SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter is before the Administrative Law Court (“ALC”) on the motion of the Petitioners, MRI at Belfair, LLC; Hilton Head Regional Medical Center; and Hilton Head Imaging, Inc. (“Petitioners”), to enforce a statutory automatic stay against Respondent Southern MRI. The court held an expedited hearing on this motion on April 29, 2008. Upon consideration of the parties’ written memoranda and oral argument at the motions hearing, the court grants the Petitioners’ motion.

On September 19, 2007, Respondent South Carolina Department of Health and Environmental Control (“Department”) granted Southern MRI’s request for a non-applicability determination (“N/A Determination”) regarding its proposal to purchase and operate a magnetic resonance imaging (“MRI”) unit and computer tomography (“CT”) unit in Beaufort County, South Carolina. Upon exhaustion of the administrative process with the Department, MRI at Belfair, LLC and Hilton Head Regional Medical Center timely filed a request for a contested case hearing before the ALC challenging the Department’s determination. Hilton Head Imaging, Inc. later intervened as a Petitioner.

The South Carolina Certificate of Need (“CON”) program for health care facilities and services is comprised of the State Certification of Need and Health Facility Licensure Act, S.C. Code Ann. §§ 44-7-110 to 44-7-370 (2002 & Supp. 2007) (“CON Act”); the associated CON regulations, 24A S.C. Code Ann. Regs. 61-15 (Supp. 2007); and the State Health Plan. The

purpose of the CON program is to “promote cost containment, prevent unnecessary duplication of health care facilities and services, guide the establishment of health facilities and services which will best serve public needs, and ensure that high quality services are provided in health facilities in this State.” S.C. Code Ann. § 44-7-120 (2002).

DISCUSSION

The issue before the court is whether a formal determination by the Department pursuant to 24A S.C. Code Ann. Regs. 61-15 § 102.3 that the certificate of need requirements are not applicable to a particular project (an N/A Determination) constitutes a “license” as defined in the South Carolina Administrative Procedures Act (“APA”), thus triggering the automatic stay found in S.C. Code Ann. § 1-23-600(G)(2). Because an N/A Determination constitutes permission from the Department to forego CON review, and because the Department’s permission to eschew the CON process is required by law when a question exists as to the particular project, the court finds that the Department’s N/A Determination in this matter is automatically stayed pursuant to § 1-23-600(G)(2).

The CON Act provides:

A person or health care facility as defined in this article[1] is required to obtain a Certificate of Need from the department before undertaking any of the following:

. . .

(6) the acquisition of medical equipment which is to be used for diagnosis or treatment if the total project cost is in excess of that prescribed by regulation; . . .

S.C. Code Ann. § 44-7-160(6) (emphasis added). The Department’s regulations specify the applicable monetary threshold as $600,000. 24A S.C. Code Ann. Regs. 61-15 § 102.1.f. Thus, a health care facility is required to obtain a CON from the Department prior to undertaking the acquisition of medical equipment which is to be used for diagnosis or treatment if the total project cost is in excess of $600,000. The regulations go on to state, “When any question exists, a potential applicant shall forward a letter requesting a formal determination by the Department as to the applicability of the certificate of need requirements to a particular project.” Id. § 102.3 (emphasis added).

The APA defines “license” as “the whole or part of any agency permit, franchise, certificate, approval, registration, charter, or similar form of permission required by law. . . .” S.C. Code Ann. § 1-23-310(4) (emphasis added). The APA further provides for an automatic stay of an agency decision to issue a new license when a contested case hearing is requested. § 1-23-600(G)(2) (“A request for a contested case hearing for a decision to issue a new license stays all actions for which the license is a prerequisite.”). After a contested case hearing is initiated before the ALC, any party may move for the presiding administrative law judge to lift the automatic stay. § 1-23-600(G)(4).

The central question before the court is whether an N/A Determination constitutes an agency decision to issue a new license triggering the automatic stay. “The primary rule of statutory construction is to ascertain and give effect to the intent of the legislature.” Mid-State Auto Auction of Lexington, Inc. v. Altman, 324 S.C. 65, 69, 476 S.E.2d 690, 692 (1996) (citing Gilstrap v. S.C. Budget & Control Bd., 310 S.C. 210, 423 S.E.2d 101 (1992)). “What a legislature says in the text of a statute is considered the best evidence of the legislative intent or will.” Knotts v. S.C. Dep’t of Natural Res., 348 S.C. 1, 10, 558 S.E.2d 511, 516 (2002). Further, the court should construe each part or section of the CON statutes and regulations together. See Grant v. City of Folly Beach, 346 S.C. 74, 79, 551 S.E.2d 229, 231 (2001) (“It is well settled that statutes dealing with the same subject matter are in pari materia and must be construed together, if possible, to produce a single, harmonious result.”). “The language must also be read in a sense which harmonizes with its subject matter and accords with its general purpose.” Hitachi Date Systems Corp. v. Leatherman, 309 S.C. 174, 178, 420 S.E.2d 843, 846 (1992).

The Petitioners argue that an N/A Determination falls within the statutory definition of “license” because it constitutes permission to proceed in a particular manner—without CON review. Additionally, they contend that such a construction of the term “license” is consistent with the legislative purposes behind the CON Act, specifically with regard to cost containment, as well as the expressed intent of 2006 S.C. Act No. 387[2]—which contained the automatic stay provision codified at § 1-23-600(G)(2)—to have uniformity of procedures for contested cases and appeals from administrative agencies.

By contrast, Southern MRI[3] argues that an N/A Determination is not a license under the APA’s definition, but rather is simply a determination by the Department that a license is not needed. Further, it contends that an N/A Determination, unlike a CON, is not required by law, since a person or health care facility is free to proceed without one if no question exists regarding the applicability of the CON requirements.

The court finds, reading the CON Act and the Department’s regulations together, that the law requires: (1) that a person or health care facility must obtain a CON before it acquires medical equipment to be used for diagnosis or treatment whose total project cost exceeds $600,000; and (2) that when any question exists, the potential applicant must obtain a formal determination by the Department that the CON requirements do not apply to its proposed project. This “formal determination” falls within the APA’s expansive definition of “license” in that it constitutes a form of agency permission required by law. Accordingly, the automatic stay of § 1-23-600(G)(2) applies. It is therefore

ORDERED that the Petitioners’ motion to enforce the automatic stay of § 1-23-600(G)(2) is GRANTED. It is further

ORDERED that Southern MRI is prohibited from proceeding with the project that is the subject of the instant contested case proceeding or in any other way acting upon the Department’s determination of non-applicability dated September 19, 2007 during the pendency of this matter before the ALC, unless otherwise ordered by the court.

IT IS SO ORDERED.

____________________________________

PAIGE J. GOSSETT

Administrative Law Judge

April 30, 2008

Columbia, South Carolina