386 A.2d 264 | Conn. Super. Ct. | 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 §
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 tem 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:
*227"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 overbedded by Commission guidelines." (Emphasis added.)
The plaintiff, also referred to as the applicant, thereupon appealed to this court claiming a reversal and modification of the decision under §
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 Resources Development Act of 1974,
On or about October 13, 1976, the HSA commenced 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 *229
agency's imposing and adopting, without public comment or hearings, a moratorium rule on what, both de jure and de facto, was a license for capital construction projects. And although the statistics developed by the commission by the use of that formula showed that the subject health service area in general and Cheshire in particular were overbedded, the applicant's counsel contended before the HSA that the adoption of the rule of 70 beds per 1000 aged population was not merely a guideline but an "agency statement of general applicability that implements . . . or prescribes law or policy" and as such was a regulation as defined by the UAPA. See General Statutes §
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 AttorneyGeneral's Office has ruled that a moratorium cannotbe legally declared, recommendations # 14 and#15, recommending bed policy allocation, are thereforevoid." (Emphasis added.) Despite, however, the admitted and patent illegality, the memorandum *230 concluded with the staff's recommendation that the statewide ceiling of 70 beds per 1000 population be adopted as a rule and guideline, but with the deletion of the three words "after the moratorium."
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 case within the meaning of §
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 *232 over the state of Connecticut and not necessarily from the region. Thus the licensed beds of those two institutions, the plaintiff claimed, may have had a distorting effect on the commission's statistical bed-need formula for the town of Cheshire.
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 §
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 §
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 §
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 §
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 *236
since the ninety-day limitation period for action on the application has long since expired. Since the failure to grant or deny the request within ninety days, as required by § 19-73m, was totally the by-product of the commission's failure to follow the UAPA, the court in the present case has the power, pursuant to §
From 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
Additionally, §
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. *238
The evidence clearly indicates that the commission's nursing home bed allocation formula was not only intended as a regulation, but was indeed applied as a regulation despite commission characterization of it as a "criterion" and a "guideline." It is obviously an agency statement of general applicability that implements, interprets or prescribes law or policy. It is equally clear that, because the commission did not even make an attempt to comply with the UAPA rule-making provisions, the regulation could not have been lawfully adopted in accordance with the provisions of §
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 §
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 *240 obligations of parties who may appear before the agency in the future, it is a substantive or legislative rule requiring compliance with the notice and hearing provisions of the UAPA.
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,
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 §
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 §
The commission's recent use of the rule-making power pursuant to §
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 ServicesCost Review Commission, No. 82047 (Baltimore Cir. Ct. Mar. 20, 1975), remanded for modification,
In the Matter of Sturman v. Ingraham,
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. *245 Satisfaction by County — 1975.' This map shows each county of the State. As can be seen from the key, the commissioner has fitted each county into one of the following three classifications: `[1] 90% or more of the 1975 need is satisfied. No further approvals are indicated at this time. [2] 75-89% of the 1975 need is satisfied. Additional approvals are possible where carefully documented local need is demonstrated. [3] 75% of the 1975 need is satisfied. Additional approvals are indicated.' The commissioner placed Westchester County in the first classification, i.e., `90% or more of the 1975 need is satisfied. No further approvals are indicated at this time.'" Sturman v. Ingraham, supra, 883-84.
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 as: "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 *246
101-a of the New York Executive Law, cited inSturman v. Ingraham, supra, 884. That definition is identical to, or in pari materia with, the definition in §
That decision is quite persuasive to this court.
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.