Family Home Health Care, Inc. v. Saint Joseph Health System, Inc., No. 2008-CA-001790-MR (Ky. App. 8/7/2009)
| Decision Date | 07 August 2009 |
| Docket Number | No. 2008-CA-001790-MR.,2008-CA-001790-MR. |
| Parties | FAMILY HOME HEALTH CARE, INC., Appellant, v. SAINT JOSEPH HEALTH SYSTEM, INC., d/b/a Seton Home Health<SMALL><SUP>1</SUP></SMALL> and Professional Home Health Care Agency, Inc.; and Commonwealth of Kentucky, Cabinet for Health and Family Services, Appellees. |
| Court | Kentucky Court of Appeals |
J. Guthrie True, Frankfort, Kentucky, Briefs for Appellant.
Carole D. Christian, Louisville, Kentucky, Brief for Appellee.
Before: CAPERTON, CLAYTON and DIXON, Judges.
Not to be Published
Appellant, Family Home Health Care, Inc. ("Family"), appeals from a decision of the Franklin Circuit Court setting aside an order of the Cabinet for Health and Family Services ("Cabinet") granting Family a Certificate of Need to expand its home health care services into Laurel County, Kentucky. Finding no error, we affirm.
On June 28, 2006, Family, a home health agency offering services in Adair and Pulaski counties, filed an application for a Certificate of Need pursuant to KRS Chapter 216B to expand its home health care services into adjacent Laurel County, Kentucky. Appellees, Professional Home Health Agency, Inc. ("Professional") and Marymount Medical Center, Inc., d/b/a Seton Home Health ("Seton"), are competing home health agencies that were already licensed to provide home health services in Laurel County. Following public notice of Family's application, Professional and Seton requested a hearing.2 A hearing on the application was thereafter scheduled on October 23, 2006.
In order to obtain a Certificate of Need, an applicant must demonstrate that its proposal is consistent with five statutory review criteria set forth in KRS 216B.040. However, while several of the criteria are open to interpretation by the hearing officer, the Certificate of Need must be consistent with the State Health Plan (SHP), a document prepared by the Cabinet that is used to determine whether there is a sufficient "need" from a statistical perspective for a new or expanded service. In other words if the SHP indicates no need for that particular facility or service in the county in question, then any application for a Certificate of Need is "un-approvable" as a matter of law.
Herein, for Family's application to be approvable as an expansion of an existing service, the SHP had to show that, statistically, at least 125 additional patients were projected to be in need of home health care services in Laurel County. If the SHP showed fewer than 125 additional patients in need of such services, Family's application could not be approved even if it satisfied the remaining criteria set forth in KRS 216B.040.
Pursuant to the regulations in existence at the time, 900 KAR 6:050, Family was required to pre-file its written direct testimony, and all parties were required to file exhibits, witness lists, and notices of appearance on or before October 12, 2006. The deadline for Professional and Seton to file their written direct testimony was Wednesday, October 17, 2006. Family then had until Friday October 19, 2006, to file any objections that it had to Professional and Seton's submissions.
On October 2, 2006, the Cabinet published SHP figures showing a negative need of 111 patients in Laurel County. On October 10, 2006, the Cabinet published a second set of figures projecting that only 32 additional patients would be in need of home health care services. Professional and Seton both filed their witness lists and exhibits on the October 12th deadline, relying upon the October 10th projections.3
However, on the afternoon of October 16, 2006, the Cabinet published yet a third set of figures indicating that 130 additional patients were projected to be in need of home health care services in Laurel County. Thus, for the first time, Family's application was consistent with the SHP. The following day, Professional and Seton filed a joint "Motion for Additional Prehearing Conference and Extension of Time" to respond to the new projections. Professional and Seton thereafter also moved the hearing officer for a continuance of the hearing that was scheduled for the following Monday, October 23, 2006. Professional and Seton's motions were denied and the hearing convened as scheduled. Therein, the hearing officer ruled that Professional and Seton could not present any new evidence or testimony regarding the change in the SHP figures that had not been pre-filed by the regulatory deadlines.
On November 15, 2006, the hearing officer issued her findings of fact, conclusions of law, and final order approving Family's application based upon the October 16th SHP projections. Professional and Seton thereafter filed a request for reconsideration pursuant to KRS 216B.090. On December 8, 2006, almost three weeks before the hearing officer ruled on the request for reconsideration, the Cabinet published a fourth set of figures, wherein Laurel County again showed negative projection numbers. Nonetheless, the hearing officer summarily denied the request for reconsideration and the Cabinet granted Family's application.
Professional and Seton thereafter appealed to the Franklin Circuit Court arguing that they had been denied due process of law and that the hearing officer's decision was not supported by substantial evidence. In an opinion and order entered on May 27, 2008, the trial court set aside the Cabinet's order granting the certificate of need and remanded the matter for "an administrative hearing at which each and every party shall be given an opportunity to present evidence regarding the validity of the SHP need calculations for home health care services in Laurel County." In so doing, the trial court specifically noted that "it is clear from the record that the figures relied upon in the initial review were incorrect and neither party was given any meaningful opportunity to present evidence regarding the validity of the figures published on October 16, 2006, or the corrected figures published on December 8, 2006." Family thereafter appealed to this Court.
On appeal, Family argues that the trial court erred in finding that Professional and Seton had been denied due process in the administrative hearing. Further, Family contends that the hearing officer's decision was supported by substantial evidence and that she was not entitled to consider the revised December 8, 2006 projections upon reconsideration. We disagree.
As previously noted, certificate of need applications are reviewed under KRS 216B.040 and its companion regulation, 900 KAR 6:050, §7(1). KRS 216B.040(2)(a)(2) requires that a certificate of need application satisfy the following criteria:
a. Consistency with plans. Each proposal approved by the cabinet shall be consistent with the state health plan,4 b. Need and accessibility. The proposal shall meet an identified need in a defined geographic area and be accessible to all residents of the area. A defined geographic area shall be defined as the area the proposal seeks to serve, including its demographics, and shall not be limited to geographical boundaries;
c. Interrelationships and linkages. The proposal shall serve to accomplish appropriate and effective linkages with other services, facilities, and elements of the health care system in the region and state, accompanied by assurance of effort to achieve comprehensive care, proper utilization of services, and efficient functioning of the health care system;
d. Costs, economic feasibility, and resources availability. The proposal, when measured against the cost of alternatives for meeting needs, shall be judged to be an effective and economical use of resources, not only of capital investment, but also ongoing requirements for health manpower and operational financing;
e. Quality of services. The applicant shall be prepared to and capable of undertaking and carrying out the responsibilities involved in the proposal in a manner consistent with appropriate standards and requirements assuring the provision of quality health care services, as established by the cabinet[.]
Further, KRS 216.090 provides that any party to the proceedings who is adversely affected by a decision of the Cabinet pertaining to an application for a certificate of need may, for good cause shown, request reconsideration within fifteen days of notice of the hearing officer's decision. KRS 216B.090(1) states, in relevant part:
For purposes of this section there shall be deemed to be "good cause shown" if the request . . .:
(a) Presents significant, relevant information not previously available for consideration by the cabinet (b) Demonstrates that there have been significant changes in the factors or circumstances relied upon by the cabinet in reaching its decision;
(c) Demonstrates that the cabinet has materially failed to follow its adopted procedures in reaching its decision; or
(d) States that a public hearing pursuant to KRS 216B.085 was not conducted prior to a decision to deny a certificate of need.
"It is well-established that a court's review of the action of an administrative agency is limited to `review, not reinterpretation.'" Allen v. Woodford County Board of Adjustments, 228 S.W.3d 573, 575 (Ky. App. 2007) (Internal citation omitted). A reviewing court is not permitted to substitute its judgment for that of the agency even though it could have reached a different result. Id. Likewise, on appeal this Court must defer to the factual findings of the administrative agency "if its findings are supported by substantial evidence and if its procedure is not tainted by arbitrariness." New v. Commonwealth, 156 S.W.3d 769, 772 (Ky. App. 2005).
After reviewing the record, we conclude that the trial court correctly found that the hearing officer violated Professional and Seton's due process rights by denying them the opportunity to present evidence relevant to the revised projection...
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