Summary
holding an agency letter to appellant was a case decision when, prior to publishing the letter, the parties participated in a meeting, appellant submitted extensive data to the agency about the proposed facility, and the letter applied the agency's rules and regulations to the specific facts of appellant's case
Summary of this case from Frederick Cnty. v. Va. DeptOpinion
44604 Record No. 810628.
March 9, 1984.
Present: All the Justices.
Hospital is required to apply to State Health Commissioner for certificate of public need before reinstituting medical program of open heart surgery previously discontinued for more than twelve months before case decision handed dawn by Commissioner; Trial Court improperly overruled Commissioner's demurrer alleging non-compliance with procedural requirements for appeal of case decision; other issues.
(1) Administrative Law — Administrative Process Act (Code Sec. 9-6.14:1, et seq.) — Statutory Construction — Definitions: Case Decisions [Code Sec. 9-6.14:4(D)] — Includes Any Agency Decision As to Named Party's Compliance or Non-Compliance With Existing Regulation.
(2) Administrative Law — Administrative Process Act (Code Sec. 9-6.14:1, et seq.) — Statutory Construction — Definitions: Case Decision [Code Sec. 9-6.14:4(D)] — Commissioner's 1977 Letter to Health Systems Agency Not Case Decision Under APA.
(3) Administrative Law — Administrative Process Act (Code Sec. 9-6.14:1, et seq.) — Statutory Construction — Definitions: Case Decision [Code Sec. 9-6.14:4(D)] — Commissioner's 1978 Letter to Hospital is Case Decision Under Section.
(4) Administrative Law — Administrative Process Act (Code Sec. 9-6.14:1, et seq.) — Statutory Construction — Right, Forms, Venue (Code Sec. 9-6.14:16) — Rules of Court — Notice of Appeal (Rule 2A:2) — Compliance with Code Sec. 9-6.14:16 and Rule 2A:2 Required Where No Express Alternative Appeal Provision Exists.
(5) Administrative Law — Pleading and Practice — Administrative Process Act (Code Sec. 9-6.14:1, et seq.) — Rules of Court — Notice of Appeal (Rule 2A:2) — Trial Court Properly Disregarded Plaintiff's Non-Compliance With Rule 2A:2 in Motion for Declaratory Judgment.
(6) Administrative Law — State Health Commissioner — State Medical Facilities Plan — Definition: Open Heart Surgery — Evidence — Shows No Open Heart Surgery Performed During Twelve Months Prior to Commissioner's Case Decision.
(7) Administrative Law — State Health Commissioner — State Medical Facilities Plan — Pleading and Practice — Certificate of Public Need — Open Heart Surgery Services — Application for — Properly Required by Commissioner.
Riverside Hospital in Newport News sought to reactivate its program of open heart surgery in late 1977. The State Health Commissioner advised the Hospital that a certificate of public need was required to institute any service not offered during the preceding twelve months. Riverside then applied for a certificate of public need and the Commissioner denied the application. Riverside appealed and also initiated a declaratory judgment proceeding seeking a declaration that it did not have to obtain a certificate of public need under Code Sec. 32.1-93 to -102. Evidence presented at trial showed that the State Board of Health Medical Facilities Plan defined open heart surgery procedures as those using a heart-lung by-pass machine during surgery. Riverside's evidence showed that no by-pass machine was available and no open heart surgery was performed after 11 November 1977. The Commissioner filed a demurrer to the Hospital's motion on the ground that the Hospital had not alleged compliance with the Administrative Process Act, Code Sec. 9-6.14:1, et seq., or Part Two A of the Rules requiring a timely appeal to administrative decisions. The Trial Court overruled the demurrer and ruled that the Hospital was not required to obtain a certificate as a condition precedent to the maintenance and operation of an open heart surgery program. The Commissioner appeals.
1. Under Code Sec. 9-6.14:4(D) a "case" or "case decision" is an agency determination whether or not a named party is or may be in violation of a law or regulation or in compliance with an existing requirement. Va. ABC Comm. v. York St. Inn, 220 Va. 310, 257 S.E.2d 851 (1979); Commonwealth v. County Utilities, 223 Va. 534, 290 S.E.2d 867 (1982), discussed.
2. The Commissioner's letter of 27 December 1977 was not a case decision under the Administrative Process Act, Code Sec. 9-6.14:4(D), being merely a general statement of the Commissioner's position regarding the issuance of certificates of public need addressed to the Eastern Virginia Health Systems Agency and not to the Hospital.
3. The Commissioner's letter of 21 November 1978 was a case decision within the definition of Code Sec. 9-6.14:4(D). It was addressed to the Hospital, the party seeking a certificate, focused on the Hospital's program and applied the administrative rules and procedures to the facts.
4. Where, as here, there is no express statutory provision for appeal of a case decision of the Commissioner determining that certificates of public need are required, the aggrieved party must follow the appeal procedure of Code Sec. 9-6.14:16(ii) which, in turn, requires compliance with Supreme Court Rule 2A:2. Under Rule 2A:2 notice of a direct appeal must be given to the administrative agency within thirty days after the agency's final order in the case decision.
5. The Trial Court correctly overruled the Commissioner's demurrer filed on the ground that the Hospital had not alleged compliance with the Administrative Process Act (APA), Code Sec. 9-6.14:1 to -20, or Part Two A of the Rules. Part Two A of the Rules applies only to direct appeals and not to motions for declaratory judgment filed pursuant to Code Sec. 8.01-184 to — 191.
6. Evidence shows that, applying the 1979 State Medical Facilities Plan definition of "open heart surgery," no open heart surgery was performed at the Hospital during the twelve month period before the Commissioner's "case decision" of 21 November 1978.
7. The Commissioner properly required the Hospital to apply for and obtain a certificate of public need prior to offering open heart surgery services.
Appeal from a judgment of the Circuit Court of the City of Newport News. Hon. Henry D. Garnett, judge presiding.
Reversed and final judgment.
Robert T. Adams, Assistant Attorney General (Gerald L. Baliles, Attorney General, on briefs), for appellant.
Phillips M. Dowding for appellee.
Newport News General Non-Sectarian Hospital Association, Inc. (owner and operator of Riverside Hospital and herein referred to as the Hospital or Riverside), filed in the trial court a motion for declaratory judgment against James B. Kenley, M.D., State Health Commissioner. The Hospital sought a declaration that it did not have to obtain a certificate of public need under Code Sections 32.1-93 to -102 to operate a program of open heart surgery.
Repealed by Acts 1982, c. 388, and reenacted with amendments as Code Sections 32.1-102.1, -102.11.
The Commissioner filed a demurrer on the ground that the Hospital had not alleged compliance with either the Administrative Process Act (APA), Code Sections 9-6.14:1 to 20, or Part Two A of the Rules relating to timely appeals. After overruling the demurrer, the trial court conducted an ore tenus hearing on the merits and, at the conclusion of the hearing, ruled orally in favor of the Hospital. By final order entered January 26, 1981, the court declared, over the Commissioner's objection, that the Hospital was not required to comply with Code Sections 32.1-93 to -102, or any rules or regulations of the State Board of Health, as a condition precedent to the maintenance and operation of a "complete open heart surgery program" at its facility. On appeal, the Commissioner contends that the trial court erred in overruling his demurrer and in ruling in favor of the Hospital on the merits.
This controversy is the outgrowth of correspondence originating with a letter to Riverside Hospital dated November 3, 1977, from P. M. Boynton, Executive Director of Eastern Virginia Health Systems Agency, Inc. (EVHSA). In his letter Boynton noted the small number of open heart surgery operations performed at Riverside in 1976, suggested a reevaluation of the need for the program, and requested pertinent information. By letter of November 7, 1977, Riverside reported that it had discontinued its program of open heart surgery in September 1976, because of lack of anesthesia "coverage," but that it had recently employed an anesthesiologist and therefore was reactivating the program. Boynton replied that under applicable Federal regulations, services not offered within the preceding twelve months were classified as "new institutional services" for which a certificate of public need would probably be required. Boynton sent a copy of this letter to the Commissioner requesting his "advice."
Under Code Sections 32.1-93 to -102, a health systems agency, as defined in Sec. 32.1-93, makes recommendations to the Commissioner before he determines whether to issue a certificate of public need for a new medical program.
By letter dated December 27, 1977, the Commissioner advised Boynton as follows:
This is in reference to your letter of November 14 and your followup letter of November 30 relative to re-instituting the open heart surgery service at Riverside Hospital. Based upon the advice provided by our legal counsel, who has researched this matter, it has been determined that if any services [sic] not provided by a hospital during its previous 12 months of operation is re-instituted, it is considered to be a new service and as such will require a Certificate of Public Need prior to implementation.
The definition of "New Services" to include those not provided within the preceding twelve months was a part of revised rules and regulations promulgated by the Commissioner and the State Board of Health on December 1, 1977, but with an effective date of January 2, 1978.
I hope this clarifies the matter. By copy of this letter I am informing Mr. St. Clair, Administrator of Riverside Hospital, of this finding.
On April 17, 1978, a Riverside representative wrote to Boynton that Riverside was in error when it previously reported that it had discontinued its program of open heart surgery. In response to a request from Boynton, Riverside furnished additional information about its program, but EVHSA adhered to its position that a certificate of public need was required. There was a difference of opinion as to the correct definition of "open heart surgery," Riverside contending that such surgery required the mere availability of a heart-lung bypass pump, EVHSA believing that the pump must actually be used during the operation.
Following this correspondence with Boynton, Riverside representatives met with the Commissioner, presented information about their program, and by letter dated October 16, 1978, asked him to reconsider the position he had taken in his letter of December 27, 1977. By letter to Riverside dated November 21, 1978, the Commissioner noted that during the calendar year 1977 and the year 1978 to date Riverside had a limited cardiac surgery program consisting of pacemaker insertions, pulse generator changes, insertion of a vena cava umbrella, and pericardiectomies, but did not perform open heart surgery. Reciting the definition of a new service as one not offered during the preceding twelve months, the Commissioner continued as follows:
From this definition and the data provided, I conclude that: Riverside Hospital can continue to operate a cardiac surgery program for non-open heart procedures. Riverside Hospital must obtain a Certificate of Need prior to performing open heart surgery procedures.
Riverside then applied for a certificate of public need. When the application was denied, Riverside appealed, but before completing the appellate process, it initiated this declaratory judgment proceeding. At trial, a surgeon on the staff at Riverside testified that he defined "open heart surgery" as "cardiac surgical procedures with pump assist or pump standby." He said that six peri cardiectomies were performed at Riverside between September, 1976, and November, 1977; although the pump was not used during any of these operations, it was available on a standby basis. No such operations with the pump available had been performed since November 11, 1977, the date the pump technician, known as the "perfusionist," left Riverside's employment. The 1979 State Medical Facilities Plan of the State Board of Health, introduced as an exhibit by the Commissioner, defined open heart surgery procedures as "procedures which use a heart-lung by-pass machine to perform the functions of circulation during surgery. (Citation omitted)."
The record indicates that the appeal is being held in abeyance pending disposition of this proceeding.
We must first determine whether the Commissioner's letters of December 27, 1977, and November 21, 1978, were "case decisions" under the APA. Code Sec. 9-6.14:4(D) provides the following definition:
"Case" or "case decision" means any agency proceeding or determination that, under laws or regulations at the time, a named party as a matter of past or present fact, or of threatened or contemplated private action, either is, is not, or may or may not be (i) in violation of such law or regulation or (ii) in compliance with any existing requirement for obtaining or retaining a license or other right or benefit.
The Reviser's Notes to this statute state that the "heart" of a case decision "is a fact determination respecting compliance with law." For example, case decisions are those decisions "of a declaratory nature issued in advance of contemplated private activities" or those "forbidding named parties from acting . . . or threatening to act in some way . . . forbidden by the basic laws, the regulations, or other applicable law under which the agency is operating." Code Sec. 9-6.14:4, Reviser's Notes D.
In Va. ABC Comm. v. York St. Inn, 220 Va. 310, 257 S.E.2d 851 (1979), the Alcoholic Beverage Control Commission denied a request to serve alcoholic beverages in a restaurant on a counter containing imbedded backgammon boards. After an informal conference with representatives of the applicant, the Commission again denied the request. We held that the Commission's refusal to permit the applicant to use the counter was a case decision under the APA. Id. at 312-13, 257 S.E.2d at 853.
In Commonwealth v. County Utilities, 223 Va. 534, 290 S.E.2d 867 (1982), the State Water Control Board issued permits to two privately owned utilities. The original permit of one of the utilities was less restrictive than that of the other utility, but the Board subsequently modified the permits to require both utilities to stand upon an equal basis. We held that the Board's actions were case decisions as defined by the APA. Id. at 541, 290 S.E.2d at 871. Moreover, in State Bd. of Health v. Godfrey, 223 Va. 423, 290 S.E.2d 875 (1982), we held that the denial of a permit for a septic system after a formal hearing and an informal rejection of the post hearing applications were case decisions under Code Sec. 9-6.14:4(D). Id. at 433, 290 S.E.2d at 880.
The language of the Commissioner's letter of December 27, 1977, was no more than a general statement of position regarding certificates of public need. The letter was not addressed to Riverside but to EVHSA, with a copy to Riverside. It merely stated that any hospital service that is reactivated after an absence of twelve months is considered to be a new service. There was neither an application of law to Riverside's program of open heart surgery nor any finding of facts as to the kind of program Riverside was providing. We hold that this letter was not a case decision under the APA.
We hold that the letter of November 21, 1978, however, was a case decision. Before the Commissioner wrote this letter, representatives of Riverside met with him and submitted extensive and detailed data about the Hospital's program of open heart surgery. The letter was addressed to Riverside, it focused on the Hospital's program, and it applied the rules and regulations to the facts. The Commissioner found that throughout 1977 and 1978 until November 21, the date of the letter, Riverside's cardiac surgery program consisted of specified procedures which did not constitute open heart surgery. The Commissioner then made administrative rulings based on these findings. He ruled that Riverside could continue to operate its cardiac surgery program as before, performing what he had found were non-open heart procedures. He further ruled that Riverside must obtain a certificate of public need before performing open heart surgery. The letter came within the definition of a case decision under Code Sec. 9-6.14:4(D).
Having determined that the Commissioner's letter of November 21, 1978, was a case decision, we examine the procedure followed by Riverside to obtain court review of the decision. Code Sec. 9-6.14:16 provides in pertinent part as follows:
Sec. 9-6.14:16. Right, forms, venue. — Any person affected by and claiming the unlawfulness of any regulation, or party aggrieved by and claiming unlawfulness of a case decision, as the same are defined in Sec. 9-6.14:4 of this chapter . . . shall have a right to the direct review thereof either (i) by proceeding pursuant to express provisions therefor in the basic law under which the agency acted or (ii), in the absence, inapplicability, or inadequacy of such special statutory form of court review proceeding, by an appropriate and timely court action against the agency as such or its officers or agents in the manner provided by the rules of the Supreme Court of Virginia. Such proceedings include those for declaratory judgments. . . .
The basic law under which the Commissioner acted was Title 32.1-1, Code Sections 32.1-2, et seq. Code Sections 32.1-96 to -98 provide for the filing of applications for certificates of public need, proceedings thereon before hearing examiners, and appeals from adverse determinations by hearing examiners. There is no express provision, however, for appeals from decisions of the Commissioner that certificates of public need are required. This case differs, therefore, from Commonwealth v. County Utilities, 223 Va. 534, 290 S.E.2d 867 (1982), and Forbes v. Kenley, 227 Va. 56, 314 S.E.2d 49 (1984). In those cases, there were express statutory provisions for appeal in the basic law, and under Code Sec. 9-6.14:16(i) those provisions were available to the aggrieved parties. In the present case, there is no express statutory provision in the basic law for appeal of the case decision. Therefore, in the absence "of such special statutory form of court review proceeding," a person aggrieved by a case decision is required to follow the appeal procedure of Code Sec. 9-6.14:16(ii) by resorting to "an appropriate and timely court action . . . in the manner provided by the rules of the Supreme Court of Virginia." Under Rule 2A:2 notice of a direct appeal must be given to the administrative agency within thirty days after entry of the final order in the case decision.
Riverside contends that Part Two A of the Rules applies only to direct appeals and not to motions for declaratory judgment filed pursuant to Code Sections 8.01-184 to -191. We note, however, that in this case the declaratory judgment procedure is being used to accomplish the purpose of a direct appeal of a pending case. As the Commissioner points out, if the declaratory judgment alternative were available without the time constraints of Part Two A of the Rules, litigants could render Code Sec. 9-6.14:16 ineffectual and meaningless. Nevertheless, we will assume, without deciding, that, in enacting the statute in imprecise language, the General Assembly intentionally or unintentionally achieved this result, and that the trial court, therefore, did not err in overruling the Commissioner's demurrer.
Reaching the merits of the case, we hold that Riverside cannot prevail. The trial court apparently made a finding of fact that Riverside was performing open heart surgery when it had a heart-lung bypass pump available on a standby basis. There was conflicting evidence from which this finding could be made before the effective date of the 1979 State Medical Facilities Plan establishing the more restrictive definition of "open heart surgery" as "procedures which use a heart-lung bypass machine to perform the functions of circulation during surgery. (Citation omitted)." The twelve-months rule for determining new services was effective, however, when the Commissioner issued the case decision on November 21, 1978. Riverside's evidence showed that no open heart surgery was performed after November 11, 1977, even under the less restrictive definition for which Riverside argued. There was no perfusionist employed by Riverside after that date; consequently, there was no heart-lung bypass pump available for use during surgery. The Commissioner in effect found from uncontradicted evidence that Riverside was performing non-open heart cardiac surgery procedures without the use or availability of such a pump.
Having discontinued the program of open heart surgery under its own definition for more than twelve months before the case decision of November 21, 1978, Riverside was properly required by the Commissioner to apply for and obtain a certificate of public need before offering a program of open heart surgery under the definition then in effect. Holding, therefore, that the trial court erred in ruling to the contrary, we will reverse the final order and enter judgment here in favor of the Commissioner consistent with this opinion.
Reversed and final judgment.