Tanner Med. Ctr., Inc. v. Vest Newnan, LLC

337 Ga.App. 884

789 S.E.2d 258

Tanner Medical Center, Inc. d/b/a Tanner Medical Center–Villa Rica et al.

v.Vest Newnan, LLC d/b/a Newnan Behavioral Hospital et al.

Georgia Department of Community Health

v.Vest Newnan, LLC d/b/a Newnan Behavioral Hospital et al.

A16A0120

A16A0121

Court of Appeals of Georgia.

July 12, 2016

Kathlynn Butler Polvino, Robert Michael Rozier, Adrienne E. Marting, Lawrence J. Myers, Atlanta, for Appellant.

John Ryan Hood, Jason Edward Bring, LaRonica King Lightfoot, Samuel S. Olens, Robin Ginsburg Cohen, Marc L. Peterzell, Atlanta, for Appellee.

Boggs, Judge.

In these consolidated appeals, the Georgia Department of Community Health (“DCH”) denied Vest Newnan, LLC d/b/a Newnan Behavioral Hospital (“Vest”) a Certificate of Need (“CON”) to establish an inpatient psychiatric hospital. The trial court reversed the decision of DCH and ordered it to grant the CON, and this court granted applications for discretionary review filed by DCH and the hospitals that opposed the CON. For the reasons explained below, we reverse the trial court's judgment and affirm the decision of DCH in both cases.

As our court explained in Palmyra Park Hosp. v. Phoebe Sumter Med. Center , 310 Ga.App. 487, 714 S.E.2d 71 (2011),

The CON program, OCGA § 31–6–40 et seq., establishes a comprehensive system of planning for the orderly development of adequate health care services throughout the state. OCGA § 31–6–1. DCH is the “lead planning agency for all health issues” in Georgia. OCGA § 31–2–1 (1). OCGA § 31–6–42 (a) specifies that DCH will issue a CON that is “consistent with” a list of general considerations, including the establishment of a need for the services. Under DCH regulations, “need” is based on several factors, including area population and the use of existing services. OCGA § 31–6–42 (a) (2) ; Ga. Comp. R. & Regs. r. 111–2–2–.24 (3) (b) ...

The administration of the CON program requires a particularly high level of expertise and specialization. The DCH rules promulgated to administer the program are detailed and lengthy. See, e.g., Ga. Comp. R. & Regs. r. 111–2–2–.07, which describes the review procedures for CON applications. Both the hospital seeking a CON and the hospitals opposing it gather and organize vast amounts of data, expert testimony, and other evidence which are presented to the agency staff, which then interprets and synthesizes the evidence and applies it to the agency rules. See OCGA § 31–6–43. The initial staff decision must be issued within a relatively short period of time, at most 150 days after the CON application is complete. OCGA § 31–6–43 (d), (i).

Further administrative review is also highly specialized. The hearing officer who reviews the initial DCH staff decision is one of five members of the CON Panel, all of whom are appointed by the Governor and are attorneys “who are familiar with the health care industry but who do not have a financial interest in or represent or have any compensation arrangement with any health care facility.” OCGA § 31–6–44 (a), (b). The commissioner of community health then reviews the hearing officer's decision upon request and issues the final agency decision. OCGA § 31–6–44 (k), (m).

Id. at 488 and 491–492 (1), 714 S.E.2d 71.

OCGA § 31–6–40 (a) (1) provides that “[o]n 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 ... [t]he construction, development, or other establishment of a new health care facility.” And a “health care facility” includes a hospital, which in turn is defined as “an institution which is primarily engaged in providing to inpatients, ... treatment, and care of injured, disabled, or sick persons or rehabilitation services for the rehabilitation of injured, disabled, or sick persons. Such term includes public, private, psychiatric, rehabilitative, geriatric, osteopathic, and other specialty hospitals.” OCGA § 31–6–2 (17) and (21).

The record reveals that in August 2013, Vest filed a CON application to establish a new freestanding 60–bed acute care psychiatric and substance abuse inpatient hospital in Coweta County, Georgia. After review, DCH denied the application. Vest timely appealed DCH's denial with Coweta County and the City of Newnan intervening in the action on its behalf. Three other healthcare providers, who opposed Vest's CON application (hereinafter “the opposing hospitals”),¹ intervened in support of DCH.

Following a de novo administrative hearing during which over 20 witnesses testified, the hearing officer affirmed DCH's denial of the CON in a 28–page decision. The hearing officer concluded that Vest did not show a need for a new psychiatric inpatient program, that it had “not met its burden of establishing that its proposed project's costs and methods of construction are reasonable and adequate,” and that it had “not met its burden of establishing no adverse impact on similar existing and approved programs in the planning region....” He concluded further that

the proposed project would constitute an unnecessary duplication of services, would have an unreasonable effect on payors, would not foster improvements or innovations, would not have a positive relationship to the existing health care delivery system, and is not reasonably consistent with the relevant goals and objectives of the State Health Plan. Thus, the proposed project is inconsistent with [Ga. Comp. R. & Regs. r.] 11–2–2–0.9 (1) (a), (e), (h), and (m) and OCGA §§ 31–6–42 (a) (1), (5), (8), and (13).

Vest then appealed the hearing officer's decision to the DCH Commissioner, who affirmed the hearing officer's decision and adopted it in a final order. See OCGA § 31–6–44 (m) (“decision of the commissioner shall become the department's final decision by operation of law”).

Following this third denial, Vest, Coweta County, and the City of Newnan petitioned for judicial review. The Coweta County Superior Court reversed DCH's decision. The court concluded that the service-specific need rule is unconstitutional on its face, and that the “ ‘adverse impact’ and ‘relationship to the delivery system analysis' rests upon the unconstitutional service-specific need rule.” The court concluded further that the manner in which DCH reviewed Vest's application was arbitrary and capricious because the DCH reviewer did not take notes during his review or perform any need or adverse impact analysis, and because Vest had no notice “that construction costs were considered an issue.” DCH and the opposing hospitals appeal from this ruling. In Case No. A16A0120, the opposing hospitals appeal, and in Case No. A16A0121, DCH appeals.

We begin our analysis with the proper standard of review. “Neither the superior nor the appellate courts review DCH decisions de novo. Instead, the reviewing court determines whether ‘substantial evidence’ supports the agency's findings of fact, and whether the conclusions of law drawn from those findings of fact are sound.” (Citations and punctuation omitted.) Palmyra Park Hosp ., supra, 310 Ga.App. at 488, 714 S.E.2d 71. OCGA § 31–6–44.1 (a) provides that

in conducting such review, the court may reverse or modify the final decision only if substantial rights of the appellant have been prejudiced because the procedures followed by the department, the hearing officer, or the commissioner or the administrative findings, inferences, and conclusions contained in the final decision are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the department;

(3) Made upon unlawful procedures;

(4) Affected by other error of law;

(5) Not supported by substantial evidence, which shall mean that the record does not contain such relevant evidence as a reasonable mind might accept as adequate to support such findings, inferences, conclusions, or decisions, which such evidentiary standard shall be in excess of the “any evidence” standard contained in other statutory provisions; or

(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

1. The opposing hospitals assert that the trial court erred in denying their motion to transfer venue. They contend that venue was improper in Coweta County and that the petition for judicial review should have been filed in Fulton County. “In considering the trial court's ruling on the motion to transfer venue, we affirm the trial court's findings on disputed factual questions relating to venue if there is any evidence to support them. But we review de novo the trial court's application of the law to undisputed facts.” (Citation and punctuation omitted.) Hamner v. Turpen , 319 Ga.App. 619, 620, 737 S.E.2d 721 (2013).

OCGA § 50–13–19 (b) provides in part:

Proceedings for review are instituted by filing a petition within 30 days after the service of the final decision of the agency or, if a rehearing is requested, within 30 days after the decision thereon. The petition may be filed in the Superior Court of Fulton County or in the superior court of the county of residence of the petitioner; or, if the petitioner is a corporation, the action may be brought in the Superior Court of Fulton County or in the superior court of the county where the petitioner maintains its principal place of doing business in this state .

(Emphasis supplied.) In denying the motion to transfer venue, the trial court concluded that Vest's “principal place of business in this state” is Coweta County because it listed a Coweta County address on its CON application and submitted a letter of intent to purchase the property in Coweta County. The court held in the alternative that “the presence of Coweta County and the City of Newnan is sufficient to make proper venue.” The opposing hospitals assert that Vest does not have a principal place of doing business in Georgia so venue lies in the superior court of Fulton County. They argue that a letter of intent to...