Placentia-Linda Community Hospital, Inc. v. Zaretsky

Opinion

THE COURT.* The parties to this action are the plaintiff/appellant, Placentia-Linda Community Hospital, Inc. (hereafter hospital) and the respondent, the Director of the Office of Statewide Health Planning and Development for the State of California (hereafter director).

On May 1, 1979, the trial court denied hospital’s petition for a writ of mandate to require the director to issue a certificate of exemption pursuant to Health and Safety Code section 437.13, exempting hospital from the requirements of Health and Safety Code section 437.10. The hospital had made application to the director for a certificate of exemption for a contemplated addition of 3,290 square feet to enable hospital to relocate beds from preexisting three-bed rooms to two-bed rooms. [852]The total cost of the project was less than the $250,000 threshold amount prescribed in section 437.13, subdivision (a)(8).

By letter dated November 15, 1978, the director denied the hospital’s application upon the finding that: “The project is not a remodeling or replacement project. The project is essentially, the addition of a new wing of approximately 3,290 square feet of floor area to the hospital, space that is to house seven (7) new two-bed patient rooms. All existing space is to be retained, therefore this project is not the type that can be exempted under section 437.13. The certified cost estimate for project portion of the application shows $204,723.00 for new construction and no expenditure for reconstruction. This is further evidence that the project is not basically a remodeling/replacement project.”

By letter dated January 19, 1979, at the request of the hospital, the director further explained his original denial by quoting the dictionary definition of the words “replace” and “remodel” and stated, inter alia, “None of these definitions lends any support to a claim that an exemption provision that is explicitly for remodeling and replacement projects could be understood to apply to an expansion project. That is, physical expansion of existing buildings is simply not included within the meaning of ‘remodeling’ or ‘replacement.’”

It is conceded by the director that prior to January 1, 1978, the director had granted cértificates of exemption for projects indistinguishable from the proposed project of the hospital, pursuant to the director’s then interpretation of section 437.13. Director contends that the Legislature amended section 437.13 effective January 1, 1978, and (although the amendments themselves did not change any part of the statute which is relevant to a determination as to whether or not hospital is entitled to a certificate of exemption), the fact that the statute was amended caused the office of the director to reanalyze the meaning of the unaffected portions of the statute. As a result of this reanalysis, the director concluded that the original statutory construction which authorized the certificate of exemption to applicants submitting projects indistinguishable from hospital’s was incorrect and that the correct interpretation of the statute excluded “expansion projects.”