Frye Regional Medical Center, Inc. v. Hunt
| Decision Date | 05 February 1999 |
| Docket Number | No. 613PA97.,613PA97. |
| Citation | 510 S.E.2d 159,350 N.C. 39 |
| Parties | FRYE REGIONAL MEDICAL CENTER, INC., Plaintiff, v. 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. |
| Court | North Carolina Supreme Court |
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.
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 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: 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 "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.
"North Carolina State Health Coordinating Council" means the Council that prepares, with the Department of Human Resources, the State Medical Facilities Plan.
Read in pari materia, these sections contemplate that the SMFP is to be prepared by the SHCC acting with the Department, and then approved by the Governor. The Governor may approve or disapprove the SMFP as submitted by the SHCC and the Department but may not unilaterally develop or amend it. The power is similar to that exercised by him in reviewing legislation: he can approve or veto, but he cannot rewrite the bill.
For the same reasons noted above, it is also clear that the Governor does not have the power to amend the open heart review schedules in 1997, because the SHCC did not prepare and develop any such amendments.
The entire statutory and regulatory process for health planning in North Carolina contemplates that the SMFP shall be developed by the SHCC and the Department in an orderly and logical fashion, with numerous checks and balances along the way. The Governor's sole function in that process is to accept or reject the SMFP as submitted to him. The Governor's amendment of the SMFP in this case completely circumvents that process. Because the authority to develop, prepare or amend the SMFP is solely vested by statute in the SHCC and the Department, the Governor has no authority to amend the SMFP.
(Emphasis added.)
We do not agree with the above-emphasized portions of the preliminary injunction order. We specifically reject analogizing the Governor's power to amend the State Medical Facilities Plan to the Governor's authority under the Constitution to veto legislation enacted by the General Assembly. Furthermore, as explained below, the statutes give the Council and the Department specific authority to develop or prepare the SMFP, without specific reference to amending it. See N.C.G.S. §§ 131E-176(17), (25), 131E-177(4). We conclude that the Governor's power to amend in this case facilitates his role in bringing closure to the statutory and regulatory process and does not suggest a circumvention of the process.
Plaintiff argues that under N.C.G.S. § 131E-177, the final decision-making power rests with the head of the Department of Human Resources. While the Secretary of the Department does have the final decision-making power with regard to all functions under N.C.G.S. § 131E-177, the Secretary's powers are separate and distinct from those of the Governor. While the Secretary must develop or prepare the SMFP to effectuate the legislative purpose, the Governor must, as a part of the approval process, ensure that the SMFP comports with the general health policies and goals of the state. To this end, the Governor has the authority to make substantive changes by amending the SMFP to ensure that its provisions are properly executed under the statutes. If the provisions of the SMFP, after review, are approved by the Rules Review Commission, they will become permanent rules. N.C.G.S. § 150B-21.3 (1995).
The Department of Human Resources is a department of the Executive Branch of state government, with its Secretary reporting directly to the Governor as chief executive officer of the state. Although there is statutory recognition of the State...
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