{ "id": 11918457, "name": "BRITTHAVEN, INC., d/b/a BRITTHAVEN OF MORGANTON, Petitioner-Appellant v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF FACILITY SERVICES, Respondent-Appellee, and VALDESE NURSING HOME, INC., Respondent-Intervenor-Appellee", "name_abbreviation": "Britthaven, Inc. v. North Carolina Department of Human Resources", "decision_date": "1995-04-04", "docket_number": "No. 9410DHR502", "first_page": "379", "last_page": "389", "citations": [ { "type": "official", "cite": "118 N.C. App. 379" } ], "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": "336 S.E.2d 625", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "78 N.C. App. 224", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520561 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/78/0224-01" ] }, { "cite": "353 S.E.2d 106", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1987, "opinion_index": 0 }, { "cite": "319 N.C. 105", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4741831, 4739850, 4738802, 4739196, 4741374 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/nc/319/0105-04", "/nc/319/0105-02", "/nc/319/0105-01", "/nc/319/0105-03", "/nc/319/0105-05" ] }, { "cite": "349 S.E.2d 639", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1986, "pin_cites": [ { "page": "649-50" } ], "opinion_index": 0 }, { "cite": "83 N.C. App. 161", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8358236 ], "weight": 3, "year": 1986, "pin_cites": [ { "page": "175" } ], "opinion_index": 0, "case_paths": [ "/nc-app/83/0161-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7\u00a7 131-175", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 }, { "cite": "338 S.E.2d 139", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "145", "parenthetical": "decided under former N.C. Gen. Stat. \u00a7\u00a7 131-175 and 131-181 (1985 Supp.)" } ], "opinion_index": 0 }, { "cite": "78 N.C. App. 637", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8523388 ], "year": 1986, "pin_cites": [ { "page": "646", "parenthetical": "decided under former N.C. Gen. Stat. \u00a7\u00a7 131-175 and 131-181 (1985 Supp.)" } ], "opinion_index": 0, "case_paths": [ "/nc-app/78/0637-01" ] }, { "cite": "398 S.E.2d 466", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "page": "470" } ], "opinion_index": 0 }, { "cite": "327 N.C. 573", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2493346 ], "year": 1990, "pin_cites": [ { "page": "578" } ], "opinion_index": 0, "case_paths": [ "/nc/327/0573-01" ] }, { "cite": "276 S.E.2d 404", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "410" } ], "opinion_index": 0 }, { "cite": "302 N.C. 458", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567436 ], "year": 1981, "pin_cites": [ { "page": "465-66" } ], "opinion_index": 0, "case_paths": [ "/nc/302/0458-01" ] }, { "cite": "323 U.S. 134", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1229682 ], "weight": 3, "year": 1944, "pin_cites": [ { "page": "140" }, { "page": "164" }, { "page": "129" } ], "opinion_index": 0, "case_paths": [ "/us/323/0134-01" ] }, { "cite": "273 S.E.2d 232", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "236" } ], "opinion_index": 0 }, { "cite": "302 N.C. 14", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563691 ], "year": 1981, "pin_cites": [ { "page": "21" } ], "opinion_index": 0, "case_paths": [ "/nc/302/0014-01" ] }, { "cite": "281 S.E.2d 24", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1981, "pin_cites": [ { "parenthetical": "holding that in presenting appeals from an administrative decision to the judicial branch, it is essential for the parties to present their contentions as to the applicable scope of review, and further, the reviewing court should make clear the review standard under which it proceeds" }, { "page": "29", "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "303 N.C. 573", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574954 ], "weight": 2, "year": 1981, "pin_cites": [ { "page": "580-81" } ], "opinion_index": 0, "case_paths": [ "/nc/303/0573-01" ] }, { "cite": "326 U.S. 327", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6157057 ], "weight": 4, "year": 1945, "pin_cites": [ { "page": "333" }, { "page": "113" } ], "opinion_index": 0, "case_paths": [ "/us/326/0327-01" ] }, { "cite": "361 S.E.2d 89", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "opinion_index": 0 }, { "cite": "320 N.C. 793", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4725473, 4729122, 4724459, 4730873, 4728189 ], "year": 1987, "opinion_index": 0, "case_paths": [ "/nc/320/0793-05", "/nc/320/0793-01", "/nc/320/0793-04", "/nc/320/0793-02", "/nc/320/0793-03" ] }, { "cite": "355 S.E.2d 788", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1987, "pin_cites": [ { "page": "791" } ], "opinion_index": 0 }, { "cite": "85 N.C. App. 639", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 12170248 ], "weight": 2, "year": 1987, "pin_cites": [ { "page": "644" } ], "opinion_index": 0, "case_paths": [ "/nc-app/85/0639-01" ] } ], "analysis": { "cardinality": 960, "char_count": 25861, "ocr_confidence": 0.741, "pagerank": { "raw": 7.213142612905042e-07, "percentile": 0.9676749493889412 }, "sha256": "ad3b0e7ef126bbc3cc50a03c89448043f205788413ff75464000356e9e73e243", "simhash": "1:d4024cd244ea84d1", "word_count": 4054 }, "last_updated": "2023-07-14T20:04:31.897721+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges JOHNSON and MARTIN, Mark D., concur." ], "parties": [ "BRITTHAVEN, INC., d/b/a BRITTHAVEN OF MORGANTON, Petitioner-Appellant v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF FACILITY SERVICES, Respondent-Appellee, and VALDESE NURSING HOME, INC., Respondent-Intervenor-Appellee" ], "opinions": [ { "text": "ARNOLD, Chief Judge.\nPetitioner Britthaven\u2019s first assignment of error is that the Agency\u2019s initial decision was improperly reviewed, thereby restricting the applicant\u2019s statutory hearing rights. Specifically, petitioner argues that the AU\u2019s Recommended Decision and the Director\u2019s Final Decision afforded a \u201cpresumption of correctness\u201d as to the Agency\u2019s initial decision, rather than providing a de novo hearing as to all disputed issues. Petitioner\u2019s argument is without merit.\nThe review procedure set forth in certificate of need (hereinafter \u201cCON\u201d) law allows for the agency to make an initial decision as to whether an applicant is entitled to a certificate of need. N.C. Gen. Stat. \u00a7 131E-186(a) (1994). If there are competing applications, the agency must hold a public hearing. G.S. \u00a7 131E-185(a)(2). The agency\u2019s decision to approve, approve with conditions, or deny an application for a certificate of need is based upon its determination of whether the applicant has complied with statutory review criteria under N.C. Gen. Stat. \u00a7 131E-183(a) and rules adopted by the agency, in this case, 10 North Carolina Administrative Code \u00a7 3R.1100, et seq. (1991). G.S. \u00a7 131E-186(a) and (b).\nThereafter, administrative and judicial review of the agency\u2019s decision is governed by N.C. Gen. Stat. \u00a7 131E-188. Any \u201caffected person,\u201d such as Britthaven, is entitled to a contested case hearing under Article 3 of Chapter 150B of the General Statutes. G.S. \u00a7 131E-188(a). Under Chapter 150B, a petitioner is afforded a full adjudicatory hearing before the AU, including an opportunity to present evidence and to cross examine witnesses. G.S. \u00a7\u00a7 150B-23(a) and 150B-25(c) and (d) (1991). The AU then makes a recommended decision or order, containing findings of fact and conclusions of law. G.S. \u00a7 150B-34(a). Based solely upon its review of an official record prepared by the OAH, which includes evidence presented at the contested case hearing, the agency issues a final decision, either adopting the AU\u2019s recommended decision, or if not, stating specific reasons why it did not adopt the recommended decision. G.S. \u00a7 150B-36(b). Finally, any affected person who was a party in the contested case hearing may appeal to this Court for judicial review of all or any portion of the final decision. G.S. \u00a7 131E-188(b).\nPetitioner contends that the exercise of its right to an evidentiary hearing under the contested case provision of N.C. Gen. Stat. \u00a7 131E-188(a) commenced a de novo proceeding by the ALJ intended to lead to a formulation of the final decision. Petitioner misconstrues the nature of contested case hearings under the CON law and the Administrative Procedure Act. The subject matter of a contested case hearing by the ALJ is an agency decision. Under N.C. Gen. Stat. \u00a7 150B-23(a), the AU is to determine whether the petitioner has met its burden in showing that the agency substantially prejudiced petitioner\u2019s rights, and that the agency also acted outside its authority, acted erroneously, acted arbitrarily and capriciously, used improper procedure, or failed to act as required by law or rule. G.S. \u00a7 150B-23(a). The judge determines these issues based on a hearing limited to the evidence that is presented or available to the agency during the review period. See In re Application of Wake Kidney Clinic, 85 N.C. App. 639, 355 S.E.2d 788, disc. review denied, 320 N.C. 793, 361 S.E.2d 89 (1987); see also 2 Am. Jur. 2d, Administrative Law \u00a7 299 (1994) (\u201c[U]pon resumption of formal proceedings all evidence presented in the informal proceeding becomes part of the record of the formal proceeding.\u201d). Therefore, based on the evidence presented here, the Agency\u2019s decision was properly reviewed for error under N.C. Gen. Stat. \u00a7 150B-23(a).\nFurthermore, petitioner\u2019s reliance on Ashbacker Radio Corp. v. Federal Com. Com., 326 U.S. 327, 90 L. Ed. 108 (1945) for its contention that petitioner is entitled to a de novo hearing in the O\u00c1H is misplaced. The Supreme Court merely held in Ashbacker that \u201cwhere two bona fide applications are mutually exclusive the grant of one without a hearing to both deprives the loser of the opportunity which Congress chose to give him.\u201d Id. at 333, 90 L. Ed. at 113. In this case, unlike in Ashbacker, each applicant was afforded an opportunity to be heard on their competing applications.\nPetitioner\u2019s second assignment of error is that the Agency erred in its improper application of the review criterion found in N.C. Gen. Stat. \u00a7 131E-183(a)(4), referred to as Criterion 4. The ALJ agreed with petitioner that the Agency\u2019s review process \u201cdid not comport with the statutory requirements,\u201d but nevertheless found that the procedural defect amounted to \u201charmless error not affecting the outcome of the Agency decision.\u201d The Director in his Final Decision affirmed the AU\u2019s Recommended Decision, however, he disagreed with the judge \u201cto the extent that it implies that the Agency improperly conducted the review of the applications . . . .\u201d Therefore, there are conflicting views as to how competing applications for a certificate of need are to be compared under the statute.\nBefore addressing the merits of petitioner\u2019s assignment of error, the proper scope of review for this Court to review a CON case should be considered. See Brooks, Comr. of Labor v. Grading Co., 303 N.C. 573, 281 S.E.2d 24 (1981) (holding that in presenting appeals from an administrative decision to the judicial branch, it is essential for the parties to present their contentions as to the applicable scope of review, and further, the reviewing court should make clear the review standard under which it proceeds). \u201cThe nature of the contended error dictates the applicable scope of review.\u201d Utilities Comm. v. Oil Co., 302 N.C. 14, 21, 273 S.E.2d 232, 236 (1981). Because the nature of this assignment of error concerns the Agency\u2019s interpretation and application of an administrative statute, the following rule applies:\nWhen the issue on appeal is whether a state agency erred in interpreting a statutory term, an appellate court may freely substitute its judgment for that of the agency and employ de novo review. Although the interpretation of a statute by an agency created to administer that statute is traditionally accorded some deference by appellate courts, those interpretations are not binding. \u201cThe weight of such [an interpretation] in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.\u201d Skidmore v. Swift & Company, 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124, 129 (1944).\nBrooks, 303 N.C. at 580-81, 281 S.E.2d at 29 (citations omitted) (quoting In re Appeal of North Carolina Savings & Loan League, 302 N.C. 458, 465-66, 276 S.E.2d 404, 410 (1981)).\nIn deciding whether to issue a certificate of need, the Agency must determine whether an application is \u201ceither consistent with or not in conflict with [the criteria set forth in N.C. Gen. Stat. \u00a7 131E-183(a)].\u201d G.S. \u00a7 131E-183(a). One of the fifteen criteria in effect, Criterion 4 states, \u201cWhere alternative methods of meeting the needs for the proposed project exist, the applicant shall demonstrate that the least costly or most effective alternative has been proposed.\u201d G.S. \u00a7 131E-183(a)(4). Petitioner contends that the Agency, in making its initial decision, improperly used Criterion 4 as a \u201ccatch-all comparative standard\u201d to decide which of the applicants was the \u201cleast costly or most effective.\u201d In other words, once the Agency found petitioner conforming to several criteria, it in effect used the same criteria to decide Criterion 4, finding petitioner nonconforming solely because it chose Valdese as the \u201cleast costly or most effective\u201d of the mutually exclusive applications. Petitioner argues that it is not the intent of N.C. Gen. Stat. \u00a7 131E-183(a) to compare competing applications under Criterion 4, but rather to judge each application individually under Criterion 4, as well as the remaining criteria set forth in the statute, and only thereafter analyze the competing proposals to determine which was better overall. Petitioner\u2019s argument has merit.\nThe CON statute calls for competing applications to be reviewed together, or \u201cbatched,\u201d in compliance with Ashbacker, yet the statute does not set forth a procedure as to how to compare the applications. \u201c[A] statute must be construed, if possible, to give meaning and effect to all of its provisions.\u201d HCA Crossroads Residential Ctrs. v. N.C. Dept. of Human Res., 327 N.C. 573, 578, 398 S.E.2d 466, 470 (1990). A two stage process similar to that suggested by petitioner, and the AU in his Recommended Decision, is consistent with the language, purpose and overall scheme of the statute.\nFirst, after the Agency \u201cbatches\u201d all applications for competing proposals, the Agency must review each application independently against the criteria (without considering the competing applications) and determine whether it \u201cis either consistent with or not in conflict with these criteria.\u201d G.S. \u00a7 131E-183(a). The use of singular nouns in the phrases beginning each listed criterion, such as \u201cthe applicant shall show\u201d or \u201cthe proposed project shall show,\u201d\u2019 support an initial independent evaluation of each application. Moreover, the plain language of Criterion 4 establishes that an applicant\u2019s burden is to show the least costly or most effective of the alternative methods, if any, within its own proposed project, not that its project is the least costly or most effective of all competing proposals. G.S. \u00a7 131E-183(a)(4).\nSecond, after each application is reviewed on its own merits, the Agency must decide which of the competing applications should be approved. This decision may include not only whether and to what extent the applications meet the statutory and regulatory criteria, but it may also include other \u201cfindings and conclusions upon which it based its decision.\u201d G.S. \u00a7 131E-186(b). Those additional findings and conclusions give the Agency the opportunity to explain why it finds one applicant preferable to another on a comparative basis. The CON law, therefore, does not contemplate that the Agency will review any criteria competitively, and subsequently find one applicant nonconforming to a criterion simply because another applicant is found conforming.\nThis procedure is consistent with the CON statute and its stated purpose. The language of the statute demonstrates the intent of the Legislature to have the Agency first ensure that each application comports with the statutory and regulatory criteria. Moreover, the stated purpose of the CON law to \u201ccontrol the cost, utilization, and distribution of health services and to assure that the less costly and more effective alternatives are made available,\u201d In re Denial of Request by Humana Hospital Corp., 78 N.C. App. 637, 646, 338 S.E.2d 139, 145 (1986) (decided under former N.C. Gen. Stat. \u00a7\u00a7 131-175 and 131-181 (1985 Supp.)), is fulfilled by the Agency\u2019s second step of making an overall comparison of the applications and supporting its decision to grant the certificate to one applicant, and not the other, with written findings and conclusions explaining its decision.\nOur next question is whether the Agency\u2019s improper application of Criterion 4 was nevertheless harmless given the ultimate decision to issue the certificate of need to Valdese. Both the ALT and the Director agreed that the Agency\u2019s initial decision was supported by substantial evidence, and that the same result would have been reached if the Agency had analyzed the applications in the manner prescribed above. Petitioner argues that the Agency\u2019s findings under Criterion 4 were not supported by the evidence.\nThe scope of review here is the whole record test, \u201cunder which the findings of fact made by the agency are conclusive on appeal if they are supported by substantial evidence in the record reviewed as a whole.\u201d Wake Kidney Clinic, 85 N.C. App. at 644, 355 S.E.2d at 791. We are required to consider evidence which detracts from the decision, as well as evidence which supports it, but we cannot substitute our judgment for that of the Agency. Id. Proper application of the whole record test takes into account the administrative agency\u2019s expertise. In re Charter Pines Hospital, Inc. v. N.C. Dept. of Human Resources, 83 N.C. App. 161, 349 S.E.2d 639 (1986), disc. review denied, 319 N.C. 105, 353 S.E.2d 106 (1987).\nPetitioner contends that there was insufficient evidence to support the Agency\u2019s findings and conclusions concerning Criterion 4, specifically the following: (1) Valdese was a more effective alternative with regard to geographic accessibility, (2) Valdese was the least costly or most effective alternative with regard to operating costs and charges, and (3) Valdese\u2019s application would promote competition. Although we agree with petitioner that Criterion 4 was improperly used as a catch-all standard for competing applications, after a thorough review of the record and transcripts of the OAH hearing, we find the evidence supported these findings and further serves as a rational basis for the Agency\u2019s decision that Valdese was entitled to the certificate of need. Although there was evidence presented by petitioner at the hearing which detracts from the decision, the instant case is not one in which this Court will substitute its judgment for that of a well-reasoned and supported Agency decision. Id.\nFinally, petitioner assigns as error a method of allocating bed need used by the Project Analyst of the CON Section in determining where the beds should be located. Petitioner contends that the Project Analyst improperly departed from the SMFP\u2019s method used to compute the need for nursing beds on a county basis. Although, according to the SMFP mathematical formula, the overall need for nursing beds in Burke County was sixty, the Project Analyst used an independent sub-county analysis to determine where those sixty beds should be located within the county. In conducting his analysis, the Project Analyst analyzed Burke County\u2019s nursing home bed need using the same methodology used by the 1992 SMFP. He then divided Burke County into three areas, western, central and eastern, based upon the population clusters, existence of one or more nursing homes located in each area, and the highway systems. The analyst determined that eastern Burke County, in which the Valdese facility was located, had the greatest need for beds, and that the approval of Valdese\u2019s application would best address the need for additional nursing beds in Burke County. The AU made the following findings relevant to this issue, which were adopted by the Director in his Final Decision:\n81. The Project Analyst performed an independent analysis of geographic access and used the 1992 SMFP methodology to project future bed need by township in Burke County.\n82. The Project Analyst normally uses a sub-county analysis in his nursing home reviews. (Vol. II, p. 163). A sub-county analysis is consistent with Agency practice. The Project Analyst correctly determined that using townships was a valid means of analyzing where to locate nursing beds in Burke County, because the information from the 1990 census was the most current and readily available in the age categories used in the SMFP. (Vol. II, pp. 164-65). Britthaven did not provide any statistical sub-county analysis of need in its application and, in particular, did not offer a zip code analysis in its application, written comments or at the public hearing. Moreover, a zip code analysis was not practical, because maps are not always available showing the zip code areas, and zip codes can change from time to time. (Vol. I, p. 158).\n83.The Project Analyst\u2019s decision to divide Burke County into three (3) areas, western, central, and eastern, based on the existence of a population cluster and one or more nursing homes in each area, was reasonable. (Vol. II, p. 167).\nUnder CON regulations, the \u201ccorrectness, adequacy, or appropriateness of criteria, plans, and standards shall not be an issue in a contested case hearing.\u201d 10 N.C.A.C. 3R .0420 (1989); Charter Pines Hospital, 83 N.C. App. 161, 349 S.E.2d 639. However, while the use of the required SMFP methodology was not reviewable at the contested case hearing, the Project Analyst\u2019s application of the SMFP methodology was \u201copen to scrutiny at the contested case hearing for analytical, procedural and mathematical correctness.\u201d Charter Pines Hospital, 83 N.C. App. at 175, 369 S.E.2d at 648. The rules adopted by the Department of Human Resources for the review of nursing facility applications require the applicant only to show that \u201cat least 85 percent of the anticipated patient population lives within 45 minutes automobile driving time ... from the facility,\u201d 10 N.C.A.C. 3R .1118(b) (1991), but nothing in the statute prohibits the analysis conducted by the Project Analyst in the instant case. Although the Agency must review the applications in accordance with statutory criteria and administrative rules adopted by the Department of Human Resources, N.C. Gen. Stat. \u00a7 131E-186(b) requires the Agency to provide notice of its findings and conclusions upon which it based its decision, but does not limit those findings to statutory criteria or rules. In fact, the Project Analyst testified that it was his usual practice to conduct a sub-county analysis when receiving competing applications from applicants who propose to locate facilities in different areas within the county. As this Court stated in Charter Pines Hospital:\nThe hearing officer was empowered to use his own best judgment in evaluating the weight and credibility of the evidence in the light of his administrative expertise. He was not bound by the testimony of [the petitioner\u2019s] expert, nor was he required to accept it as true. His determination that [the agency\u2019s project analyst] properly applied the 1983 SMFP methodology to [the petitioner\u2019s] proposal for psychiatric beds required the use of his administrative expertise in judging the credibility of the expert testimony presented. We cannot second-guess the exercise of that expertise and, finding substantial evidence in the record to support DHR\u2019s findings and conclusions, overrule these assignments of error.\nId., 83 N.C. at 177-78, 349 S.E.2d at 649-50. The findings made in the Recommended Decision and eventually adopted in the Final Decision include the sub-county analysis performed by the Project Analyst, which was supported by substantial evidence and was not without reasonable basis, was not arbitrary and capricious or inconsistent with Agency practice.\nIn a related issue we are not persuaded by petitioner\u2019s argument that the AU abused his discretion by not allowing Britthaven\u2019s rebuttal expert testimony. The judge properly excluded the testimony of an expert witness identified by petitioner to rebut the Project Analyst\u2019s sub-county need analysis because petitioner failed to disclose its witness in a timely manner. See Mt. Olive Home Health Care Agency, Inc. v. Dept. of Human Resources, 78 N.C. App. 224, 336 S.E.2d 625 (1985).\nFor the foregoing reasons we conclude that the Agency erred in comparing the competing applications by misapplying the statutory review criteria, but, based on our review of the record, and the arguments presented by the parties, the error was harmless. In light of our disposition of petitioner\u2019s appeal there is no need to address respondent Valdese\u2019s cross-assignments of error.\nAffirmed.\nJudges JOHNSON and MARTIN, Mark D., concur.", "type": "majority", "author": "ARNOLD, Chief Judge." } ], "attorneys": [ "Bode, Call & Green, by Robert V. Bode, Nancy 0. Mason, and Diana E. Ricketts, for petitioner appellant.", "Attorney General Michael F. Easley, by Associate Attorney General Sherry L. Cornett, for respondent North Carolina Department of Human Resources.", "Smith, Helms, Mull\u00eds & Moore, L.L.R, by Maureen Demarest Murray and Terrill Johnson Harris, for respondent Valdese Nursing Home, Inc." ], "corrections": "", "head_matter": "BRITTHAVEN, INC., d/b/a BRITTHAVEN OF MORGANTON, Petitioner-Appellant v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF FACILITY SERVICES, Respondent-Appellee, and VALDESE NURSING HOME, INC., Respondent-Intervenor-Appellee\nNo. 9410DHR502\n(Filed 4 April 1995)\n1. Hospitals and Medical Facilities or Institutions \u00a7 15 (NCI4th)\u2014 certificate of need \u2014 review of decision \u2014 de novo hearing not required\nA nursing facility owner was not entitled to a de novo proceeding by an administrative law judge when it petitioned for a contested case hearing challenging an agency\u2019s denial of its application for a certificate of need for additional nursing and home-for-the-aged beds in its facility, and the agency\u2019s initial decision was properly reviewed by the administrative law judge. The subject matter of a contested case hearing before an administrative law judge is the agency decision, and the administrative law judge is to determine whether the petitioner has met its burden of showing that the agency substantially prejudiced its rights and that the agency acted outside its authority, acted erroneously, acted arbitrarily and capriciously, used improper procedure, or failed to act as required by law. N.C.G.S. \u00a7\u00a7 131E-188, 150B-23(a).\nAm Jur 2d, Hospitals and Asylums \u00a7\u00a7 3 et seq.\n2. Hospitals and Medical Facilities or Institutions \u00a7 12 (NCI4th)\u2014 competing certificate of need applications\u2014 applications judged individually, then compared \u2014 least costly or most effective alternative\nIt is not the intent of N.C.G.S. \u00a7 131E-183(a) to compare competing applications for a certificate of need under Criterion 4, that applicant shall demonstrate that the least costly or most effective alternative has been proposed, but rather to judge each application individually under Criterion 4, as well as the remaining criteria set forth in the statute, and only thereafter analyze the competing proposals to determine which is better overall. Even though respondent improperly applied Criterion 4, the agency\u2019s initial decision was supported by substantial evidence, and the same result would have been reached if the agency had analyzed the applications by the required two-step process.\nAm Jur 2d, Hospitals and Asylums \u00a7\u00a7 3 et seq.\n3. Hospitals and Medical Facilities or Institutions \u00a7 12 (NCI4th)\u2014 certificate of need applications \u2014 method of allocating bed need proper\nThe method of allocating bed need used by the project analyst of the Certificate of Need Section in determining where nursing beds should be located, including a subcounty analysis, was included in the findings of the recommended decision and eventually adopted in the Final Decision, was supported by substantial evidence and was not without reasonable basis, and was not arbitrary, capricious, or inconsistent with agency practice.\nAm Jur 2d, Hospitals and Asylums \u00a7\u00a7 3 et seq.\nAppeal by petitioner from final decision entered 21 November 1993 by John M. Syria, Director of the North Carolina Department of Human Resources Division of Facility Services, Burke County. Heard in the Court of Appeals 11 January 1995.\nIn 1992, the State Medical Facilities Plan (hereinafter \u201cSMFP\u201d) identified a need for sixty nursing beds in Burke County. On 16 July 1992, North Carolina Department of Human Resources, Division of Facility Services, Certificate of Need Section (hereinafter \u201cthe Agency\u201d) received proposals from three different applicants, each seeking to develop or expand their respective Burke County facilities.\nPrior to the 1992 review, Valdese Nursing Home, Inc. (hereinafter \u201cValdese\u201d) had received a certificate of need to construct an eighty bed nursing facility, consisting of forty nursing beds and forty home-for-the-aged beds. During the 1992 review, Valdese submitted an application seeking to convert twenty home-for-the-aged beds to twenty nursing facility beds, and to construct forty new nursing facility beds in Valdese, North Carolina. Burke Health Care Center, Inc. (hereinafter \u201cBurke\u201d) filed an application seeking to construct a new eighty bed combination nursing facility in Morganton, North Carolina. Britthaven, Inc., d/b/a Britthaven of Morganton (hereinafter \u201cBritthaven\u201d) submitted a CON application, seeking to. add sixty additional nursing facility beds and five home-for-the-aged beds at its existing one hundred twenty-one nursing bed facility located in Morganton.\nOn 25 November 1992, following a public hearing the Agency notified Britthaven and Burke of its decision to deny their applications and to approve the Valdese application. Only Britthaven filed a petition for contested case in the Office of Administrative Hearings (hereinafter \u201cOAH\u201d), challenging the denial of its application and approval of Valdese\u2019s application. Valdese intervened. On 17 September 1993, an administrative law judge (hereinafter \u201cAU\u201d) affirmed the Agency\u2019s decision to approve the Valdese application, but concluded that the Agency failed to use proper procedure in conducting the review of the applications under the applicable statutory criteria. The ALJ held, however, that \u201csuch procedural imperfection amounts to harmless error not affecting the outcome of the Agency decision.\u201d\nOn 21 November 1993, the Director of the Division of Facility Services issued the Final Decision. He adopted and affirmed the ALJ\u2019s findings of fact, but disagreed \u201cto the extent that [the Recommended Decision] implies that the Agency improperly conducted the review of the applications . . . .\u201d Britthaven appeals the Final Decision.\nAdditionally, Respondent Valdese presents a cross-assignment of error pursuant to North Carolina Rule of Appellate Procedure, Rule 10(d) (1994) pertaining to the exclusion of evidence that Britthaven misrepresented certain information in its CON application.\nBode, Call & Green, by Robert V. Bode, Nancy 0. Mason, and Diana E. Ricketts, for petitioner appellant.\nAttorney General Michael F. Easley, by Associate Attorney General Sherry L. Cornett, for respondent North Carolina Department of Human Resources.\nSmith, Helms, Mull\u00eds & Moore, L.L.R, by Maureen Demarest Murray and Terrill Johnson Harris, for respondent Valdese Nursing Home, Inc." }, "file_name": "0379-01", "first_page_order": 411, "last_page_order": 421 }