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National Nephrology Foundation v. Dougherty

Decided: January 12, 1976.

NATIONAL NEPHROLOGY FOUNDATION, APPELLANT,
v.
WILLIAM J. DOUGHERTY, COMMISSIONER OF HEALTH, ST. BARNABAS MEDICAL CENTER AND MORRISTOWN MEMORIAL HOSPITAL, RESPONDENTS. NATIONAL NEPHROLOGY FOUNDATION, APPELLANT, V. JOANNE E. FINLEY, COMMISSIONER OF HEALTH, AND HEALTH CARE ADMINISTRATION BOARD, RESPONDENTS



Carton, Crahay and Handler. The opinion of the court was delivered by Carton, P.J.A.D.

Carton

The Acting Commissioner of Health granted to St. Barnabas Medical Center, on May 2, 1974, a certificate of need for the operation of an intermediate renal dialysis facility in the Morris County area. On the same date he rejected separate applications by the National Nephrology Foundation (National) and Morristown Memorial Hospital to operate an intermediate renal dialysis unit in the same area.

National appeals (National I) the action of the Acting Commissioner of Health granting the certificate of need to St. Barnabas. In the consolidated case (National II) National appeals the June 1975 decision of the Health Care Administration Board (HCAB) affirming the denial to National of a certificate of need. The Commissioner's decision to grant a certificate is a final one and hence appealable here as of right. The Commissioner's decision not

to grant a certificate is, however, subject to review by the HCAB. Hence the bifurcation of the application process.

The State's role in cases of this kind is set forth in the Health Care Facilities Act of 1971 (N.J.S.A. 26:2H-1 et seq.). Under that act no health care facility may be constructed or expanded unless a certificate of need for the facility is issued by the Commissioner of Health. The statute establishes criteria for the granting of such certificates (N.J.S.A. 26:2H-8), the review procedure to be followed (N.J.S.A. 26:2H-9), and the application procedure (N.J.S.A. 26:2H-10).

The statute governs the issuance of certificates as follows:

No certificate of need shall be issued unless the action proposed in the application for such certificate is necessary to provide required health care in the area to be served, can be economically accomplished and maintained, and will contribute to the orderly development of adequate and effective health care services. In making such determinations there shall be taken into consideration (a) the availability of facilities or services which may serve as alternatives or substitutes, (b) the need for special equipment and services in the area, (c) the possible economies and improvement in services to be anticipated from the operation of joint central services, (d) the adequacy of financial resources and sources of present and future revenues, (e) the availability of sufficient manpower in the several professional disciplines, and (f) such other factors as may be established by regulation. The commissioner shall cause appropriate surveys and studies to be made concerning the need for health care facilities and keep current records and statistics thereon by designated areas or regions of the State. * * * [ N.J.S.A. 26:2H-8]

These criteria have been elaborated via regulation. N.J.A.C. 8:33-1.6, especially relevant to the arguments here advanced, provides:

Before a new health care facility is expanded or a new facility is approved, the Commissioner shall determine that a need exists which cannot be adequately and more economically met by a similar health care facility.

The application review process encompasses several distinct agencies. The statute commands that:

The commissioner shall recognize the State Health Planning Council, the comprehensive area-wide health planning agencies and area planning councils as the recommending agencies in carrying out ...


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