Case Title: Saint Peter's University Hospital v. Clifton R. Lacy, M.D., et al.

Citation: 

Docket Number: a-74-04

State: new-jersey

Court: New Jersey Supreme Court

Date: 2005-08-11T00:00:00Z

Document:
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). In 1971, the Legislature adopted the Health Care Facilities Planning Act (HCFPA), N.J.S.A. 26:2H-1 to -26, in response to a growing concern over the rising costs of hospital care. HCFPA is essentially cost-containment legislation focusing on the institutional delivery of health care services. In part, the HCFPA provides that all new health care facilities constructed or expanded and all new health care services must apply for and receive a certificate of need. N.J.S.A. 26:2H-7. HCFPA also requires that the Commissioner of the Department adopt and amend rules and regulations to effectuate HCFPA, including "standards and procedures relating to the licensing of health care facilities and the institution of certain additional health care services." N.J.S.A. 26:2H-5b. In 1992, the Legislature added subsection 18d to HCFPA, which obligated the Commissioner to "designate Robert Wood Johnson University Hospital/St. Peter's Medical Center in the City of New Brunswick as the State's specialty acute care children's hospital in central New Jersey for the counties of Hunterdon, Mercer, Middlesex, Monmouth and Somerset." There was no separate legislative finding of need or a requirement for the issuance of a certificate of need for that designation. In April 2002, the Commissioner proposed new regulations governing the licensing standards for children's hospitals "designed to ensure that facilities licensed as children's hospitals provide more comprehensive and specialized pediatric care and meet more stringent regulations than hospitals licensed to operate a general pediatric service." Among other things, the proposed regulations required that, as part of the continuing designation as a licensed children's hospital, all licensed children's hospitals in this State had to operate a regional perinatal center by October 21, 2003. N.J.A.C. 8:43-22A.6(c). A regional perinatal center is "a general acute care hospital that is designated and licensed to provide care to high risk mothers and neonates." N.J.A.C. 8:33C-1.2. The regulations, however, while limiting the numbers of beds or bassinets for the new service, exempted already licensed children's hospitals from the requirement to obtain a certificate of need before establishing a regional perinatal center. N.J.A.C. 8:43G-22A.6(e). During the comment period, St. Peter's University Hospital objected to the proposed requirement that, in order to retain a meaningful designation as a licensed children's hospital, an entity also must be licensed to operate a regional perinatal center. St. Peter's contended that the requirement would place an undue financial burden on existing licensed children's hospitals and also place undue competitive and economic pressures on current centers. The objections were rejected and the regulations became effective on October 21, 2002. On appeal, the Appellate Division held that the regulations were invalid as inconsistent with the requirements of the certificate of need statute. 372 N.J. Super. 170 (2004). HELD : Given the presumption of validity and reasonableness accorded to administrative regulations, the Court finds valid the regulations codified at N.J.A.C. 8:43G-22A.6(c) and (e), requiring all licensed children's hospitals in the State to operate a regional perinatal center and exempting already licensed children's hospitals from the requirement to obtain a certificate of need before establishing the regional perinatal center. 1. Administrative regulations enjoy a presumption of legality and, unless they are clearly ultra vires on their face, the person attacking them has the burden of proving their invalidity. Courts give great deference to an agency's interpretation and implementation of its rules enforcing the statutes for which it is responsible. A rule will be set aside, however, if it is plainly at odds with the statute it purports to interpret. (Pp. 14 15). 2. When a court interprets different statutory provisions, it must make every effort to harmonize them. Here, twenty-two years after first adopting the certificate of need requirement of HCFPA and on the heels of having created a list of exemptions to the certificate of need requirement the Legislature specifically designated both Robert Wood Johnson Hospital and St. Peter's as "the State's specialty acute care children's hospital in central New Jersey for the counties of Hunterdon, Mercer, Middlesex, Monmouth and Somerset." N.J.S.A. 26:2H-18d. No certificate of need was required. The view that most closely approximates the intent of the Legislature in creating statutorily designated children's hospitals must be that, when read in pari materia with the certificate of need statute, the designation is a legislative in lieu of an administrative finding of need, the implementation of which is delegated to the Commissioner. The Court's conclusion that the Legislature, which created the certificate of need process, intended the legislative designation of certain hospitals as children's hospitals to serve in lieu of the certificate of need process is consistent with the interpretation the Commissioner and the Department have given this statutory enactment. (Pp. 15 19). 3. Further, subsequent legislation may be used as an extrinsic aid when seeking to discern legislative intent. Here, in May 2004, the Assembly sought to designate Jersey Shore University Medical Center and Monmouth Medical Center as the State's specialty acute care children's hospitals for Monmouth and Ocean Counties. The bill, as passed by the Assembly in 2005, required the centers to comply with all appropriate certificate of need and licensure requirements. The Senate, however, required only that the Commissioner determine that the centers meet "all of the licensure criteria that apply to a children's hospital" and "all of the requirements to obtain State authorization to offer the component services that constitute a children's hospital." The Senate bill was signed into law on June 29, 2005. N.J.S.A. 26:2H-18g. The Legislature's intent is clear and applies with equal force to the earlier statutory designation concerning Robert Wood Johnson Hospital and St. Peter's: by creating statutorily designated children's hospitals, the Legislature obviated the certificate of need process once a statutory designation as a children's hospital is made. Viewed through that prism and in light of the deference due, the challenged regulations are entirely consistent with the statutory scheme and are neither arbitrary, nor capricious, nor unreasonable, nor plainly incompatible with HCFPA. (Pp. 19 21). The judgment of the Appellate Division is REVERSED. JUSTICE ZAZZALI, in a separate dissenting opinion in which JUSTICE WALLACE joins, is of the opinion that the regulations and the statute are incompatible, and he would affirm the Appellate Division's decision. Further, in respect of the recent legislation, N.J.S.A. 26:2H-18g, he interprets the Legislature's language requiring the centers to have "met and complied with all of the requirements to obtain State authorization to offer the component services that constitute a children's hospital" as including the requirements set forth in the certificate of need statute. CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA and ALBIN join in JUSTICE RIVERA-SOTO's opinion. JUSTICE ZAZZALI filed a separate, dissenting opinion in which JUSTICE WALLACE joins. JUSTICE LONG did not participate. JUSTICE LONG did not participate. Appellant-Respondent, v. CLIFTON R. LACY, M.D., COMMISSIONER OF THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, MARY WACHTER, CHIEF OF STAFF OF THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, AND THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, AN AGENCY OF THE STATE OF NEW JERSEY, Respondents-Respondents, and ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL, Intervenor-Appellant. Argued March 28, 2005 Decided August 11, 2005 On certification to the Superior Court, Appellate Division, whose opinion is reported at 372 N.J. Super. 170 (2004). Joseph M. Gorrell argued the cause for intervenor-appellant (Wolf, Block, Schorr & Solis-Cohen, attorneys; Mr. Gorrell and Richard B. Robins, on the briefs). Melissa H. Raksa, Deputy Attorney General argued the cause for respondents Clifton R. Lacy, M.D., Mary Wachter and New Jersey Department of Health and Senior Services (Peter C. Harvey, Attorney General of New Jersey, attorney). Anthony A. Bongiorno, a member of the Massachusetts bar, argued the cause for respondent Saint Peter's University Hospital (Sills Cummis Epstein & Gross, attorneys; Mr. Bongiorno, Steven S. Radin and James M. Hirschhorn, of counsel). Gage Andretta argued the cause for amicus curiae, UMDNJ-Robert Wood Johnson Medical School (Wolff & Samson, attorneys). JUSTICE RIVERA-SOTO delivered the opinion of the Court. In October 2002, after due notice and comment and upon the approval of the Health Care Administration Board (Board), the Commissioner (Commissioner) of the New Jersey Department of Health and Senior Services (Department) adopted regulations requiring that, [b]y October 21, 2003, all licensed children s hospitals [in the State] shall operate a regional perinatal center [RPC], N.J.A.C. 8:43G-22A.6(c), that is, a general acute care hospital which is designated and licensed to provide care to high risk mothers and neonates. N.J.A.C. 8:33C-1.2. Those regulations, however, exempted already licensed children s hospitals from the requirement to obtain a certificate of need before establishing either a RPC, a pediatric intensive care unit (PICU) or a neonatal intensive or intermediate care unit (NICU). N.J.A.C. 8:43G-22A.6(e). It is the perceived conflict between that latter and specific exception an d the general certificate of need requirements of the Health Care Facilities Planning Act (HCFPA), N.J.S.A. 26:2H-1 to -26, that gives rise to this appeal. We hold that, given the presumption of validity and reasonableness we accord to administrative regulations, the regulations codified at N.J.A.C. 8:43G-22A.6(c) and (e) are valid. We, therefore, reverse the judgment of the Appellate Division invalidating those regulations. RESPONSE: The Department disagrees. The Department contends that it is essential that all children s hospitals provide the services of a RPC, services geared toward the needs of pregnant women, neonates, and pediatric patients. To permit a children s hospital to do less would damage access to a smooth continuum of necessary services for these classes of patients. No changes are being made. (b) A licensed children s hospital not licensed to operate a [PICU] on October 21, 2002 shall file a licensing application to initiate such a unit in accordance with (a) above. Such a licensing application shall be filed in accordance with the procedures described in N.J.A.C. 8:43G-2.2 through 2.5, as applicable. (c) By October 21, 2003, all licensed children s hospitals shall operate a [RPC] in accordance with N.J.A.C. 8:43G-19 and applicable provisions of N.J.A.C. 8:33C, including N.J.A.C. 8:33C-3.4(a)3 through 10. (d) A licensed children s hospital not licensed to operate a [RPC] on October 21, 2002 shall file a licensing application to initiate such a service, including [NICU](s), in conformance with (c) above. Such a licensing application shall be filed in accordance with the procedures described in N.J.A.C. 8:43G-2.2 through 2.5, as applicable. (e) A licensed children s hospital not also licensed to operate a [PICU] or a [RPC] on October 21, 2002 shall not be required to obtain certificate of need approval to establish such a unit or center, including [NICU](s) within the center. 1. A licensed children s hospital without a licensed [PICU] may establish such a unit with a maximum size of six beds without certificate of need approval. 2. A licensed children s hospital without a licensed [NICU] may establish such a unit(s) with a maximum size of four bassinets for an intermediate care nursery and six bassinets for an intensive care nursery without certificate of need approval. Despite that deference, a rule will be set aside if it is inconsistent with the statute it purports to interpret. Smith v. Director, Div. of Taxation, 108 N.J. 19, 26 (1987). That is, the agency may not under the guise of interpretation . . . give the statute any greater effect than its language allows. In re Valley Rd. Sewerage Co., 154 N.J. 224, 242 (1998) (Garibaldi, J., dissenting) (quoting Kingsley v. Hawthorne Fabrics Inc., 41 N.J. 521, 528 (1964)). Thus, if the regulation is plainly at odds with the statute, we must set it aside. See New Jersey Tpk. Auth. v. AFSCME, Council 73, 150 N.J. 331, 351-52 (1997). [In re Freshwater Wetlands Protection Act Rules, 180 N.J. 478, 488-89 (2004).] Although the Appellate Division panel here properly set forth the foregoing standard of review, St. Peter s Univ. Hosp. v. Lacy, 372 N.J. Super. 170, 177-78 (App. Div. 2004), we must part company with the result the panel reached in applying that standard. The presumption of validity is especially strong here in light of the similar subject matter and common purpose of both statutes . . . . Statutes that deal with the same matter or subject should be read in pari materia and construed together as a unitary and harmonious whole. This maxim of statutory construction is especially pertinent when, as in this case, the statutes in question were passed in the same session. [In re Adoption of a Child by W.P. and M.P., 163 N.J. 158, 182-83 (2000) (Poritz, C.J., dissenting) (citations and footnote omitted).] The legislative designation of St. Peter s and RWJ Hospital as specialty acute care children s hospitals cannot be either a nullity or transparent window-dressing; it must have substance. Similarly, to engraft onto that designation the added requirement of a certificate of need is to take away with one hand what has been given with the other, and we cannot assume that the Legislature intended such a result. Instead, the view that most closely approximates the intent of the Legislature in creating statutorily designated children s hospitals must be that, when read in pari materia with the certificate of need statute, the designation is a legislative in lieu of an administrative -- finding of need, the implementation of which is delegated to the Commissioner. Our conclusion that the Legislature, which created the certificate of need process in the first instance, intended the legislative designation of certain hospitals as children s hospitals to serve in lieu of the certificate of need process also is consistent with the interpretation the Commissioner and the Department have given this statutory enactment. We have stated the governing principle thusly: Generally, we do give substantial deference to the interpretation an agency gives to a statute that the agency is charged with enforcing. Nevertheless, administrative regulations are not binding on the courts and a regulation will fall if a court finds that the rule is inconsistent with the statute it purports to interpret. [Smith v. Director, Div. of Taxation, 108 N.J. 19, 25-26 (1987) (citations omitted).] That deference arises because [t]he meaning ascribed to legislation by the administrative agency responsible for its implementation, . . . is persuasive evidence of the Legislature s understanding of its enactment. Cedar Cove, Inc. v. Stanzione, 122 N.J. 202, 212 (1991) (citations omitted). Our conclusion is supported further by the unquestioned proposition that [w]hen the Legislature expressly includes a requirement in one subsection and excludes that same requirement in other subsections of the same general statute, we need not strain to import that requirement where it is not. In re Freshwater Wetlands Protection Act Rules, supra, 180 N.J. at 492. Because subsequent legislation may be used as an extrinsic aid when seeking to discern earlier legislative intent[,] Varsolona v. Breen Capital Servs. Corp., 180 N.J. 605, 623 (2004) (citations omitted), we also look to more recent legislative acts for guidance. In May 2004, the Assembly sought to designate Jersey Shore University Medical Center as the State s specialty acute care children s hospital for Monmouth and Ocean counties. Assembly Bill No. 2884, 1b, 2b. As proposed by the Assembly, Jersey Shore University Medical Center was required to compl[y] with all of the appropriate certificate of need and licensure requirements as a condition precedent to such statutory designation. Id. at 1a. In March 2005, when Assembly Bill 2884 was considered by the Assembly Health and Human Services Committee, it was amended to designate Jersey Shore University Medical Center and Monmouth Medical Center, each, as the State s special acute care children s hospital for Monmouth and Ocean counties, subject to the commissioner s determination that each hospital meets all of the licensure criteria that apply to a children s hospital and has met and complied with all of the appropriate certificate of need and licensure requirements to obtain State authorization to offer the component services that constitute a children s hospital. [Assembly Bill No. 2884[1R], March 1, 2005 (emphasis supplied).] As so modified, Assembly Bill No. 2884 was passed by the Assembly on March 14, 2005. The Senate, however, rejected the requirement that either hospital satisfactorily complete the certificate of need process as a condition precedent to designation as a specialty acute care children s hospital. As adopted by the Senate Health, Human Services and Senior Citizens Committee on May 5, 2005, approved by the Senate on May 16, 2005, and ultimately enacted into law on June 29, 2005, newly-enacted N.J.S.A. 26:2H-18g now designate[s] Jersey Shore University Medical Center and Monmouth Medical Center, each, as the State s special acute care children s hospitals for Monmouth and Ocean counties, subject to the commissioner s determination that each hospital meets all of the licensure criteria that apply to a children s hospital and has met and complied with all of the requirements to obtain State authorization to offer the component services that constitute a children s hospital. Appellant-Respondent, v. CLIFTON R. LACY, M.D., COMMISSIONER OF THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, MARY WACHTER, CHIEF OF STAFF OF THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, AND THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, AN AGENCY OF THE STATE OF NEW JERSEY, Respondents-Respondents, and ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL, Intervenor-Appellant. JUSTICE ZAZZALI, dissenting. This appeal requires the Court to decide the validity of regulations promulgated by the New Jersey Department of Health and Senior Services (Department) that require all children s hospitals to offer a Regional Perinatal Center (RPC) without first obtaining a certificate of need (CN). The Appellate Division held that the Legislature has clearly expressed its intent that the CN mechanism be retained as an integral part of the process for approving undertakings such as RPCs, and that the challenged regulations are invalid because they contravene that legislative requirement. Saint Peter s Univ. Hosp. v. Lacy, 372 N.J. Super. 170, 173 (App. Div. 2004). A majority of this Court disagrees with that conclusion and now reverses. Because I believe Judge Kestin s opinion properly analyzed this matter, I respectfully dissent. The discussion below first compares the Department s regulations with the statutory language that establishes the CN requirement. I then consider indications of the Legislature s intent. Finally, I address the impact of recently enacted legislation regarding children s hospitals. SAINT PETER S UNIVERSITY HOSPITAL, Appellant-Respondent, v. CLIFTON R. LACY, M.D., COMMISSIONER OF THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, MARY WACHTER, CHIEF OF STFF OF THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, AND THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, AN AGENCY OF THE STATE OF NEW JERSEY, Respondents-Respondents, and ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL, Intervenor-Appellant. DECIDED August 11, 2005 Chief Justice Poritz PRESIDING OPINION BY Justice Rivera-Soto CONCURRING/DISSENTING OPINIONS BY DISSENTING OPINION BY Justice Zazzali