In re Professional Nurses Service, Inc.

In re Professional Nurses Service, Inc.  (97-314); 168 Vt. 611; 719 A.2d 894

[Filed 10-Sep-1998]

                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 97-314

                               MAY TERM, 1998


In re Professional Nurses Service, Inc.  }   APPEALED FROM:
                                         }
                                         }
                                         }   Department of Banking, Insurance,
                                         }   Securities and Health Care 
                                         }   Administration
                                         }
                                         }   DOCKET NO. 97-001-H


       In the above-entitled cause, the Clerk will enter:

       Professional Nurses Services, Inc. (PNS) appeals from a decision of
  the Commissioner of the Department of Banking, Insurance, Securities and
  Health Care Administration, which denied PNS's application for a
  certificate of need (CON) to offer a full range of nurse-aide and other
  therapeutic services.  The CON is necessary for PNS to seek certification
  as a Medicare home health agency.  PNS claims that the Commissioner erred
  by (1) failing to make findings of fact on whether a new home health agency
  is needed as a result of changes in the health-care market, (2) concluding
  that PNS's proposal for a new home health agency is not consistent with the
  health resource management plan as required by 18 V.S.A. § 9437(5), (3)
  failing to comply with the timetable of the health resource management
  plan, and (4) failing to assert jurisdiction over other non-Medicare
  certified home health providers.  We affirm.

       The Vermont Legislature has provided that "[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 commissioner."  18 V.S.A. § 9434.  Among the purposes of the
  CON program are: to avoid unnecessary duplication of services, to contain
  the cost of services, and to promote a rational allocation of health care
  resources.  Id. § 9431.  In determining whether to grant a CON, the
  Commissioner must consider the general criteria set forth in 18 V.S.A. §
  9436(a), and to grant a CON, the Commissioner must make the five findings
  required by 18 V.S.A. § 9437, sometimes called the mandatory criteria.  The
  fifth of the mandatory criteria is the criterion relevant to this case.  It
  provides that the proposed new service must be consistent with the health
  resource management plan.  See 18 V.S.A. § 9437(5).

       The health resource management plan is a plan for distribution of
  health services in Vermont.  See 1992, No. 160 (Adj. Sess.), § 1,
  superseded by 1995, No. 180 (Adj. Sess.), § 11, codified at 18 V.S.A. §
  9405.  The 1996-1999 plan, applicable in this case, states that, to date,
  there are "no reliable measures for determining the need of Vermont
  residents for medically-necessary home health services."  Vermont Health
  Care Authority, Health Resource Management Plan 1996-1999 115 (March 15,
  1996). Nonetheless, "[c]ompared to other states, the cost per home health
  visit in Vermont is low, as is the cost per person."  Id.  The current
  Medicare data suggests "that the existing system is providing appropriate
  access at a reasonable cost."  Id.  Nonetheless, the plan notes, the
  Medicare payment system may change and managed care systems are emerging. 
  See id. at 116.  Consequently, the State should "determine at what stage it
  may be appropriate to allow additional home health agencies to operate in
  Vermont."  Id.

 

       Although the 1996-1999 plan contemplates additional home health
  agencies in the future, the intention is to support the existing home
  health agencies at this time, adopt standards to evaluate these agencies,
  and then examine their performance under these standards.  See id. 
  Moreover, an agency will be encouraged to remedy any problems discovered
  before any new home health agency is approved.  See id.  The plan calls for
  a work group to make recommendations for these standards and to be
  responsible for "continued examination of the Vermont's health care
  delivery system, including roles of managed-care organizations, nursing
  homes and hospitals, so that the authority can determine whether additional
  home health agencies may be appropriate."  Id. at 117.  A work group was
  established, but did not meet the December 31, 1996 deadline imposed by the
  plan, nor had it issued a report at the time of the Commissioner's decision
  in this case in July 1997.

       PNS commenced this proceeding by filing a letter of intent under 18
  V.S.A. § 9440(b)(1), requesting a determination of whether a CON was
  required for PNS to offer a full range of nurse-aide and other therapeutic
  services necessary to obtain Medicare certification.  At the time, PNS was
  operating under a CON that limited the services that PNS could provide,
  preventing it from obtaining Medicare certification.  The Commissioner
  determined that the proposed new services would require a CON review, and
  PNS submitted an application.  The public oversight commission held a
  public hearing, at which PNS, the public, two interested parties -- the
  Vermont Assembly of Home Health Agencies and Home health Nursing Service,
  Inc. -- had the opportunity to comment on and ask questions about the
  application.  See 18 V.S.A. § 9440(c)(2) (public oversight commission shall
  hold public hearing if requested).  The commission recommended that the
  Commissioner deny the application, which she did on the ground that the
  proposal for new services was inconsistent with the health resource
  management plan, and therefore, did not satisfy mandatory criterion (5). 
  See id. § 9437(5).  PNS appeals.

       We presume an agency's interpretation of its regulations is correct. 
  See In re Verburg, 159 Vt. 161, 165, 616 A.2d 237, 239 (1992).  To overcome
  this presumption, the challenging party must show a compelling indication
  of error.  See id.  PNS argues that under the 1996-1999 plan, it may obtain
  a CON to operate a home health agency by showing changes in the health-
  care market and consumer desire for a choice of providers.  Neither showing
  would satisfy the 1996-1999 plan.  Although the plan recognizes that the
  health-care market is changing, and therefore, additional home health
  agencies may be appropriate at some point, it does not contemplate that
  changes in the market alone would support a CON for a new home health
  agency.  On the contrary, the plan supports the existing home health
  agencies and recognizes that these agencies are providing appropriate
  access at a low cost in comparison to other states.

       Both the 1996-1999 plan and the statute contemplate a showing of need
  in terms of cost and accessibility.  See 18 V.S.A. §§ 9434(a) (no new
  health services shall be offered without a determination of need) & 9437(3)
  (commissioner shall not grant CON without finding patients would experience
  serious problems in terms of cost, availability or accessibility without
  the proposed service).  Accordingly, the Commissioner did not err by
  failing to make findings regarding the evidence PNS presented on market
  forces and consumer choice because such findings would not satisfy the
  1996-1999 plan in any event.  For the same reason, we do not address PNS's
  claim that this is a contested case under the Administrative Procedures Act
  and that, therefore, the Commissioner was required to make findings on
  PNS's evidence concerning market forces.  See 3 V.S.A. § 812.  Further, the
  Commissioner did not err in concluding that PNS's proposal was inconsistent
  with the 1996-1999 plan.

       The problem here is that PNS presents a policy argument for
  competition in the health care industry rather than presenting evidence of
  a consumer need due to high costs or gaps in

 

  service. The Legislature has, however, adopted a regulatory model to
  control costs and ensure accessibility, not a competition model.  To the
  extent that PNS urges us to adopt a competition model, it is in the wrong
  forum.  PNS's argument and evidence  should be presented to the
  Legislature.  The Department's role is  to enforce the regulatory framework
  requiring a showing of consumer need.

       Next, PNS argues that it has been unfairly prevented from making a
  case that there is need for new providers because the work group failed to
  produce the evaluation standards by December 31, 1996 as required by the
  1996-1999 plan.  The timeline, however, was not mandatory; it was a target
  date and does not provide PNS with any remedy for untimeliness.  Cf. In re
  AssureCare of Vt. Inc., 165 Vt. 535, 542, 686 A.2d 959, 963 (1996)
  (statutory time period is not mandatory, but target date, unless provision
  specifies consequence for failure to meet deadline).  We similarly dispose
  of PNS's complaint that the Department has been slow to collect the
  objective information to enable an applicant to show consumer need, which
  has made it impossible for PNS to demonstrate the need.  The Department has
  no obligation, however, to help PNS collect data to make the requisite
  showing of need.  PNS's application was simply premature if it wanted to
  rely on the work group's product to make its showing.

       Finally, PNS contends that the Commissioner has discriminated against
  PNS by requiring it to obtain a CON in 1980 and in 1994 to offer limited
  services that do not qualify it for Medicare certification because, since
  1996, the Commissioner has not required new home health care services to
  obtain CONs provided they do not offer the range of services that would
  allow them to seek Medicare certification.  We do not reach this issue
  because it is not properly before us.  None of the decisions concerning
  other health care providers are before us, nor are PNS's 1980 and 1993
  CONs.  This is an appeal from the denial of the 1997 application for a CON
  to provide home health care services that would allow PNS to obtain
  home-health-agency certification.  PNS has demonstrated no compelling error
  in the Commissioner's decision to deny the CON.

       Affirmed.


     BY THE COURT:



     _______________________________________
     Jeffrey L. Amestoy, Chief Justice

     _______________________________________
     John A. Dooley, Associate Justice

     _______________________________________
     James L. Morse, Associate Justice

     _______________________________________
     Denise R. Johnson, Associate Justice

     _______________________________________
     Marilyn S. Skoglund, Associate Justice