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Town of Kearny v. New Jersey Dep't of Health and Senior Services

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 11, 2008

TOWN OF KEARNY AND ALBERTO SANTOS, ALEXA ARCE, CAROL JEAN DOYLE, EILEEN ECKEL, DAVID KRUZNIS, MICHAEL LANDY, SUSAN MCCURRIE, LAURA PETTIGREW AND BARBARA SHERRY, CITIZENS OF THE TOWN OF KEARNY, APPELLANTS,
v.
NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES AND FRED M. JACOBS, COMMISSIONER, RESPONDENTS.

On appeal from a final decision of the Department of Health and Senior Services.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted January 8, 2008

Before Judges Skillman and Winkelstein.

Appellants are the Town of Kearny and several of its residents. They challenge an April 25, 2007 decision of the Department of Health and Senior Services (the Department) that denied their request for a hearing with regard to the Department's decision to approve a request of the Monmouth-Ocean Hospital Service Corporation (MONOC) to reduce the hours of operation of mobile intensive care unit 257, located in Kearny.*fn1

On appeal, appellants also claim that the Department's decision to permit MONOC to reduce unit 257's hours of operation was arbitrary and capricious.

We conclude that appellants did not have standing at the agency level so as to be entitled to a hearing, and that the Department's decision was supported by the record. Consequently, we affirm.

On April 1, 2003, West Hudson Hospital, located in Kearny, submitted a certificate of need (CN) application to discontinue its general acute care hospital services and realign those services between Clara Maass Medical Center, located in Belleville, and West Hudson Hospital; both facilities are part of the St. Barnabas Healthcare system.*fn2 In December 2003, the Department approved the application subject to certain conditions, requiring the mobile intensive care unit located at West Hudson Hospital to "expand its services from 16 hours of operation to 24 per day . . . and continue these services for a period of 3 years from the date of approval. After three years, any changes in service requires written approval from the Department."

In August 2004, MONOC and St. Barnabas sought permission to transfer operating rights for various mobile intensive care services. The Department granted conditional approval on September 10, 2004, dependent upon MONOC's continuing to provide twenty-four hour, seven day per week mobile intensive care services at West Hudson Hospital. MONOC was also required to adhere to the conditions of the December 2003 approval, which, as noted, obligated MONOC to expand services for its mobile intensive care unit located at West Hudson Hospital from sixteen hours to twenty-four hours per day for a period of three years.

On November 16, 2006, Jeff Behm, MONOC's vice president of operations, asserted that MONOC was facing an "impending financial crisis" with regard to its mobile intensive care units. He stated that MONOC intended to remove a number of those units from service, including unit 256 in Belleville, and decrease the hours of operation of unit 257, in Kearny, from twenty-four hours per day, seven days a week, to sixteen hours a day, seven days a week. The Department responded on December 4, 2006, that the request does not conform to the administrative notice requirement, which requires prior departmental authorization. MONOC's unauthorized action to place CN mobile intensive care units out of service - effectively terminating a CN service - is contrary to law and administrative rule governing CN approved services. . . .

MONOC . . . by its actions, has created an unstable and unsafe environment in several communities. MONOC's actions are instigating a de facto public health crisis.

These actions constitute violations at least of N.J.S.A. 26:2H-5.8 and N.J.S.A. 8:41-9.2(a)3.

The Department directed MONOC to "maintain and adequately staff" its mobile intensive care services in multiple towns, including Belleville and Kearny.

MONOC responded that it did not intend to abandon or reduce mobile intensive care unit certificates of need. It stated that mobile intensive care unit 257, operating out of the former West Hudson Hospital area in Kearny, would remain in service, but MONOC "will be reverting" that MIC unit's operating hours to those that pre-existed the closure of West Hudson Hospital. In other words, it intended to reduce MIC unit 257's operating hours to those hours that were in effect prior to the Department's December 4, 2003 letter, which stated that the MIC unit at West Hudson Hospital was required to "expand its services from 16 hours of operation[] to 24 hours per day."

In response to that letter, the Department informed MONOC that "[p]ending additional documentation as to coverage and dispatch protocols, Medic unit 257 located in Kearny at the old West Hudson Hospital, shall be required to continue to provide 24-hour, seven-day per week Mobile Intensive Care Services . . . ." The Department did approve, however, MONOC's request to remove MIC unit 256, located in Belleville, from service, contingent upon the continued operation of MIC unit 257. The Department agreed to work with MONOC to monitor and document calls in Belleville and Kearny over a three-month period to determine whether further MONOC service curtailments could be approved.

In January 2007, Behm contacted the Department. Instead of removing MIC unit 256 in Belleville from service, MONOC proposed to continue operating that unit twenty-four hours per day, seven days a week, and to instead curtail the operating hours of MIC unit 257 in Kearny. It requested permission from the Department "to curtail the hours of Medic unit 257 to operate Monday through Friday, 7 am to 7 pm which is a curtailment of hours on the weekends and night shift only."

On February 6, 2007, the Department conditionally approved the requests. It stated:

In response to your January 23, 2007, letter requesting a change in the approval of MIC units, the Department will allow MONOC to continue operating Medic unit 256 located in Belleville, twenty-four hours a day, seven days a week and curtail the hours of operation of Medic unit 257 located in Kearny to operate Monday through Friday, 7am to 7pm only based on the following conditions:

Allowing MONOC to curtail the hours of operation of the Kearny unit is contingent upon the Belleville unit remaining operational twenty-four hours a day, seven day[s] a week.

In addition, you must personally meet with town administrators and emergency medical service (EMS) agencies of Kearny, East Newark, North Arlington and Lyndhurst prior to the implementation of the reduced hours of operation of the Kearny unit. This will afford you the opportunity to explain these changes in MIC services and to address their questions and concerns.

Kearny objected to the curtailment of MIC unit 257's hours, and, on February 22, 2007, requested the Department to stay the approval "until the Town has had the opportunity to be heard on the curtailment." On February 26, 2007, the Department denied the request, stating:

Paramedic Unit 257 is not a vehicle required by the DHSS Certificate of Need which defines MONOC's requirements for the Kearny area, and MONOC is, therefore, not required to formally apply for a change to its Certificate of Need in order to reduce Unit 257's hours of operation. Since MONOC's request regarding Unit 257 was not part of the CN process, the Department's letter to MONOC of February 6, 2007 does not constitute an agency action giving rise to formal hearing rights. Accordingly, the Department is not in a position to grant your request for a stay.

Also noted in the letter of February 6, 2007 is the Department's requirement that MONOC continue operating Paramedic Unit 256 located in Belleville twenty-four hours a day, seven days a week, in support of Kearny. The Department is closely monitoring the level of service that Unit 256 provides to Kearny and the surrounding areas. If the DHSS notes a reduction in the availability or quality of paramedical services to Kearny as a result of the aforementioned changes we will take immediate actions to mitigate this shortcoming. We ask your assistance in monitoring this situation and request you contact me at the Office of Emergency Medical Services . . . .

The next day, appellants again requested a stay and an opportunity to be heard. By letter of April 25, 2007, the Department again denied their request. The letter stated:

The decision letter to MONOC dated February 6, 2007, approved MONOC's application to reduce the hours of operation of MICU 257 to Monday through Friday, 7 a.m. to 7 p.m., contingent upon MONOC continuing to operate MICU 256, located in Belleville, twenty-four hours a day, seven days a week. The Department and MONOC are the parties to the initial certificate of need and therefore to this decision, a matter between the regulatory agency and the licensee. Accordingly, neither the Town of Kearny nor the citizens of the Town of Kearny have standing to appeal the Department's decision.

Against this factual and procedural background, we first address appellants' argument that as the town where the hours of MIC unit 257 have been curtailed, and as citizens of that town, they have standing to be entitled to a Departmental hearing. We agree with the Department that appellants did not have standing to challenge its decision to permit MONOC to curtail the hours of mobile intensive care unit 257, and consequently, appellants were not entitled to a hearing.

The Commissioner of the Department has broad authority under the Healthcare Facilities Planning Act (the Act), N.J.S.A. 26:2H-1 to -126, which gives him or her the "central responsibility for the development and administration of the State's policy with respect to health planning, hospital and related health care services and health care facility cost containment programs." N.J.S.A. 26:2H-1. The Commissioner is authorized to adopt regulations to effectuate the purposes of the Act. N.J.S.A. 26:2H-5b and c.

Pursuant to this authority, the Commissioner has adopted regulations governing mobile intensive care programs. N.J.A.C. 8:41-9.1 to -9.23. These regulations provide that although a certificate of need is required to establish a mobile intensive care program, N.J.A.C. 8:41-9.1(b), a certificate of need is not required to decrease the hours of operation of an existing mobile intensive care unit or for the removal of a mobile intensive care unit from service. N.J.A.C. 8:41-9.2(a)3. To either remove the unit from service or reduce its hours of service, the provider of the mobile intensive care program must simply notify, and receive approval from, the Department's Office of Emergency Medical Services. Ibid. No legislative enactment or regulation confers standing upon a municipality in which a MIC unit provides service, or upon a resident of that municipality, to participate in the administrative review of that proposed action.

"As an alternative to acting formally through rulemaking or adjudication, administrative agencies may act informally." In re Solid Waste Util. Customers Lists, 106 N.J. 508, 518 (1987). Indeed, "informal action constitutes the bulk of the activity of most administrative agencies." Ibid. "[I]nformal agency action includes investigating, publicizing, planning, and supervising a regulated industry." Id. at 519. In effectuating that action, an agency has the discretion to determine how to appropriately proceed to enable it to fulfill its statutory and regulatory functions. Ibid. Consequently, we normally "defer to the procedure chosen by the agency in discharging its statutory duty," so long as its procedure complies with due process and the Administrative Procedure Act." Ibid. An agency's interpretation of its own regulations that enforce the statutes for which the agency is responsible is entitled to great deference. In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 488-89 (2004).

Whether an administrative agency is required to conduct a hearing generally depends on "the private interest affected, the burden on the government in providing a hearing, and the adequacy of the procedure to evaluate the effect of the governmental action on the private interest." In re Solid Waste Util. Customers Lists, supra, 106 N.J. at 520. In other words, due process does not always require an administrative agency to conduct a hearing before making decisions that affect a regulated industry. Ibid.; see also Elizabeth Fed. Sav. & Loan Ass'n v. Howell, 24 N.J. 488, 505 (1957) (holding that competitors of savings and loan association not entitled to hearing before Commissioner of Banking and Insurance granted permission to savings and loan association to move from one city to another; the Court stated: "there is no constitutional basis for [the claim for a hearing]; if it exists, it is only because of a statutory provision for it"). Appellants point to no statutory or regulatory provision that would afford them a right to an administrative hearing where, like here, the agency is carrying out its function of supervising a regulated industry.

Nor have appellants established a constitutional right to such a hearing. To be constitutionally entitled to a hearing, appellants would be required to demonstrate "the deprivation of interests encompassed by the Fourteenth Amendment's protection of liberty and property." Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 569, 92 S.Ct. 2701, 2705, 33 L.Ed. 2d 548, 556 (1972). A property interest is "more than a unilateral expectation of [the interest]"; the individual must "have a legitimate claim of entitlement to it." Id. at 577, 92 S.Ct. at 2709, 33 L.Ed. 2d at 561. Appellants have shown no entitlement to the services of the medic unit for twenty-four hours per day, seven days per week, nor do they assert that they have been deprived of a liberty interest.

Though appellants have a sufficient stake in the Department's decision to have standing to challenge its action in this court, see Elizabeth Fed. Sav. & Loan Ass'n, supra, 24 N.J. at 499 ("in cases involving substantial public interest, the courts have held that 'but slight private interest, added to and harmonizing with the public interest' is sufficient to give standing") (quoting Hudson Bergen County Retail Liquor Stores Ass'n v. Bd. of Comm'rs of Hoboken, 135 N.J.L. 503, 510 (E. & A. 1947)), that does not equate to the right to a hearing at the administrative level. Appellants have demonstrated no constitutional basis for a hearing in the administrative process; their right to a hearing would exist "only because of a statutory provision for it." Id. at 505. No such statutory provision exists. Consequently, we agree with the Department that appellants did not have standing to request a hearing or seek a stay of the Department's decision, which it made in the discharge of its statutory and regulatory functions.

Finally, we address appellant's claim that the Department's decision to permit MONOC to curtail the hours of operation of unit 257 was arbitrary and without factual foundation. We disagree.

A strong presumption of reasonableness is accorded to the agency's exercise of its delegated authority. In re Application of Holy Name Hosp. for a Certificate of Need, 301 N.J. Super. 282, 295 (App. Div. 1997). "The burden is on the party challenging the validity of an agency's decision to demonstrate that the action was arbitrary, capricious or contrary to a legislative purpose." Ibid. If "there is room for two courses of action, an administrative decision will not be deemed arbitrary and capricious if exercised honestly and the course ultimately chosen is a reasonable one." Id. at 295-96. Here, that is what occurred.

Between 2003 and 2007, beginning with the certificate of need application to discontinue general acute care at West Hudson Hospital, changes were made to the healthcare services provided to a number of towns, including Kearny. When MONOC first applied to reduce the hours of operation of its MIC units, the Department rejected its application. It was not until MONOC provided a plan consistent with the Department's directions to MONOC in its letter of December 28, 2006, that the Department conditionally agreed to the curtailment of the hours of operation of unit 257. The conditions required "the Belleville unit [to] remain[] operational twenty-four hours a day, seven day[s] a week," and close monitoring of "the level of service that Unit 256 provides to Kearny and the surrounding areas." Given the record as a whole, appellants have not met their burden to demonstrate that the Department's action was arbitrary, capricious or contrary to the agency's legislative purpose.

Affirmed.


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