South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
South Carolina Medical Endoscopy Center, Inc. vs. SCDHEC, et al

AGENCY:
South Carolina Department of Health and Environmental Control

PARTIES:
Petitioner:
South Carolina Medical Endoscopy Center, Inc.

Respondents:
Consultants in Gastroenterology, P.A., Columbia Gastroenterology Associates, P.A., Palmetto Gastroenterology, P.A., Midlands Gastroenterology Associates, P.A., and Nguyen D. Thieu, M.D.

Respondent:
South Carolina Department of Health and Environmental Control
 
DOCKET NUMBER:
03-ALJ-07-0409-A-CC

APPEARANCES:
n/a
 

ORDERS:

ORDER ON REMAND

STATEMENT OF THE CASE

This matter is before me pursuant to an Order of Remand filed with the Administrative Law Court (ALC or Court) on September 19, 2005, by the Board (Board) of the South Carolina Department of Health and Environmental Control (DHEC). In that Order of Remand, the Board set forth, in relevant part:

Rather than ruling in the first instance on this Motion based on evidence not presented to the Administrative Law Judge or appearing in the Record on Appeal, the Board remands this matter to the Administrative Law Judge pursuant to S.C. Code Ann., Section 1-23-610(D) (2005) for consideration of the limited issues of property ownership and transfer raised by the Motion to Dismiss and the Responses thereto. On remand, the Board requests that the Administrative Law Judge examine the effect of these property ownership and control issues on the Certificate of Need, including receipt of any appropriate evidence on these issues and its impact on the viability on the Certificate of Need.

A hearing was held before me at the offices of the Court on November 30, 2005.

DISCUSSION

Background

On January 24, 2005, I issued a Final Order and Decision determining that the South Carolina Medical Endoscopy Center’s (Center) CON application did not meet the applicable criteria set forth in The 2001 State Health Plan to warrant its expansion of services. During the review of the case, I remanded the matter to DHEC for the staff to make a determination as to whether the change in the location of the property created a substantial change in the application as to constitute a new application. See 24A S.C. Code Ann. Regs. 61-15 § 310 (Supp. 2003). DHEC determined that no substantial change resulted from the modification in the site of the location but, nevertheless, issued a letter which set forth that any future change in the property will render the project void.[1]

Property Ownership

In the contested case before me, the Center sought a CON for a facility to be located on an approximately one-half acre of land situated at the corner of Hampton and Pulaski Streets in Columbia, South Carolina. The Center provided the proper assurances that it or Dr. Lloyd owned the property upon which the proposed facility was to be constructed by fee simple title. See 24A S.C. Code Ann. Regs. 61-15 § 202 (2)(d)(1) (Supp. 2003). However, after I issued the Final Order and Decision in this case, Dr. Lloyd sold the property back to the previous owner, Warren Culbertson, on March 1, 2005, with the right to repurchase the property within 120 days. Dr. Lloyd subsequently repurchased the property within that time frame. Nevertheless, Dr. Lloyd informed Mr. Culbertson that if he obtained a suitable buyer, Dr. Lloyd would be interested in selling the property. On December 14, 2005, Dr. Lloyd sold the property to the South Carolina Automobile Dealers' Association. Therefore, he does not own the property that was the subject of the contested case upon which his facility was to be constructed. Nonetheless, Dr. Lloyd contends that if this application is subsequently approved on appeal, he will obtain suitable property.

Effect of Property Ownership

Respondents contend that the CON was extinguished when Dr. Lloyd sold the property back to the seller, Mr. Culbertson. They further contend that even if the brief transfer of the property does not void the CON, the latest sale to the Automobile Dealers' Association voids the Center’s CON. The Center, on the other hand, argues that rather than be saddled with the upkeep of the property during the pendency of the appeal, it elected to sell the property. However, if it prevails in its appeal, the Center contends that it should then be able to select another property upon which to build the facility and the Department can then determine if the use of that property constitutes a substantial change in the project.

Clearly, the latest sale of the property to the Automobile Dealers' Association “changed” the context upon which the application was based. That change, however, would not effect my decision in this matter. In other words, I still find that the reasoning set forth in my previous order warrants the denial of the Center’s CON application.

Furthermore, the ownership of the property may be an additional factor in denying the permit. An applicant must furnish written assurances that the facility will be completed in accordance with the CON application. See Regulation 61-15 § 202 (2)(d)(4) (Supp. 2003). The Center set forth in its case before the ALC that its facility would be built at the corner of Hampton and Pulaski Streets. Therefore, if a CON had been granted, it would have been approved only for that location.

Nevertheless, the Center’s CON was denied and the case was appealed. Therefore, the difficulty in definitively answering the effect of the property ownership on the CON is that there currently is no CON, nor do I now approve of a CON for the Center. Furthermore, even though this issue has been remanded to the ALC, this case is still under appeal. It is certainly reasonable to assume that given the length of the appellate process and the myriad of factors that are involved in a CON application (e.g., construction or personnel contracts), factual changes could and do occur in most CON cases during an appeal. Moreover, Regulation 61-15 § 202(2)(d)(3) (Supp. 2003) provides that an applicant may “submit to the Department for prior approval, changes that substantially alter the scope of work, function, utilities, major items of equipment, safety or cost of the facility during construction.”

Following Respondents' reasoning, if a change to a CON applicant or the project occurred during the appellate process, even though they prevailed on appeal, the CON would ultimately be void because the project is not exactly as originally approved.[2] Furthermore, if there is no factual analysis to be made as to whether the change is significant or not, any change could void a CON. Therefore, an applicant could prevail on appeal only to face an arbitrary determination that some change occurred during the appellate process and the CON is void.

“The interpretation of a term set forth in a statute should support the purpose of the statute and should not lead to an absurd result.” S.C. Coastal Council v. S.C. State Ethics Comm'n, 306 S.C. 41, 44, 410 S.E.2d 245, 247 (1991). Additionally, “[c]ourts will reject the plain and ordinary meaning of statutory language when to accept it would lead to a result so absurd that it could not possibly have been intended by Legislature, or would defeat plain legislative intention; if possible we will construe a statute so as to escape an absurd result and carry the legislative intention into effect.” State v. Gordon, 356 S.C. 143, 153, 588 S.E.2d 105, 110 (2003). I decline to follow the approach suggested by Respondents because that interpretation would lead, if not to an absurd result, to at least one that was not intended by the Legislature.

The requirement in Section 202 (2)(d)(3) that an applicant seek approval for changes certainly contemplates the fact that an applicant may make changes during the CON project. Conversely, the regulations do not provide that failure to seek approval of a change prior to the construction of a facility is grounds in and of itself to void a CON application. I therefore find that the simple fact that a change occurs does not void the approved CON. However, any change to a CON project requires approval from DHEC. The question in this case is when must that approval be sought and/or obtained.

I find that a determination regarding the changes in ownership is not ripe or appropriate at this stage of the litigation. The specific location of the proposed site facility was not a reason for which this Court denied the Center’s CON. Prior to this hearing but while the case was before the Board, Dr. Lloyd relinquished fee simple ownership of the property. However, before the hearing upon the remand, he reacquired ownership. But at the time of the remand hearing he had entered into a contract to sell the property. Pursuant to those facts, I held the Record open and Dr. Lloyd subsequently sold the property. Nevertheless, though Dr. Lloyd does not own the property upon which the facility was approved to be built, he asserts that if he prevails on appeal he will acquire a suitable location to build the facility and seek DHEC’s approval for that location.

If the CON is ultimately granted, the property acquisition could occur before the CON expires. Furthermore, the above regulations provide the framework to resolve the property issue after the appeal in this case, if necessary. Therefore, given the uncertainty of the need or location of a proposed site, making a determination of whether the change was so substantial as to constitute a new project at this stage of the process would be injudicious. See Clark v. Aiken County Government, 366 S.C. 102, 620 S.E.2d 99 (Ct. App. 2005); Baber v. Greenville County, 327 S.C. 31, 488 S.E.2d 314 (1997) (“Courts generally decline to pronounce a declaration wherein the rights of a party are contingent upon the happening of some event which cannot be forecast and which may never take place.”).

ORDER

IT IS HEREBY ORDERED that the issue of ownership of the property upon which the Certificate of Need currently under appeal was based and the impact of Dr. Lloyd's subsequent sale of that property be treated by the Board in a manner consistent with the language in this Order on Remand.

AND IT IS SO ORDERED.

______________________________

Ralph King Anderson, III

Administrative Law Judge

January 3, 2006

Columbia, South Carolina



[1] I do not find that letter binding, but rather choose to follow the requisites set forth in the regulations.

[2] Obviously, facts may so significantly change as to render this matter moot. “A case becomes moot when judgment, if rendered, will have no practical legal effect upon the existing controversy. This is true when some event occurs making it impossible for the reviewing Court to grant effectual relief.” Sloan v. Greenville County, 361 S.C. 568, 572, 606 S.E.2d 464, 467 (2004). Nevertheless, “[i]n the civil context, there are three general exceptions to the mootness doctrine.” Shah v. Richland Memorial Hosp., 350 S.C. 139, 150, 564 S.E.2d 681, 687 (Ct App. 2002). However, whether this case is moot is not an issue before me.


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