In re Professional Nurses Service, 05-246.

• Decision Date: 09 November 2006
• Docket Number: No. 05-246.,05-246.
• Parties: In re PROFESSIONAL NURSES SERVICE APPLICATION FOR a CERTIFICATE OF NEED.
• Court: Vermont Supreme Court

913 A.2d 381

2006 VT 112

In re PROFESSIONAL NURSES SERVICE APPLICATION FOR a CERTIFICATE OF NEED.

No. 05-246.

Supreme Court of Vermont.

November 9, 2006.

COPYRIGHT MATERIAL OMITTED

Philip H. White and Kathleen B. O'Neill of Wilson & White, P.C., Montpelier, and John D. Monahan, Jr. and Angela R. Clark of Dinse, Knapp & McAndrew, P.C., Burlington, for Appellants Vermont Assembly of Home Health Agencies.

William H. Sorrell, Attorney General, and Bridget C. Asay, Assistant Attorney General, Montpelier, for Appellee Department of Banking, Insurance, Securities and Health Care Administration.

Torin D. Togut, Lawrenceville, Georgia, for Appellee Professional Nurses Service, Inc.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

¶ 1. SKOGLUND, J.

This is an appeal by several regional home health agencies from a decision by the Commissioner of the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA or Department) granting a certificate of need (CON) to Professional Nurses Service, Inc. (PNS) to provide the full range of home health care services in Vermont. The CON effectively allows PNS to seek certification as a Medicare home health agency, and to compete for Medicare patients and other clients with the twelve regional nonprofit agencies, organized as the Vermont Assembly of Home Health Agencies (VAHHA). The regional agencies claim that, in granting the CON, the Commissioner erroneously: (1) applied provisions of the CON Guidelines; (2) concluded that the additional service was necessary to address issues of cost, care, access, and other problems within the existing system; and (3) found that the existing agencies had not remedied the identified problems. For the reasons set forth below, we affirm.

¶ 2. In January 2004, PNS filed a letter of intent with the Commissioner stating its intention to apply for a CON to become a home health agency authorized to provide a full range of home health services and thus become eligible for Medicare certification and reimbursement. 18 V.S.A. § 9440(c)(2). The following month, the Commissioner granted petitions by VAHHA and each of its twelve constituent members for interested-party status. Id. § 9440(c)(6). The Commissioner determined that a CON was required for the proposal, and PNS submitted its application in April of 2004.

¶ 3. Shortly thereafter, the agencies moved to dismiss the application, asserting that PNS had failed at the threshold to satisfy a mandatory statutory criterion entitling it to CON review. The agencies relied on 18 V.S.A. § 9437(5), one of the five so-called "mandatory" criteria for the granting of a CON. See In re Prof'l Nurses Serv., Inc., 168 Vt. 611, 612, 719 A.2d 894, 895 (1998) (mem.) (observing, while affirming an order denying PNS's prior CON application, that "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").¹ The mandatory criterion in question requires that any proposed new health service be "consistent with the certificate of need guidelines published by the department in accordance with its rules." 18 V.S.A. § 9437(5). The agencies relied, in turn, on provisions of the then-current CON Guidelines providing that any applicant to become a Medicare-certified home health agency must demonstrate a need for the service; that in determining such need the Department shall consider the data it collects in monitoring the currently-certified home health agencies, as well as "any additional evidence of need presented by the applicant"; and further that:

[i]f the data collected by the Department identify access, cost or quality issues in any area of the state, the Administration will encourage the agency or agencies with identified issues to remedy them, and will only consider approving additional home health agencies if the problems cannot be remedied in a timely manner.²

¶ 4. The agencies argued that the CON Guidelines established "a virtual moratorium on new home health agencies" until the Department had identified particular problems and afforded the appropriate agency or agencies the opportunity to remedy them. The Commissioner, however, denied the motion, observing that while the CON procedures contained no provision for the filing of a motion to dismiss, they did allow him to preliminarily assess whether problems existed within the existing home health system that required remediation by means of submitting questions and gathering additional information before ruling an application complete and suitable for consideration. See 18 V.S.A. § 9440(b)(4) (after receipt of application, Commissioner shall notify applicant whether it contains all necessary information and is complete, or whether "additional information is required").

¶ 5. Over the next several months, the Commissioner did, in fact, submit questions and gather additional information from both PNS and the regional agencies, and he finally ruled the application complete in December 2004. The Public Oversight Commission (POC) then held a public hearing in January 2005, at which PNS, VAHHA and its individual agencies, and members of the public were afforded the opportunity to testify and present evidence. 18 V.S.A. § 9440(c)(2). Thereafter, by a vote of eight to two, the POC recommended granting the CON with two conditions, one capping the percentage of Medicare patients to be served by PNS, and the other requiring that PNS submit the same statistical reports required of the other agencies.

¶ 6. The Commissioner subsequently served notice of his proposed decision, explained that it differed from the POC's recommendation, and provided the parties an opportunity to submit exceptions and additional briefs, evidence, and argument. 18 V.S.A. § 9440(d)(6)(A) & (B). On May 9, 2005, the Commissioner issued his decision, conditionally granting the application "pending an opportunity for the existing agencies to remedy issues of unmet need ... [as] ... required by CON Criterion number 5." The Commissioner's 31-page decision systematically addressed the general and mandatory criteria for the addition of new home health services in light of the substantial body of materials submitted by the parties, with particular emphasis on general criterion 4, 18 V.S.A. § 9436(a)(4) ("[t]he need for the proposed new institutional health service on the part of the population served or to be served"), mandatory criterion 3, id. § 9437(3) ("in the absence of the proposed new service, patients would experience serious problems in terms of costs, availability, or accessibility, or such other difficulties as may be identified by the commissioner, in obtaining care of the type proposed"), and the CON Guideline providing that the Commissioner would consider approving new home health agencies only if identified problems in the existing agencies "cannot be remedied in a timely manner."

¶ 7. The Commissioner found "a degree of unmet need in Vermont that the current agencies are not meeting." Citing the testimony, letters, and affidavits of "a significant number of competent witnesses," as well as data provided by VAHHA and the individual agencies, the Commissioner determined that approximately one percent of Vermonters in need of home health services are not receiving those services from the regional agencies; that the existing agencies are aware of, but have failed to meet, that need; that some agency clients are not receiving services at the level, frequency, or timeliness they require; and that PNS is ready, willing, and able to fill the need.

¶ 8. The Commissioner also cited "adequate and competent evidence in the record" to support a finding, under the third mandatory criterion, that in the absence of the proposed new service "patients would experience serious problems in terms of costs, availability, or accessibility, or such other difficulties as may be identified by the commissioner ...." 18 V.S.A. § 9437(3). The Commissioner cited, in this regard, evidence that Vermonters had been hospitalized beyond their discharge date due to the inability of the local regional agency to provide caregivers; that one percent of Vermonters are not receiving services when and as needed; and that PNS had been compelled to turn away Vermonters who had called to request assistance due to its lack of certification to provide the full range of home health services. The Commissioner also cited evidence of significant projected growth in the segment of the population requiring home health services, and the concomitant critical need for additional full-service providers with proven track records of providing quality home-care services throughout the state, such as PNS.

¶ 9. Finally, as a means of ensuring compliance with the CON Guidelines, the Commissioner declined to grant the CON outright, ruling instead that it would become effective August 1, 2005, "unless VAHHA and the 12 individual home health agencies in Vermont demonstrate to the satisfaction of the Commissioner, on or before July 9, 2005, that they have remedied the identified issues and problems." As allowed by the Commissioner, VAHHA and the individual agencies submitted written responses with supporting documentation concerning their remediation efforts on July 11, 2005, and shortly thereafter PNS filed a response, with supporting affidavits, to the agencies' submissions. Following the submission of additional brief replies, the Commissioner issued a written decision on August 1, 2005.

¶ 10. In his nineteen page ruling, the Commissioner reviewed the agencies' "remediation" response, the heart of which was a five-week study undertaken from May 23, 2005 to June 26, 2005, in which they collected data on all institutional referrals and denials of services, individual requests for services and denials, delayed discharges due to inadequate services,...