## Facts

- Jewish Hospital Healthcare Services, Inc. (Jewish Hospital) operated five duly approved cardiac-catheterization laboratories.
- Jewish Hospital sought to add a sixth cardiac-catheterization laboratory and applied to the Cabinet for Human Resources’ Interim Office of Health Planning and Certification (the interim office) for a certificate of need (CON).
- Jewish Hospital requested expedited review under Kentucky law; the interim office denied expedited consideration.
- Jewish Hospital withdrew its CON application and notified the interim office that it intended to proceed without a CON based on a Franklin Circuit Court interpretation of Kentucky’s CON statutes in a similar case.
- The interim office warned Jewish Hospital that relying on the circuit-court decision was improper because the decision was on appeal.
- The interim office issued a notice to show cause and held an administrative hearing.
- After the hearing, the interim office issued a cease-and-desist order and imposed a $10,000 civil fine, finding Jewish Hospital willfully violated Kentucky’s CON law by moving forward without approval.
- Jewish Hospital sought judicial review in Franklin Circuit Court, which construed the statutes and ruled for Jewish Hospital, concluding that adding the sixth lab was not a “substantial change in a health service” requiring a CON.
- The Cabinet appealed to the Kentucky Court of Appeals.

## Issues

1. Under Kentucky’s CON statutes (including KRS 216B.061(1)(d) and KRS 216B.015(20)), does adding a sixth cardiac-catheterization laboratory to a hospital already operating five constitute a “substantial change in a health service” (or the addition of a new health service) requiring a certificate of need?
2. If a CON was not required, may the interim office enforce a cease-and-desist order and a civil penalty based on the hospital’s proceeding without a CON?

## Decision

- The Kentucky Court of Appeals affirmed the Franklin Circuit Court’s judgment for Jewish Hospital.
- The court treated the dispute as one of statutory construction and applied the statutory definitions governing when a CON is required.
- The court concluded that adding another cardiac-catheterization lab at a facility already providing that same service amounted to an increase in quantity or capacity, not a substantial change in the health service and not the addition of a new health service.
- Because the project did not trigger the CON requirement, the interim office lacked a valid legal basis for its cease-and-desist order and the $10,000 fine.

## Legal Principles

- Whether a project falls within the CON requirement turns on the meaning of the governing statutes; statutory interpretation is a question of law for the courts.
- Under Kentucky’s CON scheme, a change that only increases the amount of an already-provided, approved service—without changing the service itself—does not, by itself, constitute a “substantial change in a health service.”
- Agency enforcement measures (including cease-and-desist orders and civil penalties) must rest on a lawful statutory requirement; if the statute does not require a CON for the activity, enforcement action cannot stand.

## Conclusion

The Kentucky Court of Appeals held that Jewish Hospital’s addition of a sixth cardiac-catheterization laboratory was merely an increase in capacity for an existing, approved service and therefore did not require a certificate of need; the Cabinet’s cease-and-desist order and $10,000 civil fine were properly set aside.


Cabinet for Human Resources v. Jewish Hospital Healthcare Services, 932 S.W.2d 388 (1996)