GENERAL ASSEMBLY OF NORTH CAROLINA
1987 SESSION
CHAPTER 511
AN ACT TO AMEND THE CERTIFICATE OF NEED LAW.
The General Assembly of North Carolina enacts:
Section 1. Article 9 of Chapter 131E of the General Statutes reads as rewritten:
"ARTICLE 9.
"Certificate of Need.
"§ 131E-175. Findings of fact.-The General Assembly of North Carolina makes the following findings:
(1) That, because of
the manner in which health care is financed, the forces of free market
competition are largely absent and that government regulation is therefore
necessary to control the cost, utilization, and distribution of health services
That the financing of health care, particularly the reimbursement of
health services rendered by health service facilities, limits the effect of
free market competition and government regulation is therefore necessary to
control costs, utilization, and distribution of new health service facilities
and the bed complements of these health service facilities.
(2) That the continuously
increasing cost of health care services offered through health service
facilities threatens the health and welfare of the citizens of this State
in that citizens need assurance of economical and readily available health
care.
(3) That the current
system of planning for health care facilities and equipment has led to the
proliferation of new inpatient acute care facilities and medical equipment
beyond the need of many localities in this State and an inadequate supply of
health personnel and of resources for long term, intermediate, and ambulatory
care in many localities. That, if left to the market place to allocate
health service facilities and health care services, geographical
maldistribution of these facilities and services would occur and, further, less
than equal access to all population groups, especially those that have
traditionally been medically underserved, would result.
(4) That this trend of
the proliferation of unnecessary health care service facilities
and equipment results in costly duplication and underuse of facilities,
with the availability of excess capacity leading to unnecessary use of
expensive resources and overutilization of acute care hospital health
care services by physicians.
(5) That a
certificate of need law is required by Title XV of the Public Health Service
Act as a condition for receipt of federal funds. If these funds were withdrawn
the State of North Carolina would lose in excess of fifty-five million dollars
($55,000,000).
(6) That excess capacity of health service facilities places an enormous economic burden on the public who pay for the construction and operation of these facilities as patients, health insurance subscribers, health plan contributors, and taxpayers.
(7) That the general
welfare and protection of lives, health, and property of the people of this
State require that new institutional health services to be offered within this
State be subject to review and evaluation as to type, level, need, cost
of service, accessibility to services, quality of care, feasibility, and
other criteria as determined by provisions of this Article or by the North
Carolina Department of Human Resources pursuant to provisions of this Article
prior to such services being offered or developed in order that only
appropriate and needed institutional health services are made available in the
area to be served.
"§ 131E-176. Definitions.-As used in this Article, unless the context clearly requires otherwise, the following terms have the meanings specified:
(1) 'Ambulatory surgical facility' means a facility designed for the provision of an ambulatory surgical program. An ambulatory surgical facility serves patients who require local, regional or general anesthesia and a period of post-operative observation. An ambulatory surgical facility may only admit patients for a period of less than 24 hours and must provide at least one designated operating room and at least one designated recovery room, have available the necessary equipment and trained personnel to handle emergencies, provide adequate quality assurance and assessment by an evaluation and review committee, and maintain adequate medical records for each patient. An ambulatory surgical facility may be operated as a part of a physician or dentist's office, provided the facility is licensed under G.S. Chapter 131E, Article 6, Part D, but the performance of incidental, limited ambulatory surgical procedures which do not constitute an ambulatory surgical program as defined in subdivision (1a) and which are performed in a physician's or dentist's office does not make that office an ambulatory surgical facility.
(1a) 'Ambulatory surgical program' means a formal program for providing on a same-day basis those surgical procedures which require local, regional or general anesthesia and a period of post-operative observation to patients whose admission for more than 24 hours is determined, prior to surgery, to be medically unnecessary.
(2) 'Bed capacity' means
space used exclusively for inpatient care, including space designed or
remodeled for licensed inpatient beds even though temporarily not used for such
purposes. The number of beds to be counted in any patient room shall be the
maximum number for which adequate square footage is provided as established by regulations
rules of the Department except that single beds in single rooms are
counted even if the room contains inadequate square footage. The term
'bed capacity' also refers to the number of dialysis stations in kidney disease
treatment centers, including freestanding dialysis units.
(2a) 'Capital expenditure' means an expenditure which under generally accepted accounting principles is not properly chargeable as an expense of operation and maintenance.
(3) 'Certificate of need'
means a written order of the Department setting forth the affirmative findings
that a proposed project sufficiently satisfies the plans, standards, and
criteria prescribed for such projects by this Article and by rules and regulations
of the Department as provided in G.S. 131E-183(a) and which affords the
person so designated as the legal proponent of the proposed project the
opportunity to proceed with the development of such project.
(4) 'Certified cost estimate' means an estimate of the total cost of a project certified by the proponent of the project within 60 days prior to or subsequent to the date of submission of the proposed new institutional health service to the Department and which is based on:
a. Preliminary plans and specifications;
b. Estimates of the cost of equipment certified by the manufacturer or vendor; and
c. Estimates of the cost of management and administration of the project.
(5) 'Change in bed
capacity' means (i) any increase in the total number of beds, or (ii) any
relocation of beds from one physical facility or site to another, or (iii) a
decrease in the total number of beds when that decrease involves a capital
expenditure exceeding the expenditure minimum as defined in subdivision (16)b
of this section, or (iv) a redistribution of beds among different categories
when that redistribution involves a capital expenditure exceeding the
expenditure minimum as defined in subdivision (16)b of this section. For
purposes of this subdivision "beds" means beds in hospitals,
rehabilitation facilities, psychiatric facilities, chemical dependency
treatment facilities, intermediate care facilities, skilled nursing facilities
and intermediate care facilities for the mentally retarded.(i) any
relocation of health service facility beds, or dialysis stations from one
licensed facility or campus to another, or (ii) any redistribution of health
service facility bed capacity among the categories of health service facility
bed as defined in G.S. 131E-176 (9c), or (iii) any increase in the number of
health service facility beds, or dialysis stations in kidney disease treatment
centers, including freestanding dialysis units.
(5a) 'Chemical dependency treatment facility' means a public or private facility, or unit in a facility, which is engaged in providing 24-hour a day treatment for chemical dependency or substance abuse. This treatment may include detoxification, administration of a therapeutic regimen for the treatment of chemically dependent or substance abusing persons and related services. The facility or unit may be:
a. A unit within a general hospital or an attached or freestanding unit of a general hospital licensed under Article 5, Chapter 131E, of the General Statutes,
b. A unit within a psychiatric hospital or an attached or freestanding unit of a psychiatric hospital licensed under Article 1A of General Statutes Chapter 122 or Article 2 of General Statutes Chapter 122C,
c. A freestanding facility specializing in treatment of persons who are substance abusers or chemically dependent licensed under Article 1A of General Statutes Chapter 122 or Article 2 of General Statutes Chapter 122C; and may be identified as "chemical dependency, substance abuse, alcoholism, or drug abuse treatment units," "residential chemical dependency, substance abuse, alcoholism or drug abuse facilities," "social setting detoxification facilities" and "medical detoxification facilities," or by other names if the purpose is to provide treatment of chemically dependent or substance abusing persons, but shall not include halfway houses or recovery farms.
(5b) 'Chemical dependency treatment beds' means beds that are licensed for detoxification or for the inpatient treatment of chemical dependency. Residential treatment beds for the treatment of chemical dependency or substance abuse are chemical dependency treatment beds but those residential treatment beds that were developed and operated without a certificate of need shall not be counted in the inventory of chemical dependency treatment beds in the State Health Plans prepared by the Department pursuant to G.S. 131E-177(4) after July 1, 1987. The State Health Plans prepared after July 1, 1987, shall also contain no limitation on the proportion of the overall inventory of chemical dependency treatment beds located in any of the types of chemical dependency treatment facilities identified in subdivision (5a).
(6) 'Department' means the North Carolina Department of Human Resources.
(7) To 'develop' when used in connection with health services, means to undertake those activities which will result in the offering of institutional health service not provided in the previous 12-month reporting period or the incurring of a financial obligation in relation to the offering of such a service.
(8) 'Final
decision' means an approval, an approval with conditions, or denial of an
application for a certificate of need.
(9) 'Health
care facilities' means hospitals; psychiatric facilities; skilled nursing
facilities; kidney disease treatment centers, including freestanding
hemodialysis units; intermediate care facilities, including intermediate care
facilities for the mentally retarded or persons with related conditions; rehabilitation
facilities; home health agencies; chemical dependency treatment facilities, and
ambulatory surgical facilities.
(9a) 'Health service' means an organized, interrelated medical, diagnostic, therapeutic, and/or rehabilitative activity that is integral to the clinical management of a sick, injured, or disabled person. 'Health service' does not include administrative and other activities that are not integral to clinical management.
(9b) 'Health service facility' means a hospital; psychiatric facility; rehabilitation facility; long term care facility; kidney disease treatment center, including freestanding hemodialysis units; intermediate care facility for the mentally retarded; home health agency; chemical dependency treatment facility; and ambulatory surgical facility.
(9c) 'Health service facility bed' means a bed licensed for use in a health service facility in the categories of (i) acute care beds; (ii) psychiatric beds; (iii) rehabilitation beds; (iv) intermediate nursing care or skilled nursing care beds; (v) intermediate care beds for the mentally retarded; and (vi) chemical dependency treatment beds.
(10) 'Health maintenance organization (HMO)' means a public or private organization which has received its certificate of authority under Chapter 57B of the General Statutes and which either is a qualified health maintenance organization under Section 1310(d) of the Public Health Service Act or:
a. Provides or otherwise makes available to enrolled participants health care services, including at least the following basic health care services: usual physician services, hospitalization, laboratory, X ray, emergency and preventive services, and out-of-area coverage;
b. Is compensated, except for copayments, for the provision of the basic health care services listed above to enrolled participants by a payment which is paid on a periodic basis without regard to the date the health care services are provided and which is fixed without regard to the frequency, extent, or kind of health service actually provided; and
c. Provides physicians' services primarily (i) directly through physicians who are either employees or partners of such organizations, or (ii) through arrangements with individual physicians or one or more groups of physicians organized on a group practice or individual practice basis.
(11) 'Health systems agency' means an
agency, as defined by
Title XV of the Public Health Service Act, as amended, and
rules and regulations implementing that act an independent, private,
nonprofit corporation, incorporated in this State, that engages in regional
health planning and development functions.
(12) 'Home health agencies agency'
means a private organization or public agency, whether owned or operated by one
or more persons or legal entities, which furnishes or offers to furnish home
health services.
'Home health services' means items and services furnished to an individual by a home health agency, or by others under arrangements with such others made by the agency, on a visiting basis, and except for paragraph e. of this subdivision, in a place of temporary or permanent residence used as the individual's home as follows:
a. Part-time or intermittent nursing care provided by or under the supervision of a registered nurse;
b. Physical, occupational or speech therapy;
c. Medical social services, home health aid services, and other therapeutic services;
d. Medical supplies, other than drugs and biologicals and the use of medical appliances;
e. Any of the foregoing items and services which are provided on an outpatient basis under arrangements made by the home health agency at a hospital or nursing home facility or rehabilitation center and the furnishing of which involves the use of equipment of such a nature that the items and services cannot readily be made available to the individual in his home, or which are furnished at such facility while he is there to receive any such item or service, but not including transportation of the individual in connection with any such item or service.
(13) 'Hospital' means a public or private institution which is primarily engaged in providing to inpatients, by or under supervision of physicians, diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons. The term includes all facilities licensed pursuant to G.S. 131E-77 of the General Statutes.
(13a) 'Hospice' means any coordinated program of
home care within with provision for inpatient care for terminally
ill patients and their families. This care is provided by a medically directed
interdisciplinary team, directly or through an agreement under the direction of
an identifiable hospice administration. A hospice program of care provides
palliative and supportive medical and other health services to meet the
physical, psychological, social, spiritual and special needs of patients and
their families, which are experienced during the final stages of terminal
illness and during dying and bereavement.
(14) 'Intermediate care
facility' means a public or private institution which provides, on a regular
basis, health-related care and services to individuals who do not require the
degree of care and treatment which a hospital or skilled nursing facility is
designed to provide, but who because of their mental or physical condition
require health-related care and services above the level of room and board.
(14a) 'Intermediate care facility for the mentally retarded' means facilities licensed pursuant to Article 2 of Chapter 122C of the General Statutes for the purpose of providing health and habilitative services based on the developmental model and principles of normalization for persons with mental retardation, autism, cerebral palsy, epilepsy or related conditions.
(14b) 'Intermediate nursing care' means the provision of health-related care and services on a regular basis to individuals who do not require the degree of care and treatment that hospitals or skilled nursing care provide, but who because of their mental or physical condition require health-related care and services above the level of room and board.
(14c) 'Long term care facility' means a health service facility whose bed complement of health service facility beds is composed principally of skilled nursing beds or intermediate nursing care beds, or both.
(15) 'Major medical
equipment' means a single unit or a single system of components with related
functions which is used to provide medical and other health services and which
costs more than six hundred thousand dollars ($600,000). In determining whether
medical equipment costs more than six hundred thousand dollars ($600,000), the
costs of studies, surveys, designs, plans, working drawings, specifications and
other activities essential to acquiring the equipment shall be included. If the
equipment is acquired for less than fair market value, the cost shall be deemed
to be the fair market value.
(16) 'New institutional health services' means:
a. The
construction, development, or other establishment of a new health care service
facility;
b. The
obligation by or on behalf of a health care facility or a local health
department established under Article 2 of Chapter 130A of the General Statutes
of any capital expenditure, other than one to acquire an existing health care
facility, which exceeds the expenditure minimum. Further, increases in approved
capital expenditures, if they exceed the expenditure minimum, are also new
institutional health services. The expenditure minimum is one million dollars
($1,000,000) for the 12-month period beginning October 1, 1985. For each
12-month period thereafter the expenditure minimum shall be the figure in
effect for the preceding 12-month period, adjusted to reflect the change in the
preceding 12-month period in the Department of Commerce Composite Construction
Cost Index. The obligation by any person of any capital expenditure on
behalf of or for a health service facility as defined in subsection(9b)
of this section exceeding two million dollars ($2,000,000), other than one to
acquire an existing health service facility or to replace such a facility
destroyed or irreparably damaged by accident or natural disaster. The
cost of any studies, surveys, designs, plans, working drawings, specifications,
and other activities, including staff effort and consulting and other services,
essential to the acquisition, improvement, expansion, or replacement of
any plant or equipment with respect to which an expenditure is made shall be
included in determining if the expenditure exceeds the expenditure minimum two
million dollars ($2,000,000);
c. The
obligation of a capital expenditure by or on behalf of a health care facility
when it is associated with a change in bed capacity and within the limits set
forth in G.S. 131E-176(5) Any change in bed capacity as defined in
G.S.131E-176(5);
d. The
obligation of any capital expenditure by or on behalf of a health care facility
which is associated with the addition of a health service which was not offered
by or on behalf of the facility within the previous 12 months or with the
termination of a health service which was offered in or through the facility The
offering of dialysis services or home health services by or on behalf of a
health service facility if those services were not offered within the previous
12 months by or on behalf of the facility;
e. A change
in a project which was subject to review under paragraphs a, b, c, or d of this
subdivision and for which a certificate of need had been issued, if the change
is proposed within one year after the project was completed. For the purposes
of this paragraph, a change in a project is a change in bed capacity, the
addition of a health service, or the termination of a health service,
regardless of whether a capital expenditure is associated with the change; A
change in a project that was subject to certificate of need review and for
which a certificate of need was issued, if the change is proposed during the
development of the project or within one year after the project was
completed. For purposes of this subdivision, a change in a project is a
change of more than fifteen percent (15%) of the approved capital expenditure
amount or the addition of a health service that is to be located in the
facility, or portion thereof, that was constructed or developed in the project;
f. The
offering of a health service by or on behalf of a health care service
facility if the service was not offered by or on behalf of the health care
service facility in the previous 12 months and if the annual
operating costs of the service equal or exceed the expenditure minimum one
million dollars ($1,000,000), or the expansion of an existing health service
when an annual operating cost of one million dollars ($1,000,000) is directly
associated with the offering of the expanded portion of the service; .
The expenditure minimum for annual operating costs is two hundred fifty
thousand dollars ($250,000) for the 12-month period beginning October 1,
1979.For each 12-month period thereafter the expenditure minimum shall be the
figure in effect for the preceding 12-month period, adjusted to reflect the
change in the preceding 12-month period in the Department of Commerce Composite
Construction Cost Index;
g. The
acquisition by any person of major medical equipment that will be owned by or
located in a health care facility or the acquisition by any person of major
medical equipment that includes magnetic resonance imaging, regardless of
ownership or location;
h. The
acquisition by any person of major medical equipment not owned by or located in
a health care facility if notice of the acquisition is not filed with the
Department in accordance with rules promulgated by the Department, or the
Department, within 30 days after receipt of the notice, finds that the
equipment will be used to provide services to inpatients of a hospital,
excluding use on a temporary basis in the case of a natural disaster, a major
accident, or equipment failure, or the Department, within 30 days after receipt
of the notice, finds that the major medical equipment is among the types
enumerated in g. above;
i.
The use, excluding use on a temporary basis in the case of a natural
disaster, a major accident, or equipment failure, of major medical equipment
which was acquired without a certificate of need, to treat inpatients of a
hospital;
j.
The obligation of a capital expenditure by any person to acquire an existing
health care facility, if a notice of intent is not filed with the Department in
accordance with rules promulgated by the Department, or the Department, within
30 days after receipt of the notice of intent, finds that there will be a
change in bed capacity, the addition of a health service not offered by or on
behalf of the facility within the previous 12 months, or the termination of a
health service which was offered by or on behalf of the facility;
k. A
change in bed capacity, the addition of a health service which was not offered
by or on behalf of the facility within the previous 12 months, or the
termination of a health service which was offered by or on behalf of the
facility, in a health care facility which was acquired without a certificate of
need, if such change occurs within one year of the acquisition;
l. Notwithstanding
the provisions of G.S. 131E-176(16)h and j, the purchase, lease or acquisition
of any of the following: any health care facility, or portion thereof; major
medical equipment; a controlling interest in the health care facility, or
portion thereof; or a controlling interest in major medical equipment. The
aforesaid are new institutional health services if the asset was obtained under
a certificate of need issued pursuant to G.S. 131E-180; The purchase,
lease, or acquisition of any health service facility, or portion thereof, or a
controlling interest in the health service facility or portion thereof, if the
health service facility was developed under a certificate of need issued
pursuant to G.S. 131E-180;
m. Any conversion of
nonhealth care service facility beds to health care service
facility beds;, regardless of whether a capital expenditure is
associated with the conversion. A bed is a nonhealth care facility bed if a
facility that contained only that type of bed would not be a health care
facility. A bed is a health care facility bed if a facility that
contained only that type of bed would be a health care facility;
n. The
construction, development, or other establishment of a hospice if the operating
budget thereof is in excess of one hundred thousand dollars ($100,000) or if
there is the obligation of any capital expenditure by or on behalf of the
hospice as provided in G.S. 131E-176(16)b .
(17) 'North Carolina State Health
Coordinating Council' means the Council as defined by Title XV of the Public
Health Service Act, as amended, and rules and regulations implementing that act
that prepares, with the Department of Human Resources, the State Medical
Facilities Plan, a component of the State Health Plan.
(18) To 'offer,' when used in
connection with health services, means that the health care service facility
or health maintenance organization holds itself out as capable of providing, or
as having the means for the provision of, specified health services.
(19) 'Person' means an individual, a trust or estate, a partnership, a corporation, including associations, joint stock companies, and insurance companies; the State, or a political subdivision or agency or instrumentality of the State.
(20) 'Project' or 'capital
expenditure project' means a proposal to undertake a capital expenditure that
results in the offering of a new institutional health service as defined by
this Article. A project, or capital expenditure project, or proposed project
may refer to the project from its earliest planning stages up through the point
at which the specified new institutional health service may be offered. In the
case of facility construction, the point at which the new institutional health
service may be offered must take place after the facility is capable of being
fully licensed and operated for its intended use, and at that time it shall be
considered a health care service facility.
(21) 'Psychiatric facility' means a public or private facility licensed pursuant to Article 2 of Chapter 122C of the General Statutes and which is primarily engaged in providing to inpatients, by or under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons.
(22) 'Rehabilitation facility' means
a public or private inpatient or outpatient facility which is
operated for the primary purpose of assisting in the rehabilitation of disabled
persons through an integrated program of medical and other services which are
provided under competent, professional supervision, and shall include
'comprehensive outpatient rehabilitation facilities' as defined by the Social
Security Act and the regulations promulgated by the Department of Health and
Human Services pursuant to that act.
(23) 'Skilled nursing facility care'
means a public or private institution or a distinct part of an institution
which is primarily engaged in providing to inpatients skilled nursing care and
related services for patients the provision of that degree of care to
inpatients who require medical or nursing care, or rehabilitation services
for the rehabilitation of injured, disabled, or sick persons.
(24) 'State Health Plan' means the
plan required by Title XV of the Public Health Service Act, as amended, and
rules and regulations implementing that act prepared by the Department
of Human Resources and the North Carolina State Health Coordinating Council and
approved by the Governor.
(25) 'State Medical Facilities Plan'
means the plan a component of the State Health Plan prepared by
the Department of Human Resources and the North Carolina State Health
Coordinating Council, as required by Title XV of the Public Health Service
Act, as amended, and rules and regulations implementing that act and
approved by the Governor.
(26) Repealed by Session Laws 1983 (Regular Session, 1984), c.1002, s. 9.
(27) "Tuberculosis
hospital" means a public or private institution which is primarily engaged
in providing to inpatients, by or under the supervision of a physician, medical
services for the diagnosis and treatment of tuberculosis.
"§ 131E-177. Department of Human
Resources is designated State Health Planning and Development Agency; powers
and duties.-The Department of Human Resources
is designated as the State Health Planning and Development Agency for the State
of North Carolina, and is empowered to fulfill responsibilities defined in
Title XV of the Public Health Service Act.
The Department shall exercise the following powers and
duties:
(1) To establish
standards and criteria or plans required to carry out the provisions and
purposes of this Article and to adopt rules and regulations pursuant to
Chapter 150A 150B of the General Statutes, to carry out the
purposes and provisions of this Article;
(2) Adopt, amend, and
repeal such rules and regulations, consistent with the laws of this State, as
may be required by the federal government for grants-in-aid for health care service
facilities and health planning which may be made available by the federal
government. This section shall be liberally construed in order that the State
and its citizens may benefit from such grants-in-aid;
(3) Define, by regulation
rule, procedures for submission of periodic reports by persons or
health service facilities subject to agency review under this Article;
(4) Develop policy,
criteria, and standards for health care service facilities
planning, conduct statewide inventories of and make determinations of need for
health care service facilities, and develop a State plan
coordinated with other plans of health systems agencies with other pertinent
plans and with the State health plan of the Department State Health Plan;
(5) Implement, by regulation
rule, criteria for project review;
(6) Have the power to
grant, deny, suspend, or revoke or withdraw a certificate of need
and to impose such sanctions as are provided for by this Article;
(7) Solicit, accept, hold and administer on behalf of the State any grants or bequests of money, securities or property to the Department for use by the Department or health systems agencies in the administration of this Article; and
(8) Develop
procedures for appeals of decisions to approve or deny a certificate of need,
as provided by G.S. 131E-188; and
(9) Establish and collect fees for submitting applications for certificates-of-need, which fees shall be based on the total cost of the project for which the applicant is applying. This fee may not exceed fifteen thousand dollars ($15,000) and may not be less than four hundred dollars ($400.00).
The Secretary of Human Resources shall have final decision-making authority with regard to all functions described in this section.
"§ 131E-178. Activities requiring
certificate of need.-(a) No person shall offer
or develop a new institutional health service without first obtaining a
certificate of need from the Department. Provided that chemical
dependency treatment facilities containing beds licensed as of June 30, 1984,
shall not be required to obtain a certificate of need. A hospital shall not be
required to obtain a certificate of need for a new institutional health service
offered or developed by or on behalf of the hospital for outpatients in a
freestanding facility unless all other persons offering or developing the same
new institutional health service in a freestanding facility are required under
this Article to obtain a certificate of need.
No person, acute care hospital, or outpatient facility
shall be required to obtain a certificate of need for the acquisition of a lithotripter
or for the development, offering, or operation of a lithotripsy service.
(b) No person shall make an acquisition by donation, lease, transfer, or comparable arrangement without first obtaining a certificate of need from the Department, if the acquisition would have been a new institutional health service if it had been made by purchase. In determining whether an acquisition would have been a new institutional health service the fair market value of the asset shall be deemed to be the purchase price.
(c) No person shall incur
an obligation for a capital expenditure which is a new institutional health
service without first obtaining a certificate of need from the department Department.
An obligation for a capital expenditure is incurred by or on behalf of a
health care facility when:
(1) An enforceable
contract, excepting contracts which are expressly contingent upon issuance of a
certificate of need, is entered into by or on behalf of the health care
facility by a person for the construction, acquisition, lease or
financing of a capital asset;
(2) The governing body
of a health care facility A person takes formal action to commit its
own funds for a construction project undertaken by the health care
facility as its as his own contractor; or
(3) In the case of donated property, the date on which the gift is completed.
(d) Where the estimated cost of a proposed capital expenditure is certified by a licensed architect or engineer to be equal to or less than the expenditure minimum for capital expenditure, such expenditure shall be deemed not to exceed the expenditure minimum for capital expenditures regardless of the actual amount expended, provided that the following conditions are met:
(1) The certified estimated cost is prepared in writing 60 days or more before the obligation for the capital expenditure is incurred. Certified cost estimates shall be available for inspection at the facility and sent to the Department upon its request.
(2) The facility on whose behalf the expenditure was made notifies the Department in writing within 30 days of the date on which such expenditure is made if the expenditure exceeds the expenditure minimum for capital expenditures. The notice shall include a copy of the certified cost estimate.
(e) The Department may grant certificates of need which permit capital expenditures only for predevelopment activities. Predevelopment activities include the preparation of architectural designs, plans, working drawings, or specifications, the preparation of studies and surveys, and the acquisition of a potential site.
"§ 131E-179. Research activities.-(a) Notwithstanding any other provisions of this
Article, a health care service facility may acquire major
medical equipment to be used solely for research, offer new institutional
health services to be used solely for research, or incur the obligation of a
capital expenditure solely for research, without a certificate of need, if the
Department grants an exemption. The Department shall grant an exemption if the
health care service facility files a notice of intent with the
Department in accordance with rules promulgated by the Department and if the
Department finds that the acquisition, offering or obligation will not:
(1) Affect the charges of
the health care service facility for the provision of medical or
other patient care services other than services which are included in the
research;
(2) Substantially change the bed capacity of the facility; or
(3) Substantially change the medical or other patient care services of the facility.
(b) After a health care
service facility has received an exemption pursuant to subsection
(a) of this section, it shall not use the major medical equipment, offer
the new institutional health services, or use the equipment or a
facility acquired through the capital expenditure, in a manner which
affects the charges of the facility for the provision of medical or other
patient care services, other than the services which are included in the
research and shall not charge patients for the use of the service for which
an exemption has been granted, without first obtaining a certificate of
need from the Department.
(c) Any of the activities described in subsection (a) of this section shall be deemed to be solely for research even if they include patient care provided on an occasional and irregular basis and not as a part of the research program.
"§ 131E-180. Health maintenance
organization.-(a) Subject to the provisions of
subsection (b) of this section, no inpatient health care service facility
controlled, directly or indirectly, by a health maintenance organization, (HMO),
hereinafter referred to as HMOs, or combination of HMOs, shall offer
or develop new institutional health services without first obtaining a
certificate of need from the Department. Further, subject to the provisions
of subsection (b) of this section, no health care service facility of an HMO
shall offer or develop any of the new institutional health services specified
in G.S. 131E-176(16)g, h, and i without first obtaining a certificate of need
from the Department. This section shall not be construed as requiring
that a certificate of need be obtained before an HMO is established.
(b) The requirements of
subsection (a) of this section shall not apply to any person who receives an
exemption under this subsection. In order to receive an exemption an
application must be submitted to the Department and the appropriate health
systems agency or agencies. The application shall be on forms prescribed by the
Department and contain the information required by the Department. The
application shall be submitted at a time and in a manner prescribed by the
rules and regulations of the Department. The Department may grant an
exemption if it finds that the applicant is qualified or will be qualified on
the date the activity is undertaken. Any of the following are qualified
applicants:
(1) An HMO or combination of HMOs, if (i) the HMO or combination of HMOs has an enrollment of at least 50,000 individuals in its service area, (ii) the facility in which the service will be provided is or will be geographically located so that the service will be reasonably accessible to the enrolled individuals, and (iii) at least seventy-five percent (75%) of the patients who can be reasonably expected to receive the health service will be individuals enrolled in the HMO or HMOs in combination; or
(2) A health care service
facility, or portion thereof, if (i) the facility primarily provides or
will provide inpatient health services, (ii) the facility is or will be
controlled, directly or indirectly, by an HMO or combination of HMOs with an
enrollment of at least 50,000 individuals in its service area, (iii) the facility
is or will be geographically located so that the service will be reasonably
accessible to the enrolled individuals, and (iv) at least seventy-five percent
(75%) of the patients who can be reasonably expected to receive the health
service will be individuals enrolled with the HMO or HMOs in combination; or
(3) A health care service
facility, or portion thereof, if (i) the facility is or will be leased by
an HMO or combination of HMOs with an enrollment of at least 50,000 individuals
in its service area and on the date the application for exemption is submitted
at least 15 years remain on the lease, (ii) the facility is or will be
geographically located so that the service will be reasonably accessible to the
enrolled individuals, and (iii) at least seventy-five percent (75%) of the
patients who can be reasonably expected to receive the health service will be
individuals enrolled with the HMO or HMOs in combination.
(c) If a fee-for-service component of an HMO or combination of HMOs qualifies for an exemption under subsection (b) of this section, then it must be granted an exemption.
(d) In reviewing certificate of need applications submitted pursuant to this section, the Department shall not deny the application solely because the proposal is not addressed in the applicable health systems plan, annual implementation plan or State Health Plan.
(e) Notwithstanding the
review criteria of G.S. 131E-183(a), if an HMO or a health care service
facility which is controlled, directly or indirectly, by an HMO applies for
a certificate of need, the Department may grant the certificate if it finds, in
accordance with G.S. 131E-183(a)(10), that (i) granting the certificate is
required to meet the needs of the members of the HMO and of the new members
which the HMO can reasonably be expected to enroll, and (ii) the HMO is unable
to provide, through services or facilities which can reasonably be expected to
be available to the HMO, its health services in a reasonable and cost-effective
manner which is consistent with the basic method of operations of the HMO and
which makes these services available on a long-term basis through physicians
and other health professionals associated with it.
"§ 131E-181. Nature of certificate of need.-(a) A certificate of need shall be valid only for the defined scope, physical location, and person named in the application. A certificate of need shall not be transferred or assigned. Provided, however, that a certificate of need granted to operate a hospital may be transferred or assigned to another person undertaking a legal obligation to own or operate the hospital if the Department determines that:
(1) The existing hospital cannot reasonably continue operating in a manner sufficient to provide the health services for which its certificate of need was granted;
(2) Another person is ready, willing and able to assume ownership or operation of the hospital and to provide the appropriate and needed health services;
(3) Failure to approve the transfer or assignment would likely result in a significant deficiency in the level of health services available in the area to be served; and
(4) There is no pending application for a certificate of need which is likely to be granted for providing the appropriate and needed services within time to prevent a significant deficiency in the level of health services available in the area to be served. Any certificate of need transferred or assigned under this section may be under such conditions as the Department considers necessary to best protect the health and lives of the people of this State.
(b) A recipient of a
certificate of need, or any person who may subsequently acquire, in any manner
whatsoever permitted by law, the service for which that certificate of need was
issued, is required to materially comply with the representations made in its
application for that certificate of need. The Department may by rule require
any recipient of a certificate of need, or its successor, whose service is in
operation to submit to the Department evidence that the recipient, or its
successor, is in material compliance with the representations made in its
application for the certificate of need which granted the recipient the right
to operate that service. The Secretary is authorized to adopt, amend, and
repeal rules to administer this subsection. In determining whether
the recipient of a certificate of need, or its successor, is operating a
service which materially differs from the representations made in its
application for that certificate of need, the court Department shall
consider cost increases to the recipient, or its successor, including, but not
limited to, the following:
(1) Any increase in the consumer price index;
(2) Any increased cost incurred because of Government requirements, including federal, State, or any political subdivision thereof; and
(3) Any increase in cost due to professional fees or the purchase of services and supplies.
(c) Whenever a certificate of need is issued more than 12 months after the application for the certificate of need began review, the Department shall adjust the capital expenditure amount proposed by increasing it to reflect any inflation in the Department of Commerce's Construction Cost Index that has occurred since the date when the application began review; and the Department shall use this recalculated capital expenditure amount in the certificate of need issued for the project.
"§ 131E-182. Application.-(a) The Department in its rules and regulations shall
establish schedules for submission and review of completed applications. The
schedules, which shall be consistent with federal law and regulations, shall
provide that applications for similar proposals in the same health service area
will be reviewed together.
(b) An application for a
certificate of need shall be made on forms provided by the Department. The
application forms, which may vary according to the type of proposal, shall
require such information as the Department, by its rules and regulations,
deems necessary to conduct the review. An applicant shall be required to
furnish only that information necessary to determine whether the proposed new
institutional health service is consistent with the review criteria implemented
under G.S. 131E-183 and with duly adopted standards, plans and criteria.
(c) All fees established
by the Department for submitting an application for a certificate-of-need certificate
of need are due when the application is submitted. These fees are not
refundable, regardless of whether a certificate-of-need certificate
of need is issued.
"§ 131E-183. Review criteria.-(a) The Department shall promulgate rules
implementing criteria outlined in this subsection to determine whether an applicant
is to be issued a certificate for the proposed project. Criteria so implemented
are to be consistent with federal law and regulations and shall cover: review
all applications utilizing the criteria outlined in this subsection and shall
determine if an application is consistent with these criteria and whether a
certificate of need for the proposed project shall be issued.
(1) The relationship of
the proposed project shall be consistent with applicable policies
and projections in to the State Medical Facilities Plan, [and] and
the State Health Plan.
(2) The
relationship of services reviewed to the long-range development plan, if any,
of the persons providing or proposing such services.
(3) The need that The
applicant shall identify the population served or to be served
by such services has for such services, and the extent to which all
residents of the area, and in particular low income persons, racial and ethnic
minorities, women, handicapped persons and other underserved groups, and the
elderly, are likely to have access to those services the proposed
project, and shall demonstrate the need that this population has for the
services proposed, and the extent to which all residents of the area, and, in
particular, low income persons, racial and ethnic minorities, women,
handicapped persons, the elderly, and other underserved groups are likely to
have access to the services proposed.
(3a) In the case of a reduction or elimination
of a service, including the relocation of a facility or a service, the
applicant shall demonstrate that the need that needs of the
population presently served has for the service, the extent to which that
need will be met adequately by the proposed relocation or by alternative
arrangements, and the effect of the reduction, elimination or relocation of the
service on the ability of low income persons, racial and ethnic minorities,
women, handicapped persons, and other underserved groups and the elderly to
obtain needed health care.
(4) The availability of
less costly or more effective alternative methods of providing the services to
be offered, expanded, reduced, relocated or eliminated Where alternative
methods of meeting the needs for the proposed project exist, the applicant
shall demonstrate that the least costly or most effective alternative has been
proposed.
(5) Financial and
operational projections for the project shall demonstrate the availability of
funds for capital and operating needs as well as the The immediate
and long-term financial feasibility of the proposal, as well as the probable
impact of the proposal on based upon reasonable projections of the
costs of and charges for providing health services by the person proposing the
service.
(6) The relationship of
the services proposed to be provided to the existing health care system of the
area in which such services are proposed to be provided The applicant
shall demonstrate that the proposed project will not result in unnecessary
duplication of existing or approved health service capabilities or facilities.
(7) The applicant shall
show evidence of the availability of resources, including health manpower,
manpower and management personnel, and funds for capital and
operating needs, for the provision of the services proposed to be provided.
Further, the applicant shall show that the use of these resources for provision
of these services will not preclude alternative uses of these resources to
fulfill other more important needs identified by the applicable State Health
Plan. and the need for alternative uses of these resources as identified
by the applicable health systems plan, annual implementation plan or State
Health Plan.
(8) The relationship,
including the organizational relationship, of the health services proposed to
be provided to ancillary or support services. The applicant shall
demonstrate that the provider of the proposed services will make available, or
otherwise make arrangements for, the provision of the necessary ancillary and
support services. The applicant shall also demonstrate that the proposed
service will be coordinated with the existing health care system.
(9) Special needs and
circumstances of those entities which provide a substantial portion of their
services or resources, or both, to individuals not residing in the health
service areas in which the entities are located or in adjacent health service
areas. Such entities may include medical and other health professions schools,
multidisciplinary clinics and specialty centers. An applicant proposing
to provide a substantial portion of the project's services to individuals not
residing in the health service area in which the project is located, or in
adjacent health service areas, shall document the special needs and
circumstances that warrant service to these individuals.
(10) The special needs and
circumstances of HMOs. These needs and circumstances shall be limited to When
applicable, the applicant shall show that the special needs of health
maintenance organizations will be fulfilled by the project. Specifically,
the applicant shall show that the project accommodates:
a. The needs of enrolled members and reasonably anticipated new members of the HMO for the health service to be provided by the organization; and
b. The
availability of new health services from non-HMO providers or other HMOs in a
reasonable and cost-effective manner which is consistent with the basic method
of operation of the HMO. In assessing the availability of these health services
from these providers, the Department applicant shall consider
only whether the services from these providers:
1. Would be available under a contract of at least five years' duration;
2. Would be available and conveniently accessible through physicians and other health professionals associated with the HMO;
3. Would cost no more than if the services were provided by the HMO; and
4. Would be available in a manner which is administratively feasible to the HMO.
(11) The special needs and
circumstances of biomedical and behavioral research projects which are designed
to meet a national need and for which local conditions offer special
advantages.
(12) In the case of a construction
project, the costs and methods of the proposed construction, including the
costs and methods of energy provision, and the probable impact of the
construction project reviewed on the costs of providing health services by the
person proposing the construction project and on the costs and charges to the
public of providing health services by other persons Applications
involving construction shall demonstrate that the cost, design, and means of
construction proposed represent the most reasonable alternative, and that the
construction project will not unduly increase the costs of providing health
services by the person proposing the construction project or the costs and
charges to the public of providing health services by other persons, and that
applicable energy saving features have been incorporated into the construction
plans.
(13) The applicant shall
demonstrate the The contribution of the proposed service in meeting
the health-related needs of the elderly and of members of medically
underserved groups, such as medically indigent or low income persons, Medicaid
and Medicare recipients, racial and ethnic minorities, women, and
handicapped persons, which have traditionally experienced difficulties in
obtaining equal access to the proposed health services,
particularly those needs identified in the applicable health systems plan,
annual implementation plan, and State Health Plan as deserving of priority.
For the purpose of determining the extent to which the proposed service will be
accessible, the Department shall consider applicant shall show:
a. The extent
to which medically underserved populations currently use the applicant's proposed
existing services in comparison to the percentage of the population
in the applicant's service area which is medically underserved, and the
extent to which medically underserved populations are expected to use the
proposed services if approved;
b. The Its
past performance of the applicant in meeting its obligation, if any,
under any applicable regulations requiring provision of uncompensated care,
community service, or access by minorities and handicapped persons to programs
receiving federal assistance, including the existence of any civil rights
access complaints against the applicant;
c. The
extent to which Medicare, Medicaid and medically indigent patients are served
by the applicant That the elderly and the medically underserved groups
identified in this subdivision will be served by the applicant's proposed
services and the extent to which each of these groups is expected to utilize
the proposed services; and
d. The
extent to which That the applicant offers a range of means by which
a person will have access to its services. Examples of a range of means are
outpatient services, admission by house staff, and admission by personal
physicians.
(14) The effect of the means
proposed for delivery of the health services on the clinical needs of health
professional training programs in the area in which the services are to be
provided The applicant shall demonstrate that the proposed health
services accommodate the clinical needs of health professional training
programs in the area, as applicable.
(15) If the proposed health
services are to be available in a limited number of facilities, the extent to
which the health professions schools in the area will have access to the
services for training purposes.
(16) The special
circumstances of health care facilities with respect to the need for conserving
energy.
(17) In accordance with
Section 1502(b) of the Public Health Service Act, 42 U.S.C. 300k-2(b), the
factors which influence the effect of competition on the supply of the health
services being reviewed.
(18) Improvements or
innovations in the financing and delivery of health services which foster
competition, in accordance with Section 1502(b) of the Public Health Service
Act, 42 U.S.C. 300k-2(b), and serve to promote quality assurance and cost
effectiveness.
(18a) The applicant shall demonstrate the expected effects of the proposed services on competition in the proposed service area, including how any enhanced competition will have a positive impact upon the cost effectiveness, quality, and access to the services proposed; and in the case of applications for services where competition between providers will not have a favorable impact on cost effectiveness, quality, and access to the services proposed, the applicant shall demonstrate that its application is for a service on which competition will not have a favorable impact.
(19) In the case of proposed
health services or facilities, the efficiency and appropriateness of the use of
existing, similar services and facilities.
(20) In the case of existing
services or facilities, the quality of care provided in the past An
applicant already involved in the provision of health services shall provide
evidence that quality care has been provided in the past.
(21) When an application is
made by an osteopathic or allopathic facility for a certificate of need
to construct, expand, or modernize a health care facility, acquire major
medical equipment, or add services, the need for that construction, expansion,
modernization, acquisition of equipment, or addition of services shall be
considered on the bases of the need for and availability in the community of
services and facilities for osteopathic and allopathic physicians and their
patients. The Department shall consider the application in terms of its impact
on existing and proposed institutional training programs for doctors of
osteopathy and medicine at the student, internship, and residency training
levels.
(b) Criteria adopted
for reviews in accordance with subsection (a) of this section may vary
according to the purpose for which a particular review is being conducted or
the type of health service reviewed The Department is authorized to
adopt rules for the review of particular types of applications that will be
used in addition to those criteria outlined in subsection (a) of this section
and may vary according to the purpose for which a particular review is being
conducted or the type of health service reviewed.
(c) (See
Editor's Note for Applicability and Effective Date). In reviewing applications
for skilled nursing facilities or intermediate care facilities to be provided
within a "life care" or "care for life" institution, the
determination of need for beds shall not include a relationship of the proposed
project to the need for such services specified in the State Medical Facilities
Plan or State Health Plan provided that (i) the use of the proposed facilities
is to be limited to resident members of the "life care" or "care
for life" institution, (ii) the facilities are not to be certified for
participation in either the Medicare or Medicaid programs, (iii) the ratio of
skilled nursing facility beds and intermediate care facility beds to
domiciliary and other residential arrangements shall not exceed one to three,
and (iv) the facilities are to be developed after residential housing has been
established or be developed as a part of a total housing construction program
which shall result in the complex being one inseparable project. Facilities
developed under this provision shall not alter the need for nursing home beds
for the general population that exists now or at any time in the future.
"§ 131E-184. Required approvals Exemptions
from review.-(a)Except as provided in
subsection (b), the Department shall issue a exempt from certificate
of need review for a proposed capital expenditure if it
receives notice from the entity proposing to make the capital expenditure,
which notice includes an explanation of why the expenditure is required:
(1) The capital
expenditure is required (i) to To eliminate or prevent imminent
safety hazards as defined in federal, State, or local fire, building, or life
safety codes or regulations, or (ii) to ;
(1a) To comply with
State licensure standards, or (iii) to ;
(1b) To comply with
accreditation or certification standards which must be met to receive
reimbursement under Title XVIII of the Social Security Act or payments under a
State plan for medical assistance approved under Title XIX of that act; and
(2) The
Department determines that (i) the facility or services for which the capital
expenditure is proposed is needed, and (ii) the obligation of the capital
expenditure is consistent with the State Health Plan. Even though the proposal
is inconsistent with the State Health Plan, the Department may issue a
certificate of need if emergency circumstances pose an imminent threat to
public health.
(3) To provide data processing equipment;
(4) To provide parking, heating or cooling systems, elevators, or other basic plant or mechanical improvements, unless these activities are integral portions of a project that involves the construction of a new health service facility or portion thereof and that is subject to certificate of need review; or
(5) To replace or repair facilities destroyed or damaged by accident or natural disaster.
(b) Those portions of a
proposed project which are not to eliminate or prevent safety hazards or to
comply with certain licensure, certification, or accreditation standards proposed
for one or more of the purposes under subsection (a) of this section are
subject to review under the criteria developed under G.S. 131E-183 certificate
of need review, if these non-exempt portions of the project are new
institutional health services under G.S. 131E-176(16).
(c) The Department shall exempt from certificate of need review any conversion of existing acute care beds to psychiatric beds provided:
(1) The hospital proposing the conversion has executed a contract with the Department's Division of Mental Health, Mental Retardation, and Substance Abuse Services and/or one or more of the Area Mental Health, Mental Retardation, and Substance Abuse Authorities to provide psychiatric beds to patients referred by the contracting agency or agencies; and
(2) The total number of beds to be converted shall not be more than twice the number of beds for which the contract pursuant to subdivision (1) of this subsection shall provide.
"§ 131E-185. Review process.-(a)Except as provided in subsection (c) of this
section there shall be a time limit of 90 days for review of the project
beginning on the day the Department declares the application "complete for
review," as established by departmental regulations.
(1) The
appropriate health systems agency or agencies shall have 60 days to review each
application as to consistency with duly adopted plans, standards, and
criteria. Following the review the health systems agency shall submit to
the Department its comments and recommendations. The comments may include a
recommendation to approve the application, to approve the application with
conditions, to defer the application, or to deny the application. Suggested
modifications, if any, shall relate directly to the project under review.
(2) The
appropriate health systems agency shall, during the course of its review,
provide an opportunity for a public meeting at which interested persons may
introduce testimony and exhibits.
(3) Any person
may file written comments and exhibits concerning a proposal under review with
the appropriate health systems agency and the Department.
(a1) Except as provided in subsection (c) of this section, there shall be a time limit of 90 days for review of the applications, beginning on the day established by rule as the day on which applications for the particular service in the service area shall begin review.
(1) Any person may file written comments and exhibits concerning a proposal under review with the Department, not later than 45 days after the date on which the application begins review. These written comments may include:
a. Facts relating to the service area proposed in the application;
b. Facts relating to the representations made by the applicant in its application, and its ability to perform or fulfill the representations made;
c. Discussion and argument regarding whether, in light of the material contained in the application and other relevant factual material, the application complies with relevant review criteria, plans, and standards.
(2) At least 15, but no more than 30 days from the conclusion of the written comment period, the Department shall ensure that a public hearing is conducted at a place within the appropriate health service area at which oral presentations may be made regarding the application or applications under review; and this public hearing shall include the following:
a. An opportunity for the proponent of each application under review to respond to the written comments submitted to the Department about its application;
b. An opportunity for any affected person as defined in G.S. 131E-188(c), except one of the proponents, to present comments regarding the applications under review;
c. An opportunity for a representative of the Department, or such other person or persons who are designated by the Department to conduct the hearing, to question each proponent of applications under review with regard to the contents of the application;
The Department shall maintain a recording of the public hearing on each application until such time as the Department's final decision is issued, or until a final agency decision is issued pursuant to a contested case hearing, whichever is later; and any person may submit a written synopsis or verbatim statement that contains the oral presentation made at the hearing.
(3) The Department may contract or make arrangements with a person or persons located within each health service area for the conduct of such public hearings as may be necessary. The Department shall publish, in each health service area, notice of the contracts that it executes for the conduct of those hearings. If a health systems agency is in operation in a health service area, the Department shall use that health systems agency for the conduct of the public hearings in that area. A health systems agency may make recommendations on any matter covered in this Article, but no such recommendation shall interfere with the timetables of the review process contained in this Article.
(4) Within 15 days from the beginning of the review of an application or applications proposing the same service within the same service area, the Department shall publish notice of the deadline for receipt of written comments, of the time and place scheduled for the public hearing regarding the application or applications under review, and of the name and address of the person or agency that will preside.
(5) The Department shall maintain all written comments submitted to it during the written comment stage and any written submissions received at the public hearing as part of the Department's file respecting each application or group of applications under review by it. The application, written comments, and public hearing comments, together with all documents that the Department used in arriving at its decision, from whatever source, and any documents that reflect or set out the Department's final analysis of the application or applications under review, shall constitute the Department's record for the application or applications under review.
(b) The Department shall issue as provided in this Article a certificate of need with or without conditions or reject the application within the review period.
(c) The Department shall
promulgate rules establishing criteria for determining when it would not be
practicable to complete a review within 90 days from receipt of a completed the
beginning date of the review period for the application. If the Department
finds that these criteria are met for a particular project, it may extend the
review period for a period not to exceed 60 days and provide notice of such
extension to all affected persons applicants.
"§ 131E-186. Final decision Decision.-The Department shall send its decision along with
written findings to the person proposing the new institutional health service
and to the Health Systems Agency for the health service area in which the new
service is proposed to be offered or developed. In the case of a final decision
to "approve" or "approve with conditions" a proposal for a
new institutional health service, the Department shall issue a certificate of
need to the person proposing the new institutional health service.
(a) Within the prescribed time limits in G.S 131E-185, the Department shall issue a decision to "approve," "approve with conditions," or "deny," an application for a new institutional health service.
(b) Within five days after it makes a decision on an application, the Department shall provide written notice of all the findings and conclusions upon which it based its decision, including the criteria used by the Department in making its decision, to both the applicant and to the appropriate health systems agency.
"§ 131E-187. Written notice of
decision Issuance of a certificate of need.-The Department shall, within 15 days after it makes
a final decision on an application, provide in writing to the applicant, to the
appropriate Health Systems Agency and, upon request to affected persons, the findings
and conclusions on which it based its decision, including but not limited to,
the criteria used by the Department in making its decision.
(a) The Department shall issue a certificate of need within 35 days of the date of the decision referenced in G.S. 131E-186, when no request for a contested case hearing has been filed in accordance with G.S. 131E-188, and all applicable conditions of approval that can be satisfied before issuance of the certificate of need have been met.
(b) The Department shall issue a certificate of need within five days after a request for a contested case hearing has been withdrawn or the final agency decision has been made following a contested case hearing, and all applicable conditions of approval that can be satisfied before issuance of the certificate of need have been met.
"§ 131E-188. Administrative and judicial
review.-(a) After a decision of the Department
to issue, deny or withdraw a certificate of need or exemption, any affected
person, as defined in subsection (c) of this section, shall be
entitled to a contested case hearing under Article 3 of Chapter 150A 150B
of the General Statutes,. if the Department receives a
request therefor within 30 days after its decision. A petition for
a contested case shall be filed within 30 days after the Department makes its
decision. When a petition is filed, the Department shall send
notification of the petition to the proponent of each application that was
reviewed with the application for a certificate of need that is the subject of
the petition.
A contested case shall be conducted in accordance with the following timetable:
(1) An administrative law judge or a hearing officer, as appropriate, shall be assigned within 15 days after a petition is filed.
(2) The parties shall complete discovery within 90 days after the assignment of the administrative law judge or hearing officer.
(3) The hearing at which sworn testimony is taken and evidence is presented shall be held within 45 days after the end of the discovery period.
(4) The administrative law judge or hearing officer shall make his recommended decision within 75 days after the hearing.
(5) The Department shall make its final decision within 30 days of receiving the recommended decision.
The administrative law judge or hearing officer assigned to a case may extend the deadlines in subdivisions (2) through (4) so long as the administrative law judge or hearing officer makes his recommended decision in the case within 270 days after the petition is filed. The Department may extend the deadline in subdivision (5) for up to 30 days by giving all parties written notice of the extension.
(a1) As a condition precedent to proceeding with a contested case hearing on the approval of an applicant for a certificate of need, the petitioner shall deposit a bond with the clerk of superior court where the new institutional health service that is the subject of the petition is proposed to be located. The bond shall be secured by cash or its equivalent in an amount equal to five percent (5%) of the cost of the proposed new institutional health service that is the subject of the petition, but may not be less than five thousand dollars ($5,000) and may not exceed fifty thousand dollars ($50,000). A petitioner who received approval for a certificate of need and is contesting only a condition in the certificate is not required to file a bond under this subsection.
The applicant who received approval for the new institutional health service that is the subject of the petition may bring an action against a bond filed under this subsection in the superior court of the county where the bond was filed. Upon finding that the petition for a contested case was frivolous or filed to delay the applicant, the court may award the applicant part or all of the bond filed under this subsection.
(b) Any affected person
who was a party in a contested case hearing shall be entitled to judicial
review of all or any portion of any final decision of the Department in the
following manner. The appeal shall be to the Court of Appeals as provided in
G.S. 7A-29(a). The procedure for the appeal shall be as provided by the rules
of appellate procedure. The appeal of the final decision of the Department
shall be taken within 30 days of the receipt of the written notice of decision
required by G.S. 131E-187 and notice of appeal shall be filed with the Division
of Facilities Facility Services, Department of Human Resources
and with all other affected persons who were parties to the contested hearing.
(b1) Before filing an appeal of a decision by the Department granting a certificate of need, the affected person shall deposit a bond with the Clerk of the Court of Appeals. The bond shall be secured by cash or its equivalent in an amount equal to five percent (5%) of the cost of the proposed new institutional health service that is the subject of the appeal, but may not be less than five thousand dollars ($5,000) and may not exceed fifty thousand dollars ($50,000). A holder of a certificate of need who is appealing only a condition in the certificate is not required to file a bond under this subsection.
If the Court of Appeals finds that the appeal was frivolous or filed to delay the applicant, the court shall remand the case to the superior court of the county where a bond was filed for the contested case hearing on the certificate of need. The superior court may award the holder of the certificate of need part or all of the bond. The court shall award the holder of the certificate of need reasonable attorney fees and costs incurred in the appeal to the Court of Appeals.
(c) The term 'affected
persons' includes: the applicant; the health systems agency for the health
service area in which the proposed project is to be located; health systems
agencies serving contiguous health service areas or located within the same
standard metropolitan statistical area; any person residing within the
geographic area served or to be served by the applicant; any person who
regularly uses health care service facilities within that
geographic area; health care service facilities and health
maintenance organizations (HMOs) located in the health service area in which
the project is proposed to be located, which provide services similar to the
services of the facility under review; health care service facilities
and HMOs which, prior to receipt by the agency of the proposal being reviewed,
have formally indicated an intention to provide similar services in the future;
third party payers who reimburse health care service facilities
for services in the health service area in which the project is proposed to be
located; and any agency which establishes rates for health care service
facilities or HMOs located in the health service area in which the project
is proposed to be located.
"§ 131E-189. Withdrawal of a certificate
of need.-(a) The Department shall specify in
each certificate of need the time the holder has to make the service or
equipment available or to complete the project and the timetable to be
followed. The timetable shall be the one proposed by the holder of the
certificate of need unless at the time the certificate of need is issued the
Department determines by a preponderance of the evidence that the timetable
proposed by the holder is unreasonable and that a different timetable should be
followed by the holder the Department specifies a different timetable in
its decision letter. The holder of the certificate shall submit such
periodic reports on his progress in meeting the timetable as may be required by
the Department. If no progress report is provided or, after reviewing
the progress, the Department determines that the holder of the certificate is
not meeting the timetable and the holder cannot demonstrate that it is
making good faith efforts to meet the timetable, the Department may,
after considering any recommendation made by the appropriate health systems
agency, withdraw the certificate. If the Department determines that the
holder of the certificate is making a good faith effort to meet the timetable,
the Department may, at the request of the holder, extend the timetable for a
specified period.
(b) The Department may
withdraw any certificate of need which was issued subject to a condition or
conditions, if the holder of the certificate fails to satisfy such
condition or conditions develop and operate the service consistent with
the representations made in the application or with any condition or conditions
the Department placed on the certificate of need.
(c) The Department may immediately withdraw any certificate of need if the holder of the certificate, before completion of the project or operation of the facility, transfers ownership or control of the facility. Any transfer after that time will be subject to the requirement that the service be provided consistent with the representations made in the application and any applicable conditions the Department placed on the certificate of need. Transfers resulting from personal illness or other good cause, as determined by the Department, shall not result in withdrawal if the Department receives prior written notice of the transfer and finds good cause. Transfers resulting from death shall not result in withdrawal.
"§ 131E-190. Enforcement and sanctions.-(a) Only those new institutional health services which are found by the Department to be needed as provided in this Article and granted certificates of need shall be offered or developed within the State.
(b) No formal commitments made for financing, construction, or acquisition regarding the offering or development of a new institutional health service shall be made by any person unless a certificate of need for such service or activities has been granted.
(c) Nothing in this Article
shall be construed as terminating the P.L. 92-603, Section 1122, capital
expenditure program or the contract between the State of North Carolina and the
United States under that program. The sanctions available under that program
and contract, with regard to the determination or of whether the
amounts attributable to an applicable project or capital expenditure project
should be included or excluded in determining payments to the proponent under
Titles V, XVIII, and XIX of the Social Security Act, shall remain available to
the State.
(d) If any health care
facility person proceeds to offer or develop a new
institutional health service without having first obtained a certificate of
need for such services, the penalty for such violation of this Article and
rules and regulations hereunder is may include the
withholding of federal and State funds under Titles V, XVIII, and XIX of the
Social Security Act for reimbursement of capital and operating expenses related
to the provision of the new institutional health service.
(e) The Medical Care
Commission may revoke or suspend the license of any person who If any
health care facility proceeds to offer or develop a new institutional
health service without having first obtained a certificate of need for such
services, the licensure for such facility may be revoked or suspended by the
Medical Care Commission, or the Commission for Health Services, as appropriate.
(f) The
Department may assess a civil penaltylnot more than twenty thousand dollars
($20,000) may be assessed by the Department against any person who
knowingly offers or develops any new institutional health service within the
meaning of this Article without a certificate of need issued under this Article
and the rules and regulations pertaining thereto, or in violation of the
terms of such a certificate,each time the service is provided in violation
of this provision. In determining the amount of the penalty the Department
shall consider the degree and extent of harm caused by the violation and the
cost of rectifying the damage. A person who is assessed a penalty
shall be notified of the penalty by registered or certified mail. The
notice shall state the reasons for the penalty. If a person fails to pay
a penalty, the Department shall refer the matter to the Attorney General for
collection. The Department may assess the penalties provided for in this
subsection. Any person assessed shall be notified of the assessment by
registered or certified mail, and the notice shall specify the reasons for the
assessment. If the person assessed fails to pay the amount of the assessment to
the Department within 30 days after receipt of notice, or such longer period,
not to exceed 180 days, as the Department may specify, the Department may
institute a civil action in the superior court of the county in which the
violation occurred or, in the discretion of the Department, in the superior
court of the county in which the person assessed has his principal place of
business, to recover the amount of the assessment. In any such civil action,
the scope of the court's review of the Department's action (which shall include
a review of the amount of the assessment), shall be as provided in Chapter 150A
of the General Statutes. For the purpose of this subsection, the word
'person' shall not include an individual in his capacity as an officer,
director, or employee of a person as otherwise defined in this Article.
(g) No agency of the State or any of its political subdivisions may appropriate or grant funds or financially assist in any way a person, applicant, or facility which is or whose project is in violation of this Article.
(h) If any health care
facility person proceeds to offer or develop a new institutional
health service without having first obtained a certificate of need for such
services, the Secretary of Human Resources or any person aggrieved, as defined
by G.S. 150A-2(6) 150B-2(6), may bring a civil action for
injunctive relief, temporary or permanent, against the person offering,
developing or operating any new institutional health service. The action may
be brought in the superior court of any county in which the health service
facility is located or in the superior court of Wake County.
(i) If the
Department determines that the recipient of a certificate of need, or its
successor, is operating a service which materially differs from the
representations made in its application for that certificate of need, the
Department may bring an action in Wake County Superior Court or the
superior court of any county in which the certificate of need is to be utilized
for injunctive relief, temporary or permanent, requiring the recipient, or its
successor, to materially comply with the representations in its application.
The Department may also bring an action in Wake County Superior Court or
the superior court of any county in which the certificate of need is to be
utilized to enforce the provisions of this subsection and G.S. 131E-181(b) and
the regulations rules adopted in accordance with this subsection
and G.S. 131E-181(b).
"§ 131E-191. Venue. -(a) Any action brought by a "person
aggrieved" as defined by G.S. provisions of this Article against any
health care facility as defined in G.S. 131E-176(9), or its agents or
employees, may be brought in the superior court of any county in which the
cause of action arose or in the county in which the health care facility is
located, or in Wake County.
(b) An action
brought by a "party" as defined in G.S. 150A-2(5), except any
"affected person" who was a party to a contested case hearing who
must bring an action in the North Carolina Court of Appeals pursuant to G.S.
131E-188(b), who has exhausted all administrative remedies made available to that
party by statute or rules and regulations, may be brought in the Superior Court
of Wake County at any time after a final decision by the Department. Such
action must be filed not later than 30 days after a written copy of the final
decision by the Department is given by personal service or registered or
certified mail to the person seeking judicial review.
"§ 131E-192 to 131E-199. Reserved for future codification purposes."
Sec. 2. The provisions of this act are severable, and if any provision of this act is held invalid by a court of competent jurisdiction, the invalidity shall not affect other provisions of this act that can be given effect without the invalid provision.
Sec. 3. This act shall become effective July 1, 1987, and shall apply to all new institutional health services that are proposed on and after that date, but does not apply to applications for certificates of need which begin review, or to projects for which certificates of need were issued, before that date. This act supersedes all previous acts that were to become effective at any time after the effective date of this act.
In the General Assembly read three times and ratified this the 30th day of June, 1987.