Wilkesboro, Ltd., Matter of

• Decision Date: 05 January 1982
• Docket Number: No. 8123SC321,8123SC321
• Citation: 55 N.C.App. 313,285 S.E.2d 626
• Court: North Carolina Court of Appeals
• Parties: In the Matter of the Construction of a Health Care facility by WILKESBORO, LIMITED, a partnership.

Page 626

285 S.E.2d 626

55 N.C.App. 313

In the Matter of the Construction of a Health Care facility by WILKESBORO, LIMITED, a partnership.

No. 8123SC321.

Court of Appeals of North Carolina.

Jan. 5, 1982.

Atty. Gen. Rufus L. Edmisten by Asst. Atty. Gen. Robert L. Hillman, Raleigh, for State respondents.

McElwee, Hall, McElwee & Cannon by William H. McElwee, III and William C. Warden, Jr., North Wilkesboro, for petitioner-appellant.

Bode, Bode & Call by Robert V. Bode, Raleigh, for respondent Wilkesboro, Limited.

MORRIS, Chief Judge.

The North Carolina Certificate of Need Law, G.S. 131-175 et seq., effective 1 January 1979, recognized, among other things, the "trend of proliferation of unnecessary health care facilities and equipment" and the resulting "costly duplication and underuse of facilities," G.S. 131-175(4). The General Assembly, in enacting the Law, found further:

That the general welfare and protection of lives, health and property of the people of this State require that new institutional health services to be offered within this State be subject to review and evaluation as to type, level, quality of care, feasibility, and other criteria as determined by provisions of this Article or by the North Carolina Department of Human Resources pursuant to provisions of this Article prior to such services being offered or developed in order that only appropriate and needed institutional health services are made available in the area to be served.

G.S. 131-175(7). Under the law, no person can undertake new institutional health services or health care facilities without first applying for (G.S. 131-180) and obtaining a certificate of need. G.S. 131-178(a).

North Carolina Session Laws 1977, 2d Sess., c. 1184, s. 4 provided that the act would not apply to any project which had received approval under the program of 42 U.S.C. § 1320a-1 (Section 1122 of the federal Social Security Act, as amended by § 221, P.L. 92-603, ³ ) prior to 1 January 1979, so long as construction of the project commenced before 1 January 1980. The amended Section 1122 provided a procedure by which the federal government, in cooperation with the various states, reviewed proposed capital expenditures for health care facilities in order to eliminate expenditures for unnecessary facilities. It is logical, therefore, that North Carolina's exemption from the Certificate of Need Law of projects approved under the federal program before 1 January 1979, and on which construction had commenced prior to 1 January 1980, was designed to avoid two review processes, one by the federal government and one by the State. On the other hand, by requiring commencement of construction prior to 1 January 1980, the legislature recognized that a delay in construction of a federally-approved project could be extensive enough to warrant a new State review.

Judicial review of actions taken under the Certificate of Need Law is governed by the North Carolina Administrative Procedure Act (hereinafter NCAPA), Chapter 150A of the General Statutes:

Any proponent of a new institutional health service or capital expenditure project or any person who qualifies as a "party" or "person aggrieved" under G.S. 150A-2 shall have all the rights of appeal and judicial review available under Articles 3 and 4 of Chapter 150A.

G.S. 131-185(b). Article 4 of Chapter 150A governs the right to judicial review:

Any person who is aggrieved by a final agency decision in a contested case, and who has exhausted all administrative remedies made available to him by statute or agency rule, is entitled to judicial review of such decision under this Article, unless adequate procedure for judicial review is provided by some other statute, in which case the review shall be under such other statute. Nothing in this Chapter shall prevent any person from invoking any judicial remedy available to him under the law to test the validity of any administrative action not made reviewable under this Article.

G.S. 150A-43. In order, therefore, for a person to be entitled to judicial review under the NCAPA, (1) he must be a person aggrieved; (2) the agency decision must be a final one; and (3) the case in which the review is sought must be a contested one.

Definitions of "contested case" and "person aggrieved" are found in G.S. 150A-2:

(2) "Contested case" means any agency proceeding, by whatever name called, wherein the legal rights, duties or privileges of a party are required by law to be determined by an agency after an opportunity for an adjudicatory hearing. Contested cases include, but are not limited to proceedings involving rate-making, price-fixing and licensing. Contested cases shall not be deemed to include rule making, declaratory rulings, or the award or denial of a scholarship or grant.

....

(6) "Person aggrieved" means any person, firm, corporation, or group of persons of common interest who are directly or indirectly affected substantially in their person, property, or public office or employment by an agency decision.

Furthermore, G.S. 131-176(9) defines a "final decision" under the Certificate of Need Law as "an approval, a denial, an approval with conditions, or a deferral."

With this statutory scheme as background, we have reviewed the action taken by petitioner Vespers, Inc. in order to determine whether the trial court properly dismissed the action. We decide that the trial court erred in concluding that petitioner was not an aggrieved party and that the 22 May 1980 letter was not a final agency decision in a contested case. Dismissal of the action was, therefore, improper.

The action taken by respondent DHR in its 22 May 1980 letter relieving Wilkesboro, Limited of the requirement to apply for a certificate of need amounted to an agency determination of the legal duties of Wilkesboro, Limited. Although the record reveals no adjudicatory hearing, we believe that the case was a contested one. According to the petition filed by Vespers, the officials of respondent DHR had been informed that there was a question as to whether respondent Wilkesboro had commenced construction on the proposed health care facility before 1 January 1980. DHR, as the designated State Health Planning and Development Agency, had the duty to fulfill the purpose of the Certificate of Need Law, G.S. 131-177, and should have determined whether Wilkesboro had commenced construction before 1 January 1980, or whether it had a legal duty to submit an application for a certificate of need. The termcommencement of construction as used in the act has a specific definition, found at G.S. 131-176(6):

"Commencement of Construction" means that all of the following have been completed with respect to a project:

a. A written contract executed between the applicant and a licensed contractor to construct and complete the project within a designated time schedule in accordance with final architectural plans;

b. Required initial permits and approvals for commencing work on the project have been issued by responsible governmental agencies; and

c. Actual construction work on the project has started and a progress payment has been made by the applicant to the licensed contractor under terms of the construction contract.

This definition, almost verbatim, is also found at N.C.A.C. 10 3R .0104(11). There is nothing in the record which discloses that respondent DHR had made determinations concerning construction contracts, permits, or progress payments. It nevertheless had approved Wilkesboro's continued development of the health care facility, thereby exempting Wilkesboro from the certificate of need requirement.

Furthermore, we find that the 28 July 1980 letter of respondent DHR refusing petitioner's request for a reconsideration of...