Court Opinion

ID: 9948954
Source: CourtListenerOpinion
Date Created: 2024-03-08 15:15:17.993032+00
Date Added: 2024-06-11T14:26:26.376088
License: Public Domain

RENDERED: MARCH 1, 2024; 10:00 A.M.
                        NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2022-CA-1471-MR

BAPTIST HEALTHCARE SYSTEM, INC.
D/B/A BAPTIST HEALTH PADUCAH                                        APPELLANT

                APPEAL FROM FRANKLIN CIRCUIT COURT
v.              HONORABLE THOMAS D. WINGATE, JUDGE
                        ACTION NO. 21-CI-00613

MERCY HEALTH – LOURDES HOSPITAL, LLC
D/B/A MERCY HEALTH – LOURDES HOSPITAL,
AND COMMONWEALTH OF KENTUCKY,
CABINET FOR HEALTH AND FAMILY SERVICES,
OFFICE OF INSPECTOR GENERAL, DIVISION
OF CERTIFICATE OF NEED                                              APPELLEES

                                    OPINION
                                   AFFIRMING

                                  ** ** ** ** **

BEFORE: EASTON, ECKERLE, AND JONES, JUDGES.

ECKERLE, JUDGE: An administrative agency denied a health care provider its

application for an additional cancer treatment facility in Paducah. The Franklin
Circuit Court reviewed the agency’s decision, found multiple errors, and directed

the application be approved. The administrative agency did not appeal, but an

affected party did. We have reviewed the Circuit Court’s order and, for the

reasons announced below, agree the agency erred and should have approved the

application.

                                  BACKGROUND

               Appellee, Mercy Health-Lourdes Hospital, L.L.C. (“Lourdes”),

applied to Appellee, the Commonwealth of Kentucky, Cabinet for Health and

Family Services, Office of Inspector General, Division of Certificate of Need

(“Cabinet”), for a Certificate of Need (“CON”) to establish a megavoltage

radiation therapy (“MVRT”) service at its acute care hospital in Paducah,

Kentucky. Appellant, Baptist Healthcare System, Inc. d/b/a Baptist Health

Paducah (“Baptist”), entered an appearance as an “affected person” and opposed

the application because it operates a similar MVRT nearly three miles away from

Lourdes’s proposed site.

               A Hearing Officer for the Cabinet conducted a 10-day public hearing

via Zoom. The Hearing Officer subsequently issued Findings of Fact, Conclusions

of Law, and a Final Order (“Final Order”) denying Lourdes a CON. The Hearing

Officer specifically found the application inconsistent with Review Criteria 1 (the

State Health Plan), 2 (Need and Accessibility), and 4 (Costs, Economic Feasibility,

                                         -2-
and Resource Availability) of the CON regulations.1 In summary, the Hearing

Officer concluded that: (1) Lourdes’s application did not demonstrate that it would

meet the threshold, 6,000-procedure minimum by the second year of operation; (2)

Lourdes’s application did not demonstrate a sufficient need, as Baptist’s facility

was meeting the current and anticipated needs of the geographic area; and (3)

Lourdes’s application did not demonstrate that the more than ten-million-dollar

expenditure was an economical use of funds given that the status quo was meeting

the current needs in the geographic area.

                 The Hearing Officer also denied Lourdes’s motion for

reconsideration, which resulted in Lourdes’s filing of a Complaint in Franklin

Circuit Court seeking review of the Cabinet’s decision. The Complaint raised

multiple counts, and the Circuit Court dismissed two of the counts before the

parties ultimately briefed and orally argued the remaining issues.

                 The Circuit Court then entered an Order (“Order”) finding and

holding that the megavoltage radiation standards adopted in the State Health Plan

violated Section 2 of the Kentucky Constitution. Specifically, the Circuit Court

determined that the regulatory requirement than an applicant demonstrate that

6,000-megavoltage radiation procedures will be performed in the second year of

1
    The CON statutory and regulatory scheme is discussed in greater detail infra.

                                                 -3-
the program’s operation does not pass constitutional muster as it is an arbitrary

number unsupported by any rational basis.

                Additionally, the Circuit Court held that the threshold is contrary to

the purposes of KRS2 216B.010, the enabling statute for the regulation. The goal

of the CON program, the Circuit Court noted, “is ‘to improve the quality and

increase access to health-care facilities, services, and providers, and to create a

cost-efficient health-care delivery system for the citizens of the Commonwealth.’”

Order at 11 (citing KRS 216B.010). The rational bases proffered by the Cabinet

and Baptist were: “the ‘Blue Book,’ general discretion awarded to the Cabinet,

and the fifteen (15) programs that have met this requirement.” Order at 11. In

contrast, the Circuit Court noted, between 2014 and 2019, more than half of the

programs throughout the state did not provide 6,000 procedures. The Circuit Court

noted that those programs are largely located in rural areas and are “providing vital

services and medical options for cancer patients in Kentucky.” Id. “Given this

data, the Court must question why the Cabinet has not reevaluated the 6000[-]

procedure threshold.” Id.

                The Circuit Court held that there was no support for finding that the

6,000-procedure threshold promoted the goal of the CON program. Additionally,

2
    Kentucky Revised Statutes.

                                            -4-
the Circuit Court found that Lourdes’s program “is necessary, is more accessible to

rural patients, and is cost-effective.” Order at 12.

             Based on its conclusion that the 6,000-procedure threshold violates

Section 2 of the Kentucky Constitution and is now void, the Circuit Court further

found that the Cabinet’s findings relating to Criterion 1 were arbitrary and not

supported by substantial evidence. The Circuit Court further found that two other

findings in the Final Order were arbitrary and not supported by substantial

evidence.

             Regarding Criterion 2 (Need and Accessibility), the Circuit Court held

that the findings were arbitrary and not supported by substantial evidence because

the number of radiation oncologists in the area were fewer than what is

recommended. The Hearing Officer had found that Drs. Peter Locken and

Salvador Espinoza, the radiation oncologists who serviced Baptist’s facility in the

area, were equivalent to 1.85 full-time equivalent (“FTE”) radiation oncologists.

However, this number appeared inflated, as Dr. Espinoza only worked 12 or 13

weeks per year at the Baptist facility, and sometimes he worked there while Dr.

Locken was absent. “[T]he record demonstrates that they are the equivalent of one

(1) full time employee. The Hearing Officer committed plain error in reaching this

conclusion as it is wholly unsupported by the record.” Opinion at 17.

Additionally, the Circuit Court held that the Hearing Officer erred by concluding a

                                          -5-
single full-time physician can meet the demand in the service area. Notably, the

Hearing Officer found that the American College of Radiology and American

Society for Radiation Oncology recommended one radiation oncologist per 200-

300 new patients per year. Baptist, however, had 615 new patients in 2019.

Additionally, Baptist performed 12,123 radiation oncology procedures in 2019,

with the cancer incident rate in the region expected to grow by 7.5% over the next

five years. Thus, the Circuit Court found the Hearing Officer’s conclusions

regarding Criterion 2 were arbitrary and not supported by substantial evidence

because the “Hearing Officer plainly disregarded the evidence in the record that

there is a need for radiation oncology services in the area.” Order at 18.

             Finally, the Circuit Court held that the Hearing Officer’s findings

relating to Criterion 4 (Costs, Economic Feasibility, and Resource Availability)

were erroneous. Fundamentally, the error identified by the Circuit Court was

simple: because the status quo is not currently meeting the area’s needs nor the

anticipated growth in needs, it was error for the Hearing Officer to find that the

existing program was more cost effective than the proposed program. Secondarily,

the Circuit Court also held that the Hearing Officer lacked substantial evidence to

find that the existing program was more cost effective when the data showed that

Lourdes’s anticipated charges were 8.84 times that of Medicare, while Baptist’s

charges are 17.4 times that of Medicare.

                                           -6-
             Accordingly, the Circuit Court reversed the Cabinet’s denial of a

CON and ordered a CON be approved for Lourdes.

             Baptist appealed to this Court. The Cabinet did not file a brief.

Lourdes filed a brief defending the Order and raising additional claims to support

reversing the Final Order. We are affirming the Circuit Court’s Order for the

reasons announced below and do not address any of the additional claims.

                                    ANALYSIS

             “When reviewing the circuit court’s ruling on an agency’s decision,

an appellate court stands in the shoes of the circuit court and reviews the agency’s

decision for arbitrariness.” Nurses’ Registry and Home Health Corp. v. Gentiva

Certified Healthcare Corp., 326 S.W.3d 15, 17 (Ky. App. 2010) (citing Martin

County Home Health Care v. Cabinet for Health and Family Serv’s, 214 S.W.3d

324, 326 (Ky. App. 2007)). We review issues of statutory interpretation and other

issues of law de novo. Id.

   I.    Does the 6,000-procedure threshold constitute an arbitrary exercise

         of power?

             The first issue to be addressed is a constitutional claim, which we

review de novo. The Circuit Court held that the 6,000-procedure threshold

violated Section 2 of the Kentucky Constitution, which prohibits the government

                                         -7-
from exercising absolute and arbitrary power. See, e.g., Kentucky Milk Marketing

and Antimonopoly Comm’n v. Kroger Co., 691 S.W.2d 893, 899 (Ky. 1985).

             A. Section 2 standard of review

             Both parties proffer that our review of the constitutionality of the

6,000-procedure threshold is to determine whether there was a rational basis.

However, it has been opined that the Section 2 “standard may be more toothsome

than rational-basis review.” Tiwari v. Friedlander, 26 F.4th 355, 370 (6th Cir.

2022), cert. denied, 143 S. Ct. 444 (2022). Indeed, the Kentucky Supreme Court

has described Section 2 with stronger verbiage than one would expect from

rational-basis review:

             Section 2 is a curb on the legislature as well as on any
             other public body or public officer in the assertion or
             attempted exercise of political power. Sanitation Dist.
             No. 1 v. City of Louisville, 308 Ky. 368, 213 S.W.2d 995
             (1948). Whatever is contrary to democratic ideals,
             customs and maxims is arbitrary. Likewise, whatever is
             essentially unjust and unequal or exceeds the reasonable
             and legitimate interests of the people is arbitrary, id. No
             board or officer vested with governmental authority may
             exercise it arbitrarily. If the action taken rests upon
             reasons so unsubstantial or the consequences are so
             unjust as to work a hardship, judicial power may be
             interposed to protect the rights of persons adversely
             affected. Wells v. Board of Education of Mercer County,
             Ky., 289 S.W.2d 492, 494 (1956). Our function is to
             decide a test of regularity and legality of a board’s action
             by statutory law and by the constitutional protection
             against the exercise of arbitrary official power. Id.

                                         -8-
             Section 2 is broad enough to embrace the traditional
             concepts of both due process of law and equal protection
             of the law. Pritchett v. Marshall, Ky., 375 S.W.2d 253,
             258 (1963). Unequal enforcement of the law, if it rises to
             the level of conscious violation of the principle of
             uniformity, is prohibited by this Section. City of Ashland
             v. Heck’s Inc., Ky. 407 S.W.2d 421 (1966); Standard Oil
             v. Boone County Bd. Of Sup’rs, Ky., 562 S.W.2d 83
             (1978). The question of reasonableness is one of degree
             and must be based on the facts of a particular case. Boyle
             Cty. Stockyards Co. v. Commonwealth, etc., Ky. App.,
             570 S.W.2d 650 (1978).

Kentucky Milk, 691 S.W.2d at 899. The Kentucky Supreme Court applied these

Section 2 standards some 20 years later and held unconstitutional a statute and a

regulation that allowed an agency to assess a penalty without access to a formal

hearing unless the one penalized could prepay the fine. Commonwealth Natural

Resources and Environmental Protection Cabinet v. Kentec Coal Co., Inc., 177

S.W.3d 718 (Ky. 2005). The case is significant because the dissent in that case

noted “dismay at the majority’s cavalier use of Section 2 of the Constitution[.]” Id.

at 740 (Roach, J., dissenting). The dissent labeled the majority opinion as lacking

a “standard to guide” the use and application of Section 2 analyses. Id. at 741.

             Since Kentec, our Supreme Court provided additional clarity to the

Section 2 analysis when the allegations concern arbitrary, administrative actions

affecting economic or property rights, which are the rights at issue in the instant

case. Section 2 is satisfied when three requirements are met. First, the alleged

deprivation of rights must have “a rational basis in furtherance of a legitimate

                                         -9-
government interest[.]” City of Villa Hills v. Kentucky Retirement Systems, 628

S.W.3d 94, 109 (Ky. 2021). Second, the affected party must have been “afforded

adequate procedural due process[.]” Id. Finally, the decision must have been

“informed by substantial evidence of record.” Id. Accordingly, our initial review

of the 6,000-procedure threshold is to determine whether there exists a rational

basis in furtherance of a legitimate government interest. We review the Circuit

Court’s determination of this constitutional question de novo. See, e.g.,

Commonwealth v. DLX, Inc., 42 S.W.3d 624 (Ky. 2001).

             B. Is the 6,000-procedure threshold rationally related to a

             legitimate government interest?

             Without a doubt, the Commonwealth has a legitimate governmental

interest in ensuring that “citizens of this Commonwealth will have safe, adequate,

and efficient medical care” with no “proliferation of unnecessary health-care

facilities, health services, and major medical equipment [that] results in costly

duplication and underuse of such facilities, services, and equipment” and

“increases the cost of quality health care within the Commonwealth.” KRS

216B.010. These are the stated legislative findings and purposes underlying the

CON program, and neither party disputes that they are legitimate interests.

             Our question, then, is whether the 6,000-procedure threshold is

rationally related to those legitimate interests. To perform this rational-basis

                                         -10-
analysis, we look for a “rational relationship to a legitimate state end.” Kentec

Coal, 177 S.W.3d at 725. There must be some “‘reasonable basis’” or

“‘substantial and justifiable reason’” for the created classification. Vision Mining,

Inc. v. Gardner, 364 S.W.3d 455, 466 (Ky. 2011) (quoting Cain v. Lodestar

Energy, Inc., 302 S.W.3d 39, 42 (Ky. 2009)). And though this standard “favors the

government, it would be incorrect to state that courts always hold that legislatively-

created classifications are rationally related to a legitimate state interest.” Id.

Rational-basis review is a high bar:

             A statute is presumed constitutional, . . . and “[t]he
             burden is on the one attacking the legislative arrangement
             to negative every conceivable basis which might support
             it,” . . . whether or not the basis has a foundation in the
             record. Finally, courts are compelled under rational-basis
             review to accept a legislature’s generalizations even
             when there is an imperfect fit between means and ends.
             A classification does not fail rational-basis review
             because it “‘is not made with mathematical nicety or
             because in practice it results in some inequality.’” . . .
             “The problems of government are practical ones and may
             justify, if they do not require, rough accommodations –
             illogical, it may be, and unscientific.”

Steven Lee Enterprises v. Varney, 36 S.W.3d 391, 395 (Ky. 2000) (quoting Heller

v. Doe by Doe, 509 U.S. 312, 113 S. Ct. 2637, 125 L. Ed. 2d 257 (1993) (citations

omitted) (alterations and emphasis added in original)) (discussing rational-basis

review of equal protection claim).

                                          -11-
                The regulation at issue here requires a CON applicant to demonstrate

the proposed MVRT program will, at minimum, perform 6,000 annual procedures

by the end of the second year of operation. 900 KAR3 5:020, Section IV.B.1. The

Cabinet filed no brief in the instant appeal, but below it proffered as its rational

basis that 15 of the current MVRT programs met the threshold in 2019, and the

threshold was lower than a few other states’ thresholds.4

                The Circuit Court rejected the finding that a rational basis existed

between the stated rationale and the legitimate state end. Principally, it found no

3
    Kentucky Administrative Regulations.
4
 We additionally note that at oral argument the parties argued about whether the Cabinet had
evidence or data to support the threshold. Lourdes believed none existed, noting that it had made
an open records request to the Cabinet during the proceedings below, specifically requesting:

                Information considered by the Cabinet regarding the metric,
                simulation, projection, data, or data compilation that supports the
                requirement that 6000 Megavoltage Radiation Oncology
                Procedures are reasonable and necessary to maintain a financially
                viable Megavoltage Radiation Oncology Program from 2011
                through present.

The Cabinet’s written response to this open records request stated that it “does not collect this
data.” At oral argument, this Court requested the Cabinet to explain its open records request
response. The attorney for the Cabinet stated that it had not seen the open records request
because its Office of the Inspector General handles those requests. Additionally, the Cabinet
noted that Lourdes did not take any additional steps regarding the response, such as asking the
Attorney General to review the response. While not an issue before us, we note that per KRS
61.880(2)(a), the Attorney General can be notified to review a “denial of a request to inspect a
public record[.]” Here there was no denial; the Cabinet affirmatively stated it “does not collect
this data.” Moreover, discovery on this issue was unlikely, as the constitutional claim could not
be decided by the hearing officer, and the claim was first before the Trial Court on a declaration
of rights action, which is by nature a summary action. See KRS Chapter 418. Thus, we accept
as true the record evidence showing the Cabinet “does not collect this data.”

                                               -12-
rational relation existed because most programs did not meet this threshold.

Between 2014 and 2019, 18 of the 34 programs that conducted MVRT performed

fewer than 6,000 procedures. One even provided fewer than 2,000 procedures.

We agree with the Circuit Court that establishing the threshold at 6,000 procedures

when existing usage rates run the gamut constitutes a shot-in-the-dark, arbitrary

classification that is not rationally related to legitimate interests. All of the

programs in operation are providing critical cancer care, not “unnecessary” health

services, KRS 216B.010, and yet over half do not meet the threshold set by the

Cabinet. In this circumstance, creating a standard that over half of the MVRT

programs cannot meet is not rationally related to the legitimate governmental

interests announced in KRS 216B.010.

             The Circuit Court also found it significant that many of the sub-6,000-

procedure programs are located in rural areas of Kentucky, and the proposed

program would also be located in a rural area of Kentucky. We agree. Equally

significant, though, is the fact that some of the programs not meeting the threshold

were located in Louisville, the most populous city in the Commonwealth. This

evidence demonstrates that there is no rational relation between a 6,000-procedure

threshold and the population needs throughout the Commonwealth. Thus,

establishing a threshold at 6,000-procedures is wholly arbitrary and not rationally

                                          -13-
related to actual, operational levels of the then-functioning, cancer treatment

centers throughout the entire Commonwealth.

             Additionally, other states’ utilization of similar or more stringent

thresholds proves arbitrariness, not rationality. First, there is no uniform

agreement; each state has a different threshold. Indeed, to establish rational

restrictions, each state must consider its own particularized geographic and

population concerns. Or, to irrationally establish restrictions, each state would

choose a random number. Cf. Vision Mining, 364 S.W.3d at 473 (footnote

omitted) (“Simply put, one type of disparate treatment does not constitute a

rational basis or substantial and justifiable reason for another form of disparate

treatment.”). Either way, the lack of a uniform agreement among states supports

an arbitrariness finding.

             Second, the bare fact that other states have thresholds only proves that

other states have thresholds. That fact neither proves that each of those states has a

legitimate interest, nor that the thresholds are rationally related to those interests.

Quite possibly those thresholds are also arbitrarily chosen. Alternatively, those

thresholds may have a rational basis but be based on significantly different criteria.

The establishment of a threshold is not inherently arbitrary, but there must be clear

criteria for the threshold, and those criteria must have a rational relationship to a

legitimate state interest. Simply picking a number is arbitrary. But so is picking a

                                          -14-
number based on criteria that lack sound factual bases. At minimum, the existence

of other thresholds does not establish that the threshold chosen here is rationally

related to the legitimate, governmental interest. Having negated the bases for the

regulation, Lourdes has proven a Section 2 violation. See Varney, 36 S.W.3d at

395.

               Baptist counters that the 6,000-procedure threshold advances multiple,

legitimate, governmental interests, any one of which provides a rational basis for

the regulation.5 First, because the equipment for one program can provide at least

9,500 procedures annually, the threshold ensures that any singular program will not

be underutilized. We find this argument unavailing. The existing programs show

that much lower thresholds are viable and provide needed healthcare. The 6,000-

procedure threshold here amounts to nothing more than a guess about the

economies of scale, and an unsupported guess at that, which demonstrates arbitrary

action by the Cabinet.

               Second, Baptist proffers that the threshold might serve an ancillary

purpose of condensing patient volumes that lead to downstream benefits of scale,

expertise, and specialization. While it is possible that limiting the number of

5
  Again, the Cabinet, which promulgated the regulation, did not file a brief and, thus, it does not
raise these additional reasons. We nonetheless address them as they do not pass rational basis
review.

                                               -15-
providers could result in an increase in patients for each provider,6 that bare

supply/demand logic could support any economic regulation and wholly nullify

judicial scrutiny under rational basis review. We will not carve out an exception

that renders rational basis meaningless. And the current utilization pattern does not

even provide a reasonable, factual basis for a conclusion that limiting the supply to

greater-than-6,000-procedure programs is rationally related to ensuring the

programs are profitable and capable of operating. Most of the programs are well

below this threshold and continue to operate.

               Third, Baptist proffers that the Cabinet’s engaging in the process of

drawing a line to advance the goals of the CON program is evidence that the line it

drew is rationally related to the legitimate state interests. As with its second

argument, Baptist’s argument creates a feedback loop that nullifies the test. Drawn

lines can be arbitrary and irrational. Notably, by not filing a brief on appeal the

Cabinet ostensibly abandoned support for the line it drew.

               Fourth, Baptist argued at oral arguments before this Court, and also in

the briefs in the Circuit Court below, that the 6,000-procedure threshold is

rationally related to the “Blue Book” guidelines for equipment utilization. The text

is hardly current, as it was last published in 1991, and its conclusions are

6
 That “logic” begs the question: will patients undergoing challenging cancer treatments endure
additional burdens imposed by artificial scarcity creation? Or will cancer-ridden patients fatigue
out of the demand chain?

                                              -16-
questionable at best given the copious evidence the parties presented below

regarding changing usage rates and changing populations. Furthermore, the Blue

Book guidelines at best demonstrate that there is no one-size-fits-all approach to

how many procedures a program should perform in a year, as the guidelines

demonstrate scenarios in which sub-6,000-procedure levels would be considered

realistic annual loads. In sum, if the Cabinet had based its 6,000-procedure

threshold on the Blue Book guidelines, the text both on its face and in modern

application does not provide rational basis support.

                Additionally, though both parties cite us to numerous cases to support

their arguments, “No case can be completely dispositive of another when

conducting a rational basis analysis unless it involves the same statute, same facts

and same arguments for what ‘rational basis’ exists to uphold the statute.”

Teco/Perry County Coal v. Feltner, 582 S.W.3d 42, 46 n. 2 (Ky. 2019). This

maxim is especially true of Christ Hospital Corporation, Inc. v. Saint Elizabeth

Medical Center, Inc., No. 2018-CA-001096-MR, 2019 WL 3990994 (Ky. App.

Jun. 13, 2019), a not-to-be-published opinion of this Court cited by both parties.

This case offers no “binding precedent,” RAP7 40(D)(1). It largely centered on a

violation of Section 59 of the Kentucky Constitution (impermissible special

7
    Kentucky Rules of Appellate Procedure.

                                             -17-
legislation). And it had nothing to do with the 6,000-procedure threshold for

MVRT volumes.

             Finally, we respectfully disagree with our esteemed colleague in her

well-written dissent that we have “placed the burden of proving a rational basis

squarely on the shoulders of Baptist and the Cabinet.” Slip Op. at 39. Though the

burden is great on one attacking the constitutionality of a regulation, Lourdes has

met that burden by providing arguments and evidence “to negative every

conceivable basis which might support” the rational basis for the regulation.

Varney, 36 S.W.3d at 395. Most notably, as it relates to the dissent’s concerns

regarding increased cost of quality health care in Kentucky, KRS 216B.010, and

“overinvestment in and maldistribution of health care facilities in the

Commonwealth[,]” Slip Op. at 42, Lourdes demonstrated that at whatever capacity

it would operate by year two, it anticipated the fees to cancer patients would be

considerably lower than those charged to Baptist patients. Because Lourdes has

met its burden of proving that the 6,000-procedure threshold for MVRT volumes is

not rationally related to a legitimate, state interest, we affirm the Circuit Court’s

Order inasmuch as it found a Section 2 violation.

                                          -18-
             C. Is the 6,000-procedure threshold consistent with KRS

             216B.010?

             As a related issue, Baptist further argues that the Circuit Court erred

by finding the 6,000-procedure threshold was invalid under KRS 216B.010

because it does not promote the goals of the CON program. But the same

reasoning that makes the threshold arbitrary under Section 2 holds true to the

statutory claim. The threshold is an arbitrarily-drawn line that is not consistent

with the purposes of KRS 216B.010.

             Baptist also argues that Lourdes’s MVRT “proposal is the epitome of

unnecessary costly duplication.” Appellant’s Brief at 16. Baptist notes that there

is no evidence that any patient in the Paducah area, an area that includes a higher

MVRT use rate than other areas of the Commonwealth, has been unable to access

MVRT on a timely basis.

             This argument goes to Review Criteria 2 and 4, not to the instant

constitutional and statutory argument. In sum, we affirm the Circuit Court’s Order

inasmuch as it found the 6,000-procedure threshold as violative of Section 2 of the

Kentucky Constitution and not consistent with KRS 216B.010.

                                         -19-
   II.   Was the Final Order arbitrary and not supported by substantial

         evidence?

             Our analysis does not end with the constitutional claim, though, as

that holding only applies to the Final Order’s analysis of Review Criterion 1 –

Consistency with the State Health Plan. The Final Order also found Lourdes’s

application failed to satisfy Review Criteria 2 and 4. The Circuit Court’s review of

the Final Order determined that the Hearing Officer erred in her findings and

conclusions on all three of these Review Criteria. Baptist argues the Circuit Court

erred when reversing the Hearing Officer’s Final Order on these issues. Our

standard of review of the Final Order’s factual findings and conclusions is different

than our de novo review of the constitutional claim. Following a recitation of the

applicable standard of review, we analyze the Final Order’s findings and holdings

of the three Review Criteria seriatim.

             A. Standard of Review

             The Cabinet reviewed the CON application pursuant to: KRS

216B.040(2)(a)2.a.-e.; the formal review criteria in 900 KAR 6:070; and the State

Health Plan (in place at the time of the application), 900 KAR 5:020. Judicial

review of a decision of an administrative agency is ultimately a review for

arbitrariness. American Beauty Homes Corp. v. Louisville and Jefferson County

Planning and Zoning Commission, 379 S.W.2d 450, 456-57 (Ky. 1964).

                                         -20-
Arbitrariness may be found in three circumstances: “(1) action in excess of

granted powers, (2) lack of procedural due process, and (3) lack of substantial

evidentiary support[.]” Id. at 456.

             The third circumstance is implicated here, and our review is for

substantial evidence. See, e.g., Starks v. Kentucky Health Facilities, 684 S.W.2d 5,

6-7 (Ky. App. 1984) (citing KRS 216B.120(2) (since repealed)) (holding the

proper standard of a CON decision is “whether the findings of fact in issue are

supported by substantial evidence and are not clearly erroneous based upon a

review of the record as a whole”). Substantial evidence “is defined as evidence of

substance and consequence when taken alone or in light of all the evidence that is

sufficient to induce conviction in the minds of reasonable people.” McManus v.

Kentucky Retirement Systems, 124 S.W.3d 454, 458 (Ky. App. 2003) (citing

Bourbon County Bd. of Adjustment v. Currans, 873 S.W.2d 836, 838 (Ky. App.

1994); Transportation Cabinet v. Poe, 69 S.W.3d 60, 62 (Ky. 2001); and Special

Fund v. Francis, 708 S.W.2d 641, 643 (Ky. 1986)). Under this standard, the

reviewing court does not review the evidence de novo, but, instead, the “reviewing

court must hold fast to the guiding principle that the trier of facts is afforded great

latitude in its evaluation of the evidence heard and the credibility of witnesses

appearing before it.” Bowling v. Natural Resources and Environmental Protection

                                          -21-
Cabinet, 891 S.W.2d 406, 409-10 (Ky. App. 1994) (citing Kentucky State Racing

Commission v. Fuller, 481 S.W.2d 298, 308 (Ky. 1972)).

             Furthermore, pursuant to McManus, supra, when the administrative

body finds the party with the burden of persuasion has failed to meet that burden,

“the issue on appeal is whether the evidence in that party’s favor is so compelling

that no reasonable person could have failed to be persuaded by it.” 124 S.W.3d at

458 (citations omitted). The dissent disagrees with our application of substantial

evidence to the McManus standard. See Slip Op. at 31 (“While substantial

evidence plays a role in a second-level McManus review, the review is more

nuanced than simply searching for substantial evidence or the lack thereof.”)

(emphasis added).

             Respectfully, we believe substantial evidence review is the first step

even under McManus. As noted by our Supreme Court, a “two-step approach by

first considering whether the . . . final order [is] properly supported by substantial

evidence” is “appropriate because it hews to the language of KRS 13B.150, which

identifies seven potential grounds for reversal including that the . . . order is

‘[w]ithout support of substantial evidence on the whole record.’” Kentucky

Retirement Systems v. Ashcraft, 559 S.W.3d 812, 819 (Ky. 2018) (emphasis

added). See also Bradley v. Kentucky Retirement Systems, 567 S.W.3d 114, 119

(Ky. 2018) (emphasis added) (“As explained more fully in Ashcraft, even where

                                          -22-
the applicant loses before the Board, it is appropriate on judicial review for the

courts, at every level, to first consider whether the denial is supported by

substantial evidence. If it is not so supported, the court is required to

reverse . . . .”). Where the record contains substantial evidence for both sides, i.e.,

the evidence is in “equipoise,” the McManus “compelling evidence” standard

“properly breaks the tie.” Bradley, 567 S.W.3d at 120. As we analyze infra, no

such tie existed as substantial evidence did not support the Hearing Officer’s

findings. Notably, neither side cited to nor argued McManus in their briefs; they

both focused on substantial evidence. As there was not substantial evidence

supporting both sides in the instant case, we may, and do, conclude under

McManus that Lourdes’s evidence was so compelling that no reasonable person

could have failed to be persuaded by it.

             B. Review Criterion 1 – the State Health Plan

             As we held above, the 6,000-procedure threshold requirement of the

State Health Plan is unconstitutional and void. The Final Order found and

concluded that Lourdes’s application was not consistent with Review Criterion 1

solely because it did not meet this 6,000-procedure threshold. As this threshold is

now void, the Hearing Officer’s conclusion that Lourdes’s application did not

comport with the State Health Plan under Review Criterion 1 is arbitrary and not

supported by substantial evidence.

                                           -23-
            C. Review Criterion 2 – Need and Accessibility

            The Hearing Officer concluded that Lourdes’s application was not

consistent with Criterion 2 – Need and Accessibility, which requires that:

            The proposal shall meet an identified need in a defined
            geographic area and be accessible to all residents in the
            area. A defined geographic area shall be defined as the
            area the proposal seeks to serve, including its
            demographics, and shall not be limited to geographical
            boundaries[.]

KRS 215B.040(2)(a)2.b.

            The Circuit Court held the Hearing Officer’s findings were not

supported by substantial evidence and led to an arbitrary conclusion:

            First, the Hearing Officer plainly erred by finding that
            Dr. Locken and Dr. Espinoza combined are equivalent to
            1.85 full time employees. Presently, Dr. Locken is the
            only radiation oncologist in the service area. Dr.
            Espinoza is based in Michigan and provides locum tenes
            coverage for Dr. Locken thirteen (13) weeks per year.
            Further, when Dr. Espinoza is present, Dr. Locken is not.
            Thus, the Court agrees with Mercy that the record does
            not support that Dr. Locken and Dr. Espinoza combined
            are equivalent to 1.85 full time employees. In fact,
            combined, the record demonstrates that they are the
            equivalent of one (1) full time employee. The Hearing
            Officer committed plain error in reaching this conclusion
            as it is wholly unsupported by the record.

            Second, the Court agrees with [Lourdes] that the Hearing
            Officer erred by concluding that a single full-time
            physician can meet the demand in the service area. The
            Hearing Officer found that the American College of
            Radiology and American Society for Radiation Oncology
            recommended a radiation oncologist to see between 200

                                        -24-
             and 300 new patients per year. The record demonstrates
             that Baptist saw 615 new patients in 2019. It is
             inconceivable how the Hearing Officer concluded that
             single full-time physician can meet the demand in the
             service area based on the number of new patients per
             year when compared to the recommended number of new
             patients that a single radiation oncologist should see per
             year. The Hearing Officer also found that Baptist
             performed 12,123 radiation oncology procedures in 2019
             and that the cancer incidence rate in the region is
             expected to grow by 7.5% over the next five (5) years.

             The Hearing Officer plainly disregarded the evidence in
             the record that there is a need for radiation oncology
             services in the service area. Professional standards
             clearly support that the service area’s needs are not being
             met. Accordingly, Hearing Officer’s conclusion
             regarding Criterion 2 (Need and Accessibility) is plainly
             arbitrary because it is not supported by substantial
             evidence.

Order, pp. 17-18 (footnote omitted).

             We do not agree with the Circuit Court’s reasoning, but we do agree

with its conclusion. The Hearing Officer’s arbitrary action occurred in her

conclusions of law, not in her factual findings.

             As the Hearing Officer correctly found in her findings of fact,

substantial evidence in the form of multiple, professional standards and testifying

experts showed that radiation oncologists are recommended to see at most 200 to

300 new patients a year. Final Order, pp. 31-32. Substantial evidence also showed

that Baptist had over 600 new patients per year. Final Order, p. 31. That evidence

alone would require a conclusion that more than 2.0 FTE radiation oncologists are

                                         -25-
necessary to service the area. Yet, the Hearing Officer concluded that Drs. Locken

and Espinoza are sufficient to meet the demand despite combining to, at best, 1.85

FTE radiation oncologists. Final Order, pp. 31, 46-47. Even though there was

testimony that Dr. Locken worked substantial hours, loved his job, and provided

Baptist’s patients a high level of service, it is unreasonable to conclude that 1.85

FTE radiation oncologists is sufficient to meet the need. Additionally, merely

because Baptist has extra capacity and could hire more radiation oncologists does

not change the situation as it existed when the CON application was filed – 1.85

FTE radiation oncologists is not sufficient to meet the need.

             That Dr. Locken must provide an extraordinary level of service to

meet the radiation oncology needs of the area shows just how needy this region is

for an additional, radiation oncologist and/or MVRT program. The record shows

that Dr. Locken is a unique individual who is irreplaceable in the service area. The

service area would likely be looking for more than one radiation oncologist to

replace Dr. Locken if and when he is unable to service the community at his

current level. Lourdes has thus demonstrated a need in the geographic area. Any

other conclusion from the factual findings is not reasonable, not supported by

substantial evidence, and constitutes an arbitrary conclusion. Thus, we affirm the

Circuit Court inasmuch as it held the Hearing Officer’s conclusion on Review

Criteria 2 was arbitrary and unsupported by substantial evidence.

                                         -26-
            D. Review Criterion 4 – Costs, Economic Feasibility, and

            Resource Availability

            The Hearing Officer likewise concluded that Lourdes’s application

was not consistent with Review Criteria 4 – Costs, Economic Feasibility, and

Resource Availability, which requires that:

            The proposal, when measured against the cost of
            alternatives for meeting needs, shall be judged to be an
            effective and economical use of resources, not only of
            capital investment, but also ongoing requirements for
            health manpower and operational financing[.]

KRS 216B.040(2)(a)2.d. Additionally, pursuant to the regulations:

            (5) . . . The cabinet shall determine:

                   (a) If it is economically feasible for the
                   applicant to implement and operate the
                   proposal; and

                   (b) If applicable, if the cost of alternative
                   ways of meeting the need identified in the
                   geographic area defined in the application
                   would be a more effective and economical
                   use of resources.

900 KAR 6:070, Section 2(5).

            Having concluded that Lourdes demonstrated need under Review

Criterion 2, the Circuit Court correctly determined that the Final Order must be

reversed on Review Criterion 4 as the Hearing Officer’s conclusion on this point

was based on her erroneous conclusion in Review Criterion 2. The Final Order on

                                        -27-
this point reviewed the costs of Lourdes’s proposal and rejected it as not effective

and economical “when measured against the cost of the alternative, which is to

maintain the status quo[.]” Final Order at 50. Baptist’s arguments on appeal

mirror this same, arbitrary conclusion. Notably, the Hearing Officer also

concluded that “[h]ad need been demonstrated, the alternative posed by [Baptist],

that [Lourdes] hire a radiation oncologist without developing its own radiation

oncology program, is not reasonable.”

             We agree with the Circuit Court that Lourdes’s application proved a

need. Given that the proposed program is cost effective when measured against

the alternatives, the Hearing Officer should have found Lourdes’s application met

Review Criterion 4. KRS 216B.040(2)(a)2.d. Accordingly, we affirm the Circuit

Court on this claim.

                                  CONCLUSION

             For the foregoing reasons we AFFIRM the Circuit Court’s Order

reversing the Hearing Officer’s Final Order and ordering the Hearing Officer to

approve Lourdes’s application for a CON.

             EASTON, JUDGE, CONCURS.

             JONES, JUDGE, DISSENTS AND FILES SEPARATE OPINION.

JONES, JUDGE, DISSENTING: Most respectfully, I dissent. As set forth below,

I disagree with affirming the Franklin Circuit Court on both the Hearing Officer’s

                                        -28-
Findings of Fact and Conclusions of Law and the constitutionality of the State

Health Plan.

             A. The Hearing Officer’s Findings of Fact & Conclusions of Law

               Mercy sought a Certificate of Need (“CON”)8 from the Cabinet of

Health and Family Services (“Cabinet”) to establish a radiation therapy center in

Paducah. During the administrative proceedings, Baptist, an interested person,

entered an appearance and objected to issuance of the certificate. Before the

Cabinet, Mercy, the party seeking the CON, bore the burden of proof.

8
   CON laws date back to the 1960s. https://www.ncsl.org/health/certificate-of-need-state-laws
(last visited Dec. 20, 2023). “At that time, there was a view that high health care costs were
driven largely by wasteful, over-investment in duplicative health care facilities.” Maureen K.
Ohlhausen, CERTIFICATE OF NEED LAWS: A PRESCRIPTION FOR HIGHER COSTS, ANTITRUST, Vol.
30, No. 1, 50 (Fall 2015). CON laws attempted to curb healthcare costs by preventing
overinvestment in and maldistribution of health care facilities by requiring new healthcare
entities receive state approval before entering the market or making capital investments. Over
the next decade, the United States Congress became convinced that CON laws were necessary to
curb rising healthcare costs across the nation. Eventually, Congress decided to incentivize
adoption of CON laws by the states through passage of the National Health Planning and
Resources Development Act of 1974. Id. The 1974 Act made certain federal funding available
only to states that had CON laws similar to the federal model in place. Id. As a result, all states,
except Louisiana, eventually adopted CON laws. Kentucky adopted its CON laws in 1980.

        CON laws have been criticized as overly restrictive and a driver of higher health care
costs and lower quality care, and the federal mandate was repealed in 1987. In response, several
states have modified or entirely repealed their CON laws. At present, only thirty-five states and
the District of Columbia still maintain some form of CON program. While Kentucky has revised
its CON laws numerous times throughout the years, most recently in 2022, the Kentucky General
Assembly has not repealed the statutes.

                                               -29-
               The Cabinet’s Hearing Officer, Maria Mier, conducted a lengthy

hearing on Mercy’s CON application.9 Thereafter, the Hearing Officer issued a

fifty-two-page Findings of Fact, Conclusions of Law, and Final Order (“Final

Order”) in which she denied Mercy’s CON application because it failed to carry its

burden of showing consistency with three of the five statutory review factors. 10

Mercy appealed to the Franklin Circuit Court. Since the Cabinet denied the CON

to Mercy, the party who bore the burden of proof, the McManus standard governed

the Franklin Circuit Court’s review below. “Where the fact-finder’s decision is to

deny relief to the party with the burden of proof or persuasion, the issue on appeal

is whether the evidence in that party’s favor is so compelling that no reasonable

person could have failed to be persuaded by it.” McManus v. Kentucky Retirement

Systems, 124 S.W.3d 454, 458 (Ky. App. 2003) (emphasis added).11

9
  The Hearing Officer heard proof from January 11-15, 2021, and again from January 19-21,
2021.
10
   By statute, the Cabinet must consider several factors when reviewing a CON application: (1)
“interrelationships and linkages” to existing care; (2) “costs, economic feasibility, and resources
availability”; (3) “quality of services”; (4) “need and accessibility” in the desired geographic
area; and (5) “consistency with” the State Health Plan as determined by the Health Services
agency. KRS 216B.040(2)(a)2.; 900 KAR 5:020.
11
   McManus, a decision from this Court, has been adopted by the Kentucky Supreme Court as
correctly setting forth the level of deference due an administrative fact-finding agency when that
agency decided against the party who bore the burden of proof. Kentucky Retirement Systems v.
Ashcraft, 559 S.W.3d 812, 819-20 (Ky. 2018).

       We reaffirm the wisdom and applicability of the McManus statement because it
       properly reflects the deference to be given to the fact-finder. See KRS
       13B.150(2) (“The court shall not substitute its judgment for that of the agency as

                                               -30-
             However, citing Starks v. Kentucky Health Facilities, 684 S.W.2d 5,

6-7 (Ky. App. 1984), the majority indicates that it applied the lower, substantial

evidence standard. While Starks correctly set forth the standard applicable to its

review, that standard does not apply here. In Starks, a CON was issued to Hospital

Corporation of America (“HCA”) to construct a new hospital facility in Logan

County. The appellant, Ronald Starks, a resident of Logan County, Kentucky,

filed an appeal challenging the issuance of the CON. Since the party who bore the

burden of proof before the administrative agency, HCA, prevailed at the

administrative level, the standard of review to be applied by circuit court and this

Court was simply one of substantial evidence. As noted above, this was not the

case here. Mercy did not prevail at the administrative level, and therefore, the

standard of review is one of compelling, not simply substantial, evidence.

      to the weight of the evidence on questions of fact.” (emphasis supplied)).
      Realistically, there are cases where the record can fairly be read as containing
      substantial evidence in favor of both sides. However, Kentucky law is clear that
      the fact-finding agency is charged with making the “call” in those difficult cases
      and outlining the grounds for the result reached. Simply put, the agency is the
      decider on issues of fact. Thus, under the McManus standard, a court cannot
      substitute its judgment on those contested issues of fact but if the appealing party
      has not met his burden of proof with the fact-finder, the court can properly, indeed
      must, consider whether that party’s proof was so compelling that no reasonable
      person could have failed to be persuaded. If this high standard is met, so is KRS
      13B.150(2)(d), which allows for reversal when a final order is “[a]rbitrary,
      capricious, or characterized by an abuse of discretion.”

Id.

                                             -31-
             While substantial evidence plays a role in a second-level McManus

review, the review is more nuanced than simply searching for substantial evidence

or the lack thereof. “In cases such as this where the evidence may, at least at first

blush, be perceived to be in equipoise, the McManus ‘compelling evidence’

standard properly breaks the tie.” Bradley v. Kentucky Retirement Systems, 567

S.W.3d 114, 120 (Ky. 2018). “It does so by implementing the legislative

command that the courts ‘not substitute [their] judgment for that of the agency as

to the weight of the evidence on questions of fact,’ KRS 13B.150(2), while

outlining an understandable test for determining if the fact-finder was ‘arbitrary,

capricious or . . . abuse[d] [its] discretion’ in violation of KRS 13B.150(2)(d) when

assessing the evidence.” Id.

             While the majority’s analysis is thoughtful, I believe this is case

where the record can fairly be read as containing substantial evidence in favor of

both sides, and therefore one where the circuit court should have only reversed if

the evidence so overwhelmingly favored Mercy that it compelled a contrary

conclusion. City of Villa Hills v. Kentucky Retirement Systems, 628 S.W.3d 94,

106 (Ky. 2021). Here, I do not believe that the evidence compelled a contrary

conclusion with respect to the three statutory factors at issue. In fact, I believe the

evidence overwhelmingly supported Baptist’s position, and I am at a loss to see

                                          -32-
how the majority concludes that there was no substantial evidence to support the

Hearing Officer’s findings of fact and conclusions of law.

              The first factor, whether the CON application is consistent with the

State Health Plan, is inextricably interwoven with the Franklin Circuit Court’s

holding that the State Health Plan’s 6,000-procedure threshold violates Section 2

of the Kentucky Constitution. Assuming the State Health Plan is constitutional,

Mercy failed to present compelling evidence that it would perform at least 6,000

procedures by the second year as the State Health Plan requires.

               In its application, Mercy asserted that by year two it would perform

6,603 procedures per year. Before the Hearing Officer, Mercy supported its

estimates with expert testimony from Brian Leigh, Engagement Manager, The

Chartis Group – Oncology Solutions. Baptist relied on Joseph Spallina, Director,

Arvina Croup, LLC. Using a Volume Projection Methodology, Mr. Spallina ran

three different models, and he estimated that in all likelihood Mercy’s proposed

facility would only perform only slightly more than 4,700 procedures by the

second year. Given Mr. Spallina’s projections, it is impossible to say that the

evidence compelled a determination in Mercy’s favor with respect to this factor.12

12
   In Paragraph 14 of her conclusions of law, the Hearing Officer determined that Mr. Spallina’s
Model III, which estimated that by the second year Mercy would provide 4,796 treatments to 275
patients, was “the most accurate and reliable way to estimate radiation treatment volumes.” It
was the Hearing Officer’s prerogative to choose which expert witness was the most credible.

                                             -33-
               The second factor is one of need and accessibility. Both the circuit

court and the majority focused heavily on number of physicians currently working

at Baptist and on rising cancer rates. First, rising cancer rates do not automatically

mean that radiological procedures are rising at the same rate. While Mercy may

have submitted evidence that cancer rates are on the rise, Baptist presented

countervailing evidence that per patient radiological procedures are trending

downwards.

               Second, while one can question whether Baptist’s physician(s) are

overworked, one cannot question the lack of evidence that any patient in the area

has been denied care. Additionally, the Baptist facility has the capacity to employ

more of its own physicians.13 Presumably, if Baptist were not able to meet the

demand of the patient population with its current physician load, it would simply

add a physician. The facility itself, however, appears able to meet the needs of the

community in terms of number of procedures needed. And Mercy is seeking the

13
   In Paragraph 22 of her conclusions of law, the Hearing Officer explained, “There was ample
evidence of record that Dr. Locken is competently handling his case load, that he employs a
locums radiation oncologist who works 12 weeks per year, that he has a strong support team in
place to efficiently manage the practice, and that Baptist has the resources and experience to seek
additional physician support if Dr. Locken is unable to continue his duties. The radiation
oncology program maintains qualifications with the Commission on Cancer and the American
College of Radiology. There was no evidence presented that there are any barriers or delays to
patients seeking radiation therapy and, in fact, the Baptist program is able to and does see
patients the same day they are referred, if medically-indicated. The Applicant did not
demonstrate that Dr. Locken’s high caseload translates to a need for an additional linear
accelerator in Paducah.”

                                               -34-
CON to build an additional facility, not simply to add more physicians. In fact, the

Hearing Officer determined that “when taking into account Baptist’s hours of

operation, the number of days the service operates, and its current volume, [the two

linear accelerators at] Baptist [are] [only] operating at approximately 60%

capacity.”

             It is illogical to approve construction of an entire cancer facility –

complete with machines and medical and support staff – to address a theoretical

concern that the current physicians in the area might be carrying too high of a

patient load. This appeal is not about whether Baptist should employ an additional

physician to staff its existing radiological center. It is about whether the Paducah

area needs an entirely new multi-million-dollar cancer facility. I cannot see how or

where that evidence was presented, especially considering that Baptist’s current

radiological facility is only running at 60% capacity.

             The final factor the Hearing Officer concluded Mercy failed to meet

concerns costs, economic feasibility, and resource availability. As noted above,

the Hearing Officer determined that Baptist’s current facility was running at only

60% capacity and did not have a backlog. Mercy projected a total capital

expenditure of $11,697,141 to implement its proposed facility. Considering that

the radiological needs of the area’s patient population are currently being met, and

                                         -35-
that Baptist had the capacity to meet any slight increase, the proposed project was

not necessary.

             The proposal, when measured against the cost of the
             alternative, which is to maintain the status quo, is not an
             effective and economical use of resources. The existing
             program, which is 2.3 miles away from the proposed
             program, is currently meeting the area’s radiation therapy
             needs and has the capacity to address the modest patient
             volume increases projected for the region. An $11.6
             million expenditure is not a cost-effective use of
             resources when there is no identified need for the project.

Final Opinion at p. 50.

             I fail to see how the Hearing Officer erred in this regard. Perhaps to

run at 100% capacity (if the need to do so ever arises), Baptist would have to hire

more staff, including another physician. However, doing so would certainly be

more cost effective than spending $11.6 million to construct an entirely new

facility.

             The majority points out that by year two Mercy anticipates that its

facility would charge patients significantly lower fees than Baptist charges its

patients for the same cancer-related care. While this may be true, the affordability

factor requires a broader view of healthcare. Instead of simply focusing on a

specific type of care, the CON’s objective is to spread healthcare dollars out

making overall care more affordable across the Commonwealth. Given that

Baptist is currently meeting the community’s needs in terms of cancer-related care,

                                        -36-
it was reasonable for the Hearing Officer to conclude that the nearly twelve million

dollars Mercy proposed spending on the new center would not positively impact

the overall healthcare picture in the Commonwealth enough to justify the expense.

             The evidence pointed out by the Franklin Circuit Court and the

majority is not without any weight. However, in my opinion, this is a case where

there was substantial evidence presented by both sides, and the Hearing Officer

decided against the party who bore the burden of proof, Mercy. In such a case, we

cannot substitute our judgment for that of the Hearing Officer unless we are able to

conclude that the evidence in favor of Mercy was so compelling that reasonable

people could not fail to be persuaded by it. Since I cannot say that the evidence

compelled a decision in Mercy’s favor, I cannot agree with the majority to affirm

the Franklin Circuit Court on its review of the three factors at issue. As such, I

would reverse and remand this matter to the Franklin Circuit Court for

reinstatement of the Cabinet’s decision denying Mercy’s CON application.

Bradley, 567 S.W.3d at 125 (“The Board’s final decision is plainly supported by

substantial evidence and Bradley has failed to meet the McManus standard for

reversal of the fact-finder’s decision. Accordingly, the Court of Appeals was

correct in its reversal of the circuit court and remand to that court for reinstatement

of the Board’s final decision.”).

                                         -37-
                         B. Constitutionality of State Health Plan

               The procedural posture of this case is somewhat unique in that Mercy

filed both an administrative appeal challenging the Cabinet’s denial of the CON

(discussed above) and a declaratory judgment action challenging the

constitutionality of the State Health Plan as part of a single complaint before the

Franklin Circuit Court.14 Specifically, Mercy challenged Section IV.B of the Plan,

which addresses Megavoltage Radiation Equipment and states, in relevant part,

“[a]n application for megavoltage radiation therapy services shall be consistent

with this Plan if the following criteria are met: . . . 1.b. the applicant shall

demonstrate that sufficient need exists for that program to perform a minimum of

6,000 annual procedures by the end of the second year of operation.” 900 KAR

5:020, Section IV.B.1.

               The administrative regulation at issue is contained within the State

Health Care Plan. “The State Health Plan is a critical element of the certificate of

need process for which the cabinet is given responsibility in KRS Chapter 216B.”

900 KAR 5:020E. “Under Kentucky law, administrative regulations have the full

14
   Since the Cabinet, an administrative agency, has no authority to decide constitutional
questions, the constitutional issue was not raised before at the administrative level. “Exhaustion
of administrative remedies is not necessary when attacking the constitutionality of a statute or a
regulation as void on its face. This is because an administrative agency cannot decide
constitutional issues. Thus, to raise the facial constitutional validity of a statute or regulation at
the administrative level would be an exercise in futility.” Commonwealth v. DLX, Inc., 42
S.W.3d 624, 626 (Ky. 2001).

                                                 -38-
force and effect of law when duly enacted and consistent with enabling

legislation.” Hughes v. UPS Supply Chain Sols., Inc., 677 S.W.3d 273, 280 (Ky.

2023).

             “[A] party seeking to have a statute declared unconstitutional is faced

with the burden of demonstrating that there is no conceivable basis to justify the

legislation.” Holbrook v. Lexmark Int’l Group, Inc., 65 S.W.3d 908, 915 (Ky.

2001) (citing Buford v. Commonwealth, 942 S.W.2d 909, 911 (Ky. App. 1997)).

In this case, Mercy bore the burden of proving that no conceivable basis justifies

the 6,000-procedure threshold. Commonwealth v. Howard, 969 S.W.2d 700, 706

(Ky. 1998) (“[T]he Commonwealth does not have the burden to prove that a statute

is constitutional, but rather the one challenging it has such a burden.”). Yet, it

appears that both the Franklin Circuit Court and the majority placed the burden of

proving a rational basis squarely on the shoulders of Baptist and the Cabinet.

             For example, the majority states that “notably, by not filing a brief on

appeal the Cabinet ostensibly abandoned support of the line it drew.” In other

words, the majority, like the Franklin Circuit Court, appears to believe that the

Cabinet has some affirmative obligation to come forward with evidence to support

rationality. This upending of the burden is not supported by our case law. “[T]he

Commonwealth has no burden to produce evidence supporting the rationality of

any statutory classifications.” Bloyer v. Commonwealth, 647 S.W.3d 219, 226

                                         -39-
(Ky. 2022); Teco/Perry Cnty. Coal v. Feltner, 582 S.W.3d 42, 47 (Ky. 2019)

(internal quotation marks and citations omitted) (“Furthermore, the General

Assembly need not articulate its reasons for enacting the statute, and this is

particularly true where the legislature must necessarily engage in a process of line

drawing.”).

              The debate about the efficacy and necessity of CON laws is not one

for this, or any, Court to resolve. “The legislature has broad discretion to

determine what is harmful to the public health and welfare.” Commonwealth v.

Harrelson, 14 S.W.3d 541, 548 (Ky. 2000). So long as the government exercises

its police powers in a constitutional manner, we must apply the law as written,

regardless of whether we agree with it philosophically. Posey v. Commonwealth,

185 S.W.3d 170, 175 (Ky. 2006). And, to be certain, “[a]mong the police powers

of government, the authority to promote and safeguard public health is a high

priority.” Lexington Fayette Cnty. Food and Beverage Ass’n v. Lexington-Fayette

Urban Cnty. Government, 131 S.W.3d 745, 749 (Ky. 2004).

              “Pertinent to this case, ‘[w]hen economic and business rights are

involved, rather than fundamental rights, substantive due process requires that a

statute be rationally related to a legitimate state objective.’” Beshear v. Acree, 615

S.W.3d 780, 816 (Ky. 2020) (quoting Stephens v. State Farm Mut. Auto. Ins. Co.,

894 S.W.2d 624, 627 (Ky. 1995)). The challenger, in this case, Mercy, has the

                                         -40-
burden of proving that the law is not rationally related to a legitimate government

purpose. Id. “Kentucky courts have always upheld restrictions on property rights

that are reasonable, particularly in the all-important area of public health.” Id. at

816-17. Reasonability is determined not by what any given court believes is fair.

Rather, under rationale basis review, a court cannot declare a law unreasonable

unless it “imposes burdens without any rational basis for doing so.” Sheffield v.

City of Fort Thomas, 620 F.3d 596, 613 (6th Cir. 2010).

             Indeed,

             Courts in this Commonwealth have recognized for half a
             century that when a “legislative body acts in a purported
             policy-making or law-making function . . . the concept of
             what is ‘arbitrary’ is much more narrowly
             constricted. . . .” City of Louisville v. McDonald, 470
             S.W.2d 173, 178 (Ky. 1971). Such an action is only
             “arbitrary if there is no rational connection between that
             action and the purpose for which the body’s power to act
             exists. Where the existence of such rational connection
             is ‘fairly debatable’ the action will not be disturbed by a
             court.”

O’Bryan v. Zip Express, 636 S.W.3d 457, 462-63 (Ky. 2021).

             Our General Assembly has explicitly determined that the CON

statutes are necessary to make all types of healthcare available throughout the

Commonwealth. To this end, KRS 216B.010, provides:

             The General Assembly finds that the licensure of health
             facilities and health services is a means to insure that the
             citizens of this Commonwealth will have safe, adequate,
             and efficient medical care; that the proliferation of

                                         -41-
             unnecessary health-care facilities, health services, and
             major medical equipment results in costly duplication
             and underuse of such facilities, services, and
             equipment; and that such proliferation increases the
             cost of quality health care within the Commonwealth.
             Therefore, it is the purpose of this chapter to fully
             authorize and empower the Cabinet for Health and
             Family Services to perform any certificate-of-need
             function and other statutory functions necessary to
             improve the quality and increase access to health-care
             facilities, services, and providers, and to create a cost-
             efficient health-care delivery system for the citizens of
             the Commonwealth.

Id. (emphasis added).

             The record reveals that the equipment at issue can provide at least

9,500 procedures annually. Thus, it is a mathematical fact that the 6,000-

procedure threshold requires that any newly proposed piece of equipment will be

utilized to at least 63% of its capacity by its second year. Certainly, then, the

6,000-procedure threshold is rationally related to the General Assembly’s

objectives of preventing the overinvestment in and maldistribution of health care

facilities in the Commonwealth.

             The fact that there are several existing facilities operating under this

threshold does not undermine the need for the threshold as the Franklin Circuit

Court and the majority suggest. Rather, it does precisely the opposite. If the

current facilities are not performing anywhere near their capacity, why would we

want to approve the expenditure of millions of limited healthcare dollars on an

                                         -42-
already saturated market? Those same healthcare dollars could be spent on other

healthcare needs throughout the state. Baptist Convalescent Center, Inc. v.

Boonespring Transitional Care Center, LLC, 405 S.W.3d 498, 506 (Ky. App.

2012).

             In sum, it is apparent to me that the 6,000-threshold, while possibly

not perfect, is rationally related to a legitimate government interest. Thus, no

matter how this Court may feel about the requirement, we must uphold it. “So

long as the statute’s generalization is rationally related to the achievement of a

legitimate purpose[,] the statute is constitutional.” Hunter v. Commonwealth, 587

S.W.3d 298, 304 (Ky. 2019).

             For the reasons set forth above, I cannot agree with the majority that

900 KAR 5:020, Section IV.B.I is unconstitutional. Therefore, I would reverse the

Franklin Circuit Court on this issue.

                                         -43-
 BRIEFS FOR APPELLANT:                         BRIEF FOR APPELLEE,
                                               MERCY HEALTH – LOURDES
 Mathew R. Klein, Jr.                          HOSPITAL LLC :
 Mark D. Guilfoyle
 David M. Dirr                                 Lisa English Hinkle
 Covington, Kentucky                           Christopher J. Shaughnessy
                                               Jonas S. Bastien
 ORAL ARGUMENT FOR                             Lexington, Kentucky
 APPELLANT:
                                               Edward Monarch
 David M. Dirr                                 William G. Carroll
 Covington, Kentucky                           Louisville, Kentucky

 ORAL ARGUMENT FOR                             ORAL ARGUMENT FOR
 APPELLEE15 COMMONWEALTH                       APPELLEE MERCY HEALTH –
 OF KENTUCKY, CABINET FOR                      LOURDES HOSPITAL LLC:
 HEALTH AND FAMILY
 SERVICES, OFFICE OF                           Lisa English Hinkle
 INSPECTOR GENERAL, DIVISION                   Lexington Kentucky
 OF CERTIFICATE OF NEED:
                                               Edward Monarch
 Olivia M. Peterson                            Louisville, Kentucky
 Frankfort, Kentucky
                                               NO BRIEF FILED FOR APPELLEE
                                               COMMONWEALTH OF
                                               KENTUCKY, CABINET FOR
                                               HEALTH AND FAMILY
                                               SERVICES, OFFICE OF
                                               INSPECTOR GENERAL, DIVISION
                                               OF CERTIFICATE OF NEED.

15
  Though labeled an “Appellee,” counsel for the Cabinet sat with the Appellant during oral
argument. The Cabinet neither filed a brief nor presented an argument during oral arguments.
The Cabinet was present for oral arguments, though, and responded to questions from the Court.

                                             -44-