STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF DURHAM

Duke University Health System
d/b/a Durham Regional Hospital
Petitioner
vs.
N. C. Department of Health and Human Services, Division of Facility Services, Certificate of Need Section
Respondent / )
))
)
))))
)
) / 05 DHR 1492
Duke University Health System
d/b/a Duke Health Raleigh Hospital
Petitioner
vs.
N. C. Department of Health and Human Services, Division of Facility Services, Certificate of Need Section
Respondent / )
))
)
))))
)
) / 05 DHR 1491
Novant Health, Inc. and Forsyth Memorial
Hospital, Inc. d/b/a Forsyth Medical Center
Petitioner
vs.
N. C. Department of Health and Human Services, Division of Facility Services, Certificate of Need Section
Respondent / )
))
)
))))
)
) / 05 DHR 1490
Community General Health Partners, Inc. d/b/a Thomasville Medical Center
Petitioner
vs.
N. C. Department of Health and Human Services, Division of Facility Services, Certificate of Need Section
Respondent / )
))
)
))))
)
) / 05 DHR 1506

ORDER OF SUMMARY JUDGMENT

Upon consideration of Petitioner’s Motion for Summary Judgment, Respondent’s responses thereto, the parties’ supplemental documentation, and the parties’ oral arguments, the undersigned hereby determines as follows:

APPEARANCES

For Petitioner: Noah H. Huffstetler, III

Catharine W. Cummer

Nelson Mullins Riley & Scarborough, LLP

Glen Lake One, Suite 200

4140 Park Lake Avenue

Raleigh, NC 27612

For Respondent: Thomas M. Woodward

Assistant Attorney General

NC Department of Justice

P.O. Box 629

Raleigh, NC 27602-0629

ISSUES

1. Whether Respondent erred by interpreting N.C. Session Law 2005-346 to apply retroactively to Petitioners’ proposed projects?

2. Whether Respondent’s interpretation of Session Law 2005-346 should be given deference?

3. Is Respondent’s interpretation of Session Law 2005-346 an unconstitutional application of that Session Law?

4. Does Respondent’s retroactive application of Session Law 2005-346 violate Petitioners’ vested rights to convert the subject rooms to operating rooms without first obtaining a Certificate of Need?

FINDINGS OF FACT- UNDISPUTED

1. On August 11, 2005, Forsyth Medical Center informed Respondent of its plan to convert two licensed endoscopy operating rooms into general surgical operating rooms to take effect immediately.

2. On August 24, 2005, Durham Regional Hospital informed Respondent of its plan to relocate and convert two endoscopy rooms to general surgical operating rooms. Durham Regional Hospital had two operating rooms that were being used for storage purposes that it could put into operation upon installation of certain equipment. Durham Regional Hospital submitted executed contracts for the purchase and installation of the equipment to Respondent.

3. On August 24, 2005, Duke Health Raleigh Hospital notified Respondent of its planned relocation and conversion of one endoscopy room into a general surgical operating room at a total cost of $456,303. Duke Health Raleigh Hospital submitted construction plans, documentation of its construction costs, and executed purchase orders for the equipment related to and necessary for the conversion.

4. On August 29, 2005, Thomasville Medical Center informed Respondent of its plan to relocate and convert one endoscopy room into a general surgical operating room, with such relocation and conversion to take effect immediately.

5. Before August 31, 2005, under the then-existing Certificate of Need law (“CON”), the conversion of an endoscopy operating room to a surgical operating room was not a “new institutional health service,” and could be pursued without a CON, as long as capital cost of the project was less than $200,000. Such conversions could take the form of renovation of an existing endoscopy room to be used for surgical procedures, or closing an endoscopy room and opening a new surgical operating room in a different location.

6. On August 21, 2005, the Governor signed Session Law 2005-346. This legislation created separate definitions for operating and endoscopy rooms as “new institutional health services” in N.C. Gen. Stat. § 131E-176(16). (Session Law 2005-346, Sections 6.(b) and (d)) It further created a new category of “new institutional health service,” thus, requiring a certificate of need for the following:

v. The change in designation, in a licensed health service facility, of an operating room to a gastrointestinal endoscopy room or change in designation of a gastrointestinal endoscopy room to an operating room that results in a different number of each type of room than is reflected on the health service facility’s license in effect as of January 1, 2005.

(Session Law 2005-346, Section 6.(d))

7. By its terms, Session Law 2005-346 is “effective when it becomes law.” (Session Law 2005-346, Section 10) The language of this statute does not expressly state or imply that this Session Law is to be applied retroactively.

8. On September 8, 2005, Respondent sent out identical responses to all four Petitioners, denying their “no review” requests regarding the conversion of said operating rooms. In each response, Respondent advised the Petitioners that:

[T]he above referenced proposal is a new institutional health service within the meaning of N.C.G.S. 131E-176(16)v. because it results in a change in designation of operating rooms and gastrointestinal endoscopy rooms that results in a different number of each type of room than was reflected on the hospital’s license in effect as of January 1, 1005. This determination is made in accordance with Session Law 2005-346, as approved by the Governor on August 31, 2005, that amends the definition of a new institutional health service in the Certificate of Need Law . . .

(Petitioner’s Motion for Summary Judgment, Exhs. 7-10)

9. It is undisputed that Respondent would have approved the Petitioners’ projects, had Respondent not applied Session Law 2005-346 retroactively to each proposed project. In her deposition, Respondent’s Chief, Lee Hoffman, conceded that Respondent did not base its denial of each project on any concern with those projects, other than the effect of Session Law 2005-346.

10. Hoffman also conceded that the statutory change to require a CON for an endoscopy room conversion is not merely “procedural.” It is undisputed that, that statutory change would require a facility to demonstrate the “need” for the conversion, show its conformity with all other statutory criteria required in N.C. Gen. Stat. § 131E-183(a), and file a voluminous CON application to be considered for approval by the Respondent.

11. On September 30, 2005, Petitioners Durham Regional Hospital, Duke Health Raleigh Hospital, Forsyth Medical Center filed contested case petitions, challenging Respondent’s no review determinations regarding the respective proposals. On October 3, 2005, Thomasville Medical Center filed its petition contesting Respondent’s no review determination regarding its proposed project.

12. On January 27, 2006, Chief Administrative Law Judge Julian Mann, II consolidated all petitions and assigned such to the undersigned.

CONCLUSIONS OF LAW

1. This contested case is governed by N.C. Gen. Stat. § 150B-23. It is not governed by N.C. Gen. Stat. § 131E-188, because it is an appeal from Respondent’s responses to Petitioners’ respective letters of intent to convert endoscopy operating rooms to a surgical operating rooms. Respondent’s responses are not “[d]ecisions of the Department to issue, deny or withdraw a CON or exemption or to issue a CON pursuant to a settlement agreement” under N.C. Gen. Stat. § 131E-188. However, the 270-day time limit is being used as guidance.

2. Pursuant to N.C. Gen. Stat. § 1A-1, Rule 56 of the North Carolina Rules of Civil Procedure, N.C. Gen. Stat. § 105A-1, N.C. Gen. Stat. §§ 150B-33(b)(3a) and -36(d), and 26 NCAC 3 .0115, the undersigned has authority to grant Summary Judgment.

3. Rule 56(c) of the North Carolina Rules of Civil Procedure provides that summary judgment will be granted:

[I]f the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.

Affidavits supporting or opposing a motion for summary judgment “shall set forth such facts as would be admissible in evidence ...” Rule 56(c).

4. Where the issue presented is one of statutory interpretation, the reviewing court is not bound by the agency’s interpretation of the statute. Christenbury Surgery Center v. N.C. Dep’t of Health and Human Services, 138 N.C. App., 531, S.E.2d 219 (2000). A court should only consider an agency’s interpretation of the statute where an ambiguity exists. In re Total Care, 99 N.C. App. 517, 520, 393 S.E.2d 338, 340 (1990) Where the language of a statute is clear and unambiguous, a court must give such language its plain and definite meaning. Id.

5. Our N.C. Supreme Court has held that:

There is always a presumption that statutes are intended to operate prospectively only, and words ought not to have a retroactive operation unless they are so clear, strong, and imperative that no other meaning can be annexed to them, or unless the intention of the Legislature cannot be otherwise satisfied. . . .

Bank of Pinehurst v. Derby, 218 N.C. 653, 12 S.E.2d 260, 263-64 (1940) (quoting Hicks v. Kearney, 189 N.C. 316, 127 S.E.2d 205, 207(1925)) “A plain expression of legislative intent, that it shall have retroactive effect, is necessary.” Speck v. Speck, 5 N.C. App. 296, 301, 168, S.E.2d 672, 677 (1969); Springer Eubank Co. v. Four County Elec. Membership Corp., 142 N.C. App. 496, 499, 543 S.E.2d 197, 200 (2000).

6. “Our Supreme Court had concluded that where amending legislation by its very terms expressly provides the intended effective date, there is no ‘room for a judicial constructions otherwise.’” Carnes v. N.C. Dept. of Human Resources, 151 N.C. App. 747, 567, S.E.2d 468 (2002) (quoting Peeler v. State Highway Comm’n, 302 N.C. 183, 187, 273 S.E.2d 705, 708 (1981)

7. Here, the language of Session Law 2005-346 (Section 10) expressly provides that the intended effective date of this law by stating, “This act is effective when it becomes law.” This statute became effective when the Governor signed Session Law 2005-346 into law on August 31, 2005. By its own express terms, Session Law 2005-346 is intended to operate prospectively, not retroactively. There is no other express or implied language that the legislature intended Session Law 2005-346 to operate retroactively.

8. Since Petitioners submitted their respective no review requests prior to August 31, 2005, the effective date for Session Law 2005-346, Session Law 2005-346 is not binding on Petitioners’ no review requests.

9. There is no genuine issue of any material fact in this case, and Petitioners are entitled to summary judgment as a matter of law. Respondent acted erroneously and failed to act as required by law in retroactively applying Session Law 2005-346 to the Petitioners’ no review requests, and in denying Petitioners’ no review requests for their respective proposed projects.

10. Given the above ruling on issue one, the undersigned need not address the remaining issues in this case.

SUMMARY JUDGMENT

Based upon the foregoing Findings of Fact and Conclusions of Law, the undersigned hereby GRANTS Petitioner’s Motion for Summary Judgment, and DENIES Respondent’s Motion for Summary Judgment.

ORDER AND NOTICE

The North Carolina Department of Health and Human Services will make the Final Decision in this contested case. N.C. Gen. Stat. § 150B-36(b), (b1), (b2), and (b3) enumerate the standard of review and procedures the agency must follow in making its Final Decision, and adopting and/or not adopting the Findings of Fact and Decision of the Administrative Law Judge.

Pursuant to N.C. Gen. Stat. § 150B-36(a), before the agency makes a Final Decision in this case, it is required to give each party an opportunity to file exceptions to this decision, and to present written arguments to those in the agency who will make the Final Decision. N.C. Gen. Stat. 150B-36(b)(3) requires the agency to serve a copy of its Final Decision on each party, and furnish a copy of its Final Decision to each party’s attorney of record and to the Office of Administrative Hearings, 6714 Mail Service Center, Raleigh, NC 27699-6714.

This the 31st day of May, 2006.

______

Melissa Owens Lassiter

Administrative Law Judge

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