Judge says radiology office like hospital

An administrative law judge ruled Dec. 3 that Imaging Associates must obtain certificates of need for its facilities in Anchorage and Mat-Su. A representative of Imaging Associates said it will apply for the certificates.

Mat-Su Regional has pushed for that order since Imaging Associates opened last year just a stone's throw from the medical center at the Parks and Glenn highways interchange.

A certificate of need is a state permit issued to health care facilities with capital investments of more than $1 million.

Since 2004, independent diagnostic testing facilities have been subject to Alaska's certificate of need law.

Imaging Associates, which provides diagnostic services such as X-rays, MRIs and ultrasound imaging, opened both facilities without certificates but with the state's blessing.

Under state law, a health care facility must prove sufficient need exists in a community to warrant a new health care operation before it can obtain a certificate.

"We had to project how our services would pay for themselves, how we would be able to support having that in the Valley," said Elizabeth Ripley, the Mat-Su Regional director of marketing and public relations. "You satisfy that through volume."

If the state considers Imaging Associates' application on need alone, Ripley said, she's confident it will be denied. After all, she said, the Mat-Su Regional diagnostic imaging services are not being used to their full capacity. "Not even close," she said.

The Providence group contends and the state health commissioner twice agreed that its facilities are exempt from the certificate of need rules because they constitute physicians' offices, not independent facilities. Imaging Associates is jointly owned by six physicians and Providence Health Systems-Washington, which owns Providence Alaska Medical Center in Anchorage.

The health commissioner, Karleen Jackson, reversed herself in August 2006, after a Superior Court judge in Fairbanks ruled against Alaska Open Imaging Center in a certificate of need dispute between it and Fairbanks Memorial Hospital. As with Imaging Associates, Jackson had deemed Alaska Open Imaging's Fairbanks facility a physician's office and allowed it to open without a certificate.

But the Superior Court judge ruled that the center was an independent diagnostic testing facility and ordered it to obtain a certificate within six months or close. Alaska Open Imaging closed its Fairbanks facility in February.

CERTIFICATES IN ANCHORAGE, VALLEY

Following the Fairbanks ruling, Jackson ordered Imaging Associates to apply for certificates of need for both its Anchorage and Mat-Su facilities.

Imaging Associates appealed that decision in October 2006.

In addition to arguing that the facilities are exempt as physicians' offices, the group argued that state law bars Jackson from reversing her original decision. Terry L. Thurbon, the administrative law judge who considered the appeal, found both arguments in error. The commissioner's earlier decisions were based on a regulation that the Superior Court found invalid, not on some change in the regulation, Thurbon stated in her decision Dec. 3.

In addition, she stated, the fact that the Imaging Associates physicians are in partnership with a hospital negates the claim that it is a physicians' office and not an independent diagnostic testing facility.

"A hospital is a hospital, not a physician," Thurbon stated.

She ordered Imaging Associates to apply for certificates for both facilities.

FIGHT TO STAY OPEN

"Obviously, we're disappointed," Mark Ackley, Imaging Associate's chief executive, said Friday.

"Our position is always going to be that we had been given the green light twice to proceed with our business and that we are a physicians' office."

The group's attorney, Peter Gruenstein, said in November that Imaging Associates opened both its facilities - a $10 million-plus investment - based on those green lights.

The group will comply with Thurbon's ruling, Ackley said.

That ruling was welcomed news to Mat-Su Regional, which claims the Providence group threatens its financial viability.

Imaging Associates' Mat-Su facility sits near Mat-Su Regional on Woodworth Loop and provides many of the same diagnostic services offered at the hospital.

"When they opened without a certificate, they significantly hurt our volume," Ripley said. Also, she said, Valley Hospital and Triad Hospitals Inc., which until this year owned the hospital, followed the rules and applied for a certificate of need before building Mat-Su Regional.

Allowing the Providence group to continue doing business in the Valley, Ripley said, will ultimately force Mat-Su Regional to raise its fees to cover its losses.

"We feel very strongly that they should be shut down until this is resolved," Ripley said.

But the wording of Thurbon's decision suggests the state might ultimately allow Imaging Associates to continue doing business even if it can't prove need, Ripley said.

In it, Thurbon addresses the group's contention that it should be exempt based on the doctrine of equitable estoppel - a legal principal that prevents a person from adopting a position, action or attitude inconsistent with an earlier position if it would result in an injury to someone else.

"Whether that or another doctrine might compel the department to 'grandfather' the IAP facilities into the program ... is a question that will not be ripe for decision until IAP applies for certificates of need and the department acts on IAP's applications," Thurbon stated.

Find Becky Stoppa online at adn.com/contact/bstoppa or call her in Wasilla at 907-352-6708.