Opinion ID: 1804083
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Heading: Overview of Certificate of Need Law.

Text: In 1977, our state legislature established the State Health Facilities Council in response to the National Health Planning and Resource Development Act enacted by Congress in 1974. See 42 U.S.C. §§ 300k-300n (1974) (national act); 1977 Iowa Acts ch. 75, §§ 1-21 (codified at Iowa Code §§ 135.61-.83 (1978)) (Iowa act). The Act required states to promulgate statutes governing the development of new health care services and facilities in order to qualify for federal funding. See Living Centers-Southeast, Inc. v. N.C. Dep't of Health & Human Servs., 138 N.C.App. 572, 532 S.E.2d 192, 193 (2000). Specifically, the states were to create a health planning and development agency to administer a certificate of need program. In re Application for Certificate of Need by HCA Health Servs. of Wyoming, Inc., 689 P.2d 108, 109 (Wyo.1984). In short, the agency would be responsible for determining the need for proposed health services as well as requiring institutions to seek approval before committing substantial capital expenditures to certain projects. Id. The certificate of need program subsequently became part of a national trend to place checks on the spiraling health care costs incurred by health institutions while facilitating the provision of economical and quality health care services to the states' citizens. See, e.g., Carriage Hill Cabin John, Inc. v. Maryland Health Res. Planning Comm'n, 125 Md.App. 183, 724 A.2d 745, 750 (1999) (Maryland); Living Centers-Southeast, Inc., 532 S.E.2d at 193-94 (North Carolina); Commonwealth, Dep't of Health v. Rehab Hosp. Servs. Corp., 127 Pa.Cmwlth. 185, 561 A.2d 342, 347-48 (1989) (Pennsylvania); St. Mary's Hosp. v. State Health Planning & Dev. Agency, 178 W.Va. 792, 364 S.E.2d 805, 808 (1987) (West Virginia); In re Application for Certificate of Need by HCA Health Servs. of Wyoming, Inc., 689 P.2d at 109 (Wyoming). Similarly, the primary purpose of Iowa's certificate of need statute is to ensure that the citizens of this state will receive necessary and adequate institutional health services in an economical manner. See 1977 Iowa Acts ch. 75, preamble; Iowa State Dep't of Health v. Hertko, 282 N.W.2d 744, 747 (Iowa 1979). To accomplish this purpose, the legislature explicitly instructed the Council to avoid unnecessary duplication of institutional services as well as to control the costs of administering these services. See id. To aid the Council, the legislature prescribed detailed procedures governing the application process and delineated specific criteria for the Council to consider in evaluating applications. See 1977 Iowa Acts ch. 75, §§ 4-6. Today, the provisions governing applications for certificates of need are found in Iowa Code sections 135.61 through 135.83. Thus, before a new institutional health facility may be constructed, the sponsor of the facility must receive a certificate of need from the Department. Id. § 135.63; Iowa State Dep't of Health, 282 N.W.2d at 747. Although there are exemptions from this requirement, none of them are applicable here. See Iowa Code § 135.63(2). Before applying for a certificate of need, the facility's sponsor must submit a letter of intent briefly describing the proposal, its geographic location, and approximate cost. Id. § 135.65(1). The sponsor must then file an application no earlier than thirty days after the submission of the letter of intent. Id. After the Department receives the application, it must provide written notice to all affected persons of the application. Id. § 135.66(2); Iowa Admin. Code r. 641-202.4(4). Affected persons include the sponsor of the application as well as each institutional health facility located in the same geographic area as the proposed facility. Iowa Code § 135.61(1)(a), (c). Prior to issuing a decision, the Council must conduct a public hearing on the propriety of the certificate. Id. § 135.66(3)(b). All affected persons or their representatives have the opportunity to present testimony to the Council at the public hearing. Id. § 135.66(4); Iowa Admin. Code r. 641-202.6(3). In making its determination, the Council must consider eighteen factors delineated in section 135.64(1) [4] and those additional, but nearly identical, considerations listed in administrative rule 641-203.5(3)(c) (1987). In addition, the Council can grant an application only if it makes four statutorily mandated findings listed in Iowa Code section 135.64(2). [5] Lastly, the written decision of the Council is considered final agency action. Id. § 135.70; Iowa Admin. Code r. 641-202.11(2)(b) (1997). A dissatisfied person has the option of either requesting a rehearing with the Council or petitioning for judicial review in accordance with section 17A.19. See Iowa Code § 135.70; Iowa Admin. Code r. 641-202.9(1). An affected person need not first have a rehearing application denied in order to petition for judicial review. See Iowa Admin. Code r. 641-202.9(6).