Premier Health Care Invs., LLC v. UHS of Anchor, L.P.

• Citation: 849 S.E.2d 441
• Decision Date: 05 October 2020
• Docket Number: S19G1491
• Parties: PREMIER HEALTH CARE INVESTMENTS, LLC v. UHS OF ANCHOR, L.P.
• Court: Supreme Court of Georgia

849 S.E.2d 441

PREMIER HEALTH CARE INVESTMENTS, LLC
v.
UHS OF ANCHOR, L.P.

S19G1491

Supreme Court of Georgia.

Decided: October 5, 2020

Christopher Scott Anulewicz, Austin Alexander, Balch & Bingham, LLP, 30 Ivan Allen Jr. Boulevard, NW, Suite 700, Atlanta, Georgia 30308, Attorneys for the Appellant.

Marial Lanier Ellis, Stacey Ann Hillock, Roxana Dehnad Tatman, Rachel L. King, Georgia Department of Community Health, 2 Peachtree St NW, 40th Floor, Atlanta, Georgia 30303, Daniel Stephen Walsh, Senior Assistant Attorney General, Christopher M. Carr, Attorney General, Andrew Alan Pinson, Solicitor-General, Margaret Kemmerly Eckrote, Assistant Attorney General, Cathelynn Tio, Assistant Attorney General, Department of Law, 40 Capitol Square, S.W., Atlanta, Georgia 30334-1300, Attorneys for the Amicus Appellant.

Robert Charles Threlkeld, Ryan Chorkey Burke, Morris, Manning & Martin, LLP, 1600 Atlanta Financial Center, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326, Attorneys for the Appellee.

Armando Luis Basarrate, II, David Boone Darden, Parker, Hudson, Ranier & Dobbs, LLP, 303 Peachtree Street, Suite 3600, Atlanta, Georgia 30308, Robert D. Ingram, David Patrick Conley, Moore, Ingram, Johnson & Steele, LLP, 326 Roswell Street, Marietta, Georgia 30060, Frank B. Strickland, Taylor English Duma LLP, 1600 Parkwood Circle, Suite 200, Atlanta, Georgia 30339, Attorneys for the Amicus Appellee.

Warren, Justice.

In 2005, the Georgia Department of Community Health ("the Department") promulgated a rule, commonly known as the "Psychiatric Rule" ("the Rule"), that requires hospitals to obtain a Certificate of Need ("CON") "prior to the establishment of a new or the expansion of an existing acute care adult psychiatric and/or substance abuse inpatient program," and defines "expansion" as "the addition of beds to an existing CON-authorized or grandfathered psychiatric and/or substance abuse inpatient program." Ga. Comp. R. & Regs., r. 111-2-2-.26 (1) (a), (2) (c). This case is about whether the Department can, through the Rule, require a licensed hospital with a psychiatric/substance-abuse program that is authorized by a CON, see OCGA § 31-6-40 et seq., to obtain an additional CON to redistribute inpatient beds in excess of those identified in its CON to operate a psychiatric/substance-abuse program, but within its total licensed bed capacity. In UHS of Anchor, L.P. v. Department of Community Health , 351 Ga. App. 29, 830 S.E.2d 413 (2019), the Court of Appeals held that the Department can. We granted certiorari to examine

[w]hether the Court of Appeals erred in holding that the Department of Community Health was authorized to promulgate a rule, Ga. Comp. R. & Regs. 111-2-2-.26 (1) (a), to create a category of institutional health services requiring a certificate of need, when such category is not listed in OCGA § 31-6-40 (a).

For the reasons explained below, we answer that question "yes," and therefore reverse the decision of the Court of Appeals.

1. Procedural History

(a) Administrative Proceedings and Judicial Review

Premier Health Care Investments, LLC d/b/a Flint River Hospital ("Flint River"), is

849 S.E.2d 444

a general acute care hospital that has obtained a CON for 49 total inpatient beds. In 2010, Flint River also obtained a CON to "[e]stablish [a] 12-bed Adult (Geriatric) Psychiatric Program" at its hospital.¹ Since that time, however, it has "redistributed" some of its inpatient beds and has been operating up to 30 psychiatric/substance-abuse beds—18 more than the 12 authorized by the 2010 CON, but no more than the 49 total beds for which the hospital is licensed.

In 2016, Lake Bridge Behavior Health System, a competitor of Flint River and a sister facility of UHS of Anchor, L.P. d/b/a Southern Crescent Behavioral Health System ("Southern Crescent"), wrote to the Department, alleging that Flint River was operating beyond its CON authorization by operating more than 12 psychiatric/substance-abuse beds. The Department investigated and initially agreed with Southern Crescent, concluding that Flint River had expanded its psychiatric/substance-abuse services by "offering [ ] services beyond the scope of its twelve (12) CON authorized adult psychiatric/substance abuse inpatient beds." The Department issued a cease-and-desist letter to Flint River.

Flint River appealed to the Department, arguing that OCGA § 31-6-40 (a) (pertaining to when a CON is required) governs when a "new institutional health service" requires CON approval, and that because Flint River's redistribution of beds within its total approved inpatient bed capacity did not fall within OCGA § 31-6-40 (a) ’s definition of a new institutional health service requiring CON approval, no CON was required for the bed redistribution. It further argued that the Department, through the Psychiatric Rule, could not require Flint River to obtain a CON for bed redistribution because the Rule impermissibly expanded the Department's authority. Southern Crescent intervened in the administrative appeal, arguing that Flint River's operation of more than 12 psychiatric/substance-abuse beds was beyond the scope of its CON in violation of OCGA § 31-6-41 (a) (pertaining to the valid "scope" of CONs), and that Flint River was required under OCGA § 31-6-40 (a) and the Psychiatric Rule to obtain a new CON before redistributing psychiatric/substance-abuse beds. At that stage, the Department maintained that under the Rule, Flint River was required to obtain a CON before it could increase additional beds for psychiatric/substance-abuse treatment through redistribution. The Department hearing officer agreed with Southern Crescent and the Department and affirmed the cease-and-desist order.

Flint River requested that the Department's Commissioner review that decision. The Commissioner reversed the hearing officer's decision and issued the "Final Order of the Department," which vacated the cease-and-desist order. Among other things, the Commissioner disagreed "that the reconfiguration of [Flint River's] beds within existing licensed capacity by [Flint River] is governed by OCGA § 31-6-41 (a)" and "that the CON statute does not allow for the flexing of beds between categories," and concluded that "the controlling statute governing analysis of whether [Flint River] impermissibly expanded the number of beds in its acute care adult psychiatric and substance abuse inpatient program is ... OCGA § 31-6-40."

Southern Crescent filed a Petition for Judicial Review, arguing that the Department's order was inconsistent with the Psychiatric Rule and that the Rule should control. The Superior Court of Fulton County, however, affirmed the Department's final order. The Court of Appeals then granted Southern Crescent's application for a discretionary appeal.

(b) Court of Appeals's Opinion

The Court of Appeals reversed, disagreeing "with the Department's conclusion that [because] Flint River ‘flexed’—i.e., reallocated or redistributed—beds from one approved service to use in another approved service without increasing the total number of beds within the facility as a whole," it "was not required to obtain a CON prior to initiating this change." UHS of Anchor , 351 Ga. App. at 42, 830 S.E.2d 413.

849 S.E.2d 445

Among other things, the Court of Appeals reasoned that the Psychiatric Rule "explicitly requires that a CON be obtained ‘prior to ... the expansion of an existing acute care adult psychiatric and/or substance abuse inpatient program,’ " and that " ‘expansion’ is defined within that Rule to mean ‘the addition of beds to an existing CON-authorized or grandfathered psychiatric and/or substance abuse inpatient program.’ " Id. (quoting Ga. Comp. R. & Regs., r. 111-2-2-.26 (1) (a), (2) (c) ). The Court of Appeals acknowledged that " OCGA § 31-6-40 (a) does not specifically include the expansion of existing programs in its list of ‘new institutional health services’ that are required to obtain a CON," but concluded that the "list is not exclusive." Id. And it reasoned that based on OCGA § 31-6-21 (pertaining to Department's rulemaking authority), "the Department saw fit to require by its Rules that the expansion of an existing psychiatric and/or substance abuse facility requires a CON," and that "[t]his rule is consistent with the statutory specification that CONs are ‘valid only for the defined scope ... approved by the department.’ " Id. at 43, 830 S.E.2d 413 (emphasis in original) (quoting OCGA § 31-6-41 (a) ).

The Court of Appeals thus concluded that the Rule was not "an unauthorized ‘enlargement’ of the scope of the CON statute," but rather that, "in the context of the statutory scheme as a whole, the most sensible interpretation of OCGA § 31-6-40 is that ‘includes’ introduces a nonexclusive list, with the Department free to promulgate by rule additional categories of ‘new institutional health services,’ but only so as to administer and implement the [CON] program and the strictures placed upon that program by the General Assembly." Id. at 44, 46, 830 S.E.2d 413 (emphasis in original).

2. Statutory and Regulatory Background

In determining whether the Department was authorized to promulgate a rule to create a category of "new institutional health service" requiring a CON, see OCGA § 31-6-40 (a), we first look to the relevant legal texts. Those include a comprehensive statutory scheme defining and establishing the CON program, as well as regulations the Department has promulgated with respect to CONs.

(a) Current Statutory Landscape

OCGA § 31-6-40 (a) establishes when a new institutional health service requires a CON. It provides:

(a) On and after July 1, 2008, any new institutional health service shall be required to obtain a certificate of need pursuant to this chapter. New institutional health services include:

(1) The construction, development, or other establishment of a new, expanded, or relocated health care facility, except as otherwise provided in Code Section 31-6-47 ;

(2) Any expenditure by or on behalf of a health care

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