Fleming County Hospital District v. Fleming Regional Medical Imaging, PLLC

354 S.W.3d 149, 2011 Ky. App. LEXIS 180, 2011 WL 4501980
CourtCourt of Appeals of Kentucky
DecidedSeptember 30, 2011
DocketNo. 2009-CA-001275-MR
StatusPublished
Cited by1 cases

This text of 354 S.W.3d 149 (Fleming County Hospital District v. Fleming Regional Medical Imaging, PLLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fleming County Hospital District v. Fleming Regional Medical Imaging, PLLC, 354 S.W.3d 149, 2011 Ky. App. LEXIS 180, 2011 WL 4501980 (Ky. Ct. App. 2011).

Opinion

OPINION

KELLER, Judge:

Fleming County Hospital District, D/B/A Fleming County Hospital (the Hospital) and the Kentucky Hospital Association (the Association) appeal from the Franklin Circuit Court’s finding that Fleming Regional Medical Imaging (Medical Imaging) is exempt from the certificate of need requirements in Kentucky Revised Statutes (KRS) Chapter 216B. For the following reasons, we affirm.

FACTS

The facts, generally, are not in dispute. In January 2007, Drs. Womack, Dineen, and Crutcher formed Medical Imaging. Dr. Womack, a primary care physician, owned 55% of the entity, and Drs. Dineen and Crutcher, radiologists, owned 25% and 20% respectively. When they formed Medical Imaging, Dr. Womack practiced through Buffalo Trace Family Health Care, PSC (Buffalo Trace), an entity he owned with his partner, Dr. Lawson. Drs. Dineen and Crutcher appear to have been engaged in solo practices, reading diagnostic test films at various health-care facilities. The stated purpose of Medical Imaging was to provide MRI services to Dr. Womack’s and Buffalo Trace’s patients at a site adjacent and connected to Buffalo Trace.

In February 2007, Medical Imaging asked the Cabinet for Health and Family Services (the Cabinet) for an advisory opinion regarding Medical Imaging’s status as a facility exempt from the certificate of need requirements. The Cabinet initially determined that Medical Imaging was not exempt because Medical Imaging had not addressed all of the factors the Cabinet deemed it was required to consider. Medical Imaging then supplemented its request and the Cabinet issued an advisory opinion stating that Medical Imaging was exempt from the certificate of need requirements. In its second advisory opinion, the Cabinet determined that Medical Imaging was exempt based on the following information it received from Medical Imaging:

Fleming Regional Medical Imaging, PLLC is a professional limited liability company which is solely owned by two (2) licensed radiologists and a general practitioner.... [T]he practice would primarily provide physician services, rather than services or equipment cov[152]*152ered by the State Health Plan.... MRI scans will primarily be provided to the patients whose medical conditions are treated or managed by the practice’s lone general practitioner.... [T]he proposed services would be performed on an outpatient basis and ... physician’s [sic], all licensed to practice medicine within the Commonwealth of Kentucky, would be responsible for the decisions regarding the medical care and treatment provided to patients.... [T]he provision of MRI services would be related to the professional services offered to the patients of the practice and that practice will not purchase or lease medical equipment in excess of the expenditure minimum provided in 900 KAR 6:030.

The Cabinet also stated that the advisory opinion was only valid as long as “the above elements ... [are] continually satisfied .... ” In the event Medical Imaging modified the proposed services “in a manner that would render them inconsistent with the position set forth herein” or “[i]f any information provided to [the Cabinet] or assumptions made by [the Cabinet] [were] incorrect,” the opinion would “be invalid.” The Cabinet then published the advisory opinion in the April edition of “The Certificate of Need Newsletter.”

The Hospital requested a public hearing regarding the advisory opinion. The matter was referred to a hearing officer who determined that Medical Imaging bore the burden of proof because it was seeking an exemption to the certificate of need requirements.

At the hearing, Drs. Womack and Dineen testified that they, along with Dr. Crutcher, were the sole members of Medical Imaging. They did not anticipate that any other members would be added to the entity. Dr. Dineen testified that he or Dr. Crutcher would be at the facility one to two days a week. While at the facility, Drs. Dineen and Crutcher would deal with patients, if necessary, and read MRI films taken by Medical Imaging. Dr. Dineen stated that he would also, time permitting, read scans from other facilities where he practiced.

According to Dr. Womack, the MRI scanner would be housed in a building that Buffalo Trace was having renovated. In addition to housing the scanner, the building would provide office space for Drs. Dineen and Crutcher and additional space to Buffalo Trace. Although there were no leases in place, Dr. Womack anticipated that Buffalo Trace and Medical Imaging would divide the expense of the renovations and the rents proportionately.

Dr. Womack further testified he anticipated that another entity, Pinnacle Management, would own the MRI scanner and lease it to Medical Imaging and would provide the technicians to operate the scanner as well as office management; e.g., scheduling, billing, etc. However, Medical Imaging had not entered into any formal agreements with Pinnacle Management regarding any of those issues.

The Hospital introduced a number of documents that indicated Medical Imaging might accept additional physician members; that it might accept Pinnacle Management, a non-physician management company, as an additional member; and that it might share profits with Pinnacle Management. Dr. Womack testified that those issues may have been discussed but that there were no formal or informal plans to expand Medical Imaging’s membership or to share its profits.

Finally, both Dr. Dineen and Dr. Wom-ack testified that they were not “in practice” together, other than through Medical Imaging. Therefore, each would bill for medical services through his individual [153]*153practice. Medical Imaging would only bill for the cost of the MRI scan.

Based on the evidence, the hearing officer found that Medical Imaging is not a private office or clinic of physicians that would be exempt from certificate of need requirements. In doing so, the hearing officer noted that the physicians would be billing through their separate entities, not through Medical Imaging; that Medical Imaging would be servicing patients from Buffalo Trace, not just from Dr. Womack; that Dr. Womack’s treatment of patients through Buffalo Trace does not transfer the management of patients to Medical Imaging; and that, while Drs. Womack, Dineen, and Crutcher are the only members of Medical Imaging, there is evidence that the physicians contemplated the participation by other physicians and Pinnacle Management in Medical Imaging. The hearing officer stated that she was not concluding, as a matter of law, the MRI facility would be owned by any entity or person other than Medical Imaging. However, she noted that “the evidence of record raises a number of questions regarding the organizational format and ownership interests in [Medical Imaging] and its potential revenue.” Finally, the hearing officer noted that Medical Imaging failed to meet a number of the physician office exemption criteria set forth in 900 KAR 6:050 § 181 and therefore, did not meet its burden of proof.

Medical Imaging requested reconsideration. The hearing officer denied that request finding that, even if Medical Imaging did not bear the burden of proof, the evidence supported her findings.

Medical Imaging then sought review by the Franklin Circuit Court. The court first addressed the issue of burden of proof, finding that the burden should be on the party protesting the Cabinet’s advisory opinion.

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354 S.W.3d 149, 2011 Ky. App. LEXIS 180, 2011 WL 4501980, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fleming-county-hospital-district-v-fleming-regional-medical-imaging-pllc-kyctapp-2011.