Case Title: Medstar v. Health Commission

Citation: 376 Md. 1

Docket Number: 47/02

State: maryland

Court: Maryland Supreme Court

Date: 2003-06-18T00:00:00Z

Document:
MEDSTAR HEALTH v. MARYLAND HEALTH CARE COMMISSION
No. 47, September Term 2002
HEADNOTES: ADMINISTRATIVE LAW; MARYLAND HEALTH CARE
COMMISSION; STATE HEALTH PLAN; REGULATION; COMAR 10.24.17;
CERTIFICATE OF NEED; QUASI-LEGISLATIVE FUNCTION
Adoption of COMAR 10.24.17 is not consistent with the underlying policy
assumptions of the State Health Plan, exceeds the Commission’s statutory authority and is
unlawful.
Circuit Court for How ard Cou nty
Case No. 13-C-01-48458
IN THE COURT OF APPEALS OF MARYLAND 
No. 47
   
 September Term, 2002
                                                                            
MEDSTAR HEALTH
v.
MARYLAND HEALTH CARE COMMISSION
                                                                            
Bell, C.J.
Eldridge
Raker
Wilner
Cathell
Harrell
Battaglia
               JJ.
                                                                            
Opinion by Bell, C.J.
Raker, Wilner and Harrell, JJ., Dissent
                                                                            
Filed:   June 18, 2003
 
1  Pub. L. No. 93-641, 88 Stat. 2225 (1975) (as amended), 42 U.S.C. §§ 300k, et
seq. (1982) (repealed 1986).
The issue to be resolved in this appeal requires this Court to determine the lawfulness
of a regulation, COMAR 10.24.17, the appellee, the Maryland Health Care Commission,
adopted as an amendment to the State Health Plan (SHP).  The appellant, Medstar Health,
challenged the regulation, filing a declaratory judgment action in the Circuit Court for
Howard County.   It alleged that the regulation conflicted with the appellee’s statutory
authority, was adopted in a procedurally improper fashion, and violated the Commerce
Clause of the United States Constitution.  After limited discovery, the parties filed cross-
motions for summary judgment.  By written memorandum decision and declaratory
judgment, the Circuit Court declared the regulation lawful.   The appellant timely noted an
appeal to the Court of Special Appeals, and, thereafter, filed a petition for writ of certiorari
with this Court.  This Court granted that petition prior to any proceedings in the intermediate
appellate court.  Medstar Health v. Maryland Health Care Commission, 369 Md. 659, 802
A.2d 438 (2002).  We shall hold, contrary to the conclusion of the Circuit Court for Howard
County, that the regulation is unlawful.
I.
A.  Background
In 1975, Congress enacted the National Health Planning and Resources Development
Act of 1974 (the “Act”)1.  In order to receive federal funding, pursuant to the Public Health
Service Act and other federal programs, states were required to establish more extensive
2  Although the Commission does not have the authority to regulate the out-of-state
activities of a non-Maryland hospital, the Commission does consider, for purposes of
CON determinations, facilities and resources located outside of the State of Maryland. 
2
review processes over state health planning.  The review process requirement imposed by the
Act established what is known as the “Certificate of Need” (“CON”) process.  The CON
process requires health service providers (i.e., hospitals, patient treatment centers, etc.) to
obtain certification, by state regulatory agencies, before engaging in certain regulated
activities (i.e., purchasing major medical equipment, offering institutional health services,
and making certain capital expenditures).  The CON process, as a planning tool, attempts to
identify and encourage the development of needed medical services, while limiting medical
services that are determined to be “unneeded.”  For many years, the CON process was the
paradigm of health planning in this country.  The federal government, however, repealed the
Act in 1986 and, thus, since that time the determination of what methodology to employ for
health planning has rested with the states.  
Some states have chosen to abrogate their  CON programs, while others have chosen
to continue following the federal structure or to modify their CON program to fit local needs.
Maryland continues to adhere to a CON model in the planning, development and delivery of
health care services in this state.  The implementation of the CON process utilized in
Maryland falls under the regulatory authority of the Maryland Health Care Commission (the
“Commission”).  Consequently, before a hospital servicing this state may offer any regulated
medical services it must apply for, and be granted, a CON from the Commission.2
This is especially true in the Washington Metropolitan area because of the number of
Maryland residents who seek treatment at hospitals located in Washington, D.C.
3  There were several predecessor commissions with different names prior to the
creation of the Maryland Health Care Commission.  For the sake of convenience, the term
“Commission” refers to all predecessor commissions.  In 2001, the Maryland General
Assembly transferred some aspects of the planning functions – those that largely involve
local plans and planning for licensed entities that are not required to obtain a Certificate
of Need or an exemption from the CON program – from the Commission to the Secretary
of Health and Mental Hygiene.  See 2001 Md. Laws, ch. 565.  That act also renumbered
various sections in title 19, subtitle 1 of the Health-General Article.  The changes effected
by Chapter 565 do not affect this case. 
Unless otherwise indicated, all references to the Maryland Code are to the Health-
General Article, (1982, 2000 Replacement Volume), in effect when this case was decided.
3
B.  Statutory Framework in Maryland
The Maryland General Assembly established the Commission on October 1, 1999
through legislative enactment, see 1999 M d. Laws, ch. 702; Md. Code (1982, 2000 Repl.
Vol., 2001 Supp.) § 19-103 of the Health General Article, by merging the Health Resources
Planning Commission and the Health Care Access and Cost Commission.3   The
Commission, which is an independent commission in the Department of Health and Mental
Hygiene, § 19-103 (a) and (b), with significant responsibilities for the delivery of health care
in Maryland and exercises  regulatory authority over several aspects of the health care system
in Maryland, is comprised of a thirteen member panel, appointed by the Governor with the
advice and consent of the Maryland Senate.  §19-104.    
The purpose of the Commission, as defined by the Legislature, is, in part, to:
“Develop health care cost containment strategies to help provide access to
appropriate quality heath care services for all Marylanders, after consultation
with the Health Services Cost Review Commission;
4Pursuant to 2001 Md. laws, ch.565, effective July 1, 2001, § 19-121 was amended
and redesignated § 19-118.   As indicated, we will refer to § 19-121, as that is the section
that was in effect when this case was decided and that, therefore, controls its decision. 
See Dept. of Health and Mental Hyg. v. Campbell, 364 Md. 108, 120, n. 12, 771 A. 2d
1051, 1058, n.12 (2001).
4
“Promote the development of a health regulatory system that provides for all
Marylanders, financial and geographical access to quality health care services
at a reasonable cost by:
“(i) Advocating policies and systems to promote the efficient
delivery of and improved access to health care services; and 
“(ii) Enhancing the strengths of the current health care service
delivery and regulatory system.”
Section 19-103 (c) (1) and (2).  Toward that end, the Commission is charged with
participating in or performing, periodically, analyses and studies relating to:
“(i) Adequacy of services and financial resources to meet the needs of the
population;
“(ii) Distribution of health care resources;
“(iii) Allocation of health care resources;
“(iv) Costs of health care in relationship to available financial resources; or
“(v) Any other appropriate matter.”
Section 19-115 (a) (2).  
The Commission is also required, “[a]t least every 5 years ... [to] adopt a State
[H]ealth [P]lan ....”  Section 19-121 (a) (1).4    Section 19-121 (a) (2) provides:
“(2) The plan shall include:
5
“(i) A description of the components that should comprise the health care
system;
“(ii) The goals and policies for Maryland's health care system;
“(iii) Identification of unmet needs, excess services, minimum access criteria,
and services to be regionalized;
“(iv) An assessment of the financial resources required and available for the
health care system;
“(v) The methodologies, standards, and criteria for certificate of need review;
and
“(vi) Priority for conversion of acute capacity to alternative uses where
appropriate.”
The Commission uses the State Health Plan as a tool to identify the need for medical services
and for evaluating CON applications submitted by health service providers.  The
Commission’s specific mandate by the Legislature is to review and, where appropriate, issue
certificates of need to permit a person to “develop[], operate[], or participate[]” in certain
“health care projects.” § 19-123 (e), et seq.   A new cardiac surgery service is one such
“health care project.”  §19-123 (j) (2) (iii) (2).   
In addition to including methodologies, standards and criteria for CON review in the
State Health Plan, the Commission is charged with developing, consistent with the State
Health Plan, standards and policies relating to the CON program that “address the
availability, accessibility, cost and quality of health care” and reviewing those standards and
policies “periodically to reflect new developments in health planning, delivery, and
technology.”  Section 19-122 (e) (1) and (2).   Moreover, “standards regarding cost,
5  The State Health Plan divides Maryland into four service regions for purposes of
cardiac surgery services: Western Maryland; Metropolitan Washington; Metropolitan
Baltimore; and Eastern Shore.   
6
efficiency, cost effectiveness or financial feasibility” adopted by the Commission “shall take
into account the relevant methodologies of the Health Services Cost Review Commission.”
Id., § 19-121 (e) (3).   And the Commission is required to “adopt rules and regulations that
ensure broad public input, public hearings, and consideration of local health plans in
development of the State health plan.”   Id., § 19-121 (d).
C.  Adoption of COMAR 10.24.17
The State Health Plan consists of a series of regulations adopted by the Commission
or its predecessors, incorporated by reference, but not in fact, in the appropriate title, subtitle
and chapters of The Code of Maryland Regulations, COMAR, here, title 10, subtitle 24,
chapters 07 through 17.    At issue in this case is an amendment to the regulations applicable
to cardiac surgery, which is incorporated at COMAR 10.24.17, in the chapter entitled
“Specialized Health Care Services - Cardiac Surgery and therapeutic Catherization Services.”
The amendment was to COMAR 10.24.17.04E, Methodology for Projecting Need for
Cardiac Surgery, specifically, one of the assumptions underlying that methodology, the one
addressing system capacity in the planning regions.5 
As amended, the regulation states:
“(i) The capacity of an existing cardiac surgery program is calculated as
follows:
6  This was the assumption utilized by the Commission in its 1997 State Health
Plan.
7
“(i) For new programs, capacity is defined as the greater of 350 cases or the
actual number of cases during the first three years of a program’s existence;
“(ii) For programs older than three years, capacity is defined as the highest
actual annual volume attained and reported by that program over the last three
years subject to a market based constraint; and
“(iii) The capacity of any program cannot be greater than the higher of 800
cases or 50 percent of the projected gross need for the planning region.”
COMAR 10.24.17.04E (4) (i).   
Before the amendment, the assumption underlying system capacity was premised on
there being performed, in each of the operating rooms dedicated to open heart surgery,  500
operations year, a year being defined as 250 days, it being assumed that the operating rooms
were used at the rate of 2.0 cases per day, five days a week, fifty weeks per year.6   Before
and after the amendment, the assumption included “an estimate of the future number of open
heart surgery cases based on an analysis of trends in regional, age-specific use rates and
changes in the size and composition of the population.” See, Final Report of the Technical
Advisory Committee on Cardiovascular Services, December 1999, at 23.   The present plan
specifically provides, as to projected adult open heart surgery for Maryland residents, that
it “is estimated by trending of the most recent three years of open heart surgery use rates to
the target year based on the average annual percentage change in historical open heart
surgery use rates for each Regional Service Area, except the Western Maryland Regional
7  The State Health Plan states that for purposes of “project[ing] adult open heart
surgery utilization [in the Western Maryland Regional Service Area] is based on the
experience in the base year.” [State Health Plan at 60].  Prior to 1999, the total number of
open heart surgery cases in the Western Maryland Regional Service Area was not
sufficient to justify an open heart surgery program.  In that same year, however, the
Commission’s predecessor granted a CON to the Western Maryland Health System to
establish a program at Sacred Heart Hospital in Allegany County.  Thus, the Commission
had no historical data to use to project the future need of adult open heart surgery in that
planning region.   
 
8
Service Area.”  COMAR 10.24.17.04E (4) (b) [State Health Plan at 60].7    
Both before and after the amendment of the regulation at issue, “net need for open
heart surgery cases” is determined by “subtracting the total existing capacity from the total
projected number of cases.” COMAR 10.24.17.04E (6), “Calculation of the Net Need for
Adult Cardiac Surgery Programs.”  [State Health Plan at 63].    “Need for an additional
cardiac surgery program exists if the net need for open heart surgery cases in a Regional
Service Area is at least 200 cases.”  Id. 
 Initially, we acknowledge that the amendment of the regulation was properly done
procedurally.  It must be noted that the amendment was adopted only after extensive review
and after receiving considerable input from a Technical Advisory Committee, Commission
staff and interested parties.   In fact, the process was initiated approximately two years before
the amendment was adopted, when the Commission, in December 1998, convened a
Technical Advisory Committee, as its predecessor had done in connection with the
development of the 1997 State Health Plan.  In addition to a report from that Committee, it
9
consisted of the development of a 40-page White Paper by Commission Staff, solicitation of
public comment on that White Paper and subsequent White Papers analyzing the initial
comments and setting forth Staff recommendations, a public hearing, the publication of the
Commission’s proposed regulation pursuant to the procedure mandated by the Maryland
Administrative Procedure Act. Maryland Code (1984, 1999 Replacement Volume, 2000
Suppl.) § 10-112 of the State Government Article, followed by another public hearing.   
The Technical Advisory Committee questioned the appropriateness of the 1997 State
Health Plan’s assumption underlying the system capacity calculation for cardiac surgery
services –  two cases per dedicated operating room model, –  suggesting that it be eliminated,
and, that the “measurement of available system capacity be re-defined to incorporate other
factors such as monitoring of patient outcomes, assessment of future need, staff availability,
access, and cost in determining the need for additional open heart programs in Maryland.”
Technical Advisory Committee Final Report, at 26.   Thereafter, in June 2000, following
staff review of the Technical Advisory Committee’s recommendations, the Commission
issued a White Paper: Policy Issues in Planning and Regulating Open Heart Surgery Services
in Maryland, which identified issues related to planning for cardiac surgery services and
policy options for addressing them.  The two options the White Paper identified for
determining system capacity for cardiac surgery services were: Option 1,  the existing
measure, utilized in the 1997 State Health Plan– the continued use of the dedicated operating
room approach, White Paper at 20, –  and, Option 2,  “capacity based on actual service
10
utilization,” id. at 22, a measurement based on actual service utilization.  Under Option 2,
which was employed in the 1990 State Health Plan, the Commission’s White Paper noted,
the capacity of existing cardiac OHS programs was defined as follows:
“the greater of 350 cases per hospital or the highest actual annual volume ever
attained by the hospital in the most recent years of accurate available data; or
if the hospital had not performed, for the past three consecutive years, at least
200 cases per year, the capacity of that program was measured by the actual
volume of cases performed in that hospital during the base year.”
  
Commission White Paper at 22.  The advantage of using Option 2 as the underlying
assumption of system capacity, the White Paper argued, was that “actual performance of a
program would be more indicative of what volumes are likely to be handled by the program.”
Id.  The Commission then solicited comment on the White Paper.
Of the responses from organizations and individuals, several took advantage of the
debate on system capacity to lobby for increased competition in the Metropolitan Washington
planning area.   In all, ten individuals or organizations submitting comments on the White
Paper did so in support of defining system capacity for cardiac surgery services using either
Option 1 or Option 2.  The remaining five organizations that submitted comments relating
to system capacity suggested using a dedicated operating room approach in conjunction with
other factors to measure system capacity.  As Anne Arundel Medical Center, one of the
organizations advocating an approach other than Options 1 or 2 identified in the White Paper,
stated, the combined effect of the CON process and the past, present and proposed
methodologies “resulted in open heart surgery services being treated as a franchise, an
11
economic bonanza so valuable that both the ‘haves’ and those that desire it spent enormous
and obscene amounts of time and money in the few CON proceedings the Commission’s
predecessor held to grant new franchises.”   Further,  it characterized the CON process as
“focus[ed] on number-driven ‘need’ analysis, limiting the number of hospitals with Open
Heart CONs (the ‘haves’),” disagreed with “the concept that CON review –  the before-the-
fact comparison of competing applicants – is the appropriate method to design an effective
system of combating heart disease,” and accused that methodology of insulating those
hospitals with the cardiac surgery “franchise” from competition.   
Greater Baltimore Medical Center took a similar tack.   Acknowledging the intent of
the White Paper, it observed, nonetheless, that
“from a practical standpoint, the policy alternatives are limited by remaining
within the confines of the existing CON framework of analysis.  The
Commission should replace the rationing of health care represented by the
existing plan in favor of adopting a patient centered, quality of care driven plan
that would judge each individual hospital’s ability and need to provide cardiac
care.”
While offering that the Commission’s “policies regarding O[pen] H[eart] S[urgery]
[“OHS”] should reflect a balance between the advantages of size and the advantages of
choice,”  Holy Cross Hospital stressed that 
“[t]here is massive evidence that significant competition leads to lower cost
and, when the market rewards quality, significant competition can lead to
higher quality as well.  Additional providers, especially independent providers,
almost by definition, increase access.  Thus, by balancing the advantages of
size and choice, [the Commission] will balance the interests of quality, cost
containment and access.”
8  The appellant owns and operates Washington Hospital Center.
12
It also made clear that it did not believe that such a balanced framework currently exists and,
in fact, stated that it does not, as “the current situation effectively prohibits new programs in
any area which has OHS.”   Holy Cross noted, furthermore, its sympathy “to many of the
arguments for opening the OHS market to new entrants and then judging after the fact
whether they are successful and should be retained (the so-called licensure model).   This
approach maximizes the opportunity for choice while retaining a state review role, generally,
after the fact.”
While praising the “five ‘right-sized’ competitive programs” in Baltimore, Suburban
Hospital decried the “dysfunctional Washington market,”with its dominant “single large
provider,”the Washington Hospital Center.8   Suburban advocated a capacity measure that
would “permit development of a new OHS program in the D.C. region but not in Baltimore.”
It also lamented the assignment to the four low production programs in the region,
Georgetown, George Washington, Howard and Prince George’s Hospital Center, of capacity
for 3000 cases when, together, during all of 1999, they performed but 395 cardiac surgeries.
 Suburban Hospital submitted:
“if just 200 cardiac surgeries and 200 angioplasties were performed at either
Suburban or Holy Cross instead of at the Hospital Center, savings to the
Medicare program (and the American people) would be $4 million each year.
These savings ... result from the rate offers that an existing Maryland-based
program must make in connection with the CON approval process. This
phenomenon, and price reductions in response to the new, lower-priced
competition, both generate savings to payers.  This is precisely what occurred
13
in the Baltimore market as a result of development of the two new, competitive
programs at Sinai and Union Memorial during the last several years. Given this
experience and the current situation in the D.C. area, it is difficult to
understand why the Commission should continue a policy that: (i) protects a
non-Maryland hospital from effective price competition; (ii) denies Maryland
consumers meaningful choice; and (iii) causes the Medicare program to pay
millions of additional dollars to a non-Maryland hospital for cardiac surgery
provided to Maryland residents.” (Emphasis in original).
 St. Agnes Hospital, having in the past supported legislation that would have replaced
CON control of cardiac surgery services with a licensure approach, was clear in advocating
for an approach that was more open, more competitive.  It commented:
“St. Agnes in its oral and written comments urges the Commission to replace
the existing regional plan with a patient and quality focused plan that promotes
a continuum of cardiac care including coronary angiosplasty and open heart
surgery in any large community hospital with the patient volumes and size to
safely provide the service. The regional plan under review is based on the
explicit premise that open heart surgery is an expensive tertiary level service
which exhibits a high correlation between volumes and outcomes and is best
served by forcing all procedures into a very small number of hospitals. On
those rare occasions when new programs have been granted a CON, they have
been parceled out one program at a time following protracted and expensive
consolidated reviews that have pitted existing providers against all applicants,
and all applicants against each other.  Despite the enormous time, money,
effort and goodwill expended in these past proceedings held by the
Commission's predecessor, one of the only three programs ever CON approved
and running has never met even the minimum volume standards adopted by the
plan. A 33% failure rate is unacceptable in the allocation of such a critical
resource. We believe it is fair to say that the existing open-heart CON process
has lived [past] its usefulness.”
Competition, and the need for it, was the theme of the Health Services Cost Review
Commission’s comments to the Commission, albeit with a caution.  That was true of the
comments of Johns Hopkins Hospital, as well, who attributed the more than 70 percent
14
market share enjoyed by the Washington Hospital Center and the failure of four of the
Washington Region programs to meet minimum surgical volumes to the lack of competition.
Thus, Johns Hopkins advocated eliminating what it termed the “flawed” dedicated operating
room methodology, as a measurement of program capacity because of a hospital’s ability to
simply add operating rooms and thus unilaterally increase system capacity.
Anne Arundel Medical Center, Greater Baltimore Medical Center, Holy Cross
Hospital, Suburban Hospital and St. Agnes Hospital all supported a capacity measure which
was likely to result in competition.   The one that they all favored was a cap on capacity. 
The group favored a cap on capacity because they objected to the assignment of more than
3000 cardiac procedures, as projected capacity in the Metropolitan Washington planning
region, when in actuality, on average, more than 2500 of the procedures were performed
solely by Washington Hospital Center, with the balance of the region’s capacity divided
among four sub-performing hospitals and one hospital performing adequately.   
The written comments were augmented by oral testimony at a public hearing
conducted by the Commission on July 21, 2000.  At that hearing, Dr. Robert Lowery, a
cardiac surgeon, employed by Washington Hospital Center, which is owned by the appellant,
testified that there was adequate capacity in the Washington Metropolitan region, and no
need for additional OHS programs existed in the region.  Dr. Eugene Passamani. director of
cardiology at Suburban Hospital, testified, consistent with Suburban’s written comments, that
the assignment of 3000 cases as a capacity measure did not “represent real capacity” because
15
at least 2500 cases were attributable solely to Washington Hospital Center.
On September 15, 2000, the Commission issued its second White Paper, analyzing the
public comments and recommendations it had previously solicited on the first White Paper.
Noting that both options for measuring system capacity that it had presented in its previous
White Paper had significant limitations, the White Paper  concluded that the chapter of the
State Health Plan dealing with Open Heart Surgery should include a cap on the number of
cardiac surgery procedures conducted by any one hospital in a planning region and that future
capacity in that planning region be determined and computed by reference to that cap.  The
cap, as we have seen, supra at 7-8, provides that the “capacity of any program cannot be
greater than the higher of 800 cases or 50% of the projected gross need for the planning
region.”  
Upon release of the second White Paper, the Commission sought additional public
comment, whereupon a third White Paper was issued on October 25, 2000.  The staff
maintained its support of the amended capacity measurement, i.e., the cap, opining that the
measurement was “reasonable and appropriately balances public policy concerns,” such as
access, cost and equality.  Final Staff Analysis at 6.
On November 21, 2000, the Commission considered the proposed amendment of the
chapter and voted to publish the regulation for public comment.  In compliance with § 10-
110 (b) of the State Government Article, the proposed regulation was required to be
submitted to the General Assembly’s Joint Committee on Administrative, Executive and
16
Legislative Review (“AELR”) at least 15 days before being submitted to the Maryland
Register for publication.  Thus, on December 13, 2000, the proposed OHS chapter, with its
amendment to the definition of system capacity was submitted to the AELR.  Thereafter, on
January 4, 2001, the proposed  chapter was submitted for review to the Governor, as required
by §19-117(c) of the Health-General Article.   
Prior to publication, the presiding Chairman of the AELR Committee sent a letter to
the Governor stating the Committee’s intent to conduct a “more detailed study of [the]
proposed regulation.”  The Committee also requested that the Commission delay final
adoption of the proposed regulation until the Committee completed its review.  As stated by
the Committee, the purpose of the delay was to “provide the Committee with an opportunity
to more closely examine a number of issues, including whether the statute under which the
regulation is adopted authorized the adoption and whether the regulation conforms to the
legislative intent of the statute.”  
The AELR Committee held a hearing and received testimony on the proposed
regulation on January 16, 2001.  Because no further action was taken by the Committee, the
proposed regulation was published in the Maryland Register on January 26, 2001.  28 Md.
Reg. 126-27 (January 26, 2001).  The publication of the proposed regulation commenced the
31-day period for the submission of public comments.  The proposed regulation, as had been
9  The letter sought to have the Commission eliminate Policy 5.2 of the proposed
regulation, “which states that the Commission should consider a pilot project to study the
provisions of elective angioplasty without the availability of on-site cardiac surgery
backup.”
17
the case with regard to the White Papers, generated considerable interest and resulted in 47
organizations and individuals submitting written comments.  Additionally, the Commission
held yet more public hearings.  The appellant used the opportunity, again, to provide
testimony and to submit written comments.  
During the period for public comment, the Commission received a letter, dated March
21, 2001, from the Co-Chairs of the AELR Committee.  The letter requested that the
Commission modify the proposed regulation.9  Shortly thereafter, the Commission received
a follow-up letter from the Honorable Thomas V. Mike Miller, President of the Maryland
Senate, which informed it that the  March 21st  letter did not “represent the consensus of the
members” and was “advisory only,” in light of the fact that the AELR Committee had not
met.   Two additional letters,  dated April 4 and April 5, signed by the members of the House
and Senate delegations to the AELR Committee, were received by the Commission.  The
letters confirmed Senator Miller’s earlier letter indicating that the March 21st  letter did not
represent the views of the AELR Committee.  More important,  the letters requested that the
Commission “withdraw the entire regulation and develop new comprehensive regulations
18
consistent with the counsel of the . . . [Technical Advisory Committee], especially related to
the issue of measuring capacity at existing [OHS] surgery programs.”
On April 19, 2001, the Commission, by an 8-1 vote, adopted COMAR 10.24.17 as a
final regulation.  The Notice of Final Action was published in the May 4, 2001 Maryland
Register.  See 28 Md. Reg. 885 (May 4, 2001).  Subsequently, on M ay 14, 2001, the
regulation became effective.   
The regulation, adopted over the objection of the appellant, had the effect of reducing
the Washington Metropolitan Planning Region’s cardiac surgery capacity by 824 cases, the
number of cases that Washington Hospital Center performed, but, because of the cap on
capacity, was not allowed to count for that purpose.    In 1999, that hospital performed 2950
open heart surgeries.   Without the amended regulation, all of those surgeries would have
been considered in determining the capacity of the Region.   When the surgeries performed
by the other hospitals in the Region, totaling 1212 in 1999 or, using 1997-1999 data, as the
Commission did, 1482, were counted, the Region’s capacity would have been 4162 or 4432
cases, respectively.   The need in the Region was projected to be 4251.  Under the amended
regulation, because the number of surgeries performed by Washington Hospital center
exceeded 50 percent of projected need for the Region, its existing and CON approved
capacity was determined to be 2126, half of the projected number of cases, and 824 cases less
10  “Calculation of the Net Need for Adult Cardiac Surgery Programs
“(a) For each Regional Service Area, calculate the net need
for open heart surgery cases by subtracting the total existing
capacity from the total projected number of cases.
“(b) Need for an additional cardiac surgery program exists if
the net need for open heart surgery cases in a Regional
Service Area is at least 200 cases.”
19
than its actual production.  Consequently, rather than an excess of capacity over need (using
1997-99 performance figures, as the Commission did, the capacity would exceed demand by
181 cases) or need less than the threshold for consideration of a new program (using 1999
performance figures, need would exceed capacity, but only by 89 cases), see COMAR
10.24.17.04E (6),10 application of the amended regulation resulted in a deficit of 643 cases,
or the need for at least one new program in the Region.  Id.  
The appellant acted without delay in challenging the newly effective regulation, filing
its action for declaratory judgment on the date the regulation took effect.
II.
In the trial court, the appellant argued that the regulation adopted “dramatically and
unlawfully” changed the methodology for projecting need for cardiac surgery services.  Such
a change, the appellant argued, was not contemplated, nor authorized, by the Commission’s
enabling legislation.  Moreover, it maintained that the regulation adopted poses a risk to
patient safety.  Specifically, citing to § 19-121(2) (currently, §19-118 (2), 2001 Supp.), but
11  In an amended complaint the appellant added a claim alleging that the adopted
regulation violated the “dormant” Commerce Clause of the United States Constitution by
discriminating against Washington Hospital Center, an out-of-state business entity and
was a burden on interstate commerce.
12  Section 10-111.1(b) of the State Government Article provides:  
(b) Factors considered. -- In its review of a proposed regulation pursuant to
this section, the factors the Committee shall consider shall include whether
the regulation: 
(1) is in conformity with the statutory authority of the promulgating unit;
and 
(2) reasonably complies with the legislative intent of the statute under
which the regulation was promulgated.
    Additionally, § 10-111.1(c) of the State Government Article provides:
 
“(c) Notice to Governor and promulgating unit. -- 
“(1) Within 5 working days after the Committee votes to oppose the
adoption of a proposed regulation, it shall provide written notice to the
Governor and the promulgating unit of its action. 
“(2) Upon receipt of such notice, and with written notice to the Committee
and as otherwise required by law, the promulgating unit may: 
20
relying on other statutory provisions, the appellant argued that the adopted regulation
violated the Commission’s statutory mandate requiring it to identify unmet health care needs
and to set forth the methodologies for certificate of need review.11   Citing to the objection
of the members of the AELR Committee, the appellant further noted that the regulation had
been adopted without the approval of the Governor in violation of Md. Code (1984, 1999
Repl. Vol., 2000 Cum. Supp.)  § 10-111.1(b) and (c) of the State Government Article.12
“(i) withdraw the regulation; 
“(ii) modify the regulation, but only in accordance with § 10-113 of this
subtitle; or 
“(iii) submit the regulation to the Governor with a statement of the
justification for the unit's refusal to withdraw or modify the regulation. 
“(3) Following the receipt of notice under paragraph (2) (iii) above, the
Governor may consult with the Committee and the unit in an effort to
resolve the conflict. After written notice has been provided to the presiding
officers and to the Committee, the Governor may: 
“(i) instruct the unit to withdraw the regulation; 
“(ii) instruct the unit to modify the regulation, but only in accordance with §
10-113 of this subtitle; or 
“(iii) approve the adoption of the regulation.”
Although the appellant raised this issue in the trial court and repeated the claims in
the Statement of the Facts section of its brief, the appellant failed to address the issue
either in the Question Presented or Argument section of its brief.  As we have indicated,
we will decide the case on alternative grounds and, thus, not reach this issue. 
21
The Circuit Court for Howard County, acting on cross-motions for summary
judgment, entered judgment in favor of the appellee, declaring that the Commission had
acted within its statutory authority in adopting COMAR 10.24.17.  Moreover, the trial court
determined that the regulation had been validly adopted and did not violate the Commerce
Clause of the United States Constitution.  
The gravamen of the appellant’s complaint is that the Commission’s adoption of
COMAR 10.24.17 uses a regulatory created assumption to create unmet need for cardiac
surgery services in the Washington Metropolitan planning region.  This, the appellant argues,
22
allows for the creation of a new OHS programs in that planning region, despite the fact that
the Commission’s own data shows that no real, or actual, need for a new cardiac surgery
program exists.    Responding, the Commission relies on its broad authority, conferred by the
Legislature, to adopt the regulation, asserting that that authority clearly permits it to do what
it did.  We disagree with the Commission and the trial court, and shall hold that the adoption
of COMAR 10.24.17 exceeded the Commission’s statutory authority.   Consequently, we
need not, and will not, reach the alternative grounds the appellant proffers for striking the
regulation.  
III.
This Court has stated that “the development, adoption, and updating of the [State
Health] plan is a quasi-legislative function.”  Adventist v. Suburban, 350 Md. 104, 122, 711
A.2d 158, 167 (1998); see also, Fogle v. H & G Restaurant, Inc., 337 Md. 441, 453, 654 A.2d
449, 455 (1995) (“Promulgation of new regulations by agencies is one of these so-called
quasi-legislative activities.”); Dep’t of Nat. Res. v. Linchester, 274 Md. 211, 222, 334 A.2d
514, 522 (1975) (noting “these agencies at times perform some activities which are
legislative in nature and thus have been dubbed as quasi-legislative”).   We have also made
clear that agency regulations must be consistent with the letter and the spirit of the law under
which the agency acts. Christ v. Department of Natural Resources, 335 Md. 427, 437, 644
13  Md. Code (1984, 1999 Repl. Vol.) § 10-125 of the State Government Article,
provides:
“Petition for declaratory judgment authorized
“(a) (1) A person may file a petition for a declaratory judgment on the
validity of any regulation, whether or not the person has asked the unit to
consider the validity of the regulation.
“(2) A petition under this section shall be filed with the circuit
court for the county where the petitioner resides or has a
principal place of business.
“(b) A court may determine the validity of any regulation if it appears to the
court that the regulation or its threatened application interferes with or
impairs or threatens to interfere with or impair a legal right or privilege of
the petitioner.
“(c) The unit that adopted the regulation shall be made a party to the
proceeding under this section.
“(d) Subject to § 10-128 of this subtitle, the court shall declare a provision
of a regulation invalid if the court finds that:(1) the provision violates any
provision of the United States or Maryland Constitution;
“(2) the provision exceeds the statutory authority of the unit; 
or
“(3) the unit failed to comply with statutory requirements for
adoption of the provision.”                 
14  Similarly, we made clear in Adventist, 350 Md. at 122-125, 711 A.2d. at 166-
169, it is inappropriate to use a CON contested case proceeding to challenge the “validity
23
A.2d 34, 38 (1994);  Maryland State Police v. Warwick, 330 Md. 474, 481, 624 A.2d 1238,
1241 (1993); Ins. Comm'r v. Bankers Independent Ins. Co., 326 Md. 617, 623, 606 A.2d
1072, 1075 (1992).
Pursuant to State Government Article, § 10-125,13 regulations promulgated by
administrative agencies may  be challenged by way of a declaratory judgment action.14  Our
and applicability of [] published needs projections contained in the existing State Health
Plan.” Rather, agency action taken pursuant to its quasi-legislative role (i.e., development,
adoption, and updating of the State Health Plan), should be challenged either by the
procedure established by “Section 19-114(c)” of the Health General Article (current
version at Health-Gen. II (Supp. 2001) § 19-118 (b)) or by way of the Declaratory
Judgment Action. 
24
scope of review in such actions is “limited to assessing whether the agency was acting within
its legal boundaries.”  Adventist, supra, 350 Md. at 124, 711 A.2d at 167, citing Linchester,
supra, 247 Md. at 224, 334 A.2d. at 524; See also Judy v. Schaefer, 331 Md. 239, 263-264,
627 A.2d 1039, 1051-1052 (1993).   In Fogle, we noted that courts, when opining upon the
validity of actions taken by agencies, should “defer to agencies’ decisions. . . because they
presumably make rules based upon their expertise in a particular field.”  Fogle, supra, 337
Md. at 455, 654 A.2d at 456; see also  Ideal Federal v. Murphy, 339 Md. 446, 461, 663 A.2d
1272, 1279 (1995) (citing Udall v. Tallman, 380 U.S. 1, 16, 85 S. Ct. 792, 801, 13 L. Ed. 2d
616, 625 (1965) for the proposition that “[w]hen faced with a problem of statutory
construction, this Court shows great deference to the interpretation given the statute by the
officers or agency charged with its administration”) and MTA v. King, 369 Md. 274, 288,
799 A.2d 1246, 1254 (2002).  Pointedly, we added in Fogle that “[t]his is especially true of
agencies working in the area of health and safety, which rely extensively on their specialized
knowledge of that area in promulgating regulations.” 
 Fogle, supra, 337 Md. at 455, 654 A.2d
25
at 456.  Moreover, where “the General Assembly has delegated . . . broad power to an
administrative agency to adopt [legislative rules] or regulations [in a particular area], this
Court has upheld the agency’s rule or regulations as long as they did not contradict the
language or purpose of the statute.”  Christ v. Department of Nat. Res., supra,  335 Md. at
437,  644 A.2d at 39; Lussier v. Maryland Racing Commission, 343 Md. 681, 689, 684 A.2d
804, 807-808 (1996). 
In its brief, the appellant challenges the Commission to identify any provision of the
statute that grants authority to the Commission “to create a need for an additional open heart
surgery program where. . . the facts[] as found by the Commission show there is no need.”
(Appellant’s Brief at 27).  To that challenge, the Commission continues to rely on the
deference this Court has extended to the regulations and rules promulgated by an agency, on
whom the Legislature has conferred broad statutory authority.  Thus, the Commission
submits that it need not point to any specific statutory authorization to justify its action,
maintaining that “it is sufficient for [it] to show that there is nothing in the Cardiac Surgery
Chapter that contradicts either the language or the purpose of the authorizing legislation.”
(Appellees Brief at 18).  We disagree.
While reliance upon the broad statutory authority conferred by the Legislature
generally will be sufficient to justify an agency’s regulation/rule making authority, logic
26
compels the self evident conclusion that there is  an outer limit to an agency’s authority.  This
Court’s attempt to demarcate the outer limits of an administrative agency’s authority has
focused on whether the regulations and rules promulgated by the agency are consistent with
the statutory scheme under which the agency operates.  So, too, with the Commission, the
question is whether the regulation at issue is consistent with the underlying policy
assumptions permeating the State Health Plan and the Commission’s own factual analysis
undertaken with the purpose of defining unmet need for cardiac surgery services.
Undertaking this analysis leads us to the conclusion that the Commission’s adoption of
COMAR 10.24.17 is not consistent with the underlying policy assumption of the State Health
Plan and is not supported by the factual analysis developed by the Commission’s Technical
Advisory Committee.   
The proof of the adopted regulation’s inconsistency with the underlying policy
assumption of the plan is evidenced by contrasting certain policy determinations pertinent
to, and underlying, the Certificate of Need process in its present form with the policy
determinations underlying the amended regulation.  Significantly, the former policy
determinations remained unchanged after adoption of the amended regulation and, thus
continue to guide the CON process, of which the amended regulation is, in reality, a critical
part.   Not least among them is the Commission’s conclusion, repeated at length in the State
27
Health Plan, and incorporated in its first Policy statement, that there is an “inverse
relationship between volume of cardiac procedures and outcome as measured by mortality
and/or complications.”   See COMAR 10.24.17.04B (1) [Amended State Health Plan at 20].
While it acknowledges the conflicting evidence on the subject, the Commission accepted the
advice of its Technical Advisory Committee that “minimum caseloads play a critical role in
promoting quality of care for specialized cardiac care services,” id. at .04B (1) (c) [id. at 23],
and concluded,  “it is preferable for public policy to support a small number of higher volume
cardiac surgery programs rather than a large number of programs performing at minimum
or lower volumes.”  Id. [at 24].    It explained:
“In many ways, recommended volume numbers are a surrogate measure for
quality of care.  The research conducted to date on the relationship between
volume and outcome in many ways suggests the need for additional study of
the factors involved in the process of care that contribute to improved
outcomes.   Although the relationship between minimum volume guidelines
and risk-adjusted mortality for CABG surgery is a critical measure of quality,
it is likely that volumes also relate to other dimensions of cardiac surgical
program quality that are more difficult to measure. As noted in the previous
report of the Technical Advisory Committee, these factors include the value
of promoting higher volume angioplasty programs, the need to promote
efficient utilization of the complex and limited resources required to provide
high quality cardiac surgical care, and the need to encourage research and
innovation in the treatment of coronary heart disease.”
Id. [at 23].   Thus, the Commission established policies governing minimum utilization levels
for adult and pediatric cardiac surgery programs, including:
28
 “Policy 1.0   There should be a minimum of 200 open heart surgery
procedures annually in any institution in which open heart surgery is
performed for adult patients.
“Policy   1.1      There should be a minimum of 130 cardiac surgery procedures
annually in any institution in which cardiac surgery is performed for only
pediatric patients.
“Policy   1.2    There should be a minimum of 200 adult open heart surgery
procedures and a minimum of 50 pediatric cardiac surgery procedures annually
in any institution in which both adult and pediatric cardiac surgery is
performed.”
Id. [at 23].   In addition, and consistently, to promote a system of higher volume cardiac
surgery programs, the Commission established Policy 1.5: “The establishment of a new adult
cardiac surgery program should permit existing programs to maintain patient volumes of at
least 350 cases annually.”  Id. [at 25].   Together, these policy statements implement the
Commission’s vision of the cardiac surgery world, one in which existing programs are
required to perform well above the minimum utilization level before new programs are
considered.  When  its view of the relationship between volume and outcomes is considered,
it is clear that that vision is based on, and looks to, quality concerns.
At bottom, the issue to be addressed in this case is whether there is unmet need for
cardiac surgery services in the Metropolitan Region.   To be sure, it is being addressed from
the perspective of a regulation concerning the criteria to be applied in assessing the system
capacity to handle the number of cases projected to enter the system, and, thus, may be
29
argued, or appear, to be only indirectly in dispute.   Under the circumstances here extant, that
is not at all true.   There is no dispute as to what the objective, hard evidence reveals about
capacity.    Nor is there any dispute as to what it shows as to demand.   Based on the actual
performance of the hospitals authorized to perform cardiac surgery in the Region, whether
using a three year or a one year period, and extrapolating from that performance, there either
is an excess of capacity over demand or a slight deficit, but not enough of a deficit to justify
certification of additional open heart surgery capacity.    The Commission’s  data clearly, and
expressly,  reflects this fact.   Its data also reflects that the demand in the Washington Region
is flat, increasing by only 1.5 percent or less.   Despite this hard, objective evidence and, it
appears, based primarily on the comments of those few hospitals who sought increased
competition and complained about the dysfunctionality in the Washington Region due to the
dominance of a single hospital, the Commission adopted a standard that created a need for
additional capacity by disregarding that hard, objective evidence.  The appellant has it right
when it points out:
“By erasing 824 of Washington Hospital Center's cases (2,950 minus 2,126),
the Commission succeeded, solely by operation of its irrebutable regulatory
‘assumption,’ in creating a ‘net need’ of 643 cases. ... Having thus created this
‘net need’ of 643 cases, the Commission can now conclude that a ‘need’ exists
for an additional open heart surgery program in the Washington Region
because this regulation-manufactured ‘deficit’ of 643 cases is more than the
required safe minimum of 200 cases. .... The Commission reached its ‘need
30
conclusion’ notwithstanding the undisputed fact that the actual, as
distinguished from the regulation-manufactured, net need in the Washington
Region is at most 89 cases and, if one applies the Commission’s methodology,
there is a negative net need — that is, capacity exceeds projected need — by
181 cases. In either case, there is, as a matter of fact, a plainly insufficient
number of cases to warrant a new program.”
This Court can discern no other reason for the regulation than to promote competition
and, perhaps, thereby terminate the dominance of the Washington Hospital Center.   The
placement of a cap on the number of open heart operations that a hospital performs and, thus,
for which it is given credit for having performed, does not change the fact that those
operations, in fact, were performed.   Nor does it reduce that hospital’s capacity to perform
that number of operations, and more; it simply permits another hospital or hospitals to benefit
from a deemed excess capacity, to use the capacity that continues to exist, but, because of the
regulation, is not allowed to be counted by the hospital that retains it.  This “regulatory slight
of hand” runs afoul of the Commission’s own policies, see Policy 1.0; Policy 1.5, and of its
commitment to “support[ing] a small number of higher volume cardiac surgery programs
rather than a large number of programs performing at minimum or lower volumes.” 
COMAR 10.24.17.04B (1) (c)[State Health Plan at 24].   It certainly is anti-factual. 
 It is undisputed that this Court has the right to determine for itself whether an
administrative regulation exceeds the power of the agency.   See § 10-125 of the State
31
Government Article.  It is also true that, in most cases where an agency promulgates new
regulations, we defer to the agency’s  decisions “... because they presumably make rules
based upon their expertise in a particular field.”  Fogle v. H & G Restaurant, supra,  337 Md.
at 455, 654 A.2d at 456.   In the case of the Commission’s adoption of COMAR 10.24.17,
however, there is nothing to which to defer.  The operative word in Fogle is “presumably.”
 Here, what the Commission did required no expertise on its part; it simply made a
determination that changed or, in effect, failed to give effect to an historical fact.   To be
sure, the fact that the Washington Hospital Center performed a specific number of procedures
in a particular year does not mean that it could do so in future years.   While that is, of course,
true, it is simply common sense that what one has done in a prior year forms a logical basis
from which to deduce what will, or can be done, in a subsequent year.  Making an
assumption that Washington Hospital Center will not, or can not, perform the same number
of, or more, procedures, solely because of the desire to create a need not supported by the
data on which the Commission has relied, and continues to rely, has much less force and is,
therefore, much less reliable.   
To be sure, the Commission has experimented with several different approaches to
the measurement of net need in its 1990, 1997, and current Plans.    It may be argued, as the
appellee does, that these alternative approaches are no more arbitrary and artificial, having
32
no more relevance to need, than does the approach adopted by the Commission in this case.
That is not a satisfactory answer.  Certainly, a wrong that goes unchallenged cannot save
from challenge and relief a subsequent wrong that is challenged.   While actual experience
may not be 100 percent determinative as to future capacity, it certainly comes a lot closer
than an untested assumption, based on absolutely nothing, but the general desire to have the
CON process opened up to greater accessibility and the cardiac surgery field subject to more
competition.   In any event, in none of the prior alternatives were the facts disregarded; it is
one thing to assume something and quite another to refuse to recognize what the data that the
agency collects, or requires to be collected, clearly shows.  What speaks loudest is that the
Commission maintained the same basic framework for CON reviews and, to achieve a result,
increased competition in the Washington Region,  that, at the least,  is not totally consistent
with the State Health Plan, simply adopted an assumption, which because it was made after
the facts had been established, was a palpable fiction.   
JUDGMENT OF THE CIRCUIT COURT FOR
HOWARD COUNTY REVERSED; CASE
REMANDED TO THAT COURT WITH
DIRECTIONS TO ENTER  JUDGMENT
CONSISTENT WITH THIS OPINION.   COSTS
TO BE PAID BY THE APPELLEE.  
IN THE COURT OF APPEALS OF MARYLAND
No. 47
September Term, 2002
______________________________________
MEDSTAR HEALTH
v.
MARYLAND HEALTH CARE COMMISSION
______________________________________
Bell, C.J.
Eldridge
Raker
Wilner
Cathell
Harrell
Battaglia,
   JJ.
______________________________________
Dissenting Opinion by Wilner, J., in which
Raker, J., and Harrell, J., join 
______________________________________
Filed:   June 18, 2003
The Court reverses a determination by the Maryland Health Care Commission
(MHCC) that the public health needs of the more than two million Marylanders who live in
the Metropolitan Washington Region would best be served by allowing one additional
hospital in that region to offer cardiac surgery services, because the Court believes that those
needs are already being adequately served.  With respect, I dissent.
The Court seems transfixed with the fact that, because Washington Hospital Center
(WHC), which is located in the District of Columbia and thus is entirely immune from any
regulation by the State of Maryland, is already performing 2,950 adult cardiac surgeries each
year – more than 70% of the total number of such surgeries in the entire region – there is no
need for any new program.  As that hospital may expand its cardiac unit at will, without any
control by the MHCC, it can, under the Court’s view, not only maintain its dominance but
effectively preclude any new program in the Metropolitan Washington Region of Maryland.
That concerned the Commission, and it should concern the Court.
The issues raised by MedStar in this case cannot be viewed in isolation, but only in
the context of the extensive set of laws and regulations governing health care policy in
Maryland.  In conformance with the National Health Planning and Resources Development
Act of 1974, the General Assembly, through the enactment of what now appears as title 19,
subtitle 1 of the Health-General Article, created and has periodically revised a comprehensive
and structured regime for health care planning in Maryland.  That regime is anchored in an
express legislative finding, articulated in § 19-102, that  the health care regulatory system “is
a highly complex structure that needs to be constantly reevaluated and modified in order to
-2-
better reflect and be more responsive to the ever changing health care environment and the
needs of the citizens of this State.”  Subject, of course, to the continuing jurisdiction and
oversight of the Legislature, control over health care policy and planning is centered, at least
in part, in MHCC, a unit within the Department of Health and Mental Hygiene and a
successor agency to several previous commissions.
There are two major components to the regulatory system – the State Health Plan,
which identifies both broadly and with particularity the health needs and resources
throughout the State, and a Certificate of Need (CON) program, which allocates and rations
health care resources in conformance with the State Health Plan to assure that the resources
are adequate to meet the identified needs but are not excessive.  The CON program, set forth
in § 19-120 of the Health-General Article, requires a hospital to obtain a Certificate of Need
from MHCC before it may commence certain new services, including any new cardiac
surgery service.  The Plan thus serves two functions: it establishes health care policy to guide
the activities of MHCC and other health-related public agencies, and it serves as the legal
foundation for MHCC’s regulatory programs, in particular the CON program.  In that latter
regard, the Plan contains policies, standards, and service-specific need projection
methodologies that MHCC uses in making CON decisions, including whether to permit any
hospital not already having a cardiac surgery service to develop and offer one.
MHCC is charged generally, under § 19-103(c), with developing health care cost
containment strategies “to help provide access to appropriate quality health care services for
-3-
all Marylanders,” and with promoting the development of a health regulatory system “that
provides, for all Marylanders, financial and geographic access to quality health care services
at a reasonable cost.”  Section 19-115 directs the Commission to perform analyses and
studies that relate to the adequacy of services and financial resources to meet the needs of the
population, the distribution and allocation of health care resources, costs of health care in
relation to available financial resources, and any other appropriate matter.  The Secretary of
Health and Mental Hygiene is required by § 19-116 to assist MHCC by providing for a study
of systems capacity in health services.  That study is (1) to determine for all health delivery
facilities “where capacity should be increased or decreased to better meet the needs of the
population,” (2) to “examine and describe the implementation methods and tools by which
capacity should be altered to better meet the needs,” and (3) to “assess the impact of those
methods and tools on the communities and [the] health care delivery system..”
Section 19-118 (formerly § 19-121) directs MHCC, at least every five years, to adopt
a State Health Plan.  Under former § 19-121, which controls this case, the plan was required
to include, among other things, (1) the goals and policies for the State’s health care system,
(2) the identification of unmet needs, excess services, minimum access criteria, and services
to be regionalized, and (3) the methodologies, standards, and criteria for CON review.  In
addition, MHCC is required to develop standards and policies, consistent with the State
Health Plan, that relate to the CON program.  Those standards must address “the availability,
-4-
accessibility, cost, and quality of health care” and must be reviewed and revised periodically
“to reflect new developments in health planning, delivery, and technology.”
The State Health Plan is in the form of regulations which, because of their bulk and
accessibility in depository centers throughout the State, are incorporated by reference into
the appropriate chapter of the Code of Maryland Regulations (COMAR).  See COMAR,
title10 (Department of Health and Mental Hygiene), subtitle 24 (Maryland Health Care
Commission), chapters 07 through 17.  Most of those chapters are topical in nature and deal
with a broad type of medical service.  At issue here is Chapter 17, dealing with Cardiac
Surgery and Therapeutic Catheterization Services, which, for convenience, we shall refer to
as SHP-Cardiac Services.
As noted, former §19-121(a)(2)(iii) required that the State Health Plan include the
identification of “services to be regionalized,” which, in its Plan, the Commission construed
as referring to “the appropriate distribution of services with regard to their geographic
location and level of care.”  SHP-Cardiac Services at 4, COMAR 10.24.17.02D.  In
conformance with § 19-121, MHCC divided the State into four service regions for purposes
of SHP-Cardiac Services – Western Maryland, Metropolitan Washington, Metropolitan
Baltimore, and Eastern Shore.  We are concerned in this case with the Metropolitan
Washington Region, which comprises Calvert, Charles, Montgomery, Prince George’s, and
St. Mary’s Counties and the District of Columbia.
-5-
Notwithstanding that Maryland residents in the other three areas may use medical
facilities or resources that are located out of State, the Metropolitan Washington Region is
the only service area for which MHCC, in determining resource capacity, considers facilities
and resources that are located outside the State of Maryland – in the District of Columbia.
MHCC, of course, has no authority to regulate medical facilities or health care delivery in
the District, but because the hospitals there serve so many Marylanders living in the
Metropolitan Washington Region, the plan for that region takes account of the kinds, levels,
and quality of the services rendered by those facilities in determining whether there is a need
for new or additional services in the region.
Based on findings and recommendations made by well-respected medical societies,
MHCC adopted the view of its Technical Advisory Committee that “minimum caseloads play
a critical role in promoting quality of care for specialized cardiac care services,” and thus
concluded that “it is preferable for public policy to support a small number of higher volume
cardiac surgery programs rather than a large number of programs performing at minimum
or lower volumes.”  SHP-Cardiac Services at 23-24, COMAR 10.24.17.04B(1)c.  In
furtherance of that conclusion, MHCC adopted, as part of the current SHP-Cardiac Services,
a requirement that there should be a minimum of 200 open heart surgery procedures
performed annually in any institution in which open heart surgery is performed for adult
patients, and that a CON for the establishment of a new cardiac surgery program will require,
as a condition of issuance, that the program achieve minimum volume standards within 24
1 George Washington Hospital did not report data for 1999.  MHCC therefore used 1998
data for that hospital.  The record does not indicate how many open heart surgeries were
performed at George Washington Hospital in 1999.
2 Some evidence was presented that MedStar acquired Georgetown University Hospital,
that the WHC physician group had taken over the cardiovascular programs at Washington
Adventist Hospital and Georgetown and that, at least in the summer of 2000, that physician
group was performing 95% of the cardiac surgery in the Metropolitan Washington Region.  By
way of contrast, the distribution in the Metropolitan Baltimore Region, with slightly more total
(continued...)
-6-
months of beginning operation and maintain the minimum utilization level in each
subsequent year of operation.
At present, six hospitals perform open heart surgery in the Metropolitan Washington
Region – two in Maryland and four in the District.  WHC is one of those hospitals and,
indeed, predominates in the performance of adult cardiac surgery.  The data for 1999 show
that:
(1) Prince George’s Hospital Center (Md.) performed 120 adult open heart surgeries,
up from 91 in 1998;
(2) Washington Adventist Hospital (Md.) performed 817, the same as in 1998;
(3) Georgetown University Hospital (D.C.) performed 140, down from 301 in 1998;
(4) George Washington University Hospital (D.C.) was assumed to have performed
85, the same as in 1998;1
(5) Howard University Hospital (D.C.) performed 50, up from 46 in 1998; and
(6) WHC performed 2,950, up from 2,709 in 1998, the former representing about 71%
of all the adult cardiac surgeries performed in the service area.2
2(...continued)
surgeries, was far more even.  St. Joseph’s Hospital performed 1,308 adult cardiac surgeries
(29%); Johns Hopkins Hospital performed 1,100 (25%); Sinai Hospital performed 541 (12%);
Union Memorial Hospital performed 893 (20%); and University of Maryland Hospital performed
596 (13%).  There was no evidence of any concentration in the Metropolitan Baltimore Region in
one physician group.  One hospital, Peninsula Regional Medical Center, performs cardiac surgery
for the Eastern Shore Area.  In 1999, a CON was approved for one facility in Western Maryland.
-7-
The State Health Plan is usually updated in segments, rather than all at one time.  The
most recent SHP-Cardiac Services, prior to the one now before us, was adopted in 1997; that
replaced the chapter adopted in 1990.  It was determined in 1997 that the cardiac surgery
segment should be reviewed and updated on a three-year cycle, rather than on a five-year
cycle.
A key feature of the SHP-Cardiac Services is MHCC’s estimate of the expected
number of open heart surgery cases in a future target year.  In the 1990 plan, the Commission
estimated that number based on the capacity of then-existing cardiac surgery programs, and
it defined that capacity as the greater of 350 cases per hospital or the highest annual volume
ever attained by the hospital in the most recent years of accurate available data (or, if the
hospital had not performed at least 200 cases per year for the most recent three years, the
actual volume of cases performed during the base year).  The 1997 plan changed that
methodology and adopted, instead, one that had two components: (1) an estimate of the
demand for open heart surgery based on the Commission’s analysis of trends in regional, age-
specific use rates and changes in the size and composition of the population; and (2) an
estimate of available system capacity based on the number of operating rooms dedicated to
-8-
the open heart surgery program.  With respect to that second factor, the 1997 plan assumed
as a benchmark that two surgeries would be performed each day, five days a week, for each
dedicated operating room, producing an aggregate of 500 cases per operating room per year
(5 days/week x 50 weeks/year = 250 days x two cases/day = 500).
In December, 1998, the Commission reconvened a Technical Advisory Committee
(TAC) that had assisted in the development of the 1997 plan.  That committee held 13 open
meetings between December, 1998, and November, 1999.  In its report to MHCC in
December, 1999, the TAC noted a number of flaws in the then-current benchmark
assumption for program capacity.  Data, both nationally and in the Maryland-D.C. area,
showed significant variations in actual operating room utilization, ranging, in the Maryland-
D.C. area, from 0.24 cases per operating room at George Washington University to 2.07
cases per operating room at WHC.  Not surprisingly, the data showed that the greater the
number of cases overall, the greater the utilization per operating room.  Given that significant
disparity, the TAC recommended that the capacity benchmark of two cases per dedicated
operating room, used in the 1997 plan, be eliminated and that the measurement of available
system capacity be “redefined to incorporate other factors such as monitoring of patient
outcomes, assessment of future need, staff availability, access, and cost in determining the
need for additional open heart surgery programs in Maryland.”  FINAL REPORT OF THE
TECHNICAL ADVISORY COMMITTEE ON CARDIOVASCULAR SERVICES, Maryland Health Care
Commission, at 26 (1999).
-9-
The recommendations of the TAC were reviewed by the MHCC Staff which, in June,
2000, issued a White Paper that identified certain key issues and discussed various policy
options for dealing with those issues.  One of the issues considered was the TAC’s
recommendation that the benchmark assumption in the 1997 plan be eliminated.  Like the
TAC, the MHCC Staff also found fault with the 1997 approach.  It pointed out that the
number of operating rooms was but one component of an open heart surgery service – that
also important were the number of open heart surgery teams and the availability of post-
operative care facilities and staff.
Because open heart surgery service is staff, rather than capital, intensive, the MHCC
Staff questioned whether the number of operating rooms was the most appropriate
benchmark for measuring capacity.  See WHITE PAPER: POLICY ISSUES IN PLANNING AND
REGULATING OPEN HEART SURGERY SERVICES IN MARYLAND, Maryland Health Care
Commission, at 21 (2000).  From a regulatory point of view, the Staff raised the concern that
existing programs could add dedicated operating rooms without seeking CON approval and
thus expand capacity without Commission review.  Id.  The Staff pointed out the wide
variations that would occur in capacity determinations depending on the benchmark
assumption: at 500 cases/operating room, the capacity would be 6,500 for the Metropolitan
Washington Region; at 350 (the assumption used in the 1990 plan), the capacity would be
4,550.  Id.  It offered as an alternative option the determination of capacity based on the
actual performance of the program, which, in all areas of the State, was considerably less (in
-10-
the most recent three years) than the number-of-operating-rooms approach, even using the
lesser benchmark of 350 per year.  Id. at 21-22.
MHCC solicited and received comment on the White Paper, including written
comment from 21 hospitals and other agencies throughout the State.  Several of the hospitals
attacked both the existing methodology for establishing net need and the recommended
alternatives, complaining that, when coupled with the CON requirement, they served to
protect a small group of hospitals – the “haves” – and unnecessarily denied freedom of
choice to patients.  Anne Arundel Medical Center charged that the existing CON process
“has granted a franchise to a handful of hospitals, insulating them from competition, while
forcing all other Maryland hospitals and, more importantly, the patients they serve, to leave
their hospital, their community, their physicians, and their family support system to go to one
of the chosen few for what should now be regarded as basic, if high tech, care.”  That
hospital suggested that each program be measured by (1) the lower of its actual utilization
or the utilization standard adopted under the quality of care section of the Plan, or (2) the
lower of its actual utilization “or a reasonable cap on the number of procedures that will be
counted at any one hospital – whether that volume cap is 350 or 500 cases or some lower
number justified by the literature.”  St. Agnes Hospital, in Baltimore, also urged MHCC to
consider a cap as an alternative in measuring a program’s capacity.  It recommended a cap
of 400 cases or double the American College of Cardiology standard, and suggested that
“[a]ny cases above that number should not be counted as existing capacity.”
-11-
A cap was urged as well by Suburban Hospital, which complained in particular about
the “dysfunctional” market in the Metropolitan Washington Region.  Suburban noted that
WHC’s share of the total number of cardiac surgeries for the region had increased from 50%
in 1994, to 58% in 1996, to 71% in 1999, with a corresponding decline in Washington
Adventist Hospital’s share from 925 surgeries in 1994 to 817 cases in 1999.  It asked that a
40% cap be assigned to the capacity of each existing program in the Baltimore and
Washington regions and argued that such a cap would remedy the limited choice available
in the Washington area market and allow MHCC to return to a policy of managing growth
in cardiac surgery program development.
Greater Baltimore Medical Center echoed the complaint that the existing program
“forces people to travel outside of their community for necessary cardiac and other specialty
care” and that “[h]aving additional successful interventional and open-heart programs
improves access through expanded choices.”  It urged that additional programs could be
supported under any of the need calculations under consideration and that it was only the
allocation of the need and the calculation of capacity that prevented hospitals from meeting
the need that exists.  In that regard, it complained that both of the TAC options were
unacceptable – that the dedicated operating room standard was irrelevant to patient care, that
the actual utilization standard served only to protect the chosen few, and that “[i]f capacity
is then measured by the number of patients treated at existing programs, without any cap on
that capacity, capacity will always equal need.”  It explained that “as long as the ‘haves’ keep
-12-
their collective doors open, there will never be any ‘need’ in Central Maryland because the
aggregate capacity of the ‘haves’ will always increase to consume any projected need.”  This
was a point made by the White Paper as well.
The Health Services Cost Review Commission expressed its support of promoting
competition and noted that an increased number of open heart surgery services would
“increase the level of competition between programs and permit greater access for patients,”
although it did warn that the “proliferation of services that operate at inefficient volume
levels” would not be wise.  Holy Cross Hospital, which is located in the Metropolitan
Washington Region, expressed its support for “a balanced system of improved access to care
and increased choice of cardiac surgery services in suburban Maryland” and for “market
reform to support price and service competition in this highly concentrated market.”  To
achieve that goal, it, too, suggested a “cap” in determining capacity – to define the capacity
of any program as “the higher of 800 cases or 40% of the projected gross need for the
hospital’s planning area.”
Johns Hopkins Hospital called attention to the fact that the Metropolitan Washington
Region “does not enjoy the same program balance in market share as that of metropolitan
Baltimore,” and that residents in the Maryland suburbs of the District “have little choice
when selecting care for cardiovascular surgery.”  Noting the 71% market share enjoyed by
WHC (which it erroneously asserted was 75%) and the 95% market share enjoyed by the one
physician group based at WHC, Hopkins observed that “[w]ithout choice and competition,
-13-
the State of Maryland and its residents are placed in a vulnerable situation.”  It pointed out
also that the State paid millions of dollars to the Washington hospitals for patients covered
under Maryland entitlement programs and that those funds could remain in Maryland if
residents in the Metropolitan Washington Region “had more than one viable option for
cardiovascular care in Maryland hospitals.”
On July 21, 2000, MHCC held a public hearing on the White Paper, at which
testimony was presented from representatives of both the “haves” and the “have-nots.”  Two
months later, the MHCC Staff released its analysis of the public comments and Staff
recommendations.  It noted the TAC recommendations that the 2 case/operating room
benchmark be eliminated and that capacity measurement be redefined to include other
factors, and observed that the public comments on the measurement issue “underscore the
significant limitations of the two approaches used to date in the State Health Plan,” including
the fact that, under the operating room approach, “existing programs may add operating
rooms without regulatory approval.”  WHITE PAPER: POLICY ISSUES IN PLANNING &
REGULATING OPEN HEART SURGERY SERVICES IN 
MARYLAND, Analysis of Public Comments
& Staff Recommendations, Maryland Health Care Commission, at 13 (2000).  The Staff
noted, in particular, the heavy, and increasing, concentration of cardiac surgery in the
Metropolitan Washington Region in WHC.  It found merit in the cap approach suggested by
several of the hospitals and recommended that the capacity of any program not exceed the
higher of 800 cases or 50% of the projected gross need for the planning region.  Id. at 15-16.
-14-
MHCC solicited and received additional public comments on the Staff analysis, and,
in October, 2000, its Staff issued a review of those comments and the Staff’s own further
recommendations.  Some of the comments, including those from Washington Adventist
Hospital and MedStar, severely criticized the Staff recommendation to impose a cap in
measuring capacity, urging that it was inappropriate for MHCC to consider market share in
measuring capacity.  Other comments supported the concept of a cap but continued to urge
that the cap be set at 40% rather than 50% of the regional need.  The Staff confirmed its
recommendation that, for purposes of the statistical calculation, the capacity of any program
not exceed the higher of 800 cases or 50% of the projected gross need.  With respect to the
comment that it was inappropriate for MHCC to consider market share, the Staff noted that
“planning policies governing program size [were] not unreasonable and clearly not outside
the scope of the Commission’s mandate.”
In conformance with its views, the Staff drafted a proposed amendment to the SHP-
Cardiac Services for consideration by MHCC that included, as part of the new methodology
for measuring capacity, the 800 cases/50% cap on individual programs.  With that cap,
WHC’s capacity, which otherwise would have been its actual 1999 performance of 2,950
open heart surgeries, was calculated at 2,126 cases (50% of the projected need of 4,251 cases
in the  Metropolitan Washington Region), a reduction of 824 cases.  That served to reduce
the capacity for the region from 4,432 cases to 3,608 cases.  When compared to the projected
need of 4,251 cases, that left a deficit of 643 cases, thereby producing a need for at least one
-15-
new program in the region.  The Commission considered the Staff proposal at its open
meeting on November 21, 2000, and approved it as a proposed amendatory regulation.
The proposal was sent to the AELR Committee and was published for comment in the
Maryland Register.  See Maryland Code, § 1-110 of the State Government Article; 28-2 Md.
Reg. 126 (Jan. 26, 2001).  Although individual members of the AELR Committee, in letters
to the Governor, the presiding officers of the Senate and House of Delegates, and MHCC,
expressed concern with or opposition to features of the plan, including the new methodology
for measuring capacity, the AELR Committee itself never took a formal vote with respect to
the proposed regulation and therefore never formally opposed its adoption.  See Maryland
Code, § 10-111.1 of the State Government Article.  MHCC held another evidentiary hearing
on February 8, 2001, at which 39 people testified.  On April 19, 2001, MHCC considered that
testimony and the further comment received with respect to the proposed regulation and, by
an 8-1 vote, adopted the regulation, to take effect May 14, 2001.  Notice of the final adoption
was published in the M aryland Register.  See 28-9 Md. Reg. 885 (May 4, 2001).
MedStar wasted no time in challenging the regulation, filing its action for declaratory
judgment on the very day that the new regulation took effect.  In its amended complaint – the
one now before us – it complained (1) that the cap adopted as part of the measurement of
capacity was arbitrary, capricious, and unauthorized; (2) that the regulation, having been
opposed by a majority of the members of the AELR Committee and not having received the
formal approval of the Governor, was not validly adopted; and (3) that the regulation
-16-
discriminated against out-of-State cardiac surgery programs in violation of Article I, § 8,
Clause 3 of the U.S. Constitution (the Commerce Clause).  The Circuit Court found no merit
in any of those complaints and entered a declaratory judgment that:  MHCC acted
consistently with its statutory duties and obligations in its promulgation of SHP-Cardiac
Services; that the portion thereof that relates to the establishment of cardiac surgery programs
did not violate either the Commerce Clause of the U.S. Constitution or § 10-111.1 of the
State Government Article; and that it was validly adopted.
MedStar’s amended complaint raised two issues under Maryland law – that the cap
applied to WHC was unauthorized and arbitrary and that the entire SHP-Cardiac Services
was invalid because it was adopted over the opposition of a majority of the members of the
AELR Committee.  The second issue has effectively been abandoned and, in my view, had
utterly no merit in any event.
MedStar’s argument, which the Court has found meritorious, is that MHCC is
required by its governing statute to determine whether there is a need for additional cardiac
surgery services in Maryland and that, in determining whether such a need exists, it cannot
use as a basis a number less than the number of surgeries actually being performed at the
present time.  There can be no lawful finding of need, the Court concludes, if the six
hospitals in the region are already performing all of the open heart surgeries.  Accordingly,
it holds that there is no authority for MHCC to use an artificial number, which, in its view,
is what a market share cap creates.  The Court regards MHCC’s decision to use such a cap
-17-
and, upon such use, to find a need for one additional program in the Metropolitan
Washington Region, as an error of law subject to a de novo standard of review.
In adopting a market share cap to help measure capacity, as part of SHP-Cardiac
Services, MHCC acted in a quasi-legislative capacity.  Adventist v. Suburban, 350 Md. 104,
122, 711 A.2d 158, 167 (1998) (“The development, adoption, and updating of the [State
Health] plan is a quasi-legislative function”); see also Fogle v. H & G Restaurant, 337 Md.
441, 453, 654 A.2d 449, 455 (1995).  The cap was part of a regulation.
Although, on judicial review of a regulation, we are required to determine for
ourselves whether the regulation exceeds the statutory authority of the agency (see State
Government Article, § 10-125), we have made clear that “courts should generally defer to
agencies’ decisions in promulgating new regulations because they presumably make rules
based upon their expertise in a particular field.”  Fogle, supra, 337 Md. at 455, 654 A.2d at
456; see also Ideal Federal v. Murphy, 339 Md. 446, 461, 663 A.2d 1272, 1279 (1995)
(citing Udall v. Tallman, 380 U.S. 1, 16, 85 S. Ct. 792, 801, 13 L. Ed. 2d 616, 625 (1965) for
the proposition that “[w]hen faced with a problem of statutory construction, this Court shows
great deference to the interpretation given the statute by the officers or agency charged with
its administration”) and MTA v. King, 369 Md. 274, 288, 799 A.2d 1246, 1254 (2002).
Pointedly, we added in Fogle that “[t]his is especially true of agencies working in the area
of health and safety, which rely extensively on their specialized knowledge of that area in
-18-
promulgating regulations.”  Fogle, supra, 337 Md. at 455, 654 A.2d at 456.  The Court seems
to acknowledge that principle but then, in my view, effectively disregards it.
Throughout the governing statute, the Legislature has directed MHCC, in terms of
both the State Health Plan and its CON review, to consider, among other things, cost,
availability, and accessibility of health care services.  Section 19-121(a), as it appeared before
the 2001 amendments, directed that the State Health Plan include the goals and policies for
Maryland’s health care system, the identification of unmet needs, excess services, minimum
access criteria, and services to be regionalized, and the methodologies, standards, and
criteria for CON review.  Section 19-121(e) also required MHCC to develop standards and
policies consistent with the State Health Plan that relate to the CON program and directed
that those standards should address the availability, accessibility, cost, and quality of health
care.
Those directions are broad ones.  The Legislature, wisely, has not chosen to direct or
limit MHCC with respect to the specifics of the State Health Plan but has left those specifics
to the Commission’s expertise, giving force to the judgment expressed in § 19-102 that the
health care regulatory system “is a highly complex structure that needs to be constantly
reevaluated and modified in order to better reflect and be more responsive to the ever
changing health care environment and the needs of the citizens of this State.”  There is, as
MedStar complains, no statute that specifically authorizes MHCC to impose a market share
cap in assessing capacity, but there is also no statute that forbids that approach or that
-19-
requires any other particular method of measuring capacity.  There is no statute that
specifically authorized the Commission to assume a capacity of 350 surgeries per hospital
per year, as it did in the 1990 Plan, or to adopt a benchmark of 2 surgeries per dedicated
operating room, five days a week, 50 weeks a year, as it did in the 1997 Plan.  There is no
statute that requires MHCC to consider the actual number of surgeries performed in District
of Columbia hospitals, some of which, no doubt, involve residents from Virginia and perhaps
other States and countries as well, in deciding capacity for the Metropolitan Washington
Region.  The fact that WHC actually performed a total of 2,950 adult open heart surgeries
in 1999 does not mean that, in any future year, that hospital could accommodate 2,950
Maryland residents from the Metropolitan Washington Region who may need such surgery.
When there is a broad delegation of authority to an agency to regulate an area of
activity, especially a complex area of activity, we have not required augmenting delegations
dealing with specific topics included within the broad grant.  See Christ v. Department, 335
Md. 427, 437-40, 644 A.2d 34, 38-39 (1994); Lussier v. Md. Racing Commission, 343 Md.
681, 688-89, 684 A.2d 804, 807-08 (1996).  Rather, we have “consistently held that, where
the Legislature has delegated such broad authority to a state administrative agency to
promulgate regulations in an area, the agency’s regulations are valid under the statute if they
do not contradict the statutory language or purpose.”  Lussier, supra, 343 Md. at 688, 684
A.2d at 807.
-20-
As noted, the Commission has experimented with several different approaches to the
measurement of net need in its 1990, 1997, and current Plans.  Although the Court views the
market share cap as arbitrary and artificial, having no relevance to need, it is no more so than
the alternative approaches.  Using 350 surgeries per hospital, or even the actual number of
surgeries performed in a given year, as a measure of capacity or need has no direct relevance
to the actual capacity of the hospitals to perform open heart surgeries or to what the need for
such surgeries may be.  Nor, for the reasons set forth by the TAC and the MHCC Staff, does
the assumption of 500 surgeries per dedicated operating room realistically measure either
capacity or need.  Apart from the artificiality of that approach, it effectively allows a few
hospitals to dominate the market forever and escape MHCC regulation, by simply opening
new operating rooms without the need for CON approval.  That prospect was particularly
acute in the Metropolitan Washington Region, where one hospital, WHC, had dramatically
increased its dominance from 50% to 71% in just five years.
The imposition of a market share cap was not an arbitrary or capricious decision.  As
noted, several hospitals in both the Washington and Baltimore metropolitan areas expressed
concern over the concentration of open heart surgery, in a major area of the State comprising
five counties with nearly 2 million people, in one hospital and one physician group.  That
concern was expressed as well by the MHCC Staff.  Much of the concern was patient-related
– that patients were being forced to leave their own physicians and communities to have
surgery elsewhere.  The result was decreased accessibility of the service to Maryland
-21-
residents and a denial of patient choice.  Another concern, noted by the Health Services Cost
Review Commission, was the effect the lack of competition had on the cost of the service –
that “increased competitiveness may result in additional cost savings for the health care
system as a whole.”  A market share cap was one reasonable method suggested by the MHCC
Staff and by several of the hospitals to address those concerns.  The hospitals recommending
a market share cap urged that the cap be set at 40% of the regional need; the Commission
opted for a 50% cap.
The record not only fails to support the Court’s accusation of arbitrary prejudice on
the part of MHCC but demonstrates precisely the opposite – that the Commission solicited
and considered extensive and continuous public input and that it was guided not only by that
input but as well by the views of the TAC it created and its own professional Staff.  It
obviously found some general merit in the view of Anne Arundel Medical Center:
“Imposing a reasonable limit on the number of procedures
counted from any one center – solely for the purpose of
estimating capacity under the Plan – balances the need for
access and maintaining quality.  It will also provide competition
to lower prices, thereby meeting all three prongs of health
planning – increasing access, maintaining quality, and
promoting cost efficiency.”
That view, shared by many of the groups who provided comment, is consistent with
and supports two of the governing principles adopted by MHCC in the SHP-Cardiac
Services: (1) “Specialized health care services should be assessed as part of the overall health
care delivery system” (COMAR 10.24.17.03B(2)), and (2) “Any expansion of the number
-22-
or distribution of specialized health care services should allow the proposed and existing
services within the region to achieve and sustain the volumes associated with optimal health
outcomes and cost-efficiency” (COMAR 10.24.17.03B(3)).  In explaining the first of these
principles, the Commission concluded that “[t]o avoid viewing specialized health care
services in isolation, the Commission will place a high priority on systematic integration and
look at the interaction of the specialized services with other components of the health care
delivery system within the region.”  COMAR 10.24.17.03B(2).  In explaining the second, it
stated:
“In measuring system capacity to determine whether additional
programs should be considered, the Commission will seek to
balance access, quality, and cost considerations.  The
Commission does not regulate the number of operating rooms
that can be used for open heart surgery in Maryland; rather it
regulates the number of open heart surgery programs.
Accordingly, the measurement of system capacity must consider
other factors.  Those factors include actual program utilization
and the distribution of caseload levels at which it would be
appropriate to consider the establishment of a new program to
enhance access without negatively impacting system quality and
cost.”
COMAR 10.24.17.03B(3) (emphasis added).
What all of this reveals is that the Commission attempted to achieve a balance
between assuring high quality of the service, which tends toward limiting the number of
programs, and assuring better access and lower cost, which tends toward greater competition
and thus more programs.  That is the very kind of decision that the Legislature entrusted to
-23-
MHCC’s expertise and judgment.  It is the kind of decision that this Court should be obliged
to respect.
Because the Court strikes down the Commission’s regulation on State law grounds,
it does not reach MedStar’s alternative complaint that the regulation constitutes an invalid
attempt to regulate interstate commerce.  Upon the assertion that the market share cap “is
targeted deliberately and solely at a single out-of-state institution (Washington Hospital
Center), and discriminates deliberately against that targeted out-of-state institution, and
unlawfully favors in-state institutions at the expense of the single targeted out-of-state
institution,” MedStar argues that the cap violates the Commerce Clause in the United States
Constitution because it “was the product of constitutionally impermissible motives and it
operates in a constitutionally impermissible fashion.”
The most fundamental problem with that argument is that none of its underlying
premises is even marginally supported by this record.  The market share cap was not targeted
at any out-of-State institution; it does not discriminate against any out-of-State institution;
it does not favor in-State institutions; it was not the product of Constitutionally impermissible
motives; and it does not operate in a Constitutionally impermissible fashion.
Article I, § 8, Clause 3 of the United States Constitution grants to Congress the power
to regulate interstate commerce.  At issue is not that affirmative grant directly but the
negative implication derived from it.  That implication, which has received the appellation
the “dormant” Commerce Clause, is to the effect that, even in situations in which Congress
-24-
has not acted either affirmatively to regulate an interstate activity or specifically to bar the
States from doing so, its very power to regulate precludes the States from acting in ways that
would burden interstate commerce.
Although the force of that negative implication flowed and ebbed in early Supreme
Court jurisprudence, the Court, in Southern Pacific Co. v. Arizona, 325 U.S. 761, 65 S. Ct.
1515, 89 L. Ed. 1915 (1945), struck a balance that continues to define what States may and
may not do.  The Court there noted that, in the absence of conflicting legislation by Congress,
there is “a residuum of power in the state to make laws governing matters of local concern
which nevertheless in some measure affect interstate commerce or even, to some extent,
regulate it.”  Id. at 767, 65 S. Ct. at 1519, 89 L. Ed. at 1923.  Later, in Pike v. Bruce Church,
Inc., 397 U.S. 137, 142, 90 S. Ct. 844, 847, 25 L. Ed. 2d 174, 178 (1970), the Court defined
the balance thusly:
“Although the criteria for determining the validity of state
statutes affecting interstate commerce have been variously
stated, the general rule that emerges can be phrased as follows:
Where the statute regulates even-handedly to effectuate a
legitimate local public interest, and its effects on interstate
commerce are only incidental, it will be upheld unless the
burden imposed on such commerce is clearly excessive in
relation to the putative local benefits.”
It is clear from this record that the market share cap approach was designed, and is
effective, as part of an evenhanded regulation of a matter of legitimate local public interest
– the assessment of health needs for the State of Maryland.  Although the unusual
concentration in the Metropolitan Washington Region was obviously a matter of particular
-25-
concern, the call for a market share cap came from many hospitals not in that area and was
adopted as a Statewide standard.  If the market in the Metropolitan Baltimore Region were
to become as “dysfunctional” as that in the Metropolitan Washington Region was alleged to
be, the standard would operate there as well.  Should one of the Maryland-based hospitals
in the Metropolitan Washington Region develop a lower cost/greater convenience/higher
quality service and, as a result, increase its market share to more than 50% of the total need,
it too would become subject to the market share cap.  In the words of the Supreme Court in
CTS Corp. v. Dynamics Corp., 481 U.S. 69, 87, 107 S. Ct. 1637, 1649, 95 L. Ed. 2d 67, 84
(1987) (quoting Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 36, 100 S. Ct. 2009,
2016, 64 L. Ed. 2d 702, 712 (1980)), the market share cap “visits its effects equally upon
both interstate and local business.”  There is no basis in this record for a conclusion that
WHC was “targeted,” or that there was any effort to discriminate against it or any other
hospital, in or out of Maryland.
Nor do I see any effective burden on WHC.  Applying a market share cap to its
program for the purpose of estimating overall capacity in the region in no way limits the
number of surgeries that hospital can perform and in no way precludes, or even discourages,
Maryland citizens from continuing to have their open heart surgery performed at that
hospital.  If, as a result of the finding of a net need for one additional program in the
Metropolitan Washington Region, another program is authorized, WHC, along with the other
five hospitals currently providing cardiac surgery service in the region, may face some
-26-
additional competition for patients, but I am aware of no pronouncement from the Supreme
Court (and none has been cited by MedStar) to the effect that subjecting an out-of-State
business to competition from an in-State business constitutes a burden on interstate
commerce.  It is, in fact, precisely the converse that States may not do – restrict access by
out-of-State entities to in-State economic activity.  I cannot conceive of how the possible
allowance of a hospital to enter a restricted market, thereby subjecting that market to
increased competition, can constitute an impermissible burden on interstate commerce.
The gravamen of MedStar’s complaint is that MHCC created a need for an additional
open heart surgery program in the Metropolitan Washington Region where none actually
existed and that it created that need by manipulating the relevant data.  That manipulation,
MedStar complains, was unauthorized by statute and, because it operated against an out-of-
State entity, violated the Commerce Clause.
My review of the record, however, shows that MHCC’s alleged “manipulation” was
merely the product of a considered and well-supported policy choice – that a program’s
capacity should be measured by its prior actual use, with a market share constraint to act as
an upper limit.  Such a constraint, MHCC found, was necessary to preserve access to low-
cost, quality open heart surgery services.  As that goal was central to the Commission’s
statutory purpose and responsibility, the constraint cannot be considered as unauthorized,
and, as it operates neutrally and without any direct burden on any individual hospital, it
cannot be said to constitute an impermissible burden on interstate commerce.  MHCC’s
-27-
decision to impose a market share cap merely reflects its choice between different
methodologies in measuring program capacity.  Its decision is not to be second-guessed by
the courts.
Judges Raker and Harrell have authorized me to state that they join in this dissenting
opinion.