## Facts

- Irvington General Hospital (Irvington) applied to the New Jersey Department of Health (Department) for a certificate of need (CON) to build an addition that would add 19 new surgical beds.
- New Jersey’s CON statute required the Department to consider multiple specified factors when acting on an application, including (1) the availability of substitute services or facilities and (2) the need for special services or equipment in a particular area.
- Irvington served a community with a high concentration of elderly patients and argued that local hospital care mattered because family and friends could provide support during inpatient stays.
- Irvington asserted that when it could not admit patients, the nearest alternative hospitals required travel outside the town, including travel through high-crime areas and reliance on poor public transportation.
- After delays attributable to both Irvington and the Department, a hearing officer conducted an evidentiary hearing and recommended granting Irvington’s CON application.
- Before the Department’s approval board acted on that recommendation, the board approved another hospital’s application in the same county to reclassify 150 long-term care beds as surgical beds.
- Because that approval materially changed the county’s surgical-bed numbers, the board remanded Irvington’s application to the hearing officer to reconsider the recommendation in light of the additional beds.
- At the rehearing, the hearing officer determined that the county now had an excess of surgical beds and recommended denying Irvington’s application.
- The Department adopted the revised recommendation and denied the CON.
- Irvington appealed the final agency action to the Superior Court of New Jersey, Appellate Division.

## Issues

1. Whether the Department acted arbitrarily, capriciously, or unreasonably by remanding Irvington’s CON application after approving another hospital’s reclassification of 150 long-term beds as surgical beds and then denying Irvington’s application based on updated county bed figures.
2. Whether the Department unlawfully applied the CON statutory factors by relying on county-wide surgical-bed supply and substitute-facility considerations rather than granting the CON based on Irvington’s evidence of local access needs.

## Decision

- The Appellate Division affirmed the Department’s denial of Irvington’s CON application.
- The court held that the Department could require reconsideration of an initial favorable recommendation when a significant intervening change (the 150-bed reclassification) altered the bed-supply data relevant to the CON decision.
- The court concluded the Department’s reliance on county-wide bed information and its weighing of the statutory factors had adequate support in the record and did not amount to arbitrary or unreasonable agency action.

## Legal Principles

- A reviewing court gives substantial deference to final agency action and will not overturn it unless it is arbitrary, capricious, or unreasonable, or lacks sufficient record support.
- In the CON setting, an agency may base its final decision on current planning data available at the time of final action, rather than freezing the analysis at the time of an initial recommendation.
- The agency may treat newly approved and reclassified beds as part of the available supply when evaluating “need” and the “availability of substitute services or facilities.”
- The agency must consider the statutory factors governing CON determinations, but it has discretion to assign weight among competing considerations, including county-level resource planning versus hospital-specific claims of need.
- The statute does not require the agency to use municipal boundaries as the controlling planning unit where the agency reasonably evaluates need and substitutes on a broader geographic basis.

## Conclusion

The Appellate Division upheld the Department of Health’s denial of Irvington General Hospital’s certificate-of-need request for an addition with 19 new surgical beds, ruling that the Department permissibly remanded the matter after approving another hospital’s 150-bed reclassification and could rely on updated county bed-supply information in concluding that additional surgical beds were not shown to be needed.


Irvington General Hospital v. Department of Health, 374 A.2d 49 (1977)