CLC OF BILOXI, LLC v. MISSISSIPPI DEPARTMENT OF HEALTH
| Docket Number: | 2011-SA-00088-SCT Linked Case(s): 2011-SA-00088-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 06-28-2012 Opinion Author: Justice Pierce Holding: Affirmed. |
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| Additional Case Information: |
Topic: Certificate of need - Violation of section 41-7-191(1)(a) and (m) - Replacement of beds - Need - Economic viability - Complete review |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Certificate of need - Violation of section 41-7-191(1)(a) and (m) - Replacement of beds - Need - Economic viability - Complete review |
| Summary of the Facts: | Miramar Lodge Nursing Home, a 180-bed nursing facility, was destroyed by Hurricane Katrina on August 29, 2005. Miramar at the time was located in Pass Christian, Harrison County. On January 5, 2010, Harrison County Properties, LLC, d/b/a Gulfport Care Center, filed a certificate of need application with the Mississippi Department of Health. GCC requested the CON for the construction of a replacement facility and relocation of ninety nursing-home beds from Miramar to an area located in central Harrison County, approximately twenty miles from Pass Christian. Sixty of Miramar’s 180 beds were relocated in 2006 to Boyington Health Care Facility in Gulfport, Harrison County. The DOH staff evaluated the CON, and found it to be in substantial compliance with the State Health Plan, the Certificate of Need Review Manual, and all adopted rules, policies, and procedures of the DOH. Several nursing homes from Harrison County and Jackson County contested GCC’s CON application and requested a public hearing. The State Health Officer granted GCC a CON for the construction of a ninety-bed replacement nursing home in Harrison County. The contestants appealed to the Hinds County Chancery Court, which affirmed the SHO’s decision. The contestants appeal. |
| Summary of Opinion Analysis: | Issue 1: Violation of section 41-7-191(1)(a) and (m) The contestants argue that the project at issue violates section 41-7-191(1)(a) and (m). The contestants submit that Miramar ceased to operate on August 29, 2005, and could not possibly have reopened before August 29, 2010 “(60 months after it ceased to operate),” given the timeline of relevant dates regarding the project. The most reasonable and appropriate interpretation of this section is that no person may reopen a health-care facility that has ceased to operate for a period of sixty months without obtaining a CON for the establishment of a new health-care facility. When GCC sought a CON for the reestablishment of a previously existing facility, the sixty-month period had not yet elapsed. Accordingly, the DOH did not violate section 41-7-191(a) and (m). Issue 2: Need The contestants argue that need does not exist for Miramar, as Harrison County’s need is amply served by other facilities. The SHO for the DOH clearly identified each of the health-planning policies: 1) improving the health of Mississippi residents; 2) increasing the accessibility, acceptability, continuity and quality of health services; 3) preventing the unnecessary duplication of resources; and 4) providing some cost containment. The SHO explained that the first element was met because Mississippi residents would have nursing home beds, destroyed by Hurricane Katrina, replaced and relocated further inland to avoid problems in the future with hurricanes. Next, the SHO found that the second element had several components, and the evidence showed that Miramar had complied with each. Then, the SHO stated that the Miramar beds already were recognized in the State Health Plan for health-planning purposes, and therefore, Miramar did not constitute an unnecessary duplication of services. The SHO made clear that the evidence illustrated that the costs of Miramar fell squarely within the middle of the guidelines of construction costs for nursing-home projects, and thereby satisfied the fourth element. The SHO also found that the relocation of Miramar complied with each of the General Review Criteria in the CON Review Manual. The record evidence substantially supports the finding that there is a need to replace beds lost to Hurricane Katrina. Miramar takes nursing home beds destroyed by Hurricane Katrina and relocates those beds to a safer location into an area with higher population growth. Moreover, the contestants conceded that Miramar would not have an adverse financial impact on their operations. Issue 3: Economic viability The hearing officer was presented with conflicting expert testimony on whether Miramar was economically viable. While the contestants asserted that GCC failed to make three-year profitability projections, testimony shows that in year one, Miramar would operate at a loss, but in the each of the next two years, Miramar would operate with more than $400,000 in profit in each year. Additionally, the contestants challenged whether Miramar had sufficient operating capital to sustain it; but testimony showed that the Family Trust had sufficient capital to sustain the Miramar project. Thus, there is substantial evidence in the record to support the SHO’s finding that Miramar is economically feasible. Issue 4: Complete review The contestants argue that the DOH abrogated its responsibility to perform a “full and complete” review of GCC’s application. The contestants submit that, not only were data and documents missing from the application, but also, much of the information contained in the application was inconsistent and inaccurate. The contestants take issue with the fact that the first draft of the purchase agreement in this case references the company “Pensacola Health Trust.” According to the record, however, a revised subsequent version of the purchase agreement reflected the proper owner as Skyler Hattiesburg. This purchase agreement, evidencing the transaction, was introduced at the hearing. Even though the DOH may have employed an imperfect method in making its decision, its decision should be affirmed when it is supported by substantial evidence. Here, the DOH’s decision is supported by substantial evidence. |
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