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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Fuhs v. Gilbertson (06/13/2008) sp-6271
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| PAUL N. FUHS; and ALASKANS | ) |
| FOR MEDICAL CHOICE AND | ) Supreme Court No. S- 12258 |
| COMPETITION, | ) |
| ) Superior Court Nos. 3AN-04-1596 CI, | |
| Appellants, | ) 3AN-04-13594 CI |
| ) | |
| v. | ) O P I N I O N |
| ) | |
| JOEL GILBERTSON, in his official | ) No. 6271 June 13, 2008 |
| capacity as COMMISSIONER, | ) |
| DEPARTMENT OF HEALTH AND | ) |
| SOCIAL SERVICES, STATE OF | ) |
| ALASKA; and SISTERS OF | ) |
| PROVIDENCE IN WASHINGTON, | ) |
| CORP., | ) |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Sharon Gleason, Judge.
Appearances: Robert J. Gunther, Law Office
of Robert J. Gunther, Anchorage, and Mark S.
Bledsoe, Law Offices of Mark S. Bledsoe,
Anchorage, for Appellants. Stacie L. Kraly,
Assistant Attorney General, and Craig J.
Tillery, Acting Attorney General, Juneau, for
Appellees State of Alaska and Joel
Gilbertson. Peter J. Maassen, Ingaldson,
Maassen & Fitzgerald, P.C., Anchorage, and
Peter Gruenstein, Gruenstein & Hickey,
Anchorage, for Appellee Providence Alaska
Medical Center.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Justices. [Bryner and Carpeneti,
Justices, not participating.]
EASTAUGH, Justice.
I. INTRODUCTION
Providence Alaska Medical Center applied to the Alaska
Department of Health and Social Services (DHSS) for a certificate
of need (CON) to build an open-bore MRI facility, and then-
Commissioner Joel Gilbertson granted the certificate. Paul Fuhs
filed an accusation requesting a hearing before DHSS to challenge
issuance of the CON. When Gilbertson denied the request based on
his conclusion that Fuhs lacked standing under Alaskas CON
statute, Fuhs filed two superior court proceedings: an
administrative appeal challenging the denial of his request for a
hearing, and a civil action seeking an injunction against
construction of the facility. The superior court consolidated
the cases and dismissed them, determining that Fuhs lacked
standing both to challenge the CON administratively and to seek
an injunction. It then awarded attorneys fees to both Providence
and Gilbertson, rejecting Fuhss assertion that he was a public
interest litigant. Because Fuhs was not substantially affected
by the CON and because the public interest litigant exemption
from Alaska Civil Rule 82 attorneys fees no longer applies to non-
constitutional causes of action, we affirm.
II. FACTS AND PROCEEDINGS
Alaskas certificate of need (CON) statute requires that
entities seeking to construct health care facilities at a cost of
$1,000,000 or more obtain a CON from the Alaska Department of
Health and Social Services (DHSS).1 In April 2004 Providence
Alaska Medical Center applied to DHSS for a CON to construct an
open-bore MRI facility. On September 2 Paul Fuhs sent then-
Commissioner Joel Gilbertson a letter expressing his concerns
with the CON system generally and Providences CON application
specifically. Two weeks later Gilbertson granted the CON to
Providence for construction of its open-bore MRI facility. The
following week, Fuhs filed an accusation under the Alaska
Administrative Procedure Act and requested a hearing before DHSS
regarding the CONs issuance.
By letter dated November 25 Gilbertson denied Fuhss
request. Gilbertson concluded that Fuhs lacked standing under
the applicable statute, AS 18.07.081(a), which confers standing
to initiate a hearing upon a person substantially affected by
activities authorized by the certificate. Gilbertson noted that
the applicable regulation, 7 Alaska Administrative Code (AAC)
07.080, grants standing to any person. But because the
regulation expressed a more liberal standard for standing than
the statute, Gilbertson determined that the regulation was
invalid. Although Gilbertson denied Fuhss request for a hearing,
he noted that he agreed with many of Fuhss concerns about the CON
process and stated that he would implement a moratorium on CON
applications until such time as these regulatory shortcomings can
be addressed. The moratorium did not apply to Providence because
Gilbertson had already granted its CON.
In December 2004 Fuhs filed two superior court cases:
an administrative appeal, 3AN-04-13594 CI, of Gilbertsons
decision denying Fuhs standing to challenge the CON and a civil
case, 3AN-04-13596 CI, against Gilbertson and Providence seeking
declaratory and injunctive relief. Alaskans for Medical Choice
and Competition (AMC2), a nonprofit corporation incorporated by
Fuhs to represent the legal and political interest of Alaskas
health care consumers, joined Fuhs in the civil case.2
In August 2005 the superior court consolidated the two
cases. In November the court granted Providences and Gilbertsons
motions to dismiss the civil case. First, the court determined
that Fuhs lacked standing to request injunctive relief under AS
18.07.091(a) because he had not shown he would be substantially
and adversely affected by construction of the open-bore MRI
facility. Second, the court determined that Fuhs had standing to
challenge Gilbertsons decision that 7 AAC 07.080(b) was invalid,
but nonetheless agreed with Gilbertson that the regulation was
invalid. Third, the court decided that it could not consider the
civil action as an administrative appeal because the
administrative appeal had been consolidated with the civil
action. Despite dismissing the three causes of action in Fuhss
original civil complaint, the court granted Fuhss request to
submit additional briefing on the administrative appeal component
of the case.
In the meantime, Providence had begun constructing the
facility; construction began in January 2005 and was completed by
the end of July 2005. The facility began serving patients in
September 2005.
In March 2006 the superior court dismissed the
administrative appeal, concluding that Fuhs did not have standing
under AS 18.07.081(a) to maintain an administrative accusation
with respect to the Providence CON.
Providence moved for Alaska Civil Rule 82 attorneys
fees. The court awarded Providence $12,897.40, twenty percent of
its incurred fees, rejecting Providences argument that the fees
should be adjusted upwards and Fuhss argument that he should be
exempt as a public interest litigant. When Gilbertson moved for
Rule 82 fees, the court granted his motion and awarded him
$2,261, twenty percent of his incurred fees.
Fuhs appeals the dismissals and the attorneys fees
awards. AMC2 appeals the grant of attorneys fees to Gilbertson.
III. DISCUSSION
A. Standard of Review
We review issues of standing using our independent
judgment.3 We review decisions regarding motions to dismiss de
novo, deeming all facts in the complaint true and provable.4 We
review decisions regarding public interest litigant status under
Rule 82 for abuse of discretion.5
B. Whether Fuhs Has Standing To Administratively Challenge
the Providence CON Under AS 18.07.081(a) or Request
Injunctive Relief Under AS 18.07.091(a)
Alaska Statute 18.07.081(a) permits a person who is
substantially affected by the activities authorized by a CON to
initiate a hearing by filing an accusation with DHSS.6 Alaska
Statute 18.07.091(a) allows a person substantially and adversely
affected to file suit for injunctive relief.7
When Fuhs initially challenged the Providence CON under
AS 18.07.081(a), the pertinent regulation granted standing to any
person requesting a hearing if good cause [were] demonstrated.8
In his civil complaint Fuhs sought a judgment declaring that the
regulation was valid and that it granted Fuhs standing under AS
18.07.081(a). But DHSS argued that the regulation was invalid
because it was inconsistent with the substantially affected
language of the statute.9 The superior court likewise held that
7 AAC 07.080(b)s standing requirement conflicted with AS
18.07.081(a)s requirement that a person be substantially affected
to challenge a CON. The superior court concluded that the
regulation was invalid and that Fuhs therefore could not claim
standing under the regulation.
After hearing oral argument, we asked the parties to
submit supplemental briefs on the issue of standing. We
specifically asked the parties to address whether the more
liberal standing requirement in the regulation violate[s] the
statute [AS 18.07.081(a)], given that the statute does not, at
least explicitly, apply to hearings concerning a decision to
grant a certificate of need. Fuhs did not address the question
in his supplemental brief and instead argued that: (1) he does
not claim standing under the regulation; (2) the statute, like
the regulation, applies to decisions to grant a CON; and (3) the
issue is moot because Fuhs does not appeal the superior courts
invalidation of the regulation. Fuhs has therefore waived any
argument he may have had under the regulation, and we look only
to the CON statutes to determine whether Fuhs has standing to
challenge the Providence CON under either AS 18.07.081 or .091.
Fuhs argues that he is substantially affected by the
issuance of the Providence CON and therefore has standing under
AS 18.07.081(a) to administratively challenge the CON. He
further argues that he is substantially and adversely affected
and therefore has standing to request injunctive relief under AS
18.07.091(a).
In his administrative accusation Fuhs asserted that he
has standing because he is a citizen of the State of Alaska and a
self-paying consumer of medical services within the State. In
his civil complaint Fuhs added that he is a retired Alaska state
employee. He asserted that his retirement is threatened by the
rising costs of medical care and that as a self-pay patient he
must pay higher prices to subsidize hospital services that he
does not use.
In response, Providence argues that the legislature
purposely limited standing in the context of challenges to CONs.
Citing the superior court order, Providence points out that Fuhs
did not even allege that he has, or ever intends to receive MRI
services, either open or closed bore. In addition to arguing
that Fuhs cannot have standing merely as a consumer of medical
services, Providence also argues that Fuhs has failed to produce
any evidence showing that the Providence CON will actually harm
consumers. Gilbertson adds that if the legislature had intended
for all members of the public to have standing to challenge the
issuance of a CON, it would not have included a heightened test
for standing in the statute.
We have previously addressed standing to challenge CONs
in two decisions.10 In South Central Health Planning &
Development, Inc. v. Commissioner of the Department of
Administration, we considered whether South Central had standing
under AS 18.07.091(a) to challenge the construction of a skilled
nursing addition to the Anchorage Pioneers Home.11 Determining
that South Central was a health systems agency under 42 U.S.C.
300l, we held that it had standing, in part because Alaska
regulations included health systems agencies in the definition of
person directly affected by the approval or denial of a CON.12
But South Central does not support Fuhss argument.
Fuhs argues that, like South Central, he fits the regulatory
definition of a person directly affected. When South Central was
issued, and when Fuhs filed his civil case below, the regulatory
definition of person directly affected included members of the
public to be served by the activity for which a certificate of
need is required.13 But this definition is of a term that is not
found in either statute. There is no reason to think the
department intended the definition to define standing under
either of the pertinent statutes. Furthermore, the subsection of
the regulation on which Fuhs relies is on its face inconsistent
with both statutory subsections. The regulation seems to
contemplate a very low threshold that does not require anything
more than being in the class of people who might be served by the
activity; indeed, it even implies that a person benignly impacted
would have standing.
In South Central, we noted that South Central was a
person directly affected but we further determined that South
Central would also be substantially and adversely affected if
health care facilities were constructed in its area without
conforming to its plan, for this could disrupt the plan, undercut
the agencys statutorily delegated planning activities, and
subvert the purposes of health systems planning.14 Because it
appeared South Central would be substantially and adversely
affected, we concluded that it had standing under AS
18.07.091(a).15
Fuhss brief seems to imply that because there are no
longer health systems planning agencies, private citizens must
monitor the issuance of CONs. He avers that the issuance of CONs
at a time Alaska does not have a current health plan subvert[s]
the purpose of health system planning. Assuming for sake of
discussion Fuhs is correct that issuing CONs without a plan is
antithetical to the purpose of health system planning, this
circumstance would be irrelevant to whether Fuhs has standing to
raise the issue. Neither the holding of South Central nor any of
its language supports a reading of AS 18.07.091(a) that would
grant Fuhs standing.
In Sisters of Providence in Washington, Inc. v.
Department of Health & Social Services, we held that Providence
had standing to challenge a DHSS decision regarding a competing
hospital.16 But Sisters of Providence involved a determination of
standing under general standing requirements, rather than the
heightened requirements of AS 18.07.081(a) and .091(a).17 General
standing requirements are liberally construed in Alaska; a
litigant must merely show a sufficient personal stake in the
outcome of the controversy.18 Under this liberal test, we held
that Providence had standing because it demonstrated a threat of
future economic harm if DHSSs decision were upheld.19
Because AS 18.07.081(a) and .091(a) are permissive
statutes that expressly grant standing and only impliedly deny
it, they do not necessarily foreclose the possibility that Fuhs
has standing under general standing requirements. But Fuhs
cannot satisfy even the generalized test for standing. Unlike
Providence in Sisters of Providence, Fuhs does not claim he is a
direct competitor of the permitted facility, nor has he shown any
other individual direct injury.
Furthermore, the plain words of AS 18.07.081(a) and
.091(a) do not confer standing upon Fuhs. Substantially affected
is a stricter test than sufficient personal stake. When Fuhs
initially challenged the CON, the statute and applicable
regulations did not define substantially affected.20 We therefore
give the term its ordinary meaning.21 Substantially affected is
not defined, but substantial is variously defined as real,
strong, considerable, and important.22 The parties assume that
the substantially and adversely affected requirement in AS
18.07.091(a) is stricter than the substantially affected
requirement in AS 18.07.081(a). For sake of discussion here, we
assume without deciding that standing under AS 18.07.091(a) is no
less rigorous than under AS 18.07.081(a).23
As the superior court noted, Fuhs does not allege that
he plans to get an MRI scan. At most, Fuhs has alleged an
indirect connection between his health care costs and the
issuance of CONs. This connection is too tenuous to give Fuhs
standing under either AS 18.07.081(a) or .091(a). Fuhs also
refers to the fact that he used to direct the South Central
Health Planning Agency and sit on the board of Alaskas Statewide
Health Coordinating Council. Although his former positions might
make Fuhs substantially interested in the issuance of CONs, they
do not cause him to be substantially affected by the activities
authorized by the Providence CON. We therefore hold that Fuhs
lacks standing to challenge the Providence CON under either AS
18.07.081(a) or .091(a).24
C. Whether Fuhs Is Exempt from Rule 82 Attorneys Fees
Awards
Fuhs argues that he is a public interest litigant and
that the superior court therefore erred in awarding Alaska Civil
Rule 82 attorneys fees to Providence and Gilbertson against Fuhs.25
In Matanuska Electric Assn v. Rewire the Board, we explained that
a party is a public interest litigant if: (1) the case was
designed to effectuate strong public policies; (2) numerous
people would benefit if the litigant succeeded; (3) only a
private party could be expected to bring the suit; and (4) the
litigant lacked sufficient economic incentive to bring suit.26
In 2003 the legislature amended AS 09.60.010 to abolish
the public interest exception to Rule 82 for non-constitutional
causes of action.27 The superior court, noting that the amendment
had been held unconstitutional by two superior court judges,
declined to rely on the amendment in denying Fuhs public interest
status. It instead conducted the traditional public interest
inquiry and held that Fuhs was not a public interest litigant.
After we heard oral argument in this case, we upheld
the constitutionality of the 2003 amendment to AS 09.60.010 in
State v. Native Village of Nunapitchuk.28 We then invited the
parties in this case to submit supplemental briefs addressing
whether, assuming Fuhs is a public interest litigant, the 2003
amendment has any application to this case.
All parties agree that the 2003 amendment applies and
bars the public interest litigant exception for non-
constitutional causes of action. Fuhs now argues that although
the 2003 amendment abolished the public interest exception, our
decision in Nunapitchuk retains the superior courts power to vary
a Rule 82(b) fee award when a given fee award may be so onerous
to the non-prevailing party that it would deter similarly
situated litigants from the voluntary use of the courts.29 But
when Providence moved for an award of fees, Fuhs only opposed an
award on grounds of his alleged public interest litigant status;
he did not argue alternatively, or on reconsideration after the
superior court ruled against him, that he was shielded by Rule
82(b)(3)(I) from an award of fees. He made no showing how any
award would chill suits by similarly situated litigants. On the
other hand, his superior court affidavit asserted that he is
president of AMC2, which has an independent board of directors
and currently has about 60 members, including consumers, doctors
and other medical providers, and small businesses. We have
received funding from a variety of businesses including [Alaska
Open Imaging Center], who is not a member. Although the
affidavit asserts that no member of AMC2 would reap substantial
economic benefit if Fuhs had prevailed, it also permits no
inference that the prospect of an award of partial attorneys fees
would discourage similarly situated potential litigants from
filing suit. Accordingly, Fuhss failure to raise this argument
in the superior court forecloses him from raising it here.30
Fuhs additionally appeals the award of attorneys fees
to Gilbertson on the ground the superior court did not adequately
explain the basis for its decision. But the court order awarding
Providence attorneys fees rejected Fuhss argument that he is a
public interest litigant; the court was not required to reiterate
its ruling with regards to Gilbertson. We therefore find no
reason to remand for a reconsideration of attorneys fees and
accordingly affirm the superior courts awards of attorneys fees
to Providence and Gilbertson.
IV. CONCLUSION
Because he was not substantially affected by the
Providence CON, Fuhs does not have standing to challenge the
issuance of the CON under AS 18.07.081(a) or .091(a). And
because Fuhs waived his argument that he should be shielded from
attorneys fees awards under Rule 82(b)(3)(I), the superior court
did not err in awarding attorneys fees to Providence and
Gilbertson. We therefore AFFIRM the dismissals of both of Fuhss
superior court cases and AFFIRM both attorneys fees awards.
_______________________________
1 See AS 18.07.031. Beginning July 1, 2005, the
threshold cost amount increases annually by $50,000. See AS
18.07.035(d). When Providence applied for a CON, the threshold
amount was still $1,000,000.
2 We refer to Fuhs and AMC2 collectively as Fuhs unless
context requires otherwise.
3 Shook v. Alyeska Pipeline Serv. Co., 51 P.3d 935, 937
(Alaska 2002).
4 Catholic Bishop of N. Alaska v. Does 1-6, 141 P.3d 719,
722 (Alaska 2006).
5 Fairbanks N. Star Borough v. Interior Cabaret, Hotel,
Rest. & Retailers Assn, 137 P.3d 289, 291 (Alaska 2006).
6 AS 18.07.081(a) provides in pertinent part:
[A] member of the public who is substantially
affected by activities authorized by the
. . . certificate of need may initiate a
hearing to obtain modification, suspension,
or revocation of an existing certificate of
need by filing an accusation with the
commissioner as prescribed under AS
44.62.360.
(Emphasis added.)
7 AS 18.07.091(a) provides in pertinent part:
Injunctive relief against violations of this
chapter or regulations adopted under this
chapter may be obtained from a court of
competent jurisdiction at the instance of
. . . any member of the public substantially
and adversely affected by the violation.
(Emphasis added.)
8 Former 7 AAC 07.080(b) (2004) provided that:
Any person other than the applicant who is
dissatisfied with a decision of the
commissioner to grant, deny, or modify a
certificate of need may request a hearing by
making a written request which is received by
the commissioner . . . . The commissioner
will grant the request for a hearing if good
cause is demonstrated.
9 DHSS amended the regulation in August 2005. The
current DHSS regulation provides:
An applicant or a person substantially
affected by activities authorized by a
certificate of need, who is dissatisfied with
a decision of the department to require a
certificate of need or a decision of the
commissioner to grant, deny, or modify a
certificate of need, is entitled to a hearing
if the request for a hearing is made in
writing and received by the department no
later than 30 days after the applicant
receives the decision.
7 AAC 07.080(a) (am. 8/14/2005).
10 See Sisters of Providence in Wash., Inc. v. Dept of
Health & Soc. Servs., 648 P.2d 970 (Alaska 1982); S. Cent. Health
Planning & Dev., Inc. v. Commr of Dept of Admin., 628 P.2d 551
(Alaska 1981).
11 S. Cent. Health Planning & Dev., Inc. v. Commr of Dept
of Admin., 628 P.2d 551, 552 (Alaska 1981).
12 Id.
13 Former 7 AAC 07.130(11)(C) (2004).
14 S. Cent. Health Planning & Dev., Inc., 628 P.2d at 552.
15 Id.
16 Sisters of Providence in Wash., Inc. v. Dept of Health
& Soc. Servs., 648 P.2d 970, 974-75 (Alaska 1982).
17 Id. at 974.
18 Id.
19 Id. at 974-75.
20 The current DHSS regulation defines person
substantially affected as:
(A) the department;
(B) the commissioner;
(C) a health care facility or provider that
(i) is located in the proposed service
area and that provides services similar to
the proposed activity, or alternatives to the
proposed activity; or
(ii) has indicated to the department, by
submitting a letter of intent in response to
a public notice issued under 7 AAC 07.042, or
a competing application under 7 AAC 07.040,
an intent to engage in the activity for which
the certificate of need is sought; and
(D) an agency that sets or regulates the
rates charged by a health care facility or
the services provided by a health care
facility[.]
7 AAC 07.900(15) (2006).
21 AS 01.10.040(a) (Words and phrases shall be construed
according to the rules of grammar and according to their common
and approved usage.).
22 Websters II New World College Dictionary at 1099
(1995).
23 See Mech. Contractors of Alaska, Inc. v. State, Dept of
Pub. Safety, 91 P.3d 240, 248 (Alaska 2004) (When we engage in
statutory construction we will presume that the legislature
intended every word, sentence, or provision of a statute to have
some purpose, force, and effect, and that no words or provisions
are superfluous.).
24 Providence additionally argues that we can affirm
dismissal of Fuhss complaint on the alternative grounds of
mootness or laches because the Providence open-bore MRI facility
has been operating since September 2005. Because we affirm the
dismissal on the ground that Fuhs lacks standing, we do not need
to address Providences alternative argument.
25 See Fairbanks N. Star Borough v. Interior Cabaret,
Hotel, Rest. & Retailers Assn, 137 P.3d 289, 291 n.2 (Alaska
2006) ( [I]t is an abuse of discretion to award attorneys fees
against a losing party who has in good faith raised a question of
genuine public interest before the courts. ) (citing Koyukuk
River Tribal Task Force on Moose Mgmt. v. Rue, 63 P.3d 1019,
1020 (Alaska 2003)).
26 Matanuska Elec. Assn v. Rewire the Bd., 36 P.3d 685,
696 (Alaska 2001).
27 See ch. 86, 2(b), SLA 2003. The amendment mandates
that a court in this state may not discriminate in the award of
attorney fees and costs to or against a party in a civil action
or appeal based on the nature of the policy or interest advocated
by the party. AS 09.60.010(b).
28 State v. Native Vill. of Nunapitchuk, 156 P.3d 389, 405-
06 (Alaska 2007).
29 Id. at 406; see Alaska R. Civ. P. 82(b)(3)(I) ([T]he
extent to which a given fee award may be so onerous to the
non-prevailing party that it would deter similarly situated
litigants from the voluntary use of the courts.).
30 Brandon v. Corr. Corp. of Am., 28 P.3d 269, 280 (Alaska
2001) (arguments first raised on appeal are waived). Because we
determine that Fuhs waived his Rule 82(b)(3)(I) argument and that
Fuhss status as a public interest litigant would not affect the
attorneys fee award, we do not need to decide whether Fuhs is a
public interest litigant.
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