Filed Washington State Court of Appeals Division Two
October 17, 2023
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II RCCH TRIOS HEALTH, LLC, a Delaware No. 57403-9-II Limited Liability Company,
Appellant,
v. PUBLISHED OPINION
DEPARTMENT OF HEALTH OF THE STATE OF WASHINGTON and KADLEC REGIONAL MEDICAL CENTER,
Respondents.
MAXA, P.J. – RCCH Trios Health LLC (Trios) appeals an administrative final order in
which the Department of Health (DOH) denied Trios a certificate of need (CN) to perform
elective percutaneous coronary interventions (PCIs).
Health care facilities without on-site cardiac services are allowed to perform elective
PCIs only after obtaining a CN from DOH, which requires a showing of projected net need of at
least 200 PCIs a year. For purposes of need forecasting, the definition of PCIs in the CN
regulation is “cases as defined by diagnosis related groups (DRGs)” that involve certain cardiac
procedures. WAC 246-310-745(4). To calculate net need, DOH gathers data from three
sources: (1) the comprehensive hospital abstract reporting system (CHARS), (2) surveys DOH No. 57403-9-II
sends out to PCI providers, and (3) clinical outcomes assessment program (COAP) data. WAC
246-310-745(7).
DOH released a methodology that showed the net need for PCIs in each of 14 PCI
planning areas using DRGs 246-251. DOH calculated that the net need for PCIs in Trios’s
planning area would be 182, less than the 200 procedure threshold.
Trios, located in planning area 2, decided to apply to DOH for a CN in 2019 to perform
elective PCIs. At the time, Kadlec Regional Medical Center (Kadlec) was the only other hospital
in planning area 2 that was performing elective PCIs.
Trios attempted to introduce data from sources other than DOH used as a part of its
application to demonstrate that the net need for PCIs was over the 200 procedure threshold.
Specifically, Trios identified 31 cases where PCIs had been performed but had not been coded
under DRGs 246-251. And Trios claimed that DOH should count PCIs performed on residents
of planning area 2 in Oregon, Idaho, and a closed Walla Walla hospital that had not reported to
DOH. But DOH concluded that it could not consider Trios’s sources and denied Trios’s
application.
Trios initiated a review procedure before an administrative health law judge (HLJ).
Kadlec was allowed to intervene and filed a motion for summary judgment. The HLJ granted
summary judgment and affirmed DOH’s CN denial in an initial order. Trios appealed, and the
review officer affirmed in a final order. Trios then appealed the final decision to superior court,
which denied Trios’s petition for judicial review.
We hold that (1) the 31 PCIs not coded under DRGs 246-251 did not fall within the
definition of PCIs in WAC 246-310-745(4) and therefore could not have been counted in the
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determination of need, and (2) DOH’s refusal to consider Trios’s proffered data was not contrary
to law because it was based on a reasonable interpretation of WAC 246-310-745(7) and WAC
246-310-745(9). Accordingly, we affirm the review officer’s final order.
FACTS
Background
A medical provider can operate certain facilities and perform certain procedures in
Washington only after obtaining a CN. RCW 70.38.105(3)-(4). Procedures requiring a CN
include new tertiary health services. RCW 70.38.105(4)(f). Elective PCIs are tertiary services.
WAC 246-310-700. The legislature directed DOH to adopt rules establishing criteria for the
issuance of CNs for elective PCIs at hospitals that do not otherwise provide on-site cardiac
surgery. RCW 70.38.128. DOH adopted such rules in WAC 246-310-700, et seq.
The definition of PCIs in the CN regulation, for purposes of need forecasting, is “cases as
defined by [DRGs] as developed under the Centers for Medicare and Medicaid Services (CMS)
contract that describe catheter-based interventions involving the coronary arteries and great
arteries of the chest.” WAC 246-310-745(4). DRGs are codes assigned to patients who are
hospitalized. DOH identified the relevant DRGs for 2019 as DRGs 246-251, which typically are
assigned to patients who receive PCIs. However, a different DRG might be assigned even if the
patient received a PCI if another procedure outweighs the PCI or other factors make a different
DRG more appropriate.
Hospitals with an elective PCI program must perform at least 200 adult PCIs per year by
the end of the third year of operation. WAC 246-310-720(1). DOH will issue a CN for elective
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PCIs to a new program only if projected unmet need within the relevant planning area meets or
exceeds the minimum volume standard of 200 procedures. WAC 246-310-720(2).
WAC 246-310-745(7) states that the data sources for determining adult elective PCI
volumes “include”:
(a) The comprehensive hospital abstract reporting system (CHARS) data from the department, office of hospital and patient data; (b) The department’s office of certificate of need survey data as compiled, by planning area, from hospital providers of PCIs to state residents (including patient origin information, i.e., patients’ zip codes and a delineation of whether the PCI was performed on an inpatient or outpatient basis); and (c) Clinical outcomes assessment program (COAP) data from the foundation for health care quality, as provided by the department.
In addition, WAC 246-310-745(9) states that the data used for evaluating CN applications “must
be the most recent year end data as reported by CHARS or the most recent survey data available
through the department or COAP data for the appropriate application year.”
CN Application
Trios is a hospital in Kennewick. Trios is located in planning area 2, which includes
Benton, Columbia, Franklin, Garfield, and Walla Walla counties. Trios began providing
emergent PCI services in 2012 but does not employ interventional cardiologists.
DOH published a methodology that showed the projected need for PCIs in each planning
area. DOH calculated that the net need for PCIs in planning area 2 would be 182.
Trios applied for a CN for elective PCIs in 2019. Trios acknowledged that DOH’s
assessment of 182 was below the 200 case requirement, but stated that it had identified a number
of areas in which the methodology had missed data. First, Trios highlighted that there was no
count or attempt to count residents of planning area 2 who received PCIs in either Oregon or
Idaho. Second, Trios noted that a Walla Walla hospital closed in 2017 and did not report any
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outpatient data in 2016 or 2017, which meant the hospital underreported PCIs. Including data
from those sources, Trios believed that the patient net need for PCIs would exceed 200.
During the review of Trios’s application, DOH was able to access Oregon’s inpatient
database and updated the methodology to include these publicly accessible PCIs. DOH’s
updated methodology increased the projected need from 182 to 188.
DOH opened the application for public comment. DOH received comments from those
opposing Trios’s application, including Kadlec, the only facility in planning area 2 that could
perform elective PCIs.
Trios also submitted comments. Trios again commented that DOH should be able to
consider the additional data from Idaho and the Walla Walla hospital that Trios submitted
because although WAC 246-310-745(7) lists CHARS, survey data and COAP as data sources, it
does not say that DOH is limited to only those three sources. Trios also commented that it had
located an additional 31 PCIs in the CHARS database identified by their ICD-10 procedure code
that were not coded under DRGs 246-251. Trios commented that DOH should include these
PCIs in the projected need calculation.1
In February 2020, DOH denied Trios’s CN application. DOH did not consider Trios’s
additional data. Therefore, Trios was unable to meet the 200-procedure threshold. DOH stated
that “[t]o accept novel data sources that could not have been [publicly] available prior to the
concurrent review cycle changes the process and removes the element of transparency, fairness,
and predictability in a Certificate of Need review.” Admin. Rec. (AR) at 32.
1 Trios initially identified an additional 52 PCIs, but reduced that number to 31. The excluded PCIs included the ones from the Walla Walla hospital.
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Procedural History
Trios requested an administrative hearing with a HLJ to contest the denial of the CN.
The presiding officer allowed Kadlec to join as an intervenor.
Before the scheduled hearing, Kadlec moved for summary judgment, arguing that Trios’s
CN denial should be affirmed because DOH’s methodology did not project a need for the PCI
program. In response, Trios submitted a declaration from Jody Carona, the principal of Health
Facilities Planning and Development. She stated in her declaration that the 31 PCIs they
identified were coded with a different DRG than DRGs 246-251, but they could have been coded
with DRGs 246-251 if a different DRG had not taken precedence based on the patient’s
condition.
The HLJ granted Kadlec’s motion for summary judgment and issued an initial order with
findings of fact and conclusions of law. The HLJ rejected Trios’s argument that the additional
31 PCIs identified using the ICD-10 procedure code should be included in the need projections.
The HLJ concluded that “WAC 246-310-745(4) is clear in requiring that PCIs be defined by
DRGs – not procedure codes – when calculating need for new PCI programs.” AR at 433.
Regarding Trios’s argument that data from other sources – like Oregon and Idaho – should be
used, the HLJ rejected the argument that the word “include” in WAC 246-310-745(7) allowed
considerations of other sources besides the three listed. AR at 432. Trios petitioned for
administrative review of the initial order. The review officer issued findings of fact and
conclusions of law in a final order that adopted and affirmed the initial order.
In addressing WAC 246-310-745(4), the review officer stated, “The methodology in
WAC 246-310-745 does not count every PCI performed. When this application was submitted,
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[DOH] could only include PCI cases defined by DRGs 246-251. . . . Therefore, [DOH] cannot
consider the additional PCIs proposed by Trios.” AR at 586.
Regarding the data sources DOH could consider, the review officer concluded,
The word ‘include’ may be either exhaustive or nonexhaustive depending on the context. Whereas, use of ‘including, but not limited to’ has consistently been interpreted by the courts as an illustrative, not exhaustive, list. The context of WAC 246-310-745 point towards interpreting ‘include’ in subsection (7) as indicating an exhaustive list of data sources because subsection (9) states the data used ‘must’ be from three specific data sources. WAC 246-310-745(7) only identifies these three specific state data sources and does not open the door to equivalent data sources . . . this Reviewing Officer finds the data sources identified are the exhaustive list.
AR at 585 (citations omitted).
Trios then petitioned for judicial review of the final order. The superior court affirmed
the final order and denied Trios’s petition for judicial review.
Trios appeals the superior court’s denial of judicial review of the review officer’s final
order.
ANALYSIS
A. STANDARD OF REVIEW
Under the Administrative Procedure Act (APA), chapter 34.05 RCW, we consider the
record before the agency and sit in the same position as the superior court. Kenmore MHP LLC
v. City of Kenmore, 1 Wn.3d 513, 519-520, 528 P.3d 815 (2023).
The APA provides nine grounds for reversing an administrative order. RCW
34.05.570(3). Three grounds potentially are applicable here: (1) the agency erroneously
interpreted or applied the law, RCW 34.05.570(3)(d); (2) the order is inconsistent with a rule of
the agency, RCW 34.05.570(3)(h); and (3) the order is arbitrary and capricious, RCW
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34.05.570(3)(i). The party challenging the agency’s decision has the burden of demonstrating
the invalidity of that decision. RCW 34.05.570(1)(a).
When an administrative decision is decided on summary judgment, we overlay the APA
and summary judgment standards of review. Waste Mgmt. of Wash., Inc. v. Wash. Util. and
Transp. Comm’n, 24 Wn. App. 2d 338, 344, 519 P.3d 963 (2022), rev. denied, 1 Wn. 3d 1003
(2023). We review the ruling de novo and construe the facts and all reasonable inferences in the
light most favorable to the nonmoving party. Id. Summary judgment can be determined as a
matter of law if the material facts are not in dispute. Antio LLC v. Dep’t of Revenue, 26 Wn.
App. 2d 129, 134, 527 P.3d 164 (2023).
We review an agency’s legal conclusions de novo and give substantial deference to the
agency’s interpretation of its own regulations when that subject area falls within its area of
expertise. Waste Mgmt. of Wash., 24 Wn. App. 2d at 344. We may substitute our own
interpretation of the law for that of the agency. Id. But we generally will uphold an agency’s
“interpretation of ambiguous regulatory language as long as the agency’s interpretation is
plausible and consistent with the legislative intent.” Kenmore MHP, 1 Wn.3d at 520. “ ‘An
agency acting within the ambit of its administrative functions normally is best qualified to
interpret its own rules, and its interpretation is entitled to considerable deference by the courts.’ ”
Id. (quoting D.W. Close Co. v. Dep’t of Lab. & Indus., 143 Wn. App. 118, 129, 177 P.3d 143
(2008)).
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B. DEFINITION OF PCI
Trios argues that DOH erroneously refused to include in its projected need calculation the
31 additional PCIs it identified that were not coded under DRGs 246-251 because those PCIs fell
within the definition of “PCI” in WAC 246-310-745(4). We disagree.
For purposes of need forecasting, WAC 246-310-745(4) defines PCIs to mean
cases as defined by diagnosis related groups (DRGs) as developed under the Centers for Medicare and Medicaid Services (CMS) contract that describe catheter- based interventions involving the coronary arteries and great arteries of the chest. . . . . The department will update the list of DRGs administratively to reflect future revisions made by CMS to the DRG to be considered in certificate of need definitions, analyses, and decisions.
(Emphasis added.) At the time of Trios’s application, the DRGs to be considered were DRGs
246-251.
The additional 31 PCIs Trios identified were not coded under DRGs 246-251. However,
Trios emphasizes that the 31 PCIs could have been coded under DRGs 246-251 and therefore
would have been considered by DOH if a different DRG had not taken precedence. Trios states,
Putting the case in concrete terms, if you go to the hospital with chest pain and receive a PCI and your visit is assigned a DRG code on that basis, [DOH] will count your PCI for its need calculation. If you go to the hospital for a different reason and your care is coded on that basis, and the doctor determines you also need a PCI, [DOH] will not count that PCI for need purposes even though the same procedure was performed.
Br. of Appellant at 22-23.
Resolution of this issue depends on the interpretation of the phrase “cases as defined by
[DRGs]” in WAC 246-310-745(4). Trios argues that “as defined by” means that a procedure
meets the definition of PCI if it is capable of being coded under DRGs 246-251, even though
they were not actually coded under those DRGs. Trios emphasizes that if the drafters of WAC
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246-310-745(4) had wanted to limit the definition of PCI to only those procedures actually coded
under DRGs 246-251, they easily could have done so. But the drafters used “defined by” instead
of “coded as,” thereby negating such a limitation. And according to Trios, DOH’s interpretation
has the effect of undercounting PCIs and preventing the issuance of a CN when there is a need.
DOH does not dispute that patients with cases classified with DRGs other than DRGs
246-251 may have received a PCI while in the hospital. But DOH emphasizes that WAC 246-
310-745(4) deliberately does not count every PCI performed. Instead, to forecast projected need
the regulation counts a specific subset of PCIs – those defined by DRGs under the CMS
classification system. Patients that may have received a PCI as indicated by a procedure code
but were discharged under a different DRG code simply are not counted. DOH notes that if
“defined by [DRGs]” does not mean that it must use DRGs in its need projections, the reference
to DRGs in WAC 246-310-745(4) would be meaningless. Kadlec argues that the use of well-
defined DRG data rather than other alternatives helps assure that applicants are treated
evenhandedly and fairly.
We conclude that the plain language of WAC 246-310-745(4) supports DOH’s position.
For purposes of need forecasting, WAC 246-310-745(4) expressly defines PCIs with reference to
DRGs, not ICD-10 procedure codes. In drafting this regulation, DOH could have defined PCI
more generally as any “catheter-based interventions involving the coronary arteries and great
arteries of the chest.” Or DOH could have defined PCIs with reference to ICD-10 procedure
codes. Instead, the regulation limits the definition to those procedures classified under certain
DRG codes. The fact that certain procedures could have been coded under DRGs 246-251 is
immaterial.
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Significantly, the CN regulation contains a general definition of PCIs that does not
reference DRG codes. WAC 246-310-705(4). But WAC 246-310-745 contains more specific
definitions “[f]or the purposes of the need forecasting method.” As noted, the specific definition
of PCIs in WAC 246-310-745(4) references DRG codes. If the PCIs included in the need
calculation were not defined with reference to DRG codes, DOH could simply have used the
general WAC 246-310-705(4) definition.
Even if the language of WAC 246-310-745(4) was ambiguous, we would give deference
to DOH’s position because the regulation falls within its area of expertise. Waste Mgmt. of
Wash., 24 Wn. App. 2d at 344. DOH is best qualified to interpret its own rules. See Kenmore
MHP, 1 Wn.3d at 520.
Trios argues that we should not give deference to DOH’s interpretation of WAC 246-
310-745(4) because DOH’s position is contrary to legislative intent. One public policy
underlying the CN program is to “promote, maintain, and assure the health of all citizens in the
state, provide accessible health services, health manpower, health facilities, and other resources
while controlling increases in costs.” RCW 70.38.015(1). Trios argues that counting all PCIs
and not only those PCIs coded under DRGs 246-251 promotes this policy because such an
approach provides a more accurate assessment of need.
DOH relies on the definition of “tertiary health service” in RCW 70.38.025(14), which
states that such service “requires sufficient patient volume to optimize provider effectiveness,
quality of service, and improved outcomes of care.” DOH asserts that strictly adhering to the
mandatory patient volume threshold is consistent with “promot[ing], maintain[ing], and
assur[ing] the health of all citizens in the state,” a stated public policy underlying the CN
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program. RCW 70.38.015(1). And adherence to the volume threshold helps ensure that other
CN providers like Kadlec have sufficient patient volume to “optimize provider effectiveness,
quality of service, and improved outcomes of care.” RCW 70.38.025(14).
In addition, another public policy of the CN program is that “the development and
maintenance of adequate health care information, statistics, and projections of need for health
facilities and services is essential to effective health planning and resources development.”
RCW 70.38.015(3). DOH has implemented this policy by relying on DRG codes to project need
for PCI services.
We conclude that DOH’s interpretation of WAC 246-310-745(4) is consistent with
legislative intent and we give deference to that interpretation. See Kenmore MHP, 1 Wn.3d at
520.
We hold that DOH’s refusal to consider the 31 additional PCIs identified by Trios was
not based on an erroneous interpretation of WAC 246-310-745(4). Therefore, we affirm the
review officer’s final order on this issue.
C. APPLICABLE DATA SOURCES
Trios argues that DOH erroneously refused to consider data from sources other than the
three sources listed in WAC 246-310-745(7). We disagree.
WAC 246-310-745(7) states,
(7) The data sources for adult elective PCI case volumes include:
(a) The comprehensive hospital abstract reporting system (CHARS) data from the department, office of hospital and patient data;
(b) The department's office of certificate of need survey data as compiled, by planning area, from hospital providers of PCIs to state residents (including patient
12 No. 57403-9-II
origin information, i.e., patients' zip codes and a delineation of whether the PCI was performed on an inpatient or outpatient basis); and
(c) Clinical outcomes assessment program (COAP) data from the foundation for health care quality, as provided by the department.
(Emphasis added.) Trios argues that the word “include” in WAC 246-310-745(7) means that the
three sources listed are examples, not an exclusive list. Therefore, DOH can consider other data
sources as well.
The cases support Trios’s position. The word “include” generally indicates that the
following list is illustrative, not exclusive. City of Edmonds v. Bass, 16 Wn. App. 2d 488, 499,
481 P.3d 596 (2021), aff’d, 199 Wn.2d 403, 414, 508 P.3d 172 (2022). “[O]ur Supreme Court
generally recognizes that a statute that uses the term ‘including’ is one of enlargement, not
restriction.” Id. (citing Queets Band of Indians v. State, 102 Wn.2d 1, 4, 682 P.2d 909 (1984));
see also Brown v. Scott Paper Worldwide Co., 143 Wn.2d 349, 359, 20 P.3d 921 (2001);
Wheeler v. Dept. of Licensing, 86 Wn. App. 83, 88, 936 P.2d 17 (1997).
However, DOH and Kadlec argue – and the HLJ and the review officer ruled – that WAC
246-310-745(7) must be read in context with WAC 246-310-745(9). WAC 246-310-745(9)
states, “The data used for evaluating applications submitted during the concurrent review cycle
must be the most recent year end data as reported by CHARS or the most recent survey data
available through the department or COAP data for the appropriate application year.” (Emphasis
added.)
DOH’s argument is that WAC 246-310-745(9) states that the data used in evaluating CN
applications “must be” from the three sources listed in WAC 246-310-745(7). DOH claims that
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harmonizing subsections (7) and (9) compels the interpretation that the three sources listed in
WAC 246-310-745(7) are exhaustive.
Trios argues that WAC 246-310-745(9) relates to the time frames to be used when data is
collected from the listed sources rather than restricting the available data sources. This
interpretation is not unreasonable. The term “must be” in WAC 246-310-745(9) appears right
before the phrase “the most recent end year data.” Arguably, the term is directing DOH to use
the most recently available end year data, not to only use those three sources of data. Trios also
points out that DOH used data from Oregon hospitals in this case and on other prior occasions,
even though that data was not from the sources listed in WAC 246-310-745(7).
But DOH’s position also is reasonable. WAC 246-310-745(9) can be interpreted as
stating that the data used for evaluating CN applications “must be” from the three listed data
sources. And the fact that WAC 246-310-745(9) only lists out the same three sources of data
contained in subsection (7) suggests that the drafter only contemplated the use of those sources
and not some other sources. That subsection could have – but did not – refer generically to “data
sources” rather than specifying the sources listed in WAC 246-310-745(7).
Because the language of WAC 246-310-745(9) is ambiguous, we give deference to
DOH’s position because the regulation falls within its area of expertise. Waste Mgmt. of Wash.,
24 Wn. App. 2d at 344. DOH is best qualified to interpret its own rules. See Kenmore MHP, 1
Wn.3d at 520.
We hold that WAC 246-310-745(7) is an exhaustive list and that DOH could not consider
other sources. Therefore, we affirm the review officer’s final order on this issue.
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CONCLUSION
We affirm the review officer’s final order.
MAXA, P.J.
We concur:
LEE, J.
CHE, J.