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Cooper University Hospital v. Jacobs

September 10, 2009

COOPER UNIVERSITY HOSPITAL AND OUR LADY OF LOURDES MEDICAL CENTER, APPELLANTS,
v.
FRED M. JACOBS, M.D., J.D., COMMISSIONER OF THE NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, RESPONDENT.
VIRTUA HEALTH, INC., INTERVENOR-RESPONDENT.



On appeal from the New Jersey Department of Health and Senior Services.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 30, 2009

Before Judges R. B. Coleman, Sabatino and Simonelli.

Appellant Cooper University Hospital (Cooper)*fn1 appeals from the adoption of certain administrative regulations by the Department of Health and Senior Services (Department) which authorizes New Jersey's continued participation in a multi-state demonstration project intended to assess the safety and efficacy of allowing community hospitals without on-site cardiac surgical services to provide elective angioplasty to its patients (the Project). Cooper argues that the adoption of the rules was arbitrary and capricious because (1) they were adopted without a full consideration of the numerous comments submitted to the Department on the proposed rules, in violation of the Administrative Procedure Act, N.J.S.A. 52:14B-1 to -25 (APA); (2) they were not supported by relevant medical and fiscal evidence; and (3) they did not comply with a prior Supreme Court decision regarding the Project. We are unpersuaded by appellant's arguments and, for the reasons set forth below, we affirm the Department's regulations as adopted.

The regulations on appeal concern a medical procedure known as percutaneous transluminal coronary angioplasty (angioplasty). There are two types of angioplasties: emergent angioplasty, required when the patient is suffering from a myocardial infarction or heart attack; and elective angioplasty, performed when the patient shows symptoms of an arterial blockage. Prior to the adopted regulations, a hospital without on-site cardiac surgical facilities could not perform elective angioplasties. N.J.A.C. 8:33E-2.16. However, such a hospital could perform emergent angioplasties. Research indicated that elective angioplasty could also be performed safely at hospitals without on-site cardiac surgical facilities. As the need for elective angioplasty increased state-wide, the Department initiated the "Atlantic C-Port Trial, Elective Angioplasty Study," a "multi-state demonstration project" to assess the safety, efficacy and cost of providing elective angioplasty services at community hospitals which do not also have full, on-site cardiac surgical services.

On November 1, 2004, the Department issued a call in the New Jersey Register by which it sought to invite applications for Certificates of Need (CNs) to participate in the demonstration project. On October 6, 2005, the State Health Planning Board (SHPB) considered and approved six of the eighteen applications received in response to the call. On October 31, 2005, the Department's Commissioner, Fred M. Jacobs (Commissioner), issued his decision letter, in which he granted CNs to nine of the hospitals that responded to the call.

Cooper, joined by Lourdes, appealed from that decision and on October 2, 2006, another panel of this court affirmed the Commissioner's action. Cooper Univ. Hosp. v. Jacobs, No. A-1122-05T3 (App. Div. October 25, 2006). The Supreme Court reversed that decision but held that the projects could continue through November 30, 2007. The Court remanded the case to the Commissioner, directing the Department to promulgate a proper authorizing regulation in adherence to the principles of rulemaking prior to continuing the demonstration project beyond that date. Cooper Univ. Hosp. v. Jacobs, 191 N.J. 125, 146-47 (2007) (Cooper I). Under the circumstances, the Court found termination of the Project would be "unjust and inappropriate." Id. at 146. A clarification of the Supreme Court opinion was sought by one of the hospitals that had previously been awarded a CN pursuant to the call, and on November 29, 2007, the Supreme Court clarified its opinion in Cooper Univ. Hosp. v. Jacobs, 193 N.J. 271 (2007) (Cooper II).

In Cooper I, supra, 191 N.J. at 128, the Supreme Court concluded that the regulations authorizing the call, N.J.A.C. 8:83-3.11(e), violated "fundamental principles relating to the regulatory process." In reaching that conclusion, the Supreme Court noted that N.J.A.C. 8:33-3.11(e), which the Department used as authority to conduct the Project, was "considerably broader and less detailed" than N.J.A.C. 8:33-3.11(c) and (d), which explicitly authorize other demonstration projects by incorporating medical prerequisites and other specific requirements for those projects. As then written, N.J.A.C. 8:33-3.11(e) authorized demonstration projects not specifically identified elsewhere in N.J.A.C. 8:33-3.11. The Court found, however, that the "need for such [greater] detail flows from the health care concerns involved." 191 N.J. at 144. The Court held that any rules authorizing the demonstration project, in this instance, must likewise include such detail. Ibid.

Pursuant to Cooper I, the Department proposed new administrative rules and proposed amendments to certain existing rules in order to implement the Project. Those proposed rules were first considered and approved by the Health Care Administration Board (HCAB) on July 19, 2007. The Department then sought public comment by formally publishing the proposed regulations as 39 N.J.R. 3462-64 (August 30, 2007).

On November 5, 2007, before the rules were formally adopted, the Department issued a second call seeking applications for CNs by community hospitals that wanted to participate in the Project. Thereafter, the Department summarized the comments it received and provided them to the HCAB. On November 15, 2007, the HCAB heard extensive public comment in consideration of the new rules and subsequently approved their final adoption. The Department formally adopted the rules upon their publication in the New Jersey Register. 39 N.J.R. 5316-37 (December 17, 2007).

Appellant filed notice of appeal challenging both the November 5, 2007, call and the adoption of the rules. On January 27, 2008, this court granted the motion of Virtua Health, Inc., to intervene in this appeal, and for its counsel to appear pro hac vice.

N.J.A.C. 8:33-3.11 specifically authorizes the licensing of demonstration projects in New Jersey. Before the instant project rules were adopted, the Department had established rules authorizing two specific demonstration projects: for an inner-city satellite demonstration; and for a bloodless surgery demonstration project. N.J.A.C. 8:33-3.11(c) and (d).

The new provision, N.J.A.C. 8:33-3.11(e), authorized the Commissioner to accept CN applications to participate in the Project. The rules permit the issuance of twelve CNs, N.J.A.C. 8:33-3.11(e)(2); N.J.A.C. 8:33-3.11(e)(7), lasting for three years each; N.J.A.C. 8:33-3.11(e)(3). Each CN must be extended annually and only if the Project is authorized to continue enrolling patients. N.J.A.C. 8:33-3.11(e)(3)(i). By adopting N.J.A.C. 8:33-3.11, the Department also amended other rules. Specifically, N.J.A.C. 8:33-1.3(d)(2), N.J.A.C. 8:33E-2.3(d)(4), and ...


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