New England Rehabilitation Hosp. of Hartford, Inc. v. Commission on Hospitals and Health Care

• Decision Date: 22 June 1993
• Docket Number: 14617,Nos. 14586,s. 14586
• Citation: 627 A.2d 1257,226 Conn. 105
• Court: Connecticut Supreme Court
• Parties: NEW ENGLAND REHABILITATION HOSPITAL OF HARTFORD, INC., et al. v. COMMISSION ON HOSPITALS AND HEALTH CARE et al.

Page 1257

627 A.2d 1257

226 Conn. 105

NEW ENGLAND REHABILITATION HOSPITAL OF HARTFORD, INC., et al. v. COMMISSION ON HOSPITALS AND HEALTH CARE et al.

Nos. 14586, 14617.

Supreme Court of Connecticut.

Argued Feb. 10, 1993.

Decided June 22, 1993.

Elliott B. Pollack, with whom were Michael Kurs and, on the brief, Mary Alice Leonhardt, Hartford, for the appellants (plaintiffs).

Patricia A. Gerner, Asst. Atty. Gen., with whom were Thomas J. Ring, Asst. Atty. Gen., and, on the brief, Richard Blumenthal, Atty. Gen., and Richard J. Lynch, Asst. Atty. Gen., for the appellee (named defendant).

Bourke G. Spellacy, with whom were Carol S. Clapp and, on the brief, Karen A. Keefe, Hartford, for the appellees (defendant Hartford Rehabilitation Hosp., Inc., et al.).

Before BORDEN, BERDON, KATZ, FRANCIS X. HENNESSY and BARALL, JJ.

KATZ, Associate Justice.

The principal issues in these appeals are: (1) whether the trial court correctly concluded that the plaintiffs, a consortium of health care providers, were not aggrieved by the decision of the defendant commission on hospitals and health care (CHHC) granting the application of the other defendants (defendants), a separate consortium of health care providers, to develop, construct and operate a rehabilitation facility; and (2) whether the trial court correctly concluded that CHHC properly conducted an independent investigation pursuant to General Statutes § 19a-149. These appeals arise from two separate actions. New England Rehabilitation Hospital of Hartford, Inc. v. Commission on Hospitals & Health Care (Docket No. 14586), and New England Rehabilitation Hospital of Hartford, Inc. v. Commission on Hospitals & Health Care (Docket No. 14617). In the first case, the plaintiffs, the New England Rehabilitation Hospital of Hartford, Inc. (NERHH), ¹ Hartford Hospital, The Institute of Living and AdvantageHealth Corporation, appeal from the judgment of the trial court dismissing their appeal from the decision of CHHC granting permission to the defendants, Central Connecticut Rehabilitation Hospital, Inc. (CCRH), ² Saint Francis Hospital and Medical Center, the Mount Sinai Hospital Corporation and the Hartford Rehabilitation Hospital, Inc., to build and operate a rehabilitation hospital in Hartford. In the second case, the plaintiffs appeal from the judgment of the trial court dismissing their appeal from the decision of CHHC denying them permission to build and operate a rehabilitation hospital in Hartford. Because both applications were heard together by CHHC and because the underlying facts are similar, we consider them in one opinion.

The following facts, as set forth in CHHC's rulings and in the trial court opinions, are undisputed. On October 10, 1990, the defendants filed a letter of intent to apply for a certificate of need to develop, construct and operate a rehabilitation facility in Hartford. On November 26, 1990, the plaintiffs filed a letter of intent to apply for a certificate of need to develop, construct and operate a rehabilitation hospital in Hartford. Pursuant to General Statutes (Rev. to 1991) §§ 19a-154 and 19a-155, ³ the plaintiffs submitted a certificate of need application to CHHC on January 18, 1991, to develop, construct and operate a ninety bed comprehensive medical rehabilitation hospital on the grounds of The Institute of Living in Hartford, at a capital expenditure of $13,350,000. The defendants submitted a certificate of need application to CHHC on May 20, 1991, to develop, construct and operate an eighty bed comprehensive medical rehabilitation hospital at the former site of the Hebrew Home and Hospital in Hartford, at a capital expenditure of $17,290,627. Both the plaintiffs' and the defendants' applications were deemed complete by CHHC on July 18, 1991. The plaintiffs' application was assigned Docket No. 91-906 and the defendants' application was assigned Docket No. 91-917. Additionally, R.H.S.C. Hospital, Inc. (RHSC), submitted a certificate of need application to CHHC to develop, construct and operate a sixty bed rehabilitation hospital at a capital expenditure of $13,827,000, and was assigned Docket No. 91-901.

On January 29, 1991, after the plaintiffs had filed their certificate of need application, but before the defendants had filed their application, CHHC adopted a resolution stating that it was going to conduct an investigation pursuant to General Statutes § 19a-149 ⁴ "to determine the availability, efficacy, and cost-effectiveness of rehabilitation services in Connecticut acute care hospitals, skilled nursing facilities, specialty hospitals, and other settings where these services may be offered." The resolution stated that CHHC was aware of at least six proposals that would be submitted to introduce rehabilitation services and that "in order to carry out its duties pursuant to [General Statutes] § 19a-153," CHHC needed information that was not then available to it. The CHHC assigned Docket No. 91-100RES to this investigation.

As part of its investigation, CHHC sent questionnaires to rehabilitation physicians and psychiatrists, inpatient and outpatient providers of interdisciplinary rehabilitation services, and acute care hospital discharge planners in Connecticut. CHHC also invited those same people to attend an investigatory proceeding at its offices on February 28, 1991, to testify as to the present status of rehabilitation services in Connecticut. CHHC instructed that "[n]o testimony concerning the specific proposals for any rehabilitation service [certificates of need] filed or expected to be filed with [CHHC] will be received at this proceeding." John J. Farrell, a CHHC commissioner, conducted the investigation.

The plaintiffs filed an application for party status in the investigation, Docket No. 91-100RES, on February 22, 1991, which CHHC subsequently denied. As part of its investigation, CHHC held a public hearing on February 28, 1991, at which a series of speakers testified, including representatives of Hartford Hospital as well as two other speakers who were later witnesses on behalf of AdvantageHealth Corporation at a contested proceeding on the plaintiffs' application on August 21, 1991. Participants in the investigation were permitted to comment in writing to CHHC at various stages before CHHC issued its report. Participants, however, were not allowed to cross-examine others who appeared before CHHC, ⁵ and none of the participants in this investigatory hearing were designated as parties. On May 1, 1991, CHHC issued an investigative report.

Thereafter, on August 2, 1991, CHHC published in the Hartford Courant legal notice that CHHC was to hold a joint public hearing on all three applications. ⁶ Following RHSC's withdrawal of its certificate of need application, ⁷ Docket Nos. 91-917 and 91-906 "were consolidated for purposes of hearing," which CHHC held on August 20, 21, 22 and September 12, 1991, before Farrell. Other commission members in attendance as observers were Steven J. Bongard, Donald G. Reed and Mary T. Collier. The hearing was conducted as a "contested case" pursuant to §§ 19a-154 and 19a-155 and in accordance with the Uniform Administrative Procedure Act (UAPA). General Statutes §§ 4-166 through 4-189.

In addition to the evidence presented by the plaintiffs and the defendants, CHHC introduced its investigative report into the record of both cases: the plaintiffs' Docket No. 91-906 and the defendants' Docket No. 91-917. At the joint hearing, CHHC also heard testimony from a number of witnesses subpoenaed by it, intervenors ⁸ and interested persons. CHHC reviewed community and regional need, cost-effectiveness and utilization, financial feasibility, quality and accessibility, teaching and research responsibilities, efforts to improve productivity and contain costs, managerial competency and technical expertise and the impact of the proposals on consumers and payers of health care.

In response to questions regarding the defendants' certificate of need application and CHHC's questioning at the hearing, the defendants submitted alternatives to their initial proposal of a newly constructed freestanding rehabilitation hospital. The defendants' "Scheme A" proposed an eighty bed facility comprised of the existing medical office building on the campus of Mount Sinai Hospital and new construction of a two story building for a capital cost of $14,344,902, without capitalized financing costs. "Scheme A-60" proposed the same basic facility as Scheme A with twenty fewer general rehabilitation beds costing $13,944,902, without capitalized financing costs. "Scheme B" proposed an eighty bed facility comprised of new construction on level three (the ground level of Mount Sinai Hospital) and renovation of what is level four of Mount Sinai Hospital, for a capital cost of $13,244,902, without capitalized financing costs. "Scheme B-60" proposed the same basic facility as Scheme B with twenty fewer beds, for a capital cost of $12,894,902, without capitalized financing costs. All of the above alternatives included costs for the demolition and removal of the Hebrew Home and Hospital. CHHC found each of these alternatives to be comparable to the defendants' initial application.

The plaintiffs did not submit alternative schemes in response to the certificate of need application questions, and instead indicated that no alternative had been considered to the proposal submitted. In response to CHHC questioning, the plaintiffs thereafter submitted descriptions of reduced bed alternatives: (1) a sixty bed freestanding hospital on the campus of the Institute of Living at a capital cost of $7,674,320; (2) a sixty bed facility on the second floor of one of the buildings already in existence on the campus of the Institute of Living, at a capital cost of $2,320,167; and (3) a forty bed facility in an existing building on the Hartford Hospital campus at a capital cost of $2,030,000. The plaintiffs considered the second...