EBG Health Care III, Inc. v. Missouri Health Facilities Review Committee

12 S.W.3d 354, 2000 Mo. App. LEXIS 202, 2000 WL 153725
CourtMissouri Court of Appeals
DecidedFebruary 15, 2000
DocketNo. WD 56314
StatusPublished
Cited by13 cases

This text of 12 S.W.3d 354 (EBG Health Care III, Inc. v. Missouri Health Facilities Review Committee) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
EBG Health Care III, Inc. v. Missouri Health Facilities Review Committee, 12 S.W.3d 354, 2000 Mo. App. LEXIS 202, 2000 WL 153725 (Mo. Ct. App. 2000).

Opinion

PATRICIA BRECKENRIDGE, Chief Judge.

The Missouri Health Facilities Review Committee (Committee) appeals the trial court’s judgment reversing the decision of the Administrative Hearing Commission (AHC). The AHC ruled that under § 197.317, RSMo Cum.Supp.1998,1 and the exception thereto contained in 19 CSR 60-50.400(5)(A)2D, the Committee could not issue a certificate of need to EBG Healthcare III, Inc., d/b/a Woodland Manor (EBG), which would allow EBG to transfer a portion of its licensed nursing home beds to a new facility. On appeal, EBG argues that (1) the AHC erred in finding that § 197.317 applied to prevent it from obtaining a certificate of need for the new facility; (2) if the exception to § 197.317 found in the regulation does not apply to EBG, then the regulation is invalid because it unlawfully extends or creates an exception to § 197.317; (3) the AHC erred in finding that EBG did not meet the requirements to qualify for a certificate of need under the exception to § 197.317 as stated in 19 CSR 60-50.400(5)(A)2D; and (4) if this court finds that § 197.317 and 19 [357]*357CSR 60-50.400(5)(A)2D do not prevent the Committee from issuing a certificate of need to EBG, this court should review the evidence presented and decide that EBG has made the required showing of need to obtain a certificate of need. This court finds that the moratorium in § 197.317 applies to prohibit the Committee from issuing a certificate of need to EBG, and EBG did not qualify for the regulatory exception to the moratorium. This court also finds that EBG lacks standing to challenge the validity of the regulatory exception, as it was not adversely affected by the regulation’s enforcement. The judgment of the trial court is reversed, and the AHC’s decision is affirmed.

Factual and Procedural Background

The Missouri Department of Social Services originally licensed EBG in 1974 to operate Woodland Manor as a skilled nursing facility with 180 beds. At that time, Woodland Manor had semi-private rooms. After April 1,1996, however, EBG restructured Woodland Manor to provide private rooms instead of the semi-private rooms. There is no federal or state requirement that nursing homes offer their patients private rooms. The restructuring caused EBG to decrease its number of beds to 94, although it continued to be licensed for 180 beds. EBG then decided to build a second facility 9.1 miles from Woodland Manor to house its 86 other licensed beds in private rooms. EBG planned to own both Woodland Manor and the second facility. The cost for the second facility was estimated at $2,500,000. EBG preferred to build this second facility rather than renovate Woodland Manor or build a new facility on Woodland Manor’s site, because EBG estimated that the cost of renovating Woodland Manor to accommodate 180 private rooms would be $6,465,701, and the cost of building a new facility on Woodland Man- or’s location would be $6,705,000.

On July 31, 1996, EBG filed its application with the Committee seeking a certificate of need to transfer 86 skilled nursing facility beds from its existing facility to the new facility. To reallocate licensed beds from one nursing home facility’s physical site to another physical site, the operator of the nursing home is required to obtain a certificate of need from the Missouri Health Facilities Review Committee (Committee). Section 197.305(12)(g), RSMo Cum.Supp.1996, and 197.315.1, RSMo 1994. At the time EBG proposed to build the second facility and transfer 86 beds to it, § 197.317 contained a statutory moratorium on the issuance of certificates of need in certain situations. One of the situations in which § 197.317 prohibited the issuance of a certificate of need was “[t]he reallocation of intermediate care or skilled nursing facility beds of existing licensed beds by transfer or sale of licensed beds between a hospital ... or a nursing care facility....” Section 197.317(3). A regulation, 19 CSR 60-50.400(5)(A)2D, contained an exception to § 197.317 for the reallocation of beds at a replacement facility under certain conditions. The Committee denied EBG’s application after the Committee’s staff found that EBG did not meet the conditions of the regulation’s exception.

EBG then requested a hearing before the AHC. EBG argued to the AHC that the moratorium contained in § 197.317 did not apply to its application because it was not seeking approval for additional beds, and that if the moratorium did apply, EBG was within the regulation’s exception for reallocating beds to a replacement facility. The AHC held a hearing in which both parties presented evidence. The parties stipulated that the sole issue on appeal to the AHC was whether § 197.317 applied to bar EBG’s application, or whether EBG’s application met the conditions for recognition of replacement beds as a possible exception to the moratorium as set forth in 19 CSR 60-50.400(5)(A)2D.

The AHC issued its Findings of Fact and Conclusions of Law on December 11, 1997. The AHC recited the stipulated facts and concluded that EBG was “clearly trying to transfer beds between two nurs[358]*358ing care facilities, even if it mil own both of them.” The AHC rejected EBG’s contention that its second building was merely an annex and not a separate facility to which EBG would transfer licensed beds. The AHC concluded that the moratorium of § 197.317 applied to prohibit the issuance of a certificate of need to EBG for their second facility. The AHC also discussed EBG’s argument that it qualified under the regulatory exception to the moratorium for replacement beds. The AHC determined that the exception was applicable only when a nursing home operator had to replace an entire facility and relocate all of the licensed beds to the replacement facility because the original facility was outdated or inadequate and could no longer be used as a residential care facility. The AHC also determined that even if the regulatory exception did allow a transfer of less than all of a facility’s licensed beds, EBG did not meet all of the exception’s conditions. Thus, the AHC concluded that EBG was not entitled to a certificate of need for the new facility.

EBG appealed the AHC’s order to the trial court. The trial court reversed the decision of the AHC, and granted EBG permission to transfer the beds to the new facility. The Committee then filed this timely appeal.2

Standard of Review

On appeal, this court examines the AHC’s decision, not the trial court’s judgment. Psychare Mgt. v. Dept. of Social Services, 980 S.W.2d 311, 312 (Mo. banc 1998). The appellate court’s function on review is limited to a determination of whether the AHC’s action is supported by competent and substantial evidence, is arbitrary, capricious, or unreasonable, or constitutes an abuse of discretion. Id. This court will consider the evidence and all reasonable inferences from the evidence in the light most favorable to the administrative agency’s findings. Shell Oil Company v. Director of Revenue, 732 S.W.2d 178, 180 (Mo. banc 1987). While this court cannot substitute its own judgment on factual matters, this court independently decides questions of law. Psychare, 980 S.W.2d at 312.

The Moratorium Contained in Section 197.317 Applies to EBG’s Certificate of Need Application

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Bluebook (online)
12 S.W.3d 354, 2000 Mo. App. LEXIS 202, 2000 WL 153725, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ebg-health-care-iii-inc-v-missouri-health-facilities-review-committee-moctapp-2000.