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The Medical Center of Central Georgia, Inc. v. Hospital Authority of Monroe County

Court of Appeals of Georgia, Fourth Division

March 7, 2017

THE MEDICAL CENTER OF CENTRAL GEORGIA, INC.
v.
HOSPITAL AUTHORITY OF MONROE COUNTY GEORGIA DEPARTMENT OF COMMUNITY HEALTH
v.
HOSPITAL AUTHORITY OF MONROE COUNTY.

          ELLINGTON, P. J., BRANCH and MERCIER, JJ.

          MERCIER, JUDGE.

         In these related discretionary appeals, the Medical Center of Central Georgia, Inc. ("MCCG") and the Georgia Department of Community Health (the "Department") (collectively, "Appellants") appeal the judgment of the Superior Court of Monroe County (the "Superior Court") reversing the Department's grant of a letter of non-reviewability ("LNR") to MCCG for the acquisition of diagnostic equipment to be installed in a medical office building.

         1. As a threshold matter, we address the Department's Motion to Vacate Judgment Under Review and Remand For Dismissal in Case No. A16A1558. Appellee, the Hospital Authority of Monroe County (d/b/a/ Monroe County Hospital) ("MCH"), filed in both cases a supplemental brief stating that "MCH and MCCG have negotiated a business and clinical affiliation that would include shared use of the imaging center at the core of this appeal. MCH and MCCG reached an agreement . . . that will, when finally executed, resolve the matter at issue in this appeal." Thus, MCH stated that it "will no longer defend the Superior Court Order overturning the [Department's] decision." The supplemental briefs were submitted concurrently with motions to withdraw MCH's requests for oral argument in these cases.

         The Department contends that its appeal from the Superior Court's judgment is thereby rendered moot, but because the mootness was created by circumstances outside of the Department's control, we should vacate the judgment and remand the cases. See Pimper v. State, 274 Ga. 624, 626-627 (555 S.E.2d 459) (2001); Babies Right Start v. Ga. Dept. of Pub. Health, 293 Ga. 553, 555 (2) (a) (748 S.E.2d 404) (2013).

         Contrary to the Department's contention, a ruling by this Court in this case would not constitute an advisory opinion or a determination of only abstract questions. MCH's briefs indicate that there is an anticipated resolution of the issues between MCH and MCCG, but the record does not demonstrate that a final resolution has been achieved, or that the Superior Court's reversal of the Department's grant of the LNR to MCCG has been rendered moot from the perspective of MCCG. See In re M.D.H., 334 Ga.App. 394, 395 (1) (779 S.E.2d 433) (2015); compare Pimper, supra; Babies Right Start, supra. The motion to vacate and remand is therefore denied, and we consider herein the contentions raised by Appellants.

         MCCG contends that the Superior Court erred in (1) determining that the Department's interpretation of the phrase "offered in a hospital" violates the "equipment threshold" provision in OCGA § 31-6-40 (a) (3); (2) concluding that the Department exceeded its statutory authority by applying said provision to a hospital-based outpatient imaging center that is not located on a hospital's main campus; (3) ordering the Department to investigate certain expenditures related to the purchase and renovation of the medical office building intended to house the equipment that is the subject of the LNR; and (4) concluding that the exemption provisions of the Certificate of Need Act are subject to the capital expenditure threshold. The Department contends that the Superior Court erred in (1) finding that the Department's final decision was contrary to the equipment threshold provision in OCGA § 31-6-40 (a) (3); (2) finding that the Department enacted a "hospital-based rule"; (3) finding that the Department abused its discretion by not conducting an investigation of the Monroe Regional Medical Complex; (4) ordering the Department to conduct an investigation of the costs of the Monroe Regional Medical Complex; and (5) reversing the Department's final decision where there was no genuine issue of material fact as to either prong of the equipment threshold provision analysis. For the reasons that follow, we reverse the judgment of the Superior Court.

         2. The Department is authorized to administer Georgia's certificate of need ("CON") program, codified at OCGA § 31-6-40 et seq. See OCGA § 31-6-21. The Department is authorized to "adopt, promulgate, and implement rules and regulations sufficient to administer" the program. OCGA § 31-6-21 (b) (4). Generally, when a party seeks to establish a "new institutional health service, " it must obtain a CON. OCGA § 31-6-40 (a). A party seeking approval for an activity that is believed not to be subject to the CON requirement based on the equipment threshold must provide prior notice to the Department of such activity and obtain an LNR. OCGA § 31-6-47.1; Ga. Comp. R. & Regs., r. 111-2-2-.10; see OCGA § 31-6-40 (a) (3).

         MCCG is a not-for-profit hospital, and its main campus is located in Macon, Bibb County, Georgia. MCH is a political subdivision of the State of Georgia, organized under the Georgia Hospital Authorities Law, OCGA § 31-7-70 et seq., and operates a hospital in Forsyth, Monroe County, Georgia. In 2013, MCCG proposed to establish a diagnostic suite at a medical office complex in Forsyth, Georgia, located in Monroe County, approximately 25 miles from MCCG's main campus. MCCG submitted an LNR request to the Department in August 2013, seeking a determination that its acquisition of a CT scanner, mammography equipment, and an x-ray machine did not require a CON. The application stated that the total value of the equipment and related items to be purchased was $701, 032.30. Of that amount, the total value of the CT scanner and related items was $419, 669.20.

         MCCG's LNR request was based on OCGA § 31-6-40 (a) (3) (referred to herein as the "equipment threshold provision"), which provides that "new institutional health services" requiring a CON include

[t]he purchase or lease by or on behalf of a health care facility or a diagnostic, treatment, or rehabilitation center of diagnostic or therapeutic equipment with a value in excess of $1 million [adjusted annually based on the consumer price index]; provided, however, that diagnostic or other imaging services that are not offered in a hospital or in the offices of an individual private physician or single group practice of physicians exclusively for use on patients of that physician or group practice shall be deemed to be a new institutional health service regardless of the cost of equipment; and provided, further, that this shall not include build out costs, as defined by the department, but shall include all functionally related equipment, software, and any warranty and services contract costs for the first five years.

         MCH filed a written objection to MCCG's LNR request, arguing that the diagnostic equipment would not be offered in a hospital, and that even if the purchases were for hospital-based equipment, they would exceed the capital expenditure threshold under OCGA § 31-6-40 (a) (2) (any expenditure in excess of 2.5 million dollars), and thus were subject to CON review. MCH argued that the expenses purportedly incurred in connection with the medical complex should be examined to determine whether they were necessary to the installation of the equipment at issue but not identified in the LNR request, and that the purchase of the equipment was part of a larger project whose aggregate cost exceeded the capital expenditure threshold in OCGA § 31-6-40 (a) (2).

         The Department granted the LNR to MCCG, finding that the equipment was for use "in a hospital." It found that mammography and x-ray equipment were not subject to CON review or the diagnostic imaging equipment threshold, and that the CT scanner and related costs were below the then-current equipment threshold of $1, 126, 874 for diagnostic imaging services offered in a hospital. Further, the Department found that the costs of the medical office building were not simultaneously developed and associated with the purchase of the equipment, based on MCCG having "confirmed" that the costs associated with the building were incurred approximately three years prior, citing Ga. Comp. R. & Regs., r. 111-2-2-.01 (8) (a), (b) (which provides that activities, services, expenditures and items are associated and simultaneously developed or planned if they occur within a six-month period), and noting that pursuant to OCGA § 31-6-40 (a) (3), build-out costs related to diagnostic and therapeutic equipment are excluded from the calculation of the equipment threshold.

         MCH requested a fair hearing under the Georgia Administrative Procedure Act ("APA"). MCCG moved for summary adjudication. A hearing was held on September 4, 2014. The Department-appointed hearing officer granted summary adjudication to MCCG on November 5, 2014, concluding that there was no genuine dispute of material fact as to the issue of whether the proposed equipment purchase was for use in a hospital and that the value of the equipment was below the equipment threshold. In addition to the statutory and regulatory grounds cited in the LNR, the hearing officer noted that the ...


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