Sec. 10.24.01.12. Effective Duration of Certificate of Need and Applicant Responsibilities

A. Good Standing. The Certificate of Need issued for a project by the Commission shall be maintained in good standing by the applicant up to completion, licensure, and first use of the approved project.

B. The Certificate of Need shall be issued with specific performance requirements, as follows:

(1) There shall be an obligation of not less than 51 percent of the approved capital expenditure, as documented by a binding construction contract or equipment purchase order;

(2) In the case of construction projects, the initiation of construction shall take place within 4 months of the effective date of a binding construction contract, and construction shall be continuous after that, subject to the following exception:

(a) If the approved project ceases continuous construction for a period in excess of 30 calendar days, the applicant shall notify the Commission in writing of the break in construction and submit for approval, documentation of the applicant's inability to control the break in construction within 35 calendar days of the work stoppage, and, within 45 calendar days of the work stoppage, submit to the Commission a plan of recommencement of construction not to exceed 90 calendar days, which period may be extended for a reasonable period if the applicant shows extraordinary circumstances; and

(b) The Commission shall consider any documentation submitted in determining whether good cause exists to grant a 6-month extension of the second performance requirement, in accordance with §E(1) of this regulation; and

(3) The applicant shall provide documentation that the approved project has been completed, has been licensed if required, or has otherwise met all applicable legal requirements and is providing the approved service or services within a specific time period beginning from the initiation of construction or from the effective date of a binding equipment purchase order.

C. Performance Requirements.

(1) Performance requirements shall be applied to approved projects with specific time limitations, beginning with the date of Certificate of Need approval, according to the nature and scope of the project.

(2) The requirements of §B(2) of this regulation apply to all approved construction projects.

(3) The requirements of §B(1) and (3) of this regulation apply, as follows:

(a) An approved new hospital has up to 36 months to obligate 51 percent of the approved capital expenditure, and up to 36 months after the effective date of a binding construction contract to complete the project;

(b) Major (greater than $5,000,000) additions, replacements, modernizations, relocations, or conversions to an existing health care facility has up to 24 months to obligate 51 percent of the approved capital expenditure, and up to 24 months after the effective date of a binding construction contract to complete the project;

(c) Except as provided in this subsection, a proposed new health care facility has up to 18 months to obligate 51 percent of the approved capital expenditure, and up to 18 months after the effective date of a binding construction contract to complete the project;

(d) A major change in bed capacity (greater than 40 beds or 25 percent of total licensed capacity), additions, replacements, modernization, relocation, or conversions to an existing inpatient health care facility that involves a capital expenditure between the threshold specified in Regulation .01B of this chapter and $5,000,000 has up to 18 months to obligate 51 percent of the approved capital expenditure, and up to 12 months after the effective date of a binding construction contract to complete the project;

(e) A minor change in bed capacity, which falls below the limits described in §C(3)(d) of this regulation but which requires review under Regulation .02 of this chapter, has up to 12 months to obligate 51 percent of its approved capital expenditure, and up to 8 months after the effective date of a binding construction contract to complete the project;

(f) A change in bed capacity or services that requires review under Regulation .02 of this chapter but involves capital expenditure below the capital expenditure threshold specified in Regulation .01B of this chapter has up to 3 months to obligate 51 percent of the approved capital expenditure, and up to 6 months after the effective date of a binding construction contract to complete the project.

(g) In a multiphased plan of construction with only one construction contract approved for an existing health care facility, the project has:

(i) Up to 12 months after Certificate of Need approval to obligate 51 percent of the approved capital expenditure for the entire project;

(ii) Up to 24 months after the effective date of the binding construction contract to complete the first approved phase of construction; and

(iii) Up to 24 months after the completion of the previous phase to complete each subsequent approved phase;

(h) In a multiphased plan of construction with more than one construction contract approved for an existing health care facility, the project has:

(i) Up to 12 months after Certificate of Need approval to obligate 51 percent of the capital expenditure for the first phase of construction;

(ii) Up to 24 months after the effective date of a binding construction contract for the first phase to complete the first approved phase of construction;

(iii) Up to 12 months after completion of the immediately preceding phase of construction to obligate 51 percent of the capital expenditure for any subsequent approved phase of construction; and

(iv) Up to 24 months after the effective date of a binding construction contract for a subsequent approved phase, to complete that phase;

(i) For a multiphased plan of construction, the Commission, upon a showing of good cause by an applicant, may authorize:

(i) Obligation for each approved phase of construction of a specified portion of the capital expenditure that is less than 51 percent of the approved capital expenditure for the entire project; and

(ii) Up to 36 months to complete each approved phase; and

(j) Home health agencies have up to 18 months from the date of the certificate of need to:

(i) Become licensed and, if applicable, Medicare certified; and

(ii) Begin operations in the jurisdiction for which the certificate of need was granted.

(4) If a project is classified as fitting more than one of the categories in §C(3) of this regulation, the category carrying the longer time frame applies.

(5) For State projects dependent solely on capital funds allocated by the Maryland General Assembly, the requirements of §B(1) of this regulation begin from the date of the Governor's approval of legislative appropriation of funds. If funds are not appropriated by the end of the second year following the granting of the Certificate of Need, the Certificate of Need is void.

D. Effective Date of a Certificate of Need. The effective date of a Certificate of Need is the date of issuance by the Commission. If a motion for reconsideration is timely filed, the effective date of the Certificate of Need is the date the Commission decides the motion. The filing of a petition for appeal does not stay enforcement of the Commission decision.

E. Extension of Performance Requirements.

(1) A person who holds a Certificate of Need may request only one extension of time, not to exceed 6 months, to meet each applicable performance requirement. The applicant shall provide reasonable assurance that it will meet the performance requirement by the end of the extended period. The Executive Director, for good cause, may approve a requested extension to an applicable performance requirement. The Commission shall fully document an extension approval.

(2) A request shall be:

(a) In writing, and

(b) Received at least 30 calendar days before the date by which the performance requirement is to be completed.

(3) For purposes of this section, a request is considered to show good cause if it demonstrates that circumstances completely beyond the control of the person who holds the Certificate of Need require the extension. Good cause does not include delays in securing financing.

F. Failure to Meet Performance Requirements.

(1) An approved project that fails to fulfill an applicable performance requirement within the specified time period is void. The sponsor of the project may reapply under the Certificate of Need review process, as set forth in Regulations .08-.10 of this chapter, and this resubmitted application shall be considered by the reviewing agencies as a new application.

(2) Nothing in this section precludes the approval of a project to be undertaken in phases, each of which would be judged in accordance with its own performance requirements, based upon the successive effective dates for each phase, as detailed in the Certificate of Need.

G. Failure of an applicant to carry out a contract or purchase order that was submitted as evidence of fulfillment of a performance requirement may render the project's Certificate of Need void, as in §F of this regulation.

H. Grounds for Withdrawal of a Certificate of Need. The Commission reserves the right to withdraw a Certificate of Need if the Commission finds that the:

(1) Applicant made a material misrepresentation upon which the Commission relied in granting the Certificate of Need;

(2) Applicant has failed to meet a performance requirement or condition in the Certificate of Need;

(3) Applicant has failed to provide quarterly reports required under Regulation .13B and C of this chapter; or

(4) Project differs from that approved by the Commission in the Certificate of Need.

I. Notice Before Withdrawal of a Certificate of Need.

(1) Before withdrawal of a Certificate of Need for failure to fully meet an applicable performance requirement, the Commission shall inform the applicant and the appropriate local health department, setting forth in writing the reasons for withdrawal. This notice shall set forth the right of the applicant to an evidentiary hearing, conducted in accordance with Regulation .11 of this chapter, to show cause why the Certificate of Need should not be withdrawn. The applicant may make a written filing in support of the applicant's position and present oral argument to the full Commission before the Commission takes final action on the notice of withdrawal.

(2) Final action by the Commission withdrawing a Certificate of Need shall:

(a) Be in writing;

(b) Include findings of fact and conclusions of law; and

(c) Be transmitted to the applicant and to the appropriate local health department within 30 days of the date of action by the Commission.