SECTIONS 127125-127300 - California Statutes

HEALTH AND SAFETY CODE

SECTION 127125-127300

127125. As used in this chapter, "office" means the Office of
Statewide Health Planning and Development and "office director" means
the director of the office.
Any reference in this chapter to the State Department of Health,
the department, the state department, or the Director of Health shall
be deemed a reference to the office in the Health and Welfare
Agency.

127130. For the purposes of this chapter:
(a) "Health maintenance organization" or "HMO" means a public or
private organization, organized under the laws of this state, that:
(1) Provides or otherwise makes available to enrolled participants
health care services, including at least the following basic health
care services: usual physician services, hospitalization, laboratory,
X-ray, emergency and preventive services, and out-of-area coverage.
(2) Is compensated (except for copayments) for the provision of
basic health care services listed in paragraph (1) to enrolled
participants on a predetermined periodic rate basis.
(3) Provides physician services primarily (i) directly through
physicians who are either employees or partners of the organization,
or (ii) through arrangements with individual physicians or one or
more groups of physicians (organized on a group practice or
individual practice basis).
(4) Is not a corporation organized or operating pursuant to
Section 10810 of the Corporations Code.
(b) "Health maintenance organization for which assistance may be
provided under Title XIII" means an HMO that is qualified under
Section 1310(d) of Title XIII of the federal Public Health Service
Act, or an HMO that the Secretary of Health, Education and Welfare
determines, upon the basis of an application and the submission of
any information and assurance that he or she finds necessary, may be
eligible for assistance under Title XIII of the act.

127135. Any reference in any code to the Health Planning Council,
the Health Review and Program Council, or the State Board of Public
Health, with respect to functions thereof that are advisory, shall be
deemed a reference to the Advisory Health Council.

127140. (a) In order to effectively implement this chapter, the
Legislature finds that it is indispensable that providers of health
care be free to engage in voluntary, cooperative efforts with
consumers, government, or other providers of health care to fulfill
the purposes of the health planning laws.
(b) Approved plans and projects undertaken in compliance with
those plans, as provided in Sections 437.20, 437.21, 437.22, and
437.23 are exempt from Chapter 1 (commencing with Section 16600),
Chapter 2 (commencing with Section 16700), Chapter 3 (commencing with
Section 16900), and Chapter 4 (commencing with Section 17000) of
Part 2 of Division 7 of the Business and Professions Code.
(c) In the case of a project that, on or before January 1, 1987,
is included in the Tulare County countywide long-range capital
investment plan, that is contained in the "April 1983 Multi-Hospital
Capital Investment and Master Plan," as amended by the April 1986
update, the exemptions set forth in subdivision (b) shall apply even
though the project is not undertaken until after January 1, 1987.

127145. (a) The Advisory Health Council, with the recommendation of
the department, shall approve the statewide health facility and
services plan adopted pursuant to subdivision (b) of Section 127155.
(b) The Advisory Health Council shall advise the department in the
conduct of its health planning activities and in the setting of
priorities in accordance with the statewide health facility and
services plan adopted pursuant to subdivision (b) of Section 127155.
(c) Public agencies shall furnish to the Advisory Health Council,
upon request, data on health programs pertinent to effective planning
and coordination.
(d) The Advisory Health Council shall act as the appeals body
pursuant to Section 127250 regarding applications for a certificate
of need filed pursuant to this chapter.

127150. (a) The office director shall adopt regulations for the
implementation of this chapter.
(b) Notwithstanding any other provision of this chapter to the
contrary, the office director may suspend the operation of any or all
of the following provisions or requirements of this chapter:
(1) The administrative appeals process for certificate-of-need
applications established by Sections 127250 to 127270, inclusive.
Nothing in this section shall be construed, however, to limit the
availability of judicial review of a decision of the office director
or of the Advisory Health Council as provided in Section 127275.
(2) The notification of intent required by Section 127225.
(c) It is the intent of the Legislature that the office and the
area health planning agencies shall not implement the requirements of
subdivisions (g) and (h) of Section 1513 of the Public Health
Service Act. To the extent required by federal law, the office and
area health planning agencies shall request from the Secretary of the
United States Department of Health and Human Services a waiver from
those requirements.
(d) The Governor shall not execute an agreement with the Secretary
of the United States Department of Health and Human Services
pursuant to Section 1122 of Public Law 92-603 as the section existed
on January 1, 1981.

127155. The Advisory Health Council shall evaluate and shall
designate annually no more than one area health planning agency for
any area of the state designated by the council. An area health
planning agency shall be incorporated as a nonprofit corporation and
controlled by a board of directors consisting of a majority
representing the public and local government as consumers of health
services with the balance being broadly representative of the
providers of health services and the health professions, or
alternatively be a health systems agency established pursuant to
Public Law 93-641. The functions of area health planning agencies are
all of the following:
(a) To review information on utilization of hospitals and related
health facilities.
(b) To develop area plans to be used for the determination of
community need and desirability of projects specified in Section
127170, consistent with the regulations adopted by the office
pursuant to Section 127160. Each plan shall become effective upon a
determination by the council that the plan is in conformance with
regulations adopted pursuant to Section 127160. The council shall
integrate all area plans into a single Statewide Health Facilities
and Services Plan that shall become effective upon formal adoption by
the council.
(c) To conduct public meetings where providers of health care and
consumers will be encouraged to participate.
(d) Area health planning agencies shall comply with all of the
following requirements:
(1) The governing body of the agency shall, to the extent
feasible, be composed of individuals representative of the major
social, economic, linguistic, and racial populations, and geographic
areas, within the area served by the agency.
(2) The agency shall hold public meetings and hearings only after
reasonable public notice. This notice shall, to the extent feasible,
be publicized directly to those who, as determined by the director,
are medically underserved and are in other ways denied equal access
to good medical care.
(3) The agency shall file with the Advisory Health Council an
affirmative action employment plan approved by the office.
Area health planning agencies may divide their areas into local
areas for purposes of more effective health facility planning, with
the approval of the Advisory Health Council. These local areas shall
be of a geographic size and contain adequate population to ensure a
broad base for planning decisions. Each local area shall contain a
local health planning agency that shall meet the requirements of this
section.
An organization that meets the requirements of this section may
make application to its area health planning agency for designation
as a local health planning agency for a designated area. Within 45
days after a complete application for designation has been received,
the area agency shall reach a decision concerning the application.
Each area health planning agency existing on the operative date of
amendments to this section enacted during the 1976 portion of the
1975-76 Regular Session of the Legislature shall continue to function
as an area planning agency pursuant to this chapter, until one or
more designated health systems agencies are fully operational, as
determined by the Advisory Health Council in the area served, or
formerly served, by the respective area health planning agency.
If the Advisory Health Council determines that an area health
planning agency approved under this section is dissolved or unable to
carry out the functions required by this chapter, the office shall
fulfill the responsibilities of an area health planning agency
pursuant to this chapter in the area until another area health
planning agency is designated by the Advisory Health Council for the
area and becomes fully operational.
Adoption of regulations setting forth administrative procedures
for area and local area health planning agencies shall be made by the
office pursuant to Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.

127160. The office shall adopt regulations setting forth statewide
policies for area health planning agencies in the performance of
their responsibilities under Section 127155.
In adopting the regulations, the office shall, with the advice of
the Advisory Health Council, consider the following factors, and may
consider other factors not inconsistent with the following:
(a) The need for health care services in the area and the
requirements of the population to be served, including evaluation of
current utilization patterns.
(b) The availability and adequacy of health care services in the
area's existing facilities that currently conform to federal and
state standards.
(c) The availability and adequacy of services in the area such as
preadmission, ambulatory or home care services that may serve as
alternatives or substitutes for care in health facilities.
(d) The possible economies and improvement in service that may be
derived from the following:
(1) Operation of joint, cooperative, or shared health care
resources.
(2) Maximum utilization of health facilities consistent with the
appropriate levels of care, including, but not limited to, intensive
care, acute general care, and skilled nursing care.
(3) Development of medical group practices, especially those
providing services appropriately coordinated or integrated with
institutional health service, and development of health maintenance
organizations.
(e) The development of comprehensive services for the community to
be served. These services may be either direct or indirect through
formal affiliation with other health programs in the area, and
include preventive, diagnostic, treatment and rehabilitation
services. Preference shall be given to health facilities that will
provide the most comprehensive health services and include outpatient
and other integrated services useful and convenient to the operation
of the facility and the community.
(f) The needs or reasonably anticipated needs of special
populations, including members of a comprehensive group practice
prepayment health care service plan, members of a religious body or
denomination who desire to receive care and treatment in accordance
with their religious conviction, or persons otherwise contracted or
enrolled under extended health care arrangements, including life-care
agreements pursuant to Chapter 10 (commencing with Section 1770),
Division 2 of the Health and Safety Code.
(g) The special needs and circumstances of those entities that
provide a substantial portion of their services or resources, or
both, to individuals not residing in the health service areas where
the entities are located. These entities may include medical and
other health professional schools, multidisciplinary clinics, and
specialty centers.
With respect to the determination of unmet need in the community
or the adverse effect of new or expanded surgical clinics on the
utilization of operating rooms in hospitals, it is not the intent of
the Legislature to limit the expansion of surgical clinics when the
hospitals have not made efforts to fully utilize their ambulatory
operating capacity and to provide ambulatory surgical services at a
reasonable cost to the community.

127165. (a) The basis for decisions by the office on applications
for certificates of need filed pursuant to this chapter shall be:
(1) The Statewide Health Facilities and Services Plan specified in
subdivision (b) of Section 127155.
(2) The statewide policies developed pursuant to Section 127160.
(b) The office shall annually update the statistical information
used in the determination of resource requirements in the Statewide
Health Facilities and Services Plan and shall update this statistical
information more frequently when new data is available. These data
updates shall include, but not be limited to, population estimates,
utilization data, changes in the inventory, and other statistical
information used in the determination of resource requirements. This
data shall be incorporated into the Statewide Health Facilities and
Services Plan by operation of law and without the necessity of
following the procedures set forth in Chapter 3.5 (commencing with
Section 11340) of Title 2 of Division 3 of the Government Code.

127170. Except as otherwise exempted by any other provision of law,
projects requiring a certificate of need issued by the office are
the following:
(a) Construction of a new health facility, relocation of a health
facility or specialty clinic on a site that is not the same site or
adjacent thereto, the increase of bed capacity in an existing health
facility, the conversion of an entire existing health facility from
one license category to another, or the conversion of a health
facility's existing beds from any bed classification set forth in
Section 1250.1 to skilled nursing beds, psychiatric beds, or
intermediate care beds, and the conversion of skilled nursing beds,
psychiatric beds, or intermediate care beds to any other bed
classification set forth in Section 1250.1, except for skilled
nursing beds or intermediate care beds licensed as of March 1, 1983,
as part of a general acute care hospital. The conversion may not
exceed during any three-year period 5 percent of the existing beds of
the bed classification to which the conversion is made.
A health facility may use beds in one bed classification that,
pursuant to the facility's license, have been designated in another
bed classification, if all of these bed classification changes do not
at any time exceed 5 percent of the total number of the facility's
beds as set forth by the facility's license and if this use meets the
requirements of Chapter 2 (commencing with Section 1250) of Division
2. In addition, a facility may use an additional 5 percent of its
beds in this manner if the director finds that seasonal fluctuations
justify it.
For purposes of this subdivision, "adjacent," means real property
within a 400-yard radius of the site where a health facility or
specialty clinic currently exists.
(b) Establishment of a new specialty clinic, as defined in
paragraphs (1) and (3) of subdivision (b) of Section 1204, a project
by a health facility for expanded outpatient surgical capacity, the
conversion of an existing primary care clinic to a specialty clinic,
or the conversion of an existing specialty clinic to a different
category of specialty-clinic licensure. It does not constitute a
project and no certificate of need is required for the establishment
of a primary care clinic, as defined in subdivision (a) of Section
1204, the conversion of an existing specialty clinic to a primary
care clinic, or the conversion of an existing primary care clinic to
a different category of primary-care-clinic licensure. Any capital
expenditure involved in the establishment of a primary care clinic
also does not constitute a project, except as provided in subdivision
(d).
(c) The establishment of a new special service delineated in
subdivision (a), (b), (c), (e), (f), (g), or (h) of Section 1255, or
the establishment by a specialty clinic, as defined in paragraphs (1)
and (3) of subdivision (b) of Section 1204, of a new special service
identified by or pursuant to Section 1203.
(d) The initial purchase or lease by a clinic subject to licensure
under Chapter 1 (commencing with Section 1200) of Division 2, of
diagnostic or therapeutic equipment with a value in excess of one
million dollars ($1,000,000) in a single fiscal year, or where the
cumulative cost exceeds this amount in more than one fiscal year. For
purposes of this subdivision, the purchase or lease of one or more
articles of functionally related diagnostic or therapeutic equipment,
as determined by the office, shall be considered together.
(e) (1) Any project requiring a capital expenditure for a
specialty clinic, as defined in paragraphs (1) and (3) of subdivision
(b) of Section 1204, or for the services, equipment or modernization
of a specialty clinic in excess of one million dollars ($1,000,000)
in the current fiscal year or cumulation to an expenditure of one
million dollars ($1,000,000) in the same fiscal year or subsequent
fiscal years for a single project.
(2) The threshold exemptions from certificate-of-need requirements
provided for in this subdivision do not apply to projects for
expanded outpatient surgical capacity.
(3) For the purposes of this subdivision, "capital expenditure"
means any of the following:
(A) An expenditure, including an expenditure for a construction
project undertaken by the specialty clinic as its own contractor,
that under generally accepted accounting principles is not properly
chargeable as an expense of operation and maintenance and that
exceeds one million dollars ($1,000,000). The cost of studies,
surveys, legal fees, land, offsite improvements, designs, plans,
working drawings, specifications, and other activities essential to
the acquisition, improvement, expansion, or replacement of the
physical plant and equipment for which the expenditure is made shall
be included in determining whether the cost exceeds one million
dollars ($1,000,000). Where the estimated cost of a proposed project,
including cost escalation factors appropriate to the area where the
project is located, is, within 60 days of the date that the
obligation for the expenditure is incurred, certified by a licensed
architect or engineer to be one million dollars ($1,000,000) or less,
that expenditure shall be deemed not to exceed one million dollars
($1,000,000) regardless of the actual cost of the project. However,
in any case where the actual cost of the project exceeds one million
dollars ($1,000,000) the specialty clinic on whose behalf the
expenditure is made shall provide written notification of the cost to
the office not more than 30 days after the date that the expenditure
is incurred. The notification shall include a copy of the certified
estimate.
(B) The acquisition, under lease or comparable arrangement, or
through donation, of equipment for a specialty clinic, the
expenditure for which would have been considered a capital
expenditure if the person had acquired it by purchase. For the
purposes of this paragraph, "donation" does not include a bequest.
(C) Any change in a proposed capital expenditure that meets the
criteria set forth in this subdivision.
(4) "Capital expenditure" includes the total cost of the proposed
project as certified by a licensed architect or engineer based on
preliminary plans or specifications and concurred in by the state
department.
(5) For the purposes of this subdivision, "project" does not
include the purchase of real property for future use or the transfer
of ownership, in whole or part, of an existing specialty clinic or
the acquisition of all or substantially all of the assets or stock
thereof, or the construction, modernization, purchase, lease, or
other acquisition of parking lots or parking structures, telephone
systems, and nonclinical data-processing systems.
(6) For the purposes of this subdivision, "modernization" means
the alteration, expansion, repair, remodeling, replacement, or
renovation of existing buildings, including initial equipment
thereof, and the replacement of equipment of existing buildings.
(f) Except as provided in subdivision (g), only those projects
where 25 percent or less of the patients are covered by prepaid
health care.
(g) Projects otherwise subject to review under subdivision (a)
that are for the addition of new licensed skilled nursing beds by
construction or conversion, regardless of the percentage of patients
served who are covered by prepaid health care.
(h) (1) Except as provided in paragraph (2), the office shall
annually adjust the dollar thresholds set forth in subdivisions (d)
and (e) to reflect changes in the cost of living, as determined by
the Department of Finance, using 1981 as the base year.
(2) Notwithstanding the amount of the dollar thresholds specified
in paragraph (1), in the event Congress increases or repeals the
amount or amounts of the thresholds, the dollar thresholds set forth
in subdivisions (d) and (e) shall be the highest amount or amounts
permitted by Public Law 93-641, as amended, or one million dollars
($1,000,000), whichever is less, on the date congressional action is
effective.
(i) This section is not applicable to an intermediate care
facility/developmentally disabled habilitative or an intermediate
care facility/developmentally disabled--nursing.

127175. (a) The office shall exempt from Sections 127210 to 127275,
inclusive, and shall issue a certificate of exemption for those
projects that were not previously subject to review under Section
127155 prior to the effective date of this section where the
applicant has shown and the office director has found all of the
following:
(1) The applicant has, prior to the effective date of this
section, committed or incurred a financial obligation, including any
obligation payable by force account, that is certified by a licensed
architect or engineer to be 10 percent of the cost of the total
project, or seventy-five thousand dollars ($75,000), whichever is
less.
(2) The project cannot be terminated without substantial economic
loss to the applicant.
(3) Except with respect to projects set forth in subdivision (d)
of Section 127170, the project was commenced prior to the effective
date of this section and is being diligently pursued to completion.
(4) The applicant has filed a notice of the project with the
office on forms supplied by the office within 60 days of the
effective date of this section.
For the purposes of this subdivision, "project" shall mean any
project set forth in Section 127170, and the term "financial
obligation" shall include cost factors set forth in the definition of
"capital expenditure" in Section 127170.
Within 120 days of the effective date of this section, the office
shall determine in public hearing the applications that are entitled
to an exemption under this subdivision.
(b) In addition, the office shall exempt from Sections 127210 to
127275, inclusive, and shall issue a certificate of need for those
projects where the applicant has shown and the office director has
found one of the following:
(1) The project is necessary solely to replace health care
services that are no longer available at the facility because of a
disaster or other emergency.
(2) The project is solely for the purpose of complying with
requirements of law or regulations.
(3) The project was the subject of an application submitted to an
area health planning agency prior to the effective date of this
section. These applications shall be processed and decided in the
manner prescribed by this chapter as it existed immediately prior to
the operative date of this section, except that any petition for
appeal of a decision or lack of decision the area health planning
agency rendered after the effective date of this section shall be
made directly to the Advisory Health Council.
(4) The project is to add not more than 10 percent of licensed bed
capacity or 10 beds, whichever is less, to an existing general acute
care hospital, an existing acute psychiatric hospital, an existing
special hospital, an existing general acute care/rehabilitating
hospital, or an existing chemical dependency recovery hospital, where
the applicant has shown and the office director has found that:
(A) The applicant hospital has not been granted a certificate of
exemption pursuant to this provision or pursuant to Section 437.112,
as Section 437.112 existed on January 1, 1982, within the last
preceding 24 months.
(B) The applicant hospital has had an occupancy rate for the
classification of beds to be added, and for the facility as a whole,
for the preceding 12-month period, of not less than 85 percent.
(C) The facility is accessible to persons for whom the cost of
care is reimbursed under Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code. In the
case of an acute psychiatric hospital, the showing required by this
subparagraph shall be limited to those categories of patients for
whom acute psychiatric hospitals are eligible to receive
reimbursement under Chapter 7 (commencing with Section 14000) of Part
3 of Division 9 of the Welfare and Institutions Code.
(5) The project is to add not more than five beds to an existing
skilled nursing facility that is operated as a distinct part of a
primary health service hospital, as defined in Section 1339.9 that
participates in Medi-Cal programs, provided that all of the following
conditions exist:
(A) At the time of the application, the Statewide Health Facility
and Services Plan indicates a need for the proposed number of beds,
taking into account the number of approved beds in the health
facilities planning area where the project is located including beds
approved pursuant to this subdivision.
(B) The applicant skilled nursing facility has had at least a 95
percent occupancy rate for existing beds for the 12 months preceding
the submission of an application.
(C) The applicant facility has not been issued within the 12
months preceding application a citation for a class A violation or
more than one class B violation, as defined in Section 1424, that is
one of the following:
(i) Uncontested.
(ii) Contested, but not adjudicated.
(iii) Contested, but sustained upon adjudication.
In determining the current number of approved beds in the health
facilities planning area where the project is located, the office
shall count the number of beds for which applications for a
certificate of need have been deemed complete pursuant to Section
127220, before the effective date of the amendments to this section
enacted by the Statutes of 1983.
The project shall not require a capital expenditure that exceeds
ten thousand dollars ($10,000), and only one project may be approved
for a facility in a 12-month period. However, no facility shall
receive approval pursuant to this section for more than two projects.
The office shall annually adjust this capital expenditure threshold
to reflect changes in the cost of living as determined by the
Department of Finance, using 1981 as the base year.
Any certificate issued for projects shall expire if the applicant
does not complete the project within 12 months after issuance unless
the office, for good cause shown, extends the certificate.
(c) A certificate of exemption issued pursuant to this section or
Section 1268 shall, for all purposes, have the same effect as a
certificate of need issued pursuant to this chapter.

127180. (a) In addition to the exemption required by Section
127175, the office director shall exempt Sections 127210 to 127275,
inclusive, and shall issue a certificate of exemption for those
projects where the applicant has shown, and the office director has
found, all of the following:
(1) The conversion of a freestanding skilled nursing facility to a
chemical dependency recovery hospital, as defined in Section 1250.3,
where the project was commenced on or before September 15, 1981, and
provided that the person or entity proposing the project was, prior
to June 1, 1981, operating in this state a health facility, or
distinct part thereof, that provided 24 hours' chemical dependency
recovery hospital in-patient services as enumerated in Section 1250.3
under a direction of a medical director, and that the person or
entity was the owner or lessee of the facility to be converted prior
to June 1, 1981. As used in this paragraph, "person" or "entity"
shall include collectively a corporation and any wholly owned
subsidiaries thereof. "Commencement" means the submission of drawings
for the project to the local government having jurisdiction
containing substantially sufficient detail for the issuance of a
building permit or permits as required and submission of a written
declaration of intent for the project to the department on or before
September 15, 1981.
(2) The project does not meet the construction standards
established by law or regulation for general acute care hospitals.
(3) The applicant has filed a notice of the project with the
office director on or before September 15, 1981.
(4) The applicant has filed a notice of the project with the
office director on forms supplied by the office director within 90
days of the effective date of this section. The office director shall
inform the applicant in writing of his or her determination as to
eligibility of the application for a certificate of exemption under
this section within 60 days of receipt of a complete application.
(b) A certificate of exemption issued pursuant to this section
shall for all purposes have the same effect as a certificate of need
issued pursuant to this chapter.

127185. (a) In addition to the exemption required by Section
127175, the office director shall exempt from Sections 127210 to
127275, inclusive, and shall issue a certificate of need for those
projects where the applicant has shown and the office director has
found all of the following:
(1) The project is for either of the following:
(A) The conversion of a skilled nursing or community care
facility, or acute psychiatric hospital or a county funded
institution-based alcoholism program, certified by the Department of
Alcohol and Drug Programs pursuant to Section 11831 as a residential
treatment program, to a chemical dependency recovery hospital as
defined in subdivision (a) of Section 1250.3, and provided that the
facility to be converted has, prior to June 1, 1981, and continuously
thereafter, been used exclusively to provide 24-hour residential
chemical dependency recovery services, including the basic services
enumerated in Section 1250.3 under the direction of a medical
director.
(B) The construction and licensure of a chemical dependency
recovery hospital where the project was commenced prior to June 1,
1981, and is being diligently pursued to completion, and provided
that the person or entity proposing the facility was, prior to June
1, 1981, operating in this state a skilled nursing or community care
facility used exclusively for 24-hour residential chemical dependency
recovery services, including the basic services enumerated in
Section 1250.3, under the direction of a medical director. As used in
this paragraph, "commencement of the project" means acquisition of
the site where the facility is to be located and submission of
drawings for the project to the local government having jurisdiction
containing substantially sufficient detail for the issuance of a
building permit or permits.
(2) The project could not meet the construction standards
established by law or regulation for general acute care hospitals.
(3) The applicant has filed a notice of the project with the
office director on forms supplied by the office director within 90
days of the effective date of this section.
The office director shall inform the applicant in writing of his
or her determination as to eligibility of the application for a
certificate of need under this subdivision within 60 days of receipt
of a complete application.
(b) In addition to the exemption required by Section 127175, the
office director shall exempt from Sections 127210 to 127275,
inclusive, and shall issue a certificate of need for a project for
the conversion of a portion of the authorized bed capacity of a
general acute care hospital in the classifications listed in Section
1250.1 to chemical dependency recovery beds as provided in
subdivision (h) of Section 1250.1, or for the conversion of a skilled
nursing facility to a chemical dependency recovery hospital as
defined in subdivision (a) of Section 1250.3, where the applicant has
shown and the office director has found all of the following:
(1) Commencement of the project began prior to August 10, 1981,
and is being diligently pursued to completion.
(2) The facility proposing a conversion was, prior to June 1,
1981, operating an alcoholism treatment program, including all the
basic services enumerated in Section 1250.3, under the direction of a
medical director, or the facility had obtained, prior to June 1,
1981, the services of a medical director and contracted with program
professionals for the conversion of the facility.
As used in this subdivision, "commencement of the project" means a
written declaration by the governing body or administration of a
hospital of the intention to convert beds of other licensed
categories to usage as chemical dependency beds pursuant to
subdivision (f) of Section 1250.3 as it existed on August 10, 1981,
or a written declaration by the governing body or administration of a
skilled nursing facility of the intention to convert to a chemical
dependency recovery hospital. The written declaration shall be
transmitted to the director by August 17, 1981.
(c) Construction or remodeling necessary to enable a facility
exempted under this section to comply with applicable licensing
regulations shall be deemed to be eligible for exemption under
paragraph (2) of subdivision (b) of Section 127175.
(d) A certificate of exemption issued pursuant to this section
shall, for all purposes, have the same effect as a certificate of
need issued pursuant to this chapter.

127190. Notwithstanding any other provision of this chapter, the
office shall exempt from Sections 127210 to 127275, inclusive, and
shall issue a certificate of need for, any health care project of a
health facility that agrees to provide free health care services to
indigents over a period of at least five years at a dollar value
equal to the dollar value of the exempted project at completion. The
annual dollar value of the free care shall be at a level equal to at
least 10 percent of the project value as determined in the agreement.
The free health care services shall be furnished in the form of
direct service or by reimbursement of costs incurred by other
facilities if an insufficient number of patients, as determined in
the agreement, are referred or present themselves for treatment to
account for the minimum 10 percent requirement.
The provision of free care pursuant to this section shall be in
accordance with an agreement executed between the health facility
granted an exemption and the office. If the health facility does not
meet the terms of the agreement, the department shall suspend the
license or special permit associated with the exempted project until
compliance with the terms is obtained. The obligations imposed by the
agreement shall not be discharged by virtue of transfer of
ownership, but shall be assumed by a new owner as a condition of
transfer.
"Free care," as used in this section, does not include either of
the following:
(a) Bad debt unless the debtor makes specific application for
relief as an indigent.
(b) Contractual allowances.

127195. Projects for freestanding outpatient surgery units that
only perform cataract surgery under the Medi-Cal program or a program
that provides over 25 percent of its services to patients covered by
prepaid health care are exempt from the certificate-of-need
requirement of this chapter.
As used in this section and in paragraphs (f) and (g) of Section
127170, patients are covered by prepaid health care if they are
members of federally qualified health maintenance organizations.

127200. Taking into consideration the basis for decision set forth
in Section 127165:
(a) The office may, in individual cases, grant certificates of
need for projects when it determines that one of the following is
applicable:
(1) The applicant has provided evidence that the project will meet
the needs or reasonably anticipated needs of a special population
including members of a religious body or denomination who desire to
receive care and treatment in accordance with their religious
convictions.
(2) The applicant has provided evidence that the project is or
will be necessary to meet the health needs or reasonably anticipated
health needs of adult residents of a nonprofit community care
facility, as defined by subdivision (a) of Section 1502, that is
owned by the applicant.
(3) The applicant has provided evidence that, as a health
facility, it has developed community support for its services as
indicated by its current utilization patterns, and has provided
health care services for at least five years.
(4) The applicant has provided evidence, when the project is for a
new health facility or an increase in bed capacity, that there will
be an equal or greater reduction in bed capacity in other health
facilities in the area.
(5) The applicant has provided evidence that it will deliver the
service proposed to be offered as a result of the project in an
innovative and more competitive manner, or at a lower cost than the
service is provided by other facilities in the area, and has provided
evidence that the quality of care offered will be comparable to that
offered by other facilities in the area; or that as a health
facility, it serves a disproportionate volume of publicly funded
patients, or patients for whom the cost of health care is
uncompensated. The office director shall, as he or she deems
appropriate, ensure fulfillment of the requirements of this
subdivision through conditions mutually agreed upon by the applicant
and the office. This paragraph does not apply to projects for the
addition of licensed skilled nursing beds by construction or
conversion.
If an applicant is requesting the exercise of discretion by the
office director pursuant to this paragraph, prior to granting a
certificate of need, the office director shall receive an evaluation
from the department assessing the potential negative financial impact
upon any county owned or operated general acute care hospital. If
there is a significant negative potential financial impact, a
certificate of need shall not be granted.
Nothing in this subdivision requires the office to grant
certificates of need as authorized by this section in any of the
above categories.
(b) In the case of a project for a service to be provided by or
through a health maintenance organization for which assistance may be
provided under Title XIII, the office shall grant a certificate of
need for the project unless the office director finds that the
project is not needed by the enrolled or reasonably anticipated new
members of the HMO or proposed HMO or the beds or services to be
provided are available from non-HMO providers or other HMO's in a
reasonable and cost-effective manner that is consistent with the
basic method of operation of the HMO.
For the purposes of subdivision (b), beds or services shall not be
considered available if they are any of the following:
(1) Dispersed in more than one facility when the HMO's basic
method of operation is to provide services through medical centers
that consist of a hospital and medical offices at the same site.
(2) Not available under a contract of at least five years'
duration, with an option to extend the contract for an additional
time period as is reasonably necessary for the HMO to obtain a
certificate of need and to construct and equip and begin operating
alternative beds or service, in the event the non-HMO provider or
other HMO gives notice that it intends to terminate the contract.
(3) Not available under circumstances that would grant full and
equal staff privileges to an adequate number of physicians associated
with the HMO in appropriate specialties, or otherwise not
conveniently accessible through physicians and other health care
professionals associated with the HMO.
(4) Not available in a manner that is administratively feasible to
the HMO.
(5) More costly than if the services were provided by the HMO.
In order to qualify under this section, a project that is proposed
to be provided by or through a health maintenance organization for
which assistance may be provided under Title XIII, and that consists
of or includes the construction, development, or establishment of a
new inpatient health care facility, shall be a facility that the
office determines will be utilized by members of the health
maintenance organization for at least 75 percent of the projected
annual inpatient days, as determined in accordance with the
recommended occupancy levels under the applicable health systems
plan.
(c) In the case of a project for a service to be provided by or
through an HMO, the office shall not deny a certificate of need with
respect to the service (or otherwise make a finding that the service
is not needed) in those cases (1) when the office has granted a
certificate of need that authorized the development of the service,
or expenditures in preparation for the offering or development (or
has otherwise made a finding that the development or expenditure is
needed), and when the offering of this service will be consistent
with the basic objectives, time schedules, and plans of the
previously approved application. However, the office may impose a
limitation on the duration of the certificate of need that shall
expire at the end of this time unless the health service is offered
prior thereto, or (2) solely because there is an HMO of the same type
in the same area, or solely because the services are not discussed
in the applicable health systems plan, annual implementation plan,
state health plan, or state medical facilities plan.
(d) A project for a service to be provided by, or through, an HMO
that is subject to review under this chapter shall remain subject to
that review, unless the federal law states that an approved state
program shall not require a certificate of need for the project.
The office shall establish uniform procedures and criteria for
approving applications under this section.

127205. (a) It is the intent of the Legislature that projects for a
general acute care hospital designated as a sole community provider
and licensed for less than 100 beds, projects for the establishment
or expansion of skilled nursing facilities or intermediate care
facilities, and projects for skilled nursing beds or intermediate
care beds in health facilities other than skilled nursing or
intermediate care facilities be processed as expeditiously as
possible, consistent with the purposes of this chapter.
(b) In reviewing an application for projects for a general acute
care hospital designated as a sole community provider and licensed
for less than 100 beds, a project for a skilled nursing facility, a
project for an intermediate care facility, or a project for skilled
nursing beds or intermediate care beds in health facilities, the
office director shall consider only need, expected utilization and
financial feasibility, compliance with applicable laws and
regulations, and whether the proposed facility will enhance access to
the population to be served.
(c) The following exceptions to the procedural provisions of this
chapter shall apply to applications for projects for a general acute
care hospital designated as a sole community provider and licensed
for less than 100 beds, projects for the establishment or expansion
of skilled nursing facilities or intermediate care facilities, or a
project for skilled nursing beds or intermediate care beds in health
facilities other than skilled nursing or intermediate care
facilities:
(1) The notification of intent specified in Section 127225 shall
not be required prior to the filing of an application.
(2) Upon a determination that an application is complete pursuant
to Section 127220, the office shall promptly publish notice in a
newspaper of general circulation in the geographical area to be
served by the project. The notice shall describe the project and
provide that any affected person may request, in writing, that the
office hold a public hearing in the course of its review. The notice
shall state the address where the request shall be made and the time
period when it shall be made. The written request shall be based upon
the applicable review criteria and shall specify the review
criteria.
(3) No hearing need be held by the office in the course of its
review unless ordered by the office within 30 calendar days after the
application is determined to be complete. In those cases when no
hearing is required to be held, the office shall, within 30 calendar
days after the application is determined to be complete, issue a
decision approving the project in its entirety or with modifications
or conditions as have been agreed to in writing by the office and the
applicant.
(d) The office shall amend its regulations and application forms
as may be necessary to effectuate the purposes of this section.

127210. Applicants for a certificate of need for a project
specified in Section 127170 shall submit an application to the
department on the official forms provided by the department, that may
include, but need not be limited to, the following information:
(a) The site of the facility in the geographic area to be served.
(b) The population to be served, categorized by age, income, and
sex, as well as projections of population growth, by age, income, and
sex.
(c) The anticipated demand for the health care service or services
to be provided.
(d) A description of the service or services to be provided.
(e) Utilization of existing programs within the area to be served
offering the same or similar health care services.
(f) The benefit to the community that will result from the
development of the project as well as the anticipated impact on other
institutions offering the same or similar services in the area.
(g) A schedule for the commencement and completion of the project.
(h) Reasonable assurance that adequate financing is available for
the completion of the project within the time period stated in the
application.

127215. Each application for a certificate of need shall contain
all of the information required by the office and, except as
otherwise provided in this chapter, shall be accompanied by a fee.
The fee shall be determined annually by regulation of the office
director and shall be set forth in a schedule differentiating by type
and cost of project, as determined by the office director. The
office director shall establish fees so that in the aggregate they
will defray costs of processing certificate of need applications that
are not otherwise defrayed by the special fees charged pursuant to
Section 127280. However, the application fee for a certificate of
need shall not in any event exceed five thousand dollars ($5,000).

127220. (a) The office, within 15 days of its receipt of an
application for a certificate of need submitted pursuant to Section
127210, shall make a determination as to whether the application is
complete. If the office determines that the applicant has not
submitted an application that adequately addresses the information
requirements of the application form, it shall provide to the
applicant a written notification of incompleteness specifying the
additional information required to render the application complete.
After receipt of this additional information, the office, within 15
days, shall make a determination as to whether the application is
complete.
(b) If, after review of additional information pursuant to
subdivision (a), the office determines that the application is still
incomplete, it shall provide to the applicant a written notification
of incompleteness, advising the applicant of the additional
information needed and the options available to the applicant to
render the application complete. Following receipt of notification,
the applicant shall exercise one of the following options:
(1) Submit the additional information required by the office.
(2) Request in writing, with or without submitting the additional
information, that the review commence notwithstanding the
determination of incompleteness.
Upon receipt of a written statement requesting that the review
commence, the application shall be deemed complete on the fifth
business day following receipt unless the office determines, and
notifies the applicant in writing, by the fifth business day, that
the lack of information is so material that it would render
meaningful analysis of the application impossible and that the
application is therefore incomplete. This determination shall be
based solely on the failure to provide information specifically
requested by the application form.
If the applicant submits the requested additional information and
does not submit a written statement requesting the office to commence
the review notwithstanding its determination of incompleteness, the
office, within 15 days after receipt of the additional information,
shall make a determination as to whether the application is complete.
Upon the receipt of any additional notifications of
incompleteness, the applicant shall exercise one of the options
enumerated in paragraphs (1) and (2). The office, in its second or
subsequent completeness inquiry, shall not request information beyond
the scope of the preceding request.
(c) If the office does not give the notification of incompleteness
within the 15-day period required for review of completeness, the
application shall be deemed complete on the 15th day following the
receipt of the material submitted and the office shall then proceed
with its review.
(d) The office shall publish notice of the commencement of the
review promptly after the application review process commences
pursuant to subdivision (b) or (c).
(e) A completed application may be amended or withdrawn by the
applicant at any time without prejudice, but any amendment to an
application, except as the office and the applicant may otherwise
agree, shall cause the amended application to be treated as a new
application for purposes of the time limits prescribed by this
chapter and for the determination of the amount of the fee.
(f) A filed application shall be a public document and shall be
available for inspection at the offices of the area health planning
agency and the office. A copy of any filed application shall be
furnished to any person upon request and payment of a reasonable fee,
to be established by the office in an amount sufficient to defray
the costs of reproduction.
(g) Applications filed by any state agency or the Board of Regents
of the University of California shall be exempt from a filing fee.

127225. At least 20 calendar days prior to the filing of an
application for a certificate of need under Section 127170, the
applicant shall notify the office of its intent to apply for a
certificate of need. The office may consult with the applicant on the
proposed project.
The office may refuse to accept a certificate-of-need application
where the applicant has failed to file a notification of intent to
apply for a certificate of need pursuant to this section. However, if
a certificate of need is issued, it shall not be invalidated on the
sole basis of failure of the applicant to notify the office within
the time required by this section.

127230. The office shall transmit a copy of each application for a
certificate of need determined by it to be complete, or otherwise
deemed complete pursuant to Section 127220, to the appropriate area
health planning agency. The area health planning agency may, at its
discretion, informally review the application and provide comment on
it at the public hearing held pursuant to Section 127235, if a public
hearing is held. If an area health planning agency intends to
provide comment on an application at a public hearing, it shall
provide notice to the applicant and to the state 20 days in advance
of making a comment. The comment shall be deemed to have given the
area health planning agency party status.

127235. (a) Within 45 calendar days of the receipt of the complete
application, or an application otherwise deemed complete pursuant to
Section 127220, the office shall do one of the following:
(1) Approve the application. The office may approve the
application pursuant to this subdivision with modifications or
conditions, provided that the applicant agrees in writing to the
modifications or conditions.
(2) Order a hearing if the office determines that substantial
questions exist as to the eligibility of the proposed project for
certificate-of-need approval. Except as otherwise provided in this
section, the hearing shall be held in the health service area served
by the applicant.
(b) The office shall order a hearing by the service of a copy of
the order on the applicant and the Office of Administrative Hearings.
The order shall include the intended position of the Division of
Certificate of Need of the office. Upon receipt of the order, the
Office of Administrative Hearings shall promptly consult with the
parties to the hearing in order to determine the time and place of
hearing. Except as otherwise agreed by the parties and the Office of
Administrative Hearings, the hearing shall commence within 15 days of
the date of the order. Upon the scheduling of the hearing, the
Office of Administrative Hearings shall promptly serve notice of the
date, location, and time of the hearing upon the parties to the
hearing. The Office of Administrative Hearings shall also publish a
notice of the date, location, and time of the hearing in at least one
newspaper of general circulation in the health service area served
by the applicant. The notice shall also include the name and address
of the applicant, the nature of the proposed project, and other
information, deemed relevant by the Office of Administrative
Hearings.
(c) The hearing shall be conducted in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code, except as otherwise provided in this chapter.
The hearing shall be conducted by a hearing officer assigned by the
Office of Administrative Hearings who shall rule on the admission and
exclusion of evidence and may exercise all other powers relating to
the conduct of the hearing. With the concurrence of the parties to
the hearing, law and motion matters pertaining to the hearing may be
heard by the hearing officer in a location other than the geographic
location of the hearing.
(d) The hearing shall conclude within 45 calendar days after
commencement of the hearing unless one of the following occurs:
(1) The applicant agrees to extend the time for conclusion of the
hearing.
(2) The hearing is ongoing and continuing during consecutive
business days, in which case it shall be concluded as soon as
reasonably practicable thereafter.
(e) Within seven days after the conclusion of the hearing, the
hearing officer shall render a proposed decision supported by
findings of fact, based solely upon the record of the hearing, and
conclusions of law. The proposed decision, findings of fact, and
conclusions of law shall be served upon the parties to the hearing.
(f) The director shall make a final decision on an application
within seven calendar days after issuance of the proposed decision by
the hearing officer. The decision shall either approve the
application, approve it with modifications, reject it, or approve it
with conditions mutually agreed upon by the applicant and the office.
The failure of any applicant to fulfill the conditions under which
the certificate of need was granted shall constitute grounds for
revocation of the certificate of need.
(g) Notice of the substance of the office's decision shall be
published in a newspaper of general circulation within the health
service area served by the applicant, within 10 calendar days
following the decision.

127240. (a) Notwithstanding subdivision (b), (c), (d), (e), or (f)
of Section 127235, if the office orders a hearing on an application,
the applicant may request an informal hearing of the matter,
described in this section, in lieu of, and in the alternative to, the
formal procedures described in subdivisions (b), (c), (d), (e), and
(f) of Section 127235.
(b) If an applicant requests an informal hearing and the office
concurs with the request, the office shall proceed as follows:
(1) Within five calendar days after receipt of the request for an
informal public hearing, the office shall order the informal public
hearing by the service of a copy of the order on the applicant. The
order shall include the staff report and recommendations prepared by
the staff of the office. Except as otherwise agreed by the applicant
and the office, the informal public hearing shall commence within 20
days of the date of the order. Upon the scheduling of the hearing,
the office shall promptly serve notice of the date, location, and
time of the informal public hearing upon the applicant. The office
shall also publish a notice of the date, location, and time of the
informal public hearing in at least one newspaper of general
circulation in the health service area served by the applicant. The
notice shall also include the name and address of the applicant, the
nature of the proposed project, and other information deemed relevant
by the office.
(2) The informal public hearing shall not be conducted in
accordance with Chapter 5 (commencing with Section 11500) of Part 1
of Division 3 of Title 2 of the Government Code. The informal public
hearing shall be conducted by an employee of the office designated by
the office director. The person conducting the informal public
hearing may exercise all powers relating to the conduct of the
hearing, including the power to reasonably limit the length of oral
presentations by any person who has been allowed to make a statement.
The informal public hearing shall be conducted as follows:
(A) The applicant shall be given an opportunity to present the
merits of the project and to address the issues raised by the staff
report and recommendations.
(B) The office staff shall be given an opportunity to present
their analysis of the project.
(C) Other interested persons shall be given an opportunity to
present written or oral statements.
(D) The person conducting the informal public hearing may question
any person making a written or oral statement and may give the
applicant and office staff an opportunity to question any person who
has made a written or oral statement.
(E) The applicant and staff shall be given an opportunity to make
closing statements.
(F) The office shall make an audio or video recording of the
hearing, and copies of the recording shall be made available at cost
upon reasonable notice. However, the applicant shall have a right to
bring a certified shorthand reporter to be used in place of the audio
or video recording, provided that he or she provides the office with
a copy of the transcript.
(c) The informal public hearing shall conclude within 10 calendar
days after commencement of the hearing unless one of the following
occurs:
(1) The applicant agrees to extend the time for conclusion of the
hearing.
(2) The hearing is ongoing and continuing during consecutive
business days, in which case it shall be concluded as soon as
reasonably practicable thereafter.
(d) Within 10 days after the conclusion of the informal public
hearing, the person conducting the hearing shall render a proposed
decision supported by findings of fact, based solely upon the record
of the hearing. The proposed decision shall be served upon the
applicant and the office staff.
(e) The director shall make a final decision on an application
within 10 calendar days after issuance of the proposed decision. The
decisions shall either approve the application, approve it with
modifications, reject it, or approve it with conditions mutually
agreed upon by the applicant and the office. The failure of any
applicant to fulfill the conditions under which the certificate of
need was granted shall constitute grounds for revocation of the
certificate of need.
(f) Notice of the substance of the office's decisions shall be
published in a newspaper of general circulation within the health
service area served by the applicant, within 10 calendar days
following the decision.
(g) Whether or not an informal hearing is granted shall be at the
discretion of the office.

127245. (a) The undertaking of a project that requires a
certificate of need, as provided in this chapter, without having
first obtained a certificate of need shall (1) constitute grounds for
revocation or denial of licensure, and (2) shall be deemed a
violation of Section 1253.
In addition, the state department may assess and collect a civil
penalty from any person undertaking a project without a certificate
of need. For projects requiring a certificate of need pursuant to
subdivision (a) of Section 127170, the civil penalty shall not be
more than five thousand dollars ($5,000). For projects requiring a
certificate of need pursuant to subdivisions (b), (c), (d), or (e) of
Section 127170, the civil penalty shall be two thousand five hundred
dollars ($2,500) or 20 percent of the cost of the project, whichever
is less.
(b) A certificate of need shall expire 18 months from the date of
issuance unless:
(1) The certificate holder has commenced the project covered by
the certificate of need and is diligently pursuing the same to
completion, as determined by the state department; or
(2) The duration of the certificate of need has been extended by
the state department upon a showing of good cause. However, an
extension shall not cumulatively exceed a period of 12 months beyond
the original expiration date of the certificate of need.

127250. Any decision issued pursuant to Section 127235 shall take
effect 30 calendar days following its issuance unless within that
time the applicant files a petition for appeal with the Advisory
Health Council. The Advisory Health Council shall render a decision
on each appeal, and appeal shall be by right. The filing of a
petition shall operate to suspend and stay the decision by the office
pending the hearing and entry of a final decision.
A petition for appeal shall be filed with the council within 30
calendar days following the date a decision is issued by the office.
The petition shall be filed in the form and manner as prescribed by
the office. As soon as a petition is filed, the council shall be
polled and respond in writing to determine within 30 calendar days
whether it will take oral argument on the petition. The council shall
order a hearing if at least seven of the members certify in writing
that they agree to take oral argument. If the council orders a
hearing, the hearing shall be held within 60 calendar days of the
date of the council's order. If a hearing is denied, a statement of
the reasons for denial shall be issued by the council that shall be
sent to the applicant, the office, and persons requesting the
statement.
The council shall cause to be published in a newspaper of general
circulation in the area where the proposed project is to be located,
at least 30 calendar days prior to the appeal hearing, a notice
summarizing the application and the office's decision, with
particulars as the council may deem necessary, including, but not
limited to, the name and address of the applicant, the type of
project, and the date, time and place of the appeal hearing. In
addition, the council shall send copies of the notice to the
applicant, the office, and any person requesting a notice.
Parties to the appeals proceedings may only be the applicant and
the office. Any other person shall have the right to appear and be
heard at the appeal hearing, but shall not be a party