Chesapeake Hospital Authority v. State Health Commissioner
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The Supreme Court reversed the judgment of the court of appeals affirming the decision of the circuit court upholding the State Health Commissioner's denial of Chesapeake Regional Medical Center's (CMRC) application for a Certificate of Public Need, holding that the harmless error doctrine does not apply to an error of law in an administrative agency case under the Virginia Administrative Process Act.
CMRC applied for a new open-heart surgery service and additional cardiac catheterization equipment. The Commissioner denied the application. CRMC appealed, contending that the Commissioner erred in his interpretation of the relevant administrative regulation. The circuit court affirmed, determining that the Commissioner's incorrect interpretation and application of the regulation was harmless error. The court of appeals affirmed. The Supreme Court reversed, holding (1) the court of appeals erred in applying the harmless error doctrine to the agency's legal error in interpreting and applying its own regulations; and (2) the lower courts erred by failing to remand the case to the Commissioner for further proceedings.
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