Citation Numbers： 878 A.2d 829, 185 N.J. 1, 2005 N.J. LEXIS 950
Judges： Rivera-Soto, Zazzali
Filed Date： 8/11/2005
Status： Precedential
Modified Date： 11/11/2024
delivered the opinion of the Court.
In October 2002, after due notice and comment and upon the approval of the Health Care Administration Board (Board), the Commissioner (Commissioner) of the New Jersey Department of Health and Senior Services (Department) adopted regulations
We hold that, given the presumption of validity and reasonableness we accord to administrative regulations, the regulations codified at N.JAC. 8:43G-22A.6(c) and (e) are valid. We, therefore, reverse the judgment of the Appellate Division invalidating those regulations.
I.
In 1971, the Legislature adopted HCFPA to implement generally the declared “public policy of the State that hospital and related health care services of the highest quality, of demonstrated need, efficiently provided and properly utilized at a reasonable cost are of vital concern to the public health.” N.J.S.A. 26:2H-1. Stated differently, HCFPA was “adopted in response to a growing concern over the rising cost of hospital care and, consequently, hospitalization insurance, in this state. It is essentially cost-containment legislation focusing on the institutional delivery of health care services.” Women’s Med. Ctr. v. Finley, 192 N.J.Super. 44, 56, 469 A.2d 65 (App.Div.1983), certif. denied, 96 N.J. 279, 475 A.2d 578 (1984). The public policy thus enunciated by the Legislature translated into the general certificate of need requirement of HCFPA: “[n]o health care facility shall be constructed or expanded, and no new health care service shall be instituted after
with the approval of the [B]oard, shall adopt and amend rules and regulations in accordance with the “Administrative Procedure Act,” [N.J.S.A 52:14B-1 to -25,] to effectuate the provisions and purposes of this act, including but not limited to: ... (3) standards and procedures relating to the licensing of health care facilities and the institution of certain additional health care services.
[N.J.S.A 26:2H-5b.]
The Legislature has revisited HCFPA several times since its original enactment. Of these, the provisions of L. 1992, c. 181, § 1, which added N.J.S.A. 26:2H-18d to HCFPA, are the most relevant. Effective January 9, 1993, N.J.S.A. 26:2H-18d required that, subject to and “contingent upon[ ] the execution of a written agreement between Robert Wood Johnson University Hospital/St. Peter’s Medical Center and a majority of the acute care hospitals providing inpatient pediatric services which are located in the [listed catchment area] counties[,]” the Commissioner was obligated to “designate Robert Wood Johnson University Hospital/St. Peter’s Medical Center in the City of New Brunswick as the State’s specialty acute care children’s hospital in central New Jersey for the counties of Hunterdon, Mercer, Middlesex, Monmouth and Somerset.”
In April 2002, as required by N.J.S.A. 26:2H~5b, the Commissioner proposed new regulations governing the licensing standards for children’s hospitals “designed to ensure that facilities licensed as children’s hospitals provide more comprehensive and specialized pediatric care and meet more stringent requirements than hospitals licensed to operate a general pediatric service.” 34 N.J.R. 1305(a) (April 1, 2002). In doing so, the Commissioner engaged in a deliberative and comprehensive process:
To develop these proposed new rules, the Department convened a children’s hospital advisory subcommittee, comprised of hospital administrators, clinical experts and other professionals to provide input on pediatric services. This subcommittee included representatives of all currently designated children’s hospitals. The proposed new rules establish the necessary guidelines for the Department’s Licensure and Inspections, Complaints and Compliance teams to determine facility compliance with the substantive standards applicable to children’s hospitals.
[.Ibid.]
Both RWJ Hospital and St. Peter’s, as “currently designated children’s hospitals,” were represented individually on this subcommittee.
Among other things, the proposed regulations required that, as part of the continuing designation as a licensed children’s hospital, all licensed children’s hospitals in this State had to operate a RPC “in accordance with the provisions contained in N.J.A.C. 8:43G-19, and N.J.A.C. 8:33C-3.4(c)3 through 10.” Ibid. Although the proposed regulations required that a children’s hospital not already licensed to operate either a PICU or a RPC file a licensing application for such a unit or center, the hospital was “not ... required to obtain a certificate of need approval for the establishment of such units/services.” Ibid. The proposed regulations
specifie[d] that a children's hospital without a licensed [PICU] may establish such a unit for a maximum of six beds without certificate of need approval, and that a licensed children’s hospital without a licensed [NICU] may create an intermediate care nursery with a maximum of four bassinets and an intensive care nursery with a maximum of six bassinets without certificate of need approval.
*8 [Ibid.]
Although the Administrative Procedure Act only requires a presumptive thirty-day notice and comment period prior to the adoption of an agency regulation, N.J.S.A. 52:14B^4(a)(l), the Commissioner specifically provided for a sixty-day comment period on these proposed regulations. 34 N.J.R. 1306 (April 1,2002).
Ten entities commented; of these, four—RWJ Hospital, St. Peter’s, St. Joseph’s Hospital and Medical Center, and Hacken-sack University Medical Center—are licensed children’s hospitals. Only one of these—St. Peter’s—objected to the proposed requirement that, in order to retain a meaningful designation as a licensed children’s hospital, the licensed children’s hospital also must be licensed to operate a RPC. St. Peter’s comments, and the Commissioner’s response, merit examination in full:
COMMENT: [St. Peter’s] reported a single area of concern with the proposed rules. While the eommenter agrees that all children’s hospitals should maintain a NICU, it does not agree that each should be a regional perinatal center (RPC). [St. Peter’s] argues that “the responsibilities associated with operation of a RPC are broad in scope. These centers must comply with strict facility and service requirements. RPCs are further required to provide community education programs and follow-up care geared toward the specific needs of neonatal patients. Existing RPCs have made the necessary financial commitments and investments in human capital to comply with these necessarily rigorous rules. Requiring this same commitment from all licensed children’s hospitals will place an undue financial burden on existing children’s hospitals that would, under this proposal, be forced to seek designation as a RPC. This proposal will also place undue competitive and economic pressures on current centers.” The eommenter asked for the removal of the requirement for [a] children’s hospital to become a RPC [as] proposed [by] N.J.AC. 8:43G-22A.6(c).
RESPONSE: The Department disagrees. The Department contends that it is essential that all children’s hospitals provide the services of a RPC, services geared toward the needs of pregnant women, neonates, and pediatric patients. To permit a children’s hospital to do less would damage access to a smooth continuum of necessary services for these classes of patients.
No changes are being made.
[34 N.J.R. 3638 (October 21, 2002).]
Although addressing some of the considerations relevant in a certificate of need analysis, St. Peter’s regulatory rule-making assault on these proposed regulations was not that they contravened the HCFPA requirement for a certificate of need before
The Commissioner rejected St. Peter’s objections and, on September 19, 2002, the Board approved the regulations, which became effective October 21, 2002. 34 N.J.R. 3638-39 (October 21, 2002). The specific regulations to which St. Peter’s objected provide in full as follows:
(a) By October 21, 2003, all licensed children’s hospitals shall operate a [PICU] in accordance with N.J.A.C. 8:43G-22.
(b) A licensed children’s hospital not licensed to operate a [PICU] on October 21, 2002 shall file a licensing application to initiate such a unit in accordance with (a) above. Such a licensing application shall be filed in accordance with the procedures described in N.J.A.C. 8:43G-2.2 through 2.5, as applicable.
(c) By October 21, 2003, all licensed children’s hospitals shall operate a [RPC] in accordance with N.J.A.G. 8:43G-19 and applicable provisions of N.J.AC. 8:33C, including N.JAC. 8:33C-3.4(a)3 through 10.
(d) A licensed children’s hospital not licensed to operate a [RPC] on October 21, 2002 shall file a licensing application to initiate such a service, including [NICU](s), in conformance with (c) above. Such a licensing application shall be filed in accordance with the procedures described in N.J.AC. 8:436-2.2 through 2.5, as applicable.
(e) A licensed children’s hospital not also licensed to operate a [PICU] or a [RPC] on October 21, 2002 shall not be required to obtain certificate of need approval to establish such a unit or center, including [NICU](s) within the center.
1. A licensed children’s hospital without a licensed [PICU] may establish such a unit with a maximum size of six beds without certificate of need approval.
2. A licensed children’s hospital without a licensed [NICU] may establish such a unit(s) with a maximum size of four bassinets for an intermediate care nursery and six bassinets for an intensive care nursery without certificate of need approval.
[N.J.AC. 8:43G-22A.6.]
St. Peter’s sought review of two of these regulations—N.J.AC. 8:43G-22A.6(c) and (e)—from the Appellate Division, R. 2:2-3(a)(2), and also separately sought from the Commissioner a stay of the regulations pending appeal. After the Commissioner denied that request, St. Peter’s requested that the Appellate Division stay the regulations pending appeal; the Department cross-moved for a partial remand to amend the regulations to address St.
Addressing the merits of St. Peter’s objections to these regulations, the Appellate Division framed the question as “whether, in promulgating the regulations at issue, the Department acted within its authority to permit such facilities outside the [certificate of need] process, or whether the governing statutory scheme requires the [certificate of need] mechanism as a prerequisite.” St. Peter’s Univ. Hosp. v. Lacy, 372 N.J.Super. 170, 182, 856 A.2d 756 (App.Div.2004). Concluding that, “[b]y these measures the regulations must fall,” ibid., the panel narrowed its focus to the specific regulatory provisions complained of by St. Peter’s and “declare[d] N.J.AC. 8:43G-22A6(c) and (e) to be invalid as inconsistent with the requirements of [the certificate of need] statute, N.J.S.A. 26:2H-7.” Id. at 185, 856 A.2d 756.
Upon the petition of RWJ Hospital, we granted certification. 182 N.J. 208, 863 A.2d 365 (2004). We denied leave to intervene
II.
RWJ Hospital urges that we reverse the Appellate Division because it fails to interpret the certificate of need statute, N.J.S.A. 26:2H-7, in pan materia with the Legislature’s designation of RWJ Hospital as a specialty acute care children’s hospital. N.J.S.A. 26:2H-18d. RWJ Hospital argues that, without the requirements of the challenged regulations, the designation “children’s hospital” is meaningless because it then becomes a watered-down version of a designated children’s hospital that cannot perform any more health services than it can without that designation. RWJ Hospital also argues that the Appellate Division improperly applied the standard of review for administrative determinations and, instead, should have ruled the regulations valid. RWJ Hospital further argues that St. Peter’s should be estopped because it applied for and received a license to operate a PICU without itself first securing a certificate of need.
In response, St. Peter’s argues first that the challenged regulations cannot stand because they directly conflict with the certificate of need statute. Applying the criteria under the certificate of need statute, St. Peter’s further argues that the challenged regulations exceed the scope of the Commissioner’s authority because they would create a RPC under circumstances where there is no need, which is inconsistent with the certificate of need statute. St. Peter’s also argues that estoppel is inapplicable here and, at oral argument, suggested that, if RWJ Hospital believed St. Peter’s received its PICU license in contravention of the certificate of need statute, RWJ Hospital has a remedy: RWJ Hospital can challenge the issuance of that license before the Appellate Division.
The primary argument advanced by amicus UMDNJ/RWJ Medical School is that the Appellate Division’s decision will negatively impact medical education in this State. According to UMDNJ/RWJ Medical School, it operates its fellowship program through RWJ Hospital and, therefore, it must have a teaching basis upon which to train future doctors.
III.
A.
Early in our consideration of the Commissioner’s rule-making power under HCFPA, we held that “[administrative
we set forth the general principles in reviewing a challenged rule. We start with the premise that we must give great deference to an agency’s interpretation and implementation of its rules enforcing the statutes for which it is responsible. In re Distrib. of Liquid Assets, 168 N.J. 1, 10-11 [773 A.2d 6] (2001). Such deference is appropriate because it recognizes that “agencies have the specialized expertise necessary to enact regulations dealing with technical matters and are ‘particularly well equipped to read ... and to evaluate the factual and technical issues that ... rulemaking would invite.’ ” New Jersey State League of Municipalities v. Dep’t of Cmty. Affairs, 158 N.J. 211, 222 [729 A.2d 21] (1999) (quoting Bergen Pines County Hosp. v. New Jersey Dep’t of Human Servs., 96 N.J. 456, 474 [476 A.2d 784] (1984)). Consequently, agency rules are accorded a presumption of validity and reasonableness, ibid., and the challenging party has the burden of proving the rule is at odds with the statute, Bergen Pines County Hosp., supra, 96 N.J. at 477 [476 A.2d 784],
Despite that deference, a rule will be set aside if it is “inconsistent with the statute it purports to interpret.” Smith v. Director, Div. of Taxation, 108 N.J. 19, 26 [527 A.2d 843](1987). That is, the agency “may not under the guise of interpretation ... give the statute any greater effect than its language allows.” In re Valley Rd. Sewerage Co., 154 N.J. 224, 242 [712 A.2d 653] (1998) (Garibaldi, J., dissenting) (quoting Kingsley v. Hawthorne Fabrics Inc., 41 N.J. 521, 528 [197 A.2d 673] (1964)). Thus, if the regulation is plainly at odds with the statute, we must set it aside. See New Jersey Tpk. Auth. v. AFSCME, Council 73, 150 N.J. 331, 351-52 [696 A.2d 585] (1997).
[In re Freshwater Wetlands Protection Act Rules, 180 N.J. 478, 488-89, 852 A.2d 1083 (2004).]
Although the Appellate Division panel here properly set forth the foregoing standard of review, St. Peter’s Univ. Hosp. v. Lacy, 372 N.J.Super. 170, 177-78, 856 A.2d 756 (App.Div.2004), we must part company with the result the panel reached in applying that standard.
B.
At its core, the controversy presented pits the certificate of need process that is part of HCFPA against that same statute’s later designation of St. Peter’s and RWJ Hospital as specialty
Twenty-two years after first adopting the certificate of need requirement of HCFPA—and on the heels of having created its list of exemptions to the certificate of need requirement
[t]he role of this Court in any statutory analysis is to determine the intent of the Legislature and give effect to its enactments if reasonably possible. When reviewing two separate enactments, the Court has an affirmative duty to reconcile them, so as to give effect to both expressions of the lawmakers’ will. In other words, it is our obligation to make every effort to harmonize separate statutes, even if they are in apparent conflict, insofar as we are able to do so.
The presumption of validity is especially strong here in light of the similar subject matter and common purpose of both statutes____Statutes that deal with*15 the same matter or subject should be read in pan materia and construed together as a “unitary and harmonious whole.” This maxim of statutory construction is especially pertinent when, as in this case, the statutes in question were passed in the same session.
[In re Adoption of a Child by W.P. and M.P., 163 N.J. 158, 182-83, 748 A.2d 515 (2000) (Poritz, C.J., dissenting) (citations and footnote omitted).]
The legislative designation of St. Peter’s and RWJ Hospital as specialty acute care children’s hospitals cannot be either a nullity or transparent window-dressing; it must have substance. Similarly, to engraft onto that designation the added requirement of a certificate of need is to take away with one hand what has been given with the other, and we cannot assume that the Legislature intended such a result. Instead, the view that most closely approximates the intent of the Legislature in creating statutorily designated children’s hospitals must be that, when read in pan materia with the certificate of need statute, the designation is a legislative—in lieu of an administrative—finding of need, the implementation of which is delegated to the Commissioner.
Our conclusion that the Legislature, which created the certificate of need process in the first instance, intended the legislative designation of certain hospitals as children’s hospitals to serve in lieu of the certificate of need process also is consistent with the interpretation the Commissioner and the Department have given this statutory enactment. We have stated the governing principle thusly:
Generally, we do give substantial deference to the interpretation an agency gives to a statute that the agency is charged with enforcing.
Nevertheless, administrative regulations are not binding on the courts and a regulation will fall if a court finds that the rule is inconsistent with the statute it purports to interpret.
[Smith v. Director, Div. of Taxation, 108 N.J. 19, 25-26, 527 A.2d 843 (1987) (citations omitted).]
That deference arises because “[t]he meaning ascribed to legislation by the administrative agency responsible for its implementation, ... is persuasive evidence of the Legislatures understanding of its enactment.” Cedar Cove, Inc. v. Stanzione, 122 N.J. 202, 212, 584 A.2d 784 (1991) (citations omitted). Our conclusion is
Because “subsequent legislation may be used as an extrinsic aid when seeking to discern earlier legislative intent[,]” Varsolona v. Breen Capital Servs. Corp., 180 N.J. 605, 623, 853 A.2d 865 (2004) (citations omitted), we also look to more recent legislative acts for guidance. In May 2004, the Assembly sought to designate “Jersey Shore University Medical Center as the State’s specialty acute care children’s hospital for Monmouth and Ocean counties.” Assembly Bill No. 2884, lb, 2b. As proposed by the Assembly, Jersey Shore University Medical Center was required to “eompl[y] with all of the appropriate certificate of need and licensure requirements” as a condition precedent to such statutory designation. Id. at la. In March 2005, when Assembly Bill 2884 was considered by the Assembly Health and Human Services Committee, it was amended to
designate Jersey Shore University Medical Center and Monmouth Medical Center, each, as the States special acute care childrens hospital for Monmouth and Ocean counties, subject to the commissioners determination that each hospital meets all of the licensure criteria that apply to a childrens hospital and has met and complied with all of the appropriate certificate of need and licensure requirements to obtain State authorization to offer the component services that constitute a children’s hospital.
[Assembly Bill No. 2884[1R], March 1, 2005 (emphasis supplied).]
As so modified, Assembly Bill No. 2884 was passed by the Assembly on March 14,2005.
The Senate, however, rejected the requirement that either hospital satisfactorily complete the certificate of need process as a condition precedent to designation as a specialty acute care chil-drens hospital. As adopted by the Senate Health, Human Services and Senior Citizens Committee on May 5, 2005, approved by the Senate on May 16, 2005, and ultimately enacted into law on June 29, 2005, newly-enacted N.J.S.A. 26:2H-18g now
*17 designate^] Jersey Shore University Medical Center and Monmouth Medical Center, each, as the State’s special acute care children’s hospitals for Monmouth and Ocean counties, subject to the commissioner’s determination that each hospital meets all of the licensure criteria that apply to a children’s hospital and has met and, complied with all of the requirements to obtain State authorization to offer the component services that constitute a children’s hospital.
\L. 2005, c. 116,1.]
The Legislature’s intent is clear and applies with equal force to the earlier statutory designation concerning RWJ Hospital and St. Peter’s: by creating statutorily designated children’s hospitals, the Legislature obviated the certificate of need process once a statutory designation as a children’s hospital is made. Viewed through that prism and because we are required to “give considerable weight to an agency’s interpretation of a statute the agency is charged with enforcing[,]” G.S. v. Dep’t of Human Servs., 157 N.J. 161, 170, 723 A.2d 612 (1999), the challenged regulations are entirely consistent with the statutory scheme and are neither arbitrary, nor capricious, nor unreasonable, nor plainly incompatible with HCFPA, the statute they in fact effectuate.
IV.
The judgment of the Appellate Division is reversed.
NJ.S.A. 26:2H-18d recently was amended in two respects: to update the name “St. Peter's Medical Center” to “St. Peter's University Hospital,” and, for the reasons set forth below, infra, N.J. at 16-17, 878 A.2d at 839 (2005), to delete Monmouth County from the catchment area in the statutory designation. L. 2005, c. 116, § 3 (effective June 29, 2005).
The Department’s efforts to separately address St. Peter’s objections ultimately were for naught. Although the Department published a proposed amendment to N.J.A.C. 8:43G-22A.6(c) that would lessen the requirement from establishing a RPC to that of establishing a “community perinatal center—intensive[,]” 35 N.J.R. 582(a) (February 3, 2003), that proposal was withdrawn due to overwhelming criticism and almost unanimous opposition: of 530 written comments received, 529 were opposed and, of those in opposition, 523 "supported the [RPC] as the appropriate level of perinatal service delivery for all designated children's hospitals[.]” 35 N.J.R. 1831(a) (May 5, 2003). As the Department tersely noted: “A single consumer commenter supported the Department's proposal.” Ibid.
On June 16, 2003, the Appellate Division vacated its stay and, on August 8, 2003, RWJ Hospital was granted a license, as provided under the challenged regulations, to operate a RPC, which it has operated since.
At oral argument, we were advised that UMDNJ/RWJ Medical School previously operated its fellowship program through St. Peter's and that, for reasons that are not before us, that relationship was terminated. UMDNJ/RWJ Medical School now runs its fellowship program through RWJ Hospital; St. Peter’s gets its resident and fellow staff from either Children's Hospital of Philadelphia or the Drexel University College of Medicine (formerly Hahnemann University), both located in Philadelphia, Pennsylvania.
L. 1992, c. 160, § 19, which created the list of statutory exemptions to the certificate of need requirement and was codified at NJ.S.A. 26:2H~7a, was approved November 30, 1992 and made effective January 1, 1993. L. 1992, c. 182, § 1, which statutorily designated RWJ Hospital and St. Peter’s as "specialty acute care children's hospital[s]’’ and was codified at NJ.S.A. 26:2H-18d, was approved December 10, 1992, and was made effective January 9, 1993.
Because we hold that the challenged regulations are valid, we need not address the remaining arguments advanced by RWJ Hospital, the Commissioner and the Department, or UMDNJ/RWJ Medical School.