STATE OF NORTH CAROLINA
COUNTY OF BURKE
CAROLINA DIGESTIVE CARE, PLLC ) and GASTROENTEROLOGY SPECIALISTS, )
P.A.,
Petitioners,
)
)
IN THE OFFICE OF
ADMINISTRATIVE HEARINGS
07 DHR 1415 vs.
NORTH CAROLINA DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
DIVISION OF HEALTH SERVICE
)
)
)
)
)
)
REGULATION, CERTIFICATE OF NEED )
SECTION, and
Respondent,
BLUE RIDGE HEALTHCARE SYSTEM,
)
)
)
)
)
)
INC. and GRACE HOSPITAL, INC.,
Respondent-Intervenors.
)
)
__________________________________________)
RECOMMENDED DECISION BY SUMMARY JUDGMENT
UPON CONSIDERATION of the Motion for Summary Judgment filed by Petitioners
Carolina Digestive Care, PLLC ("CDC") and Gastroenterology Specialists, P.A. ("GI
Specialists") (collectively, the “Petitioners”), the Cross-Motion for Summary Judgment filed by
Respondent-Intervenors Blue Ridge HealthCare System, Inc. ("Blue Ridge") and Grace Hospital,
Inc. ("Grace") (collectively, the “Respondent-Intervenors’) and joined by Respondent North
Carolina Department of Health and Human Services, Division of Health Service Regulation,
Certificate of Need Section (the “Respondent” or "Agency"), and; after review of the parties’
(Petitioners, Respondent, and Respondent-Intervenors) memoranda, filings, affidavits, supporting documents, and pleadings, and; upon hearing oral argument by all parties on
December 5, 2007 in Raleigh, North Carolina, and; after review of the relevant law; the undersigned Administrative Law Judge, Beecher R. Gray, determines the above-referenced
Motions are ripe for disposition.
For Petitioners CDC and GI Specialists:
APPEARANCES
Nelson Mullins Riley & Scarborough LLP
Noah H. Huffstetler, III, Esq.
Elizabeth B. Frock, Esq.

For Respondent North Carolina Department of Health and Human Services, Division of
Health Service Regulation, Certificate of Need Section:
North Carolina Department of Justice
Office of the Attorney General
Angel E. Gray, Esq.
For Respondent-Intervenors Blue Ridge and Grace:
Smith Moore LLP
Maureen Demarest Murray, Esq.
Allyson Jones Labban, Esq.
PARTIES
1.
CDC is a North Carolina professional limited liability company located in
Morganton, Burke County, North Carolina, owned by Dr. Mushtaq Bukhari, Dr. Suneel
Mohammed, and Dr. Edwin Holler.
2.
GI Specialists is a North Carolina professional association located in Valdese,
Burke County, North Carolina, comprised of Dr. Mushtaq Bukhari and Dr. Suneel Mohammed.
3.
The Agency is an agency of the State of North Carolina and is subject to the contested case provisions of the North Carolina Administrative Procedure Act (“APA”). The
Agency is authorized by Article 9, Chapter 131E of the North Carolina General Statutes to review applications for a certificate of need (“CON”) and requests for exemption from the CON
Law.
4.
Blue Ridge is a North Carolina non-profit corporation. Blue Ridge provides a broad range of health care services to Burke County, North Carolina and the surrounding areas.
5.
Grace is a North Carolina non-profit corporation. Grace is the owner of the land and the physician office building challenged in Petitioners' petition for a contested case hearing.
UNDISPUTED FACTS
1.
On July 16, 2007, Blue Ridge and Grace filed an exemption notice with the
Agency concerning the development of a physician office building on the campus of Grace
Hospital pursuant to N.C. Gen. Stat. § 131-184(a)(9).
2.
In their exemption notice, Blue Ridge and Grace indicated that the total square footage of the medical office building would be approximately 74,000 feet. The exemption notice further stated: “[s]hould Grace Hospital, Inc. decide to pursue any project to be located in the physician office building that would be considered a new institutional health service, Grace
Hospital, Inc. will submit an appropriate certificate of need application seeking review and approval of such project.”
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3.
On August 13, 2007, the Agency sent a letter to Blue Ridge and Grace confirming that the development of the physician office building on the campus of Grace Hospital was exempt, was not subject to CON review and did not require a CON pursuant to N.C. Gen. Stat.
§ 131-184(a)(9).
4.
On September 10, 2007, CDC and GI Specialists filed a Petition for Contested
Case Hearing challenging the Agency's August 13, 2007 decision concerning Blue Ridge’s and
Grace’s exemption notice for its physician office building.
4. On September 24, 2007, Respondent-Intervenors filed a Consent Motion to
Intervene in the Contested Case.
5. On September 29, 2007, Respondent-Intervenors' Consent Motion to Intervene was granted.
6.
On October 23, 2007, Petitioners' filed a Motion for Summary Judgment, arguing that there were no issues of material fact and that they were entitled to judgment as a matter of law. Petitioners argued that Respondent-Intervenors did not give prior written notice of their new institutional health service as required by N.C. Gen. Stat. § 131E-184, and argued that the
Administrative Law Judge (“ALJ”) should enter a recommended decision that the Agency acted erroneously and exceeded its authority in issuing the requested physician office building exemption to Blue Ridge and Grace.
7.
On November 2, 2007, Respondent and Respondent-Intervenors each filed a
Response in Opposition to Petitioners' Motion for Summary Judgment. In their response,
Respondent-Intervenors made a Cross-Motion for Summary Judgment which Respondent joined, arguing that there were no issues of material fact and that they were entitled to judgment as a matter of law.
8.
Respondent-Intervenors argued that: (1) the Agency did not err by determining that Grace's physician office building did not require a CON because the physician office building is not regulated by the CON Law and an exemption notice is not required; (2)
Petitioners are not "affected persons" as to the Agency's decision to approve the development of a physician office building without CON review; and (3) Petitioners did not plead sufficient facts to allege substantial prejudice by the Agency's action and could not show substantial prejudice under N.C. Gen. Stat. § 150B-23(a).
9.
The Agency joined in Respondent-Intervenors' second and third arguments, agreeing that Petitioners are not "affected persons" as to the Agency's decision to approve the development of a physician office building without CON review, and that Petitioners did not plead sufficient facts to allege substantial prejudice by the Agency's action under N.C. Gen. Stat.
§ 150B-23(a). The Agency further argued that it did not exceed its authority in determining that
Blue Ridge's and Grace's development of the physician office building was exempt from CON review, and argued that the Agency did not act erroneously, arbitrarily or capriciously, or failed to use proper procedure.
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10.
There is no evidence in the record that CDC or GI Specialists own or develop medical office buildings, or that they have provided notice to the Agency of their intent to develop a medical office building in Health Service Area I or Burke County.
11.
Blue Ridge presented the affidavit of Patricia Smith concerning a public records search of all the counties in Health Service Area I, including Burke County, that revealed no medical office buildings owned or under development by CDC or GI Specialists.
CONCLUSIONS OF LAW
SUMMARY JUDGMENT IS GRANTED IN FAVOR OF RESPONDENT AND
Based on the foregoing undisputed facts, the undersigned ALJ makes the following conclusions of law:
RESPONDENT-INTERVENORS
1. The rules of the Office of Administrative Hearings (“OAH”) provide that the presiding ALJ may “[r]ecommend a summary disposition of the case or any part thereof when there is no genuine issue as to any material fact.” 26 N.C.A.C. 3.0105(6).
2. Additionally, pursuant to Rule 56 of the North Carolina Rules of Civil Procedure, summary judgment should be granted when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.
3.
N.C. Gen. Stat. § 131E-188(a) provides that:
After a decision of the Department to issue, deny or withdraw a certificate of need or exemption or to issue a certificate of need pursuant to a settlement agreement with an applicant to the extent permitted by law, any affected person, as defined in subsection (c) of this section, shall be entitled to a contested case hearing under
Article 3 of Chapter 150B of the General Statutes.
4.
"Affected person" is defined in N.C. Gen. Stat. § 131E-188(c) to include: a.
any person who provides services, similar to the services under review, to individuals residing within the service area or the geographic area proposed to be served by the applicant; and b.
any person who, prior to receipt by the agency of the proposal being reviewed, has provided written notice to the agency of an intention to provide similar services in the future to individuals residing within the service area or the geographic area to be served by the applicant . . . .
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5.
With respect to the physician office building exemption at issue, Petitioners do not "provide services, similar to the services under review, to individuals residing within the service area or the geographic area proposed to be served by the applicant."
6.
With respect to the physician office building exemption at issue, Petitioners did not, "prior to receipt by the agency of the proposal being reviewed, [provide] written notice to the agency of an intention to provide similar services in the future to individuals residing within the service area or the geographic area to be served by the applicant."
7.
With respect to the physician office building exemption at issue, Petitioners are not "affected persons" as defined in N.C. Gen. Stat. § 131E-188(c).
8.
Pursuant to N.C. Gen. Stat. § 131E-188(a), Petitioners are not entitled to a contested case hearing on the physician office building exemption at issue in this case because they are not affected persons with respect to the physician office building exemption.
9.
Because Petitioners are not entitled to a contested case hearing, Respondent and
Respondent-Intervenors are entitled to judgment as a matter of law.
10.
Petitioners' Motion for Summary Judgment, filed on October 23, 2007, is denied.
11.
Respondent-Intervenors' Cross Motion for Summary Judgment, filed on
November 2, 2007, is granted.
RECOMMENDED DECISION
Based upon the arguments of counsel on December 5, 2007 and the record, it is the recommended decision of this Court that the Cross-Motion for Summary Judgment of
Respondent and Respondent-Intervenors be and hereby is granted against Petitioners, and that contested case 07 DHR 1415 be dismissed as a matter of law. Each party shall pay its own costs.
The scope of this recommended decision is limited to the issues cited in this
Recommended Decision. This Recommended Decision granting summary judgment in favor of
Respondent and Respondent-Intervenors does not reach the other issues raised in this case and does not preclude any of the parties from raising such issues in any civil action or contested case in which they are parties.
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NOTICE
The Final Agency Decision in this contested case shall be made by the North Carolina
Department of Health and Human Services, Division of Health Service Regulation. Each party has the right to file exceptions to the Recommended Decision and to present written argument on the decision.
The Division of Health Service Regulation is required by N.C. Gen. Stat. § 150B-36(b) to serve a copy of the final decision on all parties and to furnish a copy to the parties’ attorney of record and to OAH.
It is ORDERED this 3 rd
day of January, 2008.
__________________________________
Beecher R. Gray
Administrative Law Judge
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