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In re Adoption of Regulations Governing State Health Plan

Decided: February 10, 1993.

IN THE MATTER OF THE ADOPTION OF REGULATIONS GOVERNING THE STATE HEALTH PLAN, N.J.A.C. 8:100, ET SEQ.


On appeal from the Department of Health.

Antell, Dreier and Skillman. The opinion of the court was delivered by Skillman, J.A.D.

Skillman

This appeal involves the constitutionality of the part of chapter 31 of the Laws of 1992, N.J.S.A. 26:2H-5.8(a), which restricts the authority of the Department of Health to adopt regulations relating to the issuance of certificates of need.

To place this issue in proper perspective, it is necessary to set forth the history of the legislation authorizing the certificate of need regulatory program and the events leading up to the enactment of chapter 31. On May 10, 1971, the Legislature enacted the Health Care Facilities Planning Act, L. 1971, c. 136, N.J.S.A. 26:2H-1 to -26, which confers broad authority upon the Department of Health over health planning.

One of the central provisions of the Act was a requirement that "[n]o health care facility shall be constructed or expanded, and no new health care services shall be instituted . . . except upon . . . receipt of a certificate of need." L. 1971, c. 136, § 7; N.J.S.A. 26:2H-7. The Act provided legislative standards to govern the Department of Health's review of applications for certificates of need:

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.

[ L. 1971, c. 136, § 8; N.J.S.A. 26:2H-8.]

The Act also set forth other more specific considerations to guide the Department's review of certificate of need applications. Ibid. In addition, the Act authorized the Commissioner of Health to adopt "criteria and standards" for the issuance of certificates of need. L. 1971, c. 136, § 9; N.J.S.A. 26:2H-9.

On July 1, 1991 the Legislature amended the Health Care Facilities Planning Act by enacting the Health Care Cost Reduction Act, L. 1991, c. 187. This amendment established a new agency within the Department of Health, called the State Health Planning Board, N.J.S.A. 26:2H-5.7, and directed the Board to prepare a "State Health Plan." L. 1991, c. 187, § 34; N.J.S.A. 26:2H-5.8(a). The amendment provided that "[t]he State Health Plan shall identify the unmet health care needs in an area by service and location and it shall serve as the basis upon which all certificate of need applications shall be approved." Ibid. To conform with this new provision, N.J.S.A. 26:2H-8 was amended to provide that "[n]o certificate of need shall be issued unless the action proposed in the application for such certificate is consistent with the health care needs identified in the State Health Plan . . . ." L. 1991, c. 187, § 31. In addition, the amendment required the Department to adopt the State Health Plan pursuant to the Administrative Procedure Act (APA), subject to the approval of the Health Care Administration

Board (HCAB). L. 1991, c. 187, § 34; N.J.S.A. 26:2H-5.8(a).

Pursuant to this legislation, the Planning Board drafted several portions of a proposed State Health Plan. Following its review of this draft, the Department of Health proposed that certain parts of the Plan be adopted as regulations. On April 6, 1992, the proposed new regulations, which addressed seven substantive areas, were published in the New Jersey Register as N.J.A.C. 8:100-1 to -18.18, 24 N.J.R. 1164. Thereafter, the Department held public hearings and received voluminous written comments regarding the proposed regulations. See Summary, 24 N.J.R. 2562-65. The HCAB approved the regulations on June 18, 1992 and the Commissioner of Health adopted them on June 25, 1992.

Four days later, on June 29, 1992, the Legislature amended the Health Care Cost Reduction Act and Health Care Facilities Planning Act over the Governor's veto by enacting chapter 31. This legislation amends N.J.S.A. 26:2H-5.8 to delete the requirements that the State Health Plan serve as the basis for all certificate of need applications and that it be adopted pursuant to the APA. Instead, chapter 31 provides that the Plan will serve as "an advisory document, which may be considered when certificate of need applications are reviewed for approval." N.J.S.A. 26:2H-5.8(a). In addition, chapter 31 imposes a restriction upon the Department's authority to adopt regulations, which reads as follows:

Effective May 15, 1992, notwithstanding any other provision of law to the contrary, neither [HCAB] or the Department of Health shall adopt any regulation which implements any goals, objectives or any other health planning recommendations that have been included in the State Health Plan prepared by the State Health Planning Board.

[ N.J.S.A. 26:2H-5.8(a).]

Chapter 31 also amends N.J.S.A. 26:2H-5.8(b) and 26:2H-8 to reflect the new advisory status of ...


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