SC Administrative Law Court Decisions

This matter comes before this Court upon Respondent QHG's filing of a Motion to Strike or, in the Alternative, Require a More Definite Statement, filed October 10, 1995, and Petitioner McLeod's Return thereto, filed October 16, 1995. QHG applied to DHEC for a CON. Upon staff review, DHEC proposed to grant the CON applied for. Pursuant to S.C. Code Ann. §44-7-210 (D)(2) (Supp. 1994), 24A S.C. Code Ann. Regs. 61-15, § 403 (Supp. 1994), and 25 S.C. Code Ann. Regs. 61-72, § 201(1976), McLeod timely filed a Petition and Request for Contested Case Hearing. Upon receipt of the Petition, DHEC transmitted the case to the Administrative Law Judge Division for adjudication, as mandated by S.C. Code Ann. §1-23-600(B) (Supp. 1994). QHG now moves the Court to strike, or require more definite statements for 20 of the 94 specific allegations contained in McLeod's Petition, claiming that the challenged allegations are insufficient as a matter of law. McLeod asserts that the Petition allegations in dispute are sufficient to allow QHG to prepare its case and are in compliance with S.C. Code Ann. § 1-23-380 (6) (Supp. 1994) and other applicable laws. Pursuant to this Court's Order dated September 18, 1995, these prehearing motions are decided upon briefs without oral argument. For the reasons stated below, QHG's Motions are denied.

Procedural guidelines of arguable applicability in the present matter include:

(a) State Certificate of Need and Health Facility Licensure Act, S.C. Code Ann. § 44-7-110 (Supp. 1994);

(b) Administrative Procedures Act, S.C. Code Ann. §§ 1-23-310, et seq. (1986 & Supp. 1994);

(c) South Carolina Administrative Law Judge Division enabling legislation, S.C. Code Ann. §§ 1-23-500, et seq. (Supp. 1994);

(d) South Carolina Administrative Law Judge Division (ALJD) Rules of Procedure (effective May 3, 1995);

(e) DHEC Certificate of Need for Health Facilities and Services Regulations, S.C. Code Ann. Regs. 61-15;

(f) DHEC Procedures for Contested Cases, S.C. Code Ann. Regs. 61-72;

(g) 1994 State Health Plan.

Conflicts and inconsistencies exist between DHEC Regs. 61-72 and the APA and ALJD Rules, particularly relating to information required to be included in a Petition or Request for Contested Case Hearing.⁽¹⁾

S.C. Code Ann. Regs. 61-72 sets forth the procedures to be followed in contested case proceedings conducted by DHEC. Section 201 of Regs. 61-72 specifies the essential elements of a Petition, the pleading required to initiate a contested case. With the passage of Act No. 181, 1993 S.C. Acts 1407 (popularly known as the "Restructuring Act"), however, DHEC no longer conducts contested case proceedings. Contested cases involving DHEC must be filed with the ALJD for adjudication. For contested cases transmitted to the ALJD, Regs. 61-72 has limited applicability. Once the ALJD assumes jurisdiction of a case, the Administrative Procedures Act ("APA") and ALJD Rules of Procedure apply and principally govern procedure. S.C. Code Ann. §§ 1-23-600(B) and 1-23-650 (Supp. 1994); see also, S.C. Code Ann. Regs. 61-72, § 102. S.C. Code Ann. Regs. 61-15. Consequently, Regs. 61-72 is applicable in CON cases before the Administrative Law Judge Division only to the extent that the regulation is not in conflict with the APA and the ALJD Rules of Procedure.⁽²⁾

While DHEC requires a person seeking a contested case hearing to file a Petition pursuant to § 102 of S.C. Code Ann. Regs. 61-72, the ALJD does not require a party to file a Petition or any other specific pleading unless ordered by the administrative law judge pursuant to ALJD Rule 18. To be afforded a contested case hearing, the ALJD requires only that a person file a written request for a hearing with the affected agency. ALJD Rule 11. The written request must be filed within the time frame established by the affected agency, and must contain the name of the requesting party, the issues involved, the action which is the subject of the hearing, and the relief requested. The agency then transmits the case to the ALJD. Accordingly, the sufficiency of the grounds stated in a petition for a contested case hearing regarding a proposed CON decision are measured by the standards of ALJD Rule 11 and S.C. Code Ann. Regs. 61-15, § 403.

Typically, some prehearing activity in a case is necessary to define the controversy and prevent surprise at the hearing. In conformance with due process protections, parties must be given adequate notice to reasonably inform them of the matters to be addressed. Adequacy of the notice is measured with regard to the practicalities and peculiarties of the case. Aman and Mayton, Admininstrative Law, § 8.4.3 (West 1993). The DHEC regulations address that concern by requiring the filing of pleadings. Pleadings narrow the issues in controversy and give opposing parties notice of the facts and law to be litigated. The ALJD Rules provide several means to identify the issues in controversy. Upon being assigned a case, an administrative law judge may order the parties to file pleadings, prehearing statements, and/or stipulations. ALJD Rules 14 and 18.

It is improbable that any party will be a victim of ambush at the hearing in this case. This is especially true because issues which a party may raise in a CON case are statutorily limited to those presented or considered during the DHEC staff review and decision process. In this regard, all parties have a copy of the entire DHEC file. S.C. Code Ann. § 44-7-210 (E) (Supp. 1994). Further, the Prehearing Statements ordered in the present case must reveal all intended witnesses and exhibits. Pursuant to ALJD Rule 27, any witness or exhibit not exchanged prior to the hearing may be excluded from admission into evidence. Parties may also conduct discovery pursuant to ALJD Rule 21 to further develop the case and narrow the issues. Extensive discovery has been conducted in this case.

An Administrative Law Judge's review of a DHEC proposed decision to grant/deny a CON is conducted as a contested case pursuant to the Administrative Procedures Act and the ALJD Rules of Procedure. S.C. Code Ann. §§ 1-23-310(2); 1-23-600(E); and 44-7-210(D)(2) & (E) (Supp. 1994); S.C. Code Ann. Regs. 61-15, § 403. DHEC's proposed decision is not final until the completion of the contested case proceedings and the issues allowed to be considered at the contested case hearing are limited only to those presented or considered during the staff review and decision process. Within those parameters, however, the contested case hearing is otherwise conducted as a trial de novo, with a preponderance of the evidence standard of proof applied. National Health Corp. v. South Carolina Department of Health and Environmental Control, 298 S.C. 373, 380 S.E.2d 841 (Ct. App. 1989); S.C. Code Ann. §§ 1-23-320 & 330 and 44-7-210 (E) (Supp. 1994). The hearing is not an appellate proceeding, replete with a record of established findings of fact and conclusions of law subject to an appellate standard of review. Despite McLeod's assertions, the substantial evidence rule codified in S.C. Code Ann. § 1-23-380 (6) does not apply in this contested case hearing.⁽³⁾ The ultimate issue before the Court at the hearing on the merits is whether a CON should be granted to QHG for its proposed project. Because DHEC has preliminarily granted the CON and McLeod, as Petitioner, seeks to challenge the proposed decision, McLeod bears the burden of proving, by a preponderance of the evidence, that the CON should be denied.

Each of the Petition allegations which QHG claims is insufficient relate to the evaluative review criteria for CON projects contained in the 1994 State Health Plan. It is undisputed that the 1994 State Health Plan is applicable in this case. When read in conjunction with the 1994 State Health Plan, the allegations are particular enough to give reasonable notice of the issues raised.

For the foregoing reasons, I find and conclude that the allegations of McLeod's Petition which are the subject of QHG's Motions are sufficient to meet the requirements of S.C. Code Ann. Regs. 61-15, § 403 and ALJD Rule 11. Accordingly, QHG's Motion to Strike is denied. The alternative Motion to Require a More Definite Statement is also denied.

AND IT IS SO ORDERED.

___________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

October 25, 1995

Columbia, South Carolina

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Fn. 1. S.C. Code Ann. § 44-7-110 (Supp. 1994), S.C. Code Ann. Regs. 61-15, and the 1994 State Health Plan are primarily substantive, rather than procedural, in nature, so conflict with the APA and ALJD Rules is minimal if not effectively non-existent. The APA and ALJD enabling legislation lack the procedural detail to create contradictory practice requirements.

Fn. 2. The South Carolina Administrative Law Judge Division ("ALJD") was created as part of the 1993 Restructuring Act. The Restructuring Act fundamentally altered the organization and operation of the executive branch of State government. The ALJD was established as an autonomous governmental entity to conduct and render decisions in contested case hearings involving other state agencies. See generally S.C. Code Ann. §§ 1-23-500, et seq. (Supp. 1994). The General Assembly vested the Administrative Law Judge Division with the authority to promulgate its own rules of practice and procedure. S.C. Code Ann. § 1-23-650 (Supp. 1994). The primary rule of statutory construction is to ascertain the intention of the legislature. First South Savings Bank, Inc. v. Gold Coast Associates, 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990). Clearly, by creating the ALJD, authorizing the ALJD to adopt its own contested case procedures, and putting DHEC contested cases within the ALJD's jurisdiction, the legislature intended the ALJD Rules of Procedure to supersede conflicting procedural regulations previously promulgated by DHEC.

Fn. 3. An appeal of an administrative law judge decision in a CON case goes to the DHEC Board. An appeal of the Board's decision is subject to judicial review at the circuit court level. Neither the DHEC Board nor circuit court can make new findings. At each of those levels, the substantial evidence standard of review is applied. S.C. Code Ann. §§ 1-23-380, 1-23-610, and 44-7-220 (Supp. 1994); S.C. Code Ann. Regs. 61-15, § 403.