Reston Hosp. Ctr., LLC v. Remley

• Decision Date: 22 November 2011
• Docket Number: Record No. 2636–10–4.
• Citation: 59 Va.App. 96,717 S.E.2d 417
• Parties: RESTON HOSPITAL CENTER, LLC v. Karen REMLEY, M.D., M.B.A., F.A.A.P., State Health Commissioner, and Inova Health Care Services, Inc., d/b/a Inova Fair Oaks Hospital.
• Court: Virginia Court of Appeals

59 Va.App. 96

717 S.E.2d 417

RESTON HOSPITAL CENTER, LLC

v.Karen REMLEY, M.D., M.B.A., F.A.A.P., State Health Commissioner, and Inova Health Care Services, Inc., d/b/a Inova Fair Oaks Hospital.

Record No. 2636–10–4.

Court of Appeals of Virginia, Alexandria.

Nov. 22, 2011.

Robert L. Hodges, Richmond (J. William Boland; Nathan A. Kottkamp; Thomas J. Stallings; Jeffrey D. McMahan, Jr.; McGuire Woods, LLP, on briefs), for appellant.

Ishneila G. Moore, Assistant Attorney General (Kenneth T. Cuccinelli, II, Attorney General; David E. Johnson, Deputy Attorney General; Allyson K. Tysinger, Senior Assistant Attorney General, on brief), for appellee Karen Remley, M.D., M.B.A., F.A.A.P., State Health Commissioner.

Amandeep S. Sidhu (M. Miller Baker; H. Guy Collier; McDermott Will & Emery LLP, on brief), for appellee Inova Health Care Services, Inc., d/b/a Inova Fair Oaks Hospital.

Present: PETTY, ALSTON, JJ., and COLEMAN, Senior Judge.

PETTY, Judge.

Reston Hospital Center (“Reston”) appeals a ruling of the Circuit Court of Fairfax County dismissing Reston's appeal of a decision by the State Health Commissioner to issue a certificate of public need authorizing Inova Health Services (“Inova”) to provide new radiation therapy services at its Fair Oaks Hospital. The circuit court held that Reston was not “sufficiently aggrieved to have standing” to appeal the Commissioner's decision. On appeal, Reston raises six assignments of error. Reston principally argues that it has standing to appeal under the Virginia Administrative Process Act (“VAPA”) because Code § 32.1–102.3 required the Commissioner to consider the impact that the issuance of the certificate would have on the utilization and efficiency of competing services that Reston provides.¹ Reston further argues that the circuit court erroneously applied a standard of review that gave deference to the factual findings of the Commissioner and improperly relied on those findings to determine standing.² Reston argues that the circuit court should have taken the allegations in its petition for appeal as true and that those allegations showed that it had standing to appeal under the VAPA. Alternatively, it argues that the evidence in the administrative record demonstrated standing,³ and if the circuit court believed otherwise, the court should have held an evidentiary hearing on the matter.⁴ For the following reasons, we hold that Reston has standing to appeal the Commissioner's decision to the circuit court because it is a “party aggrieved” as set forth in the VAPA, and thus we reverse.⁵

I. BACKGROUND

The facts relevant to this appeal are as follows. Inova applied with the Commissioner for a certificate of public need that would authorize it to establish radiation therapy services at its Fair Oaks Hospital by installing a linear accelerator there.⁶ As part of its application, Inova proposed to decommission one of several linear accelerators at its hospital in Fairfax, located within the same “planning district” as Fair Oaks Hospital.⁷

After Inova filed its application, Reston petitioned the Commissioner to make it a party to the case based on good cause pursuant to Code § 32.1–102.6(D) and (G). The Commissioner granted Reston's petition. Thereafter, the Commissioner, through an adjudication officer, considered evidence and arguments from Inova and Reston. The Commissioner also considered the recommendations of the regional health planning agency, the Department of Health's Division of Certificate of Public Need, and the adjudication officer.

Reston argued, among other things, that the certificate should not issue because the establishment of radiation therapy services at Inova's Fair Oaks Hospital would result in the reduced utilization and efficiency of the same, competing services Reston provides at its hospital just six miles away. Reston presented evidence that the geographic reach of its hospital and the competing radiation therapy services it provides substantially overlap with the reach of the same services Inova was seeking to provide under the certificate for public need. Reston further claimed that given its hospital's close proximity to Fair Oaks Hospital and the existence of doctors that shared privileges at both hospitals, Reston's services would inevitably suffer a reduction in utilization and efficiency, because patients diagnosed with cancer at Fair Oaks Hospital would rather remain at that hospital for treatment than go to Reston's nearby hospital.

Inova responded by arguing that issuance of the certificate under its current proposal would have little or no impact on the utilization and efficiency of Reston's radiation therapy services based on a number of considerations, including the fact that Inova's proposal would not result in a net addition of a linear accelerator to the planning district. Inova also disputed Reston's analysis regarding patient choice, presenting evidence and otherwise arguing that any effect on the utilization and efficiency of its radiation therapy services would have little or no effect on the financial health of Reston's hospital.

The Commissioner decided to issue the certificate after reviewing the factors Code § 32.1–102.3(B) required her to consider. Notably, the Commissioner found the establishment of radiation therapy services at Fair Oaks Hospital would not significantly affect Reston's radiation therapy business or its broader healthcare business. She based this conclusion on her finding that only a small percentage of cancer cases arising at Fair Oaks Hospital were treated with radiation therapy services at Reston's hospital and that Reston was otherwise a “robust acute care facility.” Thus, the Commissioner found that Reston “appears likely to weather any competitive stresses that may stem” from the issuance of the certificate.

Reston appealed the Commissioner's case decision to the circuit court, invoking the court's appellate jurisdiction under Code § 2.2–4026, the relevant section of the VAPA. Inova and the Commissioner subsequently filed a motion to dismiss the appeal, contending that Reston lacked standing to appeal because it was not sufficiently “aggrieved.” ⁸ Reston's petition for appeal noted that Fair Oaks Hospital is about six miles from Reston's hospital ⁹ and that Reston provides the same services covered by the certificate. The petition also included allegations that the certificate would reduce the utilization and efficiency of its radiation therapy services, as previously asserted in the administrative proceeding. Specifically, the petition alleges that: (1) Reston is about six miles from Fair Oaks Hospital, resulting in a significant overlap in the service areas of the two hospitals such that 79% of Reston's 2008 radiation therapy patients fall under the service area of Inova's new project; (2) Reston estimates, based on internal company data, that it will lose 1,817 radiation therapy procedures, or 29% of its 2008 volume of those procedures; (3) Reston saw a 57% drop in its procedures on patients residing in Prince William and Fauquier Counties from 2006 to 2008, or a loss of 370 patients, when a competing cancer treatment facility opened 26.2 miles away in Manassas, which supports the notion that the loss from Inova's project would be even greater; (4) Inova projects that it will serve 240 patients and administer 5,000 procedures, but it currently has only 100 such patients referred for radiation therapy services authorized by the certificate; and (5) 44% of referrals for radiation therapy services to occur at Reston's hospital are made by doctors with privileges at Fair Oaks Hospital.

At a hearing on the motion to dismiss, Inova argued that because the Commissioner found that issuance of the certificate would not significantly affect Reston's competing business, it had not suffered an injury sufficient to make Reston aggrieved. The circuit court agreed, stating:

At this point, I'm going to grant the motion to dismiss. I agree with the law as well as the practical aspects raised by [Inova and the Commissioner]. I have reviewed the entire record. I believe that's the basis for the Court's decision and based on the factors that the Commissioner considered and the deference that this Court believes it would be given, Reston cannot demonstrate ... that [it was] sufficiently aggrieved to have standing.

Reston now appeals the circuit court's decision, opposed by both Inova and the Commissioner.

II. ANALYSIS

Reston principally argues that it has standing to appeal the Commissioner's decision to the circuit court under the VAPA based on its status as a provider of the same, competing services at a facility six miles from Fair Oaks Hospital, and the alleged impact on the utilization, efficiency, and ultimate profitability of those services resulting from increased competition with Fair Oaks Hospital. Reston reasons that this status makes it a “party aggrieved” under Code § 2.2–4026 because it places a burden on it different from that suffered by the public generally and shows that it has an immediate, pecuniary, and substantial interest in the case decision by virtue of the fact that Code § 32.1–102.3 required the Commissioner to consider the effect the issuance of the certificate would have on the utilization and efficiency of Reston's nearby, competing services that were the same as those to be provided by Inova under the certificate.

Neither the Commissioner nor Inova disputes that Reston owns a nearby facility that provides the same services covered by the certificate. Instead, they argue that Reston is not “sufficiently aggrieved” because in their view Reston has not suffered an appreciable injury, claiming that any harm to Reston's nearby, competing facility and services is insignificant. Inova supports this conclusion based on the evidence it presented to the Commissioner and the Commissioner's findings based on that evidence that Reston's hospital is a “robust, acute care facility” ...