SC Administrative Law Court Decisions

Two separate motions, one filed on October 24, 2000 by the South Carolina Department of Health and Environmental Control (DHEC) and one filed on October 30, 2000 by Carolina Orthopaedic Surgery Center (Carolina), seek to dismiss the instant matter for lack of subject matter jurisdiction. Petitioner Greenville Hospital System (GHS) opposes the motions. After careful consideration, I grant the motions. Accordingly, the current case is dismissed.

A contested case before the ALJD arose due to Carolina challenging DHEC's denial of Carolina's request for a CON. See Carolina Orthopaedic Surgery Center v. DHEC, Docket No. 00-ALJ-07-0072-CC. Although GHS knew a contested case was underway before the ALJD, GHS chose not to seek intervention under ALJD Rule 20.

Prior to a hearing on the merits, DHEC and Carolina entered into a settlement agreement. Under the agreement, Carolina obtained a CON effective September 1, 2001. The settlement was subsequently incorporated into an ALJD Order issued on October 9, 2000. See Carolina Orthopaedic Surgery Center v. DHEC, Docket No. 00-ALJ-07-0072-CC, October 9, 2000.

Subsequent to the October 9, 2000 order, GHS filed a Motion to Intervene and a Motion for Reconsideration. The Motion to Intervene was denied as untimely and the Motion for Reconsideration was denied due to a lack of standing. See Carolina Orthopaedic Surgery Center v. DHEC, Docket No. 00-ALJ-07-0072-CC, orders dated December 1, 2000.

On October 16, 2000, GHS filed a request for a contested case hearing to challenge the October 9, 2000 Order incorporating DHEC's settlement agreement with Carolina. This request is the subject of the two motions to dismiss for lack of subject matter jurisdiction.

1. Introduction

GHS argues jurisdiction exists for a contested case hearing before the ALJD. None of the parties to the instant case deny that the ALJD has jurisdiction over contested cases in which a CON is in dispute. See S.C. Code Ann. §§ 44-7- 210(D)(2), 1-23-310(2), and 1-23-600(B)(Supp. 2000). However, the argument by DHEC and Carolina is that GHS has not met the requirements for invoking the ALJD's jurisdiction.

2. Jurisdictional Requirements

The ALJD's jurisdiction is invoked when a party presents a contested case. S.C. Code Ann. §§1-23-310(3) and 1-23-600(B)(Supp. 2000). For matters brought to the ALJD, a contested case is presented when an agency's actions produce circumstances for which a fact-finder (here an ALJ) is "required by law to determine a party's rights after an opportunity for a hearing." See League of Women Voters of Georgetown County v. Litchfield-by-the-Sea, 305 S.C. 424, 426, 409 S.E.2d 378, 380 (1991). Thus, the issue here is whether the October 9, 2000 Order incorporating the settlement agreement between DHEC and Carolina was such that the law requires GHS's rights to be determined after an opportunity for a hearing.

This issue in addressed is two steps. First, an explanation follows of the basis upon which GHS claims it has invoked the jurisdiction of the ALJD. Second, an examination of GHS's claim is given demonstrating that GHS has failed to prove it has invoked the jurisdiction of the ALJD.

a. Explanation of GHS's Claim of Jurisdiction in the ALJD

GHS argues that the October 9, 2000 Order granted a CON for a project that is materially different from the one for which Carolina applied, i.e., an ambulatory surgery center which would be effective on September 1, 2001, instead of the date indicated in Carolina's application, July, 2000. GHS thus concludes that the October 9, 2000 Order violates S.C. Code Ann. § 44-7-230, which states that a CON is valid "only for the project described in the application . . . except as may be modified in accordance with regulations." GHS asserts that neither it nor any other "affected person," as defined in S.C. Code Ann. § 44-7-130, received proper notice that the CON would be materially different from that indicated in the application. ⁽¹⁾ GHS asserts it would have submitted its own application for a CON had GHS known DHEC was considering a similar project which would be effective on September 1, 2001. See GHS's Affidavit of Chris Sullivan. ⁽²⁾ Therefore, GHS concludes that it should be afforded the opportunity for a contested case hearing.

b. Examination of GHS's Claim of Jurisdiction in the ALJD

GHS has not invoked the jurisdiction of the ALJD. While GHS attempts to create a contested case controversy, it fails because GHS confuses the disposition of a contested case by a final order of an ALJ with that of an initial decision of staff personnel of DHEC to issue a CON. The two are simply not the same.

The jurisdictional issue cannot be divorced from the October 9, 2000 Order. That order ended an existing contested case action. The fact that the order incorporated a settlement agreement is of no significance since such orders have the same binding effect as any other Final Order and Decision issued by the ALJD. ⁽³⁾

2 Am.Jur.2d Administrative Law § 381 (1994) (An order entered upon stipulation or by consent has the same binding force as any administrative order.). Accordingly, the October 9, 2000 order was final and disposed of the issue of whether Carolina should obtain a CON.

Given that a final order of the ALJ has granted a CON to Carolina, addressing the jurisdictional issue requires identifying the essence of GHS's argument. In the final analysis, the essence is that GHS seeks a contested case to show that the ALJ decision was incorrect; i.e., a CON that is granted effective September 1, 2001 is in error since setting such a date is a substantial change amounting to a new project requiring notice to all affected parties and such notice was not given. Thus, here, GHS's filing of a request for a new contested case action amounts to a collateral attack on the October 9, 2000 Order.

Collateral attack on an administrative order is available where the issuing authority lacks jurisdiction to issue the order, or the order is procured by fraud, or the order is issued under the cloud of a mistake of such a magnitude that reopening the judgment is required. 2 Am.Jur.2d Administrative Law § 380 (1994). Here, no allegations are made that the ALJ acted in excess of his jurisdiction or that the Order was brought about by fraud or mistake. Rather, GHS alleges that the October 9 Order granted a CON different from that applied for, that the Order issued a CON for a new project, that the Order failed to give notice prior to issuing the CON for the new project, and that GHS is entitled to challenge the Order. These allegations do not present any grounds supporting a collateral attack on the October 9, 2000 order.

Moreover, to allow collateral attack of an Administrative Law Judge's final order by a nonparty that had notice of, and an opportunity to intervene in, a contested case proceeding would result in endless litigation and would result in the erosion of the public trust in the integrity of rights acquired on the faith of the adjudicatory process. Cf. 47 Am.Jur.2d Judgments § 898 (1995)(purpose of rule prohibiting collateral attack on the judgment of a court). The efficiency of the administrative adjudicatory process would be greatly impaired if consent orders, signed by all admitted parties and the presiding judge, are not final, binding decisions.

The purpose of the general rule prohibiting collateral attacks is to avoid endless litigation. The rule is based upon public interest in the final adjudication of controversies. The observance of the rule is required by a due regard for the repute of the courts and for the solemnity of judicial proceedings. The rule has been adopted as the result of weighing, on the one hand, the desire of the courts to avoid results which effect positive injustice to individuals, and on the other hand, considerations affecting public policy and convenience, especially in regard to the maintenance of the integrity of property rights acquired on the faith of judicial proceedings. The fact that a party has an opportunity for redress in a direct proceeding is also sometimes stated as an additional reason for the application of the rule.

47 Am.Jur.2d Judgments § 898 (1995) (emphasis added). Likewise, an order of the fact-finder in an administrative proceeding must carry with it the same expectation of finality accorded to a judgment of a court. See 2 Am.Jur.2d Administrative Law § 380 (1994) (Generally, an administrative order cannot be collaterally attacked.).

Accordingly, the remedy sought by GHS of seeking a second contested case hearing is an improper collateral attack. Rather, GHS must challenge the order by a direct attack, i.e. an appeal to the DHEC Board if GHS can meet the requirements for such an appeal. See S.C. Code Ann. § 1-23-610 (Supp. 2000). ⁽⁴⁾

To obtain a contested case remedy, GHS must prove that the ALJD's contested case jurisdiction has been properly invoked. Eldridge v. City of Greenwood, 331 S.C. 398, 503 S.E.2d 191 (S.C.App. 1998), rehearing denied (Aug 20, 1998), certiorari denied (May 14, 1999). Here, GHS has failed to prove that a contested case is available to it. Thus, GHS has failed to invoke the subject matter jurisdiction of the ALJD and the Motions to Dismiss must be granted.

Accordingly, DHEC's and Carolina's Motions to Dismiss are granted.

AND IT IS SO ORDERED.

_______________________________

RAY N. STEVENS

Administrative Law Judge

Dated: February 8, 2001

Columbia, South Carolina

1. Regs. 61-15, § 403.1. explains that any "affected person with standing to contest the grant or denial of an application may request a contested case hearing." Here, GHS operates an outpatient surgery center in the same area as that proposed by Carolina and is an affected party. See 44-7-130(1) ("'Affected person' means. . ., persons located in the health service area in which the project is to be located and who provide similar services to the proposed project, . . .").

2. GHS submitted the affidavit on the same day as the hearing on the Motions to Dismiss, but did so after the hearing had concluded. Carolina objected to the affidavit as being untimely.

In reviewing evidence for admission, a judge exercises discretion (Gamble v. International Paper Realty Corp., 323 S.C. 367, 474 S.E.2d 438 (1996) and that discretion includes considering the degree of prejudice that might result from the admission. Stevens v. Allen, 336 S.C. 439, 520 S.E.2d 625 (Ct.App.1999). Here, no meaningful degree of prejudice results to Carolina. While the affidavit was submitted late, Carolina had knowledge of the affidavit long before the hearing since GHS supplied the same affidavit to Carolina when it filed its Motion for Reconsideration in Carolina Orthopaedic Surgery Center v. DHEC, Docket No. 00-ALJ-07-0072-CC. Thus, lateness is not a sufficient basis for excluding the affidavit.

3. Even if DHEC had continued opposition to the CON throughout the previous contested case, the possibility existed that DHEC would not appeal any order of this tribunal granting the CON following a full adjudicatory hearing.

4. This provision states

For quasi-judicial review of any final decision of an administrative law judge of cases involving departments governed by a board or commission authorized to exercise the sovereignty of the State, a petition by an aggrieved party must be filed with the appropriate board or commission and served on the opposing party not more than thirty days after the party receives the final decision and order of the administrative law judge. Appeal in these matters is by right. A party aggrieved by a final decision of a board in such a case is entitled to judicial review of that decision by the Circuit Court . . . .

S.C. Code Ann. § 1-23-610 (Supp. 2000). Whether GHS meets the appeal requirements is a matter not before me.