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Unofficial Opinion 95-13

Unofficial Opinion 95-13

July 9, 1995
To: 

Senator
District 7

Re: 

A hospital authority may apply for a certificate of need outside its area of operation and without the permission of the affected governing authority or hospital authority board in the planned service area, provided however that in order to implement the certificate permission to pursue the health care activity would be required.

You have requested an opinion of this office concerning the certificate of need program administered by the State Health Planning Agency pursuant to O.C.G.A. §§ 31-6-40 through 31-6-50. Specifically, you ask whether a hospital authority organized under the Hospital Authorities Law, O.C.G.A. §§ 31-7-70 through 31-7-96, can apply for a certificate of need in a location outside its area of operation when another hospital authority is responsible for that location. This inquiry must be answered affirmatively.

Under O.C.G.A. § 31-6-40(b), any "person" seeking to establish a new institutional health service or health care facility is required to apply to the State Health Planning Agency for a certificate of need prior to commencing the activity. The term "person" is defined in O.C.G.A. § 31-6-2(17) as including a hospital authority. No restrictions are placed upon persons who may apply for a certificate of need provided that they fall within this defined term. Thus, it is my unofficial opinion that a hospital authority may apply for a certificate of need in a location already served by another existing hospital authority.

I understand that your inquiry was prompted by the language found at O.C.G.A. §§ 31-7-71(1) and (5) which appears to limit the intrusion of one hospital authority into the area of operation of another unless the entry into that area is requested or approved by the governing authority of that location and the board of any affected hospital authority. This language should not be read to limit a hospital authority's power to make application, but rather as a limit upon the authority's power to implement that certificate of need should it be granted by the State Health Planning Agency.

A cursory reading of the hospital authority law might suggest that it was internally inconsistent by limiting an authority's power to enter an area occupied by another authority without approval, see O.C.G.A. §§ 31-7-71(1) and (5), while at the same time permitting certain services to be established by contract regardless of the location of the contract participants, see O.C.G.A. § 31-7-75(24). Keeping in mind that statutes should be harmonized wherever possible, Ryan v. Commissioners of Chatham County, 203 Ga. 730 (1948); Osborn v. State, 161 Ga. App. 132 (1982), I interpret these Code provisions as empowering a hospital authority to act outside its area of operation, but only where the affected governing authority and authority board request or approve the activity. See Richmond County Hosp. Auth. v. Richmond County, 255 Ga. 183, 190 (1985)(recognizing that extra-territorial operation of authority is subject to "statutory stipulations"). Thus, when a hospital authority applies for a certificate of need outside its area of operation, the State Health Planning Agency should consider whether the application can be implemented during its evaluation of the application.

In this specific instance, my research indicates that it is not the hospital authority itself which has made application for a certificate of need. Instead, the applicant is the restructured corporation which has contracted with the hospital authority to conduct its operations. See generally Richmond County Hosp. Auth. v. Richmond County, 255 Ga. 183 (1985). The application is made on the corporation's own behalf, not in its capacity as the hospital authority's alter ego. Ordinarily, a corporate veil will not be disregarded absent an attempt to defeat a public convenience, to justify wrong, protect fraud, defend crime or offend principles of equity and good conscience. See ITT Business Services Corp. v. Roberts, 184 Ga. App. 764, 767 (1987). Thus, presuming that the applicant's articles of incorporation authorize the application, and that the non-profit corporation is acting on its own behalf and not that of the hospital authority with which it contracts, the corporation would not require permission of the governing authority or hospital authority board in the planned service area in order to implement a certificate of need if granted.

In summary, it is my unofficial opinion that a hospital authority may apply for a certificate of need outside its area of operation and without the permission of the affected governing authority or hospital authority board in the planned service area, provided however that in order to implement the certificate permission to pursue the health care activity would be required. I trust that this opinion is responsive to your inquiry.

Prepared by:

WILLIAM M. DROZE
Assistant Attorney General