WEST MONT COM-CARE v BD OF HEALTH
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No. 85-43 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985 WEST-I'IONT COMMUNITY CARE, INC ., Petitioner and Appellant, BOARD OF HEALTH AND ENVIRONMENTAL SCIERCES; DEPARTPIEUP OF IZEALTH AND ENVIRONMENTAL SCIENCES; JEAN K. K o M and MARJORIE ANDERSON, ~ ~ C Respondents and Respondents. APPEAL FROM: District Court of the First Judicial District, In and for the County of Lewis & Clark, The Honorable Henry Loble, Judge presiding. COUNSEL OF RECORD: For Appellant: J. Cort Harrington, Jr. argued, Helena, Montana For Respondents: Allen B. Chronister argued, Agency Legal Services, Dept. of Justice, Helena, Montana Luxan & Murfitt; Patrick Melby argued for Koma & Anderson, Helena, Montana -- - Submitted: Decided: Filed: 314. (1 fgos Clerk July 2, 1985 July 30, 1985 Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of the Court. West-Mont Community Care, Inc. , (West-Mont) appeals the January 3, 1985, order of the First Judicial District Court affirming an order of the Board of Health and Environmental Sciences (Board) which granted respondents, Jean Komac and Marjorie Anderson, a certificate of need for a home health care agency in Lewis and Clark County. We affirm the order of the District Court, although for a reason different than that relied on by the court. On January 30, 1984, Jean Komac and Marjorie Anderson, d/b/a Independent Home Health Care (Independent), filed an application with Montana's Department of Health and Environmental Sciences (Department) for a certificate of need to establish a home health care agency in Lewis and Clark County. The Department denied Independent's application, stating that Lewis and Clark County's home health care needs were already being met by West-Mont Community Care. would only be duplicating West-Mont ' s Independent services, to West-Mont's detriment. Independent appealed the Department's decision to the Board of Health and Environmental Sciences . (Board) The Board overturned the Department's decision, stating that both state and federal law required the Department to consider the effect of competition on the provision of home health care services when reviewing a certificate of need and that the Department had failed to do so. Then, relying on the compe- tition criterion, the Board granted the certificate of need. West-Mont appealed the decision of the Board to District Court and lost. West-Mont now appeals to this Court, con- tending that the federal criterion of competition has never been properly adopted by Montana and that, therefore, the Board erred in basing its decision to grant the certificate of need on the competition factor. Specifically, West-Mont raises the following issues on appea 1: 1. ence When the Montana Legislature incorporated b y refer"Title 42, CFR, Part 123, as amended" in S; 50-5-304 (1)(n), MCA, it either: a. Intended to incorporate 42 CFR, Part 123 as it existed on July 1, 1979, which does not contain competition as a review criterion; or b. Intended to include future amendments to 42 CFR, Part 123, which would be an unconstitutional delegation of legislative authority to the Secretary of Health and Human Ser~~ices. 2. If incorporation of the federal rules is discretion- ary rather than mandatory, the criterion of competition still may not be considered as it has never been properly adopted pursuant to the Montana Administrative Procedures Act. 3. For purposes of certificate of need review, does "need" include "need for competition" under the Montana statutes alone? 4. Is the Board's finding that Independent's applica- tion will not have an adverse effect on the existing home health agency and is consistent with Montana's health systems plan supported by reliable, probative and substantial evidence on the whole record? 5. Is the Board's finding that there are no less cost- ly, qua lity-equiva lent, or more effective methods of providing Independent's proposed services clearly erroneous? The case was orally argued to this Court on May 16, 1985. At that time Mr. Patrick Melby, attorney for Indepen- dent, advised this Court that the Department of Health and Environmental Sciences was considering the adoption of an administrative rule which would incorporate into the State's review criteria for a certificate of need the specific federal regulations at issue, including the need for competition. Those rules were adopted by the Department on May 30, 1985. In light of this development, the parties were asked to brief the following additional issue: "May this Court consider an administrative rule promulgated by the respondent Department of Health and Environments 1 Sciences after filing of the notice of appeal wherein there is adopted now existing federal regulations which may be material to the cause and may the same be considered by this Court in the determination of this cause?" Our resolution of this issue renders consideration of West-Mont's issues one through three unnecessary. Generally, an appellate court must apply the law in effect at the time it renders its decision. Thorpe v. Hous- ing Authority of the City of Durham (1969), 393 U.S. 268, 89 S.Ct. 518, 21 L.Ed.2d 474. Montana followed this principle in Wilson v. State Highway Commission (1962), 140 Mont. 253, 370 P.2d 486. There, after judgment for the Highway Commis- sion was entered in the trial court, the legislature enacted a statute granting the Highway Commission the authority to perform the act at issue. This Court held the appeal of the trial court judgment to be moot, stating: "We are of the opinion that this case does not present any justiciable issues. The above-cited statute resolved the question of whether the Commission had power to rent the use of the unused right of way by expressly granting such power. Likewise, the statute disposed of the constitutional question by requiring that the Commission secure rent from the unused right of way. There is nothing left for this court to decide. We do not deem it necessary to rule upon the legality of the administrative procedure which is no longer in effect, and which no longer controls the rights of the . . parties. . " Wilson, 140 Mont. 257, 370 P.2d at 488. at This principle applies to administrative regulations as well as statutes. " ' [I]f subsequent to the judgment and before the decision of the appellate court, a law intervenes and positively changes the rule which governs, the law must be obeyed, or its obligation denied. If the law be constitutional, * * * I know of no court which can contest its .' obligation. .. "This same reasoning has been applied where the change was constitutional, statutory, or judicial. Surely it 9plies with equal force where the change is made - - pursuant-to- administrative agency % an legislative authorizaacting tion." Thorpe, 393 U.S. at 282, 89 S.Ct. at 526, 21 L.Ed.2d at 484, quoting Chief Justice Marshall in United States v. Schooner Peggy (1801), 1 Cranch 103, 110, 2 L.Ed. 49, 51. (emphasis supplied) (footnotes omitted) Retroactive application of new rules is impermissible only if it "takes away or impairs vested rights acquired under existing laws or creates new obligations or imposes new duties in respect to transactions already past." State ex rel. Montana Department of Highways Castles v. (1980), 187 Mont. 356, 360, 609 P.2d 1223, 1225, citing City of Harlem v. State Highway Commission (1967), 149 Mont. 281, 284, 425 P.2d 718, 720. There is no retroactive application problem here as no vested rights are involved. "[Ilt is well established that the rights which may 'vest1 through reliance on a government permit are no greater than those specifically granted by the permit itself." Santa Monica Pines, Ltd. v. Rent Control Board of the City of Santa Monica (Cal. 1984) , 679 P.2d 27, 32. West-Mont's permit to operate a home health care agency certainly does not guarantee West-Mont that it will always operate as a monopoly, free of competition. Rather, the operation of a home health care agency is a privilege subject to conditions imposed by the Montana through its certificate of need program. State of See Peti- tion of Morris (1978), 175 Mont. 456, 575 P.2d 37, where we held the practice of law to be a privilege burdened with conditions. We would not apply the new rules to this case if such application would, in any way, prejudice West-Mont. However, the application of the new rules does not deprive West-Mont of a fair hearing. It is undisputed that the Board thought it was to consider the competition criterion. Each party had an adequate opportunity to present its case on that issue at the administrative hearing. In fact, nearly all the testimo- ny and evidence offered by each party centered around the criteria of cost and competition. In Wilson, supra, a permit had not yet been issued. This Court ordered that the new rule be considered when determining whether or not to issue the permit. Here, al- though the certificate of need has been issued (pending this appeal), the Board considered the competition criterion when determining whether or not to issue the certificate of need. There was no harm or prejudice to West-Mont. West-Mont alleges in its supplemental brief that the Department failed to properly incorporate 42 CFR 123.412 into A.R.M. § 16.32.110. is properly cited. We do not agree. The federal regulation The administrative rule indicates that the criteria in the federal regulation are to be adopted in Montana. To require a listing of the criteria would defeat the rationale for allowing the incorporation of other material in the Administrative Rules of Montana, the saving of space and money. The cite in and of itself provides the public with the needed information on where the material is located. 5 16.32.110, W e h o l d t h a t A.R.M. is t h e proper determination rule of t o be this considered cause. a d o p t e d May 3 0 , by t h i s Therefore, Court this 1985, in Court the will c o n s i d e r t h e need f o r c o m p e t i t i o n when d e t e r m i n i n g w h e t h e r o r n o t t h e e v i d e n c e p r e s e n t e d t o t h e Board s u p p o r t s t h e i s s u a n c e o f a c e r t i f i c a t e o f need t o I n d e p e n d e n t . West-Mont o b j e c t s t o two o f t h e B o a r d ' s f i n d i n g s o f f a c t on t h e b a s i s t h a t t h e y a r e n o t s u p p o r t e d by r e l i a b l e , p r o b a - t i v e and s u b s t a n t i a l e v i d e n c e on t h e whole r e c o r d and t h a t they a r e c l e a r l y erroneous. Those f i n d i n g s a r e : less costl-y, "10. There are no quality-equivalent or more effective methods o f p r o v i d i n g t h e p r o p o s e d services. [ $ 50-5-304 (1) ( d ) , MCA] "14. The e s t a b l i s h m e n t o f I n d e p e n d e n t w i l l n o t have an adverse f i n a n c i a l impact o n t h e e x i s t i n g h e a l t h c a r e s y s t e m and i s not inconsistent with joint planning e f f o r t s by h e a l t h c a r e p r o v i d e r s i n t h e [ § 50-5-304 (1) ( f ) , MCA] " area. The t r i a l c o u r t judge a f f i r m e d t h o s e f i n d i n g s , stating simply t h a t : "The C o u r t s h a l l n o t d i s t u r b t h e f i n d i n g s o f t h e Board w i t h r e s p e c t t o t h e c r i t e r i a found i n S e c t i o n 50-5-304 (1) ( a ) , ( c ) , ( a ) , and (f). There i s s u b s t a n t i a l evidence t o support t h e i r findings." W e agree with the t r i a l court. support for the factual " I f t h e record contains d e t e r m i n a t i o n s made by t h e a g e n c y , t h e c o u r t s may n o t weigh t h e e v i d e n c e . They a r e bound by t h e findings Billings of the agency." City of v. 1 9 8 2 ) , 651 P.2d Billings 627, 632, F i r e f i g h t e r s L o c a l No. 521 (Mont. 3 9 St.Rep. T h e r e i s ample e v i d e n c e i n t h e r e c o r d 1844, 1849. t o s u p p o r t t h e f i n d i n g s o f t h e Board. Regarding finding of fact no. 10, West-Mont contends t h a t I n d e p e n d e n t ' s p l a n n e d service i s n o t o f a q u a l i t y e q u i v alent to that of West-Mont because Independent does not intend t o hire a nursing supervisor. However, Jean Komac testified a t t h e h e a r i n g b e f o r e t h e Roard t h a t I n d e p e n d e n t plans hiring on shifts. ces, s u p e r ~ r i s o r s t o work two n u r s i n g alternate Those s u p e r v i s o r s would a l s o p r o v i d e d i r e c t s e r v i - b u t would transcript, s u p e r v i s i n g a t t h e same t i m e . n o t be pp. (See There i s s u f f i c i e n t evidence f o r 117-118. ) t h i s C o u r t t o a f f i r m t h e d e c i s i o n o f a Board w i t h e x p e r t i s e in the area that such an arrangement w i l l provide quality s e r v i c e t o Independent's clientele. With r e s p e c t t o f i n d i n g o f f a c t no. 1 4 , West-Mont a l l e g - es t h a t t h e Board f a i l e d t o c o n s i d e r t h a t I n d e p e n d e n t would be duplicating services offered M o n t a n a ' s H e a l t h Systems P l a n . by , contrary t o West-P4ont While M o n t a n a ' s H e a l t h Sys- t e m s P l a n d o e s n o t e n c o u r a g e d u p l i c a t i o n o f s e r v i c e s , it d o e s allow for Polson, duplicating Missoula and health care agencies. that the competition it is Falls all where Great An has deemed have appropriate. competing home a u d i t o r from B l u e C r o s s t e s t i f i e d little adverse effect on those agencies. " I t d e p e n d s b a s i c a l l y on a c o u p l e o f I t d e p e n d s on t h e i r f i n a n c i a l factors. acumen. I f t h e y can handle it, i f they can handle t h e competition, then t h e y ' r e g o i n g t o become more e f f i c i e n t . I f they c a n n o t become more e f f i c i e n t , t h e n t h e y w i l l not survive." T r . p. 2 2 . I n a d d i t i o n , t h e r e was s u b s t a n t i a l t e s t i m o n y i n d i c a t i n g t h a t c o m p e t i t i o n i n t h e home h e a l t h c a r e f i e l d i n Lewis and C l a r k County would r e d u c e t h e c o s t o f t h e s e r v i c e , w i t h no a d v e r s e e f f e c t on p a t i e n t s e r v i c e s . The a u d i t o r q u o t e d p r e v i o u s l y a l s o t e s t i f i e d t h a t : ". . . I would b e v e r y l e e r y t o s a y t h a t i n s t i t u t i n g two home h e a l t h a g e n c i e s i n a community would have a d e t r i m e n t a l e f f e c t I n my own p e r s o n a l on p a t i e n t services. o p i n i o n , I cannot i n any conscience say I t h a t t h i s would n o t b e a good t h i n g . t h i n k it would b e a good t h i n g t o have t h i s competition. I t makes b o t h home It health a g e n c i e s more e f f i c i e n t . serves t h e p a t i e n t s b e t t e r b e c a u s e w e have a d r i v e , a r e a l need t o p e r f o r m a g a i n s t each other. And t h a t ' s s i m p l y my opinion. I t h i n k t h e community a s w e l l a n o t h e r t h i n g I should mention a s HCFA i s HCFA i s on a c o s t d r i v e r i g h t now, t o r e d u c e c o s t s p a i d t o p r o v i d e r s o f services. A s f o r t h e i r goal, i n reaching t h i s goal, instituting a competition-type s i t u a t i o n would p r o b a b l y b e a good t h i n g . I t would p r o b a b l y serve t h e i r p u r p o s e s T r . p. 28. quite well." -- Mr. Robert Johnson, Director of the Lewis and Clark County H e a l t h D e p a r t m e n t , t e s t i f i e d a s f o l l o w s : "Q Bob, d o you h a v e an o p i n i o n o f whethe r o r n o t c o m p e t i t i o n i n t h e home h e a l t h c a r e a r e a would a d v a n c e t h e p u r p o s e s o f quality assurance in those services? No, I don't t h i n k t h a t it would a f f e c t t h e q u a l i t y much. I h a v e no q u e s t i o n r i g h t now t h a t West l l o n t Home Health Care i s providing high q u a l i t y s e r v i c e s and I t h i n k t h a t t h o s e a g e n c i e s a r e r e g u l a t e d t o t h e e x t e n t by v a r i o u s f e d e r a l and s t a t e a g e n c i e s t h a t t h e i r q u a l i t y o f service i s r e l a t i v e l y g u a r a n teed. I t h i n k , however, t h a t t h e r e a l i s s u e , f o r m e i n my o p i n i o n , a t l e a s t , i s c o s t , t h e charge f o r t h a t service. "A "Q Y o u ' r e saying t h a t competition i n home h e a l t h c a r e would a d v a n c e t h e p u r poses of c o s t e f f e c t i v e n e s s ? "A I think so." Tr. pp. 66-67. There i s s u b s t a n t i a l c r e d i b l e evidence i n t h e r e c o r d t o s u p p o r t t h e B o a r d ' s d e t e r m i n a t i o n t h a t a c e r t i f i c a t e o f need should be i s s u e d t o Independent. Affirmed. We concur: ief Justice , /
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