COOPER UNIVERSITY HOSPITAL et al. v. FRED M. JACOBS, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1122-05T31122-05T3

COOPER UNIVERSITY HOSPITAL and

OUR LADY OF LOURDES MEDICAL CENTER,

Appellants,

v.

FRED M. JACOBS, Commissioner of the

Department of Health and Senior Services,

Respondent,

and

VIRTUA-WEST JERSEY HOSPITAL-MARLTON

and DEBORAH HEART AND LUNG CENTER,

Intervenors.

____________________________________

 

Argued: May 31, 2006 - Decided October 25, 2006

Before Judges Kestin, Hoens and R. B. Coleman.

On appeal from the Department of Health and Senior Services.

Glenn A. Clark argued the cause for appellants (Riker, Danzig, Scherer, Hyland & Perretti, attorneys; Mr. Clark, of counsel and, with Edwin F. Chociey, Jr., on the brief).

Susan J. Dougherty, Deputy Attorney General, argued the cause for respondent (Zulima V. Farber, Attorney General, attorney; Michael J. Haas, Assistant Attorney General, of counsel; Ms. Dougherty, on the brief).

Philip H. Lebowitz, of the Pennsylvania bar admitted pro hac vice, argued the cause for intervenor Virtua-West Jersey Hospital-Marlton (Duane Morris, attorneys; Katherine Benesch, of counsel; R. Christopher Raphaely, Mr. Lebowitz, and Erin M. Duffy, on the brief).

Jonathan D. Weiner argued the cause for intervenor Deborah Heart and Lung Center (Fox Rothschild, attorneys; Mr. Weiner, of counsel; Maureen Kerns and Patricia Barron, on the brief).

PER CURIAM

Cooper University Hospital (Cooper) and Our Lady Of Lourdes Medical Center (Lourdes) appeal from the grant by the Commissioner of the Department of Health and Senior Services (Commissioner and Department, respectively) to Virtua-West Jersey Hospital-Marlton (Virtua) of a certificate of need (CN) application for a demonstration project on elective angioplasty without back-up surgery on-site (the procedure). Similar authorizations were granted to eight other hospitals in response to an invitation for CN applications to participate in the demonstration project (the Call). Virtua has intervened in support of the Commissioner, and Deborah Heart and Lung Center (Deborah) has intervened in support of appellants.

Appellants argue that the Call was ultra vires because it invited hospitals to institute the procedure which, appellants contend, is expressly prohibited by Department regulations. Appellants also argue that, even if the Call was valid, the grant of a CN to Virtua was arbitrary, capricious and unreasonable. We affirm.

On November 1, 2004, the Department published the Call: "Notice of Invitation for Certificate of Need Applications for Participation in a Demonstration Project Pertaining to Elective Angioplasty without Back-Up Surgery On-Site." 36 N.J.R. 4996(b). The State Health Planning Board (SHPB) met on October 6, 2005, to hear testimony concerning the eighteen applications received, and approved six, including that of Virtua.

On October 31, 2005, the Commissioner issued a decision letter granting nine applications, including that of Virtua and four others of the six approved by the SHPB. Four of the applications granted by the Commissioner had not been approved by the SHPB. The only challenge addressed in this appeal is the grant to Virtua. Manifestly, however, if the Call was ultra vires, the validity of the grants to the other eight applicants would also be placed in question. None of those applicants or any other affected entity has participated in this appeal.

The Call had invited CN applications from hospitals not licensed to perform cardiac surgery but which were or could be approved to provide primary percutaneous transluminal coronary angioplasty (PTCA) services* and were willing to participate in a multi-state trial called "The Atlantic C-PORT Trial, Elective Angioplasty Study, Randomized Study of Non-emergency Percutaneous Coronary Intervention in Hospitals With and Without On-site Cardiac Surgery" (the demonstration project). 36 N.J.R. 4996(b). The purpose of the demonstration was "to assess the safety, quality and cost of elective angioplasty offered at community hospitals that do not also offer cardiac surgery services on-site." Ibid.

The CN applications were to "be in compliance with all statutory provisions and applicable certificate of need and licensing rules and regulations." Ibid. The Call provided that applicants would be selected based on several criteria: "ability to offer a high quality program; representation of the State's diverse regions and urban/suburban/rural populations; potential to increase access to care for minorities and the medically underserved; and projected demonstration project elective angioplasty case volume." Ibid.

In approving nine applications made in response to the Call, the Commissioner noted that there was little sound research data on the issue of the comparative safety of elective (as distinguished from primary) angioplasty at hospitals without on-site cardiac surgery back-up. According to the Commissioner, the Call for a demonstration project was issued to contribute to this research as a response to the increased public demand for angioplasty, coupled with a decline in demand for cardiac surgery. All demonstration project hospitals would conform to the "Study involving human subjects," designed by Thomas Aversano, M.D., of the Johns Hopkins Medical Institutions, in which hospitals from several states including New Jersey, Ohio, Pennsylvania, Illinois, Alabama, and Georgia were expected to participate.

In respect of Virtua, the Commissioner found it was the only applicant located within the seven southernmost counties of New Jersey. That region has fewer primary and elective angioplasty providers per capita than hospitals in the Northeastern and Central regions. Virtua ranked seventh among the eighteen applicants in its projected demonstration project case volume and satisfied all other pertinent criteria. The Commissioner approved Virtua's application, with seven enumerated conditions.

Cooper, Lourdes, and Deborah contend that the Call was ultra vires because it violated the Department's regulatory scheme. The Commissioner and Virtua respond that the Call was a reasonable and proper exercise of the Commissioner's authority. The Health Care Facilities Planning Act (HCFPA), N.J.S.A. 26:2H-1 to -26, requires the Commissioner to adopt and amend rules and regulations to effectuate that statute. N.J.S.A. 26:2H-5(b). It also provides that, with certain exceptions not implicated here, see, e.g., N.J.S.A. 26:2H-7(a) and (c), all new health care facilities constructed or expanded and all new health care services must apply for and receive a CN. N.J.S.A. 26:2H-7. See St. Peter's Univ. Hosp. v. Lacy, 185 N.J. 1 (2005).

A strong presumption of reasonableness is accorded an agency's exercise of its statutorily delegated duties. See In re Application of Holy Name Hosp., 301 N.J. Super. 282, 295 (App. Div. 1997). We defer to an agency's interpretation of its own regulations, unless that interpretation is inconsistent with the governing legislation. See DiMaria v. Board of Trustees, 225 N.J. Super. 341, 351 (App. Div.), certif. denied, 113 N.J. 638 (1988); see also St. Peter's, supra, 185 N.J. at 15. However, no deference is warranted if the agency has exceeded the authority of its enabling legislation. See ibid.; T.H. v. Division of Developmental Disabilities, 381 N.J. Super. 366, 373 (App. Div. 2005). "Because administrative regulations that apply to the regulated public have the force and effect of statutory law, an administrative agency ordinarily must enforce and adhere to, and may not disregard, the regulations it has promulgated." County of Hudson v. Department of Corrections, 152 N.J. 60, 70 (1997).

It is undisputed that Department regulations prohibit elective procedures of the type involved here at hospitals lacking facilities for back-up surgery on site. The standards governing regional cardiac surgery centers are set forth in N.J.A.C. 8:33E-2.1 to -2.16. N.J.A.C. 8:33E-2.3(d)(3) provides for elective procedures to be "performed only in a hospital-based facility where cardiac surgery services are immediately available on site." In respect of the hospital licensing standards for cardiac services, N.J.A.C. 8:43G-7.1(a) provides:

The standards set forth in this subchapter shall apply only to separate, designated units or services for adult and/or pediatric cardiac surgery, cardiac catheterization, and interventional cardiac procedures. All hospitals licensed to provide any of these services shall also comply with all applicable staffing, staff qualification, volume, equipment and physical plant requirements contained in N.J.A.C. 8:33E.

N.J.A.C. 8:43G-7.28(a) provides: "[PTCA] shall be performed only in cardiac surgical centers approved by the New Jersey State Department of Health." N.J.A.C. 8:43G-7.31 provides: "There shall be an operating room available for immediate use on-site that complies with criteria established in the hospital's surgery policies and procedures and meets the minimal physical requirements of N.J.A.C. 5:23-3.2(b), any time a PTCA procedure is performed on an elective basis."

Notwithstanding these limitations, the Department solicited applications for a demonstration project at variance with the foregoing requirements, and, following CN review, it granted the applications of Virtua and other hospitals for the performance of elective angioplasty without backup surgery on-site as a demonstration project.

Title 8, Chapters 33 to 33S of the New Jersey Administrative Code contain the regulations governing various CN processes under the Health Care Facilities Planning Act, N.J.S.A. 26:2H-1 et seq. N.J.A.C. 8:33-1.3 provides: "'Demonstration project' generally refers to a health care service, technology, equipment or modality not currently available in the State or which targets unique institutional circumstances or the needs of underserved populations. A demonstration project requires a certificate of need as specified at N.J.A.C. 8:33-3.11."

Appellants contend that the Call did not meet the definition of "demonstration project," because elective angioplasty was already available and thus not a service "not currently available in the State." Disputing this argument, the Commissioner contends that N.J.A.C. 8:33-3.11(e), which authorizes calls for demonstrations not specifically identified in N.J.A.C. 8:33-3.11(c) or (d), does not require compliance with N.J.A.C. 8:33E-2.3(d)(3), N.J.A.C. 8:43G-7.28(a), or N.J.A.C. 8:43G-7.31, because it requires only that its own terms be satisfied, and they were satisfied. We credit the Commissioner's position as integral to the concept of demonstration and research projects generally authorized by N.J.A.C. 8:33-3.11.

N.J.A.C. 8:33-3.11(a) establishes that research projects are "exempt from certificate of need requirements as long as they are conducted exclusively for the purposes of investigational studies and scientific research." Demonstration projects require CNs, however, see N.J.A.C. 8:33-1.3 (definition of "Demonstration project"), "provided all applicable licensure standards are met." N.J.A.C. 8:33-3.11(e)(5).

The Commissioner argues that the requirements for a demonstration project were met here because

the provision of elective angioplasty services in facilities that do not have on-site cardiac surgery services is "not currently available in the State." The purpose of the proposed demonstration project is to provide policymakers with reliable data to evaluate whether the State's current rules should be amended in order to make such services available.

The Commissioner argues further that:

There is considerable debate over the benefits realized by angioplasty without cardiac surgery back up. The proposed demonstration project employs a randomized, prospective study design. This type of clinical study will provide data that will permit a determination as to whether elective angioplasty in a hospital without onsite cardiac surgery is inferior in outcomes to elective angioplasty performed in cardiac surgery centers. The demonstration project proposed by the Department here is precisely the kind of project the Department and the HCAB envisioned when they approved the adoption of N.J.A.C. 8:33-3.11(e).

The essence of the dispute in this matter involves the tension between competing forces. On the one hand, we are presented with the Commissioner's and the Department's authority and responsibilities, as defined by the Legislature, to develop and administer the State's health planning policies and the system of fulfilling those policies through the provision of hospital and related health care services. See N.J.S.A. 26:2H-1. On the other hand, we are cognizant of the interests of entities within the regulated community and the realistic understanding that they are often in economic competition with each other. The statutory and regulatory scheme is designed to achieve a workable, common sense accommodation between the forces that contribute to this tension.

The Legislature has reposed broad powers in the Commissioner to promote sensible public health policies. See N.J.S.A. 26:2H-1, -5, -8. Among these, generally, is the use of the CN process for healthcare planning purposes and, more specifically, the Legislature's acquiescence in the regulations that permit licensing of demonstration projects to aid in developing institutional capacities to meet general health care needs or the needs of underserved populations. See N.J.A.C. 8:33-3.11.

To the extent the tensions inherent in the system pull in opposite directions, especially where ostensibly differing statutory or regulatory provisions suggest different results, it is our obligation to harmonize them wherever possible. See St. Peter's, supra, 185 N.J. at 14.

Here, the Commissioner has followed the prescribed CN process with SHPB involvement. In the context of the record before us, we reject the argument advanced by appellants that any feature of that consideration, or the result reached, was so clearly flawed by arbitrariness, caprice or unreason as to justify us in substituting our judgment for the Commissioner's and invalidating the result for those reasons.

That having been said, the Commissioner possesses the general authority and the responsibility to promote the science in his field of expertise, as well as to develop understandings of what the public health requires and which practices need to be modified to achieve those ends. Although administrative agencies possess no inherent authority beyond that delegated by the Legislature, i.e. "not fairly within the powers that have been bestowed[,]" Perreira v. Redinger, 169 N.J. 399, 416 (2001)(quoting Knight v. City of Hoboken Rent Leveling & Stabilization Bd., 332 N.J. Super. 547, 552 (App. Div. 2000)), we discern in this regard no exercise of power by the Commissioner beyond that bestowed.

The question of whether to participate in a broad-based experimental venture in the health care area, fielded under respected and respectable auspices, and designed to develop better understandings of whether and how certain health services can be delivered differently, with appropriate assurances of safety and efficacy, is manifestly a decision so impacted by professional expertise as to call for our deference. As long as the public health and the interests of competing entities have been protected by a fair application of the Legislature's expressed safeguard, the CN process, it is not our place to substitute our judgment for that of the agency charged with regulating the subject matter area. See St. Peter's, supra, 185 N.J. at 15-16.

 
Affirmed.

* An historical note following the most current version of N.J.A.C. 8:33E-2.2 states that amendment R. 2006 d. 263, effective July 17, 2006, inter alia, substituted "PCI" (percutaneous coronary intervention) for PTCA throughout the regulations. See 38 N.J.R. 53(a), 38 N.J.R. 3025(a).

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A-1122-05T3

October 25, 2006