Mri At Belfair Llc v. South Carolina Dep't of Health

• Decision Date: 20 October 2011
• Docket Number: No. 4873.,4873.
• Citation: Mri At Belfair Llc v. South Carolina Dep't of Health, 394 S.C. 567, 716 S.E.2d 111 (S.C. App. 2011)
• Court: South Carolina Court of Appeals
• Parties: MRI AT BELFAIR, LLC, Appellant,v.SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL and Coastal Carolina Medical Center, Respondents.

394 S.C. 567

716 S.E.2d 111

MRI AT BELFAIR, LLC, Appellant,

v.SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL and Coastal Carolina Medical Center, Respondents.

No. 4873.

Court of Appeals of South Carolina.

Heard June 7, 2011.Decided Aug. 17, 2011.Rehearing Denied Oct. 20, 2011.

John F. Beach and John J. Pringle, Jr., of Columbia, for Appellant.Ashley C. Biggers, Carlisle Roberts, and Kristi L. Pawlowski, of Columbia, for Respondent South Carolina Department of Health and Environmental Control; Travis Dayhuff and Holly G. Gillespie, of Columbia, for Respondent Coastal Carolina Medical Center.WILLIAMS, J.

On appeal, MRI at Belfair, LLC (Belfair) contends the Administrative Law Court (ALC) erred in finding Coastal Carolina Medical Center's (Coastal) changes to its proposed MRI project were not substantial, and, therefore, not a new project under South Carolina Code of Regulations 61–15 section 605 (Supp.2010). Specifically, Belfair contends the ALC (1) failed to properly apply the relevant statutory and regulatory provisions governing the issuance of a certificate of need (CON); (2) erred in finding Coastal's changes were not substantial when Belfair presented substantial evidence to the contrary; (3) failed to apply the proper burden of proof; and (4) erred when it failed to find Coastal's CON for the MRI project was voided by the transfer of ownership from Coastal to another entity. We affirm.

FACTS

Coastal is a forty-one unit hospital located near Interstate 95 in Jasper County, South Carolina. Belfair is a free-standing imaging facility, located approximately 13.8 miles away in Beaufort County, South Carolina. Belfair provides magnetic resonance imaging (MRI) services for Beaufort and Jasper Counties. Dr. Albert J. Borelli, Jr., a radiologist, is the owner of Belfair. Belfair competes with Coastal for MRI services. Pursuant to the South Carolina Certificate of Need and Health Facility Licensure Act ¹ (the CON Act), Belfair is an “affected person” ² and thus is able to contest the issuance of Coastal's CON pursuant to the CON Act.

On May 7, 2004, Coastal submitted an application for a CON to South Carolina Department of Health and Environmental Control (DHEC) to construct a fixed MRI suite onto its existing hospital in Jasper County pursuant to the 2003 State Health Plan ³ (the Plan). Coastal's application proposed that Coastal would purchase a new 1.5 tesla General Electric MRI unit and house it in an addition to be constructed at the hospital. DHEC granted the CON to Coastal on November 22, 2004.

On November 24, 2004, Belfair requested a contested case hearing to challenge DHEC's issuance of the CON to Coastal on the grounds that the MRI project did not satisfy the project review criteria.⁴ After an evidentiary hearing, the ALC granted partial summary judgment to Coastal and DHEC in an order dated November 10, 2005. The ALC determined a CON was appropriate because an on-site MRI was necessary to make MRI services “available” to Coastal's inpatients and emergency room patients under the Plan. Belfair appealed to the South Carolina Board of Health and Environmental Control (the Board), which affirmed the ALC's order. After certification from this court, our supreme court held the Board erred when it determined Coastal did not have to establish compliance with the project review criteria. MRI at Belfair, LLC v. S.C. Dep't of Health & Envtl. Control, 379 S.C. 1, 9–10, 664 S.E.2d 471, 475 (2008). The supreme court reversed and remanded for a determination on the sole issue ⁵ of whether Coastal's application complied with the project review criteria. Id. at 10, 664 S.E.2d at 476. On remand, the ALC consolidated Belfair's initial case with the current case before this court. Upon motion of Belfair and with consent of Coastal and DHEC, Belfair conceded Coastal's MRI project, as set forth in its CON application, satisfied the relevant project review criteria. Accordingly, the ALC dismissed Belfair's initial case and proceeded on Belfair's claim of whether Coastal's amendments ⁶ to its MRI project were substantial, thereby creating a new project pursuant to section 605 of South Carolina Code of Regulations 61–15.

After hearing from the parties, the ALC concluded the amendments to Coastal's MRI project were not substantial; therefore, the amended project was not a new project under section 605, and Coastal's CON was not void. This appeal followed.

STANDARD OF REVIEW

Appeals from the ALC are governed by the Administrative Procedures Act (APA).⁷ Pursuant to the APA, this court may reverse or modify the ALC if the appellant's substantial rights have been prejudiced because the administrative decisions are: (a) in violation of constitutional or statutory provisions; (b) in excess of the statutory authority of the agency; (c) made upon unlawful procedure; (d) affected by an error of law; (e) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (f) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion. S.C.Code Ann. § 1–23–380(5) (Supp.2010). “As to factual issues, judicial review of administrative agency orders is limited to a determination [of] whether the order is supported by substantial evidence.” MRI at Belfair, 379 S.C. at 6, 664 S.E.2d at 474.

LAW/ANALYSIS

I. Application of Statutory and Regulatory Provisions

Belfair contends the ALC erred in applying the project review criteria instead of certain statutory and regulatory provisions as part of its substantial change analysis. Specifically, Belfair claims the ALC improperly considered the project review criteria ⁸ to approve Coastal's amended MRI project and thereby excused substantial changes to the MRI project that would have otherwise resulted in voiding the CON. We disagree.

Initially, we note the purpose of the CON Act “is to promote cost containment, prevent unnecessary duplication of health care facilities and services, guide the establishment of health facilities and services which will best serve public needs, and ensure that high quality services are provided in health facilities in this State.” S.C.Code Ann. § 44–7–120 (2002). To help achieve this purpose, an applicant is required to obtain a CON before undertaking a project prescribed by the CON Act. See § 44–7–120(1).

South Carolina Code of Regulations 61–15 section 801 states that “[t]he [project review] criteria listed in Section 802 are to be used in reviewing all projects under the Certification of Need program.” Additionally, an application for a CON “ must address all applicable standards and requirements set forth in departmental regulations, Project Review Criteria of the department, and the South Carolina Health Plan.” S.C.Code Ann. § 44–7–200(A) (Supp.2010) (emphasis added). Once issued, a CON is “valid only for the project described in the application including location, beds and services to be offered, physical plant, capital or operating costs, or other factors as set forth in the application, except as may be modified in accordance with regulations.” S.C.Code Ann. § 44–7–230(A) (2002). If modifications occur after DHEC grants a CON, “[DHEC] will decide whether or not the amendment is substantial and thereby constitutes a new project.” 24A S.C.Code Ann. Regs. 61–15 § 605 (Supp.2010).

Here, the ALC was asked to determine whether Coastal's modifications to the MRI project were substantial. The ALC stated in its final amended order,

Review of this issue requires a comparison of the amended project to the original project proposed in the CON application to determine whether the amendment is substantial.... In making that determination, I find that consideration of the project review criteria is relevant. In other words, whether the amendments to the project substantially change the project's compliance with the relevant project review criteria is pertinent in determining whether amendments to this permit were substantial under Section 605.

Subsequently, in the ALC's order denying Belfair's motion for reconsideration, the court expounded on why consideration of the project review criteria was appropriate. The ALC stated, “In making that determination in this contested case, it is apodictic that the ALC may consider properly admitted relevant evidence.... Following that reasoning, this [c]ourt [ ] included an analysis of whether the amended project meets those same project review criteria it originally met in substantially the same way.” (emphasis in original). We construe the above-quoted language as a permissible comparison of the original MRI project's compliance with the project review criteria to the amended MRI project's compliance with the same criteria. We find this comparison proper in determining whether Coastal's changes were “substantial” under section 605.

We are not persuaded by Belfair's argument that consideration of the project review criteria is statutorily prohibited by section 44–7–230(A). First, as a prerequisite to obtaining a CON from DHEC, section 44–7–200 expressly requires an applicant to address how its project will comply with the relevant project review criteria. See § 44–7–200 (2002 & Supp.2010). Once approved by DHEC, a CON is “valid only for the project described in the application including location, beds and services to be offered, physical plant, capital or operating costs, or other factors as set forth in the application, except as may be modified in accordance with regulations.” § 44–7–230(A) (emphasis added). In addition to reviewing certain specific factors enumerated in section 44–7–230(A), we find it logical that a review of “other factors as set forth in the application,” which necessarily includes the project review criteria, to also be appropriate when determining whether a CON is valid. Accordingly, if satisfaction of the project review criteria is a statutory prerequisite to obtaining a CON, we find any...