34 Conn. Supp. 225 | Pennsylvania Court of Common Pleas | 1977
This appeal seeking judicial review and reversal of a decision of a state agency, the commission on hospitals and health care, hereinafter the commission or the CHHC, was brought pursuant both to § 4-183 of the General Statutes, the Uniform Administrative Procedure Act, hereinafter the UAPA, and to § 19-73p of the General Statutes. The commission denied by a five-to-four vote the plaintiff’s application made pursuant to
At its regularly scheduled January 25, 1977 meeting, the commission considered the recommendation of the panel, dated January 18, 1977, to deny the application, and adopted the panel’s negative recommendation by a vote of five to four, with the tenth commissioner present, chairman pro tern William J. Lavery, not voting. The panel’s recommendation thus became the decision of the commission:
“This recommendation [to deny] is made for the following reasons:
“1. The criteria used by the Commission as a guideline for allocating nursing home beds shows the Northwest Health Service Area to be overbedded by 64 beds and the community of Cheshire overbedded by 258 beds.
“2. While the high quality of care at the Cheshire facility is recognized, such quality of care in and of itself cannot be deemed as sufficient reason to justify the construction of additional inpatient health resources in a community which is over-bedded by Commission guidelines.” (Emphasis added.)
I
The plaintiff is a Connecticut corporation and is licensed by the state department of health to operate a chronic and convalescent nursing home for eighty patient beds, i.e., a skilled nursing home, and a rest home with nursing supervision for forty patient beds, i.e., intermediate care beds, in the town of Cheshire. The principals of the corporation are Andrew J. Barth and Evelyn Barth, and their son, Andrew J. Barth, Jr.
On or about October 12, 1976, pursuant to § 19-73m the plaintiff made application to the defendant commission for permission to conduct a capital construction project in the town of Cheshire for the purpose of constructing an additional sixty-bed skilled nursing facility and an additional sixty-bed rest home with nursing supervision facility at an estimated project cost of $1,830,000. Simultaneously with the filing of the application with the commission, the applicant also filed a copy with the Northwest Connecticut Health Systems Agency, Inc., hereinafter the health systems agency or the HSA. The health systems agency was created pursuant to congressional mandate by the National Health Planning and Besources Development Act of 1974, 42 U.S.C. § 300k et seq. It replaces the former Comprehensive Health Planning Agency mentioned in § 19-73m in Connecticut’s health care regulatory superstructure. Such agencies exercise a fact finding and health resource allocation function in specified geographical health planning areas known as “health service areas.” Health systems
On or about October 13, 1976, the HSA commencéd its deliberations preparatory to rendering its advisory recommendation. Members of the HSA review panel paid a personal site visit to the applicant’s 120-bed facility, and the review committee, as well as the board of directors of the agency, deliberated on the project at four separate meetings held on November 8, 1976, November 16, 1976, November 23, 1976, and December 16, 1976. At the various fact finding sessions before the diverse subgroups of the HSA, the applicant was asked by the HSA to explain away, if it could, the guideline or standard then in use by the CHHC in deciding or adjudicating requests made pursuant to § 19-73m. That standard or guideline, to the effect that “70 nursing home beds per 1,000 population aged 65 or over” would be a rule to be applied by the CHHC as a “statewide ceiling” for allocating capital construction of nursing home beds, was adopted by the commission, at its May 13, 1975 meeting. That rule was developed as a result of recommendations made to the CHHC by a special study group, i.e., the Long Term Care Task Force, which found that a moratorium on the issuance of certificates of approval for nursing home beds was necessary in order to determine how many of 5700 nursing home beds previously authorized by the commission’s predecessor, the council on hospitals, would be actually constructed and placed in service.
At the HSA hearings, the applicant’s counsel questioned the validity of an administrative
Indeed, on October 28, 1975, Deputy Director Sarah S. Hirakis, the proponent of the May 13, 1975 motion to adopt the guideline, issued a memorandum to the commission members in which, after restating the text of the May 13, 1975 guideline as adopted, she admonished the commission members of the following legal concern: “Since the Attorney General’s Office has ruled that a moratorium cannot be legally declared, recommendations #14 and #15, recommending bed policy allocation, are therefore void.” (Emphasis added.) Despite, however, the admitted and patent illegality, the memorandum
Although some effort was made by the applicants before the HSA with respect to directing a legal attack on the validity of the CHHC’s ceiling as applied to them, their presentation included a thorough documentary record concerning the other statutory criteria which the CHHC may consider in passing upon a capital construction application under § 19-73m. Those criteria are set forth in § 19-73k.
The applicant’s presentation attempted to demonstrate that its rehabilitative therapy program, its function as a resource and teaching institution, its service to patients outside the health service area, its community care or home health care program, and its unusually high ratio of rehabilitated patients as compared to other institutions placed Cheshire in the category of a specialized facility whose services were not duplicated within the health service area. Thus, even if the 70 beds to 1000 population rule were valid, Cheshire contended that its unique program placed itself, because of the quality and nature of its care, outside the strictures of that limitation. The HSA agreed.
The hearing before a panel of three members of the commission on hospitals and health care was held and concluded on November 17, 1976. The hearing, as announced by the panel chairman, Francis P. DellaFera, was conducted pursuant to the provisions of the UAPA. Thus the application for permission to conduct the capital construction project was a contested ease within the meaning of § 4-166 (2) of the UAPA, thereby rendering
With respect to the issue of the bed-need statistical guideline, the applicant introduced evidence to demonstrate that even if the statistical guideline were not an invalid regulation, the patient occupancy census of the Masonic Home and Hospital and the Elim Park Baptist Home, which are nursing homes operated in the towns of Cheshire and Wallingford by nonprofit fraternal orders, distorted the statistical cross-section and rendered it inaccurate. The applicant contended that those two fraternal orders gave preference to relatives of aged members as well as to members themselves and thus drew their patient populations from all
There was no opposition to the application by any other nursing home or by any member of the public. In fact, the only other appearances at the hearing, other than those of the applicant and its representatives, were by two “public” intervenors who, after citing the favorable experiences of their family members with the applicant’s current facility, urged approval of the application. The panel did receive in early December the favorable report and recommendation of the Northwest Connecticut Health Systems Agency, Inc., referred to above.
The conclusions contained in the January 18,1977 panel report which recommended a denial of the application and which were adopted by the commission on January 25, 1977, are set forth above.
Prior to the commencement of the commission hearing but after the receipt of a copy of the January 18, 1977 panel report, the plaintiff’s counsel prepared and filed a formal document entitled “Objection to Regulations and Reservations of Rights” in which he claimed that the rule of 70 beds to 1000 population was a formula which “implements, interprets, or prescribes law or policy”; General Statutes § 4-166 (7); “but [which has] not been- promulgated as regulations in accordance with the procedural provisions of § 4-168, § 4-169, § 4-170 and §4-172 of the Uniform Administrative Procedure Act (‘UAPA’). This objection applies to the use or implementation of the Commission’s guideline proposed by the Long Term Care Task Force,
In addition to raising the other legal claims set forth herein, the applicant’s “reservation” concluded with the statement that the applicant “appears herein under a reservation of all of the above rights, and its participation in these proceedings and the filing of its objections to the substance as well as form of the panel report shall not be construed as a consent and waiver of any of its objections to form and substance of the proceedings herein. . .
At the commencement of the January 25, 1977 commission hearing, the applicant’s counsel filed an informal “Motion to Correct the Panel Report” and a “Request to Conduct Cross Examination to File Exceptions and to Conduct Oral Argument,” in accordance with the provisions of § 4-177 (c) and § 4-178 (1) and (3). The request to conduct oral argument was granted but the request to cross-examine, which was directed at obtaining information from staff health planner Edward Paterwic as to the foundation of certain of the statistics, was denied. A subsequent motion for rehearing, aimed at presentation of recent evidence relating to the Masonic Home and Elim Park’s statistical relevance to the application, was denied.
The plaintiff claims that its application for permission to conduct a capital construction project required of the commission a determination and an adjudication of its request after the receipt of evidence and after a public hearing. The commission is empowered to “approve, modify or deny such request, or make a finding of recommendations based upon the said request.” General Statutes § 19-73m. Thus, such a proceeding constituted for the purposes of the Uniform Administrative Procedure Act a contested case since it was a proceeding related to the determination of a right akin to a license “in which the legal rights ... of a party are required by . . . [§ 19-73m] to be determined by an agency after an opportunity for hearing or in which a hearing is in fact held . . . .” General Statutes §4-166 (2). And since §4-177 of the UAPA, which sets forth the procedure to be followed in contested cases, requires that the agency’s findings of fact shall be “based exclusively on the evidence,” the commission’s blatant admission in its final decision that it had not adopted any standards or criteria pursuant to which it denied the applicant’s request for sixty rest home beds renders that portion of the decision unsupported by any evidence and renders it clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record. General Statutes §4-183 (g) (5).
That portion of the commission’s decision which denies the applicant’s request to construct sixty nursing home beds is similarly void since the commission applied to the applicant a rule of general applicability which implemented law, i.e. § 19-73m, or policy without having promulgated that “regulation” in accordance with the prescribed rule-making procedure set forth in § 4-168 et seq. of the Uniform Administrative Procedure Act. The plaintiff will
Furthermore, and in the alternative, even if the 70 beds per 1000 population guideline did not qualify as a substantive or “legislative” rule, the commission’s denial of the applicant’s request must be reversed because of its arbitrary and capricious nature and because of its clear appearance as the product of an abused discretion. The evidence in the record of the proceedings clearly demonstrated the applicant’s unique rehabilitative therapy procedures, drawing patients from a wide geographical area and returning an unusually high percentage of patients to their homes, placed the facility outside the “. . . area served” and demonstrated in accordance with the criteria set forth in § 19-73k that the “community or regional need for . . . [the applicant’s rehabilitative therapy] service” was present. Furthermore, even if the substantive reasons set forth above are insufficient to reverse the application, the peremptory denial of the right of cross-examination to the applicant’s counsel by the commission at the January 25, 1977 hearing was clearly violative of § 4-177 (e) and § 4-178 (3) of the Uniform Administrative Procedure Act, since such cross-examination was necessary for the applicant to probe the validity and accuracy of the 70 beds per 1000 population formula used by the panel as a predicate to its denial of the applicant’s request.
The appropriate remedy, if the applicant’s contentions are sustained, is to remand the matter to the agency with a direction to grant the request
Ill
This court will discuss the plaintiff’s claim that the denial of its request was based on the application of an illegal regulation which had not been promulgated as prescribed by the rule-making procedures of the UAPA since the court feels that that particular claim is dispositive of the appeal.
Prom the minutes of the commission meetings and its consistent application of the rule of 70 beds to 1000 population in other § 19-73m adjudications, it is apparent that the commission has attempted to transform what in reality and de facto is a “regulation” by substituting the words “criteria” and “guideline” in references thereto.
Section 4-166 (7) of the UAPA defines a “regulation” as “each agency statement of general applicability that implements, interprets, or prescribes law or policy . . . .” Section 4-168 (a) of the UAPA provides that, prior to the adoption of a regulation, the agency shall: “(1) Give at least twenty days’ notice of its intended action. The notice shall include a statement of either the terms or substance of the intended action and the time when, the place where and the manner in which interested persons
Additionally, § 4-168 (e) of the UAPA establishes that “[n]o regulation adopted after January 1,1972, is valid unless adopted in substantial compliance with this section.” Sections 4-169 and 4-170 of the UAPA require that proposed regulations be approved and reviewed by, respectively, the attorney general and the legislative regulation review committee. Section 4-172 mandates the filing of approved regulations with the secretary of the state and provides that a regulation is effective only upon such filing.
On January 25, 1976, prior to its appearance before the full commission, the plaintiff filed a written objection with the commission protesting the fact that the panel’s decision was based on regulations not promulgated in accordance with the UAPA and taking exception to their use by the commission on the ground that they were void and illegal.
The conclusion that the criterion is a regulation which was not lawfully promulgated, that it is therefore void, and that actions taken upon it also are void is supported not only by the plain meaning of the UAPA and §4-166 (7), but also by law from other jurisdictions. The determination as to whether a certain administrative agency statement constitutes a regulation commanding conformity to an administrative procedure act’s rule-making process is often resolved by an analysis of how the rule or policy statement is used by the agency in future proceedings. Classifications and labels have been used by some courts in an attempt to delineate a legal distinction so that a “substantive” or “legislative” rule or policy, on the one hand, has led courts to conclude that the notice and hearing requirements of the act’s rule-making procedure are to be followed. On the other hand, the short-hand description of a policy as being “interpretative” has led courts to conclude that such a statement is only the administrator’s construction of a statute and an anticipation of what might be done by the courts
Thus, the label placed by the agency on the exercise of its administrative power is not determinative. It is what the agency does in fact that renders the most appropriate clue as to a policy’s classification; Lewis-Mota v. Secretary of Labor, supra; and if a rule has a substantial impact on the rights and
Application of the test set forth above indicates quite clearly that the 70 beds per 1000 population “guideline” is indeed a substantive rule since it establishes a rule of conduct which the agency is to apply in the future adjudications of nursing home beds. The issue on May 13, 1975, when that rule was adopted by the agency, was whether in subsequent administrative proceedings nursing homes could conform their conduct to that rule and whether the adjudicated facts conformed to the rule. Evidence adduced demonstrated that during 1976 the commission applied the rule as an adjudicatory principle to the applications of approximately seventeen nursing homes to determine whether their applications pursuant to § 19-73m should be granted. Thus, it applied an adjudicatory rule without conforming to the notice and hearing procedure as required by the UAPA.
According to the commissioners’ comment in the Model State Administrative Procedure Act, which is the basis for the Connecticut UAPA; Hartford v. Public Utilities Commission, 30 Conn. Sup. 244; the purpose of public notice and a hearing prior to the adoption of a regulation is both to ensure, “so far as feasible, that all interested persons will have an opportunity to present their views,” and also “to give some degree of assurance that the agency will, in fact, consider the arguments advanced by the affected parties.” The commissioners’ comment describes subsection (c) of § 3 of the Model Act, which is substantially identical to §4-168 (e) of the Connecticut UAPA, and which invalidates any regulation not adopted in compliance with the act, as being “a sanction of consider
The commission, however, saw fit to promulgate a statewide nursing home construction moratorium and ceiling without notice or opportunity for hearing or the presentation of views, without submission to the attorney general or to the legislative regulation review committee, and without publication in the Connecticut Law Journal, all as required by the UAPA. In fact, the commission failed to comply with any of the provisions of the UAPA dealing with the promulgation and adoption of regulations.
Moreover, logic and common sense applied to the enactment of legislative or substantive rules by administrative agencies in the more familiar municipal context demonstrate quite clearly the error of the CHHC’s method. For example, a zoning commission, pursuant to General Statutes § 8-3, the state enabling act, is prohibited from enacting a regulation “until after a public hearing in relation thereto, ... at which parties in interest and citizens shall have an opportunity to be heard.” Section 8-3 also mandates that a regulation adoption or change procedure be preceded by a newspaper notice published in sufficient time to give interested parties and members of the public an opportunity to pre
A zoning commission acts in a legislative capacity when it amends its zoning regulations to provide that premises from which alcoholic liquor shall be dispensed shall not be closer than 1500 feet from each other. By analogy, if a municipal planning and zoning commission were to seek to implement a policy of general applicability with respect to liquor outlets, e.g., that they shall be located not closer than 3000 feet from each other nor be more numerous than 70 per 10,000 persons in the community, such a substantive legislative amendment to the regulations .could not be enacted until after compliance with the notice and hearing requirements of § 8-3. No responsible public official having experience with the enactment and modification of zoning regulations could be heard to contend otherwise.
The commission’s recent use of the rule-making power pursuant to § 4-168 on April 19, 1977, indicates quite clearly that the commission should have acted differently. That recent employment of the power only serves to underscore the commission’s failure to follow prescribed rule-making guidelines. On April 19, 1977, the commission published in volume 38, number 42, of the Connecticut Law Journal a “Notice of Intent to Adopt Regulations” pursuant to § 4-168 of the Uniform Administrative Procedure Act. Those sets of regulations as noticed were (1) proposed regulations to govern rate review and budget review criteria for hospitals as regulated pursuant to § 19-73o, and (2) proposed regulations to establish standards to provide for rules by which
Two cases recently decided have struck down the use of illegal regulations by administrative agencies set up to regulate hospitals and nursing homes. In Franklin Square Hospital v. Health Services Cost Review Commission, No. 82047 (Baltimore Cir. Ct. Mar. 20, 1975), remanded for modification, 277 Md. 93, a Maryland Circuit Court held that the “guidelines” of the Maryland hospital cost commission were rules and regulations within the meaning of the Maryland administrative procedure act. Since they were not adopted and promulgated in accordance with that law, they were “invalid and of no effect.” Article 41 of the Maryland Code, subsection 244 (b), on which the decision was based,
In the Matter of Sturman v. Ingraham, 52 App. Div. 2d 882 (N.Y.), presented a fact situation closely analogous to the present proceeding. There, a decision of the state health commissioner denying an application for a certificate of need to construct and operate a nursing home was reversed and annulled and the commissioner was directed by the court to grant the application. The commissioner’s decision had been based solely upon his having applied to the pending application “a newly announced guideline” which was not filed and published by the secretary of state as a rule or regulation as required by the New York Executive Law, and not enacted as a rule or regulation by the state hospital review and planning council.
The application in Sturman was a request to the state department of health for permission to construct and operate a nursing home with ninety beds. The New York statutory scheme applicable to such requests, § 2802 of the Public Health Law, required the commissioner to be “satisfied as to the public need for the construction.” While the applicant’s request was pending before the commissioner, the commissioner announced a “6 Point Program to Control Long Term Care Cost Increases.” Sturman v. Ingraham, supra, 883. The program, having features quite similar to the May 13,1975 recommendations of the Long Term Care Task Force which reported to Connecticut’s commission, provided in pertinent part as follows: “Part of the announced Program is a map entitled ‘Long Term Care Need.
Although a hearing officer there had recommended the approval of the application on its merits, the commissioner disapproved of the application because he had predetermined (p. 884), as a result of the application of the guidelines, that “ [n] o further approvals are indicated at this time.” When the guideline was attacked by the unsuccessful applicant Sturman on the same legal theory asserted here—-that it was a rule or regulation not validly promulgated—the commissioner asserted the same defense relied on by the commission in the present case—that it was a mere guideline or criterion, but not a rule. Section 101-a of New York’s Executive Law required that the enactment of an agency rule also be preceded by a formal rule-making procedure, and the New York statute defined a rule ás: “1. Definitions. As used in this section . . . b. ‘Rule’ means the whole or part of each agency statement of general applicability or regulation or code that implements or applies law, or prescribes the procedure or practice requirements of any agency, including the amendment, suspension or repeal thereof, except such as relates to the organization or internal management of the agency.” Section
Accordingly, this court feels that the commission’s bed need criterion is invalid on the ground that it is an unlawful regulation not promulgated in accordance with the rule-making provisions of the UAPA. Any decision based on such a regulation, including the decision of the commission on January 25, 1977, is also void and of no effect.
Therefore, this court remands this case to the commission on hospitals and health care so that it may reconsider the application on its particular facts without reliance on the invalid bed need criterion.
