HCA Crossroads Residential Centers, Inc. v. North Carolina Department of Human Resources , 327 N.C. 573 ( 1990 )

Justice WHICHARD

dissenting.

The majority concludes that “when the prescribed statutory review period ended with the Department [of Human Resources] having failed to act, the Department was deemed as a matter of law to have decided in favor of issuing the certificates of need and it lost subject matter jurisdiction to do anything but issue those certificates of need.” This conclusion consists of two parts, neither of which furthers the legislative purpose underlying the certificate of need (CON) law. The first is that Department inaction should be deemed a decision in favor of issuing a certificate of need. The second is that the statutory time limit is jurisdictional in nature.

That the failure to decide within the statutory period compels approval is not self-evident. Rather, the majority is forced to rely on the doctrine of the last antecedent, a principle mentioned in a footnote in petitioners’ brief and in only one North Carolina appellate opinion. State v. Cloninger, 83 N.C. App. 529, 350 S.E.2d 895 (1986). N.C.G.S. § 131E-185(b) states: “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." (Emphasis supplied.) Only by applying the doctrine of the last antecedent can the majority limit application of the language “within the review period” to the “rejection” aspect of review, such that the Department is left with two choices — rejection within the period or automatic approval.

The dubiousness of this construction can be seen by comparing this language as so construed with language in section 131E-186. The majority reads section 185(b) to require rejection within the review period or automatic approval. Section 186(a), however, states that “[wjithin the prescribed time limits in G.S. 131E-185, the Department shall issue a decision to ‘approve,’ ‘approve with conditions,’ or ‘deny,’ an application . ...” I believe the language of section 186(a) sheds light on the proper interpretation of section 185(b). It indicates that the limiting language “within the prescribed time” applies to all three options — approve, approve with conditions, or deny. It is doubtful that the General Assembly intended in one section to apply time limits only to the rejection option, when in a neighboring section it expTessly applied time limits to all the decisional possibilities. It is more likely, especially when considered in light of the purpose behind the legislation, that the difference between the two sections reflects poor drafting rather than differing intent.

The doctrine of the last antecedent is an appropriate aid in discovering legislative intent in cases where intent is not clearly evident. This is not such a case, however. A plethora of expression of legislative intent, which is contrary to a conclusion favoring automatic approval of CON applications, is found in the findings set forth in N.C.G.S. § 131E-175. These findings indicate that the primary purpose of Article 9 (the CON law) is to review and evaluate the need for new health service facilities prior to their construction. The perceived evil sought to be remedied is the “geographical maldistribution . . . and proliferation of unnecessary health service facilities resulting] in costly duplication and underuse of facilities . . . .” N.C.G.S. § 131E-175(3), (4) (1988). Because the majority decision compels issuance of certificates independent of proven need, it is inimical to the intent that the General Assembly pellucidly expressed in its findings.

Two other sections within current Article 9 also suggest a contrary intent that the Department must complete its review before a certificate of need is issued. Section 131E-186(b) states that “[w]ith[in] 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 . . . .” This section contemplates a completed review, otherwise, there would be no basis for the findings and conclusions the majority deems the Department to have made. Further, it is clear that Article 9 requires that “all applicable conditions of approval ... be satisfied” before a certificate is issued. N.C.G.S. § 181E-187(b) (1988). The majority’s conclusion that approval occurs after the expiration of the statutory period, regardless of whether the criteria establishing need are satisfied, obviates this provision.

It is important, when inferring legislative intent from legislative history, to look not only at the language of prior versions of the relevant statute, but also at other models of the same types of legislation. With that in mind, I note that in order to assure federal assistance, North Carolina’s CON law tracked federal law very closely. Prior to 1979, federal law required automatic denial in cases of delay. 42 C.F.R. § 123.407(a)(15) (1979). In 1979, however, Congress deleted the automatic denial provision and provided that an applicant could, in cases of delay, bring an action in an appropriate state court to require agency action. 42 U.S.C. § 300n-l(b)(12)(C)(ii) (Supp. 1979). In 1980, just eight months before North Carolina amended its CON law, the Department of Health and Human Services amended its CON regulations to provide that a certificate not be issued or denied “solely because the state agency failed to reach a decision.” 42 C.F.R. § 123.410(a)(17) (1981).

The history of our section 185(b) followed a similar pattern. The 1977 session laws provided that: “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. If the department fails to act within such period, the failure to act shall constitute denial of the application.” (Emphasis supplied.) 1977 N.C. Sess. Laws ch. 1182, § 2. This language was later codified as N.C.G.S. § 131-182(b) (1977). Thus, our CON law, like the federal law, contained a provision requiring automatic denial in cases of agency delay. Subsequently, in 1981, the General Assembly again followed the federal law and deleted the automatic denial provision. It did not, however, insert a provision requiring automatic approval, although it easily could have done so. In fact, other states had inserted an automatic approval provision prior to the North Carolina amendment. See, e.g., R.S. Mo. § 197.330.2 (Supp. 1979).

In this case we are called upon to construe the meaning of section 185(b). The majority interprets the language that originally appeared in the 1977 session laws to require automatic approval of applications for certificates of need. In doing so, however, it ignores the fact that such an interpretation compels us to assume that the General Assembly intended to provide for “automatic approval” in the first sentence of then section 182(b), yet also intended to provide for “automatic denial” in the second sentence of that section. The reading of such a flagrant contradiction into the statute strongly suggests that the majority’s interpretation is mistaken.

The majority also rests its interpretation of section 185(b) on another principle of statutory construction, viz, that statutes shall be construed to avoid redundancy. It states that unless section 185(b) requires automatic approval, it is the exact equivalent of section 186. This is not the case, however. Section 131E-185 is entitled “Review Process” and section 131E-186 is entitled “Decision.” The significant difference between the two sections is the language in section 185 that “[t]he Department shall issue as provided in this Article a certificate of need . . . .” (Emphasis supplied.) The import of this distinction is that in the review process the certificate of need is to be issued when it meets the review criteria established in Article 9. Section 186, the “Decision” section, is subtly different in that it merely describes the types of decisions the Department is authorized to make, i.e., it may approve, approve with conditions, or deny. Thus, rather than being a redundancy, section 185(b) should more likely be viewed as yet another expression of legislative intent that certificates of need shall only be issued when the Department has completed its review and found that the application satisfies the need criteria for new health service facilities.

The majority also expresses concern that applicants frustrated by delay will have no remedy absent automatic approval. Applicants can, however, seek a common law writ of mandamus requiring the agency to comply with its statutory duties. N.C.G.S. § 150B-44 also provides a source of relief. It provides in pertinent part:

Unreasonable delay on the part of any agency or administrative law judge in taking any required action shall be justification for any person whose rights, duties, or privileges are adversely affected by such delay to seek a court order compelling action by the agency or administrative law judge.

N.C.G.S. § 150B-44 (1983). As noted above, when Congress deleted the automatic denial provision in its CON law it made specific reference to what is, in effect, a statutory provision for mandamus — i.e., if an agency fails to act within the applicable period, the applicant may bring an action in state court to compel a decision on the application. See 42 U.S.C. § 300n-l(b)(12)(C)(ii). Our General Assembly deleted its automatic denial provision in the context of that federal law. Further, it has amended section 150B-44 to expand its applicability from situations involving a final agency decision to situations involving the taking of any required action. The statutory remedy is available in cases of unreasonable delay, and the failure of the Department to conduct its review and make a decision within the statutory time period is prima facie an unreasonable delay. Thus, an applicant would have access to this provision in cases such as this. See Bradbury Mem. Nursing Home v. Tall Pines Manor, 485 A.2d 634 (Me. 1984). Clearly, then, automatic approval is not petitioners’ only remedy.

Perhaps the motivating rationale for the majority decision is its expressed concern for the burden the CON program puts on “an applicant’s fundamental right to engage in its otherwise lawful business,” especially when the burden is delay beyond that provided by the statute. This Court has invalidated provisions of a CON law once before. In In re Aston Park Hospital, Inc., 282 N.C. 542, 193 S.E.2d 729 (1973), the Court declared the CON law an unconstitutional deprivation of property without due process of law. The basis for that ruling, however, was the lack of a reasonable relation between the denial of a person’s right to develop health service facilities and the promotion of public health. Since Aston Park, the General Assembly has re-enacted the CON law and made the explicit findings discussed above which describe the relation between the purposes behind the CON law and the effect it has on individual property rights. Thus, the constitutional infirmity identified in Aston Park is not at issue here. While concern over burdening an applicant’s right to engage in business is appropriate, it is not a sufficient basis for interpreting legislative silence on the effect of noncompliance with time limits in a manner that effectively negates the entire purpose of the statute.

The second part of the majority’s analysis, whether the statutory time limits are jurisdictional in nature, depends largely upon its interpretation of the legislative intent behind Article 9. This Court has stated that

[i]n determining whether a particular provision in a statute is to be regarded as mandatory or directory!,] the legislative intent must govern, and this is usually to be ascertained not only from the phraseology of the provision, but also from the nature and purpose, and the consequences which would follow its construction one way or the other.

North Carolina Art Society v. Bridges, 235 N.C. 125, 130, 69 S.E.2d 1, 5 (1952). The majority looks to the purpose of the legislation, divines an inarticulate concern over bureaucratic delay, and concludes that the time limits are mandatory. It cites Snow v. Board of Architecture, 273 N.C. 559, 160 S.E.2d 719 (1968), in support of its conclusion.

Snow, however, is readily distinguishable from this case. It involved a license revocation proceeding against an architect. The proceeding was penal in nature, and the rule in that case thus has no direct application to the situation here, where petitioners are two of many applicants seeking certificates allowing them to fill a designated need for health services in a particular geographic area.

Because the primary intent of Article 9 is to regulate the development of new health service facilities through a process of complete review in light of specified criteria, with the aim of avoiding unnecessary and duplicative health care service facilities, I would conclude that the time limits are not jurisdictional. In order to effectuate the purposes of the CON law the time limits should be considered directory only. As noted above, this interpretation does not leave petitioners without a remedy. Common law and statutory mandamus remain available.

In sum, the majority uses statutory construction maxims of tenuous applicability to slay a perceived dragon of bureaucratic delay. While such delay is indeed deplorable, the remedy adopted is overly draconian. Given that petitioners have an adequate remedy in mandamus, I would not interpret the legislature’s silence on the effect of noncompliance with the prescribed time limitations, as does the majority, in a manner that is inconsistent with the nature and purpose of the statute and with the predominant phraseology of its provisions. The majority decision unnecessarily undermines the basic purpose of the law and compels consequences fundamentally at odds with its intent. I therefore respectfully dissent.

Justice Frye joins in this dissenting opinion.