August 29, 1978
Subject:
Health, Certificate of Need; Coverage of projects commenced before January 1, 1979; G.S. 131-170 et seq.
Requested By:
Mr. Charles W. Houseworth, Jr., Health Planner, State Health Planning and Development Agency Department of Human Resources
Question:
If work has commenced, but not completed by January 1, 1979, on a "new institutional health service" proposal and the proposal has not received approval under Section 1122 of the Social Security Act, 42 U.S.C.A. 1320a-1, is the person required to obtain a Certificate of Need pursuant to Chapter 1182, 1977 Session Laws (Second Session, 1978), (to be codified at G.S. 131-170 et seq.) before proceeding further with work on the proposal?
Conclusion:
No, if prior to ratification of the Act he has proceeded with development of the new institutional health service as explained below.
The North Carolina Health Planning and Resource Development Act of 1978, ratified by the General Assembly on June 16, 1978, adds a new Article 18 to Chapter 131 of the General Statutes which requires that before a person undertakes, develops, or offers a new institutional health service he must obtain a Certificate of Need from the Department of Human Resources. Chapter 1182, 1977 Session Laws (Second Session, 1978). Section 4 of the Act provides that it will be effective January 1, 1979. In addition, Section 4 provides two examples from coverage: 1) those proposals which received approval for capital reimbursement under Section 1122 of the Social Security Act, 42 U.S.C.A., 1320a-1, prior to January 1, 1979, as long as construction commences before January 1, 1980; and 2) those proposals for which application is made between July 1, 1978 and January 1, 1979 under the Section 1122 program, if the application is approved and if construction commences before January 1, 1980. The question at hand is whether a Certificate of Need is required for a proposal which does not qualify under the two exemptions and which is not completed by January 1, 1979.
A Certificate of Need "affords the person so designated as the legal proponent of the proposed project the opportunity to proceed with the development of such project." Section 131-171(3) of Section 2, Chapter 1182, 1977 Session Laws (Second Session 1978). The Act reveals that a Certificate of Need will be granted only to those proposals which the Department of Human Resources finds to be needed and in conformity with other standards and criteria asset forth in the Act and developed by the Department. Immediately prior to ratification a new institutional health service would be submitted to the Department of Human Resources for a finding of need only if the proponent desired reimbursement for capital expenditures under Titles V, XVIII, and XIX of the Social Security Act, 42 U.S.C.A. 1320A-1. The passage of the Act by the General Assembly imposes an entirely new limitation on the opportunity to proceed with the development of the new institutional health service.
If the Act is interpreted to require a Certificate of Need when prior to the ratification of the Act the proponent had already proceeded with development of the new institutional health service and incurred substantial expense the Act would invade personal and property rights protected under the Constitution of this State. See, Whaley v. Lenoir County, 5 N.C.App. 319 (1969). On the other hand, if the Act is interpreted so that it does not apply where a proponent, prior to ratification, had already proceeded with development of the new institutional health service such rights will be protected. The basic rules of statutory construction require the latter, if reasonable, as a statute will not be construed so as to raise questions as to its constitutionality if a different construction which will avoid such question of constitutionality is reasonable. State Milk Commission v. National Food Stores, Inc. 270 N.C. 323 (1967); State v. Barber, 180 N.C. 711 (1920). The definition of Certificate of Need reasonably supports a construction of the Statute which makes it inapplicable to someone who prior to ratification has already proceeded with development of the new institutional health service. As previously noted, the Certificate of Need allows the proponent to proceed with development. If the proponent had done so prior to ratification the Certificate of Need, by definition, would be unnecessary. Such a construction is also consistent with the provision that the certificate shall be valid only for the time specified by the Department of Human Resources, not to exceed 18 months, and that within such time the proponent must fulfill the specific performance requirements set forth in the Act for incurring a financial obligation. Section 131-174 (a) and (b) of Section 2, Chapter 1182, 1977 Session Laws (Second Session, 1978).
In order to be exempt from the Act, the proponent must have proceeded with development prior to ratification. Subsequent to June 16, 1978 and prior to January 1, 1979, the proponent may be protected only if he receives approval under Section 1122 of the Social Security Act, 42 U.S.C.A. 1320a-1, in accordance with Section 4 of the Act.
A person proceeds with development when he "(undertakes) those activities which will result in the offering of institutional health service not provided in the previous 12 month reporting period or the incurring of a financial obligation in relation to the offering of such a service." Section 131-171 (8) of Section 2, Chapter 1182, 1977 Session Laws (Second Session, 1978). Whether or not a person has undertaken such activities is a question of fact to be settled on a case-by-case method.
It should be noted that this opinion does not address the application of the Act to those who, subsequent to January 1, 1979, proceed with development of a new institutional health service without a Certificate of Need.
Rufus L. Edmisten Attorney General
Robert L. Hillman
Associate Attorney General