Georgia Department of Community Health v. Emory University

THIRD DIVISION
DILLARD, C. J.,
GOBEIL and HODGES, JJ.

NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules

June 28, 2019

In the Court of Appeals of Georgia
A19A0615. GEORGIA DEPARTMENT OF COMMUNITY
HEALTH v. EMORY UNIVERSITY, et al.

GOBEIL, Judge.

The Commissioner of the Georgia Department of Community Health (“the

Commissioner”) ruled that Emory University Hospital (“EUH”) could not sever its

certificate of need (“CON”) for a 16-bed, in-patient rehabilitation program from its

hospital license1 and thereafter transfer both the program and the CON to another,

separately-licensed facility located on the Emory University campus. Instead, the

Commissioner determined that the separately licensed facility, Emory Rehabilitation

Hospital (“Emory Rehab”), would be required to obtain its own CON for the 16

1
In this context, the term “license” refers to a permit issued to a health care
facility by the Department of Community Health’s Healthcare Facility Regulation
Division, pursuant to OCGA § 31-7-1, et seq. A facility’s license is separate and
distinct from its CON authorization, which is governed by OCGA § 31-6-40 et seq.
additional beds it sought to acquire from EUH. EUH and Emory Rehab (collectively,

“Emory”) appealed the Commissioner’s decision to the Superior Court of DeKalb

County, which reversed the Commissioner and held that EUH could transfer the CON

for its in-patient rehabilitation program and the 16 beds associated with that program

to Emory Rehab, without Emory Rehab having to obtain its prior CON approval.

The Department of Community Health (“DCH”) now appeals the superior

court’s ruling, arguing that the court committed legal error in finding: (1) that a CON

issued to a specific party for a specific program could be transferred (together with

the program) to a different healthcare facility not named on the original CON; and (2)

that Emory Rehab’s addition of 16 beds to its existing in-patient rehabilitation

program did not constitute an expansion of that program requiring CON review and

approval.2 For reasons explained more fully below, we agree that the superior court’s

order conflicts with the plain language of Georgia’s CON statute (OCGA § 31-6-40,

2
Emory devotes a significant portion of its brief to arguing that DCH has failed
to identify with the requisite specificity any ruling by the superior court that
constitutes legal error. We agree that DCH could have better articulated its
enumeration of error. Nevertheless, despite Emory’s arguments to the contrary, an
assertion that the trial court’s holding on one or more issues is in conflict with the
relevant statutory law identifies a specific ruling by the superior court constituting
legal error. Moreover, it appears that Emory had no problem discerning DCH’s claims
of error, as its brief responded to the same.

2
et seq.) and the administrative regulations promulgated thereunder. Accordingly, we

reverse that order.

The Underlying Facts

The facts underlying this appeal are undisputed and show that EUH is owned

by Emory University and is located at 1364 Clifton Rd., NE on the University’s

campus. From 1977 until July 1, 2014, EUH operated an in-patient rehabilitation

facility known as the Center for Rehabilitation Medicine (the “CRM”). The CRM was

located at 1441 Clifton Rd. NE, in a freestanding building on the Emory University

campus. The CRM operated under EUH’s license, and EUH had a CON that allowed

the CRM to operate a 56-bed comprehensive in-patient rehabilitation program (“CIPR

program”). In 2013, EUH sought to “decouple” the CRM from its license, obtain a

separate license for the CRM, and then transfer the CON for the CRM (which had

been held under EUH’s license) to the now independently licensed CRM. Thus, in

November 2013, EUH requested a letter of determination from DCH confirming that

it did not need to obtain prior CON review and approval to decouple both the CRM

and the CRM’s CON from EUH’s license. DCH issued the requested letter of

determination, confirming that EUH could proceed with its plan without obtaining

a new CON for the CRM. DCH determined that a new and separate CON was not

3
required because “[t]he proposed decoupling of the health care facility license does

not involve any defined new institutional health service because there will be no bed

increase, no new services offered at EUH or the CRM, and no capital expenditure

above the [statutory] threshold.” Additionally, DCH noted that even after the

decoupling “[t]here will still be only one CIPR service at the CRM location within

the scope of the [existing CON].”

After the DCH letter of determination issued, EUH decoupled the CRM from

its license, obtained a separate license for the facility, and transferred the CON to the

new license. On July 1, 2014, the CRM was acquired by ES Rehabilitation, LLC,3

which now operates the facility and its CIPR program under the name Emory

Rehabilitation Hospital. Independent of the CRM/Emory Rehab, however, EUH

continued to maintain a CON for its own 16-bed CIPR program.4 That program is

housed inside the hospital, is administered by EUH for its patients, and operates

under EUH’s hospital license.

3
ES Rehabilitation, LLC is a joint venture that is majority owned by Emory
Rehabilitation, LLC, a wholly-owned subsidiary of Emory Healthcare, Inc. Emory
Healthcare, in turn, is wholly owned by Emory University, d/b/a Emory University
Hospital.
4
It is undisputed that this CON is separate from EUH’s CON for an acute care
hospital.

4
 Administrative Proceedings

In 2016, EUH and Emory Rehab agreed that EUH would decouple its CIPR

program and the associated CON from its hospital license and transfer both the 16

beds associated with the program and the CON to Emory Rehab. On December 16,

2016, EUH and Emory Rehab submitted a joint request for determination to DCH

seeking confirmation that such a decoupling and transfer would not require prior

CON review and approval.

On February 24, 2017 DCH provided the requested letter of determination,

informing Emory that it could relocate the EUH CIPR program beds to the Emory

Rehab facility, but that it could not transfer either the CON for that program or the

program itself to Emory Rehab. DCH explained that statutory law did not allow one

licensed healthcare facility to transfer a CON to another licensed healthcare facility,

unless the transfer occurs as part of a transaction whereby the transferee is acquiring

the transferor. DCH further noted that the transfer in this case would result in an

expansion of Emory Rehab’s existing CIPR program from 56 beds to 72 beds. Thus,

under applicable regulations, before acquiring the EUH CIPR program, Emory Rehab

would need to obtain prior CON review and approval allowing it to expand its

existing program.

5
 Emory filed a request for an administrative hearing on DCH’s determination,

and that hearing occurred in June 2017. The hearing officer thereafter issued a written

order in which he reversed DCH’s initial determination and granted summary

adjudication in favor of Emory. In doing so, the hearing officer relied on prior DCH

determinations to conclude that EUH could decouple the CON for its CIPR program

from its hospital license, as such decoupling would not result in any new services,

new beds, or capital expenditures above the statutory threshold set forth in the CON

statute. The hearing officer further concluded that Emory Rehab could acquire EUH’s

CIPR program without prior CON review and approval. In support of this conclusion,

the hearing officer found that EUH’s CIPR program, standing alone, met the statutory

definition of a “healthcare facility.” Thus, because Emory Rehab was acquiring a

healthcare facility, it could also acquire the CON belonging to that facility.

Additionally, the officer found that Emory Rehab’s addition of 16 beds to its CIPR

program did not constitute an expansion of its existing program requiring prior CON

review and approval. The officer again reasoned that the acquisition of EUH’s CIPR

beds was the equivalent of a merger of two healthcare facilities, who were combining

their CONs under a single license, and therefore no additional beds were “actually

being created or constructed.”

6
 DCH appealed the hearing officer’s order to the Commissioner. Relying on the

rationale set forth in DCH’s original letter of determination, the Commissioner

reversed the order of the hearing officer and found that EUH could not transfer the

CON for its CIPR program and that Emory Rehab could not acquire that program

without first obtaining CON review and approval.

The Superior Court Order

Emory challenged the Commissioner’s decision, filing a petition for judicial

review in DeKalb County Superior Court. Following a hearing, the superior court

granted Emory’s petition and reversed the decision of the Commissioner. With

respect to its reversal of the Commissioner’s conclusion that EUH could not decouple

a CON from its license and then transfer the CON to another licensed healthcare

facility, the superior court’s rationale is unclear. It appears, however, that the court

found, at least implicitly, that EUH’s CIPR program constituted a “health care

facility” being acquired by Emory Rehab. Based on this finding, the court concluded

that DCH violated the CON statute and exceeded its authority thereunder because

transfer of the CIPR program did “not involve the establishment of a new healthcare

7
facility or other new institutional health service.”5 Additionally, the court concluded

that DCH’s determination with respect to the decoupling and transfer of the CON was

“arbitrary and capricious” because DCH had mischaracterized EUH’s request as

involving the severing and transferring of “portions of an existing CON” rather than

a decoupling of a program-specific CON from EUH’s hospital license. Put another

way, the court found that DCH had attempted to treat the CON for the CIPR program

as part of EUH’s CON for an acute care hospital. The court also relied on prior

determinations by DCH addressing when a hospital may decouple a CON from its

license and transfer it to the license of another facility to find that DCH’s decision

was arbitrary and capricious.

With respect to the Commissioner’s ruling that Emory Rehab was required to

obtain CON review and approval before expanding its CIPR program from 56 to 72

beds, the superior court found that Emory Rehab’s acquisition of EUH’s CIPR

program was the equivalent of Emory Rehab acquiring a health care facility. Thus,

the court concluded that Emory Rehab could combine both CONs under its license.

5
Under OCGA § 31-6-40, a CON must be obtained for “any new institutional
health service,” which is defined to include, inter alia, the “construction,
development, or other establishment of a new health care facility.” OCGA § 31-6-40
(a) (1).

8
The court also found that the Commissioner’s ruling on this issue was arbitrary and

capricious because it violated the CON statute and exceeded DCH’s authority

thereunder. The court further concluded that in making his ruling, the Commissioner

had mischaracterized the facts underlying Emory’s request for a determination.

According to the superior court, this mischaracterization resulted from DCH’s

“insistence” that EUH was seeking to transfer only hospital beds, as opposed to

EUH’s entire CIPR program.

Questions on Appeal

DCH filed an application for discretionary appeal from the superior court’s

order. We granted that application, and this appeal followed.

A court called upon to review a final agency decision “shall not substitute its

judgment for that of the agency as to the weight of the evidence on questions of fact.”

OCGA § 50-13-19 (h). Thus, the reviewing court may reverse an agency decision

only if:

substantial rights of the appellant have been prejudiced because the
administrative findings, inferences, conclusions, or decisions are: (1) In
violation of constitutional or statutory provisions; (2) In excess of the
statutory authority of the agency; (3) Made upon unlawful procedure;
(4) Affected by other error of law; (5) Clearly erroneous in view of the
reliable, probative, and substantial evidence on the whole record; or (6)

9
 Arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.

Id.

In light of this statutorily limited scope of review, a reviewing court is limited

to determining two things. First, the reviewing court must determine whether any

evidence supported the agency’s findings of fact. Pruitt Corp. v. Ga. Dept. of

Community Health, 284 Ga. 158, 161 (3) (664 SE2d 223) (2008). Next, the court

assesses whether the agency’s legal conclusions based on those factual findings are

erroneous. Id. Thus, in an appeal from a superior court’s review of a final agency

decision, “our duty is not to review whether the record supports the superior court’s

decision, but whether the record supports [the factual findings underlying] the final

decision of the administrative agency.” North East Ga. Med. Center v. Winder HMA,

Inc., 303 Ga. App. 50, 55 (2) (693 SE2d 110) (2010) (citation and punctuation

omitted). We also “determine whether the superior court has[,] in its own final

ruling[,] committed an error of law.” Carolina Tobacco Co. v. Baker, 295 Ga. App.

115, 118 (1) (670 SE2d 811) (2008) (citation and punctuation omitted).

The current appeal presents two legal questions. First, did the superior court

err in finding that Georgia’s CON statute allows EUH to sever the CON for its 16-bed

10
CIPR program from its hospital license and thereafter transfer both the CON and the

program to another licensed healthcare facility? Second, did the superior court err in

concluding that the CON statute and related regulations allow Emory Rehab to

expand its 56-bed CIPR program to 72 beds by acquiring EUH’s program and CON,

and without obtaining prior CON review and approval for an expanded program? We

address each of these questions below.

1. We first consider whether Georgia’s CON statute allows EUH to decouple

its CIPR program and related CON from its hospital license and thereafter transfer the

same to Emory Rehab. At the outset of our analysis, we note that in concluding that

EUH could engage in the proposed transaction, the superior court relied on prior

determinations by DCH addressing when a hospital may decouple a CON from its

license and transfer it to the license of another facility. We find this reliance

misplaced, for several reasons.

First, as explained more fully below, courts are not bound by administrative

rulings. Sawnee Elec. Membership Corp. v. Ga. Public Serv. Comm., 273 Ga. 702,

706 (544 SE2d 158) (2001). Moreover, as articulated in the administrative regulations

applicable to the CON process, determinations by DCH

11
 are conclusions of [DCH] that are based on specific facts and are limited
to the specific issues addressed in the request for determination. . . .
Therefore, the conclusions of a specific determination . . . shall have no
binding precedent in relation to parties not subject to the request and to
other facts or factual situations that are not presented in the request.

Ga. Comp. R. & Regs. 111-2-2.10 (1) (a). And here, the prior determinations relied

on by the superior court have little, if any, relevance to the case at hand.

Each of those determinations involved a situation where a hospital held a

separate CON for a distinct physical facility that it operated under the hospital’s

license. Thus, in those cases, the hospital was seeking to decouple both the facility

and the separate CON it held for that facility from the hospital’s license, have the

separate facility obtain its own license, and then transfer the CON for that facility to

the facility’s license. And in each of those cases, DCH found that the hospital could

engage in that process without obtaining prior CON review and authorization. See In

Re: Savannah Rehabilitation Hospital, DET 2014-110; In Re: Hospital Authority of

Lowndes County, et al., DET 2012-156; In Re: Southern Regional Health System, et

al., DET 2008-013; In Re: Gwinnett Hospital System, et al., DET 2008-008. The facts

underlying these determinations, however, are not analogous to the facts underlying

this appeal. Specifically, EUH is not seeking to decouple a CON that it holds for a

12
program administered by and located at Emory Rehab. Instead, EUH is seeking to

decouple a CON for a program for EUH patients that is administered by EUH, under

EUH’s hospital license, and that is located in EUH’s hospital facility.6

Finally, and most importantly, the superior court erred in relying on these prior

DCH determinations because the question before the court was not whether DCH had,

in other situations, previously permitted a decoupling of a CON from a hospital

license. Rather, as noted above, the question was whether Georgia’s CON statute

allows Emory to avoid prior CON review and approval for the transaction proposed

in this case. We turn now to that question.

Georgia’s CON statute provides, in relevant part:

A certificate of need shall be valid only for the defined scope, location,
cost, service area, and person named in an application, as it may be
amended, and as such scope, location, service area, cost, and person are
approved by [DCH], unless such certificate of need owned by an
existing health care facility is transferred to a person who acquires such
existing facility. In such case, the certificate of need shall be valid for

6
In requesting a letter of determination, EUH described it CIPR program as
“sixteen (16) in-patient rehabilitation beds” located at EUH (1364 Clifton Rd.) EUH
also explained that the program is offered “as part of [EUH’s] in-patient hospital
complement under its general acute care license.” Thus, the program is operated by
EUH, for patients of EUH, in the EUH hospital facility.

13
 the person who acquires such a facility and for the scope, location, cost,
and service area approved by [DCH].

OCGA § 31-6-41 (a) (emphasis supplied).

Presumably relying on the above-italicized language, the superior court

implicitly found that EUH’s CIPR program, standing alone, constitutes a “health care

facility” within the meaning of OCGA § 31-6-41 (a). Thus, the court apparently

reasoned that Emory Rehab’s acquisition of EUH’s CIPR program meant that EUH

could transfer to Emory Rehab the CON associated with that program. We disagree.

For purposes of the CON statute, “health care facility” is defined as:

hospitals; destination cancer hospitals; other special care units,
including but not limited to podiatric facilities; skilled nursing facilities;
intermediate care facilities; personal care homes; ambulatory surgical
centers or obstetrical facilities; health maintenance organizations; home
health agencies; and diagnostic, treatment, or rehabilitation centers . . .

OCGA § 31-6-2 (17).7

7
Notably, Emory’s brief fails to acknowledge this definition. As a result,
Emory does not offer any reasoned argument or citation to legal authority to support
its argument that EUH’s CIPR program falls within the statutory definition of “health
care facility.”

14
 The statute further defines different types of health care facilities as

“institutions” or “facilities,” indicating that, as a general rule, health care facilities

have a distinct and self-contained physical location. See OCGA § 31-6-2 (1)

(“‘[a]mbulatory surgical center or obstetrical facility’ means a public or private

facility, not part of a hospital, . . .”); OCGA § 31-6-2 (13) (“‘[d]estination cancer

hospital’ means an institution with a licensed bed capacity of 50 or less . . . “); OCGA

§ 31-6-2 (16) (“‘diagnostic, treatment, or rehabilitation center’ means any

professional or business undertaking . . . which offers . . . any clinical health service

in a setting which is not part of a hospital . . .”); OCGA § 31-6-2 (21) (“‘[h]ospital’

means an institution which is primarily engaged in providing [services] to in-patients

. . .”); OCGA § 31-6-2 (22) (“‘[i]ntermediate care facility’ means an institution which

provides . . . health related care and services to individuals . . .”); OCGA § 31-6-2

(34) (“‘[s]killed nursing facility’ means a public or private institution or a distinct part

[thereof] which is primarily engaged in providing in-patient skilled nursing care . .

.”). In other words, the language of the statute indicates that a healthcare facility does

not generally house and administer a second healthcare facility for the benefit of the

first facility’s patients.

15
 Reading OCGA § 31-6-2 as a whole, therefore, it is clear that the definition of

“health care facility” does not encompass a specialized program operated by and

within a licensed healthcare facility, such as a hospital. See Deal v. Coleman, 294 Ga.

170, 172-73 (1) (a) (751 SE2d 337) (2013) (when construing a statute, “we must

presume that the General Assembly meant what it said and said what it meant. To that

end, we must afford the statutory text its plain and ordinary meaning, we must view

the statutory text in the context in which it appears, and we must read the statutory

text in its most natural and reasonable way, as an ordinary speaker of the English

language would”) (citations and punctuation omitted). And this conclusion holds true

even though the specialized program – such as the CIPR program at issue – has its

own CON. See OCGA § 31-6-2 (21) (defining “hospital” as an institution that

provides “to in-patients, by or under the supervision of physicians, . . . Rehabilitation

services for the rehabilitation of injured, disabled, or sick persons . . .”).

In an effort to avoid this conclusion, Emory relies on DCH’s determination

letter, issued in February 2017. As set forth in the letter, DCH concluded that EUH

could relocate its 16 CIPR beds to Emory Rehab’s location without prior CON review

and approval. DCH further stated that its conclusion was based on an exception to the

16
CON statute found at OCGA § 31-6-47 (a) (24). Under that statutory provision, the

CON statute does not apply to

[t]he relocation of any skilled nursing facility, intermediate care facility
or micro-hospital within the same county, . . . and any other healthcare
facility in an urban county within a three-mile radius of the existing
facility so long as the facility does not propose to offer any new or
expanded clinical health services at the new location.

Citing this language, DCH concluded that “EUH is authorized to relocate its sixteen

(16) CIPR beds on its campus as long as the varying locations are not more than three

(3) miles apart or within more than one county.”

On appeal, Emory argues (as it did below) that DCH could not treat the EUH

CIPR program as a healthcare facility for purposes of allowing the program to

relocate, but refuse to treat it as such a facility when determining whether EUH could

decouple and transfer the program and accompanying CON. We are not persuaded.

We first note that given the statutory definition of health care facility, DCH’s

decision, set forth in the February, 2017 determination letter, to treat EUH’s CIPR

program as a healthcare facility under OCGA § 31-6-47 (a) (24) violated the plain

language of the CON statute and therefore exceeded DCH’s authority. See OCGA §

31-6-21 (delegating to DCH the authority to administer the CON program in

17
accordance with the statute); Albany Surgical, P. C. v. Dep’t of Community Health,

257 Ga. App. 636, 638 (2) (572 SE2d 638) (2002) (“courts have consistently held that

[DCH] lacks authority to expand [the statutory] exceptions” to the CON statute); N.

Fulton Med. Center v. Stephenson, 269 Ga. 540, 543 (1) (501 SE2d 798) (1998)

(“administrative agencies . . . are not authorized to enlarge the scope of . . . a

properly-enacted statute”). See also Sawnee Elec. Membership Corp., 273 Ga. at 704

(“legislative exceptions in statutes are to be strictly construed and should be applied

only so far as their language fairly warrants”) (citation and punctuation omitted).

More importantly, this Court is not bound by any DCH determination that

EUH’s CIPR program, standing alone, constitutes a health care facility. The principle

that courts are not bound by an administrative agency’s interpretation of a statute,

including a statute the agency is charged with administering, is well-established.

Sawnee Elec. Membership Corp., 273 Ga. at 706. Instead, the judicial branch must

“make an independent determination as to whether the interpretation of the

administrative agency correctly reflects the plain language of the statute.” Id. See also

Palmyra Park Hosp. v. Phoebe Sumter Med. Center, 310 Ga. App. 487, 491 (1) (714

SE2d 71) (2011) (“[w]hile reviewing courts defer to agency interpretations of the

statutes [an agency is] charged with administering, that deference applies only as far

18
as the agency interpretation is consistent with the statute” See City of Guyton v.

Barrow, Case No. S18G0944, 2019 W.L. 2167460, at 1 (Ga. May 20, 2019) (“At the

core of the judicial power is the authority and the responsibiity to interpret legal

text”). And as explained supra, we find that the plain language of OCGA § 31-6-2

forecloses any argument that a specialized program for which a hospital holds a CON,

which is administered by the hospital for its patients, and which is physically located

within the hospital itself, constitutes a healthcare facility under the CON statute.

In light of the foregoing, we find that the superior court committed legal error

when it concluded that EUH could decouple the CON for its CIPR program from its

hospital license and transfer the program and the CON to the separately-licensed

Emory Rehab without Emory obtaining prior CON review and approval.

2. We next consider whether Emory Rehab can expand its 56-bed CIPR

program to 72 beds by acquiring EUH’s program and accompanying CON, and

without obtaining prior CON review and approval. Like the first issue, this question

is controlled by the plain language of the CON statute.

OCGA § 31-6-40 provides, in relevant part:

On and after July 1, 2008, any new institutional health service shall be
required to obtain a certificate of need pursuant to this chapter. New

19
 institutional health services include: . . . [a]ny increase in the bed
capacity of a health care facility except as provided in Code Section 31-
6-47.

OCGA § 31-6-40 (a) (4) (emphasis supplied). Additionally, Chapter 111-2-2.358 of

Georgia’s Administrative Code provides that “[a] Certificate of Need shall be

required prior to the . . . expansion of an existing [CIPR] Adult Program.” Ga. Comp.

R & Regs. 111-2-2.35 (1) (a). And the chapter defines “expansion” as meaning “the

addition of beds to an existing CON-authorized . . . [CIPR] Program.” Ga. Comp. R

& Regs. 111-2-2.35 (2) (c).

It is undisputed that Emory Rehab is a health care facility under the CON

statute. See OCGA § 31-6-2 (17). And if Emory Rehab acquires EUH’s 16-bed CIPR

program, then Emory Rehab’s CIPR program will expand from 56 beds to 72 beds.

Under the plain language of both OCGA § 31-6-40 (a) (4) and Ga. Comp. R & Regs.

111-2-2.35, therefore, Emory Rehab must obtain a CON to add 16 additional beds to

its CIPR program.9 Accordingly, we find that the superior court erred as a matter of

8
This regulation addresses specific review considerations for CIPR services.
9
For the reasons explained in Division 1, in acquiring EUH’s CIPR program,
Emory Rehab would not be acquiring a separate health care facility. Accordingly, the
exception to the CON statute found at OCGA § 31-6-47 (a) (24) does not apply to
Emory Rehab’s proposed expansion to 72 beds.

20
law in concluding that Emory Rehab’s acquisition of EUH’s CIPR program did not

require prior CON review and authorization.

For the reasons set forth above, we reverse the order of the superior court

granting Emory’s petition for judicial review.

Judgment reversed. Dillard, C. J., and Hodges, J., concur.

21