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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA11-339 NORTH CAROLINA COURT OF APPEALS Filed: 20 December 2011 THE CHARLOTTE-MECKLENBURG HOSPITAL AUTHORITY d/b/a CAROLINAS REHABILITATION-MOUNT HOLLY and d/b/a CAROLINAS HEALTHCARE SYSTEM, Petitioner, v. N.C. DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION OF HEALTH SERVICE REGULATION, CERTIFICATE OF NEED SECTION, Respondent, And CAROMONT HEALTH, INC. and GASTON MEMORIAL HOSPITAL, INC., Respondent-Intervenors. Office of Administrative Hearings No. 09 DHR 6116

Appeal by petitioner from a final agency decision entered 19 November 2010 by the North Director Carolina of the Division of of Health and

Service

Regulation,

Department

Health

Human Services, Drexdal Pratt. September 2011.

Heard in the Court of Appeals 28

-2K&L Gates LLP, by Gary S. Qualls and William W. Stewart, Jr., for petitioner-appellant. Attorney General Roy Cooper, by Assistant Attorney General, June S. Ferrell, for respondent-appellee. Nelson Mullins Riley & Scarborough LLP, by Noah H. Huffstetler, III, Wallace C. Hollowell, III, and Elizabeth B. Frock, for respondent-intervenor-appellees. STEELMAN, Judge. Where this Court previously declined to take judicial

notice of the CON Sections findings relating to CaroMonts 2010 CON application, we will not consider CMHAs mootness argument. Where the Agencys findings of fact were supported by

substantial evidence and these findings supported the Agencys conclusions of law, the Agency did not err in holding that

CaroMont satisfied all review criteria and that CMHA failed to satisfy Criterion 3. CaroMonts 2008 application was withdrawn

prior to final agency review, and is not properly before this Court. less The Agency has discretion to grant a CON application for than what all was originally review requested. criteria and Where CMHA CaroMont did not

satisfied

applicable

satisfy at least one of the criteria, we do not address the Agencys alternative comparative analysis of the two

applications.

The Agency properly rejected some of the ALJs

-3findings pertaining to prior CON decisions as being irrelevant and having no probative value. I. In filed a 2009, Factual and Procedural Background Hospital Authority (CMHA) to

Charlotte-Mecklenburg of Need (CON)

Certificate a

application department

proposing (Mount

develop

freestanding

emergency

Holly

Healthplex or Healthplex) in the Belmont/Mount Holly area of Gaston County. CMHA currently provides services to residents of

Gaston County at its existing Mecklenburg County facilities and their corresponding emergency departments (EDs). operates Carolina Rehabilitation-Mount Holly CMHA currently (CR). The

Healthplex would be located on CRs campus; but would not be physically attached to a hospital with acute care beds. CaroMont Health, Inc. is the parent of Gaston Memorial

Hospital, Inc. (collectively CaroMont), and operates an acute care hospital in Gaston County. CaroMonts ED is currently the On the a CON

sole provider of emergency services in Gaston County. same date as CMHAs application, CaroMont filed

application proposing to develop a satellite ED in Mount Holly (the MedPlex). The MedPlex would be operated as an outpatient The MedPlex would not be physically

department of CaroMont.

-4attached hospital. The Certificate of Need Section (the CON Section) is the division within the N.C. Department of Health and Human to CaroMont. CaroMont is a licensed acute care

Services, Division of Health Services Regulation that reviews and approves the development of new institutional health

services under CON Law. and CaroMonts

The CON Section determined that CMHAs were competitive. By decision

applications

letters dated 9 October 2009, the CON Section informed CMHA that its application had had been been disapproved and CaroMont On 6 that its

application

conditionally

approved.

November

2009, CMHA filed a Petition for Contested Case Hearing with the Office of Administrative Hearings (OAH) appealing the

disapproval of its application and contesting the approval of CaroMonts application. to intervene was granted. On 2 December 2009, CaroMonts motion On 26 July 2010, the Administrative

Law Judge (ALJ) issued a recommended decision holding that the CON Section erred in holding that CMHA failed to comply with numerous CON review criteria, and that the CON Section erred in holding that CaroMont complied with certain CON review criteria. The ALJ further new held that of the the CON Section should in consider and

conducting

reviews

applications

question,

-5"consider whether the needs of Gaston County residents would be better served by issuing a CON to both Applicants which would provide patients with a choice of providers." On 19 November 2010, the N.C. Department of Health and

Human Services (the Agency) issued a Final Agency Decision (FAD) rejecting the recommended decision of the ALJ and affirming the CON Sections decision to "conditionally approve CaroMont to

develop a freestanding emergency department in Mount Holly with 9 treatment rooms; and disapprove the CMHA Application proposing a freestanding emergency department in Mount Holly/Belmont." CMHA appeals. II. Standard of Review

The substantive nature of each assignment of error controls our review of an appeal from an administrative agencys final decision. North Carolina Dep't of Env't & Natural Res. v. Carroll, 358 N.C. 649, 658, 599 S.E.2d 888, 894 (2004). Where a party asserts an error of law occurred, we apply a de novo standard of review. Id. at 659, 599 S.E.2d at 894. If the issue on appeal concerns an allegation that the agencys decision is arbitrary or capricious or "fact-intensive issues such as sufficiency of the evidence to support [an agencys] decision" we apply the wholerecord test. Id. (citations omitted). Craven Reg'l Med. Auth. v. N.C. Dep't. of Health & Human Servs., 176 N.C. App. 46, 51, 625 S.E.2d 837, 840 (2006).

-6A court applying the whole record test may not substitute its judgment for the agencys as between two conflicting views, even though it could reasonably have reached a different result had it reviewed the matter de novo. Rather, a court must examine all the record evidence--that which detracts from the agencys findings and conclusions as well as that which tends to support them--to determine whether there is substantial evidence to justify the agencys decision. Good Hope Health Sys., L.L.C. v. N.C. Dep't. of Health & Human Servs., 189 N.C. App. 534, 543, 659 S.E.2d 456, 462 (2008)

(quotation omitted), aff'd per curiam, 362 N.C. 504, 666 S.E.2d 749 (2008). When reviewing an agency decision for an error of law "an appellate court may freely substitute its judgment for that of the agency and employ de novo review." Britthaven, Inc. v. N.C.

Dept. of Human Resources, 118 N.C. App. 379, 384, 455 S.E.2d 455, 460 (1995) (quotation omitted), disc. review denied, 341 N.C. 418, 461 S.E.2d 754 (1995). Although the interpretation of a statute by an agency created to administer that statute is traditionally accorded some deference by appellate courts, those interpretations are not binding. The weight of such [an interpretation] in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.

-7Id. (quotation and internal quotation marks omitted). III. Mootness

In its first argument, CMHA contends that CaroMonts 2009 CON application is now mooted by a 2010 CON application filed by CaroMont. We disagree.

On 11 May 2011, CMHA filed a motion with this Court to take judicial notice of the 25 February 2011 CON Section findings approving CaroMonts 2010 CON application. that motion on 26 May 2011. This Court denied

The motion to take judicial notice

advanced the same arguments now advanced by CMHA in its brief concerning mootness: The [CON Section] findings relate directly to the mootness argument addressed by CMHA in its Petitioner-Appellants Brief. As stated therein, CaroMonts 2009 Application has become moot (and thus unapprovable) due to the filing of CaroMonts 2010 Application (which expressly supersedes and supplants CaroMonts 2009 Application), and the approval thereof. The review of that 2009 Application has now been re-done in the 2010 CON review on the project that CaroMont wishes to develop. "Without question, our review is based solely upon the record on appeal, N.C.R. App. P. 9(a), and we decline to accept as part of the record herein assertions of fact in the parties

-8briefs which are not sustained by record evidence." Simmons, 139 N.C. App. 610, 613, 534 S.E.2d 616, 619 (2000) (citations omitted). This Court declined to take judicial notice of the CON Section findings relating relating to to CaroMonts CaroMonts 2010 2010 application. application is The not We Mohamad v.

information

properly part of the record evidence in the instant case. thus decline to review this argument.

See also Good Hope Health

Sys., L.L.C. v. N.C. Dep't. of Health and Human Servs., 360 N.C. 635, 637 S.E.2d 517 (2006). IV. CaroMonts Conformance with Review Criteria

N.C. Gen. Stat.

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