ORDERS:
FINAL DECISION
This matter arises from a request for a contested case hearing by Long Term Care
Foundation, d/b/a Roper Nursing Center ("Roper"). On June 24, 1997, the Department of Health and
Environmental Control ("DHEC" or "Department") notified National HealthCare, L.P., Charleston
("NHC") of its decision to award NHC a Certificate of Need ("CON") to construct and operate a 120-bed nursing home facility in Charleston County, South Carolina. On July 3, 1997, Roper filed a
Request for a Contested Case Hearing. A hearing on the merits was conducted on November 12-14,
1997. Before the presentation of evidence, the Respondents moved for Partial Judgment on the
Pleadings and Partial Summary Judgment. In Motions for Judgment on the Pleadings and Summary
Judgment, I determined that there was no genuine issue of material fact as to the finding that the
National Health Care (NHC) application was consistent with the 1996 Plan, and that, with regard
to that application, there was no genuine issue of fact as to whether the development of superior
alternative services to NHC's project would be practicable. Furthermore, I granted Judgment on the
Pleadings to Respondents as to Petitioner's allegations that the DHEC decision violated
constitutional provisions and that the decision was affected by error of law other than those
enumerated in the Petition attached to Petitioner's request for a contested case hearing.
For the reasons that follow, the decision of the DHEC staff to issue a CON to NHC is
affirmed. 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
Roper asserted thirteen causes of action in its Petition. Respondents' Motion for Summary
Judgment as to the Third Cause of Action was granted, and Respondents' Motion for Judgment on
the Pleadings was granted as to the Sixth, Ninth and Eleventh Causes of Action. The remaining
issues are:
1. Has Roper proved by the preponderance of the evidence that the Department is
incorrect in finding that NHC's CON Application adequately documents need for the
project? (First Cause)
2. Has Roper proved by the preponderance of the evidence that the Department is
incorrect in finding that NHC's project is financially feasible? (Second Cause)
3. Has Roper proved by the preponderance of the evidence that the Department is
incorrect in finding that the capital and operating costs of NHC's project and its
potential impact on patient charges are reasonable? (Fourth Cause)
4. Has Roper proved by the preponderance of the evidence that the Department is
incorrect in finding that superior alternatives to the NHC project do not exist? (Fifth
Cause)
5. Has Roper proved by the preponderance of the evidence that the Department is
incorrect in finding that alternatives to new construction were considered? (Seventh
Cause)
6. Has Roper proved by the preponderance of the evidence that the Department is
incorrect in finding that patients would experience serious problems in terms of cost,
availability or accessibility in obtaining care of the type NHC's facility proposes in
the absence of the project? (Eighth Cause)
7. Has Roper proved by the preponderance of the evidence that the Department's
decision to grant NHC's CON application exceeds DHEC's statutory authority?
(Tenth Cause)
8. Has Roper proved by the preponderance of the evidence that the Department's
decision to grant NHC's CON application is clearly erroneous in view of the reliable,
probative and substantial evidence on the whole record, and whether the
Department's decision to grant NHC's CON application was based upon valid ground
and was arbitrary, capricious and characterized by abuse of discretion or clearly
unwarranted exercise of discretion? (Twelfth and Thirteenth Causes)
DISCUSSION
The ultimate issue in this case is whether to grant a CON to NHC to construct a 120-bed
nursing home in Charleston County, which will not participate in the Medicaid program until
additional Medicaid nursing home permit days become available. A CON must be obtained from
the Department before a new health service may be added by a health services provider. 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
DHEC before undertaking the construction or other establishment of a new health care facility.
Nursing homes are included in the definition of a health care facility. See S.C. Code Ann. §44-7-150(10) (Supp. 1997). A nursing home provides inpatient care for convalescent or chronic disease
patients who require nursing care and related medical services, in which such nursing care and
medical services are prescribed by, or are performed under the general direction, of persons licensed
to practice medicine or surgery in the State.
At the time the application in the present case was filed, the 1996 State Health Plan ("Plan")
was in effect. The 1996 Plan contains eight "Project Review Criteria" (Criteria) considered most
important in evaluating CON applications for nursing home facilities. See 24A S.C. Code Ann.
Regs. 61-15 §§ 801, et seq. (Supp. 1997). The Criteria are the criteria applied, as applicable to the
particular project being reviewed, by DHEC to determine whether to grant the application. These
criteria are: (a) need; (b) projected revenues; (c) projected expenses; (d) net income; (e) methods of
financing; (f) financial feasibility; (g) record of the applicant; and (h) distribution (accessibility).
However, a project does not have to satisfy every criterion in order to be approved. 24A S.C. Code
Regs. 61-15, Section 801.3 (Supp. 1997). DHEC notified the NHC in a letter dated April 8, 1997,
that NHC's application was complete and in accordance with S.C. Code Ann. Regs. 61-15, §304,
and listed the following project review criteria as the most important in the review of the application:
1. Compliance with the State Health Plan (Need) -1
2. Distribution (Accessibility) -3a,3b,3c,3e,3f,3g
3. Projected Revenues-6a,6b,6d
4. Financial Feasibility -15
5. Methods of Financing - 11a
6. Record of Applicant - 13a, 13d
While several secondary issues are in dispute, the question of need for the project underlies
and affects all arguments in this case. The 1996 Plan identified thirty-five counties, including
Charleston, as counties which need additional nursing home beds. For Charleston County, the 1996
Plan established a need for 300 additional nursing home beds by the year 1998.
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and closely passed upon
their credibility, and considering the burden of persuasion by the parties, I make the following
Findings of Fact by a preponderance of the evidence:
General Findings
1. Notice of the date, time, place, and nature of the hearing was timely given to all
parties.
2. NHC is a South Carolina Corporation. NHC currently owns or operates 13 nursing
home facilities having a total of 1,868 beds in nine counties in South Carolina, namely, Aiken (2),
Anderson, Greenville (2), Greenwood, Laurens (2), Lexington, Richland and Sumter (2). NHC is
the largest provider of nursing home services in South Carolina.
3. Roper is a nonprofit organization owned by Long Term Care Foundation. Its nursing
home facility in Charleston County is operated under contract by Diversified Health Services. Roper
operates a 132-bed nursing home facility located in Charleston County.
4. NHC applied on March 13, 1997 for a CON to construct and operate a 120-bed
nursing home facility in Charleston County, South Carolina. The application addressed all
applicable standards and requirements set forth in CON Regulations, Project Review Criteria and
the Plan. DHEC informed NHC in a letter dated April 8, 1997, that its application was considered
complete for purposes of DHEC review.
5. DHEC is required to notify the applicant of the relative importance of the project
review criteria to be used in reviewing the application. 24A S.C. Code Ann. Regs. 61-15, § 802
(Supp. 1997), contains thirty-three (33) separate criteria [sixty-eight (68) with subparts] for review
of a CON application. None are singled out as solely determinative of the merit of the application.
DHEC identified the following criteria as those most important in reviewing NHC's application,
listing the criteria in their order of importance, and referencing beside each criterion relevant
subsections of Regulation 61-15, § 802:
a. Compliance with the State Health Plan (Need) - 1
b. Distribution (Accessibility) - 3a, 3b, 3c, 3e, 3f, 3g
c. Project Revenues - 6a, 6b, 6d
d. Financial Feasibility - 15
e. Methods of Financing - 11a
f. Record of Applicant - 13a, 13d
6. On April 25, 1997, by publication in the State Register, DHEC notified the public and
affected persons that NHC's CON application had been accepted for filing and that affected persons
had 30 days from April 25, 1997, to submit comments or requests for a public hearing. Though
Roper is an affected person as defined in the Act, Roper did not request a public hearing on the NHC
application. The only issues Roper raised during the application review period were raised by letter
dated June 17, 1997 and received by the Department via facsimile on June 18, 1997. Those issues
were that:
a. NHC did not document need.
b. The increase in residential care, assisted living, and
home health services are reducing the demand for
nursing home beds, which will make the approval of
the NHC project an unnecessary duplication of
existing services.
c. NHC's projected occupancy rate is too high and the
project's financial feasibility will be jeopardized if the
utilization rates are not achieved.
d. NHC's "proforma (sic) financial statements identified
discrepancies in operating expenses" as related to
ancillary costs reported on the "Proforma (sic)
Budget."
7. On June 24, 1997, DHEC approved the issuance of the NHC CON. Pursuant to this
decision letter ("Decision Letter"), the Department based its decision to issue the CON to NHC on
the following:
a. The applicant has adequately documented need for the
project within the application;
b. The project appears to be financially feasible; and
c. The proposed project has been determined to be
consistent with the standards for long term care
facilities and services as outlined in the 1996 S.C.
Health Plan.
8. In the Decision Letter, the Department made the following findings pursuant to 24A
S.C. Code Ann. Regs. 61-15, § 501:
a. The capital and operating costs of the proposal and
their potential impact on patient charges are
reasonable;
b. Superior alternatives to such services in terms of cost,
efficiency, or appropriateness do not exist and that the
development of such alternatives is not practicable;
c. In the case of new construction, alternatives to new
construction (e.g., modernization or sharing
arrangements) have been considered; and
d. Patients will experience serious problems in terms of
costs, availability or accessibility, or such other
problems as may be identified by the department, in
obtaining care of the type proposed in the absence of
the project.
9. Failure to meet any single criterion is not fatal to a CON application. Regs. 61-15,
Section 801(3) provides:
A project does not have to satisfy every criterion in order to be approved, but
no project may be approved unless it is consistent with the State Health Plan.
A project may be denied if the Department determines that the project does
not sufficiently meet one or more of the criteria.
(Emphasis added). There is no requirement in the State Health Plan that a nursing home
CON application have physician support letters.
10. On July 3, 1997, Roper filed its Request for a Contested Case hearing. DHEC timely
transmitted the Request for a Contested Case hearing to the Administrative Law Judge Division.
Documentation of Need
11. A nursing home is a medical facility under the Act. As required by Regs. 61-15, §
504, the Department's decision to approve the CON was based on the currently approved State
Health Plan ("Plan") in effect at the time the application was accepted. The Plan in effect at the time
the application was received was the 1996 South Carolina Health Plan.
12. S.C. Code Ann. § 44-7-180 (Supp. 1997) requires DHEC, with the advice of the
health planning committee, to prepare the Plan for use in the administration of the CON program.
Public hearings are held around the state for the public to submit input to the Plan. The Plan
addresses the need for medical facilities and services in the State. The nursing home bed need
methodology used in the Plan is based upon a ratio of 39 beds/1,000 population age 65+, which ratio
factors in the turnover rates of beds, available supply, desired occupancy factor, new Medicaid
eligible demanders (people needing nursing home services), new non-Medicaid eligible demanders,
and the limited number of slots available in the South Carolina Community Long Term Care Project.
13. The 1996 Plan documents a need for 300 new nursing home beds in Charleston
County through the year 1998. The need in the Charleston area was projected for two years from
the year of the current Plan, because it takes approximately two years for a nursing home to be
developed, constructed and licensed. At the same time that the NHC application was under
consideration by DHEC, two other CON applications for nursing home beds, one seeking approval
for 60 beds, and the other seeking approval for 42 beds, were approved by DHEC for the Charleston
area. None of these CON applications were considered competing because the total of nursing home
beds offered did not exceed the 300 additional nursing home bed need from the 1996 Plan.
14. The 300 additional bed need set forth in the 1996 Plan is not divided by payor source.
A large percentage of nursing home beds are paid with Medicaid (Title XIX) Program funds.
Medicaid days are funded by the state and nursing homes apply for a certain number of Medicaid
days from the ones that have been allocated for that year. If additional nursing home beds are not
built by facilities who will participate in the Medicaid program, then nursing home patients who
could benefit when additional Medicaid days are offered will not be able to do so. Roper, although
eligible for more Medicaid days, refused to apply for additional Medicaid days when those days were
offered, even though additional Medicaid days would have increased Roper's occupancy rate.
Furthermore, unless there are nursing home beds not certified for Medicaid available when additional
Medicaid days become available for Charleston County, the Medicaid patient days will be given to
another county and the Charleston population will not have access to those days.
Since DHEC cannot presently approve additional Medicaid beds based on limited financial
resources in South Carolina, NHC was required by DHEC to provide a certification that it would not
participate in the Medicaid program. However, NHC will seek eligibility to participate in the
Medicaid program once additional Medicaid days become available. Without available and willing
facilities, those additional Medicaid days will be allocated to a county with nursing home facilities
willing to have beds certified as Medicaid beds.
15. Based upon the documented trends and projections of the Charleston County
population, especially the increase of the elderly population, and the projected need in the 1996 Plan
for additional nursing home beds in Charleston County, an additional nursing home offering the
services recited in the NHC application is needed in Charleston County.
16. Roper alleges that NHC's project will unnecessarily duplicate services offered by
existing nursing homes in Charleston County. Roper further maintains that its nursing home is
currently underutilized, and that the nursing homes currently operating in Charleston County have
capacity sufficient to accommodate patients who do not participate in the Medicaid program. The
evidence offered by Roper to prove that the NHC facility would unnecessarily duplicate its services
and therefore have an adverse effect on Roper was based upon speculation. Roper did not prove by
the preponderance of the evidence that NHC's application does not adequately demonstrate need.
Furthermore, Roper did not prove that the services currently offered by existing nursing homes in
Charleston County would be unnecessarily duplicated by the NHC project.
Financial Feasibility
17. Regs. 61-15, § 202(B)(16) requires that the applicant submit a proposed budget, on
the budget form provided by DHEC, for the three (3) years after the completion of the proposed
project. In its application, NHC submitted its proposed three (3) year budget on the form provided
by DHEC and provided additional budget information beyond that required by DHEC. Roper
contended in its letter to DHEC that NHC's projected occupancy rate is too high and that the project's
financial feasibility will be jeopardized if the utilization rates are not achieved. In other words,
Petitioner alleged that the NHC application did not demonstrate that there was a target population
in Charleston County capable of supporting a nursing home such as the NHC project. At the
hearing, Petitioner questioned only the absence of an allocation in NHC's application for working
capital in the budgets. However, since NHC's parent company will absorb the cost of working
capital, there was no need to allocate it in the budget.
18. NHC purchased four (4) tracts of land comprising 22.17 acres in Charleston County
in 1992 at a total cost of $1,395,205. The cost of the land was $62,932 per acre. The proposed site
for the nursing center will occupy 9.446 acres of the 22.17 acres owned by NHC. The cost of the
land as stated in the application that the nursing center will occupy is $594,480. The total project
cost as stated in the application, for the nursing center is $8,991,030.
19. NHC's semi-private room rate is $105/day for 1999 (yr. 1 of operation), $110.25/day
for 2000 (yr. 2 of operation), and 115.76/day for 2001 (yr. 3 of operation). The room rate is the same
as room and board. NHC's private room rate is $129/day for 1999 (yr. 1 of operation), $135.45/day
for 2000 (yr. 2 of operation), and $142.22/day for 2001 (yr. 3 of operation). The facility will have
49 semi-private rooms (98 beds) and 22 private rooms (22 beds).
20. The payor sources for NHC's proposed facility include private pay (income or other
assets, including help from family members), Medicare, Medicare risk avoidance, CHAMPUS,
traditional insurance (reimbursement for ancillary services and medications), managed care, nursing
home care insurance, and charity care. Both the private and the semi-private room rates are
comparable to those in other nursing home facilities in Charleston County. Furthermore, the
application provided that at least 15% of the patient mix of the first year would be Medicare
recipients, and that the facility would increase its Medicare patient numbers each year. Based on the
information provided in the NHC application, there was sufficient documentation in the application
of a target population which could support a nursing home in Charleston County which did not
participate in the Medicaid program.
In 1996 there would be 205 nursing home beds needed by persons with incomes of $50,000
or over. In 2001, there would be 284. However, the $50,000 figure is a very conservative estimate,
because in actuality patients would more than likely use assets other than income alone to pay the
nursing home costs. The 1995 Joint Annual Reports ("JARs") of nursing home facilities in
Charleston County indicated that there were already 354 nursing home beds paid from funds other
than Medicaid or Medicare. This evidence demonstrates that, even as early as 1995, there were more
persons using nursing home beds funded by sources other than Medicaid or Medicare than had
incomes over a $50,000 level. Accordingly, private payor sources are derived from sources other
than income alone. In fact, most private pay nursing home residents have some sort of insurance.
Moreover, the percentage of nursing home residents obtaining long term care insurance is increasing
and is projected to continue increasing.
21. Roper did not establish that NHC's rates were unreasonable or that the capital and
operating costs were unreasonable. To the contrary, the evidence established that NHC's rates and
its capital and operating costs are reasonable. Therefore, the proposed project is financially feasible
as required by 24A S.C. Code Ann. Regs. 61-15 § 802(15).
Projected Patient Cost and Charges
22. The only issue concerning patient costs or charges presented by Roper to DHEC was
that NHC's "proforma (sic) financial statements identified discrepancies in operating expenses" as
related to ancillary costs reported on the "Proforma (sic) Budget." Roper's letter of June 18, 1997,
miscalculated the projected ancillary costs, and the ancillary costs stated in NHC pro forma budget
are correct. In determining the total ancillary cost on the pro forma budget, Roper neglected to add
into the total cost the cost of physical, occupational and speech therapy, which are also considered
to be ancillary costs. When all ancillary costs are included, the total equals the ancillary costs
identified on the Estimated Medicare Contractual Adjustment schedule.
23. In determining the cost for entry into a nursing home, only the room and board
charges should be considered. The amount of ancillary services to be used by each resident is
variable and speculative.
24. NHC's proposed patient charges for both the private and semi-private rooms are
comparable to rates charged by existing nursing home facilities in Charleston County and are
reasonable.
Alternatives to New Construction
25. NHC does not have an existing facility in Charleston County and does not have the
alternative of expanding such a facility. NHC considered the alternative of constructing a smaller
nursing home facility in Charleston County. DHEC nursing home licensure requirements provide
that nursing homes can be staffed on a 60 bed basis. The number of beds necessary to provide the
high acuity of services at the facility is 120. It is not in the best interest of patients or the facility's
economic feasibility to build a facility with fewer beds. The only alternative NHC has to fill the
existing need for nursing home beds in Charleston County is to construct a new 120-bed facility.
Availability or Accessibility of Services
26. The NHC nursing center proposes to provide the following services:
a. Nursing Services;
b. Rehabilitation Services;
c. Dietary Services;
d. Medical Director;
e. Consultant Services;
f. Housekeeping and Janitorial Services;
g. Laundry;
h. Patient Assessment Program;
I. Discharge Planning;
j. Respite Care;
k. Management;
l. Hospice;
m. Dementia/Alzheimer's Services;
n. Sub-Acute Care; and
o. Respiratory Therapy.
The facility will have a dedicated thirty (30) bed Alzheimer/dementia unit, which will be the only
dedicated Alzheimer's unit in Charleston County, and a sixteen (16) bed dedicated sub-acute unit
complete with oxygen and suction.
27. Most nursing homes in South Carolina do not have sub-acute units complete with in-wall suction and oxygen. In-wall oxygen provides a more consistent rate of oxygen, is not
cumbersome like tanks, provides a higher level of oxygen, has humidifiers and different types of
oxygen, and is better for tracheotomy patients. In-wall suction has a better pull and requires less
frequent patient suction. Additionally, a dedicated Alzheimer unit in a nursing home is more
beneficial and safer to both the facility's Alzheimer patients and non-Alzheimer patients. Roper
does not have a dedicated Alzheimer unit.
CONCLUSIONS OF LAW
Based upon the foregoing Findings of Fact, I conclude as a matter of law, the following:
1. The Administrative Law Judge Division has jurisdiction over this matter and is
authorized to hear it as a contested case pursuant to S.C. Const. Art. I, §22; Chapter 23 of Title 1 of
the 1976 Code, as amended, S.C. Code Ann. §1-23-600(B) (Supp. 1997); S.C. Code Ann. §§ 1-23-310, 320 (Supp. 1997); § 44-7-210(D)(2) (Supp. 1997); S.C. Code Ann. Regs. 61-15 §403 (Supp.
1997) and S.C. Code Ann. Regs. 61-72 § 201 (Supp. 1997).
2. The burden of proof in a contested case hearing is a preponderance of the evidence,
with the burden being upon the Petitioner. Therefore, Roper has the burden of proof to establish by
a preponderance of the evidence that NHC's CON application should be denied. S.C. Code Ann.
§§ 44-7-11- through 44-7-340 (Supp. 1997); S.C. Code Ann. Regs. 61-15, §403(1) (Supp. 1997);
National Health Corp. v. S.C. Dep't. of Health and Environmental Control, 298 S.C. 373, 380 S.E.2d
841 (1989).
3. An Administrative Law Judge's review of a DHEC administrative decision to grant
a CON application is governed by S.C. Code Ann. § 44-7-210(E) (Supp. 1997), which provides, in
pertinent part:
The department's proposed decision is not final until the completion of
reconsideration or contested case proceedings. . . . The contested case
hearing before the board or its designee is conducted as a contested case
under the Administrative Procedures Act. The issues considered at the
contested case hearing are limited to those presented or considered during the
staff review and decision process.
(emphasis added). The Administrative Procedures Act "contemplates a straight-line agency process
beginning with fact-finding and ending with judicial review; it does not contemplate an agency's
continuous re-initiation of investigation throughout the process." Milliken and Co. v. South Carolina
Department of Labor, 275 S.C. 264, 267, 269 S.E.2d 763, 764 (1980). Therefore, parties are
prohibited from submitting new or additional facts for consideration at the hearing which were not
part of the administrative record at the time of the initial staff decision.
4. Pursuant to S.C. Code Ann. §1-23-330(4) (1986), in the evaluation of the NHC
application, and in the presentation of testimony and evidence at the hearing, DHEC used its
experience, technical competence, and specialized knowledge.
5. DHEC is an agency of the State of South Carolina, charged, inter alia, with the
administration and implementation of the State Certification of Need and Health Facility Licensure
Act, S.C. Code Ann. §§ 44-7-110, et seq. (Supp. 1997). It is therefore the State agency responsible
for licensing and regulating nursing homes. Nursing homes are licensed and regulated pursuant to
24A S.C. Code Ann. Regs. 61-17 (Supp. 1997). South Carolina Code Ann. §§ 44-7-180, et seq.
(Supp. 1997) provides for the application procedures, criteria, and standards for a Certificate of
Need. Furthermore, the CON program is administered pursuant to the guidelines of S.C. Code Ann.
Regs. 61-15 (Supp. 1997). In order to approve a CON application for a nursing home the
Department must find that:
a. The capital and operating costs of the proposal and
their potential impact on patient charges are
reasonable;
b. Superior alternatives to such services in terms of cost,
efficiency, or appropriateness do not exist and that the
development of such alternatives is not practicable;
c. In the case of new construction, alternatives to new
construction (e.g., modernization or sharing
arrangements) have been considered;
d. Patients will experience serious problems in terms of
costs, availability or accessibility, or such other
problems as may be identified by the department, in
obtaining care of the type proposed in the absence of
the project; and
e. In the case of a proposed addition of beds for the
provision of nursing care service, the addition is
consistent with the plans of other State agencies
responsible for provision and financing of long-term
care (including home health) services.
24A S.C. Code Ann. Regs. 61-15 § 503 (Supp. 1997).
6. 24A S.C. Code Ann. Regs. 61-15 § 202(2)(b)(11) requires that a project application
"demonstrate that the proposed project is needed or projected as necessary to meet an identified need
of the public." The regulation further requires the application to address the following:
"identification of the target population; the degree of unmet need; projected utilization of the
proposed facility or service; utilization of existing facilities and services; past utilization of existing
similar services within the facility; and justification that the proposed project will not unnecessarily
duplicate existing entities." The regulation also requires that the applicant show all assumptions,
data sources and methodologies and that the population statistics be consistent with those generated
by the State Demographer.
7. S. C. Code Ann. § 44-7-180 (Supp. 1997) requires DHEC, with the advice of the
health planning committee, to prepare the Plan for use in the administration of the CON program.
The Plan addresses the need for medical facilities and services in the State. A nursing home is a
medical facility under the Act. All CON applications must be consistent with the State Health Plan
in effect at the time of the application. S.C. Code Ann. Regs. 61-15, §504 (Supp. 1997). The public
hearings, which are held across the state at the time a State Health Plan is proposed, are the
appropriate forums in which to object to the provisions of a State Health Plan. Once the provisions
of a State Health Plan are approved by the DHEC Board, the CON analysts are bound by the
requirements of the Plan.
8. As required by Regs. 61-15, § 504, the Department's decision to approve the CON
was based on the currently approved Plan in effect at the time the application was accepted. The
plan in effect at the time the application was received was the 1996 South Carolina Health Plan
("Plan").
9. DHEC is required by S. C. Code Ann. § 44-7-210(A) (Supp. 1997) and by S. C. Code
Ann. Regs. 61-15, Section 304 (Supp. 1997) to notify the applicant of the relative importance of the
project review criteria to be used in reviewing the application. The relative importance assigned to
each specific criterion depends on the importance of the criterion applied to the specific project. S.
C. Code Ann. Regs. 61-15, Section 801.2 (Supp. 1997). According to the 1996 South Carolina
Health Plan, the following project review criteria are considered most important in evaluating a CON
for a nursing home facility:
a. need;
b. projected revenues;
c. projected expenses;
d. net income;
e. methods of financing;
f. financial feasibility;
g. record of the applicant;
h. distribution (accessibility).
10. A project does not have to satisfy every criterion in order to be approved. Regulation
61-15, § 801(3) provides:
A project does not have to satisfy every criterion in order to be approved, but
no project may be approved unless it is consistent with the State Health Plan.
A project may be denied if the Department determines that the project does
not sufficiently meet one or more of the criteria.
(Emphasis added).
11. The NHC application meets all of the requirements of the Project Review Criteria
which DHEC ranked in importance, pursuant to S.C. Code Ann. Regs 61-15, §802.
12. The NHC application is consistent with and is in compliance with the 1996 South
Carolina Health Plan.
13. DHEC met all statutory and regulatory requirements in its review of the NHC
application and in its decision to issue a CON to NHC to construct a 120-bed nursing home facility
that will not participate in the Medicaid program.
14. Roper is an "affected person" with standing to request a contested case hearing of
DHEC's decision to approve NHC's CON application for the construction of a 120-bed nursing
home facility. S.C. Code Ann. §44-7-130 (Supp. 1997) and S.C. Code Ann. Regs. 61-15, § 103.1
(Supp. 1997). Furthermore, Roper timely filed a Petition for Administrative Review for a Contested
Case Hearing regarding DHEC's approval of NHC's CON application. However, Petitioner failed
to prove by a preponderance of the evidence that DHEC's review of the NHC application 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
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).
ORDER
IT IS HEREBY ORDERED that DHEC grant a Certificate of Need to National HealthCare,
L.P. to construct a 120-bed nursing home facility in Charleston County.
AND IT IS SO ORDERED.
Ralph King Anderson, III
Administrative Law Judge
July 14, 1998
Columbia, South Carolina |