VNA Hospice of Md. v. DEPT. OF HEALTH AND MENTAL HYGIENE

Citations: 961 A.2d 557; 406 Md. 584; 2008 Md. LEXIS 625Docket: 105, September Term, 2007

Court: Court of Appeals of Maryland; December 11, 2008; Maryland; State Supreme Court

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In VNA Hospice of Maryland v. Department of Health and Mental Hygiene, the Maryland Court of Appeals addressed a judicial review of an administrative decision by the Department of Health that amended VNA's hospice care license, barring it from providing home-based hospice services in Carroll and Prince George's Counties. This decision was based on an interpretation of Maryland Code § 19-906(c)(3) of the Health-General Article, which the Department found to exclude VNA from those services in the specified counties. VNA challenged this interpretation and argued that the statute, as applied, was unconstitutional on multiple grounds. 

The Circuit Court for Baltimore County initially reversed the Department's decision on constitutional grounds. However, the Court of Special Appeals rejected VNA's arguments and reinstated the Department's decision, prompting VNA to seek a writ of certiorari from the Maryland Court of Appeals, which highlighted several constitutional questions raised by VNA. 

Ultimately, the Court of Appeals chose to vacate the Court of Special Appeals' decision and affirmed the Circuit Court's ruling, determining that the Department's interpretation of § 19-906(c)(3) was not legally correct. Prior to the Department's action, VNA had been licensed to provide home-based hospice services across several counties and Baltimore City, but the Department's ruling meant VNA would need to apply for a Certificate of Need (CON) to resume services in the affected counties. The legal backdrop included the requirement for new hospice care programs to obtain a CON since 1983, while many existing providers were exempted from this requirement under a 1987 statute.

Ch. 670 of the Acts of 1987 permits hospice care programs in operation before January 1, 1987, to apply for licensure without obtaining a Certificate of Need (CON) between July 1, 1987, and July 1, 1988, provided they meet criteria established by the Maryland Health Resources Planning Commission, in consultation with the Hospice Network of Maryland, Inc. Existing programs benefited from grandfathering provisions as new CON requirements were added. The Maryland Health Care Commission report noted that since the 1982 establishment of the former Maryland Health Resources Planning Commission, hospice programs were classified as health care facilities subject to CON review. As these programs sought to be grandfathered amid evolving regulations, it became evident that most were initiated by hospitals or nursing homes, prompting statutory clarifications regarding geographic expansions requiring additional CONs. The lack of freestanding hospices before 1984, due to Medicare's delayed coverage of hospice care until 1983 and Medicaid's addition in 1985, signified limited competition. The 1987 law, reflecting the growth of hospice services and interest from freestanding providers, mandated that licensure applicants (with some exceptions) must possess a CON. Uncodified provisions stated that pre-existing programs could seek licensure without a CON during the specified period, retaining statewide service authority once grandfathered. Even as some facility-based hospice services transitioned to freestanding entities in the early 1990s due to tax and reimbursement changes, the statewide service area determination remained applicable to those licensed programs.

Hospice care programs in Maryland can be transferred freely, allowing providers to acquire grandfathered, Certificate of Need (CON)-exempt licenses to serve the entire state without meeting CON requirements. Such licenses became valuable assets. An example occurred when a statewide licensed program was sold to a large out-of-state organization, which aimed to expand its services beyond previous capacities. This raised concerns for smaller local hospices, prompting the introduction of Senate Bill 732 in the 2003 General Assembly, aimed at protecting these smaller entities. The bill was enacted as Chapter 404, effective July 1, 2003, adding provisions to Title 19 of the Health-General Article. Notably, it restricted the acquisition of home-based hospice service authority to jurisdictions where the seller was already licensed and barred statewide service provision without prior local service history. Specifically, new regulations required that a hospice could not be licensed to provide services in a jurisdiction unless it had provided care there within the previous year. This provision led to the Department of Health and Mental Hygiene rescinding part of VNA's license for Carroll and Prince George's Counties, limiting its service area. A letter dated August 18, 2003, informed VNA of these changes, specifying its licensed jurisdictions and allowing for a hearing request if VNA disagreed. VNA subsequently claimed it had provided services in the disputed counties in 2001, contesting the license amendment.

VNA requested a hearing by the Office of Administrative Hearings, which took place on October 31, 2003, before an Administrative Law Judge (ALJ). The hearing did not include witness testimonies; instead, it relied on a stipulation of facts, various exhibits, affidavits, legal memoranda, and oral arguments from both parties' counsel. VNA contended that it provided home-based hospice services in Carroll and Prince George's Counties in 2001, asserting that the interpretation of Title 19, Subtitle 9 of the Health-General Article (Sections 19-901 to 19-913) supported its claim. The dispute was not over factual matters, as the parties agreed on VNA's activities, but rather concerned the legal interpretation of statutory provisions. Specifically, the issue was whether VNA's bereavement services to families of the deceased qualified as "home-based hospice services to a patient" under Section 19-906(c)(3). VNA argued that these services met the statutory criteria, while the Department maintained that only services rendered directly to the dying individual qualified. VNA also claimed that if the Department's interpretation were correct, it would violate constitutional protections, including the Due Process Clause of the Fourteenth Amendment and the Taking Clause of the Fifth Amendment, as well as provisions of the Maryland Constitution, citing the case Dua v. Comcast Cable. 

The ALJ issued a comprehensive Proposed Decision and a Recommended Order on January 15, 2004, which included detailed Findings of Fact based on the stipulation and submitted documents. The findings outlined VNA's provision of hospice and bereavement services to families of deceased individuals in 2001, detailing specific cases, such as a Carroll County resident who was evaluated and received a bereavement care plan after death. The ALJ noted that bereavement services, lasting up to one year post-death, are recognized as core services under Medicare and reimbursed at the same rate as services provided to the deceased. The ALJ's findings also included additional instances of bereavement services provided by VNA to families of deceased individuals in both Carroll and Prince George's Counties.

The ALJ rejected VNA's interpretation of 19-906(c)(3), emphasizing that the phrase "services to a patient" refers specifically to services provided directly to the patient, and not to bereavement services for the patient's family. The ALJ highlighted the significance of the word "to" over "for," asserting that the statute does not support the idea that services to family members post-death qualify as services to a patient. Although the ALJ referenced various rules of statutory construction, they did not invoke the principle that favors interpretations avoiding constitutional issues. The ALJ dismissed VNA's constitutional arguments, maintaining that legislative acts are presumed constitutional and stating that VNA did not possess a "property right" in its license, which differs from occupations with established property rights. The ALJ criticized VNA's reliance on relevant case law as misplaced, concluding that the statute applies prospectively. The ALJ's recommendation to uphold the amendment of VNA’s license was adopted by the Secretary of Health and Mental Hygiene, and subsequently affirmed by the Board of Review. VNA then sought judicial review in the Circuit Court for Baltimore County, which reversed the administrative decision, finding that VNA's license constituted a property right that was taken without just compensation, citing violations of the Maryland Constitution and prior case law.

The Circuit Court identified concerns over the constitutional validity of statute 19-906(c)(3), noting its use of a 2001 date in a 2003 statute as 'arbitrary' and a 'retroactive application.' The court did not address federal constitutional issues or other state constitutional grounds. The Department appealed, contending the Circuit Court's ruling was erroneous and upheld the constitutionality of the statute. VNA, as the appellee, reiterated its constitutional arguments from prior proceedings but chose not to raise the statutory interpretation issue in this appeal. The Court of Special Appeals concluded that 19-906(c)(3) was constitutional, leading to the reversal of the Circuit Court's judgment and the direction to affirm the Department's Final Decision.

VNA subsequently petitioned for a writ of certiorari, reintroducing its constitutional arguments but omitting the statutory interpretation issue. The Department did not file a cross-petition, and the Court granted VNA's petition. VNA's constitutional claims, though somewhat disorganized, included a principal argument that the statute constituted a taking of property without just compensation, violating specific Maryland constitutional provisions. VNA asserted that the statute infringed on substantive due process rights, lacked relation to public health, and represented an arbitrary exercise of power. It also claimed the statute created a monopoly and contended that it did not fall within the General Assembly's police powers.

While some of VNA’s arguments were deemed weak, others, such as the right to practice an occupation as a property right subject to state regulation, were recognized as substantial.

The Circuit Court determined that the partial revocation of a license based on past conduct that was lawful at the time constitutes a violation of property rights without just compensation, as outlined in the Maryland Constitution and the Declaration of Rights. The statute 19-906(c)(3), enacted in 2003, retroactively imposed conditions based on actions from 2001, which the petitioner could not meet due to the lawful nature of those actions. The attorney for the Department acknowledged that the license to provide home-based hospice services qualifies as a property right under procedural due process. Legal precedents affirm that licenses cannot be revoked without adequate notice and a hearing, as mandated by the Fourteenth Amendment. In this case, the retroactive application of the statute raises significant concerns regarding the taking of property rights and procedural due process, suggesting potential unconstitutionality in the interpretation of the statute by the Administrative Law Judge and the Department.

The Court consistently maintains a strong policy of addressing constitutional issues only when absolutely necessary, as established in several cases including Burch v. United Cable and Mercy Hospital v. Jackson. The principle dictates that courts avoid deciding constitutional questions when a case can be resolved on non-constitutional grounds. If a statute can be interpreted in multiple reasonable ways, the interpretation that avoids constitutional concerns is preferred. In the case of Yangming Marine Transport, the Court did not address the constitutional challenge regarding the Commerce Clause because it determined that the company was not required to register to maintain its suit. This approach reflects a broader commitment to interpreting statutes in a manner that minimizes doubts about their constitutionality, as seen in various cases such as G. Heileman Brewing Co. v. Stroh Brewery and Becker v. State. The Court emphasized that interpreting a statute in a way that allows for potentially unconstitutional outcomes, such as allowing for property destruction without compensation, could raise serious constitutional questions under Maryland law.

The court favors interpretations that uphold the validity of ordinances and strives to avoid unnecessary constitutional rulings. Even when parties present only constitutional issues in their certiorari petitions, the court prefers to resolve cases on non-constitutional grounds if feasible. This principle is illustrated in *Professional Staff Nurses Assoc. v. Dimensions Health Corp.*, where the court affirmed a decision based on non-constitutional grounds despite the presence of a constitutional issue regarding the Supremacy Clause. Similarly, in *McCarter v. State*, the court avoided a constitutional question about the right to counsel by interpreting state law to provide a statutory right instead. The court has consistently applied this policy, even when non-constitutional grounds were not raised by the parties, indicating a broader commitment to resolving cases without addressing constitutional matters unless absolutely necessary. Examples include *Edwards v. Corbin* and *Baltimore Sun v. Baltimore*, where the court similarly chose non-constitutional resolutions.

In **Dorsey v. State**, the court addressed the right to a jury trial but ultimately based its decision on Maryland statutory provisions rather than constitutional questions. Similarly, in **Dept. of Public Safety and Correctional Services v. Henderson**, the court chose to interpret statutory provisions over deciding due process or ex post facto issues. The court consistently avoided constitutional questions, as seen in **Curran v. Price**, where it resolved the matter through statutory interpretation despite a lower court declaring a statute unconstitutional. In **Schochet v. State**, the court also focused on statutory interpretation regarding a criminal statute's application. Historical cases like **State v. Insley** and the Act of 1884 highlight the court's reluctance to rule on constitutional matters unless essential for case resolution. The court affirmed judgments based on procedural defects rather than constitutional interpretations.

In the current case involving VNA Hospice of Maryland, the court emphasized that failure to raise statutory interpretation in the certiorari petition does not hinder the court's ability to resolve the case through statutory interpretation. The key issue pertains to whether bereavement services provided in specific counties in 2001 qualify as "home-based hospice services" under the relevant statutes. The Secretary, in consultation with the Maryland Health Care Commission, has the authority to define the jurisdictions for such services, as outlined in the Health-General Article.

A general hospice cannot be licensed to provide home-based hospice services unless it or an affiliated entity offered such services to a patient in the jurisdiction within the year ending December 31, 2001. The Administrative Law Judge (ALJ) ruled that bereavement services for the family of a deceased individual did not meet the requirement of "services to a patient" as stated in the regulation. The ALJ noted that if the language had been "services for a patient," bereavement services would qualify. However, the ALJ's interpretation overlooks the overall context of the statute, which should be construed to avoid substantial constitutional issues. The relevant statute, Title 19, Subtitle 9 of the Health-General Article, lacks a definition for "patient" but uses terms like "dying individuals" and "individuals who have no reasonable prospect of cure." The term "patient" is generally understood to refer to someone with a physical or mental illness, but it can also include family members of dying or deceased individuals who require emotional support. The Definitions section of the statute outlines both general and limited hospice care programs, specifying that these programs include bereavement services for the families of individuals who lack a reasonable prospect of cure.

Section 19-902 of Subtitle 9 outlines the purposes of the Subtitle, indicating no distinction between services for dying individuals and those for others seeking a supportive environment. The 2003 Acts of Ch. 404 similarly make no differentiation between services for dying individuals and their families, notably omitting the term "patient." Section 19-903 grants the Secretary of Health and Mental Hygiene authority to establish regulations for hospice care programs, including specific requirements such as the necessity for a licensed physician as a medical director, the provision of bereavement services, and support for the spiritual or social needs of dying individuals and their families. The statute emphasizes that bereavement services to families are integral to home-based hospice care. Section 19-906(c)(2) mandates the Secretary to specify jurisdictions where general hospices can provide services, while 19-901 defines a general hospice program to include bereavement services for the deceased's family. An interpretation of 19-906(c)(3) that excludes family bereavement services based on wording differences appears unreasonable, particularly in light of significant constitutional concerns related to the interpretation of the statute. The conclusion affirms that the petitioner provided home-based hospice services in Carroll and Prince George's Counties in 2001, leading to the affirmation of the Circuit Court's judgment on different grounds, with costs awarded to the respondent.

The Maryland Code delineates the jurisdictional responsibilities for hospice services, specifying that the issuance of a Certificate of Need (CON) falls under the Health Care Commission, while the licensing of hospices is managed by the Secretary of Health and Mental Hygiene. Limited exceptions exist for general hospices to apply for a CON for home-based services, but none apply in this case. The Maryland Constitution's Article III, Section 40 mandates just compensation for the taking of private property for public use, while Article 24 guarantees due process rights against deprivation of property. Significant distinctions are noted between unconstitutional takings and violations of substantive due process, paralleling federal constitutional principles. Maryland case law indicates that retrospective statutes that infringe upon vested property rights violate both Article 24 and Article III, Section 40, particularly when no compensation is provided, thereby constituting an unlawful taking of property without due process. The focal point in relevant cases is the violation of vested rights rather than the rationality of the statutes.

Differences exist in the analyses for determining unconstitutional governmental actions under Article 24 of the Maryland Declaration of Rights and Article III, Section 40 of the Maryland Constitution. However, there are instances where the same action may violate both provisions, as established in several cases. The document cites cases including Md.-Nat'l Cap. P. P. Comm'n v. Chadwick, Bureau of Mines v. George's Creek, Arnold v. Prince George's Co., and Leet v. Montgomery County, which highlight this overlap. Additionally, the court has ruled that retrospective statutes that impair vested rights are unconstitutional under both Articles. The discussion references five key cases, three of which found governmental actions unconstitutional based on the equal protection clause of Article 24, while one rejected a substantive due process challenge and another dismissed a claim regarding the destruction of property without just compensation under Article III and the Fifth Amendment. The document clarifies that neither the U.S. Constitution nor the Maryland Constitution mandates that legislative enactments must be within the "police power" of the government, nor does it define limits to the General Assembly's authority in this regard. Historically, "police power" refers to governmental power that does not contravene specific constitutional limitations. Various cases are cited to illustrate the historical context and application of police power concerning commerce and contracts.

In the legal context, various cases illustrate the balance between state regulations and individual rights. The Maryland case of Lake Roland Elevated Railway Co. v. Baltimore highlighted the tension between state statutes and an individual's "liberty to contract," indicating that certain regulations may infringe upon due process rights, thus invalidating them as exercises of police power. Similarly, Lochner v. New York reinforced this principle by establishing that state interference in contracts could violate due process. Conversely, the Davis v. State case found that a Maryland law regulating physician advertising did not violate due process and was a valid exercise of police power. The Stevens v. City of Salisbury case confirmed that zoning ordinances do not constitute an unconstitutional taking of property, affirming the legitimacy of state police power. The concept of "police power" is described as a governmental authority that is not restricted by specific constitutional provisions, though it has been criticized as having limited practical meaning. States possess broad authority to legislate as long as they do not violate federal or state constitutional rights. Furthermore, the excerpt references a specific statute (Section 19-902) outlining the objectives of hospice care program regulations, including simplification and quality assurance of such programs.