The Department of Community Health “DCH” cancelled a certificate of need “CON” that had been awarded to Southern Crescent Rehabilitation and Retirement Center, Inc. “Southern Crescent”. Southern Crescent requested an administrative hearing to contest the cancellation. The hearing officer affirmed the cancellation, and the decision was incorporated into the final administrative decision of DCH. Southern Crescent sought judicial review, and the superior court affirmed the administrative decision. Southern Crescent then appealed to this Court. For reasons that follow, we also affirm. The relevant facts show that on January 31, 1997, DCH awarded a CON to Southern Crescent to build a 40 bed nursing home facility. The initial duration of the CON was 12 months. Before construction commenced, Southern Crescent sought and obtained several pre-construction extensions, with the last one ending on January 31, 1999. Following one extension request, Southern Crescent received a letter from DCH that stated, in relevant part, that DCH rules provided for automatic extension provisions for projects involving new construction. For projects with a total project cost under $3,000,000.00 an applicant is entitled to an automatic twelve 12 month extension to the initial twelve 12 month duration of the CON if they submit certain information to the Agency during the initial twelve 12 month period. This required information includes confirmation that 1 the construction plans have been approved by the State Architect , . . . 2 verification that construction materials and equipment are on site, and 3 the submission of a signed construction contract with beginning and ending dates. On January 29, 1999, Southern Crescent forwarded a letter to DCH, attaching certain progress reports and a copy of the construction contract, and stating that construction materials were on site. According to the contract, construction was “scheduled to commence March 15 or once the site plan receives approval from the county,” and substantial completion was expected by December 15, 1999. DCH responded by letter dated February 15, 1999, stating that Southern Crescent had complied with agency rules and that the CON was now valid through January 28, 2000.
According to Omar El Sawi, the owner of Southern Crescent, at some point during the month of January 1999, work began on the site to add a sewer line. Shortly thereafter, El Sawi experienced numerous personal problems, including a divorce and a protracted illness, that hindered work on the project. Thus, no construction occurred on the project for several years. Southern Crescent made periodic inquiries into the status of its CON, and on August 31, 2000 and again on April 1, 2002, Southern Crescent received letters informing it that there was no extension required once a project “has reached the construction phase.” The second letter noted that the project “was in compliance with the initial performance standards and had entered the eighteen-month construction phase.” If the construction was not completed during that time, DCH requested that Southern Crescent “keep DCH informed of the project’s progress, estimate when it might be completed, and provide the final report at the appropriate time.”1
