Beall Medical Surgical Clinic & Hospital, Inc. v. Texas State Bd. of Health

• Decision Date: 18 January 1963
• Docket Number: No. 16187,16187
• Citation: 364 S.W.2d 755
• Parties: BEALL MEDICAL SURGICAL CLINIC AND HOSPITAL, INC., Appellant, v. TEXAS STATE BOARD OF HEALTH.
• Court: Texas Court of Appeals

Page 755

364 S.W.2d 755

BEALL MEDICAL SURGICAL CLINIC AND HOSPITAL, INC., Appellant, v. TEXAS STATE BOARD OF HEALTH.

No. 16187.

Court of Civil Appeals of Texas, Dallas.

Jan. 18, 1963.

Rehearing Denied Feb. 8, 1963.

Odeneal & Odeneal, Dallas, for appellant.

Henry Wade, Dist. Atty., and John J. Orvis, Asst. Dist. Atty., Dallas, for appellee.

BATEMAN, Justice.

This appeal is from a summary judgment cancelling the temporary license to operate a hospital granted to appellant shortly after the effective date of Art. 4437f, Vernon's Ann.Tex.St., known as the Texas Hospital Licensing Law. Proceedings for the revocation of such license having been instituted in accordance with the provisions of Sec. 9 of said law, a hearing was held by appellee pursuant thereto. Within due time after entry by appellee of its order cancelling appellant's license appellant filed this suit in one of the district courts of Dallas County for the avowed purpose of appealing from such order and 'obtaining a trial de novo' provided for in Sec. 9 of the said Statute.

Appellant's first point assails the constitutionality of the Texas Hospital Licensing Law (Art. 4437f, V.A.T.S.) as being vague, arbitrary and repugnant to the 'due process' clauses of the Federal and State Constitutions, making the action of appellee in cancelling the license and the judgment of the district court affirming such action void and of no effect. Appellant cites Bielecki v. City of Port Arthur (Tex.Civ.App.), 12 S.W.2d 976, City of Houston v. Adams, Tex.Civ.App., 326 S.W.2d 627, err. ref. n. r. e., and Kingsbery v. Phillips Petroleum Company, Tex.Civ.App., 315 S.W.2d 561, err. ref. n. r. e., in support of this point, and argues that the Act is invalid because it authorizes appellee to grant or withhold licenses as it arbitrarily chosses, without setting forth any guide or standard to distinguish between the parties entitled to such licenses and those not so entitled.

The first two cases cited by appellant merely hold that a city cannot by establishing an arbitrary standard declare that to be a nuisance which is not in fact a nuisance; and the Kingsbery case merely holds in this connection that a citizen's right to conduct a business as he pleases is a valuable right and one which the law will protect if to do so does no violence to law, public policies or the rights of others. These cases do not in our opinion support the proposition that the Texas Hospital Licensing Law sets up such an arbitrary standard as to be repugnant to the due process clauses of the State of Federal Constitutions, or that it is too vague to be valid.

The purpose of Art. 4437f is expressed in Sec. 3 thereof as being 'to protect and promote the public health and welfare by providing for the development, establishment, and enforcement of certain standards in the construction, maintenance, and operation of hospitals.' We have carefully studied the entire act and find nothing therein that can properly be said to deprive appellant of its property, or the use of its property, or the right to transact its business, without due process. The Act requires a license to operate a hospital after January 1, 1960. It constitutes the State Board of Health as the 'Licensing Agency'. It establishes a Hospital Licensing Advisory Council consisting of nine members appointed by the Governor who shall advise with the Licensing Agency in adopting, amending, promulgating and enforcing 'such rules, regulations, and minimum standards as may be designed to further the purposes of this Act.' It then provides that such rules, regulations or minimum standards shall be limited to safety, fire prevention, and sanitary provisions of hospitals as defined in the Act, and, further, that all such rules, regulations or standards shall first be approved by the State Board of Health and then by the Attorney General as to their legality, and then filed with the Secretary of State.

The Legislature may properly delegate to an administrative agency the authority to establish rules, regulations or minimum standards which may be said reasonably to carry out the expressed purpose of the Act. Housing Authority v. Higginbotham, 135 Tex. 158, 143 S.W.2d 79, 87, 130 A.L.R. 1053; Southwestern Savings & Loan Ass'n. of Houston v. Falkner, 160 Tex. 417, 331 S.W.2d 917, 921. Accompanying and referred to in the appellee's motion for summary judgment is a certified copy of the rules, rugulations and minimum standards approved by appellee and filed in the office of the Secretary of State which we have carefully examined and which we find to be reasonable and within the guidelines of the Act itself as set forth in Sec. 3 thereof. Appellant's first point is therefore overruled.

In its second point appellant urges alternatively, if the Act is held to be constitutional, that the court below erred in applying the 'substantial evidence rule', the application of which, appellant says, would in effect declare the 'de novo' provisions of Sec. 9 of the Act unconstitutional. Taking the position that the appellee acted in a judicial or quasi-judicial capacity in conducting its hearing resulting in the cancellation of appellant's license, appellant asserts that it was entitled to a trial under the 'preponderance of the evidence rule' in the district court.

Sec. 9 of the Act gives the Licensing Agency the authority to deny, cancel, revoke or suspend a license in any case where it finds there has been a substantial failure to comply with the provisions of the Act or the rules, regulations or standards promulgated thereunder, or for the aiding, abetting, or permitting the commission of any illegal act, or for conduct detrimental to the public health, morals, welfare and safety of the people. The procedure for the cancellation, revocation or suspension of a license is then set forth in detail, after which it is provided that any hospital whose license has been cancelled, revoked or suspended may within twenty days appeal to any of the District Courts in the County in which the hospital is located. It is then provided: 'The proceedings on appeal shall be a trial de novo as such term is commonly used and intended in an appeal from the Justice Court to a County Court * * *.'

Appellee contends, however, that the order in question was an administrative order, not judicial or quasi-judicial, and that the 'substantial evidence rule' was not excluded but properly applied.

There have been numerous recent decisions by the appellate courts of Texas on the question of the applicability of the substantial evidence rule in appeals to the courts from rulings by various administrative bodies. See the interesting analysis of many of these decisions in the article entitled 'Trial De Novo--Panacea?' by Wallace P. Finfrock in the Baylor Law Review, Volume 14, No. 2, page 135. We hold that the substantial evidence rule was applicable in this case and that, despite the statutory provision for a trial de novo on appeal, appellant was not entitled to a full trial of all the issues involved under the preponderance of the evidence rule, nor to have the district court substitute its fact findings or the verdict of a jury for the determination of the matter by the appellee Texas State Board of Health.

If the language contained in Sec. 9 of the Act, 'The proceedings on appeal shall be a trial de novo as such term is commonly used and intended in an appeal from the Justice Court to a County Court,' be considered as requiring a full trial under the preponderance of the evidence rule, then we are compelled to hold that such part of Sec. 9 is unconstitutional for the reasons hereinafter set forth. Davis v. City of Lubbock, 160 Tex. 38, 326 S.W.2d 699.

We consider that these holdings are required by the decision of the Supreme Court in Southern Canal Co. v. State Board of Water Engineers, 159 Tex. 227, 318 S.W.2d 619. That case involved an appeal under Sections 12 and 13 of Art. 7477, V.A.T.S., from an adverse administrative ruling by the State Board of Water Engineers. Section 12 broadly provides that any person affected by any ruling, order, decision or other act of the Board may file in court a petition in an action to review, set aside, modify, or suspend such ruling, order, decision or other act. Sec. 13 then provides that in all suits brought under Sec. 12, 'the trial shall be de novo, as that term is used and understood in an appeal from a Justice of the Peace Court to the county court.' (Note the similarity to the corresponding language of Sec. 9 of the Act here involved.) Sec. 13 continues by providing that in such de novo trials, no presumption of validity or reasonableness or presumption of any character shall be indulged in favor of any such order, rule or regulation, but that evidence as to the validity or reasonableness thereon shall be heard and the determination made upon facts as in other civil cases, and that the procedure for such trials, etc., shall be governed solely by the rules of law, evidence and procedure prescribed for the courts of this State by its Constitution, Statutes and rules of procedure applicable to the trial of civil actions. As if this were not sufficient to spell out clearly the legislative intent, Sec. 13 then concludes: 'It is the intent of the Legislature that such trial * * * shall be made independently of any action taken by the Board, upon a preponderance of the evidence adduced at such trial and entirely free of the so-called 'substantial evidence' rule enunciated by the courts in respect to orders of other administrative or quasi-judicial agencies.' (Emphasis ours.)

The Austin Court of Civil Appeals held that ...