Does a freestanding emergency room owned by a Virginia hospital need its own license or a certificate of public need?

Plain-English summary

Senator George Barker asked AG Mark Herring two questions about freestanding emergency departments (often called FSEDs), the off-site emergency rooms that have been spreading nationally since the mid-2000s: do they need their own hospital license, and do they need a certificate of public need (COPN) from the state before opening.

On licensure, the AG read the Virginia Code and the Board of Health regulations together and concluded that a freestanding ER owned by a licensed hospital is not automatically a separately licensable "hospital." It only becomes one if it fits one of the three regulatory classifications, "general," "special," or "outpatient" hospital, defined at 12 VAC § 5-410-10. The AG observed that, as a practical matter, freestanding ERs typically do not fit any of those categories: they do not have inpatient beds (so they are not general hospitals), they do not target a specific patient population (so they are not special hospitals), and they do not perform surgery on outpatients (so they are not outpatient surgical hospitals). Whether any particular facility fits would depend on its own facts, which AG opinions historically decline to resolve.

On COPN, § 32.1-102.1 defines "medical care facility" broadly, but the statute then lists the specific facility types that actually require COPN review. Freestanding emergency facilities are not on that list. Three 2018-2019 bills (HB 1402, HB 1680, HB 2288, SB 1125) tried to add them, but none passed. So unless the new facility is also one of the listed types (general hospital, specialty surgery center, rehabilitation hospital, etc.), no COPN was required.

Currency note

This opinion was issued in 2019. 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.

Background and statutory framework

Virginia law forbids anyone to operate a hospital without a license from the State Health Commissioner (§ 32.1-125(A)). "Hospital" is defined at § 32.1-123 to mean a facility whose primary function is diagnosis, treatment, and medical/nursing services for two or more nonrelated individuals, "including hospitals known by varying nomenclature or designation such as children's hospitals, sanatoriums, sanitariums and general, acute, rehabilitation, chronic disease, short-term, long-term, outpatient surgical, and inpatient or outpatient maternity hospitals."

The Board of Health is authorized to classify hospitals (§ 32.1-127(B)(3)), and it has done so at 12 VAC § 5-410-50, dividing licensable hospitals into three classes:

• General hospital with an organized medical staff, permanent facilities including inpatient beds, and a range of medical services.
• Special hospital that limits admissions to a specialized patient group or condition.
• Outpatient hospital that primarily provides facilities for outpatient surgery.

12 VAC § 5-410-60(A) requires a separate license for hospitals operated on "separate premises" even under shared management. So if the FSED qualifies as a "hospital" under one of the three classifications and is on separate premises, a separate license is needed; if not, it is not.

The certificate of public need ("COPN") program, § 32.1-102.3(A), forbids beginning any "project" without a COPN. "Project" in turn is defined to include the "[e]stablishment of a medical care facility," and "medical care facility" is then defined narrowly by listing specific types (general hospitals, sanitariums, nursing homes, certain intermediate care facilities, mental hospitals, specialty outpatient centers, rehabilitation hospitals, and licensed hospitals generally). Freestanding emergency departments are not in the list.

Common questions

Q: What is a "freestanding emergency department"?
A: The AG quoted the American College of Emergency Physicians: a medical emergency center located apart from a hospital. It can be an off-site branch of a hospital (sometimes called a satellite ED) or an independently-owned facility.

Q: If a hospital-owned FSED is not separately licensed, what governs its operation?
A: The opinion did not address operations directly, but it implied the off-site ER continues to function under the parent hospital's license. EMTALA (42 U.S.C. § 1395dd; 42 C.F.R. § 489.24) treats a "dedicated emergency department" of a hospital as part of the hospital for federal screening and stabilization purposes regardless of state licensure.

Q: Does this opinion mean a fully independent FSED, not owned by a hospital, also avoids licensure and COPN?
A: It depends on the facility's own structure. The AG was clear that the licensure outcome turned on whether the facility fits a "general," "special," or "outpatient" hospital classification, not on who owns it. An independent FSED that meets one of those classifications would need its own license. The COPN question turns the same way: it depends whether the facility falls into one of the medical-care-facility types listed in § 32.1-102.1.

Q: Did the 2018 legislative push to add FSEDs to COPN succeed?
A: No. House Bill 1402 in 2018 and House Bills 1680, 2288, and Senate Bill 1125 in 2019 all failed in committee. The AG noted those efforts as evidence that the General Assembly had not (at the time of this opinion) chosen to bring FSEDs into the COPN net.

Q: Could the Health Commissioner add FSED rules administratively?
A: The opinion did not say, but § 32.1-127(B)(3) gives the Board of Health classification authority, and § 32.1-102.1 also empowers the Board to designate additional "specialty services" subject to COPN. Either body could expand the regulatory reach via rulemaking.

Citations

The opinion cites § 32.1-125(A), § 32.1-123, § 32.1-124, § 32.1-127(B)(3), § 32.1-102.1, § 32.1-102.3(A), and 12 VAC § 5-410-10, -40, -50, -60(A). It also references EMTALA (42 U.S.C. § 1395dd; 42 C.F.R. § 489.24(b)) and prior Virginia AG opinions from 2002 and 1996 on the AG's general practice of declining factual determinations.

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/opinions/2019/18-045-Barker-issued.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Mark R. Herring
Attorney General

202 North Ninth Street
Richmond, Virginia 23219
804-786-2071

Cynthia E. Hudson
Chief Deputy Attorney General

March 8, 2019

Fax 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

The Honorable George L. Barker
Member, Senate of Virginia
Post Office Box 10527
Alexandria, Virginia 22310

Dear Senator Barker:
I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issues Presented
You ask whether a freestanding emergency facility[1] that is owned and operated by a licensed hospital is required to be separately licensed as a "hospital" by the State Health Commissioner. You also ask whether anyone seeking to establish and operate a freestanding emergency facility, whether the facility is affiliated with a licensed hospital or is independent,[2] must first obtain a certificate of public need (COPN).

Applicable Law and Discussion

1. Licensure
   You first inquire whether a freestanding emergency facility that is owned and operated by a licensed hospital is required to be separately licensed as a "hospital" by the State Health Commissioner. As a threshold matter, Virginia law provides that no person shall own or operate a hospital in the Commonwealth unless it is licensed by the State Health Commissioner.[3] Elaborating upon this requirement, Title 12, § 5-410-60 of the Virginia Administrative Code states that "[a] separate license shall be required by hospitals maintained on separate premises even though they are operated under the same management."[4] The relevant question under this regulation is whether a freestanding emergency facility that is owned and operated by a licensed hospital is itself a "hospital" under applicable law.

Section 32.1-123 of the Code of Virginia defines the term "hospital" to mean

any facility licensed pursuant to this article in which the primary function is the provision of diagnosis, of treatment, and of medical and nursing services, surgical or nonsurgical, for two or more nonrelated individuals, including hospitals known by varying nomenclature or designation such as children's hospitals, sanatoriums, sanitariums and general, acute, rehabilitation, chronic disease, short-term, long-term, outpatient surgical, and inpatient or outpatient maternity hospitals[.][5]

Pursuant to its authority to classify hospitals and provide for the licensure of hospitals by classification,[6] the Board of Health has promulgated regulations establishing the classes of hospitals that are subject to licensure. The Regulations for the Licensure of Hospitals in Virginia[7] provide that "[h]ospitals to be licensed shall be classified as general hospitals, special hospitals or outpatient hospitals defined by 12VAC5-410-10."[8] These types of "hospitals" are defined in turn as follows:

"General hospital" means institutions as defined by § 32.1-123 of the Code of Virginia with an organized medical staff; with permanent facilities that include inpatient beds; and with medical services, including physician services, dentist services and continuous nursing services, to provide diagnosis and treatment for patients who have a variety of medical and dental conditions that may require various types of care, such as medical, surgical, and maternity.

"Special hospital" means institutions as defined by § 32.1-123 of the Code of Virginia that provide care for a specialized group of patients or limit admissions to provide diagnosis and treatment for patients who have specific conditions (e.g., tuberculosis, orthopedic, pediatric, maternity).

"Outpatient hospital" means institutions as defined by § 32.1-123 of the Code of Virginia that primarily provide facilities for the performance of surgical procedures on outpatients. Such patients may require treatment in a medical environment exceeding the normal capability found in a physician's office, but do not require inpatient hospitalization.[9]

Pursuant to these regulations, a freestanding emergency facility that is owned and operated by a licensed hospital would not be subject to separate licensure unless it meets one of the classifications set forth above. Any such determination would depend on the facts relating to a particular facility. By longstanding tradition, Attorneys General "have declined to render official opinions when the request involves determinations of fact rather than questions of law."[10]

2. Certificate of Public Need (COPN)
   You also ask whether anyone seeking to establish and operate a freestanding emergency facility, whether the facility is affiliated with a licensed hospital or is completely independent, must first obtain a certificate of public need (COPN). Virginia law states that "[n]o person shall commence any project without first obtaining a certificate [of public need] issued by the Commissioner."[11] A "project" is defined, in pertinent part, to mean the "[e]stablishment of a medical care facility."[12] A "medical care facility" is defined in § 32.1-102.1 of the Code of Virginia as

any institution, place, building or agency, whether or not licensed or required to be licensed by the Board or the Department of Behavioral Health and Developmental Services, whether operated for profit or nonprofit and whether privately owned or privately operated or owned or operated by a local governmental unit, (i) by or in which health services are furnished, conducted, operated or offered for the prevention, diagnosis or treatment of human disease, pain, injury, deformity or physical condition, whether medical or surgical, of two or more nonrelated persons who are injured or physically sick or have mental illness, or for the care of two or more nonrelated persons requiring or receiving medical, surgical or nursing attention or services as acute, chronic, convalescent, aged, physically disabled or crippled or (ii) which is the recipient of reimbursements from third-party health insurance programs or prepaid medical service plans.[13]

While this definition of "medical care facility" is broad, the statute goes on to limit the types of medical care facilities that are subject to COPN review to the following: general hospitals, sanitariums, nursing homes, certain intermediate care facilities, extended care facilities, mental hospitals, facilities for individuals with developmental disabilities, psychiatric hospitals and intermediate care facilities for the treatment and rehabilitation of individuals with substance abuse, specialized centers developed for the provision of outpatient surgery or other specialty services,[14] rehabilitation hospitals, and any facility licensed as a hospital.[15] Accordingly, unless an entity seeks to establish a freestanding emergency facility that qualifies as one of these types of medical care facilities, the proposed establishment is not a "project" that is subject to COPN review.[16] This, however, is also a factual inquiry that would depend on the nature of the specific facility in question.[17]

Conclusion
Accordingly, it is my opinion that a freestanding emergency facility that is owned and operated by a licensed hospital is not required to be separately licensed as a "hospital" unless it falls within one of the classifications of "hospital" set forth in the Regulations for the Licensure of Hospitals in Virginia. Additionally, the establishment of a freestanding emergency facility, regardless of whether it is affiliated with a licensed hospital or independent, is not subject to COPN review unless the freestanding emergency facility qualifies as one of the several types of "medical care facilities" set forth in § 32.1-102.1.

With kindest regards, I am,

Very truly yours,

Mark R. Herring
Attorney General

1. A freestanding emergency facility, commonly known as a freestanding emergency department, is a medical emergency center that is located apart from a hospital. See Freestanding Emergency Departments, AM. COLL. OF EMERGENCY PHYSICIANS, http://newsroom.acep.org/2015-01-09-freestanding-emergency-departments (policy statement) (last updated 2015).

2. A freestanding emergency facility may be either 1) an off-site or satellite emergency department of a hospital, or 2) an independently-owned facility that is not a branch of a hospital. See id.

3. See VA. CODE ANN. § 32.1-125(A) (2018); 12 VA. ADMIN. CODE § 5-410-40.

4. 12 VA. ADMIN. CODE § 5-410-60(A).

5. VA. CODE ANN. § 32.1-123 (2018); see also § 32.1-124 (2018) (exempting certain facilities from the definition of "hospital").

6. Specifically, § 32.1-127(B)(3) of the Code provides that the Board of Health "[m]ay classify hospitals ... by type of specialty or service and may provide for licensing hospitals ... by bed capacity and by type of specialty or service."

7. 12 VA. ADMIN. CODE § 5-410.

8. 12 VA. ADMIN. CODE § 5-410-50.

9. 12 VA. ADMIN. CODE § 5-410-10.

10. 2002 Op. Va. Att'y Gen. 321, 326; see also 1996 Op. Va. Att'y Gen. 102, 103. As a practical matter, I note that freestanding emergency facilities typically do not admit patients on an inpatient basis, as general hospitals do, nor do they target certain populations or provide care only for specific conditions, as special hospitals do. Moreover, freestanding emergency facilities generally do not provide facilities for surgery as outpatient hospitals do, as patients requiring surgery are transferred to a general hospital for treatment. See AM. COLL. OF EMERGENCY PHYSICIANS EMERGENCY MED. PRACTICE COMM., Freestanding Emergency Departments and Urgent Care Centers, AM. COLL. OF EMERGENCY PHYSICIANS (Aug. 2015), https://www.acep.org/globalassets/uploads/uploaded-files/acep/clinical-and-practice-management/resources/administration/fsed-and-ucs_info-paper_final_110215.pdf; Freestanding Emergency Departments, AM. COLL. OF EMERGENCY PHYSICIANS, http://newsroom.acep.org/2015-01-09-freestanding-emergency-departments (last updated 2015).

11. VA. CODE ANN. § 32.1-102.3(A) (2018).

12. VA. CODE ANN. § 32.1-102.1. While the statute establishes other types of circumstances that qualify as "projects" requiring COPN review, I assume, for purposes of this opinion, that your request is limited to the provision describing the establishment of a medical care facility.

13. Id.

14. Specifically, these include "[s]pecialized centers or clinics or that portion of a physician's office developed for the provision of outpatient or ambulatory surgery, cardiac catheterization, computed tomographic (CT) scanning, stereotactic radiosurgery, lithotripsy, magnetic resonance imaging (MRI), magnetic source imaging (MSI), positron emission tomographic (PET) scanning, radiation therapy, stereotactic radiotherapy, proton beam therapy, nuclear medicine imaging, except for the purpose of nuclear cardiac imaging, or such other specialty services as may be designated by the Board [of Health] by regulation." Id.

15. Id.

16. During the 2018 legislative session, House Bill 1402 sought to specifically include as a type of "medical care facility" subject to COPN review "[a]ny facility that has common ownership with an affiliated licensed hospital located within 35 miles of the facility and that includes, as part of the facility, a dedicated emergency department as defined in 42 C.F.R. § 489.24(b) that is subject to the requirements of the federal Emergency Medical Treatment and Labor Act (42 U.S.C. § 1395dd)." See H.B. 1402, 2018 Reg. Sess. (Va. 2018). The bill, however, was not successful. During the 2019 legislative session, there were three bills under consideration by the General Assembly that sought to include such facilities as a type of "medical care facility"; however, none proceeded past their respective committees. See H.B. 1680, H.B. 2288, S.B. 1125 (Va. 2019).

17. See supra, note 10 and accompanying text.