COUNTY OF WAKE
WAKE RADIOLOGY SERVICES, L.L.C., )
WAKE RADIOLOGY CONSULTANTS, )
P.A., RALEIGH MR IMAGING CENTER )
LIMITED PARTNERSHIP and WAKE )
RADIOLOGY DIAGNOSTIC IMAGING, )
INC., )
Petitioners, )
v. )
)
NORTH CAROLINA DEPARTMENT )
OF HEALTH AND HUMAN SERVICES, )
DIVISION OF FACILITY SERVICES, )
CERTIFICATE OF NEED SECTION, )
ROBERT J. FITZGERALD in his )
official capacity as Director of the )
Division of Facility Services and LEE B. )
HOFFMAN in her official capacity as Chief )
of the Certificate of Need Section, )
Respondents, )
)
and )
)
MOBILE IMAGING OF NORTH )
CAROLINA, LLC, )
Respondent-Intervenor. ) / IN THE OFFICE OF
ADMINISTRATIVE HEARINGS
03 DHR 0676
ORDER AND FINAL DECISION DISMISSING CONTESTED CASE
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THIS CONTESTED CASE came for hearing before the undersigned on June 24, 2003, on the following Motions:
(1) Petitioners Wake Radiology Services, LLC’s, Wake Radiology Consultants, P.A.’s and Raleigh MR Imaging Limited Partnership’s Motion for a Stay and to Release or Modify Bonds;
(2) Respondent-Intervenor Mobile Imaging of North Carolina, LLC’s, (“MINC”) motion for an order dismissing this case; and
(3) Petitioners’ Motion to Amend the Petition for Contested Case Hearing.
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At the hearing on the Motions, Petitioners withdrew their Motion for a Stay.
APPEARANCES
For the Petitioners Wake Radiology Services, LLC, Wake Radiology Consultants, P.A. and Raleigh MR Imaging Limited Partnership (“Petitioners”):
Grady L. Shields
Wyrick Robbins Yates & Ponton LLP
Suite 300, 4101 Lake Boone Trail
Raleigh, North Carolina 27607
For Respondent N.C. Department of Health and Human Services, Division of Facility Services, Certificate of Need Section (“the CON Section” or “the Agency”):
Melissa L. Trippe
Special Deputy Attorney General
North Carolina Department of Justice
Post Office Box629
Raleigh, North Carolina 27602-0629
For Respondent-Intervenor Mobile Imaging of North Carolina, LLC (“MINC”):
S. Todd Hemphill
Bode, Call & Stroupe, L.L.P.
P.O. Box 6338
Raleigh, North Carolina 27628-6338
Based upon the Findings of Fact and Conclusions of Law set forth hereinbelow, the undersigned grants Petitioners’ Motion to Amend, grants MINC’s Motion to Dismiss in part and denies that motion in part, and denies Petitioners’ Motion to Release or Modify Bonds.
FINDINGS OF UNDISPUTED FACT
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1. On or about April 29, 2003, Petitioners filed this contested case against the respondents North Carolina Department of Health and Human Services, Division of Facility Services, Certificate of Need Section, Robert J. Fitzgerald in his official capacity as Director of the Division of Facility Services and Lee B. Hoffman in her official capacity as Chief of the Certificate of Need Section (hereafter collectively referred to as “DFS” or the “Agency”).
2. The petition challenges the Agency’s issuance of a certificate of need to MINC, on April 7, 2003, to acquire a mobile magnetic resonance imaging scanner (MRI), for use at doctors’ offices in two locations, Angier in Harnett County and Franklinton in Franklin County.
3. On April 15, 2002, MINC filed the application for this certificate of need. There were no other applicants and the review was therefore noncompetitive. The Agency found that the application was complete and reviewed it in the review cycle which began on May 1, 2002 (Project I.D. No. M-6605-02).
4. By letter dated September 27, 2002 and the written “Required State Agency Findings” issued on the same day, the CON Section denied MINC’s application.
5. On October 25, 2002, MINC filed a petition for contested case challenging the decision. Mobile Imaging of North Carolina, LLC, v. N.C. Department of Health and Human Services, Division of Facility Services, Certificate of Need Section (02 DHR 1802 ) (the “Prior Contested Case”).
6. On January 22, 2003, two of the petitioners in the present case, Wake Radiology Services, LLC and Wake Radiology Consultants, P.A., moved to intervene in the Prior Contested Case on the grounds that they were an “affected person” within the meaning of G.S. 131E-188(c), because they were an entity located within the health service area providing similar services and equipment proposed by MINC in its application, specifically, MRI services. Based on the motion, Administrative Law Judge Sammie Chess allowed intervention by order entered January 31, 2003. Betsy Johnson Regional Hospital was also permitted to intervene.
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7. On April 7, 2003, the first day of the contested case hearing, Betsy Johnson withdrew from the Prior Contested Case. On the same date Judge Chess entered an order dismissing Wake Radiology Services, LLC and Wake Radiology Consultants P.A., as intervenors, based his determination that neither provides MRI services within the meaning of the CON law and therefore did not qualify to intervene under the certificate of need law provision upon which their motion to intervene was based, and in fact had acknowledged that the impact, if any, on their services would be de minimus. Order Granting Motion to Dismiss Wake Radiology Services, LLC and Wake Radiology Consultants, P.A. as Respondent-intervenors and Denying Motion to Intervene Filed by Raleigh MR Imaging Limited Partnership, at ¶¶3-9, 12, pp. 2-5 (02 DHR 1802, Apr. 7, 2003).
8. Another petitioner in the present case, Raleigh MR Imaging Center Limited Partnership (“Raleigh MRI”) also moved to intervene in Prior Contested Case, but was denied as untimely because the motion was filed the day before the first day of the contested case hearing. Judge Chess also denied intervention based on the conclusion that Raleigh MRI failed to demonstrate that it would be harmed by the approval of MINC’s application, as it had conceded in discovery deposition that, if there were any effect on its MRI services from MINC’s mobile MRI, it would only be to a “small degree” and had failed in its affidavit to make any showing of actual harm to Raleigh MRI, other than a conclusory statement that “upon information and belief,” Raleigh MRI would be adversely affected. Order, supra, at pp. 4-5.
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9. On April 4, 2003, Lee B. Hoffman, Chief of the CON Section, and counsel for MINC and the Agency agreed to and signed a proposed Settlement Agreement, which was subject to (1) Judge Chess granting MINC’s Motion to Dismiss and denying Raleigh MRI’s Motion to Intervene, and (2) approval and execution by the Final Agency Decisionmaker. On April 7, 2003, after the Wake Radiology intervenors were dismissed by Judge Chess, the Director of the Division of Facility Services, as the Final Agency Decisionmaker, approved and executed the Settlement Agreement. Pursuant to the Settlement Agreement, the Agency approved the CON application and issued a CON for MINC to acquire a mobile MRI to be located at doctor’s offices in Angier in Harnett County and in Franklinton in Franklin County. After the settlement was finalized, MINC dismissed its contested case with prejudice.
10. On or about April 29, 2003, Petitioners filed a Petition for Contested Case Hearing (the “Petition”), challenging the issuance of the CON to MINC.
11. The Administrative Procedure Act provides, in pertinent part as follows:
The party who files the petition [for contested case] shall serve a copy of the petition on all other parties and, if the dispute concerns a license, the person who holds the license. A party who files a petition shall file a certificate of service together with the petition.
G.S. 150B-23(a).
12. Under the Administrative Procedure Act, the holder of a license challenged in a contested case hearing has both the right to be served and standing as an aggrieved person to participate as a party. G.S. 150B-23 (a); 150B-2(6).
13. The definition of “license” in the APA provides:
“License” means any certificate, permit or other evidence, by whatever name called, of a right or privilege to engage in any activity...
G.S. 150B-2(3).
14. A certificate of need, by definition, is a license, because it affords the proponent the opportunity “to proceed with the development” of a project. G.S. 131E-176(3). A certificate of need is the permit that is necessary to enable any person to acquire regulated medical equipment, such as a mobile MRI, or otherwise develop a regulated “new institutional health service.” G.S. 1312E-178 (a, b).
15. Therefore, the statute requires that the Petitioners serve the Petition on MINC, as the holder of the certificate of need challenged in the Petition. G.S. 150B-23(a), supra.
16. The Petition was served upon the Agency, but was not served upon MINC, according to the certificate of service attached to the Petition.
17. The CON law imposes a 30-day time limit from the date of the decision to file a contested case petition. G.S. 131E-188(a) (“A petition for contested case shall be filed within 30 days after the Department makes its decision.”). That time limit is jurisdictional. Gummels v. DHR, 98 N.C.App. 675, 392 S.E.2d 113, disc. rev. denied, 326 N.C. 596, 393 S.E.2d 877 (1990) (1990) (upholding the dismissal of CON contested case for filing Petition after the 30-day deadline).
18. The CON law is silent, however, as to whether a petition for contested case must be served within 30 days after the Agency makes its decision.
19. The APA requires that a petition for contested case hearing state certain facts:
[The petition] shall state facts tending to establish that the agency named as the respondent has deprived the petitioner of property, has ordered the petitioner to pay a fine or civil penalty, or has otherwise substantially prejudiced the petitioner's rights and that the agency:
(1)Exceeded its authority or jurisdiction;
(2) Acted erroneously;
(3) Failed to use proper procedure;
(4) Acted arbitrarily or capriciously; or
(5) Failed to act as required by law or rule.
G.S. 150B-23(a).
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20. Petitioners’ Petition alleges that Petitioners’ rights were substantially prejudiced because the that the Agency excluded the “Petitioners from the settlement negotiations and Settlement Agreement when Petitioners Wake Radiology Consultants, P.A. and Wake Radiology Services, LLC were parties to the action and/or ‘interested’ and ‘affected’ parties within the meaning of the applicable statutes,” and that these actions violated Petitioners’ due process and equal protection rights. Petition for Contested Case Hearing, Attachment A.
21. The Petition does not state facts tending to show that the approval of the MINC application has deprived the Petitioners of property, or has resulted in the imposition of any fine or civil penalty upon Petitioners.
22. The Petition does not allege that the service proposed by MINC will have a substantial impact on the financial operations of any of the Petitioners.
23. Indeed, in the Prior Contested Case, Petitioners’ administrator conceded that he had not determined whether there would be any impact from the approval of the MINC application on Raleigh MRI, but that any such impact would only be “to a small degree.” Johnson deposition, pp. 14-15. The Petition does not state any facts rebutting this testimony.
24. Petitioners’ proposed Amended Petition, attached to their Motion to Amend, does not allege any additional facts tending to establish that the Agency’s approval of the MINC application has substantially prejudiced Petitioners’ rights. Indeed, in their Motion to Amend, Petitioners unequivocally state that the proposed Amended Petition does not seek “to add any additional claims against the Respondents or MINC.” Motion to Amend, 13.
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25. For the reasons set forth in the Conclusions of Law and Discussion hereinbelow, Petitioners’ Petition and proposed Amended Petition fail to set forth sufficient facts to demonstrate that Petitioners’ rights have been substantially prejudiced by the Agency’s decision to approve MINC’s CON application.
26. For the reasons set forth in the Conclusions of Law and Discussion hereinbelow, Petitioners’ failure to allege facts in the Petition or the Amended Petition tending to establish that Petitioners’ rights have been substantially prejudiced by the Agency’s actions, is a jurisdictional bar to proceeding with the contested case.
27. Neither the Petition nor the Amended Petition articulates facts supporting the Petitioners’ allegations that the service proposed was inconsistent with the applicable criteria (other than to state in conclusory fashion that the Agency erred).
28. Petitioners have alleged no other facts, either in the original Petition or in the Amended Petition, tending to establish that the Agency (1) exceeded its authority or jurisdiction; (2) acted erroneously; (3) failed to use proper procedure; (4) acted arbitrarily or capriciously; or (5) failed to act as required by law or rule.
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29. For the reasons set forth in the Conclusions of Law and Discussion hereinbelow, Petitioners’ failure to allege facts in the Petition or the Amended Petition tending to establish that the Agency, in approving MINC’s application, (1) exceeded its authority or jurisdiction; (2) acted erroneously; (3) failed to use proper procedure; (4) acted arbitrarily or capriciously; or (5) failed to act as required by law or rule, is a jurisdictional bar to proceeding with the contested case.
30. Prior to filing the Petition, Petitioners deposited cash bonds of $50,000 each with the Clerks of Court of Harnett and Franklin Counties, pursuant to G.S. 131E-188(a1), for a total of $100,000.
31. G.S. 131E-188(a1) provides, in pertinent part, as follows:
On or before the date of filing a petition for a contested case hearing on the approval of an applicant for a certificate of need, the petitioner shall deposit a bond with the clerk of superior court where the new institutional health service that is the subject of the petition is proposed to be located. The bond shall be secured by cash or its equivalent in an amount equal to five percent (5%) of the cost of the proposed new institutional health service that is the subject of the petition, but may not be less than five thousand dollars ($5,000) and may not exceed fifty thousand dollars ($50,000).
.....
At the conclusion of the contested case, if the court does not find that the petition for a contested case was frivolous or filed to delay the applicant, the petitioner shall be entitled to the return of the bond deposited with the superior court upon demonstrating to the clerk of superior court where the bond was filed that the contested case hearing is concluded.
32. Petitioners now ask the court to dispense with the above bond requirement as to one of the counties.
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33. It appears to the undersigned that the intention of bond provision of the CON law is to require one bond of no more than $50,000. However, the above statute is also clear that only the clerk of the superior court where the bond was filed has the authority to release the bond. There is no provision in the CON law or the APA authorizing an administrative law judge to reduce or release a bond filed pursuant to G.S. 131E-188(a).