Opinion ID: 1060455
Heading Depth: 2
Heading Rank: 1

Heading: Implied Duty

Text: To legally construct and open a nursing home for operation in Tennessee, it is necessary to obtain both a certificate of need and a license. Tenn.Code Ann. §§ 68-11-106(a)(1) and 68-11-204(a). Section 68-11-106(a)(1) specifically requires issuance of a certificate of need for [t]he construction, development, or other establishment of any type of health care institution. Health care institution is defined to include a nursing home. Tenn.Code Ann. § 68-11-102(4)(A). In 1988, when Medical Holdings applied for and was granted its certificate of need for the Oakland facility, § 68-11-106(d)(2) addressed the criteria for certification as follows: No certificate of need shall be granted unless the action proposed in the application for such certificate is necessary to provide needed health care in the area to be served, can be economically accomplished and maintained, and will contribute to the orderly development of adequate and effective health care facilities and/or services. Specific criteria for certification of need shall be prescribed by rules of the commission. Tenn.Code Ann. § 68-11-106(d)(2) (1988). Commission Rule 0720-4-.01 further defined the three criteria: 1) need, 2) economic feasibility, and 3) contribution to the orderly development of healthcare. In its certificate of need application, Medical Holdings had to answer questions related to these three criteria, including staffing, projected charge schedules, and revenues for the Oakland facility. Review of the criteria advances the Health Facilities Commission's public policy outlined in § 68-11-103: It is hereby declared to be the public policy of this state that the establishment and modification of health care institutions, facilities and services shall be accomplished in a manner which is orderly, economical and consistent with the effective development of necessary and adequate means of providing for the health care of the people of Tennessee. Tenn.Code Ann. § 68-11-103. We find that the Health Facilities Commission's certificate of need screening procedures indicate an intent that the certificate of need holder be responsible for initiating the operation of the health care facility. The application process would not require investigation of the projected operation of the facility if it were not assumed that the certificate of need applicant would, in fact, operate the facility. Moreover, the certificate of need application filed by Medical Holdings stated that approval was sought for the construction and operation of the facility. The Health Facilities Commission relied upon the representations of Medical Holdings in the application when the Health Facilities Commission approved the project. We find that Medical Holdings received its certificate of need on the premise that it would both construct and operate the Oakmont facility. Section 68-11-204 requires that an entity obtain a license to establish, conduct, operate or maintain a nursing home in Tennessee. No agency of the state ... shall ... issue any license to, a health care institution for any portion or activity thereof which is established, modified, relocated, changed, or resumed, or which constitutes a covered health care service, in a manner in violation of the provisions of this part. Tenn.Code Ann. § 68-11-106(c). In other words, no license for operation of a health care facility may be issued to an entity that does not hold a certificate of need. Ann Dodd, who handles licensing of nursing homes and hospitals for the Tennessee State Department of Health, testified in her deposition that an initial facility license could only be issued to the owner listed on the certificate of need. We find that the licensing scheme requiring that the same entity obtain both the certificate of need and the license for operation impliedly imposes a duty upon the certificate of need holder to initiate operation of the health care facility. This Court's role in statutory interpretation is to ascertain and to effectuate the legislature's intent. Freeman v. Marco Transp. Co., 27 S.W.3d 909, 911 (Tenn.2000). In interpreting statutes, we are required to construe them as a whole, read them in conjunction with their surrounding parts, and view them consistently with the legislative purpose. State v. Turner, 913 S.W.2d 158, 160 (Tenn.1995). We must seek a reasonable construction in light of the purposes, objectives, and spirit of the statute based on good sound reasoning. Id. Construction of the certification and licensing statutes and rules in this case requires finding that the certificate of need holder is responsible for both the construction and initial operation of the health care facility. To hold otherwise would not give effect to the legislature's strategy for ensuring adequate, orderly, and economical health care for the citizens of Tennessee. The certificate of need and licensing procedure would be rendered meaningless. We cannot endorse such circumvention of Tennessee law.