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Administrative Law Court
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SC Administrative Law Court Decisions

Piedmont Medical Center vs. SCDHEC et al.

South Carolina Department of Health and Environmental Control

Piedmont Medical Center

South Carolina Department of Health and Environmental Control and Old Pointe Diagnostic Center

Daniel J. Westbrook, Esquire and Travis Dayhuff, Esquire, for the Petitioner

Nancy S. Layman, Esquire, for the Department

M. Elizabeth Crum, Esquire, for Old Pointe Diagnostic Center




This matter comes before me upon a Motion to Enforce a Stay or In the Alternative for a Temporary Injunction made by Petitioner Piedmont Medical Center. Respondent Old Pointe Diagnostic Center opposes this Motion. A hearing was conducted on May 23, 2000, at which time counsel for the above-captioned parties provided the Court with oral argument on this Motion.

After careful consideration of the arguments of counsel and the memoranda submitted by the parties for the Court's consideration, the Court denies the Motion to Enforce a Stay but grants the Motion for a Temporary Injunction upon Old Pointe during the pendency of this case. Bond is set in the amount of Two Hundred Thousand ($200,000.00) Dollars. Additionally, a telephone scheduling conference is ordered for 10:00 a.m., Tuesday, June 27, 2000, to discuss and establish dates for completion of discovery and the commencement of the contested case hearing.


The above-captioned case initiated by the Petitioner Piedmont Medical Center ("Piedmont") involves a dispute over the propriety of a determination of non-applicability granted by Respondent DHEC to Respondent Old Pointe Diagnostic Center ("Old Pointe") for the installation of a magnetic resonance imaging ("MRI") facility in Rock Hill, South Carolina. Piedmont is a hospital located in Rock Hill, South Carolina. Piedmont currently operates one MRI facility on its Rock Hill campus, one mobile MRI unit, and has received a Certificate of Need ("CON") from the State Department of Health and Environmental Control ("DHEC") for operation of a third MRI facility in York County.

Old Pointe has begun construction on an MRI facility in Rock Hill, South Carolina. Before beginning construction, Old Pointe received a determination from DHEC that the state's CON requirements do not apply to Old Pointe's proposed MRI facility. Old Pointe obtained this determination of CON non-applicability (#NA-00-19) by representing to DHEC that the total project cost for its MRI facility would not be in excess of $600,000.00. S.C. Code Ann. § 44-7-160(6), and S.C. Code Ann. Reg. 61-15 § 102(1)(f) requiring a CON to be obtained before acquiring medical equipment used for diagnosis or treatment if the total project cost is in excess of $600,000.00.

Upon learning of Old Pointe's non-applicability determination, Piedmont sought administrative review by the ALJD. Piedmont contends that Old Pointe's MRI facility is not exempt from the CON review process because Old Pointe's total project cost exceeds $600,000.00. Piedmont further contends that Old Pointe underestimated its total project cost, failed to include certain costs properly part of total project cost, and/or failed to disclose certain costs to DHEC in order to obtain the determination of non-applicability.

Piedmont is contesting Old Pointe's non-applicability determination in part because Piedmont asserts that operation of Old Pointe's MRI will result in irreparable financial harm to Piedmont's existing MRI facilities. Piedmont contends that this financial harm will take the form of decreased revenue for its MRI units, and a loss on the investment of time and resources Piedmont made to obtain CONs from DHEC for two of its MRI facilities. Piedmont also seeks to avoid what it contends will be duplicative health care services in York County.

On May 12, 2000, Piedmont filed the instant Motion. Old Pointe opposes the imposition of a stay or injunction during the pendency of this case. DHEC contends that Old Pointe should be allowed to proceed at its own risk on the construction project, but does not oppose Piedmont's motion.



As a preliminary matter, this Court rejects Old Pointe's argument that this Court lacks the power to grant the relief requested in Piedmont's Motion because the Court does not have jurisdiction over Old Pointe's general contractor and other entities that have authorized construction of the MRI facility on behalf of Old Pointe. This Court has been invested by the South Carolina Constitution and the South Carolina Legislature with jurisdiction over contested issues which arise from the departments of state government, including DHEC. See S.C. Const. Art. I, Section 22 (No person shall be finally bound by a . . . decision of an administrative agency affecting private rights except on due notice. . . and he shall have in all such instances the right to judicial review."); S.C. Code Ann. § 1-23-600; S.C. Code Ann. § 44-7-210(E); Aiken Regional Medical Center v. SC DHEC and Imaging Center of Aiken, L.L.C., 99-ALJ-07-0655-CC (Filed May 9, 2000); Physician Imaging Centers, Inc. v. South Carolina DHEC, 1995 W.L. 930068, 95-ALJ-07-0540-CC (ALJ Div. September 13, 1995)(holding that the ALJ Division has jurisdiction over cases contesting DHEC non-applicability determinations). Piedmont, an affected person, sent notice to the DHEC Board requesting a hearing on the non-applicability determination issued to Old Pointe, which was then properly transmitted to the ALJ Division, giving this Court jurisdiction over this matter.

Further, this Court's power to enter a stay, injunction, or other remedial writ in this case necessarily extends to Old Pointe's agents, servants, related entities, and all other parties who seek to implement the project on behalf of Old Pointe. See ALJD Rule 16 ("The administrative law judge may issue remedial writs as are necessary to give effect to its jurisdiction. . ."); S.C. R. Civ. P. 65(d) (noting that an injunction or other restraining order is binding upon the parties and "their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise")(emphasis added); 42 Am.Jur.2d Injunctions § 300 ("One is bound by an injunction even though he or she is not a party to the suit in which the injunction was issued, if he or she has notice or knowledge of the injunction and is within the class of persons whose conduct is intended to be restrained, or acts in concert with such a person.").

Motion to Stay

In its Motion, Piedmont asks this Court to impose a stay against Piedmont that will stop the construction and prevent the eventual operation of Old Pointe's MRI facility in York County until this case is resolved. Piedmont argues that the Court should enforce the automatic stay found in Reg. 61-72 § 205(A) against Old Pointe or, in the alternative, exercise its discretionary powers to grant the stay. Piedmont argues that a stay of Old Pointe's project until this case is resolved serves the logical and beneficial purpose of maintaining the status quo(1) until the propriety of DHEC's non-applicability determination can be reviewed by this Court. Piedmont also argues that a stay during the pendency of this case would prevent Piedmont from suffering what could be unwarranted economic harm at the hands of Old Pointe if this Court were to subsequently find that Old Pointe's facility cannot be operated without first obtaining a CON from DHEC. If the Court finds that a mandatory or discretionary stay under Reg. 61-72 § 205 (A) is inapplicable in this case, Piedmont asks that the Court issue a stay pursuant to S.C. Code Ann. § 1-23-630 or ALJD Rule 16. Old Pointe contends that the automatic stay in Reg. 61-72 § 205(A) does not apply to non-applicability determinations by DHEC because the stay in Regulation 61-72 and ALJD Rule 16 conflict. Rule 16 permits the issuance of a stay or other remedial writ in the judge's discretion, while Old Pointe argues that the relief available under Regulation 61-72 is a non-discretionary, automatic stay. Old Pointe argues in the alternative that if Regulation 61-72 applies, then it cannot be enforced against Old Pointe because the provision applies to "licenses" and not non-applicability determinations. Finally, Old Pointe asserts that Regulation 61-72 does not apply because Piedmont has yet to file a formal Petition setting forth its allegations in this case.

After considering the aforementioned arguments and the other arguments made by counsel in their briefs and during the hearing of this Motion, I find that Regulation 61-72 § 205(A) is inapplicable. Previous cases have addressed the the applicability of 24A S.C. Code Ann. Reg. 71-72 (Supp. 1999) generally and Reg. 61-72 § 205(A) specifically to DHEC exemption or non-applicability determinations.

Regulation 61-72 codifies DHEC's "Procedures for Contested Cases." Regulation 61-72 § 205(A) addresses the issue of automatic stay of a DHEC decision pending a contested case appeal. In the case of Northern Beaufort County Committee v. South Carolina Department of Health and Environmental Control, Office of Ocean and Coastal Resource Management, et al, Docket No. 96-ALJ-07-0117-CC (decided October 28, 1996), Judge Kittrell held:

S.C. Code Ann. § 1-23-650 (Supp. 1995) provides that rules governing practice and procedure before the Division shall be approved by the Division; however, they must be consistent with the rules of procedure governing civil actions in Court of Common Pleas. It further provides that those rules shall be subject to review by the legislature as are rules of procedure promulgated by the Supreme Court under Article V of the Constitution. Pursuant thereto, the Division has adopted its own rules or procedure which govern all contested case proceedings heard by its Administrative Law Judges. Accordingly, since the passage of the Restructuring Act in 1993, the sole rules governing a contested case heard by an Administrative Law Judge of the Division, notwithstanding which agency or subdivision may be a party thereto, are those approved by the Division and promulgated by the General Assembly.

Id. P. 16 (Emphasis added). Because Reg 61-72 is inapplicable to hearings before the Division and only the ALJD Rules of Procedure apply, then Reg. 61-72 § 205(A) is not enforceable against Old Pointe. Because I find that the automatic stay portion of Reg. 61-72 § 205(A) is inapplicable, there is no need to address Old Pointe's alternative argument that the stay should be lifted pursuant to Reg. 61-72 § 205(C).

Temporary Injunction

ALJD Rule 16 authorizes this Division to grant injunctions as are necessary to give effect to its jurisdiction and require the parties to follow the procedures of Rule 65, SCRCP. The South Carolina Courts have adopted the "balancing of hardships" test as set forth in Blackwelder Furniture Company v. Seilig Manufacturing Company, Inc., 550 F.2d 189 (4th Cir. 1977). In Blackwelder, the Fourth Circuit recognized that the first step in a Rule 65 situation is for the court to "balance the 'likelihood' of irreparble harm to the plaintiff against the 'likelihood' of harm to the defendant." Id. At 195. If, upon application of this balance-of-hardship test, the court finds a decided imbalance of hardship in the plaintiff's favor, it is enough that grave or serious questions going to the merits are presented by the plaintiff. If the balance-of-hardship is struck in defendant's favor, the plaintiff must show a likelihood of success on the merits. Finally, in determining whether an injunction shall be issued, the court must weigh the public interest.

Petitioner argues that due process mandates that a stay be issued so that it may have a meaningful hearing on the merits prior to construction under the Permits. Due process requires that a person have notice, an opportunity to be heard in a meaningful way, and judicial review. See Stono River Environmental Protection Association v. South Carolina Department of Health and Environmental Control, 305 S.C. 90, 406 S.E.2d 340 (1991). "Due Process encompasses all rights which are of such fundamental importance as to require compliance with due process standards of fairness and justice and includes procedural . . . rights of citizens against government actions that threaten the denial of life, liberty or property." Anonymous v. State Bd. Of Med. Examiners, 323 S.C. 260, 473 S.E.2d 870, 872 (Ct. App. 1996), rev'd on other grounds, 329 S.C. 371, 496 S.E.2d 17 (1998).

In junctive relief is proper when a party shows (1) the danger of irreparable harm; (2) the absence of a remedy at law; (3) a likelihood of success on the merits; (4) the relative harm to the plaintiff if the injunction is not granted ouweighs the harm to the defendant if it is granted; and (5) public policy would support an injunction. See Blandon v. Coleman, 285 S.C. 472, 330 S.E.2d 298, 300 (1985); Johnson v. Phillips, 315 S.C. 407, 433 S.E.2d 895, 901 (Ct. App. 1993); Roach v. Combined Utility Comm'n of Easley, 290 S.C. 437, 351 S.E.2d 168, 170 (Ct. App. 1986); see also J. Flanagan, South Carolina Civil Procedure at 508 (1996) ("Flanagan").

While the decision to grant or deny an injunction is in the sound discretion of the judge, "[t]he authorities hold that where the action is for the sole purpose of an injunction, and a temporary injunction is essential to the assertion and preservation of a legal right, if established as alleged in the complaint, it would be error of law to refuse a temporary injunction." Alderman & Sons Co. V. Wilson, 69 S.C. 156, 48 S.E. 85, 86 (1904).

A. Piedmont may suffer irreparable harm without an injunction

Piedmont has made a prima facie showing it will suffer irreparable economic harm of the Court does not issue an injunction to stop Old Pointe's construction and operation of an M.R.I. facility in Yrok County. Piedmont invested significant resources to obtain CONs for two of its M.R.I. facilities, and further expended significant sums purchasing, installing, and constructing its M.R.I. facilities to serve the people in York County and the surrounding areas. All of the aforementioned investments and expenditures are threatened by Old Pointe's planned facility in York County. By operating a competing facility so near the Piedmont campus, Old Pointe would be in a position to treat patients who otherwise would be served by Piedmont's M.R.I. facilities and would thus reduce the revenue Piedmont derives from its facilities. Therefore, Old Pointe represents a serious economic threat to Piedmont's prior investments in York County and to the continued financial viability of Piedmont's M.R.I. facilities.

B. Piedmont has no adequate remedy at law

Injunctions are improper when the parties can have complete redress in a court of law. See Charleston Joint Venture v. McPherson, 308, S.C. 145, 417 S.E.2d 54, 550 (1992). Piedmont currently has no adeqaute remedy at law that can immediately and adequately protect the viability of its M.R.I. facilities from Old Pointe's planned M.R.I. facility. Piedmont does not currently have an adequate cause of action at law against Old Pointe that would allow Piedmont to make itself whole through damages. Piedmont's request for an injunction seeks to prevent the impending harm that will occur if Old Pointe is allowed to construct and operate its M.R.I. facility. Further, the fact that Piedmont may suffer irreparable harm in the absence of an injunction implies that it has no adequate remedy at law. See Flanagan at 508.

C. Piedmont may prevail on the merits

A party need not show that it has a certainty of success on the merits to obtain an injunction. See Williams v. Jones, 92 S.C. 342, 75 S.E.2d 705, 709 (1912) ("In passing upon an application for an interlocutory or preliminary injunction the court must satisfy itself, not that the plaintiff has certainly the right, but that he has a fair question to raise as to the existence of such a right."). Piedmont may succeed on the merits of this case because Piedmont may be able to establish that Piedmont should not be exempt from CON review because its actual total project cost exceeds $600,000.00. Piedmont alleges that its experts in the fields of accounting and medical facilities construction will demonstrate that Old Pointe underestimated its total project cost, failed to include certain costs properly part of total project cost, and/or failed to disclose certain costs to DHEC in order to obtain a CON exemption.

D. The hardship upon Old Pointe is outweighed by the irreparable injury that

a denial of injunctive relief will work on Piedmont

An injunction may not be proper when the possible damage to an applicant for an injunction is small, while the burden on the defendant is high. See Phillips, 315 S.C. 407, 433 S.E.2d at 901; Flanagan, at 509. While an injunction would clearly prevent harm to Piedmont's significant economic interests, it would also not be a harsh burden upon Old Pointe because the injunction would last only until the CON exemption issue is adjudicated. In fact, an injunction will prevent Old Pointe from further construction on a project that may require CON review after the case is concluded.

E. Public policy supports the issuance of an injunction against Old Pointe

Public policy is served by enjoining Old Pointe during the pendency of this case in that the state has a substantial interest in preventing duplicative health care services in York County. While it is recognized that DHEC generally operates in good faith and would attempt to correct an erroneous staff decision as a matter of professionalism and fairness, there must be a means of redress to protect against abuse or mistake. There must be a process by which an aggrieved party can seek protection of its substantive rights against action or inaction of the State. See League of Women Voters of Georgetown County v. Litchfield-by-the-Sea, 305 S.C. 424, 409 S.E.2d 378 (1991).

Posting of a Bond

Since a temporary injunction has been ordered, a bond must be posted. Rule 65(c) of the SCRCP provides, in pertinent part, that: "no restraining order or temporary injunction shall issue except upon the giving of security by the applicant." Under this section, the requirement of a bond is mandatory. S.C. R. Civ. P. 65(c). The bond amount is to be determined at the discretion of the Court. First Carolinas Joint Stock Land Bank v. Knotts, 191 S.C. 384 (S.C. 1939). Such a bond is conditioned on the plaintiff's paying such damages as defendant might sustain by reason of the injunction in the event that the injunction or restraining order is wrongfully issued. Hyler v. Wheeler, 240 S.C. 386 (S.C. 1962). The bond amount should be sufficient "to protect the defendants in case it developed that the plaintiff was not entitled to the injunction complained of." Knotts, 191 S.C. at 384. Based on the affidavit of Ralph Norman submitted by Old Pointe, and the fact that additional construction costs will be incurred due to the interuption of the existing construction schedule, Piedmont is hereby required to post a bond in the amount of Two Hundred Thousand ($200,000.00) Dollars.


IT IS THEREFORE ORDERED that Petitioner's Motion for Stay is denied.

IT IS FURTHER ORDERED that Petitioner's Motion for a Temporary Injuction is granted and Respondent Old Pointe, including its officers, directors, agents, consultants, servants, employees, attorneys, other related entities and individuals, and persons acting for, with, or under their supervision, shall refrain from any activities undertaken for the purpose of implementing its MRI facility until the issues in this case are resolved, or until further order of this Court. IT IS FURTHER ORDERED that Piedmont Medical Company is required to post a bond with this Court in the amount of Two Hundred Thousand ($200, 000.00) Dollars within one week of the date of this Order.

IT IS FURTHER ORDERED that the parties shall have a discovery scheduling conference with me to be conducted via telephone on Tuesday, June 27, 2000 at 10:00 a.m. to expedite discovery in this case, that all discovery will be completed no later than sixty (60) days from the date of this Order, and that a hearing on the merits be scheduled no later than ninety (90) days from the date of this Order.

IT IS FURTHER ORDERED that any other issues raised by the parties regarding this Motion are deemed denied. See ALJD Rule 29(C).




Administrative Law Judge

June 22, 2000

Columbia, South Carolina

1. 0 Old Pointe contends that since construction has already begun on the facility that preservation of the "status quo" would allow the continuation of the construction activities. Clearly Piedmont's Motion seeks a stay that would prevent further construction and operation of the MRI facility. See Santee Cooper Resort, Inc. v. South Carolina Public Service Com'n, 298 S.C. 179, 379 S.E.2d 119, 122 (1989)("To 'stay' an order is 'to hold it in abeyance or refrain from enforcing it; a 'stay' is 'a stopping.'")(quoting Black's Law Dictionary at 1267 (5th ed.1979).

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