Court Opinion

ID: 2744005
Source: CourtListenerOpinion
Date Created: 2014-10-21 12:04:46.085207+00
Date Added: 2024-06-11T09:29:14.361443
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

                                NO. COA14-161
                       NORTH CAROLINA COURT OF APPEALS

                             Filed: 21 October 2014

SURGICAL CARE AFFILIATES, LLC AND
FAYETTEVILLE AMBULATORY SURGERY
CENTER LIMITED PARTNERSHIP,
     Petitioner,

      v.                                        From the Office of
                                                Administrative Hearing
NC DEPARTMENT OF HEALTH AND HUMAN               (Cumberland County)
SERVICES, DIVISION OF HEALTH                    No. 12 DHR 12086
SERVICE REGULATION, CERTIFICATE
OF NEED SECTION,
     Respondent,

and

FIRSTHEALTH OF THE CAROLINAS,
INC.,
     Respondent-Intervenor.
__________________________________

CUMBERLAND COUNTY HOSPITAL
SYSTEM INC. d/b/a CAPE FEAR VALLEY
MEDICAL CENTER,
     Petitioner,

      v.                                      No. 12 DHR 12090

NC DEPARTMENT OF HEALTH AND
HUMAN SERVICES, DIVISION OF
HEALTH SERVICE REGULATION,
CERTIFICATE OF NEED SECTION,
     Respondent,

      and

FIRSTHEALTH OF THE CAROLINAS,
INC.,
                                -2-
     Respondent-Intervenor.
__________________________________

CUMBERLAND COUNTY HOSPITAL
SYSTEMS, INC. d/b/a CAPE FEAR
VALLEY HEALTH SYSTEM,
    Petitioner,

      v.

NC DEPARTMENT OF HEALTH AND HUMAN     No. 12 DHR 12094
SERVICES, DIVISION OF HEALTH
SERVICE REGULATION, CERTIFICATE OF
NEED SECTION,
     Respondent,

and

FIRSTHEALTH OF THE CAROLINAS,
INC.,
     Respondent-Intervenor.

      Appeal by petitioner Cape Fear from Final Decision entered

17 September 2013 by Administrative Law Judge Beecher R. Gray in

the Office of Administrative Hearings.      Heard in the Court of

Appeals 13 August 2014.

      K&L Gates LLP, by Gary S. Qualls, Susan K. Hackney, and
      Steven G. Pine, for petitioner.

      Attorney General Roy Cooper, by Special Deputy Attorney
      General June S. Ferrell and Assistant Attorney General
      Scott T. Stroud, for respondent.

      Nelson Mullins Riley & Scarborough LLP, by Noah H.
      Huffstetler, III, Denise M. Gunter, and Candace S. Friel,
      for respondent-intervenor.
                                          -3-
       ELMORE, Judge.

       Cumberland      County    Hospital       System,   Inc.      d/b/a    Cape       Fear

Valley Health System (Cape Fear) timely appeals from a Final

Decision entered 17 September 2013 by Administrative Law Judge

Beecher    R.   Gray    (the    ALJ),    which      upheld    the    North    Carolina

Department      of   Health     and    Human    Services,     Division       of    Health

Service Regulation, Certificate of Need Section’s (the Agency)

decision to award a Certificate of Need (CON) to FirstHealth of

the Carolinas, Inc. d/b/a FirstHealth Moore Regional Hospital

(FirstHealth) and to deny the competing CON application filed by

Cape Fear.      After careful consideration, we affirm.

                                       I. Background

       This case originates from the need determination in the

2012    State   Medical       Facilities     Plan    (SMFP)    for    28    additional

acute care beds in the Cumberland/Hoke Acute Care Bed Service

Area.     On 15 June 2012, FirstHealth and Cape Fear each filed CON

applications to meet the need for these additional beds.                               On 27

November 2012, the Agency issued its decision to approve the

FirstHealth application.              The Agency concluded that FirstHealth

conformed       to      all      applicable         statutory        criteria            and

administrative       rules,     and    was   comparatively       superior         to    Cape

Fear’s application.           With regard to Cape Fear’s application, the
                                         -4-
Agency, in relevant part, found that Cape Fear non-conformed

with Criteria 20 in N.C. Gen. Stat. § 131E-183(a)(20) because it

failed to demonstrate that it had provided quality care in the

past.

      On    21    December   2012,     Cape    Fear   filed   a    contested   case

petition         challenging     the      Agency’s      decision       to      grant

FirstHealth’s application.             Before the ALJ conducted a hearing

on the comparative analysis of the two applications, Cape Fear

filed   a    motion    for     partial   summary      judgment,     asserting    in

relevant part, that the Agency erred in finding the Cape Fear

application non-conforming with Criteria 20.                      The ALJ granted

Cape Fear’s motion for summary judgment, ruling that the Agency

erred in finding Cape Fear non-conforming with Criterion 20.

After the ALJ granted Cape Fear’s motion, he conducted a hearing

on the Agency’s comparative analysis of the two applications.

On 17 September 2013, the ALJ entered a Final Decision upholding

the   Agency’s      decision     to    approve    FirstHealth’s      application.

Cape Fear filed timely notice of appeal from the ALJ’s Final

Decision.

                                       II. Analysis

a.) Substantial Prejudice
                                      -5-
       First, Cape Fear argues that the ALJ erred by concluding

that Cape Fear was not substantially prejudiced by the Agency’s

decision to deny Cape Fear’s CON application.                   Specifically,

Cape    Fear    avers    that     a       competitive    CON    applicant    is

substantially    prejudiced      as   a    matter   of   law   solely   by   its

denial.   We disagree.

       “In cases appealed from administrative tribunals, we review

questions of law de novo and questions of fact under the whole

record test.”     Diaz v. Div. of Soc. Servs., 360 N.C. 384, 386,

628 S.E.2d 1, 2 (2006).         N.C. Gen. Stat. § 150B-51 (2013) echoes

this rule:

           (b) The court reviewing a final decision may
           affirm the decision or remand the case for
           further proceedings. It may also reverse or
           modify the decision if the substantial
           rights of the petitioners may have been
           prejudiced because the findings, inferences,
           conclusions, or decisions are:

                 (1) In violation             of    constitutional
                 provisions;

                 (2)   In   excess   of   the  statutory
                 authority or jurisdiction of the agency
                 or administrative law judge;

                 (3) Made upon unlawful procedure;

                 (4) Affected by other error of law;

                 (5) Unsupported by substantial evidence
                 admissible under G.S. 150B-29(a), 150B-
                 30, or 150B-31 in view of the entire
                                      -6-
                   record as submitted; or

                   (6) Arbitrary, capricious, or an abuse
                   of discretion.

             (c) In reviewing a final decision in a
            contested case, the court shall determine
            whether the petitioner is entitled to the
            relief sought in the petition based upon its
            review of the final decision and the
            official record. With regard to asserted
            errors pursuant to subdivisions (1) through
            (4) of subsection (b) of this section, the
            court shall conduct its review of the final
            decision using the de novo standard of
            review. With regard to asserted errors
            pursuant to subdivisions (5) and (6) of
            subsection (b) of this section, the court
            shall conduct its review of the final
            decision using the whole record standard of
            review.

Because Cape Fear challenges the ALJ’s legal conclusion that

Cape Fear was not substantially prejudiced as a matter of law,

we review this issue de novo.

    After    the    Agency   denies    a    CON   application,    the   denied

applicant is considered to be an “affected person” under N.C.

Gen. Stat. § 131E-188(c) (2013).            An “affected person” “shall be

entitled to a contested case hearing”               pursuant to N.C. Gen.

Stat. § 131E-188(a) (2013).           However, the “requirement that a

petitioner be an affected person provides only the statutory

grounds   for   and   prerequisites        to   filing   a   petition   for   a

contested case hearing regarding CONs.”              CaroMont Health, Inc.
                                          -7-
v. N. Carolina Dep’t of Health & Human Servs. Div. of Health

Serv. Regulation, Certificate of Need Section, ___ N.C. App.

___, ___, 751 S.E.2d 244, 248 (2013) (citation and quotation

marks     omitted).         “The    actual       framework      for     deciding      the

contested case is governed by Article 3 of Chapter 150B of the

General Statutes.”          Parkway Urology, P.A. v. N. Carolina Dep’t

of   Health    &   Human    Servs.,      Div.    of    Health   Serv.     Regulation,

Certificate of Need Section, 205 N.C. App. 529, 536, 696 S.E.2d
187, 193 (2010) (citation omitted).                   An “affected person” must

show that the Agency substantially prejudiced the petitioner’s

rights by      acting pursuant to any of the grounds in subdivisions

(1)-(6) of N.C. Gen. Stat. § 150B-51(b) above.                        N.C. Gen. Stat.

§ 150B-51(b).

      In CaroMont Health, a denied applicant filed a petition for

a contested hearing to challenge the Agency’s approval of a

competitor’s CON application.             CaroMont Health, __ N.C. App. at

__, 751 S.E.2d at 247.           The ALJ dismissed the petition, in part,

because    the     denied   competitive         CON   applicant       failed   to    show

“that its rights were ‘substantially prejudiced’[.]”                           Id.     On

appeal    to     this   Court,     the   denied       applicant   argued       that   it

demonstrated substantial prejudice “simply by showing that it

was an ‘affected person[.]’”               Id. at __, 751 S.E.2d at 248.
                                          -8-
This    Court   rejected      the     denied    applicant’s         argument,      holding

that its status as an “affected person” did not relieve its duty

to prove substantial prejudice.                Id.

       Similarly,      Cape    Fear    suggests       that     by    merely     being   an

“affected person” under N.C. Gen. Stat. § 131E-188(a), a denied

competitive      CON      Applicant,           it    automatically            establishes

substantial prejudice.               However, our case law, highlighted by

CaroMont above, illustrates that Cape Fear must present other

evidence at a contested case hearing to demonstrate substantial

prejudice—its mere status as a denied competitive CON applicant

alone is insufficient as a matter of law.                            See id; see also

Parkway Urology, 205 N.C. App. at 536-37, 696 S.E.2d at 193

(rejecting appellant’s argument that, simply by virtue of its

“affected person” status, “it was unnecessary for it to show

substantial prejudice to be entitled to relief”).

       Alternatively,         Cape     Fear    argues     that        it     demonstrated

substantial prejudice because it had no further relief from its

“high    utilization       and       occupancy       levels”        after    its   28-bed

application was denied.          We disagree.

       Cape Fear’s argument initially fails because it does not

argue    that    the    Agency        acted     according      to      any    ground    in

subdivision (1)-(6) of           N.C. Gen. Stat. § 150B-51(b).                  Moreover,
                                         -9-
Cape Fear had other options to relieve its alleged capacity

restraints.         At the time of the ALJ’s review, Cape Fear had not

developed two additional acute care bed projects that would have

provided      106    additional     beds.       Also,   based    on   its    present

licensed capacity, Cape Fear could have requested a temporary

increase in its bed capacity by 49 acute care beds.                      See North

Carolina Administrative Code, 10A N.C.A.C. 13B.3111(a) (2013)

(allowing a hospital to request a ten percent temporary increase

in its licensed bed capacity for sixty days).                   Furthermore, Cape

Fear has 129 observation beds that can help with the day-to-day

management of the patient census.                Because Cape Fear had many

other options to relieve its alleged capacity constraints, we

hold   that    Cape    Fear   has     failed    to   demonstrate      that   it   was

substantially prejudiced.

b.) The Britthaven Standard

       Next, Cape Fear argues that the Agency did not perform a

complete and correct Britthaven analysis.                   Specifically, Cape

Fear argues that because the Agency erred in Stage 1 of its

Britthaven analysis (finding Cape Fear non-conforming with the

Criterion 20 Quality issue), the Agency’s Britthaven Stage 2

analysis was tainted.         Accordingly, Cape Fear contends that the

ALJ    could    not    perform    a    proper    Britthaven      analysis,     which
                                                   -10-
constitutes error sufficient to require the Agency to conduct a

second review of Cape Fear’s application.                            We disagree.

       The Britthaven standard sets forth a two-pronged procedure

for     the        Agency         to     review        competing          CON      applications.

Britthaven, Inc. v. N. Carolina Dep’t of Human Res., Div. of

Facility Servs., 118 N.C. App. 379, 385, 455 S.E.2d 455, 460

(1995).            First,     the       Agency       must    “review        each     application

independently            against        the    criteria       (without       considering        the

competing          applications)             and   determine        whether     it    is    either

consistent with or not in conflict with these criteria.”                                         Id.

(citation and internal quotation marks omitted).                                     Second, it

shall       make    “an     overall          comparison       of    the     applications        and

support[]          its     decision           to   grant      the     certificate          to   one

applicant,          and     not        the    other,      with      written     findings        and

conclusions explaining its decision.”                         Id. at 385-86, 455 S.E.2d

at 461.

       Here,        the     Agency           complied       with     the    requirements          of

Britthaven in the 2012 Cumberland-Hoke 28 Acute Care Bed Review

(the Review).             In the Review, the Agency first “consider[ed] all

of    the    information           in    each      application        and     review[ed]        each

application individually against all applicable statutory and

regulatory review criteria[.]”                         Then, the Agency “conducted a
                                    -11-
comparative analysis of the proposals” and concluded that “the

application   submitted     by     FirstHealth      is   approved   and   the

application submitted by [Cape Fear] is disapproved.”

    Cape Fear does not cite any legal authority in support of

its proposition that because the ALJ ruled the Agency erred in

concluding that Cape Fear did not conform with Criterion 20, the

Agency must conduct a second review of Cape Fear’s application.

Pursuant to Cape Fear’s argument, once the ALJ granted partial

summary judgment on the Criterion 20 issue, the ALJ should not

have proceeded with the Stage 2 comparative analysis.               However,

this proposition contradicts case law.              See Living Centers-Se.,

Inc. v. N.C. Dep’t of Health & Human Servs., Div. of Facility

Servs., Certificate of Need Section, 138 N.C. App. 572, 581, 532
S.E.2d 192, 198 (2000)(holding the ALJ erred by 1.) failing to

review the Agency’s “full initial decision” and 2.) issuing her

recommendation   to   the        Agency    “after     only   reviewing    the

conformity of each applicant with the criteria in N.C. Gen.Stat.

§ 131E–183” without conducting a comparative review analysis).

Moreover, Cape Fear’s proposition would have required the ALJ to

remand the matter back to the Agency for a rehearing.               However,

an ALJ has no such authority to remand. See N.C. Gen. Stat. §
                                         -12-
150B-33(b) (2013) (listing the powers of an ALJ).                        Accordingly,

we overrule this argument on appeal.

c.) Taint Flowing Through Comparative Analysis

     Next, Cape Fear argues that because the Agency’s tainted

Stage   1    Britthaven       analysis    infected          the    Agency’s     Stage    2

Britthaven analysis, we should remand this matter to the Agency

for a new review.          We disagree.

     An appellant carries the burden to establish not just that

an   error     occurred          “but    that         the     alleged     error        was

prejudicial[.]”           Bryan Builders Supply v. Midyette, 274 N.C.
264, 272, 162 S.E.2d 507, 512 (1968)                        (citation and internal

quotation    marks        omitted).      An     error       is    prejudicial     if    “a

different result would have likely ensued had the error not

occurred.”     Responsible Citizens in Opposition to Flood Plain

Ordinance v. City of Asheville, 308 N.C. 255, 271, 302 S.E.2d
204, 214 (1983) (citations omitted).

     Here,     the    Agency       conducted      a    Stage      2   analysis    under

Britthaven by comparing the two applicants based on ten factors:

geographic     accessibility,           access         by     underserved        groups,

demonstration        of    need,      financial       feasibility,       competition,

coordination    with       the     existing     healthcare        system,     community

support, revenues, operating expenses, and quality.                         The Agency
                                            -13-
concluded that it could not conclusively compare Cape Fear and

FirstHealth on three of these factors, and it found that the

applications were equally effective on four other factors.                              The

Agency        also     determined       that     FirstHealth         was    comparatively

superior to Cape Fear as to the three remaining factors—quality,

geographic accessibility, and competition.                          Although the Agency

found FirstHealth to be superior on the quality factor, Cape

Fear    argues        that     the    Agency     based      this    conclusion     on    its

erroneous        determination           that        Cape    Fear     non-conformed       to

Criterion 20.          Even if we accept Cape Fear’s contention as true,

this alleged error is harmless because FirstHealth would still

maintain its comparative superiority with regard to two factors,

geographic accessibility and competition.                           See Britthaven, 118
N.C. App. at 383, 455 S.E.2d at 459 (asserting that the Agency’s

error in failing to “comport with the statutory requirements”

during    the        review    process     was       harmless     because   it   did    “not

affect[] the outcome of the Agency decision”).                         Accordingly, any

taint    in     the     Agency’s       Stage     2    Britthaven     analysis     was    not

prejudicial.          Thus, Cape Fear’s argument fails.

 d.) The ALJ’s “de novo” Review

       Next, Cape Fear argues that the ALJ erred by conducting a

de     novo     review        by     “superimposing         new    findings”     onto    the
                                          -14-
comparative    analysis        that       the    Agency     did     not    make.       We

disagree.

      “Under   Chapter    150B,       a    petitioner       is    afforded       a   full

adjudicatory hearing before the ALJ, including an opportunity to

present evidence and cross examine witnesses.”                       Britthaven, 118
N.C. App. at 382, 455 S.E.2d at 459.                    However, “[t]he subject

matter of a contested case hearing by the ALJ is an agency

decision.”      Id.       Accordingly,           “the     purpose     of   the       ALJ’s

determination in a CON case is to review the correctness of the

Department’s decision utilizing the standards enunciated in N.C.

Gen. Stat. § 150B–23(a) rather than to engage in a de novo

review of the evidentiary record.”                 E. Carolina Internal Med.,

P.A. v. N. Carolina Dep’t of Health & Human Servs., Div. of

Health Serv. Regulation, Certificate of Need Section, 211 N.C.

App. 397, 405, 710 S.E.2d 245, 252 (2011).                   Ultimately, the ALJ

must determine whether the petitioner has met its burden in

showing, by the greater weight of the evidence, that the Agency

substantially prejudiced petitioner’s rights by acting outside

its   authority,      acting     erroneously,           acting      arbitrarily        and

capriciously, using improper procedure, or failing to act as

required by law or rule when the Agency denied petitioner’s
                                       -15-
application.      Britthaven, 118 N.C. App. at 382, 455 S.E.2d at

459    (citing N.C. Gen. Stat. § 150B–23(a)).

       If we accepted Cape Fear’s argument on appeal, any finding

made by the ALJ that was not previously made by the Agency would

constitute a review de novo.           Cape Fear misconstrues the meaning

of “de novo.”         “The word de novo means fresh or anew; for a

second   time[,]”      as   if   the   action    had     not    previously      been

decided.      Caswell Cnty. v. Hanks, 120 N.C. App. 489, 491, 462
S.E.2d 841, 843 (1995) (internal citation and quotation marks

omitted).     “A court empowered to hear a case de novo is vested

with   full   power    to   determine    the    issues    and    rights    of   all

parties involved, and to try the case as if the suit had been

filed originally in that court.”               Id. (citation and quotation

marks omitted)        In contrast, here, the ALJ was only reviewing

the    Agency’s   decision.        The    ALJ’s    findings       of   fact     and

conclusions of law were made pursuant to the same criteria and

evidence considered by the Agency.                Such findings, which are

required by statute, were necessary to determine whether Agency

error occurred and do not amount to a review de novo.                     See N.C.

Gen. Stat. § 150B-34(a) (2013).           To otherwise require an ALJ to

make only those findings previously made by the Agency whose
                                      -16-
decision is under review would render the review meaningless.

As such, Cape Fear’s argument is without merit.

e.) Comparative Factors

      Next, Cape Fear argues that the ALJ erred in affirming the

Agency’s comparative analysis of the following factors: access

by    underserved       groups,       geographic     accessibility,          and

competition.    In essence, Cape Fear avers that the Agency lacked

substantial evidence to support its conclusions.               We disagree.

      A party that asserts error based on “the Agency’s findings,

inferences, conclusions, or decisions” as being “[u]nsupported

by substantial evidence admissible . . . in view of the entire

record as submitted[,]” triggers the whole-record test standard

of review.      WakeMed v. N. Carolina Dep’t of Health & Human

Servs., Div. of Health Serv. Regulation, __ N.C. App. __, __,

750 S.E.2d 186,   189   (2012),    review   denied,   __    N.C.   __,   743
S.E.2d 204, 205 (2013).           The whole-record test requires this

Court to:

            determine whether the Agency’s decision is
            supported by substantial evidence—relevant
            evidence   that  a  reasonable  mind   could
            conclude supports a decision. Significantly,
            we may not substitute our judgment for that
            of the Agency’s regardless of whether the
            record contains evidence that could support
            a conclusion different than that reached by
            the Agency.
                                               -17-
Id. at __, 750 S.E.2d at 190 (citations omitted).

      We now discuss each of the comparative factors challenged

by Cape Fear.

      1. Access by Underserved Groups

      Cape Fear argues that the Agency erred by “disregarding the

extent   to    which        [Cape       Fear]    was     comparatively       superior       to

[FirstHealth]” regarding access to underserved groups because

Cape Fear projected higher Medicaid access.                            Accordingly, Cape

Fear argues that it was comparatively superior to FirstHealth on

this factor, not merely comparable as ruled by the Agency and

subsequently affirmed by the ALJ.                     We disagree.

      Here,     the       Agency’s       finding        that     the    applicants        were

comparable as to servicing Medicare recipients is undisputed,

but the Agency also found that Cape Fear would provide 24.6% of

its   services       to     Medicaid       recipients          compared    to     10.4%    for

FirstHealth.              However,        Cape        Fear’s     facility       “offere[ed]

obstetrical         services,       a     service       which      often     has    a     high

percentage     of     Medicaid          recipients.       In     contrast,      obstetrical

services   will       not    be     offered      at     [FirstHealth].”            Moreover,

evidence      was     presented         that     Cape     Fear’s       Medicare     Provider

Agreement was at risk of revocation.                      According to the Agency’s

Chief, actual revocation of the agreement would result in Cape
                                          -18-
Fear’s inability “to live up to their projections” for both

Medicaid and Medicare recipients.                 Thus, the Agency’s decision

to not find Cape Fear conclusively superior to FirstHealth as to

this comparative factor was supported by substantial evidence

due    to    the   fundamental      differences         in    the    services      offered

between      the   two    applicants      and     the    status       of    Cape   Fear’s

Medicare      Provider    Agreement.        Thus,       the    ALJ    did    not   err   by

affirming the Agency’s decision.

2.Geographic Accessibility

       Cape    Fear      argues   that      the    Agency’s          bed-to-population

analysis      in   determining       that    FirstHealth            was     comparatively

superior in geographic accessibility was erroneous, and the ALJ

erred in affirming the Agency’s decision.                     We disagree.

       Here, the Agency indicated that Cumberland County had 555

existing or approved acute care beds.                   Out of the 555 beds, 490

are located at Cape Fear in Fayetteville, with the remaining 65

located at Cape Fear North about 12 miles away in a different

part    of    Fayetteville.         Hoke     County,         however,       only   had   49

existing or approved acute care beds, with 41 approved beds at

Cape Fear’s Hoke County location and 8 beds at FirstHealth Hoke.

The Agency then calculated the current ratio of existing and

approved      acute   care   beds    to     the   population         in     each   county,
                                          -19-
respectively based on 2016 population data.                       The calculation

showed that the ratio in Cumberland County was 1 acute care bed

per 608 people, and 1 acute care bed per 1,132 people in Hoke

County.     Accordingly, the Agency determined that by awarding the

28 acute care beds to FirstHealth, the total number of approved

beds in Hoke County would increase to 77, which would result in

1 acute care bed for every 720 people in Hoke County.                             Such

relevant evidence reasonably supports the Agency’s decision that

FirstHealth      was     comparatively            superior        in      geographic

accessibility.

    We also note that Cape Fear does not argue the inaccuracy

of the Agency’s calculations but merely states that the Agency

should have used a different analysis, one that incorporated in-

migration,    out-migration,         and    acuity.      Although         Cape    Fear

disagrees with the Agency’s methodology, it fails to show that

the Agency’s approach constituted error.                Thus, the ALJ did not

err in affirming the Agency’s decision.

3.Competition

    Cape      Fear   also        argues    that   the   Agency         exceeded    its

statutory    authority      in    using    “competition”     as    a     comparative

factor because both applicants were existing providers, and the

ALJ erred by affirming the Agency’s decision.                We disagree.
                                          -20-
       We review this issue on appeal de novo, “freely able to

substitute our judgment for that of the Agency.”                     Total Renal

Care Of N. Carolina, LLC v. N. Carolina Dep’t of Health & Human

Servs., Div. of Facility Servs., Certificate of Need Section,

171 N.C. App. 734, 740, 615 S.E.2d 81, 85 (2005).                     While this

Court will give some deference to an Agency’s interpretation of

a statute, it is not binding.              Id. (citation and quotation marks

omitted).        “The weight of such an interpretation in a particular

case      will    depend    upon    the     thoroughness     evident      in   its

consideration, the validity of its reasoning, its consistency

with earlier and later pronouncements, and all those factors

which give it power to persuade, if lacking power to control.”

Id. (citation and quotation marks omitted).

       Cape Fear’s argument lacks merit.              Cape Fear has provided

no legal authority to support its assertion that “competition”

is only a relevant factor when one of the applications is a new

provider to the area.         The Agency is free to use any comparative

factor it deems applicable during a comparative analysis.                      See

Parkway Urology, 205 N.C. App. at 547, 696 S.E.2d at 199 (“There

is   no   statute    or    rule   which    requires   the   Agency   to   utilize

certain comparative factors.”).
                                        -21-
      Additionally,       N.C.    Gen.       Stat.     §    131E-183(18a)         (2013)

contemplates      “competition”        as     a   valid     consideration        in   the

Agency’s decision to grant a certificate of need application:

“The applicant shall demonstrate the expected effects of the

proposed services on competition in the proposed service area,

including   how    any    enhanced      competition         will    have   a   positive

impact upon the cost effectiveness, quality, and access to the

services    proposed[.]”          As        such,    this    Court     has       accepted

“competition” as a relevant factor during comparative analysis

of certificate of need applications.                 See Total Renal Care, 171
N.C. App. at 741, 615 S.E.2d at 85 (holding that the Agency “did

not exceed its statutory authority in using enhanced competition

and consumer choice as key factors in a comparative analysis”).

      Moreover, “competition” is certainly a relevant factor in

this case because Cape Fear controlled 596 of the 604 existing

or approved acute care beds in the Cumberland/Hoke Acute Care

Bed   Service     Area,     while       FirstHealth         only     controlled       the

remaining 8 beds.         While Cape Fear also argues that the Agency

should   have     considered      a    broader      service        area,   the    Agency

properly    considered     only       the    Cumberland/Hoke         Acute     Care   Bed

Service Area as articulated in the SMFP needs determination.

See North Carolina Administrative Code, 10A N.C.A.C. 14C.0402
                                      -22-
(“The    correctness,   adequacy,         or   appropriateness         of    criteria,

plans, and standards shall not be an issue in a contested case

hearing.”).

       Thus, the Agency did not exceed its statutory authority by

utilizing competition as a comparative factor.                       The Agency also

reasonably     concluded       that       an     approval       of     FirstHealth’s

application was superior with regard to increasing competition.

Accordingly,    the   ALJ     did   not    err    in    affirming      the     Agency’s

decision.

f.) FirstHealth’s Conformity with Review Criteria

       Finally, Cape Fear argues that the Agency erred in finding

that    FirstHealth’s    application           conformed    to       certain    review

criteria, and therefore, the ALJ erred by affirming the Agency’s

decision.    We disagree.

       Fatal to Cape Fear’s position is its failure to present any

evidence from the record that would suggest the Agency exceeded

its     authority,    acted     erroneously,           failed    to     use     proper

procedure, acted arbitrarily or capriciously, or failed to act

as required by law.           See N.C. Gen. Stat. § 150B-23(a).                     To

successfully challenge the Agency’s decision, a petitioner must

first “state facts tending to establish that the agency acted

unlawfully for one or more of the specific reasons” set forth in
                                       -23-
N.C. Gen. Stat. § 150B-23(a). E. Carolina Internal Med., 211
N.C. App. at 410, 710 S.E.2d at 255 (citation and quotation

marks omitted).         The facts alleged by Cape Fear, however, are

either speculative or irrelevant to the issue of agency error.

       First, Cape Fear argues that FirstHealth failed to conform

to    Criterion   (1)    because    FirstHealth    proposed    to   shift   some

patients from its facilities in the Moore/Hoke Service Area to

the Cumberland/Hoke Service Area.              Criterion (1) requires that

the proposed project “be consistent with applicable policies and

need    determinations      in   the   State   Medical   Facilities    Plan[.]”

N.C. Gen. Stat. § 131E-183(a)(1) (2013).             The need determination

defines the general area in which the beds must be located but

does not restrict where the patients who will be treated in

those beds will reside.            Rather, it is up to the applicant to

define     patient     origin.     Therefore,    FirstHealth’s      proposal    to

shift some patients from FirstHealth Moore to FirstHealth Hoke

was not relevant to the Agency’s analysis under Criterion (1).

       Second, Cape Fear claims that FirstHealth “inappropriately

included tertiary level services in its utilization assumptions

for    a   community    hospital,”     thereby   overstating   its    projected

utilization and rendering its application non-conforming.                      Yet

Cape Fear does not direct our attention to any portion of the
                                          -24-
record that reveals FirstHealth included tertiary services in

its utilization assumptions, and it violates N.C. R. App. P.

28(b)(6) by failing to do so.                    See N.C. R. App. P. 28(b)(6)

(2007) (“Evidence or other proceedings material to the issue may

be   narrated    or    quoted      in    the     body    of    the     argument,   with

appropriate reference to the record on appeal, the transcript of

proceedings, or exhibits.”); see also Hudgins v. Wagoner, 204

N.C.    App.    480,   496,     694 S.E.2d 436,    448     (2010)    (noting

defendants’     violation     of    Rule       28(b)(6)      where    they    failed   to

support an assertion “with any reference to the multi-volume

transcript of the proceedings at trial or to the record”).

       Notwithstanding      Cape        Fear’s     appellate         rules    violation,

FirstHealth’s     application           specifically      states:       “By    excluding

services that are not planned to be provided at [FirstHealth

Hoke] because of the capacity of the hospital, the availability

of a medical or surgical specialist, and/or the need for the

patient to receive care at a tertiary care facility, FirstHealth

is decreasing the number of inpatient and inpatient days of care

that are available to ‘shift’ to [FirstHealth Hoke].”

       Third,   Cape   Fear     alleges        that     FirstHealth’s        application

projected utilization figures that were “impossible” to achieve

with the one operating room it had been approved for at the time
                                             -25-
of the review.          Yet again, Cape Fear has failed to support its

argument with any facts or direct our attention to any relevant

portion    of     the        record     to    demonstrate             that        FirstHealth’s

projected utilization figures were “impossible” to reach with

only one approved operating room.

     As    Cape    Fear        has    failed        to       “state     facts       tending     to

establish”      agency       error    with    respect          to     any    of    the    reasons

enumerated      under    N.C.        Gen.    Stat.       §    150B-23(a),          Cape   Fear’s

arguments fail.

                                     III. Conclusion

     In sum, we affirm the ALJ’s Final Decision.                                  Cape Fear has

failed    to    show    that    it     was    substantially            prejudiced         by   the

Agency’s decision, neither the Agency nor the ALJ violated the

Britthaven       Standard,       any        error        flowing        to    the        Agency’s

comparative analysis would be harmless, the ALJ did not conduct

a de novo review of the Agency’s decision, the ALJ did not err

in   affirming         the     Agency’s       finding           that        FirstHealth        was

comparatively superior to Cape Fear, and Cape Fear failed to

show that FirstHealth non-conformed with the Review Criteria.

     Affirmed.

     Judges CALABRIA and STEPHENS concur.
                         -26-
Report per Rule 30(e).