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Hospice of Spokane v. The Department of Health

Court of Appeals of Washington, Division 3

December 19, 2013

Hospice of Spokane, Appellant,
v.
The Department of Health et al., Respondents

Appeal from Spokane Superior Court. Docket No: 11-2-03003-7. Date filed: 08/17/2012. Judge signing: Honorable Kathleen M O'connor.

Peter A. Witherspoon (of Workland & Witherspoon PLLC ), for appellant.

Robert W. Ferguson, Attorney General, and Richard A. McCartan, Assistant ; and Jeffrey A.O. Freimund (of Freimund Jackson Tardif & Benedict Garratt PLLC ), for respondents.

AUTHOR: Teresa C. Kulik, J. WE CONCUR: Laurel H. Siddoway, A.C.J., George B. Fearing, J.

OPINION

Page 557

[178 Wn.App. 445]  Kulik, J. --

¶ 1 The Washington State Department of Health (Department) approved Family Home Care's (FHC) certificate of need application to provide hospice services in Spokane County. Hospice of Spokane (HOS), an existing [178 Wn.App. 446] hospice provider, requested administrative review of the decision, contending that the Department incorrectly interpreted the six-step methodology in WAC 246-310-290(7) used to determine whether an additional hospice provider is needed in a particular planning area. Specifically, HOS maintained that projected need must be established within one year of the application, instead of the three-year planning horizon used by the Department and set forth in WAC 246-310-290(6). An administrative health law judge (HLJ) adopted the Department's interpretation and granted the certificate of need. The decision was affirmed by the superior court. HOS appeals. We affirm the HLJ's decision granting the certificate of need.

FACTS

¶ 2 In October 2006, FHC applied to the Department for a certificate of need to establish a Medicare/Medicaid eligible hospice agency in Spokane County. Two approved providers already existed in Spokane County: Horizon Hospice and HOS. Although FHC was already operating a hospice in Spokane County, it was unable to serve Medicare/Medicaid patients without approval from the Department.

¶ 3 The Department initially denied FHC's application for lack of need. FHC did not show the Spokane planning area required an additional Medicare/Medicaid facility to provide hospice services. In response, FHC requested an adjudicative proceeding to review the Department's denial. HOS requested permission to intervene in the adjudicative proceeding.

¶ 4 After a stay and a series of subsequent decisions, an adjudicative proceeding finally occurred in March 2011. By this time, the Department agreed that FHC met the applicable certificate of need criteria. However, HOS continued to contest that FHC established need. An HLJ then reviewed FHC's application to determine whether the application met the certificate of need criteria.

[178 Wn.App. 447] ¶ 5 The HLJ applied the six-step need projection methodology in WAC 246-310-290(7). The methodology used past statistical data to project the need for a service provider into a future " 'planning horizon.'" Clerk's Papers at 71.

¶ 6 At issue was the extent of the planning horizon to be used for WAC 246-310-290(7). HOS contended that WAC 246-310-290(7) contained a one-year planning horizon that corresponded with the date of application. However, the HLJ determined that the three-year planning horizon in WAC 246-310-290(6) was to be harmonized with the methodology in WAC 246-310-290(7) to project need. Thus, the need methodology required a projected showing of an average of 35 hospice patients per day by the third year of operation. The HLJ found that FHC could show a daily average of 35 before the

Page 558

end of its third full year of operation. Ultimately, the HLJ concluded that FHC met the certificate of need criteria and issued an order approving FHC's certificate of need application.

¶ 7 HOS appealed the order to superior court. The court agreed with the HLJ's position that WAC 246-310-290(6) and WAC 246-310-290(7) were dependent on one another. The court found that a three-year projection analysis promoted good planning for health care services. The court affirmed the approval of the application.

¶ 8 HOS appeals to this court. HOS challenges the HLJ's interpretation of WAC 246-310-290(7), specifically the HLJ's incorporation of WAC 246-310-290(6) as part ...


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