Health Systems Agency v. Stroube

• Decision Date: 28 December 2005
• Docket Number: Record No. 2669-04-4.
• Citation: 623 S.E.2d 444,47 Va. App. 299
• Court: Virginia Supreme Court
• Parties: HEALTH SYSTEMS AGENCY OF NORTHERN VIRGINIA, INC. v. Robert B. STROUBE, M.D., M.P.H., State Health Commissioner, Northern Virginia Community Hospital, L.L.C., Loudoun Hospital Center, and Inova Health Care Services d/b/a Inova Fair Oaks Hospital.

623 S.E.2d 444

47 Va. App. 299

HEALTH SYSTEMS AGENCY OF NORTHERN VIRGINIA, INC. v. Robert B. STROUBE, M.D., M.P.H., State Health Commissioner, Northern Virginia Community Hospital, L.L.C., Loudoun Hospital Center, and Inova Health Care Services d/b/a Inova Fair Oaks Hospital.

Record No. 2669-04-4.

Court of Appeals of Virginia, Richmond.

December 28, 2005.

K. Stewart Evans, Jr. (Pepper Hamilton LLP, on brief), Washington, DC, for appellant.

Matthew M. Cobb, Assistant Attorney General (Judith Williams Jagdmann, Attorney General; David E. Johnson, Deputy Attorney General; Jane D. Hickey, Senior Assistant Attorney General, on brief), for appellee Robert B. Stroube, M.D., M.P.H., State Health Commissioner.

Jeannie A. Adams (Thomas F. Hancock, III; Hancock, Daniel, Johnson & Nagle, P.C., on brief), Glen Allen, for appellee Northern Virginia Community Hospital, L.L.C.

(Virginia H. Hackney; Mark S. Hedberg; W. Taylor Reveley, IV, Richmond; Woodrow W. Turner, Jr., Leesburg; Hunton & Williams, LLP, on brief), for appellee Loudoun Hospital Center. Appellee Loudoun Hospital Center submitting on brief.

No brief or argument for appellee Inova Health Care Services, d/b/a Inova Fair Oaks Hospital.

Present: FITZPATRICK, C.J., and BENTON and BUMGARDNER, JJ.

BENTON, Judge.

The trial judge ruled that Health Systems Agency of Northern Virginia, a regional health planning agency that was a party to an administrative proceeding under Article 1.1 of Title 32.1, did not have standing to appeal the State Health Commissioner's decision approving a hospital's application for a certificate of public need. Health Systems Agency contends the trial judge erred in dismissing its petition for appeal. We affirm the trial judge's standing decision and the order dismissing Health Systems' petition.

I.

As a prelude to considering the circumstances of this case, we review the statutory administrative structure that governs applications for certificates of public need for medical care facilities. These statutes also illuminate the relationship between the State Department of Health and regional health planning agencies, which is germane to the standing issue we must consider.

As a part of the comprehensive scheme for health care planning in Virginia, the General Assembly provided for health planning and resource development. See Code §§ 32.1-122.01 to 32.1-122.08. The General Assembly authorized the State Board of Health to develop a State Health Plan with the assistance of regional health planning agencies. Code §§ 32.1-122.03 to 32.1-122.05. These health planning agencies were created "[f]or the purpose of representing the interests of health planning regions and performing health planning activities at the regional level." Code § 32.1-122.05(A). Among the statutorily required functions of health planning agencies is reviewing applications for certificates of public need for medical care facilities. Code § 32.1-102.6(B).¹

As a medical care facility, a hospital must obtain a certificate of public need before undertaking a project enumerated in Code § 32.1-102.1. For example, a hospital must obtain a certificate of public need to establish a medical facility, increase the number of beds or operating rooms in an existing facility, relocate beds (unless for nursing home care), add a new nursing home service to an existing facility, add certain clinical services such as psychiatric service or open heart surgery, convert existing beds to rehabilitation or psychiatric beds, newly acquire certain medical equipment, or spend $5 million or more. Code §§ 32.1-102.1, 32.1-102.3.

To apply for a certificate of public need, a hospital must file a completed application with both the Department and the appropriate regional health planning agency. Code § 32.1-102.6(A). The hospital must send the application by certified mail or delivery service with a return receipt requested, or deliver it "by hand" to obtain a signed receipt. Id. Within ten days of the application's receipt, the Department and the health planning agency shall notify the hospital whether the application is complete or more information is needed. Id.

The health planning agency reviews the hospital's application within sixty days of the start of the review cycle established by the Department. Code § 32.1-102.6(B). The health planning agency must hold a public hearing on each application and publish notice for that hearing. Id. The health planning agency is also required to notify local governments in the health care planning region of the impending hearing and to consider the comments of those governing bodies. Id. The health planning agency must consider all public comments it receives and give the applying hospital an opportunity to respond to any comments that its staff has made about the proposal. Id. Within ten days of finishing its review, the health planning agency must submit its recommendations concerning the application to the Department. Id. If it has not finished its review within the statutorily designated period, the Department must deem the health planning agency's lack of response to be a recommended approval of the project. Id.

The Department must begin its application review simultaneously with the health planning agency's review. Code § 32.1-102.6(D). Although the Department has a Division of Certificate of Public Need that analyzes and issues reports on applications, the statute does not reference the Division or its function. Id. Instead, the statute provides generally that the Commissioner "shall make determinations in accordance with the Administrative Process Act." Id.

To facilitate the Commissioner's determination, the Department shall convene an informal fact-finding conference if "necessary." Id. The Department's guidelines provide that the Department will conduct an informal fact-finding conference if the Division of Certificate of Public Need has recommended denial of the application, if a regional health planning agency has recommended denial of the application, or if a person has challenged the application by seeking to show good cause as provided in Code § 32.1-102.6(G). The General Assembly designated that the parties to the case before the Commissioner "shall include only the applicant, any person showing good cause, any third-party payor providing health care insurance or prepaid coverage . . . or the health planning agency if its recommendation was to deny the application." Code § 32.1-102.6(D).²

Following this procedure, the Commissioner reviews the application and may only issue a certificate if the applicant has demonstrated a public need for the project. Code § 32.1-102.3(A). The Commissioner has the discretion to approve all or part of an application, but the Commissioner's decision to approve the issuance of a certificate of need must be consistent with the State Medical Facilities Plan, with limited statutory exceptions. Id. In considering an application, the Commissioner is required to evaluate twenty factors, including "[t]he recommendation and the reasons therefor of the appropriate health planning agency." Code § 32.1-102.3(B)(1).

During the administrative proceeding, only the applicant has the authority to extend any of the time periods. Code § 32.1-102.6(I). If the Commissioner does not make a determination within forty-five days of the close of the record, the Commissioner must notify the applicants and anyone seeking to show good cause that the application "shall be deemed approved 25 calendar days after expiration of such 45-calendar-day period," unless the hearing officer conducting the fact-finding conference permits the Commissioner to rule within the twenty-five-day grace period. Code § 32.1-102.6(E)(6). If the Commissioner does not act after forty-five days, any competing applicant may petition for immediate injunctive relief, naming "as respondents the Commissioner and all parties to the case." Code § 32.1-102.6(E)(8). Otherwise, after seventy days of the closing of the record, if the Commissioner has not made a determination whether a public need exists, the application will be deemed approved and the "certificate shall be granted." Code § 32.1-102.6(E)(7). A "deemed approval" is to be construed as a case decision and "subject to judicial review on appeal as the Commissioner's case decision." Code § 32.1-102.6(F).

II.

In 2002, in accordance with these statutory provisions, Northern Virginia Community Hospital, L.L.C. filed with the State Department of Health and the Health Systems Agency of Northern Virginia, the regional health planning agency, an application for a certificate of public need. See Code §§ 32.1-102.3 and 32.1-102.6. The application proposed to replace two of its existing hospitals (one in Arlington County and one in Fairfax County) with a new one hundred and eighty bed hospital (Broadlands Medical Center) in Loudoun County. At the same time, three other hospitals in the northern Virginia regional area filed applications for certificates of public need for hospital projects. Loudoun Hospital Center proposed to add space for thirty-two beds in its hospital in Loudoun County. Inova Health Care Services sought to add forty beds at Inova Fair Oaks Hospital in Fairfax County. Potomoc Hospital proposed to rebuild the medical-surgical area at its hospital and to add thirty beds.

During the administrative review, Health Systems Agency recommended to the Department that it deny the application from Community Hospital and approve the applications from the three other hospitals. See Code § 32.1-102.6(B). The Division of Certificate of Public Need recommended approval of only the Potomoc Hospital application. At the conclusion of these reviews, the Commissioner approved only the application from Potomoc Hospital, ruling that a public need did not exist for the projects proposed by Community Hospital, Loudoun Hospital, and Inova Hospital. Community Hospital appealed the Commissioner's denial of its application...