### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE October 9, 2003 Se ssion
WELLMONT HEALTH S YSTEM v. TENNE SSEE HEALTH FAC ILITIES COMMISSION, ET AL 

### . Appeal from the Chancery Court for Davidson County No. 02-1220-II Carol L. McCoy, Chancellor

No. M2002-03074-COA-R3-CV - Filed January 29, 2004

Administrative Law Judge vaca ted Certificate of Need, which had bee n granted by

Tenness ee Hea

lth Facilities Commission, on grounds of conflict of interest of a Commission member anderroneous information set forth in application for Certificate of Need. Chanc ery Court af firmed. We affirm, holding that the v ote of a Commission me mber with

a confli ct of inte

rest is voi d ab initio

. Commission member with conflict of interes t had an af firmative duty pursuant to Rules of Te nnessee Health Facilities Commission 0720-1-.02(1) to not only disclose the conflict but to recuse himself. Adverse party’s fa

ilure to raise the conflict was not a waiver f or there can be no waiver of the public’s interest in ha ving all v otes of the Commission take place without members who have a conflic t. Tenn. R. App. P. 3; Appeal as of right; Judgment of the Chancery Court Affirmed, Modified and Remanded

F RANK G. C LE MENT , J R ., J., delivered the opinion of the court, in which W IL LI AM B. C AIN a n d P ATRIC IA J. C OTT RELL , JJ, joined. Gary C. Shockle

y a nd Brigid M. Carpe

nter, Na shville, T

ennessee, for the appell a nt, Wellmont Health Sy stem.

G. Brian Jac

kson, Dav

id L. Johnson, and

Gayle Malone , Jr., Nashville, Tennessee, for the appellee, Mountain States Health Alliance. Reid A. Brogden and Sue Ann Sheldon, Nashville, Tennessee, for the appellee, Tenness ee Hea lth Facilities Commission.

OPINION

This appeal h

inges on two key issues: wh

ether Te nnessee Health Facilitie s Commissi o n members who have a conflict of i nterest in the matt ers at iss ue have

an affi rmative d uty to recus e1 Additional i ssues are pre sented and are set fort h later i n the opinion but the two set forth above control the outco me o f this app eal.

2 W ellmont acknow ledge d the error explai ning t

hat its consul tant tr ansposed two numbers which reported the admissions from nei ghboring Su lli van County to Washingt on County s uch tha t 8,186 was re porte d as t he numbe r of admiss i ons instead of 1,8 16 w hich wa s the co rrect nu mbe r of ad mission s. Con sequ ently, total W ashing ton C ounty admissions were overstated for 1998 and projected adm issions i n future y ears were also “i nfected” with t he error in the Certifi cate of Need application.
-2- themselves in proceedings before the Commission, and whether a conflict of interest is waived when
no party to the pr oceedi ngs raises an objection before the Commission to the alleged conflict of one of its memb ers. 1
Facts and Procedural History

The appella

nt, Wellmont Health System (Wellmon t), is a not-for-profit hospital system whic h
owns and oper

ates five hospitals a

nd rela ted fac ilitie s. These

facilitie s are loc ated in No rtheast Tennessee and Southwest Virginia. Appellee, Mountain States Health Alliance (Mountain States), is also a not-for-profit hospital system that owns a nd operates six hospitals in the same region.

On July 13, 2000 Wellmont applied for a Cer tificate of Need to build and operat

e a for- profit hospital in Johnson City, Washington County, Te nnessee. Theproposed

facility would be a

n acute care f acility providing

emerg ency

care, o bstetric s, inpatient and outpatient surgery , intensive care, mobile magnetic resonance imaging, and cardiac catheter ization. In its application, Wellmont asserted that additional hos pital cap acity is neede d in Washing

ton County

based on reports showing emergency

room waits, delays in sche d ulin g surgical and diagnostic procedures and the unavaila bility of hospita

l beds.

The application process required that Wellmont pro ject futur e hospita

l bed nee ds in Washington County

along w it h other factors. Mountain States contends that the “very heart of Wellmont’s application” is the claim that 527 beds would be needed in Washington County by 2004 andthat t his statem ent is false and misleading along with other claims in the applica tion. 2 The discrepancies were acknowledged in the testimony of Wellmont’s corporate representative who acknowledged

that the following corrections needed to be made to the projections for

2004: 24,503 hospital admissions as opposed to the incorrect figure of 32,095; 102,913 hospital patient day s as opposed to 134,799; 7,204 observation days a s opposed to 9,436; 402 hospital beds as opposed to 527; and that instead of a 106 bed shortage, there wo uld be a su

rplus of b eds. Mountain St ates also assertsthat Wellmont understated the number of licensed beds as 421, when the correct number was 564 and that We

llmont’s as serted need of 106 additional hospital beds was based on false a nd misleading information. Mountain States asserts that such erroneous information was the basis for the Commission’ s determination t hat additional beds were needed, and thus the rea son the Commission approved Wellmont’s Certificate of Need.3 Followi ng the a dverse ru lin g by Admini stra tiv e Law Judge Ralph Christian denying t he Motion f

or St ay on the basis his review was de novo pursu ant to T enn. C ode Ann. § 68-1 1-10 9, M ounta in States peti tioned the Davids on Co unty Chancery Court to revi ew the Admini stra tiv e Judge’s refus al of t he sta y of proceedings under the UAP A and the Administrati ve Law Judge’s ref usal to de cide w hether the Co mm ission ha d lawfu lly acted to ap pro ve W ellmo nt’s Certif icat e of Need application. Alt ernatively , Mountain States also request ed a writ of certiorari and a ruli ng that t he Certif icat e of Need w as nul l and voi d because of Mann’s parti cipati on in t he proceeding . Furt

her, Mountai n Stat es sought a wr it

of s uper sede as u nder

Tenn. Code An n. § 27- 9-10 6 to stay f urther proceedings by the THFC until the (con tinued ...)
-3- On October 25, 2000 the C ommission held its hearing on Wellmont’s application for the Ce rtifica te of Need. Physicia ns and lay per sons testified. During this meeting and before the Commission’s vote, the mathematical error in Wellmont’s ap plica tion was di sclosed. Mountain States characterized Wellmont’s error as “a hug e mistake.” Wellmon t ac knowledged that it had made a mist ake bu t coun tered a rguing that some of the beds were “paper beds” which were not availab le for patients. Wellmont’s couns e l further argued that lice

nsed but un

used bed s at North Side Hospital, owned by Moun tain State s, should not be considered. Mountain States countered, arguingthat lice

nsed bed s at North

Side must be

counted. Wellmont re

butt e d Mountain

States’ argument showing that

Mountain States had submitted aCertificate of Need application in January 2000 which ind

icated a need for 497 beds, a figur

e which We

llmont asse

rts is clos e to its figure even with the error.

After taking e vidence and hea ring ar gumentsof counse

l, the Commis sion vote d gra nting Wellmon t’s appli cation for the Certificate of Need. Of the ten members participating, five commission members votedto approv e Wellmont’ s Certific ateof Need and four voted to deny the Certific ateof Need . The cha irperso n abstained. Commis sioner Cha rles Man n, who is a

lleged to have a conflict of interest, voted with the majority in favor of granting the Certifica te of Need.

On November 21, 2000 Mountain States initiated a contested case pr oceeding by

its appeal pursuant to Tenn. Code Ann. § 68-11-109(a) charging that the information contained in Wellmont’s applic ation is “ misleading, inaccurate and incomplete,” tha t the new hospital is contrary to the “goals , objectives, criteria and standards” of the State Health Plan, andthat Wellmont’s new hospital is unnecessary , notfeasible and “will not lead to the orderly

development of health care.” Absent from the petition, W ellmont asserts, is an allegation of a conflict of interest by Mann under Commission Rule 0720- 1-.02, a ny p rocedur al irreg ularity as to the p

roceed ings bef ore the Commission, or

any err or wh ich formed the basis for the Commission to issue the Certificate of Need to We

llmont.
On March 13, 2001, Mountain States filed a Motionfor St ay in the p roceed ings before the Administrative Law

Judge in w

hich it all eged a

conflict of inter

est by Mann under Rule 0720-1-.02. Mountain States sought the stay so that it could c onduct dis covery as to whether Mann had a conflict of interest that would have precluded him from participating in the pr oceedings and vote before the Commission. On April 24, 2001, Administrative Law Judge Ralph Christian denied the Motion for Stay on the basisthat his re

view of th

e matter was de novo pursuant to Tenn. Code Ann. § 68-11- 109. 33 (.. .cont inu ed) Cha ncery C ourt co uld rev iew the m atter wh ich was opp osed by the C omm ission an d W ellmo nt.

On June 11, 2001 , the Chancery Court denied the motion for a stay on grounds that the Chance ry Cou rt di d not have subject matter jur isdicti on and that even if t he court did have jurisdict ion, Mountai n Sta tes had “w aive d its right to challenge parti cipati on by Commissi oner Mann in t he proceeding of October 25, 2000, by its fai lure to raise that issue at an ap pro priate time. ” Mo unta in Sta tes H ealth Allian ce v. T enn essee He alth Fa cilities Co mm ission, e t al. No. 01-1475- III(II) (Davidson County Chancery Co urt June 5, 2001). M ounta in States app ealed the Ch ance llor’s ruling to this Co urt, but while the appeal was pending t he Administrati ve Law Judge granted summary judgment in favor of Mountain Stat

es and this Court dismis sed the appeal as moot because of the Administrati ve Law Judge’s ruling.

-4- Mountain States also filed a motion for summary judg ment requesting that the Certificate of Need issued to Wellmont be vacated because the application contained information that was false, misleading and erroneous and the Certificate of Need was null and void because of Commissioner Mann’s particip ation in

the proceedings despite his conflict of interest. Mountain States arg ued that Commi ssioner

Mann’ s conflict of int erest was cri tical to th e outc ome of the he aring for h e participated

in the discussion, he made the motion to approv e Wellmont’ s Certific ateof Need and he cast what became the deciding vote to approve the Certificate of Need.

Mountain States pr

esented evidenc e which e stablishe d that Co mm issioner Mann is the principal owner, officer and director of Specialty Surgica l Instruments (S SI) an d that SSI sells surgicalinstruments to hospitals and other health care providers in Tennessee. More specific to this case, Mountain States presented evidence that SSI sol d approxima

tely $465,000 t

o Wellmont from fiscal year 1997 thr

ough June 6, 2001, and

alleged that Man

n would like

ly sell even more equipment to Wellmont if

another hospital w ere ope

ned. Moun

tainStates also introduced evidence showing that SSI sol d $158,000

to Mountain States in the year 2000, br inging the total sales by

SSI to more than one-half million dollars for the period.

The Administrative Law Judge gr anted Mountain States’ motion for summary judgme

nt on bothgrounds and vacated the Certificate of Need that had been

granted to Wellmont. Though she found that both grounds were va lid to support a grant of summary judgment, Judge Morgan held that the conflic t of inter

est issue i s “entirely dispositive of the issue of whe

ther summa

ry judgmen t should be granted.”

Wellmont filed a p etition in t he David son County

Chancery

Court seeking judicial review of the Administrative Law Judge’s ruling asserting that theAdmin istrative Law Judge er red in finding that Mann had an improper conflict of interest, that Mount

ain State s waived

the right to assert the conflict of interest, and that the Administrative La w Judge e rred in finding that the Commission based its vote on false, inaccurate and misleading information in Wellmont’s application. The Chancellor affirmed the Administrative Law Judge’s ruling, finding that Mann had a conflict of

interest and was under an affirmative duty to disclose the conflict

and recuse himself from the proceedings resulting in the vote being voi d ab i nitio . The Chancellor also vacated that portion of the pr

ior ruling in which th

e Chance llor had h eld that Mo

untain Sta

tes had w aiv ed the-5-

conflict of intere st by

not raisi ng it in

earlier administr

ative pr oceedings. The

Chancellor also affirmed the Administrative Law Judge’s ruling that the Certificate of Need was based on “ false, incorrect, or misleading” information and should be vac ated.

Standard of Review

Under the TennesseeUniform Administrative Procedures Act (UAPA), the reviewing court may reverse or modify

the decision

if the rig hts of the petitioner have been prejudiced bec ause the administr ative findings, in

ferenc es, conc lusions or

decision s are: (1) In vio lation of c onstitution al or stat utory provision s; (2) In excess of sta

tutory authority of the ag ency ; (3) Made upo n unlawf ul proce dure; (4) Arbitrary

or cap ricious or char acterized by a buse of discretion or

clearly unwarranted exercise of discretion; or (5) Unsupportedby evidence which is both substantial and material in the light of the entire record. In determining the s u bstantiality of evidence , the court shall take into account whate verin the record fairly detracts from its weight, but the court shall not substitute its judgme

nt for tha t of the a gency as to the w eight of

the evidence on questions of fact.
Tenn. Code Ann. § 4-5-322(h).

Judicial review of an agency 's action follows the narrow, statutorily defined standa

r d containedin Tenn. C ode Ann. 4-5-322(h) rather than the broad standar d of review used in other civilappeals. Wayne County v. Tennessee Solid Waste Disposal Control Bd., 756 S.W.2d 274, 279 -280 (Tenn. Ct. App. 1988) (citi ng CF Ind us. v . Tenn esse e Pub . Ser

v. Com m'n , 599 S.W.2d 536, 540 (Tenn. 1980)); Metropol itan Gov't o f Nashville

v. Shack lett , 554 S.W.2d 601, 604 (Tenn . 1977 ); DePries t v. Puet t , 669 S.W .2d 669, 673 (Tenn. Ct. App. 1985), cert. denied, 469 U.S. 1034, 105 S.Ct. 505, 83 L.Ed. 2d 397 reh. denied, 469 U.S. 1181, 105 S.Ct. 942, 83 L.Ed.2d 954 (1985)

. The scope of review by

this court is the same as the trial court; review the findings of fact by an administrative agency upon the standard of substantial and material evidence. Gluck v . Civil Serv . Comm 'n , 15 S.W. 3d 486, 490 (Tenn. Ct. A pp. 19 99) (ci ting De Pries t v. Puett , 669 S.W.2d 669 (Tenn. Ct . App. 198 4)). What amounts to "substantial and material" evidence under Tenn. Code Ann. § 4-5-322(h) is understood to require “something less than a preponder ance of the evidence, (citations omitted) but more tha n a scintilla or gl

imme r." Gluck at 490 (citi ng Wayne County v. Tennessee Solid Waste Disposal Control Bd. , 756 S.W. 2d 274, 280 (Tenn. Ct. App. 1988)).

While this court may consider e vidence in the record that detracts from its weight, the court is not allowed to substitute its judgment for that of the agency concerning the weight

of the evidence. Gluck at 490 (citing Tenn. CodeAnn. § 4-5 -322(h) ; Pace v. Garbage D isposal Dis t. , 390 S.W.2d4 Th is case was initially captioned M ethodist Healthcare-Jackson Hospital v. Jackson - Madison County General

Hospital District. The nam e of the plaintiff has been chan ged to Ja ckson T ennessee H ospital Co ., LLC. bec ause M ethodist Healt

hcare -Jac kson Hospital was acqui red by Jacks on Tennessee Hospit al Co ., LLC . W e will refer to this case by its original capti on for the prior opinion is fil ed under the original capti on.
-6- 461, 463 (Tenn. Ct. App. 1965). The evidence before the tri buna l must be such relevant evidence
as a reasonable mind might

accept as adequ ate to sup

port a ra tional co nclusion a

nd such a s to furnis h a reasonably

sound basis for the action under consideration. Gluck at 490 (citi ng Pace at 463).

Conclusions of law are subject to de novo review on appeal without any presumpt

ion of
correctness. Niziol v. Lockheed Martin Energy Sys., Inc ., 8 S.W. 3d 622, 624 (Tenn.1 999); Nutt v. Champion Int'l Corp. , 980 S.W.2d 365, 367 (Tenn.1 998). I ssues of s tatutory construction are

solely questions of law. Bryant v. Genco Stamping &Mfg. Co. , 33 S.W.3d 761, 765 (Tenn. 2000); Hardin v. Royal & Sunalliance Ins ., 104 S.W.3d 501, 503 (Tenn. 2003). Analy sis

Wellmont asserts that Mountain States’ f ailure to r aise the issue of whether Commissioner Mann had a conflict of interest constitutes a waiver of the rig ht to raise the confl ict on a ppeal. Raising the conflict at this late date is described by Wellmont as an “ace in the hole strategy ”– that is, a conflict ignored

by Mountain States when Mountain States thought Commissioner Mann may voteagainst Wellmont’s Certificate of Need app licati on, but ra ised once the vote d

id not go in Mountain States’ favor.

Co nv er se ly, Mountain States argues that under the Commission’s Rule 0720-1-.02(1), a party’swaiver of the confl ict of interest is immaterial because the Commission member has an affirmative duty

to disclose

the conf lict and to rec use himself/herself. Further, Mountain States argues that the administrative agency ’s position on this rule is, in essence, one of zero tolerance and that “courts must give great deferenc e and we ight to a n agency ’s interp

retation of its own r

ules” quoting Quaker Oats Co. v. Jackson , 745 S.W. 2d 2 69, 272 (Tenn. 1988 ); Profill De v., Inc. v. Dills , 960 S.W. 2d 17, 27 (Tenn. Ct. App. 1997).

This iss ue w as addressed recently in Methodist Healthcare-Jackson Hospital v. JacksonMadison County Ge neral Hos pital Distri ct, et al. , No. M2002-01 6 55-CO A-R3 -CV, 2003 W L 21202577 (Tenn. Ct. App. May 22, 2003) (Applica tion for Permission to Appeal Denied by Su preme Court, Oct. 27, 2003). 4 Met hodi st Healthc

are also involved a similar alleged conflict of Commissione

r Charle s Mann. The rule a t issue, Com

mission Rule

0720-1-. 02(1), pr

ovides:

CONFL ICTS O F IN

TEREST
(1) Members

. If a

ny matter be

fore the Commission in

volves an

y pr oject, transaction, or r

elationsh ip in which a member or their associated institution
or business has a direct

or a conflicting interest, the memb er shall ma ke known5 Unlike t he argument

in t his ca se, Methodis t Healthcare- Jackson Hospit al had argued t hat Tenn. Cod e. Ann. § 4-5- 302 (th e UAPA), not Commiss ion Rul e 0720-1- .02(1) , con trol led t he det ermi nati on of

whether Charles Mann had

an aff irmat ive d uty to ra ise the confl ict and recuse himsel f or whether the hospital which opposed the issuance of t he Cer tificate of N eed was req uired to raise th e con flict. W hile acknowledging that the statu te and the Co mm ission R ule both provided a means for di squali fyi ng a Commissi on member, th e Court f ound that

the t wo were not inconsistent and that the Commiss ion Rule w as cont roll ing under the cir cumst ances of

that case whi ch, as stated above, are v ery s imil ar to the fact s in t

his ca se. The Court ’s an alys is i n Methodist of the contras t betwe en the stat ute and Comm ission Rule and its applicat

ion is helpf

ul her e:

T.C. A. § 4 -5-30 2 pr ovid es onl y t hat an agg rie ved par ty "may" pet it ion f or dis quali fi cati on of

a Commiss ion m ember u pon know ledge of the ex isting or a lleged conflict. U nlike C omm ission R ule 0720-1-.02(1), T.C .A. § 4 -5-30 2 do es no t mand ate ac tion on beha lf of t he agg rie ved party through inclusi on of t

he t erm "sh all ." Commi ssi on Rule 0720-1- .02(1) does not conflict with t his st atute, but

ra ther simply goes one st ep furt her in placin g the af

firmative burden on the Commission member possessing the all eged orpo tentia l confli ct of int erest to reveal said confli ct to the adminis trati ve agency and t o recu se hi msel f f rom th e vot e and pr oceedi ngs. We find n o c onflict with T.C .A. § 4-5- 302, as th is sta tut e mandat es di squal if icat ion of any Commiss ion me mber wi th aconf li ct of interest similar in m agnitud e to the conflict inv olved in this case . Bo th the statute a nd the rule require disqu ali fi cati on bas ed on conf li ct of i nt ere st , Comm i ssion Rule 0720-1-.02(1) simply places the mandatory duty of

discl osure and r ecusal on the Commiss ion member-- the part y best suited to real ize whether such co nflict exists.

Me thodist Hea lt

hca re -J ack so n Ho spi tal v. Ja ckso n-M adiso n C oun ty Ge nera l Ho spital D istrict, et al. , No. M2002- 01655-COA-R3- CV, 2003 WL 21202577 (Tenn. Ct . App. May 22, 2003) at * 13

. -7- to the Commission that interest and recuse himself/herself from the delibera tion and vo te , and join t he general pub lic during

the proc eeding s. (emphasis added) In its application of Commission Rule 0720-1-.02(1), the Methodis t Healthc

are court stated:

To reitera te, Commis sion Rule 0720-1-.02(1) provides that a Commission member witha defined conflict

of intere st " shall

make known to the Commission that interest and recuse himself/herself from the delib eration

and vote, and join

the general public during the proceedings." (empha sis a dded). By the plain and mandatory langua ge of Commission Rule 0720-1-.02(1), it is evident that Commissioner Mann hadan affirmativeduty

to inform t

he Commission of his co nflict of interest and recuse himself from the deliberation and vote on Methodist's application.

Id . at *13. Applying Commission Rule 0720-1-.02(1), the Methodis t Health car e court found that Commissioner Mann “hadan affi rmative d uty to inform t

he Commission of his conflic t of inter est andthereby

recuse himself f rom the vote and pr

oceedings” and that “Jac

kson-Mad

ison’s fa ilure to petition the Commission for recusal did not constitute a waiver.” 5 Id. at *14. Ironically , the court’s6 The Me thodist H ealthca re cour t quo ted at len gth from th e Order rendered by Administ rati ve Law Judg e B lair Sco ville Mo rgan in thi s case. Relevant porti ons of that Order, as quoted in Methodist Healt hcare, are set

forth in this opin ion.

7 Th e O rder is slightly misq uoted in the op inion, it sho uld rea d: “dire ct interest o r a co nflicting intere st”
-8- conclusion was suppo

rted by the Orde r of the Administra

tive L aw Judge

in this case. 6 Pertinent portions of the Order that supported the foreg oing conclusionin Methodis t Healthc are are as follow s:
Becau se a party that a

ppears before the Commission may not be aw are o f a Commissioner’s conflict of interest at the time of a vote that impacts tha t party’s rights or pecuniary

interests, this rule is self-executing in the contest [sic] of a conflict of interest , placing

upon eac

h Commissio ner an af

firmative duty, regardless of whether any party

to the proc eeding re quests it , to disclose at the beginnin g of the hearing a direc t interes tor confl ict of inte rest 7 in the matter, a

nd recus e himself

/herself from further involvement in th e Commission’s hearing on the matter, the Commission’s deliberation on the CON and the Commission’s vote on the CON.

Becau se recusal in the context of a conflict of interest is an affirmative duty of the Commission member h

imself/he rself, a nd beca use all Commissioners who serve on the Tennessee He alth F acilitie s Commission s erve to a dvance the public

policy clearly stated in T.C.A. § 68-11-10 3, the fa ilure of a ny p arty to the pro ceeding

to "obje ct" to
a Commissione

r's par ticipatio n in the vot

e, prior to the vote , is immate

rial. There can be no "waiver" of t

he public 's interest

in having a ll votes of

the Commis

s ion take place without any member participating who has a conflict of interest in the outcome of the vote.


### Id. at *14. (emphasis added)

Based on Commi ssion Rule 0720-1-.02(1) and the conclusion reached in Methodis t Healthca re , we too hold that there can beno "waiver" of the public' s interest concerning this issue; therefore, Mountain States’ failure to petition the Commission for recusal did not constitute a waiver of the conflict of interest at issue.

The next issue raised by Wellmont read s, “Did t he Chancellor err in affirming the Administrative Law Judge when M ountain States failed to show the existence of any conflict of interest on the part of any THFC Commissioner?”

The Administrative Law Judge found that Commissioner Mann had a c onflict of interest. Our review of that de termi natio n is n arrowe r than in ot her civ il app eals. When review ing an a gency's factual determin ations, un like othe r civil ap peals, c ourts should

be less confident that their judgment is preferable to that of

the agency

. WayneCounty v. Tennessee Solid Waste Disposal Control Bd. 756 S.W.2d 274, 279-280 (Tenn. Ct. App. 1988), see also 2 C. Koch, Administrative Law and Practice-9-

§ 9.4 (1985 ). Courts do not review the fac t issues de novo and, ther efore, do not subst

itute thei r judgment for that of the agency

as to the weight of the evidence, Humana of Tennessee v. Tennessee Health Faci litie s Comm 'n , 551 S.W.2d 6 64, 667 (Tenn.1977 ); Grubb v. Tennessee Civil Serv. Comm' n , 731 S. W. 2d 919, 922 (Tenn.Ct.A pp.1987), even when the evidence could support a diff erent result. Hughes v . Board of Comm'rs , 204 Tenn. 298, 305, 319 S.W.2d 481, 484 (1958).

Wellmont contendsthat the r ecord do es not e stabl ish that SSI and Commiss ioner Ma

nn would enjoy an incre ase in its f

uture sa les to Wellmont if a new hospital was built. Wellmont ar

gues tha t it
was error f

or the Ad

ministrative Law Judge to infer that more sa les would result and for the Chancellor

to likewise support such an inference. Such a finding , Wellmont contends, is not supported by the evide

nce, making summary

judgment improper.

Wellmont’s arg um ent mi ss es t he p oi nt . If a disqualifying

conflict of

interest exists, it is not necessary to pr ove a future benefit to the commissioner. The presumption that such a conflict of interest may influence

a decision is the bas is for rul es requi ring recusal when a comm issioner h as a disqualifying c onflict of interest.

The record is clear that Commissioner Mann and/or SSI ha d a substantial relation ship with Wellmont during the four ye ars leading up to the vote. Specifically, the r ecord shows that SSI had sales to Wellmont of approximately $456,810 from 1997 through June of 2001. The appe llate court in Met hodist Hea lthcare affirmed the Administrative Law Judge’s finding that Mann had a “disqualifying

pecunia ry conflic t of inter

est” based on sales to Methodist of approximately $405,093, which occurred prior to the vote. Methodis t at * 1 2. The fa cts before us are not dissimilar to the facts in Methodist Healthcare. Accordingly , we affirm the finding that Commissioner Mann had a conflict of interest that disqualified him from participating and voting on Wellmont’s application for a Certificate of Need.

As a consequence of the foreg oing ruling, we must now determine whether the participation of Co mm is si on er Ma nn vo id s o nl y C ommissione r Mann’s vote or the votes of all of the commissioners and therefore the decision of the Commission. The conclusion of law set forth in the Order of the Ad

ministrative La

w Judge G

ranting Summary

Judgment t

hat is per tinent to thi s issue reads:

8. The parties to thi s case are in agreement that Commissioner Mann cast the tiebreaki ng vote th at resulted in Wellmont’s [sic] being granted the requested CON. Becau se Commissioner Mann failedin his affirmative duty to rec use himself from the vote because

of his conflict of interest, and his vote broke the tie in the Commission’s delibra tions, [sic] resulting in the granting of the CON to Wellmont, the entire

vote of the Com mission istainted and is void ab initio . Therefore, the CON gr anted to Wellmont by

the Commission, as such was the result of a tainted vote in violation of the Commission’s own conflict of interest rule, as well as the stated public policy of the Act, should be vacated. (emphasis added)8 The st atut e was in e ff

ect when t

he Commis sion vote d; how ever, it was r epeal ed ef

fect ive July1, 2002.
-10- The foregoing conclusion of law c l ea rl y states that the Administrative Law Judge held that the Certific ateof Need

was vac ated. Wha

t is not clea

r is why , whethe

r it was va

cated because “

his (Mann’s ) vote broke the tie” or because Commissioner Mann participa ted. In the Chancellor’s Memorandum

and Order she stated that the conflict of interest issue “pr ovided a reasonably

sound basis for the ALJ’s holding that the Wellmont CON was void ab initio due to a conflict of interest.” Moreover, the Chanc ellor upheld the decision of the Administrative Law Judge tha t Commissioner Mann violated his duty to disclose his conflict of intere st and re cuse

himself from deliberating and voti ng on Well mont’s application, and vacated the Wellmont Certificate of Need. Howe ver, the Chancellor

did notstate

whether she aff irmed an d vacated the Cert ificate of Need because “his vote broke the tie” or because Commissioner Mann participated.

Conclusions of

law are subject to our de novo review on appeal without any presumption of
correctness. Niziol v. Lockheed Mar tin Energy Sys., Inc ., 8 S.W.3d 62 2, 624 (Te nn.1999) ; Nutt v. Champion Int'l Corp. , 980 S.W.2d 365, 367 (T enn.1998). Therefore, we re view the Chancellor’s conclusion of law with no presumption of corr ectnessor error. We begin our analy sis of this issue withthe opinion in Methodis t Healthca re in which this court held that “Mann’s participation in the initial September 1998 vote approving Methodist’s CON applica tion caus ed the vot

e [sic] be tainted in violation of the Commission’s own c onfli ct of inter est r ule, and t here fore decl are[ d] said vote void ab initio .” Id . at *14 . (empha sis added ) It i s unclea

r whethe r the phr ase “sa id vote” a s used in Methodis t

Healthca re refers to only Commissioner Mann’s vote or the vote of the commi ssion . We readily agre e that Commissioner Mann’s vote is void ab initio, but should the votes of the other Commissioners be deemed void.

CommissionerMann indeed participated but did his pa r ticipatio n, exclusiv e of his vote “taint”, or stated another way , affect the outcome o f the d ecision in favor of Wellmont. Without Mann’s vote, Wellmont’s application did not receive a majority vote of the members present and voti ng. Theref

ore, pur suant to the statute then in ef

fect, the applic ation of We llmo n t was disapproved. Tenn. Code Ann. § 68-11-108(f). 8 If Commissioner Mann’s mere participation, in the absenceof proof that his participation affected the outco me of the

procee dings, v oids the vote of all Commissione

rs, and thereby

the decision of the Commission, we may be required to not only

vacate this decis ion, and r

emand it to the Commission for a new hearing, but other Commission decisions when a commissioner

witha conflict participates. Such may be the case even if the vote were eight to one, with only the

conflicted commis sioner voting in op position to

the majority. We do not believe t his is the int ent of the Commission Rule. To the contrary, we are of the opinion that the “participation” contempl ated in the Commission Rule requ

ires a n ef fect on the outcome of the Commission’s decision. Thi s conclusion is supported by the Commission Rule which does not require the Commissioner to vacate the hearing room, only to “join the general pub lic during the proceedings.” Commission Rule 0720-1-.02(1). Accordingly , we hold that in the absence of proof that the “participation” of the commissioner with the conflict, separate and apart from his/her vote, affected the outcome of the

commissio n’s dec ision, only the vote of the commissioner with the9 Pursuant to Tenn. Code A nn. § 68-11- 104(f) (4) “no act ion of t he commissi on shall

be eff ecti ve unle ss su ch acti on is conc urred in by a m ajor ity of its members present and voting.” Pursuant to Tenn. Code Ann. § 68-11- 104(f) (5) “the action shall be cons idere d disa ppr ove d” in the event o f a tie vote . The se statutes were in effect when the Commiss ion v oted; howeve r, t hey w ere r epeal ed ef

fect ive July1, 2002.
-11- conflict shall be void ab initio . Therefore, we hold that the vote of Commissioner Mann is void ab initio and that the votes of the other commissioners are valid. Having made th at determin ation, we must now de

termine w

hether t o remand this matte

r to the Commission for further proceeding s or w hether the decision of the commission concerning Wellmont’s application for a Certif icate of Need is f inal. The initial vot e was five in favor of granting the Certificate of

Need and four in opposition. Having found tha t Commissione

r Mann’svote is voi d ab initio , the vote is four to four which constitutes a tie v ote. For an applic ation to be

approve d it must receive a majority

of those commissioners present and voting. A tie vote is considered a denial of the application. 9 Accordingly , the decision of the Commission constituted a denial of Wellmont’s application for a Certificate of Need. Tenn. Cod e Ann. § 68-11-108(e) provides that the “commission’s decision to approve or den y an application shall be final and shall not be reconsidered.” The Chairperson abstained. Having abstained, the Chairperson cannot now vote t

o break the tie for such would violate the statute which provides that a co m mission’s d ecision to approve or deny an a

pplication sha ll be final and shall not be reconsidered. See Met hodist Healthcare-Jackson

Hosp. v. J ackson- Madison Co unty Gen eral Hosp . Dist. , 2003 WL 21202577 , *8

- 9 (Tenn. Ct. App. 2003) (holding that the statute does not distinguish between a vote and a decision), citing Tenn. Code Ann. § 68-11-108(e). Accordingly , we find that the decision of the Commission denying Wellmont’s application for a Certificate of Need is final and the matter cannot

be remanded to the Commission for the purpose of conducting another hearing on Wellmont’s application. Therefore, we too vacate the Certificate of Need granted to Wellmont for the reasons set forth above.

The third and final issue presented by Wellmont reads, “Did the Chancellor err in affirming the Administrative Law Judge when the inadvertent mathematicalerrorsin Wellmont’ s Certific ate of Need ap pli cation were fully disclosed to the THFC prior to its vote to grant the Certificate of Ne ed ?”

We have found that Commissioner Mann’s vote was void ab init io and t he application of Wellmont for a Certificate of Need was de nied by a decision of the Commission. Moreover, we found that the decision by the Commission deny ing Wellmont’s application is final andthe decision of the Commission cannot be reconsi dered. A ccordin gly , we find

the issue pertain ing tothe alleged mathematical errors set forth in the application of Wellmont is pretermitted as being moot.

In Conclusion

Based u pon the fo

regoing, we ho ld that (1)Commissione r Mann ha

d an aff irmative duty to informthe Commission of his conflict of interest and to recuse himself; ( 2) that Mountain Sta tes’ failure to petition the Commission for rec usal did not constitute a waiver; (3) that Commissioner-12-

Mann's vote approving Wellmont’s applicationfor a Cer tificate of Need was void ab initio ; (4) that the vote of the eligible commissioners voting was four to four, being a tie vote, which co nstitutes a decision by the Commission deny ing Wellmont’s application for a Certificate of Need in Washington Co un ty; and(5) the decision of the Commission is final and is not subject to reconsideration by the Commission.

Ac co rd in gl y, we modify and a ffirm the ruling of

the Chancery

Court for the reasons set

forth above. Co sts are a ssessed a gainst We

llmont Hea

lth Sy stem.

_______________________________ FRANK G. CLEMENT, JR., JUDGE