BEFORE THE OFFICE OF ADMINISTRATIVE HEARINGS ) ) ) ) ) ) ) ) ) )

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1 Lawrence J. Rosenfeld (SBN 00 lawrence.rosenfeld@squirepb.com SQUIRE PATTON BOGGS (US LLP 1 E. Washington Street, Suite 00 Phoenix, AZ 00 Telephone: (0-000 Facsimile: (0-1 Attorneys for Intervenors In the Matter of: American Medical Response of Maricopa, LLC, Applicant. BEFORE THE OFFICE OF ADMINISTRATIVE HEARINGS No. 1A-EMS-00-DHS (EMS No. INTERVENORS PRE-HEARING MEMORANDUM OF LAW (Assigned to the Honorable Tammy L. Eigenheer In this Memorandum, Intervenors generally set forth the statutes and regulations applicable to the present application. As, of course, the parties respective evidentiary presentations have not yet been made, Intervenors will, in their Post-Hearing Memorandum (and in their proposed findings of fact and conclusions of law specifically tie these governing principles to the evidentiary record. Applicant has applied for a Certificate of Necessity for virtually all of Maricopa County, for both emergency transports and for non-emergency prescheduled/interfacility transports. There is no dispute that each of the seven Intervenors currently holds and each for many years has held CONs to provide emergency and nonemergency ambulance services within the area Applicant has applied for. (Indeed, virtually all of the Intervenors have held CONs in Maricopa County for the entirety of the thirty-year period since adoption of Arizona s current ambulance regulatory model, and

2 have, in fact, provided these services for many years pre-dating enactment of the CON laws. Irrespective of the corporate parent of these seven CON-holders, each entity is separately responsible for assuring that it meets the requirements of its own certificate. All seven of these CONs have been renewed by DHS within the past two years, including several that have been renewed in recent months. With the exception of one CON which is up for renewal later this year, none of these CONs have renewal dates earlier than mid-1. Specifically: CON # CON-holder Most Recent Renewal Date Scheduled for Renewal Comtrans Ambulance Service, Inc. March, 1 April 0, Canyon State Ambulance April, 1 May 1, Southwest Ambulance of Casa Grandé September, 1 1 Professional Medical Transport October, 1 Emergency Medical Transport (American Ambulance September 0, October 1, 1 June, 1 August 1, 1 Southwest Ambulance April, 1 May 1, 1 Rural/Metro (Maricopa November, 1 November 0, 1 Given that these CON-holders, collectively, currently provide ambulance service coverage throughout the entirety of the geographic area applied for, Applicant here, in addition to being required to satisfy the extensive requirements applicable to every CON applicant (A.A.C. R--0(A(1 and (A(; A.A.C. R--0(A(1, (, and (, must also carry the burden of proof with respect to an additional set of requirements, which, among other factors, necessitates that it establish that the presently-certificated providers are not adequately meeting the ambulance service needs within their respective - -

3 certificated service areas. The burden of proof on all of these matters rests squarely upon the Applicant, A.A.C. R--1(B. The standard of proof is preponderance of the evidence, A.A.C. R--1(A. Any entity wishing to operate an ambulance service in the State of Arizona may do so only after being granted a CON by DHS, A.R.S pertinent part: This statute requires, in a. That a CON applicant demonstrate that public necessity requires the proposed service or any part of the service, A.R.S. -(B(; and b. That a CON applicant demonstrate that it is fit and proper to provide the service, A.R.S. -(B(. Fit and proper requires an assessment as to whether an applicant has the expertise, integrity, fiscal competence and resources to provide ambulance service in the service area, A.R.S. -(. Public Necessity. As BEMSTS Guidance Document GD-0-PHS-EMS explains, the CON statutes and rules establish a requirement that anyone seeking to start an ambulance service... must be able to demonstrate that there is a public necessity for the proposed service. In order to establish public necessity, an applicant must prove that an identified population needs or requires all or part of the services of a ground ambulance service, A.A.C. R--01(. Public necessity in this context includes a review of whether there is a public need for additional ambulance transports that the incumbent providers are not meeting; the extent to which granting a new CON will adversely financially impact the current providers (A.A.C. R--0(B(; and 1 The Arizona Legislature, through its enactment of the CON statutes, mandated a fully regulated ambulance industry. The Arizona Department of Health Services ( DHS, through its Bureau of Emergency Medical Sources and Trauma System ( BEMSTS, regulates ambulance services in this State, including the CON application and renewal process. See, A.R.S. - through. In addition, DHS has adopted rules pertaining to the regulation of ambulances and ambulance services. See, Arizona Administrative Code ( A.A.C. --1 through. As the attorneys for Applicant explained in a CON proceeding where their client held a CON in the applied-for area, and therefore opposed the granting of a CON to a putative new ambulance service, WEBSTER s II, New Riverside University Dictionary defines necessary, when used as an adjective, as absolutely required. (emphasis added See Docket No. 1A EMS-01-DHS (EMS No., Hearing Memo Regarding Convalescent and Interfacility Transport Definitions, at p., lines -, filed September,

4 whether the existing providers performance is substandard (as defined in A.A.C. R- -01(0. In addition to addressing all of the matters identified in A.A.C. R-- 0(A(1 and (A(, as there are here multiple established, presently-certificated providers in the proposed service area, all of the following circumstances must also be considered: That ground ambulance service presently exists throughout the entirety of the applicant s proposed service area (A.A.C. R--0(A((a; Response times (including the fact that the actual response times achieved by the certificated providers are superior to the response times proposed by the applicant; A.A.C. R--0(C(, and that each of the certificated providers in the applied-for service area is compliant with the response times approved by DHS (A.A.C. R--0(A((b; That certificate holders are available throughout the entirety of the applicant s proposed service area (A.A.C. R--0(A((c; and That emergency medical services are available throughout the entirety of the applicant s proposed service area (A.A.C. R--0(A((d. In this regard, it bears mention that the fact that A.R.S. -(A states that a CON does not confer a property right is in no respect inconsistent with the fact that these statutes and regulations, by their explicit terms, impose upon an applicant, inter alia, an obligation to establish that public necessity requires an additional ambulance service in an area that is already being fully served, and that it do so by addressing in a concrete, non-speculative way, all of the factors set forth therein. The property rights statute CONs impose response time requirements only for emergency transports; there are no specific response time requirements with respect to non-emergency responses. - -

5 does not reduce, in any respect, the statutory and regulatory showings a CON applicant must make in these circumstances. Rates. Additionally, an applicant s proposed rates must also be carefully scrutinized by the trier-of-fact. The Director has the authority to determine, fix, alter, and regulate rates and charges for the provision of ambulance services, including rates and charges for ALS service, BLS service, mileage, standby/waiting, subscription service contracts and other contracts related to ambulance services. A.R.S. -(A(1; A.R.S. -; A.A.C. R--1, et seq. The Director may consider any information or documents that may assist in evaluating the application or the proposed rates and charges. A.A.C. R--0(A(; A.A.C. R--01(A(. See also, A.R.S. - (A(1, which requires that a CON-holder s rates be just, reasonable and sufficient; and A.A.C. R--0(C (defining just, reasonable, and sufficient rates, and requiring that the rates provide for a rate of return that is at least % of gross revenue, calculated using the accrual method of accounting according to generally accepted accounting principles, unless the certificate holder requests a lower rate of return. Incident to its consideration of an application, the trier-of-fact should appropriately take into account whether the proposed rates, even if determined just, reasonable, and sufficient, will inject needless additional cost into the overall expense structure within the applied-for area (taking into account, among other considerations, that there are certain fixed overhead expenses that cannot be eliminated or reduced pro rata to adjust for the loss of transports, with the result that public rates and charges are thereby unnecessarily driven upward. This consequence, needless to say, is not of benefit to the public and more so is that the case where the current providers are, demonstrably, meeting the need. The purpose of statutes like A.R.S. -(A, which provide that a privilege to operate (like a license or a CON does not confer a property right, is to make clear that the possessor of that operating right does not have a legal basis to claim just compensation, in an eminent domain proceeding, if that license is taken away through the state s exercise of its police power. See, for example, Hooper v. Daniels, Ariz. 0, 0, P.d 0 (. - -

6 Intervenors respectfully submit that, based upon consideration of all of the relevant facts and circumstances, Applicant s application should be denied. RESPECTFULLY SUBMITTED this th day of August, 1. This document has been electronically filed ( this th day of August, 1. s/ Helen Bell s/ Lawrence J. Rosenfeld Lawrence J. Rosenfeld SQUIRE PATTON BOGGS (US LLP 1 E. Washington Street, Suite 00 Phoenix, AZ 00 Attorneys for Intervenors - -