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Cobb Hospital, Inc. v. Georgia Department of Community Health

Court of Appeals of Georgia, Third Division

March 13, 2019

COBB HOSPITAL, INC. d/b/a WELLSTAR COBB HOSPITAL et al.
v.
GEORGIA DEPARTMENT OF COMMUNITY HEALTH et al.

          GOBEIL, J., COOMER and HODGES, JJ.

          HODGES, JUDGE.

         In March 2016, Emory University d/b/a Emory University Hospital Smyrna ("EUHS") filed an application with the Georgia Department of Community Health ("DCH") for a new certificate of need ("CON") to undertake improvements and renovations totaling approximately $33.8 million at the former Emory-Adventist Hospital. Cobb Hospital, Inc. d/b/a Wellstar Cobb Hospital and Kennestone Hospital, Inc., d/b/a Wellstar Kennestone Hospital (collectively, "Wellstar") objected to EUHS' application, arguing that the application "seeks to develop a new hospital" rather than reopening and renovating the former Emory-Adventist Hospital. The DCH granted EUHS' application and awarded it a new CON for the proposed improvements and renovations. Wellstar appealed to the Certificate of Need Appeal Panel (OCGA § 31-6-44) ("CON Appeal Panel"), and a panel hearing officer affirmed the DCH's decision. Wellstar objected to the panel hearing officer's judgment and appealed to the DCH commissioner, arguing, in part, that the panel hearing officer erroneously concluded that "[i]t is not the function of the CON Appeal Panel to consider questions of CON and licensure status. . . ." The DCH commissioner affirmed the panel hearing officer's decision, and the Superior Court of Cobb County denied Wellstar's petition for judicial review.

         In this appeal, we are asked to decide whether the CON Appeal Panel, in an appeal from a decision by the DCH on a health care facility's application for a new certificate of need, has the authority to independently review the status of the facility's existing certificate of need.[1] We conclude that the plain language of OCGA § 31-6-44 and Ga. Comp. R. & Regs. r. 274-1-.09 precludes the CON Appeal Panel from reviewing the DCH's initial determination regarding a health care facility's existing CON status; rather, any such challenges to the DCH's initial determination must be brought through a different process. Because there is no dispute that substantial evidence supported the panel hearing officer's findings of fact and that the officer's conclusions of law that EUHS was entitled to a new CON based on those facts were sound, we affirm the superior court's judgment denying Wellstar's petition for judicial review.

         The record reveals that Smyrna Hospital, Inc., an 88-bed community hospital, opened on South Cobb Drive in Smyrna in 1974. Adventist Health System acquired the hospital in 1976. In 1995, Emory Healthcare entered a joint venture agreement with Adventist Health System and obtained a 35% share ownership in the hospital; thereafter, the hospital was renamed Emory-Adventist Hospital. Due to declining revenues, Emory-Adventist ceased operations on October 31, 2014. In April 2015, Emory University acquired sole ownership of the hospital, which was renamed Emory University Hospital Smyrna and reopened on October 20, 2015.[2]

         Since it first opened as Smyrna Hospital in 1974, the hospital had never had a major improvement, renovation, or upgrade. As a result, EUHS applied for a certificate of need in March 2016 in order to proceed with improvements and renovations totaling approximately $33.8 million.[3] Wellstar objected to EUHS' application, arguing that the application "seeks to develop a new hospital" rather than reopening and renovating the former Emory-Adventist Hospital. Although it listed eight reasons for its objection to EUHS' application, Wellstar's primary argument was that "[t]he CON authority of the former Emory-Adventist Hospital has lapsed." As a result, Wellstar asserted that EUHS never obtained CON authority to offer hospital services and that EUHS' application "must be reviewed as a new hospital requiring new CON approval."[4]

         In its evaluation of EUHS' application, the DCH noted that EUHS filed its application "to renovate and upgrade its current hospital facility." In addition, the DCH determined that

EUHS, formerly known as Emory Adventist Hospital (EAH), closed on October 31, 2014 and re-opened October 20, 2015, according to Department records. In April 2015, Emory University acquired full title to EAH, and renamed it EUHS. As such, EUHS maintains an active CON status.[5]

         Following its review, the DCH granted EUHS' application and issued EUHS a CON for the proposed improvements and renovations.

         Wellstar appealed the DCH's award to the CON Appeal Panel. In a motion for summary adjudication, Wellstar argued, in part, that the DCH erred in awarding a CON to EUHS "to 'renovate and upgrade' the former Emory-Adventist Hospital . . . facility despite the fact that [EUHS] has no CON authorization to operate a hospital there." As a result, Wellstar asserted that EUHS "must obtain new CON authority to operate a hospital[, ]" which applies more extensive and rigorous guidelines.[6] EUHS replied that the DCH has the sole authority to determine whether an applicant maintained a proper CON and, as a result, EUHS filed its own motion for summary determination seeking to exclude any evidence concerning the validity of EUHS' CON.

         The panel hearing officer first noted that Wellstar raised "[its] arguments in the wrong forum." In fact, the panel hearing officer found that "[i]t is not the function of the CON Appeal Panel to consider questions of CON and licensure status. . . ." The panel hearing officer observed that the Attorney General's Office had the sole authority to oversee Emory Healthcare's purchase of Emory-Adventist under the Hospital Acquisition Act (OCGA § 31-7-400 et seq.) and that the DCH had the sole authority to ascertain the validity of EUHS' CON to operate a health care facility.[7]See OCGA § 31-6-21. As a result, the panel hearing officer granted EUHS' motion to exclude "Wellstar's arguments respecting CON status, Attorney General Review, and licensure status from the scope of the hearing in that the Hearing Officer does not have the authority to decide these questions."

         Following an evidentiary hearing, the panel hearing officer affirmed the DCH's decision granting EUHS' application and issuing the CON.[8] Wellstar objected to the panel hearing officer's decision and appealed the decision to the DCH commissioner, who affirmed the panel hearing officer's judgment.[9]

         Wellstar then petitioned for judicial review of the commissioner's decision in the Superior Court of Cobb County. The superior court denied judicial review of the Commissioner's decision, [10] and we granted Wellstar's application for discretionary appeal. This appeal followed.

         1. First, Wellstar contends that the CON Appeal Panel hearing officer erroneously concluded that he "lacked authority to independently decide if [EUHS] is a CON-authorized hospital." For the following reasons, we find no error.

         (a) Certificate of Need Requirement.

         Under Georgia law, "any new institutional health service [is] required to obtain a certificate of need. . . ." OCGA § 31-6-40 (a). "The CON program, which is administered by [the] DCH, establishes a system of mandatory review requiring that, before new institutional health services and facilities can be developed, the developer must apply for and receive a CON from the DCH. OCGA §§ 31-6-1; 31-6-40 (a), (b)." (Citation and punctuation omitted.) Kennestone Hosp. v. Dept. of Community Health, 346 Ga.App. 70 (815 S.E.2d 266) (2018).

The legislature cedes this authority to the [DCH] because the public is better served by having experts in the complexities of health care planning make these decisions. The issues are complicated, and the applicable laws, rules, regulations, and precedents require much study, especially for a decision-maker who is not already familiar with them.

Dept. of Community Health v. Gwinnett County Hosp. Sys., 262 Ga.App. 879, 881-882 (586 S.E.2d 762) (2003). Pursuant to OCGA § 31-6-42 (a), the DCH "shall issue a certificate of need to each applicant whose application is consistent with [the considerations set forth in OCGA § 31-6-42] and such rules deemed applicable to a project." To that end, "[t]he DCH reviews CON applications and issues decisions granting or denying a CON under statutory considerations in OCGA § 31-6-42 and under general and specific review considerations in rules and regulations promulgated by the DCH as set forth in Ga. Comp. R. & Regs. [r.] 111-2-1-.01 and 111-2-2-.01 through 111-2-2-.43." ASMC, LLC v. Northside Hosp., Inc., 344 Ga.App. 576, 577 (810 S.E.2d 663) (2018).

         Pertinent to this case, a certificate of need is required for: "(1) [t]he construction, development, or other establishment of a new health care facility; [and] (2) [a]ny expenditure by or on behalf of a health care facility in excess of $2.5 million which, under generally accepted accounting principles consistently applied, is a capital expenditure. . . ." OCGA §§ 31-6-40 (a) (1), (2). A CON application for a capital expenditure is reviewed only under the DCH's general review considerations, see OCGA § 31-6-42 (a) and Ga. Comp. R. & Regs. r. 111-2-2-.09 (1), [11] while an application for construction or development of a "new health care facility" is reviewed under both general and service-specific requirements and review considerations. See Ga. Comp. R. & Regs. r. 111-2-2-.11 (1) (a) (1), 111-2-2-.20 (1) (a), (3). Accord Dept. of Community Health v. Northside Hosp., Inc., 295 Ga. 446, 446-447, n. 4 (761 S.E.2d 74) (2014) ("more stringent service-specific review considerations" apply to applications for new CON for "ambulatory surgery services"; if the additional services are "part of a hospital" and do not increase the number of ambulatory operating rooms, however, only general considerations need be reviewed) (citing Ga. Comp. R. & Regs. r. 111-2-2-.40 (1) (a) and (d)).

         (b) Scope of Review of the DCH's Certificate of Need Decision.

         Following the DCH's initial decision granting or denying an application for a new CON,

[a]ny applicant for a project [or] any competing health care facility that has notified the [DCH] prior to its decision that such facility is opposed to the application before the [DCH] . . . who is aggrieved by a decision of the [DCH] shall have the right to an initial administrative appeal hearing before an appeal panel hearing officer or to intervene in such hearing. . . .

OCGA § 31-6-44 (d). The CON Appeal Panel hearing officer's role is defined in OCGA § 31-6-44 (f), ...


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