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CHARTER HOSPITAL BUCKS COUNTY v. COMMONWEALTH PENNSYLVANIA (12/11/87)

decided: December 11, 1987.

CHARTER HOSPITAL OF BUCKS COUNTY, PENNSYLVANIA, INC., PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF HEALTH, RESPONDENT



Appeal from the Order of the State Health Facility Hearing Board in the case of In Re: Charter House Hospital of Bucks County, Pennsylvania, Inc.; Project Nos.: CON-86-A-6517-B; CON-86-C-6518-B; CON-86-H-6519-B; Docket Nos. CN 87-001, CN 87-002, CN 87-003, dated May 29, 1987.

COUNSEL

Richard L. Shackelford, with him, Susan T. Gelder, King & Spalding, and Ruth M. Siegel, Post & Schell, P.C., for petitioner.

Darius G. C. Moss, Assistant Counsel, for respondent.

Judges Craig and MacPhail, and Senior Judge Narick, sitting as a panel of three. Opinion by Judge Craig.

Author: Craig

[ 111 Pa. Commw. Page 578]

Charter Hospital of Bucks County, Pennsylvania, Inc. appeals an order of the State Health Facility Hearing Board upholding the Department of Health's determination that three psychiatric hospitals, proposed to be developed by Charter, were subject to certificate-of-need review. Charter requested determinations of non-reviewability from the department on December 8, 1986. On December 22, 1986, the department replied that under the Pennsylvania Health Care Facilities Act, Act of July 19, 1979, P.L. 130, No. 48, as amended, 35 P.S. § 448.101, the three proposed hospitals were new institutional health facilities requiring certificate-of-need review. The board affirmed this holding on May 29, 1987. We granted Charter's Petition for Permission to Appeal on June 11, 1987. We now affirm.

Two primary issues are presented for review: (1) whether health care facilities which do not accept or receive any state or federal funds are excluded by statute or regulation from certificate-of-need review and (2) whether the exclusion provision of § 103 of the Pennsylvania Act, 35 P.S. § 448.103, constitutes an unlawful delegation of legislative authority to the Secretary of Health and Human Services.*fn1

The facts of the case are not in dispute. Charter's three requests for determinations of non-reviewability -- for proposed psychiatric hospitals in Bucks County,

[ 111 Pa. Commw. Page 579]

Harrisburg and Pittsburgh -- described the hospitals to be developed, and included the following statement:

The hospital will not accept, directly or indirectly, any Federal or State governmental funds for capitalization, depreciation, interest, research, or reimbursement. Therefore, the construction, development, and operation of this hospital does not require certificate of need review. Charter thus requests the Department to issue a determination of non-reviewability for this project.

On December 22, 1986, the department issued its determination that the proposed hospitals were projects subject to certificate-of-need review under section 701(a)(1) of the Act, 35 P.S. § 701(a)(1). That section provides in pertinent part:

(a) No person shall offer, develop, construct or otherwise establish or undertake to establish within the state a new institutional health service without first obtaining a certificate of need from the department. For the purposes of this chapter, 'new institutional health services' shall include:

(1) The construction, development or other establishment of a new health care facility or health maintenance organization.

(2) Any expenditure by or on behalf of a health care facility or health maintenance organization in excess of $150,000 which . . . is a capital expenditure. . . .

Charter's claim of non-reviewability is based on an exclusionary provision in the definition of "health care facility" in section 103 of the Act, 35 P.S. § 448.103:

This definition shall exclude all health care facilities as hereinabove defined that do not accept, directly or indirectly, any Federal or State Governmental funds for capitalization, depreciation,

[ 111 Pa. Commw. Page 580]

    interest, research or reimbursement, unless the Secretary of Health, Education and Welfare, pursuant to Federal Public Law 93-641, section 1523(a)(4)(B), concludes that this exclusionary provision is unsatisfactory to the Departments of Health, Education and Welfare.

The Pennsylvania Health Care Facilities Act was enacted July 19, 1979, effective October 1, 1979. At that time, section 1523(a)(4)(B) of the National Health Planning and Resources Development Act of 1974, P.L. 93-641, required designated state agencies to "administer a State certificate of need program which applies to new institutional health services proposed to be offered or developed within the State and which is satisfactory to the Secretary." (Emphasis added.) The reference to the "Secretary" was to the federal Secretary of Health, Education and Welfare (HEW).

On September 11, 1979, Pennsylvania Secretary of Health Dr. Gordon K. MacLeod wrote to the Secretary of HEW regarding the exclusionary provision:

We are currently preparing regulations to implement this program so as to conform with the federal requirements, and would like your opinion as to whether or not the above exclusionary provision is satisfactory to the Department of Health, Education and Welfare.

Colin C. Rorrie, Jr., the Director of the Bureau of Health Planning, HEW, responded to the state's letter on October 3, 1979:

Sections 1523(a)(4)(B) and 1523(a)(5) of the Public Health Service Act apply to all 'health care facilities'. The Federal regulations do not provide for any exceptions to required coverage; therefore, such an exclusionary provision is clearly unsatisfactory, and the Secretary would so conclude. (Rorrie letter)

[ 111 Pa. Commw. Page 581]

At the same time the Pennsylvania legislature was debating and adopting its Act, the United States Congress was in the process of amending the federal statute, P.L. 93-641. Congress passed these amendments, embodied in P.L. 76-97, on October 4, 1979. P.L. 97-79 amended the language of section 1523(a)(4)(B) to describe the role of ...


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