Court Opinion

ID: 4714960
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:42:49.125129+00
Date Added: 2024-06-11T08:07:25.116178
License: Public Domain

C. Johnson, J.
¶38 (dissenting) — The majority allows the Washington State Department of Health to essentially reward an applicant with the license to which it was not legally entitled because the department was sued. Here, until the federal lawsuit was filed, the department’s consistent and correct legal position in this case was that historical data up to the application deadline determined future need. This position is compelled by the applicable statutes and regulations. The department applied and defended this position in reaching its initial decision and throughout agency adjudications and appeals. That decision was challenged and correctly upheld in the trial court and the Court of Appeals in Odyssey I.11 Yet, when confronted with a separate federal lawsuit for monetary damages, the department changes its position and decides it is not bound by the decision it has steadfastly defended, even though nothing about the statutes or regulations changed. And this about-face is especially egregious here because *383this change in position denied interested parties their statutory rights and their opportunity for meaningful participation. Such action is the very definition of arbitrary and capricious decision-making and is contrary to the law. The trial court correctly recognized the peculiarity of the State’s argument, vacated the certificate of need, and remanded with directions to, in essence, follow the law. We should do the same.
¶39 The majority applies the wrong standard of review and resolves this case under the discretion generally afforded administrative law judges to determine what evidence to consider. Within this discretion, reasons the majority, the health law judge (HLJ) could consider the “special circumstance” that “2008 need data” was not available until after the application deadline. But this is not remarkable or special and is largely irrelevant to the actual “special circumstance” in this case. The question, properly framed, is whether the settlement of a separate lawsuit, claiming monetary damages, can be a “special circumstance” that allows the agency to abandon the statutory and regulatory requirements, the “facts” of the case, and the agency’s consistent legal position throughout.
¶40 The “special” circumstance relied on by both the agency and the majority, and the unavailability of the 2008 data by the application deadline, is not actually special at all. Circumstances will often change after the fact and cannot be “special.” As the department admits and the majority recognizes, when WAC 246-310-290 was adopted, it provided that need data would be available before the application deadline, not at some future date. However, in the department’s own words, these “assumptions proved incorrect, meaning that applicants unfortunately had to apply without knowing whether need existed.” Clerk’s Papers at 338. This situation was not unique to Odyssey Healthcare Operating B LP and Odyssey Healthcare Inc. (collectively Odyssey), and as such, the department’s after-the-fact reliance on the lack of timely 2008 data was an *384improper departure from specific department rules and regulations. Ch. 70.38 RCW; ch. 246-310 WAC.
¶41 But more importantly, even if this were a special circumstance, whether Odyssey was somehow prevented from submitting a 2008 application should have no bearing on whether need existed when the application was filed. The agency had determined years earlier that no need existed, basing that decision on the 2006 data, a proposition that remains undisputed. The HLJ was not considering facts that somehow changed this underlying information. Rather, Odyssey was able, in exchange for settling a lawsuit, to achieve something to which it was not legally entitled. Essentially, any “new” finding of need was not triggered by a change in the original data, but by the threat of federal litigation. The majority now allows Odyssey to use the leverage gained by litigation as a way to bypass the application process and delay the proceedings until a time when favorable data is produced, a tactic that not only prejudices other interested parties but also completely abandons the statutory and regulatory requirements.
¶42 The majority’s reliance on University of Washington Medical Center v. Department of Health, 164 Wn.2d 95, 187 P.3d 243 (2008) (UWMC), is also misplaced. There, we answered the question of whether an HLJ could set an evidentiary cutoff, finding that these decisions fell within the HLJ’s discretion. Importantly, however, UWMC involved limiting the record, not expanding it indefinitely. Thus, it has little relevance to our case today other than for the undisputed proposition that an HLJ has discretion on evidentiary determinations. Additionally, the excluded evidence in UWMC applied to the time period covered by the initial application. But, as discussed above, the 2008 need data is not additional evidence bearing on the 2006 application. Accordingly, UWMC is inapplicable in this case.
¶43 The majority’s reasoning also skirts the issue as to the meaning of RCW 70.38.115(10)(c), which was the foun*385dation of the Court of Appeals’ decision.12 The provision permits the department to settle with an applicant prior to the conclusion of an adjudicative proceeding, provided that notice and an opportunity to comment are given to other interested parties. None of this applies here. The majority reasons that because the petitioners were given notice and an opportunity to comment, the department’s settlement stands. But this reasoning creates a loophole in the application procedures and allows circumvention of the legal requirements. Had Odyssey been granted a certificate of need when it first applied, petitioners would likely have been entitled to an adjudication under the Administrative Procedure Act, chapter 34.05 RCW. RCW 70.38.115(10)(b)(iii); St. Joseph Hosp. & Health Care Ctr. v. Dep’t of Health, 125 Wn.2d 733, 742, 887 P.2d 891 (1995). Now, however, petitioners are denied the opportunity for an adjudication because the approval comes in the form of a “settlement” rather than outright approval of the application.
¶44 This result is especially troubling when the legislative history of RCW 70.38.115(10)(c) is considered. The provision was passed roughly seven months after we issued our decision in St. Joseph Hospital and appears to have simply codified our holding that the department must notify opponents of any settlement and allow them an opportunity to comment. In addition to the striking similarity between the holding in St. Joseph Hospital and RCW 70.38.115(10)(c), the final bill report states that the “interested party must also be afforded an opportunity to comment in advance of any proposed settlement.” Final B. Rep. on Engrossed Second Substitute H.B. 1908, at 8, 54th Leg., 1st Spec. Sess. (Wash. 1995) (emphasis added). The use of “also” means that the rights in RCW 70.38.115(10)(c) are additional to an opponent’s right to a full adjudication when *386an application is approved. That statutory requirement was avoided here.
¶45 When these issues are considered in tandem with the department’s clear disregard for the regulations and policies regarding the use of past data to determine future need, the HLJ’s decision is especially egregious. The department has consistently considered and relied on data from prior years in determining whether a current need exists. This was the practice used by the department for years, affirmed in Odyssey I,13 and advocated by the department in the federal litigation. Odyssey and all interested parties understood and relied on these practices. Then, when confronted with a separate lawsuit, the department acquiesces, creates an irrelevant “special circumstance,” and allows circumvention of the legal requirements. The HLJ then summarily, without allowing statutorily required process, rubber stamps the department’s decision. Approval of Odyssey’s application is completely inconsistent with the department’s established and, before now, ardently defended practices required under the law. It was arbitrary and capricious and contrary to the law. We should reverse the Court of Appeals’ decision, revoke the certificate of need, and remand to the agency with instructions to follow the law.
Stephens, J., concurs with C. Johnson, J.

 Odyssey Healthcare Operating B, LP v. Dep’t of Health, 145 Wn. App. 131, 135, 185 P.3d 652 (2008).

 King County Pub. Hosp. Dist. No. 2 v. Dep’t of Health, 167 Wn. App. 740, 751-52, 275 P.3d 1141 (2012).

 Odyssey I, 145 Wn. App. at 135.