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Christ Hospital v. Department of Health and Senior Services

April 12, 2000


Judges Skillman, Newman and Fall.

The opinion of the court was delivered by: Skillman, P.J.A.D.


Argued March 7, 2000

On appeal from the Department of Health and Senior Services.

The issue presented by this appeal is whether the Department of Health and Senior Services (Department) may refuse to renew a hospital's license to operate a medical facility without affording the hospital an opportunity for a hearing on the ground that the license was issued under a pilot program that provided for automatic expiration of the license unless the hospital satisfied specific regulatory conditions for renewal.

On January 25, 1996, the Department adopted new regulations designed to expand the number of hospital facilities providing low risk cardiac catheterization services.*fn1 28 N.J.R. 1252 (Feb. 20, 1996). These regulations established a pilot program under which hospitals could be issued certificates of need and licenses to operate cardiac catheterization laboratories for a period not to exceed thirty months. N.J.A.C. 8:33E-1.12(d)2. To assure that the catheterizations performed under this program were safe and that the laboratories were operated efficiently, the regulations imposed utilization standards that had to be satisfied as a condition of continued licensure. Hospitals participating in the program were required to perform at least 350 catheterizations per year, N.J.A.C. 8:33E-1.4(c)1, and each physician with privileges at the laboratory was required to perform at least 50 catheterizations per year, N.J.A.C. 8:33E 1.4(c)2. In addition, the Director of the laboratory was required to perform at least 150 catheterizations per year, of which at least 100 had to be performed at the pilot laboratory. N.J.A.C. 8:33E-1.4(c)2. The regulations also imposed "quality of care" standards, including a requirement that the percentage of "normal" cardiac catheterization tests not exceed twenty-five percent of the total tests. N.J.A.C. 8:33E-1.6(d)2.*fn2

Hospitals that received licenses under this program were allowed twenty-six months within which to document compliance with these requirements. N.J.A.C. 8:33E-1.14(b)1. The regulations further provided that upon receipt of a hospital's documentation, "the Department . . . shall, no later than the completion of the 30th month following the month in which the facility initiated services . . ., communicate a decision to the facility as to whether the license to provide services approved under this pilot catheterization program will be renewed." N.J.A.C. 8:33E-1.14(c).

Appellant Christ Hospital, which is located in Jersey City, was one of forty hospitals granted certificates of need to provide low-risk cardiac catheterizations pursuant to these regulations. On June 6, 1997, Christ Hospital was granted an initial license to operate a catheterization laboratory for a twenty-four month period. On June 1, 1999, the Department notified Christ Hospital that its license was extended for an additional six-month evaluation period and that the license would automatically terminate on December 31, 1999, unless the hospital could demonstrate compliance with the requirements set forth in the regulations.

On December 15, 1999, the Department notified Christ Hospital, in a letter signed by the Director of the Certificate of Need and Acute Care Licensure Program,*fn3 that its license would not be renewed and that it must cease performing cardiac catheterization services as of December 31, 1999, because it had failed to demonstrate full compliance with all the licensing renewal standards set forth in N.J.A.C. 8:33E-1.14. Specifically, the Department indicated that the Director of Christ Hospital's cardiac catheterization laboratory had only performed 78 catheterizations at the hospital, 22 less than the required 100 catheterizations per year. In addition, 41.7" of Christ Hospital's catheterizations had normal results, which exceeded the 25" maximum for normal cases specified in the regulations. The hospital demonstrated compliance with all of the other requirements of the program, including the requirement that the Director perform at least 150 total catheterizations per year, that each physician using the laboratory perform at least 50 catheterizations per year, and that at least 350 catheterizations per year be performed in the laboratory.

The Department did not offer Christ Hospital the opportunity for a hearing or other administrative review to contest the agency's decision not to renew its license to perform low risk cardiac catheterization services.

On December 31, 1999, Christ Hospital filed a notice of appeal from the Department's December 15, 1999 decision refusing to renew its license. We granted a stay pending the outcome of the appeal and established an accelerated schedule for briefing and argument. In addition, we allowed Jersey City Medical Center, Meadowlands Hospital Medical Center and Bayonne Hospital, which operate cardiac catheterization laboratories in the same area as Christ Hospital, to intervene in the appeal.

We conclude that the Department violated the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -24, by failing to offer Christ Hospital an opportunity for an administrative hearing to contest the refusal to renew its license. Accordingly, we remand the matter for a hearing.

Although the right to an administrative hearing generally must be found outside the APA in another statute or constitutional provision, see Limongelli v. New Jersey State Bd. of Dentistry, 137 N.J. 317, 325 (1993), the APA itself grants a right to a hearing when an agency revokes or refuses to renew a license. N.J.S.A. 52:14B-11 provides that "[n]o agency shall revoke or refuse to renew any license unless it has first afforded the licensee an opportunity for a hearing in conformity with the provisions of this act applicable to contested cases." See also 37 New Jersey Practice, Administrative Law and Practice § 115, at 134 (Steven L. Lefelt) (1988) (noting that N.J.S.A. 52:14B-11 is the "one instance" where the APA itself provides hearing rights).

By its own terms, N.J.S.A. 52:14B-11 does not apply "where a statute provides that an agency is not required to grant a hearing in regard to revocation, suspension or refusal to renew a license . . . ." However, the Health Care Facilities Planning Act (the Act), N.J.S.A. 26:2H-1 to -91, does not authorize the Department to refuse renewal of a license without affording the licensee an opportunity for a hearing. To the contrary, even though the Act does not deal specifically with a refusal to renew a license, N.J.S.A. 26:2H-13 provides that "[t]he department shall afford the licensee an opportunity for a prompt hearing on the question of . . . the issuance, suspension or the placing on a probationary or provisional license, or revocation of the ...

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