On appeal from the Final Decision of New Jersey Commissioner of Health.
Shebell, Long and Landau. The opinion of the court was delivered by Shebell, P.J.A.D.
This is an appeal, brought by St. Joseph's Hospital and Medical Center (St. Joseph's) of Paterson, from the Commissioner of Health's (Commissioner) approval and modification of certificate of need No. 901018-14-01, granted to Chilton Memorial Hospital (Chilton), to establish radiation therapy services at its Pompton Plains facility. We reverse the Commissioner's November 17, 1992 amendment of the May 16, 1991 order granting the certificate of need and we remand to the Commissioner.
In the spring of 1990, Chilton filed an application for a certificate of need to acquire a linear accelerator radiation therapy device. It was approved by the Health Systems Agency (HSA) II,
Regional Health Planning Council's Board and Review Committee. There were, however, comments and issues raised by the State staff and the Statewide Health Coordinating Council (S.H.C.C.). Based upon these suggestions, Chilton withdrew its application in order to replan and restructure. The President of Chilton, on September 18, 1990, wrote to the President of St. Joseph's advising that Chilton would be submitting a revised certificate of need for a low voltage unit and that Chilton would be interested in developing an affiliation with St. Joseph's. Under the proposal, Chilton would refer super voltage patients and patients requiring surgical radiation to St. Joseph's. The proposal was reiterated in another letter to St. Joseph's on November 8, 1990.
On December 5, 1990, Chilton wrote to the Regional Health Planning Council advising that Chilton and St. Joseph's had worked out an agreement regarding a joint affiliation in order to provide radiation therapy on site at Chilton. The agreement, entitled "Agreement on Principles Related to Joint Radiation Therapy Program Between St. Joseph's Hospital and Medical Center and Chilton Memorial Hospital" (Agreement), provided, among other things, that:
3. St. Joseph's will provide the physicists and dosimetrists. . . .
4. The process of treatment planning which includes the localization of the tumor on a simulator and a drawing of the fields will be done at St. Joseph's Hospital and Medical Center. The treatment will be done at Chilton Memorial Hospital. St. Joseph's simulator is among the first of its sophistication and can outline the shape of a tumor with unprecedented accuracy.
5. All patients requiring part or all of their treatment on a high energy linear accelerator will be treated at St. Joseph's, and the contract between Chilton Memorial Hospital and their chief of radiation therapy will specify that this is so.
According to St. Joseph's, it dropped its opposition to Chilton's application for a certificate of need based on the Agreement formed with Chilton.
On December 5, 1990, Chilton sent a copy of the Agreement to the Chief of Health Policy, Planning and CON Program. In his letter, the President of Chilton stated that Chilton hoped it would
receive a positive recommendation for approval of the application for a certificate of need. He emphasized that no providers of radiation therapy were objecting to the application.
On December 7, 1990, Chilton's attorney wrote to the Chief requesting a waiver from the requirement that all facilities within the region meet minimum utilization requirements prior to approval of the new service. Chilton's attorney referred to Chilton's joint planning with St. Joseph's "to establish a coordinated and cooperative program utilizing a multi-disciplinary approach to the provision of oncology services in the region." He stated, "the Chilton application was revised to provide for the use of a low energy machine (6 mega voltage unit) which would be complementary to the St. Joseph's Radiation Oncology Program since patients requiring the high energy dosage would be treated at St. Joseph's."
On December 21, 1990, Chilton was informed by the Regional Health Planning Council that Chilton's request for oncological services was not approved, but that approval of the waiver was recommended. On January 17, 1991, Chilton wrote to the S.H.C.C. explaining that the Board's vote against its application was due to a misunderstanding that Chilton only had one oncologist, when in fact it had six oncologists.
Also, in the letter, the President of Chilton noted that the New Jersey Department of Health staff and the HSA recommended approval of its application. He reiterated Chilton's joint efforts with St. Joseph's, stating:
We initiated regionalized planning with St. Joseph's Hospital and Medical Center, and concluded a detailed signed agreement of project principles with them. This included the referral of high energy patients to their facility, and the agreement to have their Medical Director oversee the project's Quality Assurance Program at Chilton.
The President of St. Joseph's, on January 24, 1991, also wrote to the S.H.C.C. urging approval of Chilton's certificate of need, based on St. Joseph's and Chilton's agreement to establish a cooperative oncology department. She added, "all treatment planning ...