Opinion
No. 37157-0-II.
November 12, 2008.
Appeal from a judgment of the Superior Court for Thurston County, No. 07-2-00433-2, Christine A. Pomeroy, J., entered November 29, 2007.
Reversed in part and remanded by unpublished opinion per Van Deren, C.J., concurred in by Hunt and Quinn-Brintnall, JJ.
UNPUBLISHED OPINION.
MultiCare Health System appeals an administrative decision reversing the Washington State Department of Health's Certificate of Need Program's (Program) determination that a Certificate of Need (CN) was unnecessary before MultiCare Day Surgery could open a new ambulatory surgery center. MultiCare argues: (1) there is no provision allowing an administrative review of a Program decision that a CN is not required; and, even assuming that a review proceeding is allowed; (2) Franciscan Health System (Franciscan) did not request a hearing in a timely manner; and (3) the health law judge (HLJ) erred in reversing the Program's determination on the merits. We reverse the HLJ's determination that Franciscan timely requested administrative review of the Program's decision that MultiCare's application for an ambulatory surgery center did not require a CN. Therefore, we remand for dismissal of the adjudicative proceedings and reinstatement of the Program's determination of non-reviewability (DNR) regarding MultiCare's ambulatory surgery center.
The Program makes the decision on requests by parties seeking to operate certain health care centers without applying for a Certificate of Need (CN). WAC 246-310-050(1) provides: "(1) Any person wanting to know whether an action the person is considering is subject to certificate of need requirements (chapter 246-310 WAC) may submit a written request to the [Program] requesting a formal determination of applicability of the [CN] requirements to the action."
MulitiCare Day Surgery is operated by MultiCare Medical Associates.
We leave to another day the discussion of whether the legislature intended to preclude administrative review of the Department's DNR decisions because the issue was not raised below and all parties did not have full opportunity to consider and brief the issue.
If the Program concludes that a CN is not required, it issues a letter stating that conclusion. The letter is commonly referred to as a "DNR letter."
FACTS
In May 2005, MultiCare first applied for permission to open an ambulatory surgery center. Generally, a party seeking to open an ambulatory surgery center is required to obtain a CN from the Department of Health (Department), under RCW 70.38.105(4)(a). Franciscan Health System participated as an affected party to the proceeding and submitted comments to the Department. The Department denied the CN.
On December 15, 2005, after discussions with the Program, MultiCare again applied for permission to open an ambulatory surgery center, this time without a CN because the Washington Administrative Code exempts "a facility in the offices of private physicians or dentists, whether for individual or group practice, if the privilege of using the facility is not extended to physicians or dentists outside the individual or group practice" from the CN requirement. WAC 246-310-010(5). MultiCare believed that its proposed ambulatory surgery center fell within this exemption and asked the Program to issue a DNR indicating that its application was exempt from the CN requirements.
On January 12, 2006, the Program issued a letter to MultiCare stating: "Below are the facts relied upon by the [Program] in reaching its conclusion." Admin. Record (AR) at 23. It then listed the facts of MultiCare's proposed ambulatory surgery center as understood by the Program. The letter included the statutes and administrative code sections governing the Program's analysis of Multicare's request that it be allowed to open the ambulatory surgery center without first obtaining a CN. The letter next stated:
The Program had 30 days to respond to MultiCare's request. WAC 246-310-050(3) ("The department shall respond in writing to a request for an applicability determination within thirty days of receipt of the complete information needed for such determination.").
CONCLUSION
Based on the above factual information provided on behalf of MultiCare Medical Associates, the . . . Program concludes that the establishment of the [ambulatory surgery center] associated with the MultiCare Medical Associates practice does not meet the definition of an [ambulatory surgery center] under the [CN] provisions of Washington Administrative Code (WAC) 246-310-010. Therefore, the proposed [ambulatory surgery center] is not subject to [CN] review.
Please note: This determination is not transferable and is based on the facts submitted in the exemption application. Prior [CN] review and approval may be required . . . if changes occur in the facts as presented in the [DNR] application.
AR at 24 (emphasis added).
On January 19, Franciscan wrote to the Program about MultiCare's application. When Franciscan wrote the letter, it did not know that the Program had issued a DNR letter a week earlier. Franciscan later stated that it learned of the DNR letter shortly after it submitted its January 19 letter. On March 31, after speaking with the Program a number of times, Franciscan submitted another letter relating its concerns, emphasizing its belief that MultiCare's facility would be used by both full-and part-time physicians.
Multicare cites to the deposition of a Program employee to demonstrate that Franciscan learned of its DNR request by early January 2006.
On April 28, the Program inquired of MultiCare whether part-time physicians would be allowed to use the new MultiCare facility, based on Franciscan's letter. MultiCare responded on May 3 that it planned for both full-and part-time physicians to use the facility. The Program emailed MultiCare's counsel on May 9, stating that use of the ambulatory surgery center by part-time physicians "was material information that could impact our decision." AR at 97. It stated that MultiCare would have to request a new DNR if it wished to proceed with part-time physicians using the center. On May 17, 2006, MultiCare responded that it believed the DNR covered full-and part-time physicians. Franciscan then submitted its position on this issue.
On June 6, the Program informed MultiCare that the fact that "physicians using the [ambulatory surgery center] were full-time MultiCare employees was essential to the department's conclusion that the proposed facility was exempt from the CN law." AR at 20. It ended: "Accordingly, it appears that the facts on the proposed operation of the facility have materially changed, meaning that the January 12, 2006, [DNR] is not applicable to the project and would not support MultiCare's right to proceed without CN approval." AR at 21. On June 13, MultiCare reiterated that it believed both full-and part-time doctors could use the facility, but that it would voluntarily restrict use to full-time physicians. The Program did not further respond to MultiCare or communicate any official change in its January 12 DNR determination.
On June 20, Franciscan wrote the Program again to raise additional issues related to MultiCare's DNR application. Franciscan stated: "Based on [its] understanding of the facts and procedural status in this matter as set forth above, [it] considers the Program's June 6, 2006 letter . . . as the Program's final action on this matter." AR at 110. It indicated that it was going to file a request for an adjudicative proceeding and a petition for judicial review by June 26, unless the Program confirmed that the June 6 letter was not a final action in the matter. But instead of filing for review, Franciscan sent another letter to the Program on June 26, setting out more issues it believed the Program had failed to address. On July 3, Franciscan filed an application for an adjudicative proceeding. MultiCare, with the Program's support, unsuccessfully moved to dismiss the adjudicative proceeding because Franciscan's application was untimely. After review, the HLJ stated:
A reasonable prudent person objectively reviewing the uncontested communications in the case at hand would conclude that [the] Program's January 12, 2006 DNR letter was not its final decision; that the Program informed Franciscan it would investigate issues raised in Franciscan's January 19, 2006 letter and therefore reconsider its DNR decision. The Program's June 6, 2006 modified DNR letter was its final decision.
AR at 314.
The HLJ further concluded that no Administrative Procedure Act (chapter 34.05 RCW), rule directly addressed the statute of limitations for appealing DNR decisions. Thus, the HLJ referred to RCW 34.05.413 and WAC 246-10-203 as two potentially applicable rules. RCW 34.05.413(3) is a general provision that an agency shall give "at least twenty days to apply for an adjudicative proceeding." RCW 34.05.413(3). WAC 246-10-203, according to the HLJ, "provide[s] for 20 or 28 days depending on the issue." AR at 314. The HLJ concluded that "[s]ince Franciscan filed its request . . . on the 20th day following its receipt of the Program's final DNR letter," its request for review of the decision was timely. AR at 315. The HLJ added that, although the CN laws do not address the right to appeal DNRs, the time to appeal from the Department's denial of a CN is 28 days. WAC 246-310-610(2).
Franciscan moved for summary judgment, asking the HLJ to reverse the Program's DNR, and the Program cross-moved for summary judgment. The HLJ granted Franciscan's motion for summary judgment on the merits and denied the Program's cross-motion. MultiCare sought judicial review in Thurston County Superior Court. The trial court affirmed the HLJ.
MultiCare appeals.
ANALYSIS
MultiCare argues that the HLJ erred in denying MultiCare's motion to dismiss when it concluded that Franciscan filed a timely request for an adjudicative proceeding.
I. Standard of Review of Administrative Proceedings
RCW 34.05.570 governs judicial review of adjudicative proceedings in an agency setting.
RCW 34.05.570(3) states:
The court shall grant relief from an agency order in an adjudicative proceeding only if it determines that:
(a) The order, or the statute or rule on which the order is based, is in violation of constitutional provisions on its face or as applied;
(b) The order is outside the statutory authority or jurisdiction of the agency conferred by any provision of law;
(c) The agency has engaged in unlawful procedure or decision-making process, or has failed to follow a prescribed procedure;
(d) The agency has erroneously interpreted or applied the law;
(e) The order is not supported by evidence that is substantial when viewed in light of the whole record before the court, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this chapter;
(f) The agency has not decided all issues requiring resolution by the agency;
(g) A motion for disqualification under RCW 34.05.425 or 34.12.050 was made and was improperly denied or, if no motion was made, facts are shown to support the grant of such a motion that were not known and were not reasonably discoverable by the challenging party at the appropriate time for making such a motion;
(h) The order is inconsistent with a rule of the agency unless the agency explains the inconsistency by stating facts and reasons to demonstrate a rational basis for inconsistency; or
(i) The order is arbitrary or capricious.
The Washington State Supreme Court very recently addressed the process of judicial review of HLJ decisions in CN matters:
1. We review the entire administrative record.
2. The agency decision[] is presumed correct and the challenger bears the burden of proof.
"[The agency action we review here is the HLJ's written order, not the Program's written evaluation." DaVita, Inc. v. Wash. State Dep't of Health, 137 Wn. App. 174, 181, 151 P.3d 1095 (2007).
3. We do not retry factual issues and accept the administrative findings unless we determine them to be clearly erroneous, that is, the entire record leaves us with a definite and firm conviction that a mistake has been made. Important here is the corollary principle that the existence of credible evidence contrary to the agency's findings is not sufficient in itself to label those findings clearly erroneous.
4. The error of law standard permits this court to substitute its interpretation of the law for that of the agency, but we accord substantial deference to the agency's interpretation, particularly in regard to the law involving the agency's special knowledge and expertise.
5. To find an agency's decision to be arbitrary and capricious we must conclude that the decision is the result of willful and unreasoning disregard of the facts and circumstances.
Univ. of Wash. Med. Ctr. v. Dep't of Health, 164 Wn.2d 95, 102, 187 P.3d 243 (2008) (citations omitted) (quoting Providence Hosp. of Everett v. Dep't of Soc. Health Servs., 112 Wn.2d 353, 355-56, 770 P.2d 1040 (1989)). Thus, MultiCare has the burden of showing that the agency "misunderstood or violated the law, or made decisions without substantial evidence. We do not reweigh the evidence." Univ. of Wash. Med. Ctr., 164 Wn.2d at 103. Although this matter is a DNR case, as opposed to a CN case, we apply the same standard of judicial review.
II. Time to Commence the Adjudicative Proceeding
To resolve the issue of timeliness, we consider whether the Program's January 12 letter to MultiCare approving the DNR was its final decision. We do not retry factual issues and accept the administrative findings unless we determine them to be clearly erroneous; that is, the entire record leaves us with a definite and firm conviction that a mistake has been made. Providence Hosp., 112 Wn.2d at 355-56; see also RCW 34.05.570(3)(e). In reviewing issues of law, we may substitute our interpretation of the law for that of the agency, but "we accord substantial deference to the agency's interpretation, particularly in regard to the law involving the agency's special knowledge and expertise." Providence Hosp., 112 Wn.2d at 356; see also RCW 34.05.570(3)(d).
MultiCare asserts that the Program issued a DNR on January 12 and that "there can be no doubt that this decision was dispositive." Br. of Appellant at 9. It points to: (1) the Program's conclusion that "the proposed [ambulatory surgery center] is not subject to [CN] review," AR at 24; (2) the Program's internal recordkeeping notes stating that the January 12 decision was its "Final Action," AR at 161 (listing January 12, as date of "Final Action"); and (3) that Franciscan learned of the Program's final determination letter on January 19, well within any time period (whether 20 or 28 days) to file a request for an adjudicative proceeding. It categorizes the June 6 letter as a warning that, if MultiCare strayed from the terms of the ambulatory surgery center the Program approved, it would be subject to CN review and could not operate under the already-issued DNR. It concludes that "an opponent of an agency decision cannot artificially extend the deadline to appeal by writing letters." Br of Appellant at 14.
Statements by the Program support this argument. For example, part of the Program's motion to dismiss in the HLJ action states that the June 6, 2006, letter was not meant to amend the issued DNR.
Franciscan responds that "[t]he record of communication between Franciscan, the Program and MultiCare between January 12, 2006, and June 6, 2006, is substantial evidence that the Program's decision on MultiCare's DNR was not final until June 6, 2006 or after." Br. of Resp't at 22-23 (adding that the Program assured Franciscan it was considering issues raised in its letters). It also relies on a May 10 letter to MultiCare from the Program regarding the part-time physician issue, which stated that if part-time doctors will be using the center, "MultiCare cannot rely on the [DNR] in going forward without a [CN]." AR at 97. The June 6 letter contained similar language. This language, it argues, shows that the Program's letter of January 12 was not a final decision on the DNR. It concludes that the January 19 letter it wrote to the Program is best characterized as a request for reconsideration, which the Program worked on until June 6. The Department now agrees with Franciscan's position, even though the Program supported MultiCare's argument before the HLJ, that its final decision was communicated in the January 12, 2006, letter.
Under the administrative code governing the DNR process, "[a]ny person wanting to know whether an action the person is considering is subject to [CN] requirements may submit a written request" to the Program. WAC 246-310-050(1) (internal citation omitted). After it receives the request, the Program may request additional information if needed to make the applicability determination. WAC 246-310-050(2). The Program is required to respond to the request within 30 days of the receipt of complete information. WAC 246-310-050(3). The response has to state the reasons for the Program's determination. WAC 246-310-050(3). "A written applicability determination on an action in response to a written request and based on written information shall be binding," provided that "[t]he nature, extent, or cost of the action does not significantly change." WAC 246-310-050(5).
Here, the Program had 30 days to render a decision on MultiCare's December 15, 2005 DNR request, assuming the Program did not request additional required information. The Program did not ask for information from MultiCare within the 30-day period after the request was submitted and it issued a written determination on January 12, within the 30-day window. Consistent with WAC 246-310-050(3), the January 12 letter listed reasons for approving a DNR, and, consistent with WAC 246-310-050(5), the letter stated that a change in the facts as MultiCare presented may require it to apply for a CN. Thus, at the time the letter issued, both the Program and MultiCare considered this determination to be final and "binding." WAC 246-310-050(5). The time period for Franciscan or any other party to request an adjudicative proceeding to review this determination then started to run on January 12.
Under Franciscan's interpretation of the procedural rules, the Program could issue a DNR determination and at any time, months or years later, an affected party could present facts to the Program that the ambulatory surgery center was being operated inconsistent with the scope of the DNR under WAC 246-310-050(5). The Program's actions with respect to the DNR challenge would then serve as the basis for the affected party seeking an adjudicative proceeding regarding, not only the Program's analysis of whether the nature of the action had significantly changed (WAC 246-310-050(5)), but also of the Program's prior determination that a DNR should have issued on the project before any of the alleged changes occurred. Such a procedure would provide no finality to ambulatory surgery centers operating under a DNR.
Consequently, although the June 6 correspondence may have triggered Franciscan's ability to seek review of whether the nature of the previously-approved project had significantly changed, see generally WAC 246-310-050(5), it did not restart the limitations period for challenging the Program's approval of the original ambulatory surgery center under a DNR. The original approval of the center as MultiCare described in its December 15, 2005, DNR submission should have been administratively appealed within the 20-or 28-day challenge period following the DNR decision on January 12, 2006.
Moreover, Franciscan knew that MultiCare filed a DNR request. In fact, Franciscan's January 19 letter was meant as a response to MultiCare's filing. Franciscan's letter, however, was submitted after the statutory 30-day period for the Program to issue a DNR had lapsed and after the Program had issued its letter informing MultiCare that it need not obtain a CN to operate its ambulatory surgery center.
RCW 34.05.440(1) provides that "[f]ailure of a party to file an application for an adjudicative proceeding within the time limit or limits established by statute or agency rule constitutes a default and results in the loss of that party's right to an adjudicative proceeding." The HLJ's conclusion that the 30-day window for the Program to act can be expanded six months is inconsistent with the DNR timeline in the WAC. See also generally Univ. of Wash. Med. Ctr., 164 Wn.2d at 104 (stating with respect to the CN process, "[b]oth the statutes and the administrative rules clearly contemplate that the decision will be made quickly").
Here, Franciscan's request for adjudication of the DNR decision was untimely. Franciscan made its request over five months after the Program's mandated 30 days to make a final decision on whether MultiCare's proposed ambulatory surgery center required a CN. Despite numerous letters to the Program following the 30-day time frame for appeal, the letters cannot serve as a basis to automatically extend the appeal period or revoke a decision once it becomes final.
Our review of the entire record leaves us with a definite and firm conviction that a mistake has been made. Providence Hosp., 112 Wn.2d at 355-56. And although we give deference to the agency's interpretation of the facts and its application of the facts to the law within the agency's expertise, we may substitute our interpretation of the law for that of the agency after according substantial deference to the agency's interpretation. Univ. of Wash. Med. Ctr., 164 Wn.2d at 102. Here, the HLJ's order is outside the jurisdiction conferred by either RCW 34.05.413(3) (20 days) or WAC 246-10-203 (20 or 28 days, depending on the issue) for application for an adjudicative proceeding. See generally Johnson Forestry Contracting, Inc. v. Dep't of Natural Res., 131 Wn. App. 13, 26-28, 126 P.3d 45 (2005).
We reverse and vacate the HLJ's decision that MultiCare's ambulatory surgery center was not exempt from CN review because the adjudication proceeding was untimely, removing the HLJ's jurisdiction to hear an administrative appeal. We remand for further proceedings consistent with this decision.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
HUNT, J., QUINN-BRINTNALL, J., concur.