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Merry Heart Nursing and Convalescent Home Inc. v. Dougherty

Decided: December 4, 1974.


Leonard, Seidman and Bischoff. The opinion of the Court was delivered by Bischoff, J.A.D.


Plaintiff-appellant operates a private nursing home in Succasunna, Roxbury Township, Morris County, and has a licensed capacity of 61 beds. On March 21, 1972 plaintiff submitted an application to the New Jersey Department of Health pursuant to N.J.S.A. 26:2H-10, seeking a certificate of need granting permission to add 34 beds to its facilities. By letter dated August 15, 1972 the Commissioner of the Department of Health informed plaintiff he was recommending to the Health Care Administration Board (HCAB) that this application be denied for the reason that there was no need for additional beds of this type in the region where plaintiff's facilities were located. Plaintiff requested and was granted a hearing pursuant to N.J.S.A. 26:2H-9, which was held February 6, 1974. The only issue litigated at the hearing was whether there was a need for additional beds in plaintiff's region.

The record of the hearing indicates that a state plan for health care services pursuant to N.J.S.A. 26:2H-1 et seq. was published in the New Jersey Register March 9, 1972. This plan contained data compiled through March 31, 1971. Prior to 1973 the plan used for the purposes of this statute was the one developed for participation in the Hill-Burton Program pursuant to 42 U.S.C.A. § 291d. The plan was reviewed annually thereafter pursuant to 42 U.S.C.A. § 291d(a)(12). The plan published on March 9, 1972 showed a need in plaintiff's region for 336 additional beds of the type which it proposed to furnish. The plan was thereafter updated annually, the first update being June 29, 1972 (after plaintiff's application was filed). However, this update was not published in the New Jersey Register as was the original plan. From the time of the compilation of the first plan to the update of June 29, 1972, 460 beds had been added in plaintiff's region, resulting in an excess of available beds and eliminating the need for the construction of additional facilities. On objection to this evidence the hearing officer ruled that plaintiff's petition for a certificate

of need was to be judged on the basis of statistics reflected in the plan published on March 9, 1972, and not on the basis of unpublished updated information available as of June 29, 1972. He accordingly recommended to the Commissioner of Health that a certificate of need be issued to plaintiff.

Respondent moved before the HCAB to vacate the recommendations of the hearing officer and for a remand to the hearing officer to permit introduction into evidence of statistics developed after the publication of the plan in March 1972. Respondent made a proffer of facts to the HCAB which it sought to introduce on the remand. This proffer included the following: that on June 29, 1972 the Department's Office of Health Facilities Services Board updated the figures in the 1971 state plan; that "these updated figures on available services and facilities, their usage and other numerical information provided in the state plan were sent to regional planning agencies having the responsibility of reviewing certificate of need applications at the local level; "that these figures were available to any member of the public wishing to read them, in compliance with N.J.S.A. 47:1A-1 et seq., the Right to Know Act; that plaintiff's region "now had an excess of 128 more skilled nursing beds than necessary"; that several planning bodies had recommended that plaintiff not be granted a certificate of need on the basis of current information; that the state plan was again updated on October 1, 1972, with the resulting statistics being made available to regional agencies and the public; that updating of the statistics continues on a quarterly basis and that the 1973 state plan, which was published in the New Jersey Register on May 10, 1973, provides for quarterly and annual updates.

Plaintiff objected to respondents' motion before the HCAB on jurisdictional grounds*fn1 and on grounds that the HCAB

could not properly consider evidence contained in the proffer of respondent as it was not in the record made before the hearing officer. The HCAB ruled that the record developed before the hearing officer did not contain sufficient competent evidence to permit it to reach a final determination and remanded the matter to the hearing officer with directions to accept testimony regarding the update of the plan.

Plaintiff appeals from that decision.

We note preliminarily that plaintiff appeals from an interlocutory order. Plaintiff should have applied, pursuant to R. 2:2-4, for leave to appeal. We grant such leave nunc pro tunc and proceed to a consideration of the merits.

While this appeal was pending respondent moved to dismiss it on the ground plaintiff had not exhausted its administrative remedies; specifically, that the hearing provided by the Director's order of remand had not been held. The motion was dismissed. Respondent again urges that contention and again we reject it. The doctrine of exhaustion of administrative remedies is neither jurisdictional nor an absolute requirement. "Where the disposition of a matter depends solely upon the decision of a question of law, the interests of justice do not require the exhaustion of administrative remedies before resort may be had to the courts." Caldaro v. Ferber, 74 N.J. Super. 128, 132 (App. Div. 1962), rev'd on other grounds, 39 N.J. 314 (1963); Nolan v. Fitzpatrick, 9 N.J. 477, 486-487 (1952). The issues raised by this appeal are purely legal and the facts raising the issues are undisputed.

The basic contention of plaintiff is that the admission of updated statistics in the remanded hearing would deprive it of due process of law, for to do so would be to admit into evidence an invalid amendment to the state plan not properly ...

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