MedStar v. Health Care Commission, 47

CourtCourt of Appeals of Maryland
Writing for the CourtBELL, Chief.
Citation827 A.2d 83,376 Md. 1
Docket NumberNo. 47,47
Decision Date18 June 2003

827 A.2d 83
376 Md. 1


No. 47, Sept. Term, 2002.

Court of Appeals of Maryland.

June 18, 2003.

827 A.2d 84
Ralph S. Tyler (Elizabeth F. Harris of Hogan & Hartson, L.L.P., on brief), Baltimore, for petitioner

Suellen Wideman, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Joel Tornari, Asst. Atty. Gen., on brief), Baltimore, for respondent.


BELL, Chief Judge.

The issue to be resolved in this appeal requires this Court to determine the lawfulness of a regulation, COMAR 10.24.17, the appellee, the Maryland Health Care Commission, adopted as an amendment to the State Health Plan (SHP). The appellant, Medstar Health, challenged the regulation, filing a declaratory judgment action in the Circuit Court for Howard County. It alleged that the regulation conflicted with the appellee's statutory authority, was adopted in a procedurally improper fashion, and violated the Commerce Clause of the United States Constitution. After limited discovery, the parties filed cross-motions for summary judgment. By written memorandum decision and declaratory judgment, the Circuit Court declared the regulation lawful. The appellant timely noted an appeal to the Court of Special Appeals, and, thereafter, filed a petition for writ of certiorari with this Court. This Court granted that petition prior to any proceedings in the intermediate appellate court. Medstar v. Maryland Health Care, 369 Md. 659, 802 A.2d 438 (2002). We shall hold, contrary to the conclusion of the Circuit Court for Howard County, that the regulation is unlawful.


A. Background

In 1975, Congress enacted the National Health Planning and Resources Development

827 A.2d 85
Act of 1974 (the "Act")1. In order to receive federal funding, pursuant to the Public Health Service Act and other federal programs, states were required to establish more extensive review processes over state health planning. The review process requirement imposed by the Act established what is known as the "Certificate of Need" ("CON") process. The CON process requires health service providers (i.e., hospitals, patient treatment centers, etc.) to obtain certification, by state regulatory agencies, before engaging in certain regulated activities (i.e., purchasing major medical equipment, offering institutional health services, and making certain capital expenditures). The CON process, as a planning tool, attempts to identify and encourage the development of needed medical services, while limiting medical services that are determined to be "unneeded." For many years, the CON process was the paradigm of health planning in this country. The federal government, however, repealed the Act in 1986 and, thus, since that time the determination of what methodology to employ for health planning has rested with the states

Some states have chosen to abrogate their CON programs, while others have chosen to continue following the federal structure or to modify their CON program to fit local needs. Maryland continues to adhere to a CON model in the planning, development and delivery of health care services in this state. The implementation of the CON process utilized in Maryland falls under the regulatory authority of the Maryland Health Care Commission (the "Commission"). Consequently, before a hospital servicing this state may offer any regulated medical services it must apply for, and be granted, a CON from the Commission.2

B. Statutory Framework in Maryland

The Maryland General Assembly established the Commission on October 1, 1999 through legislative enactment, see 1999 Md. Laws, ch. 702; Md.Code (1982, 2000 Repl.Vol., 2001 Supp.) § 19-103 of the Health General Article, by merging the Health Resources Planning Commission and the Health Care Access and Cost Commission.3 The Commission, which is an independent commission in the Department of Health and Mental Hygiene, § 19-103(a) and (b), with significant responsibilities for the delivery of health care in Maryland and exercises regulatory authority over several aspects of the health care

827 A.2d 86
system in Maryland, is comprised of a thirteen member panel, appointed by the Governor with the advice and consent of the Maryland Senate. § 19-104

The purpose of the Commission, as defined by the Legislature, is, in part, to:

"Develop health care cost containment strategies to help provide access to appropriate quality health care services for all Marylanders, after consultation with the Health Services Cost Review Commission;
"Promote the development of a health regulatory system that provides for all Marylanders, financial and geographical access to quality health care services at a reasonable cost by:

"(i) Advocating policies and systems to promote the efficient delivery of and improved access to health care services; and

"(ii) Enhancing the strengths of the current health care service delivery and regulatory system."

Section 19-103(c)(1) and (2). Toward that end, the Commission is charged with participating in or performing, periodically, analyses and studies relating to:

"(i) Adequacy of services and financial resources to meet the needs of the population;

"(ii) Distribution of health care resources;

"(iii) Allocation of health care resources;

"(iv) Costs of health care in relationship to available financial resources; or

"(v) Any other appropriate matter."

Section 19-115(a)(2).

The Commission is also required, "[a]t least every 5 years ... [to] adopt a State [H]ealth [P]lan...." Section 19-121(a)(1).4 Section 19-121(a)(2) provides:

"(2) The plan shall include:

"(i) A description of the components that should comprise the health care system;

"(ii) The goals and policies for Maryland's health care system;

"(iii) Identification of unmet needs, excess services, minimum access criteria, and services to be regionalized;

"(iv) An assessment of the financial resources required and available for the health care system;

"(v) The methodologies, standards, and criteria for certificate of need review; and

"(vi) Priority for conversion of acute capacity to alternative uses where appropriate."

The Commission uses the State Health Plan as a tool to identify the need for medical services and for evaluating CON applications submitted by health service providers. The Commission's specific mandate by the Legislature is to review and, where appropriate, issue certificates of need to permit a person to "develop[ ], operate[ ], or participate[ ]" in certain "health care projects." § 19-123(e), et seq. A new cardiac surgery service is one such "health care project." § 19-123(j)(2)(iii)(2).

In addition to including methodologies, standards and criteria for CON review in the State Health Plan, the Commission is charged with developing, consistent with the State Health Plan, standards and policies relating to the CON program that "address the availability, accessibility, cost

827 A.2d 87
and quality of health care" and reviewing those standards and policies "periodically to reflect new developments in health planning, delivery, and technology." Section 19-122(e)(1) and (2). Moreover, "standards regarding cost, efficiency, cost effectiveness or financial feasibility" adopted by the Commission "shall take into account the relevant methodologies of the Health Services Cost Review Commission." Id., § 19-121(e)(3). And the Commission is required to "adopt rules and regulations that ensure broad public input, public hearings, and consideration of local health plans in development of the State health plan." Id., § 19-121(d).

C. Adoption of COMAR 10.24.17

The State Health Plan consists of a series of regulations adopted by the Commission or its predecessors, incorporated by reference, but not in fact, in the appropriate title, subtitle and chapters of The Code of Maryland Regulations, COMAR, here, title 10, subtitle 24, chapters 07 through 17. At issue in this case is an amendment to the regulations applicable to cardiac surgery, which is incorporated at COMAR 10.24.17, in the chapter entitled "Specialized Health Care Services—Cardiac Surgery and therapeutic Catherization Services." The amendment was to COMAR, Methodology for Projecting Need for Cardiac Surgery, specifically, one of the assumptions underlying that methodology, the one addressing system capacity in the planning regions.5

As amended, the regulation states:

"(i) The capacity of an existing cardiac surgery program is calculated as follows:
"(i) For new programs, capacity is defined as the greater of 350 cases or the actual number of cases during the first three years of a program's existence;
"(ii) For programs older than three years, capacity is defined as the highest actual annual volume attained and reported by that program over the last three years subject to a market based constraint; and
"(iii) The capacity of any program cannot be greater than the higher of 800 cases or 50 percent of the projected gross need for the planning region."

COMAR (4)(i).

Before the amendment, the assumption underlying system capacity was premised on there being performed, in each of the operating rooms dedicated to open heart surgery, 500 operations year, a year being defined as 250 days, it being assumed that the operating rooms were used at the rate of 2.0 cases per day, five days a week, fifty weeks per year.6 Before and after the amendment, the assumption included "an estimate of the future number of open heart surgery cases based on an analysis of trends in regional, age-specific use rates and changes in the size and composition of the population." See, Final Report of the Technical Advisory Committee on Cardiovascular Services, December 1999, at 23. The present plan specifically provides, as to projected adult open heart surgery for Maryland residents, that it "is estimated by trending of the most recent three years of open...

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