23.) CRMC advances numerous arguments in support of this claim: (1) patients do not currently receive timely care from existing facilities, particularly SNGH; (2) patients would have reduced travel time to open heart surgery services if the Commissioner allowed CRMC to offer open heart surgery services; and (3) PD 20 has a growing population with "high incidence rates of heart disease and heart disease-related death." (Id. at 23-25.)
CRMC attempts to apply the everyday understanding of "improved access" to bolster its COPN application. Colloquially, people with a shorter drive to a new service would conclude that they have improved access to open heart surgery services. The Commissioner noted, however, that all patients in PD 20 already live within a sixty-minute drive of an existing open heart surgery provider, such that CRMC's expected patients already have sufficient access to open heart surgery services. Sentara hotly contested CRMC's evidence about patient wait times and an expected increase in heart disease and introduced its own contradictory evidence on those points; the Commissioner ultimately resolved these conflicting facts against CRMC.
Upon review of those factual findings, the Record does not support a determination that "a reasonable mind would necessarily have come to a different conclusion" about the improvements to accessibility that CRMC's project would yield. Va. Imps. Ltd., 41 Va. App. at 809 (quoting Bias, 226 Va. at 269). Therefore, the Court holds that the Commissioner did not err when he found that CRMC's proposed service "would not significantly improve geographic or financial access for residents of PD 20 to open heart surgery services." (R. at 47.) Assignment of Error VI —Competition
CMRC complains that the "Commissioner erroneously found that the proposed project would not induce beneficial competition in PD 20." (Pet'r Mem. Supp. Appeal 26.) CRMC noted that "PD 20 is the most highly concentrated market in Virginia for open heart surgery providers in planning districts with more than one open heart surgery service." (Id. at 27.) Despite that, the Commissioner found that the record did not indicate any "problems with cost or quality in PD 20 that could be addressed by increased competition." (R. at 45.)
The Commissioner assigns weight to each of the eight statutory factors at his discretion, and he expressly determined that he should not give this competition factor significant weight: "Fostering competition has not historically been a primary objective in regulating highly specialized services, such as open heart surgery." (R. at 45.)
He also found that CRMC did not disprove the "volume-to-quality correlation" concomitant with open heart surgery services, leading him to find that "[i]ncreasing competition in PD 20's provision of open heart surgery would not benefit the area to be served, could harm the quality of care in the area to be served, and would not meaningfully improve access to the service." (R. at 45.)
Because CRMC's assignment of error asks the Court to review the Commissioner's factual findings, the Court will not substitute its judgment for that of the Commissioner's unless "a reasonable mind would necessarily" have concluded that the introduction of CRMC's proposed open heart surgery service would have induced beneficial competition in the planning district. Va. Imps. Ltd., 41 Va. App. at 809 (quoting Bias, 226 Va. at 269). After reviewing the Record, the Court cannot make such a conclusion. Assignment of Error VII —North Carolinians' Use of CRMC
CRMC argues that the Commissioner erred by not considering North Carolinians' use of CRMC's facilities when making his public need determination. CRMC also claims that the "Commissioner adopted Sentara's argument that he is prohibited from considering the use of services by out-of-state residents based on Wellmont v. Remley." (Pet'r Mem. Supp. Appeal 29.) The record, however, suggests otherwise. In his report, the Commissioner acknowledged that "CRMC believes that the needs of persons living in and visiting North Carolina's tidewater region may be properly taken into account in a Virginia public need determination," but he ultimately held that, "[n]o law or regulation authorizes the Commissioner to consider any need identified beyond Virginia's border." (R. at 40.)
This does not demonstrate that the Commissioner simply adopted Sentara's argument based on a purported misreading of Wellmont, as CRMC claims. Rather, the Commissioner correctly noted that CRMC could not identify any law or regulation that authorized him, let alone required him, to consider North Carolinians' alleged need for open heart surgery services at CRMC when making his public need determination. Moreover, the record reflects that the Commissioner did, in fact, consider CRMC's argument that the expected use of its facility by North Carolinians required the Commissioner to approve its COPN proposal, but that the Commissioner found that argument unpersuasive. (See R. at 42.) Therefore, the Commissioner did not err. Assignment of Error VIII —Volume-Quality Correlation
CRMC contends that the "Commissioner arbitrarily and capriciously accepted Sentara's argument that there is a documented connection between volume and quality." (Pet'r Mem. Supp. Appeal 31.) CRMC argues that the Commissioner should not have found that a correlation between volume and quality exists because (1) allegedly outdated data support the existence of a volume-quality correlation in open heart surgery services, (2) CRMC would not be a low-volume provider, and (3) CRMC's project would not reduce volumes or quality at existing facilities. (Id. at 32-33.) CRMC believes that the Commissioner "failed to adequately weigh the evidence" and "simply accepted the existence of a connection [between volume and quality] without any analysis or explanation." (Id. at 34.)
The law does not require the Commissioner "to make specific findings" regarding every statutory factor enumerated in Virginia Code § 32.1-102.3(B) in his written decision approving or denying a COPN application. Lewis Gale Med. Ctr., LLC v. Romero, No. 1289-13-3, 2014 WL 1707055, at *3 (Va. Ct. App. Apr. 29, 2014). Rather, he "needs only to notify the parties 'briefly and generally in writing[] of the factual basis for an adverse decision.'" Id. (quoting Va. Ret. Sys. v. Cirillo, 54 Va. App. 193, 199 (2009)). Here, the Commissioner's opinion notes that he examined the record and made a factual determination about the volume-quality correlation in the delivery of open heart surgery services with which CRMC disagrees. The Court may not reverse the Commissioner's factual determination unless "a reasonable mind would necessarily" have arrived at a different conclusion than the Commissioner. Va. Imps. Ltd., 41 Va. App. at 809 (quoting Bias, 226 Va. at 269). The Court cannot make that determination here and, as such, does not find that the Commissioner committed reversible error. Assignment of Error IX —Duke and Community Support
CRMC's ninth assignment of error contains two different complaints. First, CRMC claims that the Commissioner clearly "abdicat[ed] . . . his duty" by "disregard[ing]" evidence "showing that Duke Health Network ('Duke') proposed to affiliate with CRMC and assist in the development and implementation of the open heart surgery program." (Pet'r Mem. Supp. Appeal 35.) The Commissioner does, however, mention CRMC's intended partnership "with teaching hospitals," refuting CRMC's accusation that the Commissioner abdicated his duty and disregarded evidence about CRMC's proposed affiliation with Duke. (R. at 46.) The Commissioner need not mention Duke by name to fulfill his statutory obligations; indeed, he does not need to mention CRMC's intended partnership with teaching hospitals at all. See Romero, 2014 WL 1707055, at *3. Thus, rather than abdicating his duty, the Commissioner exceeded the law's minimum requirements when he mentioned CRMC's intention to partner with a teaching hospital.
Second, CRMC believes that the Commissioner improperly weighed community support for its proposed project. Community support is one of the six ways in which the Commissioner may assess the project's compliance with the factor enumerated in Virginia Code § 32.1-102.3(B)(2): "the extent to which the project will meet the needs of the area to be served ..." The Court's review of the record confirmed the clear and overwhelming support in Chesapeake for CRMC's project. The Commissioner also recognized the community support but noted:
Regarding the CRMC project, Sentara states that '[p]ublic support for new health care services is to be expected.' Sentara cautions the Commissioner against popular support when unneeded proliferation of a high acuity service, with a recognized volume-quality correlation, is being proposed. This is a valid point.(R. at 38 (emphasis added).)
The Commissioner therefore considered, but gave little weight to, the community support for CRMC's project. He clearly has the discretion to determine how much weight to give to each factor. As the Court of Appeals wrote in a decision involving a COPN appeal,
"While it appears the subject was not given dispositive weight, nothing in the statute requires that any specific factor be given any measurable weight, only that it be considered by the [agency] during the decisionmaking process." Whatever "weight that should be properly given to any specific factor" is a discretionary decision for the agency, "not the courts."Reston Hosp. Ctr. LLC v. Remley, 63 Va. App. 755, 777 (2014) (internal citations omitted).
The Commissioner noted the community support but did not give it weight in his decision. The Court lacks authority to require that he assign any more weight to that factor; therefore, the Commissioner did not commit reversible error in refusing to give additional weight to any one factor. Assignment of Error X —Procedure
Finally, CRMC argues that the Adjudication Officer departed from precedent and implemented procedures that favored Sentara throughout the COPN process. CRMC takes particular issue with Sentara's extensive participation in both the Good Cause IFFC and the case-in-chief IFFC. CRMC also accuses Sentara of unseemly gamesmanship in its attempts to participate in the review process.
CRMC cannot, however identify any single procedural rule that the Adjudication Officer violated by allowing Sentara to participate in both the Good Cause and case-in-chief IFFCs. Furthermore, CRMC does not cite a law or regulation that prevents the Adjudication Officer from allowing Sentara to give lengthy evidentiary presentations. Instead, CRMC offers anecdotal evidence about "normal procedure," (R. at 1268), and repeated complaints about general procedural unfairness. This does not demonstrate how the Adjudication Officer failed to follow required procedure. Therefore, the Commissioner did not commit reversible procedural error when he adopted the Adjudication Officer's recommendations following the allegedly irregular review process.
Conclusion
The Court has accepted one of CRMC's Assignments of Error and ruled that the Commissioner erred in his interpretation of 12 VAC 5-230-450(A)(2). CRMC urges the Court to remand the case back to the Commissioner if any error is determined.
In its posture as the appellate court reviewing the Commissioner's decision to deny a COPN application, this Court applies the "harmless error" standard that Virginia courts have regularly applied in other contexts. See Commonwealth v. White, 293 Va. 411, 420 (2017) (quoting Gilland v. Commonwealth, 184 Va. 223, 235 (1945)) ("Harmless error . . . has been 'deeply embedded in our jurisprudence.'"). Doing so allows the Court to consider the entire record that the Commissioner reviewed when making his decision to deny CRMC's application and prevents the Court from becoming an "impregnable citadel[] of technicality." Id. (quoting United States v. Hasting, 461 U.S. 499, 509 (1983)).
Therefore, because the Commissioner misinterpreted one subparagraph of one regulation that constitutes only one part of the SMFP regulations regarding the introduction of new open heart surgery services, and because compliance with the SMFP is but one of eight factors that Virginia Code § 32.1-102.3(B) requires the Commissioner to consider, the Court holds that the misinterpretation constituted harmless error.
The Court therefore AFFIRMS the Commissioner's decision.
The Court directs the Attorney General to promptly prepare and circulate for endorsement a brief Order that incorporates this letter ruling. Counsel should note all objections for the record. Please forward it to my personal attention on or before December 18, 2019.
With best wishes, I am,
Sincerely,
Mary Jane Hall
Judge Designate MJH/MRS/nm