Endoscopy Associates, Inc.
v.
Rhode Island Department of Health
Providence County Superior Court No. (PC 14-891), Associate
Justice Susan E. McGuirl
For
Petitioner: Jeffrey S. Brenner, Esq. Stephen D. Zubiago, Esq.
Christopher J. Browning, Esq.
For
Rhode Island Department of Health: Patricia K. Rocha, Esq.
Jamie J. Bachant, Esq.
Present: Suttell, C.J., Goldberg, Flaherty, and Indeglia, JJ.
OPINION
GOLDBERG, JUSTICE
The
petitioner, Endoscopy Associates, Inc. (Endoscopy), appeals
from a judgment of the Superior Court that reversed a
decision by the Rhode Island Department of Health (the DOH)
to grant an application for a Health Care Certificate of Need
(CON). This Court granted a petition for a writ of certiorari
on February 23, 2016. The parties appeared before the Supreme
Court on February 7, 2018, pursuant to an order directing the
parties to show cause why the issues raised on appeal should
not be summarily decided. After hearing the arguments of
counsel and examining the memoranda submitted by the parties,
we are of the opinion that cause has not been shown and that
this case should be decided without further briefing or
argument. For the reasons discussed herein, we quash the
judgment of the Superior Court.
Facts
and Travel
Endoscopy
is a Rhode Island physician-owned professional corporation
that provides gastroenterology services to its patients. Five
years ago, on January 10, 2013, Endoscopy applied for a CON
with the DOH pursuant to the Health Care Certificate of Need
Act of Rhode Island, G.L. 1956 chapter 15 of title 23 (the
Act), seeking to change its license from a physician
ambulatory surgery center (PASC) to a freestanding ambulatory
surgery center (FASC). As a PASC licensee, Endoscopy is
limited to a physician-owned and -operated facility, and by
converting to a FASC license, Endoscopy would be able to
expand its corporate ownership to nonphysicians and have
nonowner physicians practicing in the facility. However,
under the Act, a CON will not be approved 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." Section
23-15-4(b).
In its
CON application, Endoscopy:
"[P]ropose[d] to transition to and obtain a license to
operate as a freestanding ambulatory surgery center in order
to increase its options with respect to its ownership
structure. The Applicant currently does not have any plans to
change its ownership structure, however, as a physician
ambulatory surgery center the Applicant can only be owned by
physicians and allow owners to utilize the facility. Upon
approval of this CON application, the Applicant would have
the option, if ultimately desired, to (i) allow a
non-physician to purchase an ownership interest in the
Applicant; and (ii) allow non-owner physicians to utilize the
facility."
Endoscopy
also included a report by Harvey Zimmerman (the Zimmerman
Report) that had been commissioned by the DOH entitled
"Assessment of Need for Ambulatory Surgery Capacity in
Rhode Island: 2009[.]" The Zimmerman Report indicated
that, in 2013, sixty-one endoscopy rooms would be needed, but
only fifty-seven would be available. In reliance on the
Zimmerman Report, Endoscopy contended that there will be a
future need to expand, and that operating under a FASC would
allow them to meet the need at that time. Additionally,
Endoscopy relied on a Rhode Island Comprehensive Cancer
Control Plan from 2007, which recommended an increase in the
rate of endoscopic screenings for colorectal cancer.
Endoscopy's application also indicated that it was
operating at near capacity and had an expected utilization
rate of 92 percent through 2015, and therefore there was an
"obvious need" to change its licensure to a FASC.
However, Endoscopy also acknowledged that it had no
current plan to change its corporate ownership
structure, and that, at the time of its application, its
facility was satisfying existing patient needs and services.
Endoscopy's
CON application was first reviewed by Project Review
Committee-I of the Health Services Council (HSC), an advisory
board for the DOH. A competing provider, Blackstone Valley
Surgicare Acquisition, L.P. (Blackstone Valley), which
operates as a FASC in Johnston, Rhode Island, intervened and
filed a letter in opposition to Endoscopy's application.
Blackstone Valley argued that Endoscopy could not meet its
burden of proving need and affordability, and that the CON
statute and regulations were not designed as a corporate
restructuring tool. Following multiple proceedings before the
Project Review Committee-I, the committee voted to recommend
that the CON be approved. Subsequently, on July 30, 2013,
Endoscopy's CON came under full review by the HSC. Again,
Blackstone Valley objected and argued that Endoscopy failed
to meet its burden of proving public need for the FASC. The
HSC reviewed Endoscopy's CON application and similarly
recommended that the CON be granted. The HSC reasoned that
the application identified an adequate need and also
satisfied the requirement that the proposal be affordable.
On
August 5, 2013, the recommendations from the Project Review
Committee-I and the HSC came before the director of the DOH.
Blackstone Valley submitted another letter in opposition. The
director ultimately accepted the positive recommendations and
found:
"The state agency has applied the relevant criteria in
the appropriate statute and rules and regulations, and has
accorded to them the appropriate weight, and has considered
the record and criteria with due deference and balance to
those matters which the state agency has deemed to have
priority importance."
The
director then granted the CON, subject to seventeen
conditions.[1] Blackstone Valley requested administrative
review pursuant to the Act.[2] Blackstone Valley argued that the
evidence in the record did not support the DOH's decision
that the CON identified a public need for another FASC.
An
administrative hearing officer from the Department of
Administration (the DOA) conducted this administrative review
and issued a decision that reversed the approval granted by
the DOH. The hearing officer concluded that the CON was in
violation of statutory and regulatory requirements and did
not demonstrate a public need. The hearing officer declared
that "[a] CON decision needs to weigh those
considerations [enumerated in § 23-15-4(e)] in order to
find whether there is a substantial and/or obvious community
need. Such findings were not made by the [d]ecision."
The hearing officer declared that whether Endoscopy had the
flexibility to change its corporate structure in the future
was not a public need. On February 27, 2014,
Endoscopy filed for judicial review in the Superior Court,
pursuant to G.L. 1956 § 42-35-15.[3]
In the
Superior Court, the trial justice, in accordance with §
42-35-15, determined that § 42-35-15(g) "makes
explicit that the Superior Court reviews 'the decision of
the agency[, ]'" and therefore declared that her
review would be limited to the decision of the DOH, rather
than the decision of the DOA hearing officer. The trial
justice concluded that she sat in a similar position as the
DOA hearing officer and was to examine the record "to
determine whether some or any legally competent evidence
exists to support the DOH's decision." (Internal
quotation marks omitted.) In doing so, the trial justice
opined that it was "apparent * * * that the CON
application process is not tailored for an application of
this type * * *"; she then remanded the application to
the DOH for further proceedings to establish whether the CON
application procedure could encompass Endoscopy's
application and to "ascertain the proper channel for
such a corporate restructuring." However, after a review
of the entire record, the trial justice also reversed the
DOH's decision, reasoning that Endoscopy's
application did not demonstrate a public need.
This
Court granted Endoscopy's petition for a writ of
certiorari on February 23, 2016. We note, however, that
although the writ was directed to the DOH, the state agency
did not participate in these proceedings; Blackstone Valley
was the only respondent. At the outset, in accordance with
the trial justice's direction, we remanded the papers to
the DOH in order to ascertain whether Endoscopy's
application was an appropriate avenue for relief under the
CON process. In August 2016, the DOH submitted a response
entitled "Decision and Response of the Rhode Island
Department of Health to Question Ordered by the Court."
The DOH stated that "[w]hile the applicable application
is not typical or usual or, common to the CON application
process, nevertheless the application filed is suitable * *
*."
Before
this Court, Endoscopy argues that the trial justice failed to
give proper deference to the DOH's determination that a
public need was sufficiently demonstrated to warrant issuance
of the CON. Additionally, Endoscopy asserts that there was
ample evidence produced to support a finding that there was a
public need separate and apart from licensing restructure,
and that the suggestion that the application was a proposal
for corporate restructuring was erroneous. Blackstone Valley
responds that the trial justice appropriately upheld the
decision of the DOA hearing officer in light of ...