Hospice v. Department of Health

315 P.3d 556, 178 Wash. App. 442
CourtCourt of Appeals of Washington
DecidedDecember 19, 2013
DocketNo. 31116-3-III
StatusPublished

This text of 315 P.3d 556 (Hospice v. Department of Health) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hospice v. Department of Health, 315 P.3d 556, 178 Wash. App. 442 (Wash. Ct. App. 2013).

Opinion

Kulik, J.

¶1 The Washington State Department of Health (Department) approved Family Home Care’s (FHC) certificate of need application to provide hospice services in Spokane County. Hospice of Spokane (HOS), an existing [446]*446hospice provider, requested administrative review of the decision, contending that the Department incorrectly interpreted the six-step methodology in WAC 246-310-290(7) used to determine whether an additional hospice provider is needed in a particular planning area. Specifically, HOS maintained that projected need must be established within one year of the application, instead of the three-year planning horizon used by the Department and set forth in WAC 246-310-290(6). An administrative health law judge (HLJ) adopted the Department’s interpretation and granted the certificate of need. The decision was affirmed by the superior court. HOS appeals. We affirm the HLJ’s decision granting the certificate of need.

FACTS

¶2 In October 2006, FHC applied to the Department for a certificate of need to establish a Medicare/Medicaid eligible hospice agency in Spokane County. Two approved providers already existed in Spokane County: Horizon Hospice and HOS. Although FHC was already operating a hospice in Spokane County, it was unable to serve Medicare/Medicaid patients without approval from the Department.

¶3 The Department initially denied FHC’s application for lack of need. FHC did not show the Spokane planning area required an additional Medicare/Medicaid facility to provide hospice services. In response, FHC requested an adjudicative proceeding to review the Department’s denial. HOS requested permission to intervene in the adjudicative proceeding.

¶4 After a stay and a series of subsequent decisions, an adjudicative proceeding finally occurred in March 2011. By this time, the Department agreed that FHC met the applicable certificate of need criteria. However, HOS continued to contest that FHC established need. An HLJ then reviewed FHC’s application to determine whether the application met the certificate of need criteria.

[447]*447¶5 The HLJ applied the six-step need projection methodology in WAC 246-310-290(7). The methodology used past statistical data to project the need for a service provider into a future “ ‘planning horizon.’ ” Clerk’s Papers at 71.

¶6 At issue was the extent of the planning horizon to be used for WAC 246-310-290(7). HOS contended that WAC 246-310-290(7) contained a one-year planning horizon that corresponded with the date of application. However, the HLJ determined that the three-year planning horizon in WAC 246-310-290(6) was to be harmonized with the methodology in WAC 246-310-290(7) to project need. Thus, the need methodology required a projected showing of an average of 35 hospice patients per day by the third year of operation. The HLJ found that FHC could show a daily average of 35 patients before the end of its third full year of operation. Ultimately, the HLJ concluded that FHC met the certificate of need criteria and issued an order approving FHC’s certificate of need application.

¶7 HOS appealed the order to superior court. The court agreed with the HLJ’s position that WAC 246-310-290(6) and WAC 246-310-290(7) were dependent on one another. The court found that a three-year projection analysis promoted good planning for health care services. The court affirmed the approval of the application.

f 8 HOS appeals to this court. HOS challenges the HLJ’s interpretation of WAC 246-310-290(7), specifically the HLJ’s incorporation of WAC 246-310-290(6) as part of the need projection methodology.

ANALYSIS

¶9 The Three-Year Planning Horizon in WAC 246-310-290(6) and the Need Projection Methodology in WAC 246-310-290(7). Washington’s Administrative Procedure Act (APA), chapter 34.05 RCW, governs judicial review of administrative agency decisions. RCW 34.05.510. Pertinent here, two grounds on which this court shall grant relief [448]*448from an agency order in an adjudicative proceeding are (1) if the agency has erroneously interpreted or applied the law or (2) if the order is arbitrary and capricious. RCW 34.05-,570(3)(d), (i). The burden of demonstrating invalidity of the agency’s action is on the party asserting invalidity. RCW 34.05.570(l)(a). The appellate court “sits in the same position as the superior court, applying the standards of the [ ]APA directly to the record before the agency.” Tapper v. Emp’t Sec. Dep’t, 122 Wn.2d 397, 402, 858 P.2d 494 (1993).

¶10 When determining if an error of law has occurred as a result of an agency interpretation, the appellate court applies de novo review. Children’s Hosp. & Med. Ctr. v. Dep’t of Health, 95 Wn. App. 858, 864, 975 P.2d 567 (1999). The agency’s interpretation is given substantial weight when the interpretation falls within the agency’s expertise. Id. (quoting Purse Seine Vessel Owners Ass’n v. Dep’t of Fish & Wildlife, 92 Wn. App. 381, 389, 966 P.2d 928 (1998)). Even so, the reviewing court has the ultimate responsibility of determining whether the regulation is applied consistently with its underlying policy. Id. at 864-65 (quoting Nielsen v. Emp’t Sec. Dep’t, 93 Wn. App. 21, 29, 966 P.2d 399 (1998)).

¶11 An agency action is “arbitrary and capricious” when the action is a “ ‘willful and unreasoning action in disregard of facts and circumstances.’ ” Id. at 864 (quoting Wash. Waste Sys., Inc. v. Clark County, 115 Wn.2d 74, 81, 794 P.2d 508 (1990)).

¶12 Hospice providers wishing to enter into the Washington State health care market must first acquire a certificate of need from the Department before beginning operation. King County Pub. Hosp. Dist. No. 2 v. Dep’t of Health, 178 Wn.2d 363, 366-67, 309 P.3d 416 (2013) (citing RCW 70.38.105(4)(a), .025(6)). The provider must submit an application to the Department to begin the certificate of need review process. WAC 246-310-090(l)(a), -290(3). The applicant must show the proposed project is needed, will foster containment of costs of health care, is [449]*449financially feasible, and will meet the structure and process of care. See WAC 246-310-200(1).

¶13 For hospice agencies applying for a certificate of need, the applicant “must demonstrate that they can meet a minimum average daily census (ADC) of thirty-five patients by the third year of operation.

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Bluebook (online)
315 P.3d 556, 178 Wash. App. 442, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hospice-v-department-of-health-washctapp-2013.