St. Dominic - Jackson Mem'l Hosp. v. Miss. State Dep't, et al.


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Docket Number: 2011-SA-00007-SCT

Supreme Court: Opinion Link
Opinion Date: 04-26-2012
Opinion Author: King, J.
Holding: Affirmed

Additional Case Information: Topic: Certificate of need - Relocation - Section 41-7-191(1)(b) - Section 41-7-191(1)(e) - Specific need criteria - State Health Plan Section 108.02
Judge(s) Concurring: Waller, C.J., Carlson and Dickinson, P.JJ., Randolph, Lamar, Kitchens and Pierce, JJ.
Non Participating Judge(s): Chandler, J.
Procedural History: Admin or Agency Judgment
Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES

Trial Court: Date of Trial Judgment: 12-22-2010
Appealed from: Madison County Chancery Court
Judge: Cynthia Brewer
Disposition: Affirmed the Department of Health's denial of Appellant's CON.
Case Number: 10-CV-2138

  Party Name: Attorney Name:   Brief(s) Available:
Appellant: St. Dominic - Jackson Memorial Hospital




JONATHAN ROBER T WERNE EDMUND L. BRUNINI, JR. ROBERT RICHARD CIRILLI, JR.



 
  • Appellant #1 Brief
  • Appellant #1 Reply Brief

  • Appellee: Mississippi State Department of Health and Madison HMA d/b/a Madison River Oaks Hospital THOMAS L. KIRKLAND, JR . ALLISON CARTER SIMPSON ANDY LOWRY ROBERT EMMETT FAGAN, JR. BEA TOLSDORF CHAD WARNER BLALACK  

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    Topic: Certificate of need - Relocation - Section 41-7-191(1)(b) - Section 41-7-191(1)(e) - Specific need criteria - State Health Plan Section 108.02

    Summary of the Facts: St. Dominic-Jackson Memorial Hospital, which is located in General Hospital Service Area 3, is a short term, general, acute-care facility. At the time of its application for a Certificate of Need, St. Dominic had a licensed capacity of 535 beds that included 417 medical/surgical beds, 35 chemical-dependency beds, and 83 psychiatric beds. In June 2007, St. Dominic filed a CON application to build a new hospital in Madison County. St. Dominic later withdrew that application. Then, on December 1, 2008, St. Dominic filed a CON application requesting approval to relocate seventy-one beds (sixty-five general acute-care beds and six obstetric beds) from its Jackson location to a new “satellite campus” it planned to build in Madison. The project was estimated to cost $125,303,387 and would be located at the future Interstate 55/Reunion Interchange, between the existing Madison and Gluckstadt exits. The application consisted of four components: (I) to relocate sixty-five licensed and operational, general, acute-care beds and related services and to construct a new facility, (II) to construct an accompanying 60,000 square- foot medical office building, (III) to provide MRI services at the new facility, and (IV) to relocate six licensed, general, acute-care beds for obstetrical and neonatal services. St. Dominic stated that it would implement Components II, III, and IV only if the Department approved Component I. Madison HMA, Incorporated (also doing business as Madison River Oaks), the operator of a sixty-seven-bed hospital in Canton, challenged St. Dominic’s CON application. The hearing officer found that St. Dominic’s proposed relocation was actually a new hospital. The hearing officer determined that Madison County had an existing hospital – Madison HMA. The applicable formula showed the area was “over-bedded” – Madison County with an excess of thirty-four beds and GHSA 3 with an excess of 1,300 beds. Based on these figures, the hearing officer concluded that Madison County did not need an additional hospital. The State Health Officer reviewed the hearing officer’s recommendations and concurred with the findings, denying St. Dominic’s CON application by final order. St. Dominic appealed to chancery court which affirmed. St. Dominic appeals.

    Summary of Opinion Analysis: Issue 1: Relocation St. Dominic presented its project as a relocation, but the Department determined that the project actually was a new hospital. St. Dominic argues that the Department erred because the ruling is contrary to CON law, the Department misinterpreted and misapplied prior Court decisions, and the decision is arbitrary and capricious because it is inconsistent with the Department’s prior decisions in identical cases. Section 41-7-191(1)(b) provides, in pertinent part, that: “(1) No person shall engage in any of the following activities without obtaining the required certificate of need: . . . (b) The relocation of a health care facility or portion thereof . . . .” The statute does not define the terms “portion thereof.” The hearing officer did not address St. Dominic’s specific argument (whether moving beds from one facility to another constitutes a relocation). Instead, the Department focused on the fact that St. Dominic did not plan to reduce its services at its Jackson campus. In its CON application, St. Dominic readily admitted it had no plans to reduce services at its Jackson campus. But a reduction of services is only one factor in determining whether a project is a true relocation or a new hospital. St. Dominic’s current CON application proposes to construct a new medical building, hire new staff, and purchase new medical equipment. While a new building, new employees, and new equipment are not individually prohibited under CON law, the three are important factors to consider when determining what a project actually is. Scott Eddy, the architect who designed the facility, did not agree it was a new hospital. Instead, Eddy stated the facility was “a building to put relocated beds in.” But Eddy admitted he would not have designed the facility any differently if it were a new hospital. Ronald Luke, St. Dominic’s health planning and CON expert, also maintained the facility was not a new hospital but an additional campus. But Luke agreed that the proposed facility would have “many of the same capabilities of any acute care inpatient facility that’s providing a comparable range of – or treating a comparable range of patients.” In its application, St. Dominic stated the facility would operate under the same license as its Jackson campus. But no testimony was given to substantiate this claim. There was testimony that St. Dominic planned to move existing equipment to Madison, but St. Dominic had not identified any pieces of equipment to move. St. Dominic failed to identify by wing, unit, floor, or rooms which beds it planned to take from the Jackson campus. St. Dominic’s application assumes that it will relocate beds actually in use. But evidence shows that St. Dominic had numerous empty beds throughout the years: 190 to 203 in 2006, 140 to 162 in 2007, 138 to 164 in 2008, 140 to 163 in 2009, and approximately 105 in January 2010. Section 41-7-191(1)(e) provides that a CON is needed for “[t]he relocation of one or more health services from one physical facility or site to another physical facility or site . . . .” In its CON application, St. Dominic stated that it did not plan to reduce the scope of services available at its Jackson campus. St. Dominic argues that section 41-7-191(1)(e) does not apply to its application, because it proposed to relocate beds under subsection (b). Regardless if St. Dominic intended to relocate only beds and not services, the breadth of services St. Dominic plans to offer at its proposed facility supports the Department’s finding that this is a new hospital. The wide range of services St. Dominic plans to offer evidences that the proposed project is a new fully functioning, free-standing, general acute-care hospital. St. Dominic’s proposed Madison campus would duplicate several services already performed at its Jackson campus. The State Health Plan prohibits the unnecessary duplication of health services. Thus, St. Dominic’s attempt to “relocate” beds to Madison to build a mini version of its Jackson campus must fail. Issue 2: Specific need criteria The hearing officer reviewed whether St. Dominic’s application complied with the specific need criteria for a new hospital and found that it does not. St. Dominic argues that its CON application complies with the specific need criteria for a relocation under Section 108.03 of the State Health Plan. However, St. Dominic’s project should be reviewed under the specific need criteria for the establishment of a new hospital – Section 108.02. The Department may consider approval of a hospital with a maximum of 100 beds if the GHSA needs 100 or more beds, the project has strong community support, and the project is economically feasible. Under the formula, Madison County has an excess of thirty-four beds, and GHSA 3, which includes Madison County, has an excess of 1,300 beds. As a result, Madison County does not need an additional hospital. Thus, St. Dominic fails to comply with the CON criteria and standards for the establishment of a general acute-care hospital.


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