In Re Professional Nurses Service, Inc., 97-314.

• Decision Date: 10 September 1998
• Docket Number: No. 97-314.,97-314.
• Citation: 719 A.2d 894
• Parties: In re PROFESSIONAL NURSES SERVICE, INC.
• Court: Vermont Supreme Court

719 A.2d 894

In re PROFESSIONAL NURSES SERVICE, INC.

No. 97-314.

Supreme Court of Vermont.

September 10, 1998.

Before AMESTOY, C.J., and DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ.

ENTRY ORDER

Professional Nurses Service, Inc. (PNS) appeals from a decision of the Commissioner of the Department of Banking, Insurance, Securities and Health Care Administration, which denied PNS's application for a certificate of need (CON) to offer a full range of nurse-aide and other therapeutic services. The CON is necessary for PNS to seek certification as a Medicare home health agency. PNS claims that the Commissioner erred by (1) failing to make findings of fact on whether a new home health agency is needed as a result of changes in the health care market, (2) concluding that PNS's proposal for a new home health agency is not consistent with the health resource management plan as required by 18 V.S.A. § 9437(5), (3) failing to comply with the timetable of the health resource management plan, and (4) failing to assert jurisdiction over other non-Medicare certified home health providers. We affirm.

The Vermont Legislature has provided that "[n]o new institutional health service shall be offered or developed within this state by any person, without a determination of need and issuance of a certificate of need by the commissioner . . . ." 18 V.S.A. § 9434(a) Among the purposes of the CON program are: to avoid unnecessary duplication of services, to contain the cost of services, and to promote a rational allocation of health care resources. Id. § 9431. In determining whether to grant a CON, the Commissioner must consider the general criteria set forth in 18 V.S.A. § 9436(a), and to grant a CON, the Commissioner must make the five findings required by 18 V.S.A. § 9437, sometimes called the mandatory criteria. The fifth of the mandatory criteria is the criterion relevant to this case. It provides that the proposed new service must be consistent with the health resource management plan. See 18 V.S.A. § 9437(5).

The health resource management plan is a plan for distribution of health services in Vermont. See 1991, No. 160 (Adj.Sess.), § 1, superseded by 1995, No. 180 (Adj.Sess.), § 11, codified at 18 V.S.A. § 9405. The 1996-1999 plan, applicable in this case, states that, to date, there are "no reliable measures for determining the need of Vermont residents for medically-necessary home health services." Vermont Health Care Authority, Health Resource Management Plan 1996-1999 115 (March 15, 1996). Nonetheless, "[c]ompared to other states, the cost per home health visit in Vermont is low, as is the cost per person." Id. The current Medicare data suggests "that the existing system is providing appropriate access at a reasonable cost." Id. Nonetheless, the plan notes, the Medicare payment system may change and managed care systems are emerging. See id. at 116. Consequently, the state should "determine at what stage it may be appropriate to allow additional home health agencies to operate in Vermont." Id.

Although the 1996-1999 plan contemplates additional home health agencies in the future, the intention is to support the existing home health agencies at this time, adopt standards to evaluate these agencies, and then examine their performance under these standards. See id. Moreover, an agency will be encouraged to remedy any problems discovered before any new home health agency is approved. See id. The plan calls for a work group to make recommendations for these standards and to be responsible for "continued examination of the Vermont's health care delivery system, including roles of managed-care organizations, nursing homes and hospitals, so that the authority can determine whether additional home health agencies may be appropriate." Id. at 117. A work group was established, but did not meet the December 31, 1996 deadline imposed by the plan, nor had it issued a report at the time of the Commissioner's decision in this case in July 1997.

PNS commenced this proceeding by filing a letter of intent under 18 V.S.A. § 9440(b)(1), requesting a determination of whether a CON was required for PNS to offer a full range of nurse-aide and other therapeutic services necessary to obtain Medicare certification. At the time, PNS was operating under a CON that limited the services that PNS could provide, preventing it from obtaining Medicare certification. The Commissioner determined that the proposed new services would require a CON review, and PNS submitted an application. The public oversight commission held a public hearing, at which PNS, the public, two interested parties — the Vermont Assembly of Home Health Agencies and Home Health Nursing Service, Inc. — had the opportunity to comment on and ask questions about the application. See 18 V.S.A. § 9440(c)(2) (public oversight commission shall hold public hearing if requested). The commission recommended that the Commissioner deny the application, which she did on the ground that the proposal for new services was inconsistent with the health resource management plan, and therefore, did not satisfy mandatory criterion (5). See id. § 9437(5). PNS appeals.

We presume an agency's interpretation of its regulations is correct. See In re Verburg, 159 Vt. 161, 165, 616 A.2d 237, 239 (1992). To overcome this presumption, the challenging party must show a compelling indication of error. See id. PNS argues that under the 1996-1999 plan, it may obtain a CON to operate a...