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SC Administrative Law Court Decisions

The Charleston Endoscopy Center, LLC vs. DHEC and Roper Hospital, Inc

South Carolina Department of Health and Environmental Control

The Charleston Endoscopy Center, LLC

South Carolina Department of Health and Environmental Control and Roper Hospital, Inc




I. Introduction

The South Carolina Department of Health and Environmental Control (DHEC) granted a Certificate of Need (CON) with restrictions to Roper Hospital, Inc (Roper) allowing Roper to expand its existing facilities at 316 Calhoun Street, Charleston, South Carolina. DHEC’s decision generated several requests for contested cases with the challenge involved in the instant matter being a contested case brought by Charleston Endoscopy Center, LLC (CEC).

In response to CEC’s request for a contested case, Roper filed a Motion to Dismiss arguing that CEC lacks standing. A hearing on the motion was held May 13, 2003, in which CEC and Roper presented arguments with CEC relying upon evidence established in an affidavit filed on May 8, 2003, in opposition to the Motion to Dismiss. By May 27, 2003, the parties had each filed a memorandum supporting their respective positions.

I have now completed a review of the arguments and the evidence presented and find that the motion must be granted. Accordingly, the instant matter is dismissed.

II. Analysis

A. Requirements of Standing

Pursuant to Regs. 61-15, § 403.1 any "affected person with standing to contest the grant or denial of an application may request a contested case hearing." (Emphasis added). Thus, while CEC is an “affected person” since it is both “located in the health service area in which the project is to be located” and since it “provide[s] similar services to the proposed project” (see 44-7-130(1)), to obtain a contested case hearing, CEC must also have “standing.” Thus, the law of standing as applied in South Carolina is controlling.

South Carolina case law provides the parameters for assessing standing:

In Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), the United States Supreme Court enunciated a stringent standing test. Lujan set forth the "irreducible constitutional minimum of standing," which consists of the following three elements:

First, the plaintiff must have suffered an 'injury in fact'--an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not 'conjectural' or 'hypothetical'. Second, there must be a causal connection between the injury and the conduct complained of--the injury has to be "fairly ... trace[able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party not before the court." Third, it must be 'likely,' as opposed to merely 'speculative,' that the injury will be 'redressed by a favorable decision.'

Id. at 559-61, 112 S.Ct. at 2136 (internal citations omitted); see also Beaufort Realty Co. v. S.C. Coastal Conservation League, 346 S.C. 298, 551 S.E.2d 588 (S.C. Ct.App. 2001).

Sea Pines Ass'n for Protection of Wildlife, Inc. v. South Carolina Dept. of Natural Resources, 345 S.C. 594, 550 S.E.2d 287 (2001).

B. Standing Requirements Examined

CEC, the party alleging standing, has the burden of proving standing. Sea Pines, supra. To meet that burden, “each element [of standing] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)

1. Stage of Litigation

In South Carolina, the stage of the litigation reached by a challenge to standing (and thus the point of reference for deciding the manner and degree of evidence needed) is an attack on jurisdiction. See ALJD Rule 68 and SCRCP Rule 12(b)(1); Blandon v. Coleman 285 S.C. 472, 330 S.E.2d 298 (1985) (in the absence of standing an individual may not invoke judicial power); Lennon v. South Carolina Coastal Council, 330 S.C. 414, 498 S.E.2d 906 (Ct. App. 1998) (jurisdiction is not invoked without standing). At such a stage, the manner and degree of proof requires that the adjudicator examine the disputed jurisdictional facts and reach factual determinations from the evidence presented. Woodard v. Westvaco Corp., 315 S.C. 329, 332, 433 S.E.2d 890, 892 (Ct.App.1993), vacated on other grounds by 319 S.C. 240, 460 S.E.2d 392 (1995); Baird v. Charleston County, 333 S.C. 519, 511 S.E.2d 69 (1999) (“motion to dismiss [for lack of jurisdiction] may be supported by, and the court may consider, affidavits or other evidence proving lack of jurisdiction.”); Glass v. Dow Chemical Co., 316 S.C. 116, 447 S.E.2d 209 (Ct. App. 1994) (“It stands to reason that the court may likewise [in addition to affidavits seeking to prove lack of jurisdiction] consider affidavits and other evidence submitted by the party opposing the motion.”).

2. Manner and Degree of Evidence Required

The injury in fact element of standing requires CEC to show an injury to a legally protected interest (i.e., a “cognizable interest”) with that injury being concrete and particularized as well as actual or imminent. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).

a. Cognizable Interest

CEC’s Petition for Administrative Review along with the affidavit of Theodore G. Gourdin, a member of CEC, identify CEC’s cognizable interest as an economic interest. See Petition, IV.6 (DHEC “failed to properly quantify need and the adverse impact on affected persons.”) and Petition, IV.14 (DHEC “erred in failing to find that approval of the CON Application will adversely affect or negatively impact existing providers.”); Gourdin affidavit paragraph 8 (“Furthermore, [CEC’s] economic interests as they relate to CEC’s proposed project as well as the individual member physician’s practice at the hospital may be prejudiced by the agency decision in this CON.”). Plainly, an economic interest is a cognizable interest from which standing may spring. See Sierra Club v. Morton, 405 U.S. 727 (1972) (there the court explained that “palpable economic injuries have long been recognized as sufficient to lay the basis for standing.”). Accordingly, the allegation requiring proof is that granting the CON will negatively impact CEC in an economic sense.

b. Proof of Injury to CEC

i. Background

CEC is an organization composed of four physicians (gastroenterologists) practicing in Charleston, South Carolina. The physicians have office space in the Roper Medical Office Building and perform a majority of their endoscopy procedures at Roper Hospital with the procedures performed including both outpatient and inpatient services.

While CEC performs most of its services at Roper, CEC has decided that it wishes to establish a freestanding endoscopy center in the West Ashley area of Charleston To that end, CEC applied for a CON to build such a center. Roper opposed CEC’s request, and, while DHEC’s staff approved the request, in a contested case hearing before the ALJD, the CON was denied. CEC has appealed the ALJ’s decision to the Board of DHEC where the matter is currently pending.

In the meantime, Roper began its own quest for a CON in which Roper sought an expansion and renovation of its existing facilities. However, the renovation and expansion specifically sought to add four new outpatient operating rooms. In response, CEC informed DHEC of several reasons why the CON should not be granted and in particular argued that new outpatient operating rooms should not be allowed. On January 22, 2003, DHEC denied Roper’s CON request.

Roper asked DHEC to reconsider its decision and presented to DHEC an amended request for a CON which deleted the addition of four new outpatient operating rooms. CEC responded to the reconsideration request by pointing out to DHEC that while Roper explained it was not adding four new outpatient operating rooms, Roper’s projected cost of the project of $71,371,523 did not go down as one might have expected. Further, despite the loss of the proposed four operating rooms, CEC noted that the new square footage of the proposed CON was to decline by only 1,209 square feet, a decline too small to be consistent with a reduction of four operating rooms.

In short, CEC told DHEC that Roper was proposing a “sham change in plans” and that Roper’s position was “a self-serving manipulation of the CON process.” See page 3, Attachment to Gourdin Affidavit. Indeed, CEC made its position quite clear to DHEC:

The applicant has contested other proposed providers of outpatient surgery services contending excess capacity in the market. If the applicant is able to construct the outpatient surgery areas over the ensuing three years and not reduce the proposed project budget accordingly, the current “excess” capacity will double with the implementation of these four ORs which can be surveyed, certified and licensed without a certificate of need review from [DHEC], since the costs will have been incurred and the $1 million threshold will not be an issue.

See page 2, point 2, Attachment to Gourdin Affidavit.

DHEC addressed CEC’s concerns in a letter issued to Roper on March 10, 2003 approving the amended request for a CON. In the letter granting the reconsideration and issuing the CON, DHEC identified the project, explained why the CON was being granted, and imposed “stipulations” upon the CON.

DHEC’s letter of approval identifies the CON as a “major renovation and expansion” and gives the following description:

[T]he major renovation and expansion [is] to include the construction of a new patient tower to be used for the relocation of existing outpatient surgery services (consisting of five (5) outpatient operating rooms, one (1) procedure room, and one (1) cystoscopy room with no additional operating, endoscopy, or procedure rooms), cardiac services, and a Medical/Surgical nursing unit with no change in existing bed capacity

Further, DHEC explains the reason for granting the CON:

The Department has determined that the proposed new patient tower is needed to replace undersized, aged patient rooms and other areas in the existing Roper Hospital.

Accordingly, the CON will replace older and smaller patient rooms with newer and larger rooms and will relocate existing outpatient surgery services, cardiac services, and a nursing unit.

Finally, the changes authorized by the CON will be accomplished without adding any new operating, endoscopy, or procedural rooms since the CON is granted with stipulations. Essentially, the stipulations require Roper to first obtain an additional CON before adding any new inpatient or outpatient operating or endoscopy rooms (regardless of the cost of construction of such rooms) for two years after the date of initial licensure of the new patient tower.

Roper does not agree with DHEC’s decision to impose restrictions and has challenged the above described stipulations in a separate contested case seeking to show the stipulations are illegal. That matter is now pending before the ALJD. See Roper vs. DHEC, 03-ALJ-07-0130-CC.

ii. Lack of Evidence of Injury

Against this background, CEC must show how the CON as issued injures it economically. Sea Pines Ass'n for Protection of Wildlife, Inc. v. South Carolina Dept. of Natural Resources, 345 S.C. 594, 550 S.E.2d 287 (2001) (where standing was lacking since “[a]ppellants presented no evidence their opportunity to view and enjoy the deer would be diminished by the permits.”). Footnote In deciding the proof issue, the “court must evaluate the jurisdictional merits for itself and need not attach any presumption of truthfulness to the non-moving party's allegations.” Carpet Group Int'l v. Oriental Rug Importers Assoc., 227 F.3d 62, 69 (3d Cir.2000); Thornhill Publ'g Co., Inc. v. General Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir.1979) (explaining that a motion to dismiss based on a factual attack to subject matter jurisdiction does not place any presumptive truthfulness upon the plaintiff's allegations but instead the presence of disputed material facts requires the trial court to evaluate for itself the existence of subject matter jurisdiction in fact); Mortensen v. First Federal Sav. and Loan Ass'n, 549 F.2d 884 (3rd Cir. 1977) (“That the [trial] court is free to determine facts relevant to its jurisdiction has long been clear.”). Here, in the three areas of conceivable economic harm most apparent from CEC’s filings, CEC has failed to provide proof of an economic injury.

First, CEC in its affidavit establishes that it is an existing provider of physician services and that it and its physician-members render services at Roper on both an inpatient and outpatient basis. From such facts, a logical inference is that the expansion and renovation will benefit CEC rather than create a harm since an improved hospital establishment is likely to enhance the ability of CEC to render services to its patients.

Indeed, nothing in the evidence presented here shows how the expansion and renovation will harm CEC and its physician-members. Obviously, examples of economic harm can be imagined. Perhaps the expansion will be so long and so cumbersome that patients will not use the services of CEC during the construction period. Perhaps the size of the new patient rooms will generate a higher costs to CEC’s patients causing cost-sensitive patients to look elsewhere for a physician. Perhaps a lot of considerations could result in an economic harm to CEC. But, the adjudicating body cannot rely upon suppositions devoid of supporting facts. Rather, what is needed is factual evidence establishing an economic harm. Such is lacking here.

Second, CEC in its affidavit explains that it hopes to obtain a CON to construct a freestanding endoscopy center. Footnote CEC further explains that “its economic interests as they relate to CEC’s proposed project . . . may be prejudiced by the agency decision in this case.” Gourdin Affidavit, page 3. While the “may be prejudiced” language is broad and indefinite, the prejudice alluded to appears to arise from the suspected future addition by Roper of four outpatient operating rooms via the one million dollar cost of construction rule. While evidence is present which suggests that such a plan may exist (lack of the reduction in cost of the project and the minor reduction in square footage), the plan cannot be carried out for the simple fact that the CON granted to Roper specifically prohibits the addition of any future operating rooms without Roper obtaining additional CONs. Accordingly, since the alleged plan cannot be completed, the injury alleged cannot occur. Therefore, no proof of such an injury has been nor can be shown.

Finally, perhaps the foundation for the showing of an injury to CEC could be laid if this were a case in which CEC sought to demonstrate that the stipulations were proper and were needed to protect CEC’s economic interest (i.e., a demonstrated showing that the stipulations will prevent harm to CEC). However, no such foundation is established here since, rather than supporting the stipulations, CEC attacks the Roper stipulations as being invalid. See Petition, IV.20(“The decision of [DHEC] violated constitutional, statutory and regulatory authority, by imposing conditional stipulations upon [Roper] and any potential affected party filing a request for a contested case in connection with its determination, which are vague, ambiguous and otherwise unenforceable.”). Footnote In fact, when examined in light of the challenge made by Roper to DHEC’s decision, CEC makes essentially the same argument against the stipulations that Roper makes in its separate action. Roper’s separate action argues that “[t]he conditions described in the CON exceed DHEC’s authority and are therefore illegal.” See Roper vs. DHEC, 03-ALJ-07-0130-CC, Request for Contested Case, p. 3.

Accordingly, as to the stipulations, CEC fails to show an injury in fact in two respects. CEC fails to factually show how the existing stipulations harm CEC. Further, since CEC argues the stipulations must fall, CEC fails to show how removal of the stipulations will eliminate harm to CEC. Indeed, there being no persuasive evidence to the contrary, CEC is best viewed as arguing that a wrong (the imposition of invalid stipulations) was inflicted on a third party (Roper). CEC cannot bring a case seeking to argue another party’s rights. Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 166-167 (1972) (“Appellee has standing to seek redress for injuries done to him, but may not seek redress for injuries done to others.”); see e.g Frillici v. Town of Westport, 823 A.2d 1172, 1182 (Conn. 2003) (“It is axiomatic that a party does not have standing to raise the rights of another.”). Moreover, even in those rare instances when the rights of a third party may be raised, the “litigant must show that the third party is unable to protect its own interests.” Johnson v. Missouri, 142 F.3d 1087, 1090-91 (8th Cir.1998). Such is plainly not the case here since Roper is a sophisticated party fully capable of exercising its rights.

III. Order

Accordingly, based on all the above, CEC lacks standing in this matter. Thus, the Motion to Dismiss is GRANTED and this matter is ended.




Administrative Law Judge

Dated: July 24, 2003

Columbia, South Carolina

Brown Bldg.






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