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Comprehensive Home Health Servs., Inc. v. Professional Home Health Care Agency, Inc.

Supreme Court of Kentucky

October 24, 2013

COMPREHENSIVE HOME HEALTH SERVICES, INC., D/B/A FAMILY HOME HEALTH CARE S.E., APPELLANT
v.
PROFESSIONAL HOME HEALTH CARE AGENCY, INC.; WHITLEY COUNTY HEALTH DEPARTMENT, D/B/A WHITLEY COUNTY HOME HEALTH; AND, COMMONWEALTH OF KENTUCKY, CABINET FOR FAMILY AND HEALTH SERVICES, APPELLEES

Released for Publication November 14, 2013.

ON REVIEW FROM COURT OF APPEALS. CASE NO. 2009-CA-001846-MR. FRANKLIN CIRCUIT COURT NO. 07-CI-00016.

FOR APPELLANT: Marian J. Hayden, Holly Turner Curry.

FOR APPELLEES, PROFESSIONAL HOME HEALTH CARE AGENCY, INC., AND WHITLEY COUNTY HEALTH DEPARTMENT, D/B/A WHITLEY COUNTY HOME HEALTH: Carole Douglas Christian.

FOR APPELLEE, COMMONWEALTH OF KENTUCKY, CABINET FOR FAMILY AND HEALTH SERVICES: Ann T. Hunsaker.

OPINION

Page 434

ABRAMSON, JUSTICE.

Professional Home Health Care Agency (" Professional" ) and the Whitley County Health Department (collectively " the Existing Providers" ) requested a hearing to oppose an application for a Certificate of Need (" CON" ) filed by Comprehensive Home Health Services, d/b/a Family Home Health Care S.E. (" Family Home Health" ). The hearing officer disallowed certain evidence offered by the Existing Providers, and, on their appeal following approval of the CON, the Franklin Circuit Court concluded that that particular evidentiary ruling had denied the Existing Providers due process. Because the circuit court's final order would have limited the evidence on remand to an outdated State Health Plan, the Existing Providers appealed to the Court of Appeals. The appellate court concluded that the current State Health Plan, not the one in place years earlier at the time of the original hearing, must guide the decision on remand. After careful review, we agree and, accordingly, affirm.

RELEVANT FACTS

The Cabinet for Health and Family Services (" the Cabinet" ) is the administrative agency authorized to license health facilities and services in the Commonwealth. Kentucky Revised Statute (" KRS" ) 216B.010. Home health care providers fall under the Cabinet's licensure authority, and thus before a home health care provider can expand its existing services into a contiguous county, it must obtain approval from the Cabinet in the form of a CON. KRS 216B.015(8). The Cabinet is vested with broad statutory authority to promulgate administrative regulations concerning the CON process, including application and review procedures. KRS 216B.040(2)(a)(1). The General Assembly has identified six statutory criteria that apply to the issuance and denial of CONs.[1] KRS 216B.040(2)(a)(2).

Page 435

Consistency with the State Health Plan (" SHP" ) is the first of the criteria, and an applicant must establish consistency with the SHP in order for a CON to be approved. KRS 216B.040(2)(a)(2)(a).

The SHP is an official document prepared by the Cabinet that contains statistical data reflecting various population metrics as they relate to health care services. The purpose of the SHP is to " set forth the review criteria that shall be used when reviewing applications for certificates of need for consistency with plans pursuant to KRS 216B.040." SHP at iii. Pertinent to this case is the SHP's home health " net need" calculation, which demonstrates how many additional patients are presumed to need home health services in the county proposed to be served by the applicant. To arrive at the net need figure, the Cabinet enters population estimates, predictions of future population growth, and recent home health utilization data into the formula provided by the SHP. The SHP also contains a threshold of unmet need for home health services to which the net need figure can be compared. If an applicant's CON is inconsistent with the current SHP figures, it must be denied as a matter of law. KRS 216B.040(2)(a)(2)(a). Therefore, under KRS 216B.040 and its companion regulation, 900 KAR 6:050,[2] if a CON applicant desires to expand its services into a county that has a negative net need or a net need lower than the applicable SHP threshold, the applicant's CON will be rejected without consideration of the other statutory requirements.

In June of 2006, Family Home Health filed a CON application with the Cabinet to expand its home health services into adjacent Whitley County. The Existing Providers, which were already operating in the county, requested a hearing to challenge Family Home Health's CON application. The Cabinet scheduled a hearing for October 25, 2006.

On October 2, 2006, the Cabinet released its calculation under the SHP which showed that Whitley County had a net need of " -189," demonstrating a " negative need" for home health services. At that time, a net need of " 흮" was the threshold for a CON for a provider seeking to expand home health services. Family Home Health challenged the October 2nd calculations, arguing that Professional had inaccurately reported its numbers to the Cabinet. One week later, a new SHP calculation showed a " -20" need in Whitley County, still well below the " 흮" threshold. On October 16, the filing deadline for exhibits and witness lists for the upcoming hearing, the Cabinet published yet another SHP calculation -- this one revealing a need for additional services for 184 patients in Whitley County. Two days later, the Existing Providers moved the hearing officer for a continuance to develop additional evidence in light of the just-released SHP calculation, which obviously varied dramatically from the calculations released in the preceding two weeks. That motion was denied and the hearing commenced as scheduled on October 25. At the hearing, the hearing officer refused to allow the Existing Providers to present evidence concerning the new October 16 SHP calculation because that evidence had not been filed by the aforementioned October

Page 436

16 prehearing deadline. The hearing officer issued findings of fact, conclusions of law, and a final order approving Family Home Health's CON on November 15. The Existing Providers filed a request for reconsideration, which was denied by the hearing officer. The Cabinet granted Family Home Health's CON.

The Existing Providers appealed the Cabinet's decision to the Franklin Circuit Court, where they argued that the hearing officer erred when she refused to allow them to present any evidence concerning the new October 16 SHP calculation. The trial court agreed and reversed, finding the Existing Providers were denied due process when they were prevented from introducing evidence to " fully [address] the new, dramatically changed circumstances" simply because that evidence was not produced by the October 16 filing deadline for exhibits and witnesses. The trial court opined that despite the hearing officer's adherence to the " letter of the law" governing prehearing procedure, the result was a denial of due process. The Cabinet's decision to grant the CON, given the hearing officer's erroneous exclusion of relevant evidence, was found to be arbitrary, and the matter was remanded.

Thereafter, Family Home Health filed a motion to amend the order, asking the trial court to limit the scope of the remand hearing to the SHP in effect at the time of the October 25, 2006 hearing. The trial court cited the language of 900 KAR 6:050 as supporting Family Home Health's position, as it mandates the use of " the version of the State Health Plan in effect at the time of the cabinet's decision." Interpreting the language of 900 KAR 6:050 as a reference to the Cabinet's 2006 decision, the trial court concluded that the relevant issue on remand was whether Family Home Health was entitled to a CON under " the [SHP] and figures on the date of the original hearing." Thus, the ...


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