Loudoun Hosp. Center v. Stroube, Record No. 1273-06-4.

• Decision Date: 09 October 2007
• Docket Number: Record No. 1273-06-4.
• Parties: LOUDOUN HOSPITAL CENTER v. Robert B. STROUBE, M.D., M.P.H., State Health Commissioner, Northern Virginia Community Hospital, LLC d/b/a Broadlands Regional Medical Center and Inova Health Care Services d/b/a Inova Fair Oaks Hospital.
• Court: Virginia Court of Appeals

650 S.E.2d 879

50 Va. App. 468

LOUDOUN HOSPITAL CENTER v. Robert B. STROUBE, M.D., M.P.H., State Health Commissioner, Northern Virginia Community Hospital, LLC d/b/a Broadlands Regional Medical Center and Inova Health Care Services d/b/a Inova Fair Oaks Hospital.

Record No. 1273-06-4.

Court of Appeals of Virginia, Alexandria.

October 9, 2007.

Mark S. Hedberg (Virginia H. Hackney, M. Christine Klein, Richmond; Woodrow W. Turner, Jr., Leesburg; Hunton & Williams, LLP, on briefs, Richmond), for appellant.

Matthew M. Cobb, Assistant Attorney General (Robert F. McDonnell, Attorney General, David E. Johnson, Deputy Attorney General, Jane D. Hickey, Senior Assistant Attorney General, on brief), for appellee Robert B. Stroube, M.D., M.P.H., State Health Commissioner.

Jeannie A. Adams (Thomas F. Hancock, III, Hancock, Daniel, Johnson & Nagle, PC, on brief), Glen Allen, for appellee Northern Virginia Community Hospital, LLC d/b/a Broadlands Regional Medical Center.

No brief for appellee Inova Health Care Services d/b/a Inova Fair Oaks Hospital.

Present: FRANK and HUMPHREYS, JJ., and COLEMAN, Senior Judge.

SAM W. COLEMAN III, Senior Judge.

This case involves Virginia's Medical Care Facilities Certificate of Public Need ("COPN") Law, Code § 32.1-102.1 et seq. Loudoun Hospital Center ("LHC") appeals from the trial court's April 27, 2006 final order which upheld the decision of the State Health Commissioner ("the Commissioner") awarding a COPN to Northern Virginia Community Hospital, LLC d/b/a Broadlands Regional Medical Center ("NVCH") to construct certain hospital facilities in Loudoun County. The notice of appeal encompasses prior rulings of the trial court from an initial round of litigation between the parties which culminated in the trial court's October 3, 2003 order, and will be referred to as "Broadlands I." Subsequent litigation, resulting from a remand of Broadlands I and culminating in this appeal of the April 27, 2006 order, will be referred to as "Broadlands II." On appeal, LCH presents five questions:

I. Whether the trial court erred when it concluded that NVCH was not collaterally estopped from relitigating in Broadlands II factual issues already decided against it in Broadlands I.

II. Whether the trial court erred in finding that the Broadlands II decision-making process was not irremediably and incurably tainted by secret ex parte communications urging approval of NVCH's project, including communications between the legislative and executive branches and the Commissioner, which were not timely revealed to LHC nor made part of the administrative record.

III. Whether the trial court erred in finding that the Commissioner's Broadlands II and Broadlands remand decisions were not arbitrary and capricious, when the Broadlands I decision came to the exact opposite result, and reached opposite conclusions on fundamental and pivotal issues, based on nearly identical facts.

IV. Whether the trial court erred in finding that the Broadlands II and Broadlands remand decisions were consistent with the State Medical Facilities Plan.

V. Whether the trial court erred in refusing to allow LHC to augment the record on the issue of taint in the Broadlands II proceeding, in light of the obstacles faced by LHC in developing and presenting such evidence before the very tribunal that had been tainted.

For the reasons that follow, we affirm the decisions of the trial court.

Background

On July 1, 2002, NVCH filed a COPN application to erect a 180-bed hospital in Loudoun County, to be known as Broadlands Regional Medical Center ("BRMC"). BRMC would replace Northern Virginia Community Hospital, a 164-bed acute care facility in Arlington County, and Dominion Hospital, a 100-bed psychiatric hospital in Fairfax County. The Commissioner, by case decision dated February 23, 2003, concluded that no public need existed for NVCH's proposal. NVCH appealed the Commissioner's decision to the Loudoun County Circuit Court, which affirmed the Commissioner's decision on all substantive matters in its October 3, 2003 order.¹

After the Commissioner had denied NVCH's application in Broadlands I, NVCH filed a second application on July 1, 2003. The second application differed from the first, most notably in the absence of additional acute care beds in the applicable health-planning region. Concurrent with his consideration of the Broadlands II application, the Commissioner considered two other applications-one from LHC to establish a thirty-three-bed acute care facility known as Western Loudoun Hospital Center, and one from Inova Health Care Services, Inc. ("Inova") to add twenty-two acute care beds to Inova Fair Oaks Hospital. Adjudication Officer Douglas R. Harris, held an informal fact-finding conference ("IFFC") on November 5-6, 2003. Harris recommended, and on March 10, 2004, the Commissioner approved the award of COPNs to NVCH and Inova Health Care Services, Inc., and the denial of LHC's application.

LHC appealed to the trial court. The court, by opinion letter dated January 12, 2005, concluded "the real issues before the court only deal with the Commissioner's decision in Broadlands II. The other two COPN decisions are only relevant if the Commissioner erred in his Broadlands II decision." The court held that collateral estoppel did not bar the adjudication of issues presented in Broadlands II and that the Commissioner's decision in Broadlands II was not inconsistent with the State Medical Facilities Plan. The trial court, however, "was troubled" by the discovery of e-mail correspondence received and responded to by the Commissioner prior to the closing of the record on December 19, 2003. This correspondence was not made part of the official administrative record and was not made available to the competing applicants. The court found that those failures constituted violations of Code § 2.2-4019² and 12 VAC 5-220-60.³ By order dated February 15, 2005, the court set aside the Commissioner's decisions regarding the three applications, and remanded the matters to the Commissioner. The court directed the Commissioner, upon remand, to reopen the record and add correspondence and other documents pertaining to the COPN applications, hold a hearing and enable the parties to submit additional evidence and argument, and reconsider his prior decisions.⁴

Upon remand, Harris placed the noted documents in the record, and held a hearing on April 15, 2005. In a May 11, 2005 opinion letter, Harris addressed LHC's allegations of improper influence:

Throughout my service as an adjudication officer, I have never been pressured or otherwise influenced by any superior to recommend the approval or denial of any particular COPN project. I can comfortably and clearly state that none of the correspondence and other information at issue informed or otherwise affected the process of review I undertook and the conclusions I reached in relation to the three projects, which the Commissioner later adopted in his statutory discretion.

Harris reiterated his prior recommendations. The Commissioner adopted the recommendations on May 13, 2005.

LHC again appealed to the trial court. The court, by Opinion and Order entered April 27, 2006, concluded as follows:

The Court finds that the ex parte contacts occurring during the administrative process were not illegal and did not improperly influence the Adjudication Officer or the Commissioner. The Court also finds that the Commissioner's decision is substantially supported by evidence in the administrative record and that a reasonable mind would not necessarily come to a different conclusion. Since this Court has previously decided that collateral estoppel does not apply and that the Commissioner's decision with regards to the Broadlands II application is not inconsistent with the State Medical Facilities Plan, the Court declines to readdress those issues here.

The court denied LHC's appeal. LHC then noted this appeal.

Analysis

General Standards of Review Governing Administrative Agency Decisions

Code § 2.2-4027 governs judicial review of administrative case decisions. It reads, in pertinent part:

The burden shall be upon the party complaining of agency action to designate and demonstrate an error of law subject to review by the court. Such issues of law include: (i) accordance with constitutional right, power, privilege, or immunity, (ii) compliance with statutory authority, jurisdiction limitations, or right as provided in the basic laws as to subject matter, the stated objectives for which regulations may be made, and the factual showing respecting violations or entitlement in connection with case decisions, (iii) observance of required procedure where any failure therein is not mere harmless error, and (iv) the substantiality of the evidentiary support for findings of fact.

Judicial review of an agency's factual findings "is limited to determining whether substantial evidence in the agency record supports its decision." Avante at Lynchburg Inc. v. Teefey, 28 Va.App. 156, 160, 502 S.E.2d 708, 710 (1998). Under the substantial evidence standard, the reviewing "court may reject the agency's findings of fact `only if, considering the record as a whole, a reasonable mind would necessarily come to a different conclusion.'" Virginia Real Estate Comm'n v. Bias, 226 Va. 264, 269, 308 S.E.2d 123, 125 (1983) (quoting B. Mezines, Administrative Law § 51.01 (1981)). "The phrase `substantial evidence' refers to `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Id. (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938)).

"Where . . . the issue concerns an agency decision based on the proper application of its expert discretion, the reviewing court will not substitute its own independent judgment for that of the agency but rather will reverse the agency decision only if that decision was arbitrary and capricious. [I]n...