Canonsburg General Hospital v. Department of Health
| Decision Date | 31 October 1980 |
| Citation | 422 A.2d 141,492 Pa. 68 |
| Parties | CANONSBURG GENERAL HOSPITAL, v. DEPARTMENT OF HEALTH of the Commonwealth of Pennsylvania and H. Arnold Muller, M.D., Secretary of Health, Appellants. |
| Court | Pennsylvania Supreme Court |
Argued Sept. 24, 1980.
D. Galton Cabot Moss, Asst. Atty. Gen., Pa. Dept. of Health, Reed Hamilton, Harrisburg, for appellants.
Clara Mattern, Horty, Springer & Mattern, Pittsburgh, for appellee.
Before O'BRIEN, C. J., and ROBERTS, NIX, LARSEN, FLAHERTY and KAUFMANN, JJ.
This is an appeal from an order of the Commonwealth Court granting appellee Canonsburg General Hospital a writ of peremptory mandamus directing appellants, the Commonwealth's Department of Health and its Secretary, to certify that Canonsburg General's proposal to build a new hospital conforms to standards for federal financial assistance under section 1122 of the Social Security Act, 42 U.S.C. § 1320a-1. We agree with appellants that Canonsburg General has failed to exhaust available administrative remedies and that judicial relief is thus not proper. Hence we reverse the order of the Commonwealth Court, 413 A.2d 1185, and dismiss the petition.
Canonsburg General plans to replace its existing 108 bed facility with a new 100 bed facility at a cost of approximately $17 million. Instead of pursuing only private financing, Canonsburg General seeks to obtain federal financial assistance. Accordingly, Canonsburg General submitted an application for approval of its planned construction to Health Systems Agency of Southwestern Pennsylvania (HSA), the regional body to which appellants have assigned their responsibility to review applications for approval. [1]
HSA received Canonsburg General's application on April 16, 1979. On April 30, HSA advised Canonsburg General that the application was incomplete. According to HSA, the application failed to supply necessary information regarding either joint planning with other health care facilities or the feasibility of alternatives to the $17 million proposed project. Because it deemed the application incomplete, HSA did not consider the merits of Canonsburg General's proposal.
Canonsburg General did not challenge HSA's determination of incompleteness. Instead it purported to attempt to cure the shortcomings in its application. On May 30, HSA received additional information from Canonsburg General. One week later, on June 6, HSA informed Canonsburg General that this additional information did not constitute a response to HSA's request. Again Canonsburg General sought no review of HSA's determination.
On July 13 Canonsburg General provided HSA with still more information. This, too, in the view of HSA did not serve to complete Canonsburg General's application. HSA so advised Canonsburg General on July 27. Again no review was sought. More correspondence followed, including an August 1 letter from Canonsburg General to HSA reporting that it had previously explored alternatives with a neighboring facility, and an August 10 response of HSA continuing to treat the information as inadequate. As with all previous determinations of HSA, this last determination was not challenged.
Negotiations between Canonsburg General and HSA ensued. In mid-August, Canonsburg General agreed to analysis of its proposal by Kidder, Peabody & Company, a Wall Street rating firm. By letter dated August 30, HSA expressed satisfaction with Canonsburg General's willingness to submit its proposal to analysis by Kidder Peabody. This letter went on to state HSA's understanding that, should the Kidder Peabody analysis not be completed before October 1, Canonsburg General's proposal would remain incomplete and would not be considered on the merits.
On September 5, Canonsburg General responded that it believed completion of the Kidder Peabody analysis was not a prerequisite to review of its application on the merits. Within a month, however, Canonsburg General took a new position. By letter of counsel, dated October 5, Canonsburg General informed appellant, the Secretary of the Department of Health, that despite HSA's determinations to the contrary Canonsburg General's proposal should be considered complete as of its May 30 response to HSA's initial, April 30 determination of incompleteness. Relying upon federal regulations 42 C.F.R. §§ 100.106(a)(3) and 100.106(a)(4), Canonsburg General took the position that, notwithstanding its failure to challenge HSA's determinations of incompleteness, the application is automatically approved as of August 1979 for want of a decision on the part of HSA. [2]
Appellant Secretary rejected Canonsburg General's new position. In a letter dated November 15, the Secretary stood behind HSA's continuing determinations that Canonsburg General's application was incomplete. The letter adds:
Canonsburg General neither awaited completion of the Kidder Peabody analysis nor pursued formal administrative review of the Secretary's decision not to disturb HSA's previous determinations of incompleteness. Instead, Canonsburg General filed the present petition for review in the nature of peremptory mandamus within the Commonwealth Court's original jurisdiction. In its petition, filed November 19, 1979, Canonsburg General sought immediate judicial review of HSA's determinations that Canonsburg General had not properly completed its application for approval. Canonsburg General reiterated the position taken in its October 5 letter to the Secretary that its May response to HSA "provided the HSA with the requested information, answering every question raised in the HSA's letter of April 30, 1979 in a complete manner." According to Canonsburg General, 42 C.F.R. § 100.106(a)(3) and 100.106(a)(4) establish that, as of late August (when Kidder Peabody was to begin its analysis) Canonsburg General had a clear legal right to certification that its project conformed to federal standards for financial assistance.
Appellants filed preliminary objections, including an averment that Canonsburg General had failed to state a claim upon which a writ of mandamus can be issued. Judge Craig of the Commonwealth Court dismissed the objections and, on the basis of the existing record, granted Canonsburg General the requested relief. According to Judge Craig, Canonsburg General's application was complete as of its second response dated July 13, and thus under 42 C.F.R. §§ 100.106(a)(3) and 100.106(a)(4), HSA's failure to act on a complete application worked an automatic approval. On appellants' exceptions, the Commonwealth Court en banc upheld entry of the writ of mandamus. This appeal followed.
Well-settled case law of this Court precludes a party challenging administrative decision making from obtaining judicial review, by mandamus or otherwise, without first exhausting administrative remedies. Very recently, in Delaware Valley Convalescent Center, Inc. v. Beal, 488 Pa. 292, 412 A.2d 514 (1980), this Court unanimously upheld the Commonwealth Court's dismissal of a petition for review of a previously unchallenged reimbursement ceiling of the Department of Public Welfare. Judicial review without either a proper record or an administrative adjudication would constitute " '(p)remature interruption of the administrative process.' " 488 Pa. at 296, 412 A.2d at 516, quoting B. Schwartz, Administrative Law § 172 at p. 498 (1976).
Valley Forge Racing Ass'n, Inc. v. State Horse Racing Comm'n, 449 Pa. 292, 295, 297 A.2d 823, 824-25 (1972). Accord, e.g., Rylke v. Portage Area School District...
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