Select Specialty Hospitals, Inc., d/b/a Select Specialty LTCH-Birmingham v. Alabama State Health Planning and Development Agency and Noland Health Services, Inc.

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REL: 09/21/2012 Notice: This o p i n i o n i s s u b j e c t t o formal r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e Reporter of Decisions, Alabama A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ((334) 2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . ALABAMA COURT OF CIVIL APPEALS SPECIAL TERM, 2012 2110152 Select S p e c i a l t y Hospitals, Inc., d/b/a S e l e c t S p e c i a l t y LTCH-Birmingham v. Alabama S t a t e H e a l t h Planning and Development Agency and Noland H e a l t h S e r v i c e s , Inc. Appeal from Montgomery C i r c u i t Court (CV-10-900124 and CV-10-900802) PITTMAN, J u d g e . Select Select Specialty Hospitals, S p e c i a l t y LTCH-Birmingham I n c . , doing ("Select"), business appeals as from a j u d g m e n t o f t h e Montgomery C i r c u i t C o u r t a f f i r m i n g a d e c i s i o n 2110152 of t h e S t a t e H e a l t h to issue Noland a modification Health circuit Planning of a c e r t i f i c a t e Services, court's and Development Agency o f need I n c . ("Noland"). judgment and We remand ("SHPDA") ("CON") t o reverse cause the the with instructions. F a c t u a l and P r o c e d u r a l Background I n 2002, SHPDA i s s u e d a CON a u t h o r i z i n g N o l a n d t o c o n v e r t 55 a c u t e - c a r e h o s p i t a l b e d s i n L l o y d N o l a n d H o s p i t a l t o l o n g term acute-care h o s p i t a l ("LTACH") b e d s , 1 with the converted b e d s t o become a " h o s p i t a l - w i t h i n - a - h o s p i t a l " l o c a t e d on t h e premises 2009, of Lloyd Noland H o s p i t a l Noland undertaken (which, as t h e LTACH-bed i n J e f f e r s o n County. explained conversion herein, authorized had In not yet b y t h e CON) s o u g h t a m o d i f i c a t i o n o f t h e CON t o l o c a t e t h e c o n v e r t e d LTACH beds a t a h o s p i t a l i n S h e l b y County. Select intervened i n the p r o c e e d i n g , opposed t h e proposed m o d i f i c a t i o n , and r e q u e s t e d a fair hearing. The f a i r - h e a r i n g o f f i c e r recommended SHPDA g r a n t N o l a n d ' s r e q u e s t f o r a m o d i f i c a t i o n that o f t h e CON. " ' L o n g - t e r m a c u t e care beds a r e u s e d t o s e r v e g e n e r a l l y e l d e r l y a n d c h r o n i c a l l y i l l p a t i e n t s who e x p e r i e n c e h o s p i t a l s t a y s g r e a t e r t h a n 25 d a y s . ' " L l o y d N o l a n d F o u n d . , I n c . v. C i t y o f F a i r f i e l d H e a l t h c a r e A u t h . , 837 So. 2d 253, 256 n.1 (Ala. 2002). 1 2 2110152 SHPDA issued t h e m o d i f i c a t i o n , and S e l e c t review i n the c i r c u i t court. decision, after which sought judicial The c i r c u i t c o u r t u p h e l d SHPDA's Select f i l e d a t i m e l y appeal i n this court. The circuit court's judgment protracted procedural h i s t o r y of t h i s recited the facts c a s e as f o l l o w s : " N o l a n d was i n c o r p o r a t e d i n 1951 f o r t h e c h a r i t a b l e purpose o f m a i n t a i n i n g and o p e r a t i n g a hospital or h o s p i t a l s , nursing homes, medical c l i n i c s and o t h e r f a c i l i t i e s i n c o n n e c t i o n with f u r n i s h i n g m e d i c a l s e r v i c e s . F o r t h e n e x t 45 y e a r s , N o l a n d owned a n d o p e r a t e d L l o y d N o l a n d H o s p i t a l , a 319-bed a c u t e c a r e h o s p i t a l l o c a t e d i n F a i r f i e l d , Alabama. "In ... 1995, N o l a n d f i l e d a CON a p p l i c a t i o n w i t h SHPDA r e q u e s t i n g t h e r e c l a s s i f i c a t i o n o f 100 a c u t e care h o s p i t a l beds l o c a t e d a t L l o y d N o l a n d H o s p i t a l [ i n J e f f e r s o n C o u n t y ] t o 100 LTACH b e d s .... SHPDA's CON R e v i e w B o a r d d e n i e d Noland's a p p l i c a t i o n on t h e b a s i s t h a t t h e t h e n a p p l i c a b l e State Health Plan d i d not p r o v i d e f o r long term acute care h o s p i t a l s e r v i c e s i n Alabama. "As a d e n i e d a p p l i c a n t , N o l a n d r e q u e s t e d a f a i r h e a r i n g and t h e f a i r h e a r i n g o f f i c e r r u l e d t h a t t h e CON Review Board acted i n an a r b i t r a r y and c a p r i c i o u s manner i n d e n y i n g N o l a n d ' s a p p l i c a t i o n , r e v e r s e d t h e d e c i s i o n o f t h e CON R e v i e w B o a r d , a n d remanded t h e m a t t e r t o the Board for further proceedings consistent with h i s order. "On J u l y 15, 1995, w h i l e t h e i n i t i a l fair h e a r i n g was p e n d i n g , N o l a n d e n t e r e d i n t o a S t o c k Purchase Agreement ('the SPA') with Tenet Healthsystem M e d i c a l , I n c . , a s u b s i d i a r y o f Tenet 3 and 2110152 Healthcare Corporation (collectively, 'Tenet') pursuant t o which Noland agreed t o s e l l L l o y d Noland H o s p i t a l t o T e n e t . ... "On S e p t e m b e r 10, 1996, t h e CON R e v i e w B o a r d once again denied Noland's CON application; t h e r e f o r e , N o l a n d a n d T e n e t amended A r t i c l e XV o f t h e SPA t o a d d a new S e c t i o n 15.4 w h i c h ... g r a n t e d N o l a n d t h e r i g h t t o r e p u r c h a s e t h e b e d s f o r $1.00 once N o l a n d r e c e i v e d t h e a u t h o r i t y t o o p e r a t e them as LTACH b e d s a n d r e q u i r e d t h a t T e n e t ' c o o p e r a t e with [Noland] i n having the "Option Beds" r e l i c e n s e d , r e c e r t i f i e d , or r e l o c a t e d f o r long term acute care purposes a t the H o s p i t a l or a t other sites.' " A f t e r i t s sale of L l o y d Noland H o s p i t a l t o Tenet, Noland appealed the d e n i a l o f i t s CON application to the C i r c u i t Court of J e f f e r s o n C o u n t y , A l a b a m a . W h i l e t h a t a p p e a l was p e n d i n g , t h e 1996-99 State Health Plan included provisions a d d r e s s i n g LTACHs. T h e r e a f t e r , N o l a n d a n d SHPDA r e a c h e d a s e t t l e m e n t whereby N o l a n d agreed t o d i s m i s s i t s a p p e a l i n exchange f o r the r i g h t t o r e a p p l y f o r CONs t o r e c l a s s i f y 100 o f t h e S e c t i o n 15.4 'Option Beds' as LTACH beds under t h e p r o v i s i o n s o f t h e newly r e v i s e d S t a t e H e a l t h P l a n . " P u r s u a n t t o t h e s e t t l e m e n t , on September 15, 1998, N o l a n d f i l e d a CON a p p l i c a t i o n w i t h SHPDA r e q u e s t i n g t h e r e c l a s s i f i c a t i o n o f 55 a c u t e c a r e beds l o c a t e d a t L l o y d N o l a n d H o s p i t a l ( s u b s e q u e n t l y renamed ' H e a l t h S o u t h M e t r o West') t o LTACH b e d s f o r t h e e s t a b l i s h m e n t o f a 55-bed LTACH f a c i l i t y on t h e campus of Lloyd Noland Hospital ('the N o l a n d Project'). Birmingham Baptist Medical CenterM o n t c l a i r ( ' B a p t i s t - M o n t c l a i r ' ) i n t e r v e n e d i n , and r e q u e s t e d a c o n t e s t e d case h e a r i n g w i t h r e s p e c t t o , the N o l a n d P r o j e c t . "On December 7, application with 1998, S e l e c t filed SHPDA requesting 4 a CON the 2110152 r e c l a s s i f i c a t i o n o f 38 l o n g t e r m c a r e b e d s l o c a t e d a t and owned by B a p t i s t - M o n t c l a i r as LTACH b e d s f o r t h e e s t a b l i s h m e n t o f a 38-bed LTACH on t h e campus o f B a p t i s t - M o n t c l a i r ('the S e l e c t P r o j e c t ' ) . Noland intervened i n , and requested a contested case h e a r i n g w i t h r e s p e c t t o , the S e l e c t P r o j e c t 1 " W h i l e t h e N o l a n d P r o j e c t and t h e S e l e c t P r o j e c t were p e n d i n g , T e n e t and the C i t y of Fairfield H e a l t h c a r e A u t h o r i t y ('FHA') e n t e r e d i n t o an A s s e t S a l e A g r e e m e n t d a t e d O c t o b e r 21, 1999 ('the A S A ' ) , p u r s u a n t to which Tenet agreed to s e l l L l o y d Noland H o s p i t a l t o FHA. P u r s u a n t t o t h e ASA, FHA a g r e e d t o assume T e n e t ' s o b l i g a t i o n s t o N o l a n d c o n t a i n e d i n S e c t i o n 15.4 o f t h e SPA r e g a r d i n g t h e ... 'Option Beds.' T e n e t and FHA c l o s e d t h e s a l e and p u r c h a s e o f L l o y d N o l a n d H o s p i t a l on November 15, 1999, [and] FHA arranged for HealthSouth Corporation ('HealthSouth') to u n d e r w r i t e the purchase p r i c e of t h e H o s p i t a l , t o manage t h e H o s p i t a l , and t o p r o v i d e the H o s p i t a l a l i n e of c r e d i t to fund i t s cash needs. " T h e r e a f t e r , the p a r t i e s to the Noland P r o j e c t and t h e S e l e c t P r o j e c t c o n t e s t e d c a s e s r e a c h e d a settlement p u r s u a n t t o w h i c h t h e y a g r e e d , among o t h e r t h i n g s , t o recommend t o t h e a d m i n i s t r a t i v e law j u d g e t h a t b o t h t h e N o l a n d P r o j e c t and t h e S e l e c t P r o j e c t be a p p r o v e d . C o u n s e l f o r N o l a n d and S e l e c t f u r t h e r s t i p u l a t e d t h a t b o t h t h e N o l a n d P r o j e c t and t h e S e l e c t P r o j e c t were c o n s i s t e n t w i t h t h e 1996¬ 1999 S t a t e H e a l t h P l a n and s a t i s f i e d a l l s t a t u t o r y and r e g u l a t o r y r e q u i r e m e n t s f o r t h e i s s u a n c e o f t h e r e q u e s t e d CONs. N o l a n d and S e l e c t t h e n f i l e d a j o i n t m o t i o n w i t h t h e a d m i n i s t r a t i v e law j u d g e f o r an o r d e r recommending a p p r o v a l o f t h e two p r o j e c t s , and on J a n u a r y 21, 2000, t h e a d m i n i s t r a t i v e law j u d g e i s s u e d a recommended o r d e r f o r c o n t e s t e d c a s e h e a r i n g recommending a p p r o v a l o f t h e two p r o j e c t s . 5 2110152 "On F e b r u a r y 11, 2000, FHA f i l e d s u i t a g a i n s t SHPDA, SHPDA's E x e c u t i v e D i r e c t o r , and N o l a n d i n t h e C i r c u i t C o u r t o f Montgomery C o u n t y , A l a b a m a (the 'FHA litigation'), s e e k i n g t o e n j o i n SHPDA f r o m i s s u i n g a CON f o r t h e N o l a n d P r o j e c t . Despite the f a c t t h a t FHA h a d e x p r e s s l y assumed T e n e t ' s d u t y o f c o o p e r a t i o n c o n t a i n e d i n S e c t i o n 15.4 o f t h e SPA, FHA s o u g h t a d e c l a r a t i o n t h a t N o l a n d h a d no r i g h t t o a p p l y f o r t h e N o l a n d CON b e c a u s e i t d i d n o t own t h e beds to be reclassified, that Noland's CON application was unauthorized and invalid, that N o l a n d had no o w n e r s h i p i n t h e b e d s , t h a t N o l a n d ' s o p t i o n t o p u r c h a s e t h e beds was n u l l and v o i d , and t h a t SHPDA h a d no a u t h o r i t y t o c o n s i d e r N o l a n d ' s CON a p p l i c a t i o n . ... "Notwithstanding Select's identical factual c i r c u m s t a n c e s , on M a r c h 3, 2000, SHPDA i s s u e a CON for the S e l e c t P r o j e c t . "On O c t o b e r 18, 2000, [ M o n t g o m e r y C i r c u i t Judge es C h a r l e s P r i c e ] e n t e r e d a summary j u d g m e n t i n [ f a v o r of FHA i n ] t h e FHA l i t i g a t i o n Noland appealed the j u d g m e n t t o t h e A l a b a m a Supreme C o u r t . "On F e b r u a r y 16, 2001, N o l a n d f i l e d s u i t a g a i n s t Tenet i n the U n i t e d S t a t e s D i s t r i c t C o u r t f o r the Northern D i s t r i c t o f Alabama (the 'Noland/Tenet l i t i g a t i o n ' ) , s e e k i n g damages f r o m T e n e t r e s u l t i n g from FHA's interference with Noland's CON application and the breach of the contract o b l i g a t i o n s o f T e n e t w h i c h were assumed by FHA. T e n e t f i l e d a t h i r d - p a r t y c o m p l a i n t a g a i n s t FHA and H e a l t h S o u t h , a l l e g i n g t h a t any i n t e r f e r e n c e by FHA and H e a l t h S o u t h w i t h t h e N o l a n d P r o j e c t was c o v e r e d by i n d e m n i t y o b l i g a t i o n s r u n n i n g t o T e n e t f r o m FHA and H e a l t h S o u t h , and s e e k i n g r e i m b u r s e m e n t o f any damages i n c u r r e d by T e n e t as a r e s u l t of the Noland/Tenet l i t i g a t i o n . "In defense of Noland's claims, Tenet and H e a l t h S o u t h a s s e r t e d t h e same c o n t e n t i o n s made by 6 2110152 FHA i n t h e FHA l i t i g a t i o n , i . e . , t h a t N o l a n d d i d n o t have t h e r i g h t t o a p p l y f o r a CON b e c a u s e [ i t ] d i d n o t own t h e beds [ T ] h e same c h a l l e n g e s t o t h e v a l i d i t y o f t h e N o l a n d CON t h a t were a t i s s u e i n t h e FHA l i t i g a t i o n were a t i s s u e i n t h e N o l a n d / T e n e t litigation. "On F e b r u a r y 22, 2002, t h e A l a b a m a Supreme C o u r t r u l e d i n f a v o r o f N o l a n d i n t h e FHA litigation, finding that " ' [ b ] e c a u s e [ F H A ] assumed t h e o b l i g a t i o n s o f Amendment Two o f t h e SPA, [ F H A ] was c o n t r a c t u a l l y b o u n d t o , among o t h e r t h i n g s , 'cooperate w i t h [ N o l a n d ] i n having the O p t i o n Beds r e l i c e n s e d , r e c e r t i f i e d , or r e l o c a t e d f o r long term acute care purposes a t t h e H o s p i t a l o r o t h e r s i t e s , ' so t h a t [Noland] could, f o l l o w i n g the issuance of t h e CONs, p u r c h a s e ... [ t h e ] beds f r o m [FHA]. [FHA] breached i t s o b l i g a t i o n s to c o o p e r a t e as a m a t t e r o f l a w , b y commencing t h i s a c t i o n , and b y a t t e m p t i n g t o i n t e r v e n e i n t h e c o n t e s t e d c a s e t o oppose [ N o l a n d ' s ] CON a p p l i c a t i o n s ' " L l o y d N o l a n d F o u n d a t i o n , I n c . v. C i t y o f F a i r f i e l d H e a l t h c a r e A u t h . , 837 So. 2d 253, 266 ( A l a . 2 0 0 2 ) . Thus, t h e A l a b a m a Supreme C o u r t c l e a r e d t h e way f o r SHPDA t o i s s u e t h e N o l a n d CON and f o r FHA t o t r a n s f e r o w n e r s h i p o f t h e 55 r e c l a s s i f i e d LTACH beds to Noland. 3 "On June 28, 2002, SHPDA i s s u e d N o l a n d CON 2004LTACH a u t h o r i z i n g t h e N o l a n d P r o j e c t . ... [When FHA r e f u s e d t o t r a n s f e r ownership o f t h e beds t o Noland, Montgomery C i r c u i t Judge C h a r l e s P r i c e ] o r d e r e d FHA 'to s e l l and t r a n s f e r t i t l e t o t h e 55 beds c o v e r e d by CON 2004 t o N o l a n d f o r t h w i t h . ' "On ownership September 19, 2002, FHA transferred o f t h e 55 r e c l a s s i f i e d LTACH beds t o 7 2110152 Noland pursuant to a b i l l of s a l e c o n t a i n i n g i n v a l i d and unenforceable reversionary language that v i o l a t e d FHA's assumed o b l i g a t i o n o f c o o p e r a t i o n u n d e r § 15.4 o f t h e SPA, as e x p r e s s l y i n t e r p r e t e d by t h e A l a b a m a Supreme C o u r t and Montgomery C i r c u i t Judge P r i c e . The u n d i s p u t e d t e s t i m o n y p r o v i d e d a t the f a i r h e a r i n g e s t a b l i s h e d t h a t Noland continues t o own t h e 55 LTACH b e d s . "On October 15, 2003, FHA transferred H e a l t h S o u t h M e t r o West ( f / k / a L l o y d N o l a n d H o s p i t a l ) and a l l related assets to HealthSouth in s a t i s f a c t i o n o f t h e d e b t owed by FHA t o H e a l t h S o u t h pursuant t o the v a r i o u s agreements e n t e r e d i n t o i n c o n n e c t i o n w i t h FHA's p u r c h a s e o f t h e h o s p i t a l f r o m Tenet. m ^ v-^ ^ -I- " I n J u l y 2004, H e a l t h S o u t h a n n o u n c e d t h a t i t was c l o s i n g M e t r o West i n September 2004. T h e r e a f t e r , on A u g u s t 27, 2004, N o l a n d f i l e d suit against HealthSouth i n the C i r c u i t Court of Jefferson County, Alabama (the 'Noland/HealthSouth litigation'). Though N o l a n d ' s complaint sought damages f r o m H e a l t h S o u t h , i t s p r i m a r y t h r u s t was t o e s t a b l i s h t h a t ( i ) FHA was t h e a l t e r ego o r mere instrumentality of HealthSouth, ( i i ) a l l the o b l i g a t i o n s t o N o l a n d assumed by FHA when i t b o u g h t L l o y d N o l a n d H o s p i t a l f r o m T e n e t were b i n d i n g on H e a l t h S o u t h , and ( i i i ) t h e A l a b a m a Supreme C o u r t ' s d e c i s i o n i n t h e FHA litigation was b i n d i n g and enforceable against HealthSouth. "On o r a b o u t S e p t e m b e r 1, 2004, c l o s e d H e a l t h S o u t h M e t r o West as an hospital. HealthSouth acute care "On M a r c h 30, 2005, N o l a n d p r o v i d e d SHPDA a s t a t u s r e p o r t on t h e N o l a n d P r o j e c t i n w h i c h i t r e p o r t e d t h a t t h e N o l a n d CON was s t i l l i n v o l v e d i n litigation, and SHPDA a d v i s e d N o l a n d , by letter d a t e d A p r i l 18, 2005, t h a t , ' [ i ] n a s m u c h as t h i s p r o j e c t i s i n l i t i g a t i o n , we w i l l w a i t t o h e a r f r o m 8 2110152 the C o u r t b e f o r e t a k i n g any f u r t h e r a c t i o n . ' N o l a n d provided SHPDA further updates regarding the l i t i g a t i o n on A u g u s t 1, 2006 a n d J u n e 6, 2007. "The N o l a n d / T e n e t l i t i g a t i o n was f i n a l l y t r i e d to a j u r y i n f e d e r a l court i n December 2008, r e s u l t i n g i n a j u r y v e r d i c t i n favor of Noland a g a i n s t Tenet and H e a l t h S o u t h . W h i l e v a r i o u s p o s t t r i a l m o t i o n s were p e n d i n g , t h e m a t t e r was f i n a l l y resolved a n d an a g r e e d o r d e r o f d i s m i s s a l was e n t e r e d on May 2 1 , 2009. By o r d e r d a t e d May 29, 2009, t h e N o l a n d / H e a l t h S o u t h l i t i g a t i o n a l s o was r e s o l v e d a n d a l l c l a i m s a n d c a u s e s o f a c t i o n were dismissed with prejudice. "On November 2, 2009, N o l a n d f i l e d i t s r e q u e s t w i t h SHPDA f o r t h e p r o j e c t m o d i f i c a t i o n , w h i c h was p l a c e d on t h e agenda f o r t h e November 18, 2009, m e e t i n g o f t h e CON R e v i e w B o a r d . On November 17, 2009, Select filed with SHPDA i t s notice of i n t e r v e n t i o n and o p p o s i t i o n w i t h r e s p e c t to the project modification. "The p r o j e c t m o d i f i c a t i o n came b e f o r e t h e CON R e v i e w B o a r d a t i t s November 18, 2009, m e e t i n g . After reviewing t h e documents of record and considering the presentations and arguments o f N o l a n d and i t s c o u n s e l , S h e l b y B a p t i s t , and S e l e c t ' s c o u n s e l , t h e CON R e v i e w B o a r d u n a n i m o u s l y a p p r o v e d the p r o j e c t m o d i f i c a t i o n . The u n d i s p u t e d t e s t i m o n y o f t h e P r e s i d e n t o f S h e l b y B a p t i s t b e f o r e t h e CON R e v i e w B o a r d was t h a t t h e r e was an unmet n e e d f o r LTACH s e r v i c e s i n S h e l b y C o u n t y . On December 3, 2009, t h e CON R e v i e w B o a r d issued i t s ruling approving the project modification, a n d SHPDA i s s u e [ d ] N o l a n d CON 2004-LTACH-Ext-Mod #1, Mod #2. "On December 17, 2009, S e l e c t f i l e d w i t h SHPDA i t s r e q u e s t f o r [a] f a i r h e a r i n g w i t h r e s p e c t t o t h e CON Review Board's approval of the project modification. SHPDA a p p o i n t e d t h e H o n o r a b l e P. M i c h a e l C o l e as t h e f a i r h e a r i n g officer ('FHO 9 2110152 Cole'). Following the f a i r hearing, FHO C o l e e n t e r e d an o r d e r a p p r o v i n g t h e p r o j e c t m o d i f i c a t i o n , w h i c h a p p r o v a l became t h e f i n a l order o f SHPDA p u r s u a n t t o A l a . Code 1975, § 2 2 - 2 1 - 2 7 5 ( 1 4 ) a n d A l a . Admin. Code R u l e 410-1-8¬ .25. "Although Select had p r e v i o u s l y filed a p r o t e c t i v e a p p e a l f r o m t h e December 3, 2009, f i n a l o r d e r o f t h e CON R e v i e w B o a r d a p p r o v i n g t h e p r o j e c t m o d i f i c a t i o n ( C V - 1 0 - 9 0 0 1 2 4 ) , S e l e c t f i l e d w i t h SHPDA a second n o t i c e of appeal appealing FHO C o l e ' s a p p r o v a l o f t h e p r o j e c t m o d i f i c a t i o n and f i l e d w i t h t h i s court a second p e t i t i o n f o r j u d i c i a l review (CV-10-900802) w i t h i t s protective petition for judicial review (CV-10-900124) p u r s u a n t t o R u l e 42(a) o f t h e A l a b a m a R u l e s o f C i v i l P r o c e d u r e . " The N o l a n d P r o j e c t a n d t h e S e l e c t P r o j e c t were not mutually exclusive f o r a t the time their r e s p e c t i v e CON a p p l i c a t i o n s were f i l e d t h e r e was a n e e d f o r 155 LTACH b e d s b a s e d on t h e c o m b i n e d average d a i l y census o f t h e acute care h o s p i t a l s i n J e f f e r s o n County and i t s c o n t i g u o u s c o u n t i e s , which i n c l u d e s Shelby County. The N o l a n d P r o j e c t (55 LTACH b e d s ) , a n d t h e S e l e c t P r o j e c t (38 LTACH b e d s ) , and a s e c o n d N o l a n d CON a p p l i c a t i o n ( r e q u e s t i n g 45 LTACH b e d s t o be r e l o c a t e d t o M e d i c a l C e n t e r E a s t ) , o n l y a c c o u n t e d f o r 138 o f t h e 155 n e e d e d LTACH b e d s . 1 " E v e n a f t e r t h e A l a b a m a Supreme C o u r t r u l e d i n f a v o r o f N o l a n d i n t h e FHA l i t i g a t i o n , Tenet and HealthSouth continued t o assert the i n v a l i d i t y of t h e N o l a n d CON i n d e f e n s e o f N o l a n d ' s c l a i m s i n t h e Noland/Tenet l i t i g a t i o n . " 3 (Some f o o t n o t e s omitted.) 10 2110152 Standard of Review In Colonial Management Group, L.P. v. State Health P l a n n i n g and D e v e l o p m e n t A g e n c y , 853 So. 2d 972, 974-75 ( A l a . C i v . App. 2 0 0 2 ) , t h i s c o u r t s e t o u t t h e p r i n c i p l e s t h a t to a p p e l l a t e review apply o f an a d m i n i s t r a t i v e a g e n c y ' s a c t i o n . "This c o u r t reviews a t r i a l c o u r t ' s judgment r e g a r d i n g t h e d e c i s i o n o f an a d m i n i s t r a t i v e a g e n c y ' w i t h o u t any p r e s u m p t i o n o f i t s c o r r e c t n e s s , s i n c e [the t r i a l ] c o u r t was i n no b e t t e r p o s i t i o n t o review the [agency's d e c i s i o n ] t h a n ' t h i s c o u r t . State Health Planning & Res. Dev. Admin. v. R i v e n d e l l o f A l a b a m a , I n c . , 469 So. 2d 613, 614 (Ala. Civ. App. 1985) . Under the Alabama A d m i n i s t r a t i v e P r o c e d u r e A c t ('AAPA'), § 41-22-1 e t s e q . , A l a . Code 1975, w h i c h g o v e r n s j u d i c i a l r e v i e w of agency d e c i s i o n s , " ' [ e ] x c e p t where j u d i c i a l review i s by t r i a l de novo, t h e a g e n c y o r d e r s h a l l be t a k e n as p r i m a f a c i e j u s t and reasonable and t h e c o u r t s h a l l n o t s u b s t i t u t e i t s judgment f o r t h a t o f t h e a g e n c y as t o t h e w e i g h t o f t h e e v i d e n c e on q u e s t i o n s of f a c t , e x c e p t where o t h e r w i s e a u t h o r i z e d by s t a t u t e . The c o u r t may a f f i r m t h e a g e n c y a c t i o n o r remand t h e c a s e t o t h e a g e n c y f o r t a k i n g a d d i t i o n a l t e s t i m o n y and e v i d e n c e o r for f u r t h e r proceedings. The c o u r t may reverse or modify the d e c i s i o n or grant o t h e r a p p r o p r i a t e r e l i e f from the agency action, equitable or legal, including d e c l a r a t o r y r e l i e f , i f the court f i n d s that t h e a g e n c y a c t i o n i s due t o be s e t a s i d e o r modified under standards set forth i n appeal or review s t a t u t e s a p p l i c a b l e to t h a t agency or i f s u b s t a n t i a l r i g h t s of the p e t i t i o n e r have been p r e j u d i c e d b e c a u s e t h e 11 2110152 agency a c t i o n following: i s any one o r more "'(1) In constitutional provisions; "'(2) statutory agency; violation of or statutory In excess authority of of "'(3) I n v i o l a t i o n p e r t i n e n t agency r u l e ; "'(4) procedure; of the Made upon "'(5) Affected error of l a w ; the the o f any unlawful by other "'(6) C l e a r l y e r r o n e o u s i n view of the r e l i a b l e , p r o b a t i v e , and s u b s t a n t i a l e v i d e n c e on t h e whole r e c o r d ; o r "'(7) Unreasonable, arbitrary, or capricious, or characterized b y an abuse o f discretion or a clearly unwarranted exercise of discretion.' "§ 4 1 - 2 2 - 2 0 ( k ) , A l a . Code 1975 (emphasis a d d e d ) . I n reviewing the decision of a state administrative agency, ' [ t ] h e s p e c i a l competence o f t h e a g e n c y lends great weight to i t s decision, and t h a t d e c i s i o n must be a f f i r m e d , u n l e s s i t i s a r b i t r a r y and c a p r i c i o u s o r n o t made i n c o m p l i a n c e with a p p l i c a b l e l a w . ' A l a b a m a R e n a l S t o n e I n s t . , I n c . v. Alabama S t a t e w i d e H e a l t h C o o r d i n a t i n g C o u n c i l , 62 8 So. 2d 821, 823 ( A l a . C i v . App. 1 9 9 3 ) . 'The w e i g h t or importance a s s i g n e d t o any g i v e n p i e c e o f 12 2110152 evidence presented i n a CON a p p l i c a t i o n i s l e f t primarily to the [ C e r t i f i c a t e o f Need Review Board's] d i s c r e t i o n , i n l i g h t of the [ C e r t i f i c a t e of Need R e v i e w B o a r d ' s ] r e c o g n i z e d e x p e r t i s e i n d e a l i n g w i t h these s p e c i a l i z e d areas.' State Health Planning & Dev. A g e n c y v . B a p t i s t H e a l t h S y s . , I n c . , 766 So. 2d 176, 178 ( A l a . C i v . App. 1999) . N e i t h e r this court nor the t r i a l court may substitute i t s judgment f o r t h a t o f t h e a d m i n i s t r a t i v e agency. A l a b a m a R e n a l S t o n e I n s t . , I n c . v. A l a b a m a S t a t e w i d e H e a l t h C o o r d i n a t i n g C o u n c i l , 628 So. 2d 821, 823 ( A l a . C i v . App. 1993) . ' T h i s h o l d s t r u e e v e n i n c a s e s where t h e t e s t i m o n y i s generalized, the e v i d e n c e i s meager, a n d r e a s o n a b l e minds m i g h t d i f f e r as t o t h e c o r r e c t r e s u l t . ' H e a l t h C a r e A u t h . o f H u n t s v i l l e v . S t a t e H e a l t h P l a n n i n g A g e n c y , 54 9 So. 2d 973, 975 ( A l a . C i v . App. 1 9 8 9 ) . F u r t h e r , 'an agency's i n t e r p r e t a t i o n of i t s own rule or r e g u l a t i o n must s t a n d i f i t i s r e a s o n a b l e , even t h o u g h i t may n o t a p p e a r as r e a s o n a b l e as some o t h e r i n t e r p r e t a t i o n . ' S y l a c a u g a H e a l t h C a r e C t r . , I n c . v. A l a b a m a S t a t e H e a l t h P l a n n i n g A g e n c y , 662 So. 2d 265, 268 ( A l a . C i v . App. 1 9 9 4 ) . " Discussion S e l e c t contends t h a t the c i r c u i t court e r r e d i n a f f i r m i n g SHPDA's d e c i s i o n b e c a u s e , i t s a y s , N o l a n d f a i l e d t o e s t a b l i s h t h a t i t s p r o j e c t - m o d i f i c a t i o n r e q u e s t was c o n s i s t e n t w i t h t h e 1996-1999 State Health Plan ("SHP") i n several Specifically, S e l e c t argues t h a t Noland f a i l e d any indicating evidence (1) that there was respects. to introduce a need, as d e t e r m i n e d b y t h e n e e d m e t h o d o l o g y o u t l i n e d i n t h e 1996-1999 SHP, f o r LTACH b e d s i n Shelby 13 County, (2) t h a t i t had the 2110152 ability t o "convert excess acute-care beds to long-term h o s p i t a l b e d s " as r e q u i r e d b y t h e 1996-1999 SHP, a n d (3) t h a t it had the " w r i t t e n p a t i e n t t r a n s f e r agreements" w i t h other l o c a l h o s p i t a l s r e q u i r e d b y t h e 1996-1999 SHP. I. The Need f o r LTACH Beds 1996-1999 SHP, w h i c h a l l p a r t i e s a g r e e to Noland's project modification, established i s applicable the following need methodology f o r l o n g - t e r m a c u t e - c a r e beds: "The [ L T A C H ] b e d n e e d f o r t h e a r e a s h a l l be no more t h a n f i v e (5) p e r c e n t o f t h e c o m b i n e d [ a v e r a g e d a i l y census] of a l l the acute-care h o s p i t a l s i n the county and c o n t i g u o u s c o u n t i e s . " Former R u l e 4 1 0 - 2 - 4 - . 0 2 ( 7 ) ( e ) ( 2 ) , A l a . A d m i n . Code (SHPDA). 2 S e l e c t a s s e r t s t h a t t h e methodology r e q u i r e s a computation o f the average daily census County and t h e c o u n t i e s t h e CON R e v i e w B o a r d ADC of hospitals ("ADC") o f a l l h o s p i t a l s i n S h e l b y contiguous t o Shelby County b u t t h a t ("the CONRB") e r r o n e o u s l y c o n s i d e r e d t h e only i n Jefferson and Shelby counties, t h e r e b y , S e l e c t says, i g n o r i n g t h e d a t a from c o u n t i e s that are contiguous t o Shelby but not contiguous t o J e f f e r s o n County. R u l e 410-2-4-.02 h a s b e e n amended. F o r p u r p o s e s o f t h i s o p i n i o n , we r e f e r t o R u l e 410-2-4-.02 a s i t e x i s t e d as p a r t o f t h e 1996-1999 SHP. 2 14 2110152 In response to Select's argument, the fair-hearing o f f i c e r determined the f o l l o w i n g : " [ T ] h e 1996-1999 S t a t e H e a l t h P l a n ... e s t a b l i s h e d t h a t t h e 'need [ f o r LTACH b e d s ] f o r t h e a r e a s h o u l d be no more t h a n f i v e (5) p e r c e n t o f t h e c o m b i n e d ADC of a l l acute care h o s p i t a l s i n the county and contiguous counties.' Ala. Admin. Code, Rule 410-2-4-.02(7)(e)2. Thus, the 'planning area' a p p l i c a b l e to the Noland P r o j e c t M o d i f i c a t i o n i s the c o u n t y i n w h i c h t h e LTACH i s t o be l o c a t e d and i t s contiguous counties. The N o l a n d CON a u t h o r i z e d t h e 5 5 - b e d LTACH i n J e f f e r s o n C o u n t y . A c c o r d i n g l y , t h e a p p l i c a b l e p l a n n i n g a r e a i s J e f f e r s o n C o u n t y and i t s contiguous counties, which i n c l u d e s Shelby County. Thus, t h e m o d i f i c a t i o n i s c o m p l i a n t w i t h t h e 1996¬ 1999 S t a t e H e a l t h P l a n , CON R u l e § 410-1-10-.03 and p r i o r a c t i o n s o f t h e CON R e v i e w B o a r d . 5 "This c o n c l u s i o n i s c o n s i s t e n t w i t h the o f t h e CON Review Board i n i t s a p p r o v a l Noland P r o j e c t M o d i f i c a t i o n . finding of the " ' S e l e c t a l s o a s s e r t s t h a t N o l a n d may not use t h e p r o j e c t - m o d i f i c a t i o n r u l e t o s e e k approval o f a new location that falls outside of the health service area c o n t a i n e d i n the S t a t e H e a l t h Plan at the t i m e o f t h e o r i g i n a l f i l i n g . However, f o r p u r p o s e s o f d e t e r m i n i n g n e e d f o r LTACHs, t h e 1996-1999 A l a b a m a S t a t e H e a l t h Plan c o n s i d e r e d the need i n c o n t i g u o u s c o u n t i e s , i n c l u d i n g S h e l b y C o u n t y . The B o a r d f i n d s t h a t t h e a p p l i c a t i o n , as m o d i f i e d , i s n o t i n c o n s i s t e n t w i t h the S t a t e H e a l t h Plan i n e f f e c t a t t h e t i m e o f f i l i n g and t h a t t h e change t o S h e l b y C o u n t y does n o t d e p r i v e the Board of the a b i l i t y to approve the present request.' (internal footnote omitted). 15 2110152 II " I n May 2008, a f t e r t h e enactment of the Medicare, Medicaid, and SCHIP E x t e n s i o n A c t , 121 S t a t . 2492, t h e C e n t e r f o r M e d i c a r e and Medicaid Services ('CMS') f i n a l i z e d rules regarding the e s t a b l i s h m e n t o f new LTACHs a f t e r December 29, 2007. The p r a c t i c a l e f f e c t o f t h e s e r u l e s i s t h a t h e a l t h c a r e p r o v i d e r s t h a t do n o t h o l d a CON f o r LTACH s e r v i c e s i s s u e d p r i o r t o December 29, 2007, w i l l n o t be a l l o w e d t o e s t a b l i s h an LTACH i n t h e f o r e s e e a b l e f u t u r e . The m o r a t o r i u m was i m p o s e d f o r a p e r i o d o f t h r e e y e a r s , b u t t h e r e i s d i s c u s s i o n t h a t i t may be extended. "The CMS moratorium outlined in 42 C.F.R. § 4 1 2 . 2 3 ( e ) ( 6 ) c o n t a i n s an e x c e p t i o n f o r LTACHs t h a t on o r b e f o r e December 29, 2007 ' [ h ] a d o b t a i n e d an a p p r o v e d c e r t i f i c a t e o f n e e d f r o m t h e S t a t e , when r e q u i r e d by S t a t e l a w . ' Id. at § 4 1 2 . 2 3 ( e ) ( 6 ) ( i i ) ( C ) : The N o l a n d CON was i s s u e d by SHPDA on J u n e 28, 2002, and t h u s q u a l i f i e s f o r t h e e x e m p t i o n t o t h e CMS m o r a t o r i u m . As f o u n d by t h e CON R e v i e w B o a r d , 'under c u r r e n t r u l e s , N o l a n d w o u l d thus be prevented from obtaining Medicare c e r t i f i c a t i o n o f t h e LTACH b e d s i f i t were r e q u i r e d t o f i l e a new CON a p p l i c a t i o n i n s t e a d o f f o l l o w i n g the p r o j e c t - m o d i f i c a t i o n procedure.' I f the p r o j e c t i s n o t a l l o w e d t o p r o c e e d , t h e unmet LTACH needs i n Jefferson County and i t s contiguous counties, i n c l u d i n g S h e l b y C o u n t y , w i l l go unmet. " The 2004-2007 S t a t e H e a l t h P l a n , w h i c h became e f f e c t i v e November 22, 2004, c h a n g e d t h e LTACH p l a n n i n g a r e a f r o m t h e c o u n t y i n w h i c h t h e LTACH was t o be l o c a t e d and i t s c o n t i g u o u s c o u n t i e s , t o e i g h t specifically defined 'regions.' Both Jefferson C o u n t y and S h e l b y C o u n t y a r e i n R e g i o n I I I , w h i c h a l s o i n c l u d e s Bibb, Blount, Cullman, Marion, Saint C l a i r , T a l l a d e g a , W a l k e r and W i n s t o n C o u n t i e s . The s i m i l a r i t y o f R e g i o n I I I and the p l a n n i n g area a p p l i c a b l e t o t h e N o l a n d P r o j e c t u n d e r t h e 1996-1999 5 16 2110152 State Health Plan i s s t r i k i n g . S i x of the eight c o u n t i e s i n c l u d e d i n t h e p l a n n i n g area under the 1996-1999 State Health Plan (including both J e f f e r s o n and Shelby Counties) are included i n Region I I I . " The citing circuit Brookwood System, I n c . , State Health So. "the Health Services, I n c . v. on t h i s p o i n t , Baptist Health 936 So. 2d 529, 537 ( A l a . C i v . App. 2 0 0 5 ) , a n d P l a n n i n g A g e n c y v. M o b i l e 2d 1372, 1375 I n f i r m a r y Ass'n, ( A l a . C i v . App. 1992) [SHP] g u i d e l i n e s a r e m e r e l y processing its c o u r t a f f i r m e d SHPDA's o r d e r (both a s e t of c r i t e r i a a p p l i c a t i o n s a n d [SHPDA] i s e n t i t l e d discretion i n f o l l o w i n g these stating 60 8 that used i n to exercise guidelines"). "Our r e v i e w i s l i m i t e d t o q u e s t i o n s o f w h e t h e r t h e agency exceeded i t s s t a t u t o r y a u t h o r i t y , whether i t s d e c i s i o n was s u p p o r t e d b y s u b s t a n t i a l e v i d e n c e , a n d w h e t h e r i t s a c t i o n was a r b i t r a r y . State Health P l a n n i n g A g e n c y v. M o b i l e I n f i r m a r y , 533 So. 2d 255 ( A l a . C i v . App. 1 9 8 8 ) ; A l a b a m a B o a r d o f N u r s i n g v. H e r r i c k , 454 So. 2d 1041 ( A l a . C i v . App. 1 9 8 4 ) . As l o n g as t h e a g e n c y a c t i o n i s r a t i o n a l a n d r e a s o n a b l y j u s t i f i e d , i t c a n n o t be c l a s s i f i e d as a r b i t r a r y o r c a p r i c i o u s . W a t e r s v . C i t y & C o u n t y o f Montgomery P e r s o n n e l B o a r d , 507 So. 2d 951 ( A l a . C i v . App. 1986). Furthermore, an a g e n c y ' s i n t e r p r e t a t i o n o f i t s own r u l e o r r e g u l a t i o n must s t a n d i f i t i s reasonable, even though i t may n o t a p p e a r as r e a s o n a b l e as some o t h e r i n t e r p r e t a t i o n . F e r l i s i v . A l a b a m a M e d i c a i d A g e n c y , 481 So. 2d 400 ( A l a . C i v . App. 1 9 8 5 ) . " 17 2110152 Sylacauga Health Care P l a n n i n g A g e n c y , 662 We its conclude So. that determination Ctr., 2d 265, v. 268 Alabama that Noland's Health were of 1994). SHP and modification project requirements State ( A l a . C i v . App. SHPDA's i n t e r p r e t a t i o n c o n s i s t e n t w i t h t h e SHP II. Inc. the was reasonable. A b i l i t y t o C o n v e r t A c u t e - C a r e Beds t o LTACH Beds Former Rule a p a r t of the 410-2-4-.02(7)(c), 1996-1999 SHP, A l a . Admin. Code provided, (SHPDA), in pertinent part: " ( c ) A l a b a m a has an e x c e s s o f 7,185 general a c u t e - c a r e h o s p i t a l b e d s , some o f w h i c h c o u l d be used f o r long-term hospital care. Therefore, a general acute-care hospital may apply for a c e r t i f i c a t e of need t o c o n v e r t excess acute-care beds t o l o n g - t e r m h o s p i t a l beds i f the f o l l o w i n g c o n d i t i o n s a r e met " Select maintains requirement to "convert [LTACH] beds" general acute-care out that Noland the t h a t N o l a n d cannot comply w i t h the because, i t says, the t r a n s f e r of Hospital i n J e f f e r s o n County sale acute-care Noland 2002, b i l l locating the and 19, Noland's condition general does h o s p i t a l beds t o c o n v e r t . September conditioned excess operating would of title the for five "become 18 null and own to any Select points to from the at years, beds not sale beds SHP FHA beds to upon Lloyd Noland failing which void." Select 2110152 argues t h a t , because N o l a n d has n o t s a t i s f i e d the condition, o w n e r s h i p o f t h e b e d s h a s r e v e r t e d t o FHA. In Lloyd Healthcare Noland Auth., F o u n d a t i o n , I n c . v. C i t y 837 So. 2d 253 of F a i r f i e l d ( A l a . 2002) (a d e c i s i o n r e l e a s e d on F e b r u a r y 22, 2 0 0 2 ) , o u r supreme c o u r t stated: "Because [FHA] assumed t h e o b l i g a t i o n s o f Amendment Two o f t h e SPA, [FHA] was c o n t r a c t u a l l y b o u n d t o , among o t h e r t h i n g s , 'cooperate w i t h [Noland] i n h a v i n g t h e O p t i o n Beds r e l i c e n s e d , r e c e r t i f i e d o r r e l o c a t e d f o r long term acute care purposes a t the H o s p i t a l o r o t h e r s i t e s , ' so t h a t [ N o l a n d ] c o u l d , f o l l o w i n g t h e i s s u a n c e o f t h e CONs, p u r c h a s e [ t h e ] b e d s f r o m [FHA]. [FHA] b r e a c h e d i t s o b l i g a t i o n s t o c o o p e r a t e as a m a t t e r o f l a w , b y commencing t h i s action, and by a t t e m p t i n g t o i n t e r v e n e i n t h e contested case to oppose [Noland's] CON a p p l i c a t i o n s . ... " 837 So. 2d a t 266 refused Judge (emphasis to transfer added). t h e beds S u b s e q u e n t l y , when FHA t o Noland, Montgomery Circuit C h a r l e s P r i c e e n t e r e d an o r d e r c o m p e l l i n g FHA t o " s e l l and t r a n s f e r t i t l e t o t h e 55 b e d s c o v e r e d b y t h e CON t o N o l a n d forthwith." The c o n d i t i o n a l - t r a n s f e r a n d r e v e r t e r p r o v i s i o n s o f t h e S e p t e m b e r 19, 2002, b i l l as both the recognized. Noland's fair-hearing Moreover, project o f s a l e were c l e a r l y officer neither modification 19 and the circuit FHA n o r H e a l t h S o u t h based upon an invalid, court opposed assertion of 2110152 ownership i n the beds. t h e b e d s , has a s s e r t e d t h a t Noland II. The and does n o t own the beds. P a t i e n t - T r a n s f e r Agreements 1996-1999 .02(7)(c)3. O n l y S e l e c t , w h i c h has no i n t e r e s t i n SHP 4., a p p l i c a n t f o r a CON provided, Ala. in Admin. former Code Rule 410-2-4- (SHPDA), that an t o c o n v e r t e x c e s s a c u t e - c a r e b e d s t o LTACH b e d s must e s t a b l i s h t h a t i t "3. ... has w r i t t e n p a t i e n t t r a n s f e r a g r e e m e n t s w i t h h o s p i t a l s other than the host h o s p i t a l to p r o v i d e a t l e a s t 75 p e r c e n t o f t h e a d m i s s i o n s t o t h e l o n g - t e r m h o s p i t a l , b a s e d on t h e t o t a l a v e r a g e d a i l y c e n s u s f o r a l l p a r t i c i p a t i n g h o s p i t a l s [and t h a t ] "4. [ t ] h e t r a n s f e r a g r e e m e n t s a r e w i t h o t h e r h o s p i t a l s i n the county and/or w i t h h o s p i t a l s i n contiguous counties." I n s u p p o r t o f i t s 1998 letters of support from CON seven a p p l i c a t i o n , Noland area hospitals that, s a i d , were " i n d i c a t i v e o f t r a n s f e r a g r e e m e n t s t o be upon SHPDA's a p p r o v a l o f [ t h e CON]." The seven submitted Noland executed l e t t e r s were s i g n e d by r e p r e s e n t a t i v e s o f B e s s e m e r C a r r a w a y M e d i c a l C e n t e r , Blount Memorial Methodist H o s p i t a l , Brookwood M e d i c a l C e n t e r , Medical Center, Eastern Health System, Carraway St. Clair R e g i o n a l H o s p i t a l , and t h e U n i v e r s i t y o f A l a b a m a a t B i r m i n g h a m 20 2110152 ("UAB") Hospital. Noland submitted the same letters s u p p o r t o f i t s 2009 r e q u e s t f o r a m o d i f i c a t i o n o f t h e Select first argues t h a t the letters d i d not in CON. constitute " w r i t t e n p a t i e n t t r a n s f e r agreements," w i t h i n the meaning of former Rule 410-2-4-.02(7)(c)3., because they merely expressed support for Noland's agreements to project and transfer patients not refer to to Noland's proposed Next, S e l e c t argues, even i f the be future LTACH. deemed t o agreements, Noland's i n 2009 o f t h e same l e t t e r s t h a t i t had resubmission submitted of 11 y e a r s e a r l i e r Rule letters any c o u l d be "indicative" former did transfer f a i l e d to s a t i s f y subsections 410-2-4-.02(7)(c) because, (3) and Select (4) says, of the e v i d e n c e i n d i c a t e d t h a t f i v e of the seven h o s p i t a l s referenced in exist, the 1998 letters were o p e r a t i n g At the that Bessemer u n d e r new Carraway Medical St. C l a i r Regional Vincent's Regional b e e n s o l d , had management by f a i r hearing, o p e r a t e d by UAB St. had was or 2009. Select e l i c i t e d evidence i n d i c a t i n g Medical Center was currently being C e n t e r West; t h a t B l o u n t M e m o r i a l H o s p i t a l s were c u r r e n t l y b e i n g Health Hospital ceased to System not (and, located 21 further, in a operated that county St. and by Clair that is 2110152 contiguous t o Shelby County); t h a t Carraway M e t h o d i s t M e d i c a l Center had c l o s e d ; and t h a t the l e t t e r System p e r t a i n e d t o a d i f f e r e n t CON, from Eastern Health Noland's 45-bed LTACH p r o j e c t t h a t was t o be l o c a t e d a t M e d i c a l C e n t e r E a s t . Thus, S e l e c t s a y s , o n l y two o f t h e l e t t e r s -- t h o s e f r o m B r o o k w o o d Medical " c o u l d even c o n c e i v a b l y still Center a n d UAB be v a l i d " Hospital i n d e t e r m i n i n g whether Noland had "written p a t i e n t t r a n s f e r agreements w i t h h o s p i t a l s o t h e r than t h e h o s t h o s p i t a l t o p r o v i d e a t l e a s t 75 p e r c e n t o f t h e a d m i s s i o n s t o the long-term census At hospital, based fora l lparticipating the f a i r contested-case hearing, on average daily hospitals." Noland proceedings in considering t h e CON a p p l i c a t i o n s Select stipulated had the t o t a l that, argued 1999 that, when SHPDA of both Noland "with during the respect had been and S e l e c t , to the Noland P r o j e c t , N o l a n d has w r i t t e n t r a n s f e r agreements w i t h h o s p i t a l s i n J e f f e r s o n County host h o s p i t a l , " that and, N o l a n d stipulation. collateral or i n contiguous c o u n t i e s other than the Noland estoppel agreement i s s u e . m a i n t a i n e d , S e l e c t was b o u n d b y also barred argued that relitigation the doctrine of of the transfer- We d i s a g r e e , b o t h t h a t S e l e c t was b o u n d b y 22 2110152 its stipulation collateral made estoppel in 1999 barred and that the relitigation doctrine of the of transfer- a g r e e m e n t i s s u e i n 2009. In c o n s t r u i n g to "the a t 536 circumstances." (2012). grounds "A p a r t y may "that misrepresentation, that the special facts i t was 337 73 Am. c o u r t may look be r e l i e v e d of a s t i p u l a t i o n entered have changed, or i n t o as fraud, or e x c u s a b l e n e g l e c t , that there to some other R u t i l i v. O ' N e i l l ( I n r e O ' N e i l l ) , 468 B.R. 2012) unjust is or the Ill. i t a r e s u l t of on enforce ( B a n k r . N.D. rendering the J u r . 2d S t i p u l a t i o n s § 6 mistake of f a c t , circumstance stipulation 308, a reviewing language used i n the e n t i r e agreement i n l i g h t of surrounding the a stipulation, (emphasis added). " I t i s ... g e n e r a l l y r e c o g n i z e d t h a t r e l i e f may be had f r o m a s t i p u l a t i o n where t h e r e has b e e n a change i n c o n d i t i o n s or u n f o r e s e e n developments which would render i t s enforcement i n e q u i t a b l e provided that t h e r e has b e e n d i l i g e n c e i n d i s c o v e r i n g t h e f a c t s r e l a t i v e to the d i s p u t e d matter, the a p p l i c a t i o n i s t i m e l y , and t h e o p p o s i n g p a r t y has n o t so c h a n g e d h i s o r h e r p o s i t i o n as t o be p r e j u d i c e d t o a g r e a t e r e x t e n t than the a p p l i c a n t . " 73 Am. J u r . 2d S t i p u l a t i o n s § 13 a t 547. We t h a t the e v i d e n c e i n d i c a t e d t h a t c i r c u m s t a n c e s conclude (a) a f f e c t i n g the h o s p i t a l s whose r e p r e s e n t a t i v e s had s e n t l e t t e r s o f s u p p o r t t o 23 2110152 N o l a n d i n 1998 had c h a n g e d by 2009, aware o f t h o s e c h a n g e s , and 1999 stipulation would (b) t h a t a l l p a r t i e s were (c) t h a t r e l i e v i n g S e l e c t f r o m i t s have prejudiced e x t e n t t h a n b i n d i n g S e l e c t t o i t s 1999 Noland to stipulation a lesser prejudiced Select. We a l s o conclude t h a t the d o c t r i n e of c o l l a t e r a l does n o t apply to Select's estoppel stipulation. "'In order f o r the d o c t r i n e of collateral estoppel to apply to an issue raised in an administrative proceeding, the f o l l o w i n g elements must be p r e s e n t : "'"'(1) t h e r e i s i d e n t i t y of the p a r t i e s or their privies; (2) t h e r e i s i d e n t i t y o f issues; (3) t h e p a r t i e s had an a d e q u a t e o p p o r t u n i t y to l i t i g a t e the i s s u e s i n the administrative proceeding; (4) t h e i s s u e s t o be e s t o p p e d were a c t u a l l y l i t i g a t e d and determined in the administrative proceeding; and (5) t h e f i n d i n g s on t h e i s s u e s t o be e s t o p p e d were n e c e s s a r y t o t h e administrative decision.'"' "Ex p a r t e S m i t h , 683 So. 2d 431, 433 (Ala. 1996) ( q u o t i n g Ex p a r t e S h e l b y Med. C t r . , I n c . , 564 So. 2d 63, 68 ( A l a . 1990) ( q u o t i n g P a n t e x T o w i n g C o r p . v. G l i d e w e l l , 763 F.2d 1241, 1245 ( 1 1 t h C i r . 1 9 8 5 ) ) ) . " H a l e v. H y u n d a i M o t o r Mfg. (Ala. Civ. Smitherman, App. 743 2012) So. 2d A l a b a m a , LLC, 86 So. (quoting Wal-Mart 442, ( A l a . 1999), 445 o t h e r g r o u n d s by Ex p a r t e R o g e r s , 68 So. 24 3d 1015, Stores, 3d 773 1023 Inc. v. overruled on (Ala. 2010)). 2110152 The second and f o u r t h elements o f c o l l a t e r a l e s t o p p e l a r e missing i n t h i s case. The s e c o n d e l e m e n t , i d e n t i t y o f i s s u e s , does n o t e x i s t b e c a u s e t h e 1999 p r o c e e d i n g c o n c e r n e d w h e t h e r N o l a n d a n d / o r S e l e c t was e n t i t l e d t o a CON f o r t h e conversion o f a c u t e - c a r e b e d s t o LTACH b e d s i n J e f f e r s o n C o u n t y , w h e r e a s the instant proceeding concerned whether Noland, p r e v i o u s l y b e e n i s s u e d a CON f o r t h e c o n v e r s i o n having of acute-care b e d s t o LTACH b e d s i n J e f f e r s o n C o u n t y , was e n t i t l e d t o have the CON modified County. [was] to allow f o r t h e same project i n Shelby The f o u r t h e l e m e n t , t h a t " t h e i s s u e [ ] t o be e s t o p p e d a c t u a l l y l i t i g a t e d and d e t e r m i n e d i n t h e a d m i n i s t r a t i v e proceeding," proceeding is was also missing. essentially The resolved first by a administrative consent judgment following a settlement b e t w e e n N o l a n d a n d S e l e c t , b a s e d on t h e parties' that Select stipulation project satisfied were both consistent a l l statutory the Noland with project and t h e t h e 1996-1999 SHP a n d and r e g u l a t o r y requirements f o r the i s s u a n c e o f t h e r e q u e s t e d CONs. I n AAA E q u i p m e n t 107, 112 & Rental, I n c . v. B a i l e y , ( A l a . 1 9 8 0 ) , o u r supreme c o u r t held that 384 So. 2d a consent j u d g m e n t b a s e d on s t i p u l a t i o n s o f t h e p a r t i e s "was e n t i t l e d t o 25 2110152 no c o l l a t e r a l e s t o p p e l e f f e c t b e c a u s e t h e r e was an a b s e n c e o f actual on litigation 384 So. b e t w e e n them as 2d a t 112. actual-litigation proceeding stipulations, In support requirement results the in a Bailey adversaries is not met 1977), a decision that the when judgment cited the 554 B a i l e y court F.2d the prior based Associates S e r v i c e s v. L o f t i n ' s T r a n s f e r & S t o r a g e Co., Cir. issues of i t s h o l d i n g t h a t consent court the upon Capital 188 (5th summarized as follows: " A s s o c i a t e s s u e d i n A l a b a m a t o c o l l e c t a d e b t . The d e f e n d a n t c o n t e n d e d t h a t t h e s u i t was b a r r e d b e c a u s e t h e p l a i n t i f f , an I n d i a n a c o r p o r a t i o n , had f a i l e d t o q u a l i f y t o do b u s i n e s s i n A l a b a m a . I n an e a r l i e r case i n v o l v i n g t h i s p l a i n t i f f , the d i s t r i c t c o u r t had h e l d a d v e r s e l y t o t h e p l a i n t i f f on t h e 'doing business' issue, and in this proceeding the d e f e n d a n t c o n t e n d e d t h a t t h e p l a i n t i f f was e s t o p p e d i n t h e l a t e r c a s e f r o m l i t i g a t i n g t h a t i s s u e . The C o u r t of A p p e a l s p o i n t e d out, however, t h a t the f o r m e r c a s e had b e e n remanded on a p p e a l i n a c c o r d w i t h a s t i p u l a t i o n o f t h e p a r t i e s , and s e t t l e d i n the plaintiff's favor. 'Therefore,' the court s t a t e d , 'the d e c i s i o n o f t h e d i s t r i c t c o u r t spawned no p r e c e d e n t i a l e f f e c t and r e n d e r s nugatory the q u e s t i o n of c o l l a t e r a l e s t o p p e l . ' " B a i l e y , 384 554 F.2d So. 2d a t 112 at 189). of The (quoting Associates C a p i t a l Servs., c o u r t d i s t i n g u i s h e d W h e e l e r v. Alabama Bank Birmingham, stating t h a t W h e e l e r had 364 So. 2d " i n v o l v e d two 26 1190, 1199 First (1978), a c t i o n s , i n both of 2110152 w h i c h t h e r i g h t t o income f r o m c e r t a i n t r u s t s was i n i s s u e . I n t h e f i r s t s u i t t h a t i s s u e was a c t u a l l y l i t i g a t e d , t h a t i s , t h e judgment rendered in i t was s t i p u l a t i o n , or consent." In the present representatives the only upon fair-hearing officer t h e two l e t t e r s o f Brookwood M e d i c a l hospitals based default, 384 So. 2d a t 112 ( e m p h a s i s a d d e d ) . case, d i d not determine that not whose Michael Cole of support signed by C e n t e r a n d UAB H o s p i t a l circumstances had n o t changed s i n c e 1998 when t h e l e t t e r s o f s u p p o r t f o r t h e N o l a n d p r o j e c t had b e e n r e c e i v e d remaining five letters, transfer-agreement" .02(7)(c)3., were s u f f i c i e n t , w i t h o u t c o n s i d e r i n g t h e to satisfy requirement A l a . Admin. Code of the "written-patient- former (SHPDA). Rule 410-2-4- Instead, Cole i m p l i c i t l y d e t e r m i n e d t h a t a l l s e v e n l e t t e r s were p e r t i n e n t t o the i s s u e s before the subject bound SHPDA i n 2009 b e c a u s e t h o s e l e t t e r s h a d b e e n of Select's by t h a t stipulation stipulation. i n 1999, a n d S e l e c t was In t h e i r 3 appellate briefs, F a i r - h e a r i n g o f f i c e r Cole noted that a d m i n i s t r a t i v e - l a w j u d g e M. D i x o n T o r b e r t , t h e f a i r - h e a r i n g o f f i c e r i n t h e 1999 p r o c e e d i n g s , h a d " f o u n d t h e N o l a n d P r o j e c t t o be c o n s i s t e n t with t h e 1996-1999 State Health Plan." In h i s order recommending t h a t SHPDA g r a n t t h e CON m o d i f i c a t i o n , C o l e s t a t e d t h a t he w o u l d " n o t now go b e h i n d t h e s t i p u l a t i o n s o r t h e a g r e e m e n t j u s t b e c a u s e S e l e c t no l o n g e r f i n d s them t o i t s 3 27 2110152 N o l a n d a n d SHPDA do n o t s u g g e s t any r e a s o n f o r u p h o l d i n g t h e circuit court's than S e l e c t ' s j u d g m e n t as t o t h e t r a n s f e r a g r e e m e n t s s t i p u l a t i o n on t h a t point. The f a i r - h e a r i n g o f f i c e r ' s o r d e r grant Noland's request the other recommending t h a t f o r a modification SHPDA o f t h e CON became f i n a l d e c i s i o n o f SHPDA p u r s u a n t t o § 2 2 - 2 1 - 2 7 5 ( 1 4 ) , A l a . Code 1975, a n d R u l e Insofar as t h a t 410-1-8-.25, decision A l a . Admin. Code (SHPDA). r e l a t e d to the transfer-agreement i s s u e , t h e d e c i s i o n was n o t b a s e d upon t h e e x e r c i s e o f SHPDA's discretion, any given either i n assigning piece of evidence" expertise i n dealing with Planning "weight or importance o r upon SHPDA's ... s p e c i a l i z e d a r e a s , " & Dev. A g e n c y v . B a p t i s t H e a l t h 2d 176, 178 ( A l a . C i v . App. 1 9 9 9 ) . ... t o "recognized State Health S y s . , I n c . , 766 So. Thus, SHPDA's d e c i s i o n as t o t h e t r a n s f e r - a g r e e m e n t i s s u e was n o t e n t i t l e d t o d e f e r e n c e by the c i r c u i t court, i d . , and t h e c i r c u i t court erred i n a f f i r m i n g t h a t d e c i s i o n b e c a u s e i t was a f f e c t e d b y an e r r o r o f law. See § 4 1 - 2 2 - 1 0 ( k ) ( 5 ) , A l a . Code 1975. Accordingly, remand we r e v e r s e t h e cause w i t h the c i r c u i t court's i n s t r u c t i o n s t o remand liking." 28 judgment and the matter to 2110152 SHPDA f o r a d e t e r m i n a t i o n as t o w h e t h e r t h e B r o o k w o o d M e d i c a l C e n t e r a n d UAB H o s p i t a l l e t t e r s alone s a t i s f y the requirement o f f o r m e r R u l e 4 1 0 - 2 - 4 - . 0 2 ( 7 ) ( c ) 3 . , A l a . Admin. Code (SHPDA), that Noland hospitals had " w r i t t e n patient transfer agreements with o t h e r t h a n t h e h o s t h o s p i t a l t o p r o v i d e a t l e a s t 75 p e r c e n t o f t h e a d m i s s i o n s t o t h e l o n g - t e r m h o s p i t a l , b a s e d on the total average daily census for a l l participating hospitals." REVERSED AND REMANDED WITH INSTRUCTIONS. Thompson, P . J . , and Bryan, concur. 29 Thomas, a n d Moore, J J . ,

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