PRIME LITHOTRIPTER OPER. v. LithoMedTech of Alabama, LLC

• Court: Alabama Court of Civil Appeals
• Writing for the Court: PER CURIAM.
• Citation: PRIME LITHOTRIPTER OPER. v. LithoMedTech of Alabama, LLC, 855 So.2d 1085 (Ala. Civ. App. 2001)
• Decision Date: 28 December 2001
• Parties: PRIME LITHOTRIPTER OPERATIONS, INC., and Prime Medical Services, Inc. v. LITHOMEDTECH OF ALABAMA, LLC. State Health Planning and Development Agency v. LithoMedTech of Alabama, LLC. Prime Lithotripter Operations, Inc., and Prime Medical Services, Inc. v. UroVenture, LLC, et al.

855 So.2d 1085

PRIME LITHOTRIPTER OPERATIONS, INC., and Prime Medical Services, Inc. v. LITHOMEDTECH OF ALABAMA, LLC.

State Health Planning and Development Agency v. LithoMedTech of Alabama, LLC.

Prime Lithotripter Operations, Inc., and Prime Medical Services, Inc. v. UroVenture, LLC, et al.

2991270, 2992.

Court of Civil Appeals of Alabama.

December 28, 2001.

Rehearing Applications Denied May 24, 2002.

John T. Mooresmith, John C. Morrow, Cary Tynes Wahlheim, and Jennifer L. Griffin of Burr & Forman, L.L.P., Birmingham, for Prime Lithotripter Operations, Inc., and Prime Medical Services, Inc.

Mark D. Wilkerson and Keith S. Miller of Brantley, Wilkerson & Bryan, P.C., Montgomery, for State Health Planning and Development Agency.

Thomas T. Gallion III, Constance C. Walker, and Jamie A. Johnston of Haskell, Slaughter, Young & Gallion, L.L.C., Montgomery, for LithoMedTech of Alabama, L.L.C.

Lenora Pate and E. Barry Johnson of Sirote & Permutt, P.C., Birmingham, for UroVenture, LLC, DCH Health Care Authority d/b/a DCH Regional Medical Center, The Health Care Authority of the City of Huntsville d/b/a Huntsville Hospital, Quorum Health Group of Gadsen, Inc., d/b/a Gadsen Medical Center, and Baptist Health d/b/a Baptist Medical Center South.

Gregg Brantley Everett, Montgomery, for amicus curiae The Alabama Hospital Association.

PER CURIAM.¹

These three appeals involve mobile lithotripsy services in the State of Alabama. The procedural history of the three appeals differs. Lithotripsy is a noninvasive surgical procedure that disintegrates kidney stones. However, the ultimate issue is whether vendors of mobile lithotripsy equipment are required to seek certificate-of-need review.

The procedural history of cases no. 2991270 and no. 2991302, is as follows: Prime Lithotripter Operations, Inc., d/b/a Tennessee Valley Lithotripsy and Alabama Lithotripsy Services, and its parent corporation, Prime Medical Services, Inc. (hereinafter collectively referred to as "Prime Medical"), and the State Health Planning and Development Agency ("SHPDA") appeal from the trial court's judgment holding that LithoMedTech of Alabama, LLC, as a vendor, was not required to obtain a certificate of need (hereinafter "CON") in order to lease mobile lithotripsy equipment to rural hospitals in Alabama.

On March 2, 1998, LithoMedTech filed applications seeking five separate CONs for mobile lithotripter units. Each application contained a proposal to provide mobile lithotripsy equipment on a rotating basis to various hospitals within a designated area.² Prime Medical timely intervened in each of LithoMedTech's applications and requested a contested-case status pursuant to Ala. Admin. Code § 410-1-7-.15 and 410-1-9-.03, a portion of SHPDA's rules governing the CON program, and § 41-22-14, Ala.Code 1975. Prime Medical contended that the needs of Alabama residents were being adequately served through the rotating mobile lithotripsy services it was providing.³ In addition to providing lithotripsy services through two approved fixed-based sites in Mobile and Birmingham, Prime Medical currently provides mobile lithotripsy equipment and services on a scheduled rotational basis at qualified sites in Muscle Shoals, Anniston, Huntsville, Gadsden, Tuscaloosa, and Montgomery.⁴

SHPDA's executive director granted the requested contested-case status and, pursuant to CON Rule 410-1-8-.02, directed that a public hearing be held before an administrative law judge ("ALJ") appointed by the Governor of the State of Alabama. An ALJ was appointed and was charged with the responsibility of conducting the proceedings in accordance with § 41-22-1 et seq., the Alabama Administrative Procedure Act ("AAPA"). The function of the ALJ was to conduct proceedings and to submit recommended findings of facts and conclusions of law to the certificate of need review board ("CONRB") regarding the approval or denial of the applications in accordance with § 41-22-15.

On May 19, 1998, LithoMedTech wrote SHPDA's executive director, asserting that its proposal (which had been presented in its March 2, 1998 applications for five separate CONs) was not subject to CON review at all. LithoMedTech stated in its letter that it sought "clarification" as to whether it was required to secure CONs to provide the equipment. The executive director replied by correspondence that it would be "inappropriate" to respond until the ALJ had completed her review or had returned the projects to the agency. LithoMedTech subsequently moved for declaratory relief with the ALJ, before the contested-case hearing began, but after the deadline had expired for filing prehearing motions. In its motion, LithoMedTech sought a ruling that its applications were not subject to CON review. The ALJ denied the requested declaratory relief, in part because LithoMedTech's motion was untimely; the motion was also denied because the ALJ reasoned that LithoMedTech should have sought a letter of "nonreviewability" from SHPDA's executive director before filing any of its CON applications. See CON Rule 410-1-7-.02, which allows, for informational purposes only, a determination as to current reviewability of an anticipated project.

By agreement of the parties, and to promote judicial economy, one combined case hearing was held over a period of three days to hear evidence on all five CON applications. Each application was considered separately. On July 27, 1998, one week after the contested-case hearing was concluded, but before the ALJ issued any decisions, LithoMedTech filed a declaratory-ruling request with the CONRB, pursuant to CON Rule 410-1-9-.01, and § 41-22-11, seeking a determination that its applications were exempt from CON review based on § 22-21-263(a)(4). Section 22-21-263(a)(4) exempts certain rural hospitals from CON review. The CONRB denied LithoMedTech's ruling request without addressing the merits of the request, reasoning that LithoMedTech had raised this issue in the contested-case hearing before the ALJ, and was, therefore, required to exhaust its remedies before seeking a declaratory ruling pursuant to CON Rule 410-1-9-.01. LithoMedTech did not appeal from this ruling, although judicial review of the CONRB's ruling on a declaratory-ruling request is provided for in § 41-22-11(b).

More than a year after the contestedcase hearing was concluded, the ALJ issued "Recommended Findings of Fact and Conclusions of Law," affirming the denial of LithoMedTech's motion for a declaratory ruling and recommending that CONRB approve the five applications. On September 27, 1999, CONRB rejected the recommendations and the conclusions of the ALJ and denied LithoMedTech's applications.

On September 29, 1999, LithoMedTech filed a request for a fair hearing pursuant to § 22-21-275(14). A fair-hearing review was conducted on December 17, 1999. On January 21, 2000, the fair-hearing officer ("FHO") entered an order affirming the CONRB's decisions on the merits, denying LithoMedTech's applications for the CONs and concluding that the CONRB's decisions were "made in compliance with all applicable, legal, and procedural requirements," and were not arbitrary and capricious. The FHO's decision constitutes the final, appealable, decision of SHPDA. See § 22-21-275(14).

On February 22, 2000, LithoMedTech appealed the FHO's decisions to the Circuit Court of Montgomery County, requesting that the decisions be set aside pursuant to § 41-22-20. On August 10, 2000, the trial court entered a final judgment vacating the FHO's decisions, holding that SHPDA did not have subjectmatter jurisdiction over the matter because the statute does not require mobile medical equipment vendors, and in particular mobile lithotripsy equipment vendors, to obtain a CON, and holding that SHPDA lacked jurisdiction over the matter because the applications for CONs which LithoMedTech filed "did not trigger the required criteria or monetary thresholds set forth in SHPDA's rules."

On August 24 and September 1, 2000, respectively, Prime Medical and SHPDA separately appealed from the trial court's final judgment. On September 14, 2000, the trial court consolidated those appeals ex mero motu. On September 28, 2000, the trial court granted Prime Medical's motion for a stay of its judgment pending the resolution of the appeal. LithoMedTech unsuccessfully moved the court to vacate its order staying its final judgment.

The procedural history of case no. 2000192, is as follows: Prime Medical⁵ appeals from a judgment granting UroVenture, LLC, declaratory and injunctive relief. The trial court's judgment declared that UroVenture was not required to obtain a CON in order to lease mobile lithotripsy equipment to qualified hospital sites and enjoined SHPDA from requiring CON review of UroVenture's proposal to lease the equipment.

UroVenture was formed by Lithotripsy Providers of Alabama, LLC, which owns 50.1% of UroVenture, and Urology Services, LLC, which owns 49.9% of UroVenture. Lithotripsy Providers is owned by DCH Health Care Authority d/b/a DCH Regional Medical Center; the Health Care Authority of the City of Huntsville d/b/a Huntsville Hospital; QHG of Gadsden, Inc. d/b/a Gadsden Regional Medical Center; and Baptist Health, d/b/a Baptist Medical Center South (hereinafter referred to as the "four hospitals"). Urology Services is owned by physicians, most of whom serve on the staffs of the four hospitals. UroVenture developed a proposal to acquire two mobile lithotripsy machines and then lease them to the four hospitals for use on a rotating basis. The four hospitals currently have lease agreements with Prime Medical. On June 13, 2000, pursuant to CON Rule 410-1-7.02, Uroventure submitted a nonreviewability determination request to SHPDA, seeking a determination by SHPDA's executive director of whether the proposal was subject to CON review. CON Rule 410-1-7.02 provides that any person may request "for informational purposes only a determination as to the current...