Frye Regional Medical Center, Inc. v. Hunt, 613PA97.

Docket NºNo. 613PA97.
Citation510 S.E.2d 159, 350 N.C. 39
Case DateFebruary 05, 1999
CourtUnited States State Supreme Court of North Carolina

510 S.E.2d 159
350 N.C. 39

James B. HUNT, Jr., H. David Bruton, M.D., Secretary of the North Carolina Department of Human Resources, and North Carolina Department of Human Resources, Defendants, and
Catawba Memorial Hospital, Intervenor-Defendant

No. 613PA97.

Supreme Court of North Carolina.

February 5, 1999.

510 S.E.2d 160
Bode, Call & Stroupe, L.L.P., by Robert V. Bode and Diana E. Ricketts, Raleigh, for plaintiff-appellee

Michael F. Easley, Attorney General, by James A. Wellons, Special Deputy Attorney General, for defendant-appellants; and Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by James T. Williams, Jr., and Jim W. Phillips, Jr., Greensboro, for intervenor-defendant-appellant.

FRYE, Justice.

The controlling question in this case is whether the Governor's power to approve the State Medical Facilities Plan (SMFP) includes the power to make substantive amendments to it. For the reasons stated in this opinion, we conclude that the Governor does have such authority. Accordingly, we must reverse the superior court's decision to the contrary.

The controversy arises out of the attempts by Catawba Memorial Hospital, located in Hickory, to start an open-heart surgery program. These efforts were opposed by Frye Regional Medical Center, Inc., which had already applied for and received a Certificate of Need (CON) to initiate an open-heart surgery program at its hospital in Hickory. After several years of legal proceedings between the two hospitals, the Department of Human Resources (Department), and others, the State Health Coordinating Council (Council) recommended, and the SMFP contained findings, that there was no need for

510 S.E.2d 161
any new open-heart surgery programs in 1997. On 16 September 1996, the 1997 SMFP was submitted to the Governor for his approval. On 26 November 1996, the Governor approved the 1997 recommended SMFP after amending it to provide additional nursing beds for several counties

The 1997 SMFP was presented to the Rules Review Commission for approval as a permanent rule. The Rules Review Commission objected, and in response to the objections, the Department and the Council recommended additional amendments to the Governor. These amendments modified the open-heart surgery and other cardiac-need determinations in the plan. On 23 July 1997, the Governor approved the recommended amendments, except for the amendment to the open-heart need determination. The Governor's memorandum included the following:

I concur with and approve all the proposed amendments with one exception. I do not approve the amendment to the need determination for open heart surgery services as proposed by the Council. Instead, I direct that the need determination be amended to reflect a need for open heart surgery services from any hospital which acquired a heart-lung bypass machine prior to March 18, 1993 and which, nevertheless, is unable to use such a machine in the provision of open heart surgery services because the hospital does not have a certificate of need authorizing it to provide them. I find that it is in the best interest of our citizens if valuable assets be used and not remain idle. I also believe that we should provide care close to home whenever we can.

Your Department has informed me that this situation exists only in the Catawba County area. Catawba County is located in the Hickory-Morganton MSA, which is the fourth largest MSA in the State. However, the three larger MSAs have two to four times the number of heart-lung bypass machines available for the provision of open heart surgery services per 100,000-person population. In addition, Catawba County is located in HSA I. HSA I is the only HSA (other than HSA VI) which has only two facilities located within it which provide open heart surgery services. In light of all of the foregoing, I find that the citizens residing in the Catawba County area have a need for such additional open heart surgery services.

On 22 August 1997, Frye Regional instituted the present action challenging the Governor's authority to amend the SMFP. On 5 September 1997, the superior court granted Frye Regional's motion for a preliminary injunction, suspending the 23 July 1997 amendment to the 1997 SMFP and reinstating the provisions of the preexisting 1997 SMFP. Judge Manning certified the order for immediate appeal.

Defendants and Catawba Memorial Hospital gave notice of appeal, and on 5 March 1998, this Court allowed defendants' and Catawba's petition for discretionary review of the following question prior to determination by the Court of Appeals:

Does the Governor of North Carolina, as Chief Executive of the State and head of the Executive Branch of State Government, have the power and authority, under the North Carolina General Statutes and the North Carolina Constitution, to make and execute policy decisions in the area of health care facilities' needs, including the power to amend the State's annual SMFP, a draft of which is prepared for him by the SHCC and presented to him by the Secretary of the Department of Human Resources?

In the preliminary injunction order, the judge explained: "The sole basis of my determination is my conclusion that the Governor has no authority, as a matter of law, to amend the SMFP. I specifically do not reach the other factual and legal issues raised by the parties." Thus, the narrow issue before us is the correctness of the superior court's conclusion.

In the preliminary injunction order, the judge explained his conclusion as follows:

I specifically conclude as a matter of law that the Governor of the State of North Carolina has no authority to amend the SMFP. Under the law,
510 S.E.2d 162
"State Medical Facilities Plan" means the plan prepared by the Department of Human Resources and the North Carolina State Health Coordinating Council, and approved by the Governor.

G.S. 131E-176(25) [ (1997) ].

"North Carolina

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