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Virtua Health, Inc. v. Alaigh

Nov 14, 2011
DOCKET NO. A-2371-10T4 (N.J. Super. Nov. 14, 2011)


DOCKET NO. A-2371-10T4



Philip H. Lebowitz (Duane Morris LLP) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellant (Duane Morris LLP, attorneys; James J. Ferrelli, Erin M. Duffy and Mr. Lebowitz, on the brief). Susan J. Dougherty, Deputy Attorney General, argued the cause for respondent (Paula T. Dow, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Dougherty, on the brief). Frank R. Ciesla argued the cause for intervenor Atlantic Air Ambulance (Giordano, Halleran & Ciesla, attorneys; Mr. Ciesla and Afiyfa H. Ellington, on the brief). Robin Locke Nagele (Post & Schell, P.C.) of the Pennsylvania bar, admitted pro hac vice, argued the cause for amicus curiae MidAtlantic MedEvac, LLC (Cooper Levenson April Niedelman & Wagenheim, P.A., and Ms. Nagele, attorneys; Walter J. LaCon, on the brief).



Before Judges Sabatino, Ashrafi, and


On appeal from the Department of Health and Senior Services.

Philip H. Lebowitz (Duane Morris LLP) of the

Pennsylvania bar, admitted pro hac vice,

argued the cause for appellant (Duane Morris

LLP, attorneys; James J. Ferrelli, Erin M.

Duffy and Mr. Lebowitz, on the brief).

Susan J. Dougherty, Deputy Attorney General,

argued the cause for respondent (Paula T.

Dow, Attorney General, attorney; Melissa H.

Raksa, Assistant Attorney General, of

counsel; Ms. Dougherty, on the brief).

Frank R. Ciesla argued the cause for

intervenor Atlantic Air Ambulance (Giordano,

Halleran & Ciesla, attorneys; Mr. Ciesla and

Afiyfa H. Ellington, on the brief).

Robin Locke Nagele (Post & Schell, P.C.) of

the Pennsylvania bar, admitted pro hac vice,

argued the cause for amicus curiae

MidAtlantic MedEvac, LLC (Cooper Levenson

April Niedelman & Wagenheim, P.A., and Ms.

Nagele, attorneys; Walter J. LaCon, on the


This administrative appeal involves the licensure and regulation of emergency medical helicopter services by the Commissioner of the Department of Health and Senior Services ("the Department"). Appellant, Virtua Health, Inc. ("Virtua"), challenges the Department's issuance of an emergency medical helicopter service license to intervenor, Atlantic Air Ambulance ("Atlantic Air"), a competing entity, authorizing Atlantic Air to operate out of a facility in Millville. Virtua argues that the Department was not authorized to grant the license to Atlantic Air without first issuing a certificate of need ("CN"), and that Atlantic Air's license is otherwise invalid. Virtua further contends that the Department's most recent revision of its "dispatch protocol" for helicopter responses to 9-1-1 calls, interfacility patient transfers, and search-and-rescue missions, violates both the authorizing statutes and the Administrative Procedure Act ("APA"), N.J.S.A. 52:14B-1 to -15.

For the reasons that follow, we affirm the Department's issuance of the license to Atlantic Air without a CN, as the Department has reasonably construed the applicable statutes as not requiring a CN for such emergency medical helicopter services. We also reject Virtua's other arguments contesting Atlantic Air's licensure to operate an emergency helicopter service in southern New Jersey. Finally, we conclude that the Department's present dispatch protocol is not invalid for lack of formal rulemaking under the APA, based on the various factors set forth in Metromedia, Inc. v. Director, Division of Taxation, 97 N.J. 313, 331-32 (1984).


For the past three decades, the State of New Jersey has regulated hospital-based emergency helicopters that transport acutely ill and injured persons to appropriate medical facilities. In particular, in 1986 the Legislature established the "New Jersey Emergency Medical Service Helicopter Response Program," commonly known as "JEMSTAR," pursuant to N.J.S.A. 26:2K-36(a). The statute directs the Commissioner to "designate a mobile intensive care hospital and a regional trauma or critical care center which shall develop and maintain a hospital-based emergency medical service helicopter response unit." Ibid. The statute further directs the Commissioner to designate at least two entities to provide such helicopter services, one or more in the northern region of the State, and one or more in the southern region. Ibid. The JEMSTAR program is administered jointly by the Department and by the Division of State Police. See N.J.S.A. 26:2K-37.

Virtua is a health care company with multiple facilities in southern New Jersey. It has been designated under the JEMSTAR program to operate the unit known as "SouthSTAR," covering the southern part of the State. The Department has also licensed several other private providers of emergency medical helicopter services. One of those other providers is Atlantic Air, which is affiliated with Morristown Memorial Hospital and other hospital facilities in northern New Jersey. In addition, MidAlantic MedEvac, LLC ("MedEvac"), which is an amicus curiae in this appeal, was designated as a primary responder for certain territory, under the designation "MedEvac." The Department granted MedEvac a license in August 2011 — while Virtua's appeal was pending — to provide an additional helicopter unit out of Woodbine Airport in Cape May County. These services are complemented by one or more medical helicopters operated by the State Police, and also by another provider known as MONOC.

The northern counterpart to SouthSTAR, known as NorthSTAR, is not involved in this appeal.

Shortly before oral argument was conducted in this case, we denied MedEvac's motion to intervene but permitted it to participate as an amicus curiae, in light of its similar status to Atlantic Air as an emergency medical helicopter service licensed by the Department without a CN. Because of MedEvac's limited role in this appeal, the facts relating to its own operations and licensure have not been developed in detail.

Atlantic Air first submitted an application in June 2005 to the Department to provide air medical services, including "back[-]up [9-1-1] service for other helicopter providers," "throughout the state of New Jersey." The Department conditionally approved Atlantic Air's application in August 2005. In February 2006, the Department and Atlantic Air entered into an agreement delineating various operational requirements, and the Department concurrently issued Atlantic Air a license.

Later in 2006, the Department revised its then-existing dispatch protocol. Those revised guidelines maintained SouthSTAR as the primary first responder to 9-1-1 calls for the southern portion of New Jersey, and NorthSTAR as the primary first responder for the northern portion. However, the 2006 dispatch protocol designated Atlantic Air as a primary responder within the ten-mile arc to the north of its base of operations, and assigned MedEvac similar primacy within the ten-mile arc to the east of its base of operations. Moreover, if a private provider's helicopter unit was already airborne at the time of an emergency call, that unit was to be designated the first responder if it is immediately available, is the closest available unit to the response scene, and can reach the scene prior to any other unit.

The Department expanded the primary coverage areas of the private providers in 2007, and revised the dispatch protocol once again in September 2010. As revised, the protocol assigns to the Regional Emergency Medical Communications System ("REMCS") the statewide task of dispatching air medical units. Pursuant to those revised guidelines, REMCS is to dispatch the closest New Jersey-based licensed unit capable of arriving in the safest manner to the response scene. REMCS is required to give preference to the closest JEMSTAR unit if both commercially-owned and JEMSTAR units are within five nautical miles from that location.

The key events that precipitated the parties' dispute and this appeal began when Atlantic Air entered into an agreement with the Cooper Health System ("Cooper"), on November 8, 2010. Cooper is a southern New Jersey-based medical system. At that time, Atlantic Air was operating solely in northern New Jersey. Under its agreement with Cooper, Atlantic Air agreed to provide air ambulance service in southern New Jersey pursuant to Atlantic Air's license, but permitted Cooper limited control over managing certain aspects of those services. Soon thereafter, Atlantic Air informed the Department that it intended to relocate one of its two helicopters to Millville, in southern New Jersey, and to request that the helicopter ("Air Two") be inspected and approved.

Based upon the limited information supplied in the record concerning Air Atlantic's arrangement with Cooper, it appears that Atlantic Air maintains sole ultimate responsibility for licensing and managing Air Two, maintaining appropriate operating policies, and providing all necessary staff including its director and medical director. Cooper may provide flight nurses and — subject to certain conditions respecting base stations, equipment, and staff training — may provide what is described as "medical control" for the emergency helicopter flights. In such instances where Cooper is allowed to have "medical control," Cooper must designate a local physician as medical director for the purpose of overseeing the medical control exercised at Cooper. In all other circumstances, Morristown Memorial Hospital is responsible for the medical control.

The Department conducted the inspection of Air Two, as requested by Atlantic Air, later in November 2010. Following that inspection, the Department requested Atlantic Air to provide it with written procedures pertaining to medical command, dispatch protocols, scope of services and coverage area, and any forseeable conflicts between SouthSTAR and Atlantic Air, given that Cooper was already participating with Virtua in the JEMSTAR program. After Atlantic Air supplied the information, the Department issued a notice on December 3, 2010 to "[a]ll New Jersey [a]ir [m]edical [p]roviders." The notice advised them that Atlantic Air's "request for approval to operate a second air medical helicopter to be stationed at Millville Airport has been reviewed and approved." The helicopter was added to the dispatch rotation, and made available for both interfacility and emergency 9-1-1 assignments.

At oral argument, it was represented to us that not all calls responded to by Air Two result in a patient being transported to Cooper. As it was described to us, in some instances, such as an interfacility transfer, the patient is flown to a different medical facility.

Meanwhile, MedEvac similarly obtained an emergency medical service helicopter license from the Department on August 3, 2011. That license authorized MedEvac to provide such services out of Cape May County. Consequently, both Atlantic Air and MedEvac have, in effect, encroached upon the southern New Jersey territory previously covered predominantly by Virtua through JEMSTAR.

In its appeal, Virtua objects to the Department's licensure and designation of a second Atlantic Air helicopter to serve in southern New Jersey. Virtua principally argues that the Department was obligated to require Atlantic Air to obtain a CN for those emergency helicopter services. Among other things, Virtua points to Appendix A to N.J.A.C. 8:33, which presents a listing of services indicating that an "emergency medical service helicopter" must undergo what is termed "full" CN review and approval. Ibid. Virtua argues that the Department has acted improperly by failing to abide by its own regulation, which, on its face, requires its competitors to obtain a CN.

While the appeal was pending, we denied Virtua's motion for a stay, but accelerated the appeal.

Virtua further contends that the Department's decision to allow Atlantic Air to operate a second emergency medical helicopter unit in Millville violates the Department's CN and licensure regulations for mobile intensive care ("MIC") programs. Virtua disputes Atlantic Air's contention that it merely "relocated" an existing authorized service to southern New Jersey. Additionally, Virtua submits that Atlantic Air improperly "assigned," in effect, its license for Air Two to Cooper.

With respect to the revised dispatch protocol, Virtua contends that the Department's designation of Atlantic Air (and, inferentially, MedEvac) as primary responders for certain areas of southern New Jersey violated the legislative intent of the JEMSTAR program. Moreover, Virtua contends that the dispatch protocol revisions were sufficiently broad-based and significant to require formal rulemaking under the APA.

In response, the Department contends that it acted within its statutory and regulatory authority in allowing Air Atlantic (and, inferentially, MedEvac) to operate emergency helicopter services in southern New Jersey. The Department maintains that no CN is required for those approvals, and that the entry in Appendix A of N.J.A.C. 8:33 indicating otherwise was published in error. Alternatively, the Department asserts that federal law, specifically the Airline Deregulation Act of 1978 ("the ADA"), 49 U.S.C.A. § 41713(b)(1), conceivably preempts the ability of states to require the issuance of a CN for emergency medical helicopter services.

As to the dispatch protocol, the Department contends that the protocol only affects a very limited number of helicopter providers. The Department essentially characterizes the protocol as an operational document, which may be revised periodically without formal rulemaking. The Department opposes the balance of Virtua's contentions.

The Department's substantive arguments in opposing the appeal are substantially echoed by Atlantic Air and, in more limited respects, MedEvac.


Our role as an appellate court in reviewing the Department's administrative decisions in this case is directed to four inquiries:

(1) whether the agency's decision offends the State or Federal Constitution; (2) whether the agency's action violates express or implied legislative policies; (3) whether the record contains substantial evidence to support the findings on which the agency based its action; and (4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.
[George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994).]
On the whole, "[o]ur function is to determine whether the administrative action was arbitrary, capricious or unreasonable." Burris v. Police Dep't, Twp. of W. Orange, 338 N.J. Super. 493, 496 (App. Div. 2001) (citing Henry v. Rahway State Prison, 81 N.J. 571, 580 (1980)); see also In re Carter, 191 N.J. 474, 482-83 (2007). "The burden of demonstrating that the agency's action was arbitrary, capricious or unreasonable rests upon the [party] challenging the administrative action." In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div.), certif. denied, 188 N.J. 219 (2006). See also N.J. Soc'y for Prevention of Cruelty to Animals v. N.J. Dep't of Agric, 196 N.J. 366, 385 (2008).

Deference to an administrative agency is particularly appropriate where the decision challenged on appeal implicates the agency's area of expertise. Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 10 (2009). "[I]n a 'complex area where the Legislature has delegated a great amount of discretion to the administrative experts, deference must be accorded to the administrative agency's expertise and experience in its domain.'" In re Certificate of Need Granted to the Harborage, 300 N.J. Super. 363, 379-80 (App. Div. 1997) (quoting Riverside Gen. Hosp. v. N.J. Hosp. Rate Setting Comm'n 98 N.J. 458, 469 (1985)) (according such deference to the Department in upholding its decision on a healthcare provider's application for a CN).

The case before us involves an administrative agency's interpretation and application of its authorizing statutes and regulations. In such a context, we generally defer to the agency's interpretation of those statutes and regulations "'within its implementing and enforcing responsibility[.]'" Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001) (quoting In re Appeal by Progressive Cas. Ins. Co. , 307 N.J. Super. 93, 102 (App. Div. 1997)); see also Utley v. Bd. of Review, 194 N.J. 534, 551 (2008). However, we are not bound by the agency's opinions on matters of regulatory law. G.S. v. Dep't of Human Servs., 157 N.J. 161, 170 (1999); see also Mayflower Sec. Co. v. Bureau of Sec, 64 N.J. 85, 93 (1973).

With these general principles of appellate review of administrative agency decisions in mind, we now turn to Virtua's specific contentions.


The first question presented for our consideration is whether the Department exceeded its statutory powers, or acted arbitrarily and capriciously, by authorizing Atlantic Air to operate emergency medical helicopter services in southern New Jersey without the issuance of a CN. We conclude that the Department did not exceed its authority, nor did it act arbitrarily. Notwithstanding the facial terms of the entry for emergency medical helicopters within Appendix A of N.J.A.C. 8:33, the Department's interpretation that the governing statutes do not require a CN for such helicopter services is reasonable.

The CN process is an elaborate regulatory mechanism, which was originally designed to help assure that New Jersey residents are provided with "high quality health care services at a contained cost." In re Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 423 (2008); see also N.J.S.A. 26:2H-1. To accomplish that objective, the Legislature generally required "that health care facilities and services could not be expanded or instituted without the Commissioner's identification of a need and prior approval of the change through issuance of a CN." In re Virtua-West, supra, 194 N.J. at 423; see also N.J.S.A. 26:2H-7.

Eventually, the Legislature recognized that the intricate regulatory requirements for obtaining a CN — at least with respect to certain kinds of health care services — had become unduly cumbersome, time-consuming, and "unresponsive to market changes." In re Virtua-West, supra, 194 N.J. at 424-25. Those concerns about inefficiency led the Legislature to adopt the Health Care Reform Act of 1992 ("HCRA" or "the Reform Act"), exempting certain medical services from a CN requirement. See N.J.S.A. 26:2H-7a, -7c.

Significantly, the HCRA exempts, among other services, "[a]mbulance and invalid coach services" from the CN requirement. N.J.S.A. 26:2H-7a. At the time when this statutory exemption was adopted in 1992, the Department's extant regulations defined "ambulance services" in N.J.A.C. 8:40-1.1 to include medical care and transportation provided in a vehicle, "including a helicopter." 16 N.J.R. 3127(a), 3128 (Nov. 19, 1984); 17 N.J.R. 919(a), 933 (April 15, 1985) (adopting and readopting the definitional terms recited in N.J.A.C. 8:40-1.1).The Legislature is constructively presumed to have been aware of that regulation. See Bedford v. Riello, 195 N.J. 210, 225 (2008); VSH Realty, Inc. v. Harding Twp., 291 N.J. Super. 295, 300 (App. Div. 1996).

Virtua asserts in its reply brief that when the Reform Act was adopted, the only providers of emergency medical helicopter services were out-of-state commercial providers and the in-state providers in JEMSTAR, and that in-state commercial providers outside of JEMSTAR were not authorized until 2004. Regardless of the truth of that contention, the in-state or out-of-state origins of authorized helicopter units do not bear upon whether "ambulance services" prior to 1992, either in-state or out-of-state, were treated by the Department under the regulations to include "helicopters."

In amending its regulations in 1993 following the passage of the Reform Act, the Department redefined an "[a]mbulance service" in N.J.A.C. 8:33-1.3 as "the provision of emergency or non-emergency medical care and transportation by certified personnel in a vehicle, which is designed and equipped to provide medical care at the scene and while transporting sick and/or injured persons to or from a medical care facility or provider." 25 N.J.R. 4129, 4132 (Sept. 7, 1993) (codified at N.J.A.C. 8:33-1.3). The revised definition for ambulance services in N.J.A.C. 8:33-1.3 omitted the inclusive reference to a "helicopter" that formerly appeared in N.J.A.C. 8:40-1.1. We cannot tell why this explicit reference was omitted in 1993. The Department's associated rulemaking proposal does not discuss helicopters. See 25 N.J.R. 2171(a) (June 7, 1993). Nor do any of the various comments presented to the Department before the new rules were adopted discuss helicopters. See 25 N.J.R. 4129(a) (Sept. 7, 1993). Nonetheless, it remains clear that at the time the Legislature exempted "ambulance services" from CN requirements in the Reform Act, the definition of that term in the New Jersey Administrative Code explicitly included helicopters. Thus, it is reasonable to conclude that the Legislature intended to include helicopter services within the newly-enacted CN exemption.

Virtua emphasizes that the Department has a regulation on the books, i.e., Appendix A to N.J.A.C. 8:33, which lists "[e]mergency medical service helicopter[s]" as being non-exempt from CN requirements. We note that this particular entry is one of nearly one hundred entries appearing on a list of services in Appendix A, indicating whether CN review is "exempt," "full," or "expedited" for each such particular service. Ibid. No narrative discussion accompanies the listing in Appendix A explaining why the entry calls for "full" CN review of providers of emergency medical service helicopters. Nor does Virtua point to any published commentary in the New Jersey Register explaining why Appendix A requires full CN review of such helicopters, but no such CN review is needed for ground-based ambulance services.

The Department submits that the cited entry appearing in Appendix A is erroneous and the result of an oversight. Indeed, it is undisputed that the Department has not issued a CN for emergency helicopter services for over two decades. At oral argument, the Deputy Attorney General acknowledged the error in Appendix A, and she represented that the Department is undertaking to correct that error in a future revised Appendix to be published in the New Jersey Administrative Code.

To be sure, the Department generally must be expected to give full force and effect to its own regulations. See Cnty. of Hudson v. Dep't of Corr., 152 N.J. 60, 70 (1997). However, we are not persuaded that the agency acted unreasonably or in violation of its statutory prerogatives here by not enforcing the admittedly-mistaken entry in Appendix A, and not insisting that Atlantic Air obtain CN approval for its emergency medical helicopter services. The agency's long-standing practice in not requiring such CN approval is reflective of the agency's actual interpretation of the statute. There is no express language in the CN statutes, including the 1992 Reform Act, in which the Legislature required CN approval for emergency helicopter services. Indeed, the Department's interpretation of the statutes to exempt such helicopter services is in accord with the overall deregulatory objectives of the 1992 reform legislation.

The Reform Act was remedial legislation designed to simplify administrative procedures in obtaining State approval for certain kinds of health care services. As a remedial statute, the Reform Act appropriately may be afforded a broad construction. See Hardwicke v. Am. Boychoir Sch., 188 N.J. 69, 90 (2006). In applying its regulatory expertise in construing the statutes as not requiring a CN for emergency medical helicopter services, the Department adopted a reasonable construction of the legislative enactments. It was not illogical for the Department to treat emergency helicopters in the same fashion as the Legislature explicitly treated ground-based "[a]mbulance and invalid coach services," i.e., by likewise exempting them from undergoing the cumbersome CN approval process. N.J.S.A. 26:2H-7a.

For these reasons, we defer to the Department's expertise and its long-standing practice, and affirm its determination that Atlantic Air, as well as other similarly-situated providers such as MedEvac, are not obligated to obtain CN approval to operate emergency medical helicopter services in this State. The Department has decided instead to regulate such services through the issuance of individual licenses outside the CN process. There is no statutory compulsion for this court to interfere with the Department's chosen regulatory approach. However, as a condition of our affirmance, we direct that the Department — as it has already committed to do so through its counsel — promulgate a corrective revision to Appendix A within ninety days of this opinion, subject to the usual notice and comment requirements for rulemaking under the APA.

Our disposition of the CN issue on state-law grounds makes it unnecessary for us to address the unsettled legal issue of whether federal aviation law preempts states from requiring a CN for the licensure of emergency medical helicopters. See generally Med-Trans Corp. v. Benton, 581 F. Supp. 2d 721, 736 (E.D.N.C. 2008) (holding that North Carolina's state laws requiring a CN for air carrier health services are invalid because they contravene the federal ADA).


Virtua separately argues that, whether or not Atlantic Air was legally required to obtain a CN to provide emergency medical helicopter services in southern New Jersey, a CN was at least required to operate an MIC program in conjunction with that service in that part of the State. Virtua asserts that CNs for MIC programs are geographically-specific. In particular, the CN previously issued to Atlantic Air for its MIC program authorizes it to operate MIC units in Essex, Morris, and Union counties in northern New Jersey. Virtua asserts that Atlantic Air thus should not be permitted to operate its helicopter program in southern New Jersey. The Department rejects that contention, and so do we.

A "mobile intensive care program" is defined in the regulations promulgated pursuant to N.J.S.A. 26:2K-7 through -20 and N.J.S.A. 26:2K-35 through -38. Such an MIC program is one "operated by a mobile intensive care hospital, which is validly licensed by the Department to provide pre-hospital advanced life support care by way of a specially equipped and staffed mobile intensive care unit." N.J.A.C. 8:41-1.3. The MIC regulations define a "mobile intensive care hospital," in turn, as "an acute care hospital authorized by the Commissioner, by way of a certificate of need, to develop and maintain a mobile intensive care program for the purpose of providing advanced life support care to a specific population, geographic region or political subdivision." Ibid. The MIC regulations contain certain geographic restrictions on the transport of patients. See N.J.A.C. 8:41-9:16(c). Similarly, the Department's CN

regulations generally prohibit the relocation of licensed services under an approved CN, subject to certain exemptions. See N.J.A.C. 8:33-3.4(a).

The Department's regulations in Chapter 41 specifically define an "air medical unit," or "AMU," as "a specially equipped helicopter or airplane that is validly licensed by the Department and operated in accordance with the standards set forth in this chapter." N.J.A.C. 8:41-1.3 (emphasis added). By comparison, the "mobile intensive care unit[s]" ("MICUs") contemplated by N.J.A.C. 8:41-1.3, as opposed to "air medical unit[s]," utilize ground vehicles. See N.J.A.C. 8:41-3.3(a)(2) (requiring MIC crew members to operate the unit in compliance with "all applicable motor vehicle laws") (emphasis added); N.J.A.C. 8:41-3.17 (requiring each MICU to be registered and "display a valid motor vehicle inspection decal issued by the New Jersey Motor Vehicle Commission (NJMVC)") (emphasis added). Helicopters and other aircraft are not licensed by the NJMVC. See N.J.S.A. 39:1-1 (generally defining a "vehicle" regulated by the NJMVC to encompass devices "by which a person or property is or may be transported upon a highway").

The regulations in Chapter 41 repeatedly distinguish between MICUs and AMUs. Although regulations in the first eight and the twelfth subchapters of Chapter 41 govern both sorts of units, those in the ninth, N.J.A.C. 8:41-9.1 to -9.23, apply exclusively to MICUs and those in the eleventh apply exclusively to AMUs. N.J.A.C. 8:41-1.2. Most importantly, the provisions imposing geographic limitations for MIC transports, see N.J.A.C. 8:41-9.16(c), are contained in subchapter nine and thereby are expressly excluded from the rules applicable to specialty care transport services and air medical services. See N.J.A.C. 8:41-1.2(c) and (d).

Virtua's reliance upon the general language in N.J.A.C. 8:33-3.4(a)(3) imposing geographic restrictions upon the relocation of certain services under an approved CN, is overcome by the more specific language in Chapter 41 regulating MICUs and air medical services. In particular, N.J.A.C. 8:41-9.2(c) within subchapter nine of Chapter 41 only prohibits an MIC program from "utiliz[ing] its MICUs to provide advanced life support care in any geographical area . . . for which it does not hold certificate of need approval to do so." (Emphasis added). N.J.A.C. 8:41-9.2(c) contains no similar geographic prohibition on the use of AMUs, including helicopters. Indeed, as we have noted, AMUs are specifically excluded from the restrictions in subchapter nine. Hence, the more specific provisions in Chapter 41 addressing MICUs and AMUs control, should they conflict with the more general provisions in Chapter 33 relied upon by Virtua. Wilson v. Unsatisfied Claim & Judgment Fund Bd., 109 N.J. 271, 278 (1988).

We also note that there is nothing in the text of N.J.S.A. 26:2K-35 to -38 that statutorily precludes Atlantic Air from relocating its airborne services to southern New Jersey without an amendment to its CN.

The Department's distinction between MIC ground units and airborne helicopter units with respect to Virtua's geographic restrictions argument has reasonable support in the applicable regulations and is entitled to our deference. Consequently, we reject Virtua's arguments with respect to the geographic restrictions issue.


Virtua next argues that the Department's revision of its dispatch protocol jeopardizes the viability of the JEMSTAR system. The revision, among other things, allows Atlantic Air to operate in southern New Jersey and also allows other commercial aircraft to respond to calls in certain specific instances. Virtua maintains that permitting such providers to, in essence, compete with Virtua — which was previously designated as the sole southern New Jersey provider under the JEMSTAR system — diminishes the quality of the services being provided. In particular, Virtua argues that the revision of the dispatch protocol decreases the preparedness and expertise of each helicopter unit, and diminishes the frequency with which each unit is called to respond. Moreover, Virtua contends that the revised protocol violates the APA, and must be issued pursuant to formal rulemaking process under Metromedia, supra, 97 N.J. 313.

Although the Emergency Medical Services Act, N.J.S.A. 26:2K-35 to -38, authorizes the Department, in conjunction with the Division of State Police, to implement the JEMSTAR program, nothing in that statute prohibits the State from allowing private service providers to supplement the services designated through JEMSTAR. The present version of the dispatch protocol is neither plainly inconsistent with that statute by including a role for private air service providers, nor with the applicable regulations.

The Division of State Police within the Department of Law and Public Safety, which like the Department of Health & Senior Services, is customarily represented in litigation by the Division of Law within the Department of Law and Public Safety, has not participated in this appeal. See N.J.S.A. 52:17A-4(e). The Attorney General is the head of the Department of Law and Public Safety, and thus oversees both the Division of State Police and the Division of Law. See N.J.S.A. 52:17B-2 and -3. The record contains no document from the State Police reflecting disagreement with the revised protocol or a position different than that being advocated in this appeal by the Deputy Attorney General.

Moreover, as expressed in the certification of William B. Duffy, who oversees the Department's air medical and trauma system, the Department disputes Virtua's assertion that the addition of Air Two has threatened SouthSTAR's financial viability. In particular, Duffy notes that under the JEMSTAR program, a grantee such as Virtua has the ability to request supplemental funding from the Department if its present monetary grant is not sufficient to cover the costs of providing medical care to the patients. Additionally, a certification from John B. Liqua, a public health representative with the Department, states that although "a decrease in the frequency and number of patient contacts may contribute to a decrease in skill competencies [of crew members], many other agencies successfully manage this issue by rotating their staff to higher volume ground units to maintain their skills." Liqua also notes that skills can be maintained through national certifications and through using simulators.

Whatever the merits of Virtua's arguments may be, as a matter of public policy, concerning the overall expertise and preparedness of emergency medical helicopter units under the revised protocol, Virtua has no legal basis for relief stemming from that policy disagreement. It is not this court's function to resolve the policy disagreement. See N.J. Coal. of Health Care Prof'ls, Inc. v. N.J. Dep't of Banking & Ins., 323 N.J. Super. 207, 247 (App. Div.), certif. denied, 162 N.J. 485 (1999). Rather, the dispute is most appropriately reserved for the agency's application of its expertise, which was lawfully exercised here.


We now turn to Virtua's contention that the Department was obligated to undertake formal rulemaking, with public notice and comment, before making the specific changes to the dispatch protocol that are challenged on this appeal.

At oral argument, Virtua's counsel acknowledged that minor operational changes to the dispatch protocol might not necessarily require rulemaking. However, Virtua contends that the changes to the protocol here are sufficiently substantial to require rulemaking.

In opposition, the Department contends that no rulemaking was required, and that the dispatch protocol is simply an operational directive that guides central communications for responding to 9-1-1 calls and other dispatches. As a separate argument not asserted by the Department, Atlantic Air contends that Virtua did not file a timely notice of appeal from the Department's revision of the dispatch protocol on August 5, 2010. Although we are mindful that Virtua did not seek appellate review of the protocol's revision within the forty- five days prescribed by R. 2:4-1(b), we nonetheless choose to address the substance of Virtua's rulemaking argument.

Virtua's notice of appeal was filed on January 14, 2011, which was within forty-five days of the Department's decision on December 3, 2010 to issue Atlantic Air a license to operate out of Millville, but not within forty-five days of the August 5, 2010 revision of the dispatch protocol.

The well-established standards delineating when rulemaking is required under the APA were articulated by the Supreme Court in Metromedia, supra, 97 N.J. at 331. Pursuant to Metromedia, the court must consider whether the agency's action:

(1) is intended to have wide coverage encompassing a large segment of the regulated or general public, rather than an individual or a narrow select group; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is, prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5) reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudication or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy.
[Metromedia, supra, 97 N.J. at 331-32.]
Formal rulemaking is required when these so-called "Metromedia factors" preponderate in favor of the rulemaking process. Id. at 331.

The Department asserts that the dispatch protocol may be issued and revised informally, because it impacts only a small, specific group of providers. The protocol, according to the Department, does not establish general policy, but, as its brief asserts, "merely provides guidance regarding how emergency air medical units are to be dispatched to an accident or trauma scene." The Department stresses that all past iterations of the dispatch protocol were issued informally, without resort to the formal rulemaking process and without any objections by the affected parties to the absence of rulemaking.

We agree with Virtua that some of the Metromedia factors appear to support its claim that formal rulemaking is needed to issue or revise the dispatch protocol. In particular, the most-recently revised protocol is intended to be applied uniformly (Metromedia factor two), applies prospectively rather than retroactively (factor three), and represents a significant change from prior dispatch protocols (factor five).

On the other hand, we concur with the Department that the protocol is intended to apply only to a "narrow select group." See Metromedia, supra, 97 N.J. at 331 (discussing Metromedia factor one). That select group includes the handful of helicopter services licensed by the Department to provide emergency services and, only incidentally, the commercial aircraft permitted to respond to 9-1-1 calls in lieu of the licensed units in narrowly-defined situations. Under Metromedia factor four, the dispatch protocol does not constitute a "legal standard," but rather it is more in the nature of a day-to-day operational guideline. Ibid. The formulation and administration of such a guideline is logically within the purview of the Department and the State Police in their ongoing administration of JEMSTAR. Moreover, under Metromedia factor six, the revised dispatch protocol does not appear to "reflect[] a decision on administrative regulatory policy in the nature of the interpretation of law or general policy." Id. at 331-32. The protocol is not "interpreting" law or policy. Rather, it is an operational mechanism to make sure that emergency aircraft respond to 9-1-1 calls and other requests in an orderly manner.

We appreciate Virtua's uncontested representation that it is now receiving fewer calls for response as a result of the revised dispatch protocol and the addition of Atlantic Air into the southern New Jersey coverage region. We also recognize Virtua's claim that the Department's expansion of eligible responders could have adverse collateral effects upon the overall quality and preparedness of the helicopter units in the JEMSTAR program. On the other hand, we also recognize that the Department, as asserted in the Duffy and Liqua certifications, disputes Virtua's assertions of diminished quality and preparedness. If such adverse impacts have arisen, or if they arise in the future, the Department should retain the flexibility to make appropriate adjustments in the dispatch protocol without being hampered by the formal constraints of the rulemaking process. The longstanding custom of the Department to revise the dispatch protocol in an informal manner, without any apparent prior objection to that procedure from Virtua or from anyone else, provides an additional reason for continuing the Department's tradition of informality and flexibility in updating and refining the protocol.

Although the question is not free from doubt, we conclude that, on balance, the Metromedia factors weigh in favor of affording the Department the ability to revise the dispatch protocol without formal rulemaking. That determination in the present appeal is, of course, without prejudice to the Department potentially choosing to pursue future changes to the protocol in a formal manner. Nor does our opinion preclude Virtua, or any other provider, from filing a petition for rulemaking pursuant to N.J.S.A. 52:14B-4(f) with the Department for its consideration concerning any future changes that may be contemplated in the protocol.


We have considered the balance of Virtua's contentions on appeal, including its assertion that Atlantic Air improperly assigned its license for the Air Two aircraft to Cooper, and have determined that those arguments lack sufficient merit to be addressed in this written opinion. R. 2:11-3(e)(1)(E).

In rejecting that argument, which is largely based upon the contractual provisions between Atlantic Air and Cooper, we do not foreclose Virtua from raising a new challenge before the Department if, in actual practice, the respective activities of Atlantic Air and Cooper as to Air Two are shown to contravene particular regulatory provisions. If a prima facie showing of such unauthorized activity is presented but factually disputed, the Department would be free to refer the factual dispute to the Office of Administrative Law. We simply conclude that, based on the limited record before us, the Department did not act unreasonably in approving Atlantic Air's operation of Air Two in southern New Jersey with the assistance of Cooper, as specified under the terms of their agreement, and in not treating the arrangement as an improper assignment.


I hereby certify that the foregoing

is a true copy of the original on

file in my office



Summaries of

Virtua Health, Inc. v. Alaigh

Nov 14, 2011
DOCKET NO. A-2371-10T4 (N.J. Super. Nov. 14, 2011)
Case details for

Virtua Health, Inc. v. Alaigh

Case Details



Date published: Nov 14, 2011


DOCKET NO. A-2371-10T4 (N.J. Super. Nov. 14, 2011)