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Endoscopy Associates, Inc. v. Rhode Island Department of Health

Superior Court of Rhode Island

March 18, 2015

ENDOSCOPY ASSOCIATES, INC.
v.
RHODE ISLAND DEPARTMENT OF HEALTH

Superior Court Providence County

For Plaintiff: Jeffrey S. Brenner, Esq., Stephen D. Zubiago, Esq.

For Defendant: Stephen A. Morris, Esq., Joseph G. Miller, Esq., Patricia K. Rocha, Esq.

DECISION

MCCGUIRL, J.

Appellant Endoscopy Associates, Inc. (Endoscopy Associates) appeals the January 28, 2014 decision of Hearing Officer Catherine Warren (Hearing Officer Warren) overturning the Rhode Island Department of Health's (the DOH) grant of a Certificate of Need (CON), in effect denying Endoscopy Associates' application to change its corporate structure. Jurisdiction in the instant matter is pursuant to G.L. 1956 § 42-35-15.

I

Facts and Travel

On January 10, 2013, Endoscopy Associates applied to the DOH for a CON in compliance with the Health Care Certificate of Need Act of Rhode Island, G.L.1956 §§ 23-15-1 et. seq. Endoscopy Associates sought approval to change its corporate structure from a physician ambulatory surgery center (PASC) to become a freestanding ambulatory surgery center (FASC). Under a PASC license, ownership is limited to physicians and surgical procedures may be performed only by these physician-owners. Sec. 23-17-2(13). However, under a FASC license, non-physicians may become owners and non-owner physicians are allowed to perform surgeries. R.I. Admin. Code 31-4-6:1.0 et seq. As "[n]o health care provider . . . shall . . . offer . . . new institutional health services in Rhode Island [without] approval by the [DOH, ]" § 23-15-4, Endoscopy Associates needed approval of this CON application in order to change their corporate structure.

In Endoscopy Associates' CON application, it notes that its "CON application is unique because it simply involves a request for a new license category." (Application at 10.) Indeed, it has requested a license to operate a FASC "in order to increase its options with respect to its ownership structure." Id. at 1. Endoscopy Associates was frank in stating that its "facility is presently satisfying existing need[.]" Id. at 10 (emphasis added). The CON application further states that Endoscopy Associates "projects a 92% utilization through 2015." Id. The application concedes that "if this CON is not granted, [Endoscopy Associates] will continue to meet the need and provide services." Id. Not only did Endoscopy Associates not apply for more rooms to perform endoscopy procedures, id. at 9, it also denied having any current "plans to change its ownership structure[.]" Id. at 1.

After a series of public hearings as well as a positive recommendation from the Project Review Committee, the Health Services Council (HSC), an advisory body for DOH, voted 8-4 to recommend the approval of the CON proposal as both needed and affordable as required by the Health Care Certificate of Need Act of Rhode Island. Subsequently, on August 5, 2013, DOH Director Dr. Michael Fine approved the CON application. This CON application was granted subject to the condition that there would be "no increase in [the] existing number of endoscopy rooms in the facility[.]" (HSC Minutes at 2, July 16, 2013.) In response, Blackstone Valley Surgicare (Blackstone) appealed this decision, contending that Endoscopy Associates failed to meet its burden of demonstrating an unmet public need. R23-15-CON, § 17.1.[1]

With regard to public need, the General Assembly has mandated:

"No [CON] approval shall be made without an adequate demonstration of need by the applicant at the time and place and under the circumstances proposed, nor shall the approval be made without a determination that a proposal for which need has been demonstrated is also affordable by the people of the state." Sec. 23-15-4(b).

The Rules and Regulations for the DOH define "public need" as "a substantial or obvious community need for the specific new health care equipment or new institutional health service proposed and the scope thereof, in light of the attendant circumstances[.]" R23-15-CON, § 3.25. Section 4.3 requires consideration of "the availability of existing facilities, equipment and services, both statewide and on a local basis, which may serve as alternatives or substitutes for the whole or any part of the proposed new institutional health service or new health care equipment."

The decision of the state agency may be administratively reviewed upon written request pursuant to DOH R23-15-CON, § 17, and § 23-15-6. This review, as per § 23-15-6, mirrors § 42-35-15 (The Administrative Procedures Act) almost exactly, requiring that the hearing officer "shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact." Sec. 42-35-15; see Sec. 23-15-6 ("The ...


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