Could Kentucky regulators move entire types of health facilities into a faster certificate of need review?

Plain-English summary

In 1996, Kentucky's Attorney General rejected a proposal to let broad types of health services and facilities use the shorter certificate of need review process. The health secretary proposed moving services with State Health Plan review criteria, including cardiac catheterization, open heart surgery programs, and hospice, into nonsubstantive review. Six more categories without those criteria were also proposed. The AG concluded that KRS 216B.095 did not authorize such a sweeping change by regulation.

The statute listed five specific circumstances for nonsubstantive review, including relocating a proposed facility, replacing worn equipment, and cost escalations. It also let the cabinet prescribe "other circumstances" by regulation. The AG read that phrase as limited to circumstances similar to the five listed ones. It did not permit the cabinet to shift whole service or facility categories out of formal review. Having resolved that question, the AG did not answer the senator's second question about limits on permissible additions.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Health facilities and service providers

The proposed 1996 change would have put a range of health services and facilities into nonsubstantive review instead of the formal certificate of need process. The AG concluded that KRS 216B.095 did not allow the cabinet to make that categorical shift by administrative regulation.

Health cabinet officials

The opinion said the cabinet's authority to prescribe "other circumstances" was confined to situations of the same kind as the statute's five listed circumstances. The AG characterized the proposal as an unlawful enlargement of statutory authority.

Legislators

Senator Bailey asked both whether the proposal conflicted with the certificate of need statute and what restrictions would apply if categories could be added. The AG answered the first question against the proposal and expressly left the second unanswered.

Common questions

Could Kentucky's health cabinet fast track all open heart surgery programs under this proposal?

The AG said no. Open heart surgery programs were among the types the secretary proposed moving to nonsubstantive review, and the opinion rejected the addition of broad service categories through this regulation.

What kinds of applications did the 1996 statute expressly allow into nonsubstantive review?

The opinion quoted examples such as changing a proposed facility's location, replacing or relocating a licensed facility without substantial service or bed changes, replacing worn equipment after five years of use, cost escalations, and establishing an industrial ambulance service.

Why did "other circumstances" not cover every health service category?

The AG applied the rule of ejusdem generis: general words following specific examples ordinarily cover things of the same kind. The listed examples were particular circumstances arising in ordinary operations or population growth, while the proposal covered whole types of facilities and services.

Did the AG define every permissible future addition to nonsubstantive review?

No. After finding this proposal unlawful, the AG said it was unnecessary to address the second question about restrictions on additions.

Background and statutory framework

KRS 216B.095 allowed a certificate of need applicant to seek nonsubstantive review and listed circumstances in which the cabinet could grant it. The sixth clause allowed "other circumstances" prescribed by administrative regulation. The AG applied ejusdem generis to limit that clause by the nature of the five preceding examples. The opinion also relied on the principle that an agency cannot add to a statute through regulation.

Citations and references

• KRS 216B.095: the certificate of need nonsubstantive review provision the AG construed.
• KRS 15.025(2): authority cited for the AG's response to a legislator's public law question.
• Steinfeld v. Jefferson County Fiscal Court, 312 Ky. 614, 229 S.W.2d 319, 320 (1950): source quoted for the ejusdem generis rule.
• Burke v. Oates, Commissioner of Revenue, 293 Ky. 563, 169 S.W.2d 608 (1943): additional case cited for that rule.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG96-037.htm

Original opinion text

OAG 96-37

October 3, 1996

Subject: Certificates of Need

Written By: Diane Schuler Fleming

Requested By: Senator Benny Ray Bailey, The Honorable Senator from Knott County

Syllabus: Pursuant to the rules of statutory construction, the addition of broad categories of health services and facilities to the certificate of need nonsubstantive review process is in direct conflict with the provisions of KRS 216B.095. An administrative agency cannot add to the provisions of a statute through the enactment of an administrative regulation.

Statute Construed: KRS 216B.095

Opinion of the Attorney General

Recently, John Morse, Secretary of the Cabinet for Health Services, initiated a proposal to add all of the health services and facilities for which there are review criteria in the State Health Plan to the categories which qualify for nonsubstantive review under KRS 216B.095(3). For example, under the proposed plan cardiac catheterization, open heart surgery programs, surgical services, hospice, chemical dependency beds, psychiatric residential treatment facilities, and lithotripters would no longer be submitted for review under the formal certificate of need process. In addition, the secretary proposed to add six additional categories (day health care, rehabilitation agencies, ambulatory surgery centers, ambulatory care centers, mobile services and medical first response services), for which there are no review criteria in the State Health Plan, to the nonsubstantive review process.

The Office of the Attorney General is asked by Senator Bailey to render an opinion pertaining to the Certificate of Need nonsubstantive review process. The Attorney General provides this opinion on a public question of law submitted by a member of the legislature pursuant to KRS 15.025(2). Senator Bailey requests our opinion on the following questions:

Does the Cabinet for Health Services' proposal to add categories of health services and facilities to the Certificate of Need (CON) nonsubstantive review process conflict with the statutory intent of KRS Chapter 216B? ; and

If additional categories may be added to the nonsubstantive review process, what are the restrictions to these additions?

The Senator contends that the CON nonsubstantive review process is intended for projects “of a lesser nature,” not for projects such as building a health care facility, adding long term care beds, or establishing a new open heart surgery program.

Addressing the Senator's first question, our review of KRS 216B.095 leads us to conclude that the Cabinet for Health Services cannot add the proposed categories of health services and facilities to the CON nonsubstantive review process. KRS 216B.095 states in relevant part:

(1) An applicant may waive the procedures for formal review of an application for a certificate of need and request a nonsubstantive review as provided below . . . .

. . .

(3) The cabinet may grant nonsubstantive review status to an application for a certificate of need which is required:

(a) To change the location of a proposed health facility;

(b) To replace or relocate a licensed health facility, if there is no substantial change in health services or substantial change in bed capacity;

(c) To replace or repair worn equipment if the worn equipment has been used by the applicant in a health facility for five (5) years or more;

(d) For cost escalations;

(e) To establish an industrial ambulance service; or

(f) In other circumstances the cabinet by administrative regulation may prescribe.

(Emphasis added.) The question thus becomes, what “other circumstances” may be prescribed by administrative regulation. To ascertain the legislative intent, we apply the basic rules of statutory construction, specifically, the rule of ejusdem generis. According to that rule, where general words follow a designation of specific subjects or classes, the meaning of the general words will be presumed to be restricted by the particular designation, and to include only things or persons of the same kind, class, or nature as those specifically enumerated, unless there is a clear manifestation of a contrary purpose.

Steinfeld v. Jefferson County Fiscal Court, 312 Ky. 614, 229 S.W.2d 319, 320 (1950). See also, Burke v. Oates, Commissioner of Revenue, 293 Ky. 563, 169 S.W.2d 608 (1943); and Hill v. Baker, 309 Ky. 514, 218 S.W.2d (1949).

Applying this rule of statutory construction to the statute before us, we see that each of the five reasons specified in subparts (a - e) for which the cabinet may grant nonsubstantive review are circumstances which occur in the normal course of business or result from the natural population growth of an area. They do not encompass broad categories of health services or facilities. Therefore, the Cabinet is limited in its ability to prescribe administrative regulations granting nonsubstantive review status to circumstances similar in nature to those specifically provided for in subparts a - e.

Here we also note that it is a basic tenet of administrative law that an agency cannot add to the provisions of a statute through the enactment of an administrative regulation. The Cabinet for Health Services is proposing to add major categories of health services and facilities to the nonsubstantive review process. These additions will result in substantial changes which go beyond the legislative provisions found in subpart f, and as such are contrary to the legislative scheme. Thus, we find the Cabinet's proposal is an unlawful attempt to enlarge the legislative enactment.

In conclusion, applying the principles of ejusdem generis, the proposal by the Cabinet for Health Services to add categories of health services and facilities to the CON nonsubstantive review process, is in direct conflict with the provisions of KRS 216B.095. Enactment of Secretary Morse's proposal would effectively eliminate the need for a formal CON review process as virtually all health facilities and services could be placed under nonsubstantive review status. Such a result is incompatible with the legislative scheme, and is an unlawful attempt to add to the statutory powers granted to the Cabinet through the enactment of an administrative regulation. Having reached this conclusion, it is unnecessary to address the second question presented by Senator Bailey.

A. B. CHANDLER III

ATTORNEY GENERAL

DIANE SCHULER FLEMING

ASSISTANT ATTORNEY GENERAL