in the Court of Appeals 22 August 2017.
by respondent from decision entered 9 August 2016 by Judge
Paul C. Ridgeway in Wake County No. 16-CVS-600 Superior
Poe Adams & Bernstein LLP, by Renee J. Montgomery and
Matthew W. Wolfe, for petitioner-appellee.
Attorney General Joshua H. Stein, by Special Deputy Attorney
General Amar Majmundar and Assistant Attorney General Bethany
A. Burgon, for respondent-appellant.
Robbins Yates & Ponton LLP, by Frank Kirschbaum, Charles
George, and Tobias Hampson, for Greensboro Orthopaedics,
P.A., OrthoCarolina, P.A., Raleigh Orthopaedic Clinic, P.A.,
Surgical Center of Greensboro, LLC, Southeastern Orthopaedic
Specialists, P.A., Orthopaedic & Hand Specialists, P.A.
(Hand Center of Greensboro), Cary Orthopaedic and Sports
Medicine Specialists, P.A., and Stephen D. Lucey, M.D., as
amici curiae in support of petitioner-appellee.
Troutman Sanders LLP, by Christopher G. Browning, Jr. and
Gavin B. Parsons, for North Carolina Retail Merchants
Association, North Carolina Home Builders Association, North
Carolina Chamber, North Carolina Farm Bureau, North Carolina
Association of Self-Insurers, American Insurance Association,
Property Casualty Insurers Association of America, Employers
Coalition of North Carolina, North Carolina Forestry
Association, North Carolina Automobile Dealers Association,
North Carolina Association of County Commissioners, Builders
Mutual Insurance Company, Dealers Choice Mutual Insurance
Company, First Benefits Insurance Mutual, Inc., Forestry
Mutual Insurance Company and the North Carolina Interlocal
Risk Management Agency, and P. Andrew Ellen for North
Carolina Retail Merchants Association, J. Michael Carpenter
for North Carolina Home Builders Association, Amy Y. Bason
for the North Carolina Association of County Commissioners,
Kimberly S. Hibbard and Gregg F. Schwitzgebel, III, for North
Carolina Interlocal Risk Management Agency, T. John
Policastro for North Carolina Auto Dealers Association, and
H. Julian Philpott, Jr., for North Carolina Farm Bureau, as
amici curiae in support of respondent-appellant.
we hold the Superior Court erred in defining the term
"hospital, " as used in the context of 2013 N.C.
Sess. Laws ch. 410, § 33. (a) and concluding that
"hospitals are separate and legally distinct entities
from ambulatory surgical centers, " we reverse the
court's decision that our General Assembly did not
authorize the Industrial Commission to adopt new maximum fees
for ambulatory surgical centers pursuant to 2013 N.C. Sess.
Laws ch. 410, § 33. (a) and remand the matter for entry
of an order affirming the Commission's declaratory
October 2015, petitioner Surgical Care Affiliates, LLC,
("petitioner") filed a request for a declaratory
ruling with respondent, the North Carolina Industrial
Commission ("the Commission").
[Petitioner] has requested a declaratory ruling regarding the
validity of certain of the Commission's rules affecting
the fee schedule for services performed at ambulatory surgery
centers. Specifically, [petitioner] has requested that the
Commission declare invalid its adoption of a new fee schedule
for ambulatory surgery center services set forth in 04 NCAC
10J .0103(g) and (h) (also referenced in 04 NCAC 10J
.0103(i)), and its amendment of 04 NCAC 10J .0101(d)(3) and
(5) to remove the former fee schedule.
July 2013, our General Assembly ratified 2013 N.C. Sess. Laws
ch. 410, § 33. (a), which set out mandates for the
Commission regarding its medical fee schedule. The Commission
noted in its 14 December 2015 Declaratory Ruling that
"[w]ith respect to the schedule of maximum fees for
physician and hospital compensation adopted by [the
Commission] pursuant to G.S. 97-26, those fee schedules shall
be based on the applicable Medicare payment
methodologies." (Emphasis added). Furthermore, the
Commission noted that in developing the new fee schedules,
2013 N.C. Sess. Laws ch. 410, § 33. (a) provided that
"[the Commission was] exempt from the certification
requirement of G.S. 150B-19.1(h) and the fiscal note
requirement of G.S. 150B-21.4."
the new mandate, the Commission adopted rules 04 NCAC 10J
.0102 and .0103 and amended rules 04 NCAC 10J .0101 and
.0102. Under Rule 04 NCAC 10J .0101, the Commission set out
its "Hospital Fee Schedule, " which included
reimbursement for services provided by ambulatory surgery
centers. Further, the Commission reasoned that by following
the procedures for rulemaking, as set out in General
Statutes, Chapter 150B, a rebuttable presumption was created
that the rules were adopted in accordance with the
Administrative Procedure Act.
challenged the Commission's determination that the
mandates set out in 2013 N.C. Sess. Laws ch. 410, § 33.
(a), "[w]ith respect to the schedule . . . for
physician and hospital compensation" (emphasis
added), directed the Commission to change the fee schedule
for medical treatment provided at ambulatory surgery
centers. Furthermore, petitioner challenged the
assertion that the session law's exemption from the
fiscal note requirement of N.C. Gen. Stat. § 150B-21.4
was applicable to the Commission. Thus, petitioner argued
that the adopted new rules (04 NCAC 10J .0102 and .0103) and
the amended existing rules (04 NCAC 10J .0101 and .0102) were
also invalid due to the Commission's failure to meet the
fiscal note requirements of section 150B-21.4. Petitioner
asserts that "as a result of substantially reduced
maximum reimbursement rates for surgical procedures provided
pursuant to Chapter 97, and the Commission's failure to
promulgate a fee schedule that includes all surgical
procedures performed at ambulatory surgery centers,
[petitioner] will lose a significant amount of revenue."
as reflected in its declaratory ruling, the Commission
reasoned that petitioner failed to rebut the presumption of
validity regarding the Commission's adopted and amended
rules and denied petitioner's requested relief.
January 2016, petitioner filed a petition for judicial review
of the Commission's declaratory ruling in Wake County
Superior Court. Prior to the hearing, the following parties,
Greensboro Orthopedics, P.A.; OrthoCarolina, P.A.; Raleigh
Orthopaedic Clinic, P.A.; Surgical Center of Greensboro, LLC;
Southeastern Orthopaedic Specialists, P.A.; Orthopaedic &
Hand Specialists, P.A.; Cary Orthopaedic and Sports Medicine
Specialists, P.A.; and Stephen D. Lucey, filed a motion to