South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
Oncology and Hematology Associates of SC, LLC vs. SCDHEC, et al

AGENCY:
South Carolina Department of Health and Environmental Control

PARTIES:
Petitioner:
Oncology and Hematology Associates of SC, LLC, d/b/a Cancer Centers of the Carolinas

Respondents:
South Carolina Department of Health and Environmental Control and Spartanburg Regional Medical Center
 
DOCKET NUMBER:
03-ALJ-07-0158-CC

APPEARANCES:
Raymon E. Lark, Jr., Esquire and Kelly H. Rainsford, Esquire, for Oncology and Hematology Associates of SC, LLC, d/b/a Cancer Centers of the Carolinas

Nancy S. Layman, Esquire, for the South Carolina Department of Health and Environmental Control

James G. Long, Esquire, and Ralph W. Barbier, Esquire, for the Spartanburg Regional Medical Center
 

ORDERS:

FINAL ORDER AND DECISION

BACKGROUND

This contested case involves the South Carolina Department of Health and Environmental Control’s (DHEC) ruling on two Certificate of Need applications. DHEC approved Spartanburg Regional Medical Center’s (SRMC) application for a Certificate of Need (CON) to establish a regional cancer center with a linear accelerator on the hospital campus of Upstate Carolina Medical Center in Gaffney, South Carolina, in Cherokee County. Petitioner Cancer Centers of the Carolinas (CCC) contested DHEC’s approval of SRMC’s application, and also contested DHEC’s denial of CCC’s CON application for the development of a Radiation Oncology Center with a linear accelerator near Mary Black Hospital in Spartanburg, South Carolina.


On June 18, 2002, DHEC received a CON application from SRMC, Gibbs Regional Cancer Center Satellite, for the establishment of a regional cancer center with a linear accelerator on the hospital campus of Upstate Carolina Medical Center in Gaffney, South Carolina. DHEC notified SRMC by certified letter dated August 28, 2002 that its application was deemed complete and the review period had begun. Notice of the application was published in The State Register on September 27, 2002. On October 10, 2002, DHEC received a CON application from CCC for the development of a Radiation Oncology Center with a linear accelerator near the campus of Mary Black Hospital in Spartanburg, South Carolina. DHEC deemed this application by CCC “competing.” DHEC notified CCC that its application was complete by certified letter dated January 2, 2003, thus beginning the review period.

Mr. Rodney Bowman of DHEC was assigned to review both applications and to report his findings to Mr. Joel C. Grice, Director of the Bureau of Health Facilities and Services Development, who made the final determinations. After comprehensive evaluation of both applications, DHEC approved SRMC’s application by letter dated March 31, 2003; DHEC denied CCC’s CON application by letter on the same date.

As outlined in Section 802 of 24A S.C. Code Ann. Regs. 61-15 (Supp. 2003), DHEC determined that SRMC better met the Criteria for Project Review of the 2001 South Carolina Health Plan (SHP) listed below.

(1.) Need: The proposal shall not be approved unless it is in compliance with the State Health Plan (SHP).

(3.b) Distribution (Accessibility): The proposed service should be located so that it may serve medically underserved areas (or an underserved population segment) and should not unnecessarily duplicate existing services or facilities in the proposed service area.

(22) Distribution: The existing distribution of the health service(s) should be identified and the effect of the proposed project upon that distribution should be carefully considered to functionally balance [sic] the distribution to the target population.

 


Radiation therapy services are currently available in Spartanburg County through the operation of three linear accelerators, which have been continuously operational since October 1997. These three units reached 80.0% utilization during the fiscal year ending September 30, 2002. Although Standard (3)(A) of the State Health Plan (II-78) allows DHEC to approve a new megavoltage therapy service when existing units in the service area perform at a combined use rate of 80% of capacity for the preceding year, if approval of the new service would reduce utilization below the 80% threshold, the service should be denied (SHP, II-78, (3)(B)). The provision of a new radiation therapy service by SRMC in Cherokee County would equitably balance the distribution of such services to the population of the three-county service area, thereby improving accessibility of these services in the central upstate area of South Carolina.

DHEC deemed SRMC’s application complete and published its Notice of Affected Persons on September 27, 2002. On October 10, 2002 DHEC received a competing CON application from CCC. DHEC deemed CCC’s application complete and published its Notice of Affected Persons on January 24, 2003. DHEC held a Project Review Meeting on both applications on February 25, 2003, after which it received additional information from both applicants. By letter dated March 31, 2003 DHEC approved SRMC’s application. By letter to CCC dated March 31, 2003 DHEC denied its application. CCC requested a contested case hearing on April 3, 2003.

The hearing took place at the Administrative Law Court in Columbia, South Carolina December 8–12, 2003.

STANDARD OF REVIEW AND BURDEN OF PROOF

In a CON case, the Petitioner bears the burden of proving its case by a preponderance of the evidence. S.C. Code Ann. § 44-7-210(E) (Supp. 2003); see also Anonymous v. State Bd. Of Med. Exam’rs, 329 S.C. 371, 375, 496 S.E.2d 17, 19 (1998); Nat’l Health Corp. v. S.C. Dep’t of Health & Envtl. Control, 298 S.C. 373, 379, 380 S.E.2d 841, 844 (Ct. App. 1989). Further, the issues that can be raised in a CON contested case proceeding are limited to those that were presented to or considered by DHEC during its review and decision-making process. S.C. Code Ann. § 44-7-210(E) (Supp. 2003). Thus, CCC bears the burden of proving by a preponderance of the evidence that it better meets the criteria for approval of a CON than does SRMC or, in the alternative, that both proposed projects meet the criteria for CON approval and both should be approved.

After reviewing the entire record and all the testimony during the hearing, I find that the two CON applications are not “competing” and that both SRMC’s and CCC’s certificate of need applications are approved.

ISSUES FOR DECISION

Did the Petitioner, CCC, prove by a preponderance of the evidence that the South Carolina Department of Health and Environmental Control erred in its determination that CCC’s and SRMC’s applications were competing, so that only one additional linear accelerator was needed in the service area composed of Cherokee, Spartanburg and Union Counties and only one application could be approved, or is it feasible and within the guidelines established in the statute, regulations and State Health Plan that both facilities could be approved?

FINDINGS OF FACT

Having observed the exhibits and the testimony of the witnesses presented by the parties at the hearing and closely assessed their credibility, I make the following Findings of Fact by a preponderance of the evidence:

General Findings

1. Notice of the time, date, place and subject matter of the hearing was sent to all parties in a timely manner.

2.                  The South Carolina Department of Health and Environmental Control is the state agency charged with administration and enforcement of the State Certification of Need and Health Facility Licensure Act.

3. The 2001 South Carolina Health Plan (SHP) controlled both applications for Certificates of Need.

4. The policy behind the CON program and the SHP is to contain costs and to establish services where they are most needed without duplicating services unnecessarily.

5. Adding unnecessary radiation services increases the cost of cancer treatment to patients and ultimately to the citizens of South Carolina. Over-proliferation of radiation therapy facilities could lead to closing units, which is poor health planning for the state. (TR., 12/12/03, p. 110).

6. The applicable statute for Certificates of Need is S.C. Code Ann § 44-7-110 et seq. (Supp. 2003); the applicable regulation is 24A S.C. Code Ann. Regs. 61-15 (Supp. 2003).

7. The service area for both projects is the tri-county area composed of Cherokee, Union and Spartanburg Counties.

8. SRMC currently operates the Gibbs Cancer Center in Spartanburg County, a facility with three operating linear accelerators on its campus.

9. SRMC, a not-for-profit hospital, sought CON review to construct and operate a new regional cancer center with a linear accelerator on the campus of Upstate Carolina Medical Center in Gaffney, South Carolina in Cherokee County, where no linear accelerators exist.


10. CCC applied for a CON to operate a for-profit facility to house a linear accelerator near Mary Black Hospital in Spartanburg County.

11. The DHEC reviewer for both applications was Rodney Bowman; the ultimate decision approving SRMC’s project and denying CCC’s project was made by Joel Grice, Director of the Bureau of Health Facilities and Services Development. Mr. Grice evaluated the applications and drafted the decision letters. (TR., 12/12/03, pp. 32-33).

12. Competing applications must be submitted not later than 15 days from publication of the notification of affected persons in the State Register for the first applicant. 24A S.C. Code Ann. Regs. 61-15 § 103(6) (Supp. 2003). CCC timely submitted its competing application.

13. Per regulation, 24A S. C. Code Ann. Regs. 61-15 § 305(2)(b), DHEC’s review period of SRMC’s application was extended 60 days--until January 25, 2003--in order to give CCC more time to complete its application.

14. By letter to SRMC dated January 27, 2003, DHEC made changes to the project review criteria, re-ordered the review criteria, and extended the review period for an additional 60 days. CCC was notified of the changes in the relative importance of the criteria on February 26, 2003 and knew the same criteria applied to both applicants. CCC had actual knowledge of the re-ordered criteria by February 7, 2003, prior to the Project Review meeting on February 25, 2003. (TR., 12/12/03, p. 120).

15. A project review committee meeting was held on February 25, 2003, at which both SRMC and CCC made presentations regarding the need for each facility. The purpose of a project review committee meeting is to permit DHEC staff to receive additional information from applicants.

16. DHEC deemed the applications competing; that is, applications for the same service in the same service area where approval of both would exceed the need. DHEC determined there was a need for only one additional linear accelerator in the tri-county service area.

17. On March 31, 2003, DHEC sent letters to SRMC and CCC, approving a CON for SRMC and denying a CON for CCC.

 

 

 

Radiation Treatment and the State Health Plan


18. The 2001 South Carolina Health Plan does not project the need for linear accelerators in South Carolina, but contains seven standards that must be satisfied before an additional linear accelerator will be approved. (SHP, pp. II-78 – II-79).

19. The SHP provides that the third year of operation of a new radiation therapy facility is the target period for assessing the number of radiation treatments at that facility.

20. Although a linear accelerator is capable of providing more than 7,000 treatments per year, that number is its maximum capacity for health planning purposes.

21. The SHP requires that all existing linear accelerators be utilized at 80 % of capacity before DHEC can approve an additional linear accelerator; i.e., each unit must be performing 5,600 treatments for the year preceding the filing of a CON. (SHP, II-78, (3) (B)).

22. SRMC’s application, filed June 17, 2002, showed that from June 1, 2001 through May 31, 2002, the Gibbs Cancer Center had performed 18,554 treatments. (SRMC, Ex. #2). Therefore, SRMC’s three existing linear accelerators in Spartanburg each exceeded the requisite 5,600 treatments for the year preceding this CON application.

23. The utilization of the linear accelerator must be projected to be a minimum of 3,500 treatments annually within three years of initiation of services, without reducing the utilization of existing megavoltage therapy machines in the service area below the 80 % threshold, or 5,600 treatments per year. (SHP, II-78)

24. The SHP requires that the benefits of improved accessibility to a linear accelerator be equally weighted with the adverse effects of unnecessary duplication. (SHP, II-79)

25. An applicant must document the need for its proposed service by providing:

A. epidemiological evidence of the incidence and prevalence of those conditions for which megavoltage therapy is appropriate within the proposed service area, including the number of potential patients.

B. documentation of referral sources for patients within the service area, including letters of support from physicians and health care facilities indicating a willingness to refer patients to the proposed service. (SHP, II-78)

Treatment of Cancer

26. The incidence of cancer generally rises with the increasing age of the population. (TR, 12/8/03, p. 160).

27. About 60 % of all new cancer patients require radiation treatment. A typical course of treatment for a radiation patient is 25 treatments. (TR., 12/8/03, p. 28).


28. Treatments are typically given five days per week for a four- to five-week period. (TR, 12/8/03, p. 28).

29. Convenience and closeness to home are the criteria which are most important to patients receiving radiation therapy. (TR, 12/9/04, p. 216). Richard B. Taylor, a principal in Oncology Solutions, LLC, testified that a patient with cancer who goes through the health care system may need surgery, a medical oncologist and radiation. The more a facility can integrate the delivery of that care, the better the service will be. (TR, 12/10/04, pp. 15—16). Mr. Taylor was qualified as an expert in oncology health care consulting and the preparation of feasibility studies. (TR, 12/10/04, p. 37)

30. A radiation treatment typically takes approximately 15 minutes, including setting up and resetting the linear accelerator. (TR, 12/9/04, p. 185).

31. For the vast majority of cancers treated by radiation therapy, the treatment is by linear accelerator. (TR, 12/9/04, p. 185).

32. The primary target population for SRMC’s satellite is composed of cancer patients residing in Gaffney, South Carolina, Cherokee County, but it will also be accessible to residents in adjacent counties. The target population for CCC’s facility will be Spartanburg county, but CCC also expects to draw from the surrounding counties, including Cherokee and Union counties.

33. SRMC estimates that 250 new cancer cases will need treatment in 2004. Since 60% of new cancers will be treated with radiation therapy, 150 new cancer cases will require treatment and each of those cancers will require 25 treatments. The State Health Plan requires that total projected treatments exceed 3500 within three years of beginning operations. Total projected treatments for the year after approval are approximately 3,750 for SRMC’s linear accelerator. This projection is consistent with the SHP.

34. Dr. Mark O’Rouke, a practicing oncologist, testified that in projecting the incidence of cancers in a particular service area, “age specific incidence” must be evaluated. He further testified that if data fail to account for the increasing age of a population, the numbers will be inadequate. (TR, 12/8/04, p.162). Dr. O’Rouke, who has worked with the S.C. Cancer Registry, was qualified as an Expert Witness in Oncology and Geriatrics.

35. Dr. O’Rouke testified that even if a Certificate of Need were granted to CCC for a new linear accelerator, the usage of each of SRMC’s accelerators would still exceed 3,500 treatments in the third year. He projected 5,783 uses for each of SRMC’s three accelerators, or a total of 20,847 treatments by year three.

36. I find that Dr. O’Rouke was a very credible witness, and that his testimony supported the finding that the two CON applications were not competing, and that there would be no reduction in services below the 80% utilization requirement in the third year of operation for any of the existing operational linear accelerators.

37. Currently, Cherokee County cancer patients must drive 30 – 40 minutes to Spartanburg for daily cancer treatments. Radiation therapy is frequently debilitating and fatiguing. Additionally, many patients have difficulty securing transportation. The patient’s spouse, who may also be in poor health, may have to drive the patient to Spartanburg and back for treatment. (TR., 12/12/04, p. 41.)

38. With the proposed SRMC project, patients will have to travel to Spartanburg once to receive treatment planning services, but thereafter will be able to receive daily treatments at the Gibbs Cancer satellite in Cherokee County. The facility at the Gibbs Cancer Center utilizes IMRT, or Intensity Modulated Radiation Therapy. This therapy is designed to vary the radiation treatment so that there is less damage to the surrounding tissue according to Dr. Julian Josey, a radiation oncologist at the Gibbs Center. (TR, 12/10/04, pp. 110-11`

39. SRMC currently has three linear accelerators at Gibbs Regional Cancer Center, all of which currently exceed the 80% utilization rate per unit annually.

Data Sources and Projections


40. S.C. Code Ann. Regs. 61-15 § 202(11) requires the applicant to use population statistics consistent with those generated by the State Demographer of the State Budget and Control Board.

41. The number of new cancer patients who will require radiation treatments in a service area is calculated by multiplying the cancer incidence rate by the population in the service area; 60% of those new cancer patients will require the services of a linear accelerator.

42. SRMC used population data from the State Demographer’s office based on the 2000 census.

43. Statistics from the State Demographer’s office for the tri-county service area for the years 2002 to 2007 predict a growth rate of 4.6 % in that area; for the entire state of South Carolina, the growth rate from 2002 to 2007 is 5.3 %. Cherokee and Spartanburg Counties exhibit a slower growth rate than the state average, while Union County’s growth is minimal. (SRMC Ex. #1, p. 2).

44. Using population statistics from the State Demographer’s office and cancer incidence from the S.C. Central Cancer Registry for the year 2002, the number of new cancer cases in the tri-county area for that year was 1,438; for the year 2007, the number of new cancer cases is projected to be 2,005. (SRMC Ex. #1, p. 4.)

45. SRMC’s testing and exhibits project that when its facility in Cherokee County is operational, for years 2004 – 2007, 95 % of new cancer patients would use that facility rather than out-migrating to another county, and that the existing Spartanburg facilities would still sustain utilization rates above 80 %. (SRMC Ex. #1, pp. 6-7).

46. CCC used Claritas population data in its application, which it maintains is more accurate than that of the State Demographer’s office. Claritas source separates the population into age cohorts. The statistical difference between the two sources is minimal.


47. Incidence data on which the projected number of cancer cases is based is provided by SEER[1] (created by the National Cancer Institute) and by the South Carolina Cancer Registry (SCCR). SEER data is extrapolated from the number of cancer cases in a sampling of the population at large (TR, 12/10/04, p. 155); SCCR data is based on the actual number of cancer cases in South Carolina. However, CCC contends that SCCR underreports the actual number of cancer cases.

48. CCC relied on SEER data for its number of projected cases; SRMC relied on SCCR data. I find, however, that the data do not reveal statistically significant differences in the number of projected cases.

49. SRMC based its need for a linear accelerator on projections of cancer cases in Cherokee County alone. However, SRMC anticipates that patients other than those from Cherokee County will use its facility, e.g., patients from Spartanburg, York and Union Counties. (TR. 12/11/03, pp. 21-92).

50. SRMC predicts it will perform 3,850 radiation therapy treatments in 2006 and 3,900 treatments in 2007 at a new Cherokee County location; both projections exceed the State Health Plan’s requirement of 3,500 annual treatments per linear accelerator. (TR., 12/12/03, p. 212).

51. SRMC projects that the total number of radiation therapy treatments in the service area in 2006 will be 22,346 and 22,544 in 2007; CCC, using SEER data, projects that the total number will be 27,172 treatments in 2006 and 27,586 in 2007.

52. Because the increases in new cancers have been gradual, it has taken six years for SRMC, with a third unit, to reach 80% utilization of all its linear accelerators. (TR. 12/12/03, p. 73.)

Indigent Care Plan and Medically Underserved Groups

53. Applicants should demonstrate that the location of their project will promote services to medically underserved areas. (Regulation 61-15 § 802(3) (b)).

54. SRMC’s indigent care plan is projected to provide 4 % of gross charges for indigent care.

55. CCC’s indigent care plan is projected to provide 3.47 % of gross charges for indigent care.

56. Dr. Mark O’Rouke, an expert witness in Oncology and Geriatrics, testified that more indigent patients would be served by CCC’s linear accelerator than at SRMC’s in Gaffney.

Financial Feasibility

57. Radiation oncology projects generate positive net income and are usually financially feasible. (TR., 12/12/03, p.173).

58. Financing for SRMC’s project will come from its operations. CCC is funded by U.S. Oncology, a for-profit corporation. Both entities are financially stable. (TR., 12/12/03, pp. 53-54).


59. Each applicant submitted its budget and certified that the information submitted was true and correct to the best of its knowledge.

60. By a preponderance of the evidence, both projects appear to be financially feasible.

Community Need Documentation

61. Both SRMC and CCC presented evidence of extensive support from the community and local physicians for their projects.

62. Approval of SRMC’s project will balance the distribution of radiation therapy services to the population of the three-county service area and improve accessibility of these services in the central upstate area of South Carolina.

63. Placing a linear accelerator in Cherokee County, when compared with Spartanburg County, minimizes the adverse effect on the existing units in the three-county service area. (TR.,12/12/04, p. 45).

64. CCC garnered 663 letters of support for its CON application, 57 of which were from physicians; SRMC submitted 312 letters, 3 of those were from physicians. (TR., 12/8/04, p. 184). I find that there is extensive documentation in the record of the community’s need for both facilities and of the willingness to utilize both facilities.

CONCLUSIONS OF LAW

Based upon the preceding Findings of Fact, I conclude the following as a matter of law:

1. S.C. Code Ann. § 1-23-600 (Supp. 2003) grants jurisdiction to the South Carolina Administrative Law Court to hear contested cases under the Administrative Procedures Act.

2. The standard of proof in administrative proceedings is a preponderance of the evidence. Anonymous v. State Bd. Of Medical Examiners, 329 S.C. 371, 496 S.E.2d 17 (1998).

3. Pursuant to ALC Rule 29(C), issues raised at the hearing not specifically addressed in this Order are deemed denied.

4. S.C. Code Ann. §§ 44-7-110 et seq. (Supp. 2003), the State Certification of Need and Health Facility Licensure Act, grants DHEC the authority to administer the State’s CON program.


5. The burden of proof is on the Petitioner. CCC has the burden to establish by a preponderance of the evidence that CCC’s application more satisfactorily meets the requirements of S.C. Code Ann. §§ 44-7-110 through -340 (Supp. 2003), 24A S.C. Code Ann. 61-15 (Supp. 2003) and the 2001 South Carolina Health Plan. In the alternative, CCC must prove that both CCC’s and SRMC’s applications meet those requirements and thus both applications should be approved. National Health Corp. v. S.C. Dept. of Health and Envt’l Control, 298 S.C. 373 380 S.E.2d 841 (1989).

6. The Administrative Law Judge (ALJ) is the fact finder in this matter for purposes of administrative and judicial review and does not sit in an appellate capacity. Brown v. S.C. Dep’t of Health and Envt’l. Control, 348 S.C. 507, 560 S.E. 2d 410 (2002). Evidence of allegations must be sufficient and probative of the matter to be proven. Coleman v. Palmetto State Life Ins. Co., 241 S.C. 384, 128 S.E. 2d 699 (1962). As trier of fact, the ALJ is not compelled to accept an expert’s testimony, but may give it such weight and credibility as the ALJ determines it deserves. Florence County Dep’t of Social Serv. v. Ward, 310 S.C. 69, 425 S.E. 2d 61 (1992).

7. It is appropriate to give due consideration to the Department’s CON Staff’s utilization of its specialized knowledge and expertise in the application of the CON Act and CON regulations. See S.C. Code Ann. §1-23-330 (4) (1986 and Supp. 2003). As a state administrative agency, DHEC can only exercise those powers conferred upon it by the General Assembly. Triska v. Department of Health and Environmental Control, 292 S.C.190, 355 S.E. 2d 531(1987). When the language of a statute or regulation is clear and unambiguous, the court is to impose its meaning without employing the rules of statutory interpretation. Paschal v. State Election Commission, 317 S.C. 434, 454 S.E. 2d 890 (1995).

8. DHEC’s evaluation of both applications was fair, comprehensive and in keeping with its customary procedures for review. The project review committee meeting was conducted in a manner equitable to both CCC and SRMC.

9. No statutory or regulatory provision requires DHEC to approve any project that is inconsistent with the State Health Plan. S.C. Code Ann. § 44-7-180(B)(4) (Supp. 2003), 24A S.C. Code Ann. Regs. 61-15 § 106(2) (Supp. 2003).


10. DHEC may not issue a Certificate of Need unless an application is in compliance with the State Health Plan as described in this regulation, project review criteria, and other regulations which must be identified by DHEC. 24A S.C. Code Ann. Regs. 61-15 § 307(1) (Supp. 2003).

11. The applicable State Health Plan is the 2001 South Carolina Health Plan. According to this Plan the following project review criteria are considered most important in evaluating a CON for a linear accelerator unit:

a. Compliance with the Need Outlined in this Plan;

b. Community Need Documentation;

c. Distribution (Accessibility);

d. Projected Revenues;

e. Projected Expenses;

f. Financial Feasibility; and

g. Cost Containment.

 

12. A project does not have to satisfy every project review criterion in order to be approved, but no project may be approved unless it is consistent with the State Health Plan. A project may be denied if DHEC determines that the project does not sufficiently meet one or more of the criteria. (S.C. Code Ann.Regulation 61-15 § 801(3)).

13. DHEC considered SRMC’s and CCC’s application with the following Project Review Criteria contained in S.C. Code Ann. Regs. 61-15 § 802, ranked in order of importance by DHEC:

1.                  Need (Compliance with the State Health Plan) – 1

Distribution (Accessibility)- 31, 3b, 3d, 3f, 3g

Medically Underserved Groups- 31a, 31b, 31d

 

2.                  Community Need-Documentation- 2a, 2b, 2c, 2e

Distribution- 22

 

3.                  Projected revenues/Projected Expenses- 6a/7

Financial Feasibility- 15

 

4. Acceptability- 4a, 4b

Cost Containment- 16c

 


14. In the case of competing applications, DHEC shall award a Certificate of Need, if appropriate, on the basis of which, if either, most fully complies with the requirements, goals, and purposes of the Certificate of Need program, State Health Plan, project review criteria, and any regulations developed by DHEC. 24A S.C. Code Ann. Regs. 61-15 § 307(2) (Supp. 2003).

15. The relevant service area for linear accelerators applicable to CCC and SRMC is defined in the 2001 SHP as Cherokee, Spartanburg and Union Counties. While CON Standard (2) of the 2001 Plan (DHEC Ex. 3) defines the service area for the CCC and SRMC proposals herein in the section concerning linear accelerators at II-82, to consist of Cherokee, Spartanburg, and Union counties, it also provides flexibility to allow consideration of the “relevant” service area in assessing need. (II-2). The CCC and SRMC proposals herein may be viewed as either both being located inside the same three-county service area or within the Spartanburg/Union service area for CCC and Cherokee county service area for SRMC. That is, if sufficient need is shown for two units, both applications could be approved at the same time, since the two applicants would not be “competing applicants” under S.C. Code Ann. §44-7-130 (5). Accord, Tr., Grice at 18, lines 2 through 14 and 70, line 19 through 71, line 10 (12/12/03).

16. The 2001 SHP provides that existing linear accelerators must perform at 80 % of capacity (5,600 treatments per unit) in the year immediately preceding the filing of the applicant’s CON application and that within three years of initiation of its proposed service, the applicant must project that it will perform a minimum of 3,500 treatments annually. No existing linear accelerator in the service area should fall below the 80 % threshold.

17. “The benefits of improved accessibility will be equally weighted with the adverse affects [sic] of duplication . . .” in DHEC’s evaluation of CON applications for linear accelerators. (2001 SHP, II-79).

ANALYSIS

The term “Competing Applications” is defined in S.C. Code Ann. §44-7-130(5) as “two or more persons or health care facilities as defined in this article who apply for Certificates of Need to provide similar services or facilities in the same service area within a time frame as established by the department regulations and whose applications, if approved, would exceed the need for services or facilities.[Emphasis added]

Regulation 61-15, Section 103(6) repeats the statutory definition, and then adds:

 

An application shall be considered competing if it is received by the Department no later than fifteen (15) days after a Notice of Affected Persons is published in the State Register for one or more applications for similar services and/or facilities in the same service area. All applications received by the Department within fifteen (15) days of publication of the Notice of Affected Persons in the State Register for the first application(s) will be considered to be competing. Any applications received by the Department later than the fifteenth day following publication of the Notice of Affected Persons in the state Register for the first applications(s) will not be considered to be competing with the(se) applications.

 

The statutory definition, when construed with the Regulation, requires that two conditions be met for two applications to be “competing”: (1) both Applications for Certificates of Need must be received by DHEC within the same fifteen-day time frame; and (2) there must be a finding that if both applications were approved, the need for services would be exceeded.

The first requirement for “competing” Applications—filing the Application for a CON with DHEC within 15 days of the Notice in the State Register—is simply a method of initially classifying Applications.[2] The Regulation makes that clear by stating that any Application received by DHEC after the fifteenth day is not considered “competing”.

Thus, the significant and outcome-determinative inquiry which must be made to ascertain if Applications are truly “competing” is: Would granting both Applications exceed the need for facilities or services in that service area?

After reviewing the voluminous exhibits, extensive testimony, and taking into account the totality of circumstances in the tri-county service area in this case, I find that the two applications are not competing because granting both Applications will not exceed the need for linear accelerator facilities and the services which they provide. I further find that each application is consistent with the requirements of the State Health Plan, as contained in the Plan itself, and as ranked in relative importance by the DHEC staff.

The record is replete with evidence that both the aging population and the general class of cancer patients in the tri-county service area—particularly those in the more rural areas—need easier access to radiation treatments. Moreover, the rapidly expanding population in the urban areas of the tri-county region establishes the need for the additional Spartanburg facility.

I find that a preponderance of the evidence establishes that the projected population growth in the service area justifies granting both Certificates of Need, and that the projected growth will enable both facilities to meet the requirement of 3,600 treatments per year for each linear accelerator by their third year of operation. Moreover, I find that the preponderance of the evidence supports the conclusion that each facility is financially feasible.

"The cardinal rule of statutory construction is to ascertain and effectuate the legislative intent whenever possible." Strother v. Lexington County Recreation Comm'n, 332 S.C. 54, 62, 504 S.E.2d 117, 121 (1998). "All rules of statutory construction are subservient to the one that the legislative intent must prevail if it can be reasonably discovered in the language used, and that language must be construed in the light of the intended purpose of the statute." Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 275, 440 S.E.2d 364, 366 (1994). The words of the statute must be given their plain and ordinary meaning without resorting to subtle or forced construction to limit or expand the statute's operation. Hitachi Data Sys. Corp. v. Leatherman, 309 S.C. 174, 178, 420 S.E.2d 843, 846 (1992). Marlboro Park Hospital v. SCDHEC, 358 S.C. 573, 595 S.E. 2d 851 (SC Ct. App. 2004).

The plain language of S.C.Code Ann. § 44-7-120 and of the project review criteria requires a comprehensive evaluation of an Application in light of the stated purposes. This includes not only whether a facility may duplicate existing facilities, but the relative merit of allowing that duplication in order to promote cost containment and establish high quality health facilities and services. These purposes are plainly set forth in the Act and in the regulations. That is why the Act prevents only unnecessary duplication.

Nowhere in the Act does it state that a proposed facility is always unnecessary if there are existing facilities which are not currently utilized at full capacity. A proposed facility is only unnecessary to the extent it does not promote the purposes of the Act as set forth in S.C.Code Ann. § 44-7-120 and as amplified in the applicable State Health Plan.

This court is aware of the complexities facing DHEC when confronted by conflicting opinions on scientifically complex issues presented by opposing factions of the medical community. I am equally aware of the complex nature of current economic trends in healthcare, which often result in the forging of unlikely economic relationships in response to new competition and call into question the rationale underlying the Act. See Joshua A. Newberg, In Defense of Aston Park: The Case For State Substantive Due Process Review of Health Care Regulation, 68 N.C.L.Rev. 253 (1990). Here, however, each center has its own strengths and advantages for specific populations in need of these services. Based upon the totality of the circumstances, I find that each party has established by a preponderance of the evidence that its CON application meets the requirements of S.C. Code Ann. §§44-7-100—340, 24 A S.C. Code Ann. Reg. 61-15 and the 2001 State Health Plan.

ORDER

THEREFORE, IT IS HEREBY ORDERED that DHEC’s approval of a Certificate of Need for Spartanburg Regional Medical Center’s proposed project for the establishment of a regional cancer center with a linear accelerator on the hospital campus of Upstate Carolina Medical Center in Gaffney, South Carolina (Cherokee County) is upheld and that DHEC’s denial of a Certificate of Need for Cancer Centers of the Carolinas for the development of a Radiation Oncology Center with a linear accelerator near the campus of Mary Black Hospital in Spartanburg, South Carolina is reversed. DHEC shall issue a CON for both proposed projects.

 

 

AND IT IS SO ORDERED.

 

 

 

___________________________________

CAROLYN C. MATTHEWS

Administrative Law Judge

 

 

June 24, 2004

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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