Bio-Medical Applications v. Nc Dhhs

• Decision Date: 19 September 2006
• Docket Number: No. COA05-294.,COA05-294.
• Citation: 634 S.E.2d 572
• Court: North Carolina Court of Appeals
• Parties: BIO-MEDICAL APPLICATIONS OF NORTH CAROLINA, INC., Plaintiff, v. NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF FACILITY SERVICES, Defendant, and North Carolina Department of Health and Human Services, Division of Facility Services, Medical Facilities Planning Section, Defendant, and Total Renal Care of North Carolina, LLC and Health Systems Management, Inc., Defendant-Intervenor.

634 S.E.2d 572

BIO-MEDICAL APPLICATIONS OF NORTH CAROLINA, INC., Plaintiff, v. NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF FACILITY SERVICES, Defendant, and North Carolina Department of Health and Human Services, Division of Facility Services, Medical Facilities Planning Section, Defendant, and Total Renal Care of North Carolina, LLC and Health Systems Management, Inc., Defendant-Intervenor.

No. COA05-294.

Court of Appeals of North Carolina.

September 19, 2006.

COPYRIGHT MATERIAL OMITTED

Appeal by plaintiff from order entered 16 November 2004 by Judge Henry W. Hight, Jr. in Wake County Superior Court. Heard in the Court of Appeals 2 November 2005.

Kennedy Covington Lobdell & Hickman, LLP, by Gary S. Qualls, Research Triangle Park, plaintiff-appellant.

Attorney General Roy A. Cooper, III, by Assistant Attorney General Thomas M. Woodward, for NCDHHS Division of Facility Services and NCDHHS Division of Facility Services Medical Facilities Planning Section, defendants-appellees.

Poyner & Spruill LLP, by Thomas R. West and Pamela A. Scott, Raleigh, for Total Renal Care of North Carolina, LLC, defendant-intervenor-appellee; and Bode, Call & Stroupe, L.L.P., by S. Todd Hemphill, for Health Systems Management, Inc., defendant-intervenor-appellee.

JACKSON, Judge.

Plaintiff, Bio-Medical Applications of North Carolina, Inc. ("BMA"), appeals from an order issued 16 November 2004 in Wake County Superior Court dismissing BMA's claims pursuant to North Carolina Rules of Civil Procedure, Rule 12(b)(1), and alternatively, granting summary judgment in favor of defendants, North Carolina Department of Health and Human Services, Division of Facility Services ("DFS") and North Carolina Department of Health and Human Services, Division of Facility Services, Medical Facilities Planning Section ("the Planning Section"), and defendant-intervenors, Total Renal Care of North Carolina, Inc. ("TRC") and Health Systems Management, Inc. ("HSM").

On 1 July 2004, BMA, the sole provider of in-center kidney dialysis services in Wake County, received the July 2004 Semiannual Dialysis Report ("SDR") prepared by the Planning Section. This report is released twice each year as part of the State Medical Facilities Plan ("SMFP"). The SMFP defines and governs how the need for additional dialysis stations is to be determined. The Planning Section applies the formula established in the SMFP to the data reported to it from the Southeastern Kidney Council ("Kidney Council") to determine whether the various counties are in need of additional dialysis stations. The July 2004 SDR reported that there was a need in Wake County for an additional ten dialysis stations, and gave a deadline for applications to fill that need. Any dialysis provider, including BMA, could apply for a Certificate of Need ("CON") which is what is required to fill a reported need.

After reviewing the SDR, BMA contacted the Planning Section and was provided with the data upon which the report was based. BMA compared the data it was given to its own numbers and determined that an error had been made in the data reported to the Planning Section by the Kidney Council. The data reported by the Kidney Council showed fifty-two patients at BMA's Fuquay-Varina facility when there actually were fifty-one. This error resulted in a calculation that the Fuquay-Varina facility was operating at over eighty percent capacity, when use of the correct patient count would have shown the facility was operating at less than eighty percent capacity. Due to the formula used to calculate need, had the correct data been used, the need determination for new dialysis stations in Wake County would have been zero, rather than ten as reported in the July 2004 SDR. BMA contacted the Planning Section to report this error and was informed that no changes to the SDR could be made based on BMA's data unless the error was confirmed by the Kidney Council.

On 2 July 2004, BMA contacted the Kidney Council regarding the possible data error. The Kidney Council confirmed the error to BMA on 13 July 2004. The Kidney Council informed the Planning Section of the error on 16 July 2004. On 19 July 2004, BMA requested that the Planning Section amend the July 2004 SDR to correct the error in the data reported by the Kidney Council. The Planning Section advised BMA on 20 July 2004 that, after reviewing the request to amend the July 2004 SDR, DFS management had declined to amend the SDR.

BMA filed a verified Complaint for a Declaratory Judgment, a Permanent and Preliminary Injunction, and Writ of Mandamus on 11 August 2004 where BMA sought to compel the Planning Section to amend the July 2004 SDR to reflect results based on corrected data. BMA further sought to prevent the acceptance of any CON applications based upon the unamended July 2004 SDR. TRC and HSM, providers of in-center kidney dialysis services in counties other than Wake, were allowed to intervene by consent on 25 August 2004.

Defendants DFS and the Planning Section filed an Answer and Motions to Dismiss and Defendant-Intervenors TRC and HSM filed a Motion to Dismiss on 20 September 2004. A hearing on the motions was held at the 12 November 2004 session of Wake County Superior Court. The trial court dismissed BMA's claims pursuant to North Carolina Rules of Civil Procedure, Rule 12(b)(1), and alternatively, granted summary judgment in favor of defendants DFS and the Planning Section and defendant-intervenors TRC and HSM by order issued 16 November 2004. BMA gave notice of appeal on 15 December 2004.

BMA argues the following issues on appeal: (1) the trial court erred in dismissing its claims based on the doctrine of sovereign immunity; (2) the Planning Section abused its discretion in failing to amend the SDR; (3) the Governor was not the person or entity with the authority to amend the SDR; (4) the trial court erred in converting defendants' motions to dismiss to motions for summary judgment; (5) BMA's claims are not moot; and (6) if not properly before the trial court, BMA's action may be brought before the Office of Administrative Hearings ("OAH"). For the reasons stated below, we affirm Judge Hight's order.

BMA's first assignment of error contends the trial court erred in dismissing its claims pursuant to the doctrine of sovereign immunity. As a preliminary matter, we address whether the issue of sovereign immunity is properly before this Court.

In their Motion to Dismiss, defendants DFS and the Planning Section alleged, inter alia, a lack of subject matter jurisdiction pursuant to North Carolina Rules of Civil Procedure, Rule 12(b)(1), a lack of personal jurisdiction under Rule 12(b)(2) pursuant to the doctrine of sovereign immunity, and failure to state a claim pursuant to Rule 12(b)(6). Defendants TRC and HSM also filed a Motion to Dismiss, in which they alleged, inter alia, a lack of subject matter jurisdiction in part due to sovereign immunity, a lack of personal jurisdiction, and failure to state a claim.

The trial court dismissed the action pursuant to Rule 12(b)(1) and alternatively granted summary judgment in favor of defendants and defendant-intervenors, having considered matters outside the verified pleadings. The trial court did not rule on the other grounds for dismissal, such as a lack of personal jurisdiction pursuant to Rule 12(b)(2). The reasons stated for granting dismissal included, inter alia, that the claims were barred by the doctrine of sovereign immunity.

"`[A]n appeal of a motion to dismiss based on sovereign immunity presents a question of personal jurisdiction rather than subject matter jurisdiction.'" Davis v. Dibartolo, ___ N.C.App. ___, ___, 625 S.E.2d 877, 880 (2006) (quoting Data Gen. Corp. v. Cty. of Durham, 143 N.C.App. 97, 100, 545 S.E.2d 243, 245-46 (2001)). Although the trial court gave several reasons why BMA's claims were barred by the doctrine of sovereign immunity, it did not rule on the Rule 12(b)(2) motions. Neither defendants nor defendant-intervenors brought cross assignments of error to the trial court's failure to make a 12(b)(2) ruling. The scope of review on appeal is limited to those assignments of error properly set forth in the record on appeal. N.C. R.App. P. 10(a) (2006). To properly preserve a question for appellate review a party must request, and receive, a ruling on the question from the trial court. N.C. R.App. P. 10(b)(1) (2006). As there was no ruling by the trial court on the issue of personal jurisdiction, and there was no error assigned, the matter is not properly before this Court.

We next consider whether sovereign immunity may properly be addressed under a grant of summary judgment.

A defendant may show that summary judgment is proper by "(1) proving that an essential element of the plaintiff's case is nonexistent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense which would bar the claim." James v. Clark, 118 N.C.App. 178, 181, 454 S.E.2d 826, 828, disc. review denied, 340 N.C. 359, 458 S.E.2d 187 (1995). As sovereign immunity is an affirmative defense, the issue may properly be addressed pursuant to the grant of summary judgment.

"A trial court's ruling on a motion for summary judgment is reviewed de novo as the trial court rules only on questions of law." Coastal Plains Utils., Inc. v. New Hanover County, 166 N.C.App. 333, 340-41, 601 S.E.2d 915, 920 (2004) (citing Va. Electric and Power Co. v. Tillett, 80 N.C.App. 383, 384-85, 343 S.E.2d 188, 190, cert. denied, 317 N.C. 715, 347 S.E.2d 457 (1986)). "Summary judgment is proper where `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.'" Dept. of Transportation v....