Open MRI v. Coastal County Imaging Services
| Docket Number: | 2005-SA-00799-COA | |
| Oral Argument: | 06-07-2006 | |
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| Court of Appeals: |
Opinion Link Opinion Date: 10-10-2006 Opinion Author: GRIFFIS, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Certificate of need - Improper information - Diagnostic modalities - Financial projections - Affidavits Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., SOUTHWICK, IRVING, CHANDLER, BARNES, ISHEE AND ROBERTS, JJ. Procedural History: Admin or Agency Judgment Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES |
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| Trial Court: |
Date of Trial Judgment: 04-15-2005 Appealed from: Hinds County Chancery Court Judge: William H. Singletary Disposition: AFFIRMED THE MISSISSIPPI DEPARTMENT OF HEALTH’S GRANTING OF A CERTIFICATE OF NEED. Case Number: G-2005-11 S/2 |
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| Party Name: | Attorney Name: | |||
| Appellant: | OPEN MRI, LLC, COMPASS IMAGING, LLC, AND
CEDAR LAKE OPEN MRI, LLC |
THOMAS L. KIRKLAND, JR., ALLISON C. SIMPSON, ANDY LOWRY |
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| Appellee: | MISSISSIPPI STATE DEPARTMENT OF HEALTH AND COASTAL COUNTY IMAGING SERVICES, LLC | STAN T. INGRAM, JAMES L. PETTIS, III, PAMELA S. RATLIFF, SARAH E. BERRY |
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| Topic: | Certificate of need - Improper information - Diagnostic modalities - Financial projections - Affidavits |
| Summary of the Facts: | Open MRI, LLC, Compass Imaging, LLC, and Cedar Lake Open MRI, LLC, appeal the grant of a certificate of need to Coastal County Imaging Services, LLC, to provide open magnetic resonance imaging services. The Mississippi State Department of Health granted the certificate of need. |
| Summary of Opinion Analysis: | Issue 1: Improper information The appellants argue that the Department awarded the certificate of need based on incorrect information. Their concern has to do with the number of existing MRI units in the area which are used by the Department to assess Coastal’s evidence of need for any additional units. The State Health Plan sets out several criteria for a certificate of need to be granted. The first is designated as the “Need Criterion.” To satisfy the Need Criterion, “[t]he entity desiring to acquire or otherwise control the MRI equipment must document that the specified equipment shall perform a minimum of 1,700 procedures per year by the end of the second year of operation.” In the case of freestanding facilities such as Coastal, the affidavit method allows the applicant to establish this criteria. The Department accepts affidavits by physicians, wherein they estimate how many referrals they expect to give to Coastal. In this case, even discounting alleged untimely affidavits, affidavits were submitted into evidence that Coastal was expected to perform 1,884 procedures in the second year. The staff analysis considered the estimates produced by the affidavits to be accurate. The Department’s decision to give credibility to the affidavits presented by Coastal was supported by the evidence. The Department’s refusal to count nonexistent, non-operational units, was not arbitrary and capricious. Issue 2: Diagnostic modalities The appellants argue that there was no evidence that Coastal would provide a full range of diagnostic modalities, and therefore, the CON should not have been granted. The State Health Plan requires an applicant desiring to offer MRI services to document that a full range of diagnostic imaging modalities for verification and complementary studies will be available at the time MRI services begin. The appellants’ expert admitted that to satisfy the availability criterion, all that is needed is that the applicant makes sure someone will refer the patient to another facility that provides the other needed modalities. There is nothing to indicate that Coastal could not make use of this tactic of making sure the original referring physician locates a facility that provides the other needed procedures. Furthermore, Coastal has a better ability to directly refer its patients to coast hospitals, as none of appellants’ doctors have staff privileges at any coast hospitals. Issue 3: Financial projections The appellants argue that Coastal’s financial projections were faulty because they were based on the cash accounting basis rather than the accrual accounting basis, Coastal projected to pay their staff barely minimum wage, and the projection was based on a less expensive MRI unit than was later sought. Coastal’s expert in financial analysis of medical practices testified that the projections and application, which were based on the assumption that the unit would be leased, conformed to generally accepted accounting principles. There was substantial credible evidence to support a finding that Coastal’s employee salary projections were reasonable. There was also substantial credible evidence to support a finding that Coastal’s financial projections were accurate. Issue 4: Affidavits The appellants argue that the Department violated its own rules when it accepted additional affidavits from Coastal on March 10 and again on April 26, even though it had given Coastal the deadline of March 1. Appellants argue that accepting the March 10 and April 26 affidavits violated their rights to notice and a hearing. However, appellants had notice, a pre-hearing discovery period, and their statutorily guaranteed right to a public hearing on all the information several months later. Regardless, the evidence indicated, and appellants admit, that even discounting the April 26 affidavits, Coastal satisfied its showing of need. |
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