Sacred Heart Health System, Inc. v. Infirmary Health System

155 So. 3d 969, 2010 WL 3722565, 2010 Ala. Civ. App. LEXIS 276
CourtCourt of Civil Appeals of Alabama
DecidedSeptember 24, 2010
Docket2090239
StatusPublished
Cited by2 cases

This text of 155 So. 3d 969 (Sacred Heart Health System, Inc. v. Infirmary Health System) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sacred Heart Health System, Inc. v. Infirmary Health System, 155 So. 3d 969, 2010 WL 3722565, 2010 Ala. Civ. App. LEXIS 276 (Ala. Ct. App. 2010).

Opinions

On Application for Rehearing

THOMAS, Judge.

The opinion of June 25, 2010, is withdrawn, and the following is substituted therefor.

Sacred Heart Health System, Inc. (“Sacred Heart”), is an out-of-state, not-for-profit corporation that, among other things, provides medical services through three hospitals and other medical facilities located in the northwestern region of Florida. Sacred Heart is also the owner of a multi-specialty physician group known as Sacred Heart Medical Group (“SHMG”). SHMG is made up of 143 physicians practicing in the northwestern area of Florida and the south Baldwin County area of Alabama. The record indicates that SHMG is not a separate legal entity; however, Sacred Heart has presented evidence indicating that the physicians of SHMG have employment contracts with SHMG, [971]*971that SHMG employees perform consolidated billing for all the SHMG physicians’ patients, that third-party providers like insurers consider SHMG a medical group, and that SHMG physicians all share the same billing number.

Six SHMG physicians provide healthcare services to patients in the south Baldwin County area of Alabama. Because the practices of three of those physicians had increased and an expansion of the physicians’ existing offices was not feasible, Sacred Heart began, as early as 2003, seeking a way to assist those physicians in locating more office space to provide better service to their patients. To that end, Sacred Heart ultimately began negotiations regarding some property upon which it could construct a medical office building (“MOB”). Once the property was secured, Sacred Heart entered into a preconstruction agreement with Colonial Pinnacle MOB, LLC, an affiliate of Johnson Development, LLC, the developer of the MOB project, regarding the construction of and proposed leasing of the MOB from Colonial Pinnacle MOB, LLC, by Sacred Heart. That agreement contained the details of the utilization of the space in the 44,000-square-foot MOB. Included in the space to be leased was an area to house an ambulatory-surgery center,1 an area for medical-office suites, an area for timeshare space for incremental use by non-SHMG physicians, an area for a diagnostic center, an area for a rehabilitation center, and an area for a laboratory.

Sacred Heart advertised the MOB project as a new facility providing new and improved services to the south Baldwin County area. The information contained on the Sacred Heart Web site about the project explained that the MOB was part of a process to “expand ... services in order to meet the growing health care needs of [the south Baldwin County] area.... This is part of a long-term commitment that Sacred Heart is making to the communities of south Baldwin County.” Other advertisements and information concerning the MOB project indicated that Sacred Heart intended to seek an oncologist to join SHMG and offer services in the MOB, including mammography and CT scans, neither of which were offered by SHMG physicians already practicing in the south Baldwin County area and which would require the purchase of the CT scanner and mammography unit once an oncologist was recruited.

The minutes of a'March 31, 2006, meeting of the Sacred Heart board of directors mention the planning and development of the MOB project. Those minutes state that

“[t]he hospital is currently engaged in a planning process for the construction of a 60,000 square foot office building in Gulf Shores, which would include an ambulatory surgery center, outpatient diagnostic services and physician offices. The construction and operation of an ambulatory surgery center will require a certificate of need, which has been applied for.”

(Emphasis added.) Minutes from the SHMG management board meetings also include references to the planned MOB [972]*972project. The minutes from April 27, 2006, read:

“We have reserved property on Highway 59, north of the intercoastal waterway, which is large enough to build a 60,000 [square foot] building and are in the process of talking to developers who will build the building. The plan is for an integrated SHMG practice, surgery center, and diagnostic center like in Pace, [Florida], We are in discussions with surgeons to put a surgery center, deal together. We have filed for a [certificate of need] for the surgery center.”

(Emphasis added.) The minutes from the. August 17, 2006, SHMG management board meeting indicate that the group had a letter of intent to purchase the property for the MOB project and mentioned “detailed negotiations” regarding the proposed ambulatory-surgery center to be operated by Pleasure Island Ambulatory Surgery Center, LLC (“PIASC”).2

In addition to the reference in the SHMG management board meeting minutes to the medical facility in Pace, Florida, the record contains another reference to the Pace facility. In its announcement regarding the MOB project on the Sacred Heart Web site, Sacred Heart noted that Johnson Development, LLC, had partnered with Sacred Heart to construct similar medical office parks. The Web site specifically referenced, among other locations, the medical office park in Pace, Florida. According to information on the Sacred Heart Web site about Sacred Heart Medical Park in Pace, the Pace facility provides laboratory and imaging services, outpatient-surgery services, rehabilitation services, physical therapy, and also contains physician offices. The Sacred Heart Web site declares that “[t]he new Sacred Heart Medical Park [in Pace] will make it easier for Santa Rosa County residents to receive outpatient services from Sacred Heart, all in one convenient location. This is an important step in the growth of our regional health system.” The Pace facility operates as a part of the Sacred Heart Hospital System.

Procedural History

South Baldwin Regional Medical Center (“South Baldwin”), a health-care facility located in Baldwin County, filed a petition for a declaratory ruling with the State Health Planning and Development Agency (“SHPDA”), requesting that SHPDA declare Sacred Heart’s plans to develop the MOB required Sacred Heart to obtain a certificate of need (“CON”) from SHPDA. Infirmary Health System (“IHS”), another health-care facility that provides health services in the Mobile County/Baldwin County area, intervened in support of the petition. The administrative law judge (“ALJ”) assigned to hear the petition determined that he lacked jurisdiction to decide the matter and remanded the petition to the CON Review Board (“CONRB”). Because neither the CONRB nor the ALJ issued any ruling on the petition within 45 days, see Ala.Code 1975, § 41-22-ll(b) (stating that an agency’s failure to rule on a request within 45 days constitutes a denial of the request), South Baldwin and IHS (hereinafter referred to collectively as “the opponents”) filed a petition for judicial review in the Montgomery Circuit Court. See Ala.Code 1975, § 41-22-20 (explaining the procedure to seek judicial review of an agency decision).

In the petition for judicial review, as originally filed, the opponents sought an order directing that SHPDA conduct a fact-finding proceeding and issue a ruling on the merits of the petition for a deelara-[973]*973tory ruling.

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Related

Sacred Heart Health System, Inc. v. Infirmary Health System
155 So. 3d 989 (Court of Civil Appeals of Alabama, 2013)
Infirmary Health System v. Sacred Heart Health System, Inc.
155 So. 3d 980 (Supreme Court of Alabama, 2012)

Cite This Page — Counsel Stack

Bluebook (online)
155 So. 3d 969, 2010 WL 3722565, 2010 Ala. Civ. App. LEXIS 276, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sacred-heart-health-system-inc-v-infirmary-health-system-alacivapp-2010.