Texas Health Facilities Commission v. El Paso Medical Surgical Associates

573 S.W.2d 291, 1978 Tex. App. LEXIS 3842
CourtCourt of Appeals of Texas
DecidedOctober 26, 1978
DocketNo. 1176
StatusPublished
Cited by10 cases

This text of 573 S.W.2d 291 (Texas Health Facilities Commission v. El Paso Medical Surgical Associates) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Texas Health Facilities Commission v. El Paso Medical Surgical Associates, 573 S.W.2d 291, 1978 Tex. App. LEXIS 3842 (Tex. Ct. App. 1978).

Opinion

DUNAGAN, Chief Justice.

This appeal arose from an order of the Texas Health Facilities Commission, hereinafter “Commission,” which denied the application of El Paso Medical Surgical Associates, hereinafter “E.P.M.S.A.,” to transfer ownership of a Certificate of Need and relocate the proposed facility which was the subject of the Certificate.

The Commission, established by Article 4418h, Tex.Rev.Civ.Stat.Ann., and known as the Texas Health Planning and Development Act, is a state regulatory agency. It was created in response to the federal mandate of the National Health Planning and Resources Development Act of 1974, P.L. 93-641. The stated purpose of the Act is to insure that health care services and facilities are made available to all citizens in an [293]*293orderly and economical manner. Through appropriate health planning activities, the Act seeks to assure that health care services and facilities will be provided in a manner which is cost effective and compatible with the health care needs of the various areas and populations of the state. Article 4418h, section 1.02, supra.

In June 1976, the Commission granted a Certificate of Need to E.P.M.S.A., a professional association of physicians, which authorized the establishment and operation of a day surgery outpatient center. The proposed facility was to consist of four minor operating rooms to be located in the Eastwood Medical Clinic and Office Building, hereinafter “Clinic.” However, E.P.M.S.A., in November 1976, applied for a transfer of ownership of the Certificate of Need for the day surgery center to Eastwood Hospital, Inc. The application for transfer of ownership included a request for approval of the relocation of the project from the Clinic to the adjacent Eastwood Hospital. It was submitted that an unused room at Eastwood Hospital be converted for day surgery outpatient use and be utilized in connection with existing facilities rather than the previously contemplated four-room surgical suite at the Clinic.

Subsequent to a review of all the evidence and the recommendations of the Hearing Officer, the Commission found that the relocation of the day surgical center from the Clinic to Eastwood Hospital would (1) require modification of Eastwood Hospital, (2) constitute a service not currently offered by Eastwood Hospital, (3) substantially alter the project authorized by the Certificate of Need granted to E.P.M. S.A., and (4) would be outside the scope of the project previously approved. As a result of the above findings of fact, the Commission concluded as a matter of law that it could not grant the transfer of ownership of the Certificate of Need and relocation of the proposed facility, but that Eastwood Hospital, Inc. would have to obtain a new Certificate of Need. The application for transfer and relocation submitted by E.P.M. S.A. was therefore denied.

Upon denial of the application by the Commission, E.P.M.S.A. perfected its appeal to the district court which reversed the Commission’s order and remanded the cause to the Commission with instructions to grant and approve the transfer and relocation in question. In support of its judgment, the district court filed conclusions of law of which the following are pertinent to this appeal:

“(3) The Order of the Texas Health Facilities Commission is arbitrary and capricious and is characterized by an abuse of discretion because the Commission did not authorize the transfer of the Certificate of Need even though it is specifically authorized to do so by Rule 515, Rules and Regulations of the Texas Health Facilities Commission, and the reliable and probative evidence of record presents an affirmative showing of ‘good cause.’
(4) The Order of the Texas Health Facilities Commission is arbitrary and capricious and is characterized by an abuse of discretion because the Commission failed to follow its established holdings in authorizing a transfer of ownership and a relocation of the project.
(5) The order of the Texas Health Facilities Commission is founded upon an improper construction of Article 4418(h), Tex.Rev.Civ.Stat., and the Rules and Regulations promulgated by the Commission thereunder.”

From this adverse judgment, the Commission has perfected its appeal to this court.

The Commission predicates its appeal upon four points of error. We will first consider the complaints raised by appellant in points of error Nos. 1 and 3 which assert that the trial court erred in holding that (1) the action of the Commission was arbitrary, capricious, and characterized by an abuse of discretion because the Commission did not authorize the transfer of the Certificate of Need as authorized by Rule 515, Rules and Regulations of the Texas Health Facilities Commission, and (3) the Commission’s order was founded upon an improper construction of Article 4418h, supra, and the Rules and Regulations promulgated by the Commission thereunder.

[294]*294It is evident that transfers of Certificates of Need were contemplated by both the Health Planning and Development Act, supra, and the Rules and Regulations promulgated by the Commission. Section 3.13(b)(3) of Article 4418h, supra, is the only portion of the Health Planning and Development Act to deal with such transfers and provides that a Certificate of Need is subject to forfeiture where:

“. . . a certificate holder, before completion and operation of the project, has attempted to or has transferred or conveyed more than a two percent interest in the certificate of need or the certificate holder without prior written approval from the commission. Transfers resulting from . . . good cause as determined by the commission . are exempt from this provision.”

In addition to the above provision in Article 4418h, supra, the Commission has promulgated Rule 515(c), Rules and Regulations of the Texas Health Facilities Commission, which directly deals with transfers and states:

“(c) Transfer. Exemption Certificates, Declaratory Rulings, and Certificates of Need are not transferable prior to the completion of the project without the written consent of the Commission. Upon an affirmative finding of good cause the Commission may authorize the transfer of an Exemption Certificate, Declaratory Ruling or a Certificate of Need.”

In the instant case, the Commission admits that had only an issue of transfer of ownership been involved there would have been no question that appellee carried its burden of showing “good cause.” Appellee, in noting this admission, argues that it was an abuse of discretion for the Commission to deny this application once good cause for the transfer had been shown. However, the application submitted by appellee was not solely a request for transfer of ownership of a Certificate of Need but in addition sought approval for the relocation of the proposed facility. This additional request, concludes the Commission, places this application beyond the scope of the provisions of both section 3.13(b)(3), supra, and Rule 515(c), supra.

The Health Planning and Development Act, section 3.01(a), supra, specifies certain activities for which a Certificate of Need or an Exemption Certificate must be obtained from the Commission. These designated activities include proposed projects to:

“(1) substantially expand a service currently offered or provide a service not currently offered by the facility;

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Texas Health Fac. Com'n v. EL PASO MED., ETC.
573 S.W.2d 291 (Court of Appeals of Texas, 1978)

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573 S.W.2d 291, 1978 Tex. App. LEXIS 3842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texas-health-facilities-commission-v-el-paso-medical-surgical-associates-texapp-1978.