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SC Administrative Law Court Decisions

DISC Diagnostic Medical Imaging et al. vs. SCDHEC et al.

South Carolina Department of Health and Environmental Control

DISC Diagnostic Medical Imaging; Health Images, Inc., d/b/a Charleston Magnetic Imaging (CMI); Roper Hospital; North Trident Regional Hospital, Inc., d/b/a Trident Regional Medical Center and Trident MRI Associates, L.P.

South Carolina Department of Health and Environmental Control and Charleston Physicians Imaging Center




A motion hearing/prehearing conference was held on October 9, 1995. The parties presented oral arguments on Respondent Charleston Physicians Imaging Center's Motion To Dismiss. Subsequent to the hearing, DHEC submitted its complete administrative file to the Court. For the reasons set forth below the Motion is denied.

Pursuant to Prehearing Order of this Court dated October 10, 1995, the parties subsequently submitted to the Court written proposed guidelines for discovery and the hearing. Accordingly, the provisions set forth below regarding discovery and scheduling are ordered.


Respondent Charleston Physicians Imaging Center ("CPIC") made a CON application to DHEC for establishment of a free-standing magnetic resonance center and DHEC preliminarily approved the application. Within ten days of the date of receipt of the DHEC proposed decision, each of the Petitioners filed written requests for a contested case hearing, 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 ALJD Rule 11. 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).

CPIC now moves to dismiss Petitioners DISC Diagnostic Medical Imaging; Roper Hospital; and North Trident Regional Hospital, Inc., d/b/a Trident Regional Medical Center and Trident MRI Associates, L.P. [all Petitioners except Health Images, Inc., d/b/a Charleston Magnetic Imaging (CMI)], as parties on the ground that each of those parties failed to timely file a Petition For Administrative Review under 25 S.C. Code Ann. Regs. 61-72, § 201 (1976). The affected Petitioners oppose the Motion, claiming the inapplicability of Regs. 61-72. Health Images, Inc., d/b/a Charleston Magnetic Imaging (CMI) and DHEC do not actively oppose the Motion but take the general position that Regs. 61-72 is inapplicable when in conflict with ALJD Rules of Procedure. The dispositive issue is the applicability of Regs. 61-72 to CON cases before the Administrative Law Judge Division. It is undisputed that each of the affected Petitioners timely filed a written request for a hearing. It is also undisputed that those written requests for hearing are not in technical conformance with a "Petition," as defined by Regs. 61-72, § 201. CPIC asserts that the hearing requests must conform to the form and substance of Regs. 61-72, § 201. Petitioners argue that conformance with S.C. Code Ann. §§ 1-23-310, et seq. (1986 & Supp. 1994) (the Administrative Procedures Act), South Carolina Administrative Law Judge Division (ALJD) Rules of Procedure; and S.C. Code Ann. Regs. 61-15, is adequate to be granted a hearing.

Procedural guidelines of relevance 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;

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. 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. Joint Acts and Resolutions (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, 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.(1)

While DHEC requires a person seeking a contested case hearing to file a Petition pursuant to Section 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 request 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. To assure due process, parties must be given adequate notice to reasonably inform them of the matters to be addressed at the hearing. Adequacy of the notice is measured with regard to the practicalities and peculiarities of the case. Aman and Mayton, Administrative 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, pre-hearing 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. The 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 and all parties have or will have a copy of the entire DHEC file. S.C. Code Ann. § 44-7-210 (E) (Supp. 1994). 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 is being 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. The substantial evidence rule, as codified in S.C. Code Ann. § 1-23-380 (6) does not apply at this stage of the proceedings.(2) The ultimate issue before the Court at the hearing on the merits is whether a CON should be granted to CPIC for its proposed project. Because DHEC has preliminarily granted the CON and Petitioners seek to challenge the proposed decision, Petitioners bear the burden of proving, by a preponderance of the evidence, that the CON should be denied.

For the foregoing reasons, I find and conclude that the Requests for Contested Case Hearing filed by each Petitioner which are the subject of CPIC's Motion are sufficient to meet the requirements of S.C. Code Ann. Regs. 61-15, § 403 and ALJD Rule 11. The pleading requirements of S.C. Code Ann. Regs. 61-72, § 201 are not applicable to the procedure for contested cases before the ALJD to the extent they are inconsistent with the ALJD Rules, the APA, and specific CON application and review provisions contained in Regs. 61-15. Accordingly, the Motion to Dismiss is denied.


The following schedule and guidelines shall be followed in this case:

(1) No later than November 30, 1995, each party shall provide to all other parties the names and addresses of all potential expert witnesses to be called;

(2) No later than February 29, 1996, all discovery must be completed;

(3) No later than March 15, 1996, all prehearing motions must be filed;

(4) All prehearing motions filed subsequent to the date of this Order shall be decided upon briefs or memorandum without oral argument, unless otherwise ordered by this Court; Responsive memorandum or briefs must be filed and served no later than ten (10) days from the date of receipt of the motion;

(5) In addition to discovery specifically allowed under ALJD Rule 21, each party may serve no more than 15 Production Requests upon each opposing party and take no more than four (4) depositions of witnesses of each opposing party; For all discovery requests served on or after the date of this Order, responses must be served within fifteen (15) days of service of the request; In addition, discovery may be further expanded or curtailed pursuant to agreement and consent of all parties, not to exceed the parameters of SCRCP 26-37, and subject to possible future restriction as may be ordered by this Court;

(6) The parties shall meet at least thirty minutes prior to the commencement of the hearing to pre-mark and exchange exhibits and to finalize any stipulations to be submitted to the Court;

(7) The contested case hearing in this matter shall be held at the Administrative Law Judge Division, 1205 Pendleton Street, Columbia, South Carolina, and commence at 9:30 a.m., Monday, April 1, 1996, and continue as necessary on succeeding business days.

(8) The order of presentation at the hearing shall be in accordance with ALJD Rule 29, with the parties presenting evidence in the order in which they are listed in the caption of the case.





October 25, 1995

Columbia, South Carolina


Fn. 1. The South Carolina Administrative Law Judge Division 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. 2. An appeal of an administrative law judge decision in a CON case goes to the DHEC Board. An appeal of the Board's decision provides 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.

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