St. Mary's Hosp. v. State Health Planning and Development Agency

• Decision Date: 15 December 1987
• Docket Number: No. 17484,17484
• Citation: 364 S.E.2d 805,178 W.Va. 792
• Parties: ST. MARY'S HOSPITAL v. STATE HEALTH PLANNING AND DEVELOPMENT AGENCY, Tax Commissioner, Appellees, and HCA Health Services of West Virginia Inc., Intervenor.
• Court: West Virginia Supreme Court

Page 805

364 S.E.2d 805

178 W.Va. 792

ST. MARY'S HOSPITAL v. STATE HEALTH PLANNING AND DEVELOPMENT AGENCY, Tax

Commissioner, Appellees, and HCA Health Services

of West Virginia Inc., Intervenor.

No. 17484.

Supreme Court of Appeals of

West Virginia.

Dec. 15, 1987.

Syllabus by the Court

1. "Upon judicial review of a contested case under the West Virginia Administrative Procedure Act, Chapter 29A, Article 5, Section 4(g), the circuit court may affirm the order or decision of the agency or remand the case for further proceedings. The circuit court shall reverse, vacate or modify the order or decision of the agency if the substantial rights of the petitioner or petitioners have been prejudiced because the administrative findings, inferences, conclusions, decisions or order are '(1) In violation of constitutional or statutory provisions; or (2) In excess of the statutory authority or jurisdiction of the agency; or (3) Made upon unlawful procedures; or (4) Affected by other error of law; or (5) Clearly wrong in view of the reliable, probative and substantial evidence on the whole record; or (6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.' " Syl. Pt. 2, Shepherdstown Volunteer Fire Department v. Human Rights Commission, --- W.Va. ----, 309 S.E.2d 342 (1983).

2. Before a certificate of need may be issued to any entity other than a health maintenance organization, the state agency must find that the proposed new institutional health service is both needed and, except in emergency circumstances, consistent with the state health plan. In addition, the state agency must make written findings regarding the (1) existence of alternatives, (2) utilization of similar existing services, (3) consideration of alternatives to new construction, (4) serious problems of patients in obtainings services without the proposed services, (5) consistency with applicable long-term plans, and (6) needs of the medically underserved population. W.Va.Code § 16-2D-6(e), -9 (1986 Replacement Vol.).

3. Because the conduct of a certificate of need hearing must be in accordance with the requirements of West Virginia Code § 29A-5-1 et seq., the state agency must rule on all proposed findings and must accompany any findings set forth in statutory language with "a concise and explicit statement of the underlying facts supporting the findings." W.Va.Code § 29A-5-3 (1986 Replacement Vol.).

4. The requirement of West Virginia Code § 29A-5-3 that an administrative agency rule on the parties' proposed findings is mandatory and will be enforced by the courts. Although the agency does not need to extensively discuss each proposed finding, such rulings must be sufficiently clear to assure a reviewing court that all those findings have been considered and dealt with, not overlooked or concealed.

Sam R. Harshbarger, Milton, Seymour J. Schafer, Pittsburgh, Pa., for St. Mary's Hosp.

J. Bradley Russell, Asst. Atty. Gen., for SHP Agency & Rose.

Michael I. Spiker, Charleston, for intervenors.

McGRAW, Chief Justice:

This is an appeal by St. Mary's Hospital from the judgement of the Circuit Court of Kanawha County affirming the grant of a certificate of need to the intervenor-appellee, HCA Health Services of West Virginia Inc. The circuit court's decision followed a long and involved set of administrative rulings which resulted in the award of a certificate of need to Appellee HCA to construct and operate a freestanding sixty bed psychiatric hospital in Huntington, West Virginia. The appellant makes four assignments of error and seeks reversal of the decisions below. Because we agree that the findings of fact were inadequate to meet the statutory requirements, we reverse and remand this case to the West Virginia Health Care Cost Review Authority with directions to conduct hearings in compliance with the statutory requirements.

I.

The certification of need in West Virginia began in 1977 with the passage of state legislation complementary to a national trend to deal with spiraling health care costs through reviewing the appropriateness of proposed major capital expenditures by health care institutions. Princeton Community Hospital v. State Health Planning and Development Agency, --- W.Va. ----, ----, 328 S.E.2d 164, 167-68 (1985). When Appellee HCA applied for a certificate of need for its proposed facility in 1982, the Appellee State Health Planning and Development Agency (SHPDA) was the state agency empowered by statute to administer the program. W.Va.Code § 16-2D-1 et seq. (1985 Replacement Vol.). ¹ The application explained that the proposed hospital would be divided into three twenty bed units providing services for substance abusers, adult psychiatric patients, and child and adolescent psychiatric patients. The hospital, which would cost over six million dollars to build, would employ approximately sixty-five persons.

In September 1982, the SHPDA determined that the application was complete, and a public hearing was held December 8-10, 1982. The first SHPDA decision granting the certificate of need was issued in January 1983. After a review and remand by the West Virginia Tax Department, ² the SHPDA issued a remand decision granting the certificate of need on September 19, 1983. It is this administrative decision which is the primary matter under review today. The Tax Department affirmed the SHPDA's second ruling and the appellant sought review of the administrative decisions in circuit court in March 1984, pursuant to Code § 16-2D-10(f). In April 1986, the circuit court issued its opinion affirming the decisions of the Tax Department and the SHPDA.

In reviewing the SHPDA's decision, both the Tax Department, as the statutorily designated review agency, and the circuit court were required by the statute, Code § 16-2D-10(f), to conduct their reviews in accordance with Code § 29A-5-4, which is the Administrative Procedures Act provision which governs the review of contested cases. Princeton Hospital, --- W.Va. at ----, 328 S.E.2d at 168. Regarding the parameters of this review, we have said:

Upon judicial review of a contested case under the West Virginia Administrative Procedure Act, Chapter 29A, Article 5, Section 4(g), the circuit court may affirm the order or decision of the agency or remand the case for further proceedings. The circuit court shall reverse, vacate or modify the order or decision of the agency if the substantial rights of the petitioner or petitioners have been prejudiced because the administrative findings, inferences, conclusions, decisions or order are: "(1) In violation of constitutional or statutory provisions; or (2) In excess of the statutory authority or jurisdiction of the agency; or (3) Made upon unlawful procedures; or (4) Affected by other error of law; or (5) Clearly wrong in view of the reliable, probative and substantial evidence on the whole record; or (6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion."

Syl. Pt. 2, Shepherdstown Volunteer Fire Department v. Human Rights Commission, --- W.Va. ----, 309 S.E.2d 342 (1983). Thus, the key question is whether the circuit court and the Tax Department were correct, based on the foregoing standards, in affirming the Appellee SHPDA's determinations and granting a certificate of need.

II.

Chapter 16, Article 2D of the Code details a complex process and specific standards by which applications for certificates are to be reviewed by the state agency. Before a certificate of need may be issued to any entity other than a health maintenance organization, the state agency must find that the proposed new institutional health service is both needed and, except in emergency circumstances, consistent with the state health plan. In addition, the state agency must make written findings regarding the (1) existence of alternatives, (2) utilization of similar existing services, (3) consideration of alternatives to new construction, (4) serious problems of patients in obtaining services without the proposed service, (5) consistency with applicable long-term care plans, and (6) needs of the medically underserved population. W.Va.Code § 16-2D-6(e), -9; see W.Va. C.S.R. § 65-7-10 (1983). Finally, because the conduct of a certificate of need hearing must be in accordance with the requirements of West Virginia Code § 29A-5-1 et seq., the state agency must rule on all proposed findings ³ and must accompany any findings set forth in statutory language with "a concise and explicit statement of the underlying facts supporting the findings." W.Va.Code § 29A-5-3 (1986 Replacement Vol.); see Harrison v. Ginsberg, 169 W.Va. 162, 170, 286 S.E.2d 276, 281 (1982). The Appellee SHPDA's remand decision falls short of these statutory standards in several ways.

The remand opinion makes no attempt to rule on the parties' proposed findings. The requirement of West Virginia Code § 29A-5-3 that an administrative agency rule on the parties' proposed findings is mandatory and will be enforced by the courts. Although the agency does not need to extensively discuss each proposed finding, such rulings must be sufficiently clear to assure a reviewing court that all those findings have been considered and dealt with, not overlooked or concealed. Pelham v. Superintendent, 436 So.2d 951 (Fla.Dist.Ct.App.1983); Schomer v. Department of Professional Regulation, 417 So.2d 1089 (Fla.Dist.Ct.App.1982); Outdoor Circle v. Harold K. L. Castle Trust Estate, 4 Haw.App. 633, 675 P.2d 784 (1983).

The Administrative Procedures Act also requires a concise and explicit explanation of the facts underlying an agency's findings that the substantive statute has or has not been complied with. A simple recitation of findings of fact in bare statutory language will not suffice. Citizens Bank of Weirton v. West Virginia Board of Banking and Financial Institutions, 160 W.Va. 220, 231, 233 S.E.2d 719, 727 ...