Dialysis Care of North Carolina, LLC v. North Carolina Department of Health & Human Services

529 S.E.2d 257, 137 N.C. App. 638, 2000 N.C. App. LEXIS 491
CourtCourt of Appeals of North Carolina
DecidedMay 2, 2000
DocketCOA99-436
StatusPublished
Cited by16 cases

This text of 529 S.E.2d 257 (Dialysis Care of North Carolina, LLC v. North Carolina Department of Health & Human Services) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dialysis Care of North Carolina, LLC v. North Carolina Department of Health & Human Services, 529 S.E.2d 257, 137 N.C. App. 638, 2000 N.C. App. LEXIS 491 (N.C. Ct. App. 2000).

Opinions

WALKER, Judge.

Dialysis Care of North Carolina (“DCNC”) appeals from a final agency decision of the North Carolina Department of Health and Human Services (formerly the Department of Human Resources, N.C. Gen. Stat. § 143B-138.1 (1999)) (“Department” or “agency”), awarding a Certificate of Need (“CON”) to Bio-Medical Applications of North Carolina, Inc. et al, (“BMA”). DCNC moves this Court to take judicial notice of its corporate name change to Total Renal Care of North Carolina, LLC. We grant this motion, but for the sake of clarity in this opinion, we will refer to the corporation as DCNC.

BMA, a subsidiary of Fresenius Medical Care, provides dialysis treatment for kidney disease patients at their dialysis facilities in North Carolina, including Concord. DCNC also operates dialysis facilities in North Carolina, including facilities in Kannapolis and Salisbury. The DCNC Kannapolis facility was the focus of a dispute between these same two parties in this Court’s recent decision in BMA v. N.C. Dept. of Health and Human Services, 136 N.C. App. 103, 523 S.E.2d 677 (1999). In that case, DCNC applied to transfer ten dialysis stations located at its Salisbury facility to a new location in Kannapolis, which BMA contested. This Court upheld the final agency decision awarding DCNC a CON for the Kannapolis facility. Id.

On 16 July 1997, BMA filed an application with the CON Section of the agency to establish a new ten-station dialysis facility in Kannapolis, whereby BMA would relocate ten of its Concord dialysis stations to the proposed Kannapolis facility so that the overall number of dialysis stations operated by BMA would not increase. BMA’s application proposed that the new facility would be operated by BMA, but constructed by and leased from Metrolina Nephrology Associates, RA. (“MNA”). The proposed facility would be approximately 7 miles from BMA’s Concord facility and approximately 1.3 miles from DCNC’s Kannapolis facility. BMA surveyed its Concord patients and determined that 34 patients expressed a willingness to transfer their dialysis treatment from the BMA Concord facility to the proposed BMA Kannapolis facility.

Initially, the CON Section found BMA’s application incomplete because the lessor, MNA, had not submitted a certification page with [642]*642the application. In response, George Hart, M.D., Vice-President of MNA, submitted a notarized certification page to the CON Section and listed the applicant as “Kannapolis Nephrology Associates, LLC* (* A limited liability company to be formed by principles of [MNA], upon issuance of CON).” Upon receipt of this certification page, the CON Section deemed BMA’s application to be complete.

The project analyst determined that the capital expenditure associated with the project was approximately $1.1 million and that MNA’s portion of the costs was proposed to be $900,000. BMA’s application contained a financing letter from Beth Blanton, Vice President and Relationship Manager of NationsBank. The financing letter expressed NationsBank’s willingness to consider a loan to fund the proposed project up to 80% of the appraised value, which was determined by the project analyst to be $900,000. Accordingly, NationsBank evidenced a commitment of $720,000 (80% of $900,000).

On 7 November 1997, the CON Section issued a Conditional Approval of BMA’s application, which required in part that:

5. Within 35 days of the date of this decision and prior to issuance of the certificate of need, Metrolina Nephrology Associates, P.A. shall submit documentation that $180,000 is available and committed by Metrolina Nephrology Associates, P.A. for its portion of the total capital cost of the project.
6. Within 35 days of the date of this decision and prior to issuance of the certificate of need, Bio-Medical Applications of North Carolina, Inc. d/b/a BMA of Kannapolis shall submit documentation from the person who is fiscally responsible for the funds to be used for the lessee’s portion of the capital cost and for start-up and initial operating expenses that $539,076 is available and committed to this project.

Further, the Conditional Approval stated that the CON would not be issued “until all applicable conditions of approval that can be satisfied before issuance of the [CON] have been met pursuant to G.S. 131E-187(a).”

On 4 December 1997, DCNC filed a petition challenging the CON Section’s decision to issue a Conditional Approval. BMA was permitted to intervene in the contested case on 4 February 1998.

At the contested case hearing before the Administrative Law Judge (“ALJ”), Ms. Blanton testified that the intent of the [643]*643NationsBank letter was “to finance for Metrolina or another entity that they would form to construct and for the permanent financing for the Kannapolis center.” Further, she testified that:

Our primary relationship is with Metrolina Nephrology, and with talking to Suzanne Mecum, who is with Metrolina and works with the other centers that they have, it was our intent to service Metrolina. And whether that be funding to Metrolina directly or to another entity that they set up specifically with the Kannapolis location, it was our intent to service either one and to finance that.

Ms. Blanton further testified that Metrolina had access to sufficient funds for the equity contribution of $180,000.

On 31 August 1998, the ALJ found that although the project was needed, BMA’s application was incomplete and non-conforming with N.C. Gen. Stat. § 131E-183(a)(5) (1999) (“Criterion 5”), which pertains to the availability of funds for capital and operating needs of the facility.

On 8 December 1998, the Department’s final decision concurred with the AU that the project was needed, but found BMA’s application in compliance with N.C. Gen. Stat. § 131E-183. After making extensive findings, the Department concluded in part that:

3. The Agency appropriately determined that BMA was conforming with the applicable criteria regarding need. The Agency did not fail to consider DCNC’s existing facility in Kannapolis, Rowan County in making its determination that the BMA facility was conforming with the need criteria.
4. The conditions imposed on the approval of the BMA application were lawful and appropriate pursuant to the statutory and regulatory authority granted to the Agency. N.C. Gen. Stat. § 131E-186(a) provides in part “[t]he department shall issue a decision to approve, approve with conditions or deny an application. . . .” 10 N.C.A.C. 3R.0313(a) provides in part “If a proposal is not consistent with all applicable standards, plans and criteria, the Agency decision shall be to either not issue the certificate of need or issue one subject to those conditions necessary to ensure that the proposal is consistent with applicable standards, plans and criteria.” These conditions were properly imposed and sufficient to ensure conformity of the BMA application with the applicable criteria. The imposition of conditions [644]*644in this case did not prejudice any competing applicants, as there were none in this review.
6. The CON Section can conditionally approve an application with respect to Review Criterion 5 subject to the applicant supplying certain additional information.
7.

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Bluebook (online)
529 S.E.2d 257, 137 N.C. App. 638, 2000 N.C. App. LEXIS 491, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dialysis-care-of-north-carolina-llc-v-north-carolina-department-of-health-ncctapp-2000.