Wake Radiology, et al v NC DHHS, et al

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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA10-1129 NORTH CAROLINA COURT OF APPEALS Filed: 6 September 2011 Wake Radiology Services LLC, Wake Radiology Diagnostic Imaging Inc., Wake Radiology Consultants PA, Smithfield Radiology Inc., and Raleigh MR Imaging LP, Petitioners-Appellants, v. NC Dept. of Health & Human Services No. 09 DHR 3473 North Carolina Department of Health and Human Services, Division of Health Service Regulation, Certificate of Need Section, Respondent-Appellee, and Pinnacle Health Services of North Carolina, LLC, d/b/a Raleigh Radiology at Cedarhurst, Respondent-Intervenor-Appellee. Appeal by petitioners from a final agency decision entered 3 June 2010 by the North Carolina Department of Health and Human Services. Heard in the Court of Appeals 8 March 2011. Kirschbaum, Nanney, Keenan & Griffin, P.A., by Frank S. Kirschbaum and Chad Lorenz Halliday, for PetitionerAppellants. Attorney General Roy Cooper, by Assistant Attorney General June S. Ferrell, for Respondent-Appellee. -2Williams Mullen, by Marcus C. Hewitt and Elizabeth Sims Hedrick, for Respondent-Intervenor-Appellee. ERVIN, Judge. Petitioners Diagnostic Smithfield Wake Radiology Services, LLC; Imaging, Inc.; Radiology, (collectively Wake ) Wake Inc.; appeal Radiology and a Consultants, Raleigh final Wake Radiology MR agency P.A.; Imaging, decision by LP the North Carolina Department of Health and Human Services, Division of Health Service Regulation, Certificate of Need Section affirming the award of a Certificate of Need (CON) to Pinnacle Health Services of North Carolina, LLC. On appeal, Wake argues that the Department improperly upheld the decision to award the requested CON to Pinnacle on the grounds that the Department s decision was inconsistent with N.C. Gen. Stat. § 131E-183(a). We do not reach the merits of Wake s challenges to the Department s decision, however, given our conclusion that the Department establish correctly that it determined was that substantially Wake had failed prejudiced by to the Department s decision to award the requested CON to Pinnacle. As a result, after careful consideration of Wake s challenges to the Department s applicable law, decision we should be affirmed. in conclude light that of the the record Department s and the decision -3I. Factual Background Pinnacle is a wholly owned subsidiary of Outpatient Imaging Affiliates, LLC, which has provided magnetic resonance imaging (MRI) services at three sites in Wake and Johnston Counties since 2007: Raleigh Radiology at Cedarhurst, Raleigh Radiology at Wake Forest, and Raleigh Radiology at Clayton. In order to provide this service, Pinnacle contracted with Alliance Imaging, Inc., for the use of a mobile MRI scanner. Pinnacle was not required to have a CON in order to provide mobile MRI services using an Alliance scanner and is not subject to any limitations as to the number of locations at which it is entitled to use the Alliance scanner. On seeking 17 the November issuance 2008, of Pinnacle a CON submitted authorizing an the application purchase and operation of a mobile MRI scanner for use in Wake and Johnston Counties pursuant to N.C. Gen. Stat. § 131E-182. In accordance with N.C. Gen. Stat. § 131E-185, the Department began its review of Pinnacle s application on 1 December 2008. The Department completed its review of Pinnacle s application on 29 April 2009 and issued the required findings on 6 May 2009. In its decision, the Department determined that Pinnacle had satisfied all applicable statutory and approved Pinnacle s application. regulatory review criteria and -4On 29 May 2009, Wake appealed the approval of Pinnacle s application by filing a petition for a contested case hearing with the Office of Administrative Hearings in accordance with N.C. Gen. Stat. §§ 131E-188(a) and 150B-23. In its petition, Wake alleged that the Department had erred by concluding that Pinnacle s application satisfied the review criteria listed in N.C. Gen. Stat. § 131E-183(a). On 22 February 2010, Administrative Law Judge Beecher R. Gray entered a recommended decision concluding that the Department s decision to approve Pinnacle s application should be affirmed. The parties filed written exceptions to and arguments addressing the merits of ALJ Gray s recommended decision and submitted proposed final agency decisions to the Department. On 3 June 2010, Jeff Horton, Acting Director of the Division of Health Service Regulation, entered a final recommendation and agency decision affirming approve Pinnacle s application. the accepting Department s ALJ Gray s decision to Wake noted an appeal from the final agency decision to this Court on 2 July 2010. II. Legal Analysis A. Applicable Law & Standards of Review A person seeking to obtain the issuance of a CON must make application . . . on forms provided by the Department. Gen. Stat. § 131E-182(b). N.C. After compliance with the procedural -5requirements utilizing specified the in criteria N.C. Gen. outlined in Stat. N.C. § Gen. 131E-185 Stat. § and 131E- 183(a), the Department shall issue a decision to approve, approve with conditions, or deny, an application for a new institutional health service. Within five business days N.C. Gen. Stat. § 131E-186(a). after it makes a decision on an application, the Department shall provide written notice of all the findings and conclusions upon which it based its decision, including the criteria used by the Department in making decision, to the applicant. its N.C. Gen. Stat. § 131E-186(b). The Department s decision to grant or deny a request for the issuance of a CON hinges upon the extent, if any, to which the applicant has complied with the statutory review criteria set out in N.C. Gen. Stat. § 131E-183(a), with the applicant bearing the burden criteria. of demonstrating compliance with those review See Presbyterian-Orthopaedic Hosp. v. N.C. Dept. of Human Resources, 122 N.C. App. 529, 534, 470 S.E.2d 831, 834 (1996), disc. review improvidently allowed, 346 N.C. 267, 485 S.E.2d 294 (1997). After the issuance of the Department s decision, affected person, including: the applicant; any individual residing within the service area or the geographic area served or to be served by the applicant; any individual who regularly uses any -6health service facilities within that geographic area or the service area; any person who provides services, similar to the services under review, to individuals residing within the service area or the geographic area proposed to be served by the applicant; any person who, prior to receipt by the agency of the proposal being reviewed, has provided written notice to the agency of an intention to provide similar services in the future to individuals residing within the service area or the geographic area to be served by the applicant; third party payers who reimburse health service facilities for services in the service area in which the project is proposed to be located; and any agency which establishes rates for health service facilities or HMOs located in the service area in which the project is proposed to be located, shall be entitled to a contested case hearing under Article 3 of Chapter 150B of the General Statutes. 131E-188. In order to challenge a N.C. Gen. Stat. § decision concerning the issuance of a requested CON, an affected person must file a petition stating facts tending to establish that the agency named as the respondent has deprived the petitioner of property, has ordered the petitioner to pay a fine or civil liability penalty, or has otherwise substantially prejudiced the petitioner's rights and that the agency: (1) Exceeded its jurisdiction; authority (2) Acted erroneously; (3) Failed to use proper procedure; or -7(4) Acted arbitrarily or capriciously; or (5) Failed to act as required by law or rule. N.C. Gen. Stat. § 150B-23(a). Any person seeking to challenge a Departmental decision relating to the issuance of a CON has the burden of establishing that the Department s decision substantially prejudiced its rights and is subject to reversal for one of the reasons enunciated in N.C. Gen. Stat. § 150B23(a). Britthaven, Inc. v. N.C. Dept. of Human Resources, 118 N.C. App. 379, 382, 455 S.E.2d 455, 459, disc. review denied, 341 N.C. 418, 461 S.E.2d 754 (1995). A party seeking to challenge the issuance of a CON is provided with an opportunity to present evidence and cross-examine witnesses during an adjudicatory hearing held before an administrative law judge. Id. (citing N.C. Gen. Stat. § 150B-23(a) and N.C. Gen. Stat. §§ 150B-25(c) and (d)). hearing, the At the conclusion of the contested case [administrative law judge] shall make a recommended decision or order that contains findings of fact and conclusions of law[,] N.C. Gen. Stat. § 150B-34(c), determining whether the petitioner has met its burden in showing that the agency substantially prejudiced petitioner s rights, and that the agency also acted outside its authority, acted erroneously, acted arbitrarily and capriciously, used improper procedure, or -8failed to act as required by law or rule. Britthaven, 118 N.C. App. at 382, 455 S.E.2d at 459 (citing N.C. Gen. Stat. § 150B23(a)) (emphasis omitted). of the In view of the fact that the purpose statutorily-authorized contested case hearing is to review the correctness of the Department s decision under N.C. Gen. Stat. § 150B-23(a), the administrative law judge does not engage in a de novo review of the evidentiary record. (rejecting a litigant s contention that the initiation Id. of a contested case hearing commenced a de novo proceeding by the [administrative law judge] intended to lead to a formulation of the final decision administrative law and explaining judge under that the the role applicable of the statutory provisions involved determining whether the petitioner has met its burden of demonstrating substantial prejudice and the commission of an error of the nature listed in N.C. Gen. Stat. § 150B-23(a)). After the issuance of the administrative law judge s recommendation, [a] final decision shall be made by the agency in writing after review of the official record as defined in [N.C. Gen. Stat. §] 150B-37(a)[, which] shall include findings of fact and conclusions of law [and] recite and address all of the facts set forth in the recommended decision. Stat. § 150B-34(c). N.C. Gen. Any affected person who was a party in a -9contested case hearing shall be entitled to judicial review of all or any portion of any final decision of the Department by means of an appeal to this Court pursuant to N.C. Gen. Stat. § 7A-29(a). N.C. Gen. Stat. § 131E-188(b). In reviewing a CON determination: [m]odification or reversal of the Agency decision is controlled by the grounds enumerated in [N.C. Gen. Stat. § 150B-51(b); the decision, findings, or conclusions must be: (1) In violation provisions; of constitutional (2) In excess of the statutory authority or jurisdiction of the agency; (3) Made upon unlawful procedure; (4) Affected by other error of law; (5) Unsupported by substantial evidence admissible under [N.C. Gen. Stat. §§] 150B29(a), 150B-30, or 150B-31 in view of the entire record as submitted; or (6) Arbitrary and capricious. Parkway Urology v. N.C. Dept. of Health & Human Serv., __ N.C. App. __, __, 696 S.E.2d 187, 192 (2010), disc. review denied, 365 N.C. 78, 705 S.E.2d 739 (2011) (quoting Total Renal Care of N.C., LLC v. N.C. Dep t. of Health & Human Servs., 171 N.C. App. 734, 739, 615 S.E.2d 81, 84 (2005));1 see also Dialysis Care of 1 The previous decisions of this Court have clearly established that the 1999 version of N.C. Gen. Stat. § 150B-51 -10N.C., LLC v. N.C. Dep t. of Health & Human Servs., 137 N.C. App. 638, 645, 529 S.E.2d 257, 261, aff d per curiam, 353 N.C. 258, 538 S.E.2d 566 (2000).2 contends that a final In the event that an appealing party agency decision is in violation of constitutional provisions, in excess of the statutory authority or the agency, made upon unlawful proceedings, or affected by other error of law, we conduct a de novo review of the agency s decision. Good Hope Health Sys., L.L.C. v. N.C. Dep t of Health & Human Servs., 189 N.C. App. 534, 543, 659 S.E.2d 456, 462, aff d per curiam, 362 N.C. 504, 666 S.E.2d 749 (2008). On the other hand, assertions that the evidence was insufficient to support decision a particular was finding arbitrary whole record test. S.E.2d at 261. or of fact capricious or are that a reviewed particular using the Dialysis Care, 137 N.C. App. at 646, 529 Under the whole record test, the reviewing court is required to examine all competent evidence (the whole record ) in order to determine whether the agency decision is controls our review of Department decisions granting or denying CON applications. Total Renal Care, 171 N.C. App. at 738, 615 S.E.2d at 83-84. 2 In addition to the standard of review issues discussed in the text of this opinion, we are also required to determine whether the [Department] relied on new evidence in making its decision. Total Renal Care, 171 N.C. App. at 738, 615 S.E.2d at 84 (citations omitted). However, given our decision that the Department did not err by determining that Wake had failed to make the necessary showing of substantial prejudice, we need not address the new evidence issue in order to properly decide this case. -11supported by substantial evidence, with [s]ubstantial evidence [consisting of] such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. (internal citations and quotation marks omitted). Id. The whole record test does not operate as a tool of judicial intrusion into the administrative decision-making process; instead, it gives a reviewing court the capability to determine whether an administrative decision is rationally based in the evidence. Hospital Group of Western N.C. v. N.C. Dept. of Human Resources, 76 N.C. App. 265, 268, 332 S.E.2d 748, 751 (1985) (quoting In re Rogers, 297 N.C. 49, 65, 253 S.E.2d 912, 922 (1979)). Thus, under the whole record test, this Court [will] not replace the agency s judgment as between two reasonably conflicting views, even if we might have reached a different result if the matter were before us de novo. 646, 529 S.E.2d at 261. Dialysis Care, 137 N.C. App. at We will now examine Wake s challenges to the Department s decision utilizing the applicable standard of review. B. Substantial Prejudice 1. Necessity for Proof of Substantial Prejudice According to the express language of N.C. Gen. Stat. § 150B-23(a), Wake was required to demonstrate that the decision to approve Pinnacle s CON application for authorization to -12purchase and operate a mobile MRI scanner substantially prejudiced its rights in order to mount a successful challenge to the Department s decision. Even so, Wake contends that it was not required to make such a showing in order to receive relief under N.C. Gen. Stat. § 150B-23(a). As we understand Wake s argument, entities seeking to challenge the issuance of a CON are not required to prove facts demonstrating substantial prejudice in addition to establishing that they qualify as affected persons for purposes of N.C. Gen. Stat. § 131E-188(c) on the grounds that both requirements relate to the issue of standing to synonymous. to a commence a contested case proceeding and are Acceptance of Wake s argument would be tantamount determination that all affected persons are also substantially prejudiced. This Court held in Parkway Urology, __ N.C. App. at __, 696 S.E.2d at 195, that the affected person and substantial prejudice requirements were distinct and that establishing that one was an affected person did not establish that one was substantially prejudiced. In reaching that conclusion, stated that: As previously noted, Rex qualified as an affected person because it provided similar services to individuals residing within the service area of CCNC's proposed LINAC. Obtaining the status of an affected person does not satisfy the prima facie requirement we -13of a showing of substantial prejudice. Rex was required to provide specific evidence of harm resulting from the award of the CON to CCNC that went beyond any harm that necessarily resulted from additional LINAC competition in Area 20, and NCDHHS concluded that it failed to do so. Id.; see also Bio-Medical Applications of N.C., Inc. v. N.C. Dept. of Health & Human Serv., 173 N.C. App. 641, 619 S.E.2d 593 (2005) (unpublished). Urology, which we In find Wake s status as an light to be of our decision controlling, affected person we in Parkway conclude that pursuant to N.C. Gen. Stat. § 131E-188(c) in no way obviated the necessity for Wake to demonstrate that it was substantially prejudiced by the Department s decision as required by N.C. Gen. Stat. § 150B23(a). As a result, Wake was, in fact, required to prove substantial prejudice in order to successfully challenge the issuance of the CON to Pinnacle. 2. Sufficiency of the Evidence to Establish Substantial Prejudice Having concluded that Wake was, in fact, required to prove that it suffered substantial prejudice as a result of the Department s decision to award the requested CON to Pinnacle, we must now examine the present record to determine whether the Department erred by concluding that Wake had failed to make the necessary showing of substantial prejudice. In light of the -14applicable standard of review, we believe that the Department did not commit any error of law in making that determination. The Department made the following findings of fact relating to the substantial prejudice issue: 49. Wake Radiology provides the professional interpretation of MRI scans performed at Johnston Memorial Hospital. 50. Wake Radiology s president, Robert E. Schaaf, M.D. testified that he observed a decline in the volume of MRI procedures performed at Johnston Memorial Hospital and Wake Radiology s Garner office (located in Wake County) since Pinnacle began offering mobile MRI services at its Clayton office using the Alliance Mobile MRI in late 2007. 51. Dr. Schaaf also testified that he had observed a change in Johnston Memorial Hospital s and Wake Radiology s payor mixes since Pinnacle began offering mobile MRI services at its Clayton office on the Alliance Mobile MRI in 2007. . . . Dr. Schaaf observed that Johnston Memorial Hospital and Wake Radiology s Garner site have seen higher percentages of lower paying groups (Medicare, Medicaid and self-pay patients) relative to commercially insured patients since Pinnacle initiated mobile MRI services at its Clayton office in 2007. 52. However, Dr. Schaaf relied entirely on Wake Radiology s own volume and payor mix data for the five-year period from 2005-2009. . . . No data or evidence was offered to identify the causes of any decline in MRI volumes or payor mix at Wake Radiology or at Johnston Memorial Hospital or to attribute any such declines to Pinnacle s entrance into the market. -1553. Moreover, the declines in payor mix and MRI volume in and near Johnston County identified by Dr. Schaaf all took place during the period since 2007 in which Pinnacle already offered mobile MRI service using the Alliance Mobile MRI at its Clayton location. . . . Thus, even if any such trends could be attributed to Pinnacle, they occurred before the Agency s decision and could not be a result of the Agency s decision. . . . . 54. Although Wake Radiology argued that Pinnacle s current provision of mobile MRI services using the Alliance Mobile MRI is harmful to other providers, Pinnacle s current service is not the result of the Agency decision at issue in this contested case. Prior to the Application, the Agency recognized that Pinnacle already was an existing provider of MRI services in Wake and Johnston Counties using the Alliance Mobile MRI[.] 55. Further, since the Alliance Mobile MRI was a grandfathered mobile MRI scanner, Pinnacle was free to continue and expand its service using the Alliance Mobile MRI or similar contract arrangement without obtaining a CON[.] 56. Wake Radiology s witnesses identified no contractual or legal limitation under the Alliance MRI Service Contract in effect at the time of the Application that would have prevented Pinnacle from adding more hours and/or days of service, adding more sites, or even additional contracted MRI scanners[.] 57. Pinnacle s application proposed to serve only the same three sites at which it already provided MRI services, and proposed to terminate the Alliance MRI Service -16Contract prior to starting service with its own mobile MRI scanner. Consequently, the approval of the Application would result in no change in the number of MRI scanners operated by Pinnacle or the locations at which service is provided[.] 58. Despite its dissatisfaction with Pinnacle s existing MRI services, Wake Radiology failed to offer any evidence other than speculation as to how it would be harmed by the award of a CON to Pinnacle to replace the Alliance Mobile MRI with its own mobile MRI scanner. If Pinnacle received a CON for its own mobile MRI, Wake Radiology s President testified that he expects more of the same. 59. Neither Dr. Schaaf nor Wake Radiology s expert witness offered any prospective analysis or projections of any kind to demonstrate any harm expected as a result of Pinnacle s obtaining its own mobile MRI scanner, compared with the continuation of Pinnacle s existing MRI service using the Alliance Mobile MRI[.] 60. Instead, Dr. Schaaf testified that his basis for believing Wake Radiology would suffer harm as a result of Pinnacle s acquiring its own mobile MRI was Wake Radiology s own experience at Wake Radiology in moving from a leased MRI to a purchased MRI. 61. Dr. Schaaf also testified that Pinnacle projected a payor mix lower in Medicare, Medicaid and self-pay patients than the payor mix of MRI procedures performed at Johnston Memorial Hospital[.] However, Pinnacle s projected payor mix was identical to its historical payor mix at all three of its proposed sites, and therefore would not constitute any change to the status quo[.] -17Based on these findings of fact, the Department concluded as a matter of law that: 24. Wake Radiology failed to demonstrate substantial prejudice to its legal rights as required by N.C. Gen. Stat. § 150B-23. Wake Radiology s allegations regarding potential harm were speculative and/or were based on conditions that predated the Agency s decision. 25. Wake Radiology offered no competent evidence that any decline in MRI procedure volumes it may have experienced was caused by the Agency s decision to approve Pinnacle s Application for a CON. 26. Wake Radiology offered no competent evidence that any deterioration in its payor mix was caused by the Agency s decision to approve Pinnacle s Application for a CON. 27. Wake Radiology instead relied on conclusory and speculative assumptions that deterioration of its MRI procedure volumes and payor mix were caused by Pinnacle s provision of services prior to the Agency s decision, and that Wake Radiology expects more of the same following the grant of the CON to Pinnacle. However, before the Application was filed, Pinnacle already provided MRI services at the same sites proposed in its Application. The conditions complained of by Wake Radiology thus did not result from the Agency decision, but were instead the status quo prior to the decision. 28. Wake Radiology failed to present any evidence that the Agency decision would result in any change to Pinnacle s MRI scanner capacity, to the sites at which Pinnacle provides service, or to Pinnacle s payor mix. Wake Radiology indeed failed to -18offer any competent evidence or testimony to show how the acquisition of Pinnacle s own mobile MRI scanner to replace the Alliance Mobile would affect Wake Radiology in any way. Consequently, Wake Radiology failed to offer any competent evidence to meet its burden to show that the agency decision at issue substantially prejudiced its rights. See Britthaven, 118 N.C. App. at 382, 455 S.E.2d at 459; Presbyterian Hosp., 177 N.C. App. at 785, 630 S.E.2d at 216 []; BioMedical Applications v. NC. Dep t of Health & Human Servs., No. COA04-1644, 2005 N.C. App. LEXIS 2090, at *13[.] 29. Further, the evidence demonstrated that Wake Radiology s primary concern is the effect of competition. The fact that some patients have chosen or may choose to receive services at a Pinnacle facility rather than a facility staffed by Wake Radiology does not support or define any legal right that is substantially prejudiced by the Agency s decision to grant Pinnacle a CON to obtain its own mobile MRI scanner. Everyone [has] the right to enjoy the fruits and advantages of his own enterprise, industry, skill, and credit. He has no right to be protected against competition. Coleman v. Whisnant, 225 N.C. 494, 506, 35 S.E.2d 647, 655 (1945). Wake Radiology is not being prevented from benefiting from the fruits and advantages of [its] own enterprise, industry, skill, and credit, but merely is being required to compete for such benefit. Bio-Medical Applications v. N.C. Dep t of Health & Human Servs., 179 N.C. App. 483, 491-92, 634 S.E.2d 572, 578 (2006) (quoting Coleman, 225 N.C. at 506, 35 S.E.2d at 665). 30. Because Wake Radiology has failed to establish that substantial prejudice to its legal rights resulted or will result from the Agency s decision, it has failed to prove an essential element of its case and -19therefore its case is subject to dismissal without regard to whether it proved agency error. On appeal, contends Wake that points his to the testimony testimony, standing of Dr. alone, establish the necessary substantial prejudice. Schaaf and sufficed to We are not persuaded by this argument, which is tantamount to a request that we overturn a factual decision that is committed to the Department rather than the appellate courts. At the contested case hearing, Dr. Schaaf testified that Wake had been adversely affected by Pinnacle s entry into the mobile MRI market in Johnston County in 2007 based upon what Dr. Schaaf considered to be Pinnacle s practice of maintaining an unreasonably low percentage of Medicare, Medicaid, and self-pay patients, More while absorbing specifically, Dr. higher Schaaf paying testified patients that, from since Wake. Pinnacle began offering mobile MRI scanning services in Johnston County, Wake s overall volume had and] declined . . . and its self-pay service to populations the Medicare[,] Medicaid[, had increased. Based on his personal observation of this change in patient demographics and the fact that Pinnacle and Wake are the only providers of MRI services in Johnston County, Dr. Schaaf testified that these changes were directly and attributable to Pinnacle s entrance into the market. conclusively -20As the Department noted, Dr. Schaaf s testimony leaves numerous possible explanations for the changes in Wake s patient demographics unaddressed. For example, neither Dr. Schaaf nor any other Wake witness appears to have considered the impact that changes in the percentage of insured patients, the extent to which patients were seeking MRI services outside Johnston County, or the extent to which patients had become dissatisfied with Wake s services demographics. In might have addition, Dr. had on Schaaf s Wake s patient testimony rests exclusively on numbers derived from an analysis of Wake s own internal statistics, which would reasonably be deemed an insufficient basis for evaluating market conditions as a whole. As a result, the record provides ample evidentiary support for the Department s determination that Wake had failed to adequately explain the reasons underlying the changes in Wake s patient demographics described in Dr. Schaaf s testimony. Moreover, even if Wake had successfully demonstrated that Pinnacle s entry into the relevant market was responsible for the change in patient demographics described in Dr. Schaaf s testimony, Wake has failed to establish how, or to what extent, the service that Pinnacle would be authorized to provide under the CON would result in additional harm to Wake over and above that inherent in existing market conditions. As Wake -21acknowledges, a showing of past harm does not suffice to prove substantial prejudice. Instead, Wake claims that [i]t is the projected increase in already damaging practices that comprises the substantial prejudice to Wake. Wake based this contention on Dr. Schaaf s testimony that, given Pinnacle's projection of an enhanced presence in the relevant service area combined with a continuation of the existing payor mix, the adverse effect on Wake would necessarily be compounded, thereby creating substantial prejudice to Wake as a result of the issuance of the requested provided CON. by According Dr. to Schaaf the is Wake, only testimony means such of as that demonstrating substantial prejudice [in this context] and cannot be dismissed as mere speculation. We do not find Wake s reasoning persuasive. As we have already noted, Wake bears the burden of proving substantial prejudice as a prerequisite challenging the Department s decision. to successfully At the contested case hearing, Wake did not call a health planning expert to testify concerning the causal relationship, if any, between Pinnacle s entrance into corresponding the change mobile in MRI Wake s market patient in 2007 demographics and or the the likelihood that Pinnacle would expand its services following the issuance of the requested CON to a greater degree than would -22have been possible under the Alliance contract. Instead, Wake relied exclusively on the testimony of its own president, Dr. Schaaf, who simply testified that [he thought he knew] what the future [was Pinnacle]. and that] we ll see more of the same [from However, the Department found that Dr. Schaaf s testimony relied entirely on Wake Radiology s own volume and payor data mix for the five-year period from 2005-2009; that the declines in payor mix and MRI volume in and near Johnston County . . . all took place during the period since 2007 in which Pinnacle already offered mobile MRI service using the Alliance Mobile MRI at its Clayton location; and that, even if any such trends could be attributed to Pinnacle, they occurred before the Agency s decision and could not be a result of the Agency s decision. adequate record Based support, the on these Department findings, concluded which have that Wake failed to present any evidence that the Agency decision would result in any change to Pinnacle s MRI scanner capacity, to the sites at which Pinnacle provides service, or to Pinnacle s payor mix or to offer any competent evidence or testimony to show how the acquisition of Pinnacle s own mobile MRI scanner to replace the Alliance Mobile would affect Wake Radiology in any way. In light of these findings and conclusions, which provide ample justification for the Department s determination that a -23decision to authorize Pinnacle to replace a leased mobile MRI scanner with Pinnacle-owned equipment would not adversely affect Wake more than maintenance of the status quo, we are unable to conclude that the Department erred by concluding that Wake failed to establish that it would be substantially prejudiced by the issuance of the requested CON.3 At bottom, the Department s determination that Dr. Schaaf s testimony was speculative, founded on flawed logic, and insufficient to require a finding in Wake s favor has ample record adequately support. This determination, in turn, supports the Department s conclusion that Wake failed to satisfy its burden of proof with respect to the substantial prejudice issue. that we Wake s argument to the contrary amounts to a request revisit the Department s factual determinations and reach a different result than that found appropriate by the relevant administrative agency. We are not at liberty to take such a step under the applicable standard of review. As a result, we conclude that the Department did not commit any error 3 In fact, the record tends to suggest that the issuance of the CON, which conditioned approval of Pinnacle s request to purchase and operate a mobile MRI scanner on the retirement of the Alliance scanner and the provision of service at only the three existing locations, might constrain Pinnacle s ability to provide service in new locations in and around Johnston County or to add additional leased MRI scanners, thereby making it more difficult for Pinnacle to compete with Wake than would be the case in the event that the status quo were to be maintained. -24of law by refusing to provide any relief to Wake given Wake s failure Since to Wake establish has the failed necessary to substantial establish that its prejudice. rights were substantially prejudiced by the issuance of the requested CON, it cannot be entitled to relief under N.C. Gen. Stat. § 150B23(a), obviating any necessity for us to address the remainder of Wake s challenges to the Department s decision. III. Conclusion Thus, for the reasons set forth above, we conclude that Wake has failed to demonstrate that the Department erred by concluding that Wake had failed to demonstrate that it would be substantially prejudiced by the Department s decision to approve Pinnacle s application for the issuance of a CON authorizing Pinnacle to purchase and operate a mobile MRI scanner. result, the Department s decision should be, affirmed. AFFIRMED. Judges ROBERT C. HUNTER and STEPHENS concur. Report per Rule 30(e). and hereby As a is,

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