RCCH Trios Health, LLC v. Dep't of Health of Wash.

536 P.3d 1189

RCCH TRIOS HEALTH, LLC, a Delaware Limited Liability Company, Appellant,

v.DEPARTMENT OF HEALTH of the State of Washington and Kadlec Regional Medical Center, Respondents.

No. 57403-9-II

Court of Appeals of Washington, Division 2.

Filed October 17, 2023

Donald W. Black, Paul Jerome Dayton, Ogden Murphy Wallace P.L.L.C., Madeleine C. Haller, Attorney at Law, 901 5th Ave., Ste. 3500, Seattle, WA, 98164-2059, for Appellant.

Jack Eastman Bucknell, Christopher Luke Gerard, Office of the Attorney General, Dept. of Agriculture & Health A.g. Office, Attorney at Law, 7141 Cleanwater Dr. Sw, P.O. Box 40109, Olympia, WA, 98504-0109, Brian William Grimm, Practus, LLP, 506 2nd Ave., Ste. 1400, Seattle, WA, 98104-2329, for Respondent.

PUBLISHED OPINION

Maxa, P.J.

¶1 RCCH Trios Health LLC (Trios) appeals an administrative final order in which the Department of Health (DOH) denied Trios a certificate of need (CN) to perform elective percutaneous coronary interventions (PCIs).

¶2 Health care facilities without on-site cardiac services are allowed to perform elective PCIs only after obtaining a CN from DOH, which requires a showing of projected net need of at least 200 PCIs a year. For purposes of need forecasting, the definition of PCIs in the CN regulation is "cases as defined by diagnosis related groups (DRGs)" that involve certain cardiac procedures. WAC 246-310-745(4). To calculate net need, DOH gathers data from three sources: (1) the comprehensive hospital abstract reporting system (CHARS), (2) surveys DOH sends out to PCI providers, and (3) clinical outcomes assessment program (COAP) data. WAC 246-310-745(7).

¶3 DOH released a methodology that showed the net need for PCIs in each of 14 PCI planning areas using DRGs 246-251. DOH calculated that the net need for PCIs in Trios's planning area would be 182, less than the 200 procedure threshold.

¶4 Trios, located in planning area 2, decided to apply to DOH for a CN in 2019 to perform elective PCIs. At the time, Kadlec Regional Medical Center (Kadlec) was the only other hospital in planning area 2 that was performing elective PCIs.

¶5 Trios attempted to introduce data from sources other than DOH used as a part of its application to demonstrate that the net need for PCIs was over the 200 procedure threshold. Specifically, Trios identified 31 cases where PCIs had been performed but had not been coded under DRGs 246-251. And Trios claimed that DOH should count PCIs performed on residents of planning area 2 in Oregon, Idaho, and a closed Walla Walla hospital that had not reported to DOH. But DOH concluded that it could not consider Trios's sources and denied Trios's application.

¶6 Trios initiated a review procedure before an administrative health law judge (HLJ). Kadlec was allowed to intervene and filed a motion for summary judgment. The HLJ granted summary judgment and affirmed DOH's CN denial in an initial order.

Trios appealed, and the review officer affirmed in a final order. Trios then appealed the final decision to superior court, which denied Trios's petition for judicial review.

¶7 We hold that (1) the 31 PCIs not coded under DRGs 246-251 did not fall within the definition of PCIs in WAC 246-310-745(4) and therefore could not have been counted in the determination of need, and (2) DOH's refusal to consider Trios's proffered data was not contrary to law because it was based on a reasonable interpretation of WAC 246-310-745(7) and WAC 246-310-745(9). Accordingly, we affirm the review officer's final order.

FACTS

Background

¶8 A medical provider can operate certain facilities and perform certain procedures in Washington only after obtaining a CN. RCW 70.38.105(3) - (4). Procedures requiring a CN include new tertiary health services. RCW 70.38.105(4)(f). Elective PCIs are tertiary services. WAC 246-310-700. The legislature directed DOH to adopt rules establishing criteria for the issuance of CNs for elective PCIs at hospitals that do not otherwise provide on-site cardiac surgery. RCW 70.38.128. DOH adopted such rules in WAC 246-310-700, et seq.

¶9 The definition of PCIs in the CN regulation, for purposes of need forecasting, is "cases as defined by [DRGs] as developed under the Centers for Medicare and Medicaid Services (CMS) contract that describe catheter-based interventions involving the coronary arteries and great arteries of the chest." WAC 246-310-745(4). DRGs are codes assigned to patients who are hospitalized. DOH identified the relevant DRGs for 2019 as DRGs 246-251, which typically are assigned to patients who receive PCIs. However, a different DRG might be assigned even if the patient received a PCI if another procedure outweighs the PCI or other factors make a different DRG more appropriate.

¶10 Hospitals with an elective PCI program must perform at least 200 adult PCIs per year by the end of the third year of operation. WAC 246-310-720(1). DOH will issue a CN for elective PCIs to a new program only if projected unmet need within the relevant planning area meets or exceeds the minimum volume standard of 200 procedures. WAC 246-310-720(2).

¶11 WAC 246-310-745(7) states that the data sources for determining adult elective PCI volumes "include":

(a) The comprehensive hospital abstract reporting system (CHARS) data from the department, office of hospital and patient data;

(b) The department's office of certificate of need survey data as compiled, by planning area, from hospital providers of PCIs to state residents (including patient origin information, i.e., patients’ zip codes and a delineation of whether the PCI was performed on an inpatient or outpatient basis); and

(c) Clinical outcomes assessment program (COAP) data from the foundation for health care quality, as provided by the department.

In addition, WAC 246-310-745(9) states that the data used for evaluating CN applications "must be the most recent year end data as reported by CHARS or the most recent survey data available through the department or COAP data for the appropriate application year."

CN Application

¶12 Trios is a hospital in Kennewick. Trios is located in planning area 2, which includes Benton, Columbia, Franklin, Garfield, and Walla Walla counties. Trios began providing emergent PCI services in 2012 but does not employ interventional cardiologists.

¶13 DOH published a methodology that showed the projected need for PCIs in each planning area. DOH calculated that the net need for PCIs in planning area 2 would be 182.

¶14 Trios applied for a CN for elective PCIs in 2019. Trios acknowledged that DOH's assessment of 182 was below the 200 case requirement, but stated that it had identified a number of areas in which the methodology had missed data. First, Trios highlighted that there was no count or attempt to count residents of planning area 2 who received PCIs in either Oregon or Idaho. Second, Trios noted that a Walla Walla hospital closed in 2017 and did not report any outpatient data in 2016 or 2017, which meant the hospital underreported PCIs. Including data from those sources, Trios believed that the patient net need for PCIs would exceed 200.

¶15 During the review of Trios's application, DOH was able to access Oregon's inpatient database and updated the methodology to include these publicly accessible PCIs. DOH's updated methodology increased the projected need from 182 to 188.

¶16 DOH opened the application for public comment. DOH received comments from those opposing Trios's application, including Kadlec, the only facility in planning area 2 that could perform elective PCIs.

¶17 Trios also submitted comments. Trios again commented that DOH should be able to consider the additional data from Idaho and the Walla Walla hospital that Trios submitted because although WAC 246-310-745(7) lists CHARS, survey data and COAP as data sources, it does not say that DOH is limited to only those three sources. Trios also commented that it had located an additional 31 PCIs in the CHARS database identified by their ICD-10 procedure code that were not coded under DRGs 246-251. Trios commented that DOH should include these PCIs in the projected need calculation.¹

¶18 In February 2020, DOH denied Trios's CN application. DOH did not consider Trios's additional data. Therefore, Trios was unable to meet the 200-procedure threshold. DOH stated that "[t]o accept novel data sources that could not have been [publicly] available prior to the concurrent review cycle changes the process and removes the element of transparency, fairness, and predictability in a Certificate of Need review." Admin. Rec. (AR) at 32.

Procedural History

¶19 Trios requested an administrative hearing with a HLJ to contest the denial of the CN. The presiding officer allowed Kadlec to join as an intervenor.

¶20 Before the scheduled hearing, Kadlec moved for summary judgment, arguing that Trios's CN denial should be affirmed because DOH's methodology did not project a need for the PCI program. In response, Trios submitted a declaration from Jody Carona, the principal of Health Facilities Planning and Development. She stated in her declaration that the 31 PCIs they identified were coded with a different DRG than DRGs 246-251, but they could have been coded with DRGs 246-251 if a different DRG had not taken precedence based on the patient's condition.

¶21 The HLJ granted Kadlec's motion for summary judgment and issued an initial order with findings of fact and conclusions of law. The HLJ rejected Trios's argument that the additional 31 PCIs identified using the ICD-10 procedure code should be included in the need projections. The HLJ concluded that " WAC 246-310-745(4) is clear in requiring that PCIs be defined by DRGs – not procedure codes – when calculating need for new PCI programs." AR at 433. Regarding Trios's argument that data from other sources – like Oregon and Idaho – should be used, the HLJ rejected the argument that the word "include" in WAC 246-310-745(7) allowed considerations of other sources besides the three listed. AR at 432. Trios petitioned...