Certificate of Need New Rule Invalidated by Supreme Court

The Washington Supreme Court unanimously agreed with the Washington State Hospital Association that the new expanded Certificate of Need rule defining the “sale, purchase or lease” of a hospital exceeded the Department of Health’s authority.  WSHA successfully argued that the new definition, promulgated by the Department of Health’s Certificate of Need Program, which expanded its jurisdiction to include “any transaction in which the control, either directly or indirectly, of part or all of any existing hospital changes to a different person, including, but not limited to, by contract, affiliation, corporate membership restructuring, or any other transaction,” was overly expansive.

The Supreme Court agreed that pursuant to the wording of the new rule, Certificate of Need approval would be required for any change in control of a hospital, including those changes that commonly occur, for example a change in the composition of the board of directors of a hospital.  The Supreme Court held that the new rule interprets “sale, purchase, or lease” in RCW 70.38.105(4)(b) too broadly and “departs too far from the plain meaning of those terms.”

For more information regarding the Certificate of Need rules please contact Elana Zana.

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