After the Salem County Hospital Corporation (SCHC) filed an application for a certificate of need (CN) to transfer ownership of the Memorial Hospital of Salem County, intervenors Carneys Point Rehabilitation and Nursing Center and Golden Rehabilitation and Nursing Center objected to SCHC's requests within that application to convert thirty existing medical/surgical beds to long-term care (LTC) beds and implement a previously approved CN for twenty-six psychiatric beds. Intervenors argued that with regard to the LTC beds: 1) SCHC's application was not filed in accordance with N.J.A.C. 8:33-4.1(a), which requires a finding by the Commissioner that a need exists for such beds in the area and the issuance of a call notice inviting competing applications from other providers in the area, and 2) the administrative record failed to establish a need for LTC beds. They also contended that with respect to the psychiatric beds, N.J.A.C. 8:33-3.3(j) prohibited the transfer of a previously unimplemented CN subject to exceptions which were inapplicable in this case.
The Commissioner granted SCHC's application for transfer of ownership as well as its requests for the LTC and psychiatric beds. It concluded that with regard to the LTC beds, "the addition of [thirty] LTC beds will have a minimal impact on the health care system as a whole and will contribute to the financial viability of Salem Hospital." With respect to the psychiatric beds, the Commissioner noted that the November 17, 2017 CN approval letter "addressed the requirements of N.J.S.A. 26:2H-8(a) [to] (f)" and incorporated that analysis by reference.
The court concludes that, despite the general deference owed to administrative agencies on appeal, the Commissioner failed to apply the relevant statutory factors to determine that there was a need for LTC beds in Salem County and he improperly awarded those beds without issuing a call notice in the New Jersey Register inviting competing applications for the provision of LTC beds. Further, even if the Commissioner's final decision can be interpreted as having determined a need for LTC beds in the area, the record contained insufficient support for such a finding. The court also concludes that the Commissioner was required to conduct an independent analysis of the actual need for a proposed service regardless of whether the transaction has an otherwise meritorious purpose, such as to support a hospital's financial viability. The court agrees, however, with the Commissioner's approval of the open adult acute care psychiatric beds to SCHC consistent with an unimplemented CN.