Emory Univ. v. Kennestone Hosp., A22A0111

CourtUnited States Court of Appeals (Georgia)
Writing for the CourtHODGES, JUDGE.
PartiesEMORY UNIVERSITY d/b/a EMORY UNIVERSITY HOSPITAL SMYRNA et al. v. KENNESTONE HOSPITAL, INC. d/b/a WELLSTAR WINDY HILL HOSPITAL. GEORGIA DEPARTMENT OF COMMUNITY HEALTH v. KENNESTONE HOSPITAL, INC. d/b/a WELLSTAR WINDY HILL HOSPITAL.
Decision Date29 June 2022
Docket NumberA22A0111,A22A0112

EMORY UNIVERSITY d/b/a EMORY UNIVERSITY HOSPITAL SMYRNA et al.
v.
KENNESTONE HOSPITAL, INC. d/b/a WELLSTAR WINDY HILL HOSPITAL.

GEORGIA DEPARTMENT OF COMMUNITY HEALTH
v.

KENNESTONE HOSPITAL, INC. d/b/a WELLSTAR WINDY HILL HOSPITAL.

Nos. A22A0111, A22A0112

Court of Appeals of Georgia, First Division

June 29, 2022


BARNES, P. J., BROWN and HODGES, JJ.

HODGES, JUDGE.

In this appeal, we are asked to determine whether an authorized long-term care hospital may convert its beds and available services to operate as a short-stay general acute care hospital without first obtaining a new certificate of need ("CON"). See OCGA § 31-6-40 et seq. In 2019, Kennestone Hospital, Inc. d/b/a WellStar Windy Hill Hospital ("WellStar") sought confirmation from the Georgia Department of Community Health ("the DCH") that its long-term care hospital beds at its Windy Hill Hospital facility "would revert to their previous status as . . . short-stay acute care

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beds" without obtaining a CON once the facility relinquished its Medicare long-term care hospital certification. Emory University d/b/a Emory University Hospital Smyrna and Saint Joseph's Hospital of Atlanta, Inc. d/b/a Emory Saint Joseph's Hospital (collectively, "Emory") objected to WellStar's proposal, arguing that WellStar sought to create a new short-stay acute care general hospital, which required prior CON authorization. The DCH agreed with Emory, finding that WellStar had operated as a long-term care hospital since 1996 and, as a result, had obtained various CONs during that span which did not involve short-stay hospital beds. Thus, the DCH determined that WellStar's proposed transition of Windy Hill Hospital to a 115-bed short-stay hospital constituted a "new institutional health service," which required CON approval. See OCGA § 31-6-40 (a).

WellStar appealed to the CON Appeal Panel, and a hearing officer affirmed the DCH's decision. WellStar next appealed to the DCH commissioner, who affirmed the hearing officer. However, the Superior Court of Cobb County granted WellStar's petition for judicial review and reversed the DCH commissioner's decision, finding that WellStar "is entitled to revert its beds to their previous short-stay status without prior CON review and approval."

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We granted Emory and the DCH's applications for discretionary appeal, and now conclude that, based upon the plain language of OCGA § 31-6-40 et seq., Ga. Comp. R. & Regs. r. 111-2-2-.20 (1) (d) and 111-2-2-.36 (2) (d), WellStar's proposed conversion of its long-term care hospital beds to short-term acute care hospital beds requires a new CON. Therefore, we reverse the superior court's judgment granting WellStar's petition for judicial review in Case No. A22A0111 and dismiss Case No. A22A0112, filed by the DCH, as moot.

1. At the outset, we determine "whether 'substantial evidence' supports the agency's findings of fact[.]" Palmyra Park Hosp. v. Phoebe Sumter Med. Center, 310 Ga.App. 487, 488 (714 S.E.2d 71) (2011). In this case, the operative facts are undisputed.[1] So viewed, the record demonstrates that WellStar Windy Hill Hospital ("Windy Hill") opened in 1973 as a general acute care short-stay hospital before Georgia enacted its CON program.[2] See OCGA § 31-6-40 et seq. In 1983, Windy Hill

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reduced its short-stay bed capacity from 165 to 115. In 1996, WellStar contacted the State Health Planning Agency ("the SHPA"), the predecessor agency to the DCH, inquiring whether a CON to convert Windy Hill from a short-stay general acute care hospital to a long-term care hospital would be required. In addition to providing long-term care, WellStar represented that it would provide outpatient surgical services and convert the emergency room into a minor emergency, or immediate care, facility.

Based on WellStar's representations, the SHPA issued a determination letter stating that WellStar would "not need to obtain CON approval in order to implement its proposal" because the operation of Windy Hill "as a long-term acute care hospital is within the original scope of Windy Hill's CON authorization as a general acute care hospital." Thereafter, Windy Hill surrendered its original permit, which had authorized Windy Hill to operate as a "General Hospital," and the SHPA marked the permit as "Void." WellStar obtained a new permit in 1997 authorizing it to operate as a "Specialized Long Term Acute Care Hospital," and it began operating as a long-term care hospital. Windy Hill initially had 42 beds, but in 2007, WellStar obtained

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a new CON to renovate the hospital in order to add 5 additional beds.[3] Thereafter, although WellStar only operated 47 beds at Windy Hill, the hospital retained a licensed bed capacity of 115 beds.

In 2019, WellStar sought a determination from the DCH that its complement of 115 long-term beds would revert to short-stay beds without going through CON approval, and that it would then have authorization to operate as a short-stay general acute care hospital, if it relinquished its Medicare long-term care hospital certification. In support of its application, WellStar cited Ga. Comp. R. & Regs. r. 111-2-2-.20 (1) (d) and 111-2-2-.36 (2) (d), which allow for the automatic conversion, or reversion, of certain long-term beds to short-stay beds for hospitals that have been approved through the CON process.

Emory objected to WellStar's proposal, arguing that WellStar sought to create a new short-stay hospital, which constituted a "new institutional health service" and required prior CON approval. In its initial agency determination, the DCH agreed

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with Emory, finding that WellStar had operated as a long-term care facility since 1996 and, as such, had obtained various CONs which did not involve short-stay hospital beds. In addition, the DCH's determination noted that the SHPA determined in 1996 "that Windy Hill's operating as a [long-term care hospital] was not subject to prior CON review and approval." Thus, the DCH determined that WellStar's proposed transition to a 115-bed short-stay hospital constituted a new institutional health service, which required CON review and approval.

WellStar appealed the DCH's initial decision to the CON Appeal Panel, and a hearing officer affirmed the agency's decision. The hearing officer, citing Ga. Comp. R. & Regs. r. 111-2-2-.20 (1) (d) and 111-2-2-.36 (2) (d), upon which WellStar also relied, rejected WellStar's argument that it was "an existing general acute care hospital that was approved through the CON process to operate as a [long-term care hospital.]" The hearing officer concluded that WellStar had not gone through the CON process in converting to a long-term care hospital, instead finding that "Windy Hill permissibly avoided rather than underwent, much less was 'approved through,' a CON process." The hearing officer also determined that Windy Hill had not "offered inpatient short-stay acute care services since it converted to a [long-term care hospital] . . . 23 years ago" and that "[o]perating a short-stay acute

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care facility offering such services where none were offered on a regular basis within the previous 12 months would make it a 'new institutional health service'" that required CON review and approval. Finally, the hearing officer rejected WellStar's argument that refusing to allow Windy Hill to convert its beds into short-stay acute care beds violated equal protection by treating it differently than other long-term care hospitals that could revert beds to short-term care beds. WellStar appealed to the DCH commissioner, who affirmed the hearing officer. The commissioner concluded that Windy Hill's proposed conversion "would result in the offering of a reviewable new health service" that required CON review and approval, and that accepting WellStar's argument "would result in a hospital's being able to flip back and forth[,]" thereby undermining the purpose of the CON program.

WellStar then petitioned for judicial review in the superior court. Following a hearing, the superior court reversed the DCH commissioner's decision, concluding that: (1) WellStar was entitled to automatically revert its beds from long-term care to short-stay beds under Ga. Comp. R. & Regs. r. 111-2-2-.20 (1) (d) and 11-2-2-.36 (2) (d) because the 1996 letter from SHPA acknowledging WellStar's right to change from a short-stay hospital to a long-term care hospital constituted a determination under the "CON process" referenced in the Rules; (2) WellStar was not offering a

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new institutional health service requiring compliance with the CON procedure; and (3) WellStar was authorized to operate either short-stay or long-term beds, and to take away one of those vested rights would be unconstitutional. From that order, we granted Emory and the DCH's applications for discretionary appeal. We consider each appeal in turn, starting with Emory's appeal.

No. A22A0111

2. Considering Emory's fourth enumeration first,[4] Emory contends that the superior court erred in finding that WellStar went through the CON process in 1996 when it converted to a long-term care hospital from a short-stay general acute care hospital and that it could, therefore, take advantage of certain CON reversion procedures. We agree.

(i) General Principles.

"The CON program, which is administered by the DCH, establishes a system of mandatory review requiring that, before new institutional health services and facilities can be developed, the developer must apply for and receive a CON from the DCH." (Citation and punctuation omitted.)

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Cobb Hosp., Inc. v. Dept. of Community Health, 349 Ga.App. 452, 456 (1) (a) (825 S.E.2d 886) (2019), reversed in part on other grounds, 307 Ga. 578 (837 S.E.2d 371) (2019); see also OCGA § 31-6-1.[5] The DCH is also authorized to promulgate rules for the administration of the CON program. See OCGA § 31-6-21 (a).

The legislature cedes this authority to the DCH because the public
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