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In re Application of Virtua-West Jersey Hospital Voorhees for a Certificate of Need

February 8, 2007


On appeal from the Department of Health and Senior Services, CN# FR 030513-04-01.

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



Argued: October 4, 2006

Before Judges Kestin, Payne and Lihotz.

Cooper Health System and Our Lady of Lourdes Medical Center appeal from the October 5, 2004 final decision of the Deputy Commissioner for Public Health Services of the Department of Health and Senior Services (Commissioner; Department) approving a certificate of need (CN) application from Virtua-West Jersey Hospital Voorhees (Virtua), allowing Virtua to change its maternal and child health care (MCHC) designation from Community Perinatal Center-Intensive (CPC) to Regional Perinatal Center (RPC), so that it would be authorized to provide a broader range of services. Appellants, in a single point of argument with several facets, contend that the approval granted was invalid because the Commissioner, without sound basis, failed to comply with regulatory requirements governing CN calls, particularly N.J.A.C. 8:33-4.1(a), and thus erred in applying the CN process in this matter. We granted Virtua's motion for leave to intervene in the appeal; and we denied, as had the Commissioner, appellants' motion for a stay of the decision pending appeal. We now affirm.

On March 3, 2003, the Department issued a "Notice of Rescheduling of Certificate of Need Call for Applications for Maternal and Child Health Consortia Change in Membership and Intermediate and Intensive Bassinets in Certain Maternal and Child Health Consortia Regions." 35 N.J.R. 1311(b). The notice invited certificate of need applications on a full review basis for Maternal and Child Health Consortia change in membership, and for intermediate and intensive bassinets in licensed general hospitals in those Maternal and Child Health Consortia (MCHC) regions in which a need has been identified based on the most recent utilization projections. [Ibid.]

This CN call specified the needs for both intermediate and intensive care bassinets in the Southern NJ Perinatal Cooperative, Inc., as well as in other areas of the State. See ibid.

In response, Virtua submitted a timely application dated May 1, 2003. It sought approval "to change its designation from a Community Perinatal Center-Intensive to a Regional Perinatal Center and to add four intensive care bassinets and eight intermediate care bassinets[.]"

Following Virtua's submission of additional information as requested, the Department, on April 12, 2004, announced that the application was complete. Pursuant to N.J.A.C. 8:33, the Department referred Virtua's application to the State Health Planning Board (SHPB) for "the full review process" and, on July 8, 2004, "to consider applications, receive public comment and make recommendations to the Commissioner." On June 30, 2004, appellants objected to the Department's decision to accept the designation-changing aspect of Virtua's application and requested that Virtua's "request for a change in designation level not be permitted to move forward at this time to the [SHPB]."

On July 8, 2004, the SHPB held a meeting, at which the Department staff submitted a report recommending that the SHPB approve Virtua's application in its entirety, including, for reasons stated, its redesignation as an RPC. The SHPB also entertained public comment on the application. Appellants' representatives were heard, among others, and their written presentations were received. Cooper Health System's representative stated: "If Virtua is approved, there will be a serious and damaging impact on the existing Regional Perinatal Center in Camden." Further, he said: "no study has been conducted that has identified the need for [an] additional Regional Perinatal Center in South Jersey." He opined that "changes in designation level specifically require . . . the full review in [the] CN process and [a] separate CN call which was not accomplished here." He questioned, "[H]ow did the Department allow Virtua to request a change in designation . . . when the Department itself never issued the CN call for a change in designation . . . ?" He concluded by stressing that, if Virtua were designated as an RPC, then appellants "will have to cut off services to the indigent in Camden . . . ."

The SHPB considered all the data it had received and views it had heard. Following discussion among its members that reflected a weighing of pertinent considerations, the SHPB voted to approve Virtua's CN application in its entirety. The approval on the redesignation issue was by a vote of five votes in the affirmative and one vote in the negative.

On October 4, 2004, appellants wrote the Commissioner with a "request that [he] invalidate that part of the Virtua application pertaining to a change in perinatal designation level . . . ." Nevertheless, on October 5, 2004, the final decision issued, approving Virtua's CN application in its entirety. The decision stated that the Commissioner was "satisfied that Virtua's RPC designation would not impact current referral patterns of the other two RPCs in the consortium region (Our Lady of Lourdes Medical Center and Cooper Hospital), since the majority of Virtua's projected additional patients would originate from within the Virtua Health System." Furthermore, according to the decision, "the balance of Virtua's additional patients [is] anticipated to be from Virtua's service area who currently outmigrate to Philadelphia hospitals." Hence, "Virtua has sufficiently documented that its RPC designation would primarily reduce current transfers out of Virtua's system and recapture patients going out of state, rather than compete with the existing Camden City RPCs for their patients." Ultimately, "Virtua's project will provide families who choose Virtua the opportunity to receive Regional Perinatal Center level services at the same location, will improve their access to care and reduce incentives for these families to leave New Jersey to get more complex services out of state."

Specifically with respect to the redesignation application, the Commissioner found that Virtua met the requirements of N.J.A.C. 8:33C-3.4(a) by establishing the required number of very low birth weight infants annually. Furthermore, the decision stated: "Virtua has also documented that all professional staff necessary for RPC designation are currently in place." Therefore, "being satisfied that [Virtua] has documented compliance with the applicable ...

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