Court Opinion

ID: 9897902
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:26:55.26928+00
Date Added: 2024-06-11T09:16:04.598499
License: Public Domain

Filed
                                                                                        Washington State
                                                                                        Court of Appeals
                                                                                         Division Two

                                                                                        October 17, 2023

    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                        DIVISION II
 RCCH TRIOS HEALTH, LLC, a Delaware                                 No. 57403-9-II
 Limited Liability Company,

                               Appellant,

        v.                                                     PUBLISHED OPINION

 DEPARTMENT OF HEALTH OF THE
 STATE OF WASHINGTON and KADLEC
 REGIONAL MEDICAL CENTER,

                               Respondents.

       MAXA, P.J. – RCCH Trios Health LLC (Trios) appeals an administrative final order in

which the Department of Health (DOH) denied Trios a certificate of need (CN) to perform

elective percutaneous coronary interventions (PCIs).

       Health care facilities without on-site cardiac services are allowed to perform elective

PCIs only after obtaining a CN from DOH, which requires a showing of projected net need of at

least 200 PCIs a year. For purposes of need forecasting, the definition of PCIs in the CN

regulation is “cases as defined by diagnosis related groups (DRGs)” that involve certain cardiac

procedures. WAC 246-310-745(4). To calculate net need, DOH gathers data from three

sources: (1) the comprehensive hospital abstract reporting system (CHARS), (2) surveys DOH
No. 57403-9-II

sends out to PCI providers, and (3) clinical outcomes assessment program (COAP) data. WAC

246-310-745(7).

       DOH released a methodology that showed the net need for PCIs in each of 14 PCI

planning areas using DRGs 246-251. DOH calculated that the net need for PCIs in Trios’s

planning area would be 182, less than the 200 procedure threshold.

       Trios, located in planning area 2, decided to apply to DOH for a CN in 2019 to perform

elective PCIs. At the time, Kadlec Regional Medical Center (Kadlec) was the only other hospital

in planning area 2 that was performing elective PCIs.

       Trios attempted to introduce data from sources other than DOH used as a part of its

application to demonstrate that the net need for PCIs was over the 200 procedure threshold.

Specifically, Trios identified 31 cases where PCIs had been performed but had not been coded

under DRGs 246-251. And Trios claimed that DOH should count PCIs performed on residents

of planning area 2 in Oregon, Idaho, and a closed Walla Walla hospital that had not reported to

DOH. But DOH concluded that it could not consider Trios’s sources and denied Trios’s

application.

       Trios initiated a review procedure before an administrative health law judge (HLJ).

Kadlec was allowed to intervene and filed a motion for summary judgment. The HLJ granted

summary judgment and affirmed DOH’s CN denial in an initial order. Trios appealed, and the

review officer affirmed in a final order. Trios then appealed the final decision to superior court,

which denied Trios’s petition for judicial review.

       We hold that (1) the 31 PCIs not coded under DRGs 246-251 did not fall within the

definition of PCIs in WAC 246-310-745(4) and therefore could not have been counted in the

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No. 57403-9-II

determination of need, and (2) DOH’s refusal to consider Trios’s proffered data was not contrary

to law because it was based on a reasonable interpretation of WAC 246-310-745(7) and WAC

246-310-745(9). Accordingly, we affirm the review officer’s final order.

                                             FACTS

Background

       A medical provider can operate certain facilities and perform certain procedures in

Washington only after obtaining a CN. RCW 70.38.105(3)-(4). Procedures requiring a CN

include new tertiary health services. RCW 70.38.105(4)(f). Elective PCIs are tertiary services.

WAC 246-310-700. The legislature directed DOH to adopt rules establishing criteria for the

issuance of CNs for elective PCIs at hospitals that do not otherwise provide on-site cardiac

surgery. RCW 70.38.128. DOH adopted such rules in WAC 246-310-700, et seq.

       The definition of PCIs in the CN regulation, for purposes of need forecasting, is “cases as

defined by [DRGs] as developed under the Centers for Medicare and Medicaid Services (CMS)

contract that describe catheter-based interventions involving the coronary arteries and great

arteries of the chest.” WAC 246-310-745(4). DRGs are codes assigned to patients who are

hospitalized. DOH identified the relevant DRGs for 2019 as DRGs 246-251, which typically are

assigned to patients who receive PCIs. However, a different DRG might be assigned even if the

patient received a PCI if another procedure outweighs the PCI or other factors make a different

DRG more appropriate.

       Hospitals with an elective PCI program must perform at least 200 adult PCIs per year by

the end of the third year of operation. WAC 246-310-720(1). DOH will issue a CN for elective

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No. 57403-9-II

PCIs to a new program only if projected unmet need within the relevant planning area meets or

exceeds the minimum volume standard of 200 procedures. WAC 246-310-720(2).

       WAC 246-310-745(7) states that the data sources for determining adult elective PCI

volumes “include”:

       (a) The comprehensive hospital abstract reporting system (CHARS) data from the
       department, office of hospital and patient data;
       (b) The department’s office of certificate of need survey data as compiled, by
       planning area, from hospital providers of PCIs to state residents (including patient
       origin information, i.e., patients’ zip codes and a delineation of whether the PCI
       was performed on an inpatient or outpatient basis); and
       (c) Clinical outcomes assessment program (COAP) data from the foundation for
       health care quality, as provided by the department.

In addition, WAC 246-310-745(9) states that the data used for evaluating CN applications “must

be the most recent year end data as reported by CHARS or the most recent survey data available

through the department or COAP data for the appropriate application year.”

CN Application

       Trios is a hospital in Kennewick. Trios is located in planning area 2, which includes

Benton, Columbia, Franklin, Garfield, and Walla Walla counties. Trios began providing

emergent PCI services in 2012 but does not employ interventional cardiologists.

       DOH published a methodology that showed the projected need for PCIs in each planning

area. DOH calculated that the net need for PCIs in planning area 2 would be 182.

       Trios applied for a CN for elective PCIs in 2019. Trios acknowledged that DOH’s

assessment of 182 was below the 200 case requirement, but stated that it had identified a number

of areas in which the methodology had missed data. First, Trios highlighted that there was no

count or attempt to count residents of planning area 2 who received PCIs in either Oregon or

Idaho. Second, Trios noted that a Walla Walla hospital closed in 2017 and did not report any

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No. 57403-9-II

outpatient data in 2016 or 2017, which meant the hospital underreported PCIs. Including data

from those sources, Trios believed that the patient net need for PCIs would exceed 200.

       During the review of Trios’s application, DOH was able to access Oregon’s inpatient

database and updated the methodology to include these publicly accessible PCIs. DOH’s

updated methodology increased the projected need from 182 to 188.

       DOH opened the application for public comment. DOH received comments from those

opposing Trios’s application, including Kadlec, the only facility in planning area 2 that could

perform elective PCIs.

       Trios also submitted comments. Trios again commented that DOH should be able to

consider the additional data from Idaho and the Walla Walla hospital that Trios submitted

because although WAC 246-310-745(7) lists CHARS, survey data and COAP as data sources, it

does not say that DOH is limited to only those three sources. Trios also commented that it had

located an additional 31 PCIs in the CHARS database identified by their ICD-10 procedure code

that were not coded under DRGs 246-251. Trios commented that DOH should include these

PCIs in the projected need calculation.1

       In February 2020, DOH denied Trios’s CN application. DOH did not consider Trios’s

additional data. Therefore, Trios was unable to meet the 200-procedure threshold. DOH stated

that “[t]o accept novel data sources that could not have been [publicly] available prior to the

concurrent review cycle changes the process and removes the element of transparency, fairness,

and predictability in a Certificate of Need review.” Admin. Rec. (AR) at 32.

1
 Trios initially identified an additional 52 PCIs, but reduced that number to 31. The excluded
PCIs included the ones from the Walla Walla hospital.

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No. 57403-9-II

Procedural History

       Trios requested an administrative hearing with a HLJ to contest the denial of the CN.

The presiding officer allowed Kadlec to join as an intervenor.

       Before the scheduled hearing, Kadlec moved for summary judgment, arguing that Trios’s

CN denial should be affirmed because DOH’s methodology did not project a need for the PCI

program. In response, Trios submitted a declaration from Jody Carona, the principal of Health

Facilities Planning and Development. She stated in her declaration that the 31 PCIs they

identified were coded with a different DRG than DRGs 246-251, but they could have been coded

with DRGs 246-251 if a different DRG had not taken precedence based on the patient’s

condition.

       The HLJ granted Kadlec’s motion for summary judgment and issued an initial order with

findings of fact and conclusions of law. The HLJ rejected Trios’s argument that the additional

31 PCIs identified using the ICD-10 procedure code should be included in the need projections.

The HLJ concluded that “WAC 246-310-745(4) is clear in requiring that PCIs be defined by

DRGs – not procedure codes – when calculating need for new PCI programs.” AR at 433.

Regarding Trios’s argument that data from other sources – like Oregon and Idaho – should be

used, the HLJ rejected the argument that the word “include” in WAC 246-310-745(7) allowed

considerations of other sources besides the three listed. AR at 432. Trios petitioned for

administrative review of the initial order. The review officer issued findings of fact and

conclusions of law in a final order that adopted and affirmed the initial order.

       In addressing WAC 246-310-745(4), the review officer stated, “The methodology in

WAC 246-310-745 does not count every PCI performed. When this application was submitted,

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No. 57403-9-II

[DOH] could only include PCI cases defined by DRGs 246-251. . . . Therefore, [DOH] cannot

consider the additional PCIs proposed by Trios.” AR at 586.

         Regarding the data sources DOH could consider, the review officer concluded,

         The word ‘include’ may be either exhaustive or nonexhaustive depending on the
         context. Whereas, use of ‘including, but not limited to’ has consistently been
         interpreted by the courts as an illustrative, not exhaustive, list. The context of WAC
         246-310-745 point towards interpreting ‘include’ in subsection (7) as indicating an
         exhaustive list of data sources because subsection (9) states the data used ‘must’ be
         from three specific data sources. WAC 246-310-745(7) only identifies these three
         specific state data sources and does not open the door to equivalent data sources . . .
         this Reviewing Officer finds the data sources identified are the exhaustive list.

AR at 585 (citations omitted).

         Trios then petitioned for judicial review of the final order. The superior court affirmed

the final order and denied Trios’s petition for judicial review.

         Trios appeals the superior court’s denial of judicial review of the review officer’s final

order.

                                             ANALYSIS

A.       STANDARD OF REVIEW

         Under the Administrative Procedure Act (APA), chapter 34.05 RCW, we consider the

record before the agency and sit in the same position as the superior court. Kenmore MHP LLC

v. City of Kenmore, 1 Wn.3d 513, 519-520, 528 P.3d 815 (2023).

         The APA provides nine grounds for reversing an administrative order. RCW

34.05.570(3). Three grounds potentially are applicable here: (1) the agency erroneously

interpreted or applied the law, RCW 34.05.570(3)(d); (2) the order is inconsistent with a rule of

the agency, RCW 34.05.570(3)(h); and (3) the order is arbitrary and capricious, RCW

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No. 57403-9-II

34.05.570(3)(i). The party challenging the agency’s decision has the burden of demonstrating

the invalidity of that decision. RCW 34.05.570(1)(a).

       When an administrative decision is decided on summary judgment, we overlay the APA

and summary judgment standards of review. Waste Mgmt. of Wash., Inc. v. Wash. Util. and

Transp. Comm’n, 24 Wn. App. 2d 338, 344, 519 P.3d 963 (2022), rev. denied, 1 Wn. 3d 1003

(2023). We review the ruling de novo and construe the facts and all reasonable inferences in the

light most favorable to the nonmoving party. Id. Summary judgment can be determined as a

matter of law if the material facts are not in dispute. Antio LLC v. Dep’t of Revenue, 26 Wn.

App. 2d 129, 134, 527 P.3d 164 (2023).

       We review an agency’s legal conclusions de novo and give substantial deference to the

agency’s interpretation of its own regulations when that subject area falls within its area of

expertise. Waste Mgmt. of Wash., 24 Wn. App. 2d at 344. We may substitute our own

interpretation of the law for that of the agency. Id. But we generally will uphold an agency’s

“interpretation of ambiguous regulatory language as long as the agency’s interpretation is

plausible and consistent with the legislative intent.” Kenmore MHP, 1 Wn.3d at 520. “ ‘An

agency acting within the ambit of its administrative functions normally is best qualified to

interpret its own rules, and its interpretation is entitled to considerable deference by the courts.’ ”

Id. (quoting D.W. Close Co. v. Dep’t of Lab. & Indus., 143 Wn. App. 118, 129, 177 P.3d 143

(2008)).

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No. 57403-9-II

B.     DEFINITION OF PCI

       Trios argues that DOH erroneously refused to include in its projected need calculation the

31 additional PCIs it identified that were not coded under DRGs 246-251 because those PCIs fell

within the definition of “PCI” in WAC 246-310-745(4). We disagree.

       For purposes of need forecasting, WAC 246-310-745(4) defines PCIs to mean

       cases as defined by diagnosis related groups (DRGs) as developed under the
       Centers for Medicare and Medicaid Services (CMS) contract that describe catheter-
       based interventions involving the coronary arteries and great arteries of the chest. .
       . . . The department will update the list of DRGs administratively to reflect future
       revisions made by CMS to the DRG to be considered in certificate of need
       definitions, analyses, and decisions.

(Emphasis added.) At the time of Trios’s application, the DRGs to be considered were DRGs

246-251.

       The additional 31 PCIs Trios identified were not coded under DRGs 246-251. However,

Trios emphasizes that the 31 PCIs could have been coded under DRGs 246-251 and therefore

would have been considered by DOH if a different DRG had not taken precedence. Trios states,

       Putting the case in concrete terms, if you go to the hospital with chest pain and
       receive a PCI and your visit is assigned a DRG code on that basis, [DOH] will count
       your PCI for its need calculation. If you go to the hospital for a different reason
       and your care is coded on that basis, and the doctor determines you also need a PCI,
       [DOH] will not count that PCI for need purposes even though the same procedure
       was performed.

Br. of Appellant at 22-23.

       Resolution of this issue depends on the interpretation of the phrase “cases as defined by

[DRGs]” in WAC 246-310-745(4). Trios argues that “as defined by” means that a procedure

meets the definition of PCI if it is capable of being coded under DRGs 246-251, even though

they were not actually coded under those DRGs. Trios emphasizes that if the drafters of WAC

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No. 57403-9-II

246-310-745(4) had wanted to limit the definition of PCI to only those procedures actually coded

under DRGs 246-251, they easily could have done so. But the drafters used “defined by” instead

of “coded as,” thereby negating such a limitation. And according to Trios, DOH’s interpretation

has the effect of undercounting PCIs and preventing the issuance of a CN when there is a need.

       DOH does not dispute that patients with cases classified with DRGs other than DRGs

246-251 may have received a PCI while in the hospital. But DOH emphasizes that WAC 246-

310-745(4) deliberately does not count every PCI performed. Instead, to forecast projected need

the regulation counts a specific subset of PCIs – those defined by DRGs under the CMS

classification system. Patients that may have received a PCI as indicated by a procedure code

but were discharged under a different DRG code simply are not counted. DOH notes that if

“defined by [DRGs]” does not mean that it must use DRGs in its need projections, the reference

to DRGs in WAC 246-310-745(4) would be meaningless. Kadlec argues that the use of well-

defined DRG data rather than other alternatives helps assure that applicants are treated

evenhandedly and fairly.

       We conclude that the plain language of WAC 246-310-745(4) supports DOH’s position.

For purposes of need forecasting, WAC 246-310-745(4) expressly defines PCIs with reference to

DRGs, not ICD-10 procedure codes. In drafting this regulation, DOH could have defined PCI

more generally as any “catheter-based interventions involving the coronary arteries and great

arteries of the chest.” Or DOH could have defined PCIs with reference to ICD-10 procedure

codes. Instead, the regulation limits the definition to those procedures classified under certain

DRG codes. The fact that certain procedures could have been coded under DRGs 246-251 is

immaterial.

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No. 57403-9-II

       Significantly, the CN regulation contains a general definition of PCIs that does not

reference DRG codes. WAC 246-310-705(4). But WAC 246-310-745 contains more specific

definitions “[f]or the purposes of the need forecasting method.” As noted, the specific definition

of PCIs in WAC 246-310-745(4) references DRG codes. If the PCIs included in the need

calculation were not defined with reference to DRG codes, DOH could simply have used the

general WAC 246-310-705(4) definition.

       Even if the language of WAC 246-310-745(4) was ambiguous, we would give deference

to DOH’s position because the regulation falls within its area of expertise. Waste Mgmt. of

Wash., 24 Wn. App. 2d at 344. DOH is best qualified to interpret its own rules. See Kenmore

MHP, 1 Wn.3d at 520.

       Trios argues that we should not give deference to DOH’s interpretation of WAC 246-

310-745(4) because DOH’s position is contrary to legislative intent. One public policy

underlying the CN program is to “promote, maintain, and assure the health of all citizens in the

state, provide accessible health services, health manpower, health facilities, and other resources

while controlling increases in costs.” RCW 70.38.015(1). Trios argues that counting all PCIs

and not only those PCIs coded under DRGs 246-251 promotes this policy because such an

approach provides a more accurate assessment of need.

       DOH relies on the definition of “tertiary health service” in RCW 70.38.025(14), which

states that such service “requires sufficient patient volume to optimize provider effectiveness,

quality of service, and improved outcomes of care.” DOH asserts that strictly adhering to the

mandatory patient volume threshold is consistent with “promot[ing], maintain[ing], and

assur[ing] the health of all citizens in the state,” a stated public policy underlying the CN

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No. 57403-9-II

program. RCW 70.38.015(1). And adherence to the volume threshold helps ensure that other

CN providers like Kadlec have sufficient patient volume to “optimize provider effectiveness,

quality of service, and improved outcomes of care.” RCW 70.38.025(14).

       In addition, another public policy of the CN program is that “the development and

maintenance of adequate health care information, statistics, and projections of need for health

facilities and services is essential to effective health planning and resources development.”

RCW 70.38.015(3). DOH has implemented this policy by relying on DRG codes to project need

for PCI services.

       We conclude that DOH’s interpretation of WAC 246-310-745(4) is consistent with

legislative intent and we give deference to that interpretation. See Kenmore MHP, 1 Wn.3d at

520.

       We hold that DOH’s refusal to consider the 31 additional PCIs identified by Trios was

not based on an erroneous interpretation of WAC 246-310-745(4). Therefore, we affirm the

review officer’s final order on this issue.

C.     APPLICABLE DATA SOURCES

       Trios argues that DOH erroneously refused to consider data from sources other than the

three sources listed in WAC 246-310-745(7). We disagree.

       WAC 246-310-745(7) states,

       (7) The data sources for adult elective PCI case volumes include:

          (a) The comprehensive hospital abstract reporting system (CHARS) data from
       the department, office of hospital and patient data;

          (b) The department's office of certificate of need survey data as compiled, by
       planning area, from hospital providers of PCIs to state residents (including patient

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No. 57403-9-II

          origin information, i.e., patients' zip codes and a delineation of whether the PCI was
          performed on an inpatient or outpatient basis); and

             (c) Clinical outcomes assessment program (COAP) data from the foundation for
          health care quality, as provided by the department.

(Emphasis added.) Trios argues that the word “include” in WAC 246-310-745(7) means that the

three sources listed are examples, not an exclusive list. Therefore, DOH can consider other data

sources as well.

          The cases support Trios’s position. The word “include” generally indicates that the

following list is illustrative, not exclusive. City of Edmonds v. Bass, 16 Wn. App. 2d 488, 499,

481 P.3d 596 (2021), aff’d, 199 Wn.2d 403, 414, 508 P.3d 172 (2022). “[O]ur Supreme Court

generally recognizes that a statute that uses the term ‘including’ is one of enlargement, not

restriction.” Id. (citing Queets Band of Indians v. State, 102 Wn.2d 1, 4, 682 P.2d 909 (1984));

see also Brown v. Scott Paper Worldwide Co., 143 Wn.2d 349, 359, 20 P.3d 921 (2001);

Wheeler v. Dept. of Licensing, 86 Wn. App. 83, 88, 936 P.2d 17 (1997).

          However, DOH and Kadlec argue – and the HLJ and the review officer ruled – that WAC

246-310-745(7) must be read in context with WAC 246-310-745(9). WAC 246-310-745(9)

states, “The data used for evaluating applications submitted during the concurrent review cycle

must be the most recent year end data as reported by CHARS or the most recent survey data

available through the department or COAP data for the appropriate application year.” (Emphasis

added.)

          DOH’s argument is that WAC 246-310-745(9) states that the data used in evaluating CN

applications “must be” from the three sources listed in WAC 246-310-745(7). DOH claims that

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No. 57403-9-II

harmonizing subsections (7) and (9) compels the interpretation that the three sources listed in

WAC 246-310-745(7) are exhaustive.

       Trios argues that WAC 246-310-745(9) relates to the time frames to be used when data is

collected from the listed sources rather than restricting the available data sources. This

interpretation is not unreasonable. The term “must be” in WAC 246-310-745(9) appears right

before the phrase “the most recent end year data.” Arguably, the term is directing DOH to use

the most recently available end year data, not to only use those three sources of data. Trios also

points out that DOH used data from Oregon hospitals in this case and on other prior occasions,

even though that data was not from the sources listed in WAC 246-310-745(7).

       But DOH’s position also is reasonable. WAC 246-310-745(9) can be interpreted as

stating that the data used for evaluating CN applications “must be” from the three listed data

sources. And the fact that WAC 246-310-745(9) only lists out the same three sources of data

contained in subsection (7) suggests that the drafter only contemplated the use of those sources

and not some other sources. That subsection could have – but did not – refer generically to “data

sources” rather than specifying the sources listed in WAC 246-310-745(7).

       Because the language of WAC 246-310-745(9) is ambiguous, we give deference to

DOH’s position because the regulation falls within its area of expertise. Waste Mgmt. of Wash.,

24 Wn. App. 2d at 344. DOH is best qualified to interpret its own rules. See Kenmore MHP, 1

Wn.3d at 520.

       We hold that WAC 246-310-745(7) is an exhaustive list and that DOH could not consider

other sources. Therefore, we affirm the review officer’s final order on this issue.

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                                       CONCLUSION

      We affirm the review officer’s final order.

                                                    MAXA, P.J.

 We concur:

LEE, J.

CHE, J.

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