BLUE RIDGE HEALTHCARE HOSPITALS INC. d/b/a CAROLINAS HEALTHCARE SYSTEM - BLUE RIDGE, Petitioner,
NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF HEALTH SERVICE REGULATION, HEALTHCARE PLANNING AND CERTIFICATE OF NEED SECTION, Respondent, and CALDWELL MEMORIAL HOSPITAL, INC. and SCSV, LLC, Respondent-Intervenors.
in the Court of Appeals 23 August 2017.
by petitioner from Final Decision entered 3 October 2016 by
Administrative Law Judge Selina Malherbe Brooks in the North
Carolina Office of Administrative Hearings No. 16 DHR 08034.
Moore Leatherwood LLP, by Maureen Demarest Murray, Carrie A.
Hanger and Matthew Nis Leerberg, for petitioner-appellant
Blue Ridge Healthcare Hospitals, Inc. d/b/a Carolinas
Healthcare System - Blue Ridge.
Attorney General Joshua H. Stein, by Assistant Attorney
General Jill A. Bryan and Special Deputy Attorney General
June Ferrell, for respondent-appellee North Carolina
Department of Health and Human Services.
Williams Mullen, by Joy Heath and Elizabeth D. Scott, for
respondent-intervenors-appellees Caldwell Memorial Hospital,
Inc. and SCSV, LLC.
Ridge Healthcare Hospitals, Inc. d/b/a Carolinas Healthcare
System - Blue Ridge ("Blue Ridge") appeals from a
final decision of the Administrative Law Judge
("ALJ"), which granted summary judgment in favor of
the North Carolina Department of Health and Human Services
("DHHS"), Caldwell Memorial Hospital, Inc.
("Caldwell Memorial"), and SCSV, LLC. We affirm.
Memorial is a not-for-profit community hospital located in
Lenoir, North Carolina, which became part of the UNC Health
Care System in 2013. Caldwell Memorial operates and maintains
eight operating rooms, which are the only operating rooms
located in Caldwell County. Three of the operating rooms are
located at Hancock Surgery Center ("HSC"), which is
housed in an older building previously used as a shopping
center. HSC is located approximately 0.6 miles from Caldwell
Memorial, and is licensed as part of Caldwell Memorial.
2015, Caldwell Memorial and SCSV, LLC (collectively,
"Caldwell Memorial") filed a Certificate of Need
("CON") application with DHHS's Division of
Health Service Regulation, Healthcare Planning and
Certificate of Need Section ("the Agency"), seeking
approval to establish Caldwell Surgery Center
("CSC"), a new separately-licensed ambulatory
surgery center to be located in Granite Falls, one to two
miles from the southern border of Caldwell County.
Memorial seeks to create a second point of surgery access
within a more densely populated area of Caldwell County in
addition to the city of Lenoir. Ambulatory surgical centers
are capable of offering surgical services to patients at a
purported lower cost than surgeries performed inside of
hospitals. Caldwell Memorial asserts an ambulatory surgery
center is suited to attract and retain capable surgeons by
offering physician investment opportunities, which are not
available in hospital operating rooms. The propriety of this
investment opportunity is not before us.
total inventory of currently licensed operating rooms located
in Caldwell County would not change as a result of Caldwell
Memorial's proposal. Caldwell Memorial had sought
previous approval in 2014 to relocate the three operating
rooms from HSC to CSC, but the Agency denied the CON
Ridge maintains and operates six operating rooms at its
Morganton hospital campus and four operating rooms at its
Valdese hospital campus. It submitted written comments in
opposition to the application, and participated in the public
hearing held in September 2015. Blue Ridge had also submitted
its objections to Caldwell Memorial's previous CON
applications. Two other hospitals and an ambulatory surgery
center in the extended geographical area also submitted
comments in opposition to Caldwell Memorial's
proposed site for CSC is five miles from both Viewmont
Surgery Center and Frye Medical Center, twelve miles from
Catawba Valley Medical Center, and eleven miles from Blue
Ridge's Valdese hospital campus. All of these facilities
possessed surgical capacity during the Agency's review.
Viewmont Surgery Center in Catawba County is the only
multi-specialty ambulatory surgery center in the area, but
does not offer the surgical specialties proposed in Caldwell
Memorial's CON application, such as spine and vascular
surgery. Blue Ridge notes the existence of a significant
surplus of operating rooms in Caldwell, Burke, and Catawba
Counties in support of its opposition to Caldwell
Agency and ALJ Decision
letter dated 28 December 2015, the Agency notified Caldwell
Memorial of its decision to conditionally approve its
application to establish the ambulatory surgery center. On 29
January 2016, Blue Ridge filed a petition for a contested
case hearing in the Office of Administrative Hearings
("OAH") and challenged the Agency's decision to
approve Caldwell Memorial's CON application. See
N.C. Gen. Stat. § 131E-188(a) (2015) (providing any
"affected person" is entitled to bring a contested
case challenging the agency's decision on a CON
application); N.C. Gen. Stat. § 131E-188(c) (defining
"affected person" to include "any person who
provides services, similar to the services under review, to
individuals residing within the service area or geographic
area proposed to be served by the applicant"). The ALJ
permitted Caldwell Memorial and Frye Regional Medical Center,
LLC ("Frye") to intervene.
Memorial and the Agency moved for summary judgment before the
OAH on 9 September 2016. Blue Ridge and Frye opposed the
motion. By final decision entered on 3 October 2016, the ALJ
granted summary judgment in favor of Caldwell Memorial and
the Agency. Blue Ridge appeals.
lies in this Court from the final decision of the ALJ
pursuant to N.C. Gen. Stat. §§ 131E-188(b) and
Ridge argues the Agency erred by ignoring or applying certain
criteria set forth in N.C. Gen. Stat. § 131E-183 when it
approved Caldwell Memorial's CON application and asserts
genuine issues of material fact exist regarding the
conformity of the CON application with the statutory review
Standard of Review
North Carolina Administrative Code governs our review of the
ALJ's decision, and provides:
(b) The court reviewing a final decision may affirm the
decision or remand the case for further proceedings. It may
also reverse or modify the decision if the substantial rights
of the petitioners may have been prejudiced because the
findings, inferences, conclusions, or decisions are:
(1)In violation of constitutional provisions;
(2) In excess of the statutory authority or jurisdiction of
the agency or administrative law judge;
(3)Made upon unlawful procedure;
(4)Affected by other error of ...