Miss. State Dep't of Health v. Rush Care, Inc.
| Docket Number: | 2003-CC-00427-SCT | |
| Oral Argument: | 06-08-2004 | |
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| Supreme Court: | Opinion Link Opinion Date: 09-02-2004 Opinion Author: Waller, P.J. Holding: Reversed and Rendered |
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| Additional Case Information: |
Topic: Certificate of Need - Need methodology - Number of probable admissions - Average length of stay - Adverse effect Judge(s) Concurring: Smith, C.J., Cobb, P.J., Easley, Dickinson and Randolph, JJ. Non Participating Judge(s): Diaz, J. Dissenting Author : Carlson, J. Dissent Joined By : Graves, J. Procedural History: Admin / Agency Judgment Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES |
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| Trial Court: |
Date of Trial Judgment: 02-26-2003 Appealed from: Hinds County Chancery Court Judge: Patricia D. Wise Disposition: Reversed the Appellant's decision to grant a certificate of need to Regency Hospital Company, LLC. Case Number: G2002-2173 W/4 |
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| Party Name: | Attorney Name: | |||
| Appellant: | Mississippi State Department of Health and Regency Hospital Company, LLC |
JULIE ANN BOWMAN
ANDY LOWRY
THOMAS L. KIRKLAND, JR.
SARAH E. BERRY |
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| Appellee: | Rush Care, Inc. d/b/a The Specialty Hospital of Meridian | KATHRYN RUSSELL GILCHRIST CHRISTOPHER A. SHAPLEY J. RICHARD BARRY |
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| Topic: | Certificate of Need - Need methodology - Number of probable admissions - Average length of stay - Adverse effect |
| Summary of the Facts: | Regency Hospital Company, LLC, filed an application for a certificate of need for the establishment of a 40-bed long-term acute care hospital in Meridian. Three hospitals are located in Meridian: Riley Hospital, Rush Hospital and Jeff Anderson Regional Medical Center. Rush currently operates an LTAC (The Specialty Hospital of Meridian) within its hospital building. Regency's application proposed that 40 LTAC beds would be located on the second floor of Riley, but that the LTAC hospital would be separate and independent from Riley. The Mississippi State Department of Health granted the CON to Regency. Specialty filed suit in the Chancery Court of the First Judicial District of Hinds County, to contest the approval of the CON. The chancellor reversed the decision finding that it was arbitrary and capricious and was not supported by substantial evidence. Regency appeals. |
| Summary of Opinion Analysis: | Issue 1: Need methodology Regency argues that the court erred in reversing the Department’s approval of its CON because the application was in substantial compliance with the 2002 Mississippi State Health Plan, with the General Considerations stated in Chapter 8 of the CON Review Manual, and with current federal and state rules and regulations. The Plan requires that an application for an LTAC facility contain at least 450 examples of clinically appropriate restorative care admissions with an average length of stay of 25 days. Regency listed 241 probable admissions from Riley and 438 probable admissions from Jeff Anderson. These probable admissions were based on actual hospitalizations. At the hearing, Regency's representative testified that it had, since the filing of the CON application, acquired patient data from Jeff Anderson and that this data showed that Jeff Anderson had 833 patients with LTAC-appropriate DRGs. The chancellor therefore erred when she substituted her judgment for that of the Department. With regard to the average length of stay required by the Plan, the Department does not provide a methodology with which applicant hospitals may calculate that period. Regency calculated the period as 29 days based on the fact that Riley LTAC-appropriate patients had an ALOS of 18.2 days and Jeff Anderson LTAC-appropriate patients had an ALOS of 17 days and making the assumption that these patients would have stayed in the hospital longer had the respective hospital not discharged the patients due to Medicare's cut-off of benefits after a short oftlineperiod of time. Regency also supports this conclusion with Medicare federal regulations which state that the 97 DRGs listed by Regency had an "application yield" of 31 days. Given this evidence, the chancellor erred when she substituted her judgment for that of the Department. Issue 2: Adverse effect Specialty argues that the Regency CON will adversely affect it because, if Regency's statistics are realized as projected, Specialty will lose 30% of its patient base and $10 million in gross revenues. However, it admitted that no financial analysis had been undertaken. In fact, Specialty's own occupancy percentages and history of growth show that the market for LTAC in the Meridian area is growing. The fact that the trend toward the establishment and operation of LTACs is growing will have an impact on the Meridian market. The chancellor should have affirmed the Department’s findings on this issue. |
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