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Virtua Health, Inc v. Poonam Alaigh

November 14, 2011


On appeal from the Department of Health and Senior Services.

Per curiam.


Argued September 12, 2011

Before Judges Sabatino, Ashrafi, and Fasciale.

This administrative appeal involves the licensure and regulation of emergency medical helicopter services by the Commissioner of the Department of Health and Senior Services ("the Department"). Appellant, Virtua Health, Inc. ("Virtua"), challenges the Department's issuance of an emergency medical helicopter service license to intervenor, Atlantic Air Ambulance ("Atlantic Air"), a competing entity, authorizing Atlantic Air to operate out of a facility in Millville. Virtua argues that the Department was not authorized to grant the license to Atlantic Air without first issuing a certificate of need ("CN"), and that Atlantic Air's license is otherwise invalid. Virtua further contends that the Department's most recent revision of its "dispatch protocol" for helicopter responses to 9-1-1 calls, interfacility patient transfers, and search-and-rescue missions, violates both the authorizing statutes and the Administrative Procedure Act ("APA"), N.J.S.A. 52:14B-1 to -15.

For the reasons that follow, we affirm the Department's issuance of the license to Atlantic Air without a CN, as the Department has reasonably construed the applicable statutes as not requiring a CN for such emergency medical helicopter services. We also reject Virtua's other arguments contesting Atlantic Air's licensure to operate an emergency helicopter service in southern New Jersey. Finally, we conclude that the Department's present dispatch protocol is not invalid for lack of formal rulemaking under the APA, based on the various factors set forth in Metromedia, Inc. v. Director, Division of Taxation, 97 N.J. 313, 331-32 (1984).


For the past three decades, the State of New Jersey has regulated hospital-based emergency helicopters that transport acutely ill and injured persons to appropriate medical facilities. In particular, in 1986 the Legislature established the "New Jersey Emergency Medical Service Helicopter Response Program," commonly known as "JEMSTAR," pursuant to N.J.S.A. 26:2K-36(a). The statute directs the Commissioner to "designate a mobile intensive care hospital and a regional trauma or critical care center which shall develop and maintain a hospital-based emergency medical service helicopter response unit." Ibid. The statute further directs the Commissioner to designate at least two entities to provide such helicopter services, one or more in the northern region of the State, and one or more in the southern region. Ibid. The JEMSTAR program is administered jointly by the Department and by the Division of State Police. See N.J.S.A. 26:2K-37.

Virtua is a health care company with multiple facilities in southern New Jersey. It has been designated under the JEMSTAR program to operate the unit known as "SouthSTAR," covering the southern part of the State.*fn1 The Department has also licensed several other private providers of emergency medical helicopter services. One of those other providers is Atlantic Air, which is affiliated with Morristown Memorial Hospital and other hospital facilities in northern New Jersey. In addition, MidAlantic MedEvac, LLC ("MedEvac"), which is an amicus curiae in this appeal,*fn2 was designated as a primary responder for certain territory, under the designation "MedEvac." The Department granted MedEvac a license in August 2011 -- whileVirtua's appeal was pending -- to provide an additional helicopter unit out of Woodbine Airport in Cape May County. These services are complemented by one or more medical helicopters operated by the State Police, and also by another provider known as MONOC.

Virtua's appeal was pending -- to provide an additional helicopter unit out of Woodbine Airport in Cape May County. These services are complemented by one or more medical helicopters operated by the State Police, and also by another provider known as MONOC.

Atlantic Air first submitted an application in June 2005 to the Department to provide air medical services, including "back[-]up [9-1-1] service for other helicopter providers," "throughout the state of New Jersey." The Department conditionally approved Atlantic Air's application in August 2005. In February 2006, the Department and Atlantic Air entered into an agreement delineating various operational requirements, and the Department concurrently issued Atlantic Air a license.

Later in 2006, the Department revised its then-existing dispatch protocol. Those revised guidelines maintained SouthSTAR as the primary first responder to 9-1-1 calls for the southern portion of New Jersey, and NorthSTAR as the primary first responder for the northern portion. However, the 2006 dispatch protocol designated Atlantic Air as a primary responder within the ten-mile arc to the north of its base of operations, and assigned MedEvac similar primacy within the ten-mile arc to the east of its base of operations. Moreover, if a private provider's helicopter unit was already airborne at the time of an emergency call, that unit was to be designated the first responder if it is immediately available, is the closest available unit to the response scene, and can reach the scene prior to any other unit.

The Department expanded the primary coverage areas of the private providers in 2007, and revised the dispatch protocol once again in September 2010. As revised, the protocol assigns to the Regional Emergency Medical Communications System ("REMCS") the statewide task of dispatching air medical units. Pursuant to those revised guidelines, REMCS is to dispatch the closest New Jersey-based licensed unit capable of arriving in the safest manner to the response scene. REMCS is required to give preference to the closest JEMSTAR unit if both commercially-owned and JEMSTAR units are within five nautical miles from that location.

The key events that precipitated the parties' dispute and this appeal began when Atlantic Air entered into an agreement with the Cooper Health System ("Cooper"), on November 8, 2010. Cooper is a southern New Jersey-based medical system. At that time, Atlantic Air was operating solely in northern New Jersey. Under its agreement with Cooper, Atlantic Air agreed to provide air ambulance service in southern New Jersey pursuant to Atlantic Air's license, but permitted Cooper limited control over managing certain aspects of those services. Soon thereafter, Atlantic Air informed the Department that it intended to relocate one of its two helicopters to Millville, in southern New Jersey, and to request that the helicopter ("Air Two") be inspected and approved.*fn3

The Department conducted the inspection of Air Two, as requested by Atlantic Air, later in November 2010. Following that inspection, the Department requested Atlantic Air to provide it with written procedures pertaining to medical command, dispatch protocols, scope of services and coverage area, and any forseeable conflicts between SouthSTAR and Atlantic Air, given that Cooper*fn4 was already participating with Virtua in the JEMSTAR program. After Atlantic Air supplied the information, the Department issued a notice on December 3, 2010 to "[a]ll New Jersey [a]ir [m]edical [p]roviders." The notice advised them that Atlantic Air's "request for approval to operate a second air medical helicopter to be stationed at Millville Airport has been reviewed and approved." The helicopter was added to the dispatch rotation, and made available for both interfacility and emergency 9-1-1 assignments.

Meanwhile, MedEvac similarly obtained an emergency medical service helicopter license from the Department on August 3, 2011. That license authorized MedEvac to provide such services out of Cape May County. Consequently, both Atlantic Air and MedEvac have, in effect, encroached upon the southern New Jersey territory previously covered predominantly by Virtua through JEMSTAR.

In its appeal,*fn5 Virtua objects to the Department's licensure and designation of a second Atlantic Air helicopter to serve in southern New Jersey. Virtua principally argues that the Department was obligated to require Atlantic Air to obtain a CN for those emergency helicopter services. Among other things, Virtua points to Appendix A to N.J.A.C. 8:33, which presents a listing of services indicating that an "emergency medical service helicopter" must undergo what is termed "full" CN review and approval. Ibid. Virtua argues that the Department has acted improperly by failing to abide by its own regulation, which, on its face, requires its competitors to obtain a CN.

Virtua further contends that the Department's decision to allow Atlantic Air to operate a second emergency medical helicopter unit in Millville violates the Department's CN and licensure regulations for mobile intensive care ("MIC") programs. Virtua disputes Atlantic Air's contention that it merely "relocated" an existing authorized service to southern New Jersey. Additionally, Virtua submits that Atlantic Air improperly "assigned," in effect, its license for Air Two to Cooper.

With respect to the revised dispatch protocol, Virtua contends that the Department's designation of Atlantic Air (and, inferentially, MedEvac) as primary responders for certain areas of southern New Jersey violated the legislative intent of the JEMSTAR program. Moreover, Virtua contends that the dispatch protocol revisions were sufficiently broad-based and significant to require formal rulemaking under the APA.

In response, the Department contends that it acted within its statutory and regulatory authority in allowing Air Atlantic (and, inferentially, MedEvac) to operate emergency helicopter services in southern New Jersey. The Department maintains that no CN is required for those approvals, and that the entry in Appendix A of N.J.A.C. 8:33 indicating otherwise was published in error. Alternatively, the Department asserts that federal law, specifically the Airline Deregulation Act of 1978 ("the ADA"), 49 U.S.C.A. ยง ...

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