Present: Carrico, C.J., Lacy, Hassell, Keenan, Koontz, and
Kinser, JJ., and Compton, Senior Justice

STATE HEALTH COMMISSIONER

v.   Record No. 992018   OPINION BY JUSTICE ELIZABETH B. LACY
                                    September 15, 2000
SENTARA NORFOLK GENERAL HOSPITAL

              FROM THE COURT OF APPEALS OF VIRGINIA

      In this appeal, we consider whether the Court of Appeals

erred in concluding the State Health Commissioner

(Commissioner) exceeded his statutory authority and committed

reversible error by relying on evidence outside the record and

on a mistake of fact when he denied a Certificate of Public

Need (COPN) for creation of an additional liver transplant

program in Virginia.

      On July 31, 1996, Sentara Norfolk General Hospital

(Sentara) submitted an application for a COPN pursuant to Code

§ 32.1-102.3 to establish a liver transplant facility in

Norfolk.   In accordance with the procedures governing

consideration of an application for a COPN, § 32.1-102.6, a

public hearing was held in Norfolk on September 16, 1996.

Following the hearing, the staff of the Eastern Virginia

Health Systems Agency Board recommended that the application

be denied.   The Board disagreed with the staff recommendation

and voted to recommend approval of the application.
     The application was then forwarded to the Virginia

Department of Health (VDH), Division of Certificate of Public

Need, for review.   The staff of VDH recommended denial of the

application.   An informal non-adversarial fact finding

conference was convened pursuant to § 9-6.14:11, and a VDH

adjudication officer recommended that the application be

approved.

     The adjudication officer's recommendation along with the

entire record of the proceeding was submitted to the

Commissioner for decision.   The Commissioner reviewed the

agency record, rejected the adjudication officer's

recommendation, and, by letter dated November 3, 1997, denied

Sentara's application for a COPN, finding that there was

currently no public need for the project.   In his letter, the

Commissioner stated three reasons for this decision.   First,

the Commissioner determined that the provisions of the State

Medical Facilities Plan (SMFP) relating to liver transplants

are "inaccurate, outdated, inadequate or otherwise

inapplicable" and that "[b]ecause they fail to reflect current

standards, they should not be applied here."   The Commissioner

based this finding on the fact that although the SMFP only

requires that facilities perform a minimum of 12 liver

transplant procedures annually, 12 VAC 5-280-70, "[t]he

average number of liver transplants performed per transplant


                                2
center nationally in 1994 was 36.   In 1996 the average number

of liver transplants performed per transplant center in

Virginia was 52."

      Second, the Commissioner concluded that the

establishment of an additional liver transplant facility at

Sentara "may erode the quality of other transplant centers by

reducing the volume of liver transplants at the other

centers."   The Commissioner made this statement based on his

finding that "[i]ndications in the healthcare system are that

the numbers of available organs may be reaching a plateau;

consequently, the actual numbers of transplantations performed

appear to be stabilizing."

     Finally, the Commissioner stated that "an additional

liver transplant center at [Sentara] may seriously impact the

established liver transplant fellowship training program at

MCVH [Medical College of Virginia Hospital]" because MCVH is

required by the American College of Surgeons "to perform 45

liver transplants annually."

     In conclusion, the Commissioner found that Sentara's

application for a COPN was premature because "the system

presently (i) reflects no need for additional liver

transplantation sites in light of organ supply; (ii) appears

to have no excess of transplantation procedures requiring

accommodation whereas approval of another site could result in


                                3
an excess of facilities lacking volume to meet the national

average or to assure essential technical experience; and (iii)

should maintain and sustain necessary training programs in the

Commonwealth."

     Sentara filed a petition for appeal in the Circuit Court

for the City of Norfolk, arguing that the Commissioner's

decision should be reversed because the Commissioner exceeded

the scope of his authority, relied on evidence not contained

in the record, and relied on a mistake of fact regarding the

impact of the proposed transplant program on accreditation of

the liver transplant fellowship program at MCVH.   During the

circuit court proceedings, the Commissioner conceded that his

recitation of the accreditation requirement was incorrect.

     The circuit court affirmed the Commissioner's decision

and dismissed Sentara's petition, holding that the

Commissioner did not abuse his discretion in denying the COPN

and that, considering the record as a whole, "a reasonable

mind could not necessarily conclude that Sentara's COPN should

be approved."    Additionally, the circuit court held that the

Commissioner's reliance on the mistake of fact regarding

accreditation requirements was harmless error.

     Sentara appealed to the Court of Appeals, raising the

same three issues.   The Court of Appeals resolved each issue

adversely to the Commissioner, holding that:   (1) the


                                 4
Commissioner exceeded his authority in denying the petition

because § 32.1-102.3(A) does not allow the Commissioner to

deny an application for a COPN based on his determination that

the SMFP standards are outdated, inaccurate, inadequate, or

otherwise inapplicable; (2) the Commissioner's finding that

the number of livers available for transplantation "may be

reaching a plateau" was based on evidence outside the record,

reliance on this finding prejudiced Sentara and, therefore, it

was reversible error; and (3) the Commissioner's reliance on a

mistake of fact regarding the number of transplant procedures

necessary for a facility to maintain teaching accreditation

constituted reversible error and was not harmless.       Sentara

Norfolk Gen. Hosp. v. State Health Comm'r, 30 Va. App. 267,

283, 516 S.E.2d 690, 698 (1999).      The Commissioner appealed,

assigning error to the holding of the Court of Appeals on each

issue.    We consider these assignments of error in order.

               I.   Commissioner's Statutory Authority

        In his letter denying the COPN, the Commissioner stated

that the SMFP standard of 12 liver transplants per year was

"inaccurate and outdated" and "should not be applied" in this

case.    The Commissioner directed that procedures for amending

the SMFP standard be initiated.       Sentara claims that, in

making this determination, the Commissioner "set aside the

SMFP in order to impose a higher volume standard, rather than


                                  5
a less strict standard as permitted by the statute."    In doing

so, Sentara asserts, the Commissioner exceeded his statutory

authority because § 32.1-102.3(A) allows the Commissioner to

set aside the SMFP if it is outdated and inaccurate only to

grant a COPN application, not to deny an application.

     Agreeing with Sentara, the Court of Appeals held that

"[t]he plain language of the statute provides that the

Commissioner 'may issue or approve' a petition that does not

comply with an outdated or inaccurate SMFP" but it does not

provide "that he may deny or disapprove a petition on this

basis."   Sentara, 30 Va. App. at 277, 516 S.E.2d at 695.

     Section 32.1-102.3(A) provides in relevant part:

     No person shall commence any project without first
     obtaining a certificate issued by the Commissioner.
     No certificate may be issued unless the Commissioner
     has determined that a public need for the project
     has been demonstrated . . . . 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;
     however, if the Commissioner finds, upon
     presentation of appropriate evidence, that the
     provisions of such plan are not relevant to a rural
     locality's needs, inaccurate, outdated, inadequate
     or otherwise inapplicable, the Commissioner,
     consistent with such finding, may issue or approve
     the issuance of a certificate and shall initiate
     procedures to make appropriate amendments to such
     plan.

This section clearly authorizes the Commissioner to conclude

that provisions of the SMFP are outdated and directs the

Commissioner to initiate the process for changing the


                                6
provisions found to be outdated.    Thus, in this case, the

Commissioner acted within his statutory authority when he

determined that the existing SMFP requiring a minimum of 12

liver transplants was outdated and directed that procedures be

instituted to adopt appropriate amendments.

     We agree with the Court of Appeals, however, that the

section specifically authorizes the Commissioner to grant a

COPN even if he finds provisions of the SMFP "outdated" or

"otherwise inapplicable," but does not contain similar

specific authorization to deny a COPN under such

circumstances.   Denial of the COPN under such circumstances

would allow the Commissioner to unilaterally impose new, and

presumably higher, standards.   The statute contemplates that

new standards would be imposed as a result of amendment

procedures initiated, not pursuant to unilateral adoption and

application of new standards by the Commissioner in the course

of the COPN process.

     Section 32.1-102.3(A) does not, however, require the

Commissioner to grant a COPN simply because a COPN application

complies with the provisions of the existing SMFP.    The

Commissioner correctly points out that compliance with the

SMFP is only one factor in the decision.   The statute provides

that to grant a COPN, the Commissioner must conclude that "a

public need for the project has been demonstrated."


                                7
Subsection B of § 32.1-102.3 lists 20 factors which the

Commissioner must consider in addition to compliance with the

SMFP in determining whether a public need has been

demonstrated.   In this case, therefore, the Commissioner

exceeded his authority under § 32.1-102.3(A) if the

Commissioner denied Sentara's application solely on the basis

that the SMFP regarding the average number of transplants was

outdated and inapplicable.    While the Court of Appeals opinion

states that the Commissioner exceeded his authority "to the

extent" he denied the COPN on the ground the SMFP was

outdated, there is no discussion of the extent to which the

denial was based on that ground.

     Sentara argues that the Commissioner exceeded his

authority because, in setting aside the existing SMFP, he

applied "some higher, impromptu, unspecified standard" as a

basis for denying the COPN.   The record, however, contains no

evidence that the Commissioner required Sentara to satisfy

some higher standard in order to secure the COPN.    The

Commissioner's only references to higher standards were those

regarding the national average for annual liver

transplantations.   First, the Commissioner observed that it

was "reasonable to assume" that over time there would be an

increase in the number of liver transplants performed by

Sentara and that this would reduce the number of procedures at


                                 8
other existing transplant centers.   This redistribution of

patients, the Commissioner wrote, "would place the

Commonwealth's programs below the national average of 36

transplants per center."   A second reference is contained

within one of the three considerations cited in his

conclusion:   "[a]pproval of another site could result in an

excess of facilities lacking volume to meet the national

average or to assure essential technical experience."

     These references to the national average were made in

regard to future events, not requirements which the

Commissioner imposed on Sentara as a prerequisite to securing

a COPN in this proceeding.    They are a reflection of the

record evidence that the quality of transplant medical

expertise is directly related to the number of procedures

performed, and that the clinical outcome for liver transplants

improves as the number of procedures performed in a facility

increases.    Thus, they cannot be the "higher, impromptu,

unspecified standard" that Sentara argues the Commissioner

applied as a basis for denying the COPN.

     Furthermore, although the Commissioner stated that the

SMFP standard was outdated and would not be applied, he

nevertheless relied on the provisions of the existing SMFP in

support of his decision that no public need existed for

Sentara's proposed project.   Citing the portion of the SMFP


                                 9
that states that transplantation programs are expected "to

perform substantially larger numbers of transplants annually"

and that meeting the minimum volume "does not necessarily

indicate a need for additional transplantation capacity or

programs," the Commissioner concluded that the existing SMFP

was "not binding as to minimum acceptable volumes."    The

Commissioner also stated that even the existing SMFP "does not

support" the grant of a COPN to Sentara at this time.

        In his letter denying Sentara's application, specifically

in the section relating to the existing SMFP standards, the

Commissioner made no statements which support the proposition

that the COPN was denied solely on the basis of a

determination that the existing SMFP was outdated and

inapplicable.    Rather, the statements as set out above

indicate that the Commissioner found that even though Sentara

complied with the existing SMFP, it had not demonstrated a

public need for the project.     This conclusion was within the

discretion and authority of the Commissioner under both

§ 32.1-102.3 and the provisions of the SMFP.

        For these reasons, we hold that the Commissioner did not

exceed his statutory authority in denying the COPN in this

case.

                  II.   Evidence Outside the Record




                                  10
     The Commissioner's determination that a liver transplant

facility at Sentara might reduce the quality of transplants at

other facilities because a new facility would reduce the

number of such procedures at those facilities was based on his

conclusion that "the numbers of available organs may be

reaching a plateau."   The Court of Appeals concluded that the

evidence on trends in organ donation rates was, at best,

inconclusive and that the proposition was faulty because the

number of liver transplants performed in Virginia increased in

1995 and 1996.   Based on this rationale, the Court of Appeals

held, "as a matter of law that the evidence contained in the

record is insufficient to support the Commissioner's finding

that organ donation rates have reached a plateau," 30 Va. App.

at 279, 516 S.E.2d at 696, and, therefore, that the

Commissioner must have relied upon evidence outside the record

in making his decision.   Because such evidence outside the

record constituted neither "institutional knowledge" nor "a

public statistic," the Commissioner's reliance on it was

improper.   Id. at 280, 516 S.E.2d at 696.   Reliance on this

improper evidence was reversible error, according to the Court

of Appeals, because the record did not otherwise support the

concerns of the Commissioner and, therefore, Sentara was

prejudiced by the Commissioner's consideration of evidence

outside the record regarding organ donation rates.    Id. at


                               11
282, 516 S.E.2d at 697.   We disagree with the Court of

Appeals' analysis and conclusion.

     In considering whether the record evidence is sufficient

to support a factual finding made by an agency, we apply the

substantial evidence standard of review.   Virginia Real Estate

Comm'n v. Bias, 226 Va. 264, 268-69, 308 S.E.2d 123, 125

(1983).   Under that standard, substantial evidence is " 'such

relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.' "   Id. at 269, 308 S.E.2d

at 125 (citations omitted).   An agency's factual findings

should only be rejected if, " 'considering the record as a

whole, a reasonable mind would necessarily come to a different

conclusion.' "   Id.

     As the Court of Appeals and trial court acknowledged, the

record in this case contains testimonial and documentary

evidence suppporting the proposition that the number of livers

available for transplantation has reached a plateau.    Examples

of this evidence include a chart prepared by MCVH showing a

decline in liver donations in Virginia, testimony that MCVH

must import livers from out of state for its transplant

program, and various letters from members of the medical

community involved in liver transplantation programs.     These

letters state that "there remains throughout the world, a

scarcity of donor solid organs for transplantation"; that


                               12
"[t]here has been an increase in the numbers of liver

transplants in the state with addition of programs at UVA

(1988) and Fairfax (1992); however, over the past three years

. . . this number has reached a state-steady plateau,

indicating the driving force is now only the numbers of

available donor organs"; that "the number of livers donated in

our procurement region is inadequate to support the existing

capacity of the region to perform liver transplantations";

that "[a]t the present time, the availability of liver

transplants is limited primarily by the availability of

transplantable livers.   A second transplant program . . . will

do nothing to change the one limiting factor.   In addition, it

may diminish the overall quality and effectiveness of this

procedure in our area"; and "[t]he most dramatic improvements

in access to liver transplantation for the residents of

Virginia can be accomplished through initiatives directed at

improving the rate of organ donations."   (Emphasis omitted.)

     Applying the substantial evidence standard of review, we

conclude that the character of this evidence would not require

a reasonable person to reject it as untrustworthy or

incredible and that a "reasonable mind might accept" it to

support the conclusion that the availability of livers "may

have reached a plateau."   And, in light of this evidence, we




                               13
cannot say that a reasonable person would necessarily come to

a different conclusion.

     For these reasons, we hold that the Court of Appeals

erred in finding that the Commissioner relied on evidence

outside the record in making a factual finding regarding organ

donation rates.   Because the Commissioner did not improperly

base his finding on evidence outside the record, questions of

prejudice to Sentara do not arise.

                      III.   Mistake of Fact

     The third reason cited by the Commissioner for denying

Sentara's application for a COPN was that the new transplant

center "may seriously impact the established liver transplant

fellowship training program at MCVH."   This conclusion was

based on the Commissioner's factual finding that "the American

College of Surgeons requires the training institution to

perform 45 liver transplants annually."   This factual finding

was wrong.   The accreditation requirement, which had been

changed by the American College of Surgeons during the course

of the application process, no longer required a specific

number of procedures annually by the institution but rather

required 45 procedures by the fellow as primary surgeon in the

course of the fellowship, usually two years.

     The Court of Appeals determined that "[i]n the absence of

substantial credible evidence supporting the Commissioner's


                                14
decision to deny the COPN, we must assume that Sentara was

also prejudiced by this mistake of fact."      Sentara at 282, 516

S.E.2d at 698.   We disagree with the Court of Appeals.

     In determining whether an error is reversible, we apply

familiar principles.

     Error will be presumed prejudicial unless it plainly
     appears that it could not have affected the result.
     A plaintiff in error must always show, not only
     error . . . , but also error of a substantial
     nature. When once he has pointed out an error of a
     substantial character, he is entitled to have it
     corrected if it appears from the record that there
     is reasonable probability that it did him any harm.

Breeding v. Johnson, 208 Va. 652, 659, 159 S.E.2d 836, 842

(1968).   The Commissioner argues that the factual mistake was

not substantial and that there is no reasonable probability

that it did Sentara any harm.   We agree with the Commissioner.

     In determining whether there was a public need for

Sentara's transplant program, the Commissioner was required to

consider the program's impact on "the clinical needs of health

professional training programs in the area in which the

project is proposed."   § 32.1-102.3(B)(12).    The gravamen of

the Commissioner's expressed concern was whether the volume of

liver transplant procedures would be sufficient to sustain

MCVH's liver transplant training accreditation if Sentara

established a transplant program.    According to the record,




                                15
MCVH performed 66 liver transplants in 1996.   That year,

Sentara referred 28 patients for liver transplants and the

majority of these patients went to MCVH for the procedure.

Based on these figures, the Commissioner stated that, if the

COPN were granted, over time Sentara would perform those

transplant procedures and the volume of liver transplants at

MCVH would be reduced by 40-50%.   That degree of reduction in

transplant procedures at MCVH would impact the accreditation

of MCVH's liver transplant fellowship training program under

either the current accreditation standard or the erroneous

standard considered by the Commissioner.

     Furthermore, the number of procedures which must be

performed at MCVH each year to retain its accreditation under

the current standard may be as many as 45 because, under the

new standard, the requisite number of procedures must be

performed by the fellow as primary surgeon.    Presumably, a

fellow will have to assist on some number of procedures before

assuming the role of primary surgeon.   As noted by the trial

court, "[a]ssuming there is one new fellow each year, as well

as an expert surgeon directing the program and performing the

majority of procedures during the first year of each fellow's

training, the training facility will exceed forty-five

transplants per year."




                              16
     Therefore, we conclude that the Commissioner's use of an

accreditation requirement of 45 transplants per institution

per year, rather than 45 transplants per fellow as primary

surgeon, in considering the impact of Sentara's proposed

transplant program on MCVH's liver fellowship training

program, was not "error of a substantial nature."

     Finally, as we have already noted, the Commissioner's

decision to deny the COPN was based on multiple grounds.     In

addition to concern about the continued accreditation of

MCVH's training program, the Commissioner's denial was based

on the need to maintain the quality of the technical

experience and the need for additional transplant centers in

light of the availability of donated livers.   These other

reasons for denying the COPN are not affected by the mistake

of fact.   Thus, we cannot conclude that a different result

would have occurred in the absence of the factual error.

     In summary, we hold (1) that the Commissioner did not

exceed his authority when he did not apply certain standards

in the SMFP because he found that they were outdated,

inaccurate, inadequate, and otherwise inapplicable; (2) that

he did not rely on evidence outside the record when finding

that "the numbers of available organs may be reaching a

plateau"; and (3) that his reliance on a mistake of fact was

harmless error.


                               17
     For the foregoing reasons, the judgment of the Court of

Appeals will be reversed and the judgment of the trial court

dismissing Sentara's petition for appeal will be reinstated.

                                   Reversed and final judgment.




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