GREENWOOD LEFLORE HOSPITAL, Greenwood Specialty Hospital, L.L.C. and Greenwood Specialty Hospital II, L.L.C. d/b/a Greenwood Specialty Hospital v. MISSISSIPPI STATE DEPARTMENT OF HEALTH and Delta Regional Medical Center.
No. 2007-SA-00877-SCT
Supreme Court of Mississippi
April 17, 2008
980 So. 2d 931
Before SMITH, C.J., CARLSON and DICKINSON, JJ. DICKINSON, Justice, for the Court.
Jeffrey Scott Moorе, Tupelo, Donald E. Eicher, III, Flowood, Darrell Jay Solomon, Tupelo, attorneys for appellees.
DICKINSON, Justice, for the Court.
¶ 1. The Hinds County Chancery Court approved the Mississippi State Department of Health‘s decision to award a cеrtificate of need to Delta Regional Medical Center. The chancellor held that the department‘s decision was supported by substantial evidence and was not contrary to the manifest weight of evidence. We affirm.
STATEMENT OF FACTS AND PROCEEDINGS
¶ 2. Delta Regional Medical Center (“DRMC“) is a 405-bed, short-term, general acute-care, non-profit hospital located
¶ 3. On December 1, 2005, DRMC filed an application with the Mississippi State Department of Health (MSDH) seeking a certificate of need (“CON“), i.e., regulatory approval, to establish a forty-bеd, long-term, acute-care hospital (“LTACH“) at its West Campus.1 DRMC proposed in its CON application to establish and operate a “hospital within a hospital” (the “Project“) by contracting with Allegiance Health Management (“Allegiance“) to lease the forty beds from DRMC and operate the LTACH.2 DRMC‘s application represented that the capital cost of the Project would be $1,076,000. It further represented that the Project would be financially feasible, with a projected net income of $1,891,876 by the end of the LTACH‘s third year of operation.
¶ 4. There are three levels of review within the MSDH: (1) the MSDH‘s Division of Health Planning and Resource Development (the “staff“); (2) the hearing officer; and (3) the state health officer. In February 2006, the staff issued its analysis, in which it concluded that the Project was in substantial compliance with the FY 2006 Mississippi State Health Plan (the “SHP“), the Mississippi Certificate of Need Review Manual, 2000 Revisiоn, and all other relevant rules and procedures of the MSDH. Based on its conclusion that the project would meet the requirements set out by the MSDH, including the “Need Criterion,” which requires the applicant to demonstrate that its рroposed facility will have a minimum of 450 annual clinically-appropriate restorative-care admissions with an average length of stay of twenty-five days, the staff recommended approval of DRMC‘s application.
¶ 5. Subsequently, Greenwood Specialty Hospital (“GSH“), Select Specialty Hospital-Jackson (“Select“) and Greenwood Leflore Hospital (“GLH“) filed requests for a hearing during the course of review pursuant to
¶ 6. Following the submission of proposed findings by both parties, the Hearing Officer issued his Executive Summary, finding that “DRMC provided substantial and credible evidence” to fulfill the “need criterion,” and recommending that the State Health Officer approve the application. The State Health Officer agreed and issued a Final Order, approving the application and granting the CON.
¶ 7. GLH, GSH and Greenwood Specialty Hоspital II, a successor-in-interest to GSH, appealed to the Chancery Court of Hinds County, alleging the MSDH‘s decision (1) was not supported by substantial evidence and (2) was contrary to the manifest weight of evidence. The chanсellor affirmed the decision of the MSDH, holding it was “supported by substantial evidence and was not arbitrary or capricious.” They now appeal to this Court, raising an additional, third issue that the MSDH‘s decision should be reversed and remanded due to new federal regulations which directly impact the project.
ANALYSIS
¶ 8. The standard of review for the appeal of a final order of the Mississippi
The order shall not be vacated or set aside, either in whole or in part, except for errors of law, unless the court finds that the order of the State Department of Health is not supported by substantial evidence, is contrary to the manifest weight of the evidence, is in excess of the statutory authority or jurisdiction of the State Department of Health, or violates any vested constitutional rights of any party involved in the appeal. . . .
This law is “nothing more than a statutory restatement of familiar limitations upon thе scope of judicial review of administrative agency,” which is the arbitrary-and-capricious standard. Miss. State Dep‘t of Health v. Natchez Community Hosp., 743 So. 2d 973, 976 (Miss. 1999) (citing Magnolia Hosp. v. Miss. State Dep‘t of Health, 559 So. 2d 1042, 1044 (Miss. 1990)).
¶ 9. Additionally, this Court has pointed out that “[o]ur Constitution does not permit the judiciary of this state to retry de novo matters on appeal from administrative agencies.” Miss. State Bd. of Nursing v. Wilson, 624 So. 2d 485, 489 (Miss. 1993). Therefore, the decisions of administrative agencies are given great deference, and the burden of proof rests on the challenging party to prove that the depаrtment erred. Miss. State Dep‘t of Health v. Rush Care, Inc., 882 So. 2d 205, 208 (Miss. 2004) (citing Delta Reg‘l Med. Ctr. v. Miss. State Dep‘t of Health, 759 So. 2d 1174, 1176 (Miss. 1999)). This Court has further held that the same deference due the department‘s finding must also be given to the chancellor who, on appeal, affirms and adopts the department‘s finding. Ricks v. Miss. State Dep‘t of Health, 719 So. 2d 173, 177 (Miss. 1998).
I.
¶ 10. The appellants contend that thе chancellor erred in affirming MSDH‘s approval of DRMC‘s CON because there is no substantial evidence supporting the finding that DRMC met the twin requirements of 450 LTACH admissions with an average length of stay of twenty-five days. DRMC presented three sepаrate methodologies to prove the need for an LTACH in Greenville. Employing the first methodology, DRMC listed 1,571 restorative care admissions. To arrive at this number, DRMC examined discharges attributable to twenty-six specific Diagnosis-Relatеd Groups (“DRGs“) from its total discharges over a twelve-month period.3 Rock Bordelon, an expert in the field of operation of LTACHs, testified that the industry standard is to consider twenty-five to thirty-five percent of this LTACH admission pool, which рrovides the required 450 LTACH admissions. DRMC also added that this number did not include the potential LTACH referrals from other hospitals located in General Hospital Service Area Number 2 (GSHA 2) and surrounding areas that wrote letters evidencing supрort for DRMC.
¶ 11. Using the second methodology, DRMC arrived at a number greater than the required 450 LTACH beds by employing a ten-to-one ratio of the total number of licensed beds to determine LTACH bed need.4 Ultimately, by applying the third
¶ 12. This Court has stated that “substantial evidence” as used in
¶ 13. Also, the appellants’ argument — that “DRMC either presented data showing patients with medical conditions having potential for an LTACH admission (without taking into account the average length of stay), or patient data showing long lengths of stay of certain patient groups (without taking into account whether they were appropriate candidates for admission to an LTACH)” — is erroneous. The SHP doеs not require a specific methodology by which applicants must prove the requirements; however, it should be a reasonable one. This Court previously has acknowledged that MSDH “does not provide a methodology with whiсh applicant hospitals may calculate an [average length of stay].” Miss. State Dep‘t of Health v. Rush Care, Inc., 882 So. 2d 205, 209 (Miss. 2004). Further, this Court has upheld MSDH‘s findings even when an imperfect analysis is used, because “[w]hile the Department‘s method of . . . analysis may be imperfect, it hardly approaches an arbitrary or capricious action.” Id. at 210 (quoting Miss. State Dep‘t of Health v. Southwest Miss. Reg‘l Med. Ctr., 580 So. 2d 1238, 1242 (Miss. 1991)).
¶ 14. At the chancery court hearing, the chancellor recognized that the three methodologies employеd by DRMC factor in both restorative-care admissions and average length of stay. This Court agrees with the chancellor‘s examination that the average length of stay is “intrinsically embedded” in each of these three methodolоgies. Therefore, this Court finds that MSDH‘s decision is supported by substantial evidence and is not contrary to the manifest weight of evidence.
II.
¶ 15. Appellants also ask us to reverse the chancellor‘s holding and remand this proceеding to the chancery court because of new federal regulations that have been issued since the chancery court‘s order.7
¶ 16. However, the appellants are barred from raising this fаctual matter on appeal outside the record. Commercial Credit Equip. Corp. v. Kilgore, 221 So. 2d 363, 367 (Miss. 1969). This Court consistently has refused to overturn factual findings based on factual matters not found within the record. In re City of Jackson, 912 So. 2d 961, 971 (Miss. 2005). Appellants erroneously argue that this is a change in law, not in facts. Unless the federal regulations clearly state that they effectively would cut the proposed number in half, it is merely a factual speculation to determine what effect the special payment provisions would have on patient referrals. Therefore, this Court will not overturn the chancellor‘s holding and remand based on facts outside the record that occurred subsequent to the initial appeal.
CONCLUSION
¶ 17. Applying, as we must, a strict standard of review, we hold that the chancellor did not err in finding that the Mississippi State Department of Health‘s grant of the certificate of need to DRMC was supported by substantial evidence and not contrary to the manifest weight оf evidence. Further, this Court will not consider facts outside of the record when reviewing appeals from lower courts. Therefore, the judgment of Chancery Court of Hinds County is affirmed.
¶ 18. AFFIRMED.
SMITH, C.J., WALLER AND DIAZ, P.JJ., EASLEY, CARLSON, GRAVES, RANDOLPH AND LAMAR, JJ., CONCUR.