{ "id": 8526058, "name": "LAUREL WOOD OF HENDERSON, INC., Petitioner v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF FACILITY SERVICES, Respondent, and PARK RIDGE HOSPITAL and PIA-ASHEVILLE, INC., d/b/a/ Appalachian Hall, Intervenors-Respondents", "name_abbreviation": "Laurel Wood of Henderson, Inc. v. North Carolina Department of Human Resources", "decision_date": "1995-01-17", "docket_number": "No. 9310SC1188", "first_page": "601", "last_page": "608", "citations": [ { "type": "official", "cite": "117 N.C. App. 601" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "61 ALR3d 278", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "opinion_index": -1 }, { "cite": "327 N.C. 573", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2493346 ], "opinion_index": -1, "case_paths": [ "/nc/327/0573-01" ] }, { "cite": "372 S.E.2d 342", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1988, "pin_cites": [ { "page": "344" } ], "opinion_index": 0 }, { "cite": "91 N.C. App. 459", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525947 ], "year": 1988, "pin_cites": [ { "page": "463" } ], "opinion_index": 0, "case_paths": [ "/nc-app/91/0459-01" ] }, { "cite": "443 S.E.2d 89", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "91-92" } ], "opinion_index": 0 }, { "cite": "114 N.C. App. 711", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527957 ], "year": 1994, "pin_cites": [ { "page": "715-16" } ], "opinion_index": 0, "case_paths": [ "/nc-app/114/0711-01" ] }, { "cite": "398 S.E.2d 466", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1990, "pin_cites": [ { "page": "470" }, { "page": "575, 580" }, { "page": "468, 470-71" }, { "page": "468, 470-71" } ], "opinion_index": 0 }, { "cite": "327 N.C. 573", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2493346 ], "weight": 2, "pin_cites": [ { "page": "579" }, { "page": "575, 580" } ], "opinion_index": 0, "case_paths": [ "/nc/327/0573-01" ] }, { "cite": "398 S.E.2d 466", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1990, "pin_cites": [ { "page": "470" }, { "page": "579-80" }, { "page": "470-71", "parenthetical": "emphasis added" } ], "opinion_index": 1 }, { "cite": "327 N.C. 573", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2493346 ], "pin_cites": [ { "page": "579" } ], "opinion_index": 1, "case_paths": [ "/nc/327/0573-01" ] } ], "analysis": { "cardinality": 612, "char_count": 14793, "ocr_confidence": 0.731, "pagerank": { "raw": 3.6856254361847664e-07, "percentile": 0.8916965815381515 }, "sha256": "1a8153ce476fd902158a81af47a0baca338bb7d9da47127ad047edb0b47255df", "simhash": "1:65bc96a076e9c4b2", "word_count": 2275 }, "last_updated": "2023-07-14T20:31:41.091249+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judge JOHNSON concurs.", "Judge LEWIS dissents." ], "parties": [ "LAUREL WOOD OF HENDERSON, INC., Petitioner v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF FACILITY SERVICES, Respondent, and PARK RIDGE HOSPITAL and PIA-ASHEVILLE, INC., d/b/a/ Appalachian Hall, Intervenors-Respondents" ], "opinions": [ { "text": "GREENE, Judge.\nLaurel Wood of Henderson, Inc. (petitioner) appeals from an order filed 3 August 1993 in Wake County Superior Court, affirming the declaratory ruling of the North Carolina Department of Human Resources\u2019 Division of Facility Services (the Department) that petitioner is not authorized to treat individuals with eating disorders in its substance abuse/chemical dependency beds.\nN.C. Gen. Stat. \u00a7 131E-178(a) (1994) requires a person to obtain a Certificate of Need (CON) from the Department before offering or developing \u201ca new institutional health service,\u201d which is defined as the \u201cconstruction, development, or other establishment of a new health service facility.\u201d N.C.G.S. \u00a7 131E-176(16)(a) (1994). On 16 May 1988, petitioner filed an application with the Department for a CON to develop a 66-bed substance abuse/chemical dependency facility for adolescents in Henderson County. Petitioner stated in its application it \u201cwill be dedicated to the treatment of adolescents suffering from the addictive diseases of chemical dependency and eating disorders.\u201d In determining whether a CON should be issued for the offering or development of a \u201cnew institutional health service,\u201d the service must \u201cbe subject to review and evaluation as to need, cost of service, accessibility to services, quality of care, feasibility, and other criteria\u201d so that \u201conly appropriate and needed institutional health services are made available in the area to be served.\u201d N.C.G.S. \u00a7 131E-175(7) (1994). The Department relies on the State Medical Facilities Plan (SMFP), the official statement of projected need for health services, to determine whether a new institutional health service is needed. The 1988 SMFP projected a need for chemical dependency beds in Health Service Area I, which includes Henderson County, and a net surplus of psychiatric beds.\nOn 21 November 1988, the Department denied petitioner\u2019s CON application; however, the Department issued its decision beyond the 150-day time limit imposed by N.C. Gen. Stat. \u00a7 131E-185. Petitioner filed a petition for a contested case in the Office of Administrative Hearings on 21 December 1988, and the Administrative Law Judge (AU) issued a decision recommending issuance of a CON to petitioner because the Department, by failing to act within the 150-day time limit, lost jurisdiction to deny petitioner\u2019s CON application. In its final decision, the Department rejected the AU\u2019s recommended decision and affirmed its denial of petitioner\u2019s application. On 1 March 1990, our Supreme Court granted discretionary review, ex mero motu, before a determination by this Court.\nOur Supreme Court vacated the Department\u2019s final decision and determined that because the Department failed to act within the 150-day time limit, the Department \u201cis deemed as a matter of law to have decided to approve the certificates of need in question, and that it lost jurisdiction over the subject matter of the applications in question for all purposes except the issuance of the certificates of need.\u201d HCA Crossroads Residential Ctrs., Inc. v. Department of Human Resources, 327 N.C. 573, 579, 398 S.E.2d 466, 470 (1990). The Court, therefore, ordered the Department to issue a CON based on petitioner\u2019s \u201capplication to develop a 66-bed adolescent chemical dependency treatment facility.\u201d Id. at 575, 580, 398 S.E.2d at 468, 470-71.\nOn 11 January 1991, the Department sent petitioner a CON to \u201c[c]onstruct and operate a 66 Bed Substance Abuse/Chemical Dependency Treatment Hospital for Adolescents (ages 12 through 17) with 60 treatment beds and 6 detoxification beds in Henderson County.\u201d Before a facility that has been issued a CON can be operated, it must be licensed by the Department. The Licensure Section of the Department informed petitioner that it could not issue a license allowing treatment of individuals with eating disorders in beds designated substance abuse/chemical dependency because only psychiatric beds could be used to treat eating disorders. Petitioner therefore requested the Director of the Division of Facility Services of the Department (the Director) to issue a declaratory ruling on the scope of services petitioner can provide under the CON issued by the Department. Petitioner sought a ruling that licensing the chemical dependency beds awarded to it included the treatment of eating disorders.\nOn 8 November 1991, the Director issued a declaratory ruling denying petitioner\u2019s request. Petitioner petitioned for review in the superior court, which affirmed the ruling.\nThe issue presented is whether the CON issued by the Department in accordance with HCA Crossroads permits petitioner to provide treatment for adolescents with eating disorders in substance abuse/chemical dependency beds.\nUnder N.C. Gen. Stat. \u00a7 150B-51(b), this Court may, in reviewing an administrative agency\u2019s decision, reverse or modify the decision if it is:\n(1) In violation of constitutional provisions;\n(2) In excess of the statutory authority or jurisdiction of the agency;\n(3) Made upon unlawful procedure;\n(4) Affected by other error of law;\n(5) Unsupported by substantial evidence ... in view of the entire record as submitted; or\n(6) Arbitrary or capricious.\nN.C.G.S. \u00a7 150B-51(b) (1991); see Brooks v. Ansco & Assocs., Inc., 114 N.C. App. 711, 715-16, 443 S.E.2d 89, 91-92 (1994). Where a petitioner alleges an agency\u2019s decision is based on an error of law, de novo review is required. Brooks v. Rebarco, Inc., 91 N.C. App. 459, 463, 372 S.E.2d 342, 344 (1988). Where a petitioner alleges the agency\u2019s decision is not supported by substantial evidence, the whole record test applies. Id.\nIn this case, petitioner argues that the Department lost its jurisdiction to impose the restriction that eating disorders are properly treatable only in beds designated for psychiatric services when it failed to act within the 150-day time limit and our Supreme Court mandated that petitioner\u2019s \u201capplication, even with its alleged defects, had to be granted in toto.\u201d Petitioner, in the alternative, argues that the Department\u2019s determination that an eating disorder, as a psychiatric illness, is not allowed to be treated in a substance abuse bed is erroneous and not based on substantial evidence. We disagree with petitioner\u2019s contentions.\nIn HCA Crossroads, the only action our Supreme Court ordered the Department to do was to issue a CON based on petitioner\u2019s \u201capplication to develop a 66-bed adolescent chemical dependency treatment facility.\u201d HCA Crossroads, 327 N.C. at 575, 580, 398 S.E.2d at 468, 470-71. This order by our Supreme Court was exactly fulfilled by the Department on 11 January 1991 when it sent petitioner a CON to \u201c[c]onstruct and operate a 66 Bed Substance Abuse/Chemical Dependency Treatment Hospital for Adolescents (ages 12 through 17) with 60 treatment beds and 6 detoxification beds in Henderson County.\u201d The question, therefore, is whether petitioner can properly treat eating disorders under the CON issued by the Department in accordance with HCA Crossroads.\nEating disorders are subsumed under the definition of mental illness, see N.C.G.S. \u00a7 122C-3(21) (1993) (for a minor, a mental condition that so impairs capacity to exercise age adequate self-control or judgment in conduct of activities and social relationships so that he needs treatment), and are not included in the terms \u201cchemical dependency\u201d or \u201csubstance abuse.\u201d See 1988 State Medical Facilities Plan at 41 (\u201cchemical dependency\u201d describes the abuse and/or addiction to alcohol or other drugs); N.C.G.S. \u00a7 122C-3(36) (1993) (\u201csubstance abuse\u201d means pathological use or abuse of alcohol or other drugs in a way or degree that produces impairment in personal, social, or occupational functioning); N.C.G.S. \u00a7 90-87(12)(c) (1993)' (defines drugs as \u201csubstances (other than food) intended to affect the structure or any function of the body of man or other animals\u201d). Therefore, treating eating disorders in substance abuse/chemical dependency treatment beds would constitute redistributing health service facility bed capacity to a new institutional health service, i.e., psychiatric service, which requires its own CON. See N.C.G.S. \u00a7 131E-178(a) (no person may offer or develop \u201cnew institutional health service\u201d without obtaining certificate of need); N.C.G.S. \u00a7 131E-176(16)(a) (\u201cnew institutional health service\u201d means construction, development, or other establishment of new health service facility); N.C.G.S. \u00a7 131E-176(9b) (1994) (new psychiatric facility is \u201chealth service facility\u201d). For these reasons, the Department\u2019s decision that petitioner cannot treat eating disorders pursuant to its CON for substance abuse/chemical dependency treatment was not based on an error of law and is supported by substantial evidence. The decision of the trial court is therefore\nAffirmed.\nJudge JOHNSON concurs.\nJudge LEWIS dissents.", "type": "majority", "author": "GREENE, Judge." }, { "text": "Judge Lewis\ndissenting.\nI respectfully dissent, as I believe petitioner is correct in its contention that the declaratory ruling was affected by error of law. When the Department of Human Resources denied petitioner\u2019s CON application, one of its reasons for doing so was that it concluded that eating disorders were not properly treatable in chemical dependency/substance abuse beds. The matter reached the Supreme Court, which held that the Department, by failing to act within 150 days, was \u201cdeemed as a matter of law to have decided to approve the [CON] in question\u201d. HCA Crossroads Residential Ctrs., Inc. v. N.C. Dep't of Human Res., 327 N.C. 573, 579, 398 S.E.2d 466, 470 (1990). The Court further held that the Department had \u201clost jurisdiction over the subject matter of the [CON application] for all purposes except the issuance of the [CON].\u201d Id. Finally, the Court ordered that the Department \u201cmust now issue the [CON] applied for.\" Id. at 579-80, 398 S.E.2d at 470-71 (emphasis added). The CON applied for was for a facility \u201centirely devoted to the treatment of adolescents suffering from substance abuse, including programming and facilities devoted exclusively to adolescent eating disorder patients.\u201d It is to be presumed that the Supreme Court was aware of the nature of the proposed facility, as the record before that Court contained the Department\u2019s denial of the CON application and its findings in support of its decision. The findings specifically addressed the proposed eating disorder aspect of the application. For example, the Department found that\nLaurel Wood\u2019s proposal to treat persons with eating disorders in licensed chemical dependency beds is not consistent with the Plan\u2019s [the State Medical Facilities Plan\u2019s] defined use for these beds. Instead, Laurel Wood should consider the establishment of psychiatric beds for the purpose of treating individuals who are not dependent on alcohol or other drugs but have an eating disorder.\nThe Supreme Court ordered the Department to issue the CON applied for, even though the Department had determined that several aspects of the application, including the proposed treatment of patients with eating disorders, were inconsistent with the policies of the SMFP and the CON law. I conclude that the Department\u2019s attempt to avoid the clear mandate of the Supreme Court was error.\nFurthermore, I find additional support for this conclusion in the CON law, as highlighted in a letter from the Department to petitioner. The letter was sent to petitioner along with the CON after the Supreme Court\u2019s decision. The letter cautioned:\nPlease be aware that pursuant to G.S. 131E-181(b), you are required to materially comply with the representations made in your application for a Certificate of Need. If you operate a service which materially differs from the representations made in your application for a Certificate of Need, . . . the Department may bring remedial action against the holder of the Certificate of Need pursuant to G.S. 131E-189 and 131E-190.\nThus, the holder of an approved CON application must develop its service consistent with the representations made in its CON application, or face having its CON withdrawn by the Department, see \u00a7 131E-189(b) (1994), or face an injunction requiring material compliance with the representations it made in its CON application. See \u00a7 131E-190(i) (1994). Having represented in its CON application that it intended to provide treatment for eating disorders, petitioner was required to do so once its CON was issued by the Department.\nI conclude that, in light of the Supreme Court\u2019s decision in HCA and the CON law, the Department committed an error of law when it ruled that petitioner could not provide treatment for patients with eating disorders in chemical dependency/substance abuse beds. Thus, the trial court erred in finding no error of law. Accordingly, I would reverse the order of the trial court.", "type": "dissent", "author": "Judge Lewis" } ], "attorneys": [ "Bode, Call & Green, by Robert V. Bode and Diana E. Ricketts, for petitioner-appellant.", "Michael F. Easley, Attorney General, by James A. Wellons, Special Deputy Attorney General, for respondent Department of Human Resources, Division of Facility Services.", "Petree Stockton, L.L.P., by Noah H. Huffstetler, III and Barbara B. Garlock, for intervenor/respondent-appellee Park Ridge Hospital.", "Smith Helms Mulliss & Moore, L.L.P., by Maureen Demarest Murray and William K. Edwards, for intervenor-respondent PIA-Asheville, Inc., d/b/a/ Appalachian Hall." ], "corrections": "", "head_matter": "LAUREL WOOD OF HENDERSON, INC., Petitioner v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF FACILITY SERVICES, Respondent, and PARK RIDGE HOSPITAL and PIA-ASHEVILLE, INC., d/b/a/ Appalachian Hall, Intervenors-Respondents\nNo. 9310SC1188\n(Filed 17 January 1995)\nHospitals and Medical Facilities or Institutions \u00a7 17 (NCI4th)\u2014 CON in accordance with Supreme Court order \u2014 eating disorders \u2014 no treatment allowed in substance abuse/chemical dependency hospital\nThe certificate of need issued by DEHNR in accordance with HGA Crossroads v. DEHNR, 327 N.C. 573, did not permit petitioner to provide treatment for adolescents with eating disorders in substance abuse/chemical dependency beds, since the CON allowed petitioner to construct and operate a 66-bed substance abuse/chemical dependency treatment hospital for adolescents; the issuance of the CON exactly fulfilled the Supreme Court order; and eating disorders are subsumed under the definition of mental illness and are not included in the terms chemical dependency or substance abuse.\nAm Jur 2d, Hospitals and Asylums \u00a7\u00a7 3 et seq.\nValidity and construction of statute requiring establishment of \u201cneed\u201d as precondition to operation of hospital or other facilities for the care of sick people. 61 ALR3d 278.\nJudge Lewis dissenting.\nAppeal by petitioner from order filed 3 August 1993 in Wake County Superior Court by Judge Wiley F. Bowen. Heard in the Court of Appeals 1 September 1994.\nBode, Call & Green, by Robert V. Bode and Diana E. Ricketts, for petitioner-appellant.\nMichael F. Easley, Attorney General, by James A. Wellons, Special Deputy Attorney General, for respondent Department of Human Resources, Division of Facility Services.\nPetree Stockton, L.L.P., by Noah H. Huffstetler, III and Barbara B. Garlock, for intervenor/respondent-appellee Park Ridge Hospital.\nSmith Helms Mulliss & Moore, L.L.P., by Maureen Demarest Murray and William K. Edwards, for intervenor-respondent PIA-Asheville, Inc., d/b/a/ Appalachian Hall." }, "file_name": "0601-01", "first_page_order": 633, "last_page_order": 640 }