Court Opinion

ID: 7919988
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:19:59.613673+00
Date Added: 2024-06-11T16:32:58.916085
License: Public Domain

WILNER, J.
We are faced, for the second time in three years, with a challenge to a part of the State Health Plan (SHP) dealing with cardiac surgery services in the Washington, D.C. metropolitan area. Some of the contextual background to this case was set forth in Medstar v. Maryland Health Care Commission, 376 Md. 1, 827 A.2d 83 (2003) (.Medstar I), which involved an attack on the 2001 SHP. The challenge here is to the 2004 SHP. We need not repeat all that was covered in Medstar I and shall recite only what is particularly relevant to the issues raised here by appellants MedStar Health and Washington Adventist Hospital.

BACKGROUND

In conformance with the National Health Planning and Resources Development Act of 1974 and through the enact*430ment of what is now Maryland Code, title 9, subtitle 1 of the Health-General Article, the General Assembly created and has periodically revised a comprehensive regime for regulating health care resources in Maryland. There are two principal, and inter-related, components of the regulatory scheme—the SHP, designed to identify the health needs and resources throughout the State, and a Certificate of Need (CON) program, designed to allocate and ration health care resources in conformance with the SHP.1 The development and implementation of both components were, and to a large extent still are, entrusted to the Maryland Health Care Commission, created by the Legislature as an independent unit within the State Department of Health and Mental Hygiene.2
The SHP is in the form of regulations incorporated by reference in COMAR, title 19, subtitle 24, chapters 07 through 18. Chapter 17 deals with Cardiac Surgery and Therapeutic Catheterization Services (SHP-Cardiac Services). In conformance with the legislative finding expressed in § 19-102(a) that the health care regulatory system is “a highly complex structure that needs to be constantly reevaluated and modified in order to better reflect and be more responsive to the ever changing health care environment and needs of the citizens of this State,” the Commission is required to review the SHP annually and update it at least every five years. See § 19-118(a) and (b). In 1999, the Commission decided to revise the cardiac services part of the Plan on a tri-annual basis. In *4312001, it revised the 1998 plan, and in 2004, it revised the 2001 plan.
As noted, the CON program is an allocation and rationing device, designed to assure that health care resources, which are expensive to create and maintain, are sufficient to meet the public need, but not excessive. The law requires a person to obtain a CON issued by the Commission before developing, operating, or participating in the creation or relocation of any health care facility or health care service offered by a health care facility. § 19-120. Section 19-118(a) requires that the SHP include “[t]he methodologies, standards, and criteria for certificate of need review.” Those standards must “address the availability, accessibility, cost, and quality of health care” and are to be “reviewed and revised periodically to reflect new developments in health planning, delivery, and technology.” § 19-118(d). Section 19-120(e) directs the Commission to adopt regulations for “applying for and issuing certificates of need.” See, in general, Adventist v. Suburban, 350 Md. 104, 711 A.2d 158 (1998).
In conformance with the legislative direction, now found in § 19-117(a), to designate health service areas in the State, the Commission, for purposes of SHP-Cardiac Services, has divided the State into four service regions—Western Maryland, Metropolitan Washington, Metropolitan Baltimore, and Eastern Shore. The Metropolitan Washington region comprises five Maryland counties—Calvert, Charles, Montgomery, Prince George’s, and St. Mary’s—and the District of Columbia. It is the only one of the four regions that includes an area outside of Maryland—the District of Columbia—in which the Commission has no jurisdiction but nonetheless considers facilities and resources located there in devising the SHP.
After considerable study, the Commission, several years ago, reached the conclusion that it was generally preferable, as a matter of public policy, to support a small number of high-volume cardiac surgery programs than a large number of lower volume programs. In furtherance of that conclusion, the Commission adopted and maintains, as part of the SHP-*432Cardiac Services, a requirement that there should be a minimum of 200 open heart surgery procedures performed annually in any institution in which open heart surgery is performed for adult patients.
When the Commission’s 2001 SHP-Cardiac Services plan was developed and promulgated, six hospitals in the Metropolitan Washington Region performed open heart procedures. Two of those hospitals were located in Maryland (Washington Adventist in Montgomery County and Prince George’s Hospital Center in Prince George’s County); the other four were in the District of Columbia. The number of procedures performed by those hospitals in the relevant years was as follows: 3
Hospital 1999 2000 2001 2002 2003
Prince Geo. Hosp. Ctr 120 155 150 159 155
Wash. Advent. Hosp. 817 802 770 739 721
Georgetown Univ. Hosp. 140 122 269 260 92
Geo. Wash. Univ. Hosp. 85 103 177 190 261
Howard Univ. Hosp. 50 45 20 23 16
Wash. Hosp. Ctr. 2,950 2,631 2,324 2,252 2,152
When the Commission undertook to revise the Cardiac Services part of the 1998 State Health Plan, the law required that the SHP include the “[¡Identification of unmet needs, excess services, minimum access criteria, and services to be regionalized.” See former Health-General Article (2000 Repl.Vol.) § 19—121(2)(iii). At the time, there was no actual “unmet need” in the Metropolitan Washington Region. The data showed a projected need in the Region for 4,251 procedures and a capacity, based on the number of procedures actually being performed, of 4,432 cases.
*433In an asserted effort to improve accessibility and cost, however, the Commission adopted a new methodology for measuring available capacity. Instead of determining capacity based on the number of procedures actually being performed by the six hospitals in the Region, it created an artificial cap, for each hospital, of the higher of 800 cases or 50% of the projected gross regional need. The effect of that cap was to reduce, for purposes of calculating the regional capacity, the number of procedures performed at Washington Hospital Center (WHC)—the only hospital affected by the cap—from 2,950 cases (the number actually performed in the base year) to 2,126 cases (50% of the projected regional need). That served to reduce the Commission—determined regional capacity from 4,432 cases to 3,608 cases and thus show an unmet need of 643 cases (4,251 need less 3,608 capacity). The mere existence of that artificially created unmet need would allow the Commission to issue a CON to one or more additional hospitals to conduct open heart surgery in the region.
WHC was, and remains, an affiliate of MedStar, and, on behalf of its affiliate, MedStar challenged the new methodology, contending that it was unauthorized, arbitrary, and capricious. That led to Medstar I, in which this Court, sharply divided, agreed that the “objective, hard evidence” showed that there was either “an excess of capacity over demand or a slight deficit, but not enough of a deficit to justify certification of additional open heart surgery capacity.” Medstar I, supra, 376 Md. at 24-25, 827 A.2d at 97-98. The Court concluded that “the Commission adopted a standard that created a need for additional capacity by disregarding that hard, objective evidence” and thus finding a deficit that was contrary to fact. Id. at 25, 827 A.2d at 98. The Court stated that it could discern no reason for the new methodology other than to promote competition and terminate the dominance of WHC, and declared that the methodology ran afoul of the Commissions’s stated policies and commitment to support a small number of higher volume cardiac service programs. On that ground, the Court effectively invalidated that part of the Commission’s 2001 SHP-Cardiac Services.
*434Medstar I was filed in June, 2003. Work on revisions to the 2001 SHP-Cardiac Services plan had already commenced, but under a somewhat different regime. In its 2001 Session, the General Assembly made a number of modifications to the governing statutes in title 19, subtitle 1, some of which were to implement a shifting of part of the Commission’s planning responsibilities to the Department of Health and Mental Hygiene. See 2001 Md. Laws, ch. 565 (Senate Bill 786); Fiscal Note (Revised) to SB 786; House of Delegates Environmental Matters Committee Floor Report on SB 786; and Maryland Health Care Commission Bill Analysis on SB 786. One of the changes was the deletion in what was former § 19-121 (present § 19-118) of the requirement that the Commission include in its SHP an identification of unmet needs. Under the 2001 (and current) law, the SHP was to include only “[t]he methodologies, standards, and criteria for certificate of need review” and “[p]riority for conversion of acute capacity to alternative uses where appropriate.” § 19-118(a)(2). The Commission’s standards for CON review were still required to address the “availability, accessibility, cost, and quality of health care.” § 19-118(d)(2)(i).
Prior to the enactment of ch. 565, the Commission created an Advisory Committee to study and develop recommendations. The Steering Committee of that Advisory Committee presented its recommendations to the Commission in June, 2003. A draft revised plan was submitted for informal comment in July; comments from eighteen organizations and individuals were received and considered; and, in September, 2003, Commission Staff released its analysis of those comments. At its October 20, 2003 meeting, the Commission discussed and adopted the draft Plan and, in conformance with the relevant requirements of the Administrative Procedures Act, caused it to be published in the Maryland Register and submitted for review to the General Assembly’s Joint Committee on Administrative, Executive and Legislative Review. Following the conclusion of the formal comment period, the Commission held two further meetings. On January 8, 2004, it considered written comments from 89 organizations and *435individuals and heard 31 oral presentations on behalf of 19 organizations. At its February 20, 2004 meeting, following a presentation by its Deputy Director addressing the various comments, the Commission formally adopted the revised plan, to take effect March 15, 2004. See 31 Md. Reg. 449 (March 5, 2004).
As was the case with Medstar I, MedStar let no moss grow on the plan. On the very day it became effective, MedStar filed suit in the Circuit Court for Howard County seeking a declaratory judgment that the plan was invalid. In May, Suburban Hospital, Inc. was allowed to intervene as a defendant and Adventist Healthcare, Inc. (Washington Adventist Hospital) was permitted to intervene as a plaintiff. In March 2005, acting on cross-motions for summary judgment, the court upheld the validity of the 2004 SHP-Cardiac Services, declaring that it was “consistent with the Commission’s statutory authority.” MedStar and Adventist appealed, and we granted certiorari prior to any proceedings in the Court of Special Appeals. We shall affirm the judgment of the Circuit Court.

DISCUSSION

The 2004 SHP-Cardiac Services under attack here maintains its commitment to high volume programs. Policy 1.0 provides that “[tjhere should be a minimum of 200 open heart surgery procedures annually in any institution in which open heart surgery is performed for adult patients.” The minimum for open heart procedures in institutions performing only pediatric open heart surgery is set at 130 annually. See Policy 1.1. Policy 1.5 provides that “[t]he establishment of a new cardiac surgery program should permit existing programs to maintain patient volumes of at least 350 cases or more annually.” The complaint by MedStar and Adventist centers on one provision in the plan dealing with the issuance of a new CON to perform open heart surgery. COMAR 10.24.17.05 B, captioned “Consideration of New Program,” provides, in relevant part:
*436“The Commission will consider a new program in a Regional Service Area under the following circumstances
(1) One or more existing programs in a Regional Service Area have not met the minimum volume standards for the past two consecutive years.
(2) For the purpose of determining compliance with the minimum volume standards, the Commission will not consider the volumes achieved by a newly-approved program during that program’s first two years of operation.”
The basis for that provision is explained in other parts of the Plan. In the section dealing with “Legal Authority and Overview,” COMAR 10.24.17.02 B, the Plan notes that § 19-103(c)(2) gave the Commission a “broad statutory mandate” to “[p]romote the development of a health care regulatory system that provides for all Marylanders, financial and geographic access to quality health care at a reasonable cost.” To achieve that objective, the plan “stresses the importance of access by Maryland residents to quality cardiac surgery programs at a cost that benefits the entire health care system,” and, in that regard, notes that a policy that results in a populous region “having either a very small number of programs that achieve large volumes or having a number of programs that consistently fail to achieve minimum volumes may reflect a sub-optimal balancing of cost, access, and quality.” 4 The explanation continues:
*437“For this reason, the Chapter provides that the Commission can consider applications for a new cardiac surgery service in a region in which one or more providers have failed to meet the minimum volume requirements. Access to a cardiac services program that consistently fails to meet minimum-volume requirements is not considered access to a high quality cardiac surgery program. In those circumstances, the consideration of a new program that must meet minimum volume requirements is appropriate.”
(Emphasis added).5
MedStar views the provision, even with this explanation, as a “fundamental flaw.” Although it seems to have no problem with the policy statements requiring an annual minimum of 200 procedures in hospitals performing adult open heart surgery, and indeed lauded those policies in Medstar I, it now proclaims that “[t]he 200 Surgery Threshold is not among the factors the General Assembly directed the Commission to consider in the CON application process” and that, by adopting under-performance within a Region as an “artificial gatekeeper” for the consideration of any new CON, the Commission has “placed the 200 Surgery Threshold ahead of the statutory factors—availability, accessibility, cost and quality.” Adventist makes a similar argument—that the 2004 plan “ignores hard objective evidence and violates the Commission’s own policies and enabling law by using a meaningless hypothesis that one low volume program in a region equates to a region-wide lack of ‘access’ to quality programs.” In making those *438arguments, appellants have mischaracterized the nature and effect of the provision they challenge.
COMAR 10.24.17.05 is, indeed, a gatekeeper, and that is all that it is. With the “unmet need” criterion from the 2001 plan deleted, there is no reason, under the 2004 plan, for the Commission even to consider a new CON in a region if all of the existing programs in that region are performing at least 200 open heart procedures (or 130 procedures in a pediatric program), and that is all that the challenged provision states. Only if there are one or more programs in the region not meeting the minimum requirement—a requirement that finds a wealth of support in the medical literature and in the record in both this case and in Medstar I—will the Commission even consider a new CON application. The COMAR provision neither discards nor denigrates any other criterion or consideration relevant to the approval of a new CON. It does not place the 200-procedure requirement ahead of any other requirement for a CON.
This is clear from other provisions in the 2004 plan that MedStar and Adventist simply ignore. In the “Statement of Principles” section of the Plan (COMAR 10.24.17.03 B(3)), the Commission declared that “[a]ny expansion in the number or distribution of specialized health care services should allow the proposed and existing services within the Region to achieve and sustain the volumes associated with optimal health outcomes and cost-efficiency.” (Emphasis added). It noted that, when an existing program does not meet the required minimum volumes, the Commission was limited in its responses. Obviously, it has no control whatever over programs operating in the District; nor did it have any authority to withdraw a CON for a Maryland-based program that was issued prior to December 1, 1997. Accordingly, it stated, the Commission would use other strategies to balance access, quality, and cost, including “an examination of actual program utilization and distribution of caseload levels at which it would be appropriate to consider the establishment of a new program to enhance access without negatively impacting system quality and cost ...” (Emphasis added).
*439In the actual “Approval Policies” part of the Plan (COMAR 10.24.17.05 C), the Commission made abundantly clear that under-utilization of one or more existing programs would not alone justify approval of new programs. Approval Policies (2), (3), and (4) state:
“(2) Approval of New Program. The Commission will approve the establishment of a new cardiac surgery program in a Regional Service Area projected to have a stable or declining open heart surgery utilization only if the Commission determines that the establishment of a new program will demonstrably benefit the service area population in access, quality, and/or cost effectiveness, and the value of that benefit is greater than any increased cost that may result from distributing the projected open heart surgery cases over a larger number of programs in the Region.
(3) Number of New Programs Allowed. The Commission will approve only one new adult or pediatric cardiac surgery program at a time in each Regional Service Area. After a new program has been approved the Commission will not consider an additional program in that Regional Service Area until the new program has been in operation for at least three years.
(4) Minimum Volume Standards. The Commission will approve a cardiac surgery program only if an applicant demonstrates that the proposed program can retain sufficient patients to meet the minimum start-up volume of 200 cases annually.”
(Emphasis added).
In furtherance of Approval Policy 2, the Certificate of Need Review Standards (COMAR 10.24.17.06 A and B) require that all applicants for the establishment of a cardiac surgery program “must meet all standards set forth in this section.” Two of those standards are particularly relevant. One, Standard (6)(b), requires that, if one or more programs in the Region are not operating above minimum volumes, the applicant “offer evidence as to why an application should be approved, which should include, but not be limited to, issues of quality, need,, and access.” (Emphasis added). Standard *440(7) requires an applicant for a new open heart program to “provide a detailed description of the manner in which the new program will demonstrably benefit the population of the Regional Service Area in access, quality, and/or cost effectiveness.” (Emphasis added). The documentation must include the identification of any operating cardiac surgery program in the Region that has failed to meet the minimum volume standard in the three most recent calendar years for which discharge abstract data are available and a “detailed description of the evidence and methods used to estimate the potential benefit to the Maryland population in the Region and the potential cost to Maryland of establishing the new program.”
These various provisions demonstrate the limited gatekeeping function of the challenged part of the plan (COMAR 10.24.17.05 B(1)). Unless there is an under-performing program in the Region, no new CON application will be considered; if there is such an under-performing program, the Commission may consider a new application, but may not grant it unless the applicant satisfies the full panoply of requirements, including a demonstration of access, quality, and cost effectiveness. The existence of an under-performing program is in no way a substitute for, or excuses compliance with, the substantive requirements for any new CON. The inclusion of that gatekeeping provision was not haphazardly or capriciously done, but was (1) recommended by the Commission Staff, (2) the subject of comment that was fairly considered by the Commission, and (3) approved for legality by the Attorney General.6
The standard for judicial review of administrative agency regulations is both limited and deferential. We have long espoused the view that, in reviewing regulations, the adoption of which is quasi-legislative in nature, “the judiciary’s *441scope of review is limited to assessing whether the agency was acting within its legal boundaries.” Dep’t of Nat. Res. v. Linchester Sand & Gravel Corp., 274 Md. 211, 224, 334 A.2d 514, 522 (1975); also Fogle v. H & G Restaurant, 337 Md. 441, 454, 654 A.2d 449, 455 (1995). We added in Fogle that “courts should generally defer to agencies’ decisions in promulgating new regulations because they presumably make rules based on their expertise in a particular field” and that “[t]his is especially true of agencies working in the area of health and safety, which rely extensively on their specialized knowledge of that area in promulgating regulations.” Fogle, supra, 337 Md. at 455, 654 A.2d at 456. See also Lussier v. Md. Racing Commission, 343 Md. 681, 690, 684 A.2d 804, 808 (1996).
MedStar’s and Adventist’s protestations notwithstanding, there is clear legislative authority for the Commission’s regulation. Section 19—118(d)(2) not only authorizes, but mandates, that the Commission adopt standards in the SHP that “address the availability, cost, and quality of health care,” and that is precisely what it has done. See also § 19-103(c)(2). It has determined, based on voluminous medical evidence, that programs consistently performing fewer than 200 open heart procedures a year do not constitute high quality programs, and that, where that deficiency exists, it is empowered to consider whether a new program, capable of performing the minimum number of procedures, should be authorized. As we have indicated, the Commission may not actually authorize a new program unless it is assured from the evidence presented in support of the application that the population in the Region will be benefitted in terms of access, quality, and cost. The regulation is fully consistent with the statutory mandate.
JUDGMENT OF THE CIRCUIT COURT FOR HOWARD COUNTY AFFIRMED, WITH COSTS.
BELL, C.J., CATHELL and BATTAGLIA, JJ., Dissent.

. The SHP itself recognizes its dual purpose: to establish health care policy to guide the actions of the Commission and other health-related public agencies, and to serve as “the legal foundation for the Commission’s decisions in its regulatory programs.” See State Health Plan for Facilities and Services: Specialized Health Care Services—Cardiac Surgery and Percutaneous Coronary Intervention Services, incorporated by reference into COMAR 10.24.17.02 A(2) (March 15, 2004). To achieve the second objective, the SHP "contains policies, standards, and methodologies that the Commission uses in making Certificate of Need decisions. Id.

. As we shall point out later, in 2001, the General Assembly transferred much of the general health planning responsibility to the Department of Health and Mental Hygiene.

. The data for 1999 are taken from the record in Medstar I, supra, 376 Md. at 31-32, 827 A.2d at 102. The data for 2000 through 2003 are in the record in this case. At some point in 2003, Georgetown University Hospital was acquired by MedStar, which took over the cardiac services program there. That program was closed by MedStar in 2003. There are thus now only five hospitals performing open heart surgery in the Metropolitan Washington area, two in Maryland and three in the District.

. The concern about the effect on accessibility and cost of having only a “very small number" of programs in a populous area is well illustrated by the data for the Washington Metropolitan Region. For the two most recent years considered by the Commission in the development of the 2004 plan (2001 and 2002), only three hospitals in that Region, which contains almost half the population of the State, had met the minimum number of procedures in both years—Adventist located in Maryland and WHC and Georgetown located in the District, and the Commission was aware that MedStar had terminated the Georgetown program, leaving only two hospitals that would likely maintain the minimum volume. The data for 2003 confirms that prospect. None of the other four hospitals then performing adult open heart surgery in the Region had performed 200 or more procedures in both years. Taking the two years together, that left the entire Region with access to only two “high quality cardiac surgery programfs]."

. That point is made as well in the section of the plan dealing with Issues and Policies (COMAR 10.24.17.04). As an introduction to the minimum procedure Policies (Policies 1.0 through 1.5), the Commission notes:
"The relationship between volume and quality is a key consideration in planning for specialized cardiac care services. For this reason, the Chapter provides that the Commission can consider applications for new cardiac surgery service in a Region in which one or more providers have failed to meet minimum volume requirements. Access to a cardiac service program that consistently fails to meet minimum volume requirements is not considered access to a high quality cardiac surgery program.”

. On December 12, 2003, Assistant Attorney General Kathryn M. Rowe advised a member of the General Assembly that what was then the proposed revision was lawful and not contrary to Medstar I. The views expressed in Ms. Rowe's letter opinion were confirmed in an Opinion of Attorney General J. Joseph Curran and his Chief Counsel for Opinions and Advice, Robert N. McDonald, on January 21, 2004.