Top NC court issues stay in Candler CON dispute

The North Carolina Supreme Court agreed Monday to stay a lower court’s ruling in a certificate-of-need dispute in western North Carolina.

AdventHealth had asked for the stay as it seeks the high court’s review of its challenge to a CON issued to competitor Mission Health for a free-standing emergency department in Candler.

The Supreme Court issued an order Monday granting the stay without comment.

Health care providers must secure a CON from state regulators before building a new hospital, adding hospital beds, opening many other types of health care facility, or buying the most expensive medical equipment.

AdventHealth is asking North Carolina’s highest court to take the case to help clarify future legal disputes over the state CON law.

The state Appeals Court ruled in March against AdventHealth.

If the state Supreme Court takes the case, it “will have before it the very facts” the court indicated in 2025 that it needed to resolve an outstanding legal issue, according to AdventHealth’s petition filed April 8.

The high court ruled last October in Pinnacle Health Services v. NC Department of Health and Human Services that a health care provider who is denied a CON after a competitive process can claim that state regulators’ decision led to “substantial prejudice.” A plaintiff needs to show that form of prejudice, along with “agency error,” to win a CON case.

AdventHealth did not compete for the CON awarded to Mission Health’s Candler emergency department. The Supreme Court could use AdventHealth’s appeal to explain what a plaintiff must prove to win a CON dispute involving “non-competitive” CON reviews, according to the petition. “[T]here remains a need for a clearly defined standard,” AdventHealth’s lawyers wrote.

“While opponents in non-competitive reviews — typically market competitors of an applicant for a CON — have a clear statutory right to challenge a decision of a certificate of need under N.C. Gen. Stat. § 131E-188, such right is most often illusory as their challenges are repeatedly dismissed due to a purported inability [to] meet the burden to establish substantial prejudice,” the petition explained.

“Unlike obscenity, substantial prejudice should not be so difficult to define,” AdventHealth’s lawyers wrote. “In Pinnacle Health the court did it for competitive reviews, and the court should grant discretionary review in this case to do the same for all reviews.”

The petition cited other issues for the Supreme Court to consider, including the argument that state law gives “affected persons” the right to challenge a CON decision from state regulators.

“Thus, where a challenger can show that the Agency Decision is procured by false representations to the Agency as occurred in this case, or was made as a result of the Agency’s failure to abide by the law — in this case, the failure to have the statutorily required public hearing — that such matters are not excused because of a failure of a competitor to meet the nebulous standard for substantial prejudice in non-competitive cases,” AdventHealth’s lawyers wrote.

“Rather, the harm resulting from the Agency’s failure to follow the law or the harm from allowing an applicant to mislead the Agency, is precisely that the Agency failed to follow the law or was misled, harms that exist to all citizens, including competitors of the applicants,” the petition continued.

A unanimous Appeals Court panel issued a March 4 opinion rejecting AdventHealth Hendersonville’s challenge of North Carolina regulators’ decision to award competitor Mission Health a CON for a new free-standing emergency department in Candler.

Appellate judges ruled in 2024 that regulators had failed to follow proper procedures when they held no public hearing before issuing the Candler emergency department CON to Mission. But the Appeals Court also determined that the error did not necessarily amount to substantial prejudice against AdventHealth.

When the case returned to a state administrative law judge, AdventHealth did not convince the ALJ that it had suffered the type of prejudice that would allow for a successful CON challenge.

“Here, the ALJ’s award of summary judgment to Mission and DHHS was proper because AdventHealth failed to meet its burden of showing substantial prejudice,” Judge John Arrowood wrote. “The evidence that AdventHealth presented about the harm arising from not holding an in-person hearing is hypothetical and fails to demonstrate specific, actual harm.”

“AdventHealth’s prediction that there would have been significant community participation at an in-person hearing, and that the public would have raised serious concerns, is purely speculative,” Arrowood added. “Moreover, AdventHealth did not demonstrate that such an in-person crowd would have had a different effect on the CON determination than the written comments that were actually submitted from the public.”

The Appeals Court rejected arguments that Mission’s CON would lead to lost revenue and reduced services for AdventHealth.

“[T]his Court has already held that quantifications of lost revenue and the resulting compromise of certain services are not sufficient to show substantial prejudice” in two precedent cases, Arrowood wrote. “AdventHealth has not demonstrated that its evidence of harm is significantly dissimilar to those cases.”

Appellate judges “conclude that AdventHealth has not demonstrated harm that goes above and beyond that which naturally results from additional competition,” Arrowood added.

“Top NC court issues stay in Candler CON dispute” was originally published on www.carolinajournal.com.