Opinion
DOCKET NO. A-5772-12T2
08-13-2015
IN THE MATTER OF THE CERTIFICATE OF NEED ISSUED TO BURRIS POST ACUTE NETWORK/WAYNE, LLC
Chiesa Shahinian & Giantomasi, P.C., attorneys for appellant Regency Gardens Nursing Center (John F. Casey and Elisa M. Pagano, on the brief). John J. Hoffman, Acting Attorney General, attorney for respondent Department of Health (Melissa H. Raksa, Assistant Attorney General, of counsel; Susan J. Dougherty, Deputy Attorney General, on the brief). Fox Rothschild LLP, attorneys for intervenor Burris Post Acute Network/Wayne, LLC (Jonathan D. Weiner, of counsel; Mr. Weiner and Abbey True Harris, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fuentes, Ashrafi and O'Connor. On appeal from the New Jersey Department of Health, Docket No. 120607-16-02. Chiesa Shahinian & Giantomasi, P.C., attorneys for appellant Regency Gardens Nursing Center (John F. Casey and Elisa M. Pagano, on the brief). John J. Hoffman, Acting Attorney General, attorney for respondent Department of Health (Melissa H. Raksa, Assistant Attorney General, of counsel; Susan J. Dougherty, Deputy Attorney General, on the brief). Fox Rothschild LLP, attorneys for intervenor Burris Post Acute Network/Wayne, LLC (Jonathan D. Weiner, of counsel; Mr. Weiner and Abbey True Harris, on the brief). PER CURIAM
Regency Gardens Nursing Center (Regency) appeals from a final agency decision of the New Jersey Department of Health (Department) that granted a certificate of need to intervenor Burris Post Acute Network/Wayne, LLC (Burris). The certificate of need permitted Burris to relocate to a new health care facility both a license to operate a long term care facility and the license rights to 107 beds. We affirm.
Burris was known as Health Care Resources of New Jersey, LLC, until it changed its name in April 2013. For simplicity, we refer to this entity as Burris throughout this opinion. --------
I
In August 2011, Ivy Healthcare I, LLC (Ivy) held the license rights to 107 long term care beds that it had acquired from three different health care facilities in Passaic County. Ivy also had obtained the long term care facility license that had been held by one of those facilities, the Valley Rest Nursing Home. Ivy intended to relocate the facility license and the license rights to the beds to a new facility within Passaic County.
Burris, which sought to construct a short-term sub-acute care facility in Passaic County, contracted with Ivy to obtain the facility license and the license rights to the beds Ivy had acquired. In January 2012, Burris filed an application with the Department to approve the transfer of those licenses. That application was granted on April 16, 2013.
In June 2012, Burris also filed an application with the Department for a certificate of need to permit the relocation of the licenses it had acquired from Ivy to its new facility. It is not disputed that when Burris filed its application, the 107 beds had not been in use for more than two years. Burris requested that its application be reviewed on an expedited basis, and completed its application in accordance with the expedited review procedure outlined in N.J.A.C. 8:33-3.9(b).
In its application, Burris set forth its justification for the new facility, stating that the
facility will be a state-of-the art treatment facility designed for short term, post-hospital subacute care . . . . The Passaic County area has a rapidly aging population, exemplified by the 85+ population increasing by over 17% between 2000 and 2010, according to NJ Department of Labor statistics. The facility will provide specialized short-term post-hospitalization services that will be integrated into accountable care organizations and other health care initiatives designed to foster community-based care at the earliest stage of patient illnesses.
Acute care hospitals will significantly benefit by the availability of high-quality subacute care services in the Passaic County area. General long term care nursing homes will not be impacted negatively by this level of care.
There is a steady growth in the 65+ population, but as indicated above, an increase of approximately 17% in the 85+ period during the past ten years. The aging
population will need increased access to long term care services in general, but with the implementation of ACO's and gainsharing initiatives that will continue to shorten acute care hospital length of stay, which is significantly higher in New Jersey than in many states, subacute care services will be needed throughout the state, and in particular in areas with rapidly aging populations.
The project cost is based on the applicant's extensive experience in designing and building state of the art long term care facilities throughout the state for many current nursing home owners.
On June 11, 2013, William Conroy, the Deputy Commissioner, granted the relief Burris sought in its application. Initially, he found the applicant provided
an appropriate project description, which includes information as to the total project cost, operating costs and revenues, services affected, equipment involved, source of funds, utilization statistics, and justification for the proposed project (8:33-5.3(a)1); assurance that all residents of the area, particularly the medically underserved, will have access to services (8:33-5.3(a)2); and documentation that it will meet appropriate licensing and construction standards (8:33-5.3(a)3i).Conroy then determined Burris met the criteria in N.J.A.C. 8:33-3.4(a)(3) and N.J.A.C. 8:33-5.1(a)(12) for a certificate of need. N.J.A.C. 8:33-3.4(a)(3) states in pertinent part:
(a) The following criteria apply to changes in licensed beds and/or services:
. . . .
3. For services for which there is a specific licensed bed complement, . . . the relocation of a portion of a facility's licensed beds or the entire service from one licensed facility (sending facility) to another (receiving facility) located within the same planning region requires a certificate of need and shall follow the expedited review process . . . . The application shall be considered pursuant to the following criteria:
N.J.A.C. 8:33-5.1(a)(12) provides:i. The relocation shall take place within the same planning region where the sending facility is located;
ii. The receiving facility shall already hold a license for the category of beds proposed for relocation. . . . ;
iii. The relocation shall not have an adverse impact on the ability of the population currently being served in the sending facility's service area to access the same types of service or bed complement as those proposed for relocation;
iv. The relocation shall not reduce access by the medically underserved and shall address the criteria set forth at N.J.A.C. 8:33-4.10(a);
v. The relocation shall not have an adverse impact on quality of care at either the sending or receiving facility;
vi. All minimum and maximum bed/unit size requirements . . .
shall be maintained at both the sending and receiving facilities; and
vii. The relocation shall not violate a condition of a prior certificate of need approved for the establishment of the beds or services, unless the applicant presents evidence of substantial changes since imposition of the condition and the Commissioner makes a finding that the evidence warrants removal or modification of the condition.
(a) The expedited review process shall be used for the following types of applications:
In his decision, the Deputy Commissioner concluded that the. . . .
12. The relocation of an entire licensed health care facility that is subject to the certificate of need requirement, except for general hospitals, within the same planning region.
criteria set forth at N.J.A.C. 8:33-3.4(a)3 ii requires the receiving facility to hold a license for the category of beds proposed for relocation. As noted, [Burris] has acquired the LTC license formerly held by Valley Rest Nursing Home. Pursuant to the criteria set forth at N.J.A.C. 8:33-3.4(a) iii and iv, Department staff has found no indication of any adverse effect on the ability of either the general population currently being served or the medically underserved in accessing inpatient long term
acute care in Passaic County as a result of the relocation of these LTC beds within the County.
Regency claims the Department lacked the authority to review and decide Burris's application for a certificate of need on an expedited basis. Regency further contends, among other things, that the certificate of need should be vacated because the Department failed to properly consider the requisite statutory and regulatory factors and, in particular, failed to consider whether there was even a need for an additional 107 long term care beds in Passaic County.
II
"The role of a court in reviewing administrative agency decisions is limited." Mainland Manor Nursing & Rehab. Ctr. v. N.J. Dep't of Health & Senior Servs., 403 N.J. Super. 562, 571 (App. Div. 2008) (citing Univ. of Med. & Dentistry of N.J. v. Grant, 343 N.J. Super. 162, 168 (App. Div. 2001)). An appellate court will not "upset the ultimate determination of an administrative agency unless it is shown that it was arbitrary, capricious or unreasonable, that it violated legislative policies expressed or implied in the enabling legislation, or that the findings on which the decision was based were not supported by substantial, credible evidence." City of Plainfield v. N.J. Dep't of Health & Senior Servs., 412 N.J. Super. 466, 484 (App. Div.) (citing R & R Mktg., L.L.C. v. Brown-Forman Corp., 158 N.J. 170, 175 (1999)), certif. denied, 203 N.J. 93 (2010).
Despite the fact that an appellate court is "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue," reviewing courts will ordinarily "give substantial deference to the interpretation an agency gives to a statute that [it] is charged with enforcing." Norfolk S. Ry. Co. v. Intermodal Props., LLC, 215 N.J. 142, 165 (2013) (citations omitted) (internal quotation marks omitted). Moreover, an agency's interpretation of its own regulations is afforded substantial deference. See In re Freshwater Gen. Permit No. 7, 405 N.J. Super. 204, 213 (App. Div.) ("'An agency's interpretation of its own rule is owed considerable deference because the agency that drafted and promulgated the rule should know the meaning of that rule.'" (citation omitted)), certif. denied, 199 N.J. 132 (2009). Finally, when an agency deals with the protection of the public's health and welfare, the delegation of authority to that agency is to be construed liberally. In re Certificate of Need Granted to the Harborage, 300 N.J. Super. 363, 379 (App. Div. 1997) (citations omitted).
The Health Care Facilities Planning Act, N.J.S.A. 26:2H-1 to -26 (Act), gives the Department the "central responsibility for the development and administration of the State's policy with respect to health planning, hospital and related health care services," N.J.S.A. 26:2H-1, and confers upon the Commissioner the power to promulgate regulations to effectuate the purposes of the Act, N.J.S.A. 26:2H-5(b). Regulations adopted under the Act provide for two kinds of review over certificate of need applications: full review and expedited review. N.J.A.C. 8:33-2.1.
The kind of certificate of need Burris sought mandated that its application be expedited. N.J.A.C. 8:33-3.4(a)(3) specifically states that the relocation of a portion of a facility's licensed beds from one facility to another within the same planning region "shall follow the expedited review process."
N.J.A.C. 8:33-5.1(a)(12) states that the expedited review process shall be used in an application to relocate a licensed facility within the same planning region. Although Burris did not seek to relocate Valley Rest Nursing Home, it did seek, as the Deputy Commissioner noted, "the relocation of a long term care (LTC) license."
Regency acknowledges that N.J.A.C. 8:33-5.1(a)(12) and N.J.A.C. 8:33-3.4(a)(3) would apply were it not for the fact that the beds Burris sought to relocate had been out of use for more than two years. Regency contends that when long term care beds are dormant for two years or more, an application for a certificate of need for the relocation of such beds must be subjected to a full review. Regency relies upon language in N.J.A.C. 8:33-3.2(a) and N.J.A.C. 8:33-3.4(a)(3)(iii) to support its premise.
N.J.A.C. 8:33-3.2(a) does state that "[a]ny health care facility which has closed or substantially ceased operation of any of its beds, facilities or services which require a certificate of need to be initiated, for any consecutive two-year period, shall be required to obtain a certificate of need before reopening such beds, facilities or services." However, absent from this regulation is any requirement that an application for a certificate of need to reopen a bed be subject to a full review. Further, N.J.A.C. 8:33-3.4(a)(3) explicitly states that there shall be an expedited review of an application to relocate a bed within the same planning region, and this regulation does not limit this requirement to beds that have been in use for less than two years.
The language in N.J.A.C. 8:33-3.4(a)(3)(iii) also does not support Regency's claim that an application to relocate beds that have been out of use for more than two years requires a full review. Although Regency does not dispute N.J.A.C. 8:33-3.4(a)(3)(iii) mandates an expedited review of an application for a certificate of need to relocate beds within the same planning region, Regency contends the requirement that there be an expedited review pertains only to those beds that are currently in use. Regency cites the following language from this regulation in support of its argument:
[t]he relocation shall not have an adverse impact on the ability of the population currently being served in the sending facility's service area to access the same types of service or bed complement as those proposed for relocation . . . .
[N.J.A.C. 8:33-3.4(a)(3)(iii) (emphasis added)].
It is Regency's position that the phrase "population currently being served" refers to beds that are currently in use at a facility and, therefore, the requirement that an application to relocate beds be expedited cannot apply to any beds that have been out of use for more than two years. There is no merit to this argument. We disagree this is what the regulations means. We construe the phrase the "population currently being served" in N.J.A.C. 8:33-3.4(a)(3)(iii) to refer to the type of individuals in need of beds of this kind, not to those actually using or occupying a bed in a facility. This approach is consistent with the overarching policy goal of this regulatory scheme, to allow for an expedited review without compromising the services that are available to the "population being served."
Regency next contends that, even if N.J.A.C. 8:33-5.1(a)(12) and N.J.A.C. 8:33-3.4(a)(3) apply, the certificate of need must be vacated because the Department failed to consider all of the factors in these two regulations, as well as the factors in N.J.S.A. 26:2H-8. We first address Regency's claim that the Department failed to address the factors in N.J.S.A. 26:2H-8. This statute states that a certificate of need shall not be issued unless the
certificate is necessary to provide required health care in the area to be served, can be economically accomplished and maintained, will not have an adverse economic or financial impact on the delivery of health care services in the region or Statewide, and will contribute to the orderly development of adequate and effective health care services.
However, since June 29, 1992, when this statute was last amended, the Department adopted regulations on September 8, 1992 that permitted the expedited review of certain applications. See N.J.A.C. 8:33-5.1 to -5.4. Further, in 1995, the Department proposed to amend N.J.A.C. 8:33-5.1, the regulation that delineates the kinds of applications that can be heard on an expedited basis. In response to public comments on the proposed amendment, the Department stated that
[r]equiring a "need" assessment for applications subject to the expedited review process is unwarranted since it is expected that the services proposed for expedited review will have a minimal impact on the health care delivery system as a whole and the changing health care environment calls for more flexibility in the regulatory process wherever possible.
[28 N.J.R. 1231 (Feb. 20, 1996).]
The Department's remarks are both instructive and authoritative. See Bedford v. Riello, 392 N.J. Super. 270, 279-81 (App. Div. 2007) (using public comments and responses to elucidate the meaning of a regulation), aff'd and modified on other grounds, 195 N.J. 210 (2008); see also In re Freshwater General Permit No. 7, supra, 405 N.J. Super. at 213 ("'An agency's interpretation of its own rule is owed considerable deference because the agency that drafted and promulgated the rule should know the meaning of that rule.'") (citation omitted); Riverside Gen. Hosp. v. N.J. Hosp. Rate Setting Comm'n, 98 N.J. 458, 469 (1985) (When "the Legislature has delegated a great amount of discretion to the administrative experts, deference must be accorded to the administrative agency's expertise and experience in its domain." (citations omitted)).
The Department recognized that applications which qualify for expedited review concern matters that will not have any measureable impact upon the health care delivery system as a whole. This is the reason an applicant whose application qualifies for expedited review does not have to provide a need assessment. The Department did not have to address the first factor in N.J.S.A. 26:2H-8, which states that a certificate of need is not to be granted unless the certificate is necessary to provide required health care in the area to be served.
Mindful of the complexity of the subject matter, the Deputy Commissioner nevertheless addressed the factors in this statute. These factors are whether the health care the applicant seeks to provide: (1) is necessary in the area to be served; (2) can be economically accomplished and maintained; (3) will not have an adverse economic or financial impact on the delivery of health care services in the region or Statewide; and (4) will contribute to the orderly development of adequate and effective health care services.
As for the first factor, the Deputy Commissioner found that Burris provided justification for the proposed project. In its application, Burris described and gave reasons why "specialized short-term post-hospitalization services" were needed. Second, the Deputy Commissioner noted that Burris provided the requisite information concerning the costs of the project and the source of its funding, from which we infer the Department's acknowledgement that the project could be economically accomplished and maintained.
Third, he found that there was no indication the approval of Burris's application would adversely affect those who are currently being served or those who are medically underserved in accessing long term care in Passaic County. Implicitly subsumed within that determination was a recognition that the actions for which Burris sought approval will not have an adverse economic or financial impact upon the delivery of health care services within the region. Fourth, he noted that Burris had provided justification for the proposed project, indicating the Department was satisfied the project contributed to the development of adequate and effective health care services.
In sum, the Deputy Commissioner substantially addressed the factors in N.J.A.C. 8:33-5.1(a)(12) and N.J.A.C. 8:33-3.4(a)(3). After carefully considering the record and the briefs, we conclude Regency's remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION