Adventist Healthcare Midatlantic, Inc. v. Suburban Hosp., Inc.

• Decision Date: 01 September 1997
• Docket Number: No. 114,114
• Citation: 350 Md. 104,711 A.2d 158
• Parties: ADVENTIST HEALTHCARE MIDATLANTIC, INC. d/b/a Washington Adventist Hospital, Inc. et al. v. SUBURBAN HOSPITAL, INC., et al. ,
• Court: Maryland Court of Appeals

Page 104

350 Md. 104

711 A.2d 158

ADVENTIST HEALTHCARE MIDATLANTIC, INC. d/b/a Washington Adventist Hospital, Inc. et al. v. SUBURBAN HOSPITAL, INC., et al.

No. 114, Sept. Term, 1997.

Court of Appeals of Maryland.

June 10, 1998.

Reconsideration Denied July 28, 1998.

Joel Tornari, Asst. Atty. Gen., J. Joseph Curran, Jr., Atty. Gen., C. Frederick Ryland, Asst. Atty. Gen., Baltimore, and Howard L. Sollins (Marc K. Cohen, Ober, Kaler, Grimes & Shriver, Baltimore; John R. Metz, Lerch, Early & Brewer, Chtd., Bethesda), on brief, for appellants.

Jack C. Tranter (Thomas C. Dame, Gallagher, Evelius & Jones, Baltimore), and Richard G. McAlee (Richard G. McAlee, P.A., Crofton), on brief, for appellees.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ.

WILNER, Judge.

This is a battle over administrative procedure. Two Washington metropolitan area hospitals--Suburban Hospital and Holy Cross Hospital--filed applications with the Maryland Health Resources Planning Commission for a certificate of need (CON) to establish and operate open heart surgery (OHS) units at their respective hospitals. A third area hospital Washington Adventist Hospital, opposed those applications. Upon the recommendation of its Staff, the Commission summarily denied the applications on the ground that the existing State Health Plan showed an insufficient need for an additional open heart surgery unit in the Washington metropolitan area and that approval of the applications, or either of them, would therefore be inconsistent with that Plan.

The Circuit Court for Baltimore City, acting on petitions for judicial review filed by Suburban and Holy Cross, reversed that decision. The court concluded that the Commission erred in rejecting the applications as a matter of law, based solely on their inconsistency with the State Health Plan. The Commission was required, it held, to consider the applications on their merits and to consider the applicants' evidence of current need for OHS services in the Washington metropolitan area. Washington Adventist and the Commission noted appeals from the court's judgment, and we granted certiorari on our own initiative prior to argument in the Court of Special Appeals. We shall reverse.

BACKGROUND

In response to the National Health Planning and Development Act of 1974, the General Assembly created an apparatus to prepare and implement a comprehensive State Health Plan for Maryland. See S. Md. Hosp. v. Ft. Wash. Community Hosp., 308 Md. 323, 519 A.2d 727 (1987). That apparatus has changed over the years; it is now centered principally in the Commission and operates in accordance with Maryland Code, §§ 19-101 through 19-123 of the Health-General Article, and the regulations adopted pursuant to § 19-107 of that Article (Repl.Vol.1996).

The basic goal of the Legislature, expressed in § 19-102(a), was "to promote the development of a health care system that provides, for all citizens, financial and geographic access to quality health care at a reasonable cost." To meet that goal, the Legislature created the Commission and charged it, among other things, with (1) developing, adopting, and periodically updating a comprehensive State Health Plan, and (2) assisting in the implementation of that plan, in part through the legislatively-established CON program. Section 19-114(a) requires the Commission to adopt a State Health Plan at least every five years and to include within that plan, among other things, (1) the identification of unmet needs, excess services, and minimum access criteria, (2) an assessment of the financial resources required and available for the health care system, and (3) "[t]he methodologies, standards, and criteria for certificate of need review." Section 19-114(c) directs that "[a]nnually or upon petition by any person, the Commission shall review the State health plan and publish any changes in the plan that the Commission considers necessary...." Section 19-114(e) requires the Commission to include in the plan standards and policies that relate to the CON program. Those standards must address "the availability, accessibility, cost, and quality of health care," and are to be "reviewed and revised periodically to reflect new developments in health planning, delivery, and technology." Id.

The CON program is authorized and governed by §§ 19-115 through 19-121 and the regulations adopted by the Commission pursuant to § 19-115(c). Essentially, a CON is required before a person may develop, operate, expand, change, or invest capital in health care facilities or services, including an OHS service. § 19-115. Section 19-118(c)(1) requires that all decisions of the Commission on an application for a CON, except in emergency situations posing a threat to public health, "shall be consistent with the State health plan and the standards for review established by the Commission." Although the Commission is given the non-delegable duty to act on CON applications, it is authorized by § 19-118(d) to delegate to a committee of the Commission the responsibility for reviewing an application, holding a hearing on it, and making a recommendation to the Commission. The Commission may approve, approve with conditions, or deny the CON application on the basis of the committee's recommendation and the whole record before the Commission. Section 19-118(f) provides that, if a party or interested person requests an evidentiary hearing with respect to a CON application, the Commission or its committee "shall hold the hearing in accordance with the contested case procedures of the Administrative Procedure Act."

The Commission has adopted a State Health Plan in the form of regulations found in COMAR §§ 10.24.07--17. The plan for OHS cardiac surgery and therapeutic catheterization services is incorporated by reference in § 10.24.17. The Commission has also adopted regulations governing the CON procedure. Each January and July, the Commission publishes in the MARYLAND REGISTER a schedule for conducting comparative and standard reviews of CON applications for designated services, by health service area. The schedule states the status of applicable need forecasts found in the State Health Plan and the dates for the receipt of letters of intent and applications. COMAR § 10.24.01.08 D. Persons desiring to apply for a CON first submit a letter of intent that must contain a brief description of the project, the quantity and types of beds or health services to be affected, and the jurisdictions in which the services will be provided. COMAR § 10.24.01.07 C. Upon receipt of a letter of intent, the Commission staff meets with the proposed applicant to discuss, among other things, Commission procedures for reviewing the application and any State Health Plan requirements that may affect the project. COMAR § 10.24.01.07 E. Within 180 days after filing the letter of intent, the person may file a formal application. After Staff review for technical compliance, the application is docketed.

COMAR § 10.24.01.08 G sets forth substantive criteria for review of an application. Subsection G. (3) provides, in relevant part, that "[a]pplications for Certificate of Need shall be evaluated according to all relevant State Health Plan standards, policies, and criteria" and that "[f]or purposes of evaluating an application under this subsection, the Commission shall consider the applicable need analysis in the State Health Plan." In furtherance of that requirement, COMAR § 10.24.01.10 C provides that, at any time after docketing an application, the Staff may move for summary decision to deny an application "if the proposed project is inconsistent with one or more standards of the State Health Plan that make the project unapprovable."

As noted, the State Health Plan is, itself, in the form of regulations. The part dealing with OHS services, applicable in this case, became effective October, 1990. It was based on 1988 data, projected through the "target year" of 1993 "to account for the effect of preventive measures, advances in medicine and surgery, and other factors that might impact the need for cardiac surgery." The OHS plan was supplemented in January, 1996, although the supplement dealt only with exemptions for certain research projects and did not alter the standards, methodologies, or criteria applicable to OHS projects.

Section .07 of the plan (COMAR 10.24.17.07) sets forth a methodology, in both descriptive and mathematical form, for determining the projected need for adult cardiac surgery in the four health service areas of the State. For the Washington metropolitan area, consisting of Washington, D.C., and Calvert, Charles, Montgomery, Prince George's, and St. Mary's counties, the plan, using that methodology, showed a projected need for 1993 of 3,497 adult cardiac surgeries and an existing capacity within six hospitals in that area to perform 3,407 of those surgeries, producing a net projected unfilled need of 90. Those figures were set forth in an Appendix to the plan. COMAR 10.24.17 Appendix 3, Table 6. The plan stated that the need projections calculated by using that methodology "are those applied by the Commission in its Certificate of Need decisions," that no update of need projections would take place before September, 1992, and that "[p]ublished need projections remain in effect until the Commission publishes updated projections." COMAR 10.24.17.07 E. The plan also contained certain CON "Approval Policies," among which were:

"(1) Identification of Need for Cardiac Surgery Programs.

Maximum need for cardiac surgery programs is identified using the need projection methodology in Regulation .07 of this Chapter and is found in the Appendix to this Chapter or in subsequent updates published in the Maryland Register.

(2) Minimum Net Need Identified.

Net need for cardiac surgery projected in a Regional Service Area is no less than 200 open heart surgery cases for an adult program...."

(...