Request By:
William L. Shadoan, Esq.
Fourth Street
Wickliffe, Kentucky 42087Mr. Larry Newby
Acting Director
Kentucky Health Systems Agency-West, Inc.
Suite 401, 1941 Bishop Lane
Louisville, Kentucky 40218
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: K. Gail Leeco, Assistant Attorney General
You have asked for an opinion on two questions relating to KRS 216.445(3), which provides:
No license shall be issued to a health facility or a health service which is constructed or expanded, or which institutes, expands or modifies a health care service in violation of the provisions of KRS 216.405 to 216.485.
Your questions are:
(1) Whether a health facility or health service which has acted in violation of KRS 216.405 to 216.485 is prohibited from subsequently applying for a certificate of need in order to qualify for licensure.
(2) Whether a health facility which has acted in violation of KRS 216.405 to 216.485 can, nevertheless, be licensed for whatever portion of the facility or service is not in violation of the statutes.
As to your first question, KRS 216.445(3) prohibits only the issuance of licenses, not the issuance of certificates of need. The issuance of licenses and the issuance of certificates of need are separate and distinct functions of the Certificate of Need and Licensure Board, KRS 216.425(4)(a) and (b). A license is an authorization to an applicant to operate a health facility or a health service, KRS 216.405(7), whereas a certificate of need is an authorization to an applicant to construct, expand, or modify a health facility, or to initiate, expand, or modify a health service, KRS 216.405(3). Obviously, however, if the applicant is prohibited by KRS 216.445(3) from ever obtaining a license to operate a health facility or service, then it would be useless to apply for a certificate of need to construct, expand, or modify that facility or service. Therefore, the answer to your first question depends on whether, under KRS 216.445(3), a facility or service which has violated the Certificate of Need and Licensure Act is forever prohibited from obtaining a license.
In our opinion, KRS 216.445(3) does not prohibit a facility or service from obtaining a license to operate where the violation of the Act occurred in the past but the violation has ceased. The statute does prohibit a facility or service from obtaining a license where the violation is a continuing one, present at the time of licensure. Under our interpretation of the statute, then, the answer to your question is that a facility or service may subsequently apply for a certificate of need in order to qualify for licensure where it has violated the statute but has removed the illegality at the time of application. A facility or service cannot obtain a certificate of need which will qualify it for licensure where it is constructed, expanded, or modified in violation of the Act and remains so constructed, expanded, or modified during application for certificate of need and licensure.
In illustration, a wing added to a hospital without approval by the Certificate of Need Board is constructed in violation of the statutes. Once the wing is constructed, it remains constructed. KRS 216.445(3) prohibits the issuance of a license where a facility is constructed in violation of the statutes. The facility can never be issued a license to operate the illegally-constructed wing. The facility cannot, subsequent to construction, obtain a certificate of need and, thereby, qualify for licensure of the wing.
The same reasoning applies when a facility or service purchases $100,000 worth of equipment without approval. The facility or service is expanded in violation of the statute. If the facility or service retains the illegal equipment, a license is forever prohibited from being issued for the facility or service which is and remains illegally expanded. The facility or service cannot obtain a certificate of need which will qualify it for licensure. If, however, the facility or service disposes of the illegal equipment, it no longer is expanded in violation of the statute. It may obtain a certificate of need to obtain similar equipment. Similarly, when a facility or service expands by offering a new service which has not been approved, it will fall within the statutory prohibition if the service is not withdrawn prior to application for a certificate of need. Only after withdrawal of the unapproved service may the facility or service obtain a certificate of need allowing it to offer the service.
Our interpretation of KRS 216.445(3), that it prohibits licensure where the violation is a continuing one but allows licensure where the violation has been removed and a subsequent certificate of need issued, carries out the intent of the legislature as expressed in the statement of purpose, KRS 216.415, and the language of the licensing prohibition itself. KRS 216.415 states:
. . . It is the intent of KRS 216.405 to 216.485 to provide for the orderly development of all health facilities and health services in accordance with needs of the various regions of the commonwealth through a certificate of need program. Further, it is the intent of KRS 216.405 to 216.485 to combine and coordinate the licensure and regulation of health facilities and health services in order to insure the availability and delivery of quality health care to the citizens of the commonwealth.
There would be no "orderly development of all health facilities and health services in accordance with needs" if facilities and services could go ahead and expand, construct, and modify, and then, ex post facto, apply for approval and licensure. However, in fashioning the sanction to ensure against such ex post factor legalization, the legislature used the present tense: "No license shall be issued to a health facility or health service which is constructed or expanded, or which institutes, expands, or modifies a health care service. . ." The legislative use of the present tense limits the sanction to the situation where the violation is a continuing one and present at the time of licensure. Our interpretation of the statute allows this language to be given its fullest effect without losing the essential purpose of the Certificate of Need and Licensure Act.
In answer to your second question, a license cannot be issued for a facility or service which is not in compliance with the statutes at the time of licensure. If the facility or service is offering an unapproved service or possesses unapproved equipment or is using an unapproved addition, it is not in compliance with the statute and cannot receive a license. When the illegality is removed, the facility or service may be licensed. In the case of unapproved construction, whose removal would be impossible, a license may be issued for that portion of the facility which is in compliance so long as it is not making any use of the unapproved construction.
I trust that the above adequately answers your questions. If not, do not hesitate to contact me.