Noland Hosp. Shelby, LLC v. Select Specialty Hosps., Inc.

193 So.3d 751

NOLAND HOSPITAL SHELBY, LLC, and Noland Hospital Birmingham, LLC

v.SELECT SPECIALTY HOSPITALS, INC., d/b/a Select Speciality Hospital–Birmingham; Brookwood Health Services, Inc., d/b/a Brookwood Medical Center; State Health Planning and Development Agency ; and Alva Lambert, in his official capacity as Director of the State Health Planning and Development Agency.

2140473.

Court of Civil Appeals of Alabama.

Sept. 18, 2015.

Colin H. Luke, Kristen A. Larremore, and Zachary D. Trotter of Waller Lansden Dortch & Davis, LLP, Birmingham, for appellants.

David M. Hunt of Gilpin Givhan, P.C., Birmingham, for Select Specialty Hospitals, Inc., d/b/a Select Specialty Hospital-Birmingham.

James E. Williams of Melton, Espy & Williams, P.C., Montgomery; John T. Mooresmith of Burr & Forman, LLP, Montgomery; and Steve Windom, Montgomery, for Brookwood Health Services, Inc., d/b/a Brookwood Medical Center.

Mark D. Wilkerson and Dana H. Billingsley of Wilkerson & Bryan, P.C., Montgomery, for State Health Planning and Development Agency and Alva Lambert, in his official capacity of Director of the State Health Planning and Development Agency.

THOMAS, Judge.

Select Specialty Hospitals, Inc., d/b/a Select Specialty Hospital–Birmingham (“Select”), has operated a 38–bed, long-term acute-care hospital (“LTACH”) on the campus of the general acute-care hospital operated by Affinity Hospital, LLC, d/b/a Trinity Medical Center of Birmingham (“Trinity”), since 2002.¹ Trinity is relocating its hospital, and it informed Select that it would not have sufficient room at its new campus to house the LTACH operated by Select. Select's lease with Trinity provided that, upon its termination, Select would

“peaceably quit and surrender to [Trinity] any rights that [Select] may have by virtue of this Lease to own, lease, operate, build, or otherwise possess or be affiliated with the Beds, or the going concern of the long term acute care hospital, operated by [Select] in the Facility. Upon such surrender, [Select] shall fully cooperate with [Trinity] to enable [Trinity] to obtain all such licenses, permits, certifications, and any other such items necessary to operate the Beds as hospital beds and the Premises as a duly licensed long term acute care hospital and to the extent permitted under applicable law, qualify for third-party payor programs, such a Medicare or Medicaid.... Nothing herein shall be deemed to prohibit [Select] from applying for the necessary licenses to operate another long term care hospital at any other location.”

Select sought a new location for its LTACH, and Select and Brookwood Health Services, Inc., d/b/a Brookwood Medical Center (“Brookwood”), entered negotiations to house Select's LTACH at Brookwood's campus. In February 2014, Select sought a certificate of need (“CON”) to “relocate” its LTACH beds from Trinity's campus to Brookwood's campus. Noland Hospital Shelby, LLC (“Noland Shelby”), and Noland Hospital Birmingham, LLC (“Noland Birmingham”)(sometimes collectively referred to as “Noland”), filed a request for a declaratory ruling in which they requested that Select's CON application be dismissed because Select had no right to “relocate” the LTACH beds at Trinity's campus, which beds, pursuant to the lease, would revert to Trinity upon the termination of the lease. The Certificate of Need Review Board (“the CONRB”) of the State Health Planning and Development Agency (“SHPDA”)² dismissed Select's February 2014 CON application because it had not sought to convert acute-care beds from another source, as required by the State Health Plan (“the SHP”). See Ala. Admin. Code (SHPDA), Rule 410–2–4–.02(8)(c).

Select filed a second CON application in June 2014. In the second CON application, Select proposed to lease 38 excess general acute-care beds from Brookwood. Select sought a contested-case hearing on its own application, and Noland intervened. After a 10–day, contested-case hearing before an administrative-law judge (“ALJ”), the ALJ issued a 66–page recommended order in which he recommended denial of Select's CON application because, he determined, the CON application was not consistent with the SHP. He outlined a myriad of reasons that Select's CON application should not be approved, including, among other determinations, that Select had failed to meet each of the criteria outlined in Ala.Code 1975, § 22–21–266. The CONRB, after a brief hearing, rejected the ALJ's recommendation and entered a five-page order concluding that Select's application met the criteria specified in § 22–21–266 and approving the requested CON. Noland first sought reconsideration of the CONRB's order, but it withdrew that request and filed a notice of appeal.

As a preliminary matter, we must consider Select's motion to dismiss this appeal and determine whether Noland timely appealed the CONRB's order. The CONRB's ruling was issued on January 21, 2015, and became final on February 5, 2015. See Ala.Code 1975, § 22–21–275(13) (indicating that the CONRB's ruling becomes final 15 days after it is issued). Noland timely sought reconsideration of the CONRB's ruling on February 19, 2015, within 15 days of the date the CONRB's ruling became final, as required by Ala.Code 1975, § 22–21–275(12). See also Ala. Admin. Code (SHPDA), Rule 410–1–8–.09. According to § 22–21–275(12), the “[r]equest for reconsideration ... shall have the effect of holding in abeyance the final decision and suspending any certificate of need issued thereto, subject to the outcome of the public hearing” on reconsideration. See also Ala. Admin. Code (SHPDA), Rule 410–1–8–.13. Noland withdrew its request for reconsideration on March 16, 2015, and then filed a notice of appeal with this court on March 17, 2015. See § 22–21–266(6).

Select argues that Noland's notice of appeal was untimely because it was filed 40 days after the CONRB's ruling became final on February 5, 2015, instead of within 21 days of that date as permitted by § 22–21–275(6). The pertinent statutes and administrative rules make clear that the CONRB's ruling is held in abeyance and is not considered final until after any request for reconsideration has been resolved. Ala.Code 1975, § 22–21–275(12) ; Ala. Admin. Code (SHPDA), Rule 410–1–8–.13 ; see also Ex parte STV One Nineteen Sr. Living, LLC, 161 So.3d 196, 203–04 (Ala.2014) (explaining that, under § 22–21–275(12) & (14), a request for reconsideration or for a fair hearing holds the CONRB ruling “in abeyance” and suspends any CON issued by the ruling). Select argues that Noland's request for reconsideration has no bearing on the timeliness of its appeal because, Select contends, Noland's withdrawal of the request for reconsideration rendered the request a ity. However, nothing in the applicable statutes or administrative rules explains the effect of a withdrawal of a request for reconsideration.

Select relies on Ex parte Sealy, L.L.C., 904 So.2d 1230 (Ala.2004), in support of its argument. Ex parte Sealy involved the voluntary dismissal of a circuit-court action by a plaintiff. Noland did not dismiss an action. Instead, as Noland contends, Noland's action is more analogous to the withdrawal of a postjudgment motion by the filing of a notice of appeal, an issue this court considered in Griffin Wheel Co. v. Harrison, 568 So.2d 1248, 1249 (Ala.Civ.App.1990). In Griffin Wheel, this court determined that the withdrawal of a postjudgment motion after the 42–day period for filing an appeal had expired but before the motion was ruled upon did not prevent the postjudgment motion from having effectively tolled the time for filing the appeal.³ We agree with Noland that the request for reconsideration was effective to hold the CONRB's ruling in abeyance until that request was either ruled upon or withdrawn. See, e.g., Rosler v. Derwinski, 1 Vet.App. 241, 249 (1991) (concluding that the denial or withdrawal of a motion for reconsideration in an administrative proceeding triggers the appeal period); see also Tideland Welding Serv. v. Sawyer, 881 F.2d 157, 160 (5th Cir.1989) (rejecting the conclusion that a party that withdraws a motion for reconsideration under the federal Longshore and Harbor Workers' Compensation Act must file its notice of appeal within the appeal period running from the date of the entry of the original order and stating that the court had found “no support for the ... statement that a perfected motion for reconsideration that is later withdrawn fails to toll the period for filing a notice of appeal”). Thus, we conclude that Noland's notice of appeal, which was filed the day following its withdrawal of its request for reconsideration, was timely filed.

Turning now to the merits of the appeal, we begin by recognizing our standard of review of a decision of the CONRB granting or denying an application for a CON. Review of agency decisions is governed by Ala.Code 1975, § 41–22–20(k), a part of the Alabama Administrative Procedure Act:

“Except where judicial review is by trial de novo, the agency order shall be taken as prima facie just and reasonable and the court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact, except where otherwise authorized by statute. The court may affirm the agency action or remand the case to the agency for taking additional testimony and evidence or for further proceedings. The court may reverse or modify the decision or grant other appropriate relief from the agency action, equitable or legal, including declaratory relief, if the court finds that the agency action is due to be set aside or modified under standards set forth in appeal or review statutes applicable to that agency or if substantial rights of the petitioner have been prejudiced because the agency action is any one or more of the following:

“(1) In violation of constitutional or statutory provisions;

“(2) In excess of the statutory authority of the agency;

“(3) In violation of any pertinent agency rule;

“(4) Made

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