Present: Hassell, C.J., Keenan, Koontz, Kinser, Lemons, and
Goodwyn, JJ., and Russell, S.J.
VIRGINIA DEPARTMENT OF HEALTH
v. Record No. 081174 OPINION BY
SENIOR JUSTICE CHARLES S. RUSSELL
NRV REAL ESTATE, LLC June 4, 2009
FROM THE COURT OF APPEALS OF VIRGINIA
This appeal arises out of a dispute between the Virginia
Department of Health (VDH) and a medical care facility
concerning the facility’s right to operate nursing home beds.
It involves the interpretation of statutes relating to health
care planning.
Facts and Proceedings
The essential facts are undisputed and the appeal
presents a pure question of law. Carilion Giles Memorial
Hospital (Giles) operated 46 beds licensed by VDH. Of those
beds, 22 were licensed as “medical/surgical” beds, three as
intensive care beds and the remaining 21 were certified for
reimbursement by the Medicaid program as nursing facility
beds.
On June 28, 2004, Giles informed VDH that it intended to
cease operations as an intermediate-care nursing home
effective September 24, 2004. Giles also notified Medicaid of
its intentions and its 21 Medicaid reimbursement nursing
facility beds were “de-certified” and “de-licensed” effective
September 24, 2004.
NRV Real Estate, LLC (NRV) was the owner of a nursing
home in Radford known as Radford Nursing and Rehabilitation
Center (Radford Nursing). On September 20, 2004, four days
before Giles’ cessation of operations as a nursing home was to
become effective, Giles entered into an agreement with NRV to
“relocate” its 21 nursing home beds from Giles to Radford
Nursing.
On August 1, 2005, NRV filed an application with VDH for
a Certificate of Public Need (COPN) to approve the relocation
of the 21 nursing home beds from Giles to Radford Nursing.
The director of the VDH division concerned with COPN
applications replied by letter, declining to accept the
application on the ground that “execution of the proposed
project would constitute an addition to the supply of nursing
home beds in PD [Planning District] 4,” citing Code § 32.1-
102.3:2(A).
In 1982, the General Assembly adopted a comprehensive
statutory system of health care planning laws, replacing
former statutes, to ensure that the development of health care
facilities would meet the needs of the public. See 1982 Acts
ch. 388. Under this system, Code § 32.1-102.3(A) provides, in
pertinent part, that “[n]o person shall commence any project”
2
without obtaining a COPN from the State Health Commissioner.
The definition of “Project” includes any increase in the total
number of nursing home beds in an existing medical care
facility. Code § 32.1-102.1. The Commissioner may only
accept or approve an application for a COPN that would result
in an increase in the number of nursing home beds within the
planning district in which the project is located, if the
application is in response to “Requests for Applications”
issued by the Commissioner. Code § 32.1-102.3:2(A). It is
undisputed that Radford Nursing is located in Planning
District 4, as designated by the Commissioner, and that no
“Request for Applications” had been issued for additional
nursing home beds in that district at the time of NRV’s
application.
The director's letter issued by VDH, refusing to accept
NRV’s application, stated:
Although your application seems to imply that Giles
Memorial has 21 nursing home beds available to be
relocated, Giles Memorial does not now have such
beds. Giles Memorial has never had nursing home
beds, per se, but it did have 21 hospital beds
certified for Medicaid nursing facility (“NF”)
reimbursement until September 24, 2004, on which
date those NF beds were de-certified pursuant to the
hospital’s request. Since September 24, 2004, Giles
Memorial has not had any beds that qualify as
nursing home beds within the meaning of the statute
governing the certificate of public need program.
3
VDH followed that letter by a formal refusal to accept
the application on the ground that it would result in an
increase of nursing home beds in Planning District 4, in
violation of Code § 32.1-102.3:2(A). NRV appealed the
decision to the Circuit Court of Roanoke County. VDH filed a
motion to dismiss NRV’s petition for appeal on legal grounds,
there being no issues of fact to be tried. The circuit court,
by opinion and order, granted the motion to dismiss the
appeal, agreeing with the position taken by VDH.
NRV noted an appeal of right to the Court of Appeals,
which, by a unanimous panel opinion entered April 15, 2008,
reversed the judgment of the circuit court and remanded the
case. NRV Real Estate, LLC v. Virginia Dep’t of Health, 51
Va. App. 514, 519-20, 659 S.E.2d 527, 530 (2008). The Court
of Appeals denied a petition for rehearing en banc and we
awarded VDH an appeal.
Analysis
The appeal presents a pure question of statutory
interpretation. We review such questions de novo.
Commonwealth v. Barker, 275 Va. 529, 536, 659 S.E.2d 502, 504
(2008). Although decisions by administrative agencies are
given deference when they fall within an area of the agency’s
specialized competence, issues of statutory interpretation
4
fall outside those areas and are not entitled to deference on
judicial review. Id. at 536, 659 S.E.2d at 505.
The dispositive question presented by VDH is whether it
was precluded by Code § 32.1-103:2(A) from accepting NRV’s
application, as the circuit court held, or whether NRV’s
application was exempted from the effect of that section by
the “twelve-month rule” provided by Code § 32.1-102.1.
Code § 32.1-102.1 defines certain terms used in the
relevant statutes. The definition of “Project” contains eight
parts, one of which reads:
(5) Introduction into an existing medical care
facility of any new cardiac catheterization,
computed tomographic (CT) scanning, gamma knife
surgery, lithotripsy, magnetic resonance imaging
(MRI), magnetic source imaging (MSI), medical
rehabilitation, neonatal special care, obstetrical,
open heart surgery, positron emission tomographic
(PET) scanning, psychiatric, organ or tissue
transplant service, radiation therapy, nuclear
medicine imaging, except for the purpose of nuclear
cardiac imaging, substance abuse treatment or such
other specialty clinical services as may be
designated by the Board by regulation, which the
facility has never provided or has not provided in
the previous 12 months[.]
(Emphasis added.)
VDH argues that if an activity is contained in the above-
quoted list, or is a specialty clinical service added to that
list by a regulation adopted by the State Board of Health,
that activity will have the benefit of the “twelve-month
rule.” Thus, VDH continues, such an activity may be relocated
5
to another facility without obtaining a new COPN, if the
relocating facility has provided the same services within the
past twelve months, because such a relocation would not be a
“Project” as defined in Code § 32.1-102.1. Conversely, VDH
contends, an activity not contained in the above-quoted
statutory list, or added thereto by regulation, is a “Project”
and thus does not have the benefit of the “twelve-month rule.”
Any “Project” must obtain a new COPN before it may be
commenced by any person. The Commissioner of Public Health is
precluded by Code § 32.1-102.3(A) from issuing a COPN “unless
the Commissioner has determined that a public need for the
project has been demonstrated.”
Furthermore, VDH points out, Code § 32.1-102.3:2
specifically forbids the Commissioner to accept an application
for a COPN that would have the effect of increasing the total
number of nursing home beds in a planning district unless the
Commissioner has first issued a Request for Applications
therefor. Id.
VDH concludes that because (1) there was no Request for
Applications pending in the planning district, (2) granting
NRV’s application would result in an increase in the number of
nursing home beds in the planning district, (3) nursing home
beds were not included in the list of activities entitled to
the benefit of the “twelve-month rule,” and (4) no regulation
6
had added them to that list, then the acceptance of NRV’s
application was explicitly prohibited by law. The circuit
court agreed with that analysis.
In its appeal to the Court of Appeals, NRV cited several
cases in which VDH had, in the past, applied the “twelve-month
rule” to approve the relocation of nursing home beds. 1 In its
opinion, the Court of Appeals noted that VDH had not, in this
case, explained its departure from its own precedent and,
citing federal cases, held that unexplained change of position
to be arbitrary and capricious. NRV Real Estate, 51 Va. App.
at 533-34, 659 S.E.2d at 537. The Court of Appeals also
observed that VDH’s position “that any cessation of service in
nursing home beds necessitates a new COPN would produce an
impermissibly absurd result.” Id. at 526, 659 S.E.2d at 533.
The Court’s opinion stated: “Any closure for renovation or
even cleaning, however temporary, would require a facility to
obtain a new COPN.” Id. The Court also observed: “[t]he fact
that the agency may apply a rule does not mean it must . . . .
[A]n agency ‘has incidental powers which are reasonably
implied as a necessary incident to its expressly granted
powers for accomplishing [its] purposes.’ ” Id. (citation
omitted).
1
Because the applicants in those cases were successful,
the cases were not subjected to judicial review.
7
We do not agree with the Court of Appeals’ analysis. An
administrative agency’s implied and incidental powers do not
extend to a violation of unambiguous statutory language. When
statutory language is clear and unambiguous, a court is bound
by the plain meaning of that language. Cummings v. Fulghum
261 Va. 73, 77, 540 S.E.2d 494, 496 (2001). Neither the trial
court, the Court of Appeals nor this Court have discerned any
ambiguity in the statutes under consideration.
The list of services entitled to the benefit of the
“twelve-month rule” by Code § 32.1-102.1 does not include
nursing home beds. In interpreting statutory language, we
have consistently applied the time-honored principle expressio
unius est exclusio alterius. That rule recognizes the
competence of the legislature to choose its words with care.
In applying it, we hold that the mention of specific items in
a statute implies that all items omitted were not intended to
be included. GEICO v. Hall, 260 Va. 349, 355, 533 S.E.2d 615,
617 (2000). “[B]ecause [a] statute specifically lists
exceptions . . . , those exceptions are the only ones allowed
by law.” Jackson v. Fidelity & Deposit Co., 269 Va. 303, 313,
608 S.E.2d 901, 906 (2005).
We do not share the concern of the Court of Appeals that
applying the statutes as written would necessarily lead to an
“impermissibly absurd result.” In another definitional
8
section of Code § 32.1-102.1, subdivision (3) of the
definition of "Project," the Legislature has made express
provision for the relocation of a limited number of beds in a
nursing home to another physical facility at the same site for
a period of up to two years without the requirement of a new
COPN. 2
Finally, we do not agree that VDH acted arbitrarily in
applying the statutes as written. Erroneous statutory
interpretations an administrative agency may have adopted in
the past can never cause the subsequent adoption of a correct
application of the law to be arbitrary and capricious. If an
agency has acted in error, it has no obligation to continue to
err in perpetuity.
When the decision of an administrative agency is
challenged as arbitrary, judicial interference is permissible
only for relief against arbitrary or capricious action that
constitutes a clear abuse of the discretion delegated to the
agency. Virginia ABC Comm'n v. York St. Inn, 220 Va. 310,
315, 257 S.E.2d 851, 855 (1979); Board of Zoning Appeals v.
Fowler, 201 Va. 942, 948, 114 S.E.2d 753, 758 (1960). The
only discretion delegated to VDH by law in this context was to
2
We apply the term "absurd result" to describe a
situation in which a law would be "internally inconsistent or
otherwise incapable of operation." Cook v. Commonwealth, 268
Va. 111, 116, 597 S.E.2d 84, 87 (2004).
9
add, or refrain from adding, nursing home beds to the list of
services entitled to the benefit of the “twelve-month rule” by
adopting a regulation to that effect, a process requiring
public hearing after notice. VDH exercised its discretion in
that respect by refraining from adopting such a regulation.
At the time NRV submitted its application, VDH, confronted by
a clear statutory prohibition, had no discretion in the
matter.
Conclusion
For the reasons stated, we conclude that VDH acted in
compliance with the applicable statutes in declining to accept
NRV’s application. Because we agree with the analysis made by
the circuit court, we will reverse the judgment of the Court
of Appeals, reinstate the judgment of the circuit court and
enter final judgment here dismissing NRV’s appeal.
Reversed and final judgment.
10