HCA Crossroads Residential Centers, Inc. v. North Carolina Department of Human Resources

398 S.E.2d 466, 327 N.C. 573, 1990 N.C. LEXIS 989
CourtSupreme Court of North Carolina
DecidedDecember 5, 1990
Docket79PA90
StatusPublished
Cited by43 cases

This text of 398 S.E.2d 466 (HCA Crossroads Residential Centers, Inc. v. North Carolina Department of Human Resources) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
HCA Crossroads Residential Centers, Inc. v. North Carolina Department of Human Resources, 398 S.E.2d 466, 327 N.C. 573, 1990 N.C. LEXIS 989 (N.C. 1990).

Opinions

MITCHELL, Justice.

The controlling issue before this Court is whether the Department of Human Resources (“Department”) lost subject matter jurisdiction when it failed to act, within the time prescribed by law, on applications for certificates of need for construction of chemical dependency treatment facilities. We conclude that when the prescribed statutory review period ended with the Department having failed to act, the Department was deemed as a matter of law to have decided in favor of issuing the certificates of need and it lost subject matter jurisdiction to do anything but issue those certificates of need. As a result, the agency had no authority to deny the applications.

On 16 May 1988, HCA Crossroads Residential Centers, Inc. (“Crossroads”) submitted an application for a certificate of need to construct and operate a 48-bed freestanding chemical dependency treatment facility for adolescents in Buncombe County. On the [575]*575same date, Laurel Wood of Henderson, Inc. (“Laurel Wood”) submitted its application to develop a 66-bed adolescent chemical dependency treatment facility in Henderson County. The Department, acting through the Certificate of Need Section of its Division of Facility Services, assigned both applications to a regularly scheduled 90-day review cycle beginning on 1 June 1988.

A time limit of 90 days is prescribed by statute for the Department’s review of applications for certificates of need, running from the date upon which the assigned review period begins. N.C.G.S. § 131E-185(al) (1988). The statute further provides that upon complying with certain requirements, the Department may extend this time limit for a period not to exceed 60 days. N.C.G.S. § 131E-185(c) (1988).

On 29 August 1988, the Department purported to extend the review period for the petitioner-appellants’ applications until 28 October 1988. The petitioner-appellants contend that the Department’s attempt to extend the applicable review period for 60 days did not comply with statutory requirements and was ineffective. We neither consider nor decide this disputed question. Instead, we assume for purposes of this opinion that the purported 60-day extension complied with the law in all respects and was proper.

For both the Crossroads and the Laurel Wood applications, the Department thereafter allowed the maximum 150-day period (90 days plus 60 days) prescribed by statute to expire on 31 October 1988, without acting on either application. On 21 November 1988, 173 days after the applicable review cycle began, the Department issued letters to Crossroads and Laurel Wood which purported to deny their applications for certificates of need.

In verified petitions for contested case hearings before the Office of Administrative Hearings filed by Crossroads on 30 November 1988 and by Laurel Wood on 21 December 1988, those parties asserted that the Department’s purported denials of their applications exceeded its authority and jurisdiction. They contended that the Department was required by law to issue the certificates of need they sought when it failed to act on their applications within the statutorily prescribed maximum time limit of 150 days. By order of Chief Administrative Law Judge Robert A. Melott, dated 29 December 1988, the contested cases initiated by Crossroads and Laurel Wood were consolidated for hearing.

[576]*576On 20 December 1988, Crossroads filed a motion for a recommended decision granting summary judgment in its favor, pursuant to N.C.G.S. § 1A-1, Rule 56, N.C.G.S. § 150B-34, and 26 NCAC 3 .0005. At the conclusion of a hearing on 6 January 1989, presiding Administrative Law Judge Beecher R. Gray issued a recommended decision concluding inter alia that the Department’s denial of Crossroads’ application was in excess of its authority and jurisdiction and recommending that the Department issue a certificate of need to Crossroads to develop its project.

On 10 January 1989, Laurel Wood filed a similar motion for a recommended decision granting summary judgment in its favor. On 27 January 1989, Administrative Law Judge Gray issued a decision recommending that the Department issue a certificate of need to Laurel Wood.

Under N.C.G.S. § 131E-188(a), the recommended decisions in favor of Crossroads and Laurel Wood were subject to further review by the Department before issuance of its final decisions on their applications. The Department issued final decisions on the applications of Crossroads and Laurel Wood on 8 March 1989 and 17 March 1989, respectively. In each instance the Department rejected the recommended decision of the Administrative Law Judge, reaffirmed its denial of the application, and informed the applicant of its right to appeal to the Court of Appeals. Crossroads and Laurel Wood filed notices of appeal to the Court of Appeals on é April 1989 and 14 April 1989, respectively. On 1 March 1990, this Court granted discretionary review, ex mero motu, prior to a determination by the Court of Appeals.

N.C.G.S. § 131E-185(al) provides:

Except as provided in subsection (c) of this section, there shall be a time limit of 90 days- for review of the applications [for certificates of need], beginning on the day established by rule as the day on which applications for the particular service in the service area shall begin review.

(Emphasis added.)

An exception to the 90-day time limit mandated by the foregoing provision is contained in N.C.G.S. § 131E-185(c), which states:

The Department shall promulgate rules establishing criteria for determining when it would not be practicable to complete a review within 90 days from the beginning date of the review [577]*577period for the application. If the Department finds that these criteria are met for a particular project, it may extend the review period for a period not to exceed 60 days and provide notice of such extension to all applicants.

These statutory provisions clearly prescribe a mandatory maximum time limit of 150 days within which the Department must act on applications for certificates of need. To the extent it is applicable, this time limit is jurisdictional in nature. See Snow v. Board of Architecture, 273 N.C. 559, 569, 160 S.E.2d 719, 727 (1968) (administrative agency loses jurisdiction over the subject matter when it fails to make a decision within the time allowed by law); see also 2 Am. Jur.2d Administrative Law § 334 (the jurisdiction of administrative agencies “although once obtained, may be lost, and in such case proceedings cannot be validly continued beyond the point at which jurisdiction ceases”).

We conclude that since it failed to make a decision as to either of the applications at issue here within the statutory review period, the Department must be deemed as a matter of law to have decided in favor of issuing certificates of need to Crossroads and Laurel Wood and that the Department lost subject matter jurisdiction to do anything thereafter but issue the certificates of need. Therefore, the Department’s decision purporting to disapprove the pending applications after the maximum 150-day review period expired was a nullity and of no legal consequence. See Charlotte Liberty Mut. Ins. Co. v. Lanier, 16 N.C. App. 381, 384, 192 S.E.2d 57

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Bluebook (online)
398 S.E.2d 466, 327 N.C. 573, 1990 N.C. LEXIS 989, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hca-crossroads-residential-centers-inc-v-north-carolina-department-of-nc-1990.