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LLC v. Berry

Supreme Court of Georgia

October 16, 2017

WOMEN'S SURGICAL CENTER, LLC et al.
v.
BERRY et al. BERRY et al.
v.
WOMEN'S SURGICAL CENTER, LLC et al.

          MELTON, PRESIDING JUSTICE.

         Women's Surgical Center, LLC d/b/a Georgia Advanced Surgery Center for Women (hereinafter referred to as the "Center") provides outpatient surgery services in Cartersville, Georgia. The Center has immediate plans to add a second operating room to its premises in order to create opportunities to form contracts with additional surgeons who could then use the Center in connection with their medical practices. However, any such change to the Center could only be legally accomplished if the Center sought and was granted a certificate of need ("CON")[1] by the Georgia Department of Community Health (the "Department"). Specifically, pursuant to OCGA § 31-6-40 (a) (7) (C):

On and after July 1, 2008, any new institutional health service shall be required to obtain a certificate of need pursuant to this chapter. New institutional health services include . . . [c]linical health services which are offered in or through a diagnostic, treatment, or rehabilitation center which were not offered on a regular basis in or through that center within the 12 month period prior to the time such services would be offered, but only if the clinical health services [involve] . . . [s]urgery in an operating room environment, including but not limited to ambulatory surgery.

         Because the Center believed that it should not be subject to the CON requirements, on June 30, 2015, the Center filed an action for declaratory and injunctive relief against the Department[2] in an effort to have Georgia's applicable CON law and the regulations authorizing it declared unconstitutional.[3] On August 20, 2015, the Department moved to dismiss the complaint, arguing, among other things, that the trial court lacked jurisdiction over the case because the Center failed to exhaust its administrative remedies before filing its lawsuit. The trial court denied the motion to dismiss on February 10, 2016. On September 16, 2016 both the Center and the Department filed motions for summary judgment with regard to the Center's constitutional claims. In an October 31, 2016 order, the trial court rejected all of the Center's constitutional challenges and granted summary judgment to the Department. In Case No. S17A1317, the Center appeals from this ruling, and in Case No. S17X1318, the Department appeals from the denial of its August 2015 motion to dismiss. For the reasons that follow, we affirm in both cases.

         S17X1318[4]

         1. The Department argues that the trial court erred in failing to dismiss the Center's declaratory action because the Center failed to exhaust its administrative remedies before filing its declaratory action and did not have standing to bring such an action at this point. We disagree.

An action for declaratory judgment is available to test the validity of an alleged unconstitutional law, in order that a person desiring to practice his vocation may know whether he may proceed in disregard of the requirements of the law, or whether he must refuse to [advance his interests that are] regulated by the law until he can comply with its provisions.

Jenkins v. Manry, 216 Ga. 538, 540-41 (118 S.E.2d 91) (1961). While an entity may not seek a declaratory judgment where no "actual controversy" exists between the relevant parties (see OCGA § 9-4-2 (a)), a party has standing to pursue a declaratory action where the threat of an injury in fact is "actual and imminent, not conjectural or hypothetical." Summers v. Earth Island Inst., 555 U.S. 488, 493 (II) (129 S.Ct. 1142, 173 L.Ed.2d 1) (2009). See also Georgiacarry.Org, Inc. v. Atlanta Botanical Garden, Inc., 299 Ga. 26 (785 S.E.2d 874) (2016).

         Here, it is undisputed that the Center's imminent plans to add a second operating room would be subject to the approval of the Department under the CON laws. In fact, the Center had already been denied a CON for this same proposed expansion in 2014.[5] However, even without filing a new application for a CON, the Center is still currently "faced with the prospect of either punishment if [it expands its facilities] without a [CON] or enduring much expense and effort to obtain the [new CON]." (Citation and punctuation omitted.) Bruner v. Zawacki, 997 F.Supp.2d 691, 696 (III) (A) (E.D. Ky. 2014). Under such circumstances, we find that the Center is confronted with an injury in fact that is "actual and imminent, not conjectural or hypothetical" (Summers, supra), such that it has standing to pursue its declaratory action here. See Bruner, supra.

         Because the Center has standing to pursue, and is in fact pursuing, a direct facial constitutional challenge to OCGA § 31-6-40 (a) (7) (C) (see Division 2, infra), the Center was not required to exhaust its administrative remedies before filing its declaratory action. Unlike in situations where a constitutional claim is raised in the context of actual administrative proceedings or where the constitutional challenge is as applied (see, e.g., Dep't of Pub. Safety v. Foreman, 130 Ga.App. 71 (202 S.E.2d 196) (1973)), "[t]here is . . . no exhaustion requirement when, as in the present case, the [plaintiff] challenges the constitutionality of [a statute] on its face." King v. City of Bainbridge, 272 Ga. 427, 428 (2) (531 S.E.2d 350) (2000).

         The trial court did not err in denying the Department's motion to dismiss.

         S17A1317

         2. The Center contends that OCGA § 31-6-40 (a) (7) (C) is unconstitutional on its face because the statute (a) violates the Anti-Competitive Contracts clause of the Georgia Constitution (see Ga. Const. of 1983 Art. III, § VI, Para. V (c) (1)), and (b) violates the due process clauses of the Georgia and United States Constitutions (see USCS Const. Amend. 14 and Ga. Const. of 1983 Art. ...


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