University of Wash. v. Dept. of Health

• Decision Date: 10 July 2008
• Docket Number: No. 80264-5.,80264-5.
• Citation: 187 P.3d 243,164 Wn.2d 95
• Court: Washington Supreme Court
• Parties: UNIVERSITY OF WASHINGTON MEDICAL CENTER, Respondent, v. WASHINGTON STATE DEPARTMENT OF HEALTH, Petitioner.

187 P.3d 243

164 Wn.2d 95

UNIVERSITY OF WASHINGTON MEDICAL CENTER, Respondent, v. WASHINGTON STATE DEPARTMENT OF HEALTH, Petitioner.

No. 80264-5.

Supreme Court of Washington, En Banc.

Argued May 8, 2008.

Decided July 10, 2008.

Peter Scott Ehrlichman, Brian William Grimm, Dorsey & Whitney LLP, Seattle, Richard Arthur McCartan, Alan D. Copsey, Attorney General's Office, Olympia, for Petitioner.

Kathleen Dell Benedict, Narda D. Pierce, Benedict Garratt Pond & Pierce, Olympia, for Respondent.

CHAMBERS, J.

¶ 1 Under Washington law, certain medical services can be offered only by holders of a "certificate of need" issued by the Washington State Department of Health. We are asked to decide whether the department improperly gave Swedish Medical Center a certificate of need to provide liver transplants. We conclude it did not and reinstate the health law judge's order approving the certificate.

BACKGROUND

¶ 2 In 1979, our legislature accepted Congress's invitation to regulate the number of healthcare providers entering the market and enacted the State Health Planning and Resources Development Act, chapter 70.38 RCW. Because of this, certain types of health care facilities and programs (including liver transplant programs) may be opened only if the department first issues a certificate of need. RCW 70.38.105; WAC 246-310-200, -210. Substantively, before a certificate can be granted, the department considers the need for the proposed program, alternative ways to provide the same health benefits, the financial feasibility of the proposed program, and the impact on existing training programs, among other things. RCW 70.38.115(2); see also WAC 246-310-210 through -240. Procedurally, the department must notify certain interested parties (such as those providing competing services), take public comment, and, if requested, hold a public hearing. RCW 70.38.115(9), (10); WAC 246-310-160, -180. The public comment period is generally limited to 45 days, with the last 10 days reserved for rebuttal from the applicant and certain interested parties. WAC 246-310-160(1)(a). The department is to act within 90 days on applications (45 days after the close of the public comment period), though extensions are possible. RCW 70.38.115(8); WAC 246-310-160(1), (2). An unsuccessful applicant or other interested party can appeal the department's decision, first to a health law judge for a de novo review, then to the judicial system. WAC 246-310-610; RCW 34.05.514.

¶ 3 In June 2003, Swedish applied for a certificate of need to establish a liver transplant program. The University of Washington Medical Center (UWMC) objected and asked for a public hearing, where it argued stridently against the certificate. For many years, the UWMC has operated the only adult liver transplant program in the five state "WWAMI" area (Washington, Wyoming, Alaska, Montana, and Idaho).¹ The UWMC submitted considerable evidence to support its contention that there was no need for a second liver transplant program in Washington State.

¶ 4 After the public hearing, Swedish and the UWMC submitted rebuttal evidence on November 24, 2003, the last day authorized by law, and the department formally closed the evidentiary record. There is no established procedure for surrebuttal. In 2004, the department granted Swedish a certificate of need. The UWMC appealed. Because Health Law Judge Caner was reviewing the department's initial decision, she substantially restricted the new evidence the parties could present to evidence directly relevant to the record upon which the department granted the certificate of need. On that evidence, in 2005, Judge Caner affirmed the department's decision.

¶ 5 The UWMC sought judicial review. In 2006, Thurston County Superior Court Judge Tabor reversed Judge Caner on procedural grounds. Judge Tabor concluded that Swedish had submitted a new argument in rebuttal, and that Judge Caner's evidentiary rulings had improperly prevented the UWMC from being allowed to respond to it.

¶ 6 On remand, Judge Caner expanded the scope of admissible evidence to evidence "that existed as of December 31, 2003." Clerk's Papers at 290. In effect, she reopened the administrative record another five weeks. Among other things, this meant that Judge Caner would not hear evidence the UWMC sought to submit relating to changes in the way donor livers were matched nationwide, which would have, it asserts, undercut other factual determinations of the department relating to the local need for a second program. It also meant that Judge Caner would not hear evidence about the UWMC's plans to add a second liver transplant fellow. The new fellow could potentially impact both the need for a second liver transplant center and the impact of a second center on the UWMC's training program. It appears UWMC had not raised its plans for an additional liver transplant fellow during the public comment period. Several of the UWMC's witnesses testified at the remand hearing that the evidence they wished to present did not comply with the evidentiary cutoff, and, essentially, sat down without testifying. After a hearing that had been scheduled for three days but took only one, Judge Caner affirmed the certificate of need. She specifically found the area would support two liver transplant programs, patients would benefit from having a choice, and that both liver transplant programs would benefit from collegial competition. Once again, the UWMC appealed, arguing that Judge Caner had erred by refusing to hear the post-2003 evidence it wished to submit and that the department was substantively wrong that the area needs another liver transplant center.

¶ 7 The superior court reversed again, finding that Judge Caner abused her discretion by setting the evidentiary cutoff so far back in time. We granted direct review.

ANALYSIS

¶ 8 Justice Brachtenbach briefly summarized the standards of review in certificate of need cases. We cannot improve upon his words:

1. We review the entire administrative record.

2. The agency decision is presumed correct and the challenger bears the burden of proof.

3. We do not retry factual issues and accept the administrative findings unless we determine them to be clearly erroneous, that is, the entire record leaves us with a definite and firm conviction that a mistake has been made. Important here is the corollary principle that the existence of credible evidence contrary to the agency's findings is not sufficient in itself to label those findings clearly erroneous.

4. The error of law standard permits this court to substitute its interpretation of the law for that of the agency, but we accord substantial deference to the agency's interpretation, particularly in regard to the law involving the agency's special knowledge and expertise.

5. To find an agency's decision to be arbitrary and capricious we must conclude that the decision is the result of willful and unreasoning disregard of the facts and circumstances.

Providence Hosp. of Everett v. Dep't of Soc. & Health Servs., 112 Wash.2d 353, 355-56, 770 P.2d 1040 (1989) (citations omitted) (citing Renton Educ. Ass'n v. Pub. Empl. Relations Comm'n, 101 Wash.2d 435, 440, 680 P.2d 40 (1984); In re All-State Constr. Co., 70 Wash.2d 657, 659, 425 P.2d 16 (1967); Franklin County Sheriff's Office v. Sellers, 97 Wash.2d 317, 325, 646 P.2d 113 (1982); Keppeler v. Bd. of Trs., 38 Wash.App. 729, 732, 688 P.2d 512 (1984); Barrie v. Kitsap County, 93 Wash.2d 843, 850, 613 P.2d 1148 (1980)). Thus, the challenger has the burden of showing the department misunderstood or violated the law, or made decisions without substantial evidence. We do not reweigh the evidence. Providence, 112 Wash.2d at 360, 770 P.2d 1040.

1. THE EVIDENTIARY CUTOFF

¶ 9 The threshold question before the court is whether Judge Caner abused her discretion when she imposed the December 31, 2003 evidentiary cutoff in the remand hearing. The department argues that Judge Caner appropriately exercised her discretion to exclude irrelevant evidence. See RCW 34.05.452(1) ("The presiding officer may exclude evidence that is irrelevant, immaterial, or unduly repetitious."). At oral argument, the department suggested that the decision to grant a certificate of need is made on a "snapshot" of facts around the time the application is filed. The UWMC responds that the Court of Appeals has recently held that the health law judge is the final administrative decision maker. DaVita, Inc. v. Dep't of Health, 137 Wash.App. 174, 181, 151 P.3d 1095 (2007). It argues that implicit in its right to a de novo hearing before the health law judge is the right to present existing evidence that supports its case, even if that evidence did not exist when the department's "snapshot" was taken.

¶ 10 Nothing in the rules or the statutes specifically addresses the appropriate record before the health law judge. Instead, the law leaves that question to the department by rule or to the health law judge by rulings guided by the Rules of Evidence. See RCW 34.05.452 (evidence at administrative review hearings); RCW 70.38.115 (procedures for certificate of need review hearings). Under the Rules of Evidence, "[e]rror may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected." ER 103(a). We review a trial judge's evidentiary rulings for abuse of discretion. State v. Myers, 133 Wash.2d 26, 34, 941 P.2d 1102 (1997).

¶ 11 Both the statutes and the administrative rules clearly contemplate that the decision will be made quickly; ideally, 90 days from the application's filing. RCW 70.38.115(8); WAC 246-310-160(1). Requiring the health law judge to admit evidence created long after this period of time would undermine the statutory objective of expeditious decision making and prevent meaningful public input on that evidence. A request for an adjudicative hearing does not begin the application process anew; the adjudicative...