Dep't of Cmty. Health v. Hous. Hosps., Inc., A22A1013, A22A1014, A22A1249, A22A1250

• Court: United States Court of Appeals (Georgia)
• Writing for the Court: Dillard, Presiding Judge.
• Citation: 365 Ga.App. 751,880 S.E.2d 245
• Parties: DEPARTMENT OF COMMUNITY HEALTH v. HOUSTON HOSPITALS, INC. Coliseum Medical Center, LLC v. Houston Hospitals, Inc. Department of Community Health v. The Medical Center of Peach County, Inc. Coliseum Medical Center, LLC v. The Medical Center of Peach County, Inc.
• Docket Number: A22A1013, A22A1014, A22A1249, A22A1250
• Decision Date: 26 October 2022

365 Ga.App. 751
880 S.E.2d 245

DEPARTMENT OF COMMUNITY HEALTH
v.
HOUSTON HOSPITALS, INC.

Coliseum Medical Center, LLC
v.
Houston Hospitals, Inc.

Department of Community Health
v.
The Medical Center of Peach County, Inc.

Coliseum Medical Center, LLC
v.
The Medical Center of Peach County, Inc.

A22A1013, A22A1014, A22A1249, A22A1250

Court of Appeals of Georgia.

October 26, 2022

880 S.E.2d 249

Christopher Michael Carr, Attorney General, Atlanta, Margaret Kemmerly Eckrote, Deputy Attorney General, Atlanta, Daniel Stephen Walsh, Senior Assistant Attorney General, Atlanta, Crystal Serena Lang, Cathelynn Tio, Assistant Attorneys General, for Appellant in A22A1013.

Jason Edward Bring, Kara Gordon Silverman, Arnall Golden Gregory; Michael G. Gray, Walker Hulbert Gray & Moore, for Appellee in A22A1013.

Kathlynn Butler Polvino, KBP Law, for Appellant in A22A1014.

Jason Edward Bring, Atlanta, for Appellee in A22A1014.

Christopher Michael Carr, Attorney General, Atlanta, Margaret Kemmerly Eckrote, Deputy Attorney General, Atlanta, Daniel Stephen Walsh, Senior Assistant Attorney General, Atlanta, Cathelynn Tio, Assistant Attorney General, for Appellant in A22A1249.

Armando Luis Basarrate II, Elizabeth Murphy Kitchens, Grace Park Kopache, Parker Hudson Rainer & Dobbs; Lawrence C. Collins, Collins & Aromatorio; Julia Hall Magda, Magda Law, for Appelle in A22A1249.

Kathlynn Butler Polvino, KBP Law; Joshua Barrett Belinfante, Daniel J. Monahan, Robbins Alloy Belinfante Littlefield; Stephen A. Ecenia, Jennifer A. Hinson, Rutledge Ecenia, for Appellant in A22A1250.

Armando Luis Basarrate II, Elizabeth Murphy Kitchens, Grace Park Kopache, Parker Hudson Rainer & Dobbs; Lawrence C. Collins, Collins & Aromatorio; Julia Hall Magda, Magda Law, for Appellee in A22A1250.

Dillard, Presiding Judge.

365 Ga.App. 751

These consolidated appeals arise from the Georgia Department of Community Health's grant of a certificate of need to Coliseum Medical Center, LLC, which Coliseum applied for to establish a free standing emergency department in Houston County. Several nearby hospitals, including the appellees, opposed the project and Coliseum's CON application. And following the Department's decision (which was issued by its commissioner), Houston Hospitals, Inc., sought judicial review of that decision in the Superior Court of Houston

365 Ga.App. 752

County, while the Medical Center of Peach County, Inc. d/b/a Medical Center of Peach County, Navicent Health sought judicial review of the same agency decision in the Superior Court of Peach County. Both trial courts granted judicial review of the commissioner's decision and reversed it, effectively denying Coliseum's CON application.¹

880 S.E.2d 250

In Case Nos. A22A1013 and A22A1014 (the "Houston County cases"), the Department and Coliseum, respectively, appeal the Houston County court's reversal of the Department's decision to grant a CON to Coliseum. And in related Case Nos. A22A1249 and A22A1250 (the "Peach County cases"), the Department and Coliseum, respectively, appeal the Peach County court's decision to do the same. While these appeals arise from two separate trial court orders issued in different counties, they all require our review of the same decision by the Department to grant Coliseum a CON for its proposed FSED. In several separate claims of error, both the Department and Coliseum essentially argue the Houston and Peach County courts erred by (1) failing to apply the proper judicial standard of review to the Department's decision, including the failure to afford sufficient deference to the commissioner's findings of fact and conclusions of law; (2) misinterpreting the scope of the commissioner's statutory and regulatory authority; and (3) finding that certain unappealed lower-level agency decisions issued in 2012 were precedential and binding on the Department and its commissioner in these proceedings. For the reasons set forth infra , we vacate the orders of both the Houston and Peach County courts and remand the cases to those courts with direction.²

I. Statutory and Regulatory Framework.

Before detailing the underlying factual and procedural background, it is instructive to first review the statutory and regulatory framework pertinent to evaluating CON applications. The State Planning and Development Act—which is codified at OCGA § 31-6-40 et seq.

365 Ga.App. 753

(the "CON Act")—"establishes a comprehensive system of planning for the orderly development of adequate healthcare services throughout the state."³ To this end, OCGA § 31-6-40 (a) provides that "[o]n and after July 1, 2008, any new institutional health service shall be required to obtain a [CON] ...." And these services include, inter alia , "[t]he construction, development, or

880 S.E.2d 251

other establishment of a new, expanded, or relocated health care facility...."⁴ Particularly relevant here, in 2019, the General Assembly amended the CON Act's definition of "health care facility" to include "freestanding emergency departments or facilities not located on a hospital's primary campus."⁵

Of course, in determining whether the Department was authorized to promulgate a rule to create a category of "new institutional health service" requiring a CON, "we first look to the relevant legal texts."⁶ And those include a "comprehensive statutory scheme defining and establishing the CON program, as well as regulations the Department has promulgated with respect to CONs."⁷ As a result, the statutory framework that "sets forth the CON program is not the only text

365 Ga.App. 754

relevant to our inquiry."⁸ Indeed,

to administer the [CON] program, the Department is authorized to adopt, promulgate, and implement rules and regulations sufficient to administer the [CON] program [and] to establish, by rule, need methodologies for new institutional health services and health care facilities ....⁹

As to the administrative process for obtaining a CON to build a new healthcare facility in Georgia (such as the FSED proposed by Coliseum), a party must first submit an application with the Department.¹⁰ Then, the Department reviews the application and "all written information submitted by the applicant ... and all information submitted in opposition to the application to determine the extent to which the proposed project is consistent with the applicable considerations"¹¹ delineated in the statutory and regulatory scheme governing CONs.¹² And following this review, the Department "provide[s] written notification to an applicant of [its] decision to issue or to deny issuance of a certificate of need for the proposed project."¹³

Next, any party opposing the Department's initial so-called desk decision may request an administrative appeal to the Certificate of Need Appeal Panel, which is a separate administrative agency responsible for conducting a review of the Department's initial decision through a designated hearing officer.¹⁴ And once appointed, the hearing officer conducts a full evidentiary hearing on the matter.¹⁵ Specifically, the hearing officer

880 S.E.2d 252

must decide whether, "in the hearing officer's judgment, the application is consistent with the considerations as set forth in Code Section 31-6-42 and the [D]epartment's rules, as the hearing officer deems such considerations and rules applicable to the review of the project."¹⁶ Subsequently, "[w]ithin 30 days after the conclusion of the hearing, the hearing officer shall make written findings of fact and conclusions of law as to each consideration as set forth in Code Section 31-6-42 and the [D]epartment's rules, including a detailed statement of the reasons for the decision of the hearing officer."¹⁷ If no party appeals to the commissioner, the hearing officer's ruling becomes the Department's final agency decision.¹⁸

But any party, including the Department, "which disputes any finding of fact or conclusion of law rendered by the hearing officer in such hearing officer's decision and which wishes to appeal that decision may appeal to the commissioner ...."¹⁹ If a party does so, the decision of the commissioner "shall become the department's final decision by operation of law."²⁰ And in such an appeal,

... the commissioner may adopt the hearing officer's order as the final order of the department or the commissioner may reject or modify the conclusions of law over which the department has substantive jurisdiction and the interpretation of administrative rules over which it has substantive jurisdiction.²¹

The scope of the commissioner's authority and review defined in OCGA § 31-6-44 (k) (1) is particularly relevant to the issues presented in these appeals. Specifically,

... [b]y rejecting or modifying [a hearing officer's] conclusion of law or interpretation of administrative rule, the department must state with particularity its reasons for rejecting or modifying such

...