Opinion
No. COA05-294.
Filed September 19, 2006.
1. Appeal and Error — preservation of issues — failure to assign error
Although plaintiff contends the trial court erred by dismissing its claims under the doctrine of sovereign immunity, the issue of sovereign immunity was not properly before the Court of Appeals because: (1) an appeal of a motion to dismiss based on sovereign immunity presents a question of personal jurisdiction rather than subject mater jurisdiction; and (2) there was no ruling by the trial court on the issue of personal jurisdiction, and there was no assigned error.
2. Immunity — sovereign — summary judgment
Sovereign immunity may properly be addressed under a grant of summary judgment, because: (1) defendant may show that summary judgment is proper by proving that an essential element of plaintiff's case is nonexistent, showing through discovery that plaintiff cannot produce evidence to support an essential element of his claim, or showing that plaintiff cannot surmount an affirmative defense which would bar the claim; and (2) sovereign immunity is an affirmative defense.
3. Hospitals and Other Medical Facilities; Immunity — amendment of dialysis report — sovereign immunity
Sovereign immunity precluded claims by plaintiff, the sole provider of in-center kidney dialysis services in Wake County, seeking to compel the Medical Facilities Planning Section of the Division of Facilities Services of the Department of Health and Human Services to amend the July 2004 Semiannual Dialysis Report (SDR) which concluded that ten additional dialysis stations were needed in the county, to correct erroneous patient census data so as to support a conclusion that no additional dialysis stations were needed, and to prevent the acceptance of any Certificate of Need (CON) applications based upon the unamended July 2004 SDR, because: (1) sovereign immunity for plaintiff's claims was not waived by N.C.G.S. § 150B-43 of the Administrative Procedure Act since plaintiff was not a person aggrieved by a final administrative decision in a contested case, and plaintiff failed to exhaust its administrative remedies by requesting that the SDR be amended by the Governor, who has the authority to amend the State Medical Facilities Plan and thus to amend the SDR; (2) sovereign immunity was not waived by the Certificate of Need (CON) statute, N.C.G.S. § 131E-188, since there has been no decision by the Department of Health and Human Services regarding the inssuance, denial or withdrawal of a CON, even if the SDR would set in motion the process that would ultimately result in the granting or denial of a CON; and (3) plaintiff cannot overcome defendant's sovereign immunity on constitutional grounds since it has no constitutional right to be protected from lawful competition and may apply for a CON for the additional ten dialysis stations.
Judge TYSON dissenting.
Appeal by plaintiff from order entered 16 November 2004 by Judge Henry W. Hight, Jr. in Wake County Superior Court. Heard in the Court of Appeals 2 November 2005.
Kennedy Covington Lobdell Hickman, LLP, by Gary S. Quails, plaintiff-appellant. Attorney General Roy A. Cooper, III, by Assistant Attorney General Thomas M. Woodward, for NCDHHS Division of Facility Services and NCDHHS Division of Facility Services Medical Facilities Planning Section, defendants-appellees. Poyner Spruill LLP, by Thomas R. West and Pamela A. Scott, for Total Renal Care of North Carolina. LLC, defendant-intervenor-appellee; and Bode, Call Stroupe, L.L.P., by S. Todd Hemphill, for Health Systems Management, Inc., defendant-intervenor-appellee.
Plaintiff, Bio-Medical Applications of North Carolina, Inc. ("BMA"), appeals from an order issued 16 November 2004 in Wake County Superior Court dismissing BMA's claims pursuant to North Carolina Rules of Civil Procedure, Rule 12(b)(1), and alternatively, granting summary judgment in favor of defendants, North Carolina Department of Health and Human Services, Division of Facility Services ("DFS") and North Carolina Department of Health and Human Services, Division of Facility Services, Medical Facilities Planning Section ("the Planning Section"), and defendant-intervenors, Total Renal Care of North Carolina, Inc. ("TRC") and Health Systems Management, Inc. ("HSM").
On 1 July 2004, BMA, the sole provider of in-center kidney dialysis services in Wake County, received the July 2004 Semiannual Dialysis Report ("SDR") prepared by the Planning Section. This report is released twice each year as part of the State Medical Facilities Plan ("SMFP"). The SMFP defines and governs how the need for additional dialysis stations is to be determined. The Planning Section applies the formula established in the SMFP to the data reported to it from the Southeastern Kidney Council ("Kidney Council") to determine whether the various counties are in need of additional dialysis stations. The July 2004 SDR reported that there was a need in Wake County for an additional ten dialysis stations, and gave a deadline for applications to fill that need. Any dialysis provider, including BMA, could apply for a Certificate of Need ("CON") which is what is required to fill a reported need.
After reviewing the SDR, BMA contacted the Planning Section and was provided with the data upon which the report was based. BMA compared the data it was given to its own numbers and determined that an error had been made in the data reported to the Planning Section by the Kidney Council. The data reported by the Kidney Council showed fifty-two patients at BMA's Fuquay-Varina facility when there actually were fifty-one. This error resulted in a calculation that the Fuquay-Varina facility was operating at over eighty percent capacity, when use of the correct patient count would have shown the facility was operating at less than eighty percent capacity. Due to the formula used to calculate need, had the correct data been used, the need determination for new dialysis stations in Wake County would have been zero, rather than ten as reported in the July 2004 SDR. BMA contacted the Planning Section to report this error and was informed that no changes to the SDR could be made based on BMA's data unless the error was confirmed by the Kidney Council.
On 2 July 2004, BMA contacted the Kidney Council regarding the possible data error. The Kidney Council confirmed the error to BMA on 13 July 2004. The Kidney Council informed the Planning Section of the error on 16 July 2004. On 19 July 2004, BMA requested that the Planning Section amend the July 2004 SDR to correct the error in the data reported by the Kidney Council. The Planning Section advised BMA on 20 July 2004 that, after reviewing the request to amend the July 2004 SDR, DFS management had declined to amend the SDR.
BMA filed a verified Complaint for a Declaratory Judgment, a Permanent and Preliminary Injunction, and Writ of Mandamus on 11 August 2004 where BMA sought to compel the Planning Section to amend the July 2004 SDR to reflect results based on corrected data. BMA further sought to prevent the acceptance of any CON applications based upon the unamended July 2004 SDR. TRC and HSM, providers of in-center kidney dialysis services in counties other than Wake, were allowed to intervene by consent on 25 August 2004.
Defendants DFS and the Planning Section filed an Answer and Motions to Dismiss and Defendant-intervenors TRC and HMS filed a Motion to Dismiss on 20 September 2004. A hearing on the motions was held at the 12 November 2004 session of Wake County Superior Court. The trial court dismissed BMA's claims pursuant to North Carolina Rules of Civil Procedure, Rule 12(b)(1), and alternatively, granted summary judgment in favor of defendants DFS and the Planning Section and defendant-intervenors TRC and HMS by order issued 16 November 2004. BMA gave notice of appeal on 15 December 2004.
BMA argues the following issues on appeal: (1) the trial court erred in dismissing its claims based on the doctrine of sovereign immunity; (2) the Planning Section abused its discretion in failing to amend the SDR; (3) the Governor was not the person or entity with the authority to amend the SDR; (4) the trial court erred in converting defendants' motions to dismiss to motions for summary judgment; (5) BMA's claims are not moot; and (6) if not properly before the trial court, BMA's action may be brought before the Office of Administrative Hearings ("OAH"). For the reasons stated below, we affirm Judge Hight's order.
BMA's first assignment of error contends the trial court erred in dismissing its claims pursuant to the doctrine of sovereign immunity. As a preliminary matter, we address whether the issue of sovereign immunity is properly before this Court.
In their Motion to Dismiss, defendants DFS and the Planning Section alleged, inter alia, a lack of subject matter jurisdiction pursuant to North Carolina Rules of Civil Procedure, Rule 12(b)(1), a lack of personal jurisdiction under Rule 12(b)(2) pursuant to the doctrine of sovereign immunity, and failure to state a claim pursuant to Rule 12(b)(6). Defendants TRC and HSM also filed a Motion to Dismiss, in which they alleged, inter alia, a lack of subject matter jurisdiction in part due to sovereign immunity, a lack of personal jurisdiction, and failure to state a claim.
The trial court dismissed the action pursuant to Rule 12(b)(1) and alternatively granted summary judgment in favor of defendants and defendant-intervenors, having considered matters outside the verified pleadings. The trial court did not rule on the other grounds for dismissal, such as a lack of personal jurisdiction pursuant to Rule 12(b)(2). The reasons stated for granting dismissal included, inter alia, that the claims were barred by the doctrine of sovereign immunity.
"`[A]n appeal of a motion to dismiss based on sovereign immunity presents a question of personal jurisdiction rather than subject matter jurisdiction.'" Davis v. Dibartolo, 176 N.C. App. 142, 144-45, 625 S.E.2d 877, 880 (2006) (quoting Data Gen. Corp. v. Cty. of Durham, 143 N.C. App. 97, 100, 545 S.E.2d 243, 245-46 (2001)). Although the trial court gave several reasons why BMA's claims were barred by the doctrine of sovereign immunity, it did not rule on the Rule 12(b)(2) motions. Neither defendants nor defendant-intervenors brought cross assignments of error to the trial court's failure to make a 12(b)(2) ruling. The scope of review on appeal is limited to those assignments of error properly set forth in the record on appeal. N.C. R. App. P. 10(a) (2006). To properly preserve a question for appellate review a party must request, and receive, a ruling on the question from the trial court. N.C. R. App. P. 10(b)(1) (2006). As there was no ruling by the trial court on the issue of personal jurisdiction, and there was no error assigned, the matter is not properly before this Court.
We next consider whether sovereign immunity may properly be addressed under a grant of summary judgment.
A defendant may show that summary judgment is proper by "(1) proving that an essential element of the plaintiff's case is non-existent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense which would bar the claim." James v. Clark, 118 N.C. App. 178, 181, 454 S.E.2d 826, 828, disc, review denied, 340 N.C. 359, 458 S.E.2d 187 (1995). As sovereign immunity is an affirmative defense, the issue may properly be addressed pursuant to the grant of summary judgment.
"A trial court's ruling on a motion for summary judgment is reviewed de novo as the trial court rules only on questions of law." Coastal Plains Utils., Inc. v. New Hanover County, 166 N.C. App. 333, 340-41, 601 S.E.2d 915, 920 (2004) (citing Va. Electric and Power Co. v. Tillett, 80 N.C. App. 383, 384-85, 343 S.E.2d 188, 190, cert. denied, 317 N.C. 715, 347 S.E.2d 457 (1986)). "Summary judgment is proper where `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.'" Dept. of Transportation v. Idol, 114 N.C. App. 98, 100, 440 S.E.2d 863, 864 (1994) (quoting N.C. Gen. Stat. § 1A-1, Rule 56(c)). The questions for determination on appeal when a motion for summary judgment is granted are, "whether on the basis of the materials presented to the trial court, there is a genuine issue as to any material fact and whether the movant is entitled to judgment as a matter of law." Id. (citing Smith v. Smith, 65 N.C. App. 139, 308 S.E.2d 504 (1983)).
Under the doctrine of sovereign immunity, the State can only be sued "with its consent or upon its waiver of immunity." Whitfield v. Gilchrist, 348 N.C. 39, 42, 497 S.E.2d 412, 414 (1998). When sovereign immunity is waived by statute, the State may "`be sued only in the manner and upon the terms and conditions prescribed.'" Kawai Am. Corp. v. University of N.C. at Chapel Hill, 152 N.C. App. 163, 165, 567 S.E.2d 215, 217 (2002) (quoting Alliance Co. v. State Hospital, 241 N.C. 329, 332, 85 S.E.2d 386, 389 (1955)). There is no right of appeal from a decision of a State administrative agency unless such right is granted by statute. In re Assessment of Sales Tax, 259 N.C. 589, 592, 131 S.E.2d 441, 444 (1963) (citing In re Employment Security Com., 234 N.C. 651, 68 S.E.2d 311 (1951)).
BMA argues that under the circumstances of this case this action is expressly permitted by two separate statutes and, accordingly, the doctrine of sovereign immunity is inapplicable. First, BMA contends that the Administrative Procedure Act ("APA") allows suit against State agencies when appropriate relief is not available through the administrative and judicial review process. In support of this position, BMA specifically relies upon the following language contained in the APA:
Nothing in this Chapter shall prevent any person from invoking any judicial remedy available to him under the law to test the validity of any administrative action not made reviewable under this Article.
N.C. Gen. Stat. § 150B-43 (2003). BMA ignores, however, the preceding language of that statute. In its entirety the statute provides:
Any person who is aggrieved by the final decision in a contested case, and who has exhausted all administrative remedies made available to him by statute or agency rule, is entitled to judicial review of the decision under this Article, unless adequate procedure for judicial review is provided by another statute, in which case the review shall be under such other statute. Nothing in this Chapter shall prevent any person from invoking any judicial remedy available to him under the law to test the validity of any administrative action not made reviewable under this Article.
Id. At no time does BMA assert that it is — and clearly it is not — a person aggrieved by a final decision in a contested case, which is a pre-requisite for this statute to apply.
Further, the trial court made the following findings of fact, which we hold are supported by sufficient evidence:
4. . . . . The State Medical Facilities Plan is specifically excluded from the definition of a rule. N.C. Gen. Stat. § 150B-2(8a)(k). As acknowledged by Plaintiff in its Complaint, the SDR is part of the State Medical Facilities Plan Therefore, the SDR is not a rule.
. . . .
11. It is clear, as a matter of law, neither Defendants nor any of their individual employees or agents named by Plaintiff have authority to amend the July 2004 SDR as requested by Plaintiff, as that authority lies with the Governor of North Carolina. Frye Regional Medical Center, Inc. v. Hunt, 350 N.C. 39, [46-47,] 510 S.E.2d 159, 164 (1999). There is no allegation or evidence tending to show that Plaintiff ever made a proper request for the Governor to amend the July 2004 SDR.
Pursuant to Frye, the Governor has the authority to amend the SMFP, and in the instant case, there is no evidence indicating that such a request was made to or denied by the Governor. As the SDR is a part of the SMFP, it is only logical that the Governor is the proper party with the authority to amend the SDR. BMA sought to have the Planning Section amend the report, when in actuality, the Governor was the proper party to whom the proposed amendment should have been addressed.
The dissent suggests that the majority's allowing the use of the defense of sovereign immunity abrogates any remedy for a party aggrieved by the State. This is not the case. We merely are presented by a set of facts in this case in which sovereign immunity is appropriate and, accordingly, have permitted application of the defense.
There is nothing in this opinion which abrogates or seeks to abrogate the proper application of the APA — which provides a more than adequate remedy to a party aggrieved by the State in many instances. Moreover, there is nothing in this opinion that abrogates or seeks to abrogate the proper application of the Declaratory Judgment Act — another remedy available to parties aggrieved by the State in certain instances. In this case, however, neither remedy is available as plaintiff did not seek an amendment to the SMFP as prescribed by Frye — by seeking an amendment through the Governor.
The dissent seems to suggest that the plan is a fluid document, subject to constant updating via the agency's ministerial duties. We cannot agree. Instead, the enabling statute seems to suggest that the plan is a snapshot in time intended to enable the Department to "[d]evelop policy, criteria, and standards for health service facilities planning[,]" among other things. N.C. Gen. Stat. § 131E-177(4) (2003). Frye was clear on this point. It is the role of the Department of Health and Human Services and the State Health Coordinating Council to
"prepare" or "develop" the SMFP. N.C. [Gen. Stat.] §§ 131E-176(25), 131E-177(4). The Governor's role is to "approve" the SMFP. N.C. [Gen. Stat.] § 131E-176(25). Read in context, these statutes suggest that the Governor's role is to make the final decision concerning the SMFP's contents after it has been developed and prepared by the Department and the Council.
Frye, 350 N.C. at 44, 510 S.E.2d at 163. This Court recently has reiterated that authority in Good Hope Health Sys., L.L.C. v. N.C. Dep't of Health and Human Serv., 175 N.C. App. 296, 298-99, 623 S.E.2d 307, 309 (2006) ("The Governor has final authority to approve or amend the SMFP, which becomes the binding criteria for review of CON applications.").
BMA further contends that this action is authorized statutorily pursuant to the CON statute, North Carolina General Statutes, section 131E-188 (2003). BMA cites specifically to subsections (a) and (b) which authorize suit against the Department of Health and Human Services in an administrative proceeding or in court regarding decisions to "issue, deny, or withdraw a certificate of need[.]" This statute clearly is inapplicable as there has been no decision by the Department of Health and Human Services regarding the issuance, denial or withdrawal of a CON. BMA argues that this statute should be applied nonetheless in this case as the refusal to amend the SDR "set the process in motion" that ultimately would result in the granting or denial of a CON. This is beyond the terms and conditions for the waiver of immunity prescribed by the statute and therefore does not support a waiver of immunity under the circumstances of this case.
As the State has not consented to suit in this case and there is no statutory waiver of sovereign immunity under this set of circumstances, we hold that the doctrine of sovereign immunity applies in this case. BMA further argues that its rights under both the State and federal constitutions have been violated and, therefore, its claims should not be precluded on the basis of sovereign immunity. However, BMA did not allege violation of its constitutional rights in either its Complaint or proposed Amended Complaint. Although BMA did allege in its Response to Defendant and Defendant-Intervenors' Motion to Dismiss that its constitutional rights had been violated, this allegation was insufficient to overcome the defense of sovereign immunity because the right allegedly violated is not constitutionally protected. See Coleman v. Whisnant, 225 N.C. 494, 506, 35 S.E.2d 647, 655-56 (1945).
BMA alleged in its Response to the Motion to Dismiss that its constitutional rights were violated in that it "will lose both patients and the income they provide[.]" "`Every one has [the] right to enjoy the fruits and advantages of his own enterprise, industry, skill and credit. He has no right to be protected against competition; but he has a right to be free from malicious and wanton interference, disturbance or annoyance.'" Id. (quoting Walker v. Cronin, 107 Mass. 555 (1871)).
In the case sub judice, there is no indication in the record, nor argument from BMA, that BMA is precluded from applying for a CON for the additional ten dialysis stations identified by the SDR. In fact, BMA made such an application for the additional stations. Accordingly, BMA is not being prevented from benefitting from "the fruits and advantages of [its] own enterprise, industry, skill and credit," but is merely being required to compete for such benefit.
As BMA has no constitutional right to be protected from lawful competition, it is unable to overcome defendant's sovereign immunity on constitutional grounds. Accordingly, the trial court properly granted summary judgment in favor of defendants DFS and Planning Section and defendant-intervenors TRC and HSM.
BMA argues in the alternative that this Court should hold that its action may properly be heard before the OAH. The parties have stipulated, however, that BMA has exhausted all of its administrative remedies. "`Stipulations are judicial admissions and are therefore binding in every sense, preventing the party who agreed to the stipulation from introducing evidence to dispute it and relieving the other party of the necessity of producing evidence to establish an admitted fact.'" In re I.S., 170 N.C. App. 78, 86, 611 S.E.2d 467, 472 (2005) (quoting Thomas v. Poole, 54 N.C. App. 239, 241, 282 S.E.2d 515, 517 (1981), disc, review denied, 304 N.C. 733, 287 S.E.2d 902 (1982)). However, parties to an action may not stipulate to give a court subject matter jurisdiction, where no such jurisdiction exists. Pineville Forest Homeowners Ass'n v. Portrait Homes Co., lib N.C. App. 320, 321-22, 623 S.E.2d 620, 623 (2006); see also Northfield Dev. Co. v. City of Burlington, 165 N.C. App. 885, 887, 599 S.E.2d 921, 924, disc, review denied, 359 N.C. 191, 607 S.E.2d 278 (2004). Thus, the parties could not simply stipulate that they had exhausted all administrative remedies in order for the trial court to have jurisdiction over the matter.
As it was stipulated that BMA already had exhausted its administrative remedies, the issue of whether BMA's action could properly be heard before OAH was not before the trial court and no evidence on that issue was presented. Accordingly, no assignment of error could be, or was, made pertaining to the trial court's failure to make a ruling on the issue. As previously stated, the scope of review on appeal is limited to those assignments of error set forth in the record on appeal. N.C. R. App. P. 10(a) (2006). To properly preserve a question for appellate review a party must request, and receive, a ruling on the question from the trial court. N.C. R. App. P. 10(b)(1) (2006). As this issue was not before the trial court, the trial court could not have made a ruling on it. Accordingly, this matter is not properly before this Court.
"It is not the role of the appellate courts to render advisory opinions in matters that are not properly before them." Carolinas Med. Ctr. v. Employers Carriers Listed in Exhibit A, 172 N.C. App. 549, 554, 616 S.E.2d 588, 591 (2005) (citing Wiggins v. Pyramid Life Ins. Co., 3 N.C. App. 476, 478, 165 S.E.2d 54, 56 (1969)). The question of whether BMA's action could properly be brought before the OAH is not properly before this Court and to address that issue would result in the rendering of an advisory opinion. Accordingly, the merits of this argument are not considered.
Because we have determined that the trial court did not err in granting summary judgment in favor of defendants DFS and Planning Section and defendant-intervenors TRC and HSM on sovereign immunity grounds, it is unnecessary to reach BMA's remaining assignments of error.
Affirmed.
Judge SMITH concurs.
Judge TYSON dissents in a separate opinion.