No Harm, No Foul in CON Challenges

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The North Carolina Court of Appeals recently issued a decision making crystal clear that in order to successfully challenge the approval of a non-competitive certificate of need application, a petitioner must show how its rights have been substantially prejudiced by the CON approval. Wake Radiology Services LLC et al. v. N.C. Department of Health and Human Services et al. (N.C. Court of Appeals Case No. COA10-1129, Sept. 6, 2011) involved an appeal from a decision to award Pinnacle Health Services of North Carolina, LLC a CON to purchase a mobile MRI scanner for use in Wake and Johnston Counties. Pinnacle essentially proposed to acquire its own mobile MRI scanner to replace the leased MRI scanner it had been using to provide services at three sites in Wake and Johnston. Wake Radiology Services, LLC and affiliated entities challenged the approval of Pinnacle’s non-competitive application. In upholding the decision to award the CON to Pinnacle, the Court of Appeals focused on the statutory requirement that a party appealing a decision to approve a CON application must demonstrate how the decision “substantially prejudiced” its rights.

The court rejected Wake Radiology’s theory that its status, under the CON Law, as an entity that could challenge the Pinnacle decision automatically established the substantial prejudice component of its case. The court concluded that Wake Radiology’s standing to appeal the CON decision in no way obviated the need to prove that its rights were substantially prejudiced by the decision.

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