Appeal of THI of New Hampshire at Derry, LLC

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Health Services Planning and Review Board
No. 2014-0674
APPEAL OF THI OF NEW HAMPSHIRE AT DERRY, LLC
(New Hampshire Health Services Planning and Review Board)
Argued: September 16, 2015
Opinion Issued: January 12, 2016
Andrew Eills Law Offices, PLLC, of Concord (Andrew B. Eills on the brief
and orally), for the petitioner.
Joseph A. Foster, attorney general (Kenneth A. Sansone, attorney, on the
brief and orally), for the State.
LYNN, J. In this appeal from an order of the Health Services Planning
and Review Board (Board), the petitioner, THI of New Hampshire at Derry, LLC
(THI), argues that the Board incorrectly interpreted RSA 151-C:4, III(a) as
preventing the Board from granting a certificate of need (CON) to THI for the
construction of a nursing home. See RSA ch. 151-C (Supp. 2015) (repealed by
Laws 2013, 144:84, eff. June 30, 2016). Finding no error, we affirm.
The following facts are derived from the record. THI is a subsidiary of
THI of New Hampshire, LLC, itself a subsidiary of a parent company that owns
nursing home operators throughout the country. In approximately 2003, THI
purchased and began operating a nursing home, Pleasant Valley Nursing
Center (Pleasant Valley), in Derry.
In 2012, THI had an opportunity to expand when Exeter Healthcare, Inc.
closed its nursing home in Exeter and offered to sell its 109 licensed nursing
beds. THI and Exeter Healthcare entered into a purchase and sale agreement
for the beds on January 25, 2013, and THI made deposit payments to Exeter
Healthcare in accordance with the agreement.
The following month, THI requested that the Board grant approval for the
transfer of the beds from Exeter Healthcare to THI. Because the Pleasant
Valley building would not accommodate all of the beds to be transferred, THI
also requested permission to apply for a CON to construct a new building to
house the beds in a different location. THI selected a site in Londonderry for
the new building, which it planned to operate under the name Traditions at
Londonderry. In its application, THI explained that the transfer would occur in
the same nursing home region in Rockingham County, such that the number
of beds in the region would not increase. THI also informed the Board that its
contract conditioned its obligation to buy the beds from Exeter Healthcare
upon the Board’s approval of the CON for Traditions at Londonderry.
The Board met on February 21, 2013, and questioned whether it had
statutory authority to approve THI’s requests. RSA 151-C:4 effectively creates
a moratorium by barring construction of new nursing home facilities in the
state unless the applicant obtains a CON from the Board, which may issue a
CON only under very limited circumstances. See RSA 151-C:4, I, III (a). Under
one such exception, the Board “may” issue a CON “for construction or
renovation as necessary to repair or refurbish an existing facility, or to
accommodate additional beds obtained by transfer to an existing facility.” Id.
(emphases added). The Board looked to the statutory definition of “Health care
facility” and found that it encompassed “licensed nursing homes including all
services and property owned by such.” RSA 151-C:2, XV-a (emphasis added).
Based upon this definition, the Board concluded that it had authority to
approve the bed transfer and gave THI permission to apply for a CON,
apparently finding that Pleasant Valley was an “existing facility” and that the
proposed Londonderry facility would be “property owned by such.”1 The Board
conditioned its ruling upon THI submitting the CON application within 24
months, so that THI would not “hold [the beds] hostage.”
THI submitted its CON application in September 2013. The Board
deemed the application “complete” and commenced formal review in December
2013. In accordance with RSA 151-C:8, XII, THI submitted a request to amend
its application in February 2014 to include an improved design. The Board
approved the request, and THI submitted its amendment the following month.
1 Neither party challenges the Board’s conclusion that a newly constructed (or to be constructed)
facility remotely located from the one currently operated by the applicant can qualify as an
“existing facility” within the meaning of the statute. We thus have no occasion to resolve this
issue.
2
Formal review commenced again on April 25, 2014, with the 90-day formal
review period ending on July 25, 2014. As required by RSA 151-C:8, X, the
Board held a public hearing on June 19, 2014, which continued on July 17,
2014.
Before the Board deemed THI’s initial application complete, unrelated
litigation resulted in an agreement to transfer ownership of Pleasant Valley
from THI to a third party. The third party’s attorney contacted the Board in
May and again in October 2013 to notify it of the fact that Pleasant Valley
would be transferred to the third party as of December 2013.
In November 2013, the Board asked THI to clarify how this change of
ownership of Pleasant Valley would affect THI’s CON application. Specifically,
the Board questioned who would “be the rightful CON applicant” following the
transfer. THI informed the Board that it remained the applicant and that it
was not in any way affiliated with the third party transferee of Pleasant Valley.
However, it nonetheless asserted that the Board should consider THI as an
“existing facility” excepted from the statutory moratorium. The Board approved
the transfer of Pleasant Valley to the third party on December 10, 2013.
According to THI, the transfer of Pleasant Valley was complete as of January 1,
2014.
The Board undertook a full review of THI’s status as the CON applicant
following the transfer of Pleasant Valley, addressing the issue in
correspondence with THI, at public hearings, and in consultation with the
Attorney General. At the conclusion of its July 17, 2014 meeting, the Board
voted unanimously to deny THI’s CON application. In an August 21, 2014
memorandum confirming its decision, the Board detailed its findings pursuant
to RSA 151-C:7 and applicable regulations. See N.H. Admin. Rules, He-Hea
303.01. Although the Board found that THI’s proposed facility would satisfy
regulatory requirements for services offered, quality of care, and financial
feasibility, among other criteria, the Board nevertheless denied THI’s
application because it was not an “existing facility.” The Board reasoned that
Pleasant Valley had been the only New Hampshire facility operated by THI, and
THI’s ownership of Pleasant Valley had formed “the basis upon which the
transfer of beds was approved by the [Board], which then allowed a CON
application to be filed.”2 In reaching its decision, the Board relied in part on
precedent set by its past adjudications “requir[ing] that any transferred beds
be: (1) kept in the same nursing home region in order to maintain the
2 The record reflects that THI’s ownership of Pleasant Valley had been material to the Board’s
February 2013 deliberations, when it first gave THI permission to apply for a CON. The Board’s
minutes from its February 21, 2013 meeting state that THI submitted its requests “for the
Pleasant Valley Nursing Center.” In a February 27, 2013 letter to counsel for THI, the Board
stated that it had “considered the requests submitted by [THI], d/b/a Pleasant Valley Nursing
Center.”
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requirements of the statutory bed need formula; and (2) placed at a facility
where existing nursing beds are in operation.” THI moved for reconsideration,
which the Board denied, and this appeal followed.
Appeals from a decision of the Board are brought pursuant to RSA 151-
C:10, which incorporates by reference the provisions of RSA chapter 541
(2007). Appeal of Parkland Med. Ctr., 158 N.H. 67, 70 (2008). We will affirm
the Board’s decision unless we find it to be “arbitrary or capricious or not made
in compliance with applicable law.” RSA 151-C:10, III; see Appeal of Parkland,
158 N.H. at 70. The burden of proof is on “the party seeking to set aside any
order or decision of the [Board] to show that the same is clearly unreasonable
or unlawful.” RSA 541:13.
THI contends that the Board incorrectly applied the statutory
moratorium found in RSA 151-C:4, III because THI had an existing facility —
Pleasant Valley — when it first petitioned the Board for a CON to construct a
new facility, and under the statute, an exception to the moratorium allows for
the transfer of beds to an “existing facility.” See RSA 151-C:4, III(a) (“[A]
certificate of need may be issued . . . to accommodate additional beds obtained
by transfer to an existing facility.”). THI also argues that the Board’s denial of
THI’s CON application was arbitrary, capricious, and unlawful because the
Board based its denial on the transfer of Pleasant Valley, yet the Board
approved that very transfer during the CON completeness review process.
To resolve these issues, we must engage in statutory interpretation. See
Appeal of Michele, ___ N.H. ___, 123 A.3d 255, 258 (2015). “Statutory
interpretation is a question of law, which we review de novo.” Petition of
Malisos, 166 N.H. 726, 729 (2014). In matters of statutory interpretation, we
are “the final arbiter of the legislature’s intent as expressed in the words of the
statute considered as a whole.” Appeal of Town of Seabrook, 163 N.H. 635,
644 (2012). “We first look to the language of the statute itself, and, if possible,
construe that language according to its plain and ordinary meaning.” Appeal of
Local Gov’t Ctr., 165 N.H. 790, 804 (2014). “We interpret legislative intent from
the statute as written and will not consider what the legislature might have
said or add language that the legislature did not see fit to include.” Id. “We
construe all parts of a statute together to effectuate its overall purpose and
avoid an absurd or unjust result.” Id. “Moreover, we do not consider words
and phrases in isolation, but rather within the context of the statute as a
whole.” Id. “This enables us to better discern the legislature’s intent and to
interpret statutory language in light of the policy or purpose sought to be
advanced by the statutory scheme.” Id. Additionally, “[w]hen the language of a
statute is plain and unambiguous, we need not look beyond the statute itself
for further indications of legislative intent.” Petition of Malisos, 166 N.H. at
729.
4
We begin by examining the language of RSA 151-C:4, I, which creates a
statutory moratorium on construction of new nursing homes: “No new
institutional health service shall be offered or developed within the state, nor
shall any arrangement or commitment for financing the offering or developing
of a new institutional health service be made, except pursuant to obtaining a
[CON] for such service.” RSA 151-C:4, III(a) then directs the Board: “No new
[CON] shall be granted . . . for any nursing home, skilled nursing facility,
intermediate care facility, or rehabilitation facility . . . through the period
ending June 30, 2016.”
The statute provides for limited exceptions to this prohibition on the
Board’s authority to grant a CON. See RSA 151-C:4, III. The Board “shall”
issue a CON “for replacement or renovation of existing beds as necessary to
meet life safety code requirements or to remedy deficiencies noted in a licensing
inspection pursuant to RSA 151 or state survey and certification process
pursuant to titles XVIII and XIX of the Social Security Act.” RSA 151-C:4, III(a).
Additionally, the Board “may” issue a CON “for construction or renovation as
necessary to repair or refurbish an existing facility, or to accommodate
additional beds obtained by transfer to an existing facility.” Id. The statute
qualifies the exception for the transfer of beds to an “existing facility” as
follows:
In the case of repair, refurbishment, or transferred beds, the
resulting costs in excess of the current capital expenditure
threshold as adjusted for inflation pursuant to RSA 151-C:5, II(f)(1)
shall not be reflected in any state Medicaid rate. Any application
for a certificate of need under this subparagraph shall indicate
whether it is for a life safety code requirement or to remedy
deficiencies noted in a licensing inspection or whether it is for
repair or refurbishment of an existing facility or for transferred
beds. If the application is approved, it shall be deemed that the
board has agreed with the indicated reason for such application.
Id.
The statute does not define “existing” or “existing facility,” but RSA 151-
C:2, XV-a defines the term “Health care facility” as “hospitals, ambulatory
surgical facilities, specialty hospitals and licensed nursing homes including all
services and property owned by such.” Furthermore, “[h]ealth care facilities
shall include facilities . . . which are licensed or required to be licensed in
whole or in part by the state.” Id. The statute also defines “Physical facility or
site” as “the total buildings, structures, and land of a health care facility.” RSA
151-C:2, XXIX.
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We assume, without deciding, that, at the time it was owned by THI,
Pleasant Valley nursing home could have been the same “health care facility”
as THI’s proposed new location, Traditions at Londonderry, because the
legislature so broadly defined the terms “health care facility” and “physical
facility.” See RSA 151-C:2, XV-a; RSA 151-C:2, XXIX. Regardless of what
might comprise a “facility,” however, that facility must be “existing” for the
Board to approve any transfer of beds to it. See RSA 151-C:4, III(a). We turn,
then, to the meaning of the term “existing facility.”
Because the term “is not defined in the statute, we look to its common
usage, using the dictionary for guidance.” K.L.N. Construction Co. v. Town of
Pelham, 167 N.H. 180, 185 (2014). We have interpreted the term “existing
facility,” as used in RSA chapter 151-C, by looking to the dictionary definition
of “existing,” which is “to have actual or real being.” Appeal of Parkland, 158
N.H. at 75; see Webster’s Third New International Dictionary 796 (unabridged
ed. 2002).
The State argues that the term “existing facility” in RSA 151-C, III(a) is
clear and unambiguous, and that a facility must be “existing” when the Board
acts on the merits of the CON application, not merely when the application is
submitted or when the Board deems the application complete for purposes of
commencing its review. THI, on the other hand, contends that a facility need
not remain “existing” throughout the course of the Board’s CON review.
According to THI, “existing” means only that the facility must exist when the
CON applicant obtains beds by transfer. We agree with the State.
In interpreting “existing facility,” we do not examine the phrase in
isolation. See Local Gov’t Ctr., 165 N.H. at 804. The statute states that a CON
“may be issued for construction or renovation as necessary to repair or
refurbish an existing facility, or to accommodate additional beds obtained by
transfer to an existing facility.” RSA 151-C:4, III(a) (emphasis added). Further,
the statute broadly provides that “[n]o new certificate of need shall be granted
by the board.” Id. (emphasis added). The statute specifies the requirements
that must be met — including that there be an existing facility — when the
Board “grants” or “issues” a CON. In other words, the facility must exist when
the Board engages in its final review and either approves or denies the request,
and not merely at the time the applicant files its application or obtains beds by
transfer. If the legislature meant the latter, it could have said that in the
statute. We do not add language that the legislature did not see fit to include,
Local Gov’t Ctr., 165 N.H. at 804, and THI’s reading of the statute would
require us to do exactly that.
THI seems to suggest that once its application was accepted as complete,
the Board all but agreed to issue a CON. However, that is not a reasonable
interpretation of the statutory scheme. There would be no need for the review
process contemplated by the statute if the Board’s decision to accept an
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application as complete was the equivalent of granting the application. THI
relies heavily on the fact that the Board initially found that Traditions at
Londonderry could be an “existing facility” for purposes of the transfer of beds
from Exeter Healthcare, and then gave THI permission to apply for a CON on
that basis. However, these initial findings by the Board were interlocutory and
did not preclude the Board from reassessing the situation based upon the
changed circumstances that existed at the time it considered THI’s application
for approval on the merits. Cf. Radziewicz v. Town of Hudson, 159 N.H. 313,
315 (2009) (reciting the general principle that a “trial court has the power to
reconsider an issue until final judgment or decree”). Likewise, the fact that the
Board approved the transfer of Pleasant Valley to an unrelated third party
provides no basis to interpret the statute in the manner THI advocates. THI
suggests that the Board should have informed THI, at the time it approved the
transfer of Pleasant Valley to the third party, that such transfer could affect
THI’s CON application, but did not do so. To the contrary, the record shows
that the Board reached out to THI and asked questions about the transfer and
the CON. THI does not explain what more the Board could or should have
done, and provides no basis for its assertion that the onus was on the Board to
notify the applicant more specifically that its actions might affect its pending
application.
THI also contends that the Board erroneously and unlawfully relied on
its precedent set in prior adjudications. In its order denying THI’s application,
the Board noted that it previously had denied a transfer of nursing beds to a
facility that operated only residential care beds because the transfer would be
akin to establishing a new institutional health service, in violation of the
moratorium on nursing home beds. The Board required that transferred beds
be placed at a facility where existing nursing beds were already in operation. It
is not clear to what extent the Board relied on this precedent in reaching its
final decision. However, regardless of the extent of such reliance, we agree with
the Board that the term “existing facility” cannot be stretched so far as to
include an entirely new facility that no longer has any relationship to another
operating facility owned by the applicant at the time the Board is asked to
grant the CON.
THI also argues that the Board’s decision contradicts the statute’s
purpose, which THI claims is to keep beds in service. However, the plain
language of the statute reflects that this goal is to be accomplished only in the
narrow circumstances to which the statute applies. Here, THI did not meet the
requirement that it have an existing facility, and the Board had no authority to
ignore this requirement to further an arguably more general statutory objective.
See State v. Dor, 165 N.H. 198, 205 (2013) (“[I]t frustrates rather than
effectuates legislative intent simplistically to assume that whatever furthers the
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statute’s primary objective must be the law.” (quotation omitted)).3 Therefore,
we conclude that the Board properly interpreted RSA 151-C:4 as preventing it
from approving THI’s CON application.
Affirmed.
HICKS, CONBOY, and BASSETT, JJ., concurred.
3 As explained in the text, even if the primary purpose of the statute is to avoid a decrease in the
number of beds, that cannot override the clear statutory language. Moreover, it is far from clear
that this is the primary purpose, given the arguably conflicting objective evidenced by the
moratorium on new nursing facilities.
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