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Seashore Ambulatory Surgery Center, Inc. v. New Jersey Dept. of Health

March 1, 1996


On appeal from the Final Decision of the Commissioner of the Department of Health.

Before Judges Petrella, Skillman and Eichen

The opinion of the court was delivered by: Eichen


This appeal involves the applicability of certificate of need (CON) regulations governing the initiation of ambulatory surgical facilities, N.J.A.C. 8:33S-1.1 to -1.7 (current regulations), to physicians in their private practice. The Department of Health (DOH) determined appellants were required to obtain a CON for certain uses of an ambulatory surgical facility they had initiated after regulations governing such facilities had lapsed, N.J.A.C. 8:33A-2.1 to -2.7, (the prior regulations) and before the effective date of the current regulations. Appellants challenge that determination on this appeal.

Morris Antebi, M.D., an anesthesiologist, operates an ambulatory surgical facility, Seashore Ambulatory Surgery Center, Inc. (Seashore), and carries out his private practice of anesthesiology through a professional association, Pain Specialists, P.A. (collectively appellants). Dr. Antebi is currently the sole member of his professional association.

On October 27, 1994, the Assistant Commissioner of Health Paul R. Langevin, Jr. issued a letter decision permitting appellants to use one operating room at Seashore without obtaining a CON, but directing that they cease using the second operating room and limit use of the first operating room to physicians who are associates or employees of Dr. Antebi's professional association until a CON is obtained.

The Assistant Commissioner determined that a CON was required for the second operating room even though the prior regulations had expired. The DOH emphasized not only that the CON requirement for a two-operating room surgical facility existed in both the prior and current regulations, but also that the lapse in the prior regulations occurred during a moratorium on CON applications, and that the DOH had clearly informed Dr. Antebi he could not utilize more than one operating room until he obtained a CON. Further, the Assistant Commissioner noted that Dr. Antebi was aware of the CON requirement and recognized and acknowledged the DOH's "right to exercise regulatory authority over him."

The Assistant Commissioner also interpreted the current regulations, N.J.A.C. 8:33S-1.1 to -1.7, to provide that appellants are exempt from the CON requirement only if the single operating room is limited to the exclusive use of "Dr. Antebi and any other physician who is a member or full-time employee of his professional association." Noting that Dr. Antebi could perform pain management nerve blocks without outside physicians, the Assistant Commissioner rejected appellants' contentions that Dr. Antebi could not carry out his practice of anesthesiology without the involvement of unassociated physicians.

On appeal of the Assistant Commissioner's decision, appellants contend the current regulations do not apply to their second operating room because they initiated their ambulatory surgical facility when there were no regulations regarding surgical facilities in effect. They argue the current regulations only apply to "new" ambulatory surgical facilities and, therefore, cannot apply to their "previously existing operating rooms." Essentially, they argue that because the language of the current regulations refers only to "new" facilities, the regulations are "unambiguously prospective" and do "not contain the clear expression of legislative intent necessary to justify a retroactive application."

Appellants also contend on appeal they do not have to obtain a CON in order to invite unassociated physicians to perform surgeries with Dr. Antebi at Seashore because even if the current regulations apply retroactively to the ambulatory facility, they do not cover the situation where an anesthesiologist invites outside surgeons to use the facility with him.

The DOH concedes on appeal that no regulations were in effect at the time Dr. Antebi opened his two-operating room facility, but maintains it does not matter because the current regulations apply retroactively to appellants, requiring them to obtain a CON. The DOH additionally argues that the current regulations clearly provide that Dr. Antebi is exempt from the CON requirement only for his or his associates' exclusive use of a single operating room.

We have carefully reviewed the record, the parties' contentions, their briefs and the legal arguments, and affirm the decision of the Assistant Commissioner.


To understand this controversy, we discuss the legislative history and pertinent events. In 1971, the Legislature enacted the Health Care Facilities Planning Act, L. 1971, c. 136, N.J.S.A. 26:2H-1 to -26, (the Act). At that time, the Legislature declared as the public policy of this state that hospital and related health care services "efficiently" provide care "of the highest quality ... at a reasonable cost" based on "demonstrated need." N.J.S.A. 26:2H-1. The Act required a CON for the initiation of any new health care facility *fn1 or service except those "provided by a physician in his [or her] private practice." N.J.S.A. 26:2H-2b (1987) (amended 1991); Marsh v. Finley, 160 N.J. Super. 193, 198-99, 389 A.2d 490 (App. Div.), certif. denied, 78 N.J. 396 (1978). Thus, as of 1971, a health care service was not subject to a CON requirement when provided by a physician in his or her private practice. This blanket exemption continued until 1991.

In 1985, pursuant to the Act, the DOH promulgated "surgical facilities" regulations in order "to guide the planning and review of all Certificate of Need applications for new and expanded surgical facilities in the State." 17 N.J.R. 154 (Jan. 21, 1985). The surgical facilities regulations specifically required a CON "for any new surgical facility" with two or more operating rooms. N.J.A.C. 8:33A-2.2 and 2.3. *fn2 On February 20, 1990, these regulations were readopted without change, indicating the DOH's interest in continuing to regulate two-operating room facilities. The DOH set an operative period of two years for the ...

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