IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA23-351

Filed 6 August 2024

Office of Administrative Hearings, No. 22 DHR 02685

DUKE UNIVERSITY HEALTH SYSTEM INC., Petitioner,

 v. 

N.C. DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF 

HEALTH SERVICE REGULATION, HEALTH CARE PLANNING & CERTIFICATE 

OF NEED SECTION, Respondent, 

 and 

UNIVERSITY OF NORTH CAROLINA HOSPITALS AT CHAPEL HILL AND 

UNIVERSITY OF NORTH CAROLINA HEALTH CARE SYSTEM, RespondentIntervenors.

Appeal by Petitioner from final decision entered on 9 December 2022 by 

Administrative Law Judge Melissa Owens Lassiter in the Office of Administrative 

Hearings. Heard in the Court of Appeals 15 November 2023.

Baker, Donelson, Bearman, Caldwell & Berkowitz, a Professional Corporation, 

by Kenneth L. Burgess, Matthew A. Fisher, Iain M. Stauffer, and William F. 

Maddrey, for petitioner-appellant.

Attorney General Joshua H. Stein, by Special Deputy Attorney General Derek 

L. Hunter, for respondent-appellee.

Nelson Mullins Riley & Scarborough LLP, by Noah H. Huffstetler, III, Candace 

S. Friel, Lorin J. Lapidus, Nathaniel J. Pencook, and D. Martin Warf, for 

respondent-intervenor.

MURPHY, Judge.

When an appellant challenges the substantive determinations of an 

administrative law judge (“ALJ”) on appeal from a contested case hearing for a 
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

Opinion of the Court

2

certificate of need, we review the decision for substantial evidence on the whole 

record. However, where our statutes dictate the proper scope of administrative 

review, the ALJ may not exceed that scope. Here, although we affirm the ALJ in 

almost all respects, we must remand for further findings insofar as the final decision 

granting the certificate of need relied upon a site other than that presented in the 

respondent’s application.

BACKGROUND

Petitioner-Appellant Duke University Health System, Inc. (“Duke”) challenges 

on appeal the 9 December 2022 final decision of the ALJ to uphold the conditional 

approval of a certificate of need (“CON”) granted to Respondents-IntervenorsAppellees University of North Carolina Hospitals at Chapel Hill and University of 

North Carolina Health Care System (collectively “UNC”) by the North Carolina 

Department of Health and Human Services (the “Agency”).

Pursuant to N.C.G.S § 131E-183(a)(1) and chapters 5 and 6 of the 2021 State 

Medical Facilities Plan (“SMFP”), the Agency determined the need to develop 40 

acute care beds and four operating rooms for the Durham/Caswell County health 

service areas. The “new acute care beds [and operating rooms] [could not] be 

developed without a CON issued by the Agency.” On 15 April 2021, in response to 

the need determinations of the SMFP, five applications to develop additional acute 

care beds and operating rooms for the Durham County area were submitted to and 

reviewed by the Agency. Applications were submitted by Duke and North Carolina 
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

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3

Specialty hospital/Southpoint Surgery Center, two Durham County health systems. 

Additionally, UNC applied as a new provider in Durham County.

On 1 May 2021, the Agency independently reviewed all applications against 

the statutory review criteria found in N.C.G.S. § 131E-183(a)1 and the applicable 

1 In pertinent part, N.C.G.S. § 131E-183(a) provides: 

(a) The Department shall review all applications utilizing the 

criteria outlined in this subsection and shall determine that an 

application is either consistent with or not in conflict with these 

criteria before a certificate of need for the proposed project shall be 

issued.

(1) The proposed project shall be consistent with applicable 

policies and need determinations in the State Medical Facilities Plan, 

the need determination of which constitutes a determinative limitation 

on the provision of any health service, health service facility, health 

service facility beds, dialysis stations, operating rooms, or home health 

offices that may be approved.

. . . . .

(3) The applicant shall identify the population to be served by 

the proposed project, and shall demonstrate the need that this 

population has for the services proposed, and the extent to which all 

residents of the area, and, in particular, low income persons, racial and 

ethnic minorities, women, handicapped persons, the elderly, and other 

underserved groups are likely to have access to the services proposed.

. . . .

(12) Applications involving construction shall demonstrate 

that the cost, design, and means of construction proposed represent the 

most reasonable alternative, and that the construction project will not 

unduly increase the costs of providing health services by the person 

proposing the construction project or the costs and charges to the public 

of providing health services by other persons, and that applicable 

energy saving features have been incorporated into the construction 

plans.

N.C.G.S. § 131E-183(a)(1), (3), (12) (2023).
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

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4

regulatory review criteria found in 10A NCAC 14C. Southpoint Surgery Center 

submitted an application to add four operation rooms based on the need 

determination in the 2021 SMFP; UNC Hospitals submitted an application to develop 

40 acute care beds and two operating rooms in the Research Triangle Park area. 

Meanwhile, Duke submitted three applications: the first was to add 40 acute care 

beds and two operating rooms to its existing Durham facility; the second was to 

develop two operating rooms; and a final application sought to develop two more 

operating rooms at its Ambulatory Surgery Center. The Agency found that 

Southpoint Surgery Center failed to demonstrate financial feasibility and failed to 

show that its application was not unnecessarily duplicative of existing or approved 

services, among other criteria, while it found both Duke and UNCs applications 

conforming to all the review criteria. As a result, the Agency denied Southpoint’s 

CON application.

Since the need determination in the SMFP places limits on the number of acute 

care beds that can be approved by the Agency—40 acute care beds and two other 

operating rooms—accepting both the Duke and UNC applications would have 

resulted in more acute care beds and operating rooms than the SMFP need 

determination for Durham County allowed. The Agency therefore concluded that, 

because the SMFP allowed for only 40 acute beds in the Durham County area, 

granting Duke’s application would require the denial of UNC’s application and vice 

versa. Pursuant to the review criteria under N.C.G.S. § 131E-183, the Agency 
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

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5

conducted a comparative analysis review of both Duke and UNC CON applications 

for 40 acute care beds, as well as another for the two operating rooms.

On 21 September 2021, “[b]y decision and Required State Agency Findings[,] 

the Agency (1) conditionally approved the UNC Hospitals-RTP Application; (2) 

conditionally approved [Duke’s Ambulatory Surgery Center’s] Application [for two 

additional operating rooms]; (3) denied [Duke’s] [two operating rooms] Application; 

(4) denied [Duke’s acute care beds] Application; and (5) denied the Southpoint 

Application [for two operating rooms].” By letter and Required State Agency 

Findings dated 21 September 2021, the Agency informed Duke that its application 

for 40 acute care beds and two operating rooms had been denied. Also on 21 

September 2021, the Agency issued the Required State Agency Findings containing 

the findings and conclusions upon which it based its decisions.

On 21 October 2021, Duke filed a petition for contested case hearing pursuant 

to N.C.G.S § 150B-23 alleging that the Agency had erroneously approved the CON 

application of UNC in which UNC sought to develop two operating rooms and 40 

acute care beds in Durham County. On 10 November 2021, the OAH issued an order, 

by consent of all parties, to grant UNC the right to intervene in the contested case 

hearing. The ALJ issued a final decision in which it affirmed the Agency’s decision 

finding UNC’s application to be comparatively superior to Duke’s application. Duke 

appealed.

ANALYSIS
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On appeal, Duke challenges the ALJ’s final decision on four distinct bases, all 

of which, in substance, challenge the original determinations of the Agency and only 

derivatively challenge the ALJ’s final decision insofar as it did not reverse the 

Agency. The bases for its challenges on appeal are (A) that the ALJ incorrectly 

affirmed the Agency’s determination that UNC’s application was superior to Duke’s 

with respect to geographic accessibility; (B) that the ALJ incorrectly affirmed the 

Agency’s determination that UNC’s application was superior to Duke’s on the basis 

of competition; (C) that the ALJ incorrectly affirmed the Agency’s finding that UNC’s 

application conformed with N.C.G.S. § 131E-183(a)(3); and (D) the ALJ incorrectly 

affirmed the Agency’s finding that UNC’s application conformed with N.C.G.S. § 

131E-183(a)(12).

In reviewing the ALJ’s determinations, our standard of review is governed by 

N.C.G.S. § 150B-51, which permits a party seeking judicial review to challenge an 

ALJ’s final decision 

if the substantial rights of the petitioners may have been 

prejudiced because the findings, inferences, conclusions, or 

decisions are:

(1) In violation of constitutional provisions;

(2) In excess of the statutory authority or jurisdiction of the 

agency or administrative law judge;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Unsupported by substantial evidence admissible under 

[N.C.G.S. §] 150B-29(a), [N.C.G.S. §] 150B-30, or [N.C.G.S. 

§] 150B-31 in view of the entire record as submitted; or

(6) Arbitrary, capricious, or an abuse of discretion.
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

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7

N.C.G.S. § 150B-51(b) (2023). “With regard to asserted errors pursuant to 

subdivisions (5) and (6) of subsection (b) of [N.C.G.S. § 150B-51], the court shall 

conduct its review of the final decision using the whole record standard of review.” 

N.C.G.S. § 150B-51(c) (2023). 

“In applying the whole record test, the reviewing court is required to examine 

all competent evidence in order to determine whether the [final] decision is supported 

by substantial evidence.” Surgical Care Affiliates, LLC v. N.C. Dep’t of Health & 

Hum. Servs., 235 N.C. App. 620, 622-23 (2014) (marks omitted), disc. rev. denied, 368 

N.C. 242 (2015). “Substantial evidence is such relevant evidence as a reasonable 

mind might accept as adequate to support a conclusion.” Id. at 623. “This test does 

not allow the reviewing court to replace the [ALJ’s] judgment as between two 

reasonably conflicting views, even though the court could justifiably have reached a 

different result had the matter been before it de novo.” Mills v. N. Carolina Dep’t of 

Health & Hum. Servs., 251 N.C. App. 182, 189 (2016) (marks omitted).

A. Relative Geographic Accessibility

We first address whether the ALJ properly affirmed the Agency’s conclusions 

as to geographic accessibility. Duke contends that the ALJ’s decision was erroneous 

because the Agency had favorably evaluated the UNC application on the basis of 

geographic accessibility despite being located in Research Triangle Park, a 

nonresidential area of Durham, and had analyzed the geographic access factor in a 
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8

manner that lacked a coherent guiding principle and deviated from the methodology 

of previous reviews. We disagree.

While analyzing the geographic access factor, the ALJ’s final decision 

acknowledged many of the issues Duke raises before us and nonetheless affirmed the 

Agency’s determination in favor of UNC:

420. The Agency utilized the comparative factor of 

Geographic Accessibility in its comparative analysis of the 

UNC and Duke Applications. (Jt. Ex. 1, pp. 1609, 1619). 

421. In analyzing this comparative factor, the Agency 

looked at where each applicant proposes to place the 

proposed services. (Meyer, Vol. 7, p. 1299). An application 

placing the services at issue in a location where there are 

not any such services is deemed the more effective 

alternative under this factor. (Jt. Ex. 1, p. 253; Carter, Vol. 

11, pp. 1874-75).

422. Ms. Sandlin opined that the Agency erred in its 

analysis of this comparative factor as having geographic 

dispersal of these need determined assets is not critical 

because Durham has less land mass than other counties in 

North Carolina. (Sandlin, Vol. 6, pp. 1058-67).

423. Mr. Meyer opined that this factor is important because 

it is related to access, a foundational principle of the CON 

Law. The CON Law seeks to avoid geographic 

maldistribution of services, and North Carolina has a 

“compelling interest in helping to ensure that all North 

Carolinians have access to [. . .] healthcare services[.]” 

(Meyer, Vol. 7, p. 1299).

424. In the acute care beds review, the Agency noted there 

were 1,388 existing and approved acute care beds in the 

Durham/Caswell County service area, all of which are 

located in the central area of Durham County, illustrated 

by the following table:
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

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Facility Total AC 

Beds

Address Location

Duke 

University 

Hospital

1,048 2301 

Erwin Rd, 

Durham 

27710

Central 

Durham 

County

Duke 

Regional 

Hospital

316 3643 N. 

Roxboro 

Rd, 

Durham 

27704

Central 

Durham 

County

North 

Carolina 

Specialty 

Hospital

24 3916 Ben 

Franklin 

Blvd, 

Durham 

27704

Central 

Durham 

County

(Jt. Ex. 1, p. 1609; see also Meyer, Vol. 7, p. 1300).

425. Similarly, in the ORs review, the Agency noted that 

there were 93 existing and approved ORs in Durham 

County, the vast majority of which were concentrated in 

the central area of Durham County, illustrated by the 

following table:

Facility Type Durham 

SA OR 

System

Total 

ORs

Address Location

NCSH Exiting 

Hospital

NCSH 4 3916 Ben 

Franklin 

Blvd, 

Durham 

27704

Central 

Durham 

County

DUH Exiting 

Hospital

Duke 66 2301 

Erwin Rd, 

Durham 

27710

Central 

Durham 

County
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DRH Exiting 

Hospital

Duke 13 3643 N. 

Roxboro 

Rd, 

Durham 

2704

Central 

Durham 

County

DASC Existing 

ASF

Duke 4 2400 Pratt 

St, 

Durham 

2704

Central 

Durham 

County

Arringdon Existing 

ASF

Duke 4 5601 

Arringdon 

Park Dr, 

Morrisville 

27560

South 

Durham, 

near I540 

at I40

SSC Approved 

ASF

NCSH 2 7810 NC 

Hwy 751, 

Durham 

27713

South 

Durham, 

near Hwy 

147

UNC-RTP Proposed 

Hospital

UNC 2 Parcels in 

[RTP] 

27709

South 

Durham, 

just 

below I40

(Jt. Ex. 1, p. 1620).

426. For both the acute care beds and ORs comparative 

analyses, the Agency determined that the UNC Application 

was the more effective alternative, and Duke’s Applications 

were the less effective alternatives for geographic 

accessibility. (Jt. Ex. 1, pp. 1609, 1620; Hale, Vol. 1, p. 

188).

427. UNC proposed placing the acute care beds in this 

Review in the southern area of Durham County, where 

there were no existing acute care beds, while Duke 

proposed placing additional beds at DUH where there were 

already over one thousand existing or approved acute care 

beds. (Jt. Ex. 1, p. 1609; Hale, Vol. 1, p. 188). The Agency 

also found UNC Hospitals-RTP, Duke Arringdon, and 

Southpoint Surgery Center to be more effective because 
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they “propose to develop ORs in South Durham County 

where there are currently only six of 93 existing/approved 

Durham County ORs[,]” as opposed to the Duke ORs 

Application which proposed placing additional ORs at 

DUH where there were already sixty-six existing and 

approved ORs. (Jt. Ex. 1, p. 1620).

428. Mr. Meyer agreed with the Agency’s analysis of this 

comparative factor. (Meyer, Vol. 7, pp. 1299-1300, 1330-

31). In the beds analysis, the existing facilities in Durham 

are concentrated in the center of the county. (Jt. Ex. 97, p. 

11; Meyer, Vol. 7, p. 1301). Mr. Meyer analyzed the 

locations of hospitals in certain populous counties in North

Carolina, including Wake, Mecklenburg, Guilford, and 

Forsyth counties, all of which have hospitals in the 

perimeter of the county and generally have good 

geographic dispersal of hospitals. (Jt. Ex. 103; Meyer, Vol. 

7, pp. 1302-1305). His analysis showed that compared to 

these highly populated counties, Durham County as 

another highly populated county, “does not have an acute 

care hospital that’s located anywhere but in the center of 

the county,” (Meyer, Vol. 7, p. 1305).

429. Similarly, both Mr. Meyer and Mr. Carter observed 

that both the UNC Application and the Duke Arringdon 

application proposed to place ORs in south Durham 

County, and both were deemed the more effective 

alternative as to this comparative factor, which they agree 

was the correct decision. (Meyer, Vol. 7, pp. 1330-31; 

Carter, Vol. 11, pp. 1886-87).

430. While Durham County has relatively small land mass 

compared to other counties, Durham County is the third 

most densely populated county in the state, and such 

density leads to traffic congestion that can make 

geographic dispersion of healthcare facilities more 

important. (Meyer, Vol. 7, pp. 1306-07, 1309-10).

431. Ms. Sandlin produced two maps showing different 

amounts of population density in Durham County. In 

Sandlin’s initial expert report, the map showing population 
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density illustrated that UNC Hospitals-RTP would be 

located in a densely-populated area of the county where 

there are no existing hospitals. (Jt. Ex. 54, p. 12; Meyer, 

Vol. 7, p. 1309). However, in Sandlin’s rebuttal report, the 

map showing population density illustrated there is no 

population in the zip code where UNC Hospitals-RTP 

would be located, but still showed that the surrounding zip 

codes are densely populated. (Jt. Ex. 212; Meyer, Vol. 7, 

pp. 1307-09).[] [A footnote affixed to this finding in the 

original text reads as follows: “Similarly, there is no 

population in the zip code that comprises DUH. (Jt. Ex. 4, 

p. 242; Sandlin, Vol. 7, p. 1201; Carter, Vol. 11, p. 1903).”]

432. Mr. Meyer opined that despite the lack of population 

in UNC Hospitals-RTP’s zip code, UNC’s primary site is 

easily accessible by “the largest, most significant traffic 

arteries in that part of the county” such that residents in 

densely-populated southern Durham County would have 

easy access. (Meyer, Vol. 7, pp. 1308-09).

433. Mr. Carter likewise explained that the UNC 

Application illustrated that UNC Hospitals-RTP is located 

along prominent roadways in addition to being located near 

the heavily populated southern Durham zip codes. (Carter, 

Vol. 10, p. 1703; see also Jt. Ex. 4, pp. 51-58).

434. Ms. Sandlin also opined that UNC Hospitals-RTP is 

not near a majority of Durham County zip codes and that 

this does not improve geographic access for the majority of 

the service area zip codes. (Sandlin, Vol. 6, p. 1061).

435. In contradiction, Mr. Meyer noted that it is more 

important for a healthcare facility to be proximate to more 

people, rather than more zip codes. (Meyer, Vol. 7, p. 1310). 

The zip codes in southern Durham County which are near 

UNC Hospitals-RTP “comprise more than half of the 

population of Durham County.” (Jt. Ex. 4, p. 55; Meyer, 

Vol. 7, p. 1310; Sandlin, Vol. 7, pp. 1205-06).
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436. When looking at population rather than zip codes, 

UNC Hospitals-RTP was proximate to over half of the 

population of Durham County. (Meyer, Vol. 7, p. 1311-12).

437. Mr. Carter added that UNC Hospitals-RTP’s primary 

site is “on the border of RTP” and is “near where a lot of 

people live.” (Carter, Vol. 11, pp. 1904-05). He further 

opined that UNC Hospitals-RTP’s location being in the 

southern region of Durham County improves access by 

providing another option for those residents. While some of 

those residents may still choose one of the existing 

facilities, they have another option that may be closer to 

where they live. (Carter, Vol. 10, p. 1733). Furthermore, 

compared to DUH, UNC Hospitals-RTP would be easier to 

find parking and navigate as a smaller facility. (Id. at pp. 

1733-34).

438. The fact that DUH may be closer to some residents in 

Caswell County and northern Durham County does not 

change the Agency’s analysis that UNC Hospitals-RTP 

enhances geographic accessibility. In Mr. Meyer’s opinion:

[R]esidents of northern Durham County are not going 

to be disadvantaged by this proposal. They will 

continue to have the same access to any of those 

existing acute care hospitals that they do currently. 

This doesn’t take away from their access.

(Meyer, Vol. 7, pp. 1313-14). Instead, UNC’s proposal 

“enhances access for south Durham County residents,” 

which is where the greatest need exists for these services 

due to the population growth in that area. (Id. at p. 1314).

439. As a small hospital, “the intent is not to serve each 

and every patient within Durham County,” because UNC 

Hospitals-RTP does not “have the capacity to do that.” 

(Carter, Vol. 10, pp. 1703-04).

440. Ms. Sandlin testified that the Agency’s analysis of this 

comparative factor was inconsistent with the way the 

Agency analyzed it in prior reviews. (Sandlin, Vol. 6,
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pp. 1045-46).

441. Mr. Meyer disagreed with Ms. Sandlin of the Agency’s 

prior reviews. While he interpreted Ms. Sandlin’s 

testimony as opining that the Agency needs to analyze 

geographic accessibility based on municipalities, Mr. 

Meyer noted that there is no rule requiring that. Moreover, 

analyzing geographic accessibility based on municipalities 

is impractical in Durham County, where there is only one 

incorporated municipality, the City of Durham. (Meyer, 

Vol. 7, pp. 1314-15). More importantly, the geographic 

accessibility comparative factor should look at where 

people live compared to the existing and proposed services. 

(Id. at 1315-16).

442. Likewise, Mr. Carter disagreed with Ms. Sandlin. In 

his opinion, the 2020 Forsyth Acute Care Beds Review 

mentioned by Ms. Sandlin was an inapt comparison, where 

the existing hospitals were more dispersed than the 

existing facilities within Durham that are contained in a 

five-mile radius. (Carter, Vol. 11, p. 1877)

443. Ms. Sandlin testified that UNC’s analysis splitting 

Durham into different regions based on zip codes “seemed 

manufactured and illogical.” (Sandlin, Vol. 6, p.

1017).

444. However, Ms. Sandlin’s testimony ignores the fact 

that Duke itself, assisted by Keystone Planning while Ms. 

Sandlin was still with that company, analyzed geographic 

accessibility in this same “manufactured” manner in its 

2018 application to develop the Duke Arringdon facility. In 

its 2018 application, Duke described the same four zip 

codes (27703, 27709, 27707 and 27713) as “South Durham” 

that UNC described as south Durham in its application in 

this Review. (Compare Jt. Ex. 106, p. 30 with Jt. Ex. 4, p. 

54; see also Meyer, Vol. 7, pp. 1317-18; Sandlin, Vol. 6, pp. 

1120-22).

445. Mr. Carter explained the process by which UNC 

determined to split Durham County into regions and 
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concluded that UNC divided Durham County into three 

regions by zip codes so it could analyze where in the county 

a new hospital should be located, which the SMFP does not 

discuss in any detail. (Carter, Vol. 10, pp. 1704-06). Mr. 

Carter further opined that not all patients within the City 

of Durham were equally served by the existing hospitals 

due to the lack of available facilities in southern Durham. 

In other words, “there aren’t enough facilities to serve 

residents in Durham County notwithstanding the fact that 

the municipality of Durham may go well into the southern 

part of the county.” (Id. at p. 1708).

446. Ultimately, Mr. Meyer agreed with the Agency’s 

analysis of this comparative factor, describing it as “an 

easy call for the Agency.” (Meyer, Vol. 7, p. 1318).

447. Mr. Carter agreed that the Agency was correct in 

determining the UNC was the more effective alternative, 

and that it was consistent with other findings he has seen. 

(Carter, Vol. 11, pp. 1874, 1886). Mr. Carter further opined 

that he did not believe “the Agency’s analysis or 

conclusions would have been any different if UNC had 

proposed a different site really anywhere else in the county 

that was not within five miles of another hospital.” (Id. at 

p. 1877). 

Reviewing the record for substantial evidence, see Surgical Care Affiliates, 235 N.C. 

App. at 622-23, we affirm the ALJ’s decision with respect to this factor. 

At the threshold, we note that Duke has primarily framed its arguments as 

though our task on appeal were to review the determinations of the Agency rather 

than the ALJ. However, this is incorrect. While the statute governing judicial review 

of administrative decisions, N.C.G.S. § 150B-51, used to contemplate direct judicial 

review of Agency determinations, revisions by our General Assembly in 2011 have 

refocused our substantive review on the final decision of the ALJ:
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In 2011, the General Assembly amended the 

Administrative Procedure Act (“APA”), conferring upon 

administrative law judges the authority to render final 

decisions in challenges to agency actions, a power that had 

previously been held by the agencies themselves. See 2011 

N.C. Sess. Laws 1678, 1685-97, ch. 398, §§ 15-55. Prior to 

the enactment of the 2011 amendments, an ALJ hearing a 

contested case would issue a recommended decision to the 

agency, and the agency would then issue a final decision. 

In its final decision, the agency could adopt the ALJ’s 

recommended decision in toto, reject certain portions of the 

decision if it specifically set forth its reasons for doing so, 

or reject the ALJ’s recommended decision in full if it was 

clearly contrary to the preponderance of the evidence. See

[N.C.G.S.] § 150B36, repealed by 2011 N.C. Sess. Laws 

1678, 1687, ch. 398, § 20. As a result of the 2011 

amendments, however, the ALJ’s decision is no longer a 

recommendation to the agency but is instead the final 

decision in the contested case. [N.C.G.S.] § 150B–34(a).

Under this new statutory framework, an ALJ must “make 

a final decision . . . that contains findings of fact and 

conclusions of law” and “decide the case based upon the 

preponderance of the evidence, giving due regard to the 

demonstrated knowledge and expertise of the agency with 

respect to facts and inferences within the specialized 

knowledge of the agency.” Id.

AH N.C. Owner LLC v. N.C. Dep’t of Health & Hum. Servs., 240 N.C. App. 92, 98-99 

(2015). Thus, our review of substantive issues will be based on the ALJ’s final 

decision. 

Having established the proper scope of our review, we are entirely satisfied 

that substantial evidence exists to support each of the arguments Duke raises on 

appeal. While Duke argues that the ALJ’s decision was reversible insofar as it found 

UNC’s application favorable on the basis of geographic access in a zip code with no 
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residents, the ALJ cited substantial evidence indicating that the immediately 

adjacent zip codes are densely populated—to say nothing of the potential usage the 

proposed location may receive from those who work, rather than reside, in the 

proposed location of the UNC facility. As to UNC’s allegation that the Agency 

deviated from its mode of analysis in previous reviews, rendering its decision 

arbitrary and capricious, we cannot say a deviation without a more specific argument 

as to why the analysis employed in this case was deficient that such an alleged 

deviation constitutes reversible error, especially absent any directly binding law on 

point to support such a proposition. The task before the Agency is multifaceted, and 

the CON review process does not demand that it apply a fixed lens to every case, 

especially where some considerations may be more salient in a given case than in 

others. The ALJ’s findings and conclusions with respect to geographic access are 

affirmed.

B. Relative Impact on Competition

Second, we address whether the ALJ properly affirmed the Agency’s 

conclusions as to the Duke and UNC applications’ relative impact on competition. 

Duke argues that the ALJ erroneously affirmed the Agency’s decision with respect to 

this comparative factor because the Agency believed the comparative factor of 

promoting market competition would always favor a new market entrant and because 

the Agency failed to consider “quality, cost, and access” as part of the competition 

factor. With these arguments, too, we disagree.
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While the ALJ’s final decision does discuss this factor, we note that Duke’s 

stance on this issue takes the form of a broad methodological critique rather than an 

allegation that a specific analytical error occurred, making reproduction of this 

portion of the record unnecessary. To the extent this argument constitutes an 

allegation of legal error, we apply the de novo, rather than whole record, standard of 

review. N.C.G.S. § 150B-51(c) (2023) (“With regard to asserted errors pursuant to 

subdivisions (1) through (4) of subsection (b) of this section, [subsection (b)(4) 

referring to “other error[s] of law[,]”] the court shall conduct its review of the final 

decision using the de novo standard of review.”). 

At the threshold, we note once again that Duke’s arguments principally 

concern the determinations of the Agency and not the ALJ. However, as the ALJ’s 

final decision is the proper object of our review, see AH, 240 N.C. App. at 98-99, we 

base our analysis primarily on that decision. Bearing that in mind, very few of the 

issues raised by Duke on appeal directly apply to the ALJ’s final decision. The 

alleged defect that the Agency believed the competition factor would always favor a 

new market entrant—a view found neither in the Agency’s written decision nor the 

final decision of the ALJ, but sourced to testimony by Agency employees before the 

Office of Administrative Hearings—was not present in the reasoning of the ALJ, who 

indicated a typical preference for a new market competitor rather than a categorical 

one.

However, even if the ALJ’s view had been as categorical as the view Duke 
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imputes to the Agency, this would hardly be a case where such reasoning would merit 

reversal on appeal. Duke has not disputed the ALJ’s finding that, of the 1,388 acute 

care beds in Durham County, only twenty are outside Duke’s control. Nor has Duke 

otherwise presented us with any reason to believe UNC’s facility would present more 

of a threat to competition for this service in Durham County than its own market 

dominance.2 Rather, its arguments largely reduce to a contention that it could not 

realistically “win” the competition factor. Barring radically extenuating 

circumstances, we do not think an entity controlling more than 98% of a service 

within a county should realistically expect to “win” when a neutral third party 

considers whether a new market entrant would be the healthier choice for 

competition. Cf. Craven Reg’l Med. Auth. v. N.C. Dep’t of Health & Hum. Servs., 176 

N.C. App. 46, 57 (2006) (“[The petitioner]’s argument appears to be that if it operated 

all three of the MRI scanners this would somehow foster competition rather than if a 

competitor operated one of the MRI scanners. [The petitioner], in effect, argues that 

giving it a monopoly in the service area would increase competition. We decline to 

adopt this incongruous line of reasoning.”).

2 Duke points out that UNC, despite currently operating no acute care beds in Durham County, 

is already a major medical provider in the greater triangle region, and it further contests the adequacy 

of the ALJ’s analysis as to competition on this basis. While we recognize Duke’s concern insofar as a 

regional oligopoly may be unhealthy for the state of market competition in the absolute sense, the 

ALJ’s assessment of competition was relative, not absolute. Thus, we cannot say the ALJ erred in its 

determination that, as between the two regionally dominant providers being considered in the 

competitive application process, the one not currently operating acute care beds within Durham 

County creates a more favorable impact on competition within the county than the one currently 

wielding a near-monopoly for that service. 
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Duke also argues that the failure to consider cost and quality of care within 

the scope of the competition factor rendered its decision reversibly arbitrary. This 

argument is meritless. Impact on the health of market competition is one of eleven

factors considered in the competitive CON review process, several others of which 

account for cost and quality of care. We affirm the ALJ’s determinations as to relative 

impact on competition.

C. UNC’s Compliance with Criterion 3

We next address whether the ALJ properly affirmed the Agency’s conclusions 

as to UNC’s compliance with N.C.G.S. § 131E-183(a)(3). N.C.G.S. § 131E-183(a)(3), 

or “Criterion 3,” provides that a certificate of need applicant 

shall identify the population to be served by the proposed 

project, and shall demonstrate the need that this 

population has for the services proposed, and the extent to 

which all residents of the area, and, in particular, low 

income persons, racial and ethnic minorities, women, 

handicapped persons, the elderly, and other underserved 

groups are likely to have access to the services proposed.

N.C.G.S. § 131E-183(a)(3) (2023). With respect to Criterion 3, Duke argues that 

UNC’s application was insufficient because it relied on unrealistically low projections 

for the number of out-of-county patients the proposed facility could be expected to 

attract and because UNC’s application allegedly failed to account for the absence of 
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high-acuity care at the proposed facility.3 As these arguments are derived from 

factual disagreements with the Agency findings—which, in the ALJ review, were 

supported by substantial evidence, see Surgical Care Affiliates, 235 N.C. App. at 622-

23—we affirm the ALJ.

In its final decision, the ALJ affirmed the Agency’s conclusion that UNC’s CON 

application was in compliance with criterion 3, finding, in relevant part, as follows:

85. Criterion (3) requires the applicant to “identify the 

population to be served by the proposed project” and to 

“demonstrate the need that this population has for the 

services proposed, and the extent to which all residents of 

the area, and, in particular, low-income persons, racial and 

ethnic minorities, women, handicapped persons, the 

elderly, and other underserved groups are likely to have 

access to the services proposed.” ([N.C.G.S.] § 131E183(a)(3); Jt. Ex. 1, p. 1502).

86. To find an applicant conforming with this Criterion, the 

Agency engages in a four-part analysis: (1) the applicant 

must identify the population to be served, also referred to 

as the patient origin; (2) the applicant must demonstrate 

the need of the identified population for the services 

proposed; (3) the applicant must project the utilization of 

these services by the identified population in the first three 

operating years of the project; and (4) the applicant must 

project the extent to which the projected population, and 

particularly those in medically underserved groups, have 

access to the proposed services. (Jt. Ex. 1, p. 1502; Hale, 

Vol. 2, p. 224; see also Meyer, Vol. 5, p. 936). To be found 

conforming, the information provided by the applicant 

must be reasonable and adequately supported. (Hale, Vol. 

3 Duke also argues that UNC’s alleged nonconformity with criterion 3 brings it out of 

conformity with criteria 1, 4, 5, 6, and 18(a). However, because we determine below that Duke’s 

arguments with respect to criterion 3 are without merit, we need not independently evaluate this 

argument. 
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2, pp. 223-24). 

 i. Patient Origin

87. The first element of Criterion (3) discusses patient 

origin, which is where the applicant projects patients will 

come from to utilize the proposed services. (Jt. Ex. 1, p. 

1509; Hale, Vol. 2, p. 225). To analyze patient origin, the 

Agency reviews the information provided by the applicant 

and determines whether that information is reasonable 

and adequately supported. (Hale, Vol. 2, pp. 225-26).

88. The UNC Application provided that the patient origin 

for UNC Hospitals-RTP would include 90 percent Durham 

County residents, with some in-migration from Wake, 

Chatham, and Caswell Counties. (Jt. Ex. 4, p. 43; Carter, 

Vol. 10, pp. 1690-92).

89. To determine its projected patient origin, UNC 

considered the limited size of the facility and the 

overwhelming need in Durham County. While UNC could 

have used a higher percentage of in-migration in its 

projections, doing so would have been more aggressive, 

especially given that a small hospital would be less likely 

to attract patients from outside of the county. (Carter, Vol. 

10, pp. 1692-93). 

90. Ms. Sandlin acknowledged that her opinions regarding 

UNC’s projected patient origin, in-migration, and patient 

population were not based on any Duke facilities of similar 

size, since there are none. She also did not perform any 

analysis of the patient origin of a hospital of similar size 

developed by UNC in developing her opinions. (Sandlin, 

Vol. 7, pp. 1165-66). 

91. Daniel Carter, one of UNC’s expert witnesses, opined 

that UNC’s 10 percent in-migration assumption was wellsupported, reasonable, and conservative. (Carter, Vol. 10, 

pp. 1695-96). The UNC Application analyzed in-migration 

at all 116 acute care hospitals in North Carolina to reach 

its 10 percent in-migration assumption, and it also 
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accounted for UNC Hospitals-RTP’s smaller size and 

densely populated location. (Jt. Ex. 4, pp. 146-47; Carter, 

Vol. 10, pp. 1693, 1695). 

92. Mr. Carter analogized UNC Hospitals-RTP to UNC 

Johnston Health in Clayton, a 50-bed community hospital 

which is approximately the same distance from Wake 

County as UNC Hospitals-RTP would be. At UNC 

Johnston Health, there is approximately 9 percent inmigration from Wake County despite its proximity. 

(Carter, Vol. 10, pp. 1693-94).

93. Mr. Carter also noted that had UNC proposed higher 

in-migration, it would also have the effect of increasing 

UNC Hospitals-RTP’s utilization and the financial 

feasibility of the project, which would strengthen its 

application for both Criteria (3) and (5). (Id. at p. 1693). 

Furthermore, he noted that UNC could have supported an 

assumption of 20 percent or even 30 percent in-migration 

without going beyond its maximum utilization. (Id. at pp. 

1694-95). 

94. Based upon the information provided in the UNC 

Application, the Agency determined that UNC adequately 

identified the patient origin for the population it proposed 

to serve. (Jt. Ex. 1, p. 1511; Hale, Vol. 2, pp. 226-27).

 ii. Demonstration of Need

95. The second element of Criterion (3) analyzes whether 

the applicant demonstrates that the population proposed 

to be served needs the proposed services. (Jt. Ex. 1, p. 1511; 

Hale, Vol. 2, p. 231-32). To conduct its analysis of need, the 

Agency reviews the information provided by the applicant 

and assesses whether that information is reasonable and 

adequately supported. (Hale, Vol. 2, pp. 231-32). This 

differs from the need determination of Criterion (1), which 

focuses on the need determination in the SMFP, rather 

than the needs of patients for the proposed services.

96. UNC provided several reasons why the patients it 
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proposed to serve at UNC Hospitals-RTP needed the 

proposed services. The Agency determined that UNC’s 

methodology and resulting projections were both 

reasonable and adequately supported. (Sandlin, Vol. 7, p. 

1214).

97. The first reason provided by UNC is the population 

growth and aging in Durham County. (Jt. Ex. 4, pp. 48-

50). UNC noted that Durham County is the sixth most 

populous county and the third fastest growing county in 

North Carolina, with the growth rate expected to continue 

into the next decade. (Id. at 48-49). This growth, combined 

with the aging of the population, demonstrated that there 

will be more patients needing acute care services. (Id. at 

49-50; Carter, Vol. 10, pp. 1700-01).

98. The second reason provided by UNC is the need for a 

new hospital in Durham County. As of the date the 

applications were submitted, there were no acute care beds 

in the southernmost zip codes in Durham County, where 

most of the population and growth exists within the county. 

(Jt. Ex. 4, pp. 51-55). The UNC Application contained the 

following map illustrating the location of existing hospitals 

in Durham County and the proposed UNC Hospitals-RTP 

location:
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(Id. at 51; see also id. at 53; Carter, Vol. 10, pp. 1710-11).

99. Additionally, UNC demonstrated that its proposed 

services were needed because (1) there has not been a new 

hospital opened in Durham County in over 45 years and (2) 

Durham County lacks a full-service community hospital. 

(Jt. Ex. 4, pp. 51-52). 

100. The UNC Application included a table which 

displayed UNC’s existing market share of certain zip codes 

within Durham County. This table showed that UNC 

already has a strong market presence in southern Durham 

County (including zip codes 27703, 27713, 27707, 27709) 

despite not having any facilities there. (Id. at 54; Carter, 

Vol. 10, pp. 1711-12).

101. The UNC Application also included a table which 

displayed the historical population growth by region and 

zip code within Durham County. This table showed that a 
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majority of the Durham County population lives in the 

southern zip codes. As of 2020, 165,824 out of 326,262 

people live in the southern zip codes. In addition, those 

southern zip codes are the fastest growing zip codes with a 

compound annual growth rate (“CAGR”) of 2.4% between 

2015 and 2020 and expected CAGR of 1.9% between 2020 

and 2025. (Jt. Ex. 4, p. 55).

102. In further support of the need for a community 

hospital in southern Durham County, UNC described the 

development of roadways and businesses in southern 

Durham County to emphasize the “sustained growth and 

development” of southern Durham County that supports 

the need for UNC Hospitals-RTP. (Id. at pp. 56-58; Carter, 

Vol. 10, pp. 1713-14).

103. While the SMFP never states that there is a need for 

any hospital, the fact that there is a need for both beds and 

ORs in the same area offers the potential for a new 

hospital. Combined with the need for low acuity services 

in southern Durham County, there is a need for a 

community hospital in Durham County. (Carter, Vol. 10, 

pp. 1696-98).

104. UNC examined the entire Durham/Caswell service 

area when deciding where to locate its hospital. UNC 

determined that Caswell County was not an ideal location 

for a hospital due to its relative lack of population and 

determined that southern Durham County was ideal based 

on the need in those densely populated zip codes that 

lacked a hospital. (Id. at pp. 1699-702; Jt. Ex. 4, pp. 50-55).

105. A third reason provided by UNC is the need for UNC 

Hospitals hospital-based services in Durham County. A 

significant number of patients from Durham County use 

UNC Health facilities and developing a community 

hospital closer to them would meet their needs for higher 

frequency, lower acuity services. (Jt. Ex. 4, pp. 58-60; 

Carter, Vol. 10, pp. 1714-15).

106. UNC already has physicians in Durham County that 
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are part of UNC Health. UNC is focused on meeting the 

physician needs in the area and would recruit physicians 

to meet those needs. (Carter, Vol. 10, pp. 1715-16; see also 

Jt. Ex. 4, pp. 58-59, 382-511). Moreover, UNC HospitalsRTP would have the same provider number as UNC 

Hospitals, so the same medical staff that performs surgery 

in Chapel Hill could do so at UNC Hospitals-RTP. (Carter, 

Vol. 10, pp. 1716-17; see also Jt. Ex. 4, p. 152; Hadar 

consistent testimony at Vol. 8, pp. 1464-65).

107. UNC already serves a large number of Durham 

County residents even without having a hospital in 

Durham County. Moreover, around one-half of patients in 

a hospital may not need surgery, and the hospitalists that 

would provide those services at UNC Hospitals could also 

provide those services at UNC Hospitals-RTP. (Carter, 

Vol. 10, pp. 1718-19). 

108. The UNC Application further supported the need for 

UNC Hospitals services in Durham County by describing 

how UNC Hospitals-RTP “represents an exciting 

opportunity to develop a new hospital facility with 

innovation as a central design tenet.” (Jt. Ex. 4, p. 59). Mr. 

Carter explained that UNC felt that this opportunity to 

build a new hospital in Durham County, which had not 

presented itself for over 40 years, would allow UNC to 

provide care in a more modern, unique, and innovative 

way, as it described doing at its other facilities. (Carter, 

Vol. 10, p. 1720; Jt. Ex. 4, pp. 58-61). 

109. The UNC Application provided examples of its “long 

history of embracing innovation to deliver the highest 

quality care with the best patient experience.” (Jt. Ex. 4, 

pp. 60-61). In developing this application, administrators 

of REX Holly Springs and Johnston Health Clayton 

provided input of lessons learned from the development of 

these relatively new hospitals that could be incorporated 

into the development of UNC Hospitals-RTP. (Carter, Vol. 

10, pp. 1721-23; Jt. Ex. 4, pp. 60-61).

110. As a fourth supporting reason, UNC explained that 
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UNC Hospitals-RTP meets the need for acute care beds by 

providing lower acuity community hospital beds in 

particular, as it projected that convenient, local access to 

community hospital services was the primary driver of 

need for additional acute care beds in the service area. (Jt. 

Ex. 4, pp. 62-69; Carter, Vol. 10, pp. 1723-30). 

111. UNC identified certain lower acuity, high volume 

services as “selected services,” and then analyzed Truven 

data to illustrate how, “despite the growth at existing 

tertiary and quaternary facilities in Durham, the basis of 

this growth was the need for lower acuity, community 

hospital services.” (Jt. Ex. 4, p. 65; Carter, Vol. 10, p. 1726).

112. UNC demonstrated that of the existing hospitals in 

Durham County, Duke Regional is the fastest growing. (Jt. 

Ex. 4, p. 64; Carter, Vol. 10, p. 1727). UNC then showed 

that the selected services were experiencing greater growth 

than other services in the existing Durham hospitals as a 

whole, and at DUH and Duke Regional in particular. (Jt. 

Ex. 4, p. 65; Carter, Vol. 10, pp. 1727-29).

113. UNC further demonstrated that south Durham 

County residents are seeking lower acuity services more 

than the central and north regions of Durham County, with 

over 94 patients daily seeking lower acuity services at 

existing hospitals. (Jt. Ex. 4, p. 66; Carter, Vol. 10, pp. 

1731-33).

114. The UNC Application showed that UNC currently 

provides the most days of care and experiences the greatest 

growth for Durham County residents out of all other 

hospitals except for Duke facilities, and that out of those 

patients, the highest volume originates from the south 

region of Durham County. (Jt. Ex. 4, pp. 68-69; Carter, Vol. 

10, pp. 1734-36). 

115. The UNC Application further showed that UNC 

Hospitals-RTP meets the need for ORs by providing 

additional hospital-based ORs, which are well-utilized and 

provide flexibility and capacity not otherwise available 
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when those ORs are placed in an ambulatory surgical 

facility. (Jt. Ex. 4, pp. 69-71). Notably, UNC pointed out 

that while inpatient surgeries have grown at a slower rate 

than outpatient surgeries statewide, that trend is the 

opposite in Durham County. (Id. at pp. 69-70; Carter, Vol. 

10, pp. 1736-37). UNC also indicated that there has been 

significant growth in outpatient ORs at ASCs, but that 

hospital-based ORs would provide the flexibility to meet 

the need for inpatient surgeries while still allowing for 

outpatient surgeries to be performed as well. (Jt. Ex. 4, pp. 

70-71; Carter, Vol. 10, pp. 1737-38).

116. UNC also supported the need for other services at 

UNC Hospitals-RTP, including observation beds, 

procedure rooms, C-Section rooms, imaging, laboratory, 

and other services, which are needed to support the 

patients to be seen at UNC Hospitals-RTP. (Jt. Ex. 4, p. 

71; Carter, Vol. 10, p. 1738).

117. Based on the information UNC provided, the Agency 

found UNC’s analysis of need to be reasonable and 

adequately supported. (Jt. Ex. 1, []p. 1512; Hale, Vol. 2, pp. 

232-34).

. . . .

 iii. Projected Utilization

125. The third element of Criterion (3) evaluates the 

reasonableness and adequacy of the support for the 

applicant’s projected utilization. (Hale, Vol. 2, p. 235).

126. The Agency does not require applicants to use 

particular assumptions or methodologies to develop their 

utilization projections; instead, the assumptions and 

methodology used by each applicant must be reasonable 

and adequately supported. (Cummer, Vol. 4, p. 670; 

Sandlin, Vol. 6, pp. 1115-16).

127. Ms. Sandlin acknowledged that projected utilization 

at a facility may not necessarily line up with an applicant’s 
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actual experience for various reasons. (Sandlin, Vol. 7, pp. 

1193-94).

128. The need methodology and projected utilization for the 

UNC Application were contained in Form C Utilization –

Assumptions and Methodology in Section Q of the 

application. (Jt. Ex. 4, pp. 141-60). UNC projected 

utilization for the acute care services, surgical services, and 

ancillary and support services proposed in its application. 

(Jt. Ex. 1, pp. 1512-20; Hale, Vol. 2, pp. 236-39). 

129. UNC used Truven data as the basis for its utilization 

projections, which both the Agency witness and expert 

witnesses agreed is frequently utilized by applicants and is 

a reliable source of data. (Hale, Tr. pp. 237-38; Meyer, Vol. 

5, pp. 941-43; Carter, Vol. 11, pp. 1953-55).

130. At the hearing, Mr. Carter explained in detail the 

assumptions and methodologies used in the UNC 

Application. The UNC Application began by describing the 

service area and emphasizing the focus on Durham 

County, which “sets the stage for” UNC’s focus on Durham 

County in the methodology. (Jt. Ex. 4, pp. 141-42; Carter, 

Vol. 10, pp. 1739-40).

a. Selected Services

131. The UNC Application next discussed acute care bed 

utilization, looking first to all days of care for Durham 

County residents statewide. (Jt. Ex. 4, p. 142; Carter, Vol. 

10, p. 1740). Mr. Carter notes that while many 

methodologies look no further than this, the UNC 

Application took the extra step of identifying certain high 

acuity services that it would exclude from the potential 

days of care to be provided at UNC Hospitals-RTP, as UNC 

did not propose to provide high acuity, tertiary and 

quaternary services at UNC Hospitals-RTP. (Jt. Ex. 4, pp. 

142-43; Carter, Vol. 10, pp. 1740-41). 

132. The remaining services utilized by UNC were called 

the Selected Services. (See Jt. Ex. 4, p. 143).
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133. The decision to exclude certain services was the 

product of discussions within UNC and the expertise of Mr. 

Carter. Certain services like cardiac catheterization were 

excluded because there was no need for a cardiac 

catheterization unit in the SMFP; other services like 

neurosurgery could have been included, but given that 

UNC Hospitals is located nearby, it made sense not to 

duplicate those services. Moreover, given that UNC 

Hospitals-RTP is proposed to be a community hospital, 

UNC prioritized lower-acuity, high-frequency, highvolume cases. (Carter, Vol. 10, pp. 1744-45).

134. UNC decided not to include ICU services at UNC 

Hospitals-RTP in part based on its recent experience 

developing community hospitals in Wake and Johnston 

Counties. Through those facilities, UNC learned that it did 

not make sense to develop ICU units due to the low volume 

of patients needing those services compared to the 

resource-intensive staffing that is required for those beds. 

(Id. at pp. 1763-65). 

135. As explained in the UNC Application, the rooms at 

UNC Hospitals-RTP were designed to be flexible spaces 

that would be built to standards such that they could 

provide ICU-level care as needed. (Jt. Ex. 4, p. 38). If UNC 

Hospitals-RTP learns as it begins operating that more ICU 

beds are needed, it could decide to make those beds 

permanent ICU beds, which would not require any 

additional construction or renovation, or any CON 

approval. (Carter, Vol. 10, pp. 1761-62, 1765).

136. UNC accomplished the exclusion of high acuity 

services from its analysis by removing diagnosis related 

groups (“DRGs”) associated with the excluded high acuity 

services from the dataset. (Carter, Vol. 10, pp. 1741-42, 

Vol. 11, pp. 1897-98). The exclusion of these services 

resulted in a 31.1 percent reduction in 2019 days of care for 

Durham County residents. (Jt. Ex. 4, p. 143; Carter, Vol. 

10, pp. 1742-44). 
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137. While the Agency does not require applicants to 

exclude services in its methodology, UNC chose to do so to 

underscore the conservativeness of its projections and to 

reiterate UNC’s intention not to develop a quaternary 

academic medical center in Durham County. (Carter, Vol. 

10, pp. 1742-43). 

138. Ms. Sandlin did not conduct any analysis utilizing 

DRG weights to determine the reasonableness of UNC’s 

projections. (Sandlin, Vol. 7, p. 1222; Carter, Vol. 10, pp. 

1767-68). She also opined that there is no specific cutoff or 

threshold for DRG weights that are associated with ICU 

level of care. (Sandlin, Vol. 7, p. 1223).

139. Mr. Carter likewise opined that there is no bright-line 

rule for a DRG weight for ICU services. (Carter, Vol. 10, 

pp. 1756-58). 

140. Mr. Carter even analyzed the data UNC relied upon 

in its analysis and discovered that had UNC applied a 

bright-line rule excluding DRG weights of over 3.5, only 

approximately ten percent of the patient days of care for 

UNC Hospitals-RTP were over that threshold. (Id. at pp. 

1759-61). 

141. Moreover, those patients without exception had a 

comorbid condition or major complication that led their 

condition to progress beyond a 3.5 DRG weight. In those 

cases, if UNC Hospitals-RTP could not provide the higher 

level of care needed, they could be transferred to an 

appropriate facility. (Id. at pp. 1760-61).

142. Ultimately, even if there were ICU patients that were 

not excluded from UNC Hospitals-RTP’s selected services 

patients, the projections in the UNC Application would not 

be impacted. (Id. at p. 1762).

143. Ms. Sandlin created and utilized a Venn diagram as a 

demonstrative exhibit to show the alleged overlap between 

UNC’s selected services, ICU, post-ICU, and pediatric 

patients. (Duke Ex. 227). On cross-examination, however, 
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Ms. Sandlin admitted that she did not know what 

percentage each of the “bubbles” or “circles” on her diagram 

represented for each service and that her exhibit was not 

drawn to scale. (Sandlin, Vol. 7, pp. 1218-20). Ms. Sandlin 

further acknowledged that she did not quantify the 

numbers or percentage of patients that the diagram was 

intended to represent. (Sandlin, Vol. 7, p. 1220; Carter, 

Vol. 10, pp. 1765-67).

144. Regardless of the exclusion of certain high acuity 

services, UNC Hospitals-RTP will be able to stabilize high 

acuity patients in an emergency in need of tertiary or 

quaternary care and transfer them to another hospital that 

can treat their condition, as it does at its other community 

hospitals in the greater Triangle area. (Carter, Vol. 10, pp. 

1745-46; Hadar, Vol. 8, p. 1454). 

b. Methodology

145. Next, UNC projected potential days of care for the 

selected services in Medicine, Surgery, and Obstetrics 

through 2029, which is the third project year, using a 

CAGR based on historical growth rate for those services. 

(Jt. Ex. 4, pp. 143-44; Carter, Vol. 10, pp. 1746-47). Duke, 

in its expert testimony, did not criticize UNC’s growth 

rates or methodology included on page 144 of the UNC 

Application. Mr. Carter opined the growth rates and 

methodology to be reasonable based on the historical 

growth rates for Durham County. (Carter, Vol. 10, p. 

1747). UNC then showed the potential days of care for 

Durham County residents for the first three fiscal years of 

the project. (Jt. Ex. 4, p. 144; Carter, Vol. 10, p. 1747).

146. After that, UNC discussed its market share 

assumptions for UNC Hospitals-RTP, which is typically 

analyzed for any new healthcare facility that needs to 

project a volume of services to be provided. (Carter, Vol. 

10, pp. 1747-48). Since UNC already treats many Durham 

County patients at its existing facilities outside of Durham 

County, UNC conservatively projected that UNC 

Hospitals-RTP would serve three-fourths of UNC’s existing 
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34

market share of Durham County residents. (Jt. Ex. 4, p. 

145; Carter, Vol. 10, pp. 1748-50). In the third full project 

year, this results in a 7.7 percent market share of Durham 

County patient days for the selected services, leaving 92.3 

percent of Durham County patient days to be treated at 

any other facility in the state. (Carter, Vol. 10, pp. 1750-

52). 

147. After isolating Durham County and narrowing down 

days of care based on selected services and UNC’s market 

share of Durham County patient days, UNC was then able 

to project the patient days by service for Durham County 

residents, yielding an average daily census (“ADC”) of 26.5 

patients in the third project year. (Jt. Ex. 4, p. 146; Carter, 

Vol. 10, pp. 1768-69).

148. The next part of the methodology in the UNC 

Application demonstrated why the 26.5 ADC was 

reasonable. UNC noted that its 2019 ADC for Durham 

County residents for selected services at its existing 

facilities was 24.4. This highlighted how reasonable and 

conservative it is to project that UNC Hospitals-RTP would 

serve only about two more patients per day than UNC 

currently serves, after UNC Hospitals-RTP is open and 

operational. (Jt. Ex. 4, p. 146; Carter, Vol. 10, p. 1769). 

UNC also provided more information about its inmigration assumptions. (Jt. Ex. 4, pp. 146-47; Carter, Vol. 

10, pp. 1769-70). 

149. UNC further highlighted the conservativeness of its 

methodology by noting that the amount of patients UNC 

Hospitals-RTP projects to serve is only part of the projected 

growth of Durham County residents over the next ten 

years. (Jt. Ex. 4, p. 148; Carter, Vol. 10, pp. 1770-71). In 

comparison, the Duke Beds Application proposed to 

increase patient days by roughly 40,000 in less than ten 

years. (Jt. Ex. 2, p. 95; Carter, Vol. 10, pp. 1771-72). Based 

on this observation, Mr. Carter opined that it was not 

unreasonable for the UNC Application to project to reach 

10,700 patient days over a ten-year period of time, 

especially since UNC already had more patient days for 
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35

these lower acuity services at hospitals outside of Durham 

County. (Carter, Vol. 10, pp. 1772-73). 

150. In its Comments, Duke claimed that UNC relied on a 

shift in volume to support its projections. (Jt. Ex. 1, pp. 

176-78; Sandlin, Vol. 6, p. 990). UNC responded, however, 

that this claim was incorrect, because UNC was taking a 

portion of the new growth in patient days in Durham 

County. (Jt. Ex. 1, pp. 309-12; Carter, Vol. 10, pp. 1773-

75). Regardless, Ms. Sandlin acknowledged that it is 

reasonable in theory to assume that developing a facility in 

an area where patients live will cause the existing market 

share for that provider to increase. (Sandlin, Vol. 6, pp. 

1115-16).[4]

151. Ms. Sandlin testified that UNC’s projections were 

unreasonable because the patients that UNC currently 

treats are going to UNC Hospitals for specialty services. 

(Id. at pp. 994-96). Mr. Carter refuted Ms. Sandlin’s 

testimony, opining that Ms. Sandlin ignored UNC’s 

exclusion of high acuity patients in its methodology. 

(Carter, Vol. 10, pp. 1775-76). Moreover, Ms. Sandlin 

acknowledged that she had not done any analysis of the 

acuity level of services provided to Durham County 

patients currently seeking care at UNC. (Sandlin, Vol. 7, 

pp. 1159-60).

152. UNC also projected emergency department (“ED”) 

utilization in its assumptions and methodologies. (Jt. Ex. 

4, pp. 149-51; Carter, Vol. 10, pp. 1776-77). A hospital is 

required to have an emergency department in North 

Carolina, though there are no statutes or rules that apply 

to emergency department projections. (Sandlin, Vol. 7, p. 

1215; Carter, Vol. 10, pp. 1778-79).

4 At several points in its final decision—most notably, findings 150 and 155—the ALJ used 

language that signaled the existence of conflicts in the evidence without explicitly clarifying which 

testimony it deemed more credible. While these areas of the final decision were not specifically 

challenged on the basis of indecisive wording, we note that, in other areas of our caselaw, a gesture to

conflicts in the evidence without an explicit resolution by the factfinder may support a challenge on 

appeal to the finding in question. We therefore note that the better practice for a factfinder is to

explicitly, rather than implicitly, signal how it resolves conflicts in evidence.
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36

153. UNC’s ED utilization projections were not based solely 

on ED admissions in Durham County; rather, it analyzed 

all ED admissions of Durham County residents receiving 

care throughout the state. (Jt. Ex. 4, p. 150; Carter, Vol. 

10, pp. 1777-78). As Mr. Carter opined, even if the ED 

utilization projection methodology was wrong, as a 

hospital, UNC Hospitals-RTP is required to include an ED, 

and there is no standard the Agency applies to ED 

utilization that would cause the UNC Application to not be 

approvable. (Carter, Vol. 10, pp. 1778-79). 

154. UNC began projecting OR utilization by assuming 

that each surgical inpatient is one surgical inpatient case. 

(Jt. Ex. 4, pp. 155-56; Carter, Vol. 10, p. 1779). UNC then 

analyzed projected outpatient cases and concluded that 

there would be 1.5 outpatient surgeries for every inpatient 

surgery. (Jt. Ex. 4, p. 155; Carter, Vol. 10, pp. 1779-80).

155. Although Duke’s expert witness testified that UNC’s 

OR utilization projections were unreasonable because its 

acute care beds projections were unreasonable, both of 

UNC’s expert witnesses refuted this testimony. Mr. Carter 

opined that UNC’s OR utilization projections were 

conservative. The projections showed that some of the 

surgical cases would need to be performed in procedure 

rooms based on the relatively small capacity of 2 ORs in 

UNC’s proposal. (Carter, Vol. 10, p. 1781). Mr. Meyer 

opined that UNC’s projections were reasonable, and 

conservative based on his experience in healthcare 

planning. (Meyer, Vol. 5, pp. 943-44).

156. UNC similarly projected utilization for imaging and 

ancillary services, observation beds, procedure rooms, and 

LDR and C-Section rooms. (Jt. Ex. 4, pp. 151-55, 159-60).

157. Based on the information provided by UNC, the 

Agency found UNC’s projected utilization to be reasonable 

and adequately supported, because UNC: 

(1) used publicly available data to determine Durham 
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37

County residents’ potential days of care for UNC 

Hospitals-RTP’s projected services, 

(2) used an historical 2-yr compound annual growth 

rate (“CAGR”) to project days of care going forward, 

and 

(3) based its projected surgical, obstetrics, emergency, 

imaging/ancillary, and observation bed services on 

historical Truven data for Durham County residents, 

relevant historical UNC Hillsborough experience, or 

UNC Health services for Durham County residents. 

(Jt. Ex. 1, p. 1520; Hale, Vol. 2, pp. 239-40).

158. The Agency also found UNC’s projection that 90 

percent of its patient population would come from Durham 

County to be reasonable because the southern part of 

Durham County was highly populated, and any nearby 

Wake County residents have a number of healthcare and 

hospital choices in Wake County. (Hale, Vol. 2, p. 317).

In light of these findings, the ALJ made the following conclusions of law:

45. To conform with Criterion (3), an applicant’s projected 

patient origin, demonstration of need, and projected 

utilization must be reasonable and adequately 

supported.

46. The Agency correctly determined that UNC’s projected 

patient origin for UNC Hospitals-RTP, including 90 

percent Durham County residents and its conservative 10 

percent in-migration assumption, was reasonable and 

adequately supported. 

47. The Agency also correctly determined that UNC’s 

demonstration of need for UNC Hospitals-RTP based on 

the population growth and aging of the population in 

Durham County, the need for a new hospital in Durham 

County (particularly the southern area), the need for UNCHospitals’ hospital-based services in Durham County, and 
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38

the need for acute care beds (especially community hospital 

beds) and ORs in Durham County, was reasonable and 

adequately supported.

48. The Agency further correctly determined that UNC’s 

projected utilization for all service components at UNC 

Hospitals-RTP was reasonable and adequately supported. 

49. Substantial evidence in the record of this case supports 

the Agency’s determination that the UNC Application was 

conforming with Criterion (3).

As reproduced above, these findings and conclusions demonstrate that the ALJ 

extensively considered UNC’s proposal with respect to the service of in-county 

patients. While we will not belabor the issue by reciting the support for each of the 

more than eighty findings by the ALJ pertaining to Criterion 3 generally, we 

specifically note that the alleged underprediction of patient days provided by UNC’s 

proposed facility in light of the absence of high-acuity services—one of the primary 

issues raised by Duke in this appeal—was considered and rejected at finding 151, et 

seq. This finding was supported by testimony in the record indicating that, despite 

Duke’s expert having opined that UNC overestimated its patient day projections at 

the new facility, UNC’s projection methodology specifically accounted for the absence 

of high-acuity services at the new facility—a projected patient reduction of 31 percent. 

Similarly, Duke’s argument on appeal that the UNC application unrealistically 

projected the number of patients originating from Durham County to be served was 

also addressed and rejected by the ALJ on the basis that UNC statistically grounded 

its claims about the relative need for the facilities in Durham County and in-
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39

migration rates at comparable UNC facilities, with the ALJ consistently noting that 

UNC conservatively projected its Durham-resident patient volume to account for 

such considerations. These findings, too, were supported by testimony on the record.

Despite this evidentiary support in the ALJ’s final decision, Duke asks us to 

overturn the result below on the basis of alleged failures in the reasoning of the 

Agency. However, our task on appeal is not to evaluate the reasoning of the Agency, 

but the reasoning of the ALJ. Compare N.C.G.S. § 150B-51 (2023) (governing appeals 

from the Office of Administrative Hearings to the Court of Appeals) with N.C.G.S. § 

150B-23 (2023) (governing appeals from the Agency to the Office of Administrative 

Hearings); see also AH, 240 N.C. App. at 98. Where the reasoning of the ALJ is 

supported by substantial evidence, we will not overturn the ALJ’s final decision 

simply because the ALJ weighed the evidence in a manner unfavorable to the 

appellant, Mills, 251 N.C. App. at 189; and, here, the ALJ’s decision was amply 

supported. We will not, therefore, overturn its determination that UNC’s application 

conformed with Criterion 3.

D. UNC’s Compliance with Criterion 12

Finally, we address whether the ALJ properly affirmed the Agency’s 

conclusions as to UNC’s compliance with N.C.G.S. § 131E-183(a)(3). N.C.G.S. § 131E183(a)(12), or “Criterion 12,” provides that a certificate of need applicant 

shall demonstrate that the cost, design, and means of 

construction proposed represent the most reasonable 

alternative, and that the construction project will not 
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40

unduly increase the costs of providing health services by 

the person proposing the construction project or the costs 

and charges to the public of providing health services by 

other persons, and that applicable energy saving features 

have been incorporated into the construction plans.

N.C.G.S. § 131E-183(a)(12) (2023). Duke argues that UNC’s proposal was 

nonconforming with Criterion 12 in that the hospital’s primary proposed location in 

RTP was subject to restrictive covenants not accounted for in the application, while 

the alternate proposed site occupies a property that straddles proposed expansion of 

a highway and is otherwise limited by power lines, a public greenway trail, and water 

hazards.

In its final decision, the ALJ affirmed the Agency’s conclusion that UNC’s CON 

application was in compliance with Criterion 12, making the following findings of 

fact:

200. Analysis of this Criterion contains three elements: (1) 

whether the cost, design, and means of construction 

proposed represent the most reasonable alternative; (2) 

whether the construction project will not unduly increase 

the cost of providing health services by the person 

proposing the project; and (3) whether energy-saving 

features have been incorporated into the construction 

plans. (Id.; Meyer, Vol. 7, pp. 1271-72). 

201. The UNC Application satisfied the first element by (1) 

providing drawings of its site plan and floor plan in Exhibit 

C.1 and (2) explaining that the proposed construction and 

layout for the hospital was based on a “configuration that 

provides the most efficient circulation and throughput for 

patients and caregivers,” based on “best practice 

methodologies,” as well as “relationships and adjacencies 

to support functions while also preventing unnecessary 
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41

costs.” (Jt. Ex. 4, pp. 112-13, 233-39; Meyer, Vol. 7, p. 1273). 

202. UNC satisfied the second element of Criterion (12) by 

explaining that while the UNC Hospitals-RTP project 

would be capital intensive, UNC set aside excess revenues 

to fund the project, such that the project could be completed 

without increasing costs or charges to the public to help 

fund it. (Jt. Ex. 4, p. 113). UNC provided a letter from the 

Chief Financial Officer of UNC Hospitals certifying the 

availability of accumulated cash reserves to fund the 

project. (Id. at p. 292; Meyer, Vol. 7, pp. 1273-74).

203. Finally, UNC satisfied the third element of Criterion 

(12) by showing that its proposed hospital would be energy 

efficient and conserve water, and that UNC would develop 

and implement an Energy Efficiency and Sustainability 

Plan. (Jt. Ex. 4, p. 113; Meyer, Vol. 7, p. 1274). 

 i. Zoning of UNC’s Primary Site

204. Because a CON is “valid only for the . . . physical 

location . . . named in the application,” applicants also are 

required to identify a proposed site for a new facility. (N.C. 

Gen. Stat. § 131E-181(a); Jt. Ex. 4, p. 114; Meyer, Vol. 7, 

pp. 1272, 1282). The applicant should specify an address, 

a parcel number, or intersection of roads. (Meyer, Vol. 7, 

p. 1272). 

205. The primary site for UNC Hospitals-RTP identified in 

the UNC Application is located in southern Durham 

County in the Research Triangle Park (“RTP”) at the 

convergence of North Carolina Highway 54 and North 

Carolina Highway 147, also known as the Triangle 

Expressway. (Jt. Ex. 4, p. 114). At the time of the filing of 

the UNC Application, the property, also known as the 

Highwoods Site, was owned by Highwoods Realty Limited 

Partnership (“Highwoods”). (Id. at 115). UNC provided a 

Letter of Intent for UNC Health to purchase the property 

from Highwoods along with its application. (Id.at 517-23).

206. The CON Law does not regulate or even mention 
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42

zoning. (Meyer, Vol. 7, p. 1281). Nonetheless, Section 4(c) 

of Criterion (12) in the Agency’s application form is entitled 

“Zoning and Special Use Permits.” (Hale, Vol. 2, p. 244). 

This Section requires an applicant to first describe the 

current zoning at the proposed site, and then, “[i]f the 

proposed site will require rezoning, describe how the 

applicant anticipates having it rezoned[.]” (Jt. Ex. 4, p. 

115; Hale, Vol. 2, pp. 266-67). 

207. The Agency contemplates that a proposed site for a 

project may not be properly zoned for the proposed project 

at the time the application is submitted, by asking 

applicants the questions posed in Section 4(c). (Hale, Vol. 

2, pp. 246, 267). 

208. The fact that a site identified in an application may 

need rezoning does not make an application nonconforming 

with Criterion (12) or non-approvable. (Id. at p. 267; 

Meyer, Vol. 7, pp. 1281-82, Vol. 8, p. 1398). The Agency 

frequently approves applications that propose projects to 

be developed on sites that require rezoning before they can 

be used to develop the proposed services. (Hale, Vol. 2, p. 

246; Meyer, Vol. 7, pp. 1277-78). In Mr. Meyer’s 25 years 

of healthcare planning experience, he cannot recall a time 

when the Agency denied an application due to the fact that 

a site needed to be rezoned. (Meyer, Vol. 7, p. 1278).

209. Moreover, the Agency is tasked with applying the 

CON Law and related rules, not with considering an 

applicant’s compliance with other laws like zoning 

ordinances. Therefore, the Agency does not review 

applicable zoning laws or restrictive covenants when it 

reviews an application. (Hale, Vol. 2, p. 266; see also 

Craven Reg’l Med. Auth. [v. N.C. Dep’t of Health & Hum. 

Servs., 176 N.C. App. 46, 57-58 (2006)]). 

210. Rezoning of sites identified in CON applications 

typically does not occur until after a CON has been 

awarded. (Meyer, Vol. 7, p. 1277). 

211. According to the UNC Application, UNC’s primary 
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43

proposed site “will require rezoning.” UNC noted that it 

anticipated having the property rezoned:

The proposed site is located in Research Triangle 

Park across the street from the Research Triangle 

Foundations Frontier and HUB RTP developments 

that have an SRP-C zoning designation. UNC 

Hospitals currently is working with land use counsel, 

the property owner, and Research Triangle 

Foundation management to have the property 

rezoned to permit hospital use. With the guidance of 

land use counsel, UNC Hospitals will engage with 

Durham Planning staff, the Durham Planning 

Commission, and the Durham Board of County 

Commissioners to complete the rezoning process. 

Additionally, UNC Hospitals will, with the 

cooperation of the Research Triangle Foundation, 

work with the Research Triangle Park Owners and 

Tenants Association (O&T) to amend the Research 

Triangle Park Covenants, Restrictions, and 

Reservations by resolution to permit hospital use. . . 

. .

(Jt. Ex. 4, p. 115; Hale, Vol. 2, pp. 268-69).

212. Applicants are not required to submit letters of 

support with their CON application; however, it is common 

for CON applicants to do so. (Hale, Vol. 2, p. 260; Carter, 

Vol. 10, pp. 1790-91). The UNC Application included a 

letter of support from Scott Levitan, CEO of the Research 

Triangle Foundation (“RTF”). (Jt. Ex. 4, p. 512). Mr. 

Levitan’s letter indicated that the RTF supported the UNC 

Application; however, it did not make any reference to the 

property being rezoned or restrictive covenants being

amended. (Id.; Hale, Vol. 2, pp. 280-82). 

213. UNC was not required to submit the letter of support 

from Mr. Levitan or anyone else on behalf of RTF to be 

approvable. (Hale, Vol. 2, pp. 280-81; Carter, Vol. 10, p. 

1791). 
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 ii. UNC’s Primary Site in the Research Triangle Park

214. The RTP is an approximately 7000-acre university 

research park located in Durham and Wake Counties, with 

5,600 acres, or 80 percent, located in Durham County. 

(Levitan, Vol. 5, pp. 774, 799-800). There are currently no 

people living in the RTP. (Id. at 897). 

215. Scott Levitan is the President and CEO of the 

Research Triangle Foundation (“RTF”), a position he has 

held for approximately five years. (Id. at 769). In this 

position, Mr. Levitan reports to the RTF Board, which 

includes representatives of UNC, Duke, NC State 

University, and North Carolina Central University. (Id. at 

773-74). 

216. The RTF is a 501(c)(4) entity founded approximately 

63 years ago for the purpose of facilitating coordination 

among UNC, Duke, and NC State University and to 

enhance the wellbeing of the residents of North Carolina. 

(Id. at 769-70). The RTF administers the activities of the 

RTP Owners and Tenants Association (“O&T”). (Id. at 

770). The RTF also owns certain property within the RTP. 

(Id.). 

217. There are two types of zoning within the RTP: Science 

Research Park (“SRP”) and Science Research Park –

Commercial (“SRP-C”). (Id. at 777-78). SRP-C zoning is 

more lenient than SRP zoning but only covers 101 acres in 

RTP known as the RTP Hub, which is a mixed-use 

development intended to serve as a “town center” for RTP. 

(Id. at 780-81). The Hub includes Boxyard, a retail center 

containing food and retail vendors; Frontier, an innovation 

campus for startups and emerging companies; residential 

multi-family apartments; and other businesses not focused 

on scientific research. (Id. at 781, 829-31). 

218. There are also restrictive covenants covering RTP that 

restrict the property to certain uses. (Jt. Ex. 1, pp. 191-

255). According to Mr. Levitan, these restrictive covenants 

do not currently permit the development of a hospital at 
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45

UNC’s primary site. (Levitan, Vol. 5, p. 785).

219. The primary site for UNC Hospitals-RTP is adjacent 

to the RTP Hub. (Id. at 783-84). In the recent past, the 

RTF allowed a parcel of property adjacent to the RTP Hub 

to be rezoned from SRP to SRP-C to allow the development 

of a fire station in Durham County. The RTP also allowed 

a text amendment to the RTP restrictive covenants to allow 

a school on a particular parcel in Wake County. (Id. at 782-

83, 895-96). 

220. David Meyer is a 35-year resident of Durham County 

in addition to his healthcare planning expertise. Mr. 

Meyer opined that UNC’s location adjacent to the RTP Hub 

made sense from a health planning perspective. He 

likened UNC Hospitals-RTP to REX Hospital’s adjacency 

to Cameron Village in Raleigh, now known as the Village 

District, to support the notion that a hospital being 

adjacent to a multi-use district in the midst of a highly 

populated area is sensible. (Meyer, Vol. 7, pp. 1274-76, Vol. 

8, pp. 1389-91).

221. Initially, UNC explored purchasing a site owned by 

Keith Corp. within the RTP, but not adjacent to the RTP 

Hub, and having the site rezoned to allow UNC to build a 

hospital there. When approached by Keith Corp. about this 

proposal, Mr. Levitan was not comfortable setting a 

precedent of SRP-C zoning in areas other than the Hub; 

however, Mr. Levitan eventually suggested that UNC 

approach Highwoods about purchasing its property 

adjacent to the Hub. (Levitan, Vol. 5, pp. 832, 839-42). 

222. Mr. Levitan discussed UNC using the Highwoods Site 

for its proposed hospital at a [11 February] 2021, RTF 

Development Committee meeting. (Jt. Ex. 119; Levitan, 

Vol. 5, pp. 843-44). Following that meeting, Mr. Levitan 

emailed members of the RTF Development Committee who 

were not affiliated with either Duke or UNC and obtained 

their approval to continue cooperating with UNC’s 

proposal. (Jt. Ex. 117; Levitan, Vol. 5, pp. 844-49).
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46

223. In particular, RTF Board member Smedes York 

stated: “I believe this could be positive as it ‘anchors’ the 

location without changing the ‘sizzle’ of the Hub area. We 

need the ‘personality’ of Boxyard and other parts of what 

we have planned. Rex Hospital’s previous location was 

adjacent to Cameron Village which was a positive.” (Jt. Ex. 

117).

224. To change the zoning of the primary site, UNC would 

need to seek approval for rezoning from Durham County 

and would also need to seek approval from the RTP O&T 

to amend the restrictive covenants. (Levitan, Vol. 5, p. 785, 

798). To Mr. Levitan’s knowledge, there has never been a 

healthcare facility like a hospital permitted in the RTP. 

(Id.).

225. Although the ultimate decision to allow the 

development of UNC Hospitals-RTP on the Highwoods Site 

is up to the RTP’s O&T, Mr. Levitan has already begun the 

process of running the proposal through the relevant 

committees for a recommendation to the RTP’s O&T. 

UNC’s proposal was first brought before the RTF 

Development Committee. Mr. Levitan believed he “had the 

imprimatur of the Development Committee to continue 

conversations in support of the hospital application on the 

part of the foundation . . . .” (Id. at 796-97). Based on this 

direction from the Development Committee, Mr. Levitan 

cooperated with UNC in its efforts to build a hospital 

within the RTP. (Jt. Exs. 15, 42; Levitan, Vol. 5, pp. 837-

38). 

226. Mr. Levitan did not discuss his letter of support with 

the RTF Board or Development Committee before signing 

it, as he is frequently asked to sign letters of support and 

does not generally bring those to the RTF Board or other 

committees for review. (Levitan, Vol. 5, p. 799).

227. Mr. Levitan gave conflicting testimony about whether 

he was aware Duke might be applying for the same need 

determined assets in Durham County as UNC. (Compare 

Levitan, Vol. 5, pp. 786-87 with pp. 822-23). Despite Mr. 
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47

Levitan’s apparent confusion, this Tribunal finds that Mr. 

Levitan appears to have been aware that Duke may have a 

conflicting interest with UNC’s proposed hospital, based on 

his [11 February] 2021 email to certain members of the 

RTF Development Committee. In this email, Mr. Levitan 

noted he was “[k]eeping conflicted folks out of the 

conversation”—i.e., people who were affiliated with either 

Duke or UNC—and sought their approval to recommend 

the Highwoods site to UNC. (See Jt. Ex. 119).

228. Mr. Levitan’s Letter of Support indicated that the RTF 

supported UNC’s Application; however, it did not make any 

reference to the property being rezoned or restrictive 

covenants being amended. (Id.; Hale, Vol. 2, pp. 280-82). 

At the time the letter was submitted, Mr. Levitan 

understood the letter would be used “as support for UNC’s 

certificate of need application for a hospital in RTP.” 

(Levitan, Vol. 5, pp. 790-92).

229. UNC reasonably believed its statements regarding the 

zoning of the primary site were accurate at the time UNC 

submitted its Application. In an email to Scott Selig and 

Tallman Trask, Levitan stated, “I think Duke is going to 

need to pursue its interests in this matter, but based on the 

direction from the DevComm meeting, we have cooperated 

with this initiative.” (Jt. Ex. 42; Hale, Vol. 2, pp. 283-287). 

Similarly, in a [20 May] 2021 meeting of the RTF 

Development Committee, the meeting minutes reflected 

that at a prior meeting, that “committee suggested to UNC 

that they could pursue extending the SRP-C zoning across 

the street if Highwoods was interested in selling their 

land.” (Jt. Ex. 15; Hale, Vol. 2, pp. 287-88).

230. The Agency’s Team Leader Ms. Hale did not review 

any documents prior to the Agency decision that suggested 

UNC would not be able to have the primary site rezoned or 

the restrictive covenants amended. (Hale, Vol. 2, p. 291).

231. On or about [13 May] 2021, the Triangle Business 

Journal published an article discussing UNC’s proposed 

new hospital in the RTP. (Jt. Ex. 130; Levitan, Vol. 5, p. 
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48

808). Following the publication of this article, Mr. Levitan 

was asked by the RTF Executive Committee to clarify his 

letter of support. (Levitan, Vol. 5, pp. 804, 816). The 

Executive Committee gave Mr. Levitan the language to 

include in his second letter verbatim. (Levitan, Vol. 5, pp. 

808, 813-14, 827-28).

232. At the hearing and at his deposition, Mr. Levitan used 

the terms “clarify,” “rescind,” and “withdraw” 

interchangeably to mean the same thing. (Levitan, Vol. 5, 

p. 816). Given the text of the [12 July] 2021 Letter and Mr. 

Levitan’s testimony, the [12 July] 2021 Letter was a 

clarification of the RTF’s position on the UNC Application, 

rather than a rescission or withdrawal of support.

233. After the RTF Executive Committee decided a 

clarifying letter should be sent to the Agency, Mr. Levitan 

sent an email to the Agency stating that his letter of 

support, which he described as “an outdated 

correspondence” was included in the UNC Application. In 

that email, Mr. Levitan asked to speak with either Ms. 

Inman or Lisa Pittman, the Agency’s Assistant Chief of 

Certificate of Need, regarding “the process and deadlines 

for submitting comment on UNC Health’s application.” 

(Duke Ex. 200; Hale, Vol. 3, pp. 332-33; Levitan, Vol. 5, pp. 

810, 812-13). 

234. Mr. Levitan subsequently spoke with Ms. Inman, who 

informed him that the deadline for submitting public 

comments to the CON Section had passed. Ms. Inman told 

Mr. Levitan he could still submit a letter and that she 

would “make every effort” to ensure it was seen by the CON 

Section. (Levitan, Vol. 5, p. 810). 

235. After speaking with Ms. Inman, Mr. Levitan sent his 

second letter, dated [12 July] 2021 to the Agency. (Jt. Ex. 

46). Mr. Levitan submitted his [12 July] 2021 letter to the 

Agency after the end of the public comment period in this 

Review. (Hale, Vol. 2, pp. 283, 308-09, 336). Mr. Levitan 

stated in the [12 July] 2021 Letter, in relevant part, that 

he was “writing to clarify [his] prior letter dated 13 April 
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2021,” and that “[u]ntil a certificate of need has been 

awarded and any appeals to the determination of the 

Healthcare Planning and Certificate of Need Section have 

been exhausted, RTF will not consider a zoning change for 

the proposed site in RTP.” (Jt. Ex. 46; Levitan, Vol. 5, pp. 

818-19). 

236. In a [3 September] 2021, letter to Jud Bowman, 

Chairman of the RTF Board, Vincent Price, President of 

Duke University, characterized Duke’s position on the [12 

July] 2021 Letter as follows: 

[Mr. Levitan] then sent a follow up letter on July 12th 

to the State CON analyst stating that the Foundation 

would not consider a zoning change until after the 

CON determination and any appeals. This second 

letter is also deeply troubling. It did not withdraw the 

endorsement by RTF of UNC’s application. It 

continued to support placing a hospital within the 

RTP. It was also provided outside the prescribed 

public comment period, so cannot by law be 

considered by the State; thus, its purpose is unclear 

to me. 

(Jt. Ex. 25). 

237. Though the Agency received Mr. Levitan’s [12 July] 

2021 Letter, the Agency did not consider Mr. Levitan’s 

second letter, and did not include the letter as part of the 

Agency File because the letter was submitted after the end 

of the public comment period. (Jt. Ex. 91; Hale, Vol. 1, pp. 

177-78, 308-09, 336, 339). Mr. Levitan advised the RTF 

Executive Committee that he had submitted the clarifying 

letter and that it was submitted outside the public 

comment period. (Levitan, Vol. 5, pp. 814-15).

238. At the hearing, Mr. Levitan opined that UNC’s 

description on page 115 of the UNC Application regarding 

the zoning of the primary site was accurate. (Id. at pp. 833-

38).
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50

 iii. Issues Raised by Duke Regarding UNC’s Proposed 

Sites

239. Duke’s Comments raised issues regarding UNC’s 

primary site and pointed to UNC’s statement that rezoning 

was needed. Duke indicated that “the rezoning will require 

not only Durham County approval but also compliance 

with the applicable covenants and restrictions affecting 

Research Triangle Park to which the site is subject,” and 

attached the RTP restrictive covenants to its comments. 

(Jt. Ex. 1, pp. 185, 191-255). 

240. Duke had no knowledge or factual basis to support its 

comments regarding the UNC Application’s primary site or 

conformity with Criterion (12). 

241. Duke provided no expert testimony in support of its 

contention that the UNC Application was nonconforming 

with Criterion 12. (Sandlin, Vol. 6, p. 955).

242. Catharine Cummer was the only fact witness Duke 

called in its case. Ms. Cummer serves dual roles as 

regulatory counsel and in strategic planning for Duke and 

has primary responsibility for ensuring the preparation of 

all CON applications submitted by Duke. (Cummer, Vol. 

3, pp. 410-11). Ms. Cummer was not tendered or accepted 

as an expert witness in this case. Ms. Cummer has never 

been qualified as an expert witness in any kind of case. She 

has no expertise in finance, is not a clinician and has never 

served as a healthcare or certificate of need consultant. 

Ms. Cummer has never been employed as a project analyst 

or in any other capacity by the Agency. She has never 

served on the SHCC or its subcommittees. (Cummer, Vol. 

4, pp. 579-82). Ms. Cummer is not on the Real Estate 

Development Committee or any other committee of the 

RTF Board. She is not a member of the RTF Board of 

Directors. (Id. at p. 647). 

243. Duke included multiple pages of comments regarding 

the primary and alternative sites proposed by UNC and its 

conformity with Criterion 12. Duke also included a copy of 
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51

the RTP Restrictive Covenants in its Comments against 

the UNC Application. (Id. at pp. 638-39; Jt. Ex. 1, pp. 191-

255). Ms. Cummer was sent a copy of the RTP Restrictive 

Covenants from Dr. Monte Brown. (Cummer, Vol. 4, p. 

645).

244. Duke relied heavily upon its Comments filed against 

the UNC project as a purported basis for alleging Agency 

error in this matter and argued that the Agency failed to 

appropriately consider its Comments, in particular those 

comments regarding Criterion 12. In its Comments, Duke 

alleged:

Notably, the Board [Research Triangle Foundation 

Board] has historically denied all rezoning 

applications to allow for health care facilities. In fact, 

DUHS is informed and believes that UNC has 

previously asked for permission to put a healthcare 

facility on the RTP campus itself, which was denied. 

(Jt. Ex. 1, p. 185).

245. Ms. Cummer was primarily responsible for the 

preparation of the Duke Comments regarding Criterion 

(12). On cross-examination, contrary to the above 

Comment, Ms. Cummer admitted she had no personal 

knowledge regarding any prior applications for rezoning 

related to healthcare facilities at the RTP and had no 

personal knowledge regarding what other applications, if 

any, had been submitted by UNC to the RTP. (Cummer, 

Vol. 4, pp. 646-49).

246. Instead, Ms. Cummer relied upon a discussion with 

Scott Selig, Vice President of Real Estate and Capital 

Assets for Duke University and a designated member of the 

Real Estate Development Committee of the RTF, for the 

factual basis of Duke’s contentions in its Comments to the 

Agency. (Cummer, Vol. 4, pp. 646-47). 

247. On cross-examination, Ms. Cummer’s testimony was 

impeached by the following deposition testimony of Mr. 
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52

Selig:

Question: Okay. Well, regardless of who prepared it, 

there’s a statement in here, right here it says, 

‘Notably, the board has historically denied all 

rezoning applications to allow for healthcare 

facilities.’ Is that accurate?

Answer: I have no idea.

Question: Okay. Can you recall a time when the RTF 

board has denied rezoning for a healthcare 

facility?

Answer: No.

Question: Okay. The following sentence says, ‘In fact, 

UNC has previously asked for permission to put a 

facility on the RTP campus itself, which was denied.’ 

Is that accurate?

Answer: I have no idea.

Question: Do you know anything about UNC asking 

permission to put a facility on the RTP campus itself 

being denied?

Answer: No.

(Jt. Ex. 157, p. 140; Cummer, Vol. 4, pp. 646-51). After such 

impeachment, Ms. Cummer agreed that she would defer to 

Mr. Selig’s personal knowledge of such questions regarding 

the history of the RTF and any submissions, approvals or 

denials made for zoning. (Cummer, Vol. 4, p. 652).

248. Ms. Cummer then testified that Dr. Monte Brown, 

Vice President of Administration for the Duke University 

Health System, had provided her with the factual basis for 

those representations made by Duke to the Agency. 

However, on cross-examination, Ms. Cummer’s testimony 

was impeached with the following deposition testimony of 
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53

Dr. Brown:

Question: And with respect to the primary site in the 

RTP, why do you say that was not a viable site?

Answer: Because we had always been told, the entire 

time I was here at Duke, that you can’t put healthcare 

in the RTP.

Question: Who had told you that?

Answer: I don’t know. It’s kind of folklore. Scott 

[Selig], Tallman [Trask], my predecessor, we had 

always stayed out of it.

(Jt. Ex. 147, p. 39; Cummer, Vol. 4, p. 654). Ms. Cummer 

acknowledged that she did not speak with any other 

persons regarding the content of this section of the 

Comments. (Cummer, Vol. 4, p. 655).

249. At hearing, Dr. Brown could not recall the factual 

basis supporting Duke’s contention in this regard. (Brown, 

Vol. 10, pp. 1630, 1634).

250. Despite Duke’s comments opposing the proposed site 

for UNC Hospitals-RTP, Dr. Brown sent an email 

communication to other Duke representatives calling the 

UNC primary location a “prime location.” (Jt. Ex. 12). Dr. 

Brown also sent an email stating that “DUHS honored the 

RTP rules and has purchased land at Page Road and Green 

Level Road to accomplish its goals outside the RTP. Had 

the RTP allowed for medical, we likely would have chosen 

differently.” (Jt. Ex. 17).

251. Dr. Brown acknowledged he made no investigation or 

inquiry whether the zoning for the primary site proposed 

by UNC could be modified by the Durham County zoning 

authorities. (Brown, Vol. 10, p. 1633).

252. The unrefuted factual testimony from UNC 

established that there was no factual basis supporting 
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54

Duke’s contention that UNC had previously sought 

permission to put a healthcare facility on the RTP campus 

and was denied. In its Response to Comments, UNC 

disputed Duke’s statements regarding UNC’s primary site 

as UNC was “not aware of the Research Triangle 

Foundation Board purportedly historically denying all 

rezoning applications to allow for healthcare facilities[,]” 

nor was UNC “aware of any situation in which it asked for 

permission to put a healthcare facility on campus.” (Jt. Ex. 

1, p. 320). Ms. Hadar testified unequivocally, that UNC 

has not previously sought to put a facility on the RTP 

campus prior to the UNC Hospitals-RTP Application. 

(Hadar, Vol. 8, p. 1467).

253. Moreover, Ms. Hale’s testimony established that a 

project analyst may, but is not required to, research 

information outside of the application to understand what 

is contained in an application. (Hale, Vol. 1, p. 193). Ms. 

Hale was aware of the Agency doing such additional 

research in one other review—the 2016 Wake County MRI 

Review. (Hale, Vol. 1, pp. 194-97). While zoning 

ordinances, real estate deeds, and restrictive covenants 

may be public documents that the Agency could locate and 

review, the Agency was not required to do so and did not 

feel the need to do so with respect to UNC’s primary site. 

(Hale, Vol. 1, pp. 197-98, Vol. 2, pp. 300-01). Further, the 

Agency does not request additional information from 

applicants who are involved in a competitive review. (Hale, 

Vol. 2, pp. 277-78). 

 iv. The Alternate Site Identified in the UNC Application

254. UNC also identified an alternate site for its proposed 

new hospital. (Jt. Ex. 4, p. 114, n. 30). The alternate site 

is located along Highway 70 in Durham County and would 

not require any rezoning. (Id. at 515-16). The alternate 

site is also close to power, water, and sewer services. (Id. 

at 516).

255. Duke raised concerns about UNC’s alternate site in its 

Comments alleging the following: “However, that site has 
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55

even more fundamental obstacles to development than the 

primary site. . . . The bigger issue, however, is that the 

alternate site will be rendered unavailable for the proposed 

use by a NCDOT highway project in planning stages. . . .” 

(Jt. Ex. 1, p. 186). For that reason, Duke took the position 

in its Comments that UNC’s alternate site is not a viable 

possible location for UNC Hospitals-RTP. (Cummer, Vol. 

4, p. 661). 

256. By letter dated [3 September] 2021, during the 

Agency’s review of the UNC and Duke Applications, Dr. 

Vincent Price, President of Duke University, sent a fourpage letter to the Chair of the Board of Directors for the 

Research Triangle Foundation, Jud Bowman (“Dr. Price 

Letter”). (Jt. Ex. 25). In his letter, Dr. Price aired several 

grievances regarding the UNC Hospitals-RTP project, its 

proposed primary site in the RTP, and the support letters 

from Mr. Levitan regarding the same. Dr. Price’s Letter 

represented to the RTF that: 

It seems to me that the only cure for this highly 

concerning matter is for the Board to recuse itself 

going forward from any decision that relates to the 

CON application or eventual award, regardless of who 

is successful in the CON process. Note that UNC’s

application does include an alternate site that does 

not require RTF action that does not require RTF 

rezoning.

(Id. at 3). 

257. Thus, while the Comments filed by Duke represent 

that the alternate site is “not viable,” the Dr. Price letter to 

the RTF makes no reference to Duke’s public position on 

the alternate site and implies that the alternate site is 

viable. 

258. Duke attempted to distinguish its position in these 

two documents by claiming that it was merely pointing out 

that UNC had represented the alternate location to be 

viable and that the “alternate site has nothing to do with 
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56

the Research Triangle Park or Research Triangle 

Foundation, so there would be nothing for the board to do 

as to the viability or not of an alternate site.” (Cummer, 

Vol. 4, p. 668). Dr. Brown confirmed in his testimony that 

he did not discuss whether this representation by Dr. Price 

was inconsistent with the representations in Duke’s 

Comments. (Brown, Vol. 10, p. 1645). Though it could cite 

no factual support for the same, Duke continued to stand 

by its Comments in Opposition. (Id. at 1652). Nonetheless, 

this answer did not explain why Dr. Price addressed UNC’s 

alternate site at all if its existence was not relevant to the 

RTF. 

259. Ms. Cummer, the author of the Comments, also 

reviewed and provided comments on a draft of Dr. Price’s 

Letter prior to it being sent to the RTF (Cummer, Vol. 4, p. 

666), and was therefore aware of the inconsistent 

representations made by Duke to the Agency regarding the 

alternate site and those made to the RTF regarding the 

same.

260. At hearing, Dr. Brown acknowledged that he provided 

the information in Duke’s Comments about the proposed 

NCDOT highway project on UNC’s alternate site. Yet, he 

also conceded that he did not investigate whether (1) the 

proposed alternate site had actually been acquired for the 

highway project or (2) whether there were any restrictions 

on what UNC could do with the alternate site property if it 

had not been acquired by NC DOT or if UNC had acquired 

the property. (Brown, Vol. 10, pp. 1635-36). Dr. Brown 

also testified that UNC admitted, in its application, that a 

highway project was planned for its alternate site. (Id. at 

p. 1635). 

261. However, Mr. Carter clarified that the UNC 

Application provided information about the alternate site 

but did not speculate “as to the future of that parcel of land 

or how it may be used other than for a proposed hospital.” 

(Carter, Vol. 10, p. 1792).

 v. UNC Can Make a Material Compliance Request if it 
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57

Ultimately Cannot Develop a Hospital at its Primary Site

262. A material compliance request is a letter to the Agency 

stating why the applicant cannot proceed with the project 

exactly as described in its application. (Hale, Vol. 2, pp. 

247, 276-77; Meyer, Vol. 7, p. 1283). The applicant would 

include in its request the reasons why they could not 

develop the project at the site and identify an alternate site 

for the Agency to consider as a location for the assets 

awarded in the CON. (Hale, Vol. 2, pp. 247-48; Meyer, Vol. 

7, p. 1283). Through this process, a modification in plans 

can be deemed by the Agency to be in “material compliance” 

with the representations in the approved application.

263. The Agency routinely approves material compliance 

requests and has approved material compliance requests to 

develop projects at alternate sites. (Hale, Vol. 2, p. 248; 

Cummer, Vol. 4, pp. 680-81; Meyer, Vol. 7, p. 1283). For 

example, in 2018, Mr. Meyer assisted an ASC in making a 

material compliance request to the Agency seeking to 

develop its ASC in a location within Brunswick County at 

a different site. The Agency approved this request. (Jt. Ex. 

100; Meyer, Vol. 7, pp. 1284-85). 

264. Regardless of whether UNC develops UNC HospitalsRTP at the primary site, UNC would be able to submit a 

material compliance request to the Agency to approve a 

new location for the facility. UNC could make a similar 

request if it ultimately was unable to have the primary site 

rezoned appropriately. (Meyer, Vol. 7, pp. 1285-86).

265. Notably, Duke itself experienced issues with a site 

identified in a 2018 CON application for ORs in Orange 

County. (Id. at p. 1286). The 2018 Orange County OR 

Review was a competitive review in which Duke and UNC 

both applied for 2 ORs in Orange County. (Cummer, Vol. 

4, p. 681). The Agency ultimately awarded the CON to 

Duke, and UNC challenged this award in a contested case. 

(Id. at p. 681-82). Duke engaged Keystone Planning, Mr. 

Meyer’s company, to develop Duke’s application, and later 

serve as an expert witness, in that review. (Meyer, Vol. 7, 
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58

pp. 1286-87). 

266. In that review, Duke had leased a location on Sage 

Road, which location was approved by the Agency. 

However, during the course of the Agency’s review of the 

application, Duke identified certain remediation and code 

issues that it believed made it financially more favorable 

for the project to be developed at a different location. In 

response, Duke determined that it could make a successful 

request for a material compliance determination to change 

the location. (Cummer, Vol. 4, pp. 685-88; Meyer, Vol. 7, 

pp. 1286-87). 

267. Duke did not inform the Agency during the course of 

the review that it had identified potential issues with its 

proposed site. (Cummer, Vol. 4, p. 691). Because the 

original site was still available to Duke during the course 

of the review, the “information in the application that the 

site was available was correct.” (Id. at p. 693). According 

to Ms. Cummer, “[s]o unless an[d] until we were interested 

in seeking a different site or doing anything else, there was 

nothing to inform the agency of.” (Id.)

268. In both his expert report and deposition testimony in 

the 2018 Orange County OR Review, Mr. Meyer 

emphasized that the issues with Duke’s ASC site in its 

CON application were immaterial, as Duke could submit a 

material compliance request, which the Agency routinely 

approves. (Jt. Exs. 101, 102; Meyer, Vol. 7, pp. 1287-89).

269. Ms. Cummer also cited to an occasion when Duke 

previously withdrew a CON application after learning it 

had relied upon incorrect and overstated data. She 

explained that the data error was so significant that it 

made the application infeasible as presented. (Id. at pp. 

697-98).

270. Mr. Meyer’s opinion concerning UNC’s conformity 

with Criterion (12) and the ability of an approved applicant 

to submit a material compliance request in the event of site 

issues is consistent between this Review on behalf of UNC 
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59

and the 2018 Orange County OR Review on behalf of Duke. 

(Id.). 

271. Mr. Carter agreed with the Agency’s conclusion that 

the UNC Application was conforming with Criterion (12), 

as UNC provided all information requested by the Agency 

for this Criterion. (Carter, Vol. 10, p. 1790). Mr. Carter 

opined that the Agency’s analysis of this Criterion was 

consistent with the way the Agency has analyzed Criterion 

(12) in previous reviews. (Id. at 1792). Mr. Carter also 

opined that the specific location of UNC Hospitals-RTP was 

not material to UNC’s demonstration of need for this 

project, but rather the location of the facility within the 

southern region of Durham. (Carter, Vol. 11, pp. 1982-83).

272. Ms. Sandlin offered no opinions with respect to UNC’s 

conformity with Criterion (12). (Sandlin, Vol. 6, p. 955; see 

also Jt. Exs. 54, 146).

273. The Agency considered Duke’s Comments in its 

analysis of UNC’s conformity with Criterion (12). In its 

analysis of Criterion (12), the Agency noted “there is some 

question as to whether or not the first site can be rezoned 

for a hospital” and indicated it had reviewed Duke’s 

Comments. (Jt. Ex. 1, pp. 1575-76; Meyer, Vol. 7, pp. 1280-

81, Vol. 8, pp. 1393-94). The Agency was aware that the 

site has not yet been rezoned and that Duke questioned the 

possibility of rezoning the site. (Id.). 

274. Ultimately, the Agency found that UNC had 

adequately explained its proposed project and its plans for 

accomplishing the required rezoning, such that it was 

conforming with Criterion (12). (Jt. Ex. 1, pp. 1575-76; 

Hale, Vol. 2, pp. 274-75).

In light of these findings, the ALJ made the following conclusions of law:

73. The Agency correctly determined that the UNC 

Application identified a proposed site and adequately 

demonstrated that the cost, design, and means of 

construction of UNC Hospitals-RTP represent the most 
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60

reasonable alternative, will not unduly increase the cost of 

service to the public, and incorporates energy saving 

features. 

74. UNC provided adequate information requested by the 

Agency in the application related to Criterion (12), 

including describing how it anticipated having the property 

rezoned.

75. The Agency reasonably assessed potential zoning and 

restrictive covenant issues with the primary site for UNC 

Hospitals-RTP and correctly determined that the UNC 

Application was conforming with Criterion (12) 

nonetheless. Moreover, the Agency did not err in not 

seeking additional information regarding the zoning and 

restrictive covenants at the primary site. “There is no 

provision in [N.C.G.S.] § 131E-183, nor Chapter 131E, 

which permits the Agency to independently assess whether 

the applicant is conforming to other statutes.” (Hale, Vol. 

2, p. 266; see also Craven Reg’l Med. Auth., 176 N.C. App. 

at 58[] . . .). Therefore, the Agency did not err in not 

engaging in further analysis of the zoning or restrictive 

covenants beyond what was contained in the Agency 

findings. 

76. The letter of support from Mr. Levitan was not 

necessary to the approval of the UNC Application; 

nonetheless, Mr. Levitan’s support letter was consistent 

with UNC’s representations in the UNC Application and 

its Responses to Comments. 

77. The Agency was correct to exclude Mr. Levitan’s 

clarifying letter of [12 July] 2021 from the Agency File 

because it was submitted after the end of the public 

comment period. Had the Agency considered that letter 

and used it as a basis to deny the UNC Application, it 

would have been reversible error.

78. Mr. Levitan’s clarifying [12 July] 2021 Letter did not 

state that the RTF would deny any efforts to rezone the 

primary site; instead, it simply noted that the RTF would 
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61

not take action until a CON has been awarded and any 

appeals exhausted. (Jt. Ex. 46; see also Jt. Ex. 25). Thus, 

had the Agency considered the [12 July] 2021 Letter, the 

Agency would have been incorrect to use it as a basis for 

UNC’s nonconformity with Criterion (12).

79. While Duke raised questions about UNC’s alternate 

site, Duke presented no competent evidence as to the 

unavailability of that site. Neither Ms. Cummer nor Dr. 

Brown are qualified as an expert in real estate, 

condemnation, or highway construction. Their testimony 

suggesting UNC could not develop a hospital at the 

alternate site is unreliable, and the undersigned gives it no 

weight.

80. If UNC is ultimately unable to develop a hospital at the 

UNC Hospitals-RTP primary site due to zoning or 

restrictive covenant issues, UNC may submit a material 

compliance request for another suitable site, consistent 

with prior Agency decisions approving alternate sites 

following issuance of a CON. (See [N.C.G.S.] § 131E-181; 

Hale, Vol. 2, p. 248; Meyer, Vol. 7, pp. 1283-89; Jt. Exs. 100-

102). The Agency has the discretion to evaluate any 

request to develop the proposed hospital at a different 

location and determine whether such project would be in 

material compliance with UNC’s representations in the 

UNC Application. [N.C.G.S.] § 131E-189(b). 

81. Substantial evidence in the record supports the 

Agency’s determination that the UNC Application was 

conforming with Criterion (12).

Here, while the ALJ’s decision critiques at length Duke’s failure to ground its 

contentions concerning medical providers’ historical inability to create facilities in 

RTP in fact, it does admit that the primary location is currently subject to zoning 

requirements and restrictive covenants that would, as they stand currently, prevent 

the construction of the proposed facility. Moreover, under N.C.G.S. § 131E-181(a), 
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“[a] certificate of need shall be valid only for the defined scope, physical location, and 

person named in the application.” N.C.G.S. § 131E-181(a) (2023). The application in 

this case concerned only the RTP location and not the proposed alternative location 

discussed by the ALJ, so the scope of the consideration should have been limited to 

the primary proposed location.5 Thus, much of the ALJ’s reasoning was unsound 

insofar as it treated the presence of the zoning requirements and covenants as 

unproblematic and considered the alternative site in the determination of whether 

the CON should issue.6

As we review the determination as to Criterion 12 only for substantial evidence 

on the record and do not interfere with the credibility and weighting determinations 

of the ALJ, Surgical Care Affiliates, 235 N.C. App. at 622-23, we note that the 

reasoning of the ALJ concerning UNC’s compliance with Criterion 12 may have been 

5 In so holding, we express no opinion on whether the ALJ could have permissibly considered 

an alternate site for the proposed facility if that alternate site had been included in UNC’s application.

6 Moreover, to the extent the ALJ used the subsequent possibility of UNC filing a material 

compliance request to justify its reliance on the availability of the alternate site, we have treated the 

material compliance request process arising under N.C.G.S. § 131E-181(b) as analytically independent 

of, and distinct from, the grant or denial of a CON ab initio. See Craven, 176 N.C. App. at 59 (“The 

CON Section granted [the] request for a material compliance determination after the CON was issued. 

[The petitioner] is asking this Court to review events which occurred after the issuance of the final 

agency decision.”); see also N.C.G.S. § 131E-181(b) (2023). We understand the possibility of rectifying 

issues with a proposed facility as a remedial mechanism, not an invitation to lower the threshold at 

which an initial proposal is deemed satisfactory under our statutory criteria, and the absence of any 

caselaw in the course of our research in which the future possibility of a material compliance request 

has constituted substantial evidence to grant a CON appears to confirm this view. While the ordinary 

rule is that the ALJ is “authorized to establish its own standards in assessing whether an applicant” 

conforms with the criteria in N.C.G.S. § 131E-183(a), this rule only applies where review requirements 

have not been specified by our General Assembly. AH, 240 N.C. App. at 100; see also N.C.G.S. § 131E177(1) (2023). In this case, our General Assembly clarified in N.C.G.S. § 131E-181(a) that an 

application’s consideration is limited to the physical location described. N.C.G.S. § 131E-181(a) 

(2023).
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

Opinion of the Court

63

independently supported, but not definitively so. Namely, even setting aside the 

ALJ’s reasoning concerning the alternate location and its qualms with the support 

proffered by Duke for its challenge to UNC’s CON application, the ALJ’s invocation 

of prior cases where certificates of need have been awarded prior to zoning 

amendments and finding that RTP has recently altered its zoning restrictions to 

accommodate a fire station and its covenants to accommodate a school suggests it 

found the proposal at the location listed in UNC’s application satisfactory under 

Criterion 12. However, given the possibility that the ALJ would not have awarded 

UNC the CON without the additional consideration of the proposed alternative site 

and a future material compliance request, we have no way of knowing whether the 

ALJ’s conclusion would have followed from only the allowable considerations.

Under N.C.G.S. § 150B-51(b), “[t]he court reviewing a final decision may affirm 

the decision or remand the case for further proceedings. It may also reverse or modify 

the decision if the substantial rights of the petitioners may have been prejudiced 

because the findings, inferences, conclusions, or decisions are[,]” inter alia, 

“[u]nsupported by substantial evidence . . . .” N.C.G.S. § 150B-51(b) (2023). For the 

reasons explained above, the ALJ’s decisions as to Criterion 12 were, for purposes of 

our review, supported by substantial evidence. However, the use of considerations 

outside the scope of the ALJ’s review casts doubt on whether the ALJ herself would 

have reached the same conclusions as to Criterion 12 when taking only the proposed 

location in the application into account. Accordingly, we remand to the ALJ for 
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

Opinion of the Court

64

consideration of whether UNC’s application, taking into account only the site 

proposed in its application and setting aside the possibility of a future material 

compliance request, satisfied Criterion 12. 

In particular, the ALJ should give due consideration to the possibility that a 

potential inability to change RTP’s applicable covenants could result in substantial 

cost being passed to patients. While the ALJ appears to have been satisfied with the 

likelihood that both the zoning restrictions and applicable covenants could be 

amended as necessary to accommodate the proposed UNC facility given a recent 

history of amendments to permit the construction of a fire station and a school, the 

final decision makes no meaningful reference to the financial ramifications of a 

failure to amend either. This is especially troubling with respect to the restrictive 

covenants, the termination of which requires the consent of the owners of 90% of the 

subject property and the amendment of which is subject to judicial scrutiny to ensure 

any changes are “reasonable in light of the contracting parties’ original intent” in the 

event one of the affected property owners is dissatisfied with the amendment. 

Armstrong v. Ledges Homeowners Ass’n, Inc., 360 N.C. 547, 559 (2006); but see Kerik 

v. Davidson Cnty., 145 N.C. App. 222, 228 (2001) (emphasis added) (“[A]doption, 

amendment, or repeal of a zoning ordinance is a legislative decision that must be 

made by the elected governing board[.]”). When considering the potential for property 

owners with an interest in maintaining these covenants to disallow the construction 
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

Opinion of the Court

65

of the new facility7 in isolation of UNC’s ability to pivot to a location not listed in its 

application, the ALJ may make a new determination in accordance with whether it 

is satisfied that UNC has demonstrated that the project “will not unduly increase the 

costs of providing health services” at the site proposed in the application. N.C.G.S. § 

131E-183(a)(12) (2023).

CONCLUSION

We affirm the ALJ with respect to geographic access, competition, and 

Criterion 3; however, because we cannot determine whether the ALJ would have 

found UNC’s application in conformity with Criterion 12 without considering matters 

outside the scope of its CON application, we remand to the Office of Administrative 

Hearings for further findings.

AFFIRMED IN PART; REMANDED IN PART.

Judge STADING concurs.

Judge GRIFFIN concurring in part and dissenting in part by separate opinion.

7 Or, perhaps more concerningly, consent only for an exorbitant price.
No. COA23-351 – DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH 

& HUM. SERVS.

GRIFFIN, Judge, concurring in part and dissenting in part.

I concur with Parts A, B, and C of the majority opinion. However, I dissent 

from Part D because there was substantial evidence that UNC’s application 

conformed with Criterion 12 and I would therefore affirm the ALJ’s decision.

Criterion 12 provides that

[a]pplications involving construction shall demonstrate 

that the cost, design, and means of construction proposed 

represent the most reasonable alternative, and that the 

construction project will not unduly increase the costs of 

providing health services by the person proposing the 

construction project or the costs and charges to the public 

of providing health services by other persons, and that 

applicable energy saving features have been incorporated 

into the construction plans.

N.C. Gen. Stat. § 131E-183(a)(12) (2023); see N.C. Gen. Stat. § 131E-183(a)(1), (3). 

The majority holds the ALJ erred by considering evidence regarding a secondary 

location that was not included on UNC’s CON application when determining whether 

the application for the RTP location conformed to Criterion 12.

The standard of review is set forth by section 150B-51 of the North Carolina 

General Statutes. “With regard to asserted errors pursuant to subdivisions (5) and 

(6) of subsection (b) of [N.C.G.S. § 150B-51], the court shall conduct its review of the 

final decision using the whole record standard of review.” N.C. Gen. Stat. § 150B51(c) (2023). The whole-record test requires this Court to determine whether the 

Agency’s decision is supported by substantial evidence. Craven Reg’l Med. Auth. v. 
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

GRIFFIN, J., concurring in part and dissenting in part

- 2 -

N.C. Dep’t of Health & Hum. Servs., 176 N.C. App 46, 52, 625 S.E.2d 837, 841 (2006) 

(internal citations omitted). Substantial evidence is relevant evidence that a 

reasonable mind could conclude supports a decision. Parkway Urology, P.A. v. N.C. 

Dep’t. of Health & Hum. Servs., 205 N.C. App. 529, 535, 696 S.E.2d 187, 192 (2010) 

(internal marks and citations omitted).

This Court may not “replace the agency’s judgment as between two reasonably 

conflicting views” even if it may be possible to reach a different result if the matter 

were reviewed de novo. Id. “Rather, a court must examine all the record evidence –

that which detracts from the agency’s findings and conclusions as well as that which 

tends to support them – to determine whether there is substantial evidence to justify 

the agency’s decision.” N.C. Dep’t. of Env’t. & Nat. Res. v. Carroll, 358 N.C. 649, 660, 

599 S.E.2d 888, 895 (2004) (internal marks and citations omitted). Substantial 

evidence is “relevant evidence a reasonable mind might accept as adequate to support 

a conclusion.” Dialysis Care of N.C., LLC v N.C. Dep’t of Health & Hum. Servs., 137 

N.C. App. 638, 646, 529 S.E.2d 257, 261 (2000) (internal marks and citations omitted).

The majority correctly points out that a CON is specific to what is listed on the 

application. N.C. Gen. Stat. § 131E-181(a) (2023) (“A certificate of need shall be valid 

only for the defined scope, physical location, and person named in the application.”). 

While an ALJ may generally “establish standards and criteria or plans required to 

carry out the provisions and purposes of [a CON]”, N.C. Gen. Stat. § 131E-177(1) 

(2023), the ALJ may not utilize requirements that conflict with what has been 
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

GRIFFIN, J., concurring in part and dissenting in part

- 3 -

specified by our General Assembly, AH N.C. Owner LLC v. N.C. Dept. of Health & 

Hum. Servs., 240 N.C. App. 92, 100, 771 S.E.2d 537, 542 (2015) (internal citations 

omitted). 

Here, the ALJ considered a secondary location not included on the application. 

These considerations were error. However, as the majority states, the ALJ’s decisions 

concerning Criterion 12 were supported by other allowable substantial evidence.

UNC provided drawings of its site plan and floor plan and explained how the 

construction was designed to be efficient for the provision of services based on “best 

practice methodologies” while preventing unnecessary costs. UNC also explained 

that even though the project would be capital intensive, there was funding set aside 

to ensure the project could be completed without increasing costs. A letter from the 

Chief Financial Officer of UNC Hospitals was included to certify the availability of 

funds to be used on this project. Additionally, UNC showed that it would design and 

implement an Energy Efficiency and Sustainability Plan to demonstrate that the 

proposed hospital would be energy efficient and conserve water. Although UNC’s 

proposed site required rezoning, UNC anticipated having the property rezoned and 

indicated that it would work with Durham County and the Research Triangle 

Foundation to achieve the rezoning required. UNC also supplied a letter of support 

from the CEO of the Research Triangle Foundation. There was also testimony at the 

hearing indicating CON applications are almost never denied due to the fact that a 

site needs to be rezoned.
DUKE UNIV. HEALTH SYS., INC. V. N.C. DEP’T OF HEALTH & HUM. SERVS.

GRIFFIN, J., concurring in part and dissenting in part

- 4 -

All of this evidence is permissible as it relates only to the primary site that is 

included on the application. See Living Centers-Southeast, Inc. v. N.C. Dep’t. of 

Health & Hum. Servs., 138 N.C. App. 572, 580, 532 S.E.2d 192, 197 (2000) (“Our 

review of the individual statutes within the CON Statute . . . indicates that this 

article grants applicants a full contested case hearing at which they are allowed to 

present testimony and evidence contained in their applications.” (emphasis added)). 

I would hold that this is substantial evidence as a reasonable mind may accept this 

evidence as adequate in support of the conclusion that UNC’s application conforms 

with Criterion 12. 

Our standard of review demands we stop here. N.C. Gen. Stat. § 150B-51(b) 

(2023) (“The court reviewing a final decision may affirm the decision or remand the 

case for further proceedings. It may also reverse or modify the decision if the 

substantial rights of the petitioners may have been prejudiced because the findings, 

inferences, conclusions, or decisions are . . . [u]nsupported by substantial evidence.” 

(emphasis added)). As UNC’s application provided substantial evidence supporting 

the ALJ’s decisions regarding Criterion 12, I would affirm that part of the ALJ’s 

decision, as well.