West Bloomfield Hospital v. Certificate of Need Board

507 (On Rem) Bd Need Bloomfield West OF NEED BOARD HOSPITALv CERTIFICATE WEST BLOOMFIELD (ON REMAND) 197327, 197325, 197326, 197324, Submitted November 197328. Docket Nos. May 16, 1997, 1996, at A.M. Leave at 9:15 to Detroit. Decided sought. appeal Valley Hospital, Hospital, William Beaumont Huron Bloomfield West Osteopathic Mercy Corporation, Hospital, Pontiac of Health Sisters applied Hospital, in 1983 each two other medical facilities and Department need for a certificate of in to the of Public Health 1984 facility or to alter an medical to build a new medical order comparative facility. department review of the The conducted proposed projects applications gauge in the to the effects the County, acknowledged that no affected Pontiac subarea of Oakland by part plan adopted required as medical facilities had been state 333.22132; Code, 14.15(22132), Health MCL 221 of the Public repealed, that the acute-care-bed-need methodol- now determined guidelines surrogates ogy for a state medical and could be used any plan, was no need for of the and concluded that there facilities projects. applicants appealed proposed The to the Certificate of department denying Board, claiming erred in their that the assuring applications that its consistent with without decision respect plan. with to medical facilities The board affirmed a state respect applicants, with Pontiac Osteo- six of the but reversed hospital Hospital, granting pathic need. Five of a certificate of original applicants appealed Ingham in Court. The the Circuit court, Giddings, X, affirmed denial of the certificates James R. grant to Pontiac need and reversed the certificate P.J., Hospital. Appeals, Tay- Osteopathic The Court Weaver, X, reversed, holding dissenting), that the failure lor, X (Cavanagh, adopt a state medical facilities follow by part Code, plan, Health was error. as mandated 221 of Public court the issuance the case to circuit for The Court remanded applicants. App (1995). 208 Mich of need of certificates Appeals Supreme reversed, holding the Court of adopt ruling a state medical facilities in failure erred processing automatically precluded plan from remedy requiring as a certificates of need and applicants. of need be issued that certificates Appeals, directing Court remanded the case to the Court Appeals employed methodology Court of to determine whether the conducting statutory its review assured that goals be would met and whether the decision was fair statutory and well-reasoned accordance with criteria 452 Mich (1996). 515 remand, Appeals On the Court of held: part misinterpret 1. The circuit court did not 221 of the Public department concluding in Health Code the has the discretion deny application to an for a certificate of need even all where the statutory pro- other criteria if is no are satisfied there need for the posed project. interpretation This is consistent with the opinion in Court’s this case. methodology 2. the Use of acute-care-bed-need to determine proper. promulgate future bed was The need failure to methodology procedural the as an is a administrative rule defi- ciency merely methodology can be excused because the department assisted the in the exercise of its discretion and there prejudice applicants was no to substantial the from use the methodology methodology. determining The was better at applicants’ proposed than the methods its use has since been by Legislature approved. mandated the until other standards are attorney general 3. The dual role of an assistant attor- senior ney Department legal for the of Public Health and as to advisor by itself, Board, Certificate of Need § did not violate Act, 24.279; 3.560(179), Administrative Procedures MCL MSA which requires impartial by hearing officer, hearing an an unbiased APA, 24.282; 3.560(182), § 82 of MCL MSA which restricts ex parte proceedings. communications in administrative department reviewing Valley Hospi- 4. The did err in not Huron application tal’s for a certificate need under 1978 PA rather abeyance application, than 1972 PA 256. The which was held in pending prior litigation, part the outcome of to be had reviewed as comparative subject of a review of other that were Thus, Valley application Hospital’s 1978 PA 368. Huron had to be compari- reviewed under 1978 PA 368 in order to make an accurate unsigned stipulation Valley Hospital’s applica- son. An that Huron tion would be reviewed under PA 256 not of a indicative agreement valid for such review. Valley Hospital’s application 5. The decision to Huron was contrary great weight evidence, not to the nor it arbi- was trary capricious. against Valley counting 6. The did not err in Huron Hospital approved 350 beds that had been for Pontiac Hos- General (On v Need Bd Bloomfield West hospitals applied pital for certificates of earlier had when both Valley by Hospital prior application Huron denial of that need. The appeals circuit court and Court after reversed Hospital. Valley Appeals, and a certificate was issued Huron compel appeal Appeals does not decision previously granted ignore to Pontiac the 350 beds Hospital. General Hospital’s support claim 7. does The record evaluating supe- proposed for that a formula it forecasting methodology in terms of rior to acute-care-bed-need accounting patients migrating hospitals share and market outside the Pontiac subarea. contention, Contrary Osteopathic Hospital’s 8. to Pontiac plenary authority to not have Certificate of Board does department. grant or denial of certificate review 333.22121(3)(b); authority under MCL

board’s review determining repealed, 14.15(22121)(3)(b), whether now is limited arbitrarily, law or acted in accordance with the reviewing approval regardless or a of whether the board is of a certificate need. denial court, Hospital’s reviewing Osteopathic Pontiac 9. The circuit application, applied of correct and the same standard review department’s i.e., applied applications, whether the to the other arbitrary contrary law. was decision each instance grant of Board to a cer- 10. The decision the Certificate Need supported by Osteopathic Hospital was tificate need Pontiac respect evidence on the record with to demonstrated substantial efficiency. need and cost for cer- and remanded to the circuit court issuance of a Reversed Osteopathic Hospital. tificate Pontiac J., dissenting part, that all the facilities are enti- stated Taylor, plan a medical facilities should tled to certificates because state adopted rule, a have been as substantive administrative deficiency plan procedural of a not a that can be absence prejudiced by excused, applicants and the were therefore plan. aof absence Smith, Gary & P.C. J.

Foster, Swift, (by Collins E. for Stephen Rhodes, Doster), J. and Eric McRay, Hospital. West Bloomfield ti-ie Court Miller, Canfield, C. (by Paddock and Stone James Valley Foresman and David L. Kasef), Huron Hospital Mercy Corporation. Sisters Health

McGinty, Jakubiak, & Frankland, Hitch Hender- son, (by PC. Kenneth P. Frankland), for Pontiac Osteopathic Hospital. Kelley,

Frank J. Attorney L. General, Thomas Casey, Solicitor General, and Ronald J. Styka, Susan I. and Marvin L. Attorneys Bromley, Assistant Leffler General, for Certificate Depart- of Need Board and ment of Public Health.

ON REMAND Before: P.J., and Taylor and Michael J. Cavanagh, JJ. Kelly, case, P.J. This appellant which facili-

Cavanagh, ties seek certificates of need from the Department of Public Health to build or alter their facilities, before us for the second time. Previously, divided panel of this Court concluded that the adopt failure to and follow a state medical facilities plan, by law, error, mandated and therefore remanded the case to the circuit court for issuance parties. certificates need to all the Hosp v Bd, 208 Mich App 393; 528 Certificate of NW2d 744 (1995). reversed, hold- ing that the failure to adopt state medical facilities plan not automatically preclude does from processing for certificates of need require as a remedy that the of be certificates issued all applicants. West Hosp v Cer- Bloomfield Bd, 515; 452 Mich 550 NW2d 223 tificate of v Need Bd (On West Bloomfield the Court this case then remanded Supreme The (1996). part remand. in We now affirm to this Court. set forth in the this case are The facts of opinion: Court’s Depart- applied hospital to the

In three facilities part Health, pursuant to 221 of the Public ment Public Code, need that would allow them Health for certificates of hospital in new beds construction to add to undertake County. Valley Hospital Huron “subarea” of Oakland Pontiac area, sought 153-bed add 150 beds to its Pontiac facility. Osteopathic Hospital applied hospital for a Pontiac facility containing to build a Clarkston certificate beds, decreasing correspondingly number beds while facility. applied Hospital for in its Pontiac facility permission in the a new 200-bed Pon- construct same number of beds in region tiac and to delicense the hospitals in its other subareas. two or more of other parties to all The issued notices interested proposals subarea. submit for new facilities Four applications. parties The interested submitted additional parties’ comparative conducted review of any applications that there was no need and concluded new facilities the Pontiac subarea. exceptions with applicants filed

The unsuccessful legal board, claiming that committed error assuring denying without deci- their plan, facilities “consistent the state medical sion was with” required by part the Public Health Code. rejected argument, the decision of this and affirmed board respect applicants. hearing six of officer with need, respect reversed, with to Pon- ground board on the Hospital Osteopathic granted alone a certificate. tiac it appealed, original applicants this time in the Five of the Ingham the denial of the Court. The court affirmed Circuit grant appellants, need to and reversed certificate of Osteopathic Hospital. Pontiac of the certificate need to at 518-519.] [Id. 223

Opinion of the Court under cir- that, Court concluded the required the cumstances, not to wait plan a formally state medical facilities be promulgated reviewing applications. before the Although 22132, 333.22132; MCL MSA 14.15(22132), § repealed by 332, contemplated 1988 PA that a state plan medical facilities would be promulgated before review of (CON) certificate are the undertaken, Court determined that the intent Legislature should not be frustrated because failure to promulgate plan. such a Because a plan state medical facilities had been formally adopted, obligated conduct its review employing methodology assured that goals the statute would met be and its decision was fair and well-reasoned in accor- statutory dance with criteria. West Bloomfield Hosp, 452 Mich 523. at that, cautioned minimum, granting of a con must be based on “a demonstrated current and future facility.” need for the See id. at quoting § 22132.

I. JOINT ISSUES Appellants West Hospital Bloomfield (wbh), Huron Valley Hospital William Hospital, Beaumont (hvh), Mercy Sisters of Corporation Health joint submitted a brief.1 We now address their remaining issues. A. EXTENT OF THE DEPARTMENT OF PUBLIC HEALTH’S AUTHORITY

Appellants argue opinion the trial court’s on based an interpretation erroneous of the now- repealed part 221 Public Code, Health MCL in briefs Some of the issues raised in submitted individual appellants. appellants’ joint brief are also addressed (On 1997] West Bd Bloomfield Opinion of the Court seq., 14.15(22101) seq.; which et et 333.22101 ques- governed at the time in the distribution of CONs Appellants court determined assert that trial tion.2 department with absolute vests the that the statute power in the admin- and discretion uncontrolled program. However, we read the istration con depart- opinion holding simply that the trial court’s even' the discretion to ment has statutory if satisfied criteria are where all the other project. proposed This inter- the is no need for there pretation opinion with is consistent the Hosp, Supreme 452 Mich West Court. See Bloomfield Accordingly, we find no error. 525. METHODOLOGY TO OF ACUTE-CARE-BED-NEED B. UTILIZATION BED NEED DETERMINE FUTURE propriety challenge using Appellants the the methodology to deter- acute-care-bed-need (acbnm) question, the the time mine future bed need. At promulgated department as an had not acbnm Supreme has However, Court administrative rule. deficiency procedural may be excused stated that this merely agency question “if the rule assists the and there is no substan- the exercise its discretion party.” prejudice complaining WestBloom- tial Hosp, citing 524, 452 Mich Farm American field Freight 539; Service, 532, 397 US Lines Black Ball (1970), 1288; L Ed and EEOC v S Ct 25 2d 547 90 Corp, (CA Kimberley 1352, Clark 511 F2d 1360-1361 1975). 6, abrogate language

We do not construe this duty promulgate agency’s rules administrative Part Part 221 of the Public Health Code was repealed MCL 333.22201 et seq.; MSA 14.15(22201) et seq., and replaced by 1988 PA 308. with 223 Mich

procedures, particularly where, here, adoption as plan of a has by been mandated statute. See MCL 333.22132; 14.15(22132). Rather, MSA we believe that only pro- Court meant that the failure to plan mulgate necessarily in such a case would not be fatal provided where the Legislature has detailed criteria consideration, basis for the agency’s where actually such criteria were taken into account by the agency, applicants and where the are not unfairly surprised by any other method used agency. this standard, appellants

Under we find that were substantially prejudiced. Contrary appellants’ arguments, department rely solely did not on the acbnm. The record reveals that the did in analyze fact statutory all fourteen criteria before reaching its decision.3 In addition, 333.22131(1); 14.15(22131)(1)provided: MCL making In conducting determinations and reviews for certificates need, systems agency apply and a health shall at following least the criteria: (a) relationship being of the health care facilities or services systems plan implementation reviewed the health and annual plan, any, if for all health services areas to be served. (b) relationship being The of the health care facilities or services long-range department plan, any, person reviewed the if proposing facility providing or the or service. (c) population need of The the served or to be served for the being health or care facilities services reviewed. (d) feasibility availability costly and The of less alternatives or providing more effective methods of the health care facilities or being services reviewed. (e) relationship being The of the health care facilities or services system reviewed the health care of the health services provided proposed, area in which the facilities or services are or probable including impact the providing the on costs of health ser-

vices in the areas served. (f) the proposed In case health of care or facilities services application, availability under a certificate of need or other the or (On Bd v Opinion of the Court availability resources, including personnel, man- potential health of operating capital personnel, needs for agement and and funds services, potential the for alter- provision or and of the facilities the provision of other health resources for the native uses of those care services. special of health (g) and circumstances institutional needs The part provide a of and entities which substantial care facilities other residing in the to individuals not health or resources their services are located or in facilities or other entities areas which the service may and adjacent include medical other in areas. The entities specialty multidisciplinary clinics, schools, professional and health centers. special (h) of maintenance needs and circumstances health The comprehensive programs. organizations and health care The other of, to, mem- circumstances include the needs and costs needs and organiza- projected of health maintenance bers and members the obtaining potential services and the for a reduction tion in health community through inpatient in a an extension of the preventative care use of systematic provision and of more health services the comprehensive and health services. proposal, project (i) the costs and In the case of a construction probable impact financing proposed project; the methods providing by project services reviewed on the costs of health specific requirements building, applicant; and law for inspections fire, safety permits zoning, and and standards and other applicable project. to the physicians degree Q) and to which residents provided community region access and affected are immediate facility programs applying for and of the health services of need. certificate special (lc) and circumstances of biomedical and needs projects designed are to meet state behavioral research which special advantages. need and for which local conditions offer race, facility G) does because of That the health not discriminate color, age, operations religion, origin, in its includ- national or sex patient care, assignment, ing employment, room and admission and programs, professional nonprofessional training or selection body facility governing health does not discriminate and that the physician appointment its of individuals staff selection facility training programs on the basis licen- the health or professional registration as doctor of or or education sure medicine, osteopathic surgery, podiatry. or medicine and facility nonprofit facility, (m) That in the case of a health composed majority body governed of a consumer mem- fact broadly population bership representative of the served. (n) need to con- an is made for a certificate of When allopathic facility, expand osteopathic the need for struct or Valley considered effect the then-unbuilt Huron appellants’ Hospital, proposed pop- market share and figures, time, ulation patients’ travel and issues con- cerning applicants. the individual After examining all factors, these concluded that there was no need for the proposed projects that, and if any applications granted, were there would be on adverse effect in region. health-care costs

Furthermore, the use of the patently acbnm was not unfair. As appellant WBH in concedes its brief on appeal, in guidelines administrative effect at the time relevant referred to the as a formula for ACBNM projecting 1984 bed needs creates methodology against which may CON review be conducted. The acbnm was also in second-cycle plan referenced for the hospital reduction capacity excess and the plan; 1980-1984 state hearing health officer found these documents were well known readily and available the health-care field. Appellants were on notice that the acbnm could be used to determine whether additional beds Appellants were needed. thus had opportunity to review the acbnm criteria and respond accordingly their and subse- quent responses. facility availability on the basis of the need and commu- nity osteopathic allopathic physi- for services and facilities for and cians, professionals, patients other licensed health care and their impact and the for a certificate of need on proposed training programs institutional doctors osteopathy profession- medicine and and other licensed care health student, internship, residency training als at the level. This sub- departure good division shall be construed to dictate a from planning principles unnecessary duplication health or to mandate services facilities. (On Bd Opinion of the Court

Appellants should not contend that the acbnm also because it mea- future bed need be used to determine hospitals only market share of sures subsequent accurately predict need. The does not department, however, concluded that the acbnm appellants’ proposed determining need than better at methods. department’s hearing noted that the officer apply projected Stanley Nash, was able

statistician, population obtained from the state estimates demographer determine the acbnm formula to originally had been need. That the acbnm future bed plans designing does not mean bed reduction used for reasonably accurate methodol it was not also a that ogy in need; fact, acute-care bed to determine future methodology avail that it was the best Nash testified purpose. Consequently, agree we able for the latter appel hearing officer and the trial court that with the that the lants have failed to demonstrate need was to determine future use of acbnm improper. hearing Moreover, note, we as did the 22217(1),4 enacting § officer, 1988 PA Legislature made the use of the acbnm con reviews mandatory approved, standards are thus until other implicitly acknowledging an ade that the acbnm quate purpose. tool for the

C. ROLE OF ATTORNEY TAUBE DUAL Attorney Appellants General assert that Assistant department’s senior Robert J. Taube’s dual role as the attorney preju- legal advisor was and the con board’s disagree. dicial and unlawful. We 14.15(22217)(1). 333.22217(1); 4 MCL 223 Opinion of the Court proceedings below, rep- In the Attorney resented Assistant General Marvin L. Bromley of the Public Health Division. At that time Taube, Bromley’s supervisor, legal was the advisor to Attorney the CON board as the General’s designee. The trial court found that the dual representation, per se, constituted violation of 79 and 82 of the §§ Administrative Procedures Act. provides, Section 79 pertinent part, “[hearings shall be conducted in an impartial manner.” This require includes the ment preside unbiased officer hearing over Blue Water proceedings. Dep’t Isles Co v Natu Resources, ral 171 Mich App 526, 532; 431 NW2d 53 (1988). Section 82 restricts parte ex communications in administrative proceedings. The trial court con cluded that the error harmless, however, because department’s disapproval appellants’ appli supported cations was lawful and by substantial evidence.

We conclude Attorney Assistant General advisory Taube’s supervisory roles, per se, did not constitute a violation of 79 and 82. §§ There is no evidence in the record indicating partici- that Taube pated in parte ex Bromley, communications with nor is there evidence that Taube influenced the CON board department’s on the fact, behalf. In the CON board deviated from decision to all applications. the CON Under these circumstances, we find no error.6 24.279; 3.560(179), 24.282; 3.560(182). MCL MSA MCL issue, depart Because of our resolution of this we do not address the appeal appellants right

ment’s contention on cross waived their challenge representation. legal the con board’s 1997] v Need Bd (On Rem) Opinion of the Court n. VALLEY HURON HOSPITAL’S ISSUES Hvh separate raises three issues brief.

A. REVIEW UNDER 1972 PA 256 argues applica- that it was entitled to have its Hvh provisions tion reviewed under the of 1972 PA origi- which was in effect at the time that hvh filed its application, replaced by nal CON and which was agreeing that, PA 368. Hvh claims to hold its CON application abeyance pending prior the outcome of litigation,7 promised also to review application under the 1972 criteria, PA 256 which apparently were more favorable to hvh. arrangement

We conclude that such an would have legislative prior litigation violated intent. Once the expansion application had been concluded and hvh’s Osteopathic Hospital was reactivated, Pontiac (poh) application relating filed a CON to the same subarea. comparative determined that a required, appli- review was and it solicited additional applications cations. Because the other were filed depart- after the effective date of 1978 PA 368, required ment was to review these under the criteria set forth in that statute. In order to con- comparative duct a true review, it was essential for to review hvh’s under the applications. same criteria as the other hearing Moreover, officer concluded that there meeting had been no of the minds between hvh department regarding applicable criteria. In order to form a contract, valid there must be a meet- 7 Valley Hosp, Comm, See Huron Inc v State Health Facilities 110 App 236; (1981). Mich 312 NW2d 422 520 Mich 507 all material facts. minds with regard of the ing Hosp Corp, 194 Mich Mercy Memorial Kamalnath App 543, 548; (1992). unsigned 487 NW2d 499 presented 1972 PA 256 stipulation proceed under of a of the objective meeting is not evidence hvh minds. See id. B. THE EVIDENCE GREAT WEIGHT OF deny contends the decision to its CON Hvh contrary application great weight to the arbitrary capricious. and was thus both evidence First, application We hvh assumes that disagree. have the 1972 PA 256 cri- should been reviewed under previous issue, depart- teria; as discussed application pursuant properly ment reviewed its PA HVH’s arguments 368. The remainder of merely attempts inteipreta- constitute to substitute its department’s. tion of the facts and law for the We find no evidence that the failed to take seri- ously statute, alleges; rather, its role under the as HVH opposite find the to be true. Because hvh has not we its CON shown the decision to contrary to the arbitrary, capricious, great evidence, requiring there is no error weight reversal.

C. PROPRIETY OF COUNTING BEDS AWARDED TO PONTIAC GEN-

ERAL HOSPITAL Finally, erred in argues that hvh it the 350 beds that had been counting against approved Hospital for Pontiac General 1978. (pgh) in Huron Val- opinion Hvh contends that this Court’s ley Hosp, Comm, Inc v State Health Facilities implicitly com- App 236; (1981), 312 NW2d

1997] v Need Bd (On

Opinion of the Court pelled ignore previ- the 350 beds ously granted present analysis. PGH disagree. Valley Hosp, We In Huron and hvh pgh applied each CON to construct new facilities. The only determined that one CON could be granted for the area and awarded the CON pgh. Hvh appealed application, from the denial of its and the circuit court ordered the to issue a CON hvh. This Court affirmed. See id. at 252.

We are at a loss to understand how this Court’s prior any litigation bearing decision in the has on whether the 350 beds awarded to should be con- pgh sidered in the need evaluation in the instant case. hearing Furthermore, we concur with the officer’s conclusion that a decision not to count those beds ignore reality would and would be a clear violation of department’s statutory duty to consider the needs population to be served. See MCL 333.22132; 14.15(22132).

III. WEST BLOOMFIELD HOSPITAL’S ISSUE argues that the reliance on the Wbh provided by acbnm rather than the formula ren- wbh, application dered its decision to wbh’s CON Specifically, depart- unlawful. wbh asserts that the determining ment should have used its formula for need instead of the acbnm because the latter does not population consider the entire within a subarea and accurately because wbh’s formula more forecasts mar- ket share.

Appellants’ expert, Lifton, James testified at the hearing predicted that market share can be in three ways, perfect. different fact, by none of which is In methodologies of those different three

Opinion of the Court widely con- varying applicants the con resulted beds, the number of needed respect with clusions Furthermore, appli- each 195 to 349. ranging from respec- theory assumed cant’s market share attempted to completed and then project tive occupancy have a facility high would prove that facility its new wbh asserted Although rate. facilities, patients draw from would not who reviewed the department personnel reasonably otherwise. quite concluded not wbh also that the acbnm does Appellant argues who were then adequately patients account for those However, hospitals outside the subarea. migrating process, tes- Harvey Day, Dr. oversaw the review who facility probably cap- tified that the new hvh would patients, and that there migrating ture some of the population was migrating was no evidence that Ann Arbor by large choice to Detroit and going reputations. hospitals good with IV. ISSUES PONTIAC OSTEOPATHIC HOSPITAL’S to the trial court’s relating Poh raises three issues a grant reversal of the con board’s of con. THE DENIAL OF CON

A. AUTHORITY OF CON BOARD TO REVERSE Poh claims that the trial court erred as a matter of pertinent limiting law in statutes as construing authority by a decision CONboard’s to reverse asserts deny application. a CON Poh has contrary ruling, to the trial court’s the board that, authority to review both the plenary applications. of CON granting denial by party a denied a CON the Pursuant to § appeal: of following right had the Bd v (On Opinion of the Court applicant by aggrieved a If an for certificate of need is the decision of the or if the recommendation of systems accepted, applicant agency the health is not systems may request agency hearing be con- the health pursuant procedures act ducted to the administrative authority appeals pursuant Section created authority appeals 22121(2). The of the issue or decision binding a certificate need shall and is on be final department. 333.22165; 14.15(22165), [MCL repealed by 1978 PA 368.] forth powers con board’s review were set 22121(3):

§ facility granted

A health which is not of need certificate may upon application appeal to the certificate hearing board. certificate need board shall hold a on days appeal appeal within after is filed. The hear- ing pursuant pro- be shall conducted to the administrative cedures act of 1969. If the certificate need board finds any may following, grant it the certificate of need or modify facility: the bed reduction order for that health

(a) plan The bed reduction or the limitation on the num- facility arbitrary ber beds the health capricious.

(b) application The denial of the certificate was arbitrary appropriate or not in accordance with law or the plan. bed reduction (c) significant The denial will cause a in ser- reduction by physicians particular

vices school of medicine. by 333.22121(3); repealed 14.15(22121)(3), [MCL PA 368.]

The trial court concluded the two that sections are greater inconsistent that board has discretion in reviewing approval application of a than in con reviewing disapproval. disagree its We with the trial interpretation court’s of these sections. the Court statutory interpretation is primary goal the Legisla- the intent of effect to give

ascertain v Total Petro- Farrington provision. enacting ture (1993). NW2d 76 201, 212; 501 Inc, 442 Mich leum, reasonably, construed be Statutory should language the statute. Barr purpose of in mind the keeping App 512, 516-517; 546 Inc, 215 Mich Brighton Mount plain lan- of the An examination (1996). NW2d 273 that lead to the conclusion of 22165 does not guage § board’s review expand intended Legislature 22121(3)(b). authority beyond expressed § authority equally circum- the board’s review Thus, denial approval reviewing whether it is scribed application. a con was correct in conclud- the trial court Nonetheless, case was authority in this that the board’s review ing reviewing because it 22121(3)(b) limited § prop- court application. The trial of POH’s CON denial in finding the board erred erly considered whether application disapproval of the department’s law. in accordance with the arbitrary and not is not entitled to relief appellant POH Accordingly, to this issue. regard with STANDARD OF REVIEW

B. APPLICABLE asserts the trial court Appellant POH next of review to a different standard improperly applied it did to the other than must deference give it stated that the board when application. its CON department’s decision the trial court erred However, of whether regardless accord deference that the board must determining it is application, denial appropriate stan- applied the that the trial court clear Hosp v (On Bd 525 the Court of review. The trial that dard court stated the board department’s determine whether the must decision arbitrary contrary law. was is the This standard provided 22121(3)(b); MCL 14.15(22121)(3)(b). Because the trial court not did applicable review, misstate the standard of no we find requiring error reversal.

C. POH’S CON APPLICATION Finally, appellant argues that the board’s deci- POH grant supported by sion it CON substantial evidence on the The record. board ruled that arbitrary decision to a CON poh and not in on accordance with the law basis following (1) eighth largest factors: POH is the osteopathic teaching hospital (2) States; in the United existing facility cramped space, is which POH’s adversely patient affects care and medical instruction (3) also and constitutes and license code violations; existing facility the structural foundation of the would support (4) facility floors; not additional expanded laterally; (5) is landlocked and be cannot proposed facility would add beds to the suba- (6) proposed facility rea; would be cost efficient. trial court ruled that the board’s decision was

contrary arbitrary. disagree. to law and We explained granting Court has CON must be based on “a demonstrated current facility.” future for the See West Bloomfield Hosp, quoting Mich MCL 333.22132; MSA 14.15(22132). undisputed proposal It POH’s would not add beds to subarea cur- and that POH’s multiple rent facilities suffer from deficiencies J. Taylor, both, functions. teaching and its patient care affect conclusion support record board’s is There Accordingly, are satisfied. 22131 the criteria § that for issu- the circuit court and remand to we reverse poh. of a CON ance

V. CONCLUSION court for issu- and remand to circuit We reverse In all appellant a certificate of need ance of POH. court of the trial is respects the decision other jurisdiction. We do not retain affirmed. Kelly, J., J. concurred.

Michael part dissenting (concurring Taylor, J. majority Pontiac Osteo- I concur with the part). pathic Hospital to a remand for the trial entitled of need. Because the issuance of a certificate court’s are to similar health-care facilities entitled other majority opinion. I dissent from the rest relief, failure of the originally This Court held and follow a adopt of Public Health Department which had been plan (smfp), medical facilities state required by the was error and expressly Legislature, power to was therefore without applica- deny, hospitals’ much several process, less Hosp need. West v tions for certificates of Bloomfield 393; 397; 208 Mich Bd, Need Certificate of Michigan (1995). Supreme NW2d 744 that an our decision on the narrow basis reversed rules to the adopt requisite failure to agency’s automatically of an does not processing subject invalid to rever- decision agency’s make Bd, Hosp sal. West Bloomfield Certificate of 515, 524; (1996). NW2d 223 452 Mich v Need Bd (On Opinion by Taylor, J. pointing Court, to the case of Ameri- Freight can Farm Lines v Black Ball Service, 397 US (1970),1 532; 1288; S Ct 25 Ed 2d 547 held that L the failure to have rules could be excusable if the missing merely procedural were rules and their substantia] prejudice absence would not create to the party. complaining I believe American Farm Lines holds, at broadest, its that a federal administrative may agency modify procedural “relax or rules” justice require when the “ends of id. it,” at but in no event can it be read to excuse failure of the adopt agency administrative if rules those rules are provide substantive, i.e., the decisional basis, for the agency’s ruling. Indeed, I believe, American Farm Lines must be read in this fashion. To do otherwise, grant agencies right adju- would administrative parties’ rights process dicate without due for those parties. Certainly, Supreme our Court would not thing contrary order such a because it be would understandings Michigan the most fundamental of the say, and federal constitutions. Needless to there is no gives authority. case that such question, missing then, before us is: Were the procedural import? rules substantive or in their I they only believe can be considered as substantive. public things inform was to of the smfp 1 outset, At the it seems unusual that we are referred to American Farm Lines. The last time the Michigan Supreme Court cited American Michigan Farm Lines Farm Bureau v Bureau Workmen’sCom inwas pensation, 141, 150-151, 4; (1980). There, 408 Mich n 289 NW2d 699 higher required Michigan agencies, Court noted the standards that are agencies, agency’s as regarding promul contrasted with federal need to gate, rules, regulations, statements, standards, policies, as their and so any case, noted, misgivings will, In forth. I we have been directed to do, analyze Farm American Lines as I under our believe currently understands it. 528 223 Mich J. Taylor, a whether certifi- deciding to be considered needed could look at justified. applicant An cate need was had be shown to what facts the SMFP and determine plan need and the case accord- certificate of get a by any not, understanding This is reasonable ingly. a A fair review of concepts, procedural matter. decisional basis the record shows methodology was the acute-care-bed-need department which, it, described stood as the (acbnm),2 If 522. the acbnm was of the lieu smfp. was a substantive, how can the for which it sur- smfp, not be? rogate, depart-

Moreover, if I were to assume that even medical facilities adopt plan failure state ment’s merely procedural problem was substan- tive, part must look the second we still Farm, Lines if American to determine holding depart- from the parties prejudice suffered substantial they record, failure. On this I find that did. ment’s applicants had One of the criteria the to establish 333.22131(l)(n); need. MCL future However, witnesses 14.15(22131)(l)(n). predictive.3 Simply conceded that the acbnm was not Eaton, analyst department’s planning section, Phyllis a staff with the rely only upon pre would acbnm testified that the relying any upon methodology than the ACBNM. cluded from other Harvey Day, Dr. the chief of the Bureau of Health Facilities for the department, predictive of future market testified that acbnm is not only descriptive retrospective signifi it is market. The shares because by following portion cance is made of this limitation clear hypothetical appellants’ joint brief, situation which summarized a that presented: expert Lifton James hospitals particular in a that were four subarea Assume there patients. measure, full of The acbnm black box would that were by aggregate, captured ail market share that had been four hospitals and market share or volume of would calculate that their Bd (On West Bloomfield Opinion by Taylor, J. job could stated, sup- this means it not do the it was do. posed predictive Because it was not of future hospital need, it was no than a snapshot, more at best, of the market. matter good current No how snapshot may been, predic- a have it cannot serve as Accordingly, arbitrary tion. to use it as the test was circumstances, and unreasonable. such using Under snapshot the acbnm as a methodology decisional stan- dard caused the applicants prejudice. substantial the department’s adopt smfp

Because failure to procedural deficiency, was not and because it applicants caused the substantial it prejudice, is not necessary to reach the issues in this case. remaining

For the foregoing reasons, I would remand trial court issuance of certificates of need to all the appellant providers. health-care justified existing business all of the Then if beds. three of the hos-

pitals closed, analyze only down burned and were the acbnm would discharge remaining hospital data from the one in the subarea only (discharges) since the measures market in the suba- acbnm existing hospitals. rea from subarea would show that acbnm discharges by being hospital there were sufficient handled the one justify only beds, capacity that is since all the that the one hospital could handle. The acbnm would show a need for the hospitals previously existed, three even one of the three previously only existed. ... It looks at the share market hospitals. beds, ... does not It measure need for new required 22131(l)(c) predict Sections and 33132 It cannot [sic]. hospital predict whether a will be full once it is and it built cannot impact hospital hospitals. full will have on other

Case Details

Case Name: West Bloomfield Hospital v. Certificate of Need Board

Court Name: Michigan Court of Appeals

Date Published: Aug 6, 1997

Citation: 567 N.W.2d 1

Docket Number: Docket Nos. 197324-197328

Court Abbreviation: Mich. Ct. App.