                             COURT OF APPEALS OF VIRGINIA


Present: Judges Frank, Humphreys and Senior Judge Coleman
Argued at Alexandria, Virginia


LOUDOUN HOSPITAL CENTER

v.     Record No. 1273-06-4

ROBERT B. STROUBE, M.D., M.P.H.,                                  OPINION BY
 STATE HEALTH COMMISSIONER,                                  JUDGE SAM W. COLEMAN III
 NORTHERN VIRGINIA COMMUNITY                                      OCTOBER 9, 2007
 HOSPITAL, LLC d/b/a BROADLANDS
 REGIONAL MEDICAL CENTER AND
 INOVA HEALTH CARE SERVICES
 d/b/a INOVA FAIR OAKS HOSPITAL


                   FROM THE CIRCUIT COURT OF LOUDOUN COUNTY
                             T.J. Markow, Judge Designate

               Mark S. Hedberg (Virginia H. Hackney; M. Christine Klein;
               Woodrow W. Turner, Jr.; Hunton & Williams LLP, on briefs), for
               appellant.

               Matthew M. Cobb, Assistant Attorney General (Robert F.
               McDonnell, Attorney General; David E. Johnson, Deputy Attorney
               General; Jane D. Hickey, Senior Assistant Attorney General, on
               brief), for appellee Robert B. Stroube, M.D., M.P.H., State Health
               Commissioner.

               Jeannie A. Adams (Thomas F. Hancock, III; Hancock, Daniel,
               Johnson & Nagle, PC, on brief), for appellee Northern Virginia
               Community Hospital, LLC d/b/a Broadlands Regional Medical
               Center.

               No brief for appellee Inova Health Care Services d/b/a Inova Fair
               Oaks Hospital.

       This case involves Virginia’s Medical Care Facilities Certificate of Public Need

(“COPN”) Law, Code § 32.1-102.1 et seq. Loudoun Hospital Center (“LHC”) appeals from the

trial court’s April 27, 2006 final order which upheld the decision of the State Health Commissioner

(“the Commissioner”) awarding a COPN to Northern Virginia Community Hospital, LLC d/b/a
Broadlands Regional Medical Center (“NVCH”) to construct certain hospital facilities in

Loudoun County. The notice of appeal encompasses prior rulings of the trial court from an initial

round of litigation between the parties which culminated in the trial court’s October 3, 2003 order,

and will be referred to as “Broadlands I.” Subsequent litigation, resulting from a remand of

Broadlands I and culminating in this appeal of the April 27, 2006 order, will be referred to as

“Broadlands II.” On appeal, LCH presents five questions:

               I. Whether the trial court erred when it concluded that NVCH was
               not collaterally estopped from relitigating in Broadlands II factual
               issues already decided against it in Broadlands I.

               II. Whether the trial court erred in finding that the Broadlands II
               decision-making process was not irremediably and incurably
               tainted by secret ex parte communications urging approval of
               NVCH’s project, including communications between the
               legislative and executive branches and the Commissioner, which
               were not timely revealed to LHC nor made part of the
               administrative record.

               III. Whether the trial court erred in finding that the
               Commissioner’s Broadlands II and Broadlands remand decisions
               were not arbitrary and capricious, when the Broadlands I decision
               came to the exact opposite result, and reached opposite conclusions
               on fundamental and pivotal issues, based on nearly identical facts.

               IV. Whether the trial court erred in finding that the Broadlands II
               and Broadlands remand decisions were consistent with the State
               Medical Facilities Plan.

               V. Whether the trial court erred in refusing to allow LHC to
               augment the record on the issue of taint in the Broadlands II
               proceeding, in light of the obstacles faced by LHC in developing
               and presenting such evidence before the very tribunal that had been
               tainted.

       For the reasons that follow, we affirm the decisions of the trial court.

                                            Background

       On July 1, 2002, NVCH filed a COPN application to erect a 180-bed hospital in Loudoun

County, to be known as Broadlands Regional Medical Center (“BRMC”). BRMC would replace


                                                 -2-
Northern Virginia Community Hospital, a 164-bed acute care facility in Arlington County, and

Dominion Hospital, a 100-bed psychiatric hospital in Fairfax County. The Commissioner, by

case decision dated February 23, 2003, concluded that no public need existed for NVCH’s

proposal. NVCH appealed the Commissioner’s decision to the Loudoun County Circuit Court,

which affirmed the Commissioner’s decision on all substantive matters in its October 3, 2003

order. 1

           After the Commissioner had denied NVCH’s application in Broadlands I, NVCH filed a

second application on July 1, 2003. The second application differed from the first, most notably

in the absence of additional acute care beds in the applicable health-planning region. Concurrent

with his consideration of the Broadlands II application, the Commissioner considered two other

applications—one from LHC to establish a thirty-three-bed acute care facility known as Western

Loudoun Hospital Center, and one from Inova Health Care Services, Inc. (“Inova”) to add

twenty-two acute care beds to Inova Fair Oaks Hospital. Adjudication Officer Douglas R. Harris

held an informal fact-finding conference (“IFFC”) on November 5-6, 2003. Harris

recommended, and on March 10, 2004, the Commissioner approved the award of COPNs to

NVCH and Inova Health Care Services, Inc., and the denial of LHC’s application.

           LHC appealed to the trial court. The court, by opinion letter dated January 12, 2005,

concluded “the real issues before the court only deal with the Commissioner’s decision in

Broadlands II. The other two COPN decisions are only relevant if the Commissioner erred in his

Broadlands II decision.” The court held that collateral estoppel did not bar the adjudication of

issues presented in Broadlands II and that the Commissioner’s decision in Broadlands II was not

inconsistent with the State Medical Facilities Plan. The trial court, however, “was troubled” by


           1
       An appeal to this Court by NVCH of the October 3, 2003 order was withdrawn on
March 26, 2004.

                                                  -3-
the discovery of e-mail correspondence received and responded to by the Commissioner prior to

the closing of the record on December 19, 2003. This correspondence was not made part of the

official administrative record and was not made available to the competing applicants. The court

found that those failures constituted violations of Code § 2.2-4019 2 and 12 VAC 5-220-60. 3 By

order dated February 15, 2005, the court set aside the Commissioner’s decisions regarding the

three applications, and remanded the matters to the Commissioner. The court directed the

Commissioner, upon remand, to reopen the record and add correspondence and other documents




              2
                A. Agencies shall ascertain the fact basis for their decisions of
              cases through informal conference or consultation proceedings
              unless the named party and the agency consent to waive such a
              conference or proceeding to go directly to a formal hearing. Such
              conference-consultation procedures shall include rights of parties
              to the case to (i) have reasonable notice thereof, (ii) appear in
              person or by counsel or other qualified representative before the
              agency or its subordinates, or before a hearing officer for the
              informal presentation of factual data, argument, or proof in
              connection with any case, (iii) have notice of any contrary fact
              basis or information in the possession of the agency that can be
              relied upon in making an adverse decision, (iv) receive a prompt
              decision of any application for a license, benefit, or renewal
              thereof, and (v) be informed, briefly and generally in writing, of
              the factual or procedural basis for an adverse decision in any case.

              B. Agencies may, in their case decisions, rely upon public data,
              documents or information only when the agencies have provided
              all parties with advance notice of an intent to consider such public
              data, documents or information. This requirement shall not apply
              to an agency’s reliance on case law and administrative precedent.
              3
                Written information including staff evaluations and reports and
              correspondence developed or utilized or received by the
              commissioner during the review of a medical care facility project
              shall become part of the official project record maintained by the
              Department of Health and shall be made available to the applicant,
              competing applicant and review bodies. Other persons may obtain
              a copy of the project record upon request. All records are subject
              to the Virginia Freedom of Information Act.


                                              -4-
pertaining to the COPN applications, hold a hearing and enable the parties to submit additional

evidence and argument, and reconsider his prior decisions. 4

       Upon remand, Harris placed the noted documents in the record, and held a hearing on

April 15, 2005. In a May 11, 2005 opinion letter, Harris addressed LHC’s allegations of

improper influence:

               Throughout my service as an adjudication officer, I have never
               been pressured or otherwise influenced by any superior to
               recommend the approval or denial of any particular COPN project.
               I can comfortably and clearly state that none of the correspondence
               and other information at issue informed or otherwise affected the
               process of review I undertook and the conclusions I reached in
               relation to the three projects, which the Commissioner later
               adopted in his statutory discretion.

Harris reiterated his prior recommendations. The Commissioner adopted the recommendations

on May 13, 2005.

       LHC again appealed to the trial court. The court, by Opinion and Order entered April 27,

2006, concluded as follows:

                       The Court finds that the ex parte contacts occurring during
               the administrative process were not illegal and did not improperly
               influence the Adjudication Officer or the Commissioner. The
               Court also finds that the Commissioner’s decision is substantially
               supported by evidence in the administrative record and that a
               reasonable mind would not necessarily come to a different
               conclusion. Since this Court has previously decided that collateral
               estoppel does not apply and that the Commissioner’s decision with
               regards to the Broadlands II application is not inconsistent with the
               State Medical Facilities Plan, the Court declines to readdress those
               issues here.

The court denied LHC’s appeal. LHC then noted this appeal.




       4
         LHC appealed the circuit court’s decision to this Court. We dismissed the appeal,
finding that it was interlocutory and that we lacked jurisdiction to entertain it. Loudoun Hosp.
Center v. Stroube, Record No. 0687-05-4 (Va. Ct. App. Dec. 28, 2005).

                                               -5-
                                                Analysis

           General Standards of Review Governing Administrative Agency Decisions

       Code § 2.2-4027 governs judicial review of administrative case decisions. It reads, in

pertinent part:

                          The burden shall be upon the party complaining of agency
                  action to designate and demonstrate an error of law subject to
                  review by the court. Such issues of law include: (i) accordance
                  with constitutional right, power, privilege, or immunity, (ii)
                  compliance with statutory authority, jurisdiction limitations, or
                  right as provided in the basic laws as to subject matter, the stated
                  objectives for which regulations may be made, and the factual
                  showing respecting violations or entitlement in connection with
                  case decisions, (iii) observance of required procedure where any
                  failure therein is not mere harmless error, and (iv) the
                  substantiality of the evidentiary support for findings of fact.

       Judicial review of an agency’s factual findings “is limited to determining whether

substantial evidence in the agency record supports its decision.” Avante at Lynchburg, Inc. v.

Teefey, 28 Va. App. 156, 160, 502 S.E.2d 708, 710 (1998). Under the substantial evidence

standard, the reviewing “court may reject the agency’s findings of fact ‘only if, considering the

record as a whole, a reasonable mind would necessarily come to a different conclusion.’”

Virginia Real Estate Comm’n v. Bias, 226 Va. 264, 269, 308 S.E.2d 123, 125 (1983) (quoting B.

Mezines, Administrative Law § 51.01 (1981)). “The phrase ‘substantial evidence’ refers to ‘such

relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’” Id.

(quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).

                  “Where . . . the issue concerns an agency decision based on the
                  proper application of its expert discretion, the reviewing court will
                  not substitute its own independent judgment for that of the agency
                  but rather will reverse the agency decision only if that decision was
                  arbitrary and capricious. [I]n reviewing an agency decision, the
                  courts are required to consider the experience and specialized
                  competence of the agency and the purposes of the basic law under
                  which the agency acted.”



                                                  -6-
Holtzman Oil Corp. v. Commonwealth, 32 Va. App. 532, 539, 529 S.E.2d 333, 337 (2000)

(quoting Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 246, 369 S.E.2d 1, 9 (1988)).

                             Question Presented I – Collateral Estoppel

       LHC contends the trial court erred in concluding that NVCH was not collaterally

estopped from relitigating in Broadlands II factual issues already decided against it in

Broadlands I.

       In its January 12, 2005 opinion letter, the trial court held:

                         Collateral estoppel does not operate against a state agency
                 performing a governmental function. See Falls v. Virginia State
                 Bar, 240 Va. 416, 418[, 397 S.E.2d 671, 672] (1990). The court
                 finds that the State Health Commissioner performs a governmental
                 function in granting or denying COPN applications and therefore
                 collateral estoppel does not apply to this administrative process.

       LHC argues that the trial court confused collateral estoppel and equitable estoppel and, as

such, committed an error of law in ruling that collateral estoppel was not a bar to relitigation.

Given the posture of this case, we need not decide whether the trial court committed an error of

law. In an appeal from an administrative agency, a circuit court acts in an appellate posture and

is, in essence, the first appellate court to review the agency’s determination. See Pence

Holdings, Inc. v. Auto Center, Inc., 19 Va. App. 703, 707, 454 S.E.2d 732, 734 (1995) (“On

appeal to the circuit court from an administrative body the appeal is based only upon the record

before the agency as if it were an appeal from the circuit court to an appellate court.”). Thus, it

matters not whether the trial court committed an error of law. See Driscoll v. Commonwealth,

14 Va. App. 449, 452, 417 S.E.2d 312, 313 (1992) (“An appellate court may affirm the judgment

of a trial court when it has reached the right result for the wrong reason.”). It matters only

whether the Commissioner erred in not ruling that collateral estoppel barred relitigation in

Broadlands II.



                                                -7-
          “The doctrine of collateral estoppel precludes the same parties to a prior proceeding from

litigating in a subsequent proceeding any issue of fact that was actually litigated and essential to

a final judgment in the first proceeding.” Glasco v. Ballard, 249 Va. 61, 64, 452 S.E.2d 854, 855

(1995).

                 [B]efore the doctrine of collateral estoppel may be applied, four
                 requirements must be met: (1) the parties to the two proceedings
                 must be the same; (2) the factual issue sought to be litigated must
                 have been actually litigated in the prior proceeding; (3) the factual
                 issue must have been essential to the judgment rendered in the
                 prior proceeding; and (4) the prior proceeding must have resulted
                 in a valid, final judgment against the party to whom the doctrine is
                 sought to be applied.

Whitley v. Commonwealth, 260 Va. 482, 489, 538 S.E.2d 296, 299 (2000).

          While neither this Court nor our Supreme Court has decided the standard of review to be

used in determining the application of the doctrine of collateral estoppel, other courts have

determined that the appropriate standard is de novo. See, e.g., Kent v. United of Omaha Life Ins.

Co., 484 F.3d 988, 994 (8th Cir. 2007) (applying de novo standard of review); Jean Alexander

Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 248 (3d Cir. 2006) (“The general rule is that

we exercise plenary review over the application of issue preclusion.”); Eilrich v. Remas, 839

F.2d 630, 632 (9th Cir. 1988) (“The availability of collateral estoppel is a mixed question of law

and fact which this court reviews de novo.”); Modiri v. 1342 Rest. Group, Inc., 904 A.2d 391,

394 (D.C. 2006) (“Whether the foundational requirements for applying [t]he doctrine [of

collateral estoppel] have been met presents a legal issue which we decide de novo.”); and In re

Claim of Guimarales, 503 N.E.2d 113, 115 (N.Y. 1986) (“Whether collateral estoppel applies is

. . . a question of law.”).

          Because collateral estoppel involves mixed questions of law and fact, not pure questions

of law, we apply a de novo standard of review as to the legal conclusions of whether collateral

estoppel is applicable but we are bound by the underlying factual issues as determined by the fact
                                                 -8-
finder unless they are plainly wrong or unsupported by the evidence. See Gilbane Bldg. Co. v.

FRB, 80 F.3d 895, 905 (4th Cir. 1996) (“We review [mixed questions of law and fact] under a

hybrid standard, applying to the factual portion of each inquiry the same standard applied to

questions of pure fact and examining de novo the legal conclusions derived from those facts.”).

Cf. Conyers v. Martial Arts World, 273 Va. 96, 104, 639 S.E.2d 174, 178 (2007) (“an issue of

statutory interpretation is a pure question of law which we review de novo”). As such, here

“[w]e are bound by the [Commissioner’s] factual findings unless those findings are ‘plainly

wrong or unsupported by the evidence.’ Pyramid Development, L.L.C. v. D & J Associates, 262

Va. 750, 753, 553 S.E.2d 725, 727 (2001). However, the [Commissioner’s] application of the

law is reviewed de novo. Brown v. Commonwealth, 270 Va. 414, 419, 620 S.E.2d 760, 762

(2005).” Ward v. Commonwealth, 273 Va. 211, 218, 639 S.E.2d 269, 272 (2007).

       LHC argued before Harris, the hearing officer, that Broadlands II consisted of the same

issues as Broadlands I and that “[t]he application has not changed in material respect.” Although

Harris did not explicitly address that argument, his implicit rejection of it is apparent. Although

not an exhaustive list, Harris found the Broadlands II application differed from the Broadlands I

application in these respects:

           •   A reduction in the number of beds from 180 to 164;
           •   The merger of LHC with INOVA to strengthen LHC’s financial status;
           •   The addition of an obstetrics unit at BRMC;
           •   NVCH’s implementation of an expanded charity care policy;
           •   The proposed retention of emergency facilities at NVCH’s Arlington facility; and
           •   The increased population of Loudoun County.

       The Commissioner approved Harris’ recommendation and by doing so adopted Harris’

factual findings. Those findings are supported by the evidence; hence, we are bound by them.

       Applying those findings to our de novo review, we conclude that LHC, at a minimum,

has failed to meet the second requirement of the four-part test for applying the doctrine of

collateral estoppel—“the factual issue sought to be litigated must have been actually litigated in
                                               -9-
the prior proceeding . . . .” Whitley, 260 Va. at 489, 538 S.E.2d at 299. The distinctions noted

between the Broadlands I application and the Broadlands II application are such that the factual

issues of Broadlands II were not “actually litigated” in Broadlands I. Therefore, collateral

estoppel does not preclude the Broadlands II litigation.

       Moreover, LHC’s position, if carried to its logical extension, would lead to absurd,

illogical, and nonsensical results. According to that position, a medical entity would have one,

and only one, opportunity to apply for a COPN for a particular project. That position would bar

an applicant from taking into account the reasons and criticisms expressed by the Commissioner

in his rejection of an initial application and, just as NVCH did in this case, submitting a second

application addressing and correcting the reasons for the previous rejection. Indeed, Harris, in

commenting on the Broadlands II application, stated, “[NVCH] clearly took to heart what we

based last year’s denial on.” A “one-shot” approach, such as that advocated by LHC, would be

antithetical to serving the public need as outlined in the COPN statutory scheme.

                              Question Presented II – Tainted Process

       LHC contends the trial court erred in finding that the Broadlands II decision-making

process was not irreparably and incurably tainted by ex parte communications urging approval of

the BRMC project. LHC divides its argument into three parts. Because these three parts are

inextricably intertwined, however, our discussion of them is likewise intertwined.

       First, LHC argues that NVCH improperly procured the intervention of the Governor in

the adjudicative process by (a) soliciting and prompting the filing of e-mails, letters, and ballots

with the Commissioner after the administrative record closed, and (b) successfully soliciting

members of the General Assembly to write to the Governor in support of BRMC. LHC likens

NVCH’s actions to the crime of embracery—“an attempt corruptly to influence a juror.”

Wiseman v. Commonwealth, 143 Va. 631, 635, 130 S.E. 249, 250 (1925).

                                                - 10 -
       Second, LHC argues that the Commissioner has lost the presumption of official

regularity, see Code § 2.2-4027 (“Whether the fact issues are reviewed on the agency record or

one made in the review action, the court shall take due account of the presumption of official

regularity, the experience and specialized competence of the agency, and the purposes of the

basic law under which the agency has acted.”), because he failed to (a) disclose documents

received before and after the close of the record on December 19, 2003, (b) disclose hundreds of

documents received after the Broadlands II record closed, and (c) comply with the remand order.

       Finally, LHC argues that the inferences arising from NVCH’s conduct lead to the

conclusion that the conduct influenced, or could have influenced, the Commissioner’s decision.

       Four items, or points of contact, are of particular concern in evaluating LHC’s

contention: (1) a November 19, 2003 e-mail from the Commissioner of the Department of

Mental Health and Mental Retardation and Substance Abuse Services (“MHMRSAS”) to the

State Health Commissioner; (2) correspondence from legislators to the Governor urging approval

of BRMC; (3) a lunch meeting between the Commissioner and Bill Murray, a member of the

Governor’s staff; and (4) a communication between Harris and the Secretary of Health and

Human Resources.

       Before evaluating these items, we must first determine the standard that governs us in

reviewing the Commissioner’s conduct. LHC urges us to adopt the reasoning set forth in Jones

v. West, 46 Va. App. 309, 616 S.E.2d 790 (2005). There, a local social services agency failed to

comply with its regulations to either tape record an interview of an alleged child victim or

“document in detail in the record and discuss with supervisory personnel the basis for a decision

not to audio tape record an interview with an alleged child victim.” 22 VAC 40-705-80(B)(1).

We affirmed the circuit court’s decision that the social services agency’s failure to tape record

the interview “constituted a procedural violation and was not mere harmless error . . . .” West,

                                               - 11 -
46 Va. App. at 334, 616 S.E.2d at 803. In so ruling, we asked “whether any of the procedural

violations committed by the local department during its investigation of the sexual abuse

complaint against West ‘could have had a significant impact on the ultimate decision so as to

undermine the “substantiality of the evidential support” for the factual findings.’” Id. at 329, 616

S.E.2d at 800 (quoting Virginia Bd. of Med. v. Fetta, 244 Va. 276, 283, 421 S.E.2d 410, 414

(1992)) (other citation omitted). Crucial to our holding in West, however, was the impossibility

to recreate the interview or to cure the defect upon remand. Id. at 332-33, 616 S.E.2d at 802.

While LHC conceded at oral argument there was no evidence of direct influence exerted on the

Commissioner or hearing officer, nevertheless, as in West, LHC argues that it was likewise

impossible for the Commissioner to render a fair decision under the circumstances of this case.

       We disagree. We are not convinced that a remand, coupled with disclosure of suspect

contacts and documents and the opportunity for the parties to address those contacts and

documents, could not cure any defect. Rather, we are guided by the rationale employed

previously by this Court and the Supreme Court: “‘No reversible error will be found . . . unless

there is a clear showing of prejudice arising from the admission of [improper] evidence, or unless

it is plain that the agency’s conclusions were determined by the improper evidence, and that a

contrary result would have been reached in its absence.’” Johnston-Willis, Ltd., 6 Va. App. at

258, 369 S.E.2d at 16 (quoting Bias, 226 Va. at 270, 308 S.E.2d at 126) (other citation omitted).

                                     (1) MHMRSAS E-Mail

       The trial court’s remand in Broadlands II was prompted by the disclosure of the e-mail

from the MHMRSAS Commissioner to the State Health Commissioner, and its subsequent

transfer to Harris, the Adjudication Officer. That e-mail reads as follows:

               As I’m sure you are very aware, any help in maintaining the
               number of private psychiatric beds is vital to the success of the
               Governor’s reinvestment projects in Mental Health (closing a
               portion of the state MH beds and reinvesting in community MH
                                               - 12 -
                capacity) is greatly appreciated. Items such as Broadlands
                Hospital COPN and the support of keeping as many private
                psychiatric beds in [Northern Virginia] is particularly critical –
                since we have very (and always have had) very few state
                psychiatric beds at Northern Virginia Mental Health Institute.

                I’d be glad to talk to you more about this – and of course there are
                lots of factors related to the volume of private psychiatric beds in
                the Commonwealth – but if there is any way the COPN process
                can assist with that – or if you need more information from us – let
                me know.

         As noted, Harris disavowed the notion that this or other correspondence influenced his

decision or that he was pressured by a superior to reach a decision in favor of NVCH. Harris

wrote:

                When this email was forwarded to me, I identified it as a
                communication extraneous to the review process, like so many
                other unexpected emails the Commissioner received. I believe it
                was not produced earlier due to the absence of “Broadlands,”
                “BRMC,” “COPN,” or “Loudoun” in its subject line. Without
                these terms in the subject line, it was not discovered when
                electronic searches were conducted in response to a Freedom of
                Information Act request and to ensure that all documents were
                placed in the Adminstrative Record, which appears to have
                resulted in the inadvertent failure to reveal the existence of this
                email.

The Commissioner adopted Harris’ findings. Upon appeal to the trial court, the court found “that

the ex parte contacts occurring during the administrative process were not illegal and did not

improperly influence the Adjudication Officer or the Commissioner.”

         It is noteworthy that the remand prompted by this e-mail arose not out of its substance,

but out of its nondisclosure. In ordering the remand, the trial court noted:

                The court is extremely disturbed by the Commissioner’s
                intentional failure to disclose this correspondence according to
                [Code § 2.2-4019] and further disturbed by the Commissioner’s
                failure to disclose this correspondence prior to a court order
                requiring it. The court finds that it was reversible error for the
                correspondence not to be made part of the official administrative
                record and not to be made available to a competing applicant prior
                to his adjudication.

                                                - 13 -
        We have previously approved remand as a cure for alleged taint. See Branch v.

Department of Alcoholic Beverage Control, 21 Va. App. 242, 250, 463 S.E.2d 340, 344 (1995).

Accord D.C. Fed’n of Civic Ass’ns v. Volpe, 459 F.2d 1231, 1249 (D.C. Cir. 1971) (“We

conclude that the case should be remanded to the District Court with directions that it return the

case to the Secretary for him to perform his statutory function in accordance with this opinion. It

seems clear that even though formal administrative findings are not required by statute, the

Secretary could best serve the interests of the parties as well as the reviewing court by

establishing a full-scale administrative record which might dispel any doubts about the true basis

of his action.”).

        Here, upon remand, the e-mail was disclosed, LHC had the opportunity to present

evidence in reference to the e-mail and to argue the effect of the e-mail. Nonetheless, the

hearing officer, the Commissioner, and the trial court found that the e-mail did not affect the

decision-making process. LHC has not convinced us to the contrary. See Johnston-Willis, Ltd.,

6 Va. App. at 258, 369 S.E.2d at 16.

                               (2) Correspondence from Legislators

        LHC complains of the presence of correspondence from legislators to the Governor in

support of BMRC. It contends many of the letters were ghostwritten by NVCH representatives

for certain legislators to sign, and argues that the letters improperly influenced the

decision-making process.

        Harris and the Commissioner rejected LHC’s contention. The trial court did likewise:

                        Unquestionably, several legislators wrote letters to the
                Governor on behalf of [NVCH] and its Broadlands Project.
                However, there is nothing improper about legislators writing letters
                to the Governor in support of a project and Loudoun Hospital
                Center has not pointed to any statutes or case law that prohibits
                legislators from contacting the Governor regarding a COPN
                application.

                                                - 14 -
       In Virginia, legislators, as well as others, are permitted to comment to the Commissioner

on proposed projects. 12 VAC 5-220-240 reads: “Any person affected by a proposed project

under review may directly submit written opinions, data and other information to the appropriate

health planning agency and the Commissioner for consideration prior to their final action.”

       Other tribunals have addressed the issue of legislative intrusion into the administrative

process. We cite with approval the test utilized by the United States Court of Appeals for the

District of Columbia:

                       An administrative adjudication is “invalid if based in whole
               or in part on [legislative] pressures.” District of Columbia Fed’n
               of Civic Ass’ns v. Volpe, 459 F.2d 1231, 1246 (D.C. Cir.), cert.
               denied, 405 U.S. 1030 (1972) (Volpe). [Legislative] interference
               so tainting the administrative process violates the right of a party to
               due process of law. Id. at 1245-49; Pillsbury Co. v. Federal Trade
               Comm’n, 354 F.2d 952, 963-65 (5th Cir. 1966) (Pillsbury). “A
               court must consider the decision-maker’s input, not the legislator’s
               output. The test is whether ‘extraneous factors intruded into the
               calculus of consideration’ of the individual decisionmaker.” Peter
               Kiewit Sons’ Co. v. United States Army Corps of Eng’rs, 230 U.S.
               App. D.C. 72, 714 F.2d 163, 170 (D.C. Cir. 1983) (quoting Volpe,
               459 F.2d at 1246) (emphasis added) (Kiewit).

ATX, Inc. v. United States Dep’t of Transp., 41 F.3d 1522, 1527 (D.C. Cir. 1994).

       Applying this test, and given the findings made by Harris, the Commissioner, and the

trial court, we cannot say that the legislative contacts in this case “intruded into the calculus of

consideration” of the decision-makers.

                                         (3) Lunch Meeting

       LHC complains that the Governor asserted improper influence over the decision-making

process, and points to evidence of a lunch meeting between the Commissioner and Bill Murray, a

staff member of the Governor’s office, as proof thereof. The primary evidence supporting

LHC’s contention is a December 2, 2003 e-mail exchange between the Commissioner and

Murray. The Commissioner wrote: “The IFFC on the Broadlands II group was held on Nov 5


                                                - 15 -
and 6. The record closes on Dec 19 and the decision is due by March 12. Thanks for lunch.”

Murray replied: “Thanks and you are most welcome!”

       Again, as noted, Harris rejected the idea that any superior had influenced the

decision-making process. The Commissioner, in approving Harris’ recommendation, stated, “At

no time during the review of these applications was I directed by anyone in the Executive Branch

of Virginia government to approve or deny any one of them.”

       The trial court also addressed this issue:

                      Loudoun Hospital Center suggests that Bill Murray of the
               Governor’s Office and the Commissioner had lunch to discuss the
               Broadlands Project. However, the only evidence in the record is
               an email from December 2, 2003 wherein the Commissioner
               thanks Mr. Murray for lunch and a calendar entry from November
               24, 2003 noting the word “Broadlands” and indicating that Murray
               and David Hallock, also of the Governor’s Office, would meet.
               The record is silent as to whether Mr. Murray was acting on behalf
               of one of the applicants or what was discussed at the meeting.

                       While an inference based upon speculation can be made
               that the contacts were improper, there is not adequate evidence to
               allow this Court to make that finding. For this Court to determine
               that the contacts were illegal ex parte contacts, there must be
               evidence that Bill Murray met with the Commissioner for lunch
               while acting in support of Northern Virginia Community
               Hospital’s Broadlands Project. See Va. Code § 32.1-102.6(C).
               There is simply no evidence in the record to support such a
               contention. Furthermore, Appellant could have made that record at
               the administrative level, but failed to do so.

       In support of the inference that the Governor improperly influenced the decision-making

process, LHC points to (a) evidence of NVCH’s actions to secure political and community

support for BRMC, and (b) Harris’ and the Commissioner’s shift in views on the applications.

Yet, as the trial court noted, this inference is based on nothing more than speculation. Evidence

of the lunch meeting, even in the context of surrounding circumstances, does not demonstrate

that Harris or the Commissioner allowed the Governor or his staff member to “intrude[] into the

calculus of consideration” of the decision-makers. ATX, 41 F.3d at 1527. See also In the Matter

                                               - 16 -
of the Water Use Permit Applications, 9 P.3d 409, 435 (Haw. 2000) (finding that executive

actions vis-à-vis the administrative process did not rise to the level of violating a party’s right to

due process). At no level of these proceedings has LHC produced evidence of a nexus between

the lunch meeting and the decision-making process.

                              (4) Communication Between Harris and
                           the Secretary of Health and Human Resources

       In further support of its improper influence argument, LHC points to a March 5, 2004

e-mail from Harris to Jane Woods, the Secretary of Health and Human Resources. In that

e-mail, a copy of which was sent to the Commissioner, Harris informs the Secretary of his

decisions on the three applications and that the decisions will be released on March 10, 2004.

The Secretary forwarded the e-mail to Bill Leighty, the Governor’s Chief of Staff.

       Harris discussed concerns about this e-mail in his May 11, 2005 Recommendation on

Remand:

               This email served to comply with a standing request to apprise [the
               Secretary] of major COPN decisions just before they were to be
               released, and to offer a shorthand description of the attendant
               situation. It was intended, as were other similar emails routinely
               prepared following the finalization of my recommendations, to
               prevent undue surprise within the Executive Branch of Virginia
               government and was not intended to seek approval or direction. I
               did not receive direction from the Executive Branch regarding my
               recommendations, and I was not instructed or influenced by those
               in the upper levels of the Executive Branch to approve Community
               Hospital’s and Inova’s projects or to deny the Loudoun Hospital
               project.

       The trial court, citing ATX, 41 F.3d 1522, and Water Use Permit Applications, 9 P.3d

409, found no impropriety:

                        Without question, the Administrative Adjudication Officer
               in this case sent Secretary Woods a copy of the draft opinion prior
               to its being released. However, that the Administration should
               know in advance about decisions coming from a subordinate
               agency does not suggest any improper influence.


                                                - 17 -
       Although Harris informed the Secretary of the decisions five days prior to its release to

the public, there is no evidence that the Secretary or anyone else in the Governor’s

administration responded to Harris’ e-mail in any manner. Therefore, we cannot say that

“intruded into the calculus of consideration” of the decision-makers. ATX, 41 F.3d at 1527.

                                             Conclusion

       For the reasons stated, we cannot say that LHC has made “a clear showing of prejudice

arising from the admission of [improper] evidence, or” that ‘“it is plain that the agency’s

conclusions were determined by the improper evidence, and that a contrary result would have

been reached in its absence.’” Johnston-Willis, Ltd., 6 Va. App. at 258, 369 S.E.2d at 16

(quoting Bias, 226 Va. at 270, 308 S.E.2d at 126) (other citation omitted).

                        Questions Presented III – Arbitrary and Capricious

       LHC contends the decision in Broadlands II was arbitrary and capricious. Its argument is

premised on the perception that the decision in Broadlands II was based on the same facts

presented in Broadlands I.

       The trial court addressed this contention in its January 12, 2005 opinion letter:

                       After reviewing the record as a whole, the court finds that
               there is substantial evidence to support the Commissioner’s
               findings in Broadlands II. While a different conclusion from
               Broadlands I may suggest an arbitrary or capricious decision, the
               court is not authorized to base its finding of evidentiary support on
               a comparison between Broadlands I and Broadlands II, but rather
               solely on the record of Broadlands II. Because the court finds
               there is substantial evidence in the record of Broadlands II to
               support the Commissioner’s finding, the court holds that the
               Commissioner’s decision in Broadlands II was not arbitrary and
               capricious. It should be noted that inconsistent decisions do not
               necessarily constitute an arbitrary and capricious decision, as the
               presence of “substantial evidence” is able to support either
               conclusion when weighed by the fact finder.

The trial court reiterated its ruling in a January 31, 2005 order.



                                                - 18 -
       On appeal, LHC argues that “[t]he Commissioner failed to adequately identify or explain

the reasons supporting the Broadlands II Decision, contrary to Va. Code § 2.2-4019.” We

disagree. As noted above, the Commissioner, by way of the hearing officer, identified several

factual differences between the applications in Broadlands I and Broadlands II:

           •   A reduction in the number of beds from 180 to 164;
           •   The merger of LHC with INOVA to strengthen LHC’s financial status;
           •   The addition of an obstetrics unit at BRMC;
           •   NVCH’s implementation of an expanded charity care policy;
           •   The proposed retention of emergency facilities at NVCH’s Arlington facility; and
           •   The increased population of Loudoun County.

                       Actions are defined as arbitrary and capricious when they
               are “willful and unreasonable” and taken “without consideration or
               in disregard of facts or law or without determining principle.”
               Black’s Law Dictionary 105 (6th ed. 1990). In Johnson v. Prince
               William County School Board, 241 Va. 383, 404 S.E.2d 209
               (1991), we noted that an act was arbitrary and capricious if the
               school board “departed from the appropriate standard in making its
               decision.” Id. at 389 n.9, 404 S.E.2d at 212 n.9.

School Bd. of the City of Norfolk v. Wescott, 254 Va. 218, 224, 492 S.E.2d 146, 150 (1997).

This record does not demonstrate that the Commissioner’s decision in Broadlands II was

“unreasonable” or made “without consideration or in disregard of facts or law.” Rather, the

Commissioner, by accepting Harris’ detailed recommendations, thoroughly considered the

evidence in favor of and against BRMC. Nor can we say that the Commissioner “departed from

the appropriate standard in making [his] decision.” Indeed, Harris engaged in a painstaking

discussion of the twenty factors included in Code § 32.1-102.3(B) in determining whether a

public need for BRMC had been demonstrated.

       Accordingly, we cannot say that the Commissioner’s decision was arbitrary and

capricious. Rather, substantial evidence in the record supports his decision. Considering the

record as a whole, we cannot say that a reasonable mind would “necessarily” come to a different

conclusion. See Bias, 226 Va. at 269, 308 S.E.2d at 125.

                                              - 19 -
                        Question Presented IV – State Medical Facilities Plan

       LHC contends that the Commissioner did not comply with Code § 32.1-102.3(A), which

provides in pertinent part: “Any decision to issue or approve the issuance of a certificate shall be

consistent with the most recent applicable provisions of the State Medical Facilities Plan

(“SMFP”).” Specifically, LHC argues that the decision was not consistent with that portion of

the SMFP included in 12 VAC 5-240-30(B)(1), which reads:

                 No proposal to replace acute care inpatient beds off-site, to a
                 location not contiguous to the existing site, should be approved
                 unless: (i) off-site replacement is necessary to correct life safety or
                 building code deficiencies; (ii) the population served by the beds to
                 be moved will have reasonable access to the acute care beds at the
                 new site, or the population served by the facility to be moved will
                 generally have comparable access to neighboring acute care
                 facilities; and (iii) the beds to be replaced experienced an average
                 annual utilization of 85% for general medical/surgical beds and
                 65% for intensive care beds in the relevant reporting period. 5

       We discussed the “consistent with” requirement in Chippenham & Johnston-Willis

Hosps. v. Peterson, 36 Va. App. 469, 553 S.E.2d 133 (2001). We stated: “‘“[C]onsistent with”’

means ‘“compatible with” . . . or “in general agreement with”’ rather than ‘“exactly alike” or

“the same in every detail.”’” Id. at 479, 553 S.E.2d at 138 (quoting Roanoke Mem. Hosps. v.

Kenley, 3 Va. App. 599, 606, 352 S.E.2d 525, 529 (1987)). We concluded, however, that the

“report recommending issuance of the COPN contained a substantial material mistake of law

and, therefore, was arbitrary and capricious because its recommendation that the Commissioner

issue the COPN under those circumstances was not consistent with the SMFP.” Id. at 482, 553

S.E.2d at 139.


       5
         The parties agree that the trial court erred in ruling that 12 VAC 5-240-30 was not part
of the SMFP. The court, however, concluded that even if 12 VAC 5-240-30 was part of the
SMFP, the Broadlands II decision was consistent with the SMFP. Therefore, the trial court’s
error was harmless. Moreover, in any event, our review focuses on the Commissioner’s
decision, not the trial court’s. See Pence Holdings, Inc., 19 Va. App. at 707, 454 S.E.2d at 734.

                                                 - 20 -
       We reach no such conclusion here, however. Rather, our determination turns on the

meaning of the word “should” as contained in 12 VAC 5-240-30(B). In Roanoke Mem. Hosps.,

3 Va. App. at 605-06, 352 S.E.2d at 529, we rejected the suggestion that the word is mandatory

in nature:

               “Should” is the past tense of “shall.” It is used in auxiliary
               function in a number of ways, including to express condition,
               obligation, propriety, or expediency, and to express futurity from a
               point of view in the past. It is also used to express what is
               probable or expected, or ought to be in the future. Webster’s
               Seventh New Collegiate Dictionary (1961). The word “should,”
               therefore, may be used to import discretion.

                     In a case involving similar facts, the Court of Appeals of
               Kentucky held as follows:

                                The prevalent use of the word “should” in
                       the statute and correlative regulations denotes
                       discretion. Appellant’s argument that the statutory
                       use of the word “should” is to be construed as
                       “shall,” inasmuch as should is the past tense of
                       shall, is without merit. We find no case in this
                       jurisdiction upon the interpretation of the word
                       “should” when used in a statute or regulation.
                       However, in University of South Florida v. Tucker,
                       374 So. 2d 16 (Fla. Dist. Ct. App. 1979), it was said
                       that the word “should,” when used in an
                       administrative code, denotes discretion.

               Starks v. Kentucky Health Facilities, 684 S.W.2d 5, 7 (Ky. Ct.
               App. 1984). We agree with the reasoning of the Kentucky Court
               of Appeals and hold that the use of the word “should” in the
               context of the State Health Plan was intended to confer an
               appropriate amount of discretionary authority in the administrative
               body.

Therefore, use of the word “should” in 12 VAC 5-240-30(B) required the Commissioner to

consider, in the context of the application and relevant circumstances, whether “off-site

replacement is necessary to correct life safety or building code deficiencies,” but did not mandate

rejection of the application. The Commissioner took those factors into consideration. LHC

notes that Harris stated, “Clearly [the existing facilities] can be [replaced on site].” In so stating,

                                                 - 21 -
Harris merely revealed the obvious. Any facility, if enough time, money and effort are devoted

to it, can be replaced on site. But, unlike LHC, we do not read Code § 32.1-102.3(A) and 12

VAC 5-240-30(B) as mandating an unreasonable and infeasible expenditure of time, money, and

effort to accomplish that end.

       Harris made the following findings:

                       The physical plants of [Community] and Dominion are in
               need of substantial upgrades, as [the Division of Certificate of
               Public Need (“DCOPN”)] observes. [Health Systems Agency of
               Northern Virginia] has encouraged HCA [the parent company of
               NVCH] to replace Dominion for “nearly two decades.” NVCH
               presented considerable evidence at the IF[F]C regarding
               deficiencies and circumstances that fail to comport with modern
               health care needs and expectations, including the provision of child
               and adolescent psychiatric services in an environment that is
               therapeutic and appropriately designed.

Harris concluded “on-site replacement” was “not feasible.” The Commissioner accepted Harris’

findings and conclusion. Substantial evidence in the record supports the decision. Considering

the record as a whole, we cannot say that a reasonable mind would “necessarily” come to a

different conclusion. See Bias, 226 Va. at 269, 308 S.E.2d at 125.

                         Question Presented V – Augmenting the Record

       In January 2006, LHC filed a motion with the trial court to allow it to augment the

administrative record by, among other things, deposing the Commissioner, Harris, former

Secretary Woods, and DCOPN Director Erik Bodin. The trial court denied the motion by

Opinion and Order dated March 1, 2006:

                       Rule 2A:5 of the Rules of the Virginia Supreme Court
               clearly excludes discovery for administrative appeals. In an
               agency appeal, the circuit court is not free to take evidence at the
               request of one of the parties; rather, it is obliged to defer to the trier
               of fact based upon the administrative record. The scope of review
               on appeal is limited to a determination of whether there was
               substantial evidence in the record to support the agency’s decision.



                                                 - 22 -
                      Although it is within the trial court’s discretion to take
               evidence to resolve claims of arbitrary action or bad faith, such
               evidence must be limited to that purporting to show that the agency
               denied the applicant a fair and impartial review of his application
               in accordance with proper procedures.

                       Petitioner was aware of the existence of the evidence of ex
               parte communications, but chose not to admit that evidence during
               the Remand Hearing or before the close of the Administrative
               Record. This Court cannot determine that Petitioner was denied a
               fair and impartial review when it was Loudoun Hospital’s decision
               not to admit the evidence that makes the record incomplete.
               Petitioner should not be able to fail to create the record and then
               complain on appeal that the record requires augmentation.

(Citations omitted.)

       Rule 2A:5 provides as follows:

               Further proceedings shall be held as in a suit in equity and the rules
               contained in Part Two, where not in conflict with the Code of
               Virginia or this part, shall apply, but no matter shall be referred to
               a commissioner in chancery. The provisions of Part Four shall not
               apply and, unless ordered by the court, depositions shall not be
               taken.

       Rule 2A:5 clearly excludes discovery for administrative appeals. Depositions may only

be taken with leave of court. Therefore, the standard of review is whether the trial court abused

its discretion in denying appellant’s motion to take the depositions. See State Bd. of Health v.

Godfrey, 223 Va. 423, 434, 290 S.E.2d 875, 880 (1982). Although it is within the trial court’s

discretion to take evidence to resolve claims of arbitrary action or bad faith, “such evidence

should be limited to that purporting to show that the agency denied the applicant a fair and

impartial review of his application in accordance with proper procedures.” Id. at 434, 290 S.E.2d

at 880. “Where the proffered evidence tends to show that the fact-finding procedure was tainted

by unfair prejudice or animosity, the agency may be said to have decided the case on factors

irrelevant to the issues of fact before it.” Id. at 434, 290 S.E.2d at 881.




                                                - 23 -
       LHC claims “it would have been contrary to good sense and highly prejudicial to LHC to

attempt to depose or subpoena the testimony of the Adjudication Officer, the Commissioner,

their subordinate Bodin, and their superior Woods, at the very hearing that they were presiding

over.” Even so, in its motion to augment the record and/or memorandum in support thereof,

LHC identifies the following individuals as possible parties to the alleged taint:

               •   Bill Murray, the Governor’s Deputy Director of Policy
               •   David Haddock, Policy Advisor and Deputy Counsel to the Governor
               •   Bill Leighty, the Governor’s Chief of Staff
               •   Dr. James Reinhard, the Commissioner of MHMRSAS
               •   Delegate Hargrove
               •   Senator Lambert
               •   Delegate Nixon
               •   Delegate Hall
               •   Senator Howell
               •   Senator Norment
               •   Senator Watkins

Upon remand, LHC had the opportunity to explore the knowledge and involvement of these

individuals in the decision-making process. It made the tactical decision not to do so. The trial

court, then, was presented with unequivocal disavowals of taint by Harris and the Commissioner,

and LHC proffered only speculation and surmise to counter those disavowals. Given that

posture, we cannot say that the trial court abused its discretion in denying the motion to augment

the record.

                                            Conclusion

       For the reasons stated, we conclude (1) collateral estoppel does not impact the

Broadlands II litigation, (2) the remand ordered by the trial court was sufficient to cleanse the

decision-making process of any alleged taint, (3) the Commissioner’s decision was not arbitrary

and capricious, (4) substantial evidence supports the Commissioner’s decision that on-site

replacement of NVCH’s physical plants was not feasible and that the Commissioner’s decision



                                               - 24 -
was consistent with the SMFP, and (5) the trial court did not abuse its discretion in denying

LHC’s motion to augment the record. Accordingly, we affirm.

                                                                                         Affirmed.




                                              - 25 -
