South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
Hedgemark Brentwood Medical Services, Inc. vs. SCDHEC

AGENCY:
South Carolina Department of Health and Environmental Control

PARTIES:
Petitioner:
Hedgemark Brentwood Medical Services, Inc., d/b/a PHC Home Health

Respondent:
South Carolina Department of Health and Environmental Control and Home Health of South Carolina, (Berkeley County)
 
DOCKET NUMBER:
95-ALJ-07-0473-CC

APPEARANCES:
Robert D. Fogel, Esquire, Attorney for PHC Home Health,

John P. Kassebaum, Esquire, Attorney for SCDHEC

Stuart M. Andrews, Esquire; Daniel Westbrook, Esquire;

Tracey M. Roberts, Esquire, Attorneys for Home Health of South Carolina
 

ORDERS:

DECISION AND ORDER

STATEMENT OF THE CASE

This is a consolidated action involving two separate staff decisions of Respondent South Carolina Department of Health and Environmental Control ("DHEC" or "Department"). A contested case hearing was sought by Petitioner Hedgemark Brentwood Medical Services, Inc., d/b/a PHC Home Health ("PHC") pursuant to S.C. Code Ann. § 44-7-210(D) (Supp. 1995) and § 1-23-310 et seq.(Rev. 1986 and Supp. 1995) for a hearing de novo of DHEC's decision to issue a Certificate of Need ("CON") to Respondent Home Health of South Carolina Inc., ("Home Health") for home health agencies in Berkeley and Dorchester counties.

On June 23, 1995, DHEC notified all applicants of its decision to grant a CON in both Berkeley and Dorchester counties to Home Health, and to deny the applications of PHC and the other competing applicants. On July 6, 1995, PHC filed its Request for Staff Reconsideration and, in the alternative, a Request for Contested Case Hearing. The separate appeals were transmitted to the Administrative Law Judge Division (Division) and by Order of the Division dated October 11, 1995, Docket Numbers 95-ALJ-07-0473-CC and 95-ALJ-07-0474-CC were consolidated for hearing purposes, however, each case retained its separate caption and docket number.(1)

After notice to the parties, a hearing on the merits was conducted on February 6 and 7, 1996. For the reasons that follow, CON's are granted to Home Health for Berkeley and Dorchester counties. Any issues raised in the proceedings or hearing of this case but not addressed in this Order are deemed denied. Further, the filing of a motion for reconsideration is not a prerequisite to any party filing a notice of appeal of this Order.

ISSUES PRESENTED FOR DETERMINATION

The issues presented for determination are as follows:

1. Whether the Department erred in granting CON's to Home Health for home health agencies in Berkeley and Dorchester counties.

2. Whether the Department erred in denying CON's to PHC for home health agencies in Berkeley and Dorchester counties.

3. Whether the Department materially failed to follow its adopted procedures in the following respects:

(a) By not applying the same deadline to each party as to the submission of documents in support of the application;
(b) By allowing Home Health to submit additional information and documents after the deadline;
(c) By accepting documents from Home Health that were incomplete;
(d) By rejecting referral letters from PHC based upon a claim that they failed to comply with the format as set forth in the 1994 State Health Plan;
(e) By applying the 1994 State Health Plan as to whether or not referral letters were in the correct format when DHEC Regulation 61-15 does not proscribe a particular format for said letters;
(f) By misleading PHC as to the acceptability of certain referral letters from doctors and discharge planners and then stating that these letters were not acceptable and using that as the basis of its decision;
(g) By not treating each applicant equally insofar as the establishment of deadlines, the acceptance of evidence after deadlines, and applying S.C. Code Regs. 61-15 (Supp. 1995).

At the hearing, PHC also argued that the scope of review by the Division of DHEC's staff decision is restricted to review of the specific allegations raised in PHC's pre-hearing statement.

DISCUSSION

The State Certification of Need and Health Facility Licensure Act ("CON Act") seeks to prevent unnecessary duplication of health care facilities and services and to guide the establishment of health facilities and services in South Carolina. To achieve these ends the Department is required to prepare a State Health Plan for use in the administration of the CON Program. A CON must be obtained from the Department before undertaking the addition or expansion of a health service.

At the time the applications in the present case were filed, the 1994 State Health Plan ("Plan") was in effect. The CON Act requires that every State Health Plan include standards for the distribution of health care facilities. The 1994 Plan contained seven standards for home health agencies. Two of those seven standards were raised as issues in this case: 1) Standard 3, which describes the format for physician and discharge planner support letters; and 2) Standard 5, which addresses the issue of indigent care.

A home health agency provides part-time or intermittent skilled nursing care on an outpatient basis in a patient's place of residence. The 1994 State Health Plan identified thirteen counties, including Berkeley and Dorchester counties, as able to accommodate an additional home health agency. There were eight competing applicants in Berkeley County and nine competing applicants in Dorchester County. In the case of competing applications, "the department shall award a Certificate of Need, if appropriate, on the basis of which, if any, most fully complies with the requirements, goals, and purposes of [§ 44-7-110 et seq.], and the State Health Plan, Project Review Criteria, and the regulations adopted by the department." S.C. Code Ann. § 44-7-210(C) (Supp. 1995).

Both PHC and Home Health have previously applied for and received CON's from the Department for home health agencies in South Carolina. PHC currently owns and operates a home health agency in Charleston County. Home Health currently owns or operates home health agencies in Florence, Dillon, Darlington, Marion, and Lee counties.

The CON application process requires an applicant to address all applicable standards and requirements set forth in departmental regulations, Project Review Criteria, and the State Health Plan. The Department shall determine the relative importance of the project review criteria for the project and shall notify the applicant of that determination. The applicant then has thirty days from the date of this notice to present any additional information. Once the applicant responds to the Department's request for additional information the application is complete. The Department then has 60 days in which to reach a decision from the date of notification of affected persons, or up to sixty days from the date that applicants are notified of the relative importance of project review criteria provided for in this section, whichever is longer.

The Department notified PHC by letter dated March 29, 1995, of the following:

In accordance with Section 44-7-210(A) of the State Certification of Need and Health Facility Licensure Act, the following project review criteria are considered more important in the review of this application. These criteria are ranked according to their relative importance with the most important being listed first. All other relevant criteria will be given equal importance.
1. Need (compliance with the State Health Plan) - 1(2)
2. Acceptability - 4a
3. Distribution (Accessibility) - 3b, f, g
Medically Undeserved Groups - 31a, d
4. Record of the Applicant - 13a, d
5. Projected Revenues - 6a
6. Net Income - 9
Financial Feasibility - 15
If you wish to provide any additional information relative to any of the above criteria, you must provide written response within thirty (30) days of your receipt of this letter.

The Department reviewed each of the applications submitted for the CON's in Berkeley and Dorchester counties utilizing the above-named criteria. The primary factor differentiating the competing applications was criteria number 2, acceptability, which is defined as community support, including physicians and hospital discharge planners located in the geographic area proposed to be served. Regulation 61-15, Section 802.4.a. states that a CON applicant should have the support of "affected persons," including local providers and the target population. The 1994 State Health Plan further defined the standards which an applicant must comply with on pages II-123 through II-125. Standard 3 provides that CON applications for home health agencies should include:

[D]ocumentation from physicians and hospital discharge planners in the proposed service area indicating the number of patients that they currently refer to home health agencies and the number of additional patients that they will refer to the proposed agency. If there are problems with the existing agencies serving the area, they must be stated in the letters.

Physicians are the driving force behind home health care in that they prescribe the care and refer patients to home health agencies. For this reason physician letters of support for the proposed project are critical for an applicant to be successful where there is competition for a CON. Support letters indicate need because physicians "have a feel" both for current and future need. They also indicate quality in that physicians will not support an agency in which they do not have confidence. Moreover, physician support is a "paramount" factor in determining the success of a new agency. Home Health demonstrated that they had greater physician support for their proposed project than any other competing applicant.

Additionally, net income, financial feasibility, revenues, and history of the applicant are also considered in making the determination of which applicant receives a CON. Home Health best met these criteria and standards in the State Health Plan.

Witnesses for PHC testified that Joel C. Grice, Director of DHEC's CON Office, informed them by phone that no additional information would be accepted by the Department after June 1, 1995. Mr. Grice informed inquiring applicants that supplementary information should be submitted by June 1, 1995 to ensure that the Department would have time to adequately review the information prior to the decision. The Department's request that additional information be submitted by June 1, 1995 was communicated orally only to those applicants who expressed an interest in submitting additional information. At the hearing, PHC alleged that letters were accepted for the Department's consideration after the passage of the June 1 deadline.

SCOPE OF REVIEW

PHC argues that pursuant to S.C. Code Regs. 61-15, §403(1), this tribunal should consider only the issues identified by DHEC in its June 23, 1995 decision letters to the applicants.

This tribunal declines to limit its review to only those issues raised by Petitioner. Section 403(1) of Regulation 61-15 must be construed in a manner consistent with S.C. Code Ann. §1-23-500 et seq. (Supp. 1995) and the Rules of Procedure for the Division, to the extent it has not been supplanted by them. See Home Health Services, Inc. v. S.C. Dept. of Health and Environmental Control, 379 S.E.2d 734 (Ct. App. 1989); 73 Am. Jur. 2d Statutes §189 (1974) (statutes addressing same subject matter are in pari materia and should be construed together). Both Section 403(1) and the CON Act provide that an administrative court may consider any "issues" that were:

        1. presented to DHEC staff, or
        2. considered by DHEC staff during the staff review, and decision-making process.

S.C. Code Ann. § 44-7-210(E) (Supp. 1995) (emphasis added). No authority supports limiting the term "issues" to those specifically identified by DHEC in its letters to applicants notifying them of its decision. Neither the CON Act, Regulation 61-15, nor the State Health Plan require or even recommend that DHEC enumerate in its decision letters every issue that has been presented to it or that it has considered. The CON Act and Regs. 61-15 state that this tribunal may consider issues "presented or considered" during the staff review, the disjunctive "or" suggesting that an issue is reviewable even if DHEC failed to consider it, as long as it was presented to DHEC during the review process. Therefore, in the absence of contrary authority, the Division is empowered to receive and consider evidence on all issues contained in the DHEC record, regardless of whether such issues were specifically referenced in DHEC's decision letters.

Furthermore, the General Assembly has provided that judges from the Division will preside over contested case hearings of administrative decisions. S.C. Code Ann. §1-23-600(B) (Supp. 1995). At a contested case hearing conducted pursuant to the Administrative Procedures Act, "[o]pportunity shall be afforded all parties to respond and present evidence and argument on all issues involved." S.C. Code Ann. § 1-23-320(e) (Supp. 1995). Respondents have requested that this tribunal review the Department's decision to determine if it is in conformity with the applicable statutes, regulations and the applicable State Health Plan. In doing so, all relevant evidence is reviewed using a de novostandard. See National Health Corp. v. South Carolina Department of Health and Environmental Control, 298 S.C. 373, 380 S.E.2d 841 (Ct. App. 1989).

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, considering the burden of persuasion by the Parties, I make the following Findings of Fact by a preponderance of evidence:

General Facts

1. This Division has personal and subject matter jurisdiction over the parties and issues presented.

2. Notice of the date, time, place, and nature of the hearing was timely given to all parties.

3. Prior to the hearing, Professional Home Nursing, Inc., and First American Home Care of South Carolina, Inc., withdrew as Petitioners whereupon this tribunal dismissed them with prejudice as parties in Docket Numbers 95-ALJ-07-0473-CC and 95-ALJ-07-0474-CC.

4. Hedgemark Brentwood Medical Services, Inc., d/b/a PHC Home Health, is a South Carolina corporation. Its principles currently own and operate a home health agency in Charleston County.

5. Home Health of South Carolina Inc., is a South Carolina corporation. Its principles currently own or operate home health agencies in Florence, Dillon, Darlington, Marion, and Lee counties.

6. DHEC is an agency of the State of South Carolina, charged, inter alia, with the administration and implementation of the CON review procedure.

CON Application Process

7. During February and March 1995, eight (8) agencies, including PHC and Home Health, filed applications with the Department for a CON for a home health agency in Berkeley County, South Carolina.

8. During February and March 1995, nine (9) agencies, including PHC and Home Health, filed applications with the Department for a CON for a home health agency in Dorchester County, South Carolina.

9. Following receipt of the applications, the Department sent each applicant a letter requesting additional information and informing them that their applications could be strengthened by submitting support letters in compliance with Standard 3 as set forth on page II-123 of the 1994 State Health Plan. The Department's letter to PHC specifically stated that:

Letters from physicians and hospital discharge planners from the county in which the home health services are proposed that meet the criteria for such letters as outlined in Item No. 3 on page II-123 of the enclosed 1994 South Carolina Health Plan will strengthen your application.

The enclosed Item No. 3 set forth that:

There should be documentation from physicians and hospital discharge planners in the proposed service area indicating the number of patients that they currently refer to home health agencies and the number of additional patients that they will refer to the proposed agency. If there are problems with the existing agencies serving the area, they must be stated in the letters.

Standard 3 prescribes the form an acceptable CON support letter should take.

10. Both PHC and Home Health responded to the Additional Information Letters within their respective 30-day time frames. Upon receipt of the applicant's responses to its request for additional information, the Department notified each applicant that its application was complete for purposes of review.

11. Pursuant to Regs. 61-15, §304, the applicants were notified by a "Complete Letter" of the project review criteria the Department considered most important in evaluating the competed applications and provided a 30 day period in which to submit additional information relative to the ranked criteria. The Priority Criteria, ranked in order of importance, were:

i. Need (compliance with the State Health Plan - 1
ii. Acceptability - 4a
iii. Distribution (Accessibility) - 3b, f, g
Medically Under served Groups - 31a, d
iv. Record of the Applicant - 13a, d
v. Projected Revenues - 6a
vi. Net Income - 9
Financial Feasibility - 15

The numbers beside each criterion reference subsections of Regulation 61-15, §802, where the criterion is described.

12. Each Complete Letter informed the recipient that if it wished to provide additional information relative to the Priority Criteria, it must do so within 30 days of receipt of the Complete Letter.

13. Mr. Joel C. Grice, Director of DHEC's CON Office, was personally responsible for reviewing the eight applications for Berkeley County and the nine applications for Dorchester County, as well as the applications for Chesterfield County. Mr. Grice became concerned in April or May that if some applicants submitted additional information late in the review process the staff might not have time to review it adequately before the June 23 decision date. With the approval of his supervisor, Leon B. Frishman, Mr. Grice decided that if any applicant phoned DHEC to say it was submitting supplementary information, DHEC would "request" that such information be submitted "around June 1." Mr. Grice followed that procedure in subsequent dealings with the applicants.

14. PHC owner Hugh Durrence testified he understood Mr. Grice to say in May that June 1 was an "absolute" deadline for submission of supplementary material. Additionally, PHC's office manager, Lori Matthews, also testified she understood Mr. Grice to say that June 1 was an absolute deadline. However, none of the other applicants in Berkeley or Dorchester County ever indicated to Mr. Grice that they understood June 1 represented a deadline for submission.

15. The Department accepted material submitted by the applicants up until the day of its decision, June 23, 1995.

PHC's Support Letters

16. PHC's physician/discharge planner letters were form letters drafted by two employees, Jean Maglione and Lori Matthews. Neither Ms. Maglione nor Ms. Matthews had ever reviewed the 1994 State Health Plan. Neither Ms. Maglione, Ms. Matthews, nor anyone else at PHC met or spoke with a professional health care consultant or attorney during the review period. Ms. Maglione modeled PHC's form letters on those used by PHC in its 1991 or 1992 CON application for home health services in Charleston County. That application was not subject to the 1994 Plan. DHEC revised the standards for physician/discharge planner letters between 1991 and 1994. Unlike the earlier Plan, Standard 3 of the 1994 Plan required that such letters estimate both the current referrals the letter writer made to home health agencies in the relevant county and the future additional referrals the letter writer would make to the agency he/she was supporting. The form letters drafted by Ms. Maglione did not provide estimates of current referrals as required by Standard 3

17. Ms. Matthews realized that PHC's support letters did not satisfy Standard 3 early in May of 1995, during a phone conversation with Mr. Grice. At that time, Ms. Matthews drafted a new form letter that referenced current referrals. However, no one from PHC ever went back with the new form letters to obtain signatures from the physicians and discharge planners who had signed support letters based on the original PHC form.

18. PHC submitted almost all of its support letters in three batches. On February 23, 1995, it submitted 22 letters along with its Berkeley application and 21 letters along with its Dorchester application. None estimated current referrals. On March 14 PHC submitted eight more letters for Berkeley and three for Dorchester. Again, none estimated current referrals. On May 30, PHC submitted three more letters for Berkeley and five for Dorchester.

19. On June 13 - nearly two weeks after the presumed June 1 deadline - DHEC received another support letter for PHC's Dorchester application.

20. Of all the Berkeley letters, DHEC found only one, submitted May 30, in compliance with Standard 3. Of the Dorchester letters, DHEC found three to be in compliance with Standard 3. Of these three, two were submitted May 31 and one was submitted June 13.

Home Health's Support Letters

21. Home Health submitted a total of 65 physician/discharge planner letters in Berkeley County and 66 in Dorchester County. Fifty-five of the Berkeley County letters and fifty-nine of the Dorchester County letters met Standard 3.

22. Whereas PHC submitted its letters in three batches (February 23, March 14, and May 30), HHSC submissions were more piecemeal.

23. Although DHEC's ordinary practice is to insert all information it receives into the record in reverse chronological order, the letters received from Home Health were inadvertently mixed together. The letters were not stamped upon receipt, so there is no way of knowing the date that most were received. Some of the Home Health's supporting letters were dated by the signatory, others were dated by Home Health on the date it picked up the letter from the physician, and others were dated by Home Health on the date it mailed them to DHEC.

Acceptable Support Letters (3)

24. The following acceptable support letters were submitted within 30 days of the receipt of the Complete Letter:

a) Home Health (Berkeley application)- 14 letters
b) PHC (Berkeley application)- 0 letters
c) Home Health (Dorchester application)- 9 letters
d) PHC (Dorchester application)- 0 letters

25. The following acceptable support letters were submitted by the Department's June 1, 1995 deadline.

a) Home Health (Berkeley application)- 41 letters
b) PHC (Berkeley application)- 1 letter
c) Home Health (Dorchester application)- 45 letters
d) PHC (Dorchester application)- 3 letters


"Service Area" Support Letters

26. Standard 3 requires documentation "from physicians and hospital discharge planners in the proposed service area." Plan at II-123. It is DHEC's policy to accept support letters from physicians whose offices are outside the relevant county, if the letter states that the physician refers patients to agencies operating in the county. In the present case, DHEC accepted a number of letters for Home Health in both Berkeley and Dorchester Counties that were written by Charleston County physicians.(4)

In every instance the physician specifically indicated that home health patients were referred to the appropriate county.

27. Home health referrals crossing county lines are common in South Carolina. Residents of rural counties where physicians are scarce often seek medical treatment in neighboring counties. As Mr. Frishman testified, "I think you've got to be reasonable. People who live in Fairfield County seek health care in Richland County. People who live in Berkeley and Dorchester Counties see physicians in Charleston County." Tr. 1 at 319:21-25.

Department's Decision

28. After holding a project review committee hearing on June 7, 1995, the Department issued its decision letters on June 23, 1995, that Home Health's applications for CON's in Berkeley and Dorchester counties were approved. Also, on June 23, 1995, the Department notified PHC and the other applicants that their applications for the CON's in Berkeley and Dorchester counties had been denied, and the applications of Home Health had been approved.

29. On July 6, 1995, PHC filed its Request for Staff Reconsideration and, in the alternative a Request for a Contested Case hearing. By letter dated July 14, 1995, the Department advised PHC that its Request for Staff Reconsideration was denied.

30. Mr. Grice testified that if the decision had been made on June 1, 1995, he would have recommended that the CON's be awarded to Home Health because they had greater physician support evidenced by more acceptable letters in their application. He further testified that if the decision had been made on May 3, 1995, he would have recommended that the CON's be awarded to Home Health. (5)

31. The Department reviewed the applications of PHC and Home Health in a manner that was totally consistent with other applications for CON's for home health agencies in a competitive review.

32. In addition to the fewer number of support letters, PHC's application failed to:

a) identify a target population or the degree of unmet need,
b) show assumptions and data sources on which need projections were based,
c) provide pricing mechanisms to allow for the projected amount of indigent care, and
d) project budget assumptions that produced a positive net income trend and were financially feasible.

33. Home Health's applications for Berkeley and Dorchester counties comply with the 1994 State Health Plan.

34. Home Health's applications for Berkeley and Dorchester counties best meet the relevant statutes, and standards and requirements set forth in departmental regulations, Project Review Criteria, and the State Health Plan.

CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact, I conclude as a matter of law, the following:

General Conclusions

1. The Administrative Law Judge Division has subject matter jurisdiction in this action pursuant to S.C. Code Ann. §§ 1-23-600 et seq. (Supp. 1995) and 1-23-310 et seq. (1986 and Supp. 1995).

2. S.C. Code Ann. § 44-7-210(E) (Supp. 1995) authorizes the Administrative Law Judge Division to hear contested cases arising under Chapter 7 of Title 44 of the 1976 Code.

3. S.C. Code Ann. § 44-7-140 (Supp. 1995) grants the Department of Health and Environmental Control the authority to administer the Certificate of Need program for the State of South Carolina.

4. S.C. Code Ann. § 44-7-210(C) (Supp. 1995) provides that, "[t]he Department may not issue a Certificate of Need unless an application complies with the State Health Plan, Project Review Criteria, and other regulations." Section 44-7-210(C) further provides that "[i]n the case of competing applications, the department shall award a Certificate of Need, if appropriate, on the basis of which, if any, most fully complies with the requirements, goals, and purposes of this article and the State Health Plan, Project Review Criteria, and the regulations adopted by the department." (emphasis added).

5. Standard 3, as set forth on page II-123 of the 1994 State Health Plan, sets forth the following requirement:

There should be documentation from physicians and hospital discharge planners in the proposed service area indicating the number of patients that they currently refer to home health agencies and the number of additional patients that they will refer to the proposed agency. If there are problems with the existing agencies serving the area, they must be stated in the letters.

6. Petitioner argues that Regs. 61-15, §304, operates to limit the Department's review of additional information submitted by an applicant to that which is received by the Department during the prescribed review period. The South Carolina statutes provide as follows with respect to the submission of additional information necessary to complete an application. After the Department receives an application, the Department may request the applicant to provide additional information to complete the application. "The applicant has thirty days from the date of the request to submit the additional information." S.C. Code Ann. § 44-7-200 (D) (Supp. 1995). Once the application is complete, S.C. Code Ann. § 44-7-210(A) (Supp. 1995) provides that:

[A]ffected persons must be notified in accordance with departmental regulations. The notification of affected persons begins the review period. During the review process, the department shall determine the relative importance of the project review criteria for this project and shall notify the applicant of this determination. The applicant has thirty days from the date of the receipt of this notice to submit any additional information.

DHEC has promulgated the following regulations implementing this statutory deadline:

Upon determination by the Department that an application is complete, the Department shall notify the applicant, by certified mail, of the relative important of the project review criteria to be used in reviewing the application. The applicant will have thirty (30) days from the date of receipt to submit any additional information.

S.C. Code Regs. 61-15, §304 (Supp. 1995) (emphasis added). Any information submitted after this thirty-day period should not be considered by the Department.

7. As the moving party PHC bears the burden of proving by the preponderance of the evidence that the Department should not have granted the CON's to Home Health and should not have denied the applications of PHC. National Health Care Corp. v. South Carolina Department of Health and Environmental Control, 298 S.C. 373, 380 S.E.2d 841 (Ct. App. 1989).

8. Petitioner has failed to prove by a preponderance of the evidence that the Department's review of the Berkeley and Dorchester county applications was not in accordance with the State Health Plan, the Project Review Criteria, and Regulation 61-15. Likewise, the evidence and testimony presented at the hearing do not support a finding that DHEC materially failed to follow its adopted procedures. Evidence of allegations must be sufficient and probative of the matter proven. Coleman v. Palmetto Life Insurance Co., 241 S.C. 384, 128 S.E.2d 699 (1962).

"Service Area" Support Letters

9. Standard 3 requires documentation "from physicians and hospital discharge planners in the proposed service area." Plan at II-123. Since DHEC defines "service area" as the relevant county, PHC contends that only support letters from physicians and discharge planners with offices located in the county comply with Standard 3. However, it is DHEC's policy to accept support letters from physicians whose offices are outside the relevant county, if the letter states that the physician refers patients to agencies operating in the county.

The reason DHEC requires support letters is their value as indicators of current and future need, quality of care provided by the agency, and the agency's likelihood of success. Letters from physicians whose offices are in an adjacent county to the service area, but who treat service area residents and who refer patients to service area agencies, are as reliable an indicia of need, quality, and success as letters from physicians with offices in the county.

PHC's position is unreasonably restrictive and ignores the fact that a physician's practice is not necessarily limited by county lines, nor is his location necessarily defined by the site of his office. I find that "service area" reasonably includes physicians in other counties that refer patients within the proposed county. In fact, it could certainly be presumed that most of those patients referred lived in the county of the proposed CON. DHEC's interpretation in this regard is reasonable and consistent with the purpose, intent, and language of Standard 3.

ORDER

Based upon the Discussion, Findings of Fact and Conclusions of Law, it is hereby:

ORDERED that the applications of Home Health Inc., for Certificates of Need in Berkeley and Dorchester counties be granted.

IT IS FURTHER ORDERED that the applications of Hedgemark Brentwood Medical Services, Inc., d/b/a PHC Home Health for Certificates of Need in Berkeley and Dorchester counties be denied.

AND IT IS SO ORDERED.

Ralph King Anderson, III

Administrative Law Judge

September 10, 1996

Columbia, South Carolina

____________________

Fn. 1. Prior to the hearing, Professional Home Nursing, Inc., and First American Home Care of South Carolina, Inc., withdrew as Petitioners, whereupon this tribunal dismissed their appeal with prejudice, leaving PHC as the sole Petitioner.

Fn. 2. The numbers beside each criteria identify the subsection of Section 802, Regs. 61-15, in which the criteria is described.

Fn. 3. Letters found to be unacceptable letters were those that did not indicate current or future referrals, had illegible signatures, or those that failed to identify the signatory.

Fn. 4. Of the Charleston County physicians who wrote support letters for Home Health's Berkeley County application, six have Berkeley County offices as well. Of the Charleston County physicians who wrote support letters for Home Health's Dorchester County application, four had Dorchester County offices as well.

Fn. 5. May 3, 1995, is 30 days from PHC's receipt of the "complete letter."


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