HCA CROSSROADS RESIDENTIAL CENTERS, INC. AND LAUREL WOOD OF HENDERSON, INC. v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF FACILITY SERVICES, CERTIFICATE OF NEED SECTION
No. 79PA90
IN THE SUPREME COURT
5 December 1990
327 N.C. 573 (1990)
Under the doctrine of the last antecedent, relative and qualifying words, phrases and clauses ordinarily are to be applied to the word or phrase immediately preceding and, unless context indicates a contrary intent, are not to be construed as extending to or including others more remote.
Am Jur 2d, Statutes § 230.
2. Hospitals § 2.1 (NCI3d) - certificates of need-rejection within review period-construction of statute
Under the doctrine of the last antecedent, the limiting phrase “within the review period” in
Am Jur 2d, Hospitals and Asylums §§ 3, 4.
3. Hospitals § 2.1 (NCI3d) - certificates of need-failure to act on applications within review period-issuance of certificates required
When the Department of Human Resources failed to make a decision on applications for certificates of need for construction of chemical deрendency treatment facilities within the maximum statutory review period of 150 days, the Department must be deemed as a matter of law to have decided in favor of issuing the certificates of need and lost subject matter jurisdiction to do anything thereafter but issue the certificates of need. Therefore, the Department‘s decision purporting to disapprove the pending applications after the maximum review period expired was a nullity and no legal consequence.
Justice WHICHARD dissenting.
Justice FRYE joins in this dissenting opinion.
On discretionary review pursuant to
Petree, Stockton & Robinson, by Noah H. Huffstetler, III, for petitioner-appellant HCA Crossroads Residential Centers, Inc.
Bode, Call & Green, by Robert V. Bode, Nancy O. Mason and Diana E. Ricketts, for petitioner-appellant Laurel Wood of Henderson, Inc.
Lacy H. Thornburg, Attorney General, by Richard A. Hinnant, Jr., and James A. Wellons, Assistant Attorneys General, for the respondent-appellee Department of Human Resources.
Johnson, Gamble, Hearn & Vinegar, by George G. Hearn and Samuel H. Johnson, for North Carolina Health Care Association, amicus curiae.
MITCHELL, Justice.
The controlling issue before this Court is whether the Department of Human Resources (“Department“) lost subject matter jurisdiction when it failed to act, within the time prescribed by law, on applications for certificates of need for construction of chemical dependency treatment facilities. We conclude that when the prescribed statutory review period ended with the Department having failed to act, the Departmеnt was deemed as a matter of law to have decided in favor of issuing the certificates of need and it lost subject matter jurisdiction to do anything but issue those certificates of need. As a result, the agency had no authority to deny the applications.
On 16 May 1988, HCA Crossroads Residential Centers, Inc. (“Crossroads“) submitted an application for a certificate of need to construct and operate a 48-bed freestanding chemical dependency treatment facility for adolescents in Buncombe County. On the
A time limit of 90 days is prescribed by statute for the Department‘s review of applications for certificates of need, running from the date upon which the assigned review period begins.
On 29 August 1988, the Department purported to extend the review period for the petitioner-appellants’ applications until 28 October 1988. The petitioner-appellants contend that the Department‘s attempt to extend the applicable review period for 60 days did not comply with statutory requirements and was ineffective. We neither consider nor decide this disputed question. Instead, we assume for purposes of this opinion that the purported 60-day extension complied with the law in all respects and was proper.
For both the Crossroads and the Laurel Wood applications, the Department thereafter allowed the maximum 150-day period (90 days plus 60 days) prescribed by statute to expire on 31 October 1988, without acting on either application. On 21 November 1988, 173 days after the applicable review cycle began, the Department issued letters to Crossroads and Laurel Wood which purported to deny their applications for certificates of need.
In verified petitions for contested case hearings before the Office of Administrative Hearings filed by Crossroads on 30 November 1988 and by Laurel Wood on 21 December 1988, those parties asserted that the Department‘s purported denials of their applications exceeded its authority and jurisdiction. They contended that the Department was required by law to issue the certificates of need they sought when it failed to act on their applications within the statutorily prescribed maximum time limit of 150 days. By order of Chief Administrative Law Judge Robert A. Melott, dated 29 December 1988, the contested cases initiated by Crossroads and Laurel Wood were consolidated for hearing.
On 10 January 1989, Laurel Wood filed a similar motion for a recommended decision granting summary judgment in its favor. On 27 January 1989, Administrative Law Judge Gray issued a decision recommending that the Department issue a certificate of need to Laurel Wood.
Under
Except as provided in subsection (c) of this section, there shall be a time limit of 90 days for review of the applications [for certificates of need], beginning on the day established by rule as the day on which applications for the particular service in the service area shall begin review.
(Emphasis added.)
An exception to the 90-day time limit mandated by the foregoing provision is contained in
The Department shall promulgate rules establishing criteria for determining when it would not be practicable to complete a review within 90 days from the beginning date of the review
period for the application. If the Department finds that these criteria are met for a particular project, it may extend the review period for a period not to exceed 60 days and provide notice of such extension to all applicants.
(Emphasis added.)
These statutory provisions сlearly prescribe a mandatory maximum time limit of 150 days within which the Department must act on applications for certificates of need. To the extent it is applicable, this time limit is jurisdictional in nature. See Snow v. Board of Architecture, 273 N.C. 559, 569, 160 S.E.2d 719, 727 (1968) (administrative agency loses jurisdiction over the subject matter when it fails to make a decision within the time allowed by law); see also 2 Am. Jur.2d Administrative Law § 334 (the jurisdiction of administrative agencies “although once obtained, may be lost, and in such case proceedings cannot be validly continued beyond the point at which jurisdiction ceases“).
[1, 2] We conclude that since it failed to mаke a decision as to either of the applications at issue here within the statutory review period, the Department must be deemed as a matter of law to have decided in favor of issuing certificates of need to Crossroads and Laurel Wood and that the Department lost subject matter jurisdiction to do anything thereafter but issue the certificates of need. Therefore, the Department‘s decision purporting to disapprove the pending applications after the maximum 150-day review period expired was a nullity and of no legal consequence. See Charlotte Liberty Mut. Ins. Co. v. Lanier, 16 N.C. App. 381, 384, 192 S.E.2d 57, 59 (1972) (аction of board in excess of its jurisdiction “was without warrant in law and is a nullity“).
The Department shall issue as provided in this Article a certificate of need with or without conditions or reject the application within the review period.
The limiting phrase “within the review period” modifies only the phrase “reject the application,” and, therefore, the Department loses subject matter jurisdiction to reject an application when the review period ends. Once the review period expires without action by the Department, it retains jurisdiction only for the purpose of issuing cеrtificates of need.
The only other conceivable interpretatiоn of the language of
Our interpretation of
When viewed in its entirety, Article 9 of Chapter 131E of the General Statutes, the Certificate of Need Law, reveals the legislature‘s intent that an applicant‘s fundamental right to engage in its otherwise lawful business be regulated but not be encumbered with unnecessary bureaucratic delay. The comprehensive legislative provisions controlling the times within which the Department must act on applications for certificates of need, set forth in Article 9, will be nullified if the Department is permitted to ignore those time limits with impunity. As a result, the provisions of Article 9 must be construed as expressing the legislature‘s intent that the Department be deemed as a matter of law to have rendered a deсision to approve a certificate of need, if the Department fails to act upon an application within the applicable review period. Thereafter, the Department retains subject matter jurisdiction only for the purpose of issuing the certificate of need, which it is deemed to have decided to approve. A contrary interpretation of our Certificate of Need Law would leave the applicant with no effective remedy for the Department‘s failure to comply with the statute.
[3] For the foregoing reasons we have conсluded that the Department was required, within the review period, either to reject the applications for certificates of need in the present case, or make a decision to deny or approve those applications. Further, we conclude that, having failed to act within the applicable review period, the Department is deemed as a matter of law to have decided to approve the certificates of need in question, and that it lost jurisdiction over the subject matter of the applications in question for all purposes except the issuance of the certificates of need. As a result, the Department must now issue the certificates of
Vacated and remanded.
Justice WHICHARD dissenting.
The majority concludes that “when the prescribed statutory review period ended with the Department [of Human Resources] having failed to act, the Department was deemed as a matter of law to have decided in favor of issuing the certificates of need and it lost subject matter jurisdiction to do anything but issue those certificates of need.” This conclusion consists of two parts, neither of which furthers the legislative purpose underlying the certificate of need (CON) law. The first is that Department inaction should be deemed a decision in favor of issuing a certificate of need. The second is that the statutory time limit is jurisdictional in nature.
That the failure to decide within the statutory period compels approval is not self-evident. Rather, the majority is forced to rely on the doctrine of the last antecedent, а principle mentioned in a footnote in petitioners’ brief and in only one North Carolina appellate opinion. State v. Cloninger, 83 N.C. App. 529, 350 S.E.2d 895 (1986).
The dubiousness of this construction can be seen by comparing this language as so construed with language in section 131E-186. The majority reads section 185(b) to require rejection within the review period or automatic approval. Section 186(a), however, states that “[w]ithin the prescribed time limits in G.S. 131E-185, the Department shall issue a decision to ‘approve,’ ‘approve with conditions,’ or ‘deny,’ an application . . . .” I believe the language of section 186(a) sheds light on the proper interpretation of section 185(b).
The doctrine of the last antecedent is an appropriate aid in discovering legislative intent in cases where intent is not clearly evident. This is not such a case, however. A plethora of expression of legislative intent, which is contrary to a conclusion favoring automatic approval of CON applications, is found in the findings set forth in
Two other sections within current Article 9 also suggest a contrary intent that the Department must complete its review before a certificate of need is issued. Section 131E-186(b) states that “[w]ith[in] five days after it makes a decision on an application, the Department shall provide written notice of all the findings and conclusions upon which it based its decision. . . .” This section contemplates a completed review; otherwise, there would be no basis for the findings and conclusions the majority deems the Department to have made. Further, it is clear that Article 9 requires that “all applicable conditions of approval . . . be satisfied” before a certificate is issued.
It is important, when inferring legislative intent from legislative history, to look not only at the languagе of prior versions of the
The history of our section 185(b) followed a similar pattern. The 1977 session laws provided that: “The department shall issue as provided in this Article a certificate of need with or without conditions or reject the application within the review period. If the department fails to act within such period, the failure to act shall constitute denial of the application.” (Emphasis supрlied.) 1977 N.C. Sess. Laws ch. 1182, § 2. This language was later codified as
In this case we are called upon to construe the meaning of section 185(b). The majority interprets the language that originally appeared in the 1977 session laws to require automatic approval of applications for certificates of need. In doing so, however, it ignores the fact that such an interpretation compels us to assume that the General Assembly intended to provide for “automatic approval” in the first sentence of then section 182(b), yet also intended to provide for “automatic denial” in the second sentence of that section. The reading of such a flagrant contradiction into thе statute strongly suggests that the majority‘s interpretation is mistaken.
The majority also rests its interpretation of section 185(b) on another principle of statutory construction, viz, that statutes shall
The majority also expresses concern that applicants frustrated by delay will have no remedy absent automatic approval. Applicants can, however, seek a common law writ of mandamus requiring the agency to comply with its statutory duties.
Unreasonable delay on the part of any agency or administrative law judge in taking any required action shall be justification for any person whose rights, duties, or privilеges are adversely affected by such delay to seek a court order compelling action by the agency or administrative law judge.
Perhaps the motivating rationale for the majority decision is its expressed concern for the burden the CON program puts on “an applicant‘s fundamental right to engage in its otherwise lawful business,” especially when the burden is delay beyond that provided by the statute. This Court has invalidated provisions of a CON law once before. In In re Aston Park Hospital, Inc., 282 N.C. 542, 193 S.E.2d 729 (1973), the Court declared the CON law an unconstitutional deprivation of property without due process of law. The basis for that ruling, however, was the lack of a reasonable relation between the denial of a person‘s right to develop health service facilities and the prоmotion of public health. Since Aston Park, the General Assembly has re-enacted the CON law and made the explicit findings discussed above which describe the relation between the purposes behind the CON law and the effect it has on individual property rights. Thus, the constitutional infirmity identified in Aston Park is not at issue here. While concern over burdening an applicant‘s right to engage in business is appropriate, it is not a sufficient basis for interpreting legislative silence on the effect of noncompliance with time limits in a manner that effectively negates the entire purpose of the statute.
The second pаrt of the majority‘s analysis, whether the statutory time limits are jurisdictional in nature, depends largely upon its interpretation of the legislative intent behind Article 9. This Court has stated that
[i]n determining whether a particular provision in a statute is to be regarded as mandatory or directory[,] the legislative intent must govern, and this is usually to be ascertained not only from the phraseology of the provision, but also from the nature and purpose, and the consequences which would follow its construction one way or the other.
North Carolina Art Society v. Bridges, 235 N.C. 125, 130, 69 S.E.2d 1, 5 (1952). The majority looks to the purpose of the legislation, divines an inarticulate concern over bureaucratic delay, and concludes that the time limits are mandatory. It cites Snow v. Board
Snow, however, is readily distinguishable from this case. It involved a license revocation proceeding against an architect. The proceeding was penal in nature, and the rule in that case thus has no direct application to the situation here, where petitioners are two of many applicants seeking certificates allowing them to fill a designated need for health services in a particular geographic area.
Because the primary intent of Article 9 is tо regulate the development of new health service facilities through a process of complete review in light of specified criteria, with the aim of avoiding unnecessary and duplicative health care service facilities, I would conclude that the time limits are not jurisdictional. In order to effectuate the purposes of the CON law the time limits should be considered directory only. As noted above, this interpretation does not leave petitioners without a remedy. Common law and statutory mandamus remain available.
In sum, the majority uses statutory construction maxims of tenuоus applicability to slay a perceived dragon of bureaucratic delay. While such delay is indeed deplorable, the remedy adopted is overly draconian. Given that petitioners have an adequate remedy in mandamus, I would not interpret the legislature‘s silence on the effect of noncompliance with the prescribed time limitations, as does the majority, in a manner that is inconsistent with the nature and purpose of the statute and with the predominant phraseology of its provisions. The majority decision unnecessarily undermines the basic purpose of the law and compels consequences fundamentally at odds with its intent. I therefore respectfully dissent.
Justice FRYE joins in this dissenting opinion.