COURT OF APPEALS OF VIRGINIA 

Present: Judges Humphreys, Millette* and Retired Judge Olitsky** 

Argued at Chesapeake, Virginia 

DOCTORS’ HOSPITAL OF WILLIAMSBURG, LLC 

 AND LTACH @ RIVERSIDE, LLC1

 OPINION BY 

v. Record No. 1798-07-1 JUDGE LeROY F. MILLETTE, JR. 

 SEPTEMBER 9, 2008 

ROBERT B. STROUBE, M.D., M.P.H., 

 STATE HEALTH COMMISSIONER, AND 

 SENTARA HEALTHCARE 

FROM THE CIRCUIT COURT OF THE CITY OF WILLIAMSBURG 

AND COUNTY OF JAMES CITY 

Richard D. Taylor, Jr., Judge Designate 

Jeannie A. Adams (Paul Walkinshaw; Hancock, Daniel, Johnson & Nagle, 

P.C., on briefs), for appellants. 

 

Thomas W. McCandlish (Jamie B. Martin; Jeremy A. Ball; McCandlish 

Holton, P.C., on brief), for appellee Sentara Healthcare. 

Matthew M. Cobb, Assistant Attorney General (Robert F. McDonnell, 

Attorney General; David E. Johnson, Deputy Attorney General; Jane D. 

Hickey, Senior Assistant Attorney General, on brief), for appellee Robert 

B. Stroube, M.D., M.P.H., State Health Commissioner. 

 Doctors’ Hospital of Williamsburg, LLC (Doctors’), submitted a Certificate of Public 

Need (COPN) application to the Virginia Department of Health (the Department) and the 

appropriate local health planning agency (HPA), Eastern Virginia Health Systems Agency 

 

 * Justice Millette prepared and the Court adopted the opinion in this case prior to his 

investiture as a Justice of the Supreme Court of Virginia. 

 ** Retired Judge Norman Olitsky took part in the consideration of this case by designation 

pursuant to Code § 17.1-400(C). 

1

 Appellants will be referred to collectively as Doctors’ Hospital of Williamsburg, LLC. 
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(EVHSA) pursuant to Code § 32.1-102.6(A). Doctors’ proposed establishing a 51-bed general 

acute care hospital in Williamsburg, Virginia. On the same day, LTACH @ Riverside, LLC 

(LTACH) submitted a COPN application to establish an 18-bed long-term acute care hospital 

within the proposed Doctors’ hospital project. Appellee Sentara Healthcare (Sentara) filed two 

competing COPN applications to add six medical/surgical beds and six long-term acute care beds 

to Sentara Williamsburg Regional Medical Center, a new acute care hospital located 12 miles 

from the proposed Doctors’ hospital project. 

As all four applications proposed projects involving acute-care beds in the same planning 

district, the Department accepted them for review as competitors in the same “batch review 

cycle.” The Virginia State Health Commissioner’s Adjudication Officer, Douglas R. Harris (the 

Adjudication Officer), held an informal fact-finding conference (IFFC) and recommended denial 

of all four COPN applications to Robert B. Stroube (the Commissioner). On March 13, 2006, 

the Commissioner issued his case decision, adopting the Adjudication Officer’s findings and 

denying all four COPN applications. Doctors’ appealed the Commissioner’s case decision to the 

trial court. The trial court affirmed. 

On appeal to this Court, Doctors’ argues the Commissioner erred by considering a staff 

report and other evidence submitted by EVHSA that contained information supporting denial of 

Doctors’ COPN application as the Commissioner was required to consider the EVHSA Board’s 

recommendation to be one of approval. Finding no error, we affirm the trial court. 

 The dispute in this case centers on the Commissioner’s consideration of the EVHSA staff 

report regarding the Doctors’ hospital project. The report was prepared by the EVHSA staff and 

submitted to the Department’s Division of Certificate of Public Need (DCOPN) and the EVHSA 

Board of Directors. After the EVHSA Board met to consider the Doctors’ hospital project, the 

Board sent a letter to DCOPN stating it unanimously voted to recommend denial of the COPN 
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applications submitted by Doctors’, LTACH, and Sentara. As support for its recommendation, 

the EVHSA Board’s letter cited the reasons stated in the EVHSA staff reports on the proposed 

projects. In contrast, after receiving both EVHSA’s recommendation and the EVHSA staff 

report, DCOPN recommended approval of the Doctors’ hospital project but denial of Sentara’s 

COPN applications. 

The Department determined that an IFFC was necessary, pursuant to Code 

§ 32.1-102.6(D) & (E) and Code § 2.2-4019, to ascertain the pertinent facts. During the IFFC, 

18 witnesses gave evidence, including Paul Boynton, EVHSA Director, who testified in support 

of denying Doctors’ COPN application. Sentara also presented information in opposition to the 

Doctors’ project and later put the EVHSA staff report in the record without objection. Doctors’ 

presented EVHSA membership information, showing that at the time of EVHSA’s review of the 

Doctors’ hospital project, the EVHSA Board was not properly constituted in accordance with 

Code § 32.1-122.05(B) and 12 VAC 20-30-50.2

 Doctors’ argued that because of the EVHSA 

Board’s improper constitution, the Commissioner should proceed as though EVHSA had 

2

 Pursuant to Code § 32.1-122.05(B), 

Each regional health planning agency shall be governed by a 

regional health planning board to be composed of not more than 

thirty residents of the region. The membership of the regional 

health planning boards shall include, but not be limited to, 

consumers, providers, a director of a local health department, a 

director of a local department of social services or welfare, a 

director of a community services board, a director of an area 

agency on aging and representatives of health care insurers, local 

governments, the business community and the academic 

community. The majority of the members of each regional health 

planning board shall be consumers. Consumer members shall be 

appointed in a manner that ensures the equitable geographic and 

demographic representation of the region. . . . 

The regulation governing regional health planning boards like EVHSA, 12 VAC 20-30-50, 

mandates the same composition required by Code § 32.1-122.05(B). 
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recommended approval of its project without conditions or revision pursuant to Code 

§ 32.1-102.6(B) or “the Commissioner may choose just to disregard any information that’s 

coming from [EVHSA].”3 In the Adjudication Officer’s recommendation to the Commissioner, 

he stated that “[d]ue to the objection raised by [Doctors’] to the constitution of the EVHSA 

[B]oard of [D]irectors, . . . that [B]oard’s recommendations must be considered to be ones of 

approval.” 

The Commissioner’s March 13, 2006 case decision denied all four COPN applications 

and incorporated the Adjudication Officer’s recommendation by reference. On appeal to the trial 

court, Doctors’ alleged the Commissioner improperly considered EVHSA’s invalid 

recommendation of denial and the EVHSA staff report in reaching his decision because they 

contained information contrary to a recommendation of approval.4

 Finding no error, the trial 

court affirmed the Commissioner’s case decision as the Commissioner considered EVHSA’s 

recommendation to be one of approval, the EVHSA staff report was properly in the agency 

record; the Commissioner had authority to consider the EVHSA staff report, and the 

Commissioner had discretion in what weight to assign the EVHSA staff report. This appeal by 

Doctors’ followed. 

3

 Recognizing the novelty of this issue and expressing uncertainty as to the appropriate 

remedy, Doctors’ asserted at the IFFC that the Adjudication Officer would have to consult with 

the Attorney General’s Office, which represents the Commissioner, on how to proceed when a 

regional health planning board is improperly constituted. 

4

 Doctors’ further argued the Commissioner’s factual findings were not supported by 

substantial evidence. On appeal to this Court, Doctors’ contends the Commissioner’s erroneous 

consideration of evidence submitted by EVHSA served to undermine the substantiality of the 

evidentiary support for his factual findings. Doctors’ substantial evidence argument derives 

from its allegations of error committed by the Commissioner. As we find no error, we decline to 

consider Doctors’ derivative substantial evidence argument. 
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EVHSA Board’s Composition and the Commissioner’s Duty to Treat EVHSA Board’s 

Recommendation as one of Approval

 Pursuant to Code § 32.1-102.3(B)(1), the Commissioner was required to consider the 

recommendation of EVHSA as “the appropriate health planning agency” involved in the review 

of Doctors’ COPN application. However, due to the EVHSA Board’s improper constitution, 

EVHSA lacked the power to make a legally valid recommendation to the Commissioner. As an 

invalid recommendation is the equivalent of no recommendation in the COPN review process, 

Code § 32.1-102.6(B) applied and required the Commissioner to consider EVHSA’s 

recommendation to be one of approval without conditions or revision.5

 

While these issues were argued at the agency and trial court levels, they are not being 

contested on appeal. Sentara and the Commissioner do not deny that the EVHSA Board was 

improperly constituted nor that the Commissioner therefore had a duty to treat the EVHSA 

Board’s recommendation as one of approval. Thus, we proceed as though the EVHSA Board 

was improperly constituted in violation of the governing statute and regulation. 

EVHSA Staff Report was Properly in the Agency Record

 On brief, Doctors’ conceded the EVHSA staff report was properly included in the agency 

record: “Sentara Healthcare incorrectly states that [Doctors’] argues the EVHSA’s staff report 

 5

 Code § 32.1-102.6(B) provides: 

If the health planning agency has not completed its review within 

the specified 60 calendar days or such other period in accordance 

with the applicant’s request for extension and submitted its 

recommendations on the application and the reasons therefor 

within 10 calendar days after the completion of its review, the 

Department shall, on the eleventh calendar day after the expiration 

of the health planning agency’s review period, proceed as though 

the health planning agency has recommended project approval 

without conditions or revision. 

(Emphasis added). 
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should never have been included in the record. [Doctors’] makes no such argument. The 

EVHSA staff report is in the record, and it should be so . . . .” “[Doctors’] has never objected to 

the inclusion of the staff report in the record. . . . It has never been [Doctors’] position that the 

EVHSA staff report should not be included in the record.” We therefore consider the EVHSA 

staff report to be an appropriate part of the agency record in light of Doctors’ concession and the 

requirement imposed by 12 VAC 5-220-60 that “staff evaluations and reports . . . utilized or 

received by the commissioner during the review of a medical care facility project shall become 

part of the official project record maintained by the Department . . . .” 

The Commissioner Did Not Err by Considering the EVHSA Staff Report, Boynton’s IFFC 

Testimony, and EVHSA’s Post-IFFC Submissions

 On appeal from an administrative agency’s decision, “[t]he burden shall be upon the 

party complaining of an agency action to designate and demonstrate an error of law subject to 

review by the court.” Code § 2.2-4027. 

When the decision on review is to be made on the agency record, 

the duty of the court with respect to issues of fact shall be limited 

to ascertaining whether there was substantial evidence in the 

agency record upon which the agency as the trier of the facts could 

reasonably find them to be as it did. 

 

Id. Under this standard of review, this Court will reject an agency’s factual findings “‘only if, 

considering the record as a whole, a reasonable mind would necessarily come to a different 

conclusion.’” Tidewater Psychiatric Inst. v. Buttery, 8 Va. App. 380, 386, 382 S.E.2d 288, 291 

(1989) (quoting Va. Real Estate Comm’n v. Bias, 226 Va. 264, 269, 308 S.E.2d 123, 125 

(1983)). “Substantial evidence” refers to “‘such relevant evidence as a reasonable mind might 

accept as adequate to support a conclusion.’” Bio-Medical Applications of Arlington, Inc. v. 

Kenley, 4 Va. App. 414, 427, 358 S.E.2d 722, 729 (1987) (quoting Bias, 226 Va. at 269, 308 

S.E.2d at 125). Upon review of the agency’s action, Code § 2.2-4027 requires this Court to “take 
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due account of the presumption of official regularity, the experience and specialized competence 

of the agency, and the purposes of the basic law under which the agency has acted.” 

[W]here the question involves an interpretation which is within the 

specialized competence of the agency and the agency has been 

entrusted with wide discretion by the General Assembly, the 

agency’s decision is entitled to special weight in the courts[, and] 

. . . “judicial interference is permissible only for relief against the 

arbitrary or capricious action that constitutes a clear abuse of the 

delegated discretion. The reviewing judicial authority may not 

exercise anew the jurisdiction of the administrative agency and 

merely substitute its own independent judgment for that of the 

body entrusted by the Legislature with the administrative 

function.” 

Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 244, 369 S.E.2d 1, 8 (1988) (quoting Va. 

Alcoholic Beverage Control Comm’n v. York St. Inn, Inc., 220 Va. 310, 315, 257 S.E.2d 851, 

855 (1979)). 

Doctors’ argues the Commissioner failed to proceed as though EVHSA recommended 

approval of Doctors’ COPN application by considering the EVHSA staff report, Boynton’s IFFC 

testimony, and EVHSA’s post-IFFC submissions.6 Doctors’ contends that in order to proceed as 

though EVHSA recommended approval, the Commissioner must act like “the agency as a whole 

recommended approval” and therefore assign no weight to the EVHSA staff report, which the 

EVHSA Board relied upon when it voted to recommend denial of Doctors’ COPN application. 

However, Doctors’ cites to no authority that prohibits the Commissioner from utilizing evidence 

properly in the record. 

 6

 Our analysis applies equally to the EVHSA staff report, Boynton’s IFFC testimony, and 

EVHSA’s post-IFFC submissions, as they comprise the same evidentiary matter involving the 

Commissioner’s consideration of the EVHSA staff report. Doctors’ objects to Boynton’s 

testimony at the IFFC and post-IFFC submissions as “indistinguishable from the official (but 

legally invalid) EVHSA recommendation of denial which relied upon the information and 

analysis contained in the EVHSA staff report. 
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Code § 32.1-102.6(B) does not bar the Commissioner from considering a health planning 

board’s staff report that is contained in the Department’s official project record in compliance 

with 12 VAC 5-220-60. The trial court correctly held, “there is nothing in the law that prohibits 

the consideration of the staff report when the board is unable to issue a recommendation within 

the 60 days [of the batch review cycle]. Accordingly, . . . the law does not preclude 

consideration of the staff report when the board is improperly constituted.” The statutory 

scheme and regulations governing the COPN review process contemplate the Commissioner’s 

review of an extensive record upon which he can make a public need determination. Code 

§ 32.1-102.3 requires the Commissioner to consider 20 factors in determining whether an 

applicant has demonstrated public need for a proposed project. One of these 20 factors is the 

recommendation and reasons therefor of the appropriate HPA. At the conclusion of the IFFC, 

the Adjudication Officer addressed these factors when he instructed counsel: 

One final thing, I think I have said this before, but I want to 

emphasize it. When you do your proposed findings and 

conclusions, I would like those to be directly related to the 20 

considerations that are in the law, and I would like that submittal to 

reflect the culmination of your proposal and the discussion of the 

proposal. . . . It really will help me out if I can isolate that along 

with the transcript as my major guides going through what is really 

going to be a pretty voluminous record, more voluminous than is 

typical . . . . 

The IFFC transcript alone ran 276 pages. During an IFFC, evidence is let in broadly, and the 

only prerequisite to the Commissioner’s consideration of information in the agency record is that 

applicants have notice of the information. Code 2.2-4019; 12 VAC 5-220-60. It is undisputed 

that Doctors’ had notice of the EVHSA staff report and the opportunity to rebut the information 

it contained. 

Further, Doctors’ concedes the Commissioner has broad discretion in his review of the 

agency record. At the IFFC, Doctors’ counsel recognized, “the Commissioner may choose just 
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to disregard any information coming from [EVHSA].” (Emphasis added.) Later, in Doctors’ 

Proposed Findings of Fact, Conclusions of Law and Closing Arguments to the Department, 

Doctors’ stated: 

The recommendation of the staff does not constitute the 

recommendation of a Board, nor in this case could the members 

who voted, [sic] formulate an official recommendation since the 

[EV]HSA Board does not have the required statutory composition 

and representation. At a minimum, the Commissioner should 

provide no weight to the staff’s recommendation . . . . 

(Emphasis added.) By making these assertions, Doctors’ acknowledged the discretionary power 

vested in the Commissioner to review and assign weight to evidence properly in the agency 

record. 

The General Assembly has granted the Commissioner broad discretion in rendering case 

decisions. Johnston-Willis, Ltd., 6 Va. App. at 244, 369 S.E.2d at 8. The Commissioner’s 

determination that the EVHSA staff report was relevant to understanding public need lies within 

an area of his experience and specialized competence and therefore, is entitled to great deference. 

In reaching his case decision, the Commissioner properly adopted the Adjudication Officer’s 

findings, which were formulated after review of the EVHSA staff report’s “objective data and 

information” and “careful analysis from a regional perspective” that were reliable for 

“informational or analytical purposes” and to “corroborat[e] findings and conclusions drawn 

from the independent, adjudicatory process of review [the Adjudication Officer had] conducted.” 

Clearly, the EVHSA staff report contained a wealth of useful data, background information, and 

statistics that the Commissioner appropriately gave due consideration to prior to reaching his 

decision. Additionally, the Adjudication Officer addressed Doctors’ objection to reliance upon 

the EVHSA staff report, stating: 

Due to the objection raised . . . to the constitution of the EVHSA 

board of directors, I believe that board’s recommendations must be 

considered to be ones of approval. While HPA board 
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recommendations, in general, are normally indicative of a regional 

perspective, any contention that such recommendations are binding 

on the Commissioner or that they somehow suspend his obligation 

to conduct thorough, independent analysis of COPN applications is 

inconsistent with the law. The recommendations of HPAs are but 

one of twenty statutory considerations considered in rendering 

adjudicatory recommendations and making a Commissioner’s 

decision. Regardless, the EVHSA staff reports are properly in the 

record, as is an HPA staff report in the matter of any COPN 

application, regardless of whether the HPA board involved makes 

a recommendation conflicting with its staff’s report and 

recommendation. 

Conclusion

 Due to the improper constitution of the EVHSA Board, the Commissioner was required 

to consider the Board’s recommendation to be one of approval. The Commissioner’s reliance on 

information and analysis contained in the EVHSA staff report did not violate this duty. The 

EVHSA staff report was properly in the administrative record; therefore, in accordance with the 

legislature’s intent, the Commissioner had wide discretion in determining the weight to give the 

staff report in reaching his decision. Doctors’ has not shown that the Commissioner abused this 

delegated discretion. Further, with substantial evidence in the agency record to support the 

Commissioner’s decision, which fell within the specialized competence of the agency and was 

neither arbitrary nor capricious, we affirm the trial court’s judgment. 

Affirmed.