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BIO-MEDICAL APPLICATIONS OF NORTH CAROLINA, INC. Plaintiff, v.
NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, DIVISION
OF FACILITY SERVICES, Defendant, and NORTH CAROLINA DEPARTMENT OF
HEALTH AND HUMAN SERVICES, DIVISION OF FACILITY SERVICES, MEDICAL
FACILITIES PLANNING SECTION, Defendant, and TOTAL RENAL CARE OF
NORTH CAROLINA, LLC and HEALTH SYSTEMS MANAGEMENT, INC.,
Filed: 19 September 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
3. Hospitals and Other Medical Facilities; Immunity_amendment of dialysis
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. Qualls,
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-
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 SemiannualDialysis 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 Sectionto 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
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
nonexistent, 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 basisof 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 remedyavailable 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
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 prerequisite 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,] 510S.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
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
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
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 amendmentto the SMFP as prescribed by Frye - by seeking an amendment through
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
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 regardingdecisions 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 bothpatients 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., 175 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. CarolinasMed. 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
Judge SMITH concurs.
Judge TYSON dissents in a separate opinion.
TYSON, Judge dissenting.
The majority's opinion affirms the trial court's grant of
summary judgment in favor of defendants and defendant-intervenors
and holds that Bio-medical Applications of North Carolina, Inc.'s
(BMA) claims, and judicial review thereof, are barred by sovereign
immunity. Because sovereign immunity does not bar judicial review
of BMA's claims, I vote to reverse the trial court's order. I
On 1 July 2004, North Carolina Department of Health and Human
Services, Division of Facility Services (DFS) published the July
2004 Semiannual Dialysis Report (SDR) which determined a need for
ten additional dialysis stations in Wake County as a result of data
provided by the Kidney Council to North Carolina Department of
Health and Human Services, Division of Facility Services, Medical
Facilities Planning Section (the Planning Section). On 1 July
2004, Jim Swann (Swann), Regional Director of Health Services for
BMA, contacted Jim Keene (Keene), a planner with the Planning
Section. Swann noted an error in the data which indicated fifty-two
patients were receiving services at BMA's Fuquay-Varina dialysis
facility, when the actual census was only fifty-one patients.
But for the Kidney Council's error, no additional need
determination would have occurred, and the utilization of existing
dialysis stations would have remained below eighty percent. Keene
recalculated the dialysis station need, but failed to make any
changes in the SDR based on the corrected data Swann provided. On
2 July 2004, Swann contacted the Kidney Council, which acknowledged
the correct census was fifty-one patients. Later that day, Swann
spoke with Keene to see whether the Kidney Council had contacted him
to correct the miscalculation. Swann discovered the Kidney Council
had not yet contacted Keene.
On 13 July 2004, the Kidney Council contacted Swann, confirmed
that the reported patient census was erroneous, and stated it would
contact the Planning Section. On 16 July 2004, Jenna Krisher, the
Executive Director of the Kidney Council, sent an e-mail to Keeneadmitting the error and stated the correct patient census for BMA's
Fuquay-Varina facility was fifty-one patients as of 31 December
On 19 July 2004, Swann sent a letter to Keene and requested DFS
amend the SDR to reflect the actual census of fifty-one patients.
On 20 July 2004, Keene responded in a letter and stated in pertinent
[T]he Agency relies on data provided by the
Southeastern Kidney Council (SEKC) for the
Semiannual Dialysis Reports (SDR). The
timeline for production of each issue of that
report is established in the State Medical
Facilities Plan. The timeline for the July
2004 SDR indicated that data for the period
ending December 31, 2003 would be reported by
the SEKC on May 12, 2004 for the report to be
published on July 1, 2004. The Agency must
adhere to this timeline.
. . . .
[T]he current Agency practice regarding
revision of need determinations based on
changes in inventory, a different but parallel
issue, does not allow a need determination to
be reduced if the relevant inventory is
adjusted upward 60 days or less prior to the
applicable 'Certificate of Need Application Due
Date.' Applications for need determinations
in the July 2004 SDR are due on September 15,
2004. Even if an amendment was recommended,
there is not sufficient time for 60 days
advance notice to other interested parties.
. . . .
The Agency will adhere to the timelines as
published in the State Medical Facilities Plan.
Under the July 2004 SDR, the due date for Certificate of Need
(CON) Applications was 15 September 2004, with a scheduled 1October 2004 review date. DFS failed to amend the July 2004 SDR,
and began accepting applications for CONs. BMA filed suit against
defendants seeking a declaratory judgment, preliminary and permanent
injunctions, and petition for writ of mandamus. On 13 September
2002, Judge Howard Manning issued a temporary injunction, which
prohibited [defendants] from issuing a certificate of need to any
person for the development or operation of any dialysis stations in
Wake County as a result of the [ten]-station county need
determination set forth in the July 2004 SDR . . . .
On 16 November 2004, Judge Henry W. Hight, Jr., converted
defendants' Rule 12(b)(1) motion to dismiss into a motion for
summary judgment, granted summary judgment in favor of defendants,
and dismissed BMA's claims for lack of subject matter jurisdiction
due to sovereign immunity. Plaintiff appeals.
On appeal, BMA argues: (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'
motion to dismiss to a motion 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.
The majority's opinion erroneously affirms the trial court's
grant of summary judgment on the grounds of sovereign immunity.
A. Person Aggrieved
Under N.C. Gen. Stat. § 150B-43 (2005):
[a]ny 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, 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
A person aggrieved is defined as any person or group of
persons of common interest directly or indirectly affected
substantially in his or its person, property, or employment by an
administrative decision. N.C. Gen. Stat. § 150B-2(6) (2005); see
Carter v. N.C. State Bd. of Registration, 86 N.C. App. 308, 313,
357 S.E.2d 705, 708 (1987) (a person aggrieved means one who is
adversely affected in respect to legal rights, or is suffering from
an infringement or denial of legal rights).
BMA is an aggrieved party because BMA's in-center dialysis
services are adversely affected by the Planning Section's refusal
to amend the SDR. DFS illegally allowed CON applications to be
filed when the utilization of dialysis stations remained below
B. Contested Case
A contested case is defined as:
an administrative proceeding pursuant to this
Chapter to resolve a dispute between an agency
and another person that involves the person'srights, duties, or privileges, including
licensing or the levy of a monetary penalty.
Contested case does not include rulemaking,
declaratory rulings, or the award or denial of
a scholarship, a grant, or a loan.
N.C. Gen. Stat. § 150B-2(2) (2005); see Davis v. Hiatt, 326 N.C.
462, 465, 390 S.E.2d 338, 340 (1990) (The petitioner, whose driving
privilege was mandatorily suspended under N.C. Gen. Stat. §§ 20-
17(2) and 20-19(e), did not have the right to appeal under this
Chapter. However, the superior court could review the actions of
the Commissioner by issuing a writ of certiorari.).
BMA appeals from a contested case because the Planning
Section's failure to amend the SDR affects BMA's rights, duties,
and privileges in the required utilization of in-center dialysis
services. All parties stipulated BMA exhausted any administrative
remedies available to adjudicate the issues raised in its
BMA correctly invoked judicial remedies available under the
statutes and case law to test the validity of DFS's administrative
action and inaction. N.C. Gen. Stat. § 150B-43. BMA has standing
under N.C. Gen. Stat. § 150B, The Declaratory Judgment Act, N.C.
Gen. Stat. § 1-254, and established case law to assert these claims
and the trial court possessed jurisdiction to review and rule on
BMA's claims. See Bland v. City of Wilmington, 278 N.C. 657, 659,
180 S.E.2d 813, 815 (1971) (The Declaratory Judgment Act permits
any person affected by a statute or municipal ordinance to obtain
a declaration of his rights thereunder.).
IV. Standard of Review
The trial court converted defendants' motion to dismiss into
a motion for summary judgment by reviewing affidavits and other
documents outside of the pleadings. See N.C.R. Civ. P. 56(c)
(2005); Stanback v. Stanback, 297 N.C. 181, 205, 254 S.E.2d 611,
627 (1979) (a motion to dismiss for failure to state a claim under
N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) was converted to a motion for
summary judgment when matters outside the pleadings were presented
to and not excluded by the court).
The movant for summary judgment has the burden of establishing
that there are no genuine issues of material fact and that it is
entitled to judgment as a matter of law. Hines v. Yates, 171 N.C.
App. 150, 157, 614 S.E.2d 385, 389 (2005). The movant can meet the
burden by either: (1) Proving that an essential element of the
opposing party's claim is nonexistent or (2) Showing through
discovery that the opposing party cannot produce evidence
sufficient to support an essential element of his claim nor
[evidence] sufficient to surmount an affirmative defense to his
When a motion for summary judgment is made and
supported as provided in this rule, an adverse
party may not rest upon the mere allegations
or denials of his pleading, but his response,
by affidavits or as otherwise provided in this
rule, must set forth specific facts showing
that there is a genuine issue for trial. If
he does not so respond, summary judgment, if
appropriate, shall be entered against him.
Id. On appeal, an order allowing summary judgment is reviewed de
novo. Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470, 597
S.E.2d 674, 693 (2004).
V. Sovereign Immunity
The majority's opinion holds the trial court properly granted
summary judgment because it was without subject matter jurisdiction
under the doctrine of sovereign immunity. I disagree.
It is well-established that a state and its agencies may not
be sued unless sovereign immunity is waived. Guthrie v. State
Ports Authority, 307 N.C. 522, 534, 299 S.E.2d 618, 625 (1983).
[North Carolina] has expressly waived sovereign immunity for
various types of civil actions. Ferrell v. Dep't of Transp., 334
N.C. 650, 654, 435 S.E.2d 309, 312 (1993); see, e.g., N.C. Gen.
Stat. § 143-135.3(d) (2005) (permitting suit for certain contract
claims after procedural remedies are exhausted).
Our Supreme Court has held that the State may also implicitly
waive its immunity through conduct. See Smith v. State, 289 N.C.
303, 320, 222 S.E.2d 412, 423-24 (1976) (The State implicitly
consented to the suit when it entered into a valid contract); see
also N.C. Gen. Stat. § 143-291(a) (2005) (sovereign immunity waived
by enactment of the North Carolina Tort Claims Act: If the
Commission finds that there was negligence on the part of an
officer, employee, involuntary servant or agent of the State while
acting within the scope of his office, employment, service, agency
or authority that was the proximate cause of the injury and that
there was no contributory negligence on the part of the claimant
or the person in whose behalf the claim is asserted, the Commission
shall determine the amount of damages that the claimant is entitled
to be paid[.]); Bell Arthur Water Corp. v. N.C. Dep't of Transp.,101 N.C. App. 305, 310, 399 S.E.2d 353, 356 (The State implicitly
waived immunity by law requiring DOT to compensate injured party),
disc. rev. denied, 328 N.C. 569, 403 S.E.2d 507 (1991).
A. Ministerial versus Discretionary Duties
North Carolina case law distinguishes between discretionary
duties and ministerial duties under the immunity doctrine.
Discretionary acts are those requiring personal deliberation,
decision and judgment; duties are ministerial when they are
'absolute, certain, and imperative, involving merely the execution
of a specific duty arising from fixed and designated facts.'
Meyer v. Walls, 347 N.C. 97, 113, 489 S.E.2d 880, 889 (1997)
(quoting Hare v. Butler, 99 N.C. App. 693, 700, 394 S.E.2d 231,
235-36, disc. rev. denied, 327 N.C. 634, 399 S.E.2d 121 (1990)).
Sovereign, governmental, or public officer immunity generally
only applies to discretionary actions, not to ministerial actions.
See Miller v. Jones, 224 N.C. 783, 787, 32 S.E.2d 594, 597 (1945)
(officer charged with discretionary duty cannot be liable for
negligence, but officer charged with ministerial duty can be liable
for misfeasance); Hipp v. Ferrall, 173 N.C. 167, 170, 91 S.E. 831,
832 (1917) (distinguishing between discretionary and ministerial
actions, holding that a public officer charged with a ministerial
duty may be personally liable for negligent breach).
The proper action to require an agency to perform a
ministerial duty is a declaratory judgment and a petition for writ
of mandamus, both of which were asserted by BMA in its complaint. N.C. Gen. Stat. § 1-254 (2005); see Bland v. City of Wilmington,
278 N.C. 657, 659, 180 S.E.2d 813, 815 (1971) (the declaratory
judgment act permits any person affected by a statute or municipal
ordinance to obtain a declaration of his rights thereunder); see
also Ragan v. County of Alamance, 330 N.C. 110, 112, 408 S.E.2d
838, 839 (1991) ([A] superior court has the inherent power to
issue a writ of mandamus to the County Commissioners requiring them
to provide adequate court facilities.).
Under N.C. Gen. Stat. § 131E-177(1) (2005):
the Department of Health and Human Services is
designated as the State Health Planning and
Development Agency for the State of North
Carolina, and is empowered to exercise the
following powers and duties: (1) To establish
standards and criteria or plans required to
carry out the provisions and purposes of this
Article and to adopt rules pursuant to Chapter
150B of the General Statutes, to carry out the
purposes and provisions of this Article.
When reviewing criteria for a CON, [t]he Department is
authorized to adopt rules for the review of particular types of
applications that will be used . . . . N.C. Gen. Stat. § 131E-
Under both Chapter 150B, Administrative Procedure Act, and
Chapter 131E, Certificate of Need, the North Carolina
Administrative Code delegates rule making to defendants and sets
out the procedure to be used for changes in need determinations.
N.C. Admin. Code tit. 10A, 14B.0155(b) (2006); N.C. Admin. Codetit. 10A, 14A.0102 (2006). The plain language of the
Administrative Code states:
(1) The need determinations in 10A NCAC
14B.0156 through 10A NCAC .0181 shall be
revised continuously by the Medical Facilities
Planning Section throughout the calendar year
to reflect all changes in the inventories of:
. . . .
(D) dialysis stations
. . . .
as those changes are reported to the Medical
Facilities Planning Section. However, need
determinations in 10A NCAC 14B .0156 through
10A NCAC 14B .0181 shall not be reduced if the
relevant inventory is adjusted upward 30 days
or less prior to the first day of the
applicable review period.
. . . .
(2) Inventories shall be updated to reflect:
. . . .
(G) corrections of errors in the inventory as
reported to the Medical Facilities Planning
. . . .
(4) Need determinations resulting from changes
in inventory shall be available for a review
period to be determined by the Certificate of
Need Section, but beginning no earlier than 60
days from the date of the action identified in
Subparagraph (b)(2) of this Rule, except for
dialysis stations which shall be determined bythe Medical Facilities Planning Section and
published in the next Semiannual Dialysis
Report. Notice of the scheduled review period
for the need determination shall be mailed by
the Certificate of Need Section to all persons
on the mailing list for the State Medical
Facilities Plan, no less than 45 days prior to
the due date for submittal of the new
N.C. Admin. Code tit. 10A, 14B.0155(b)(1) - (4) (2006) (emphasis
We apply the rules of statutory construction when interpreting
a statute, ordinance, or administrative code. Campbell v. Church,
298 N.C. 476, 484, 259 S.E.2d 558, 564 (1979). The principal rule
of statutory construction is the legislature's intent controls.
Id. A statute that is clear and unambiguous must be construed
using its plain language. Burgess v. Your House of Raleigh, Inc.,
326 N.C. 205, 209, 388 S.E.2d 134, 136 (1990). Here, the
Administrative Code's plain language states that the Planning
Section shall continuously revise need determinations. Under the
statutes and the Administrative Code, the Planning Section lacked
discretion to determine whether to amend the SDR and was
ministerially required to correct and update inventories to
reflect. . . .(G) corrections of errors in the inventory as
reported . . . . N.C. Admin. Code tit. 10A, 14B.0155(b)(2)(g).
The Administrative Code's mandatory language requires that the
Planning Section shall perform ministerial duties. Id.
In addition to failing to perform a ministerial act required
by the Administrative Code regulations, DFS and the PlanningSection also waived any defense of sovereign immunity. In their
answer to BMA's complaint, defendants stated:
20. Defendants admit that had the final,
audited count of in-center dialysis patients
that was reported by the [Kidney Council] to
CMS shown that there were 51 patients at BMA's
Fuquay Varina facility as of December 31,
2003, there would not have been a need
determination for ten dialysis stations in
Wake County reported in the July 2004 SDR.
. . . .
24. Defendants admit that Keene did confirm to
Swann that Swann was using the correct
mathematical steps to calculate need, that
Keene told Swann that he could not accept
patient data from Swann and that Keene stated
that all data for the SDR must come through
the [Kidney Council].
. . . .
27. Director Fitzgerald . . . stated that he
was not inclined to seek an amendment to the
July 2004 SDR, although he had not made his
final decision on the matter at that time.
. . . .
30. Defendants admit that the Planning Section
received the e-mail attached as Exhibit B to
. . . .
48. Defendants admit that after publication of
the July, 2004 SDR, the Planning Section was
contacted by the [Kidney Council] and informed
that [the Kidney Council] had received
additional information which indicated that 51patients were receiving dialyses at BMA's
Fuquay-Varina facility on December 31, 2003.
. . . .
51. Defendants admit that had the audited data
reported to CMS by the [Kidney Council] shown
51 patients dialyzing at BMA's Fuquay Varina
facility as of December 31, 2003, there would
have been no need determination for dialysis
stations in Wake County reported in the July
Defendants admitted they received the corrected census count
from the Kidney Council for fifty-one patients on 2 July 2004.
Defendants also admitted: (1) the Kidney Council was the sole
provider of this information; (2) they received revised information
in July 2004; (3) more than thirty days prior to the first date of
review for the CON applications; (4) and within forty-five days
prior to the due date for submittal of the new CON applications.
See N.C. Admin. Code tit. 10A, 14B.0155(b) (2006). Defendants also
admitted no need was shown for additional dialysis stations in Wake
County, given the corrected census count of fifty-one patients and
a utilization rate below eighty percent for existing dialysis
Under the plain language of the Administrative Code,
defendants were ministerially required to continuously revise need
determinations. See N.C. Admin. Code tit. 10A, 14B.0155(b) (the
need determinations. . . shall be revised continuously by the. . .
Planning Section throughout the calendar year. . . . (emphasissupplied)). The execution of this specific ministerial duty arose
from fixed and admitted facts and regulations pursuant the
Defendants' duty to revise need determinations was not
discretionary and did not invoke immunity. Defendants' refusal to
correct the erroneous data and cancel the application process was
unlawful, arbitrary, and capricious. The trial court erred in
granting summary judgment in favor of defendants based upon
VI. The Governor's Authority to Amend
The majority's opinion states, [p]ursuant to Frye, the
Governor has the authority to amend the SMFP . . . . [T]he Governor
is the proper party with the authority to amend the SDR.
The Frye Court states, the Governor has the authority to make
substantive changes by amending the SMFP to ensure that its
provisions are properly executed under the statutes. Frye
Regional Medical Facility v. Hunt, 350 N.C. 39, 44, 510 S.E.2d 159,
162-62 (1999). Frye does not state that the Governor has the sole
authority to amend the SMFP, or that his authority is required to
amend an SDR. The reliance of majority's opinion on Frye to
support its conclusion is misplaced. Neither Frye nor the statutes
contemplate or require BMA to petition the Governor to amend the
SDR prior to seeking and obtaining judicial relief.
The Administrative Code states, [t]he need determinations .
. . shall be revised continuously by the Medical FacilitiesPlanning Section throughout the calendar year to reflect all
changes in the inventories of . . . dialysis stations. N.C.
Admin. Code tit. 10A, 14B.0155(b)(1)(D) (2006) (emphasis supplied).
Under the plain language of the Administrative Code, the Planning
Section has the authority, a duty, and shall continuously revise
the SDR. Id.
The practical effect of the majority's decision is to remove
from judicial review and remedy a state administrative agency's
decision under the guise of sovereign immunity. N.C. Admin. Code
tit. 10A, 14B.0155(b). The North Carolina General Assembly
expressly waived sovereign immunity by enacting N.C. Gen. Stat. §
150B-43 and the Declaratory Judgment Act, N.C. Gen. Stat. § 1-254.
A state agency cannot assert sovereign immunity as a defense to
claims by an aggrieved party adversely affected by that agency's
action or inaction. Judge Manning expressly recognized the
availability of judicial review and issued an injunction, a
judicial remedy, to prevent DFS from proceeding to issue
certificates of need based on erroneous data which generated the
need. Nothing in the record shows DFS defended or objected to
entry of this injunction based upon an assertion of sovereign
The Administrative Code clearly requires defendants to correct
the SDR when erroneous data is timely brought to its attention as
a ministerial duty. BMA's requested remedies of declaratoryjudgment and petition for writ of mandamus are expressly recognized
by N.C. Gen. Stat. § 150B-43, the Declaratory Judgment Act, and
BMA's requested review and remedies have been recognized for
centuries as an inherent right and authority of the Judicial Branch
and under the North Carolina Constitution to compel a governmental
agency to perform a ministerial duty owed to BMA. See
Art. I, § 18 (All courts shall be open; every person for an injury
done him in his lands, goods, person, or reputation shall have
remedy by due course of law; and right and justice shall be
administered without favor, denial, or delay.); Marbury v.
, 5 U.S. 137, 163, 2 L. Ed. 60, 69 (1803) (where there is
a legal right, there is also a legal remedy by suit, or action at
law, whenever that right is invaded); Augur v. Augur
, 356 N.C.
582, 586-87, 573 S.E.2d 125, 129 (2002) (We believe it more
consistent with the [declaratory judgment] statute to vest [trial]
courts with discretion in the first instance, because facts bearing
on the usefulness of the declaratory judgment remedy, and the
fitness of the case for resolution, are peculiarly within their
grasp. . . .).
BMA immediately presented DFS with undisputed proof of the
erroneous data. DFS admitted, using the corrected data, it
possessed neither power nor authority under the statutes or
Administrative Code to solicit CON applications for additional
dialysis stations in Wake County, if the utilization rate was below
eighty percent. The corrected data was furnished to DFS wellwithin the time period required in the Administrative Code to
cancel the solicitation. See
N.C. Admin. Code tit. 10A,
14B.0155(b). DFS was required to correct the error and to cancel
the solicitation for CON applications as a ministerial duty.
It is undisputed that DFS received the corrected patient
census long before the Administrative Code and statutes would have
allowed additional beds to be added under a new CON.
The Judicial Branch and the General Court of Justice possesses
the statutory jurisdiction to review defendants decision and power
to compel defendants to comply with the statutes and Administrative
Code to correct its admitted error. Sovereign Immunity does not
remove jurisdiction to prevent the court's review of BMA's claims.
The majority's opinion is an unprecedented abdication of the
court's essential statutory and constitutional duty to provide
judicial review and remedies to BMA's claims.
The trial court erred in granting summary judgment for
defendants based on sovereign immunity. The trial court's order
should be reversed. I respectfully dissent.
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