Administrative – State Medical Facilities Plan – Qualified Applicant

The ALJ did not err in finding the healthcare Respondent to be a “qualified applicant for a certificate of need for a new hospital.

We affirmed the ALJ’s finding.

Petitioner MH Mission Memorial Hospital, LLLP appealed from a Final Decision by an Administrative Law Judge (ALJ) affirming the decision of the North Carolina Department of Health and Human Services, Division of Health Service Regulation, Healthcare Planning and Certificate of Need Section (DHHS). DHHS approved AdventHealth Asheville, Inc.’s and Adventist Health System Sunbelt Healthcare Corporation’s (collectively Respondent-Intervenor or Advent) application for a certificate of need (CON) for a new hospital with 67 acute beds, one obstetrical c-section delivery operating room, and five procedure rooms. Petitioner appealed DHHS’ decision to the Office of Administrative Hearings (OAH). The ALJ affirmed DHHS’ decision.

On appeal, Mission Memorial contended, among other things, that the ALJ erred in concluding Advent’s CON application met the “qualified applicant” standard and complied with Criteria 1 and 12 of N.C. Gen. Stat. § 131E-183(a)(1), (12) (2023) to meet the need outlined in the 2022 State Medical Facilities Plan (SMFP). Mission Memorial further asserted DHHS violated N.C. Gen. Stat. § 131E-185 (2023) by refusing to allow eight individuals to speak at the public hearing, resulting in substantial prejudice to Mission Memorial from the approval of Advent’s application. Advent argued Mission Memorial’s application failed to comply with Criteria 1, 4, and 18a, under N.C. Gen. Stat. § 131E-183(a)(1), (4), (18a) (2023), and was not eligible for CON approval.

Mission Memorial argued the ALJ erroneously found Advent to be a qualified applicant because it had failed to comply with Criteria 1 and 12. We disagreed. The 2022 SMFP defines a “qualified applicant” applying “for a CON to acquire the needed acute care beds” as a person or entity “who proposes to operate the additional acute care beds in a hospital,” to provide: (1) “a 24-hour emergency services department;” (2) “inpatient medical services to both surgical and non-surgical patients; and” (3) “if proposing a new licensed hospital, medical and surgical services on a daily basis within at least five of the following major diagnostic categories (MDC) recognized by the Centers for Medicare & Medicaid Services (CMS).”

Statutory Review Criterion 1 of N.C. Gen. Stat. § 131E-183(a)(1) requires proposed projects to be consistent with needs of qualified applicants as set forth by the SMFP. The 2022 SMFP provided an applicant proposing to develop and construct a new hospital must also provide medical and surgical services on a daily basis within at least five of the 25 MDCs listed in the 2022 SMFP and recognized by CMS. NC DHHS, State Medical Facilities Plan 37. Mission Memorial argued, while Advent’s application includes a proposal to develop a new c-section operating room (OR), the application did not propose to develop a new general purpose OR to be used for any type of surgical procedure, which would not support the conclusion Advent would be providing surgeries on a daily basis. The purported requirement to provide a general purpose OR is not mentioned in the SMFP definition of a “qualified applicant.” The SMFP simply requires the applicant to offer “medical and surgical services” within the five of the 25 MDCs. NC DHHS, State Medical Facilities Plan 37. The language of the SMFP is unambiguous and incorporated into a statute. The language should be interpreted using the plain meaning of its words, applying “surgical services” broadly rather than to limit the terms of the 2022 SMFP to mandate a general purpose OR.

While no other approved applicant proposed to develop a new hospital without at least one general OR, DHHS concluded a general OR is not a qualification for the CON award. The ALJ concluded the absence of something does not mean it is either required or prohibited. Mission Memorial’s own witness testified no current law specifies what specific types of procedures can be performed in a procedure room. One of Mission Memorial’s witnesses testified surgeries may be performed in a procedure room, provided the licensed clinicians and governing body of the specific facility agree the space is safe and equipped to perform such procedure. The ALJ’s Final Decision acknowledges this fact and used this as part of his conclusion Advent was a qualified applicant and DHHS’ grant of the CON to Advent should be affirmed.

Affirmed.

MH Mission Hospital LLLP v. NC Department of Health and Human Services, Division of Health Service Regulation, Health Care Planning & Certificate of Need (Lawyers’ Weekly No. 011-154-25, 23 pp.) (John Tyson, J.) Appealed from the Office of Administrative Hearings (Michael C. Byrne, J.) Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, by William F. Maddrey, Kenneth L. Burgess, Matthew A. Fisher, and Iain M. Stauffer, for the petitioner-appellant. Attorney General Jeff Jackson, by Assistant Attorney General, Derek L. Hunter, for the respondent-appellee. Wyrick Robbins Yates & Ponton LLP, by Frank Kirschbaum, Charles George, and Trevor P. Presler, for the respondent-intervenor-appellant. North Carolina Court of Appeals