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Doctors Hospital of Augusta, LLC v. Georgia Department of Community Health

Court of Appeals of Georgia, First Division

April 30, 2019


          BARNES, P. J., MERCIER and BROWN, JJ.

          MERCIER, JUDGE.

         In a final decision issued November 23, 2015, the Georgia Department of Community Health ("the Department") granted MCG Health, Inc. d/b/a Georgia Regents Medical Center ("Georgia Regents") a Certificate of Need ("CON") to build a new hospital in Columbia County. Doctors Hospital of Augusta, LLC ("DHA"), which had competed against Georgia Regents for the CON, petitioned the superior court for review. The superior court upheld the Department's final decision, and we granted DHA's application for discretionary appeal. For reasons that follow, we affirm.

         The record shows that DHA is a 354-bed acute-care hospital located in Augusta, Richmond County, Georgia. Georgia Regents, an acute-care teaching hospital affiliated with Georgia Regents University, is also located in Augusta. In 2014, Georgia Regents, DHA, and University Health Systems, Inc. ("University Health"), a third Augusta-area hospital, filed competing applications with the Department for a CON to establish a new hospital in neighboring Columbia County. Although the applications differed in terms of location, size, and overall cost, each proposed construction of a new, 100-bed short-stay facility.[1] Columbia County, which did not have a hospital at the time, pledged to fund more than 20 percent of the total hospital cost.

         The Department joined the competing applications for review on July 1, 2014, and, after evaluating the proposals, awarded the CON to Georgia Regents. The two other applications were denied. DHA and University Health appealed the Department's award to the Certificate of Need Appeal Panel. Following an evidentiary hearing, a hearing officer appointed by the Appeal Panel determined that the Department had properly awarded the CON to Georgia Regents. DHA requested further review by the Department's Office of the Commissioner, which issued a final decision upholding the CON award to Georgia Regents. See OCGA § 31-6-44 (m) (unless the hearing officer's decision becomes the Department's final decision by operation of law, the commissioner's decision constitutes the Department's final decision). Following that ruling, DHA petitioned the superior court for judicial review of the Department's final decision, and the superior court affirmed.

         Codified at OCGA § 31-6-40 et seq., the CON program "establishes a comprehensive system of planning for the orderly development of adequate health care services throughout the state." Palmyra Park Hosp. v. Phoebe Sumter Med. Center, 310 Ga.App. 487, 488 (714 S.E.2d 71) (2010) (citations omitted). Entities seeking to establish a new health care service or facility in Georgia generally must apply for a CON. See OCGA § 31-6-40 (b). The Department, which administers the CON program and serves as Georgia's "lead planning agency for all health issues," reviews CON applications in light of 17 general considerations, including the population living in the proposed service area, existing health service alternatives in the area, project costs, and whether the proposed services are reasonably consistent with state health plan goals and objectives. See OCGA §§ 31-2-1 (1); 31-6-21 (a); 31-6-42 (a). The legislature has authorized the Department to establish procedures for managing the CON program. OCGA § 31-6-21 (a). To that end, the Department has adopted numerous administrative rules and regulations regarding program procedures and considerations. See Ga. Comp. R. & Regs. r. 111-2-2-.01 et seq.

         After the Department issues its final decision regarding a CON application, an aggrieved party may seek judicial review of that ruling. See OCGA § 31-6-44.1. Ultimately, "the reviewing court determines whether 'substantial evidence' supports the [Department's] findings of fact, and whether the conclusions of law drawn from those findings of fact are sound." Palmyra Park Hosp., supra at 488. The Department's decision may be reversed "if it was based on legal error and unlawful procedures, was arbitrary and capricious, or prejudiced the opposing parties' substantial rights." Id. As long as the Department acts within its statutory authority, however, the reviewing court defers to the Department's "interpretation and application of the CON statute and the rules and regulations it has enacted to fulfill the function given it by the legislative branch." Id. at 491 (1). See also Medical Center of Central Ga. v. Hosp. Auth. of Monroe County, 340 Ga.App. 499, 504 (3) (798 S.E.2d 42) (2017) (noting deferential standard). Such deference to agency interpretation and application is appropriate because

agencies provide a high level of expertise and an opportunity for specialization unavailable in the judicial or legislative branches. They are able to use these skills, along with the policy mandate and discretion entrusted to them by the legislature, to make rules and enforce them in fashioning solutions to very complex problems. Thus, their decisions are not to be taken lightly or minimized by the judiciary. Review overbroad in scope would have the effect of substituting the judgment of a judge or jury for that of the agency, thereby nullifying the benefits of legislative delegation to a specialized body.

Palmyra Park Hosp., supra (citation and punctuation omitted).

         1. With these principles in mind, we turn to DHA's arguments, including its claim that the Department improperly granted the CON to Georgia Regents pursuant to an "invalid" exception to the statutory requirements governing CON applications. The superior court rejected this argument. We find no error.

         The Department determined that each of the three competing applications met the 17 general CON considerations set forth in OCGA § 31-6-42 (a). Because the applications involved a proposed short-stay hospital, however, they were also subject to OCGA § 31-6-21 (b) (8), which requires the Department to "establish service-specific need methodologies and criteria for . . . short stay hospital beds." The Department has promulgated specific short-stay hospital review criteria in Rule 111-2-2-.20. That rule includes a detailed "numerical need methodology designed to assess need for the specific purpose sought in the application." Ga. Comp. R. & Regs. r. 111-2-2-.20 (3) (b). But it also allows the Department to make an exception to the numerical need methodology in four limited circumstances, including when

[t]he facility is a sole community provider and more than twenty percent (20%) of the capital cost of any new, replacement or expanded facility is financed by the county governing authority . . . of the home county or the county governing authorities of a group of counties[.]

Ga. Comp. R. & Regs. r. 111-2-2-.20 (3) (c) (3).

         Although the facilities proposed by Georgia Regents, DHA, and United Health did not satisfy the numerical need methodology outlined in Rule 111-2-2-.20 (3) (b), the Department found that all three fell within this "county-financed exception." Without dispute, no other hospital existed in Columbia County at the time, and the County had agreed to pay more than 20 percent of the cost of the new hospital proposed in the CON applications. DHA argues, however, that the Department's county-financed exception (generally and as applied here) contravenes the CON statutory scheme and is unreasonable, rendering the exception invalid. See Albany Surgical v. Dept. of Community Health, 257 Ga.App. 636, 637 (1) (572 S.E.2d 638) (2002) ("The test for the validity of administrative regulations is based upon a two-part analysis: (1) is the regulation authorized by statute; and (2) is the regulation reasonable?").

         (a) When considering the meaning of a statute, "we must afford the statutory text its plain and ordinary meaning[.]" Medical Center of Central Ga., supra at 504 (3) (punctuation omitted). The applicable CON legislation requires the Department to "establish, by rule, need methodologies for new institutional health services and health facilities," including service-specific methodologies for short-stay hospitals. OCGA ยง 31-6-21 (b) (8). The Department complied with this mandate by enacting Rule 111-2-2-.20, which sets forth extensive short-stay hospital review considerations. Those considerations ...

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