This is an official copy of the following document.

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:

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