Adventist Health v. Health Care

• Citation: 896 A.2d 320,392 Md. 103
• Decision Date: 12 April 2006
• Docket Number: No. 73, September Term, 2005.,73, September Term, 2005.
• Parties: ADVENTIST HEALTH CARE INC. v. MARYLAND HEALTH CARE COMMISSION, et al.
• Court: Court of Special Appeals of Maryland

896 A.2d 320

392 Md. 103

ADVENTIST HEALTH CARE INC. v. MARYLAND HEALTH CARE COMMISSION, et al.

No. 73, September Term, 2005.

Court of Appeals of Maryland.

April 12, 2006.

COPYRIGHT MATERIAL OMITTED

Howard L. Sollins (Diane Festino Schmitt, Ober, Kaler, Grimes & Shriver, Baltimore, on brief), for appellants.

Jason W. Sapsin, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Jane E. Pilliod, Suellen Wideman, Asst. Attys. Gen.), Paul S. Caiola (Jack C. Tranter, Gallagher Evelius & Jones, LLP, Baltimore, on brief), for appellees.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

BELL, C.J.

The Maryland Health Care Commission ("Commission"), one of the appellees herein, is required by Md.Code (1982, 2005 Replacement Volume), § 19-118 of the Health-General Article,¹ "at least every 5 years," to adopt a State health plan ("SHP"), § (a)(1), that shall include "[t]he methodologies, standards, and criteria for certificate of need review...." § 19-118(a)(2)(i). Moreover, the Commission is charged with developing standards and policies consistent with the SHP that relate to the Certificate of Need ("CON") process. § 19-118(d)(1).² These standards, inter alia, "[s]hall address the availability, accessibility, cost, and quality of health care," § 19-118(d)(2)(i),³ and "shall take into account the relevant methodologies of the Health Services Cost Review Commission." § 19-118(d)(3).⁴ The Commission also is authorized to promulgate regulations in order more effectively to manage and implement the duties prescribed under Md.Code § 19-118. Section 19-118(c) provides:

"(c) The Commission shall adopt rules and regulations that ensure broad public input, public hearings, and consideration of local health plans in development of the State health plan."

The issue in this case is whether a request by a merged asset hospital system to relocate a portion of its existing cardiac surgery program from one location to another triggers or engages the comparative review process required upon application for a CON for a new cardiac surgery program, or whether such request is to be resolved by a CON process that is separate and distinct. The problem, and accordingly, the resolution, relates solely to the interpretation of the Code of Maryland Administrative Regulations ("COMAR") 10.24.17.04F, the section entitled "Merged Hospital Systems," and, specifically, Policy 6.0 contained therein. COMAR 10.24.17.04F provides:

"The regionalization of cardiac surgery services plays an important role in the strategic planning and placement of these programs to achieve an optimal balance between promoting patient access, containing costs, and maintaining quality of care. By regulating the number of cardiac surgery programs needed by Maryland residents in order to ensure adequate caseloads, the Commission acts to strengthen quality and avoid unnecessary costs to the healthcare system.

"In recent years, the Commission has encouraged and overseen several mergers and consolidations of two or more hospitals as part of statewide initiatives to promote efficiencies and contain health costs. This has created an opportunity, under specified conditions, for merged institutions to relocate all or part of an existing service from one hospital to another under that merged system by obtaining an exemption from Certificate of Need. While the General Assembly has created this opportunity for the reconfiguration of existing services, its intention was not to promote the expansion of a service which otherwise would be subject to Certificate of Need coverage. The potential relocation or dividing of cardiac surgery programs may result in proliferation of programs in the absence of need, and defeat the principles of regional planning. For this reason, the Commission establishes the following policy:

"Policy 6.0 A merged hospital system may not relocate any part of its existing cardiac surgery capacity to another hospital within its system without obtaining a Certificate of Need."

The Commission interpreted COMAR 10.24.17.04F to mean that a relocation of a portion of an existing cardiac surgery program is subject to the CON process required for a new program. In so doing, it rejected the interpretation advocated by the appellant, Adventist Health Care, Inc., the parent of the merged hospitals, Washington Adventist Hospital and Shady Grove Hospital. Adventist had urged, and continues in this Court to do so, that its relocation application was entitled to be reviewed in a separate and distinct process from the comparative review required for the establishment of a new program. Consequently, it maintained on judicial review, and again in this Court, that, by interpreting Policy 6.0 and COMAR 10.24.17.04F the way it did, the Commission exceeded its authority. On judicial review, the Circuit Court for Baltimore City affirmed the Commission's interpretation. We also shall affirm.

A.

Adventist is a merged asset hospital system that includes, as indicated, both the Washington Adventist Hospital and Shady Grove Hospital. The Washington Adventist Hospital has an existing cardiac surgery program. Interested in relocating a portion of that existing cardiac surgery program to Shady Grove Hospital, Adventist submitted to the Commission a Letter of Intent ("LOI") to do so. The LOI described the proposed project, the quantity and types of health services beds that would be affected, and, under the applicable need methodology in the SHP, the jurisdictions the new service would affect. Explaining that the new joint program would have "common medical staffs for Program services, a single set of Program policies and procedures," Adventist concluded that the relocation "would not result in the establishment of a new Program but rather [only in] the relocation of a portion of the existing Program at Washington Adventist."

To be clear as to the latter point, Adventist submitted to the Commission, along with the LOI, a separate letter in which it reaffirmed that it was not seeking a Certificate of Need for a new program, and stated that it was not responding to an earlier notice, issued by the Commission, requesting LOI's for new cardiac surgery programs.⁵ Adventist explained, in that regard:

"We wish to avoid a situation wherein the Commission would either reject this letter of intent or any subsequently filed application. We are therefore seeking your guidance whether there is any reason why this letter of intent cannot be accepted. We further request a determination that the project proposed in the letter of intent is considered a partial relocation of an existing program and not the establishment of a new program."

Responding, the Commission advised that it considered Adventist's LOI to relocate a portion of its cardiac surgery program to be a request for a new program. It explained that "[i]t is the Commission's view that Policy 6.0 ... considers the relocation of a cardiac surgery program by a merged asset system as the establishment of a new program, and, therefore, subject to all of the policies and standards under COMAR 10.24.17."

This prompted Adventist to file its "Petition for Acceptance of Letter of Intent for Partial Relocation of an Existing Cardiac Surgery and Percutaneous Coronary Intervention Program" ("Adventist Petition"). In a supporting memorandum accompanying the Petition, Adventist described what had already transpired, and argued that the LOI complied with Policy 6.0, that Policy 6.0's plain language required an independent, non-comparative review of its LOI, and that the health care resources that Adventist already possessed most efficiently would be utilized by allowing the relocation.

The Petition relied on three examples which, it maintained, demonstrated that the Commission's regulations allowed for the relocation of all, or part, of existing services between hospitals within a merged asset system: the Health Resources Planning Commission's granting of an exemption, pursuant to which Greater Laurel Beltsville Hospital (now Laurel Regional Hospital) was permitted to establish an obstetrics program under its merged asset system, the Commission's approval of the partial relocation from Sinai Hospital of Baltimore to Northwest Hospital Center, of inpatient psychiatric services, without the need for establishing a need for a new health care service, and the Commission's Proposed Decision granting the University of Maryland Medical System an exemption to relocate an obstetrics program. As to this third example, Adventist pointed out that the Commission noted that an allowable change in patient services among the components of a merged organization included the establishment of a service at a facility within the merged organization.

Adventist acknowledged that all of these examples involved a merger exemption, but insisted that they nevertheless reflected a distinction being drawn between the treatment of "new" and "existing" services. Furthermore, it asserted:

"[t]he Commission, in fact, has adopted other regulations permitting CON exemptions for merged asset systems for projects which otherwise would require CON coverage. It would be illogical and inconsistent for the Commission to, on the one hand, apply the `merger and consolidation' exemption process to permit the establishment of a service that was not previously available at a hospital within a merged asset system while, on the other hand[,] treating a partial relocation of another service as a `new' service."

Pursuant to this, Adventist argued that treating its proposal as a "new program" would be inconsistent with these and other examples, and with the Commission's enabling statute. The petition further asserted that the language of Policy 6.0 did not equate a partially relocated program to a "new" program.

Over Adventist's objection, the Commission submitted Adventist's LOI and Petition to the hospitals participating in the comparative review for a new...