The opinion
STATE OF MAINE SUPERIOR COURT
CIVIL ACTION
KENNEBEC, ss. DOCKET NO. AP-03-70,
DWM = KEN ~ 3 fu jeoo4
YORK HOSPITAL,
Petitioner
Vv. DECISION AND ORDER
ON RESPONDENTS’
WILLIAM PERFETTO and MOTION TO DISMISS
MAINE DEPARTMENT OF
HUMAN SERVICES, vont
Respondents
MAY § 5 2004
This matter is before the court on respondents’ motion to dismiss. Petitioner,
York Hospital, is attempting to seek review in the underlying petition of a decision-by
the Bureau of Medical Services Certificate of Need Unit (CON Unit”) that the relocation
of the hospital’s oncology service project and the construction of a new office building
for treatment, physician’s offices and laboratory space are “related projects” subject to
review under the Certificate of Need Act (CON Act) 22 M.R.S.A. §§ 301 — 325.
Respondents had previously advised petitioner that the relocation of the oncology
services did not require a CON. However, petitioner’s letter of intent with regard to the
construction of the physician office space in South Berwick precipitated the
respondents’ decision. In a letter dated November 26, 2003, Mr. Perfetto, Director of the
CON Unit, informed petitioner that regarding the two projects, “[t]he hospital
expenditure for this project as well as the renovation .. . are determined to be related.”
This letter had two effects. First, it meant that petitioner must go through the
administrative procedure of applying to obtain a CON and, second, due to the
moratorium on non-emergency letters of intent embodied in the Certificate of Need Act
Limitation adopted pursuant to 22 V.R.S.A. § 242, it would likely have to wait until
May 4, 2004 to apply:
Except as provided in Section 2, the Department of Human Services (the
"Department") shall not accept any letter of intent relating to a proposed
expenditure or action requiring a certificate of need under the Maine
Certificate of Need Act of 2002 (the "Act") from August 3, 2003 through
May 4, 2004.
CMR 10-144-501.
Asserting that respondents’ determination in the letter of November 26, 2003,
was a “final agency action,” petitioner submitted a Petition for Review of Final Agency
Action and for Declaratory Relief in six counts on December 29, 2003.! Respondents
filed an answer and a motion to dismiss. Petitioner timely filed opposition to the
motion to dismiss along with twenty-two “Statement[s] of Material Facts in Opposition
to Motion to Dismiss,” five exhibits and an affidavit of Joseph M. Kozak, Esq.
Respondents filed a motion to exclude the materials petitioner filed with their
opposition to the motion to dismiss. Due to the issues of jurisdiction in this matter, this
court does not need to reach the issue of whether or not to exclude the materials
submitted by petitioner and whether they would trigger summary judgment.
A motion to dismiss for failure to state a claim tests the legal sufficiency of the
complaint. Plimpton v. Gerrard, 668 A.2d 882, 885 (Me. 1995). When reviewing a motion
to dismiss, the material allegations of the complaint are accepted as true. Id. In ruling
on a motion to dismiss, the court should “consider the material allegations of the
complaint as admitted and review the complaint in the light most favorable to the
' Pursuant to 5 M.R.S.A. § 11002(3) “The petition for review shall be filed within 30 days after receipt of notice if
taken by a party to the proceeding of which review is sought.” December 29, 2003, was thirty-three days after
November 26, 2003. The thirtieth day after November 26, 2003 was Friday December 26, 2003. By order of
Governor Baldacci the courts were closed from noon December 24" until Monday December 29, 2003. This
qualifies Friday December 26, 2003, as a “legal holiday” pursuant to M.R. Civ. P. 6(a). This petition, filed the
following Monday, was timely.
plaintiffs to determine whether it sets forth elements of a cause of action or alleges facts
that would entitle the plaintiffs to relief pursuant to some legal theory.” Bussell v. City
of Portland, 1999 ME 103, { 1, 731 A.2d 862. Dismissal for failure to state a claim is
appropriate only where it appears beyond doubt that the plaintiff is entitled to no relief
under any set of facts which he might prove in support of his claim. Dutil v. Burns, 674
A.2d 910, 911 (Me. 1996). The legal sufficiency of a complaint is a question of law.
Sargent v. Buckley, 1997 ME 159, J 10, 697 A.2d 1272, 1275.
Discussion of this motion to dismiss will require resolution of three jurisdictional
issues. First, whether there has been “final agency action” pursuant to the APA and
thereby jurisdiction for this court to review the agency action in question. Second,
whether a sort of interlocutory right of appeal may exist due to possible “irreparable
harm.” A final jurisdiction issue —- whether petitioner has standing to bring Counts three
through six (challenging the constitutionality of statutes and regulations) also presents
itself.
Respondents, noting that this court’s jurisdiction to review agency decisions is
specifically limited to “final agency action” pursuant to 5 M.R.S.A. § 11002(2), maintains
that the decision made by the CON Unit of the DHS and transmitted to petitioner via
the November 26, 2003 letter was not a final agency action pointing to the definition of
such under the APA:
FINAL AGENCY ACTION. "Final agency action" means a decision by an
agency which affects the legal rights, duties or privileges of specific
persons, which is dispositive of all issues, legal and factual, and for which
no further recourse, appeal or review is provided within the agency.
5 M.RS.A. § 8002(4).
Respondents cite authority from the Law Court for the proposition that the
Superior Court has jurisdiction to hear a petitioner for review only upon final agency
4
action. Partnership of Brooks Brown, et al. v. Maine Dep't of Manpower Affairs, 426 A.2d 880,
883 (Me. 1981) citing 5 M.R.S.A. § 11001. Respondents maintain that the letter of
November 26, 2003 was not final agency action as defined by § 11002 or described by
the Law Court. See Partnership of Brooks Brown, 426 A.2d at 883.
Respondents maintain that the Superior Court may have jurisdiction to review
nonfinal agency action, but only when the petitioner for review alleges sufficient
irreparable injury if review does not take place. Northeast Occupational Exch., Inc. Bureau
of Rehabilitation, 473 A.2d 406, 409-10 (Me. 1984). Respondents assert that petitioner has
alleged no irreparable injury in this matter. Petitioner replies that since DHS rules
“explicitly recognize a determination of applicability but do not provide a mechanism
for administrative review of that determination [it] clearly implies that judicial review is
a party’s appropriate course.” Petitioner asserts that a decision to require an applicant
to apply for a CON permit is final agency action because there is no avenue for
administrative relief within the agency.
Respondents reply that there is further recourse within DHS from the
determination that the CON Act applies to the projects at issue. Respondents note that
the Commissioner has final decision making authority pursuant to the CON Act and
that the decisions of the staff in the CON Unit may be reviewed when the matter comes
to the Commissioner for a final decision on the CON permit. Further, petitioner may
request reconsideration of the Commissioner’s decision pursuant to 22 M.R.S.A. § 340.
Petitioner has not explicitly argued “irreparable harm” in this case, but has
asserted that due to the moratorium it will be many months before it can even file an
application and there is no guarantee that the moratorium will not be extended and
review of final agency action (well in the future) “would not provide any adequate
remedy.” Citing 5 M.R.S.A. § 11001(1). Respondents assert that petitioner has not
5
alleged any facts to show sufficient irreparable injury to meet the § 11001 standard.
Citing a 1984 Law Court decision regarding review of “de-authorization” of a service
provider by the Dept. of Rehabilitation, Northeast Occupational Exch., Inc. v. Bureau of
Rehabilitation, 473 A.2d 406, (Me. 1984):
- . review of nonfinal agency actions should be undertaken only when
"the parties face the prospect of irreparable injury, with no practical means
of procuring effective relief after the close of the proceedings... ." Cities
of Anaheim and Riverside v. Federal Energy Regulatory Commission, 224
USS. App. D.C. 4, 692 F.2d 773, 779 (D.C. Cir. 1982) (quoting Papago Tribal
Utility Authority v. FERC, 202 US. App. D.C. 235, 628 F.2d 235, 239 (D.C.
Cir.), cert. denied, 449 U.S. 1061, 101 S. Ct. 784, 66 L. Ed. 2d 604 (1980)).
Id. at 409-10.
Count three of this petition challenges the constitutionality of 22 M.RS.A.
§ 329(8). Count four challenges the constitutionality of the CON manual. Count five
seeks declaratory relief in the form of a finding that 22 M.R.S.A. § 329(8) constitutes
unconstitutional delegation of authority. Finally, count six seeks declaratory relief
finding the CON manual unconstitutionally vague.
The Law Court provided a summation of the question of standing and its
applicability to cases wherein the constitutionality of a statute is challenged:
We have established general standing rules for litigants seeking to
challenge the validity of a statute. Although we have declined to use a
label to describe these rules, we have stated:
While standing is an amorphous concept fraught with a plurality of
meanings, its basic purpose and requirements are clear. A party must
assert a personal stake in the outcome of the litigation and present a real
and substantial controversy touching on the legal relations of parties with
adverse legal interests.
Franklin Property Trust v. Foresite, Inc., 438 A.2d 218, 220 (Me. 1981)
(internal citations omitted). To have standing to challenge a statute's
validity, "a party must actually be deprived of a constitutional right by the
operation of the statute." State v. York, 1997 ME 209, 704 A.2d 324 (citing
Brann v. State, 424 A.2d 699, 702 (Me. 1981)). We can raise the issue of
standing sua sponte as it is jurisdictional. See Nemon v. Summit Floors, Inc.,
520 A.2d 1310, 1312 (Me. 1987).
Collins v. State, 2000 ME 85, 15, 750 A.2d 1257, 1260.
The petitioner asks this court to analyze the circumstances with guidance from a
1985 decision of the Kennebec County Superior Court wherein it determined that,
“[plaintiff] should not be required to exhaust the CON process when the very necessity
of the process is seriously in question. The Court is persuaded that this is one of those
Tare cases in which an agency’s decision, even if ‘preliminary,’ is reviewable because
‘review of the final agency action would not provide an adequate remedy.” 5M.RS.A,
§ 1101(1). MediMaine v. Petit, Civil Action CV-84-272 (1985 MLE. Super. LEXIS 31). In
that case, the court noted that the Certificate of Need Act does not provide for agency
reconsideration of a threshold determination that an acquisition of major medical
equipment is reviewable in the absence of a final determination by the commissioner
after reconsideration of the review process. The Court held,
Whether MediMaine will treat hospital inpatients with its scanner is a
straightforward, nontechnical question of fact that does not require the
special expertise of the Department. If the Department’s determination
that MediMaine will treat inpatients is unsupported by substantial
evidence, its decision to subject MediMaine to the costly, time consuming
CON administrative procedure is an essentially arbitrary one.
The respondents, on the other hand, ask this court to be guided by the analysis in
a later Superior Court case, under similar circumstances, finding that plaintiff had failed
to provide the court with sufficient supporting documentation indicating the actual
monetary loss from filing a license application, erroneous administrative orders and
other prospective monetary losses, and therefore declined to find “irreparable injury.”
Portland Surgery Center, LLC v. Commissioner, Me. Dept. of Human Services, Cumberland
Superior Court Civil Action AP-03-74. In that case, the court was asked to overrule a
finding by the CON Unit that plaintiffs proposed ambulatory surgical facility to be
located at a specific address in Portland was subject to CON review. Whereas in
7
MediMaine the court found that the issue of whether hospital inpatients would be
treated with the scanner was a straightforward, nontechnical question of fact not
requiring the special expertise of the Department of Human Services, the Portland
Surgery Center court found that the analysis as to the ambulatory surgical facility was
not as straightforward and nontechnical as the question presented in MediMaine and
therefore required the expertise of the Department of Human Services.
The CON Act provides:
A certificate of need from the department is required for: ...
(8) Any projects that the Department determines are related projects if
such projects, considered in the aggregate, would otherwise require a
certificate of need under this section.
22 M.R.S.A. § 329(8).
Obviously the operative word is “related.” Neither the statutes nor the
regulations appear to provide a definition or a basis for a meaning of the term
“related.”? While the term “related” is clearly ambiguous, it obviously must be
interpreted in light of the context, ie. the requirement of the CON Act. This is more
than a straightforward, nontechnical interpretation which any layman could determine
from agreed facts; it clearly requires the expertise of the regulatory agency to determine
its applicability in this case.
Petitioner has not provided an allegation in its petition as to the nature and
extent of the harm to be visited upon it in the event the respondents prevail on its
motion to dismiss nor the basis upon which it would be considered irreparable. It goes
without saying that the impact on a small hospital in going through the Certificate of
* The Department of Human Services in its memorandum of law says, “The determination of whether the
projects are related requires, but is not limited to, a carefully analysis of (1) the types of services to be
offered at each proposed facility; (2) the capital expenditures for each project; (3) the future operating
cost for each proposed facility; and (4) the service provider (at each proposed facility). The respondents
cite no authority for those standards nor indicates any source for such requirements. Indeed, one of
petitioner’s serious complaints is the absence of articulated standards for the determination of
applicability based upon “relationship.”
8
Need process, particularly if there is a competing application by a larger health facility,
is expensive, time consuming, and, in this case, greatly delayed by the moratorium,
which, in itself, is of uncertain duration. Adding to that burden is the possibility that
the Certificate of Need would be denied leading to the question whether the petitioner
would be irreparably harmed by that denial. The tragedy arising out of such
circumstances is for the petitioner to undertake the time, expense and delay of the
process, whether successful or not, only to have it determined at the conclusion of the
process that, as a matter of law, the decision on applicability of the CON Act was in
error. Such matters of reality of pure economics in the business world is serious and
may be devastating to a small sized health care provider but it is not necessarily an
irreparable injury.
Notwithstanding the issue of standing as it relates to petitioner with regard to
the constitutional questions, petitioner clearly has not suffered a deprivation of
property or its rights at any stage of the proceedings. Its only investment has been the
preparation and submission of a letter of intent and the receipt of an unfavorable
response. Clearly this requires final agency action, exhaustion of administrative review,
as well as the establishment of deprivation of due process.
For all the reasons enumerated, the entry will be:
Respondents’ motion to dismiss is GRANTED?
Dated: March ¢¢ 2004 ipl’
Donald H. Marden
Justice, Superior Court
° The court has not addressed the estoppel argument brought forward by the petitioner since it is
satisfied that the statute, regulation and the Bureau of the Department of Human Services in the previous
case are not consistent with the present case.
Date Filed
12/29/03 Kennebec
Docket No. —APO3=70-
County
Action Petition for Review
80C
York Hospital YS. _Willaim Perfetto & DHS
Plaintiff's Attorney Defendant’s Attorney
Joseph M. Kozak, Esq. Janine Keck Massey, AAG
160 Capitol Street 6 State House Station
Augusta, Maine 04330 Augusta, Maine 04333-0006
Julius Ciembroniewicz, Esq.
Michael D, Seitzinger, Esq.
Date of
Entry
12/29/03 Petition for Review of Final Agency Action and for Declaratory Relief,
filed. s/Kozak, Esq.
1/7/04 Petitioner's Motion to Specify Future Course of Proceedings, filed.
s/Kozak, Esq. s/Seitzinger, Esq.
Proposed Order, filed.
1/15/04 Answer, filed. s/Massey, AAG
Entry of Appearance, filed. s/Massey, AAG
Respondents’ Motion to Dismiss with Incorporated Memorandum of Law and
Request for Hearing, filed. s/Massey, AAG
Proposed Order, filed.
1/28/04 Respondents’ Response to Petitioner's Motion to Specify Future Course
of Proceedings, filed. s/J. Massey, AAG.
2/4/04 Petitioners’ Memorandum in Opposition to Motion to Dismiss, filed.
s/Seitzinger, Esq.
Petitioners's Statement of Material Facts in Opposition to Motion to
Dismiss, filed. s/Seitzinger, Esq.
Affidavit of Joseph M. Kozak, Esq. in Opposition to Motion to Dismiss,
filed. s/Kozak, Esq, (attached exhibits 1-4)
2/11/04 Respondent's Motions to Exélude with Incorporated Memorandum of Law,
filed. s/Massey, AAG
Proposed Order, filed.
Respondents’ Reply to Petitioner's Opposition to Motion to Dismiss, filed
s/Massey, AAG.
2/20/04 Petitioner's Memorandum in Opposition to Motion to Exclude, filed.
s/Kozak, Esq. s/Seitzinger, Esq.
2/27/04 Respondents' Reply to Petitioner's Opposition to Motion to Exclude, filed.
Massey, AAG.
3/2/04
Hearing held on Motion to Dismiss and Motion to Exclude with Hon. Justice
Donald Marden, presiding. Tape #655 Index 1855-3112
Michael Seitzinger, Esq. for the Plaintiff and Janine Massey, AAG for