Mri at Belfair v. S.C. D.H.E.C.

• Citation: 664 S.E.2d 471,379 S.C. 1
• Decision Date: 14 July 2008
• Docket Number: No. 26517.,26517.
• Parties: MRI AT BELFAIR, LLC, Appellant, v. SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL and Coastal Carolina Medical Center, Respondents.
• Court: South Carolina Supreme Court

664 S.E.2d 471

379 S.C. 1

MRI AT BELFAIR, LLC, Appellant, v. SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL and Coastal Carolina Medical Center, Respondents.

No. 26517.

Supreme Court of South Carolina.

Heard February 7, 2008.

Decided July 14, 2008.

M. Elizabeth Crum, A. Victor Rawl, Jr., and Ariail B. Kirk, all of McNair Law Firm, of Columbia, for Appellant.

Nancy S. Layman and Ashley C. Biggers, both of S.C. Department of Health and Environmental Control, of Columbia; Stuart M. Andrews, Jr., Travis Dayhuff, and Jennifer I. Cooke, all of Nelson, Mullins, Riley & Scarborough, of Columbia, for Respondents.

Justice PLEICONES.

This appeal arises from an application for a certificate of need ("CON") for a fixed magnetic resonance imaging ("MRI") unit to be located at Coastal Carolina Medical Center ("CCMC" or "Hospital") in Jasper County. DHEC granted a CON to CCMC, and MRI at Belfair ("appellant") requested a contested case hearing before the Administrative Law Court ("ALC"). The ALC upheld the decision to grant the CON, and the South Carolina Board of Health and Environmental Control ("Board") affirmed the ALC order. Appellant appealed the Board's order to the Court of Appeals, and we certified the appeal pursuant to Rule 204, SCACR. We reverse and remand.

FACTS

In 2004, CCMC submitted an application for a CON to DHEC pursuant to the 2003 State Health Plan ("Plan").¹ CCMC sought to provide MRI services at the Hospital's forty-one bed acute care facility in Hardeeville. CCMC opened in 2004 and provides medical care, including an emergency room, twenty-four hours a day, seven days a week. The Hospital is located near Interstate 95, and its primary service area encompasses Jasper and Beaufort Counties.

Appellant is a limited liability company owned and operated by Dr. Joseph Borelli, Jr., and it is a free-standing, mobile MRI facility. Appellant provides MRI services in Bluffton, which is in Beaufort County, located approximately 13.8 miles from CCMC. Dr. Borelli is the sole physician who reads the MRI scans, and appellant is open for business from 7:00 a.m. to 6:00 p.m., Monday through Friday.

After CCMC filed its application and DHEC began its review, appellant opposed the grant of a CON to CCMC. DHEC approved CCMC's CON application to provide MRI services to its inpatients, outpatients, and emergency patients.

Thereafter, appellant requested a contested case hearing before the ALC, naming DHEC and CCMC as respondents. Appellant argued that the purposes of the CON Act would be best served by CCMC providing MRI services through a shared arrangement of either mobile MRI services, an ownership sharing arrangement, or a transfer agreement, none of which had to be with appellant. CCMC contended that because it was a hospital, it needed MRI accessibility twenty-four hours a day, seven days a week.

Prior to the ALC hearing, CCMC and appellant filed motions for summary judgment. CCMC argued that because the Plan standards provided that hospitals, whenever possible, should have at least one MRI unit available for the diagnosis of inpatients, outpatients, and emergency patients, CCMC should be granted the CON as a matter of law. Appellant's motion for summary judgment was based on the assertion that Plan standards for MRI services and equipment did not comply with § 44-7-180(B) and that the DHEC exceeded its statutory authority by relying on the MRI Plan standards. The ALC denied appellant's motion but granted partial summary judgment to CCMC, ruling that the MRI standards under the Plan did not require CCMC to establish compliance with project review criteria.² The case proceeded to trial to determine what constituted "available" under the MRI Plan standard.

After a hearing on the merits, the ALC affirmed DHEC's decision to grant the CON. The ALC ruled that for MRI services to be sufficiently available to CCMC, the Hospital would need a fixed, in-house MRI unit that would be accessible twenty-four hours a day, seven days a week. Appellant appealed to the Board, and the Board affirmed and incorporated the ALC decision in its order.

ISSUES

I. Do the MRI standards found in the Plan violate the CON Act, thereby causing the Board to exceed its statutory authority in approving the CON awarded to CCMC?

II. Is the Board's determination that an "available" MRI for CCMC could only be achieved by an onsite MRI facility arbitrary and capricious or otherwise affected by an abuse of discretion?

III. Is the finding that the Plan standards did not require CCMC to establish the project review criteria violative of § 44-7-210?

ANALYSIS

This appeal is governed by the Administrative Procedures Act ("APA"), S.C.Code Ann §§ 1-23-310, et seq. (Supp. 2005). We may reverse or modify the Board's order if 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 other 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). As to factual issues, judicial review of administrative agency orders is limited to a determination whether the order is supported by substantial evidence. Roper Hosp. v. Bd. of S.C. DHEC, 306 S.C. 138, 140, 410 S.E.2d 558, 559 (1991).

I. State Health Plan

Appellant challenges the validity of the standards for MRI services set forth in the Plan. First, appellant argues that the CON award violates § 44-7-180(B)(2) and (3) because the Plan's standards for MRI services do not contain projections of need or standards of distribution. We disagree.³

Section 44-7-180(B)(2) and (3) of the CON Act requires the State Health Plan, at a minimum, to include:

(2) projections of need for additional health care facilities, beds, health services, and equipment;

(3) standards for distribution of health care facilities, beds, specified health services, and equipment including scope of services to be provided, utilization, and occupancy rates, travel time, regionalization, other factors relating to proper placement of services, and proper planning of health care facilities;

S.C.Code Ann. § 44-7-180(B).

The 2003 State Health Plan sets forth three standards for MRI distribution:

1) Each hospital should have at least one MRI unit available for diagnosis of emergency patients, inpatients and outpatients.

2) In order to promote cost-effectiveness, the use of shared mobile MRI units should be considered.

3) The applicant agrees in writing to provide the Department utilization data on the operation of the MRI service.

Although the Plan does not give specific projections of need or standards of distribution in terms that track the exact statutory language, the Plan does not violate § 44-7-180. Clearly, the first MRI standard that each hospital should have at least one MRI unit available satisfies the statute's directive for projections of need when a hospital applies for a CON of an MRI. The second MRI standard also provides guidance for distribution and utilization of existing MRI resources. The Plan satisfies the requirements of § 44-7-180(B)(2) and (3) by unmistakably stating the need and guiding distribution for MRI units in hospitals. See Bursey v. S.C. DHEC, 369 S.C. 176, 631 S.E.2d 899(2006) (cardinal rule of statutory construction is to ascertain and effectuate legislative intent). Accordingly, the Plan is not violative of the CON Act, and the Board did not exceed its statutory authority in granting the CON in light of the Plan standards.⁴

Appellant also argues that the Board's order should be reversed because there is no statutory basis to treat hospitals differently from other health care facilities. We disagree.

Even though there is no specific provision in the CON Act that authorizes hospitals to be treated differently vis-à-vis standards of need for MRI services, the ability of the Plan to differentiate between different types of medical providers is essential to the CON process. See S.C.Code Ann. § 44-7-150 (department may adopt substantive and procedural regulations considered necessary by the department and approved by the board to carry out the department's licensure and CON duties). Furthermore, appellant's contention that first Plan standard results in hospitals being treated differently from other health care facilities is misguided. The first Plan standard only satisfies the showing of need for hospitals, while other health care facilities will have to document need separately. Nothing in the CON Act prevents such a distinction. See S.C.Code Ann. § 44-7-130 (containing separate definitions for "hospital" and "health care facility"); S.C.Code Ann. § 44-7-150.

II. Determination of "Available"

The issue addressed at trial was whether CCMC had access to an "available" mobile MRI facility so that a CON for an onsite MRI would not be warranted under the Plan...