SC Administrative Law Court Decisions

This matter is before the Administrative Law Judge Division (ALJD or Division) on a Joint Motion to Dismiss filed by the Respondents Department of Health and Environmental Control (DHEC or Department) and Tricounty Radiology Associates (Tricounty). The Petitioner, Charleston Radiologists, P.A., opposes the motion. The motion was argued on November 30, 2000 at the offices of the Division in Columbia, South Carolina. For the reasons set forth below, the motion is granted and the case is dismissed.

On October 4, 1999, Tricounty notified DHEC that it intended to replace its mobile MRI equipment by entering a lease agreement for a 1.0 T MRI. At that time, Tricounty requested a non-applicability determination from the Certificate of Need (CON) requirements pursuant to 24A S.C. Code Ann. Regs. 61-15 §102 (3) (Supp. 2000). At first, DHEC rejected the request, but then reconsidered the request upon receipt of additional information. On November 4, 1999, DHEC sent a letter, signed by Shannon Cantwell of the Health Facilities and Services Branch, to Tricounty stating, in part, the following:

Based upon the information contained in your letter of October 22, 1999, the . . . project does not require Certificate of Need review because it does not meet the applicability requirements as stated in Section 102.1 of Regulation No. 61-15. Certification of Need for Health Facilities and Services. However, if this proposal should change from the information presented to the Department, this determination is not valid . . . .This determination is valid for six (6) months from the date of this letter.

(emphasis added).

On March 17, 2000, Tricounty notified DHEC that the project had been implemented and further reported that it had leased a different MRI than originally reported and had added a third location to be serviced weekly. On March 30, 2000, DHEC wrote Tricounty seeking more information and reminding them that the November 4, 1999 letter had stated that any changes from the original information would render the determination invalid. On April 12, 2000, Tricounty responded to DHEC with more information about the changes. Afterwards, on April 25, 2000, DHEC notified Tricounty by letter that the determination of non-applicability was void based on Tricounty's changes. Furthermore, DHEC ordered Tricounty to discontinue operation of the system.

Counsel for Tricounty then contacted DHEC by letter on May 4, 2000, and sought to negotiate the April 25, 2000 determination. DHEC then stayed its order to cease operation pending execution of a consent order by letter of May 16, 2000. As a result, the Petitioner filed its petition for a contested case hearing with this Division. The Respondents then filed a Joint Motion to Dismiss on the grounds that the issue is not yet ripe for review since DHEC has not issued a final decision and that the Petitioner does not have standing.

The Respondents assert that the issue is not ripe for review since the Department has not issued a final agency decision. S.C. Code Ann. § 44-7-160 (6) (Supp. 2000) sets forth that a Certificate of Need is required from the Department prior to the acquisition of diagnostic or therapeutic medical equipment necessary to provide radiological services "if the total project cost is in excess of that prescribed by regulation." When questions arise as to whether the Certificate of Need statute applies, a person or health care facility may ask the Department for a determination. If the Department determines that a CON is not required, the Department will release a person or health care facility from CON review via a letter of non-applicability. With regard to applicability issues, Regulation 61-15, §102 (3) provides:

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. Such a letter shall contain a detailed description of the project including the extent of modifications, changes in services and total costs. Additional information may be requested as may be reasonably necessary to make such applicability determination. The Department shall respond within sixty days of receipt of the necessary information.

24A S.C. Code Ann. Regs. 61-15, §102 (3) (Supp. 2000).

The CON Act and its implementing regulations provide for administrative review of DHEC decisions regarding Certificates of Need. A non-applicability decision is a decision regarding Certificates of Need pursuant to Reg. 61-15 §102 (3). See also Aiken Regional Medical Center v SC DHEC and Imaging Center of Aiken, Docket No. 99-ALJ-07-0655- CC (May 9, 2000). The decision of non-applicability on November 4, 1999 was one which could have been contested before this Division. Therefore, it logically follows that the April 25, 2000 recision of non-applicability was also a decision over which the Division has jurisdiction. ⁽¹⁾

However, the Division does not have jurisdiction until a final agency decision has been made by the Department. Immediately after the voidance of the non-applicability determination, DHEC received a written request for "negotiation," which was in essence a request for reconsideration, from counsel for Tricounty, pursuant to 24A S.C. Code Ann. Regs. 61-15 § 308 (1) (Supp. 2000). ⁽²⁾

On May 16, 2000, DHEC responded in a letter which indicated that negotiations were underway and that the decision to cease business would be stayed in the interim.

The ALJD obtains jurisdiction of a DHEC dispute if a contested case is presented. S.C. Code Ann. § 1-23-600(B) (Supp. 2000). A "contested case" is presented when "the legal rights, duties, or privileges of a party are required by law to be determined by an agency after an opportunity for a hearing. . . ." S.C. Code Ann. § 1-23-310 (Supp. 2000). Therefore, jurisdiction arises when the legal rights of a party are impacted by an agency's decision. In this case, DHEC has not yet made an agency decision since DHEC has not concluded whether the non-applicability status sought by Tricounty should be upheld or rescinded.

"A justiciable controversy is a real and substantial controversy which is ripe and appropriate for judicial determination, as distinguished from this dispute of a contingent, hypothetical or abstract character." Orr v. Clyburn, 277 S.C. 536, 290 S.E.2d 804 (1982). The Administrative Procedures Act provides that "[a] party who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision in a contested case is entitled to judicial review . . . ." S.C. Code Ann. § 1-23-380 (A)(Supp. 2000). To that end, the Supreme Court held in South Carolina Baptist Hosp. v. South Carolina Dept. of Health and Environmental Control, 291 S.C. 267, 353 S.E.2d 277 (1987), that "[i]t would be premature for a court to decide the merits of a dispute when the agency responsible for making the decision has not yet had an opportunity to decide the merits of the case." Furthermore, in Video Gaming Consultants, Inc. v. South Carolina Department of Revenue, 342 S.C. 34, 535 S.E.2d 642 (2000), the Supreme Court held that "exhaustion is generally required as a matter of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review." The Petitioner is not yet seeking judicial review, but rather a contested case hearing based upon the Department's decision in this case. However, the same reasoning for requiring the exhaustion of administrative remedies before judicial review occurs is analogous to cases before the ALJD.

In this case, the crux of the Petitioner's argument is that DHEC cannot reconsider a staff decision once it has been rendered. However, in its "provisional" letter of nonapplicability, DHEC reserved the right to withdraw that protection from Tricounty should Tricounty alter from its original plan as presented to DHEC. Within the six month period of the validity of the non-applicability letter, Tricounty did alter the plan it presented to DHEC, thereby causing DHEC to withdraw Tricounty's nonapplicability status. Thereafter, within 10 days, Tricounty made a proper motion for reconsideration of DHEC's decision to withdraw its non-applicability status, pursuant to Regulation 61-15 § 308 (1). Therefore, based on the foregoing, the Petitioner has presented a claim that is not ripe and which, therefore, deprives the ALJD of jurisdiction.

Furthermore, though neither the statutes nor regulations directly addresses the reconsideration of a non-applicability determination, Regulation 61-15 § 308 (2) provides that "[t]he Department's proposed decision is not final until the completion of reconsideration or contested case proceedings." 24A S.C. Code Ann. Regs. 61-15 § 308 (2) (Supp. 2000). Therefore, jurisdiction of a CON matter does not vest with this Division until the completion of the reconsideration process. It likewise stands to reason that the same basis should be followed as to a non-applicability decision.

The Petitioner also cites Triska v. Department of Health and Environmental Control, 292 S.C. 190, 355 S.E.2d 531 (1987), in support of its argument that DHEC cannot reconsider a decision once made. In Triska, a 401 Water Quality Certification was revoked after being granted and the appeals process expired. However, Triska is very specific as to 401 Water Quality Certifications and even recognizes that there are other actions within DHEC's authority which may be reconsidered. Id. at 534 (recognizing DHEC's authority to suspend or revoke a permit issued under the Pollution Control Act).

Since this case is not ripe for review, this Division need not reach the issue of standing.

IT IS THEREFORE ORDERED that this case be dismissed without prejudice.

AND IT IS SO ORDERED.

______________________________

Ralph King Anderson III

Administrative Law Judge

February 22, 2001

Columbia, South Carolina

1. It appears that Tricounty agrees with this assessment since in its letter to DHEC of May 4, 2000, they expressly reserved all rights to a contested case hearing.

2. Regulation 61-15 § 308 sets forth:

1. On the basis of staff review of the record established by the Department, including but not limited to, the application, comments from affected persons and other persons concerning the application, data, studies, literature and other information available to the Department, the staff of the Department shall make a proposed decision to grant or deny the Certificate of Need. The proposed decision becomes the final agency decision within ten days after the receipt of a notice of the proposed decision by the applicant unless a staff reconsideration or contested case hearing is requested pursuant to Chapter 4- Appeals of this Regulation.

2. The Department's proposed decision is not final until the completion of reconsideration or contested case proceedings.