- The North Carolina Court of Appeals has vacated a ruling favoring Duke Health in a battle with UNC Health over government permission to add 68 new hospital beds in Durham and Caswell counties.
- An administrative law judge had ruled in 2023 that Duke was substantially prejudiced by state healthcare regulators' failure to hold a public hearing before awarding a government certificate of need to UNC.
- Following a decision in a similar dispute earlier this year, appellate judges ruled unanimously that the lack of a public hearing is not enough for Duke to win the case.
The North Carolina Court of Appeals has vacated an administrative law judge’s decision favoring Duke Health in its legal battle with UNC Health over 68 new hospital beds in Durham and Caswell counties.
Duke had challenged state health regulators’ decision to award a government-mandated certificate of need to UNC. Duke’s lawyers argued that the absence of a public hearing during the CON application process amounted to substantial prejudice against Duke.
Administrative Law Judge Melissa Owens Lassiter issued a July 2023 decision siding with Duke. Tuesday’s Appeals Court opinion threw out Lassiter’s ruling.
“The failure of the North Carolina Department of Health and Human Services, Division of Health Service Regulation, Healthcare Planning and Certificate of Need Section (‘the Agency’) to conduct a public hearing pursuant to N.C.G.S. § 131E-185(a1)(2) does not automatically constitute substantial prejudice to a petitioner in a contested case before the Office of Administrative Hearings,” wrote Judge Hunter Murphy for a unanimous three-judge appellate panel. “Here, where the Office of Administrative Hearings reasoned in its final decision that the Agency’s failure to conduct a public hearing constituted per se substantial prejudice to the petitioner before it, we must vacate that final decision.”
Tuesday’s decision followed two other Appeals Court cases earlier this year dealing with the lack of a public hearing during the CON application process. In the earlier cases, appellate judges determined that critics of the CON decision could not rely solely on the absence of a public hearing to win their case.
The case will head back to an administrative law judge.
“Our holding does not preclude a subsequent ruling that Duke was substantially prejudiced in the event more specific findings supporting such a ruling are found to exist on remand,” Murphy wrote.
Appellate judges also noted the importance of public hearings.
“Jurists and academics alike have critiqued agency proceedings on the basis that they suffer from problems of democratic legitimacy, and the public hearing requirement of N.C.G.S. § 131E-185(a1)(2) exists, at least in significant part, to legitimize aspects of the agency review process that might otherwise be democratically suspect,” Murphy wrote. “Public hearings under N.C.G.S. § 131E-185(a1)(2) are not, therefore, private benefits to their participants, but critical aspects of the agency review process that exist for public and systemic benefits.”
This case marks just one of the ongoing CON battles between UNC and Duke. Last week, lawyers for UNC and the state Department of Health and Human Services filed paperwork asking the North Carolina Supreme Court to take up a CON dispute over a new 40-bed hospital in Durham County.
State regulators granted UNC permission to move forward with a new hospital in Research Triangle Park. Duke challenged that decision. The state Appeals Court split, 2-1, in sending the case back to an administrative law judge to address potential zoning concerns for the new UNC building.