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REHAB HOSPITAL SERVICES CORPORATION v. HEALTH SYSTEMS AGENCY SOUTHWESTERN PENNSYLVANIA (04/30/84)

decided: April 30, 1984.

REHAB HOSPITAL SERVICES CORPORATION, PETITIONER
v.
HEALTH SYSTEMS AGENCY OF SOUTHWESTERN PENNSYLVANIA, RESPONDENT. REHAB HOSPITAL SERVICES CORPORATION, PETITIONER V. HARMARVILLE REHABILITATION CENTER, INC., RESPONDENT. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF HEALTH, PETITIONER V. HARMARVILLE REHABILITATION CENTER, INC., RESPONDENT. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF HEALTH, PETITIONER V. HEALTH SYSTEMS AGENCY OF SOUTHWESTERN PENNSYLVANIA, RESPONDENT



Appeals from the Orders of the State Health Facility Hearing Board in cases of In re: Harmarville Rehabilitation Center, Inc., Project No. CON-81-H-1140-B, Docket No. CN 82-021 and In re: Health Systems Agency of Southwestern Pennsylvania, Project No. CON-81-H-1140-B, Docket No. CN 82-022.

COUNSEL

Richard DiSalle, with him Edward C. Schmidt and Templeton Smith, Jr., Rose, Schmidt, Dixon & Hasley, of counsel, Edward F. Shay, Gosfield & Shay, for petitioner, Rehab Hospital Services Corporation.

Ruth M. Siegel, Chief Counsel, with him Carolyn B. McClain, Assistant Counsel, Thomas D. Rees, Deputy General Counsel, and LeRoy S. Zimmerman, Attorney General, for petitioner, Pennsylvania Department of Health.

Eric W. Springer, with him Barbara Blackmond and James C. McManus, Horty, Springer & Mattern, P.C., for respondents, Harmarville Rehabilitation Center, Inc. and Health Systems Agency of Southwestern Pennsylvania.

Judges Craig, Doyle and Colins, sitting as a panel of three. Opinion by Judge Colins.

Author: Colins

[ 82 Pa. Commw. Page 149]

This is a consolidated appeal from two decisions of the State Health Facility Hearing Board (Board). Petitioners, Rehab Hospital Services (Rehab) and the Commonwealth of Pennsylvania, Department of Health (Department) appeal the reversal by the Board of the Secretary of Health's grant of a certificate of need (CON) to Rehab.

Rehab filed an application for a CON with the Department on February 17, 1982. Respondent Health Systems Agency (HSA), a regional planning agency, which includes local citizens and health care providers, requested additional information on March 18, 1982, advising Rehab that their application was incomplete. Rehab supplied additional information through August 4, 1982. On May 28, 1982 Rehab exercised its right to demand that its application be reviewed. The HSA referred the application to the Project Review Committee IV (Committee) of the Allegheny Sub-Area Advisory Council. On July 8, 1982, the Committee voted to recommend disapproval of the application, although they found the project financially feasible and the per diem charge to be low compared to other facilities. On July 21, 1982 the Allegheny Sub-Area Advisory Council voted to recommend disapproval. The HSA Board voted on July 28, 1982 to recommend disapproval of the application.

[ 82 Pa. Commw. Page 150]

The Department staff prepared a summary and made a recommendation that the application be disapproved. The Secretary approved the project and on November 5, 1982 the Department approved the project and granted a CON.

On November 30, 1982 the HSA and Harmarville each filed a Notice of Appeal to the grant of the CON.

The Board took testimony from the Secretary and made numerous findings of fact. Their conclusions of law were that the Department's decision was not based solely on the record, thus violating Section 702(f)(2) of the Health Care Facilities Act (Act).*fn1 This was apparently because of the Secretary's testimony that he had also relied upon his years of experience in evaluating the application. The Board then reversed the Department's order granting Rehab's CON.

This somewhat cumbersome procedure is mandated by the Act.*fn2 The purposes of the Act were enumerated as follows:

The General Assembly finds that the health and welfare of Pennsylvania citizens will be enhanced by the orderly and economical distribution of health care resources to prevent needless duplication of services. Such distribution of resources will be furthered by governmental involvement to coordinate the health care system. Such a system will enhance the public health and welfare by making the delivery system responsive and adequate to the needs of its citizens, and assuring that new health care services and facilities are efficiently and effectively used; that health care services and

[ 82 Pa. Commw. Page 151]

    facilities continue to meet high quality standards; and, that all citizens receive humane, courteous, and dignified treatment. In developing such a coordinated health care system, it is the policy of the Commonwealth to foster responsible private operation and ownership of health care facilities, to encourage innovation and continuous development of improved methods of health care and to aid efficient and effective planning using local health systems agencies. It is the intent of the General Assembly that the Department of Health foster a sound health care system which provides for quality care at appropriate health care facilities throughout the Commonwealth. (Emphasis added.)*fn3

Under this Act, the Department must act as a statewide health planning and development agency, following the directives of Subchapter XIII of the Federal Public Health Services Act.*fn4 The Health Care Facilities Act further states its purpose in ยง 448.202:

Encouragement of competition and innovation

The health system agencies and the department shall in their planning and review activities foster competition and encourage innovations in the financing and delivery systems for health services that will promote economic behavior by consumers and providers of health services and that lead to appropriate investment, supply and use of health services. To this end, the health systems plan and the annual implementation plan ...


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