NURSES' REGISTRY AND HOME HEALTH CORPORATION VS. GENTIVA CERTIFIED HEALTHCARE CORPORATION , ET AL.
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RENDERED: AUGUST 27, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
ORDERED PUBLISHED: OCTOBER 29, 2010; 10:00 A.M.
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001175-MR
NURSES' REGISTRY AND HOME
HEALTH CORPORATION, (NURSES'
REGISTRY)
v.
APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE PHILLIP J. SHEPHERD, JUDGE
ACTION NO. 08-CI-00952
GENTIVA CERTIFIED HEALTHCARE
CORPORATION, D/B/A GENTIVA
HEALTH SERVICES; COMMONWEALTH
OF KENTUCKY, CABINET FOR HEALTH
AND FAMILY SERVICES, OFFICE OF
CERTIFICATE OF NEED; AND JANIE
MILLER, SECRETARY FOR HEALTH AND
FAMILY SERVICES, IN HER OFFICIAL
CAPACITY
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, VANMETER, AND WINE, JUDGES.
VANMETER, JUDGE: Nurses’ Registry and Home Health Corporation (Nurses’
Registry) appeals from an opinion and order of the Franklin Circuit Court
reversing the decision of the Cabinet for Health and Family Services, Division of
Administrative Hearings (Cabinet) remanding the case to the Cabinet. For the
following reasons, we affirm.
Gentiva Certified Healthcare Corporation (Gentiva) is a home health
service provider that submitted a certificate of need application to the Cabinet
seeking to establish a health service in Boyle, Garrard, Lincoln and Mercer
counties. At the time Gentiva submitted its application, it held certificates of need
to provide health services in sixteen counties, including Boyle, Garrard, Lincoln,
and Mercer counties. Gentiva’s parent office is located in Lexington, Kentucky;
however, it also operates a branch office in Danville, Kentucky that has been in
operation for over 12 years, serving Boyle, Garrard, Lincoln, and Mercer counties.
Seeking to provide the Danville office with the resources to operate independently
from the Lexington office, Gentiva filed a certificate of need application with the
Cabinet to request a separate license for the Danville office to serve Boyle,
Garrard, Lincoln, and Mercer counties.
After Gentiva submitted its application, Nurses’ Registry informed the
Cabinet it was an affected party, requested a public hearing on the submitted
application and formally challenged the application. Prior to the hearing, Nurses’
Registry filed a motion for summary judgment alleging the certificate of need
application was not in compliance with the 2007-2009 State Health Plan for the
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Commonwealth of Kentucky (State Health Plan). Gentiva filed a cross-motion for
summary judgment.
The Cabinet granted Nurses’ Registry’s motion for summary
judgment and denied Gentiva’s certificate of need application. The Cabinet held
Gentiva’s application to be inconsistent with the State Health Plan, which requires
a showing of an additional 250 patients in the particular county of license who are
in need of health services before a license is issued to establish a health service
provider. Gentiva appealed the Cabinet’s decision to the Franklin Circuit Court
and Nurses’ Registry moved to intervene in the appeal, which the Circuit Court
granted.
The Franklin Circuit Court reversed the decision of the Cabinet, held
Gentiva’s certificate of need application to be consistent with the State Health
Plan, and remanded the case to the Cabinet. This appeal followed.
When reviewing the circuit court’s ruling on an agency’s decision, an
appellate court stands in the shoes of the circuit court and reviews the agency’s
decision for arbitrariness. Martin County Home Health Care v. Cabinet for Health
and Family Serv’s, 214 S.W.3d 324, 326 (Ky.App. 2007) (citations omitted).
Questions of statutory interpretation are matters of law and are reviewed de novo.
Id.
Nurses’ Registry argues the Franklin Circuit Court erred by reversing
the Cabinet’s decision. We disagree.
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KRS1 216B details the licensure and regulation of health facilities. In
doing so, it requires any person who seeks to establish a health facility, to first
obtain a certificate of need. KRS 216B.061(1)(a). A “certificate of need” is
defined as “authorization by the [Cabinet for Health and Family Services] to
acquire, to establish, to offer, to substantially change the bed capacity, or to
substantially change a health service as covered by this chapter[.]” KRS
216B.015(8). One of the purposes of requiring health providers to acquire a
certificate of need via the Cabinet is “that the proliferation of unnecessary healthcare facilities, health services, and major medical equipment results in costly
duplication and underuse of such facilities, services, and equipment; and that such
proliferation increases the cost of quality health care within the Commonwealth.”
KRS 216B.010.
Specifically, KRS 216B.040(2)(a)2.a. requires the Cabinet “[t]o
establish criteria for issuance and denial of certificates of need[,]” particularly that
“[e]ach proposal approved by the cabinet shall be consistent with the state health
plan[.]” The Cabinet found Gentiva’s application to be inconsistent with the State
Health Plan under the criteria which states, “[a]n application to establish a home
health service shall be consistent with [the State Health Plan] if there is a projected
need for at least two hundred-fifty (250) additional patients needing home health
care services in the county for which the application is made[.]” The State Health
Plan defines establishing “a home health service” as establishing “a parent home
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Kentucky Revised Statutes.
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health agency or a subunit as defined by Medicare in a county where the applicant
is not currently licensed to serve.” (emphasis added).
The Cabinet determined that since the license held by Gentiva’s
Lexington office covering Boyle, Garrard, Lincoln, and Mercer counties would be
surrendered if the application was approved for the Danville office, Gentiva cannot
be said to be “currently licensed” under the language of the State Health Plan.
Therefore, if Gentiva is not “currently licensed” under the definition of the State
Health Plan, their actions amounted to establishing a new health facility.
Accordingly, the Cabinet concluded that since Gentiva was establishing a new
health facility, there must be a projected need of an additional 250 patients seeking
home health services in each four counties. As this was not the case, the Cabinet
held Gentiva’s application to be inconsistent with the State Health Plan and
granted Nurses’ Registry’s motion for summary judgment.
However, the Franklin Circuit Court concluded Gentiva was not
establishing a home health facility, and was therefore not required to comply with
the showing of 250 additional patients under the State Health Plan. The court
reasoned that Gentiva, rather than adding to the total number of home health
agencies serving those four counties, was seeking to license a home health agency
currently in operation as two separate offices. The court held that since Gentiva’s
application only sought to separate their existing license and no actual change in
health services or location of where health services are provided, the application
was consistent with the State Health Plan. The purpose of KRS 216B.010, the
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court noted, was to prevent the proliferation of unnecessary home health providers
under the theory that an abundance of providers increases the cost of health care
within the Commonwealth, and costly duplication and underuse of such facilities.
Since Gentiva’s certificate of need application would not create any additional
home health providers, the court held the license to be consistent with the State
Health Plan.
Nurses’ Registry directs us to St. Luke Hospitals, Inc. v.
Commonwealth, 186 S.W.3d 746 (Ky.App. 2005), in which this court affirmed the
Cabinet’s decision to deny St. Luke’s certificate of need application that sought to
establish a freestanding, separately licensed ambulatory surgical center on the
campus of its Florence, Kentucky-based hospital. St. Luke’s argued since the new
facility would contain two operating rooms and two operating rooms on the same
campus would be closed, the application did not seek to create additional surgery
capacity and therefore the State Health Plan criteria did not apply. Both the
Cabinet and circuit court held that St. Luke was establishing a health facility, and
must obtain a certificate of need that is consistent with the State Health Plan.
However, St. Luke is distinguishable from the case at bar. St. Luke
was building and operating a newly established ambulatory surgical center that had
yet to be in operation prior to seeking the certificate of need. Here, Gentiva’s
Danville office has been in operation for over 12 years and already serves Boyle,
Garrard, Lincoln and Mercer counties. Furthermore, the issue on appeal in St.
Luke was the agency’s departure from past precedent by denying the certificate of
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need. In this case, the issue is whether Gentiva is establishing a home health
facility under the definition of the State Health Plan.
Since the State Health Plan defines establishing a home health facility
as “establishing . . . a subunit as defined by Medicare in a county where the
applicant is not currently licensed to serve,” a logical conclusion would be that the
State Health Plan does not consider the establishment of a subunit in a county
where the applicant is currently licensed to serve as establishing a home health
agency. We find the reasoning of the Franklin Circuit Court to be sound and hold
Gentiva was currently licensed to service the counties of Boyle, Garrard, Lincoln
and Mercer, and therefore was not seeking to establish a home health agency as
defined by the State Health Plan. Therefore, Gentiva is not required to show an
additional 250 patients in each county in need of health services. Though, as the
Cabinet reasoned, Gentiva’s Lexington office would surrender its certificate of
need covering Boyle, Garrard, Lincoln, and Mercer counties if the Danville
office’s application were to be approved, we find no authority or precedent to
conclude this means Gentiva is not currently licensed to serve those counties, and
any such interpretation seems counterintuitive to the plain reading of the State
Health Plan.
The opinion and order of the Franklin Circuit Court is affirmed.
ALL CONCUR.
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BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Lisa English Hinkle
Luke Alan Wingfield
Lexington, Kentucky
Mathew R. Klein, Jr.
Mark D. Guilfoyle
Reneé L. Alsip
Crestview Hills, Kentucky
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