Lewis-Gale Med. Ctr., LLC v. Romero
| Decision Date | 29 April 2014 |
| Docket Number | Record No. 1289-13-3 |
| Court | Virginia Court of Appeals |
| Parties | LEWIS-GALE MEDICAL CENTER, LLC v. CYNTHIA C. ROMERO, M.D., STATE HEALTH COMMISSIONER, COMMONWEALTH OF VIRGINIA |
UNPUBLISHED
Present: Judges Huff, Chafin and Decker
Argued at Richmond, Virginia
MEMORANDUM OPINION* BY
FROM THE CIRCUIT COURT OF THE CITY OF SALEM
J. Michael Gamble, Judge Designate
Jeffrey D. McMahan, Jr. (Robert L. Hodges; Nathan A. Kottkamp;
Thomas J. Stallings; McGuire Woods LLP, on briefs), for appellant.
Ishneila G. Moore, Assistant Attorney General (Kenneth T.
Cuccinelli, II, Attorney General; Rita W. Beale, Deputy Attorney
General; Allyson K. Tysinger, Senior Assistant Attorney General, on
brief), for appellee.
Lewis-Gale Medical Center, LLC (Lewis-Gale), appeals from the circuit court's affirmance of the decision of the Commissioner of the Department of Health (Department) denying its application for a certificate of public need (COPN). Lewis-Gale contends that the circuit court erred in upholding the Commissioner's decision denying the COPN because the Commissioner: (1) deviated from prior agency decisions without explanation; (2) applied the wrong legal standard, thereby treating Lewis-Gale differently from other Virginia hospitals; (3) applied the public need calculation required under the State Medical Facilities Plan (SMFP) in an improper manner; and (4) reached a decision that was not supported by substantial evidence in the record. We hold that the record does not support these claims. Therefore, we affirm the circuit court's ruling.
Lewis-Gale, a for-profit hospital owned by HCA, Inc., and located in Salem, sought a COPN to renovate space in its existing newborn nursery. At the time the July 1, 2010 application was filed, Lewis-Gale's nursery contained five general-level bassinets.1 It was licensed for twenty-three obstetrics beds but was not staffing all of those beds due to low demand. In an effort to increase usage rates for its obstetrics beds, Lewis-Gale sought to create a neonatal intensive care unit (NICU) by adding eight specialty-level bassinets.2 It indicated, as permitted by the applicable regulations, an intent to provide both specialty-level and intermediate-level services within those bassinets.3
Lewis-Gale averred that the only other hospital in the health planning region specifically licensed to provide specialty-level newborn care, Centra Virginia Baptist Hospital (CVBH), was located sixty miles away in Lynchburg, in a different planning district, and was not a realistic option for Lewis-Gale patients. It further noted that Carilion Roanoke Memorial Hospital (Carilion), located eight miles from Lewis-Gale in the same planning district, was the only facility in that district that was licensed to provide any level of NICU care. Carilion, as a licensed provider of subspecialty-level care, was also permitted to provide all lower levels of care in those bassinets,including specialty-level care. Because Carilion was the only provider of NICU services in the local planning district, Lewis-Gale asserted that no real competition existed for such services. Lewis-Gale suggested that an increasing need for specialized NICU services existed in the geographical area due to increasing maternal age and a high proportion of at-risk patients. Finally, Lewis-Gale offered evidence that its proposed project enjoyed significant public support as a means to avoid separating infants needing specialized care from their mothers.
The only public opposition to Lewis-Gale's COPN application came from Carilion, which was licensed for thirty intermediate-level and thirty subspecialty-level bassinets. Carilion contended the geographical market for NICU care was "oversupplied" and that the need for such care was "diminishing." It pointed to statistics showing downward trends in occupancy rates for Carilion's NICU bassinets over a period of years and noted studies showing "a high, positive correlation between larger size/volumes of NICU's and infants having a higher level of overall health and a significantly lower level of mortality."
The Department's Division of Certificate of Public Need (the DCOPN) reviewed Lewis-Gale's application and contacted Carilion for additional NICU occupancy data. Once it completed its review, the DCOPN issued a detailed report recommending denial of the application. It concluded that "reasonable availability and access to special care nursery services exists in the [health planning region], especially within the service areas of both [Lewis-Gale] and Carilion."
At the subsequent informal fact-finding conference, Lewis-Gale presented evidence challenging the DCOPN recommendation. The adjudication officer (AO), like the DCOPN, recommended denying Lewis-Gale's COPN application. The AO provided a detailed written analysis of the statutory and regulatory factors, including an assessment of the consistency of the application with the SMFP. He considered Carilion's declining occupancy statistics for its subspecialty-level bassinets in his analysis of both the SMFP and non-SMFP factors. Additionally,the AO observed that authorizing Lewis-Gale's requested eight additional specialty-level bassinets "pose[d] a risk of further reducing utilization" of existing specialty-level and subspecialty-level newborn services.
The Commissioner expressly adopted the findings, conclusions, and recommendation of the AO and denied the application. In doing so, she analyzed the administrative record pertaining to the proposed project and considered all the criteria in Code § 32.1-102.3 required to make a determination of public need. The Commissioner noted that she was "mindful of the emotional challenge created when a needful infant is separated from its family in order to receive special level nursery services at another hospital." However, she opined that such services "should not be allowed to be duplicated when evidence strongly shows that sufficient volume would not exist to support proficiency and quality in neonatal care delivery." She also opined that the addition of such services at Lewis-Gale would "stand[] to harm" the quality of care at Carilion, the facility then providing those services. The Commissioner further held that the proposed project was inconsistent with applicable provisions of the SMFP, including its 85% occupancy standard, as well as the "purposes to which that plan is devoted." She concluded that the project would "reduce the frequency and duration of medical transportation for only some infants in the Lewis-Gale system of hospitals"—those actually delivered at Lewis-Gale—and that the economic viability of the plan was "readily questionable." As a result, the Commissioner denied the COPN application despite her acknowledgement of "many expressions of community support for the project."
Lewis-Gale sought circuit court review of the Commissioner's decision. The circuit court, in affirming the decision, found that the Commissioner had "complied with her duty to thoroughly consider the factors under Code §32.1-102.3(B)[,] . . . includ[ing] . . . the regulations adopted pursuant to the [SMFP]." The circuit court held that Lewis-Gale had not established an error oflaw subject to review under Code § 2.2-4027. The court further held that the agency record contained "substantial evidence . . . with respect to issues of fact upon which the Commissioner could deny the COPN." The court concluded that it could not "find that the Commissioner's factual findings should [have] be[en] rejected."
Lewis-Gale appeals the circuit court's ruling affirming the denial of the COPN.
Code § 32.1-102.3(A) provides that "[n]o person shall commence any [medical care facilities] project without first obtaining a [COPN] issued by the Commissioner." It further provides that "[n]o [COPN] may be issued unless the Commissioner has determined that a public need for the project has been demonstrated." Code § 32.1-102.3(A). That statute also requires that "[a]ny decision to issue or approve the issuance of a [COPN] shall be consistent with the most recent applicable provisions of the [SMFP]." Id. As relevant to the instant case, the SMFP sets out certain size and occupancy standards, based on the level of neonatal care to be provided, for use in determining whether a COPN for additional neonatal bassinet space should issue. See 12 VAC 5-410-443 (levels of care); 12 VAC 5-230-940, -960 to -980 (standards for determining additional need).
Consistency with the SMFP, however, is only one of eight statutory factors for consideration. Code § 32.1-102.3(B). The Commissioner is not required to award a COPN if the evidence supports a finding that the applicant has failed to demonstrate a public need based on any of the enumerated factors. See State Health Comm'r v. Sentara Norfolk Gen. Hosp., 260 Va. 267, 273, 534 S.E.2d 325, 329 (2000). The other seven factors are whether the project: improves access to needed health care services, enjoys community support, fosters institutional competition, improves utilization and efficiency of existing services, is feasible in financial andhuman resources terms, provides improvements or innovations in health care financing and delivery, and positively impacts a teaching hospital or medical school. Code § 32.1-102.3(B).
Further, when denying a COPN application, the Commissioner is not required to make specific findings with respect to the SMFP and the seven other statutory criteria. See, e.g., Va. Ret. Sys. v. Cirillo, 54 Va. App. 193, 199, 676 S.E.2d 368, 371 (2009). She needs only to notify the parties "'briefly and generally in writing[] of the factual basis for an adverse decision.'" Id. (quoting Code § 2.2-4019(A)(v)).
On appeal of an administrative agency's decision, "the party complaining . . . has the burden of demonstrating an error of law subject to review." Hilliards v. Jackson, 28 Va. App. 475, 479, ...
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