SC Administrative Law Court Decisions

On April 17, 2002, Providence Hospital (Providence) filed a request for contested case with the Administrative Law Judge Division (Division or ALJD) challenging the Department of Health and Environmental Control's (DHEC or Department) decision reflected in its April 4, 2002, letter determining that an increase in the size of the parking garage is exempt from the CON review requirements of the State Certification of Need and Health Facility Licensure Act (the Act), S.C. Code Ann. §§ 44-7-110, et seq. (Supp. 2001), and its accompanying regulations, 24A S.C. Code Ann. Regs. 61-15 (Supp. 2001). The Respondents have filed a Motion to Dismiss this claim.

The General Assembly has enacted a comprehensive statutory process pursuant to the Act, which requires the Department to approve and permit new health facilities and services. The declared legislative purposes of the Act are to "promote [health care] cost containment, prevent unnecessary duplication of health care facilities and services, guide the establishment of health facilities and services which will best serve public needs, and ensure that high quality [health] services are provided in health facilities in this State." S.C. Code Ann. § 44-7-120 (Supp. 2001). To carry out these purposes, the Act requires that a CON be obtained prior to the undertaking of a project prescribed by the Act. Id. A person is required to obtain a CON from DHEC, inter alia, before it can expand an existing health care facility. S.C. Code Ann. § 44-7-160(1) (Supp. 2001). The Heart Center is part of a "health care facility" as defined by S.C. Code Ann. § 44-7-130(10) (Supp. 2001).

On March 17, 1999, Palmetto filed an application under the 1998 State Health Plan for a CON for the construction of the Heart Center on the northwest portion of the Palmetto campus in order to upgrade its existing cardiovascular services and to add one therapeutic cardiac catheterization laboratory and one electrophysiology laboratory. After publication in the State Register notifying affected parties of the application, the project review meeting on the Application was held by the Department on September 23, 1999. Representatives of Providence attended this meeting. During the entire Departmental review process, Providence did not oppose the Application, file any comments in opposition to the Application or otherwise participate in or provide information to the Department in opposition to the Application. On October 22, 1999, the Department notified Palmetto of its decision to issue the CON for the Heart Center. Neither Providence nor any other affected party requested reconsideration or appealed the Department's decision to issue the CON to Palmetto. The Department approved Palmetto's CON application on November 5, 1999.

Subsequent to the Department issuing the CON, Palmetto made four (4) separate requests for extensions of the CON implementation deadline. The fourth extension request was withdrawn on April 9, 2002, prior to the Board's April 11, 2002 meeting, after Providence had received permission to appear before the Board in opposition to the extension request. The withdrawal of the fourth extension request coincided with Palmetto's April 9, 2002 proposed redesign and relocation of the Heart Center, which does not require the use of the Ambulatory Care Center site. Consequently, under the current proposed design, the Heart Center CON is no longer tied to the Ambulatory Care Center CON.

Providence did not originally object to Palmetto's CON application request. However, on February 15, 2002, Providence ascertained that Palmetto had entered into a joint venture relationship with Columbia Heart Clinic, P.A. (CHC) as part of the development of the Heart Center. The involvement of CHC physicians in the Heart Center project, many of whom have historically exclusively provided services at Providence, spurred Providence to begin investigating Palmetto's CON application.

On April 1, 2002, Palmetto submitted an exemption request to the Department, seeking the Department's approval that no CON was needed for the construction of an 800 car parking garage/foundation (Foundation Project) due to the fact that the Foundation Project was non-medical. In this letter, Palmetto states, "Changes in the design of the Heart Center now include an 800-car, four-level sub-grade garage as the foundation of the Heart Center." ⁽¹⁾ Providence argues that since the garage serves as the actual foundation for the Heart Center, the garage is not subject to an exemption. Moreover, Providence argues that patient and administrative offices will be incorporated into the garage structure. Nevertheless, in a letter dated April 4, 2002, the Department determined that the Foundation Project was exempt from CON review. See S.C. Code Ann. § 44-7-170 (Supp. 2001); 24A S.C. Code Ann. Regs. 61-15 § 104(2)(f) (Supp. 2001).

Palmetto contends that the Department's decision on April 4 was a "quasi-administrative" decision and therefore not subject to review. "[D]ue process is flexible and calls for such procedural protections as the particular situation demands." Stono River Envtl. Protection Ass'n v. S.C. Dep't of Health and Envtl. Control, 305 S.C. 90, 94, 406 S.E.2d 340, 342 (1991). Under South Carolina law, the conclusion that a case is not an APA "contested case" does not automatically negate the necessity for an administrative hearing. The South Carolina Constitution provides that:

No person shall be finally bound by a judicial or quasi judicial decision of an administrative agency affecting private rights except on due notice and an opportunity to be heard . . . and he shall have in all such instances the right to judicial review.

S.C. Const., Art. I, Section 22. In Ross v. Medical Univ. of South Carolina, 328 S.C. 51, 492 S.E.2d 62 (1997), the Supreme Court held that although an adjudicatory hearing may not be required pursuant to the APA, the constitutional due process provision of Section 22, apart from the APA, is sufficient to require the right to notice and an opportunity to be heard by an administrative agency prior to a final determination that affects "private rights." Therefore, under certain circumstances, an administrative hearing may be mandated by Article I, Section 22 of the South Carolina Constitution, even where there is no statute or regulation providing for such a hearing.

In Redmond v. Lexington County School Dist. No. Four, the Supreme Court of South Carolina held that:

The duties of public officials are generally classified as ministerial and discretionary (or quasi-judicial). The duty is ministerial when it is absolute, certain, and imperative, involving merely the execution of a specific duty arising from fixed and designated facts. It is ministerial if it is defined by law with such precision as to leave nothing to the exercise of discretion. In contrast, a quasi-judicial duty requires the exercise of reason in the adaptation of means to an end, and discretion in determining how or whether the act shall be done or the course pursued.

314 S.C. 431, 437-38, 445 S.E.2d 441, 445 (1994).

S.C. Code Ann.§ 44-7-170 (B)(1) (Supp. 2001) provides that the Certificate of Need provisions do not apply to "an expenditure by or on behalf of a health care facility for nonmedical projects for services such as . . .parking garages . . . ." See also 24A S.C. Code Ann. Regs. 61-15 § 104 (2)(f) (Supp. 2001). However, the exemptions "must be obtained in writing from the Department." 24A S.C. Code Ann. Regs. 61-15 § 104 (1) (Supp. 2001). The exemption request "should contain, at a minimum, a project description, capital and/or operational cost, location, and any other information deemed necessary in order for the Department to make a determination." Id.

The April 4 letter constitutes a decision made by the Department. Nevertheless, in order for this case to go forward as a "quasi-judicial" decision of an administrative agency affecting the private rights of Providence, the Department's decision must involve discretion following the exercise of reason, rather than merely a ministerial rubber stamp. The question to be considered in determining the Respondent's Motion to Dismiss is "whether in the light most favorable to the [Petitioner], and with every doubt resolved in [its] behalf," the Petitioner has set forth any valid claim for relief. Washington v. Lexington County Jail, 337 S.C. 400, 523 S.E.2d 204, 206 (Ct. App.1999). In other words, "[t]he motion will not be sustained if the facts alleged and the inferences reasonably deducible therefrom would entitle the [Petitioner] to relief on any theory of the case." Id.

Here, the Department simply reviewed the drawings and upon discerning that the drawings were that of a "parking garage" issued an exemption. In fact, the Petitioner does not dispute that this exempt structure is a "parking garage." Rather, the Petitioner contends that the "parking garage" serves the dual function of providing a structure for parking vehicles and as the foundation for the redesigned Heart Center. However, the fact that the "parking garage"may be the foundation upon which the Heart Center is built does not change the nature of the structure. ⁽²⁾ Therefore, the only reasonably deducible inference is that the structure is a "parking garage"and thereby exempt from the CON requirements under Regulation 61-15 § 104(2)(f). Consequently, the Department's determination was not a quasi-judicial decision for which Providence may properly seek review.

Moreover, the APA provides that all parties must be afforded an opportunity for a contested hearing after proper notice. S.C. Code Ann. § 1-23-320 (1986 & Supp. 2001). However, the APA defines a contested case as "a proceeding, including but not restricted to . . . licensing, in which the legal rights, duties or privileges of a party are required by law to be determined by an agency after an opportunity for hearing." S.C. Code Ann. § 1-23-310 (2) (1986 & Supp. 2001). The Department's determination to exempt the "parking garage" did not involve any "legal rights, duties or privileges" of Providence under the CON Act.

Based on the foregoing analysis:

IT IS THEREFORE ORDERED that this matter is hereby dismissed.

AND IT IS SO ORDERED.

_______________________________

Ralph King Anderson, III

Administrative Law Judge

June 25, 2002

Columbia, South Carolina

1. Providence argues that in Palmetto's initial CON application for the Heart Center, Palmetto also included a parking garage as part of the Heart Center design.

2. This argument may be relevant concerning whether there have been substantial changes to the Heart Center project. However, that consideration is not an issue in this case but is an issue that has been raised in Providence Hospital v. South Carolina Department of Health and Environmental Control and Palmetto Richland Memorial Hospital, Docket No. 02-ALJ-07-0155-CC.