In re Professional Nurses Service, Inc.

IN_RE_PROFESSIONAL_NURSES_SERV.94-456; 164 Vt 529; 671 A.2d 1289

[Filed 12-Jan-1996]

  NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
  40 as well as formal revision before publication in the Vermont Reports. 
  Readers are requested to notify the Reporter of Decisions, Vermont Supreme
  Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
  order that corrections may be made before this opinion goes to press.


                                 No. 94-456


In re Professional Nurses Service, Inc.         Supreme Court

                                                 On Appeal from
                                                 Health Care Authority

                                                 October Term, 1995
             

Richard G. Brandenburg, Chair

       Philip H. White of Wilson & White, P.C., Montpelier, for
  appellants/cross-appellees Vermont Assembly of Home Health Agencies and its
  constituent members

       Charles F. Storrow of Kimbell & Storrow, Montpelier, for
  appellee/cross-appellant Professional Nurses Service, Inc.

       Robert A. Mello, South Burlington, for appellee Vermont Health Policy
  Council


PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


       GIBSON, J.   The Vermont Assembly of Home Health Agencies and its
  thirteen constituent members (Assembly) appeal the Vermont Health Care
  Authority's denial of their petition to revoke the Certificate of Need
  (CON) issued in 1980 to Professional Nurses Service, Inc. (PNS).  PNS
  cross-appeals the Authority's order requiring CON review of PNS's proposal
  for expanded services.  We affirm.

       Since 1979, "[n]o new institutional health service shall be offered or
  developed within this state by any person, without a determination of need
  and issuance of a certificate of need by the board . . . ."  18 V.S.A. §
  9434(a) (formerly 18 V.S.A. § 2403(a)).  In a February 1980 letter of
  intent to the State Health Planning and Development Agency (SHPDA), PNS
  proposed to "provid[e] the community of Burlington with an organized system
  of obtaining a Registered Nurse, a Licensed Practical Nurse or a nurse aide
  for private duty patients in the home, convalescent home or hospital," and
  to provide supplemental staffing for existing health care

 

  institutions.  In April 1980, PNS applied for a CON to provide such
  services in Chittenden County.  In an August 1980 addendum, PNS sought to
  expand its proposed service area to include "not only Chittenden County,
  but also the areas of St. Albans, and Barre/Montpelier." The Assembly was
  granted party status in the PNS CON proceeding in September 1980. Following
  a public hearing in November, the SHPDA on December 1, 1980 issued a CON to
  PNS.

       The 1980 CON authorized PNS to offer "private duty nursing,"
  "homemaking" and "supplemental staffing" services and did not restrict the
  scope of PNS's service area.  The CON defined "homemaking" to include
  various nursing services provided at a patient's home, but expressly
  excluded "monitoring vital signs, range of motion exercises, or supervision
  of medications."  The CON did not define "private duty nursing" or
  "supplemental staffing."

       In February 1992, PNS filed a letter of intent with the Commissioner
  of Health to offer "unrestricted" nurse aide services, including the
  monitoring of vital signs, range of motion exercises, and supervision of
  medication.  PNS argued that the proposed expansion of its CON did not
  amount to a "material change" requiring CON approval under 18 V.S.A. §
  9444.  In a March 1992 letter, the Commissioner of Health notified PNS that
  the Legislature had transferred jurisdiction over CON applications to the
  Health Care Authority Board.  See 18 V.S.A. §§ 9403(b), 9433(a).  PNS
  interpreted this reply as a determination that its proposal required CON
  review, and in April 1992, appealed this determination to the Chittenden
  Superior Court.  PNS also sought a declaration that the proposed expansion
  did not come within the Health Care Authority's CON jurisdiction.

       In June 1992, PNS applied to the Department of Health for a CON to
  allow it to offer the additional services it had proposed.  In December
  1992, the superior court determined that the jurisdictional question should
  be decided by the newly established Health Care Authority.  The Health Care
  Authority Board (Board) agreed to consider the jurisdictional issue once
  PNS completed its pending CON application.

 

       In January 1993, the Assembly filed with the Board a "Petition to
  Revoke and Thereafter Reinstate with Additional Conditions the Certificate
  of Need of Professional Nurses Service, Inc."  The Assembly alleged that
  PNS had unilaterally expanded its operation to include skilled nursing
  services offered on a statewide basis, and that PNS was therefore in
  substantial noncompliance with the 1980 CON.

       In February 1993, the Health Policy Council (Council) determined that
  PNS's application for a second CON was complete, and in March 1993, PNS
  filed a motion to dismiss the Assembly's petition.  The Board denied that
  motion, and held hearings on both the Assembly's petition and PNS's
  jurisdictional challenge on December 6-7, 1993.  The hearing officer
  submitted recommended findings and conclusions to the Board in April 1994.

       In response to PNS's jurisdictional challenge, the Board ruled that 18
  V.S.A. § 9434 required PNS to obtain CON approval before offering expanded
  home health services.  With respect to the Assembly's petition, the Board
  held that the 1980 CON was not meant to limit PNS in the types of skilled
  nursing services it could offer and that PNS's statewide expansion did not
  amount to substantial noncompliance with the 1980 authorization.  The Board
  also concluded that the Assembly was barred by laches from contesting PNS's
  geographical expansion.  On July 28, 1994, the Board reissued the 1980 CON
  with revisions.  The instant appeals followed.

       Our standard of review is limited in cases involving an administrative
  agency's interpretation of statutory provisions that are within its
  particular area of expertise.  Absent a clear and convincing showing to the
  contrary, decisions made within the expertise of an administrative agency
  are presumed correct, valid and reasonable.  In re UNUM Life Ins. Co., 162
  Vt. 201, 206, 647 A.2d 708, 712 (1994).  We will affirm a proper
  administrative decision even if the grounds stated in its support are
  erroneous.  Vermont Elec. Power Co. v. Town of Cavendish, 158 Vt. 369, 374,
  611 A.2d 389, 392 (1992).  The Legislature has given the Board express
  authority for the administration of "[c]omprehensive health planning" in
  Vermont.  18

 

  V.S.A. §§ 9401(a), 9404(a).  Therefore, we will not disturb the Board's
  statutory interpretations absent a compelling indication of error.  UNUM,
  162 Vt. at 206, 647 A.2d  at 711.

                                     I.

       The Assembly claims that the Board erred in concluding that PNS was
  not in "substantial noncompliance" with the 1980 CON when it expanded to a
  statewide operation that provides skilled nursing services.

       Under 18 V.S.A. § 9444, "[t]he board may revoke a certificate of need
  for substantial noncompliance with the scope of the project as designated
  in the application, or for failure to comply with the conditions set forth
  in the certificate of need granted by the board."  The Board found that
  PNS's expansion beyond the geographical area it had proposed in the CON
  application placed PNS in "noncompliance with the scope of its designated
  project."  The Board concluded, however, that the 1980 CON did not limit
  the geographical area in which PNS operated, but rather, restricted PNS
  from operating as a home health agency with access to Medicare
  reimbursement.  Because the 1980 CON did not include a condition limiting
  the area of PNS's operation, the Board concluded that PNS's geographical
  expansion was not "substantial noncompliance" warranting revocation under §
  9444.  We agree.

       Although the Board found that the Health Policy Corporation (HPC)
  (predecessor in interest of the Council) had used PNS's proposed service
  area as the basis for determining the existence of need for the purposes of
  the CON, there is no indication that the HPC would have considered an
  expansion of that service area to be a substantial violation of the CON. 
  The Commissioner's statements during the 1980 CON review indicate that the
  Department of Health was primarily concerned with the "accessibility,
  acceptability and flexibility of services" and less concerned with the
  potential for increased competition in the nursing industry.  Undoubtedly,
  the statewide expansion of PNS services did in fact serve the purposes of
  the 1980 CON by increasing the accessibility, acceptability, and
  flexibility of nursing services.  We see no compelling indication of error
  in the Board's interpretation of the term "substantial

 

   noncompliance" in § 9444.

                                     II.

       The Assembly also claims that the Board erred in construing the term
  "private duty nursing" in the 1980 CON and in finding that PNS did not
  violate the terms of the CON by providing intermittent nursing services. 
  The Assembly contends that, contrary to the Board's conclusion, the term
  "private duty nursing" is a term of art that restricted PNS to providing
  home nursing only in blocks of four or more hours; "intermittent nursing,"
  according to the Assembly, is a distinct category of nursing services,
  which PNS was not authorized to provide under the 1980 CON.  The Board
  construed "private duty nursing" to include nurses "hired by patients for
  both long and short blocks of time," and the term "intermittent nursing" to
  mean nursing visits in short blocks of time, usually less than two hours, a
  service that is covered by Medicare.  But while the Board found that the
  terms had different connotations, the Board found no distinction in the
  types of services actually rendered.  Stating that "nursing is nursing,"
  the Board concluded that private-duty nursing and intermittent nursing are
  overlapping subsets of skilled nursing services and should be regulated the
  same way regardless of the source of their payment.  In light of the
  deference we give to decisions made within the expertise of administrative
  agencies, see, e.g., Vermont State Colleges Faculty Fed'n v. Vermont State
  Colleges, 151 Vt. 457, 460, 561 A.2d 417, 419-20 (1989), we are unable to
  conclude that the Board misconstrued the term "private duty nursing."

       The Assembly argues that the 1980 CON intended to protect home health
  agencies from competition for private insurance revenues paid for medically
  necessary nursing services by restricting PNS to the provision of
  private-duty nursing in at least four-hour shifts.  The 1980 CON did not,
  however, define the term "private duty nursing."  The Assembly points to
  several statements suggesting that the length of PNS's proposed nursing
  shifts was one issue in the review of the 1980 CON application, but it
  fails to establish that the term "private duty nursing" required PNS nurses
  to work in four-hour shifts.  In the absence of an express condition to
  that

 

  effect, we cannot conclude that the length of nursing shifts is a relevant
  criterion in defining the term "private duty nursing" as it was used in the
  1980 CON.  Nor are we persuaded that the 1980 CON intended to restrict
  competition between PNS and home health agencies, inasmuch as the
  Commissioner was aware at the time of issuance that the CON was likely to
  result in increased competition between PNS and the Assembly.

       It is true that, in enacting the Health Facility Planning Act, the
  Legislature expressed its intention to provide new institutional health
  services "in a manner which avoids unnecessary duplication."  18 V.S.A. §
  9431.  That was not, however, the sole purpose of the Act.  The Legislature
  also sought to contain or reduce cost increases in the delivery of health
  services while maintaining and improving the quality of and access to such
  services.  Id.  Although the Board's decision may increase competition
  among nursing providers in Vermont, the decision also furthers other
  purposes of the Act.  Under these circumstances, the agency's decision must
  stand.  See UNUM, 162 Vt. at 206, 647 A.2d  at 712.

                                    III.

       The Assembly also claims that the Board exceeded its statutory
  authority when it used the 1994 CON to redefine "private duty nursing," as
  that term was used in the 1980 CON, and to expand the geographical scope of
  PNS services beyond that proposed in the 1980 CON application.  The
  Assembly argues that, under 18 V.S.A. § 9444, the Board has authority only
  to grant or deny the revocation of a CON, and not to clarify or modify a
  material term of an existing CON.

       We have recognized, however, that "`[t]he powers of an administrative
  agency must be construed to include such incidental, implied powers as may
  be needed for the agency to achieve the task assigned to it.'"  Id. at 205,
  647 A.2d  at 711 (quoting In re DeCato Bros., Inc., 149 Vt. 493, 495, 546 A.2d 1354, 1356 (1988)).  The Health Facility Planning Act provides that
  proposals "to materially change the scope . . . of [an] approved project .
  . . are subject to review under this subchapter."  18 V.S.A. § 9444.  The
  Board needed to clarify the scope of

 

  the 1980 CON to determine whether PNS was in compliance and whether the
  proposed change was material.  We hold, therefore, that the power to
  clarify an existing CON is one of the implied powers necessary to carry out
  the Board's statutory authority.

       The Board also had the authority to issue the revised 1994 CON.  The
  statute authorized the Board to review the PNS proposal once it concluded
  that PNS proposed to make a material change to the 1980 CON.  Id.  The
  Board's review power includes the power to issue or deny certificates of
  need under 18 V.S.A. § 9433(a).  The Assembly concedes that the Board
  followed the appropriate procedure when it issued the 1994 CON to PNS.  As
  long as the Board followed proper statutory procedure, we see little
  difference between revising and reissuing the 1980 CON on the one hand, and
  issuing a separate CON on the other.

                                    IV.

       On cross-appeal, PNS claims that the Board erred in requiring CON
  review of PNS's proposal to offer unrestricted nurse aide and other
  therapeutic services.  It argues that the proposal did not constitute a
  "material change" of the 1980 CON, and therefore, did not require separate
  authorization.  Here again, we will sustain interpretations of statutory
  provisions by an administrative agency in the absence of compelling
  indication of error.  UNUM, 162 Vt. at 206, 647 A.2d  at 711.

       The applicable statute states, "If a change itself would be considered
  a new institutional health service as defined in section 9434(a) of this
  title, it shall be considered as material."  18 V.S.A. § 9444.  Section
  9434(a)(1) defines "new institutional health service" as "the construction,
  development, or other establishment of a new health care facility. . . ." 
  The term "health care facility" includes "home health agencies."  18 V.S.A.
  § 9432(10).  Although "home health agency" is not defined in the statute,
  the Board determined that, since the early 1970s, the phrase had meant the
  same thing to those responsible for CON review in Vermont as it did to
  those responsible for administration of the federal Medicare reimbursement
  program, namely, "the offering of skilled nursing services plus at least
  one other therapeutic service."  See 42

 

  C.F.R. § 484.14(a).  Because PNS proposed to offer unrestricted nurse aide
  services and other therapeutic services, the Board concluded that PNS
  intended to make a material change in its 1980 CON authorization.  We see
  no reason to disturb this conclusion.

       PNS asserts that the definition of "home health agency" adopted by the
  federal Medicare program is not a sufficient basis for concluding that PNS
  sought a material change of the 1980 authorization.  We disagree.  Without
  explaining how the Board's interpretation is deficient, PNS invites us to
  substitute PNS's definition for that of the agency authorized to interpret
  the applicable statute.  We decline such invitation and uphold the Board's
  interpretation in the absence of a compelling indication of error.

       Affirmed.


               FOR THE COURT:



               _________________________________________
               Associate Justice