Gordon v. Allen

COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Moon, Judges Willis and Fitzpatrick
Argued at Alexandria, Virginia

RALPH L. GORDON, STATE HEALTH COMMISSIONER,
DEPARTMENT OF HEALTH
OPINION BY
v. Record No. 1394-96-4 JUDGE JERE M. H. WILLIS, JR.
MARCH 4, 1997
DR. HAROLD H. ALLEN, JR., d/b/a
PHYSICIANS SURGICAL ALLIANCE, P.C.

FROM THE CIRCUIT COURT OF LOUDOUN COUNTY
Paul F. Sheridan, Judge Designate

Carol S. Nance, Assistant Attorney General
(James S. Gilmore, III, Attorney General;
William H. Hurd, Deputy Attorney General;
Jane D. Hickey, Senior Assistant Attorney
General, on briefs), for appellant.

Wyatt B. Durrette, Jr. (John T. Brennan, Jr.;
Thomas A. Guidoboni; Bronson F. Byrd;
Durrette, Irvin & Bradshaw; Michaels, Wishner
& Bonner, on brief), for appellee.

Amicus Curiae: Virginia Hospital &
Healthcare Association (Julia Krebs-Markrich;
H. Lane Kneedler; D. Patrick Lacy; Hazel &
Thomas, on brief), for appellant.

The State Health Commissioner appeals from a final judgment

of the trial court reversing the commissioner's denial of Dr.

Harold H. Allen, Jr.'s request for a determination of

nonreviewability under the certificate of public need (COPN)
1
statute, Code § 32.1-102.1 et seq., and holding that statute to
1
Following the circuit court's ruling, the General
Assembly amended Code § 32.1-102.1, modifying the definition of a
"medical care facility," and the provisions regarding the
application of review to said facilities. 1996 Va. Acts ch.
1050. For purposes of this opinion, we refer to the statute as
it was written in 1994.
be unconstitutionally vague. For the reasons set forth below, we

reverse the judgment of the trial court.

I.

On January 28, 1994, Dr. Allen, d/b/a Physicians Surgical

Alliance, notified the commissioner that he intended to establish

an "outpatient surgical hospital" in Sterling, Virginia. He

requested a determination by the commissioner that the COPN

statute did not apply to "outpatient surgical hospitals" and that

COPN review and approval of his project was unnecessary. He

contended that the COPN statute defined a universe of "medical

care facilities," and strictly limited to that universe the

facilities requiring COPN review. See Code § 32.1-102.1. He

contended that although licensure law recognizes an "outpatient

surgical hospital" as a type of medical care facility, Code

§ 32.1-123 et seq., "outpatient surgical hospitals" are not

included specifically in the list of medical facilities requiring

COPN review under Code § 32.1-102.1. He contended that,

therefore, the COPN statute did not apply to his proposed

facility.

By letter dated February 16, 1994, the Department of Health

(Department) rejected Dr. Allen's argument. The Department

concluded that Dr. Allen's proposed medical care facility was a

specialized center developed for the provision of outpatient or

ambulatory surgery. It recommended that COPN review and approval

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of his facility be required for certification. 2 In issuing its

recommendation, the Department stated that:
This categorization of a type of medical care
facility in the COPN law is neither subtle
nor ambiguous. A plain reading of this term
does not allow for any reasonable suggestion
that facilities such as those developed by
Dr. Allen would not fall within its ambit
simply because they are specialized centers
for outpatient or ambulatory surgery that
require licensure in Virginia as outpatient
surgical hospitals.

As you know, the authors of Virginia's
2
Code § 32.1-102.1 provides in pertinent part that:

"Medical care facility," as used in this
title, means any institution, place, building
or agency, whether licensed or required to be
licensed . . . whether operated for profit or
nonprofit and whether privately owned or
privately operated or owned or operated by a
local governmental unit, (i) by or in which
health services are furnished, conducted,
operated or offered for the prevention,
diagnosis or treatment of human disease,
pain, injury, deformity or physical
condition, whether medical or surgical, of
two or more nonrelated mentally or physically
sick or injured persons, or for the care of
two or more nonrelated persons requiring or
receiving medical, surgical or nursing
attention or services as acute, chronic,
convalescent, aged, physically disabled or
crippled, or (ii) which is the recipient of
reimbursements from third-party health
insurance programs or prepaid medical service
plans. For purposes of this article, only
the following medical care facilities shall
be subject to review:

* * * * * * *

9. Specialized centers or clinics or that
portion of a physician's office developed for
the provision of outpatient or ambulatory
surgery . . . .

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 COPN law did not establish the list of
medical care facilities subject to COPN
review as a subset of the medical care
facilities subject to licensure in Virginia.
There are categories of "medical care
facility" subject to COPN review which are
not licensed by the Department of Health or
any other state agency as medical care
facilities. Likewise, the Department
requires licensure of certain types of
facilities and services that are not
regulated under the COPN law. Therefore the
fact that you have been able to detect some
congruence in the nomenclature used to
describe medical care facilities subject to
COPN review and medical care facilities
subject to licensure in Virginia is
irrelevant.

Upon Dr. Allen's request for reconsideration of the

Department's recommendation, the commission conducted an informal

fact-finding conference. Dr. Allen argued that the phrase

"[s]pecialized centers or clinics or that portion of a

physician's office developed for the provision of outpatient or

ambulatory surgery," as applied to him, was unconstitutionally

vague. On November 17, 1994, the commissioner rejected Dr.

Allen's argument and held that he was required to undergo COPN

review to obtain approval of his proposed outpatient surgical

hospital.

Pursuant to the provisions of the Virginia Administrative

Process Act (VAPA), Code §§ 9-6.14:15 to 9-6.14:21, Dr. Allen

appealed the commissioner's case decision to the trial court,

which, after hearing argument on August 31, 1995, issued a letter

opinion reversing the commissioner's decision and ruling that the

COPN statute and regulations were unconstitutionally vague. The

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trial court denied the commissioner's motion for reconsideration.

II.

On August 8, 1996, we made a preliminary determination that

the transcript of the August 31, 1995 hearing had not been filed

timely. See Rule 5A:8. We ordered the commissioner to show

cause why this appeal should not be dismissed. We directed that

the parties' briefs contain argument concerning: (1) whether the

transcript of the August 31, 1995 hearing was properly made a

part of the record on appeal; and (2) if not, whether that

transcript is indispensable to a determination of the issues.
We conclude that the transcript was not properly made a part

of the record on appeal. However, we further find that the

transcript is not indispensable to a determination of the issues.

See Turner v. Commonwealth, 2 Va. App. 96, 99, 341 S.E.2d 400,

401-02 (1986).

"Under the VAPA, the circuit court's role in an appeal from

an agency decision is equivalent to an appellate court's role in

an appeal from a trial court. In this sense, the General

Assembly has provided that a circuit court acts as an appellate

tribunal." School Board v. Nicely, 12 Va. App. 1051, 1062, 408

S.E.2d 545, 551 (1991).

The July 7, 1994 informal fact-finding conference and the

Department's accumulation of the agency record performed a trial

court's traditional fact-finding function. See Code

§§ 9-6.14:16, 9-6.14:17. The agency record was filed timely in

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the trial court. The August 31, 1995 hearing before the trial

court was an appellate proceeding. The trial court's function

was limited to considering the parties' legal arguments based

upon the agency record. While our consideration of the issues

might have been aided by a review of the August 31, 1995

transcript, the written record, encompassing the parties'

pre-hearing briefs, the trial court's letter opinion, and the

agency record, along with transcripts of the Department's

informal fact-finding conference and argument before the trial

court to reconsider its decision, provides a sufficient record

for our consideration of this appeal.
III.

In his petition for appeal to the trial court, Dr. Allen

asserted that the commissioner's decision was illegal because:
[I]t is based upon a portion of the
Certificate of Public Need statute which
itself is unconstitutionally vague under both
the United States and Virginia Constitutions.
Specifically, the determination of the
Acting Commissioner that Petitioner's project
required prior Certificate of Public Need
approval was based on his conclusion that the
outpatient surgical hospital Petitioner
proposed to establish comprised a
"specialized center or clinic", which term or
terms are undefined in statute or regulation.

In argument before the trial court, Dr. Allen contended that

an amendment to the definition of "medical care facility" limited

COPN review to entities that are licensed or required to be

licensed. He argued that the COPN regulations were inconsistent

with this statutory amendment, and that, therefore, the COPN

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statute and regulations were unconstitutionally vague. The

commissioner argues that this contention was not embraced within

Dr. Allen's petition for review in the trial court and that the

trial court erred in considering it. For purposes of this

appeal, we give Dr. Allen's petition a broad reading and, for

purposes of decision, we accept without deciding that his

petition was broad enough to encompass the questioned argument.

IV.
The trial court held:
The second issue considered is the
relationship of the COPN statutory definition
of "medical care facility", [] and the State
Medical Facilities Plan (SMFP). Petitioner
says that the new statutory language made
licensure a prerequisite to the necessity for
COPN review. . . .

The Court finds that the SMFP, read in
conjunction with COPN statute, ignores
significant statutory changes. The Court
must follow the statute when such a conflict
exists. The statutory language changed from
"whether or not [licensed or] required to be
licensed" to "whether licensed or required to
be licensed." The effect of the revision is
a substantive one that must be reflected in
the regulations. The effect is that the
question "What facility needs licensure?", is
difficult to clearly answer. This equivocal
result means the statute and regulations are
fatally vague, facially and in application. 3

3
The circuit court referred mistakenly to the State
Medical Facilities Plan. See 32.1-102.3(A); 12 VAC §§ 5-230-10
to 5-350-60. The appropriate reference is to the Virginia
Medical Care Facilities Certificate of Public Need Rules and
Regulations (COPN regulations), which establish the required
procedures for the administrative application of COPN review.
Code § 32.1-102.2; 12 VAC §§ 5-220-10 to 5-220-400.

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 If we accept the trial court's reading of Code § 32.1-102.1,

that statute provides a two-step predicate for the requirement of

COPN review: (1) the proposed facility must require licensure,

and (2) the proposed facility must fall within one of the

classifications set forth in Code § 32.1-102.1. Dr. Allen has

never disputed that his proposed facility requires licensure.

Therefore, "what facility needs licensure" is not an issue in

this case.
The commissioner determined that Dr. Allen's proposed

facility would be a specialized center or clinic developed for

the provision of out-patient or ambulatory surgery, thus bringing

it within the scope of Code § 32.1-102.1 "medical care facility

(9)." While this determination may leave room for argument, it

does not pose an issue of classification that is

unconstitutionally vague.

The judgment of the trial court is reversed, and this case

is remanded for review on the question whether the record

developed before the commission supports the commissioner's

determination.

Reversed and remanded.

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