Johnston Ambulatory Surg. Assoc. v. Nolan

• Citation: 755 A.2d 799
• Decision Date: 12 July 2000
• Docket Number: No. 98-512-M.P., 98-493-M.P.,98-512-M.P., 98-493-M.P.
• Parties: JOHNSTON AMBULATORY SURGICAL ASSOCIATES, LTD. v. Patricia NOLAN, in her capacity as Director of the Rhode Island Department of Health et al. St. Joseph Health Services of Rhode Island, Inc., doing business as St. Joseph Hospital for Specialty Care and Our Lady of Fatima Hospital v. Patricia Nolan, in her capacity as Director of the Rhode Island Department of Health et al.
• Court: United States State Supreme Court of Rhode Island

755 A.2d 799

JOHNSTON AMBULATORY SURGICAL ASSOCIATES, LTD. v. Patricia NOLAN, in her capacity as Director of the Rhode Island Department of Health et al.

St. Joseph Health Services of Rhode Island, Inc., doing business as St. Joseph Hospital for Specialty Care and Our Lady of Fatima Hospital v. Patricia Nolan, in her capacity as Director of the Rhode Island Department of Health et al.

No. 98-512-M.P., 98-493-M.P.

Supreme Court of Rhode Island.

July 12, 2000.

Present: LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.

Patricia Rocha, Providence, Randolph Bart Totten, for Plaintiff.

Joseph G. Miller, Warwick, Peter J. McGinn, Providence, for Defendant.

OPINION

LEDERBERG, Justice.

These consolidated petitions for certiorari sought our review of decisions by two successive Rhode Island Department of Health (department) directors on applications for certificate of need (CON) approval to operate an ambulatory surgical facility. In one of the petitions, the department sought review of that portion of a Superior Court judgment that vacated the department's grant to Johnston Ambulatory Surgical Associates Limited (Johnston Ambulatory) of a CON to establish a freestanding ambulatory surgical center (surgical center) in Johnston, Rhode Island.In the other petition, Johnston Ambulatory sought review of the entire Superior Court judgment, and in particular, that part of the judgment affirming a decision of the department that denied Johnston Ambulatory's prior application for a CON to establish the surgical center. St. Joseph Health Services of Rhode Island, Inc., doing business as St. Joseph Hospital for Specialty Care and Our Lady of Fatima Hospital (St. Joseph), objected to both petitions and asked us to affirm the judgment of the Superior Court. In denying certiorari in both cases, we discuss the doctrine of administrative finality and its applicability here, and we delineate the conditions that must obtain before an applicant may reapply to an administrative agency that has rejected the applicant's previous application.

Facts and Procedural History

In June 1994, Johnston Ambulatory filed an application for a CON (1994 application) seeking the department's approval to establish in Johnston a surgical center containing three operating rooms, three procedure rooms, and thirteen recovery beds. A CON must be issued by the department prior to the establishment or expansion of any health care facility in the State of Rhode Island, pursuant to G.L. 1956 chapter 15 of title 23 and the regulations promulgated thereunder.¹ On July 15, 1994, in accord with § 23-15-6 and section 10.1 of the regulations, St. Joseph intervened in the 1994 application and made a formal request for public hearings. An administrative adjudication officer held fifteen public hearings to consider the application between July 27, 1994, and October 19, 1994.

After the hearings, a committee of the Health Services Council (council) reviewed the record, compiled a report (the 1994 report), and recommended that the application be approved. OnNovember 28, 1994, the council approved the 1994 report by a vote of eleven to four, with five abstentions. The council's recommendation was forwarded to the then department director, Barbara DeBuono, M.D., (DeBuono). In a twenty-page decision issued on December 3, 1994, DeBuono rejected the council's recommendation and denied Johnston Ambulatory's application. Johnston Ambulatory appealed that decision to a hearing officer, pursuant to section 17 of the regulations. The hearing officer upheld DeBuono's denial of the 1994 application, and on September 29, 1995, Johnston Ambulatory appealed this decision to the Superior Court, pursuant to G.L.1956 § 42-35-15.

While its appeal of the denial of the 1994 application was still pending, Johnston Ambulatory filed a second application for a CON in June 1995 (1995 application). This application was essentially identical to the 1994 application. Again, St. Joseph intervened and requested a formal hearing. Thirteen hearings were held between July 28, 1995, and January 12, 1996. On June 4, 1996, the council voted to issue a report recommending approval of the 1995 application by a vote of eleven to one, with five abstentions. On June 14, 1996, the new director of the department, Patricia Nolan, M.D., (Nolan), accepted the council's recommendation and approved the application. St. Joseph appealed Nolan's decision to a hearing officer, who upheld the grant of the CON. On March 19, 1996, St. Joseph appealed the hearing officer's decision in the Superior Court pursuant to § 42-35-15. This appeal was consolidated with Johnston Ambulatory's appeal of the denial of the 1994 application.

Before the trial justice, Johnston Ambulatory claimed that the denial of the 1994 application was error because, it argued, our decision in Environmental Scientific Corp. v. Durfee, 621 A.2d 200 (R.I. 1993), required DeBuono to give great deference to the recommendation of the council. St. Joseph, on the other hand, asserted that Environmental Scientific did not apply to this case because the council acts in an advisory capacity, rather than as an adjudicative fact-finder.

St. Joseph contended that Nolan's approval of the 1995 application was error because that decision did not give deference to DeBuono's decision to reject the 1994 application. In response, the department claimed that the 1994 record was substantially different from the 1995 record and that there was sufficient evidence on the record to support Nolan's grant of the 1995 application.

In a thirty-four-page decision, the trial justice affirmed the denial of the 1994 application and vacated the grant of the 1995 application. With respect to the 1994 application, the trial justice first determined that the director owed no special deference to the recommendations of the council. He then examined DeBuono's written decision and found that it was supported by sufficient competent evidence. On that basis, he denied Johnston Ambulatory's appeal of the decision on the 1994 application. The trial justice then found that the 1995 application was essentially identical to the 1994 application, and that under the doctrine of administrative finality, a subsequent application could be granted only if there had been a substantial change in circumstances since the first application. After examining Nolan's decision to grant the 1995 application, the trial justice determined that there had been no demonstration of a substantial change in circumstances. Accordingly, he determined that the granting of the 1995 application was erroneous, and he vacated that approval.

The department and Johnston Ambulatory each filed petitions for certiorari with this Court seeking review of the judgment of the trial justice, pursuant to § 42-35-16. The writ was issued on Johnston Ambulatory's petition on March 24, 1999, and on the department's petition on May 6, 1999. On November 12, 1999, this Court ordered that the petitions be consolidated for briefing and oral argument.

In their memoranda and argument before this Court, the parties essentially repeated their positions presented in the Superior Court. Johnston Ambulatory contended that DeBuono's decision onthe 1994 application was in error because she did not grant sufficient deference to the recommendation of the council, and that Nolan's approval of the 1995 application was appropriate because the doctrine of administrative finality should not be applied to the CON process. St. Joseph took the contrary position on each of these claims. The department argued that DeBuono appropriately denied the 1994 application, but that there was sufficient new evidence at the time of the 1995 application for Nolan to grant approval.

Additional facts will be presented as required for legal analysis of the issues discussed.

Standard of Review

In reviewing the decision of an administrative agency, the Superior Court is limited to "an examination of the certified record to determine if there is any legally competent evidence therein to support the agency's decision." Barrington School Committee v. Rhode Island State Labor Relations Board, 608 A.2d 1126, 1138 (R.I.1992). In conducting that review, "the Superior Court may not, on questions of fact, substitute its judgment for that of the agency whose action is under review," Rhode Island Public Telecommunications Authority v. Rhode Island State Labor Relations Board, 650 A.2d 479, 485 (R.I.1994), even in a case in which the court "might be inclined to view the evidence differently and draw inferences different from those of the agency." Id. If there is sufficient competent evidence in the record, the court must uphold the agency's decision. Barrington School Committee, 608 A.2d at 1138. The court may, however,

"reverse, modify, or remand the agency's decision if the decision is violative of constitutional or statutory provisions, is in excess of the statutory authority of the agency, is made upon unlawful procedure, is affected by other errors of law, is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record, or is arbitrary or capricious and is therefore characterized by an abuse of discretion." Id. (citing § 42-35-15(g)).

When this Court examines the judgment of the Superior Court in administrative proceedings, we are restricted by § 42-35-16 to a review of "any questions of law involved." Rhode Island Public Telecommunications Authority, 650 A.2d at 485. We do not weigh the evidence that was before the trial justice, but merely examine the record to determine whether his or her decision was supported by competent evidence. Barrington School Committee, 608 A.2d at 1138. When the decision of the trial justice or of the agency is based upon questions of law, as it was in this case, we review those findings de novo. See, e.g., Nonnenmacher v. City of Warwick, 722 A.2d 1199, 1202 (R.I.1999)

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