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Matter of Visiting Nurse Ass'n of Sussex County

June 6, 1997


On appeal from the Office of Administrative Law.

Approved for Publication June 6, 1997. As Corrected June 16, 1997.

Before Judges Shebell, Baime, and P.g. Levy. The opinion of the court was delivered by Baime, J.A.D.

The opinion of the court was delivered by: Baime

The opinion of the court was delivered by


Visiting Nurse Association of Sussex County, Inc. (VNA) appeals from the denial of its application for a certificate of need (CON) to provide home health care services in Morris and Warren Counties. The State Health Planning Board (SHPB) adopted the findings of the Local Advisory Board (LAB) that (1) VNA failed to demonstrate an unmet need in Morris County and (2) the applications of other providers to furnish services in Warren County were superior and were thus entitled to a priority. The Administrative Law Judge (ALJ) determined that the SHPB's findings were supported by the record, and thus denied VNA's application. VNA contends that (1) the proceedings were procedurally defective because the SHPB did not issue a separate written decision as required by regulation, and (2) the ALJ's denial of a CON was arbitrary and capricious. We perceive no sound basis to disturb the ALJ's decision.


Under the Health Care Facilities Planning Act (N.J.S.A. 26:2H-1 to -18.70), no health care provider may construct new facilities or expand existing ones or initiate new services unless a CON has been granted by the Commissioner of Health. N.J.S.A. 26:2H-7; see also N.J.A.C. 8:33-3.1. In In re Certificate of Need Granted to the Harborage, N.J. Super. (App. Div. 1997), and In re Holy Name Hospital for a Certificate of Need, 277 N.J. Super. 472, 649 A.2d 1319 (App. Div. 1997), we described at length the statutory and regulatory framework within which decisions pertaining to applications for CONs are made. It would be superfluous to tread upon the ground so exhaustively covered in these opinions. By way of summary, the administrative process is triggered by a "call" from the Department of Health and Senior Services inviting the submission of CON applications based upon a preliminary finding of need or patient access problems. N.J.A.C. 8:33-4.1(a). Applications must receive the affirmative vote of at least twenty-five percent of the voting members of the LAB having jurisdiction over the applicable geographic region as well as that of the SHPB, before they will be forwarded to the Commissioner for final review. N.J.S.A. 26:2H-10.1(a)(1), (2). If the applicant does not obtain the approval of the requisite percentage of the voting members of either the LAB or the SHPB, it may seek a hearing by the Office of Administrative Law. N.J.A.C. 8.33-4.14. Upon approval of the application by an administrative law Judge, the matter is then forwarded to the Commissioner for final review. However, if the ALJ sustains the LAB's or the SHPB's denial of the application, the decision is deemed a final agency determination which may be directly appealed to this court. R. 2:2-3(a)(2).

It is against this abstruse statutory and regulatory backdrop that we briefly recite the salient facts. In 1994, the Department of Health and Senior Services issued a call inviting the submission of CON applications for the establishment or expansion of home health agency services. The call was predicated upon a statewide survey which disclosed a "service gap" - a gap between services provided and services needed - in home health care for medicare patients.

VNA submitted an application in response to the call, proposing to expand its existing service to meet the perceived need in both Morris and Warren counties. As described in its application, VNA has existed as a health care agency for thirty years in Sussex County. It is licensed by the Department of Health and has received medicare certification as a free-standing home health care agency.

VNA proposed to provide Morris and Warren counties with a broad range of services including "24-hour, seven day a week skilled nursing care, physical therapy, speech therapy, occupational therapy, home health aid[], medical social [assistance], nutritional therapy, [psychiatric care], and complex treatment modalities." It anticipated servicing five percent of the indigent population in the two counties. According to VNA, because it had extensive experience operating in rural areas, it was well-equipped to expand its services into Morris and Warren counties. VNA appended letters of recommendation from satisfied customers, as well as an agreement with the Karen Ann Quinlan Center of Hope Hospice in Newton to provide staffing for the center's home health care operations.

With respect to the need for its services, VNA furnished a study which compared the current utilization rates in each of the subject counties with the demand present in mature population markets having almost identical demographics, and identified an unmet need of 548,675 visits in Morris County and 162,946 visits in Warren County. VNA asserted that it would be able to provide substantial skilled nursing assistance in both counties. Because of the overwhelming need which it claimed existed, VNA claimed that approval of its application would have no impact on existing agencies.

VNA identified access problems in Morris and Warren counties. It stated that it could "offer the full range of complex treatment modalities to this expanded service area." VNA identified the full range of services as "total parenteral nutrition (TPN), IV chemotherapy and pain management." As will become evident later in our opinion, no specific mention of mechanical ventilator care was made in the application or in response to supplemental requests made by the Department.

After VNA's application was certified as complete, it was forwarded to the LAB for the applicable geographical region. The LAB determined that much of the data submitted by VNA and other applicants was out of date and could not be verified. To correct this situation, the LAB created a task force charged with the responsibility of determining whether there was a service gap or patient access problem in the region. The task force subsequently issued a report indicating: (1) need and access problems were caused largely by the insufficient supply of professionals and staff in existing agencies, and (2) existing providers lacked the financial capacity to ...

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