West Virginia Health Care Cost Review Authority v. Boone Memorial Hosp.

• Decision Date: 17 May 1996
• Docket Number: No. 23035,23035
• Citation: 196 W.Va. 326,472 S.E.2d 411
• Court: West Virginia Supreme Court
• Parties: The WEST VIRGINIA HEALTH CARE COST REVIEW AUTHORITY, Appellee, v. BOONE MEMORIAL HOSPITAL, Appellant.

Page 411

472 S.E.2d 411

196 W.Va. 326

The WEST VIRGINIA HEALTH CARE COST REVIEW AUTHORITY, Appellee, v. BOONE MEMORIAL HOSPITAL, Appellant.

No. 23035.

Supreme Court of Appeals of West Virginia.

Submitted April 24, 1996.

Decided May 17, 1996.

[196 W.Va. 328] Syllabus by the Court

1. " 'Upon judicial review of a contested case under the West Virginia Administrative Procedure[s] 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, 172 W.Va. 627, 309 S.E.2d 342 (1983)." Syllabus Point 1, St. Mary's Hospital v. State Health Planning and Development Agency, 178 W.Va. 792, 364 S.E.2d 805 (1987).

2. Once a disputed regulation is legislatively approved, it has the force of a statute itself. Being an act of the West Virginia Legislature, it is entitled to more than mere deference; it is entitled to controlling weight. As authorized by legislation, a legislative rule should be ignored only if the agency has exceeded its constitutional or statutory authority or is arbitrary or capricious.

3. If the language of an enactment is clear and within the constitutional authority of the law-making body which passed it, courts must read the relevant law according to its unvarnished meaning, without any judicial embroidery. Even when there is conflict between the legislative rule and the initial statute, that conflict will be resolved using ordinary canons of interpretation.

4. "Judicial review of an agency's legislative rule and the construction of a statute that it administers involves two separate but interrelated questions, only the second of which furnishes an occasion for deference. In deciding whether an administrative agency's position should be sustained, a reviewing court applies the standards set out by the United States Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The court first must ask whether the Legislature has directly spoken to the precise question at issue. If the intention of the Legislature is clear, that is the end of the matter, and the agency's position only can be upheld if it conforms to the Legislature's intent. No deference is due the agency's interpretation at this stage." Syllabus Point 3, Appalachian Power Co. v. State Tax Department of West Virginia, 195 W.Va. 573, 466 S.E.2d 424 (1995).

5. "If legislative intent is not clear, a reviewing court may not simply impose its own construction of the statute in reviewing a legislative rule. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. A valid legislative rule is entitled to substantial deference by the reviewing court. As a properly promulgated legislative rule, the rule can be ignored only if the agency has exceeded its constitutional or statutory authority or is arbitrary or capricious. W. Va.Code, 29A-4-2 (1982)." Syllabus Point 4, Appalachian Power Co. v. State Tax Department of West Virginia, 195 W.Va. 573, 466 S.E.2d 424 (1995).

Marianne K. Stonestreet, General Counsel, Sallie H. Tweel, Assistant General Counsel, Charleston, for Appellee.

James W. Thomas, Jackson & Kelly, Charleston, for Appellant.

CLECKLEY, Justice.

The appellant herein, Boone Memorial Hospital (Hospital), appeals the December 29, 1994, order of the Circuit Court of Kanawha County which held the Hospital's proposed stationary computerized tomography (CT) service is subject to Certificate of Need (CON) review. In so determining, the circuit court reversed the June 9, 1994, administrative decision of the Office of Hearings and Appeals of the West Virginia Department of Tax and Revenue (OHA) which held the proposal is not subject to CON review. OHA had reversed the November 16, 1993, decision of the West Virginia Health Care Cost Review Authority (HCCRA), ¹ the appellee herein, and held HCCRA exceeded its statutory authority by finding the proposal is subject to CON review. The primary issue on appeal is whether HCCRA has jurisdiction over the proposed CT service. For the following reasons, we affirm.

I. FACTUAL AND PROCEDURAL HISTORY

By letter dated October 14, 1993, ² the Hospital requested a determination of reviewability for a proposed stationary CT unit. See 65 W.Va. C.S.R. 7, § 25.2 (1992). ³ In its letter, the Hospital stated that since 1985 it had contracted for a mobile CT unit which provided its patients CT services one day per week. In August of 1993, the Hospital was notified by its vendor that its mobile services would be discontinued. After mobile services ceased, it became necessary to transfer patients in need of CT services to Charleston Area Medical Center which the Hospital asserted was significantly more expensive than on-site services. Thus, the Hospital proposed to enter into a purchased services agreement with US Medical Management II(USM) for a stationary CT unit.

The Hospital stated it would provide staffing, board certified CT radiology services, and all medical supplies for the unit's operation. It also would purchase the CT services for a flat fee per scan. In turn, USM would be responsible for the total capital expenditure for the stationary unit at a cost of $296,800. The Hospital emphasized this amount is less than the $300,000 threshold to constitute the acquisition of major medical equipment as defined in W. Va.Code, 16-2D-2(q) (1991), ⁴ and the acquisition did not constitute a "new institutional health service" as set forth in W. Va.Code, 16-2D-3 (1993), specifically W. Va.Code, 16-2D-3(e) and 3(h), ⁵ and 65 W. Va.C.S.R. 7, § 2.14 (1992). ⁶ Furthermore, the Hospital argued the projected annual operating expenses of $93,930.54 associated with the CT services are below the $300,000 threshold contained within 65 W. Va.C.S.R. 7, § 2.9 (1992). ⁷ Therefore, the Hospital requested HCCRA find the proposal not subject to CON review because the project did not meet the regulatory requirements for CON reviewability and it did not require an exemption review.

In its decision dated November 16, 1993, HCCRA disagreed. It relied upon the State Health Plan Standards for Certificate of Need (State Health Plan Standards) approved on October 5, 1992, to determine "that new/additional stationary CT services meet certain criteria." HCCRA determined "the intent of these Standards is that proposals for new/additional stationary CT units will be viewed as new institutional health services under W. Va.Code § 16-2D-3(e)." ⁸ Thus, HCCRA found the proposal to be subject to CON review. The Hospital appealed this decision to OHA. See W. Va.Code, 16-29B-13 (1983).

The Hospital argued before OHA, as it also does in the present appeal, that the CT services are not being offered as a "new institutional health service" under the plain language of W. Va.Code, 16-2D-3(e). "[W]hen used in connection with health services," to "offer" is defined as a "health care facility or health maintenance organization hold[ing] itself out as capable of providing, or as having the means for the provision of, specified health services." W. Va.Code, 16-2D-2(t) (1991). In addition, W. Va.Code, 16-2D-2(l) (1991), defines "health services" as "clinically related preventive, diagnostic, treatment or rehabilitative services[.]" The Hospital states it is beyond dispute that CT services were offered at the Hospital during the preceding twelve-month period.

The Hospital also asserted below, as it does here, "that the State Health Plan Standards fail to confer jurisdiction or authority for HCCRA's decision." On the other hand, HCCRA argued that CON review was necessary under "current law" and W. Va.Code, 16-2D-3(e), because the Hospital was switching from a mobile part-time unit which had not undergone CON review to a stationary full-time unit. Relying upon the State Health Plan Standards, HCCRA points to the fact that the State Health Plan Standards define stationary and mobile CT services differently. ⁹ It also quotes other language it argues evidences a distinction between mobile and stationary CT services. ¹⁰ The Hospital not only claims HCCRA cannot obtain its jurisdiction from another agency's promulgation of the State Health Plan Standards but, regardless of that fact, "[t]he State Health Plan exists to define criteria for otherwise reviewable transactions, not to define reviewability in the first instance."

The State Health Plan Standards were created by the West Virginia Health Care Planning Commission (Commission) which the Legislature gave "all powers necessary or appropriate to carry out the health planning purposes of this article [W. Va.Code, 16-1A-1, et seq.], said powers being related to developing a comprehensive state health plan." W. Va.Code, 16-1A-3 (1991). The Commission was created within the Governor's office, and the Governor was given the power to designate and appoint its members. W. Va.Code, 16-1A-3. Among other things, the Commission was charged with the responsibility to develop and present to the Governor before July 1, 1992, "proposed amendments and modifications to...