2021 Georgia Code
Title 31 - Health
Chapter 6 - State Health Planning and Development
Article 3 - Certificate of Need Program
§ 31-6-40. (See Editor's notes.) Certificate of Need Required for New Institutional Health Services; Exemption

1. On and after July 1, 2008, any new institutional health service shall be required to obtain a certificate of need pursuant to this chapter. New institutional health services include:
   1. The construction, development, or other establishment of a new, expanded, or relocated health care facility, except as otherwise provided in Code Section 31-6-47;
   2. Any expenditure by or on behalf of a health care facility in excess of $10 million which, under generally accepted accounting principles consistently applied, is a capital expenditure, except expenditures for acquisition of an existing health care facility. The dollar amounts specified in this paragraph and in paragraph (14) of Code Section 31-6-2 shall be adjusted annually by an amount calculated by multiplying such dollar amounts (as adjusted for the preceding year) by the annual percentage of change in the composite index of construction material prices, or its successor or appropriate replacement index, if any, published by the United States Department of Commerce for the preceding calendar year, commencing on July 1, 2019, and on each anniversary thereafter of publication of the index. The department shall immediately institute rule-making procedures to adopt such adjusted dollar amounts. In calculating the dollar amounts of a proposed project for purposes of this paragraph and paragraph (14) of Code Section 31-6-2, the costs of all items subject to review by this chapter and items not subject to review by this chapter associated with and simultaneously developed or proposed with the project shall be counted, except for the expenditure or commitment of or incurring an obligation for the expenditure of funds to develop certificate of need applications, studies, reports, schematics, preliminary plans and specifications or working drawings, or to acquire sites;
   3. The purchase or lease by or on behalf of a health care facility or a diagnostic, treatment, or rehabilitation center of diagnostic or therapeutic equipment, except as otherwise provided in Code Section 31-6-47;
   4. Any increase in the bed capacity of a health care facility except as provided in Code Section 31-6-47;
   5. Clinical health services which are offered in or through a health care facility, which were not offered on a regular basis in or through such health care facility within the 12 month period prior to the time such services would be offered;
   6. Any conversion or upgrading of any general acute care hospital to a specialty hospital or of a facility such that it is converted from a type of facility not covered by this chapter to any of the types of health care facilities which are covered by this chapter;
   7. Clinical health services which are offered in or through a diagnostic, treatment, or rehabilitation center which were not offered on a regular basis in or through that center within the 12 month period prior to the time such services would be offered, but only if the clinical health services are any of the following:
      1. Radiation therapy;
      2. Biliary lithotripsy;
      3. Surgery in an operating room environment, including but not limited to ambulatory surgery; and
      4. Cardiac catheterization; and
   8. The conversion of a destination cancer hospital to a general cancer hospital.
2. Any person proposing to develop or offer a new institutional health service or health care facility shall, before commencing such activity, submit a letter of intent and an application to the department and obtain a certificate of need in the manner provided in this chapter unless such activity is excluded from the scope of this chapter.
3. 1. Any person who had a valid exemption granted or approved by the former Health Planning Agency or the department prior to July 1, 2008, shall not be required to obtain a certificate of need in order to continue to offer those previously offered services.
   2. Any facility offering ambulatory surgery pursuant to the exclusion designated on June 30, 2008, as division (14)(G)(iii) of Code Section 31-6-2; any diagnostic, treatment, or rehabilitation center offering diagnostic imaging or other imaging services in operation and exempt prior to July 1, 2008; or any facility operating pursuant to a letter of nonreviewability and offering diagnostic imaging services prior to July 1, 2008, shall:
      1. Provide annual reports in the same manner and in accordance with Code Section 31-6-70; and
      2. 1. Provide care to Medicaid beneficiaries and, if the facility provides medical care and treatment to children, to PeachCare for Kids beneficiaries and provide uncompensated indigent and charity care in an amount equal to or greater than 2 percent of its adjusted gross revenue; or
         2. If the facility is not a participant in Medicaid or the PeachCare for Kids Program, provide uncompensated care for Medicaid beneficiaries and, if the facility provides medical care and treatment to children, for PeachCare for Kids beneficiaries, uncompensated indigent and charity care, or both in an amount equal to or greater than 4 percent of its adjusted gross revenue if it:
      3. Makes a capital expenditure associated with the construction, development, expansion, or other establishment of a clinical health service or the acquisition or replacement of diagnostic or therapeutic equipment with a value in excess of $800,000.00 over a two-year period;
      4. Builds a new operating room; or
      5. Chooses to relocate in accordance with Code Section 31-6-47.

         Noncompliance with any condition of this paragraph shall result in a monetary penalty in the amount of the difference between the services which the center is required to provide and the amount actually provided and may be subject to revocation of its exemption status by the department for repeated failure to pay any fees or moneys due to the department or for repeated failure to produce data as required by Code Section 31-6-70 after notice to the exemption holder and a fair hearing pursuant to Chapter 13 of Title 50, the "Georgia Administrative Procedure Act." The dollar amount specified in this paragraph shall be adjusted annually by an amount calculated by multiplying such dollar amount (as adjusted for the preceding year) by the annual percentage of change in the consumer price index, or its successor or appropriate replacement index, if any, published by the United States Department of Labor for the preceding calendar year, commencing on July 1, 2009. In calculating the dollar amounts of a proposed project for the purposes of this paragraph, the costs of all items subject to review by this chapter and items not subject to review by this chapter associated with and simultaneously developed or proposed with the project shall be counted, except for the expenditure or commitment of or incurring an obligation for the expenditure of funds to develop certificate of need applications, studies, reports, schematics, preliminary plans and specifications or working drawings, or to acquire sites. Subparagraph (B) of this paragraph shall not apply to facilities offering ophthalmic ambulatory surgery pursuant to the exclusion designated on June 30, 2008, as division (14)(G)(iii) of Code Section 31-6-2 that are owned by physicians in the practice of ophthalmology.

4. A certificate of need issued to a destination cancer hospital shall authorize the beds and all new institutional health services of such destination cancer hospital. As used in this subsection, the term "new institutional health service" shall have the same meaning provided for in subsection (a) of this Code section. A certificate of need shall only be issued to a destination cancer hospital that locates itself and all affiliated facilities within 25 miles of a commercial airport in this state with five or more runways. Such destination cancer hospital shall not be required to apply for or obtain additional certificates of need for new institutional health services related to the treatment of cancer patients, and such new institutional health services related to the treatment of cancer patients offered by the destination cancer hospital shall not be reviewed under any service-specific need methodology or rules except for those promulgated by the department for destination cancer hospitals. After commencing operations, in order to add an additional new institutional health service, a destination cancer hospital shall apply for and obtain an additional certificate of need under the applicable statutory provisions and any rules promulgated by the department for destination cancer hospitals, and such applications shall only be granted if the patient base of such destination cancer hospital is composed of at least 65 percent of out-of-state patients for two consecutive years. The department may apply rules for a destination cancer hospital only for those services that the department determines are to be used by the destination cancer hospital in connection with the treatment of cancer. In no case shall destination cancer hospital specific rules be used in the case of an application for open heart surgery, perinatal services, cardiac catheterization, and other services deemed by the department to be not reasonably related to the diagnosis and treatment of cancer; provided, however, that the department shall apply the destination cancer hospital specific rules if a destination cancer hospital applies for services and equipment required for it to meet federal or state laws applicable to a hospital. If such destination cancer hospital cannot show a patient base of a minimum of 65 percent from outside of this state, then its application for any new institutional health service shall be evaluated under the specific statutes and rules applicable to that particular service. If such destination cancer hospital applies for a certificate of need to add an additional new institutional health service before commencing operations or completing two consecutive years of operation, such applicant may rely on historical data from its affiliated entities, as set forth in paragraph (2) of subsection (b.1) of Code Section 31-6-42. Because destination cancer hospitals provide services primarily to out-of-state residents, the number of beds, services, and equipment destination cancer hospitals use shall not be counted as part of the department's inventory when determining the need for those items by other providers. No person shall be issued more than one certificate of need for a destination cancer hospital. Nothing in this Code section shall in any way require a destination cancer hospital to obtain a certificate of need for any purpose that is otherwise exempt from the certificate of need requirement. Beginning January 1, 2010, the department shall not accept any application for a certificate of need for a new destination cancer hospital; provided, however, all other provisions regarding the upgrading, replacing, or purchasing of diagnostic or therapeutic equipment shall be applicable to an existing destination cancer hospital.
5. The commissioner shall be authorized, with the approval of the board, to place a temporary moratorium of up to six months on the issuance of certificates of need for new and emerging health care services. Any such moratorium placed shall be for the purpose of promulgating rules and regulations regarding such new and emerging health care services. A moratorium may be extended one time for an additional three months if circumstances warrant, as approved by the board. In the event that final rules and regulations are not promulgated within the time period allowed by the moratorium, any applications received by the department for a new and emerging health care service shall be reviewed under existing general statutes and regulations relating to certificates of need.

(Code 1981, §31-6-40, enacted by Ga. L. 1983, p. 1566, § 1; Ga. L. 1991, p. 1871, § 6; Ga. L. 1999, p. 296, § 22; Ga. L. 2008, p. 12, § 1-1/SB 433; Ga. L. 2009, p. 8, § 31/SB 46; Ga. L. 2019, p. 148, § 1-4/HB 186.)

The 2019 amendment, effective July 1, 2019, rewrote subsection (a); deleted former subparagraph (c)(2)(A), which read: "Provide notice to the department of the name, ownership, location, single specialty, and services provided in the exempt facility;"; substituted "(A) Provide" for "(B) Beginning on January 1, 2009, provide"; redesignated former subparagraph (c)(2)(C) as present subparagraph (c)(2)(B); and substituted "Subparagraph (B)" for "Subparagraph (C)" at the beginning of the last sentence of the undesignated paragraph of subparagraph (c)(2)(B).

- Licensed hospice exempt from certificate of need requirement, § 31-7-179.

- Pursuant to Code Section 28-9-5, in 2008, "a" was deleted following "no case shall" in the seventh sentence of subsection (d).

- By resolution (Ga. L. 1990, p. 970), the General Assembly directed the State Health Planning Agency to make certain studies and reports and to update its rules and regulations.

Ga. L. 2008, p. 12, § 3-1/SB 433, not codified by the General Assembly, provides that the amendment to this Code section shall only apply to applications submitted on or after July 1, 2008.

For application of this statute in 2020, see Executive Order 03.20.20.02.

A listing of Executive Orders issued in 2020 and 2021 can be found at https://gov.georgia.gov/executive-action/executive-orders.

- For annual survey on administrative law, see 69 Mercer L. Rev. 15 (2017). For annual survey on administrative law, see 70 Mercer L. Rev. 1 (2018).

JUDICIAL DECISIONS

Constitutionality.

- By the statute's plain terms, O.C.G.A. § 31-6-40(a)(7)(C) does not authorize monopolistic contracts relating to providers of new institutional health services and only requires that all such providers obtain a Certificate of Need (CON) before adding new services; thus, it did not implicate the Anti-Competitive Contracts Clause in any way as the requirement did not authorize contracts between service providers or anyone else that would encourage a monopoly. Women's Surgical Ctr., LLC v. Berry, 302 Ga. 349, 806 S.E.2d 606 (2017).

- Trial court did not err in the court's denial of the motion to transfer venue in a case involving an application for a Certificate of Need (CON) because the company began the process of purchasing property and applied for a CON to develop a psychiatric hospital in Coweta County, Georgia; therefore, the company engaged in business activities such that venue was proper there. Tanner Med. Ctr., Inc. v. Vest Newnan, LLC, 337 Ga. App. 884, 789 S.E.2d 258 (2016).

- Georgia Supreme Court held the availability of quality health care services was certainly a legitimate legislative purpose and that the government objectives with respect to Georgia's certificate of need laws were indeed legitimate. Women's Surgical Ctr., LLC v. Berry, 302 Ga. 349, 806 S.E.2d 606 (2017).

- Nothing in O.C.G.A. § 31-6-40, or in rules of the State Health Planning Agency, gave the State Health Planning Agency (now Department of Community Health) authority to exempt a facility from Certificate of Need requirements if the facility was relocated. HCA Health Servs., Inc. v. Roach, 263 Ga. 798, 439 S.E.2d 494 (1994).

State Health Planning Agency (now Department of Community Health) did not have discretion to exempt a health care provider from review procedures established by the certificate of need program. North Fulton Medical Ctr. v. Roach, 263 Ga. 814, 440 S.E.2d 18 (1994).

- Relocation rule under which the State Health Planning Agency (now Department of Community Health) issued a certificate of need to a facility more than two years after it had already relocated to a new site and commenced operation was in direct conflict with the requirement that both new and relocating facilities first must obtain a certificate of need before commencing operations. North Fulton Medical Ctr., Inc. v. Stephenson, 269 Ga. 540, 501 S.E.2d 798 (1998).

- State Health Planning Agency (now Department of Community Health) did not have discretion to determine whether to "grandfather" a particular health care facility; rather, the agency is simply authorized to determine whether the facility may be grandfathered as one which existed and performed the same services prior to the Certificate of Need program in 1979. HCA Health Servs., Inc. v. Roach, 263 Ga. 798, 439 S.E.2d 494 (1994).

Mobile cardiac catherization unit which was "grandfathered" and exempt from obtaining a certificate of need when the unit began operating was required to obtain a certificate of need when the unit was relocated. Phoebe Putney Mem. Hosp. v. Roach, 267 Ga. 619, 480 S.E.2d 595 (1997).

- Trial court erred in determining that the Georgia Department of Community Health's interpretation of the phrase "offered in a hospital" violated the equipment threshold provision in O.C.G.A. § 31-6-40. Medical Ctr. of Cent. Ga. v. Hosp. Auth., 340 Ga. App. 499, 798 S.E.2d 42 (2017).

- Certificate of need was properly granted to a hospital for an 11 bed nursing facility, which would be created by converting 13 general acute care hospital beds into 11 skilled nursing beds, notwithstanding the contention of a nursing home that the nursing home should have received the certificate of need. St. Joseph's Hosp. v. Thunderbolt Health Care, Inc., 237 Ga. App. 454, 517 S.E.2d 334 (1999).

- Hospital could not decouple the hospital's Certificate of Need (CON) for a comprehensive in-patient rehabilitation (CIPR) program that was located in the hospital for hospital patients and transfer the program and the CON to a separately licensed rehabilitation facility without prior CON review and approval; the separate rehab facility was a "health care facility" and if the facility acquired the hospital's 16-bed CIPR program, then the rehab facility's CIPR program would expand from 56 beds to 72 beds. Dep't of Cmty. Health v. Emory Univ., 351 Ga. App. 257, 830 S.E.2d 628 (2019), cert. denied, No. S19C1532, 2020 Ga. LEXIS 157 (Ga. 2020).

- Hospital with a certificate of need (CON) for 49 inpatient beds and a CON for a 12-bed psychiatric program, which had redistributed some of its total beds as psychiatric/substance-abuse beds, was not required to obtain a CON for this redistribution because the list of health services in O.C.G.A. § 31-6-40(a) was exhaustive. To the extent Ga. Comp. R. & Regs. 111-2-2-.26 purported to require a new CON for such a redistribution, the rule was invalid. Premier Health Care Invs., LLC v. UHS of Anchor, L.P., 310 Ga. 32, 849 S.E.2d 441 (2020).

- Procedures set forth in O.C.G.A. T. 31, Ch. 6, Art. 3, for consideration of a certificate of need by the Health Planning Agency (now Department of Community Health), and appeal to the Health Planning Review Board (now Certificate of Need Appeal Panel), establish administrative proceedings within the meaning of O.C.G.A. § 50-18-70. Clayton County Hosp. Auth. v. Webb, 208 Ga. App. 91, 430 S.E.2d 89 (1993).

- Court of appeals erred in ruling that a society of surgery centers did not have to exhaust administrative remedies under the Georgia Administrative Procedure Act, O.C.G.A. § 50-13-19(a), in the society's action seeking to prevent the Georgia Department of Community Health and its Commissioner from requiring its members to respond to certain disputed requests in an annual survey because the futility exception to the exhaustion requirement was inapplicable; the Commissioner's position in the lawsuit did not establish futility because actions taken to defend a lawsuit could not establish futility. Ga. Dep't of Cmty. Health v. Ga. Soc'y of Ambulatory Surgery Ctrs., 290 Ga. 628, 724 S.E.2d 386 (2012).

Court of appeals erred in ruling that a society of surgery centers did not have to exhaust administrative remedies under the Georgia Administrative Procedure Act, O.C.G.A. § 50-13-19(a), in the society's action seeking to prevent the Georgia Department of Community Health (DCH) and its Commissioner from requiring its members to respond to certain disputed requests in an annual survey because the "acting outside statutory authority" exception to the exhaustion requirement did not apply; the society did not allege that DCH was acting wholly outside DCH's jurisdiction under O.C.G.A. § 31-6-70 to conduct surveys, but instead, the society claimed that the manner in which the survey was being conducted did not fully comply with the procedural requirements of the statute. Ga. Dep't of Cmty. Health v. Ga. Soc'y of Ambulatory Surgery Ctrs., 290 Ga. 628, 724 S.E.2d 386 (2012).

Because the Georgia Society of Ambulatory Surgical Centers represented the interests of members that had adequate administrative remedies, and those members had not exhausted those remedies, the trial court was required to dismiss its case alleging that an annual survey the Georgia Department of Community Health (DCH) issued to ambulatory surgery centers (ASC) sought information beyond the scope of O.C.G.A. § 31-6-70. Furthermore, the procedures set forth in the Georgia Administrative Procedure Act, O.C.G.A. § 50-13-19 and O.C.G.A. §§ 31-6-40(c), and31-6-47(a)(18), and Ga. Comp. R. & Regs. 111-2-2-.05(2)(e) were available to ACSs before DCH took any final adverse action against them for failing to provide the required survey information, the procedures afforded adequate administrative remedies to aggrieved ACSs. Ga. Soc'y of Ambulatory Surgery Ctrs. v. Ga. Dep't of Cmty. Health, 316 Ga. App. 433, 729 S.E.2d 565 (2012).

- Division of Health Planning (now Department of Community Health) granting a certificate of need was not arbitrary and capricious as the proposed new institutional health service was reasonably consistent with the relevant goals and objectives of the State Health Plan as set forth in Ga. Comp. R. & Regs. r. 272-2-.08(b)(1), and it did not err in interpreting the 12-month rule in O.C.G.A. § 31-6-2. Ga. Dep't of Cmty. Health, Div. of Health Planning v. Gwinnett Hosp. Sys., 262 Ga. App. 879, 586 S.E.2d 762 (2003).

Trial court erred in reversing the grant of a certificate of need on the ground that the applicant was attempting to circumvent a cease-and-desist order issued to a corporation owned by the same individual as the applicant; by seeking the certificate of need, the applicant was not doing anything that the law did not allow, the Department of Community Health held an extensive evidentiary hearing before granting the application, and the trial court improperly disregarded the corporate forms of the corporation and the applicant based on the fact that they were owned by the same individual. Global Diagnostic Dev., LLC v. Diagnostic Imaging of Atlanta, 284 Ga. App. 66, 643 S.E.2d 338 (2007).

Because the hearing officer's factual findings and conclusions of law were consistent with an application of the atypical barrier exception to remedy a barrier to services faced by an identified group of patients, and not to award a certificate of need (CON) simply for the purpose of making it more convenient for patients, the plaintiff did not show that the defendant in the defendant's final order violated Ga. Comp. R. & Regs. 111-2-2-.42(3)(b)4, the Certificate of Need Act, or the Hughston Surgical criteria. Kennestone Hosp. v. Dep't of Cmty. Health, 346 Ga. App. 70, 815 S.E.2d 266 (2018).

Substantial evidence supported the Department of Community Health's (Department) finding of a need for the proposed hospital based on rising population, general growth in the area, and increased emergency room usage at other hospitals and, thus, the Department was authorized to conclude that the appellee's certificate of need application met the general need requirements for a new short-stay hospital. Doctors Hosp. of Augusta, LLC v. Dep't of Cmty. Health, 350 Ga. App. 36, 827 S.E.2d 725 (2019).

- Given the ability of an area's patients to secure adult open-heart surgery service at a significant rate, the Georgia Health Planning Review Board (now Certificate of Need Appeal Panel) did not exceed the board's authority, abuse the board's discretion, act arbitrarily or without substantial evidence, or otherwise err by rejecting the hearing officer's determination that a certificate of need (CON) should be issued to the area's medical center under a geographical barrier exception to the Georgia Department of Community Health's CON regulations. The Board determined that neither the use of out-of-state services, nor the reluctance of the area's physicians to refer patients to in-state facilities, created a geographical barrier warranting an exception. Ga. Dep't of Cmty. Health v. Satilla Health Servs., 266 Ga. App. 880, 598 S.E.2d 514 (2004).

Appellate court reinstated the agency denial of a Certificate of Need to establish an inpatient psychiatric hospital because the agency's conclusion that the applicant did not meet the applicant's burden of establishing no adverse impact on similar existing programs was supported by substantial evidence, in particular, expert testimony and exhibits regarding the applicant's unrealistic projections, overinflated market share, and failure to account for an existing facility's additional 30 pediatric beds. Tanner Med. Ctr., Inc. v. Vest Newnan, LLC, 337 Ga. App. 884, 789 S.E.2d 258 (2016).

Cited in Ga. Oilmen's Ass'n v. Ga. Dep't of Revenue, 261 Ga. App. 393, 582 S.E.2d 549 (2003); Lakeview Behavioral Health Sys., LLC v. UHS Peachford, LP, 321 Ga. App. 820, 743 S.E.2d 492 (2013).

OPINIONS OF THE ATTORNEY GENERAL

Increase of ten beds or ten percent of bed capacity requires certificate when new service created.

- Though an increase of the lesser of ten beds or ten percent of bed capacity would be excluded from review generally under O.C.G.A. § 31-6-47(a)(15), it is likely that such increases would require a certificate of need if the new beds were used to create new institutional health services. 1983 Op. Att'y Gen. No. 83-34.

Hospital authority may apply for certificate of need outside its area of operation and without the permission of the affected governing authority or hospital authority board in the planned service area; provided, however, that in order to implement the certificate, permission to pursue the health care activity would be required. 1995 Op. Att'y Gen. No. 95-13.

RESEARCH REFERENCES

Am. Jur. 2d.

- 40A Am. Jur. 2d, Hospitals and Asylums, §§ 5, 6.