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Bio-Medical Applications of the District of Columbia v. District of Columbia Board of Appeals and Review

July 24, 2003

BIO-MEDICAL APPLICATIONS OF THE DISTRICT OF COLUMBIA D/B/A FRESENIUS MEDICAL CARE NORTH AMERICA, PETITIONER,
v.
DISTRICT OF COLUMBIA BOARD OF APPEALS AND REVIEW, RESPONDENT, CAPITOL DIALYSIS, LLC, INTERVENORS.



Petition for Review of a Decision of the District of Columbia Board of Appeals and Review

Before Ruiz, Glickman and Washington, Associate Judges.

The opinion of the court was delivered by: Glickman, Associate Judge

Argued November 5, 2002

Bio-Medical Applications of the District of Columbia, Inc. d/b/a/ Fresenius Medical Care North America ("Fresenius") appeals a decision of the District of Columbia Board of Appeals and Review ("BAR") that upheld the State Health Planning and Development Agency ("SHPDA") Director's grant of a certificate of need for Capitol Dialysis, LLC ("Capitol") to establish a kidney dialysis center. Fresenius contends that SHPDA should not have approved Capitol's application for a certificate of need because a draft chapter on end-stage renal disease services prepared for the District's Health Systems Plan did not project a need for additional dialysis stations. Because the SHPDA was not bound by this unadopted draft, and its issuance of a certificate of need was otherwise based on substantial evidence and in accordance with applicable law and regulations, we affirm.

I.

The State Health Planning and Development Agency is "responsible for health systems development in the District." D.C. Code § 44-402 (b) (2001). To ensure that health care resources are allocated appropriately, SHPDA is required to develop a Health Systems Plan for the District. See D.C. Code § 44-404 (a), (b) (2001); see also Speyer v. Barry, 588 A.2d 1147, 1158 (D.C. 1991). The Health Systems Plan must "[a]rticulate the policy of the District with respect to maintaining and improving the health of District residents and the health care delivery system in the District," "[p]roject current and future health care trends," "[i]dentify the health needs of District residents and recommend alternatives to address those health needs," and "[p]rioritize health issues." D.C. Code § 44-404 (a) (1-4) (2001). The Plan serves as "a planning and development blueprint for the health activities of the [District]." Roanoke Mem'l Hosps. v. Kenley, 352 S.E.2d 525, 528 (Va. Ct. App. 1987).

D.C. Code § 44-404 sets forth procedural requirements for the adoption and promulgation of the Health Systems Plan. First, the SHPDA is directed to develop a proposed Health Systems Plan with input from the Statewide Health Coordinating Council ("SHCC"), a fifteen member advisory body appointed by the Mayor with the advice and consent of the Council. See D.C. Code §§ 44-403, 44-404 (a) (2001). SHPDA must also "[p]rovide for public involvement in and evaluation of the development and implementation of the [Health Systems Plan]," and must hold at least one public hearing on the Plan. D.C. Code § 44-404 (c)(1) (2001). "Upon completion and promulgation of the final [Health Systems Plan], the SHPDA shall publish a notice of its completion and issuance in the District of Columbia Register and forward a copy of the final [Health Systems Plan] to the District of Columbia Public Library." D.C. Code § 44-404 (d) (2001). A new plan is to be issued every five years. D.C. Code § 44-404 (e) (2001).

In addition to its responsibilities for developing the Health Systems Plan, SHPDA administers the certificate of need program. See D.C. Code § 44-402 (b)(3) (2001). The certificate of need program is intended to ensure "an equitable distribution of health care facilities" by requiring proponents of new health services to demonstrate that the new services are needed. Speyer, 588 A.2d at 1165. With limited exceptions, anyone proposing to offer in the District of Columbia a new institutional health service must first obtain from the SHPDA "a certificate of need that demonstrates a public need for the new service or expenditure." D.C. Code § 44-406 (a) (2001).

When an application for a certificate of need is filed, SHPDA staff prepare an analysis of the application. See 22 DCMR §§ 4303.1, 4303.2 (2003). This staff analysis is forwarded to the SHCC, which reviews the application and makes a recommendation to the Director of SHPDA on whether to grant the certificate of need. See 22 DCMR § 4303.3 (2003). The Director makes the ultimate decision on certificate of need applications. The Director is not obligated to follow the staff or SHCC recommendations. See 22 DCMR §§ 4303.8, 4303.9 (2003). To grant an application, the Director must make a "written finding" that the applicant meets all statutory and regulatory requirements for a certificate of need. D.C. Code § 44-410 (a) (2001).

Those requirements are spelled out in SHPDA regulations. See 22 DCMR §§ 4050.1-4050.43, 4309.1-4309.33 (2003). The criteria include the requirement that the proposed new health service be "consistent with" the Health Systems Plan:

A [certificate of need] review shall consider the relationship of the health services being reviewed to the applicable Annual Implementation Plan and State Health Plan[ *fn1 ]. Each decision of the SHPDA, or the appropriate judicial or administrative review body, to issue a Certificate of Need shall be consistent with the State Health Plan, except in emergency circumstances that pose an imminent threat to public health.

22 DCMR § 4309.4. Other regulations similarly require that proposed projects be "in conformance with" the Plan, 22 DCMR § 4050.3, and be "needed to meet service and/or facility levels required for the District as specified in" the Plan. 22 DCMR § 4050.6 (a).

II.

On February 7, 2000, Capitol submitted an application for a certificate of need for a free-standing 20-station dialysis center to be located at 140 Q Street in Northeast Washington, D.C. Ordinarily, the need for a new dialysis center would be examined by reference to the Chapter on End-State Renal Disease Services in the Health Systems Plan. At the time of Capitol's application, however, SHPDA was still in the process of developing a Health Systems Plan to replace the old (and obsolete) 1989 State Health Plan and was utilizing a Draft Chapter on End-Stage Renal Disease Services ("Draft Chapter") to evaluate certificate of need applications such as Capitol's. This Draft Chapter had not been adopted formally in accordance with the procedural requirements of D.C. Code ยง 44-404. Based on data concerning the number of District residents with end-stage renal disease and the anticipated growth of that patient population, the Draft Chapter projected that the District needed to ...


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