UHS OF ANCHOR, L.P. v. DEPARTMENT OF COMMUNITY HEALTH Et Al.
351 Ga. App. 29
| Ga. Ct. App. | 2019Background
- Flint River Hospital operated an acute psychiatric/substance-abuse inpatient program; its CON authorized 12 adult psychiatric/substance-abuse beds but it had been using more than 12 beds since 2014.
- Lake Bridge (a competitor) complained to the Georgia Department of Community Health (the Department); the Department issued a cease-and-desist finding Flint River operated beyond its CON authorization.
- At administrative hearing, Flint River conceded use of more than 12 beds but argued it lawfully “reconfigured” or “flexed” existing licensed beds between services without exceeding total licensed capacity and thus did not need a new CON.
- A hearing officer sided with the Department and affirmed the cease-and-desist; on administrative review the Department reversed the hearing officer, concluding Flint River’s actions were a permissible bed reconfiguration under OCGA § 31-6-2(14) and § 31-6-40 and Department practice.
- Southern Crescent intervened and sought judicial review in superior court; the superior court affirmed the Department’s final decision. Southern Crescent appealed to the Court of Appeals.
- The Court of Appeals reversed: it held the Department’s final decision misinterpreted the CON statutes and rules because Rule 111-2-2-.26 requires a CON for expansion (defined as “addition of beds”) of a CON-authorized psychiatric/substance-abuse inpatient program.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Department’s final decision violated CON statutes/rules by treating Flint River’s bed changes as permissible reconfiguration (no new CON required) | Southern Crescent: Rule 111-2-2-.26 requires a CON for expansion; “expansion” means addition of beds, so Flint River needed a CON | Department/Flint River: actions were a reconfiguration/flexing of existing beds within licensed capacity and thus did not trigger CON requirements under OCGA §31-6-2(14) and §31-6-40 | Held for Southern Crescent: Department misinterpreted statute/rule; expansion (addition of beds to a CON-authorized program) requires a CON, so Department’s decision was erroneous and trial court erred in denying review |
| Whether Department’s action departed from precedent and was arbitrary/capricious (and constitutional claim) | Southern Crescent: reversal of hearing officer departed from prior agency practice, making decision arbitrary and unconstitutional | Department: relied on agency past determinations and interpreted statute/rules to allow reconfiguration in certain circumstances | Not reached: Court reversed on statutory/rule interpretation ground and therefore did not address arbitrariness/constitutional claims |
Key Cases Cited
- Broad St. Supermarket, Inc. v. Ga. Dep’t of Comm. Health, 345 Ga. App. 1 (discusses standard of review of agency final decisions under Georgia APA)
- Emory Univ. v. Levitas, 260 Ga. 894 (1991) (explains substantial-evidence/any-evidence standard in judicial review)
- Pruitt Corp. v. Ga. Dep’t of Comm. Health, 284 Ga. 158 (2008) (addresses deference to agency interpretations)
- HCA Health Servs. of Ga., Inc. v. Roach, 265 Ga. 501 (1995) (limits on agency authority to create exemptions from statutory CON requirements)
- Phoebe Putney Mem. Hosp., Inc. v. Roach, 267 Ga. 619 (1997) (policy against permitting actions that cause unnecessary duplication of services)
- United States v. Rutherford, 442 U.S. 544 (1979) (treats legislative inaction in the face of an agency interpretation as evidence of congressional acquiescence)