Swedish Health Servs. v. Dep't of Health of State
| Decision Date | 31 August 2015 |
| Docket Number | No. 72612–9–I.,72612–9–I. |
| Citation | 358 P.3d 1243,189 Wash.App. 911 |
| Court | Washington Court of Appeals |
| Parties | SWEDISH HEALTH SERVICES, a Washington nonprofit corporation, Appellant, v. DEPARTMENT OF HEALTH OF the STATE of Washington, Respondent. |
Brian William Grimm, Perkins Coie LLP, Seattle, WA, for Appellant.
Richard Arthur Mccartan, Atty. Gen. Ofc./ AHCR Div., Olympia, WA, Dept. of Agriculture & Health A.g. Office, Attorney at Law, Olympia, WA, for Respondent.
¶ 1 The Department of Health grants certificates of need to hospitals within identified planning areas based on regulatory criteria. Here, one of two primary criteria is that “[a]ll existing [percutaneous coronary interventions ] programs in that planning area are meeting or exceeding the minimum volume standard.”1 It is undisputed that two such programs in the identified planning area where Swedish Health Services seeks a certificate of need are not meeting this “minimum volume standard.” Because controlling regulations bar issuing a certificate of need under these circumstances, the Department properly denied Swedish's request for a certificate of need. We affirm.
¶ 2 The material facts are undisputed. Swedish operates two independently licensed hospitals in Seattle—First Hill and Cherry Hill—located approximately eight blocks from each other. Currently, Swedish's cardiology program is consolidated in its Cherry Hill location. When First Hill patients require cardiac care, Swedish transfers them to Cherry Hill.
¶ 3 Swedish decided to reestablish a cardiology program at First Hill. Accordingly, Swedish applied for a certificate of need from the Department to perform elective percutaneous coronary interventions (PCIs) at First Hill. PCIs are “invasive but nonsurgical mechanical procedures and devices that are used by cardiologists for the revascularization of obstructed coronary arteries.”2 These procedures can be elective or non-elective, but a hospital must obtain a certificate of need to provide elective PCIs.
¶ 4 The Department's regulations prohibit granting a certificate of need for elective PCIs to a new program if existing PCI programs in the identified planning area perform fewer than 300 PCI procedures a year.3 It is undisputed that two existing programs in the planning area where Swedish sought the certificate of need perform fewer than 300 PCI procedures a year. These programs are at University of Washington Medical Center and Northwest Hospital. Accordingly, the Department denied Swedish's application.
¶ 5 Swedish commenced an adjudicative proceeding. A health law judge granted summary judgment in favor of the Department, upholding its denial of this application for a certificate of need. Swedish sought review of this order, and the Department's review officer denied relief, adopting the health law judge's order as the final order and entering additional conclusions of law.
¶ 6 Swedish sought judicial review in King County Superior Court. The court affirmed the denial of the certificate of need.
¶ 7 Swedish appeals.
¶ 8 Swedish argues that the Department erroneously denied its application for a certificate of need. Swedish concedes that it failed to meet the regulatory requirements of WAC 246–310–720. But it claims the Department should have considered whether special circumstances entitled Swedish to a certificate. We hold that the Department properly denied the application.
¶ 9 “The standards of review in certificate of need cases stem from the Administrative Procedure Act (APA), chapter 34.05 RCW.”4 The party challenging the decision bears the burden to show that the agency action is invalid.5
¶ 10 This court substantially defers to the Department's interpretation of law, “particularly where the agency has special expertise.”6 We also defer to the Department's interpretation of its regulations, as “[it] has expertise and insight gained from administering the regulation that the reviewing court does not possess.”7
¶ 11 We interpret agency regulations using the principles of statutory interpretation.8 We first look to the regulation's plain language.9 If the meaning is clear, we apply that meaning.10
¶ 12 RCW 34.05.570(3) provides several grounds for which a reviewing court may reverse an administrative order. The reviewing court may grant relief from an agency decision if it determines that the Department erroneously interpreted or applied the law, or if the Department failed to decide all issues requiring resolution.11 These are the sole bases on which Swedish seeks reversal in this case.
¶ 13 We first consider whether the Department erroneously interpreted or applied the law. We hold that the Department properly interpreted and applied the applicable law.
¶ 14 Under RCW 70.38.128, the Department must promulgate “rules establishing criteria for the issuance of a certificate of need under this chapter for the performance of elective [PCIs] at hospitals that do not otherwise provide on-site cardiac surgery.”
¶ 15 To fulfill this statutory mandate, the Department promulgated WAC 246–310–700, which lists the standards a hospital must meet to obtain a certificate of need to perform elective PCIs. One such standard is WAC 246–310–720.
¶ 16 Under that regulation:
The minimum volume standard for an existing program is 300 PCIs per year.13
¶ 17 Here, the validity of this regulation is not at issue. Moreover, it is undisputed that two other existing PCI programs in the identified planning area where Swedish seeks a certificate of need fall below the 300 PCI minimum threshold. Swedish acknowledges this.14 Thus, the question is whether the Department correctly interpreted and applied the law in view of these undisputed facts.
¶ 18 The plain text of the Department's regulations establishes that its standards are mandatory. Under WAC 246–310–700, “To be granted a certificate of need, an adult elective PCI program must meet the standards in [the Department's regulations].”15 And under WAC 246–310–720, “The department shall only grant a certificate of need to new programs within the identified planning area if: ... All existing PCI programs in that planning area are meeting or exceeding the minimum volume standard.”16 Thus, satisfying the minimum volume standard is an essential prerequisite for a certificate of need.
¶ 19 Swedish concedes that two hospitals in its area fail to meet the minimum volume standard—300 PCI procedures per year. But it argues that the Department's decision is incorrect based on case authority in this and other jurisdictions. This argument is without merit.
¶ 20 Swedish primarily relies on King County Public Hospital District No. 2 v. Department of Health.17 Because that case is distinguishable, it does not control this one.
“Odyssey”), hospice care agencies, sought a certificate of need.18 When determining whether to grant such a certificate, the Department considers need for the proposed project as well as three other criteria.19 The Department forecasts future need based on regulatory criteria.20 For example, the relevant data includes hospice care use rates, the number of resident deaths in the applicable planning area, the projected population growth, and the current hospice care capacity.21 Another factor is whether existing hospice care providers in the applicable planning area will be unable to provide such care above a minimum threshold.22
¶ 22 Traditionally, applications for certificates of need were due in October, based on the Department's assumption that the required data for determining need would be available by that time.23 In fact, such data was not generally available by the October application deadline.24 Thus, applicants were required to apply and pay large fees without knowing whether there would be a need for additional hospice care agencies.25
¶ 23 Odyssey applied in both 2003 and 2006 for certificates of need.26 The Department denied both applications based on its determination that there was no need for additional services.27 Odyssey challenged the 2006 denial in an adjudicative proceeding.28 While that proceeding was pending, the Department released its 2008 hospice need projections.29 The projections, based on data after the October application deadline, showed that one additional hospice care agency was needed in 2009 and two in 2013.30 Odyssey asked the Department to grant its application in light of the new need calculations.31 The Department refused on the grounds that its policy was to review applications based on the data that existed at the time of the application, not later.32
¶ 24 Odyssey commenced a federal lawsuit against the Department, alleging violations of 42 U.S.C. § 1983 ; the Sherman Act; and the Commerce Clause of the United States Constitution.33 The Department maintained that its policy was to evaluate need based on the data available at the time of the application.34
¶ 25 Nevertheless, Odyssey and the Department agreed to settle both the federal lawsuit and Odyssey's pending adjudicative proceeding.35 Specifically, the Department agreed to consider stipulating to the approval of Odyssey's certificate of need application based on the new need calculations for the applicable planning area, subject to notice to other interested entities.36 It did so under what it described as “special circumstances.”37
¶ 26 Specifically, these circumstances were that Odyssey did not know of the need finding until after the 2008 application deadline.38 Moreover, the new calculation showed need for a...
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