Central Pennsylvania MRI, L.P. v. Department of Health

648 A.2d 91, 167 Pa. Commw. 319, 1994 Pa. Commw. LEXIS 519
CourtCommonwealth Court of Pennsylvania
DecidedSeptember 6, 1994
StatusPublished
Cited by1 cases

This text of 648 A.2d 91 (Central Pennsylvania MRI, L.P. v. Department of Health) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Central Pennsylvania MRI, L.P. v. Department of Health, 648 A.2d 91, 167 Pa. Commw. 319, 1994 Pa. Commw. LEXIS 519 (Pa. Ct. App. 1994).

Opinion

DOYLE, Judge.

Central Pennsylvania MRI, Harrisburg Hospital, and the Hospital of the Sisters of Christian Charity (Petitioners) appeal a determination of nonreviewability issued by the [92]*92Department of Health (Department) regarding six magnetic resonant imaging (MRI) centers, which determination was decided in a settlement agreement negotiated between the Department and ZP Investments, Inc., Wyoming Valley Physicians Imaging Center, L.P., Yonas Zegeye, M.D., Hirut Sheleshi-Zegeye, Peter J. Karoly, and Lauren B. Ang-stadt (Intervenors). Also before us is the Intervenors’ motion to quash this appeal.

The genesis of this case was a dispute between the Intervenors and the Department concerning whether six MRI centers being developed by the Intervenors were subject to certificate of need (CON) review under the Health Care Facilities Act (Act).1 That dispute was unusually difficult to resolve because, while the Act was amended in 19922 (the December 1992 amendments) to require CON review for MRI facilities such as the facilities operated by the Intervenors, the Intervenors had executed contracts to purchase the MRI equipment in November of 1992 prior to the effective date of those amendments. The Act, as it existed in November of 1992, did not require CON review for the Intervenors’ expansion project. Although the Department had initially determined that CON review was required, the Intervenors and the Department negotiated a settlement in which they agreed that the Intervenors’ MRI projects were not subject to CON review, which settlement served as a determination by the Department that the MRI projects were nonreviewable under the Act. This appeal is an attempt by the Petitioners, who are business competitors of the Intervenors, to challenge that settlement agreement.

The relevant facts are as follows. The Department first became aware that the In-tervenors were developing an additional MRI center on January 28, 1993, when an established provider of MRI services in Wilkes-Barre, Pennsylvania, notified the Department that the Intervenors were planning to place an MRI center in its service area. In that notification, it was alleged that the In-tervenors never notified the Department of their intent to build the new center nor inquired of the Department whether a CON was required or not for the proposed MRI center. In light of the preceding information, the Department initiated an investigation of the proposed MRI center in order to determine whether the project was subject to CON review.

On April 12, 1993, the Petitioners notified the Department that the Intervenors were developing another MRI center in Camp Hill, Pennsylvania. Thereafter, as part of its continuing investigation of the Intervenors, the Department asked the Intervenors to provide it with invoices relating to the purchase of its MRI equipment. The Intervenors provided the Department with correspondence from Resonex, Inc., showing the terms and conditions for the sale of six MRI systems to the Intervenors, including the Camp Hill and Wilkes-Barre facilities; the Department thus discovered that the Petitioners were in the process of developing not one or two, but six MRI facilities.

On May 14,1993, the Department issued a determination of reviewability stating that all six MRI projects were subject to CON review. The Intervenors filed an appeal with the Department to reconsider its determination of reviewability and the Petitioners advised the Department that they wished to participate in the proceedings as interested parties. Thereafter, the Department initiated settlement negotiations with the Inter-venors and, on June 22, 1993, the Department and the Intervenors executed a settlement agreement. The settlement agreement provided the following: (1) the Department’s determinations of reviewability were voided; (2) the settlement agreement would constitute a determination of nonreviewability with regard to the Intervenors six MRI projects; and (3) the Intervenors would pay a $36,000 fine for failing to comply with the notice provisions under the Act. In the settlement [93]*93agreement the Department agreed that, while the 1992 amendments required CON review for all clinically related health services, the Intervenors’ MRI centers were not reviewable under the Act as it existed before those amendments. The Department indicated in the agreement that the old Act applied in this case, since the Intervenors, inter alia, entered into contracts to purchase MRI equipment in November of 1992, before the December 1992 amendments went into effect. This appeal by Petitioners followed.

The Petitioners raise the following issues for our review: (1) whether the Department could reverse a determination of reviewability without complying with the procedures for reconsideration under the Act; (2) whether the Department could negotiate a settlement in which it reconsidered its determination of reviewability, when an appeal of that determination was pending; (3) whether the Department had the authority to enter into the settlement agreement, when the December 1992 amendments to the Act require CON review; (4) whether the Department erred applying the Act, as it existed before the December 1992 amendments, when the In-tervenors made no commitment to purchase equipment before the effective date of the amendments and failed to provide notice to the Department; and (5) whether the Department deprived the Petitioners of due process by settling the ease before the Petitioners could participate in the appeal.

Before we reach the substantive issues raised by the Petitioners, however, we must first address the Intervenors’ motion to quash the appeal. The Intervenors assert that the Petitioners, who are business competitors, lack standing to appeal a determination of nonreviewability by the Department. In support of their argument, Intervenors rely on our decisions in Powers v. Department of Health, 121 Pa.Commonwealth Ct. 321, 550 A.2d 857 (1988), petition for allowance of appeal denied, 524 Pa. 636, 574 A.2d 75 (1989) (Powers I), and Powers v. Department of Health, 131 Pa.Commonwealth Ct. 469, 570 A.2d 1350 (1990) (Powers II).

In Powers I, we held that business competitors do not have standing to appeal determinations of nonreviewability made by the Department, because nothing in the Act grants competitors the right to appeal such determinations. The Powers I Court viewed a determination of nonreviewability to be a preliminary inquiry, similar to a private letter ruling issued by the Internal Revenue Service, which gives no rights to third parties such as business competitors. In reviewing the Act, we recognized that, because the Act did not require that competitors be given any notice of the Department’s preliminary inquiry, the Act did not confer on business competitors the right to appeal a determination of nonre-viewability. We further stated in Powers I that the purpose of the Act was to foster competition and that such purpose would be promoted by denying competitors standing to appeal determination of nonreviewability.

In Powers II, we reaffirmed our decision in Powers I and further held that, even if a competitor is granted intervenor status by the Department, a competitor nevertheless lacks standing to appeal.

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Bluebook (online)
648 A.2d 91, 167 Pa. Commw. 319, 1994 Pa. Commw. LEXIS 519, Counsel Stack Legal Research, https://law.counselstack.com/opinion/central-pennsylvania-mri-lp-v-department-of-health-pacommwct-1994.